Lung v Liu
[2022] NZHC 3074
•23 November 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1720
[2022] NZHC 3074
BETWEEN JU-TING LUNG
Plaintiff
AND
YU-CHEN LIU
Defendant
Hearing: 6 July 2022 Appearances:
K Sun for the Plaintiff/Applicant
L Kearns KC and L Wang for the Defendant/Respondent
Judgment:
23 November 2022
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 23 November 2022 at 4pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Capstone Law, Auckland LW Law, Takapuna
LJ Kearns KC, Auckland
LUNG v LIU [2022] NZHC 3074 [23 November 2022]
Introduction
[1] The applicant has filed a proceeding under the Property Law Act 2007 (PLA) seeking orders for the sale of a property in Studfall Street, Pakuranga Heights (Studfall Street Property). The Property was purchased eight months after the parties separated using a half share of the proceeds of the sale of the family home.
[2] The Property was put into the names of both the applicant and the respondent to allow a loan to be obtained from the ANZ Bank who would only agree to the loan if the applicant became a joint borrower. The terms of the agreement between the parties as to the basis upon which the Property is held are disputed.
[3] The respondent filed a notice of appearance under protest to jurisdiction on the grounds that this is a relationship property dispute in respect of which the High Court does not have jurisdiction.
[4] The applicant has applied to set aside the respondent’s protest on the following alternative grounds:
(a)The Property was purchased 8 months after the parties had separated (using funds from the respondent’s separate property). Therefore this is not a transaction under the jurisdiction of the PRA because the parties are no longer spouses.
(b)In the alternative, the parties have waived their rights under the PRA with respect to the Property (i.e the parties agree the Property is not relationship property). Therefore the Family Court does not have jurisdiction to determine its division.
(c)In the alternative, the PRA does not preclude the applicant from seeking orders in the High Court for the sale of the property under the Property Law Act 2007.
[5] At the hearing, a further alternative was added: that orders can, in any event, be made under the PLA with any amount held to be relationship property set aside so proceedings could be brought in the Family Court.
Issues
[6]The issues are therefore:
(a)Are the parties still spouses for the purposes of applying the Property (Relationships) Act 1976 (PRA) as a code?
(b)Have the parties waived their rights under the PRA in respect of the Studfall Street Property?
(c)Does the PRA preclude the applicant from seeking orders under s 339 of the PLA for the sale of the Property?
(d)If relationship property was used to purchase the Property, could a sale be ordered under the PLA with directions for the relationship property to be set aside following the sale to allow relationship property proceedings to be brought in the Family Court?
Factual background
[7] On 6 May 2011, the applicant and respondent purchased a property situated at Bucklands Beach Road, Auckland (Family Home). The applicant and respondent married in October 2011 and lived in that property as their family home until they separated. The title of the Family Home was registered in the applicant’s sole name.
[8]The parties separated on 22 June 2019.
[9] On 15 October 2019 the parties sold the Family Home for $1,400,000. Settlement took place on 12 November 2019. On settlement, the applicant transferred all of the net sale proceeds, totalling $1,095,412.30, directly to her personal bank account without accounting to the respondent for his half share.
[10]The respondent asked the applicant to transfer his half share, being
$547,706.15, to his bank account a number of times but she did not do so. Later, the applicant only transferred $531,422.78, leaving $16,283.37 unpaid. The applicant accepts that the respondent is entitled to his half share but says that, as directed by the plaintiff, she has already transferred the remainder to the respondent’s lawyer in Taiwan to pay the respondent’s personal legal fees regarding unrelated litigation.
[11] On 23 February 2020 the respondent entered into an agreement to purchase the Studfall Street Property for $990,000. The purchase price was to be paid by a deposit of $50,000, settlement funds of $511,422.78 and a bank loan of $430,000.
[12] The respondent was unable to borrow the $430,000 necessary on his own due to his limited income. The bank however agreed to lend the money to the respondent if the applicant was a joint borrower.
[13] On settlement, the title of the Studfall Street Property was registered in the parties’ joint names. The parties dispute the status, ownership and their respective shares and interests in the Property.
