NJG v SS

[2013] NZHC 914

NOTE:  PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980.  FOR FURTHER INFORMATION, PLEASE SEE HTTP;// COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV2012-419-001405 [2013] NZHC 914

BETWEEN  N J G Appellant

ANDS S Respondent

Hearing:         27 March 2013

Counsel:         A M Cook and J F Briggs for the Appellant

A B Foster for the Respondent

Judgment:      30 April 2013

[RESERVED] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 30 April 2013 at 11.30 am

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Distribution:

A Cook: [email protected]

A Foster: [email protected]

G V S HC HAM CIV 2012-419-001405 [30 April 2013]

Introduction

[1]      The  appellant,  G,  appeals  a  decision  of  the  Family  Court  at  Hamilton, delivered on 11 September 2012, by Judge R H Riddell.1   The decision dealt with the division of relationship property between G and his former wife, S.

[2]      The notice of appeal initially raised 10 grounds of appeal.   One of these grounds was abandoned during the course of the hearing.  The issues requiring resolution can be summarised as follows:

(a)       Was the net equity arising from the family home gifted by G to S?;

(b)Should a debt secured of a motor vehicle sold in Malaysia have been treated as a personal debt of G?;

(c)      Should a debt owing to the taxation authority in Malaysia have been treated as a personal debt of G?;

(d)Were advances made by G’s father to G and S a relationship debt and should G’s father’s evidence in regard to the advances have been disregarded by the Judge?;

(e)      Were the sale proceeds of a home in Malaysia relationship property, and did Judge Riddell err in not making an allowance in favour of G in this regard?;

(f)       Did the Judge fail to make proper allowance to G in respect of the division of his superannuation?;

(g)Should an allowance have been made for G for repayment of a hire purchase debt following separation?;

1      NJG v SS [2012] NZFC 7043.

(h)Should there have been an allowance in favour of G for unaccounted funds?

Factual Background

[3]      G and S lived in Malaysia.   They were married in a civil ceremony on

23 December 1995.  On 24 February 1996, they had a traditional wedding and they started living together in or about July 1996.

[4]      There was one child from the relationship, a daughter, born in August 1999.

[5]      Both G and S are well educated.  He has a Masters Degree in Physics, and she is a chartered accountant.

[6]      G and S purchased a home in Malaysia that was registered in S’s name alone, as at the time she was more readily able to obtain a loan.  Both parties acknowledged that this property was their joint property.

[7]      In 2002, the couple moved to New Zealand.  The property in Malaysia was rented out.

[8]      In  October  2003,  G  and  S  purchased  a  property  at  Duke Street  in Ngaruawahia for $68,000.  The property was purchased jointly, and it became the family home.

[9]      The parties separated on 13 October 2004.

[10]     The property in Duke Street, Ngaruawahia was sold in November 2004 for

$99,365.59.  It was subject to a mortgage. The net proceeds of sale were $14,830.51. Part of this sum — $11,000 — was paid with the consent of both parties, into S’s solicitor’s trust account.  The balance — $3,830.51 — was paid by consent into S’s bank account.

[11]    In November/December 2004, a property at Orelio Street in Hamilton was purchased by S.  It was registered in her name, and in the names of two other persons

who acted as guarantors of a mortgage secured over the property.   S applied the

$11,000 from the sale of Duke Street to the purchase.

[12]     The property in Malaysia was sold in late 2004/2005.  The net sale proceeds were 85,000 RM.

[13]     The parties’ marriage was dissolved on 7 December 2006.

[14]     The parties were unable to agree on the division of their relationship property, and proceedings were filed under the Property (Relationships) Act 1976 by G in

2008.  He sought orders determining their respective shares in their relationship property and dividing the property between them.  The proceedings were heard by Judge Riddell on 11 September 2012.  She gave an oral judgment.

Family Court Decision

[15]     Judge Riddell started by recording the matters then in issue, and then went on to discuss the factual background.  She then dealt with each issue.

[16]     G was claiming an interest in the property S had purchased in Orelio Street. Judge Riddell considered whether there was a gift of the net proceeds arising from the sale of the Duke Street property.  She referred to s 21N(3) of the Property (Relationships) Act, considered the evidence before her, and concluded that the parties had agreed that all of the net proceeds were to be applied to the purchase of the property at Orelio Street and that no part of the proceeds could be construed as relationship property.  She found that the property at Orelio Street was S’s separate property.

