Little v Little
[2022] NZHC 601
•29 March 2022
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,
11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1639
[2022] NZHC 601
UNDER the Property Relationships Act 1976 IN THE MATTER
of an appeal under ss 39 and 53 of the Property Relationships Act 1976 of specified issues of determination of 4 December 2020
BETWEEN
JANET LITTLE
Appellant
AND
COLIN LITTLE
Respondent
Hearing: 4 November 2021 Appearances:
The Appellant in person
EG Snedden for the Respondent
Judgment:
29 March 2022
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 29 March 2022 at 4.00pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date………………………
Solicitors: Simpson Western, Auckland To: The Appellant
LITTLE v LITTLE [2022] NZHC 601 [29 March 2022]
Introduction
[1] The appellant appeals from a decision of Judge R von Keisenberg in the Family Court determining a dispute between the appellant and her former husband, the respondent, about the division of their relationship property.1
[2] Both parties were self-represented in the Family Court proceedings. At the conclusion of a three day hearing before the Judge, there was a large degree of agreement on the relationship property pool and its division. The remaining matters in issue comprised:
(a)a claim by the appellant for compensation under s 18B of the Property (Relationships) Act 1976 (the Act) for contributions made by her to the relationship following separation;
(b)a claim by the appellant for an adjustment under s 18C of the Act for diminution in value of the family home since separation;
(c)a claim by the appellant for compensation under s 15 of the Act for economic disparity at separation; and
(d)other more minor disputed matters, such as the status of the appellant’s credit card debt at separation.
[3] At the outset of her judgment, the Judge noted that the appellant had said in her opening submissions that she was also seeking an award of spousal maintenance, though no application for spousal maintenance under the Family Proceedings Act 1980 or a declaration of financial means had been filed. Accordingly, that matter did not form part of the judgment appealed from.
1 Little v Little [2020] NZFC 6638. The parties’ names have been anonymised in the published form of the Family Court judgment, and the same anonymised names have been adopted in this judgment.
[4] The Judge made awards in favour of the appellant under ss 15, 18B and 18C of the Act. The appellant is dissatisfied with aspects of the Judge’s decision. She appeals against the Judge’s decision on the following grounds:
(a)The appellant says the award of compensation for economic disparity pursuant to s 15 of the Act should have been higher, because:
(i)the Judge was wrong in her calculation of the disparity (including the salary levels adopted), wrong to halve the disparity, and wrong to apply a percentage approach to reflect that the disparity only partly resulted from the division of functions within the marriage;
(ii)the Judge’s approach did not take into account the appellant’s contribution to the respondent’s work during the marriage, by assisting him to prepare written reports; and
(iii)the Judge’s approach did not reflect ongoing benefits to the respondent from work and superannuation schemes.
(b)The appellant says that the Judge’s decision on the s 18B award was in error because it:
(i)did not sufficiently take into account disadvantages to the appellant post-separation;
(ii)granted interest to the respondent in connection with an interim distribution made to the appellant, while not granting interest to the appellant on the remainder of her share of property held undivided by the respondent;
(iii)did not reflect the four-month gap from the hearing to the date of the Judge’s decision; and
(iv)did not reflect that the respondent retained the post-separation earnings of a Mercer Kiwisaver scheme and two Flexipol retirement schemes for which disclosure was declined.
(c)The appellant also says that the Judge failed to make orders requiring the respondent to provide verified documents evidencing all his income and assets.
(d)She also says that the judgment wrongly includes sensitive information that was not necessary to the decision, and that the judgment should not have been forwarded to the Inland Revenue Department (IRD).
[5] The appellant does not appeal against the Judge’s decision in relation to s 18C of the Act.
[6]The respondent does not cross-appeal against any aspects of the judgment.
[7]The appellant seeks the following relief on appeal:
(a)additional s 15 compensation;
(b)additional s 18B compensation;
(c)orders for disclosure by the respondent of verified records of certain bank accounts and AMP products, and that he provide a list of “all income from investments, including any undisclosed superannuated gains and the particulars thereof”; and
(d)orders to “maintain and rectify privacy in regards to sensitive suggestions noted in [the judgment appealed from]”.
[8]I do not propose to consider further, or to make, orders of the nature sought at
(d) above. If the appellant is concerned that there is sensitive private information contained in the Family Court judgment, those matters should be raised with the Judge in the Family Court. I do not know whether the appellant has taken that step, but I observe that the version of the judgment available on legal databases has anonymised the parties’ names and contains extensive redactions in any event. I have no information on whether the judgment was forwarded to the IRD, and again, that is not a matter appropriately dealt with on appeal.
[9] The appellant also raises a number of “process” issues in her notice of appeal, and in particular, the right to be heard. She says:
… I was not afforded opportunity to be heard presenting evidence orally in answer to questions prepared to present evidence supporting my case, nor to clarify issues from cross-examination. Oral submissions were also not heard at the end of the hearing (in accommodation of the respondent), nor did the judge schedule later time for oral submissions.
[10] The Judge recorded in her judgment that both parties were self-represented at the hearing and the challenges to which this gave rise. Each party made opening submissions at the hearing, following which there were three days of hearing. The Judge said the following:
[10] It is always a concern for any judge, when hearing a matter involving self-representing parties, that all evidence which needs to be before the Court is provided to ensure that the issues are determined on a just basis. Extensive evidence was filed by the parties – in total over 1,540 pages plus many more by way of submissions. (The applicant’s final submissions were over 100 pages long.) Many of the arguments pursued by the applicant, particularly around adjustments, were complex.
[11] It was evident, despite several earlier court hearings, neither party properly understood court protocol or the court process. This was most clearly observed in each parties’ cross-examination of the other, requiring frequent judicial intervention to ensure proper process. The respondent, who is hard of hearing and dyslexic, also required additional assistance during the hearing. His brother, [Richard Sheffield], was present at the hearing for this purpose and assisted him with cross-examination, reading and locating of documents as required.
[12] Because of these challenges, I gave both parties considerable latitude in the way they questioned the other and how they adduced their evidence. In normal circumstances this may have stretched the bounds of usual court practice, however, I did so with the knowledge that at times both parties were struggling with the process.
[11]In a minute issued immediately after the hearing, the Judge said:2
[6] Both parties are seeking additional time to file final submissions in relation to those matters which they could not agree on and, to that end, the parties are to file their submissions contemporaneously by Monday, 4.00 pm, 10 August 2020. These can be filed by email.
[12] It accordingly appears that the Judge accommodated the parties’ own request to file further written submissions, which in the ordinary course would have been provided to the Court and spoken to orally at the conclusion of the hearing. As the Judge noted, the appellant’s final closing submissions were over 100 pages long. I am not aware of the parties requesting a further oral hearing prior to the delivery of the Judge’s judgment.
[13] I am therefore not persuaded that there has been a breach of the appellant’s right to be heard, and indeed the Judge seems to have gone out of her way to afford the parties considerable latitude at the hearing itself, and made provision for the filing of written closing submissions after the hearing.
[14] Finally by way of introduction, the appellant also seeks to admit new evidence on the appeal, being:
(a)evidence of a sharp increase in house property prices since August 2020;
(b)IRD documentation from February 2021 which she says suggests that the respondent had approximately $20,000 higher income than expected in the relevant income period, and thus calls into question his earlier disclosed income; and
2 Little v Little FC Auckland FAM-2015-090-585, 6 August 2020.
(c)without prejudice correspondence between the parties, which the appellant says is relevant to the credibility of certain evidence given by the respondent at the Family Court hearing.
[15]The balance of this judgment is structured as follows:
(a)I first set out some brief factual background to the proceedings;
(b)I next address the appellant’s application for leave to admit new evidence on the appeal;
(c)I then briefly set out the applicable legal principles to an appeal of this kind (which are well settled); and
(d)I then address each of the grounds of the appellant’s appeal, including summarising the Judge’s decision on that matter, the appellant’s grounds of appeal and my decision.
Factual background
[16] The appellant and respondent met in 1996 and commenced a relationship in 2000. They had both previously been married. They also both had children from those earlier marriages. The respondent also had his own home, which became the family home. The parties commenced a de facto relationship in 2002 and married on 19 October 2003.
[17] Relevant to later aspects of this judgment, both parties also had established careers at the outset of the relationship: the appellant as an occupational therapist and the respondent as an engineer. Each continued to work in their chosen profession throughout and following the marriage.
[18] There are two children of the parties’ marriage. Their son was born in April 2003, and their daughter in October 2005.
[19] Also in 2005, the parties signed a contracting out relationship property agreement which, among other matters, defined the home which the respondent had owned prior to the relationship (and in which the family were residing) as his separate property.
[20] The parties separated for the first time in July 2011, and the appellant and the children moved out of the family home. The couple reconciled in April 2013 and the appellant and the children returned to the family home. The reconciliation did not last, however, and it was later determined that the parties’ final date of separation was 1 July 2015. The marriage was dissolved on 13 March 2018.
[21] The contracting out agreement referred to at [19] above was later set aside by Judge Clarkson on 28 September 2018, on the appellant’s application. The family home was accordingly reclassified as relationship property.
[22] As at the date of the hearing in the Family Court (August 2020), the appellant was 57 years old and the respondent was 65 years old. Their children were 17 and 14 years old respectively (thus 12 and nine years old at separation). Proceedings under the Care of Children Act 2004 had been commenced in 2015, but were resolved in 2017 by consent. I interpolate to note that Judge von Keisenberg found that the appellant had the primary care of the children both during the marriage and post-separation.
[23] Finally, and as the Judge noted in the introduction to her judgment, the relationship property proceedings had an extensive history. The Judge said:3
In addition to the application to set aside the s 21 contracting out agreement, there have been several interlocutory applications filed by the applicant, including applications for discovery against the respondent and a third party (Commissioner of Inland Revenue), interrogatories, notice to admit facts and an application for interim distribution.
