Lawrence v Lawrence
[2017] NZHC 3261
•20 December 2017
NOTE: PURSUANT TO S 169 OF THE FAMILY PROCEEDINGS ACT 1980, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO
11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
THE-FAMILY-COURT/LEGISLATION/RESTRICTION-ON-PUBLISHING- JUDGMENTS.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-002144 [2017] NZHC 3261
UNDER the Family Proceedings Act 1980 IN THE MATTER
of an appeal under Section 174(1)(AA) Family Proceedings Act 1980
BETWEEN
JENNIFER LAWRENCE Appellant
AND
TREVOR LAWRENCE Respondent
Hearing: 17 August 2017 Appearances:
S Jefferson QC for Appellant
B Carter for RespondentJudgment:
20 December 2017
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 20 December 2017 at 4.30 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Lawrence v Lawrence [2017] NZHC 3261 [20 December 2017]
[1] In June 2016, Judge PR Grace in the Family Court at Auckland1 made an order that Trevor Lawrence should pay spousal maintenance at a rate of $2,500.00 per week to his wife Jennifer Lawrence, from whom she is separated.2 Ms Lawrence appeals against the decision.
[2] Ms Lawrence, a New Zealander, and Mr Lawrence, who is British, are lawyers. They started living together in Bahrain in 2008, and were married in 2009. They have three children: a daughter Sally aged 7 and two sons, Stephen aged 6 and Michael aged 3. The family lived in the Middle East until they moved to New Zealand in April
2014.
[3] Mr Lawrence was unable to obtain employment in New Zealand and the couple separated on 22 August 2015. Since 1 September 2015, Mr Lawrence has been employed as chief executive officer for an overseas company and is based in South- East Asia. His responsibilities involve extensive travel to other parts of the world but he visits New Zealand to see the children, around once a month.
[4] Prior to Mr Lawrence’s departure for his new role, maintenance and support had not been resolved. On 28 September 2015, Ms Lawrence applied for interim spousal maintenance (without notice) and past/future spousal maintenance (with notice).
[5] In a Minute dated 28 September 2015, Judge GF Ellis made an interim spousal maintenance order in the sum of $2,500 a week on a without notice basis. A notice of defence was filed on 16 October 2015 and affidavits were filed. There was a hearing on 27 April 2016 before Judge Grace to determine the future spousal maintenance
obligations of Mr Lawrence towards Ms Lawrence.
1 H v H [2016] NZFC 3679.
2 The names of the parties have been anonymised and the names of the children have been changed in this judgment, consistently with the requirement that the identity of the parties and the children shall not be published.
[6] Judge Grace noted that the application was to determine the future maintenance obligations of Mr Lawrence for Ms Lawrence alone, there being no apparent dispute over the payments he is making for “child support” or educational fees for the children’s private schools and associated costs. The Judge found that, in effect, Mr Lawrence was paying approximately $20,000 per month towards the upkeep of Ms Lawrence and the children.
[7] The Judge described Ms Lawrence’s claims in these terms:
[16] For her part the applicant is seeking future maintenance payments of
$344,000 per annum, which equates to approximately $28,684 per month, for a period of two years. After two years, she is seeking maintenance at the rate
of $274,000 per month for a further two years which equates to approximately
$22,896 per month. In addition to those maintenance payments the applicant is seeking a total of past spousal maintenance amounting to $153,044.
[17] Also in addition she is asking the respondent to continue to pay the school fees for the children at the current rate, with any subsequent increases. In addition she is asking that he continue to pay the child support calculations. These payments amount to $110,000 per annum making the amount the applicant is seeking $454,000 per annum.
[8] The Judge accepted Mr Lawrence’s evidence about his current level of income being substantially less than that he had earned in the Middle East, despite a minor dispute about bonuses. His net income at the date of the hearing was assessed at
$568,500.00 per annum, including an anticipated bonus.
[9] The Judge adopted a process of assessing what Ms Lawrence’s reasonable needs were in relation to her budget and expenditures. It is unnecessary to traverse the detail and it is sufficient to say that the assessment was predicated on a need for the parties to “cut their cloth” according to their circumstances.
