McIlraith v McIlraith - [2015] NZHC 2758

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000701 [2015] NZHC 2758

BETWEEN
IAN DAVID McILRAITH

Appellant

AND

JENNIFER McILRAITH Respondent

Hearing: 6 October 2015

Appearances:

S J Shamy and V M Heward for Appellant
RJB Fowler QC and J J Daley for Respondent

Judgment:

6 November 2015

JUDGMENT OF DUNNINGHAM J

[1] The appellant, Mr McIlraith, comes from a family which has been farming in the Waitaki River area for generations. With the assistance of a family trust established by his grandmother in 1960, Mr McIlraith has progressively acquired shares in a company which owns a farm in the Waitaki Valley known as Grassy Hills. He and Mrs McIlraith were married on 14 May 1971, and the couple lived on Grassy Hills for most of their married life. They separated in 2007, after some
36 years of marriage.

[2] As is often the case with family farms, the legal structure for farming Grassy Hills had some layers of complication. While the farm was owned by Grassy Hills Farm Company Ltd (GFCL), and the shares in GFCL were in Mr McIlraith’s name, the farm was farmed by Mr and Mrs McIlraith in partnership (“the partnership”) at the time of separation. The partnership owned the stock and
plant on the farm.

McILRAITH v McILRAITH [2015] NZHC 2758 [6 November 2015]

[3] Mr McIlraith acquired the shares in GFCL in a number of stages. This has led to the disputes over whether various parcels of the shares are relationship or separate property and, even if they are separate property, whether Mrs McIlraith has contributed to their increase in value, or sustained them in a way which entitles her to a share in their value.

[4] The farm has now been sold, but less than half of the proceeds of $3,280,000 have been distributed to the parties while Mrs McIlraith’s relationship property entitlement is in dispute. That dispute was the subject of a judgment in the Family Court on 29 August 2014, and some of the Family Court Judge’s findings are
now appealed to this Court.1

[5] Helpfully, counsel have been able to confine the points on appeal to four key areas. They are:

(a) whether certain tranches of shares in GFCL acquired by Mr McIlraith during the marriage are separate property under s 10 of the Property (Relationships) Act 1976 (“the Act”), or are relationship property under s 8(1)(e) and 8(1)(ee) of the Act;

(b)even if the shares are separate property, whether there has been an increase in value in those GFCL shares which is attributable to the application of relationship property, and which should be treated as relationship property under s 9A of the Act;

(c) even if the shares are separate property, whether Mrs McIlraith’s actions have sustained that separate property to justify Mrs McIlraith receiving an increased share of the relationship property or a sum in compensation to reflect that increase, under s 17 of the Act; and

(d)whether the Family Court correctly made the post-separation adjustments in…

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.

Continue reading McIlraith v McIlraith

Details

AGLC: McIlraith v McIlraith [2015] NZHC 2758
Case: [2015] NZHC 2758
Decision Date: 6 November 2015

CaseChat Overview and Summary

McIlraith v McIlraith concerns a dispute between former spouses, Ian and Jennifer McIlraith, over the division of property acquired during their marriage, particularly shares in Grassy Hills Farm Company Ltd (GFCL). The appeal concerns the Family Court's classification of certain shares as relationship property and the application of the Property (Relationships) Act 1976. The key issues before the Court were whether certain shares in GFCL acquired by Ian McIlraith during the marriage were separate property or relationship property, whether an increase in value of those shares was attributable to the application of relationship property, whether Jennifer McIlraith's actions sustained those shares justifying compensation, and whether the Family Court correctly made post-separation adjustments regarding salary, dividends, and interest on partnership assets. The Court found that 5,523 of the shares acquired using funds from the Mt Parker Trust were separate property, not relationship property as the Family Court had determined. The Court also found that the application of relationship property to reduce GFCL's debt did not constitute an increase in value of the separate property shares. The Court upheld the finding that Jennifer McIlraith's actions sustained Ian McIlraith's separate property shares, warranting a compensation payment, though it increased the award to $171,000. The Court allowed the appeal regarding post-separation adjustments, finding that Ian McIlraith was only required to account to Jennifer for half of the income from the relationship property proportion of the shareholding and that interest should be paid on half the net value of the livestock and plant. The appeal was allowed in part, with specific determinations on the classification of shares, the increase in value of separate property, sustenance of separate property, and post-separation adjustments. Costs were reserved for later determination.

Orders