3 Little v Little, above n 1, at [8].
Application for leave to admit new evidence on the appeal
Legal principles
[24] Under r 20.16 of the High Court Rules 2016, a party to an appeal may admit further evidence only with the leave of the Court.4 The Court may grant leave only if there are special reasons for hearing the evidence.5
[25]In B v A, Wylie J summarised the principles to be applied as follows:6
[25] The relevant principles governing the receipt of further evidence are straightforward:7
(a)the Court can receive further evidence if it thinks that the interests of justice require it to do so;
(b)it is wrong to allow an appellant to bolster his or her case with additional evidence that was available at the lower Court hearing, but not adduced because of the particular view of the case being taken at the time;
(c)admitting further evidence on appeal is exceptional rather than routine. A change of heart about how a case should have been run will not suffice. The prospect of further evidence triggering a substantial relitigation before the appellate Court of the substantive case will count against admitting the further evidence;
(d)generally, the further evidence must be fresh, credible and cogent;
(e)evidence will not be regarded as fresh if it could, with reasonable diligence, have been produced at the trial;
(f)the absence of freshness is not an absolute disqualification. When the further evidence is not fresh, it will not generally be admitted unless the circumstances are exceptional and the grounds compelling. In addition, the further evidence needs to pass the tests of credibility and cogency;
4 Rule 20.16(2). I note that a party to an appeal may adduce further evidence on a question of fact without leave if the evidence is necessary to determine an interlocutory application that relates to the appeal: r 20.16(1).
5 Rule 20.16(3).
6 B v A [2020] NZHC 580.
7 Hodgson v Hodgson [2015] NZCA 404, [2015] NZFLR 979 at [39]–[44]; and see Nation v Nation [2005] 3 NZLR 46 (CA); Telecom Corp of NZ Ltd v Commerce Commission [1991] 2 NZLR 557 (CA); Comalco NZ Ltd v TVNZ Ltd (1996) 10 PRNZ 573 (HC); and Complaints Committee No 1 of the Auckland District Law Society v P (2007) 18 PRNZ 760 (HC).
(g)the interests of justice require the parties to put their best case forward at trial, in order to avoid wasting the Court’s limited time and resources. A high value is placed on finality when the parties have been afforded the opportunity and failed to take it; and
(h)the standard to be met is “rightly high”.
The proposed new evidence and my decision
[26] The first piece of new evidence the appellant wants to admit on the appeal is information on the percentage increase in house prices from August 2020. This information of course post-dates the Family Court hearing, and in that way is “fresh”.
[27] The appellant confirmed that she did not seek to use this evidence to revisit the agreed value of the family home ($690,000). Rather, she said that the proposed new evidence was relevant to her living standards following separation, and therefore relevant to her appeal against the Judge’s s 15 award.
[28] I decline to grant leave to admit this aspect of the new evidence. Admitting new evidence on an appeal will be exceptional rather than the norm. While the proposed new evidence is strictly fresh, it is technically hearsay evidence rather than, for example, affidavit evidence given by an independent expert witness on property house prices. But more importantly, I am not persuaded it is so relevant or necessary to the issues I must determine that it ought otherwise to be admitted. The assessment of the disparity for the purposes of s 15 is to be made as at the date of separation, though it is a forward-looking exercise. The appellant’s claim for compensation under s 15 in the Family Court only extended over the period from separation to 2019, or in the alternative, to July 2020. The new information the appellant wants to rely on accordingly relates to a later time period than that covered by her claim.
[29] Further and in any event, there must be limits on the information put before the Court on an appeal, otherwise parties could routinely seek to introduce new evidence in any appeal against a s 15 award. I take judicial notice of the fact that house prices will fluctuate over time (though generally rise over the longer term). If I admitted the evidence of price increases from August 2020, should I also admit evidence of what now appears to be a plateauing of, or potentially a fall in, house prices? Further, the
appellant has been in rental accommodation since separation; should expert evidence be admitted as to the interaction between rising (and perhaps plateauing or falling) house prices and rental accommodation?
[30] Standing back, I do not consider it to be in the interests of justice for this evidence to be admitted on appeal.
[31] The second aspect of the proposed new evidence is without prejudice correspondence between the parties which the appellant says demonstrates that the respondent had asked her to be primarily responsible for the care of the children post- separation. The appellant says that this is relevant because it shows that the respondent lied under oath in the Family Court hearing, when he denied asking her to undertake childcare arrangements.
[32] Again, I decline to grant leave for this aspect of the proposed new evidence to be admitted on the appeal. Ultimately, I do not consider it relevant to the matters I must determine, or sufficiently relevant or cogent to justify setting aside what is a very important privilege.8 Most importantly, the Judge proceeded on the basis that the appellant had primary responsibility for the care of the children post-separation. Whether or not that came about through a request by the respondent or otherwise is not in my view relevant. In addition, having reviewed the notes of evidence, it is not clear to me that the respondent “lied under oath” as the appellant suggests. The relevant part of the notes of evidence is quite difficult to follow, in terms of the questions put by the appellant and the answers given by the respondent. Further, to the extent the appellant wants to admit this aspect of the proposed new evidence to undermine the respondent’s credibility more generally, as discussed in the following section of my judgment, matters of credibility are very much the domain of the trial Judge.
[33] The third item of new evidence which the appellant wants to admit on the appeal comprises IRD records in relation to the respondent from February and March 2021. She says that these show that the respondent had about $20,000 more income than anticipated, and thus call into question the source of this income, and whether he
8 Smith v Shaw [2020] NZHC 238, [2020] 3 NZLR 661 at [34]–[42].
had similar additional income in earlier years that was not disclosed. Counsel for the respondent confirmed their instructions from the respondent that the increase in February and March 2021 related to an increase in overtime work carried out by him after the hearing and judgment, in order to pay for legal fees.
[34] Again, I am not persuaded that these IRD records should be admitted on the appeal. The information is fresh, but I am not satisfied it is sufficiently relevant or cogent. Ultimately the appellant stated at the appeal hearing that she did not really know what the material showed, but that it needed to be investigated. This has a distinct air of a “fishing expedition”. Again, a line needs to be drawn in the context of appeals, and it will only be in exceptional circumstances and when consistent with the interests of justice that new evidence will be admitted. I also observe that the Judge had proceeded on the basis that the respondent had a base salary which fluctuated from time to time, depending on the amount of overtime he carried out. Accordingly, and at least on the face of the materials, there is nothing obviously “sinister” which justifies a fresh inquiry on appeal into the respondent’s income.
Legal principles applicable to the appeal
[35] Relationship property appeals from the Family Court proceed by way of rehearing.9 Because the classification of relationship property is an evaluative exercise (rather than a discretionary one), appeals against such decisions are general appeals. While I must take into account the advantage the Judge had in hearing and seeing the parties give evidence, I am free to substitute my own findings if I reach a different conclusion.10
[36] It is relevant to note, however, that an appeal by way of rehearing does not proceed as if there has been no decision at all in the lower court. It is only if the appeal court considers that the trial Judge was wrong that the appeal Judge ought to interfere with the decision on the appeal.11
9 Property (Relationships) Act 1976, s 39, incorporating District Courts Act 1947, s 75.
10 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16]; and
B v F [2010] NZFLR 67 (HC) at [6].
11 Austin, Nichols, above n 10, at [16]; Kidd v Russell [2018] NZHC 3032, [2018] NZFLR 841 at [5]–[9]; and Bowden v Bowden [2016] NZHC 1201, [2017] NZFLR 56.
[37] The Court of Appeal has also commented on the proper approach to be taken on a general appeal when credibility and factual matters are in issue. In Green v Green, the Court made the following observations:12
[29] Austin, Nichols reaffirmed the appellate court’s obligation to form its own independent judgment on the merits of an appeal by way of rehearing. But two fundamentals remain constant.
[30] First, it is still axiomatic that the appellant bears the onus of persuading the appellate court to reach a different conclusion. Of necessity, in discharging that onus the appellant must identify the respects in which the judgment under appeal is said to be in error.
[31] Second, it is also axiomatic that in determining whether the judgment was wrong the appellate court will take into account any particular advantages enjoyed by the trial court. The advantages possessed by a trial judge in determining questions of fact are obvious, especially where assessments of credibility and reliability are involved. The trial judge gets to see and hear the witnesses, and is able to evaluate the strength of the evidence as it progressively unfolds within the context of the trial as a whole. As this Court pointed out in Rae v International Insurance Brokers (Nelson Marlborough) Ltd:
As the evidence unfolds the trial Judge gains an impression from the evidence which is not necessarily or usually apparent from the cold typeface of the transcript of that evidence on appeal. The Judge forms a perception of the facts in issue from which he or she adds or subtracts further facts as witnesses give their evidence, and so obtains as complete a picture as is possible of the events in issue. The Judge perceives first hand the probabilities inherent in the circumstances traversed in the evidence and can obtain a superior impression of those probabilities as a result.
[32] It was for those reasons the Supreme Court in Austin, Nichols expressly stated an appellate court should exercise caution in considering challenges to findings of credibility.
[38] In the context of any particular advantage of the first instance court, I also note Woolford J’s observations in an appeal relating to other aspects of the Act that:13
While no particular technical expertise is called for, this sort of case is the Family Court’s bread and butter.
[39] That observation is equally applicable to applications for compensation pursuant to provisions such as ss 15 and 18B of the Act.
12 Green v Green [2016] NZCA 486, [2017] 2 NZLR 321 (footnotes omitted).
13 Venter v Trenberth [2015] NZHC 545, [2015] NZFLR 571 at [18].
[40]I turn now to the appellant’s appeal against the Judge’s s 15 award.
Appeal against s 15 award
[41] To put the Judge’s reasons for her s 15 award in context, it is helpful first to summarise the applicable legal principles.
Legal principles
[42] Section 15 of the Act empowers the Court to order a payment of compensation where, at the end of a relationship, one partner has a significantly higher income and standard of living than the other partner, and that disparity is the result of the division of functions within the relationship. It is helpful to set s 15 out in full:
15 Court may award lump sum payments or order transfer of property
(1)This section applies if, on the division of relationship property, the court is satisfied that, after the marriage, civil union, or de facto relationship ends, the income and living standards of one spouse or partner (party B) are likely to be significantly higher than the other spouse or partner (party A) because of the effects of the division of functions within the marriage, civil union, or de facto relationship while the parties were living together.