[10] Judge Grace found that the couple would have had full knowledge, appreciation and acceptance that, based on the standard of living in the Middle East and their tax-free incomes, they would be moving to a reduced standard of living in New Zealand. Given that Mr Lawrence could not find employment in New Zealand, the Judge held that when financial circumstances change for a couple, there needs to
be an element of realism in assessing their lifestyle needs.3 The Judge said the correct approach to assessing Ms Lawrence’s needs was to base any decision on the standard of living enjoyed by the parties in the period leading up to their separation. In the circumstances of this case, that was the standard in the period when they were together in New Zealand.
[11] The Judge suggested the couple could reduce the mortgage payments on the family home by converting the bank loan to an interest-only basis. By an analysis of other claimed expenses, Judge Grace said Ms Lawrence’s reasonable needs could be reduced to $3330.00 per week. Putting aside the school fees and the child support sums paid, the Judge noted that, on that basis, there was a shortfall of $830.00 between the sum reasonably claimable to meet Ms Lawrence’s needs and the weekly amount of $2,500.00 paid by Mr Lawrence.
[12] The Judge noted that Ms Lawrence estimated the remuneration for her part- time work to the date of hearing as $16,000, and taking a pro-rata approach, calculated her income from her employment to be between $60,000 to $70,000 per annum.4 This was assessed as a net income of $43,000, which was held to make up for the shortfall. On that basis, Judge Grace was of the view that the current payments by Mr Lawrence of $2500 per week are reasonable and appropriate.5 The Judge noted that
Ms Lawrence has managed to live reasonably well on her combined income and that she had not put forward any evidence that she had to enter debt to do so.6
[13] Judge Grace concluded that the length of time during which the maintenance order should apply was for three years from 21 April 2016, on the basis that
Ms Lawrence requires a reasonable period of time to get established and back in the
workforce to achieve independence.
3 At [66].
4 At [105].
5 At [109].
6 At [112].
Grounds of appeal
[14] The notice of appeal raises six points of appeal, but Mr Jefferson QC submitted that they can be can distilled to three principal objections to the decision of the Family Court:
(a) An allowance should have been provided to Ms Lawrence for assistance in the form of a nanny, on the grounds that:
(i)in light of the standard of living shared by the parties during their marriage it is a necessary expense and part of her reasonable needs to enable her to become self-sufficient; and
(ii)insufficient weight was given to the particular difficulties of caring for Sally;
(b)The Judge was wrong to make orders in respect of child support and instead should have addressed the overall household expenses and ordered maintenance for Ms Lawrence accordingly;
(c) The order was made on the assumption that Ms Lawrence was earning and would continue to earn $60,000 – $70,000 per annum, but she disputes that she ever earned that income and in any event her income has ceased.
[15] Accordingly, Ms Lawrence seeks orders to increase the currently weekly spousal maintenance figure of $2,500 by:
(a) $830 per week to take into account Ms Lawrence’s lost income;
(b)$812.30 per week to allow her to hire a nanny to relieve her of some child care responsibilities and increase her income earning ability;
(c) $658.38 per week to take into account Ms Lawrence’s child support liability in circumstances where the provisions of the Child Support Act
1991 do not apply.
[16] These increases would result in Ms Lawrence being entitled to an overall weekly amount of $4,800.68, or approximately $249,635.36 a year (44 per cent of
Mr Lawrence’s net income).
[17] Ms Lawrence also seeks a lump sum payment of $830 per week for past spousal maintenance from the date that she lost her income from employment, being
22 August 2016, up to the date of judgment in this Court.
Approach on appeal
[18] Section 174(1B) of the Act provides that an appeal under the Act is brought as a general appeal pursuant to s 72 of the District Courts Act 1947, now found in s 124 of the District Court Act 2016.
[19] An appeal against a maintenance decision is in part a general appeal by way of rehearing and in part an appeal against exercise of discretion.7 Section 174 makes it clear that an appeal is to be considered as a general appeal.8 But the Courts have acknowledged that there may be some aspects of a maintenance order, such as quantum of the maintenance, which may involve an exercise of discretion.9 The approach on a general appeal is that this Court has the responsibility of arriving at its own conclusion on the merits of the case,10 and must substitute its own decision if it reaches a different decision from that reached in the judgment under appeal, even if it entails a value judgment and was a conclusion on which minds might reasonably differ.11 To the extent aspects of the appeal are against conclusions reached by way of
an exercise of discretion, the scope of the appeal is narrower,12 in that a court should
7 McQueen v Penn [2016] NZHC 699, [2016] NZFLR 795 at [9]; CAM v JMP [2013] NZHC 592 at [16] – [19].
8 CAM v JMP [2013] NZHC 592 at [18] – [19].
9 CAM v JMP [2013] NZHC 592 at [17].
10 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [5].
