Lobb v Ryan
[2020] NZHC 834
•30 April 2020
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1595
[2020] NZHC 834
UNDER Family Proceedings Act 1980, Property (Relationships) Act 1976 and Credit Contracts and Consumer Finance Act 2003 IN THE MATTER
an application for occupation order and ancillary furniture order and associated ancillary relief and application for
maintenance
BETWEEN
STUART JAMES LOBB
Appellant
AND
VERENA COLLEEN RYAN
Respondent
Hearing: 27 February 2020 Appearances:
Appellant in person
P Cobcroft for the Respondent
Judgment:
30 April 2020
JUDGMENT OF POWELL J
[Occupation and ancillary orders/spousal maintenance appeal]
This judgment was delivered by me on 30 April 2020 at 3.30 pm pursuant to R 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
LOBB v RYAN [2020] NZHC 834 [30 April 2020]
[1] The appellant, Stuart Lobb, has appealed two judgments of Judge Burns in the Family Court at Auckland. These two judgments which I shall refer to as the occupation order judgment1 and the spousal maintenance judgment2 respectively, addressed and dismissed a number of applications brought by Mr Lobb in the aftermath of the breakdown of his marriage with the respondent, Verena Ryan.
[2] The present appeals were heard at the same time as a third appeal brought by Mr Lobb against another decision of Judge Burns granting dissolution of the parties’ marriage,3 which was addressed in a separate judgment.4
[3] The appeal of the occupation order judgment is governed by s 39 of the Property Relationships Act 1976 (“PRA 1976”), while s 174 of the Family Proceedings Act 1980 (“FPA 1980”) applies to the appeal of the spousal maintenance judgment. Both these sections require the appeals to be addressed pursuant to the High Court Rules 2016 and ss 126 – 130 of the District Court Act 2016. Section 127 of the District Court Act in particular provides that this type of appeal is by way of rehearing, and is therefore governed by the principles articulated in Austin, Nichols & Co Inc v Stitching Lodestar.5 However, to the extent that either of the appeals involves the consideration of the exercise of judicial discretion, Mr Lobb must show that Judge Burns made an error of law, took into account irrelevant considerations, failed to take account of relevant considerations; or was plainly wrong.6
Background
[4] Mr Lobb and Ms Ryan were married on in January 2000, and separated in October 2016. At the date of separation they were living at 23 Orakei Road, Remuera (“23 Orakei Road”) with their two children born in 2001 and 2002 respectively.
1 Lobb v Ryan [2019] NZFC 5249.
2 Lobb v Ryan [2019] NZFC 5254.
3 Lobb v Lobb [2019] NZFC 5268.
4 Lobb v Ryan [2020] NZHC 348.
5 Austin Nichols & Co Inc v Stitchting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141, at [16].
6 Lawrence v Baker [2013] NZHC 2378 at [4].
[5] 23 Orakei Road was and is owned by the Lothbury Trust of which Mr Lobb and Ms Ryan, together with the Lockhart Trust No. 56 Limited, are the trustees.
[6] At the time the parties separated Ms Ryan obtained interim orders against Mr Lobb, the effect of which was to exclude Mr Lobb from 23 Orakei Road, where Ms Ryan continued to reside with the parties’ children.
[7] The interim orders were challenged by Mr Lobb and resulted in complex domestic violence proceedings being pursued by both parties in the Family Court. In the course of these proceedings, in June 2017, Mr Lobb filed an application for an occupation order and an ancillary furniture order over 23 Orakei Road, with the application made pursuant to ss 27, 28A and 28B of the PRA 1976.
[8] Following a defended hearing before Judge Pidwell the interim orders were discharged and cross applications for occupation orders dismissed.7 Following the issue of Judge Pidwell’s judgment Mr Lobb returned to 23 Orakei Road in September 2018, which was then vacated by Ms Ryan.
[9] Given the change of circumstances Mr Lobb’s application for occupation and ancillary orders was not brought on for hearing. Instead, in February 2019 Mr Lobb made the application for spousal maintenance pursuant to the FPA 1980 that has resulted in the spousal maintenance judgment currently under appeal. In his spousal maintenance application Mr Lobb sought lump sum payments of $70,000 and $25,000 from Ms Ryan to cover mortgage arrears on the Westpac loan and joint credit card debt, as well as payments of $6,000 per month to cover interest on relationship debts and further payments of $2,000 per month “to cover our children’s ongoing education costs”.