[17]     Judge Riddell then turned to the vehicle debt.   Again, she examined the factual circumstances.  She accepted that the debt was a relationship debt initially, but she considered that the husband had not dealt with the sale of the car well and took the view that his mistakes should not be visited on S.  She considered that if he had acted in his “normal and careful way”, the debt would have been repaid, and the

problem could not have arisen.  She therefore found that the vehicle debt was G’s

debt.

[18]    The Judge then considered a debt comprising tax owing on a redundancy payment that had been made to G.  She referred to s 20 of the Act, and acknowledged that ordinarily, a debt owing for tax purposes accrued during a marriage would be a joint debt of the parties.  However, she noted that the debt was in the name of G, and that he had elected to allow interest to accrue on the debt without attempting to repay it.  The Judge stated that she could not see why the debt should be treated as a joint debt.  She found that it was a genuine debt, but that it was a separate debt owing by G.

[19]     Judge Riddell then considered whether advances made by G’s father to the couple were a relationship debt.   She referred to an affidavit filed by G’s father, which stated that monies advanced to the couple remained owing as a debt.  She considered that the father was not “available” to give evidence, and noted that the alleged debt was not recorded in writing.  She accepted that the sums advanced were used for general family support, but observed that it was not uncommon for monies advanced by family members to be treated as debts when a marriage ended.   She concluded  that  the  advances  made  by  the  father  were  not  formal  debts  which required repayment.  She considered that this was a case of “recasting the history”, rather than a case of genuine debts or loans which required repayment.

[20]     In relation to the Malaysian property, Judge Riddell noted that the property was sold.  She discussed how the proceeds of sale had been used.  She noted that according  to  S,  80,000  RM  was  spent  on  medical  bills  for  S’s  mother,  who underwent heart surgery in 2006.  She noted that G said that he did not consent, but went on to record that it was not clear to her on the evidence why he did not then take steps to prevent the money being spent by S for the benefit of her mother. Judge Riddell noted that when a property is sold in this country, if the proceeds are to be divided other than equally between the parties, then this requires the written consent of both parties.  On the evidence before her, she did not feel able to take the matter any further.   On balance, she declined to direct that the 80,000 RM or any lesser sum should be refunded to G.

[21]    In relation to the superannuation policy, the Judge noted the values of the respective policies, and refused to allow G an allowance for 16,935 RM that he withdrew from his policy five days before the parties separated.   G’s policy was worth more than S’s policy, and Judge Riddell divided the difference between the two policies equally, to equalise the imbalance between the parties.  She held that the New Zealand dollar equivalent of the difference in Malaysian currency was to be credited to S.

[22]     Judge Riddell did not make any finding in relation to the repayment of a hire purchase debt for relationship property which occurred post separation.  Nor did she make any finding in respect of funds that were withdrawn from an ASB Bank account, or as to how a bank balance in the BNZ were to be divided between the parties.

[23]     The Judge did make a number of findings adverse to G.  She considered that he displayed a deep-seated resentment towards S, and that he had “lost sight of the big picture”.  She considered that he was economical with the truth.  It was her view that “there was nothing in this claim” and that G “should have walked away from [it] years ago”.

Analysis

[24]     I deal with each issue in turn.

Net equity — a gift from G to S, or relationship property?

[25]     It is common ground that the property at Duke Street, Ngaruawahia, was the family home.  As such, it fell within the definition of relationship property, pursuant to s 8(1)(a) of the Act.  Equally, there was no dispute that the net equity from the sale of Duke Street was relationship property at the time of sale.

[26]     Ms Cook, acting for G, expressly abandoned any claim by G to an interest in the Orelio Street property.  Rather, she sought a half share of the net proceeds of sale. She referred to s 10(4) of the Act.  She argued that the net equity was and remained

alleged by either party; nor was it alleged that there was an agreement capable of being validated by the Court under s 21H of the Act.   She submitted that absent agreement, the net equity arising from the sale of Duke Street was relationship property, and that it should be divided equally under the Act.

[27]     Mr Foster, acting for S, argued that s 11A of the Act applies.  He argued that the parties were separated at the time of sale, and that the proceeds of sale from Duke Street were not substituted for the family home.  He noted that s 10(3) of the Act classifies as separate property properly acquired by gift from the other spouse or partner, and submitted that this provision extends to cash gifts.   He noted the evidence, and submitted that it was open to Judge Riddell to make a finding as to G’s intention at the time.