[14] The applicant claims that she owns a half share in the Property based on a “verbal investment contract” under which the applicant agreed to become a joint- borrower for the loan in exchange for co-ownership of the Property. The evidence of the applicant, Ms Lung, is that the key terms of the agreement are as follows:
(a)the respondent must transfer $560,000 of his separate property to purchase the Pakuranga Property;
(b)I must support the loan application by becoming a joint borrower and taking on the associated risks;
(c)the respondent must pay the mortgage, interest and outgoings associated with the Pakuranga Property;
(d)the respondent is entitled to take sole possession of the Pakuranga Property;
(e)the respondent is entitled to rent out the Pakuranga Property and receive rental income for his sole benefit.
(f)as consideration, the respondent must be registered as the legal and beneficial owner of ½ share of the Pakuranga Property (as tenants in common);
(g)as consideration, I must be registered as the legal and beneficial owner of ½ share of the Pakuranga Property (as tenants in common).
[15] The respondent, Mr Liu, maintains that the Property is 100 per cent owned by him, relying on an oral agreement between the parties as follows:
18.1Studfall Street was purchased by me for my home and I shall have 100% ownership in it.
18.2The applicant’s name would be on the title as a half share owner only for the purposes of meeting the bank’s lending criteria to secure the ANZ Bank Loan.
18.3I will refinance the ANZ Bank Loan by raising a new bank loan in my sole name in about one year from the date of purchase of Studfall Street. After that, the ANZ Bank Loan will be fully repaid and terminated, and the applicant’s name will be removed from the title.
18.4In consideration of the applicant’s assistance in raising the ANZ Bank Loan:
18.4.1The applicant was not required to contribute anything else towards the acquisition of Studfall Street; and
18.4.2I will be solely responsible for payment of all costs associated with Studfall Street, including but not limited to mortgage repayments, rates, repairs and maintenance etc.
18.5The applicant will do all things necessary for the termination of the ANZ Bank Loan and removal of her name from the title.
[16] Since settlement of the Property, the respondent submits that he has fulfilled all of his obligations as he understood them under the oral agreement reached:
(a)He has been solely responsible for the management of the Property and payment of all costs associated with it including but not limited to mortgage repayments, rates, maintenance and repairs. The applicant has had no involvement and made no contribution to the Property.
(b)He has successfully arranged a new bank loan in his sole name in early May 2021, and approached the applicant to seek her cooperation in respect of the refinance of the ANZ loan and the removal of her name from the title.
[17] The respondent submits however that the applicant has refused to cooperate with the refinance and the removal of her name from the title.
[18] On 11 May 2021 lawyers for the respondent wrote to the applicant seeking her cooperation in respect of the refinance of the ANZ Bank loan and the removal of her name from the title and proposing to settle all the relationship property disputes between the parties by an agreement pursuant to s 21A of the PRA. A copy of this letter is annexed to the respondent’s affidavit. The respondent’s evidence is that the applicant has refused to engage in the negotiation. The applicant does not dispute this in her affidavit in reply.
[19] On 26 August 2021 the applicant filed these proceedings seeking orders to sell the property and divide the proceeds equally pursuant to s 339 of the PLA.
[20] On 26 November 2021 the respondent filed an appearance under protest to jurisdiction on the basis that the High Court does not have jurisdiction as:
(a)the present proceeding is one aspect of a wide range of relationship property disputes between the parties; and
(b)the applicant is required to issue relationship property proceedings in the Family Court.
[21] On 24 December 2021 the applicant filed an interlocutory application seeking to set aside the protest.
[22] The respondent has filed a notice of opposition and both parties have filed evidence in support of their position.
Relevant provisions of the PRA
[23]The starting point is s 4 of the PRA which relevantly provides:
4 Act a code
(1)This Act applies instead of the rules and presumptions of the common law and of equity to the extent that they apply—
(a)to transactions between spouses or partners in respect of property; and
(b)in cases for which this Act provides, to transactions—
(i)between both spouses or partners and third persons; and
(ii)between either spouse or partner and third persons.
…
(4) Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act.
…
[24] Section 4A provides that every enactment must be read subject to the PRA, unless the PRA or the other enactment expressly provides to the contrary.
[25] Section 22(1) provides that “[e]very application under this Act must be heard and determined in the Family Court”.
[26] Section 23(1)(a) specifies that either spouse or partner, or both of them jointly may apply at the Family Court for an order under s 25(1)(a) or (b) or an order or declaration under s 25(3).
[27]Section 25 provides:
25 When court may make orders
(1)On an application under section 23, the court may—
(a)make any order it considers just—
(i)determining the respective shares of each spouse or partner in the relationship property or any part of that property; or
(ii)dividing the relationship property or any part of that property between the spouses or partners:
(b)make any other order that it is empowered to make by any provision of this Act.