[10] Shortly after the application for spousal maintenance was filed Mr Lobb’s application for occupation and ancillary orders came before Judge Druce who, following a teleconference with the parties, recorded in a Minute that Mr Lobb now wished to bring the occupation order application on for hearing and made various procedural directions, including a direction to serve the independent trustee,
7 Ryan v Lobb [2018] NZFC 6463.
Mr Lockhart. Six days later, on 13 March 2019, Mr Lobb amended his application for occupation and ancillary orders. In addition to the occupation and ancillary furniture orders contained in the original application Mr Lobb applied for a number of other orders apparently conditional on the making of the occupation order, specifically:
(a)An order that “[Ms Ryan] pay $70,000 … to cover the mortgage arrears now $1,100,000 loan with Westpac and is part compensation for [Ms Ryan’s] failure to pay for the outgoings associated with the home while she had exclusive possession; and [Ms Ryan pay $6000 per month on the 20th day of each month… To cover [her] share of the interest on our relationship debts”.
(b)An order reopening the 20 April 2015 Choices Home Loan made by Westpac New Zealand Limited (“Westpac”) to [Ms Ryan and Mr Lobb] (“the Westpac loan”), “by amending clause 5.3 of the Choices Home Loan Terms and Conditions by deleting the second paragraph of that clause and inserting ‘Only Stuart James Lobb can postpone repayments, capitalise interest, or agree to an interest rate, or give any other instruction on behalf of each of Stuart James Lobb and Verena Colleen Lobb (nee Ryan)’.”
(c)An order that “all documents and records that [Ms Ryan] has removed from [23 Orakei Road], other than her personal document and records, be returned to the home”.
[11] As noted, both applications, together with Ms Ryan’s application for dissolution came before Judge Burns on 28 June 2019.
[12] Dismissing the amended application for occupation and ancillary orders,8 Judge Burns:
8 Lobb v Ryan [2019] NZFC 5249.
(a)noted that there was an impasse with regard to the trust that owns 23 Orakei Road;9 but that “no substantive application has been filed for orders under the [PRA 1976]”;10
(b)accepted that the Family Court had no jurisdiction to grant an occupation order under s 27 of the PRA 1976 where there was otherwise no substantive proceeding pursuant to s 23 of the PRA 1976;11
(c)declined to impose conditions (ancillary furniture orders, payments and return of documents) because the occupation order was not made, observing that he would not have done so anyway;12 and
(d)concluded he did not have jurisdiction under the Credit Contracts and Consumer Finance Act 2003 (“CCA 2003”) and in any event noted that the mortgagee, Westpac Banking Corporation, had not been granted notice of the application nor given the opportunity to be heard.13
[13] Judge Burns likewise dismissed Mr Lobb’s application for spousal maintenance. In his spousal maintenance judgment,14 Judge Burns noted that Mr Lobb’s application for maintenance was made pursuant to s 63 of the FPA 1980, which provides for maintenance prior to the dissolution of a marriage, and rejected Mr Lobb’s application for the following principal reasons:15
(a)[Mr Lobb] earns sufficient income in which to meet his own reasonable needs;
(b)the application for maintenance is essentially aimed at [Ms Ryan] meeting the obligations which are more properly determined under the Property (Relationships) Act 1976 than the Family Proceedings Act;
(c)even if jurisdiction was established for the Court to consider spousal maintenance I would find that [Ms Ryan] is not able to afford spousal
9 At [9]-[11].
10 At [8].
11 At [15]-[16].
12 At [23].
13 At [8].
14 Lobb v Ryan [2019] NZFC 5254.
15 At [4].
maintenance after taking her reasonable expenses into account and the payment for child support;
(d)there is no proven link to division of functions and the alleged inability for [Mr Lobb] to meet his reasonable needs. The criteria in s 63 has not been established. He clearly has a job which earns him an income which puts him in the top 1% of income earners.
[14] In reaching his judgment, His Honour rejected what he described as an “audit analysis” carried out by Mr Lobb, said to show Ms Ryan was earning more than she had been assessed as earning by the Inland Revenue Department (“IRD”), and noted the Court did not have jurisdiction to consider child support as an issue, noting that Ms Ryan was paying child support as assessed.16
[15] Ultimately Judge Burns concluded that Mr Lobb had “chosen the wrong jurisdiction”17 in applying for maintenance when what he sought was contributions to a range of matters he claims were relationship liabilities, noting that neither party had chosen to file substantive proceedings under the PRA 1976.