[28]     There  can  be  no  dispute  that  initially  the  net  proceeds  of  sale  were relationship property.  They came from the sale of the family home, which itself was relationship property.  I accept Ms Cook’s argument that the starting point is that the net equity arising from the sale of Duke Street is relationship property, and that it

should prima facie be divided equally under the Act.2

[29]     Section 11A(1) provides as follows:

11A     Where family home sold

(1)       If the family home has been sold, each spouse or partner is entitled to share equally in the proceeds of the sale as if they were the family home, if the following conditions are satisfied:

(a)       either spouse or partner or both of them have sold the family home  with  the  intention  of  applying  all  or  part  of  the proceeds of the sale towards the acquisition of another home as a family home:

(b)      that home has not been acquired:

(c)       at the date of the application to the court, not more than 2 years have elapsed since the date when those proceeds were received or became payable, whichever is the later.

2      Property (Relationships) Act 1976, s 11.

…

[30]     In the present case, the parties were separated as at the time of sale.  Neither spouse intended to apply all or part of the proceeds of sale towards the acquisition of another home as the family home.  Section 11A(1) can not apply in its terms.

[31]     Pursuant to s 10(3), property of one spouse acquired by gift from the other spouse is not relationship property, unless the gift is used for the benefit of both spouses.  The question therefore is whether or not G, as the alleged donor, gifted his share in the net proceeds of sale to S.

[32]     Section 21N(3) is in point.  It provides that a gift between spouses may be made orally or in writing, and that it does not need to be made by deed or by delivery.

[33]     As noted, the net proceeds of sale of Duke Street were $14,830.51.   The parties signed a joint authority on 9 November 2004, instructing their solicitor to deposit the net proceeds to accounts nominated by S following the sale.  In the event,

$11,000 was paid to the trust account of a Mr Clews, a solicitor based in Hamilton. Mr Clews was acting on behalf of S and the monies were to her credit.  The balance of the net proceeds of sale — $3,830.51, was paid to an account with BNZ, in S’s name.  The payments were recorded in a settlement statement sent to G and S dated

15 November 2004.

[34]     Here, Judge Riddell assessed the evidence.  She noted the following: (a)       The parties separated on 13 October 2004;

(b)      Duke Street was sold post separation, on 12 November 2004;

(c)      G consented to $11,000 being transferred to S’s solicitor.  He also consented to the balance being paid to S’s account with the BNZ.  S said in her affidavit that post separation, the parties disagreed in relation to the redundancy payment G received.   She said that G refused to accept that she had an interest in that payment, and that as a

the purchase of Orelio Street.  When it was put to him in cross- examination that he authorised the transfer of the monies to S’ name, G accepted that this was the case.  He denied however that there was any gifting, and asserted that the monies were relationship property, and that S was supposed to use it “for her own purposes to grow ourselves here”.  He said that the monies paid to S’ bank account were a “safety net amount”, to meet outgoings should either of the parties lose their jobs, or not be able to generate an income.

(d)G lived at Orelio Street for a time.   He paid rental.   He was given notice to leave the property.

(e)      There is no written acknowledgment by S that G had any interest in Orelio Street.  Nor did G assert this at the time.  There is nothing to suggest that G made any contribution to the mortgage secured over the property or to other outgoings, except that he did pay some of the rates due on the property.

[35]     In my judgment, Judge Riddell was entitled to reach the conclusions drawn by her.

[36]     Notwithstanding   the   approach   to   general   appeals   mandated   by   the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar, it is clear that this Court on appeal must still treat with caution findings as to credibility made by a Judge in a lower Court who has heard the evidence.3   The trial Judge enjoys distinct advantages because he or she hears and sees the witnesses.  These advantages are denied a Judge on appeal who only has the transcript.

[37]     The issue was well articulated by Thomas J in Rae v International Insurance

Brokers,4 where he said as follows:

3      Austin, Nichols & Co Inc v Stichting Lodestar,[2007] NZSC 103, [2008] 2 NZLR 141 at [13].

4      Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at

199.

