Nygaard v Nygaard

[2025] NZHC 690

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,

11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER

INFORMATION, PLEASE SEE https:// court/after-the-family-court/restrictions-on-publishing-information/

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2535

[2025] NZHC 690

BETWEEN

MONA NYGAARD

Appellant

AND

OSCAR NYGAARD

Respondent

Hearing:	12 March 2025
Appearances:	B Snedden, J Gandy and R Huang for Appellant J Hawker for Respondent
Judgment:	28 March 2025

JUDGMENT OF LANG J

[on appeal against orders made under the Property (Relationships) Act 1976]

This judgment was delivered by Justice Lang On 28 March 2925 at 3.00 pm

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:

Totara Law/B Snedden, Auckland Haigh Lyon Lawyers Ltd, Auckland

NYGAARD v NYGAARD [2025] NZHC 690 [28 March 2025]

[1]    This appeal concerns an ongoing dispute between Mr and Mrs Nygaard regarding the division of their relationship property under the Property (Relationships) Act 1976 (the Act).1 They had been in a relationship for approximately five years before they were married. They had then been married for more than 21 years when they separated in November 2020. They had a son who was 16 years of age at the date of separation.

[2]    In February 2022 Mrs Nygaard issued proceedings in the Family Court to resolve issues that remained in dispute between herself and her husband. The proceeding was the subject of a four-day trial in the Family Court that commenced on 7 May 2024. Judge K Muir delivered a comprehensive decision on 4 October 2024.2 Mr Nygaard appeals against five aspects of the Judge’s decision. Mrs Nygaard cross- appeals against two aspects of the decision.

Overview

[3]    The principal assets owned by the parties at the date of separation were the family home and a construction business operated by [ON] Construction Ltd, a company incorporated by Mr Nygaard (the company). The family home was owned by a trust of which Mr and Mrs Nygaard were the trustees and discretionary beneficiaries. Their son was the final beneficiary.

[4]The home was sold in April 2023 and realised the net sum of approximately

$3.13 million, some of which had been distributed to the parties by agreement prior to the hearing in the Family Court. Mr Nygaard received the sum of approximately

$668,000  whilst  Mrs  Nygaard  received  the  sum  of  approximately  $155,000.  Mr Nygaard used some of the funds that he received to meet maintenance commitments he owed to Mrs Nygaard. The balance held on trust as at the date of the hearing was approximately $2.3 million.

[5]    The company carried out construction work, principally in the field of residential renovations. Mr Nygaard was a builder by trade and was the sole director

1      I have used pseudonyms for the parties to correspond with those adopted by the Family Court.

2      Nygaard v Nygaard [2024] NZFC 6499.

and shareholder of the company. The company had traded profitably for many years leading up to the date of separation and this enabled the parties to lead a very comfortable lifestyle. The company had also undertaken considerable works on the family home, thereby increasing its value significantly. However, Mr Nygaard decided in mid-2022 that he would leave New Zealand and live in Australia. This necessarily meant the company would cease trading. Mr Nygaard made this decision after   he   met   his   current   partner,   who   had   already   decided   to   leave   New Zealand and start up a new business in Australia. Mr Nygaard eventually left New Zealand and began living in Australia in February 2023.

[6]    It is common ground that by the date of the hearing in the Family Court the shares in the company had no value because the company had ceased trading in or about October 2023. This raised two issues, the first of which was whether the Judge should exercise his discretion under s 2G of the Act to value the shares as at the date of separation rather than as at the date of the hearing. The second was whether the Judge should award Mrs Nygaard compensation under s 18C of the Act to reflect the fact that Mr Nygaard had deliberately caused the value of the shares to become worthless. The Judge found in favour of the arguments advanced by Mrs Nygaard on the second issue. This meant he was not required to determine the first.

[7]    Mr Nygaard remained in the family home after he and his wife separated in November 2020. Mrs Nygaard lived in rented accommodation with their son. The Judge was required to determine who had retained possession of chattels and art works from the family home, as  well  as  a  clothing  and  shoe  collection  belonging  to Mr Nygaard. Mrs Nygaard contended that her husband had received the benefit of these because they remained in the family home after she vacated it. She said she had never acquired any of the items that were left in the home when she departed in November 2020. The Judge upheld this argument.

[8]    The Judge was also required to determine whether the parties should receive credits for payments they made or debts they assumed following separation. Two issues are relevant to the appeal and cross-appeal in this context. The first arises from the fact that, by the date of the hearing in the Family Court, Mr Nygaard’s current account in the company was overdrawn by more than $2.13 million. It was common

ground that an overdrawn current account of this type would usually be cleared or repaid by the company declaring a dividend in the shareholder’s favour. If this occurred, however, the company would be required to pay withholding tax to the Inland Revenue Department in the sum of approximately $165,000. The Judge held that the potential liability for withholding tax had already been taken into account in assessing the value to be attributed to the shares in the company.

[9]    The second issue, which is relevant to the cross-appeal, relates to an order the Judge  made  requiring  Mr  Nygaard  to  pay  Mrs  Nygaard  compensation  under    s 182 of the Family Proceedings Act 1980 (the FPA) to reflect the fact that he had sole possession of the family home after the date of separation. The Judge directed that the compensation was to be paid to Mrs Nygaard before the balance of the funds held in trust is divided between the parties.

[10]   The only other aspect of the issues before the Family Court that is relevant for present purposes arises out of the fact that, by the date of the hearing, Mr Nygaard was in arrears with maintenance payments he was required to make to Mrs Nygaard. These were payable under orders made by Judge Burns in an earlier judgment delivered on 8 November 2022.3 Mr Nygaard sought an order that the arrears of maintenance be remitted on the basis that he could no longer afford to pay them. The Judge granted this application.

Issues

The appeal

[11]The appeal raises the following issues:

(a)Did the Judge err in the value he attributed to the shares in the company as at the date of separation?

(b)Did the Judge err in making an order for compensation under s 18C of the Act?

3      Nygaard v Nygaard [2022] NZFC 1146.

(c)Did the Judge err in dealing with the withholding tax that may be payable by the company?

(d)Did the Judge err in taking misconduct by Mr Nygaard into account?

(e)Did the Judge err in making orders relating to the household chattels, art works and the shoe collection?

The cross-appeal

[12]Mrs Nygaard raises the following issues on the cross-appeal:

(a)If (and only if) the compensation Mr Nygaard is required to pay under s 18C of the Act is reduced, should the Court revisit the Judge’s decision to remit the arrears of maintenance owed by Mr Nygaard?

(b)Did the Judge err in directing  that  the  compensation  payable  to  Mrs Nygaard under s 182 of the FPA should be paid before the funds held in trust were divided between the parties? Mrs Nygaard contends that  she  should  have  been  reimbursed  for  this  payment  from    Mr Nygaard’s share of the funds held on trust.

Approach

[13]   Conventional appellate principles apply to most of the issues I need to determine on the appeal. This means that the appellant is entitled to this Court’s opinion as to whether the Judge’s decision was correct. However, the appellant bears the onus of identifying the aspects of the decision that are said to be wrong.4 It is also important that I bear in mind any advantages the Judge may have had in determining issues  of  credibility  because  he  had  the   advantage  of  seeing   and   hearing   Mr and Mrs Nygaard give evidence over a lengthy period.5

4      Austin, Nicholls & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].

5 At [13].

[14]   Ms Hawker also reminds me on Mrs Nygaard’s behalf that some of the Judge’s decisions must be regarded as the exercise of a discretion. An appellate court will only disturb the exercise of a discretion in circumstances where an error of law has occurred or where the decision is plainly wrong.6

Did the Judge err in the value he attributed to the shares in the company as at the date of separation?

[15]   This issue arises out of the fact that the shares in the company were worthless at the date of the hearing. Mrs Nygaard contended the Judge should therefore exercise his discretion under s 2G of the Act to value the shares at the date of separation rather than the date of the hearing. Alternatively, she sought an order under s 18C of the Act granting her compensation on the basis that her husband had deliberately diminished the value of the shares since the date of separation. As a first step in deciding whether to make these orders, the Judge assessed the value of the shares as at the date of separation.

Background

[16]   Mr Nygaard incorporated the company on 31 July 2006. At this stage he was working full time as a builder. Mrs Nygaard was also working full-time, but not for the  company,  and  was  primarily  responsible  for  the  care  of  their  three-year-old son.