(2)The court may not make an order under subsection (1) unless it is satisfied,—
(a)in the case of a marriage or civil union,—
(i)that the spouses or civil union partners are living apart (whether or not they have continued to live in the same residence) or are separated; or
(ii)that the marriage or civil union has been dissolved; or
(b)in the case of a de facto relationship, that the de facto partners no longer have a de facto relationship with each other; or
(c)that one spouse or partner is endangering the relationship property or seriously diminishing its value, by gross mismanagement or by wilful or reckless dissipation of property or earnings; or
(d)that either spouse or partner is an undischarged bankrupt.
(3)Regardless of subsection (2), the court may at any time make any order or declaration relating to the status, ownership, vesting, or possession of any specific property as it considers just.
(4)To avoid any doubt, but without limiting subsection (3), if proceedings under this Act are pending, the court, if it considers it appropriate in the circumstances, may make an interim order under that subsection for the sale of any relationship property, and may give any directions it thinks fit with respect to the proceeds.
(5)This section is subject to the other provisions of this Act.
(6)In proceedings commenced after the death of one of the spouses or partners, this section is modified by section 91.
Are the parties still spouses for the purposes of applying the PRA as a code?
[28] The applicant contends that as the parties are no longer spouses, the dispute does not fall within the jurisdiction of the PRA on the basis that:
(a)Section 2A(1) of the PRA defines spouses as a married couple.
(b)Section 2A(2)(a) provides that a couple are no longer spouses (for the purposes of the PRA) when “they cease to live together as a married couple”.
[29] In the applicant’s submission, transactions between people who are no longer spouses are not therefore under the jurisdiction of the PRA.
[30] The respondent submits however that the applicant has misconstrued the meaning of marriage and spouse under the PRA. The respondent refers to s 2 which provides that marriage has the meaning given to it by s 2A. Section 2A then provides:
2A Meaning of marriage
(1)In this Act, marriage includes a marriage that—
(a)is void; or
(b)is ended while both spouses are alive by a legal process that occurs within or outside New Zealand; or
(c)is ended by the death of one of the spouses, whether within or outside New Zealand;—
and husband, spouse, and wife each has a corresponding meaning.
(2)For the purposes of this Act, the marriage of 2 people ends if—
(a)they cease to live together as a married couple; or
(b)their marriage is dissolved; or
(c)one of them dies.
[31] The respondent submits that it is clear that s 2A gives an extended definition to marriage and includes void marriages and those ended by dissolution or death. The respondent refers to the fact that the parties’ marriage in this case has not yet been dissolved and so the parties are clearly still spouses for the purposes of the PRA.
[32] The respondent refers to Cossey v Bach1 in support of this, a case relied on by the applicant on another point. In Cossey v Bach the parties were married for five years. The marriage was then dissolved without resolving matrimonial property rights as they had no significant assets. Both parties remarried but these marriages also ended in dissolution. Some nine years after the marriage was dissolved, the plaintiff won a significant prize in Lotto. Two days later the defendant joined him to collect the cheque and they resumed cohabitation. Significant assets were purchased, including a property. The de facto relationship ended a year later, shortly after the money ran out, and the plaintiff brought proceedings under the Matrimonial Property Act 1978 (MPA) claiming that the assets purchased should vest in him, with an alternative claim in law and equity.
[33]Fisher J considered the parties were spouses for the purposes of the MPA:2
The combined effect of ss 2(1)3 and 23 of the Act was that the parties to a former marriage qualified as “spouses” and could commence valid proceedings under the Matrimonial Property Act at any time thereafter. It would seem to follow that, notwithstanding the dissolution of their marriage, both the plaintiff and the defendant in this case were entitled to commence proceedings under the Matrimonial Property Act.
[34]Fisher J then set out the reasons for the extended meaning of “marriage”:4
What was the reason for including the extended definition of “marriage” and “corresponding” meanings for “husband”, “wife” and “spouse” in s 2(1)? It seems to me that it was no more than a clumsy drafting method for ensuring that even when a marriage had been dissolved, the Act could be applied retrospectively for the purpose of resolving property rights directly or indirectly attributable to the former legal relationship of marriage. I do not think anymore was intended than that.