…  It may not be fully appreciated that the deference of an appellate court to the findings of fact of the court at first instance is founded on a number of pragmatic considerations which make it inappropriate for the appellate court to intervene.  The advantages possessed by the trial judge in determining questions of fact are manifest.  Of paramount importance, of course, is the fact the trial judge hears and sees the witnesses first hand over a matter of days, or even weeks, of taking evidence.  He or she can form an impression of  the  reliability  of  witnesses  and,  where  necessary,  their  credibility  - although in deference to the witness’s feelings the judge may not always express an adverse conclusion in that regard.  As the evidence unfolds the trial judge gains an impression from the evidence which is not necessarily or usually apparent from the cold typeface of the transcript of that evidence on appeal.  The judge forms a perception of the facts in issue from which he or she adds or subtracts further facts as witnesses give their evidence, and so obtains as complete a picture as is possible of the events in issue.  The judge perceives first hand the probabilities inherent in the circumstances traversed in the evidence and can obtain a superior impression of those probabilities as a result.

An appellate court has none of these advantages and must acknowledge that the court at first instance is far better placed to determine the facts.  Indeed, it would be an arrogance for an appellate court to assert the capacity to be able to “second-guess” a trial judge’s findings of facts when it does not share those advantages.  Exceptional caution in departing from the trial judge’s findings of fact are therefore regarded as imperative.

[38]     Rae was cited with approval in Austin, Nichols, and a number of subsequent decisions have noted the caution that is appropriate in appeals that challenge findings of credibility.5

[39]     Here, I am acutely aware of the advantages which Judge Riddell enjoyed.  I have read the affidavits filed by the parties, and the transcript.  I am not persuaded that her findings as to credibility in relation to this issue were wrong.  The appeal fails in this regard.

The vehicle debt — separate property or relationship property?

[40]     Ms Cook submitted that Judge Riddell erred in law, that s 20 applies, and that there is no proper legal basis for departing from its provisions, notwithstanding that

G may have made mistakes in selling the motor vehicle.

5      See, for example, VKFM v FJS [2012] NZFLR 594 (HC) at [2]; B v F [2010] NZFLR 67 (HC)

at [8]; K v V [2012] NZHC 1129.

that that provision was not applicable.  He accepted that it was difficult for him to

defend Judge Riddell’s decision in regard to this issue.

[42]     The background to the matter is relatively simple.  The parties owned a Volvo motor vehicle in Malaysia.  It was used as the family vehicle while the parties were living in Malaysia.  It is common ground that it was joint property.  There was a debt outstanding in respect of the vehicle.   When the parties left Malaysia to come to New Zealand, they placed the vehicle with a car dealer, who was supposed to sell it, discharge the debt, and forward them the balance.  The car dealer defaulted.  The vehicle was sold, but the debt was not repaid.  G tried to pursue the dealer, but was unsuccessful.   In the event, the finance company to whom the debt was owed repossessed the vehicle.  It was subsequently sold, but the debt was not fully repaid and the finance company sought to recover the amount outstanding in respect of the motor vehicle — 18,820.16 RM as at 2008, (approximately $7,500 NZ) — from the parties.

[43]     Before Judge Riddell, it was S’s argument that she was not responsible for the debt, on the basis that if matters had been dealt with properly by G, there would be no debt outstanding.  G argued that the motor vehicle was relationship property, that the debt was a joint debt, and that it should remain a joint debt.

[44]     Section 20 of the Act defines relationship debts.   They are debts that have been incurred by the parties jointly, or are incurred by the parties for the purpose of acquiring relationship property, or incurred by the parties for the benefit of both parties in the course of managing the affairs of the household.

[45]     Here, the motor vehicle was relationship property, and the debt outstanding in respect of its purchase was a relationship debt.  The debt was incurred prior to separation to acquire relationship property.  Judge Riddell found that the debt was initially a relationship debt.  However, she went on to say that if G had sold the vehicle, taken the full sale price, and himself repaid the finance company, then there would be no debt.  She took the view that, but for G’s error, the debt would no longer be in existence.  She did not consider that G’s mistake should be visited on S, and

that as a result, he should be held solely responsible for the debt which existed as at the date of separation.

[46]     There is no legal basis for the Judge’s decision in this regard.  Indeed, in my judgment, the Judge’s decision is, at least implicitly, contrary to the Act.   Section

18A provides that a Court may not take any misconduct of a spouse or partner into account  in  proceedings  under  the Act,  whether  to  diminish  or  detract  from  the positive contribution of that spouse or partner, or otherwise.  There are very limited exceptions to this provision.  If misconduct is irrelevant, then a mistake must be irrelevant too.  I agree with Ms Cook that there is no proper basis for reading into the Act an exception to s 20, to penalise a party who makes a mistake, which results in a relationship debt not being repaid. The appeal succeeds in relation to this point.