11 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16];
Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
12 McQueen v Penn [2016] NZHC 699, [2016] NZFLR 795 at [11].
interfere only if the Judge appealed from made an error of law, took into account irrelevant circumstances, failed to take relevant circumstances into account, or was plainly wrong.13
Relevant law
[20] Section 63 of the Family Proceedings Act 1980 provides the basis for the payment of spousal maintenance by one party to another while the marriage continues. One party is liable to provide maintenance “to the extent that such maintenance is necessary to meet the reasonable needs of the other party, where the other party cannot practicably meet the whole or any part of those needs” because one or more of the circumstances in s 63(2)(a) – (f) apply.
[21] The subsection provides:
63 Maintenance during marriage or civil union
…
(2) The circumstances referred to in subsection (1) are as follows:
(a) the ability of the parties to be or to become self-supporting, having regard to—
(i) the effects of the division of functions within the marriage or civil union while the parties are living together or lived together:
(ii) the likely earning capacity of each party: (iii) any other relevant circumstances:
(b) the responsibilities of each party for the ongoing daily care of any minor or dependent children of the marriage or civil union after the parties ceased to live together:
(c) the standard of living of the parties while they are living together or lived together:
(d) any physical or mental disability:
(e) any inability of a party to obtain work that—
(i) it is reasonable in all the circumstances for that party to do; and
13 May v May (1982) 1 NZFLR 165 (CA).
(ii) is adequate to provide for that party:
(f) the undertaking by a party of a reasonable period of education or training designed to increase that party’s earning capacity or to reduce or eliminate that party’s need for maintenance from the other party, where it would be unfair, in all the circumstances, for the reasonable needs of the party undertaking that education or training to be met immediately by that party—
(i) because of the effects of any of the matters set out in paragraphs (a)(i) and (b) on the potential earning capacity of that party; or
(ii) because that party has previously maintained or contributed to the maintenance of the other party during a period of education or training.
(3) Except as provided in this section, neither party to a marriage or civil union is liable to maintain the other party during the marriage or civil union.
[22] Section 65(2) sets out the matters that the Court must have regard to in assessing the amount payable:
65Assessment of maintenance payable to spouse, civil union partner, or de facto partner
…
(2) The matters that the court must have regard to are as follows:
(a) the means of each spouse, civil union partner, or de facto partner, including—
(i) potential earning capacity:
(ii) means derived from any division of property between the spouses or de facto partners under the Property (Relationships) Act 1976:
(b) the reasonable needs of each spouse, civil union partner, or de facto partner:
(c) the fact that the spouse, civil union partner, or de facto partner by whom maintenance is payable is supporting any other person:
(d) the financial and other responsibilities of each spouse, civil union partner, or de facto partner:
(e) any other circumstances that make one spouse, civil union partner, or de facto partner liable to maintain the other.
(3) In considering the potential earning capacity of each spouse, civil union partner, or de facto partner under subsection (2)(a)(i), the court must have regard to the effects of the division of functions within the marriage or civil union or the de facto relationship while the spouses, civil union partners, or de facto partners were living together.
(4) For the purposes of subsection (3), where the marriage or civil union was immediately preceded by a de facto relationship between the spouses or civil union partners, the effects of the division of functions within the marriage or civil union include the effects of the division of functions within that de facto relationship.
(5) In considering the reasonable needs of each spouse, civil union partner, or de facto partner under subsection (2)(b), the court may have regard to the standard of living of the spouses, civil union partners, or de facto partners while they were living together.
[23] In Z v Z, the Court of Appeal held that “reasonable needs” are not limited to a subsistence level and may vary considerably based on the circumstances of the parties.14 The fact that the Court is to have regard to the reasonable needs of “each” party, necessitates an examination of the parties’ relative needs.15
Discussion
[24] The issues crystallised by Mr Jefferson come down to these contentions:
(a) The Family Court Judge erred in his estimate of Ms Lawrence’s income and future earning ability.
(b)The loss of Ms Lawrence’s job amounts to a change of circumstances justifying a re-assessment of her reasonable needs.
