Miller v Colville

[2024] NZHC 369

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-001999

[2024] NZHC 369

IN THE MATTER OF

of an Appeal against a decision of the Family Court at North Shore

BETWEEN

ALAN GARRY MILLER

Appellant

AND

TRACEY LEE COLVILLE

Respondent

Hearing:	13 February 2024
Appearances:	P J Kennelly for the Appellant B Glasgow for the Respondent
Judgment:	4 March 2024

JUDGMENT OF WHATA J

Appeal

This judgment was delivered by me on 4 March 2024 at 4.00pm,

pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:

Kennelly Law, Orewa

Denham Bramwell, Manukau

MILLER v COLVILLE [2024] NZHC 369 [4 March 2024]

[1]    Mr Miller and Ms Colville separated in 2019. In 2001, shortly after they commenced their relationship, Mr Miller purchased a house at Matakatia with his brother. They formed a partnership for the purpose of the purchase. Mr Miller and Ms Colville lived at the property before travelling to Australia in 2003. On their return in 2017, they stayed at the Matakatia property until their separation. Mr Miller claims the Matakatia property is his separate property. Ms Colville claims it is the family home and relationship property. Judge Burns agreed with Ms Colville. This is the appeal.

Background facts

[2]    The following key facts are not disputed. The relationship commenced in about July 2001. The Matakatia property was purchased in December 2001, with settlement occurring in March 2002. The property is owned by the two Miller brothers in half shares. Mr Miller used proceeds from the sale of his former house as his contribution. They set up a partnership for the purchase. They were and remain registered as tenants in common in equal shares.   The property was occupied by    Mr Miller and Ms Colville with her two children from a former relationship from December 2001, until they left to live in Sydney in mid-2003. The property was mortgaged to enable Mr Miller and Ms Colville to obtain a loan of at least $100,0001 to purchase a home in Sydney. Both Mr Miller and Ms Colville were employed, and both made contributions to living and other expenses from this time. A house in Sydney was purchased at the end of 2003. They lived there until mid-2008, when they sold this home and moved to Brisbane, buying another home together.2

[3]    In 2016, Mr Miller became ill and had to stop work for a time. During this period Mr Miller had no income. A decision was made to move back to New Zealand in July 2017. Ms Colville returned to New Zealand, followed by Mr Miller in November the same year. They separated in June 2019. The house is presently subject to a mortgage of about $275,000.

1      Mr Miller says it was about $150,000. Nothing turns on this point.

2      Affidavit of Ms Colville dated 25 March 2022 at [14] – [21].

Disputed facts

[4]    Ms Colville claims that on her return she took over the mortgage payments on the property until she left in 2019. She says she also made improvements to the property. Mr Miller claims in 2001 Ms Colville knew and agreed that the property belonged only to him and his brother, having used their money and incurred loan debt to pay for it. He says that her payments were rent not mortgage repayments and that they were tenants at all times. He also says that Ms Colville forfeited contributions from her former partner to enable her to travel with the children to Australia, the effect of which meant they were dependant on Mr Miller at the time. This formed the backdrop to her agreement that she did not have an interest in the Matakatia property.

The Family Court decision

[5]    Judge Burns details the background, much of which is not disputed. The Judge also found that Ms Colville took over mortgage repayments on her return in 2017 and made improvements to the property during her time there. He found that Ms Colville discussed property maintenance with Mr Miller in advance.

[6]    He referred to the legislative history, noting that the relationship commenced shortly before the Property (Relationships) Act 1976 (the Act) came into full force. He observed nevertheless that the Act’s provisions dealing with contracting out applied from 1 August 2001, but that no advice appears to have been obtained by the parties about it. He records that while Mr Miller referred to an oral agreement whereby Ms Colville disclaimed ownership, there was no argument presented in relation to     s 21H of the Act dealing with oral agreements. He also observed that, while the relationship was not a qualifying relationship at the time, it is clear that the property was acquired during  the  course of  the  relationship  and  therefore  was  subject  to s 8(1)(e) of the Act and thus became relationship property. He also found that ss 9(2)-