[47]     I observe that Judge Riddell also found that it was agreed between the parties that S gave G a sum of money to pay off the debt owed on the car, and to sell the vehicle.  There was, in fact, no evidence before the Judge to support this finding. Mr Foster  did  not  seek  to  support  the  Judge’s  finding  in  this  regard.    Indeed, Mr Foster quite properly told me that that assertion had not been made by either party at the hearing before Judge Riddell.

Should  G be solely  responsible for  the debt  owing  to  the taxation  authority in

Malaysia?

[48]     The debt owing to the Malaysian Inland Revenue Department is 5233.54 RM (approximately $2,000 New Zealand).   There is no interest running on the debt, although the debt itself was still outstanding as at the date of separation.  There was no disagreement between the parties as to the existence of the tax debt.

[49]     Judge Riddell accepted that ordinarily, a debt owing in respect of tax accrued during a marriage is a joint debt of the parties.  However, she went on to note that the debt was in G’s name and that G had elected to allow interest to accrue on the debt without attempting to make any repayments.  She stated that she could see no reason why it should now be treated as a joint debt.  She found that the debt was a genuine debt, but that it was a separate debt owing by G.

[50]     Ms  Cook  again  referred  to  s  20.    She  repeated  the  argument  I  have summarised above.  Again, Mr Foster did not seriously try to defend Judge Riddell’s reasoning in relation to this debt.

[51]     Income tax liability incurred before separation is prima facie a relationship debt, and tax debts are generally accepted to be relationship property.6

[52]     Here, the debt to the taxation authorities in Malaysia was incurred in 2002. S, in cross-examination, accepted that the tax debt was a relationship debt. Unfortunately, Judge Riddell overlooked this evidence in her oral judgment.

[53]     In my judgment, the Judge’s finding in regard to this matter is in error.  The tax debt falls within the definition of a relationship debt as provided for in s 20(1)(c), (d) or (e).  It does not matter that the debt was in G’s name or that the parties did not make any repayments during the course of the relationship.  The appeal is allowed in this regard.  The Family Court should have allowed for this debt in calculating the net value of the parties’ relationship property under s 20D.

Were the advances from G’s father relationship debts?  Should G’s father’s evidence have been disregarded by Judge Riddell?

[54]     Judge Riddell found that advances made by G’s father to the parties during the term of the marriage were not formal debts that required repayment.  She found that they were therefore not relationship debts.  She observed that the father was not available to give evidence.

[55]     Ms Cook again relied on s 20.  She acknowledged that there is a rebuttable presumption that money given to children by their parents is a gift and not a loan. She noted the evidence of G and his father that the monies advanced were loans which were to be repaid when the parties were in a position to do so.  She noted that the father was not required for cross-examination and submitted that his evidence

should not therefore have been disregarded by Judge Riddell.

6      Pearson v Pearson (2002) 22 FRNZ 545 (HC); B v B FC Auckland FAM-2004-004-872, 9

October 2006.

[56]     Mr Foster submitted that G’s father’s evidence was insufficient to rebut the normal presumption of advancement.  He noted that G had accepted that the loans were “soft loans” and further, that the loans were not recorded in writing.  He submitted that on the evidence, it was open to Judge Riddell to conclude that the advances were gifts and not loans and that I should not set aside her findings in this regard.

[57]     In his affidavit, G listed the various loans he said were made to the couple over the term of the relationship.   The loans commenced in March 1996 and continued through until June 2004.  They totalled 42,772.20 RM.  G annexed to his affidavit a summary of the loans and various receipts, payment vouchers, bank statements, credit card statements, and the like, evidencing what the monies had been used for.  He described the loans as “soft loans”.

[58]     S in her affidavit said that she was not aware of the loans.  She did not accept

that there were any monies owing to G’s father.

[59]     G’s father filed an affidavit.  He deposed that he tried his best to help his son and S during their marriage in any way that he could, and that he loaned them monies whenever they needed it “with the promise that the money [would] be repaid when they have some money”.  He confirmed the approximate amount and recorded that he wanted the advances repaid.