[17]   Mr Nygaard had been “off the tools” for some years by the time he and his wife separated, meaning he had ceased to work for the company as a builder. However, he continued to run the company and deal with clients, contractors and sub-contractors. The company did not employ any staff. Instead, it relied on several building contractors and sub-contractors (sometimes referred to as “captive contractors”) to carry out the building work for clients. The company’s financial statements disclosed that the only salary it paid was that received by Mr Nygaard. In 2019 and 2020 he received salary  of $150,000  per annum.   He received a salary   of $142,971 for the year ended 31 March 2021.

6      May v May (1982) 1 NZFLR 165 (CA).

[18]   The company carried out what the Judge described as “high-end residential renovation and extension work.”7 The family home was viewed by both parties as an advertisement for the quality of work the company carried out. A carport at the home had been converted for use as the company’s office, and all administration and accounting work was carried out by Mr Nygaard and contractors from those premises.

[19]   The company did not advertise its services. Rather, it relied on the “word of mouth” reputation it developed through the quality of work it carried out for clients. At the date of separation, the company was completing a significant renovation project with a total cost of several million dollars.

[20]   Mrs Nygaard did not actively work for the company at any stage during the marriage. However, her family provided significant assistance through referrals for business by family friends and contacts. Mrs Nygaard’s father also carried out accounting work for the company without remuneration for approximately 10 years after the company was incorporated.

The valuation approaches advanced in the Family Court

[21]   In   the    Family    Court,    Mrs    Nygaard    adduced    evidence    from    Mr Samuel Bassett, an accountant with experience in carrying out business valuations He valued the company’s shares based on the company’s future maintainable earnings (FME) as at the date of separation. The Judge summarised Mr Bassett’s approach as follows:8

[84]      Unlike  Mr  Moriarty  [the  accountant  called  by  Mr  Nygaard],   Mr Bassett did carry out a valuation of [the company] at the date of separation. He  concluded  in  his   updated  valuation   that  the  shares   had   a  value  of  $3,305,964.   Deducting  the  shareholder  overdrawn  current  account   of $2,132,215 he arrived at a total net interest of $1,172,749. Mrs Nygaard’s “half share” was therefore on his calculation $586,874.

[85]      For the purposes of his valuation, he adopted a nominal salary for Mr Nygaard of $150,000 per annum – an amount that matched the figure that was attributed to  Mr  Nygaard  in  the  [company’s]  accounts  for  2019  and 2020. In preparing his original valuation dated 6 May 2024, Mr Bassett took account of the [company’s] financial statements between 2018 and 2021 in the Xero Management Report to February 2022, assuming that the

7      Nygaard v Nygaard, above n 2, at [59].

8      Original footnotes omitted.

information supplied was materially accurate, assuming the business would continue as a going concern. He determined that the capitalisation of future maintainable earnings was the most appropriate method. In estimating future maintainable earnings, he relied on an analysis of historic operating results and expectations of future earnings. He cross-checked his assumptions, for example referring to Hayes Salary Guide in determining that “a top of the range salary” of $150,000 per annum was appropriate remuneration for a business the size of [the company].

[86]      In choosing a capitalisation multiple to apply, he noted that multiples for small to medium businesses range from 1 to 4. His starting point was to obtain comparable data and he relied on Bizstats Ltd information relating to businesses sold in New Zealand.

[87]      The comparable transactions that he used were for wholesalers and distributors of building materials as opposed to building contractors. However, they were businesses of a similar turnover of [the company] operating within the same industry. He adopted a capitalisation multiple of between 1.75 and 2.25 with a mid-range of 2.

[88]      He compared the future maintainable earnings using a normalised EBITDA9 for 2018 to 2021. The 2022 figure was derived from the 11 months trading to February 2022. He apportioned a weighting to each of those trading years ranging from 10 per cent for 2018 to 30 per cent for 2021, arriving at a calculated weighted future maintainable earnings of $451,381.

[89]      Following the receipt of Mr Moriarty’s report, he corrected his valuation approach as he had inadvertently applied the Bizstats multiple for earnings before proprietors’ income, interest, depreciation and tax (EBPIDT) to the EBITDA measure of earnings. It was necessary for him to “add back” the market salary allowance of $150,000 so that his “midpoint” EBPIDT was

$691,214.  Applying his multiple of 2, that produced an enterprise value of

$1,382,428. The shareholder current account was added in as an asset and the deferred dividend withholding tax liability of $166,931 and a debt were deducted to produce a net equity value of $3,305,964. Deducting the shareholder  overdrawn  account  of  $2,132,215  produced  a  net  value  of

$1,172,749.

[22]   As will be evident, Mr Nygaard adduced evidence from another accountant, Mr Paul Moriarty. Mr Moriarty did not attempt to value the company as at the date of separation. Mr Nygaard had not instructed him to undertake that exercise. Instead, Mr  Moriarty  critiqued  the  valuation  methodology   Mr Bassett   had   adopted.  Mr Moriarty considered this was incorrect and did not pay proper regard to trading conditions or the trading outlook. He also considered that Mr Bassett had compared the company’s business to other business enterprises that were not truly comparable. Mr Moriarty considered that Mr Bassett applied his valuation multiple to an incorrect level of earnings and that he had not undertaken any cross-check of his conclusion as

9      Earnings before interest, taxes, depreciation, and amortization.

the value of the shares. Mr Moriarty did not consider that a reasonable and informed individual would have paid the sum assessed by Mr Bassett as being the value of the company as at the date of separation.

[23]   Mr Moriarty considered that the correct approach to valuation of the shares was to ascertain the net assets of the company as at May 2022.10 This was for the following reasons:11

(a)Earnings were declining rapidly due to economic conditions and a projection of [the company’s] FME could not be undertaken with sufficient confidence for a CFME valuation to be adopted.

(b)Mr Nygaard’s reputation and personal importance to the business meant that any goodwill would be personal to him and difficult or impossible to transfer.

(c)The only goodwill in the business capable of transfer would be the value of work in progress; and

(d)There were no barriers to entry for a prospective business purchaser by establishing their own business and commencing trading for a minimal cost.

[24]   Although Mr Moriarty did not provide any opinion regarding the value of the company as at the date of separation, he considered the financial statements for the year ended 31 March 2022 provided a reasonably accurate picture of the company’s value. These showed that the company had net assets amounting to $90,000 inclusive of goodwill. He viewed goodwill in this context as being the value of work in progress at the date of the valuation.

The Judge’s decision

[25]   The parties agreed that the Judge correctly stated the approach to be applied in the following paragraph of his judgment:

[72] I will apply the “conventional approach” of distinguishing “personal goodwill” when analysing the separation date value of [the company but I am conscious of Glazebrook J’s observations in Scott v Williams.12

10     Mr Snedden, counsel for Mr Nygaard explained during the hearing of the appeal that, although he instructed Mr Moriarty to use this date, there was no particular significance to it.

11     Nygaard v Nygaard, above n 2, at [63].

12     Scott v Williams [2017] NZSC 185, [2018] NZLR 507.

[138] Any valuation methodology chosen should be suitable for the particular business and the particular circumstances. Comparison with other cases should be undertaken with care as the method used, the inputs in the result will have been related to the particular businesses and to the evidence called in that case.

[26]   The Judge distinguished the factual situation in Stiles v Stiles, a case relied upon by Mr Nygaard.13 In that case, also involving a company with the director as its sole employee, the Family Court and this Court considered a share valuation methodology based on the net assets of the company to be appropriate.

[27]   The Judge observed that he derived some assistance from this Court’s decision in Cullen v Cullen.14 That case involved the valuation to be attributed, in a relationship property context, to a company that owned fishing quota. Both the Family Court and this Court held that the husband had diminished the value of the company following separation in numerous ways. These included a deliberate failure to utilise the quota held by the company.

[28]   The Judge then noted that Mr Nygaard had not made any attempt to sell the company’s business after the parties separated.15 Rather, he decided in  or about  May 2022 that the company would cease trading so as to allow him to assist his current partner in a furniture importing business in Australia.

[29]   The Judge also noted that Mr Nygaard had encouraged one of his sub-contractors, Mr M, to incorporate a new company that would carry out renovation work in the same sector as that in which the company had formerly operated.16 Mr M had acted as a supervisor of projects undertaken by the company. Mr Nygaard acknowledged he had given Mr M the bulk of the company’s tools and materials that remained in New Zealand after he moved to Australia. He also accepted these would cost approximately $150,000 to replace. Mr Nygaard acknowledged that he did not seek payment from Mr M for the tools and materials. Mr M’s new company is now also using photographs of construction work carried out by the company on the family home for promotional purposes.