[16]I now deal with Mr Lobb’s appeals in turn.
The occupation order appeal
[17] In considering the occupation order appeal it is clear that there are two issues that require determination:
(a)whether the Family Court was correct in declining to grant an occupation order and the various ancillary orders sought; and
(b)whether the Family Court was correct in concluding it did not have jurisdiction to reopen the Westpac loan as sought by Mr Lobb.
16 At [7].
17 At [9].
Issue 1 - was the Family Court correct to decline to grant an occupation order?
[18] On this first issue Judge Burns accepted Ms Cobcroft’s submissions and concluded “s 27 does not provide a source of jurisdiction as to occupation which can be invoked in isolation from s 25(1)(b) of the [PRA 1976]”.18
[19] With respect, it does not appear from Mr Lobb’s amended application (and the submissions filed in support) that this was what he was in fact arguing. It is clear from that application Mr Lobb invoked ss 23 and 25 of the PRA 1976, in addition to s 27, in seeking an occupation order over 23 Orakei Road, albeit he specifically did not seek orders determining or dividing relationship property.
[20] Although s 25 refers to an application under s 23, s 23 primarily identifies who may apply for orders “under section 25(1)(a) or (b) or an order or declaration under s 25(3)”, and it is clear that Mr Lobb as a spouse was one of those entitled to apply in terms of s 23. Section 23(1) also makes it clear that those applying (like Mr Lobb) can apply for an order under:
(a)section 25(1)(a) determining or dividing relationship property; or
(b)section 25(1)(b) for other orders it is empowered to make under the PRA 1976; or
(c)an order or declaration under s 25(3) relating to specific property when the Court would be otherwise unable to make order pursuant to s 25(1)(a) or (b) because of the effect of s 25(2). 19
18 Lobb v Ryan [2019] NZFC 5249 at [16].
19 It should be noted that s 25(3) is not relevant in this case given that the ability to make orders pursuant to s 25(1) is not in this case restricted by section 25(2) (as there was no dispute the parties were living apart). All s 25(3) does is to provide limited exceptions to enable a court to make orders in respect of specific property when it would be otherwise unable to do so due to the effect of s 25(2). This is not necessary in the present case because at the time the application was determined Mr Lobb and Ms Ryan were living apart/separated for the purposes of s25(2)(a)(i). Likewise, it should be noted that s 33 also adds nothing to the jurisdiction to grant occupation orders under section 27(1) but just confirms that a court has power to make all ancillary orders "that may be necessary or expedient to give effect or better effect to any order" made pursuant to ss 25-32, which obviously includes occupation orders pursuant to s 27.
[21] Nothing in s 23 therefore suggests that any of the applications under s 25 are conditional on making application for any other.
[22] Such an interpretation is confirmed by the construction of s 25 itself. The ability to make orders pursuant to s 25(1)(b) is not expressed be subject to an application determining or dividing relationship property pursuant to s 25(1)(a). Instead, an occupation order in terms of s 27 is quite clearly an “order [the Court] is empowered to make by any provision of this act” in terms of s 25(1)(b).
[23] It therefore follows that for the purposes of this appeal the Family Court Judge was wrong to conclude an application for orders under s 25(1)(a) of the PRA 1976 was a prerequisite for seeking an occupation order pursuant to ss 25(1)(b) and 27 in respect of 23 Orakei Road.
[24] That is not the end of the matter. Although in the Family Court Judge Burns appears to have rejected the submission of Ms Cobcroft that the Court lacked jurisdiction to make an occupation order given 23 Orakei Road was not owned by the parties but rather by the Lothbury Trust, he nonetheless also concluded that there was no basis for making the occupation order. In particular, Judge Burns noted his decision in R v R20 in which he had concluded that occupation orders could be made notwithstanding a property was owned by a trust. Despite this Judge Burns went on to distinguish the present case from R v R, and identified a number of reasons why even if there had been jurisdiction to make an occupation order in terms of s 27 he would not have, noting that there were no young and dependent children and importantly that there was “no clear bundle of rights” which gave rise to a relationship property interest in the Lothbury Trust to enable jurisdiction.21
[25] It is this latter point that is critical in the present case. Specifically, s 27(1) of the PRA 1976 makes it clear that occupation orders can only be made in respect to the personal occupation of “the family home or any other premises forming part of the relationship property”. It follows that if 23 Orakei Road is not relationship property
20 R v R [2010] NZFLR 555 (FC).
21 Lobb v Ryan [2019] NZFC 5249 at [18] – [19].
then the Family Court had no jurisdiction to make an occupation order in favour of either party.