(2)In determining whether or not to make an order under this section, the court may have regard to—
(a)the likely earning capacity of each spouse or partner:
(b)the responsibilities of each spouse or partner for the ongoing daily care of any minor or dependent children of the marriage, civil union, or de facto relationship:
(c)any other relevant circumstances.
(3)If this section applies, the court, if it considers it just, may, for the purpose of compensating party A,—
(a)order party B to pay party A a sum of money out of party B’s relationship property:
(b)order party B to transfer to party A any other property out of party B’s relationship property.
(4)This section overrides sections 11 to 14A.
[43] The legislative history to s 15 was summarised by Arnold J in the Supreme Court in Scott v Williams.14 The provision was a response to a perceived deficiency in the way the then Matrimonial Property Act 1976 addressed the position of non- career partners in relationships that operated on “traditional lines” – that is, with one party (usually female) assuming the primary responsibility for homemaking and childcare (referred to as the non-career partner), and the other assuming responsibility for income earning (the career partner). Arnold J noted that despite equal sharing of relationship property, a recognised concern was that the non-career partner was often left in an economically disadvantaged position at separation, and was unlikely to have the same income earning ability as the career partner.15 Section 15 was enacted to seek to deal with these issues.
[44] As the authors of Westlaw Family Property observe, the operation of s 15 requires an assessment of the future economic circumstances of the parties, based upon the effects of the division of functions during the relationship.16 The first part of that assessment is future looking, and is accordingly not an assessment of the parties’ present income and living standards. The second part looks to the past. The disparity must be attributable to the division of functions in the relationship while the parties were living together.
[45] It is generally accepted that the assessment is made as from the date of separation, but that the calculation is made once the extent of relationship property and the relevant shares in the property are known.17
[46] The authors also summarise two approaches that, at least until the Supreme Court’s decision in Scott v Williams, were commonly adopted by the courts when assessing whether an award under s 15 ought to be made and if so, in what amount:18
14 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 at [282].
15 At [282].
16 Nicola Peart (ed) Family Law – Family Property (online looseleaf, Thomson Reuters) at [PR15.02].
17 See X v X [Economic disparity] [2007] NZFLR 502 (HC) at [86]; and Scott v Williams, above n 14, at [216]–[220].
18 Peart, above n 16, at [PR15.02]; and see [PR15.17].
(a)The first, referred to as the “diminution method”, is based on an assessment of what the disadvantaged partner would have earned in the future, “but for” the intervention of the division of functions within the relationship.
(b)The second, referred to as the “enhancement method”, assesses how much the advantaged partner’s earning capacity had been enhanced by the division of functions within the relationship.
[47] The diminution method was endorsed by the Court of Appeal in X v X.19 It is helpful to address some aspects of that decision, and the Family Court decision at first instance, which are relevant to matters discussed later in this judgment.
[48] In describing the diminution method, O’Regan J, writing for himself and Ellen France J, said the following:20
[172] The basic methodology of the calculation of the compensation award adopted by Judge Clarkson [at first instance in X v X] involved calculating a figure representing the present value of the cumulative difference between the future after-tax income which Mrs X could have expected to earn but for her role within the relationship and the after-tax income which she is projected to actually earn if she works to the full extent of her future income-earning capacity. Appropriate allowances are then made to reflect the time value of money and the chances of non-collection of future income (because of reduced time in the workforce for reasons such as death, deteriorating health, changes in personal priorities, repartnering or early retirement). The outcome of the adoption of this methodology is a capital sum reflecting the net present value of future income that would have been earned by the disadvantaged partner but for the division of roles in the relationship. The resulting award is half that sum.
(emphasis added)
[49] O’Regan and Ellen France JJ considered the diminution method provided “a workable methodology guiding judges in the calculation of income shortfall awards meeting the statutory objectives of s 15”.21 O’Regan J noted, however, that there was
19 X v X [Economic disparity] [2009] NZCA 399, [2010] 1 NZLR 601.
20 The italicised parts of this extract from O’Regan J’s judgment are relevant to matters discussed later in my judgment.
21 X v X, above n 19, at [173].
no argument before the Court in X v X about the appropriateness of the methodology used, nor any suggestion of an alternative one. His Honour therefore stated that:22
… we do not say the methodology is the only appropriate one for cases of this kind. Rather, we endorse its use in this case and cases like it. The methodology is unlikely to provide a complete answer for every case of this type: the statutory requirement is that the award be just, and that is the overriding consideration.
[50] On appeal, Mrs X argued that the Family Court Judge had been wrong to reject the use of Mrs X’s actual income figures when applying the diminution method. The Family Court Judge had considered to do so would be wrong, because although Mrs X’s career progress had not followed the experts’ predictions, this was something that was within her control. The Judge had been concerned that if actual income figures were used, this would “skew” the calculations and might provide an incentive for disadvantaged partners to defer re-entry to the workforce or minimise their actual income in order to bolster their s 15 claims.
[51] The Court of Appeal endorsed the Judge’s approach to this issue. For the majority, O’Regan J stated:23
The focus of the s 15 quantum exercise is on the difference between the actual earning capacity of the disadvantaged partner as against what he or she would have been capable of earning but for the division of roles within the relationship. While the actual income figures may inform the assessment of earning capacity in the relevant years, actual earnings will not necessarily represent actual earning capacity. The extensive expert evidence in this case, including projections based on robust assessments, made it appropriate to deal with the case on the basis of projections of income capacity after full re-entry into the workforce, rather than actual income.
(emphasis added)
[52] The Court of Appeal in X v X was divided, however, on whether the figure arrived at by applying the diminution method ought to be halved. O’Regan J, writing for the majority, stated:24
[231] The loss for which the disadvantaged partner is being compensated in an income shortfall case is the loss of future earning capacity brought about by the division of roles in the relationship. It would be just for the advantaged
22 At [175].
23 At [200].
24 X v X, above n 19.
partner to pay the full amount of this if that partner had sole responsibility for that division of roles. But the reality is that the division of roles within a relationship is a matter of joint decision.
[53] The majority accordingly agreed with Judge Clarkson’s approach of halving the amount determined by the diminution method.25
[54] Three points from the decision in X v X which are relevant to the appeal in this case are worth emphasising:
(a)First, it is clear that, when applying the diminution method, the “actual future income” to be earned by the disadvantaged partner is to reflect what the disadvantaged partner would actually earn if they worked to the full extent of their future income earning capacity.
(b)Second, the methodology adopted in the Family Court had assessed the year in which Mrs X could reasonably have been expected to resume full-time work. The experts called to give evidence on behalf of each party had disagreed on that matter, one adopting a return to full-time work within a year of separation, the other a return to full-time work three years from separation. The Family Court Judge had adopted the latter, though the model provided by the expert whose position the Judge accepted had included actual income earned by Mrs X for the period from separation to re-entry to full-time employment (rather than using a nil figure for each year).26 The majority of the Court of Appeal endorsed the Judge’s approach on this issue.
(c)Third, and as noted earlier, the majority endorsed halving the figure determined by the diminution method.
[55] The approach to s 15 awards was subsequently considered by the Supreme Court in Scott v Williams.27 While the members of the Court, including the majority, differed somewhat in their approaches to determining quantum in the event of a
25 Robertson J did not consider it appropriate to halve the award: at [143].
26 X v X, above n 19, at [188].
27 Scott v Williams, above n 14.
successful s 15 claim, a number of general principles can be drawn from the judgments.
[56] Turning to the majority judgments, I start with that of Arnold J. After noting some preliminary difficulties with the s 15 assessment, Arnold J highlighted that to date, assessment of the “causation requirement” of s 15(1) had tended to focus on the non-career partner’s lost earning potential (that is, the diminution method), or the career partner’s earning enhancement (the enhancement method). His Honour was concerned that these approaches required consideration of various counterfactuals, for example what was the non-career partner’s likely career path in the absence of division of responsibilities within the relationship, or how would the career partner’s career have progressed absent the division of responsibilities in the relationship. In cases focusing on the non-career partner’s likely career path in the absence of the division of responsibilities (the diminution method), Arnold J said that this assessment would be based on contrasting that partner’s “but for” income with likely future income after separation, calculating a net present value in respect of the difference, deducting tax and contingencies, and then halving the resulting sum – an exercise his Honour considered demeaning, costly and contentious, as well requiring expert evidence.28 Arnold J also considered that the diminution method may not be appropriate for calculating s 15 awards in the context of a “traditionally arranged” relationship, given the difficulty of assessing the “but for” income of the non-career partner, which is often the subject of conflicting expert evidence. Arnold J also noted that the diminution method may work unfairly in the case of a non-career partner who entered the relationship at a comparatively young age, without any real opportunity to begin or develop an occupational career. In those circumstances, his Honour observed that “there is no obvious career path to provide a basis for an assessment of ‘but for’ income”.29
[57] Arnold J accordingly considered that the appropriate focus under s 15 should be on the disparity in income and living standards as between the parties themselves, and the extent to which that disparity was because of the division of functions in the
28 At [292] and [310].
29 Scott v Williams, above n 14, at [307].
relationship.30 For ease of reference, I will refer to this approach as the “disparity method”.
[58]In the context of the threshold requirement under s 15(1), Arnold J stated:31
If there has been a division of functions in a relationship along traditional lines and there is likely to be economic disparity after separation, the working assumption should be that the division in functions caused the disparity, and that is what should be compensated to the extent “just”. Only strong evidence of some other causative factor would be sufficient to negative or limit this working assumption.
(emphasis added)
[59]And further, that:32
[311] Accordingly, s 15’s causation requirement seems to me to be a broad one, in the sense that where a relationship has been conducted along traditional lines and there is a disparity of income and living standards post-separation, it should generally be assumed that the division of responsibilities in the relationship:
(a)was for the benefit of both parties;
(b)restricted the non-career partner’s income-earning ability; and
(c)enhanced the career partner’s earning ability.
As I see it, these working assumptions are supported by research; they are consistent with the Justice and Electoral Committee’s report to the House on the Matrimonial Property Amendment Bill and Supplementary Order Paper No 25; and they will, in my view, generally reflect the parties’ expectations in long-term relationships of the type at issue in this case.