[60]     When G was cross-examined in relation to this issue, he remained firm in his view that his father was entitled to be repaid for the advances made.  He explained that a soft loan was a loan made without interest.  When G cross-examined S, she gave a number of rather discursive and argumentative answers.  In essence, she suggested that G’s father was not well off; as she put it, “your father is so poor why is it he is loaning you 42,000?”.  G asked her whether she would expect an inter- family  loan  to  be  recorded  in  writing.    Again,  her  answer  was  argumentative. Judge Riddell intervened as follows:

Q.       Just pause.  You were asked whether you would expect his father to have an agreement in writing, that was the question, what is your answer?    Would  you  expect  his  father  to  have  an  agreement  in writing for the money he gave or loaned?

A.       No because it’s a family – it’s a gift.

[61]     To qualify for deduction under s 20D, a proposed deduction must constitute a debt, it must be owed by either or both spouses, and it must be a relationship debt that has been incurred.7

[62]     Disputes can arise over whether a transaction is a loan or a gift.8   There is a presumption that money given to children by their parents is a gift, and not a loan, but that presumption can be rebutted.9   It can be rebutted if the evidence shows that it is intended that the money should be repaid at some future time.10

[63]     If the only evidence before Judge Riddell had been that of G and S, I would not have been minded to allow the appeal in regard to this issue.  Their evidence is equivocal, and G’s evidence of itself does not, in my view, rebut the presumption of advancement.  There is, however, the affidavit sworn by G’s father.  He is quite clear that the advances were loans to be repaid by the couple as their financial position improved.   He was not called for cross-examination by S and there is no obvious reason for disregarding his sworn evidence.

[64]     Judge  Riddell  commented  that  the  father  was  not  “available”  to  give evidence.   The father was in Malaysia at the time of the hearing, but there was nothing to suggest that he was not available.  Rather, he was not called for cross- examination.  This point was made by G in the course of cross-examination.  Failure by a party to call a witness for cross-examination is normally regarded as acceptance of the witness’ sworn evidence.11   If S was intending to dispute the father’s evidence, then she should have given notice that she required him to make himself available for cross-examination.

[65]     In my view, the comment by Judge Riddell was unfortunate.   Given that S

had not requested the father for cross-examination, Judge Riddell should not have disregarded his evidence without hearing from him and giving him the opportunity

7      Fisher (ed) Fisher on Matrimonial & Relationship Property (looseleaf ed, LexisNexis) at [15.6].

8      See, for example, N v N [2010] NZFLR 161 (HC).

9 Ibid, at [46].

10     Ibid, at [47]; KBM v RM [2012] NZFC 2070 at [48].

11     F v W HC Dunedin CIV 2005-412-000494, 8 December 2005 at [19].

to comment on her proposed finding.  Nor should she have expressed surprise that the father, who apparently has a relatively low income, was lending monies to a couple, both of whom were on reasonable incomes.  It was not appropriate to indulge in speculation of this kind when the father was not given the opportunity to respond. To do so was to breach the rules of natural justice.

[66]     In  my  judgment,  the  father’s  unchallenged  evidence,  together  with  G’s evidence, was sufficient to rebut the presumption of advancement, and Judge Riddell erred, first, in disregarding the father’s evidence, and secondly, in holding that the loans made by the father were not relationship debts for the purpose of s 20D.  The appeal is allowed in regard to this issue.

The house in Malaysia — were the sale proceeds relationship property?  Should an allowance for G have been made in this regard?

[67]   As noted, the property in Malaysia was the parties’ joint property, notwithstanding that it was registered in S’s name.  It was sold in either late 2004 or early 2005, and the net sale proceeds were 85,000 RM (approximately $34,000 NZ).

[68]     Ms Cook argued that the net proceeds were relationship property, which should have been divided equally between the parties.  She noted the evidence given by S, namely that 8,000 RM was spent by G when he returned to Malaysia for S’s father’s prayers following his death, and that the remainder was spent, by consent, on S’s mother’s medical bills.  She noted that G accepted that 8,000 RM had been used by him so that he could return to Malaysia, but that he denied that he had given consent to S using the balance to pay her mother’s medical bills.  Ms Cook submitted that G’s evidence should be preferred in this regard, that S had provided no documentary support for her version of events, and that there was no s 21 agreement. She referred to s 18C, and submitted that in the absence of clear agreement, the proceeds of sale of the Malaysian property fell to be treated as relationship property, to be divided equally between the parties.

[69]     Mr Foster submitted that the evidence put forward by G in relation to this matter was insufficient, and that I am in no better position to determine the matter

than was Judge Riddell.  He submitted that there was a conflict of evidence, which cannot be resolved.

[70]     I agree with Ms Cook’s submissions.