13     Stiles v Stiles [2019] NZHC 3462.

14     Cullen v Cullen [2017] NZHC 42.

15     Nygaard v Nygaard, above n 2, at [79].

16 At [80]. I have redacted the name of this person to protect his privacy interests given the fact that he did not give evidence at the hearing in the Family Court.

[30]   The Judge summarised Mr Barrett’s concern about a valuation based on the company’s net assets as follows:17

[91] In [Mr Barrett’s] opinion assets-based valuations were often and more appropriately used for businesses with a large portfolio of tangible assets. He did not consider it an approach appropriate for [the company] which was trading profitably, producing a return of approximately $340,000 to the working owner in the year to 31 March 2021 using relatively low value tangible assets.

[31]   The Judge ultimately determined that the approach taken by Mr Bassett was preferable for the following reasons:

[93]      I find that the multiple adopted by Mr Bassett is comparatively moderate. The way that he has weighted the earnings for the company for the years between 2018 and 2022 is appropriate and allows for changes in market conditions. I do not accept Mr Moriarty’s view that Mr Bassett’s approach was inappropriate because of the economic conditions. He has appropriately adjusted for that.

[94]      As for Mr Moriarty’s belief that Mr Nygaard’s reputation and personal importance made the goodwill impossible to transfer, Mr Bassett made specific inquiries both through Bizstats analysis and information obtained from a business broker. Mr Moriarty does not appear to have carried out any similar inquiries. I accept Mr Bassett’s view that with appropriate restraints of trade and vendor assistance, the benefit of the future maintainable earnings in [the company] could have been transferred to a reasonably informed purchaser.

[95]      Addressing Mr Moriarty’s view that the only goodwill capable of transfer was the value of work in progress, I find that [the company] had developed during the marriage a reputation for high quality workmanship which was not solely based on Mr Nygaard. He had long been off the tools and the “product” – the building work the company delivered – came down to the quality of the subcontractors engaged including his supervisor Mr [M]. Mr Nygaard made no attempt to sell the business but with his expenses and the contracts and reputation that [the company] had acquired over the years the shares in [the company] represented a valuable asset to him which I find is fairly represented in the market value that Mr Bassett has adopted.

[96]      Finally, I do not accept Mr Moriarty’s opinion that there are “no barriers to entry for a prospective business purchaser”. Beyond tools and materials, establishing and maintaining connections with the company’s existing and past customer base, with its principal subcontractors and trade contractors and being able to reply on the quality of the work that [the company] had carried out in the past, were all factors that would not be available to a “new-to-the-market” builder seeking to obtain the kind of high- end residential work that [the company] carried out. I note it took some time for Mr Nygaard to establish a place in the market when he and his family first

17     Nygaard v Nygaard, above n 2.

returned to Auckland to live. Mr M has clearly had a “leg up” with [his company].

[97]      With appropriate restraints and vendor assistance a purchaser would have been acquiring a valuable business with a secure reputation. I prefer  Mr Bassett’s evidence and find that the separation date value of the parties’ interest in [the company] was $1,172,749.

The appeal

[32]   On Mr Nygaard’s behalf, Mr Snedden contends that the Judge was wrong to distinguish the factual situation in Stiles v Stiles. He has produced a summary of what he says are factual similarities between the present case and Stiles. He says Stiles provides strong support for a share valuation on a net asset basis.

[33]   Mr Snedden also submits that the Judge erred in placing emphasis on the fact that the company relied upon  “captive contractors” or  “captive sub-contractors”.  Mr Snedden points out that there was no case law, or expert evidence, regarding the meaning to be ascribed to those terms.

[34]   Mr Snedden challenges the significance the Judge placed on the fact that the company’s reputation was dependent on the quality of the contractors and sub-contractors it engaged. He says this point had never been pleaded, argued or advanced by either Mrs Nygaard or Mr Bassett. Mr Nygaard therefore had no opportunity to test the point and call evidence to address it.

[35]   Mr Snedden submits the Judge also erred in concluding that Mr M had acquired a significant commercial advantage through his dealings with Mr Nygaard. He reminds me that Mr M was never required to give evidence and his involvement with Mr Nygaard was raised for the first time at a late stage in the hearing. It appears that Ms Hawker raised these issues for the first time during her cross-examination of    Mr Nygaard.

[36]    Mr Snedden also points out that Mr Nygaard had given an explanation as to why he had given Mr M the tools and materials and the Judge failed to evaluate it. Finally, Mr Snedden submits that counsel for Mrs Nygaard had never

cross-examined Mr Nygaard on the concept of the transferability of the “word of mouth” nature of the business.

Analysis

[37]   The passage from Scott v Williams that the Judge referred to obviously provides valuable guidance. I also consider an earlier passage in that case to be particularly pertinent for present purposes:18

[105]    As with the valuation standard, valuation methodologies should be aimed at ensuring a fair and just division of relationship property. This means that the appropriate valuation methodology will depend on the type of business to be valued. Where a business is likely to continue as a going concern and is not very asset dependent, income based valuations, such as a discounted cashflow analysis or a capitalisation of earnings method, discussed below, may be the most appropriate methodologies.

[106]    Experts should explain in their evidence why they used a particular methodology and, where appropriate, could compare their results with other possible methodologies or market transactions. However, market transactions must be used with caution in the case of professional firms because of the thin market.

(Emphasis added)

The approach taken in Stiles v Stiles

[38]   Mr Stiles was a trader who bought and sold motor vehicles using his company as the legal entity through which the transactions took place. The company’s principal business assets were a motor vehicle and cellphone that Mr Stiles used to conduct business. It employed no other staff and did not have any business premises. Mr Stiles was often required to make instant decisions as to whether to purchase vehicles and he was often able to effect an immediate resale at a profit.

[39]   The principal issue that the Family Court and this Court were required to determine in Stiles was whether the business had identifiable goodwill for valuation purpose in a relationship property context. The nature of the company’s business, and its complete reliance on Mr Stiles, led both courts to answer this question in the negative.

18     Scott v Williams, above n 12.

[40]   There are obviously major factual differences between the present case and that in Stiles. The most obvious of these arises from the fact that Mr Stiles was solely responsible for conducting the company’s business. He was not reliant on any other person. By contrast, in the present case the company was wholly reliant on persons other than Mr Nygaard to physically carry out the work required by its clients. It also had business premises and engaged contractors to carry out administrative work. Additionally, the company owned fixed assets in the form of tools and materials that were used in its building projects.

[41]   Further, this Court did not squarely determine in Stiles whether the business could be valued on the basis of future maintainable earnings. Dobson J merely noted that “the risk of Mr Stiles not continuing [to operate the business] at all arguably rendered the FME [future maintainable earnings] approach inappropriate.”19

[42]I therefore do not consider Stiles is of assistance in the present context.

The significance of the company’s contractors and sub-contractors

[43]   I do not consider there is any substance to Mr Snedden’s argument about the significance  given  by  the  Judge  to  the  terms  “captive   contractor   and   “captive sub-contractor”. There was no evidence that the company’s contractors and sub-contractors had ever bound themselves contractually to work exclusively or primarily for either Mr Nygaard or the company. Rather, I take the Judge to have used those terms to refer to contractors and sub-contractors who had built up loyalty to  Mr Nygaard and the company over time through ongoing business dealings with them. It was not an issue that needed to be pleaded or that Mr Nygaard needed to respond to either in his evidence or submissions.

[44]   However, the fact that others physically carried out the work for the company’s clients was clearly a matter of some significance. It meant the business was not wholly reliant on Mr Nygaard for the reputation it developed. The company could not have maintained its reputation for carrying out high quality work unless the contractors and sub-contractors consistently produced work to that standard. It also meant that the

19     Stiles v Stiles, above n 13, at [65].

business could carry on in the absence of Mr Nygaard provided an orderly transition occurred. These were simply features of the manner in which the company conducted its business. They did not need to be specifically pleaded as Mr Snedden contends.

Mr Nygaard’s involvement with Mr M

[45]   I accept it may well have been advantageous for the Judge to hear evidence from Mr M. He could have given evidence regarding the extent to which Mr Nygaard had provided him with encouragement and assistance in setting up his new company. He could also have told the Judge whether he would have been prepared to pay for the assistance and items he received.

[46]   However, Mr Nygaard accepted that he had given the tools and materials to Mr M and had not sought payment for them. He said he did not believe the items had any value, and that there was no point selling them. However, he also accepts he sent Mr M a text message saying that “there’s a load of money you can make from all the items”. The text message then went on to say “Everything is chargeable to every client. You’ll make a load out of it”. The text message obviously speaks for itself.