1 Cossey v Bach [1992] 3 NZLR 612(HC).
2 At 618.
3 Equivalent to s 2A of the Property (Relationships) Act 1976.
4 At 622.
[35]Fisher J then concluded:5
My conclusion therefore is that the Act which rests on the general assumption that the matrimonial property falling for division under the Act will be directly or indirectly traceable to property created or used during the legal marriage partnership itself.
[36] Consistently with this in Shirtliff v Albert, a case decided under the PRA, Associate Judge Bell held:6
Under s 23 persons are entitled to apply for orders under s 25 of the Act include a spouse or partner. Under s 2A, a marriage includes a marriage that is ended while both spouses are alive, by legal process that occurs within or outside New Zealand. “Husband”, “Spouse” and “Wife” have corresponding meaning. Accordingly, a “spouse” includes a spouse in a marriage that has been ended by legal process while spouses are alive.
[37] In this case, unlike Cossey v Bach, the parties are separated but their marriage has not been dissolved. As submitted by counsel for the respondent, it would render the PRA inoperable if jurisdiction was not available to parties after separation. The PRA specifically permits consideration of post-separation factors so it must apply to people who are no longer spouses in terms of the definition in s 2A(2). For example, in respect of a s 15 determination (orders to redress economic disparity after separation). Furthermore s 25(2)(a)(i) provides the power to make orders in the case of a marriage or civil union only if the spouses or civil union partners are living apart (whether or not they have continued to live in the same residence) or are separated. Other examples are ss 18B and 18C which provide for compensation for contribution and dissipation of relationship property after separation respectively.
[38] In my view, the applicant and respondent are spouses under s 23(1)(a) so any question relating to relationship property must be decided as if it has been raised in proceedings under the PRA. The first basis put forward by the applicant for why the respondent’s protest ought to be set aside does not, therefore, succeed.
5 At 622.
6 Shirtliff v Albert (2011) 12 NZCPR 551 (HC).
Have the parties waived their rights under the PRA in respect of the Property?
[39] The applicant refers to Anderson v Anderson where Judge Inglis QC held (in reference to the Matrimonial Property Act 1976):7
I can find no reasonable policy or principle why a spouse, following separation or dissolution, should not be able to renounce his share in the matrimonial home; nor does there appear to be any policy or principle preventing a spouse who, following separation or dissolution, has a quantifiable entitlement under the Act, from being regarded as having abandoned or waived it if the facts of the case justify that view. It may be that, in a disputed case, a Court might have to be cautious in considering whether there had indeed been waiver or abandonment … But if the situation is clear, as it is in the present case, I see no reason why the Court should be hesitant. I do not think s. 4 stands in the way, for the rules of common law and equity are limited by that section only to the extent that they apply to “transactions” between the spouses in respect of property. The abandonment or waiver of an entitlement under the Act can hardly been seen as a “transaction” in a case such as the present one.
(original emphasis)
[40] In reliance on this passage, the applicant submits that it is possible for the parties to waive or abandon their rights under the PRA, with such a waiver not constituting a “transaction” so as to bring the matter back within the ambit of the PRA.
[41] The applicant relies on the affidavit sworn by the respondent in support of his opposition in which, the applicant says, the respondent states the Property is his separate property. The applicant submits that, by doing so, the respondent has waived all of his rights under the PRA with respect to the Property.
[42] In fact, in the passage relied on in the respondent’s affidavit, the respondent deposes:
I refer to paragraph 28 of the Applicant[’s] Affidavit and dispute the applicant’s claim that the title of Studfall Street reflects equal ownership in the property. I claim 100% ownership in Studfall Street in reliance on the Oral Agreement.
[43] I do not accept that this is a waiver of the respondent’s rights under the PRA. He does not refer to the Property as separate property but simply claims 100 per cent ownership in the property.
7 Anderson v Anderson (1985) 1 FRNZ 547 (FC) at 551.
[44] Counsel for the respondent further submits that the decision in Anderson v Anderson on which the applicant relies is entirely distinguishable. That case involved rare and unusual facts prompting Judge Inglis QC to comment that the circumstances involved a point of matrimonial property which “never before seems to have arisen for decision”.8 The Judge held that the husband had waived his rights in circumstances where it was “only too clear that Mr Anderson abandoned his family completely”.9
[45] After being ordered to pay maintenance, leaving Mrs Anderson with exclusive occupation of the matrimonial home and custody of the children, Mr Anderson left for Australia, ceased contact and after nine years had not paid a cent of maintenance. During this time, Mr Anderson had made no claim in respect of the family home nor taken any action in the matrimonial property proceedings issued by Mrs Anderson even after applying for a dissolution. The Court held that it was clear that Mr Anderson’s claim to a half interest in the equity in the matrimonial home had been abandoned. The Court was not therefore obliged to recognise the mandatory language of s 11 of the MPA, which otherwise would have imposed an obligation under the Act to direct a half share to the husband.