(6) dealing with separate property do not apply, so the property squarely falls within s 8(1)(a) and (e).3

3      Colville v Miller [2023] NZFC 7321 at [27] and at [33]

[7]    The Judge noted that the property was a family home for two periods, at the beginning of the relationship and for a period prior to the separation, being habitually used as a residence by the parties and the children during these periods. He considered that the fact of shared ownership of the property with a third party was not a bar to the property being characterised as a family home, referring to Dahya v Dahya.4 He also dismissed as inapposite a line of authorities that hold that a residential property can become separate property when the use by the family ceases before separation.     He considered that they did not apply because the parties were in a de facto relationship prior to the state of the acquisition of the property.5

[8]    Mr Kennelly’s argument applying s 13 of the Act, dealing with extraordinary circumstances, was rejected. The Judge said it is common for partners to bring different financial contributions to the relationship and that Mr Miller brought a greater sum to the relationship. However, he found that their contributions were relatively equal and that his contribution of the property was overall relatively small when all assets, including the homes purchased in Australia are taken into account.6

Threshold for appeal

[9]    This is an appeal against a substantive decision of the Family Court. There was no cross examination. Accordingly, I am free to reach my own view of the merits if I am convinced that the Court was wrong in any material way.7

Issues

[10]   There are multiple grounds of appeal. However, in oral argument Mr Kennelly focussed  on  the  failure  by  the  Judge  to  properly  weigh  the  significance  of   Ms Colville’s alleged representation as to lack of interest in the property at the outset of the relationship. He contends this should have set the starting point for the evaluation of the likelihood of the property qualifying as relationship property.

4 [1991] 2 NZLR 150.

5 At [31].

6 At [34].

7      Adopting the approach taken by Heath J in B v F [2010] NZFLR 67(HC). See also Family Property

(online looseleaf ed, Thomson Reuters) at [PR39.02].

He says that given this representation, Ms Colville is estopped from denying the property is separate property, that s 21H should apply and s 13 is engaged.

[11]   I will therefore focus on this  claim,  while  at  the  same  time  addressing  Mr Kennelly’s ancillary contentions that Ms Colville did not consider the home to be a family home, did not make mortgage repayments and did not discuss property maintenance in advance.

The no interest representation

[12]   As noted, central to Mr Miller’s case on appeal is that the judge did not have proper regard, if at all, to Ms Colville’s alleged representation at the outset of the relationship that she had no interest in the property. Mr Kennelly submits that this representation should have set the starting point and frame for the enquiry as to whether the property was relationship property and the family home. Subsequent dealings with the property all drive from this starting point – that is – treating it as a rental property at all times and without any contribution to it from the relationship property. It was in short a self-sustaining investment property. Furthermore, the homes in Australia were the family homes and the property was only occupied for relatively short periods, and then only under rental arrangement. The existence of this rental arrangement is corroborated by the bank statements referring to the payments made by Ms Colville as “rent”. It follows on this account, that the property was not a family home and that it should be treated as separate property.

[13]   Mr Miller’s written evidence supports this account. He said that he did not see the property as “the Family Home”,8 but rather said it was an “investment property”.9 He said that Ms Colville made no contribution to the property and that “she knew the deal and what [his] brother and [he] agreed on”.10 He added that “she did not take an interest in the property owned by her children’s father when she separated from him”11 and “[w]hat she said to me about why she did not want a share of [his] property was consistent with how she talked about property matters with her children’s father”.12

8 Affidavit of Mr Miller dated 1 December 2022 at [2].

9 At [4].

10 At [5].

11 At [6].

12 At [7].

[14]   In contrast, Ms Colville’s evidence was that they moved into and lived in the property as “our principal family residence until July 2003”13 and when she returned to New Zealand in November 2017, “lived in the property as our family home until the relationship ended”.14 She said she “took over the mortgage payments”, “from the day [she] moved into the property until [she] left at the separation date.”15 While there she replaced the glass on the back door, painted the interior walls, installed carpet in two bedrooms, and replaced all curtains along with some light fittings.16