[47]   Further, there could be no dispute about the use Mr M’s new company had made of photographs of construction work undertaken by Mr Nygaard’s company at the family home. The photographs were obviously used for promotional purposes. The material displayed on the Instagram site used by Mr M’s new company was there to be seen by that company’s prospective clients. In a sense it was a matter of public record. It is therefore difficult to see how Mr Nygaard could have responded to that evidence other than he did.

[48]   Mr Nygaard also accepted that, as a contractor and supervisor engaged by the company, Mr M was already familiar with some of the company’s clients and knew why the company had historically been so successful. This hinged on providing workmanship of the quality the company’s clients had come to expect.

[49]   These factors all suggest that Mr Nygaard was not taken by surprise or disadvantaged in any material way by the issues relating to Mr M being raised at a

comparatively late stage in the proceeding. They also support the Judge’s conclusion that Mr M’s new company gained a commercial advantage, or “leg up”, when it acquired the company’s tools and materials for no consideration. The use for promotional purposes of photographs of the family home also effectively amounted to use of the company’s goodwill. Normally a new entrant to a market would expect to pay for such items.

My assessment

[50]   The principal argument for Mr Nygaard rests on Mr Moriarty’s opinion that, without Mr Nygaard’s continued involvement and input, the company had nothing to sell. Mr Moriarty said he did not believe the company had “transferable relationships, contracts or any other items” that could be transferred to a hypothetical purchaser. Once Mr Nygaard left the business, the company’s income flow would inevitably cease because it was wholly dependent on his presence and reputation to gain business. Mr Moriarty contended Mr Bassett had not given this factor sufficient weight, and that it justified the shares being valued on a net asset basis.

[51]   Mr Moriarty’s approach is clearly based on his perception that the object of the exercise in the present context is to ascertain what a third-party purchaser would be prepared to pay for the company’s business. That may be relevant and appropriate where such a party can be identified. Mr M was an obvious candidate but the Judge had no evidence from him as to what he may have been prepared to pay for the assistance his new company received.

[52]   However, I consider the scope of the enquiry in the present context goes beyond that identified by  Mr Moriarty.  I  accept  Ms  Hawker’s  submission  for Mrs Nygaard that the principles confirmed by the Court of Appeal in Z v Z are relevant in the enquiry the Court is required to undertake:20

The Matrimonial Property Act does not specify the principles to be applied by valuing matrimonial property. What it calls for is a just division between spouse of matrimonial property. Concerned as they are with the same subject matter and the same goal of making a fair assessment of the value of the property in question, valuation of assets for matrimonial property purposes

20     Z v Z [1989] 3 NZLR 413 (CA) at 414–415. Citations omitted.

have naturally drawn on principles developed in the context of valuations for duty purposes. The test has been variously phrased, but in essence it calls for an inquiry as to the value at which a willing but not anxious vendor would sell and a willing but not anxious purchaser would buy. This is essentially a practice question, not to be overlaid by philosophical or legal niceties.

…

In the hypothetical market the willing but not anxious seller must be taken to seek the maximum price obtainable from what is available for sale. Protection against the hypothetical seller’s competition through a covenant in restraint of trade is an element of goodwill increasing the price a hypothetical buyer would otherwise be prepared to pay. As an element in the goodwill the covenant attaches to the business and cannot properly be characterised as a purely personal attribute.

In my view it is no answer to say that the husband in this case, or more accurately the hypothetical seller, was entitled to practise post separation. The test is the value of the property on a hypothetical sale, and on that hypothetical sale the husband may be included in the classes of hypothetical sellers and hypothetical buyers. The valuation does not vary depending on whether the actual disposal of the practice is to the husband or a third party. If he is to continue the practice in his own right he should not have it at a concessionary price.

…

(Emphasis added)

[53]   This passage makes it clear that Mr Nygaard needed to be included within the category of possible purchasers of the business. It also needs to be remembered that the relevant valuation date for present purposes was November 2020. After the parties separated in that month Mr Nygaard did not immediately wind the company’s business down. This is demonstrated by his response when Ms Hawker asked him in cross- examination why he did not move out of the family home:

A. If the business was to continue then I needed the office and all the materials and the tools were at [the family home]. The contractors knew that I had [the administrative staff] in the office. Everything was just kind of revolved around that property.

[54]   Mr Nygaard said that he began thinking  about  the possibility of leaving  New Zealand to live overseas in or about July 2021. However, these thoughts did not crystallise until after he met his current partner in late 2021. In an affidavit filed in the Family Court Mr Nygaard said that once he realised he was “moving on” with his current partner “I just notified my clients and said that I was closing down the business and moving on”. He also said he started winding the business down “by telling some

of the boys [contractors and sub-contractors] who left to go to other projects and other jobs, in about May 2022”. He also said that if he and his wife had not separated, he would have continued working in the construction business. However, after meeting his current partner he decided to “ditch” the company’s construction business to help her with her new business in Australia.

[55]   The financial statements for the year ended 31 March 2019 showed that the company had made a profit of $745,655 before taking into account tax (but after providing for interest and depreciation). The financial statements for  the  years ended 31 March 2020 and 2021 showed profits (calculated on the same basis) of

$620,688 and $238,537 respectively. The 2021 year included the disruptions caused by the Covid-19 pandemic. These figures obviously suggest that, on a going concern basis, the shares in the company still had significant value as at November 2020.

[56]   Mr Bassett said that an indicative valuation of the type he provided was commonly used where a business is to be valued as a going concern. This may occur where, as in the present case, it is necessary to value shares in a company for relationship property purposes. In this type of situation one party will often continue to operate the business after the parties separate. That was  obviously the position  Mr Nygaard was in as at November 2020.

[57]Mr Bassett explained his approach as follows:

Well the going concern assumption that I’ve used and also I have used, I’ve placed a fair value on the business, I haven’t, this is not actually a transaction. I was  asked  to  say  what  is  the  value  of  this  business  in  place  with  Mr Nygaard performing his tasks and I accepted that the business was very reliant on Mr Nygaard, but on a going concern basis and assuming that the business continued to operate that was the value I placed on it.

[58]   I do not consider the net asset valuation approach would reflect the nature of the company’s business. The company derived its income not from the sale of products or assets to customers for profit as was the case in Stiles. Rather, it provided clients with building services using relatively low value assets. Mr Nygaard was still committed to the business in November 2020 and the company still had the ability to continue earning significant annual income.

[59]   As Mr Nygaard was still operating the company’s business as a going concern in November 2020. I consider the value of the shares as at that date need to be assessed on that basis. Given the value Mr Nygaard had extracted from the business in the past, he was ideally placed to ensure it continued trading in the same way it had been doing for many years. Alternatively, he could have taken steps to sell the business for whatever he could get from Mr M or any other interested party. With an appropriate restraint of trade and vendor assistance for a suitable period a purchaser could have ensured that good relationships were maintained with the company’s contractors and clients. There is therefore no reason why the business could not have continued to operate successfully even after Mr Nygaard’s eventual departure.

[60]   It follows that I do not accept the Judge erred in adopting the valuation method used by Mr Barrett. This ground of appeal fails as a result.

Did the Judge err in making an order for compensation under s 18C of the Act?

The law

[61]Section 18C of the Act relevantly provides as follows:

18C     Compensation for dissipation of relationship property after separation

(1)In this section, relevant period has the same meaning as in section 18B.

(2)If, during the relevant period, the relationship property has been materially diminished in value by the deliberate action or inaction of one spouse or partner (party B), the court may, for the purposes of compensating the other spouse or partner (party A),—

(a)order party B to pay party A a sum of money:

(b)order party B to transfer to party A any property, whether the property is relationship property or separate property.

…

[62]   In GFM v JAM, the Court of Appeal summarised the relationship between s 2G and s 18C as follows:21

21     GFM v JAM [2013] NZCA 660 at [35]. Footnotes omitted.

(a)Overall aim: The Court’s overall aim should be to achieve a just division of relationship property between the parties having regard to the purposes and principles of the Act set out in ss 1M and 1N.

(b)Presumption: Since 1976, under s 2(2) and then (from 1 February 2002) s 2G, the presumption under the Act has been for valuation at the date of hearing. That presumption was strengthened by the introduction of ss 18B and 18C.