[26] In this case, as previously noted, Mr Lobb is in fact adamant that 23 Orakei Road is not relationship property but rather the property of the Lothbury Trust. He nonetheless argues that the “right to occupy [23 Orakei Road] granted to the parties by the Trustees of the Lothbury Trust is property for the purposes of the [PRA 1976] and is relationship property, albeit relationship property with limited value because it can be revoked at any time by the unanimous agreement of the Trustees of the Lothbury Trust”.
[27] With respect to Mr Lobb, the submission does not reflect the actual position. The Lothbury Trust trust deed makes it clear that Mr Lobb and Ms Ryan, as settlors of the Lothbury Trust are simply discretionary beneficiaries along with their children, or remoter issue of the children of the settlors, any spouse of the discretionary beneficiaries, and “any other person or persons or charity or charities appointed by the protector by deed”.
[28] It is as discretionary beneficiaries of the trust that Mr Lobb and Ms Ryan were permitted to occupy 23 Orakei Road by the trustees of the Lothbury Trust (Mr Lobb and Ms Ryan, along with the independent trustee Lockhart No. 56 Ltd) who resolved:
To permit the settlors [Mr Lobb and Ms Ryan] as primary discretionary beneficiaries with their children to reside in the house property at 23 Orakei Road, Remuera, Auckland rent free but on the basis that they meet all outgoings on it including mortgage principal and interest payments rates, insurance and maintenance.
[29] As Ms Cobcroft submitted, it is difficult to see how this permission could possibly translate into a relationship property interest held by the parties such that would enable the making of orders under s 27(1) of the PRA 1976 given that the interest was given to each of them in their respective capacities as discretionary beneficiaries under the Lothbury Trust trust deed, rather than in their capacities as spouses.
[30] Although commentary exists to the effect that relationship property subsequently settled on trust by a spouse should not lose its classification as
relationship property by virtue of settlement, limited authority is provided for this position.22 Rather, this position is inconsistent with well settled principles of trust law and, more broadly, with the ability to otherwise contract out of the PRA 1976. In essence, where parties agree to settle their relationship property on trust, they are, subject to the terms of the particular transaction, no longer legally the owners of that property, and any rights they receive solely in their capacity as discretionary beneficiaries of that trust should not typically be deemed relationship property.23 Any approach whereby trust property is converted into relationship property ought to be developed cautiously and in a principled way to prevent the erosion of the foundational principles of trust law and to ensure property rights are not simultaneously identified both as the property of the trustees and the property of the spouses.24
[31] In the present case, where neither party asserts that 23 Orakei Road is relationship property, I can see no good or principled reason why the trustees’ resolution set out at [28] above, which explicitly grants the right to occupy to Mr Lobb and Ms Ryan in their capacity as the “primary discretionary beneficiaries” should be interpreted as being some form of relationship property. I therefore conclude that as the right to occupy given to Mr Lobb and Ms Ryan by the trustees of the Lothbury Trust was not relationship property the Family Court did not have jurisdiction to make an occupation order over 23 Orakei Road.
[32] As a result of my conclusion the occupation order appeal must be dismissed. It also follows that as there was no jurisdiction to make occupation orders, there was equally no jurisdiction to make the ancillary furniture orders, the payments sought by Mr Lobb from Ms Ryan as “a condition” of the making of the occupation orders apparently pursuant to s 33 of the PRA 1976, and the orders sought for return of documents, given that all of these were clearly ancillary to the making of the occupation order, and the making of the occupation order was therefore a prerequisite to the making of these other orders sought by Mr Lobb.
22 Robert Fisher Fisher on Matrimonial and Relationship Property (NZ) (online looseleaf ed, LexisNexis NZ) at [4.47] and [11.59].