[46] As counsel for the respondent submits, the circumstances here are completely different. There has been no abandonment. The respondent has instead attempted to negotiate an overall settlement of the relationship property claims by having his solicitors write to the applicant on 11 May 2021. There has been no response. In addition, the respondent has lodged a notice of claim on the applicant’s Flat Bush School Road property which she purchased in 2020 and is registered in her sole name. No steps have been taken to remove that notice. The only step the applicant has taken is to file these proceedings.
[47] In any event, counsel for the respondent submits that any oral agreement purporting to compromise the parties’ relationship property rights under the PRA would potentially be void or invalid for failure to meet the following requirements of s 21F of the PRA:
8 At 547.
9 At 548.
(a)The agreement must be in writing and signed by both parties.
(b)Each party must have had independent legal advice before signing the agreement.
(c)The signature of each party must be witnessed by a lawyer.
(d)The lawyer who witnesses the signature of the party must certify that, prior to signing, the lawyer explained to that party the effect and implications of the agreement.
[48] Not only has the respondent not described the Property as separate property, there is no clear evidence of any waiver, much less a waiver that complies with s 21F. This basis cannot therefore be relied on for setting aside the protest to jurisdiction.
Does the PRA preclude the applicant from seeking orders under s 339 of the PLA for the sale of the Studfall Street Property?
[49] The applicant submits in the alternative that this Court has jurisdiction under s 339 of the PLA, even if the PRA applies. The applicant relies on McLean v Cheyne where one partner in a de facto relationship sought orders, by way of summary judgment, for the sale of a property under s 140 of the Property Law Act 1952 (PLA 1952) (now replaced, including by s 339 of the Property Law Act 2007).10 The other partner opposed those orders on the grounds that the High Court did not have jurisdiction. Master Gendall (as he then was) held:
[29] Taking into account all these matters, I am satisfied that as a general principle, this Court does have the power to make a s 140 PLA order for sale of the property. This power has been exercised by the Court in the face of the MPA the predecessor to the P(R)A many times. It may be that with the P(R)A Parliament was attempting to vest jurisdiction over these matters solely in the Family Court. The P(R)A is expressed as a code but it is clear that at law it is insufficient to act as a complete code, even if that was its purpose.
[50] The applicant submits that accordingly even if the PRA applies to the Studfall Street Property (which the applicant denies), the High Court still has jurisdiction to make an order for the sale of the property under the PLA.
10 McLean v Cheyne [2003] NZFLR 805 (HC) at [10].
[51] Counsel for the respondent accepts that the authorities on whether the High Court has jurisdiction over summary judgment proceedings brought by spouses involving property and co-ownership under the PLA or its predecessor are divided. Counsel submits there is one line of cases, with Shorter v Shorter given as one example, in which it has been held that, where property remains in the co-ownership of spouses, the High Court does not have jurisdiction to make partition or sale orders.11
[52] In Shorter v Shorter the parties were still married but long since separated. By agreement, the valuable family home had remained occupied by the wife and dependent child. Prompted apparently by financial difficulties, the husband brought a summary judgment application under s 140 of the PLA 1952 to force the sale of the matrimonial property. The wife opposed the application asking that it be settled under the MPA. The Court accepted the wife’s argument. Master Towle stated that if the Court allowed summary judgment in that instance, it would “open the floodgates to a host of applications between married couples as a short-cut method to try and force the disposal of what is usually the most important single item of matrimonial property”.12 The Family Court was seen as being in the best position to consider the parties’ matrimonial property rights as a whole, with Master Towle commenting that the High Court “should not be used as a crow-bar to resolve a matrimonial property dispute”.13
[53] However, Shorter v Shorter was distinguished in Clark v Clark14 on the grounds that in Clark v Clark there had been an occupation order, a factor absent in Shorter, and also that there were existing proceedings under the MPA where there were none in Shorter. Master Williams found that he had jurisdiction but said the MPA was applicable so the Court “must be influenced by the precepts of matrimonial property appearing in the Matrimonial Property Act 1976”.15 He granted summary judgment as he deemed he had heard sufficient evidence on the parties’ matrimonial position.