(c)Basis for s 2G(1) presumption: The presumption reflects the basic premise of the Act that parties share equally in the “product” of their marriage or relationship, and that the value of that product is to be assessed by the court at contemporary and not historic values, because otherwise equal sharing would not be achieved. Specifically, delivering the judgment of the Supreme Court in Burgess v Beaven, William Young J observed:

The general approach, however, was that hearing date values were conducive of equity and in particular that both parties should usually share increases in values associated with inflation (as opposed to personal effort).

(d)Onus: The onus of persuading the Court to depart from the default  or presumptive position in s 2G(1) rests on the party contending for a different valuation date. In that respect we agree with Fisher on Matrimonial Property, notwithstanding the observation of Robertson J in this Court’s judgment in M v B that “notions of onus of proof fit uncomfortably within [the Act]”.

(e)Use of ss 18B and 18C rather than the s 2G discretion: Section 2G is not expressly subject to ss 18B and 18C. Nevertheless, where a court desires to attribute to one party the benefits or losses that party has brought out post-separation, that is “more directly” achieved under ss 18B and 18C respectively, and “there is less need than in the past to depart from the default position of hearing ate valuation”.

The arguments in the Family Court

[63]   In the Family Court, Mrs Nygaard argued that the value of the shares in the company was effectively destroyed by Mr Nygaard’s decision to cause the company to cease trading. She contended this was deliberate because Mr Nygaard had told her before they separated that, in the event of a separation, he would create debt within the company and the Trust so that she would receive nothing. In cross-examination he accepted he had told her he would ensure the company had no value. Mrs Nygaard contended that, if the Judge did not value the business as at the date of separation, he ought to make an award of compensation under s 18C. This would reflect the fact that the shares had become worthless since the date of separation through Mr Nygaard’s deliberate actions.

[64]   Mr Nygaard contended that his decision to enter into a new relationship and move to Australia did not evince a deliberate intention on his part to diminish the value of the shares in the company. Rather, he said he was entitled to make a lifestyle change following a difficult separation. He also contended that the primary cause of the decline in the company’s value was a reduction of the flow of work during the period before, during and after the Covid 19 pandemic.22 He also said the company was struggling to complete the jobs that it had on hand by the time he decided to wind the business down. He denied this was primarily caused by his decision to relocate to Australia.

The Judge’s decision

[65]The Judge found that s 18C was engaged for the following reasons:23

[112] Mr Nygaard was cross-examined for the purposes of the maintenance hearing [before Judge Burns]. The following exchange occurred:

Q: Well, because its Mrs  Nygaard’s  evidence that you have told her all along that if you separate and if she leaves you, you will do what you can to create debt within [the company] and to the Trust that she receives nothing in your separation. Do you accept saying that to her?

A:       I might have said something along those lines yes.

…

[115]          As well as notifying his contractors and suppliers that he would not be trading in the business, Mr Nygaard ceased looking for or accepting work. As discussed above, he gave away $150,000 in materials and tools belonging to [the company]. It appears likely that other valuable tools which were either assets of [the company] or Mr Nygaard’s personal property were simply left by him in New Zealand – possibly at the family home. When it was put to him that he had threatened to “do whatever he can to ensure she received nothing from [the company]” he confirmed that he had told Mrs Nygaard “something along those lines”. He accepted when cross-examined – as he ought – that a decision to move to a different country and stop accepting new work would make the business worth less. He accepted that it was obvious that a business earning less and being wound up would see its share value drop. “It’s very obvious, yeah.”

[116]         It was submitted by Mr Nygaard that he “as sole director was entitled to make a “lifestyle change” following a difficult separation”. However, the result of Mr Nygaard’s “lifestyle change” was that he abandoned a business that was worth more than $1,700,000 causing a significant loss to both he and his wife. Mr Nygaard may not be permitted to unilaterally male a “lifestyle

22     Mr Nygaard does not rely on this argument for the purposes of the appeal.

23     Nygaard v Nygaard, above n 2.

change” at his wife’s expense when there were clearly other options open to him, at least not without compensating her for the loss he caused her. He had contemplated the prospect of running the business from Australia. He did not attempt to do that. He did not attempt to sell the business or market the business for sale. He did not attempt to negotiate a transfer of the company’s reputation, assets, and future projects to his existing subcontractors. I find the evidence of intentional action by Mr Nygaard was compelling.

[117]          I find that Mr Nygaard materially diminished the value of the parties’ interests in [the company] by his deliberate actions in deciding to “ditch” the business to move to Australia with his new family without any attempt to preserve its assets. His actions were deliberate, arguably vengeful, and the diminution in value of [the company] was clearly also deliberate. It was not only an obvious outcome of what he did, it must have been his intended outcome.

…

[125] There was a decline in income, in gross profit, and in net profit after tax shown in the profit and loss statement for [the company] to 31 March 2021 echoing the Covid year and the early stages of the parties’ separation. Seven months of that year was taken into account in Mr Bassett’s separate date valuation with that result being given a 30 per cent weighting in his calculation of weighted average future maintainable earnings. I find his calculation and weightings were not significantly challenged, either in cross-examination or in the evidence of Mr Moriarty. Because the causal link between the decisions Mr Nygaard made and the loss is so direct, I find that it is appropriate to award compensation to Mrs Nygaard from Mr Nygaard of $586,874 under s 18C.

The appeal

[66]   Whilst discussing the potential application of s 18C the Judge referred to the judgment of the Supreme Court in Regal Castings Ltd v Lightbody, a case dealing with s 60 of the Property Law Act 1952.24 That section related to the alienation of property by a debtor with intention to defeat the interests of creditors. The Supreme Court held unanimously that, whenever the circumstances were such that a debtor must have known that the alienation of property exposed creditors to a significantly enhanced risk of loss, the debtor had to be taken to intend that consequence even if it had not been the debtor’s wish to cause them loss.25 The Judge observed that, despite the different wording in s 44 and s 18C, “the attraction of using the Regal Castings approach to intention was obvious”.26 This was because “people can and should

24     Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433.

25     At [2], [14], [54], [60], [126] and [165].

26     Nygaard v Nygaard, above n 2, at [108].

generally be assumed to intend the obvious, natural and ordinary consequences of their actions.”27

[67]   Mr Snedden criticises this aspect of the Judge’s reasoning on the basis that the wording used in the two sections is different. He points out that, as the Court of Appeal noted in GFM v JAM, the word “deliberate” in s 18C(2) “must surely necessitate that [the party] acted or failed to act intending to diminish the value of relationship property”.28

[68]   I accept Mr Snedden’s submission that, because s 18C requires any action to be deliberate, it may not be appropriate to apply the approach taken in Regal Castings in the present context. However, it is clear from what the Judge said at [117] of his decision29 that he applied the correct test. He found that Mr Nygaard had deliberately and intentionally diminished the value of the company’s shares. The Judge did not use the approach referred to in Regal Castings. It follows that this argument does not assist Mr Nygaard on the appeal.

[69]   Mr Snedden also submits that the Judge failed to “evaluate and adjudicate on” disputed issues of fact. These comprised the explanations given by Mr Nygaard for his decision to cause the company to cease trading. As noted above, Mr Nygaard said that his decision was influenced by factors such as the effects of his separation and the company was struggling  to  complete  existing  jobs.  However,  the  onus  is  on  Mr Nygaard to show that the Judge’s decision was wrong. The Judge noted the explanations Mr Nygaard had given. However, he concluded that Mr Nygaard deliberately decided to cease trading in circumstances where he knew the effect that this would have for the  company.  This  occurred  after  he  had  effectively  told Mrs Nygaard that, if they separated, he would do what he could to ensure the company was stripped of any value.

[70]   Mr Nygaard’s appreciation of the likely effect of his decision can be gleaned from the following passage of his cross-examination in the Family Court:

27 At [108].

28     GFM v JAM, above n 21, at [37].

29 Set out above at [65].

Q.You  have been asked this question already and you have accepted it  to be the case, Mr  Nygaard, that one of the threats you made to   Mrs Nygaard during your marriage was that in the event of separation, you would do whatever you can to ensure that she received nothing from [the company]. Do you accept that?

A.       Something along those lines. Horrible.

Q. As a concept, Mr  Nygaard, if you’re operating a  business and you  decide to move to a different country and stop accepting new work, it follows, doesn’t it, that the business is going to be worth less?

A.       Absolutely.

Q.And it’s obvious if the business is earning less and is being wound up, its share value will drop, isn’t it? It’s an obvious prospect?

A.       It’s very obvious, yeah.

Q. And then once its only director and shareholder moves overseas and  stops working in the business completely, it also follows that the shares are going to be worth nothing, doesn’t it?