23 With the exception being where a “bundle of rights” is capable of identification and sufficient to satisfy the “property” requirements as set out in s 2 of the PRA 1976. See LR v JR (A bankrupt) [2011] NZFLR 797 at [58] for a summary of recent authorities on this point.
24 Anthony Grant “The Bundle of Rights: is it good law?” (NZLawyer 132, 19 March 2010).
[33] For completeness, I note that even if I had concluded there was jurisdiction to make an occupation order in this case I would have declined do so, including for the broader reasons given by Judge Burns. In particular, it is apparent that such an order is unnecessary at this point in time given Mr Lobb’s current occupation of 23 Orakei Road is in accordance with the resolution of trustees granting occupation, and is not disputed by Ms Ryan. Quite clearly any occupation order would necessarily have the effect of cancelling the trustees’ resolution granting occupation to both Mr Lobb and Ms Ryan and such an outcome should be avoided if it is not necessary to do so, given these proceedings are not concerned with the decisions taken by the Lothbury Trust. This is particularly so where the longer-term position stands to be addressed through exactly that type of proceeding with regard to the operations of and decision-making of the Lothbury Trust and/or whether or not Westpac chooses to enforce its mortgage, and the final outcome of those proceedings should not in any way be constrained by the types of orders sought by Mr Lobb.
[34] The first limb of the appeal against the occupation order judgment must therefore be dismissed.
Issue 2 – was the Family Court correct to decline to reopen the Westpac loan?
[35] As noted above, Judge Burns concluded in his occupation order judgment with regard to the Westpac loan that he did not have jurisdiction under the CCA 2003, and in addition noted that Westpac, as the mortgagee, had not been granted notice of the application nor given the opportunity to be heard.25
[36] In support of this ground of the appeal Mr Lobb relies on s 120(b) of the CCA 2003 which provides “a court may reopen a credit contract if, in any proceedings (whether or not brought under this act), it considers that … a party has exercised, or intends to exercise, a right or power conferred by the … transaction in an oppressive manner…”.
[37] Specifically, Mr Lobb argued that Ms Ryan has been and continues to prevent him from dealing with Westpac, leading to an increase in arrears on the Westpac loan
25 At [8].
which he is unable to meet. Although the specific right or power conferred on Ms Ryan that she is said to be using in an oppressive manner is not specified he therefore seeks that the contract be reopened.
Discussion – Issue 2
[38] Section 11(1) of the Family Court Act 1980 grants jurisdiction to the Family Court to exercise jurisdiction pursuant to a number of specific acts. The CCA 2003 is not one of the specific acts listed. The section however concludes by granting jurisdiction to the Family Court to “hear and determine all the proceedings that are to be heard and determined by the court under … any other enactment for the time being in force”.26
[39] Although the definition of “court” for the purposes of the CCA 2003 is widely drawn providing that court "means in relation to any matter, the court, tribunal, or arbitral tribunal by or before which the matter falls to be determined",27 that is not sufficient to grant the Family Court jurisdiction under the CCA 2003. This is because none of the specific legislation identified in s 11 of the Family Court Act specifically gives the Family Court jurisdiction for the purposes of the CCA 2003 and it therefore follows that there is no mechanism for an issue under the CCA 2003, such as the opening of a credit contract, to come before the Family Court.
[40] This point is further reinforced by ss 85-87 of the CCA 2003 which sets out the jurisdictional limits of the High Court, District Court and the Disputes Tribunal in relation to credit contracts and the operation of the CCA 2003, but makes no reference to any jurisdiction of the Family Court.
[41] In addition to this fundamental lack of jurisdiction it is clear Judge Burns could not have reopened the Westpac loan in any event because, as His Honour noted, Westpac was neither a party to the proceedings, nor had there been any application to join Westpac to the proceedings.
26 Family Court Act 1980, s 11(1)(h).
27 CCA 2003, s 5 at “court”.
[42] In this regard I note the suggestion made by Mr Lobb at the hearing before me, that Judge Druce had in the 6 March 2019 teleconference determined that it was not necessary for Westpac to be joined to the proceedings, is simply incorrect. As noted above,28 Judge Druce had on 6 March 2019 convened a teleconference of the parties to discuss the application for occupation and ancillary orders, and following that conference issued a procedural minute addressing aspects of Mr Lobb’s original occupation order application. As the original application did not seek to reopen the Westpac mortgage, Judge Druce could not have made any such directions with regard to the participation of Westpac and these proceedings. Instead it was a week after Judge Druce’s minute Mr Lobb filed his amended application which for the first time sought the reopening of the Westpac loan pursuant to the CCA 2003. That amended application did not purport to join Westpac as a party nor give notice to Westpac that Mr Lobb sought to reopen the Westpac loan.