[15]   However, Ms Colville’s evidence specifically on the issue of the representation that she had no interest in the property is unclear. She does not expressly deny making such a representation. Instead, she says “[w]hen Alan and I purchased the Matakatia property with [his brother], at no point did he ask that [she] sign a contracting out agreement to protect his share of the property,” and further “I did not receive legal advice  about  our  relationship  property  matters  prior  to  my  separation   from [Mr Miller]”.17

[16]   Problematically, neither Mr Miller nor Ms Colville was called for cross examination. What they individually said, did or intended either in 2001 or 2017 was not challenged. The Court is left to resolve the issues based on the available written evidence.

[17]   Ms Glasgow responsibly concedes that on the available written  evidence,  Ms Colville never denied representing at the beginning of the relationship that she had no interest in the property. The available record also shows that Ms Colville referred to the payments made by her on her return from Australia were recorded as rent in her bank accounts. At first blush, therefore, there is a proper basis for Mr Miller’s claim that the property was treated by Ms Colville as separate property at the outset belonging to him and his brother and that her payments were rental payments not mortgage repayments.

13 At [27].

14 At [28].

15 At [25].

16 At [25].

17     Affidavit of Ms Colville dated 20 January 2023 at [10] and [12].

[18]   But, against this starting point, there is no dispute that the property was acquired during the relationship and  was  immediately  used  by  Mr  Miller  and  Ms Colville as a family home. This supports an inference that it was acquired for the specific purpose of use as a family home. It was then used again on their return from Australia, again as a family home. Interim arrangements do not derogate from these basic facts.18 Indeed, while Mr Kennelly appears dismissive of the family occupation, each period of occupation was in the order of 15 months. Those are substantial periods. Furthermore, Ms Colville was not cross examined on her evidence that she considered that property to be her family home on her return, and that she treated the rent payments as if they were “mortgage repayments.” It is also clear that she made improvements to the property that are consistent with her treating and using it as the family home. It is also most likely that improvements of the kind undertaken would have been discussed with Mr Miller in advance (contrary to his evidence otherwise).

[19]   Furthermore, there is also evidence that Mr Miller also considered the use and occupation of the property was for their common use and benefit. The following email, sent by Mr Miller to Ms Colville, exemplifies this point:19

Hey Babe

Hope you have a great first day at the NZ Office West Pac acc details

Alan Miller

[account details]

West Pac $410.00 per week Deb paid up to the 5th July

So if you can start an AP for $820.00 2 weekly from when the Money is in your acc hopefully Tuesday the 11th then it will be 2 weeks in advance

Can you send me you ANZ details I have transferred some Money over

I will put in $5,000.00 tomorrow can you pay Rhonda from your ANZ account Let me know if you need more sent over

Love you Ali xxx

18 I acknowledge the authorities that support the proposition that once the property is not used as a family home it may lose its characterisation as a family home. But here, the property was clearly used as a family home from 2017 until separation.

19 Email from Mr Miller to Ms Colville dated 9 July 2017.

[20]   The email refers to  “the NZ office” and to the payments to be made by     Ms Colville in respect of the property, as well as to a payment of $5000, in further of their joint enterprise and to their mutual benefit. In my view it is entirely artificial to treat the contributions made by them as anything other than for their common benefit, including in respect of the property.

[21]   In the result, I find that while Ms Colville may have known that the property was owned by Mr Miller and his brother at the beginning of the relationship, the property was used by them as the family home.

[22]   I turn now to examine Mr Miller’s related claims about the property was nevertheless separate property, not the family home.

A family home?

[23]A family home:20

(a)Means the dwellinghouse that either or both of the spouses or partners use habitually or from time to time as the only or principal family residence, together with any land, buildings, or improvements appurtenant to that dwellinghouse and used wholly or principally for the purposes of the household; and

(b)includes a joint family home.