A.Yeah, towards the end there we only had three staff and we struggled to finish even the contracts that we were on. I think the last contract that we finished was in October 2023 which was a project in Parnell, and I had one guy finishing that off for us.

Q.Yes, but if you’ve lost focus and you’ve decided to move to Australia, you’re not looking for work anymore, are you? You’re not getting out there and bringing in new contracts?

A.       Correct, yeah.

[71]   I do not consider the Judge needed to analyse the explanations advanced by Mr Nygaard in any greater detail than he did.   He was plainly of the view that      Mr Nygaard’s actions were deliberate and intentional even though the explanations he gave may also have influenced him to some extent in the decision he made.

[72]   The Judge had the benefit of seeing and hearing Mr Nygaard give evidence over an extended period. He was uniquely placed to assess Mr Nygaard’s knowledge and intention at the time he decided to wind down the company’s business. I would have no justification for reaching a different view. There was also obviously a clear nexus between Mr Nygaard’s actions and the subsequent diminution in value of the company’s shares. I did not take Mr Snedden to argue to the contrary. I am therefore satisfied the Judge was justified in exercising his discretion to make an award of compensation under s 18C.

[73]   The Judge’s decision meant he did not need to resort to s 2G of the Act to value the shares at the date of separation.   However,  if he had not made an award under    s 18C I consider the Judge would have been justified in valuing the shares at the earlier date (rather than at the date of the hearing). As the passage from Burgess v Beaven30 set out above31 notes, a hearing date valuation generally allows both parties to share equally in any increase in value of assets caused by inflation since the date of separation. Different considerations apply when the value of assets depreciates significantly following separation through the acts or omissions of one of the parties. I therefore consider a valuation as at the date of separation would have been justified in the present case.

Did the Judge err in dealing with the withholding tax that may be payable by the company?

[74]   As I have already noted, this issue arises because by the time of the hearing Mr  Nygaard’s  current  account  with  the  company  was  overdrawn   by  more  than $2.13 million. This accrued over several years before and after separation as  Mr Nygaard used the company’s funds to meet household expenses and for his own purposes.

[75]   Mr Barrett and Mr Moriarty agreed that this created taxation implications for both the company and Mr Nygaard.   These arose from the fact that, in order  for   Mr Nygaard to repay the current account advances, it would ordinarily be necessary for the company to declare a dividend in Mr Nygaard’s favour. Once this occurred the company would be required to account to the Inland Revenue Department for withholding tax of approximately $166,000. Mr Nygaard would also be personally liable to pay income tax on the dividend.

[76]   There is, of course, no certainty that the company will ever declare a dividend in Mr Nygaard’s favour. Given his current circumstances it seems almost inevitable that the company will never trade again and that it will eventually be struck off the Companies Register. Mr Snedden nevertheless submits that the Judge ought to have treated the company’s contingent liability to pay withholding tax as a relationship debt

30     Burgess v Beavan [2012] NZSC 71, [2013] 1 NZLR 129 at [25].

31     At [62(c)].

because the Inland Revenue Department may attempt to recover it from Mr Nygaard in the future.

[77]   This submission overlooks the fact that this tax liability would never be owed by Mr Nygaard. Rather, it would be owed by the company. The Inland Revenue Department would have no grounds for attempting to recover it from Mr Nygaard and it therefore cannot be regarded as a relationship debt. Further, Mr Bassett confirmed that he had taken this liability into account in assessing the value of the shares in the company as at the date of separation. The Judge correctly referred to this at [89] of his decision.32

[78]There is therefore no substance in this ground of appeal.

Did the Judge err in taking misconduct by Mr Nygaard into account?

[79]   The issue of misconduct is no doubt a sensitive matter for Mr Nygaard. The present dispute forms just one aspect of proceedings involving these parties that have required the intervention of the Family Court on several occasions since they separated. These have included spousal maintenance proceedings and proceedings involving allegations of family violence. The latter resulted in the Family Court issuing a protection order against Mr Nygaard that still remains in force.

[80]   Those proceedings do not portray Mr Nygaard in a positive light. The circumstances that surrounded and followed the separation show that he acted in an entitled manner and with little or no regard for the welfare of either Mrs Nygaard or their son. Mrs Nygaard was forced to leave the family home in November 2020 with very few possessions and nowhere to go. Thereafter she lived for a short time in a motor vehicle before staying with family and friends. Following their son’s exclusion from the family home by Mr Nygaard in July 2021, they lived in a series of rental houses that were vastly inferior to the home they had left. Their son is now completely estranged from Mr Nygaard as a result of several incidents that occurred during this period.

32 Set out above at [21].

[81]   Mr Snedden contends that these issues pervaded the relationship property proceeding  as  well.   He  says  this  is  evident  from  the  cross-examination  of   Mr Nygaard when the Judge intervened and questioned Mr Nygaard on several occasions. Mr Snedden submits that the Judge’s questions suggest that he was not impressed with Mr Nygaard’s actions and attitude at the time of and following the separation. He says the Judge’s obvious concern about those issues has resulted in misconduct of Mr Nygaard wrongly being taken into account in several findings the Judge made. He contends this is in breach of s 18A of the Act, which restricts the extent to which misconduct may be taken into account in determining relationship property issues. It is common ground that the circumstances in which misconduct may be taken into account under s 18A are not engaged in the present case.

[82]   Mr Snedden took me to the passages in the evidence when the Judge questioned Mr Nygaard during Ms Hawker’s cross-examination. I accept that several of these create  the  impression  that  the  Judge  did  not  approve  of  things  that  Mr Nygaard had done after separating from Mrs Nygaard. However, I make three points about this. First, some of the Judge’s questions were directly relevant to the issue of whether Mr Nygaard had deliberately destroyed the value of the company when he caused it to cease trading. Secondly, some questions responded to evidence Mr Nygaard had just given about why he had acted in the way that he did. Thirdly, Mr Nygaard gave evidence over the course of three days. The interventions were relatively few in number and do  not  feature  prominently  in  the  cross-examination. More importantly, however, I am satisfied that the approach taken by the Judge during the hearing did not lead the Judge to erroneously decide any of the issues that were before him.

[83]   Mr Snedden took me to three passages in the Judge’s decision that he contended had been influenced by Mr Nygaard’s misconduct. I now consider each of these:33

Passage One

[60]     Mrs Nygaard was not actively working for [the company]. I accept her evidence that she was not consulted by Mr Nygaard about either day to

33     Nygaard v Nygaard, above n 2.

day or strategic decisions concerning [the company]. Part of the dynamic of power and control that existed between Mr Nygaard and Mrs Nygaard included his occasionally insisting that what was happening with [the company] was none of her business. For example, she was specifically excluded from access to the [the company] “office” at home.

[84]   This passage is found in the Judge’s introductory remarks in relation to the issue of the value to be attributed to the company shares. As Mr Snedden acknowledged in answer to a question from me, that issue turned on which valuation approach the Judge considered to be appropriate. Mr Nygaard’s conduct had no relevance to the value of the shares. It follows that this passage played no role in the Judge’s determination.

[85]   In any event I do not consider the passage suggests that Mr Nygaard was guilty of misconduct as that term is commonly understood. It merely describes the dynamic of the parties’ relationship and how that affected their respective roles in relation to the company.

Passage Two

[117] I find that Mr Nygaard materially diminished the value of the parties’ interests in [the company] by his deliberate actions in deciding to “ditch” the business to move to Australia with his new family without any attempt to preserve its assets. His actions were deliberate, arguably vengeful, and the diminution in value of [the company] was clearly also deliberate. It was not only an obvious outcome of what he did, it must have been his intended outcome.

[86]   This passage is to be found in the section of the judgment dealing with s 18C. It contains the Judge’s conclusion that Mr Nygaard deliberately diminished the value of the company’s shares. The issue of whether Mr Nygaard ’s conduct was deliberate was directly relevant to the Judge’s determination of this issue. The reference to “vengeful” clearly suggests misconduct. However, it was a legitimate use of that word because vengeful conduct is a form of deliberate conduct.

Passage Three

[136]    She [Mrs Nygaard] was extensively cross-examined. I found her in general to be a reliable witness, willing to make concessions where appropriate, and I found her evidence on this issue unshaken. I prefer her evidence to that of Mr Nygaard on this issue. He had a strong attachment to

this clothing collection, and he consistently demonstrated a strong sense of self-entitlement. I do not accept that he would have simply abandoned the bulk of a clothing collection which he had prized to the point where he had threatened his wife and child with prosecution for removing a few items.