[60] Arnold J noted that these working assumptions “could be displaced if the evidence was sufficiently compelling, but that would be unusual, at least in relationships of long duration entered into at the outset of a career partner’s career”.33 His Honour nevertheless stated:34
… I accept that it will be legitimate to point to personal characteristics as a complete or partial explanation of post-separation disparity in some situations, as where, for example, a career partner enters a relationship as a well- established and successful business or professional person. In that type of case,
30 At [289].
31 At [293].
32 Footnotes omitted.
33 Scott v Williams, above n 14, at [323].
34 At [325].
it may be that only part of the disparity can fairly be said to result from the division of responsibilities in the relationship. In relationships of relatively short duration, this may be a complete explanation for post-separation disparity. Again, however, care must be taken in these situations not to undermine the equality of contribution principle that underpins the [Act].
(emphasis added)
[61] Glazebrook J adopted a similar approach to s 15’s threshold requirements. She summarised what she saw as being the proper approach as follows:35
[263] Section 15 permits an order to be made which compensates for a disparity in income and living standards between partners after the end of the relationship if this disparity was caused by the division of roles in the relationship. Living standards will normally (but not always) be equated with income.
[264] The assessment of disparity is a broad one and it must be considered in light of provisions in the [Act] that treat all contributions made by both partners to the relationship as equal. In long-term relationships where one partner has had primary responsibility for home-making and child-care and the other partner for income-earning activities, this means that the [Act] operates on the assumption that any disparity at the end of the relationship is equally attributable to both partners. This assumption can be rebutted but this would not be easy to do in the case of long-term relationships. In shorter or differently organised relationships, the principle of equal contribution may also mean that the assumption applies, but it will likely be much easier to show that all or some of the disparity following separation resulted from something other than the division of functions in the relationship.
(emphasis added)
[62] The other member of the majority, Elias CJ, adopted a similar approach, at least in relation to the threshold or jurisdictional questions within s 15(1). In particular, her Honour agreed with Glazebrook J’s summary set out at [61] above and with Arnold J’s overall approach.36
[63] O’Regan J expressed concern at the concept of adopting “assumptions” under s 15(1), given the positive statutory requirement that the economic disparity has come about “because of” the division of functions in the relationship. He nevertheless stated:37
35 Footnotes omitted.
36 Scott v Williams, above n 14, at [331] and [356].
37 At [385]–[386].
I think Arnold J and I would agree that, where the relationship was not a traditional relationship of the kind he describes, the judge has to make a decision about the extent of the caused disparity without assumptions.
…
The judge would need to make a broad assessment taking into account the qualifications and career stage of the partners when the relationship began and when the relationship ended, the period for which the functions were divided, what, in broad terms, the respective functions were and any other relevant matters.
(emphasis added)
[64] William Young J was also concerned at the concept of assumptions, and did not support the overall approach taken by the majority. Like O’Regan J, he concluded that the words “because of” in s 15(1) require a positive causative link between division of functions and disparity, such that it would be inappropriate to say that in a large range of cases, causation may simply be assumed.38
[65] The judgments in Scott v Williams also address the appropriate method of quantifying an award to be made under s 15, making a number of points that are relevant to the present appeal.
[66] Arnold J provided the most detailed discussion of how a court might approach the calculation of an award using the disparity method.39 As a preliminary point, his Honour was clear that the claimant/non-career partner will be expected to take steps post-separation to become financially independent over time,40 and to undertake income earning activities.41
[67]Arnold J then set out a potential calculation method as follows:42
(a)First, identify the extent of the disparity resulting from the division of functions within the relationship. I interpolate to note that this step
38 At [446].
39 While the statutory provision refers to both income and living standards, the judgments proceed on the basis that relative income levels and living standards will in most cases be closely correlated. See for example at [289] per Arnold J; and at [212] and [263] per Glazebrook J.
40 At [318].
41 At [326(b)(i)].42 At [326]. O’Regan J agreed with this quantification methodology, though as noted did not endorse the suggested adoption of the “working assumption”: at [385].
ultimately involves two inquiries: the first as to the disparity between the parties, and the second being an assessment of the extent to which that disparity has come about because of the division of functions within the relationship. Where the working assumption is not displaced, the whole of the established disparity will be attributable to the division of functions within the relationship. But if the working assumption is rebutted, the extent of the disparity resulting from the division of functions within the relationship will need to be assessed.43 As I discuss further below, I respectfully agree with Walker J’s decision in Gosbee v Gosbee that first, the evidence in any given case may drive a conclusion that only part of the disparity results from the division of functions within the relationship, such that apportionment is required at the quantification stage,44 and second, that this approach is available following the Supreme Court’s decision in Scott v Williams.
(b)Returning to Arnold J’s quantification method, the second step is to consider for how long the disparity should be compensated. Arnold J noted that it should not be assumed that this period will be the same as the potential working life of either partner, given in the ordinary course, the non-career partner will be expected to undertake income earning activities and the career partner’s personal autonomy must be recognised (in terms of being left with the ability to move on with his or her life).45 Arnold J further observed that it may be relevant to consider how long it might take the non-career partner to retrain or upskill, which will be affected by matters such as whether or not he or she has responsibility for the daily care of minor or dependent children of the relationship.
(c)The third step is to apply the necessary discounts to cover the “contingencies of life” and taxation.
43 See [385] per O’Regan J.
44 Gosbee v Gosbee [2020] NZHC 1001. See below at [78]–[79].
45 Scott v Williams, above n 14, at [326(b)].
(d)Fourthly, the Judge should calculate a present value for the annual figures derived to identify a particular sum.
(e)Lastly, the Judge should halve that sum, which is necessary to avoid transferring the full disparity onto the career partner.
[68] Arnold J emphasised that consideration must ultimately be given to what is “just” in the overall circumstances, and an award should not create disparity the other way.46
[69] It is perhaps worth emphasising the observation at (e) above, namely that the resulting award should be halved. Glazebrook J agreed that halving the award would be appropriate where necessary to ensure disparity is not created for the other party.47 William Young J set out his approach to calculating the award based on a disparity method, the last step also being to halve the figure arrived at.48
[70] The Court of Appeal in Scott v Williams had adopted the diminution method in order to calculate the award under s 15.49 Glazebrook J’s judgment is the only judgment in the Supreme Court to comment in any detail on the Court of Appeal’s approach to the diminution method.
[71] A key issue raised on the appeal was the contingency rate the Court of Appeal had applied, namely 35 percent (being the same rate adopted in X v X). Counsel for Ms Scott submitted that if the disadvantaged partner’s estimated income is a reasonable estimate, then it should have already struck a balance between high and low possibilities, and thus a further and significant contingency discount was not required. Counsel also argued that a contingency was also not required for that period between separation and the hearing, given it would be known if the non-career partner had experienced any of the contingencies to which the discount is directed. Counsel further submitted that the Court of Appeal had been wrong to halve the award arrived at by applying the diminution method.
46 At [327].
47 At [215].
48 At [475]–[476].
49 Scott v Williams [2016] NZCA 356, [2016] NZFLR 499.
[72] Glazebrook J noted that the first step under the diminution method is to calculate the difference between the disadvantaged partner’s actual income and his or her projected income.50 She said that this should be calculated over the period to the earlier of retirement or when the disparity will cease.51 In terms of the claimant’s actual likely income going forward, her Honour noted that the Family Court Judge had held that Ms Scott should not have been required to return to highly stressful work for the purposes of the calculation, and had therefore adopted an actual income figure of
$84,000. Noting that that figure was no longer challenged before the Supreme Court,
Glazebrook J was nevertheless concerned at the approach adopted. She said:52
[242] While not suggesting the use of the $84,000 figure was inappropriate in this case, I do comment that calculating an actual income figure that is not based on a return to the type of work for which a disadvantaged partner is qualified should not be taken too far. Purely lifestyle choices (as against rational choices based on, for example, age, health or uncertainty as to advancement) should not be accepted as diminishing the actual income figure used in the calculations. The future actual income figure should reflect the aptitudes, abilities, qualifications and circumstances of the disadvantaged partner at the time the s 15 order is calculated.
(emphasis added)
[73] Glazebrook J emphasised, however, that the same considerations do not apply to “choices” made during the relationship.53
[74] Glazebrook J further observed that no contingency, or at least not as significant a contingency, should be necessary if the non-career partner’s “but for” income is set at a realistic level and accordingly takes into account the vagaries of life.54 Her Honour also inclined to the position that no contingency should apply from the time of separation to hearing, if none of the “contingency events” (my phrase, not Glazebrook J’s) had occurred, though was not prepared to be definitive on these points given the lack of expert evidence.55
50 Scott v Williams, above n 14, at [240].
51 At [240].
52 Footnotes omitted.
53 At [242], n 327; see also [317]–[318] per Arnold J.
54 Scott v Williams, above n 14, at [243].
55 At [243].
[75] Glazebrook J did not endorse the approach routinely taken in the lower courts of halving the figure ascertained by the diminution approach.56 Even if the award were not halved, however, her Honour was clear that there still remained a residual inquiry as to what would be “just” compensation for the disparity in any particular case.57 In that context, her Honour disagreed with a number of the factors the Court of Appeal had taken into account when assessing the “just” award, observing that the claimant’s share in the amount of relationship property and any income from it is neutral when considering what is a just order. Glazebrook J did consider, however, that the fact Ms Scott was likely to work longer post-separation than Mr Williams (given their age differential) was a relevant matter.58 In the event, Glazebrook J considered it fair to both parties to adopt the midpoint of the Court of Appeal’s range, which avoided the matter being remitted to the Family Court.59
[76] Arnold J did not separately consider the approach to quantum under the diminution method, but agreed with Glazebrook J’s analysis.60 Elias CJ considered the approach taken to s 15 in the lower courts to have been wrong, and therefore did not address the calculation of a s 15 award using the diminution method. O’Regan J agreed with Glazebrook J’s approach to the appeal and the application of the diminution method.61 William Young J did not address quantification under the diminution method.
[77] I have flagged earlier whether the majority judgments in Scott v Williams leave open the possibility that the working assumption may be partially, though not wholly, rebutted. In other words, is the working assumption an “all or nothing” approach?