11 Shorter v Shorter [1991] NZFLR 286 (HC).
12 At 286.
13 At 287.
14 Clark v Clark [1992] NZFLR 439 (HC).
15 At 442.
[54] McLean v Cheyne, as referred to above,16 followed Clark v Clark. In McLean v Cheyne, the parties had lived in a de facto relationship for a little over three years. Following breakdown of the relationship, the defendant occupied the home and had possession of the chattels, pursuant to orders of the Family Court. The parties had attempted to negotiate a settlement to their relationship property issues, but were unsuccessful. The plaintiff therefore applied for summary judgment for an order for the sale of the property pursuant to the PLA 1952. The parties were also involved in proceedings under the PRA brought by the defendant. Master Gendall described the first major issue for the Court as being whether the High Court had jurisdiction and whether s 140 of the PLA 1952 is applicable to relationship property under the PRA.
[55] The Judge held that he did have jurisdiction to make orders for the sale of relationship property under s 140 of the PLA 1952 (now replaced by subpart 5 of part 6 of the PLA 2007) as the PRA and its predecessor, the MPA, did not act as a complete code.17
[56] Master Gendall held however that summary judgment should not be ordered and the plaintiff’s application was refused:18
Taking into account the particular circumstances of the parties in this case, and giving due weight to the requirement in s 1M that the purpose of the P(R)A is to provide for a just division of relationship property between de facto partners, I am satisfied here that this is one of those rare cases where it is appropriate for the Court to exercise its discretion to refuse summary judgment pursuant to R136(1), and I now do so.
(original emphasis)
[57] In exercising the Court’s discretion to decline summary judgment, the Judge considered the difficulty it would cause to the defendant:19
The defendant has expressed the clear and strong wish to retain the home. Currently she has a possession order with respect to the home from the Family Court. I am satisfied that if an order for sale under s 140 PLA was made here, this would have the strong likelihood of prejudicing any possibility the defendant may have to obtain the home under the Family Court proceedings and this could defeat the ability of that Court, taking into account the value of
16 McLean v Cheyne, above n 10.
17 At [29].
18 At [58].
19 At [56].
all relationship property, to effect what it considered the just division of relationship property between the parties (See Sales v Sales at pp 98 and 99). In my view this would not be a decidable outcome here.
[58] Counsel for the respondent then referred to Shirtliff v Albert,20 where Associate Judge Bell, after considering the relevant authorities, disagreed with the approach taken in Clark v Clark and McLean v Cheyne.21 Consistently with Shorter v Shorter,22 Associate Judge Bell concluded:23
… this Court does not have the jurisdiction to decide the summary judgment application. I stay the present application. If the plaintiff is unsuccessful in applying to the Family Court for an extension of time under s 24(2) of the Property (Relationships) Act to obtain orders for the division of the property in this case, she may apply for the stay to be lifted.
[59] In Shirtliff v Albert, the plaintiff and defendant were married in 1971, bought a property in 1975 and settled it as their joint family home in 1976. They separated in 2000 and their marriage was dissolved in 2006. There was no question the property was relationship property, being the parties’ family home. The plaintiff applied for orders under s 339 of the PLA for the sale of the family home and division of proceeds with adjustments for occupation rent and rates payments. There had been no proceedings in the Family Court to divide the relationship property. The defendant had lived in the home since separation. He had been served with the PLA proceedings but had taken no steps. The issue for the Court was whether it had jurisdiction to deal with the matter or whether the Family Court had exclusive jurisdiction. The plaintiff argued that the High Court has independent jurisdiction to order a sale and division of the property under the PLA, citing Clark v Clark as authority in support.
[60] In reaching his conclusion, Associate Judge Bell pointed out the inconsistencies between the provisions under the PRA and the PLA, as follows:24
(a)Under the Property Law Act any division of property is made according to the owners’ respective beneficial interest in the property; under the Property (Relationships) Act, the beneficial interests are only the starting point and may be subject to adjustment under the property division provisions of Part 4, as when there is other relationship property to be divided.
20 Shirtliff v Albert, above n 6.
21 At [19(d)].
22 At [19(b)].
23 At [20].
24 At [14].
(b)Under the Property Law Act, an application may be started in this Court. Under the Property (Relationships) Act, any application for division in relationship property must be started in the Family Court and can only be transferred to this Court if the test under s 22(3) is satisfied.