[137]    The Nygaards’ relationship was regrettably punctuated by occasional incidents of physical violence and a continuing dynamic of psychological violence by Mr Nygaard against Mrs Nygaard. He did not dispute the evidence of assault in the form of photographs of Mrs Nygaard with injuries and     torn     clothing.     When    she    left    the    family    home    Mrs Nygaard had a bag of clothing with her and a small amount of cash. Her evidence was that she took nothing else and was never permitted to return to collect anything else from the home. After 26 years together Mr Nygaard apparently regarded the home, and most of what was in it as his to use as he wished to the exclusion of his wife and child. Mr Nygaard remained in sole occupation of this exquisitely constructed and well-furnished home – which had been renovated with great care and considerable expense using [the company] resources. Mr Nygaard invited his new partner to live in the family home   with   him   and    she    remained    in    that    residence    while    Mrs Nygaard and [Jonas] were living in comparatively inadequate rental accommodation and struggling to meet their living costs.

[87]   These passages are situated in the section of the judgment in which the Judge determined it was likely that Mr Nygaard had retained his clothing collection. They form part of the Judge’s reasoning for reaching that decision. I do not consider that the Judge’s observations in [136] refer to misconduct on the part of Mr Nygaard. A sense of entitlement may be a characteristic that is not desirable. However, I do not consider it to be misconduct as that term is commonly understood.

[88]   The Judge’s observations in [137] obviously refer to misconduct in the form of family violence perpetrated by Mr Nygaard on Mrs Nygaard. However, as with the previous paragraph, they form part of the Judge’s reasons for concluding it was unlikely that Mrs Nygaard would have returned to the home to uplift items from it. I consider that was a legitimate form of reasoning notwithstanding that it involved reference to misconduct by Mr Nygaard.

[89]   For these reasons I do not consider the Judge made illegitimate use of evidence relating to misconduct on the part of Mr Nygaard.

Did the Judge err in making orders relating to the chattels, art work and clothing collection?

The chattels and art work

[90]   It seems to be common ground that Mrs Nygaard took no chattels with her when she left the family home in November 2020. Thereafter she was excluded from the home and had no ability to return to uplift items from it until shortly before the property was sold.

[91]   The property was sold at the end of April 2023 after Mr Nygaard had left New Zealand to live in Australia. When he left the home it seems that he cleared out the chattels and art works. He presumably sold these or had them shipped to Australia. The evidence disclosed that he rented several storage units at or about this time. The tools and materials that Mr M later uplifted were placed in the storage units prior to the sale of the home being completed.

[92]   Mrs Nygaard returned to the family home shortly before the date of settlement to ensure it was in a state to be handed over to the purchasers. She was able to gain access to the address with the assistance of the real estate agent, who had a key.   Mrs Nygaard then cleaned up the home so that the purchasers could move in. She stored some items at the address for later collection with the consent of the purchasers. It is not known what happened to these items. However, Mrs Nygaard’s solicitors confirmed in an email to Mr Nygaard’s solicitors on 28 April 2023 that their client had no wish to retain any of the items from the home. That has consistently been her position.

[93]   The purchasers had agreed to purchase some of the chattels in the home for the sum of $9,000 and these were listed in the agreement for sale and purchase. They were left in the home at the date of settlement. It transpires that the purchasers did not pay for these items and that issue remains to be resolved.

[94]   Mrs  Nygaard  estimated  that  the  chattels  taken  from  the   address   by   Mr Nygaard had a value of approximately $100,000. Mr Nygaard said that he had priced them for possible sale on TradeMe at between $30,000 and $40,000. The Judge

recorded that the art work had a total value of $8,700.34 He dealt with the chattels and art work as follows:

[149]    Mr Nygaard submits that “there is a factual dispute as to the location and value of (chattels)” and that he left the country with only two suitcases.

[150]    I prefer Ms Nygaard’s account of what was taken from the property before she regained access. Mr Nygaard had ample time to create an inventory, record or photograph and have valued the items he says he left behind. He may not have taken them to Australia, but I find on balance of probabilities that he did not leave them for Mrs Nygaard, so he must have disposed of them somehow.

[151]    I have no reliable evidence of current or market value. In his oral evidence Mr Nygaard suggested $30,000 to $40,000 would be a reasonable estimate of the market value of the chattels excluding his clothing. In the absence of any independent evidence – I don’t even have a complete inventory – I will adopt the higher of Mr Nygaard’s figures, $40,000.

[152]    To that I would add an additional $15,000 which was his estimate of the value of the art left in the home. I do not accept his allegation that Mrs Nygaard took two pieces of art with her, I accept and prefer her evidence. Mr Nygaard did not explain when or how she had the opportunity to take the art. The result is that Mr Nygaard should account to Mrs Nygaard for an additional

$55,000 by a credit or payment to her of $27,500.

[95]   I consider the Judge was justified in concluding that Mrs Nygaard had never taken any furniture or art works from the home because she never had an opportunity to do so after she left the home. Nor did she ever express any desire to uplift chattels or art work from the home. Further, I do not see how the Judge can be criticised for adopting a value for the chattels that was within the range suggested by Mr Nygaard when he gave evidence.

[96]   The Judge ascribed a value of $15,000 for the art work based on an estimate given by Mr Nygaard in his narrative affidavit. However, he made an earlier observation that it had a value of $8,700. This value is supported by the fact that, during her cross-examination of Mr Nygaard, Ms Hawker said she understood that Mr Nygaard had agreed that an oil painting had a value of $5,000 and that a print by another artist had a value of $3,700. The figure of $8,700 would therefore appear to be correct. I will leave it to the parties to resolve this evidential issue. They have leave to make further submissions on it if they cannot reach agreement.

34     Nygaard v Nygaard, above n 2, at [51].

The clothing and shoe collection

[97]   At the time the parties separated, Mr Nygaard had a very large collection of designer clothing and shoes.  The collection was  still  at  the family  home when  Mrs Nygaard left the address in November 2020. She has always maintained that she never uplifted any items from the collection after she left the home.

[98]   Mr Nygaard contends that much of the collection was still in the home when he went to live in Australia in February 2023. He said he had always intended returning to the address to uplift the items before the property was sold. However, his circumstances in Australia subsequently prevented him from doing so, and he now has no knowledge of what happened to the clothing and shoes. He suggests that many of the items may have been uplifted by his son, who shared the same shoe and clothing size as him. He contends the Judge should not have ascribed any value to the collection.

[99]   This ground of appeal raises two issues. The first is whether the Judge erred in concluding it was more likely than not that Mr Nygaard had removed the items from the address himself. The second is whether the Judge erred in attributing a value of

$200,000 to the collection.

Did the Judge err in concluding it was more likely than not Mr Nygaard had removed the collection from the address himself?

The Judge’s decision

[100]The Judge dealt with this issue in the following way:35

[134]    Mr Nygaard did not take photographs or otherwise document the clothing, tools, or other property that he removed from the home when he relocated to Australia. His evidence was that he only took two suitcases to Australia. Mr Nygaard produced as an exhibit a video that one of his subcontractors took of the storage areas of the house. That video appeared to show some plastic bins that may have contained part of Mr Nygaard’s clothing collection left in the attic space after he had relocated to Australia. There were some photographs produced to similar effect. However, the evidence did not persuade me on balance of probabilities that all or even most of Mr Nygaard’s clothing remained in the house after he left for Australia.

35     Nygaard v Nygaard, above n 2.

[135]    There was no evidence that Mrs Nygaard had removed the clothing or in any way taken responsibility for it. Having been – albeit wrongfully – excluded from the home by her fellow trustee Mr Nygaard, it is understandable that she may have been reluctant to take or take responsibility for any of his property. She had been threatened with prosecution early in their separation when she removed a small amount of clothing for [their son’s] use. Her evidence was that [their son] at the time was reduced to having his school uniform to wear because [he] had been excluded from the home by his father. Her evidence was that she did not remove the clothes herself prior to settlement, and that she was essentially left to clear detritus from the home.

[136]    She was extensively cross-examined. I found her in general to be a reliable witness, willing to make concessions where appropriate, and I found her evidence on  this  issue  unshaken.  I  prefer  her  evidence  to  that  of  Mr Nygaard on this issue. He had a strong attachment to this clothing collection, and he consistently demonstrated a strong sense of self-entitlement. I do not accept that he would have simply abandoned the bulk of a clothing collection which he had prized to the point where he had threatened his wife and child with prosecution for removing a few items.