[78] Walker J considered this issue in Gosbee v Gosbee.62 In that case, the Judge accepted that the division of functions within the parties’ marriage was not the sole cause of economic disparity at separation, nor was it the single most influential cause.
56 At [244]. I observe that Arnold J appeared to endorse halving the amount, or at least did not suggest it would be an error to do so: see [292].
57 At [244].
58 At [257].
59 At [258].
60 At [329].
61 At [389].
62 Gosbee v Gosbee, above n 44.
She considered the disparity arose from multiple factors, including the “choices Ms Gosbee made after separation by taking no further steps or training in her employment as an occupational therapist”.63
[79] The Judge concluded that the Supreme Court left open the possibility that the working assumption may be partially rebutted.64 I respectfully agree with Walker J’s conclusion and her analysis of the judgments in Scott v Williams.65 I would only add that the majority in Scott v Williams emphasised that in longer, traditionally arranged relationships it will be difficult to displace the working assumption, and that any assessment must adhere to the principle that all contributions to the relationship, whatever form they take, are to be treated equally.
[80] With those legal principles in mind, I turn now to the Judge’s assessment of compensation under s 15.
The Judge’s s 15 award
[81] The Judge first assessed whether there was likely to be a disparity between the income and living standards between the respondent and the appellant after their marriage had ended. The Judge noted that in order to attract a s 15 award, the disparity must be significant.
[82] The Judge noted that the respondent was, at the date of the hearing, 65 years of age with existing health issues, and had had income over the period 31 March 2015 to 31 March 2019 ranging from approximately $86,000 to $100,000 per annum. She recorded that the respondent’s income “also includes interest on investments”.66 The Judge observed that at 65 years old, the respondent foresaw working only for a few more years.
63 At [45].
64 At [47]–[53].
65 The following aspects of the majority judgments in Scott v Williams, above n 14, suggest partial rebuttal is available: at [197], [204] and [213] per Glazebrook J; at [293], [325] and [326(a)] per Arnold J; and at [356] per Elias CJ. I also note the helpful discussion of the issue in Tasneem Haradasa “Causation in Section 15 of the Property (Relationships) Act 1976: Analysing the New Zealand Supreme Court’s “Working Assumption” – Is It Really Working?” (2019) 50 VUWLR 77.
66 Little v Little, above n 1, at [155(d)].
[83] In contrast, the Judge noted that at the end of the marriage in 2015, the appellant was earning approximately $6,000 per annum as an occupational therapist, supplementing her income with WINZ benefits, accommodation supplement and child support. The Judge found that her income from these sources had risen to $16,000 in 2019. The Judge recorded that during the marriage, the appellant had worked both part-time and full-time, and had earned up to $66,000 in 2011 and $55,000 in 2013.
[84] The Judge found that the respondent clearly had a higher income than the appellant at separation, and noted that while there was little evidence as to comparative living standards (the respondent’s evidence being that the quality of the appellant’s rental accommodation was far superior to the standard of the family home), income is often an important indicator of standards of living. The Judge was therefore satisfied that the respondent’s income and living standards were likely to be (and indeed were) significantly higher than the appellants.
[85] The Judge then turned to the “backward looking” exercise of whether that disparity was caused by the division of functions within the marriage. The primary focus of the Judge’s discussion was the respondent’s submission that the “working assumption” discussed in Scott v Williams ought to be rebutted in its entirety, given the nature and duration of the parties’ relationship, and the appellant’s working history, both before and during the marriage.
[86] The Judge addressed in some detail the appellant’s working history as at the time of the entry into the marriage and during the marriage itself. In particular, the Judge noted that on entry into the marriage, the appellant was already a fully trained occupational therapist, though after the birth of the children, she had worked part-time. The Judge noted that in June 2004, between the births of the two children, the appellant worked at a college as an occupational therapist and by 2011, her salary had risen to
$66,891. The appellant’s evidence was that she later reduced her work to allow flexibility to care for the children, though continued to work during the period of separation between July 2011 and 2013. In early 2013, the appellant obtained full- time employment as an occupational therapist earning $55,000 per annum, though again reduced her hours again following reconciliation with the respondent.
[87] The Judge noted that in 2014, the appellant started a new role as a self-employed contractor, but it was not as well remunerated as hoped for. The Judge noted that despite the reduced earnings, the appellant had continued in that contractor role for five years following separation.
[88] The appellant’s evidence as to why she had not returned to full-time work after separation was that this was because of:
(a)the lack of a reliable motor vehicle;
(b)vision problems, which she later rectified with getting new glasses;
(c)applying for full-time work but having missed out on positions; and
(d)after separation, the children needing her full-time support, despite being older than they were during the marriage.67
[89] The Judge found that there were inconsistencies in the reasons given by the appellant for not re-engaging in full-time work following separation, and was satisfied that the appellant could have re-engaged in full-time work as an occupational therapist immediately following separation.68 In this context, the Judge said the following:
[185] The applicant was unable to give a credible or reasonable explanation why, when the children were much younger and arguably more dependent on her, that she was able to maintain well-paid employment [as an occupational therapist at a college] from approximately 2004 to 2011 and later in 2013. She maintained full-time employment even for a period when she was separated in 2011.
[186] Therefore, I am satisfied that it is not wholly as a result of the division of functions in the marriage that at separation the applicant was in lower paying contracting work but as a result of other factors outside of the relationship. As earlier noted, she herself has proffered other reasons for not returning to full-time work which are not directly related to the division of functions. She started contracting work for the flexibility acknowledging this has been at the expense of better remuneration. (I observe that this flexibility has enabled the applicant to fully engage in these proceedings – under both the Care of Children Act and [the] Act – which have been complex and time consuming, a point made by the respondent.)
67 The children being nine and 12 years old at the date of separation, and 14 and 17 years old by the time of the Judge’s judgment.
68 Little v Little, above n 1, at [183].
[187] Against that, I am satisfied that there is also clear evidence that because the applicant bore the major responsibility for the care of the children, after school activities, cared for other family members throughout the marriage, and took work which was mostly in family friendly hours that this contributed in part to the disparity in income and living standards.
[188] Accordingly, I determine that the applicant is entitled to the working assumption accorded to a relationship in which the division of functions operations along traditional lines but that external factors have also significantly contributed to the economic disparity. This means the working assumption has been partially but not wholly displaced.
(emphasis added)
[90] Having made those factual findings, the Judge then turned to the quantification of the s 15 award, first adopting the diminution method.69 The appellant’s approach adopted a “but for” gross income figure of $77,000 (net being $60,670), and compared that with her actual post-separation earnings over the period from separation to March 2019 (being the year of the respondent’s retirement). This resulted in what the appellant submitted to be the “minimum” compensation on the diminution method of
$147,359.
[91] The Judge adopted the amount of $77,000 per annum as what an occupational therapist could earn in the present market in a full-time role, which was in fact agreed by the parties. The Judge held, however, that an income of around $55,000 per annum, which she said the appellant had earned in 2013, was a fairer estimate of what the appellant’s actual income earning capacity was at the date of separation. The Judge accordingly found that there was a disparity between the appellant’s “current earnings” (as adjusted) and “earning capacity”, namely the difference between the $55,000 and
$77,000 per annum figures.
[92]Adopting this methodology, the Judge calculated the disparity as follows:70
Taking the difference between the net income for “but for” income (net of
$77,000) $60,670 and (net of $55,000) $44,682 is $15,988 x 4 years is
$65,714. Half is $31,976.
69 The Judge no doubt did so as this was the first method of calculation adopted by the appellant in her written submissions filed following the hearing.
70 Little v Little, above n 1, at [195(a)].
[93]The Judge did not apply any contingency or other discounts.
[94] The Judge rejected the appellant’s claim based on the enhancement method, noting that “there is no compelling or direct evidence of enhancement or contribution” to the respondent’s career.71
[95] The Judge then adopted the disparity method from Scott v Williams, essentially as a cross-check of the amount arrived at under the diminution method. Again, the appellant had also adopted a similar method in her written submissions (with her calculation set out at Table 2 of those submissions). The appellant had assessed the disparity between her and the respondent’s incomes over the period from separation to March 2019 (on the basis the respondent turned 65 that year, and assuming retirement), and also to July 2020 (reflecting that by the time of the hearing, the respondent was in fact still working and thus the disparity continued).72 Over the first period, the appellant assessed the disparity to be $212,402, and then halved that amount to reach an indicative award of $106,201. Extending the period to July 2020 resulted in an indicative award of $138,118.
[96] For this cross-check approach, the Judge adopted the appellant’s assessment of the disparity (that is, those calculations in Table 2 of the appellant’s written submissions). Based on her factual findings, however, the Judge concluded that appellant and respondent’s relationship was not a traditionally arranged one, at least as envisaged in Scott v Williams (though had traditional aspects in terms of the appellant’s primary role in caring for the children). Having concluded that the disparity between the parties’ incomes and living standards was significantly caused by factors outside of the relationship, the Judge concluded that only 15 percent of the disparity was attributable to the division of functions within the marriage. This equated to $31,806.30, which the Judge observed was very similar to the outcome under the diminution method. I interpolate to note that the Judge did not go on to halve the amount calculated on the basis of the disparity method, which could be said
71 At [198].
72 Though the appellant acknowledged in her written submissions that the respondent “has prerogative to change this position when he so desires”.
to be generous to the appellant (putting aside the percentage rate adopted, with which the appellant of course disagrees).
[97] The Judge then stood back and considered whether it was just to make an award in all of the circumstances. She observed:73
… that a just result in the circumstances is a compensatory payment to the applicant in the sum of $30,000 under s15. This award, in conjunction with previous adjustments in her favour under s 18B and s 18C reflects a division of all property approximately 63 per cent in favour of the applicant and 37 per cent in favour of the respondent.
The appellant’s appeal
[98] To recap: the appellant says that the Judge was wrong to halve the awards under s 15, was wrong to find the “working assumption” had been displaced (by 85 percent), did not take into account her assistance to the respondent in preparing work reports during the marriage,74 and did not take into account ongoing benefits to the respondent from work and superannuation schemes. The appellant further says that it was wrong of the Judge to adopt $55,000 as her “but for” salary when applying the diminution method, and to assume that in 2015 she could have obtained full-time pay for part- time work (ignoring, for example, the need to “up skill” to obtain health equipment accreditation).