(c) Payment of additional maintenance is required to enable Ms Lawrence to engage paid assistance with childcare and to provide time for her to undertake paid employment.
(d)Mr Lawrence should pay arrears of maintenance calculated at the new, higher rate sought for the period since Ms Lawrence lost her job.
14 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 294 – 295.
15 At 295.
Ms Lawrence’s income
[25] Ms Lawrence had a job doing law-related project management work on contract for an Australian company. She worked from home essentially, at times that accommodated her other commitments. She says Judge Grace overstated her income by overestimating the numbers of hours she was working or able to work. She says her employment contract rate was $125 an hour, and to achieve the annual income of
$60,000.00 - $70,000.00 estimated by the Judge, she would need to work at least nine to ten hours per week for all 52 weeks of the year, without accounting for school holidays, sickness, or annual leave. Given she is the only available parent,
Ms Lawrence says this is unrealistically high.
[26] In any event, Ms Lawrence’s employment ended on 22 August 2016. Evidence produced on the hearing of the appeal included a tax invoice for the period from November 2015 to September 2016 identifying Ms Lawrence’s income during this period as AUD30,975.00 (excluding disbursements) before tax. Ms Lawrence was unclear about the rate of tax she would have to pay on that sum. The tax invoice lists her total hours worked during this period as 247.8, averaging at 6 hours per week for this period.
[27] Ms Lawrence owns what I understand to be an investment property in Australia valued at AUD1.2 million which is encumbered by a mortgage of around AUD686,000.00. The net rental return from the property is between AUD2,500 and AUD3,500 per annum. Ms Lawrence acknowledged in cross-examination that she would be able to earn a great deal more than that by selling the property and investing the net proceeds on term deposit. Evidence is not required to establish that a term deposit of, say, $500,000 earning interest at a rate of 3.5 per cent per would achieve a gross return $17,500.00 per annum. Ms Lawrence says, however, that the equity released from the sale of the property would be less than the difference between its current value and the mortgage sum because she would incur capital gains tax on the sale.
[28] Ms Lawrence said in the affidavit filed in support of the appeal, sworn in
August 2016, that there were no current employment options available to her, and that
while she would look for employment she was not confident she would be able to find a job which gave her the necessary flexibility (taking into account her responsibilities for the three children) and remuneration that the previous job did. Ms Lawrence had not obtained any work by the date of the hearing in this Court.
[29] In response to Ms Lawrence’s affidavit, Mr Lawrence tendered an affidavit from Ms Jennifer Little, the director of a business which undertakes search and placement of lawyers for law firms nationally. She considered Ms Lawrence’s qualifications and experience as a legal practitioner, noting that she had specialised in project finance and general banking, acquisition finance, asset finance and property finance. On that basis Ms Little said that Auckland is New Zealand’s largest deal market and offers the most in-house opportunities to lawyers working in the areas identified by Ms Lawrence’s profile. Ms Little’s opinion was that Ms Lawrence has the skills that would make her a useful member of a banking or corporate/commercial team in a law firm and that many law firms offer supportive and flexible hours of work and work arrangements.
[30] It was put to Ms Lawrence in cross-examination that she would be able to work a substantial number of hours a week without compromising her child care responsibilities, bearing in mind that her two eldest children are at school and the youngest is in a pre-school five days a week roughly during ordinary school hours.
Mr Lawrence is meeting the cost of that attendance and also the attendance of the two elder children at private schools. When challenged about the amount of time taken up by her childcare responsibilities during the school week, Ms Lawrence indicated that the school run to drop off the children takes from 7.30 am to 9.00 am. She is then engaged between 2.00 pm and 3.30 or 4.00 pm collecting the children from their respective schools.
[31] Sally has a rare and severe structural brain abnormality associated with learning and developmental difficulties. That disability has significant physical consequences for the child, including a lack of simple co-ordination and motor-skills and abnormally short arms. She cannot dress herself nor go to the toilet on her own and is assisted by a dedicated teacher aide at school. Ms Lawrence said that her time outside school hours is taken up with extra-curricular activities of the children and that
Sally, especially, takes up a great deal of her time both before and after school and at weekends.