[101]   The Judge then briefly traversed the unhappy circumstances leading to the separation and the events that followed. He did  so  to  explain  why he preferred  Mrs Nygaard’s evidence that she never removed any items from the home after she left in November 2020. These issues led the Judge to observe:

[138]  Generally, evidence of misconduct of this kind during a relationship   is irrelevant for relationship property purposes but it explains the cautious approach that Mrs Nygaard took to entry into their home even after Mr Nygaard had relocated to Australia.

Analysis

[102]   I am not persuaded the Judge’s approach to this issue was incorrect. It seems improbable that Mrs Nygaard would have wanted the clothing and shoes for her own use. In any event, she had no ability to access the address other than when she attempted to make it ready for sale. There is nothing in the evidence to suggest that she uplifted the clothing and shoes at that time for the purposes of re-selling them or for any other reason.

[103]   Mr Nygaard’s suggestion that the items may now be in the possession of his son is also highly speculative. Mr Nygaard’s son had no ability to gain access to the address. He did not assist his mother to help make the address ready for the purchasers. There is nothing in the evidence to suggest that he ever went back to the address after his father went to live in Australia.

[104]   As the Judge noted, Mr Nygaard was obviously greatly attached to the collection. It had cost him a great deal of money over many years. It therefore seems inherently unlikely that he would leave the collection at the family home when he moved to live in Australia. I consider it far more likely that he would have taken steps to have the items shipped to his new home in Australia.

Did the Judge err in ascribing a value of $200,000 to the collection?

Background

[105]   In her initial affidavit filed in the Family Court Mrs Nygaard ascribed a value of at least $200,000 to the clothing and shoe collection. Mr Nygaard did not initially take any steps to defend the application. This prompted Mrs Nygaard to obtain an order requiring her husband to be examined as to his means and assets. The examination took place before Judge S J Fleming on 2 August 2022. Mr Nygaard confirmed during the examination that he had spent “quite a bit” on clothing and shoes over the years. He said some of the shoes had increased in price quite substantially, especially during the Covid-19 pandemic.

[106]   Mr Nygaard estimated that he had about 200 pairs of shoes but denied that they would be worth around $200,000 as Mrs Nygaard believed. The examination of Mr Nygaard on this topic ended with the following exchange:

Q.All right, so going back to the clothing, given the disagreement in  respect of the values, would you agree to a valuer of our client’s choosing coming to the property to value that clothing?

A.No. No, that’s an invasion of my privacy.  Why would you come and look through my wardrobe? There’s no need for that. I’m really sorry, but that’s a bit much, isn’t it?

[107]   The questions asked by Mrs Nygaard’s counsel during the examination obviously put Mr Nygaard on notice that the value of his clothing and shoe collection was an issue he would need to confront when Mrs Nygaard’s application was ultimately  heard.  He  also  knew  that  she   claimed   it   was   worth   approximately $200,000. If he wished to dispute that claim he had the ability to arrange for the items to be valued. This would enable the Judge who determined the application to proceed on a much more informed evidential basis. Despite this fact,

Mr Nygaard took no steps to place any evidence before the Family Court regarding the likely value of the collection.

The Judge’s decision

[108]   The Judge determined the value to be attributed to the collection of shoes and clothing as follows:

[128]   Mr   Nygaard   did   not   file   valuation    evidence    to    dispute Mrs Nygaard’s contention that his extensive collection of clothing had a value of   $200,000.    The    clothing    was    never    formally    valued,    but   Mrs Nygaard’s contention as to its value was in evidence from the outset, including in her affidavit of assets and liabilities sworn in February 2022 and her narrative affidavit of the same date. Mr Nygaard had exclusive possession of the clothing collection and exclusive knowledge of the full cost of the collection.   In   his   affidavit   in   reply,   Mr    Nygaard    claimed   that Mrs Nygaard  had  removed  a  carton  of  shoes  and  clothing  to  a  value  of $5,000 to $6,000 including Air Jordan Shoes worth $1,310 and $720. He claimed a “best guess estimate” of $40,000 for the full collection, but he did not arrange an appraisal or ever file any valuation evidence. The inference that I draw from his failure to produce any estimate of value is reliable. If  Mr Nygaard was able to place a value of $5,000 to $6,000 on the few items Mrs Nygaard had removed for [Jonas’] use it is a reasonable conclusion that the bulk of the collection which remained was worth considerably more than the $40,000 he estimated in his affidavit evidence.

Analysis

[109]   Mr Nygaard complains that the Judge wrongly placed the onus on him to establish the value of the collection. He points out that he should not have been subject to any onus at all. However, this submission misstates the position. The Judge was required to attribute a value to the collection based on the evidence before him. He had the evidence of Mrs Nygaard to the effect that the collection was worth approximately $200,000. He had no evidence from Mr Nygaard to contradict this assessment.

[110]   The Judge’s estimate of value cannot be regarded as arbitrary. Mr Nygaard acknowledged that the collection of clothing and shoes had been his passion since he was 15 years of age, and that it now included approximately 200 pairs of shoes. Each pair had cost him between $100 and $250. Mr Nygaard stated during the means and assets examination before Judge Fleming that some of the shoes now had a value of

between $2,000 to $3,000. The collection also comprised a large quantity of designer clothing, much of which had never been worn.

[111]   During the hearing in the Family Court, Mrs Nygaard produced a schedule she had compiled using the information contained in Mr Nygaard’s bank accounts for the period    between    November    2020    and  April   2021.36  This showed  that Mr Nygaard had spent approximately $105,000 on clothing and shoes during that six- month period. This occurred after the parties separated but it provides some assistance regarding the likely value of the collection as at November 2020.

[112]   In the absence of evidence to the contrary, I consider the Judge was entitled to accept  Mrs  Nygaard’s  evidence  as   to   the   likely   value   of   the   collection.  Mr Nygaard has not shown it to be incorrect.

The cross-appeal

[113]   As I have already noted, Mrs Nygaard cross-appeals against two aspects of the Judge’s decision. It is not necessary to consider the first of these because it was only advanced in the event that I should find in favour of Mr Nygaard regarding the value of the shares in the company.

[114]   The  second  ground  of  appeal  relates  to  a  payment   of  $40,635   that Mrs Nygaard was to receive under s 182 of the FPA by way of occupation rent. This was to compensate her for the fact that Mr Nygaard had occupied the family home from the date of separation. There is no challenge by either party to the amount of the order.   However,  the  Judge  directed  that  this  sum  was  to  be  paid  to Mrs Nygaard prior to the balance of the proceeds of sale of the home being divided between the parties. This would effectively require Mrs Nygaard to meet one-half of the occupation rent that Mr Nygaard was required to pay.

36     Mrs Nygaard has never had access to Mr Nygaard’s bank statements for the period leading up to the separation.

[115]   Ms Hawker filed a memorandum following delivery of the judgment in which she asked the Judge to recall his judgment to correct this apparent error. The Judge responded as follows in a minute issued on 12 December 2024:37

I consider it is clear from my judgment that I did make an error in my judgment in relation to the amount Ms Nygaard should have received from the Trust funds to reflect my calculation of the occupation rental she was entitled to in addition to the allowance for rental costs included in Judge Burns’ maintenance order. Mr Snedden does not agree and says he should have an opportunity to fully develop his argument which I can’t give him today.

I am told the appeal is set for hearing in March. I would be prepared to allow this issue to be dealt with on appeal leaving the wording in my judgment unaltered and not make the R204 correction if there was assurance that Ms Nygaard will receive the money that is not in dispute.

[116]   I consider the argument for Mrs Nygaard on this point to be unanswerable. There is no principled basis on which she should be required to contribute to the occupation rental Mr Nygaard is to pay. The Judge acknowledged he had made an error in making an order that led to that consequence. It is appropriate that I correct the error on appeal as the Judge obviously anticipated would happen.

Result

[117]The appeal is dismissed.

[118]   The cross-appeal is allowed. The order that the Judge made for the payment of occupation rental is set aside. In its place, I make an order directing Mr Nygaard to pay Mrs Nygaard the sum of $40,635 from his net share of the sale proceeds.

[119]   It will now be necessary for the parties to give effect to the orders the Judge made as varied in one respect on appeal. Any further issues relating to division of the funds held on trust are to be dealt with in the Family Court.

37     Nygaard v Nygaard, FC Auckland FAM-2022-004-128, 12 December 2024.

Costs

[120]   Mrs Nygaard has been the successful party on the appeal and cross-appeal. She is therefore entitled to costs on a category 2B basis together with disbursements as fixed by the Registrar.

Lang J