[43] In the absence of Westpac, it is clear that no court could exercise jurisdiction to reopen the Westpac loan. On the contrary the CCA 2003 clearly envisages all parties to a credit contract being party to any application to reopen a credit contract. To do otherwise, let alone make the orders sought by Mr Lobb, would potentially jeopardise the power of Westpac to enforce the loan against the Lothbury Trust as the principal debtor and/or against Ms Ryan as a guarantor.
[44] Taken together, I have no hesitation in concluding Judge Burns was clearly correct in concluding he did not have jurisdiction to open up the Westpac loan either generally or in the absence of Westpac, and the second limb of the occupation order appeal must also be dismissed.
The spousal maintenance appeal
[45] Mr Lobb identified some nine issues with the spousal maintenance judgment. Overall, Mr Lobb submitted that Judge Burns had erred in concluding he was not entitled to spousal maintenance from Ms Ryan during the marriage pursuant to s 63 of the FPA 1980.
28 See [10] above.
[46] Mr Lobb submitted that spousal maintenance was necessary for him to meet his reasonable needs, and that he currently unable to do so. In particular Mr Lobb submitted that unless spousal maintenance was ordered he could not otherwise become “self-supporting” having regard to:
(a)his likely earning capacity (s 63(2)(a)(ii)) and other relevant circumstances (including Mr Lobb’s claim that Ms Ryan is not paying sufficient child-support) (s 63(2)(a)(iii));
(b)the responsibilities of each party to the ongoing daily care of the parties minor and dependent children after the parties cease to live together (s 63(2)(b));
(c)the standard of living of the parties while they were living together or lived together (s 63(2)(c)); and/or
(d)an inability of a party to obtain work that is reasonable in the circumstances for the party to do as and is adequate for that party (s 63(2)(e)).
[47] While Mr Lobb acknowledged in his submissions he was earning $149,600 per year as a chartered accountant working essentially full-time (based on his hourly rate of $85 per hour), because an “absurd amount of [his] income over the last three years has gone on legal fees and Westpac loan repayments (penalty interest and accelerated repayments” he was unable to meet his reasonable needs. These he asserted amounted to approximately $264,000 per year. In particular Mr Lobb stated, without apparent evidential basis, his reasonable needs per month amounted to $22,000 and are made up of: $12,500 in interest and principal payments on the parties’ joint debts; $2,500 for Lothbury expenses such as rates, repairs utilities and insurance; $2,000 for food;
$3,000 in school fees and education; and $2,000 for transport and vehicles
[48] In contrast Mr Lobb claimed Ms Ryan is earning in excess of $200,000 per year as a real estate agent but has reasonable needs of only $96,000 “because [she] does not have any outgoings and is not paying anything towards the parties’ joint debts
or otherwise making a significant contribution to the day to day care of the parties’ minor children”. Mr Lobb also claims Ms Ryan is supported by her new partner “who has significant income”.
[49] Specific complaints by Mr Lobb against Ms Ryan that have prevented him from becoming self-supporting include Ms Ryan’s alleged failure to:
(a)meet her fair and reasonable share of parties’ significant joint debts;
(b)allow Mr Lobb to lock in a new low interest rate for a fixed period or otherwise roll over the parties’ $3.1 million interest only loan to Westpac at normal market rates;
(c)pay the outgoings of 23 Orakei Road while she had exclusive possession for two years, between 29 October 2016 and 2 September 2018;
(d)properly maintain 23 Orakei Road and the parties’ VW Touareg and otherwise not damage property while she had exclusive possession of Lothbury;
(e)engage in meaningful negotiations to resolve the parties’ relationship property and trust matters;
(f)commence meaningful proceedings to resolve the parties’ relationship property and trust matters; and/or
(g)give Mr Lobb access to his documents and records.