[32] At the date of hearing, Mr Lawrence’s parents were living with her and the children, having moved there in about January 2016 after the sale of their home. They are elderly although I understood that Ms Lawrence’s father still works part-time, approximately two and a half days a week. Ms Lawrence’s parents do not pay board, as such, but Ms Lawrence’s evidence is that they contribute to the household expenses and that, importantly for her, they assist with child care, including doing the occasional school run and looking after the children when they are sick. Although Ms Lawrence was challenged about the reasonableness of her parents living board and rent-free in the former matrimonial home of which Mr Lawrence is a part-owner, I am satisfied that the arrangement is an entirely appropriate one which caring parents and grandparents might enter into to assist a daughter who has sole responsibility for the day to day care of three young children. Although there may be an opportunity for
Ms Lawrence’s parents to increase their involvement and so free her to undertake paid work, it would be unreasonable and unrealistic to assume that that would be a lasting arrangement, given that the grandparents’ arrangements are entirely voluntary.
[33] I am satisfied on the evidence that Ms Lawrence is able to obtain part-time work at flexible hours, and from home if need be, at a level of income which would enable her to engage even part-time assistance with childcare arrangements and housekeeping responsibilities. Ms Little’s evidence confirms that flexible working arrangements for women with children are available within the legal profession. I am not persuaded that Ms Lawrence is not capable of taking advantage of those opportunities.
[34] I recognise, however, that the burdens of assuming full-time responsibility for the care of three young children, including one whose condition requires a dedicated teacher aide at school and close attention while at home, imposes considerable physical and emotional burdens on Ms Lawrence. That would make an obligation to undertake full-time or substantial part-time work unreasonable. Mr Lawrence is doing what he can financially to provide for the children’s education and for their other financial needs, and he visits them monthly, no doubt at significant expense and
inconvenience given his home-base in South-East Asia. But he is not able to make any contribution to the physical and emotional demands of childcare for this young family. I take these matters into account in determining Ms Lawrence’s reasonable maintenance needs, applying the statutory considerations.
[35] I am satisfied that Judge Grace erred in his calculation of Ms Lawrence’s then current income and of her future income earning ability. I consider that, had the evidence now available to this Court been before the Family Court, the Judge would not have assumed that Ms Lawrence was capable of earning a sufficient income to meet the $830 shortfall between what he considered to be her reasonable needs and those which were being met by Mr Lawrence.
[36] I adopt the approach taken by Winkelmann J in Day v Weldon-Day16of looking at the total reasonable cost of running the household, including care for the children, deducting the income and other contributions made by Mr Lawrence as child support payments, and then taking into account what I assess to be Ms Lawrence’s ability to work. On that basis, I consider that the spousal maintenance figure paid by
Mr Lawrence should be increased by $500 per week.
[37] In reaching that figure, I have also taken into account Judge Grace’s assessment of Mr Lawrence’s income and his reasonable needs.
[38] In the event that Ms Lawrence does obtain employment which requires her to incur additional child care costs, it would be open to her to make an application for variation of the maintenance figure based on a change of circumstances which takes account of her actual income and outgoings and an assessment of her then current needs. Equally, of course, Mr Lawrence would be entitled to apply for a variation if
either his or Ms Lawrence’s financial circumstances alter.
16 Day v Weldon-Day HC Hamilton CIV-2007-419-1293, 3 December 2007 at [10].
Past spousal maintenance
[39] Ms Lawrence also seeks a lump sum payment for past spousal maintenance in the amount of $830 per week from the date that she lost her income from employment, being 22 August 2016, up to the date of this judgment.
[40] I am not persuaded such an order should be made. I have held that
Ms Lawrence has not attempted to secure further employment or turn her rental property into an asset with a reasonable return. Those options were available to her. The equitable outcome of the appeal is that Mr Lawrence should pay increased spousal maintenance on the basis of the evidence now before the Court about Ms Lawrence’s reasonable needs but that the order for an increase should not be backdated and no order made for payment of arrears.
Result
[41] I allow the appeal in part.
[42] I vary the order made in the Family Court for the payment of $2,500.00 per week by way of future maintenance by ordering that the sum shall be increased to
$3,000.00 per week from 1 February 2018. As directed by the Family Court, the order shall remain in force until 21 April 2019.
Costs
[43] Each party has had a measure of success on the appeal. I am inclined to think costs should lie where they fall. Any application for costs shall be made by memorandum filed and served by 2 February 2018. Any memorandum in reply shall be filed and served by 23 February 2018. Costs shall then be determined on the papers unless the Court directs otherwise.
…………………………….
Toogood J
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