[71]     The net proceeds of sale of the house in Malaysia were relationship property that fell to be divided equally under the Act.  S accepted that the Malaysian property was relationship property.

[72]     S was contending that the net proceeds of sale were spent for G’s travel to Malaysia, and to meet her mother’s medical expenses.  G accepted that 8,000 RM was spent on his travel, but he denied agreeing to allow S to use the balance for her mother’s medical expenses.

[73]    Generally, the notion of an onus of proof fits uncomfortably within the legislative regime created by the Act.12  As is noted in Fisher, following a separation it will be largely a procedural accident as to which party initiates proceedings.  The Act gives the Court an inquisitorial role, and it is bound to take each of the assets that have been put in issue, classify it under ss 8–10, and divide the relationship assets under ss 11–18(c).   In doing so, there is no general onus of proof on an

applicant akin to that of a plaintiff in a proceeding.  However, in certain areas, an onus of proof is created, either by express or implied statutory interpretation, or because a party asserting an affirmative position risks failure if he or she fails to adduce evidence to support it.13

[74]     Here,  S  was  asserting  an  affirmative  proposition  —  namely  that  G  had consented to 80,000 RM, obtained from the sale of the couple’s joint asset, being used to fund her mother’s medical bills.  She was trying to show that there were circumstances sufficient to rebut the equal sharing of the monies.  In my judgment, the onus was on her in this regard and she failed to meet that onus.  First, I note as

follows:

12     Y v Y [1977] 2 NZLR 385 (SC) at 395; M v B [2006] 3 NZLR 660 (CA).

13     Fisher, above n 7, at [19.27].

(a)	There was documentary evidence provided by S to support her bald assertion that the monies were used to pay her mother’s medical bills;
(b)	S did not provide any evidence from the solicitor in Malaysia who handled the sale of the Malaysian property.   She was the registered
proprietor of that property.   The solicitor was her solicitor, and she was the only person who could obtain that evidence.   G could not
require the solicitor to make the file available.  The file would have shown what had happened to the money initially;
(c)	S did not provide any evidence of a s 21 agreement.    Nor did she suggest that there was an agreement capable of being validated under
s 21H;
(d)	The  Malaysian  property  was  sold  in  late  2004,  and  S’s  mother’s
medical treatment occurred in 2006.  It seems unlikely that G would have allowed S to use, with his consent, such a large sum, some two
years  after  the  parties  separated,  and  shortly  before  they  were divorced.
[75]	Jud	ge Riddell was bound to classify the net proceeds of sale of the Malaysian

property.  She did not do so.  In my view, S failed to meet the onus which was on her to rebut the presumption that the net proceeds of sale, less 8,000 RM, where relationship  property,  which  fell  to  be  divided  equally  between  the  parties. Judge Riddell should have so found, and she should have considered a compensatory payment in G’s favour under s 18C if the monies had been used by S for other than relationship purposes. The appeal is allowed in this regard.

G’s superannuation

[76]     Both G and S had superannuation policies in Malaysia.  Judge Riddell treated the policies as being caught by the Act, and there is no appeal against her finding in this regard.  Rather, the appeal focuses on two issues.  First, should Judge Riddell

have allowed for interest, and secondly, how should the sum of 16,935 RM, which G

withdrew from his policy shortly before separation, be treated?

[77]    Judge Riddell observed, in relation to the first question, that it is the usual practice of the Family Court to take the value of a superannuation policy at separation, and if a long period has passed since separation, to then calculate interest on that value, if the party making the claim has been denied his or her share.  She did not consider it appropriate to adopt that practice in this case however.  She observed that both parties had comparable policies, and that neither had argued for interest.

[78]     Judge Riddell is wrong in her observation that neither party had argued for interest.  It is clear from G’s application and from the transcript, that he was seeking interest.   A spreadsheet was prepared by him showing how interest had been calculated. That spreadsheet was produced as an exhibit in the course of the hearing. G was cross-examined about the issue at some length by Mr Foster.

[79]     It seems that there was no claim for interest by S.  Mr Foster submitted that it was open to both parties to claim interest.  I accept that assertion, but that of itself does not compel the conclusion that the Judge was correct when she declined to deal with G’s claim to interest in this case.

[80]     Further,  Judge  Riddell  also  observed  that  both  parties  had  comparable policies.  Again, this assertion does not stand close analysis, when reference is made to the evidence.   S’s policy during the marriage was valued at 48,120 RM.   G’s policy was valued at either 66,165 RM or 83,191 RM, depending on the second issue which I discuss shortly. The policies were not comparable.