Discussion – spousal maintenance appeal
[50] As Judge Burns noted in his spousal maintenance judgment it is utterly clear Mr Lobb is attempting to use an application for spousal maintenance during marriage so that he can continue to reside at 23 Orakei Road on his current income. To achieve this he needs to get Ms Ryan to contribute to meeting the costs of a range of expenses
Mr Lobb considers to be relationship debts. The fundamental problem with this approach is that this is not what spousal maintenance was intended to cover. Given this position I have absolutely no doubt Mr Lobb’s application is fundamentally misconceived, and Judge Burns was clearly correct to dismiss it.
[51] First, it is clear from s 63(1) of the FPA 1980 that spousal maintenance can only be granted if an applicant can show that they are unable to meet his or her reasonable needs. In discussing how to determine a party’s reasonable needs the Court of Appeal in Z v Z (No 2) noted:29
Obviously, “reasonable needs” is not limited to a subsistence level. Nor are reasonable needs necessarily uniform. What constitutes the reasonable needs of one person may not be sufficient to meet the reasonable needs of another… Maintenance to meet the reasonable needs of a party may vary considerably. Furthermore, the fact that the court is to have regard to the reasonable needs of “each” party, indicates that, to some extent, it will necessarily be examining their relative needs.
[52] Likewise, the Courts have accepted that reasonable needs may include payments toward appropriate accommodation and utilities; groceries and day-to-day living costs; an allowance for entertainment costs; and house maintenance.30
[53] In this case the amounts claimed go well beyond this, noting that the reasonable needs claimed by Mr Lobb include $12,500 per month “in interest and principal payments on the parties’ joint debts” so as to enable Mr Lobb to continue to live at 23 Orakei Road.
[54] Leaving aside the amounts sought by Mr Lobb, the outcome sought by Mr Lobb ignores the fact that there has been no decision made with regard to the disposition of 23 Orakei Road. On the contrary, and as Judge Burns noted, Mr Lobb and Ms Ryan fundamentally disagree over what should happen to 23 Orakei Road. Mr Lobb wants the Lothbury Trust to retain the property so he can continue to live there while acknowledging he needs to be able to renegotiate the Westpac loan to be able to do so, while Ms Ryan is of the view that even when they were still together the
29 Z v Z (No 2) [1997] 2 NZLR 258 at 294.
30 Nicola Peart (ed) Brookers Family Law — Family Property (looseleaf ed, Thomson Reuters) at [FA63.03].
two of them with their combined incomes were unable to afford the property, and therefore the Trust should sell the property as soon as possible.
[55] This fundamental difference between the parties begs the question as to whether Mr Lobb’s reasonable needs include having the ability to meet the costs of living at 23 Orakei Road, when he claims he is unable to do so notwithstanding and as Judge Burns stated, Mr Lobb’s own statement of income places him in the top one percent of income earners in New Zealand.
[56] On the evidence available, and in particular with regard to the financial resources available to either party and, indeed, the value and expense of the property with regard to Mr Lobb’s own figures, that cannot be the case.
[57] The fact that the parties may have been jointly able to sustain a lifestyle prior to separation does not mean that either can expect that that will be able to continue once separation has occurred. In this case it is not at all clear on the evidence before the Court that the parties could sustain living at 23 Orakei Road even before the separation, let alone that either party could reasonably expect the other to support them to continue to live there. The mere fact Mr Lobb cannot afford to meet the mortgage payments out of his own resources does not by definition make those payments a reasonable need.
[58] Whether the amounts claimed by Mr Lobb constitute his reasonable needs is further complicated by the fact the amounts he seeks from Ms Ryan (a $95,000 lump sum and $96,000 per year) are, as noted, aimed at making Ms Ryan meet various payments Mr Lobb considers she should meet. The problem is that as neither party has applied under the PRA 1976 to determine what is in fact the parties’ relationship property, so it is not clear what those debts are and/or whether Ms Ryan should be required to contribute. It is likewise difficult to see how the payment of joint debts by Mr Lobb could be seen to be a reasonable need.
[59] It is also unclear as to why or to what extent Mr Lobb has taken it upon himself to in effect seek to recover monies from Ms Ryan on behalf of third parties. For example, to the extent Mr Lobb is correct and Ms Ryan did not meet the outgoings on
23 Orakei Road while she was in sole occupation between October 2016 and September 2018, that is in fact a matter between her and the Lothbury Trust rather than something for Mr Lobb to try and enforce through an application for spousal maintenance. Likewise, to the extent that there is or may be a significant joint debt owing from Mr Lobb and Ms Ryan to Mr Lobb’s parents, again this is for Mr Lobb’s parents to enforce rather than for Mr Lobb to attempt to obtain funds through spousal maintenance in order to meet any such obligation to his parents.