[24]Section 8(1) of the Act states that relationship property consists of:

(a)the family home whenever acquired; and

(b)the family chattels whenever acquired; and

(c)all property owned jointly or in common in equal shares by the married couple or by the partners; and

(d)all property owned by either spouse or partner immediately before their marriage, civil union, or de facto relationship began, if—

(i)the property was acquired in contemplation of the marriage, civil union, or de facto relationship; and

(ii)the property was intended for the common use or common benefit of both spouses or partners; and

20     Property (Relationships) Act 1976, s 2.

(e)subject to sections 9(2) to (6), 9A, and 10, all property acquired by either spouse or partner after their marriage, civil union, or de facto relationship began; and

(ee) subject to sections 9(3) to (6), 9A, and 10, all property acquired, after the marriage, civil union, or de facto relationship began, for the common use or common benefit of both spouses or partners, if—

(i)the property was acquired out of property owned by either spouse or partner or by both of them before the marriage, civil union, or de facto relationship began; or

(ii)the property was acquired out of the proceeds of any disposition of any property owned by either spouse or partner or by both of them before the marriage, civil union, or de facto relationship began; and

[25]Section 9 relevantly states:

(1)All property of either spouse or partner that is not relationship property is separate property.

(2)Subject to sections 8(1) (ee), 9A(3), and10, all property acquired out of separate property, and the proceeds of any disposition of separate property, are separate property.

(3)Subject to section 9A, any increase in the value of separate property, and any income or gains derived from separate property, are separate property.

(4)The following property is separate property, unless the court considers that it is just in the circumstances to treat the property or any part of the property as relationship property:

(a)    all property acquired by either spouse or partner while they are not living together as a married couple or as civil union partners or as de facto partners:

(b)    all property acquired, after the death of one spouse or partner, by the surviving spouse or partner, as provided in section 84.

…..

[26]   Mr Kennelly contends that simple usage as a family residence was not enough to qualify as a family home. Rather, he says, that as the property was acquired using separate property, was always owned by the brother’s partnership, and Ms Colville acknowledged this from the outset, the property was and always remained separate

property. Reliance is placed on the following observation by Judge Stephen Coyle in

Lindsay v Lamb:21

Mr Fraundorfer submits that it is usage that gives rise to the classification of the family home and not ownership. I disagree. I prefer and accept the submissions of Ms Crawshaw. If it was simply usage, then as Ms Crawshaw submitted, there would be no need for s 44, or indeed s 44C, as usage would dictate the property was the family home, and therefore was relationship property pursuant to s 8(1)(a) of the PRA. Similarly, if usage was the criteria, then a property that was rented by parties would on the face of it become a family home, although it would not be governed by s 8(1)(a) as that requires acquisition. This point was addressed in Keats v Keats where the Court stated that it may only grant occupation orders over the family home if one or both of the parties are the beneficial owners of that home. In this case Ms Lindsay has no interest (either defined or beneficial) in the trust at all.

(footnotes omitted)

[27]   But I do not consider that Judge Coyle’s observation assists Mr Kennelly, because Mr Miller’s partnership interest is plainly a qualifying beneficial interest.22 That being the case, the combination of qualifying interest as well as clear evidence of familial use supports a conclusion that the property was a “family home” at key times – namely at the beginning and end of the relationship.23

[28]   One matter, not raised by Mr Kennelly, is whether s 9(2) nevertheless applies because the property was acquired out of separate property. As the operation of s 9(2) was not argued I do not propose to dwell on it long. But for completeness, the answer to this lies in s 8(1) (ee). I am satisfied on the available evidence (and for the reasons discussed above at [18] – [20]) the property was acquired for the common use and benefit of both parties.

Estoppel, s 13 and s 21H

[29]   Mr Kennelly’s fall-back position is that Ms Colville ought not to be permitted to resile from her acknowledgement that the property was owned by Mr Miller.

21 It is unnecessary for me to rule on this point definitively, but see Lindsay v Lamb [2023] NZFC 8072 at [12] and Lobb v Ryan [2020] NZHC 834 at [25] per Powell J.

22 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 SC at [32]-[33].