[81]     In  my  judgment,  Judge  Riddell  should  have  dealt  with  the  question  of interest.

[82]     I now turn to the second issue in relation to superannuation.

[83]     G’s policy was valued at 66,135 RM during the marriage.   On 8 October

2004,  just  five  days  before  the  parties  separated,  G  withdrew  16,935  RM.

Judge Riddell observed that G had conceded that the monies withdrawn from the superannuation  policy  were  used  for  his  separate  purposes,  and  she  added  the amount  withdrawn  by  G  to  the  value  of  his  policy,  to  give  a  total  value  of

83,191 RM.  The difference between the two policies was divided in half to equalise the imbalance, and an order was made in S’s favour of $6,996.18 (NZ) using an exchange rate of 2.5.

[84]    I pause to note that I do not understand the mathematics involved.  The judgment does contain an obvious typographical error in this regard, but other than point this out, neither counsel sought to explain the mathematics to me.

[85]     Ms Cook submitted that the Judge erred when  she found that all of the

16,935 RM withdrawn was used by G for his own purposes.  She noted G’s evidence that the funds were used for relationship purposes, and further submitted that S accepted that some of the monies were used by S for relationship purposes.

[86]     Mr Foster supported the Judge’s findings and submitted that she was entitled

to make them on the evidence before her.

[87]     I agree with Mr Foster.  G did assert that he paid, post separation, mortgage payments and legal fees for the sale of the Malaysian property.  He said that these funds were used from the monies which he withdrew from his superannuation policy. This was denied by S, and G, who was acting for himself, failed to cross-examine S in relation to this matter.  In contrast, G was cross-examined in relation to this issue. He conceded  that  he did  spend at  least  some  of the money on  personal  living expenses and the like.  The finding made by Judge Riddell was open to her on the evidence, and I am not prepared to overturn it on this appeal.  The appeal fails in this regard.

Repayment of hire purchase debt — should an allowance be made for G?

[88]     This issue is trivial.

[89]     It is G’s case that he repaid a hire purchase debt which was incurred to purchase a range hood, a fridge, and a washing machine.  He says that Judge Riddell failed to deal with this issue, notwithstanding that it had been raised by him.

[90]     G is correct that the matter was raised by him in his pleadings, and that Judge Riddell has not dealt with the matter.  I am not however prepared to allow his appeal in this regard.  G is still in possession of the fridge and the washing machine. He adduced no evidence as to their value as at the date of separation.  He failed to put before Judge Riddell any sufficient evidence on which she could properly decide the issue.

Unaccounted funds

[91]     Much the same applies to the alleged discrepancy in bank accounts as at the date of separation.

[92]     G asserted that S had funds in her own account as at the date of separation, and that the monies were not used for relationship purposes.  He argued that a calculation should be made of the difference between the parties’ respective bank balances, and that an allowance should be made in his favour in respect of any difference.

[93]     The difficulty from G’s perspective is that he failed to put any proper material before the Family Court relevant to this issue.   He made some assertions about monies he said he had transferred to S at the start of their relationship, and he annexed copies of some of S’s bank accounts to his affidavit.  The difficulty however is that he provided no evidence that there was any money in any separate account operated by S as at the date the relationship came to an end.  There was nothing to suggest any discrepancy.  In my view, Judge Riddell cannot be criticised for failing to deal with a matter which was not properly put before her, even in a rudimentary way.

Result

[94]     The appeal is allowed in respect of issues (b), (c), (d), (e) and (f) as set out in

[2] of this judgment.  In all other respects, it fails.

[95]     The matter is remitted to the Family Court, so that it can reconsider the

appropriate division of the parties’ relationship property, in light of this judgment.

Costs

[96]     It  is  my preliminary view that  costs  should  lie where  they fall.    G  has succeeded in relation to some issues, but he has failed in relation to others.  The fact that the appeal was necessary, is due, at least in part, to the inadequate way in which G conducted the case before Judge Riddell.

[97]     If either party disagrees with this preliminary view, then I direct as follows:

(a)      G is to file and serve a memorandum in support of any application he may wish to make for costs within 10 working days of the date of this judgment.

(b)S is to file and serve a memorandum in reply, within a further 10 working days.

(c)       Memoranda are to be limited to five pages.

I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.

Wylie J