[60] Looking at the circumstances overall there is simply insufficient information before the Court to conclude that Mr Lobb is in fact unable to pay his reasonable needs. I therefore conclude Mr Lobb has failed to meet the threshold in s 63(1) of the FPA 1980. On this basis alone the appeal must be dismissed.
[61] Even if I had been satisfied that Mr Lobb was unable to meet his reasonable needs then as Ms Cobcroft submitted, spousal maintenance can only be awarded where one party cannot meet the whole or any part of his or her reasonable needs because of one or more of the circumstances specified in s 63(2) of the Act.
[62] As Ms Cobcroft has pointed out it is difficult to see that any of the circumstances relied upon by Mr Lobb have any substance in this case. First, it is difficult to see in what sense Mr Lobb’s income earning capacity has been affected by the marriage given that throughout his professional career his practice as a chartered accountant and, as noted by his own admission, he continues to practice, apparently full time, in this capacity and continues to earn a substantial income. It is therefore difficult to see that there is any inability for Mr Lobb to obtain work that is reasonable for him to do or that it is in fact inadequate to provide for him in terms of s 63(2)(e).
[63] Likewise, in relation to ss 63(2)(a)(iii) and (b) Ms Ryan has been and continues to pay child maintenance as assessed by the IRD. Although Mr Lobb contends that Ms Ryan’s gross income exceeds $200,000 there is no independent evidence of this before the court and having considered the evidence provided by Mr Lobb in the Family Court I conclude that Judge Burns was right in discounting it and instead preferring Ms Ryan’s evidence with regard to her income. Mr Lobb’s assertions about Ms Ryan’s income were not only extremely speculative but appear to have been based
on a number of questionable assumptions or otherwise out of date data. In any event, as Ms Cobcroft noted, Mr Lobb does not appear to have taken any formal steps to challenge the IRD’s assessment of Ms Ryan’s income. On the contrary the IRD has assumed that the whole of the couple’s income originates from Ms Ryan, with Mr Lobb’s own income not apparently taken into account in the calculation of child support payments.
[64] Reference to s 63(2)(c) (the standard of living of the parties while they were together) also does not assist Mr Lobb, noting the evidence of Ms Ryan that even together the couple were unable to maintain their pre-separation standard of living. More broadly Mr Lobb cannot show that the parties former standard of living is the reason he cannot meet his reasonable needs as opposed to simply trying to live beyond his means, in circumstances where, as Judge Burns’ concluded, there is no substantive evidential basis for suggesting that Ms Ryan has resources to pay any amount of spousal maintenance given her own evidence of her income and the extent of the child support she is already paying, and any resources attributable to Ms Ryan’s current partner as asserted by Mr Lobb are simply not relevant.
[65] I therefore also accept Ms Cobcroft’s submission that Mr Lobb cannot show that any inability to meet his reasonable needs arises because of the circumstances in s 63(2) and therefore on this basis too his claim for spousal maintenance cannot succeed.
[66] Overall, I agree with Judge Burns that spousal maintenance pursuant to s 63 of the FPA 1980 is simply not the appropriate forum to achieve the result sought by Mr Lobb. To the extent Mr Lobb seeks a contribution from Ms Ryan to meet the parties’ joint debts after separation took place in October 2016, that is something that can be addressed pursuant to s 18B of the PRA 1976 notwithstanding that to date neither Mr Lobb or Ms Ryan have made such an application.
[67]Accordingly, the spousal maintenance appeal must be dismissed.
Decision
[68] Both the occupation order appeal and spousal maintenance appeal are dismissed. Ms Ryan is entitled to costs on both appeals. As previously advised to the parties the issue of costs will be determined together with costs on the dissolution appeal, as well as issues of costs/contempt prior to the hearing of the appeals identified in my Minute (No. 6).
[69] Given this position I direct that submissions on behalf of Ms Ryan addressing these issues are to be filed within four weeks of the date of this judgment. Mr Lobb will then have four weeks to respond. In addition to dealing with substantive matters the submissions are also to address whether a further hearing is necessary and/or appropriate.
Powell J
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