[61]Associate Judge Bell went on to hold:25
These inconsistencies are resolved by s 4(4) and 4A of the Property (Relationships) Act, which requires that Act to apply:
4. Act a code –
… (4) where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided is if this had been raised in proceedings under this Act.
…
4A other enactments to be read subject to this Act – every enactment must be read subject to this Act, unless this Act or the other enactment is expressly provided to the contrary.
[62] The respondent submits that the approach taken in Shorter v Shorter and Shirtliff v Albert should be preferred as the correct approach. In counsel’s submission it provides a principled pathway in cases involving an interface between provisions of the PRA and the PLA when the parties are spouses and co-owners of the property in dispute. Counsel emphasises this is especially the case given the inconsistencies between the two enactments as discussed by Associate Judge Bell.
[63] In any event, counsel for the respondent submits that Clark v Clark and McLean v Cheyne can both be distinguished from the present case as in both those cases there had been an occupation order, relationship proceedings had been issued in the Family Court and only the family home was at issue.
[64] Here, there is no occupation order and no relationship property proceedings have been issued in the Family Court. The respondent alleges however the parties’ property issues include not only Studfall Street but also the property at Flat Bush School Road and the remaining relationship property such as bank accounts, KiwiSaver, motor vehicles, company shares and so forth.
25 At [15].
[65] Having considered both lines of authority, in my view the relevant provisions of the PRA do not exclude the jurisdiction of the High Court but instead require the PRA to be applied where any question relating to relationship property arises.
[66] This question of jurisdiction was considered in the recent decision of Campbell J in Kake v Napier.26 The sole issue was whether Ms Kake’s claim was within the exclusive jurisdiction of the Family Court.27 From 2012 to 2015, while engaged to Ms Kake, Mr Napier carried out building work on Ms Kake’s property under an alleged oral contract in which the work was done in lieu of repayment of a loan. Some years later, after the parties had married and then separated, Ms Kake said that she had been overcharged by Mr Napier. Ms Kake therefore brought a claim in the District Court for breach of the alleged oral contract. Mr Napier objected to the District Court’s jurisdiction to hear and determine the claim, on the basis that the arrangements with Ms Kake were properly characterised as contributions made as part of the de facto relationship, which had begun when they became engaged in 2009. He said that the dispute therefore had to be addressed pursuant to the provisions and principles of the PRA and was within the exclusive jurisdiction of the Family Court. As in this case, Ms Kake applied to set aside Mr Napier’s appearance. Ms Kake argued that her claim was not under the PRA and so the District Court had jurisdiction.
[67] The District Court Judge found that Ms Kake’s claim fell for determination under the PRA and that the Family Court had exclusive jurisdiction over it. The claim was therefore dismissed in the District Court for want of jurisdiction.28
[68]On appeal to this Court, Campbell J held:
[21] Section 22 of the PRA provides that “[e]very application under this Act” must be heard and determined in the Family Court. This provision is given further effect in s 11 of the Family Court Act, which provides that the Family Court must hear and determine all proceedings “that are to be heard and determined by the court under or by virtue of any of the provisions of” the PRA. It follows that the District Court has no jurisdiction over any application under the PRA.
26 Kake v Napier [2022] NZHC 2395.
27 At [20].
28 Kake v Napier [2022] NZDC 8408.
[22] The Family Court therefore has exclusive jurisdiction over applications under the PRA. Clearly, though, this does not mean that the Family Court has exclusive jurisdiction over every type of civil proceeding between spouses or partners. Nor does it mean that the Family Court has exclusive jurisdiction over every proceeding in which the PRA may have some application. There is a long line of authorities, beginning with Jew v Jew, to the effect that the exclusive jurisdiction of the Family Court obtains only where a party has applied for orders under the Act.29
[23] The PRA allows applications to be brought for a range of orders. The orders are primarily to do with determining the respective shares of each spouse or partner in relationship property and dividing that property.30 It is unnecessary to describe all the other orders that may be sought under the PRA. It suffices to say that, in her claim against Mr Napier, Ms Kake does not apply (in form or substance) for any order under the PRA. She merely claims damages for Mr Napier’s alleged breach of a building contract. This is not a claim that is, or could be, made by way of an application under the PRA.31
[69] Campbell J discussed the reliance by the District Court Judge on s 4 of the PRA who had found that it reinforced the position that the Family Court has exclusive jurisdiction over matters involving the PRA. Campbell J disagreed holding:
[26] … Section 4 deals with substantive law, not with jurisdiction. Section 4(1) states that the PRA applies instead of the rules and presumptions of the common law and equity to the extent that they apply to (among other things) “transactions between spouses or partners in respect of property”. Section 4(4) then states:
Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act.
