Malcolm Edward Rabson v Linda Gallagher - [2017] NZSC 44

IN THE SUPREME COURT OF NEW ZEALAND

SC 3/2017
[2017] NZSC 44

BETWEEN

MALCOLM EDWARD RABSON
Applicant

AND

LINDA GALLAGHER
First Respondent

MALCOLM EDWARD RABSON AS TRUSTEE OF THE MALCOLM RABSON FAMILY TRUST
Second Respondent

WAYNE SEYMOUR CHAPMAN AS TRUSTEE OF THE GALLAGHER-RABSON FAMILY TRUST
Third Respondent

Court:	Elias CJ, William Young and Arnold JJ
Counsel:	Applicant in person N Levy for First Respondent S A Barker for Third Respondent
Judgment:	5 April 2017

JUDGMENT OF THE COURT

AThe application for leave to appeal is dismissed.

BThe applicant must pay costs of $2,500 to each of the first and third respondents.

____________________________________________________________________

REASONS

Litigation between the applicant and the first respondent under the Property (Relationships) Act 1976 resulted in orders made by the Court of Appeal in 2011.[1] The Court determined that the first respondent was entitled to payment of $1,239,081.[2] This figure represented, inter alia, the High Court Judge’s assessment of the value of debts owed by the Malcolm Rabson Family Trust. The payments to the first respondent were to be funded from the proceeds of sale of three properties held by the Gallagher-Rabson Family Trust (GRFT). As perceived by the applicant, the effect of the orders was that he would receive less than 50 per cent of the relationship property pool if the net realisation from the three properties (after allowing for the expenses of the trustee) was less than what was then anticipated. That perception accords with the practical effect of the orders. However, for the purposes of the Court of Appeal (and the High Court as well) the relevant relationship property consisted of the debts. The valuation/division proceeded on the basis that those debts were worth their face value.
[1]The orders are contained in two judgments: Rabson v Gallagher [2011] NZCA 459; and Rabson v Gallagher [2011] NZCA 669 [Rabson orders judgment]. The latter is of prime concern.
[2]Rabson orders judgment, above n 1, at [10].
The orders made by the Court of Appeal generally followed the form of those made by the High Court Judge. There is no explicit explanation in either the High Court or Court of Appeal judgments for the way in which the order was structured. We think it likely that the structure was intended to ensure that difficulties generated by Mr Rabson in relation to the GRFT and the properties it owned would not diminish the amount that Ms Gallagher would receive. That has been the practical effect of the orders.
The orders of the court provided:[3]
Leave is reserved to the GRFT trustee to apply to the High Court for further directions if required and to any party to apply to this Court for clarification of any matter relating to these orders.
[3]Rabson orders judgment, above n 1.
The applicant’s application for leave to appeal to this Court was refused.[4] He complained that the effect of the orders was to confer on the first respondent an effective priority in respect of the proceeds of sale…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZSC 44
Decision Date: 5 April 2017

CaseChat Overview and Summary

In the case of Malcolm Edward Rabson v Linda Gallagher, the Supreme Court of New Zealand was tasked with determining whether Mr Rabson had grounds to appeal the Court of Appeal's decision concerning the division of property under the Property (Relationships) Act 1976. The Court of Appeal had previously ruled in favour of Ms Gallagher, awarding her a significant sum from the proceeds of three properties held by the Gallagher-Rabson Family Trust. Mr Rabson argued that the Court of Appeal's orders resulted in him receiving less than 50% of the relationship property pool, contrary to his expectations and the Act's intent for equal distribution.

The primary legal issue was whether Mr Rabson had a valid basis for appealing the Court of Appeal's decision. Specifically, the Court needed to determine if the perceived reduction in his share of the property pool was due to a change in circumstances for which he bore no responsibility, which would justify an appeal under the miscarriage of justice grounds. The Court of Appeal had already outlined several factors contributing to the distribution of funds, including Ms Gallagher's priority right to payment, the fixed nature of the relationship property by the debts' face value, and the impact of ongoing litigation and expenses associated with Mr Rabson's challenges.

The Supreme Court found that Mr Rabson could not credibly argue that his reduced share was due to a change in circumstances beyond his control. The Court of Appeal's detailed explanation of the factors affecting the property distribution adequately justified the outcome. The Court concluded that the expenses related to Mr Rabson's litigation were not a valid reason to diminish Ms Gallagher's share of the relationship property. Therefore, the application for leave to appeal was dismissed, and costs of $2,500 were awarded to each of the first and third respondents.

Orders