23   Farrimond v Farrimond [2017] NZHC 1450, [2017] NZFLR 768 at [27] and [31] per Fitzgerald J, the inquiry should survey the substantial use of the property leading up to the separation. The Court must consider whether a property’s use as the family home was “spent” by the time of separation.

He contends that Mr Miller acted to his detriment based on this representation and that had he known Ms Colville would have claimed a relationship interest, he would have never applied his separate monies to its purchase. This he says supports a conclusion that, in terms of s 13 of the Act, these are exceptional circumstances that make equal sharing repugnant to justice. He further contends that the Court should treat her representation as a valid oral agreement pursuant to s 21H to give effect to her oral representation, noting that:

(a)Mr Miller entered the relationship with property from his previous relationship;

(b)Ms Colville agreed to give her former husband the children’s father her interest in her relationship property;

(c)She could not have done that without legal advice and without a relationship property agreement and so she must have known the implications of agreeing that the property was his property; and

(d)If Mr Miller had asked her to sign an agreement then she would have, given her refusal to take any money from her previous husband.

[30]   Mr Kennelly adds that the s 21H agreement did not materially prejudice her, as she still had the benefit of the use of the property during the relationship.

[31]I can deal with these grounds briefly. Section 13 states:

(1)If the court considers that there are extraordinary circumstances that make equal sharing of property or money under section 11 or section 11A or section 11B or section 12 repugnant to justice, the share of each spouse or partner in that property or money is to be determined in accordance with the contribution of each spouse to the marriage or of each civil union partner to the civil union or of each de facto partner to the de facto relationship.

(2)This section is subject to sections 14 to 17A.

[32]   There is nothing at all extraordinary in the background facts. Even if Ms Colville represented that she did not, in 2001, have an interest in the property, that

weighs very lightly in the scales after an 18 year relationship of mutual support, including when Mr Miller was very vulnerable, requiring care and Ms Colville was the sole breadwinner. That is not to diminish Mr Miller’s contribution to the family – this is not doubted. But the principle of equal sharing is not displaced on the limited basis proffered by Mr Kennelly.

[33]As to s 21H, it states:

(1)Even though an agreement is void for non-compliance with a requirement of section 21F, the court may declare that the agreement has effect, wholly or in part or for any particular purpose, if it is satisfied that the non-compliance has not materially prejudiced the interests of any party to the agreement.

(2)The court may make a declaration under this section in the course of any proceedings under this Act, or on application made for the purpose.

[34]Section 21F provides:

(1)Subject to section 21H, an agreement entered into under section 21 or section 21A or section 21B is void unless the requirements set out in subsections (2) to (5) are complied with.

(2)The agreement must be in writing and signed by both parties.

(3)Each party to the agreement must have independent legal advice before signing the agreement.

(4)The signature of each party to the agreement must be witnessed by a lawyer.

(5)The lawyer who witnesses the signature of a party must certify that, before that party signed the agreement, the lawyer explained to that party the effect and implications of the agreement.

[35] Mr Miller did not raise s 21H in the Court below. That is a strong reason to not entertain it in this Court especially where to do so would materially disadvantage the respondent.24 In any event, none of the formalities have been satisfied. The only issue is whether Ms Colville was materially prejudiced. Mr Kennelly did not cross examine Ms Colville on any of the points noted above at [29]. She denied in her written evidence having received any advice about contracting out. It is simply not available to Mr Miller to now argue otherwise. Moreover, it is purely speculative to

24     McCollum v Thompson [2017] NZCA 269, [2019] NZAR 1106 at [52] – [53].

suggest what Ms Colville might have done had she been properly advised. Conversely, the prejudice to her of the oral representation of disinterest, if made, without legal advice is obvious. This ground has no evident merit.

Result

[36]   Judge Burns did not err in any material way. I am also satisfied that the property was the family home. There is nothing to suggest that equal sharing is repugnant to justice or that any agreement was reached that should be enforced pursuant to s 21H.

[37]   The respondent Ms Colville is entitled to costs on a 2B basis together with disbursements to be fixed by the Registrar.

[38]The appeal is therefore dismissed.

Whata J