Decision on appeal of s 15 award
[99] Given the Supreme Court’s endorsement of the disparity method, and its somewhat underwhelming enthusiasm for the diminution method, I first turn to the Judge’s assessment of the s 15 award based on the disparity method.
[100] First, there is no cross-appeal or suggestion by the respondent that there was no disparity in the parties’ income and living standards at separation. That must be right in my view. Nor does the respondent challenge the Judge’s adoption of the appellant’s assessment of that disparity.
73 Little v Little, above n 1, at [197].
74 Though at the hearing before me, the appellant acknowledged this was a relatively minor point.
[101] On the majority approach in Scott v Williams, the application of the working assumption would ascribe the whole of that disparity to the division of responsibilities within the relationship. As noted, however, the Judge found that appellant and respondent’s marriage was not a traditionally arranged relationship, and I agree with that assessment:
(a)As the appellant accepts, both parties had established careers and earned similar income at the start of the marriage.
(b)The appellant continued to work in her role as an occupational therapist throughout the relationship, in full-time, part-time and “full-time family friendly hours” scenarios. There were not, therefore, “lengthy absences” from the workforce as discussed by Walker J in Gosbee v Gosbee.75
(c)The appellant also continued to work in her chosen profession during the first period of separation from 2011 to 2013, despite having primary care of the children at that time.
[102] I am of the view, however, that the Judge erred in her assessment of the degree to which the working assumption was displaced (or to put the point another way, the apportionment adopted when calculating quantum). By concluding that only 15 percent of the disparity at separation was attributable to the division of functions in the marriage, the Judge effectively found that the vast majority of the disparity was, at all times following separation, due to factors unrelated to the division of roles within the marriage. Looking at the evidence as a whole, the following factors persuade me that that conclusion was in error:
(a)First, the appellant’s change to contract work (in 2014) was a decision or choice made within the marriage, and not unilaterally by the appellant following separation. Accordingly, it was not correct to categorise that decision as the appellant “opting” to do so,76 at least to
75 Gosbee v Gosbee, above n 44, at [45].
76 Little v Little, above n 1, at [180(d)].
the extent that it reflected a choice by the appellant only, and not a decision “shared” by the respondent. In this context, I remind myself of Arnold J’s cautionary note in Scott v Williams that choices made by a wife during the marriage to focus on family life are to be viewed as a contribution to the marriage equal to that of her husband.77
(b)Second, there is no doubt that the appellant had, at all times during the marriage, carried the main burden of childcare, at least in terms of tailoring her working hours around that role.
(c)Third, I consider the assessment of 15 percent, and that the appellant could have immediately re-entered the workforce on a full-time basis at separation, to underestimate the impact of reasonably consistent periods of part-time work during the marriage, and then the change, within the marriage, to contract work only. I also consider the assessment underemphasises the appellant’s primary role in care of the children both during the marriage and following separation, and that it was not unreasonable for the appellant not to look to make very significant changes in her working role, at least in the immediate aftermath of separation. In this context, and consistent with the quantification approach suggested by Arnold J (set out at [66]–[68] above), consideration must be given to whether the appellant ought to have been expected to return to the workforce full-time immediately following separation.
[103] Balanced against these factors, however, I do not accept the appellant’s submission that the Judge was wrong to take into account decisions made subsequent to separation.78 As Arnold J made clear in Scott v Williams, the claimant partner will
77 Scott v Williams, above n 14, at [317]. See also [317], n 407, where Arnold J stated “But even if the choice was primarily that of the non-career partner rather than the couple, that does not seem to me sufficient to justify a reduction in the amount that might otherwise be awarded, for the reasons given in the text.” See also [242], n 328 per Glazebrook J; and Walker J’s comments in Gosbee v Gosbee, above n 44, on choices made within the marriage relationship: at [55].
78 For example, the appellant relies on aspects of the Court of Appeal’s judgment in X v X, above n 19, whereas the extract relied on in fact confirms that post-separation decisions may be relevant, Robertson J stating at [136]: “If Mrs X has not been vigorous in her re-entry into the workforce so that her actual income has been less than what, in the experts’ opinion, it could have been, and
be expected to take steps post-separation to become financially independent over time, and to undertake income earning activities.79
[104] The Judge was in the best position to assess the credibility and reliability of the appellant’s explanations for why she did not or could not engage in more remunerative work in the years following separation. Ultimately a compelling factor, as the Judge noted, is that at most times during the marriage, the appellant was earning or capable of earning significantly more than she did post-separation. I also do not consider the Judge erred in rejecting the appellant’s submission that the children needed her more at this time, when they were older and less dependent than they had been when the appellant had worked full- and part-time during the marriage (including during the period of the couple’s first separation). I also do not consider it to be an error not to adjust the approach to reflect, for example, the appellant and respondent’s daughter’s illness in 2020, as the appellant suggested in her appeal submissions. Those events occurred some five years after separation, and matters such as this would normally be reflected in discounts for the “contingencies of life” (step three in Arnold J’s suggested quantum approach). As noted, no discounts or contingencies were adopted in this case.
[105] Reflecting the above, and adopting the appellant’s calculation of the disparity from Table 2 of her written submissions filed following the Family Court hearing:
(a)I consider it appropriate to compensate the disparity until June 2020, given at the time of the Family Court hearing, it was known that the disparity continued (and that the respondent expected to continue to work for a few more years). The appellant did not suggest the time period should extend any further than this, and I consider that appropriate, given the respondent’s age, health issues and the difference in age between the parties.
if she chooses to maintain substantial houses in the city and at the beach, she cannot expect to receive greater compensation under s 15.”
79 See [66] above.
(b)I consider the extent of the disparity resulting from the division of functions within the relationship in the immediate aftermath of separation to have been significantly higher than 15 percent. As noted, the appellant’s choice to change to a contracting role, in order to focus on childcare, was made within the marriage in 2014. She continued to have primary care of the children following separation. I consider the working assumption continued to apply for that first year following separation, or to put the matter another way, it was not unreasonable for the appellant not to have immediately returned to full-time work upon separation.
(c)For the following four years, however, and reflecting her income earning capacity at separation, the appellant was expected to return to the workforce and I do not consider the Judge to have erred in largely rejecting the appellant’s explanations for why she did not do so. I do, however, consider the assessment that in those years only 15 percent of the disparity was due to the division of functions within the relationship, to be in error, and while a broad-brush approach is all that can be taken, would assess it as around 20 percent.80
(d)I do not consider the Judge erred in halving the resulting amount. This was endorsed by Arnold J in Scott v Williams as the final step in the calculation method, as well as in general terms by Glazebrook J. Not to do so in this case would, in my view, risk creating disparity the other way, particularly given the respondent’s age. Indeed, the appellant’s suggested approach in her submissions in the Family Court also halved the resulting award.
[106] The following table reflects the above approach and the appellant’s assessment of disparity (from Table 2 of her written submissions in the Family Court):
80 This largely reflects the undisputed fact that both during and following the marriage, the appellant had the primary role of caring for the children.
| Year | Difference in Income | Extent disparity caused by division of functions in marriage | Qualifying Disparity |
| 2015–2016 | $27,978 | 100% | $27,978 |
| 2016–2017 | $60,033 | 20% | $12,007 |
| 2017–2018 | $59,077 | 20% | $11,815 |
| 2018–2019 | $65,314 | 20% | $13,063 |
| 2019–2020 | $65,31481 | 20% | $13,063 |
| Total | $77,926 | ||
| Less 50% | $38,963 |
[107] This reflects a (modest) increase on the Judge’s assessment of $30,000 by a (rounded) $9,000.
[108] Turning to the diminution method as a cross-check, I do not consider the Judge was wrong per se to have adopted that method; as the judgments in Scott v Williams note, there is no prescribed method for assessing a s 15 award. Moreover, the difficulties in applying that method as identified by Arnold J (see [56] above) are not in issue in this case. The appellant did have an established career at the outset of the relationship, which continued largely uninterrupted throughout the marriage. Further, the parties agreed on the appropriate “but for” salary of $77,000.
[109] As noted earlier, the appellant says the Judge was wrong to adopt $55,000 as the appropriate comparator to her “but for” salary. The majority judgment in X v X and that of Glazebrook J in Scott v Williams were clear that the claimant’s actual earnings may need to be adjusted to reflect the claimant’s projected income “if she works to the full extent of her future income earning capacity”.82 As best as I can piece together the evidence concerning the appellant’s work and salary over the course of the marriage:
81 The appellant’s Table 2 does not extend to 2019–2020, thus the precise difference in income for that year is unknown. Adopting the 2018–2019 figure is likely to be generous to the appellant.
82 X v X, above n 19, at [172]. See also [200]; and Scott v Williams, above n 14, at [240] per Glazebrook J.
(a)from September 2001 to July 2003, the appellant worked full-time;
(b)from July 2003 to September 2003, the appellant worked part-time (15 hours per week, for childcare reasons);
(c)from September 2003 to January 2004, the appellant increased her hours to 28 hours per week (earning around $41,000 per annum);
(d)at some time over the next two years, the appellant worked at a full- time rate but with “family friendly hours”, with a salary of approximately $44,000;
(e)in 2007, she reduced her hours to three days per week (for childcare reasons) and in 2008, to two and a half days per week;
(f)part-time work continued in 2009, as in 2010 (the appellant stating she was earning around $30,000 per annum);
(g)hours clearly increased in or around 2011, as payslip information and the appellant’s affidavit confirmed that salary around this time “peaked” at $66,891;83
(h)for the tax year ending 31 March 2013, IRD records disclose the appellant’s taxable income as approximately $20,000;
(i)in early 2013, during the first period of separation from the respondent, the appellant obtained a full-time role with a salary of $55,000 (being the adjusted actual earnings figure adopted by the Judge);
(j)for the tax year ending 31 March 2014, the appellant earned (gross)
$27,000 (reflecting that while she had initially taken on a full-time role at a salary of $55,000 per annum, she reduced her working hours upon reconciliation with the respondent); and
83 The appellant said this level of salary was “one off”.
(k)from 2015 onwards, her income has been significantly less given the change in 2014 to contract work.