[27] This provision contemplates that proceedings raising questions relating to relationship property may be commenced and determined in courts other than the Family Court. So long as the proceeding is not an application under the PRA, that other court will have jurisdiction, but will have to determine the question as if it had been raised in a proceeding under the PRA. In fairness to the Judge, the authorities confirming that this is the effect of s 4(4) were not cited to her.
(footnotes omitted)
[70] Campbell J therefore concluded that the District Court Judge should not have dismissed Ms Kake’s claim for want of jurisdiction.
29 Jew v Jew [2003] 1 NZLR 708 (HC) at [41]. See also AB v EF [2012] NZFLR 661 (HC) at [31] and [36]–[43]; Lai v Huang [2016] NZHC 2828; and Minister of Education v McCartney [2017] NZHC 47 at [14]–[21].
30 Property (Relationships) Act 1976, s 25.
31 Ms Kake could, alternatively, frame her claim as one in debt (on the basis that, if Mr Napier had charged her in accordance with the contract, he would still owe her money). Such a claim would also be unable to be made by way of an application under the PRA.
[71] I consider that the same conclusion must be reached in this case. The plaintiff’s application is not an application under the PRA and so there is no requirement for it to be heard and determined in the Family Court. Section 4(4) of the PRA will apply and will require the Court to decide any questions arising in relation to relationship property as if they had been raised in proceedings under the PRA. But this Court still has jurisdiction to determine the plaintiff’s application under the PLA.
[72] I therefore consider that the High Court does have jurisdiction to determine these proceedings and that the protest to jurisdiction ought to be set aside. In doing so, I follow the approach in McLean v Cheyne and respectfully disagree with the approach in Shirtliff v Albert.
[73] I note that where orders are sought pursuant to s 339 of the PLA, the Court is required to have regard to the following matters specified in s 342 of the PLA:
(a)the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:
(b)the nature and location of the property:
(c)the number of other co-owners and the extent of their shares:
(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:
(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:
(f)any other matters the court considers relevant.
[74] The final consideration in (f) allows the Court to consider whether the unresolved relationship property issues are relevant and should be taken into consideration in determining whether an order ought to be made, even if the property is separate property. There is not therefore necessarily inconsistency between the PLA and the PRA.
Can the relationship property used to purchase the Studfall Street property be set aside following a sale to allow proceedings to be brought in the Family Court?
[75] Given the view I have reached on the third issue it is unnecessary to consider this further alternative.
Result
[76]The respondent’s protest to jurisdiction is set aside.
Costs
[77] Although the applicant has succeeded in her application to set aside the respondent’s protest to jurisdiction I consider that the applicant’s approach may not be the most efficient way to resolve the issues between the parties. The fact that the applicant did not respond to the letter sent by the respondent’s letter in relation to resolution of the relationship property issues between them potentially ought to have costs consequences.
[78] My preliminary view is therefore that costs perhaps ought to lie where they fall. I ask the parties to confer and, only if agreement is not possible, to file memoranda of no more than five pages (excluding schedules).
[79] I allow longer than the usual time period by which the costs memoranda are required to be filed to allow the parties hopefully to reach a resolution not only in relation to costs but also in relation to the relationship property issues between them. Any memorandum on behalf of the applicant is required to be filed by 40 working days following this judgment and any memorandum in response on behalf of the respondent a further 10 working days following the applicant’s memorandum.
[80] I am concerned that if agreement cannot be reached, the most efficient way of resolving all issues between the parties may be instead to file proceedings in the Family Court rather than continue with these proceedings in the High Court. I therefore strongly encourage the parties to try to reach agreement between themselves and, if that is not possible, to file proceedings in the Family Court to resolve all issues between them rather than potentially requiring two proceedings. I note there is no
difficulty with the Family Court making determinations as to whether the Studfall Street Property in issue in these proceedings is in fact separate or relationship property. That is a matter that is a part of the Family Court’s assessment in many relationship property proceedings before it.
Associate Judge Sussock
5
4
1