[110] In light of the above, I do not consider it wrong for the Judge to have proceeded on the basis that following separation, and had she worked to her full earning capacity, the appellant could have obtained work with remuneration of around $55,000 (which reflects a salary in 2013, some two years earlier). The appellant was able to secure such a role in 2013 despite having worked part-time in prior years, and while also having primary care of the children (who were then younger).
[111] As to the point at which the appellant could be expected to return to full-time work at that salary level, for the reasons already given, I consider that it would not be unreasonable to consider this to be around one year after separation, though recognising that the appellant did carry out some, albeit limited, income earning work in that first year. This approach leads to a higher award than that arrived at by the Judge, as the differential of $15,988 per annum adopted by the Judge would apply only to three years, rather than to four. Adopting a differential of $51,923 for the first year,84 the resulting difference between the appellant’s “but for” income and (adjusted) actual income would be $99,887, and halved is $49,943.50. I do not consider the Judge erred in halving the award; this is consistent with the majority judgment in X v X,85 as well as Arnold J’s articulation of the diminution method in Scott v Williams.86
[112] This result is obviously higher than the amount arrived at under the disparity method, and approximately $20,000 higher than the Judge’s actual s 15 award. I do not disagree with the Judge that a just s 15 award in this case ought to be relatively modest. This reflects the respective income earning capacity of both parties at the outset and throughout the marriage; that the appellant’s actual income post marriage was significantly influenced by matters other than the division of functions within the marriage; and that the appellant, following separation, had a longer period of working life than the respondent.
84 Based on the appellant’s figures in Table 1 in her written submissions filed following the hearing.
85 See [53] above.
86 See [56] above.
[113] The parties agreed that, in the event any aspect of the appeal was successful, the matter should not be remitted to the Family Court. It is therefore appropriate that I fix the quantum of the s 15 award. I consider a just and fair outcome would be to increase the s 15 award made in the Family Court by $12,000, being slightly below the midpoint of the increased award determined by the two approaches discussed above. This is, I acknowledge, somewhat broad-brush, but reflects that while I agree with the Judge that a modest s 15 award is just, the award actually made was a little too modest. This also reflects the Supreme Court’s endorsement in Scott v Williams of the disparity method. I also take into account the respondent’s age, that allowing a full year for the appellant to re-integrate into the workforce is likely to be generous, the need to take care that disparity is not transferred to the respondent, and the need for the parties to have a clean break and to get on with their lives.
[114] Finally, I do not agree that the Judge overlooked the appellant’s claim based on the enhancement method, namely that the appellant assisted the respondent to write work reports given his dyslexia. The Judge simply found that there was no compelling or direct evidence of enhancement of the respondent’s career by the division of functions during the relationship. This was accepted by the appellant to be a relatively minor point on the appeal, and I discern nothing in the evidence to suggest the Judge erred in her approach. Nor do I accept that the Judge failed to take into account the respondent’s benefit of ongoing investments. As noted at [82] above, the Judge observed that the respondent’s income information included investment earnings.
[115] There will accordingly be an order that the respondent pay the appellant a further $12,000 by way of compensation pursuant to s 15 of the Act.
[116]I turn now to the appeal against the s 18B award.
Appeal against s 18B award
[117] Again, it is helpful first to summarise the applicable legal principles, before setting out the Judge’s decision on the appellant’s claim under s 18B, the appellant’s grounds of appeal and then my decision.
Legal principles
[118] Section 18B of the Act confers on the Court a broad discretion to compensate a spouse or partner for post-separation contributions made by them to the relationship.
[119] Following separation, the parties agreed that the respondent would remain in occupation of the family home. The appellant was therefore required to seek and rent alternative accommodation for herself and the couple’s two children.
[120] The authorities are clear that continued occupation by one party of the family home post-separation can be considered a contribution to the relationship by the non- occupying party.87 The non-occupying party is effectively contributing their share in the capital of the family home, which for a time is being used exclusively by the occupying party. The occupying party accordingly retains emotional and practical benefits from their continued occupation, and avoids the financial burden of relocating to alternative accommodation.
[121] In such circumstances, and when considered just, the courts will often award compensation to the non-occupying party based on “occupational rent” (namely a half share of a notional rent of the property), or order the occupying party to pay interest on the non-occupying party’s share of capital. I discuss these alternative approaches further below, when addressing the grounds of the appellant’s appeal.
The Judge’s s 18B award
[122] The Judge noted that the appellant sought compensation under s 18B for both occupational rent (in the sum of $128,000) and a sum for any potential gain she has foregone had she been able to invest her share of the family home ($95,000), as well as the $128,920 that she had paid in rent since separation (the Judge noting that that had been paid in part through WINZ by way of an accommodation benefit).88
87 See, for example, E v G HC Wellington CIV-2005-485-1895, 18 May 2006; C v C HC Hamilton CIV-2007-419-1313, 26 June 2008; and Griffiths v Griffiths [2012] NZFLR 327 (HC).
88 Little v Little, above n 1, at [71].
[123] The Judge concluded that having considered all of the evidence, it was just that compensation was paid to the appellant pursuant to s 18B of the Act, and that the largest contribution by her to the relationship post-separation was the respondent’s rent-free occupation of the family home.89 The Judge stated:
[75] To calculate the appropriate sum, I am mindful that the overarching purpose of compensation under s 18B is to ensure there is a just division. I consider that an award by way of compensation of an appropriate sum based on occupation rent payable to the applicant will address all her claims for contributions to the relationship post-separation. Such a sum will include her claims for use of capital by the respondent and the potential loss of investment opportunity.
[124] The Judge declined to include in any aspect of the award the cost of care of the children post-separation. In doing so, the Judge referred to authorities which confirm that s 18B is not intended to compensate a party for the financial costs of childcare.
[125] The parties agreed that a notional weekly rent for the family home was $500. The Judge also took into account that the appellant had paid rent since October 2015, at an average rate of approximately $520 per week. She also noted that no spousal maintenance was either claimed by the appellant or had been paid by the respondent post-separation.
[126] The Judge considered that occupational rent ought to be payable for the full period from October 2015 (when the appellant had moved out of the family home) to the date of hearing of 4 August 2020. The Judge also took into account that the appellant had had a part, although a relatively small part, of her capital tied up in the family home released through the interim distribution of $55,000 (paid in two tranches in 2018 and 2019). The Judge also took into account that the respondent had paid the house insurance and rates following separation, totalling $17,500. The Judge added to this a nominal amount to take into account the interim distribution, rounding the
$17,500 up to a $20,000 “credit” to be offset against the occupational rent award.
[127] Adopting the rental figure of $500 per week from 15 October 2015 until 4 August 2020, and deducting the $20,000 credit, led to an amount of $105,000. Given half of the capital in the family home “belonged” to the respondent, the Judge then
89 At [73].
halved that amount to arrive at the s 18B compensation in the appellant’s favour of
$52,500.
The appellant’s appeal
[128] The appellant says that the s 18B award did not compensate, through interest, the loss of her potential to benefit from investment of the value of her share of the family home following separation. She says that mathematically it is impossible for the award to have incorporated compensation for this matter, given the award was based solely on occupational rent. The appellant also submits the award was inequitable by “granting interest to the respondent in respect of a portion of my share of property provided as an interim distribution”, while not granting interest to her for the remainder of her share of property held undivided by the respondent. The appellant further submits that the Judge was wrong not to compensate her for her own rental accommodation costs since moving out of the family home, and by failing to compensate her for the lost potential to benefit from investment of that rental accommodation expenditure. The appellant also says that the judgment did not take into account the four-month delay between the hearing and delivery of judgment, and therefore for the purposes of s 18B(1) (which defines the “relevant period” for which compensation under s 18B may be paid), the date of hearing ought to be “extended” to the date of judgment.
Decision on appeal of s 18B award
[129] I consider the Judge’s approach to the s 18B award to be appropriate and conventional, with there being no error justifying interference on appeal.
[130] Turning first to the appellant’s submission that the award should have included compensation for her foregone ability to benefit from the investment of her share of the family home, the case law is clear that awards of occupational rent and interest on the non-occupying party’s capital are true alternatives. In Griffiths v Griffiths, Kós J explained that “[w]here appropriate the Court may order either a payment of occupational rent, or an award of interest on the non-occupying party’s capital”
(emphasis added).90 His Honour cited the following passage by Ronald Young J in
E v G which also makes clear that the two approaches are alternatives:91
Payment of occupational rental has been a way in which a “just” payment of compensation is assessed for exclusive use of the spouse’s capital tied up in the occupied family home. A judge could, if seen as just and appropriate, instead order interest payable on the capital being used. Where there is, as here, an unmortgaged house occupied by one spouse on which the other spouse has also enjoyed a capital gain, occupational rental has an obvious attraction.
(emphasis added)
[131] Kós J went on to observe that “[w]hich alternative course is taken is essentially a matter of judicial discretion”.92 His Honour noted that the competing interests to be considered were helpfully discussed by Judge Callinicos in S v B as follows:93
In terms of whether the Court should approach matters of compensation by way of an award of “occupational rent” or interest calculated on capital value, it should be noted there are two separate financial interests at play when family homes are utilised by one party at the exclusion of the other. One of the financial interests is the capital item, namely the composition of two half-share interests in the subject real estate. The other financial interest is an income asset which would normally carry benefits of rights of use, enjoyment or rent. Take for instance a situation where say, after separation both parties elected to vacate the property and rent it to a third party. In that instance each party would be entitled to a half of any increase in the capital value of the item, and would also be entitled to a half share of any net income derived from the gross rental, less the costs of maintaining the rented property. In situations where one party retains the other’s share by way of occupation, there is a risk that compensation by way of interest alone might not achieve a just outcome by virtue of interest being a somewhat arbitrary tool. In such situations it is, in my view, preferable to approach matters by way of assessing occupational rental for the use of the income asset and by way of a share in any increase in the capital component, if any. The choice of approach will very much depend upon the range and nature of assets at play between the parties and the specific circumstances existing on a case-by-case basis.
[132] Accordingly, it was not an error for the Judge in this case to have based the s 18B award on compensation for occupational rent, rather than the alternative of awarding interest to the appellant on her share of capital pending division of the relationship property pool.
90 Griffiths v Griffiths, above n 87, at [37]. See also MMB v HMH [2012] NZHC 2991.
91 E v G, above n 87, at [24].
92 Griffiths v Griffiths, above n 87, at [38].
93 S v B [s 18B compensation] [2010] NZFLR 1045 (FC) at [15].
[133] Nor was it an error to calculate the award to the date of the hearing, rather than to the date of the judgment. Doing so was consistent with the definition of “relevant period” in s 18B(1), which ends with the hearing date. Simply because the Judge reserved her decision and delivered it four months later is not a basis to override that statutory directive. Judges have very busy workloads, and judges of the Family Court are no exception. It is therefore routine for judges to reserve their decisions in matters of this kind, and the time from hearing to delivery of judgment was nothing out of the ordinary.
[134] To the extent that the appellant says that the s 18B award did not reflect her payment of accommodation costs, I am similarly unpersuaded that the Judge erred in this regard. The appellant did not refer me to, nor has research disclosed, an example where the Court has awarded a non-occupying party’s own accommodation costs as part of a s 18B award. Rather, the common theme in the authorities is that the fact the non-occupying party has incurred their own rental costs will be a relevant factor in determining whether it is “just” to make an award pursuant to s 18B. For example, in Lester v Wheeler, Judge Riddell said:94
… a claim [for occupational rent] must be justified. Where one party has incurred rental costs living elsewhere and has been denied access to their equity in the former family home, then such a claim may be reasonable.
[135]Similarly, in Saunders v Sloan, Judge O’Dwyer explained:95
Where the non-occupying party has incurred their own rental costs, that is a factor that is taken into account as E v G and Griffiths v Griffiths both show an alternative route to consider is an award of interest on the non-occupying party’s capital.
[136]In Griffiths, Kós J made the related (albeit brief) point that:96
... although the Judge might have allowed a grace period post-separation before occupational rent was payable (such as the six-months period provided for in JAK v BMCC) [it is] by no means clear that such a provision is equitable where the non-occupying spouse immediately incurs his or her own rental costs.
94 Lester v Wheeler [2013] NZFC 3634 at [75]. See also KVM v LMM [2012] NZFC 680 at [46].
95 Saunders v Sloan [2020] NZFC 3453, [2020] NZFLR 544 at [33].
96 Griffiths v Griffiths, above n 87, at [39] (footnotes omitted).
[137] I note that in Merriman v Plunkett97 and RWR v AJR,98 it was explicitly acknowledged that the non-occupying party had based their occupational rent claim on the fact they had incurred their own rental costs post-separation, while the other party remained in occupation. There was no suggestion that the actual accommodation costs incurred be paid as part of the s 18B award.
[138]Finally, in S v B, Judge Callinicos said:99
… the applicant was deprived not only of access to the significant capital item but also the practical benefits of the accommodation it offered. She had to re- house herself and the children without any capital base and incur the financial cost of that transition. From separation until the present point she has expended approximately $86,000 towards rent. It cannot be disputed that by the respondent’s retention of the home, as both a capital and income earning asset, this applicant had to forego a higher standard of living for some period of time. If she had received either her share in the home or half a share of any notional rent during the period of the respondent’s occupation she would have enjoyed a better financial situation.
… the interests of justice require the applicant to be compensated under s 18B for the respondent’s use of her half interest in the family home. Payment of occupational rental is, in the situation before me, a just manner of compensating her for the other party’s exclusive use of her share in the capital.
[139] The italicised text in the above extract highlights that an award of occupational rent itself compensates the non-occupying party for having to pay for alternative accommodation. This reflects the interests that are at play and being compensated for by a s 18B award, as also discussed in S v B and set out at [131] above.
[140] Further and in any event, as noted by the authors of Westlaw Family Property, s 18B “should not be used as a ‘cure all’ if other provisions in the [Act] or other legislation provide a more appropriate remedy”.100 In Wilton v Crimmins,
Judge Mather in the District Court said:101
[81] Obviously any claim must be offset by any child support or spousal maintenance liability. If a claim is made on the basis of provision for children, financial or otherwise, then some inquiry will be necessary as to the overall arrangements for the children. A non-custodial parent should be discouraged from seeking compensation under s 18B for money spent for the benefit of
97 Merriman v Plunkett [2019] NZFC 9983 at [117]–[118].
98 RWR v AJR [Trusts] [2010] NZFLR 82 (HC) at [70].
99 S v B, above n 93, at [29]–[30].
100 Peart, above n 16, at [PR18B.03(2)].
101 Wilton v Crimmins (2003) 23 FRNZ 357 (DC).
children, other than in the most unusual circumstances. Section 18B should not be seen as a substitute for explicit statutory provisions addressing child support and spousal maintenance issues.
(emphasis added)
[141] This view has been affirmed in various cases, including Bell v Bell102 and KBH v LJD.103 So, for example, to the extent the appellant’s accommodation costs reflected or were greater than they otherwise might have been because they involved financial provision for children, other statutory remedies directed specifically to such matters would be the appropriate route for compensation.
[142] Finally, the appellant objects to the Judge granting the respondent “interest” on the interim distribution but not awarding her interest on her undivided capital share pending division of relationship property. I proceed on the basis that this is a reference to the Judge “rounding up” the credit to be offset against the occupational rent award (see [126] above), without also granting the appellant interest on her share of retained capital.
[143] I have already discussed above how an award of occupational rent is an alternative to payment of interest on capital. In S v B, Judge Callinicos addressed a similar issue, noting that both parties in that case agreed that it was appropriate to take into account the payment of an interim distribution when considering a s 18B award; indeed the Judge observed that it would be “unjust” not to do so (being a partial “release” of the non-occupying party’s interest in the relationship property).104 Further and in any event, the “rounding up” by the Judge to reflect the interim distribution was from $17,500 to $20,000, an increase of $2,500. Had the interim distribution not been taken into account, the s 18B award would have been $53,750 and not $52,500. The difference is trivial and does not warrant interference on appeal.
[144] The appellant’s appeal against the Judge’s s 18B award is accordingly dismissed.
102 Bell v Bell HC Auckland CIV-2005-404-5479, 11 April 2006.
103 KBH v LJD FC Gisborne FAM-2004-016-140, 21 December 2005 at [85].
104 S v B, above n 93, at [27]. In that case, the Judge reduced the award of occupational rent from the date of payment of the interim distribution to the date of the hearing by 27 percent.
Verified documentation of records in regard to assets and income
[145] The appellant’s notice of appeal raises her general concern as to whether the respondent had disclosed in advance of the Family Court hearing all income and assets earned and held by him, exacerbated by the unknown item referred to in the more recent IRD records and mentioned at [33] above. The appellant refers in this regard to an absence of verified documentation in relation to the respondent’s Kiwibank accounts, ASB accounts, and verified records of all income from investments made during the marriage. The appellant submits that:
… rather than relying on the respondent’s suggestions as to the nature and extent of his income and assets … directions [are made] to provide verified documentation of records in regards to assets and income ….
[146] The appellant was clearly focussed on disclosure of information by the respondent throughout the history of the proceeding in the Family Court, which is peppered with applications by her for disclosure of information. I have read all of the Family Court minutes in the lead up to the substantive hearing, many of which address the provision of information. Various orders were made for the respondent to provide information being sought. He was represented by counsel at most stages of the proceedings, and thus would have been advised of his obligations in this regard. Counsel assisting the Court was also appointed for a reasonably lengthy period of time, including to “ensure that the information is obtained”.105 On 23 July 2019, Judge Pidwell said in a minute issued that day:
These proceedings were initially filed in 2015. They have had a long cause fixture in relation to the s 21 agreement, but they need resolution. Therefore I will not be making any further directions in relation to discovery. The issues that have been raised by the parties as being outstanding can be addressed appropriately in my view through cross-examination.
[147] Despite the above, some further orders for disclosure by the respondent were made in the lead up to the hearing. There was also a separate hearing before the Judge prior to the substantive hearing on whether disclosure orders ought to be made against the Commissioner of Inland Revenue (which was ultimately declined, but followed by directions for the respondent to provide the information to the appellant directly). The
105 Little v Little FC Auckland FAM-2015-090-585, 8 April 2019 (Minute of Judge Parsons).
appellant also confirmed that she cross-examined the respondent on what she considered to be contradictory or confusing evidence in relation to his income and assets.
[148] It is therefore clear from both the record and the Family Court judgment that there were extensive interlocutory processes prior to the substantive hearing, initiated mainly by the appellant, aimed at eliciting further information and documentation from the respondent and third parties.
[149] Whether the information before the Judge about the parties’ income and assets was perfect is unknown. Nevertheless, the Family Court Judge, an experienced practitioner in this area, was plainly satisfied she had the appropriate information before her to make the rulings and orders that she did.
[150] In her oral submissions on the appeal, the appellant said that she suspected there was up to $100,000 more in assets or income which ought to be divided. Ultimately, however, this is speculation. Inconsistencies in the respondent’s evidence similarly do not justify the orders the appellant seeks on appeal. The trial Judge, hearing the evidence first-hand, would have been alive to any material inconsistencies which gave rise to a real and credible risk that there was significant undisclosed income or assets.
[151] I accordingly decline to make what are effectively broad-ranging discovery orders on an appeal. This would be wholly inappropriate in a matter of this kind, given it would essentially “wind the clock back” to a very significant degree, and fundamentally undermine the clean break policy. As Judge Pidwell noted, the proceedings were initiated in 2015 and there must be final resolution to them so both parties can get on with their lives. This is particularly so when the request is largely based on suspicion, and the relationship property pool is modest.
[152]This aspect of the appellant’s appeal is also dismissed.
Result
[153] The appellant’s appeal against the Family Court s 15 award is allowed. The respondent is to pay the appellant an additional $12,000 by way of compensation pursuant to s 15.
[154]The appeal is otherwise dismissed.
Fitzgerald J
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