Owen v Thomas
[2014] NZHC 2200
•11 September 2014
NOTE: PURSUANT TO S 169 OF THE FAMILY PROCEEDINGS ACT 1980, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS11B TO
11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDINGS MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2014-419-000267 [2014] NZHC 2200
UNDER the Family Proceedings Act 1980 and the
Property (Relationships) Act 1976
IN THE MATTER OF
an appeal under s 174 (1AA)(a)
Family Proceedings Act 1980 and s 19, Property Relationships Act 1976
BETWEEN
OWEN Applicant
AND
THOMAS Respondent
Hearing: 3 September 2014 Counsel:
S R Jefferson QC and J I Hawker for the Applicant
V A Crawshaw for the RespondentJudgment:
11 September 2014
JUDGMENT OF DUFFY J
This judgment was delivered by Justice Duffy on 11 September 2014 at 4.00 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
OWEN v THOMAS [2014] NZHC 2200 [11 September 2014]
[1] This is an appeal against orders made by Judge Riddell in the Family Court for: (a) an interim distribution of relationship property; and (b) the appellant to pay the respondent interim maintenance. The appellant has also applied for a stay of execution of the Family Court’s orders. The appeal and the application for a stay of the execution of the orders are opposed.
[2] The order for interim maintenance was for a period of six months at
$8,509.22 per month. Since the order was made, the appellant has made the monthly payments. The parties advised me that they believed the next maintenance payment is due at the earliest on 13 September 2014 and at the latest by 30 September 2014. They were not certain about when during the course of a particular month the obligation to pay maintenance took effect. That they should be unclear as to when a Court order requires payment to be made is not satisfactory. The order should have expressly stipulated the date in each month that payment is due.
[3] As I propose to deal with the appeal now, there is no need to consider the application for a stay of execution of the orders.
Background
[4] The parties were in a domestic relationship for 11 years from August 2000 until 25 May 2011. During the course of the relationship, they married on
9 December 2006. Their marriage is now dissolved. There are two children of the marriage; the parties share the care of the children on a 2:2 and 3:2 basis, which changes in each week. The appellant is a surgeon. Before the marriage, the respondent worked as a trained nurse; she ceased full-time work during the course of the marriage. While the parties were married, the respondent was primarily responsible for the children’s care.
[5] The respondent contends that her care of the children during the parties’ marriage and her inability to complete professional training (both during and following the end of the marriage) means that she is not now able to become self- supporting and so she is reliant on a domestic purposes benefit.
[6] The appellant contends that the respondent has elected not to become self- supporting since the parties’ separation, and that as a trained nurse, she has had three years since the parties separated either to find work for which she is qualified, or to retrain in another career. The appellant maintains that the respondent’s current financial situation is, therefore, entirely of her own making.
[7] The division of relationship property is yet to be resolved; relationship property proceedings in the Family Court are extant. A hearing to determine the respondent’s entitlement to maintenance is scheduled to commence on 13 October
2014.
Appeal against order for interim distribution of relationship property
[8] In her application to the Family Court, the respondent sought an interim distribution of either $25,000, or half of the sum she believed was held in a solicitor’s trust account (whichever was the greater). By the time of the hearing, the sum in the solicitor’s trust account had been expended in its entirety. Judge Riddell noted that as there were no funds remaining in the solicitor’s trust account, there was nothing to which an order under s 25 of the Property (Relationships) Act 1976 could attach.
[9] Judge Riddell then referred to evidence of the appellant regarding funds that he had in two Auckland Savings Bank (“ASB”) accounts, one of which ended with the suffix 50 and the other with the suffix 00. The Judge said at [45] of her decision that those funds totalled $22,398.83. However, she has made an arithmetical error. At [2] of her decision, Judge Riddell noted that in the ASB 50 account, as at 1 May
2014 there were funds of $13,500; but as at the date of the hearing (28 May 2014), they had been reduced to $5,178.80. In the ASB 00 account, there were funds of
$2,500 as at 29 April 2014; by 28 May 2014 they had been reduced to $1,220.03. Accordingly, the total amount of the funds in the accounts that the Judge intended to be made the subject of the s 25 order came to $6,398.83.
[10] Although Judge Riddell accurately noted the movement of the funds in the two ASB bank accounts, she then wrongly added all the relevant figures. This
arithmetical error would be enough to require me to set aside the order requiring a distribution of $20,000. But, in addition, the appellant contends that the order is unlawful in its entirety as it falls outside the scope of s 25.
[11] In making the interim distribution order, Judge Riddell took the following considerations into account (at [48] of her decision):
[48] I have considered the following:
(i) The wife has had no access to any significant sums of relationship property since the relationship ended.
(ii) The husband on the other hand has been able to access all of
the funds in the solicitor’s trust account.
(iii) Under s 25 the Court has power to make any order it considers just.
(iv) There is a significant financial disparity of income between the husband and wife. Her present situation is constrained by sharing the care of the children, being restricted to the domestic purposes benefit and being unable to complete retraining at this time.
(v) There are funds available of approximately $20,000.
(vi) The husband has expended some of the monies held for legal fees. It is in the interests of justice that the wife should also have access to relationship property funds for her legal bills.
[12] Those considerations led Judge Riddell to conclude that the appellant knew the respondent was seeking an interim maintenance order. The funds in the solicitor’s trust account that was the subject of the application was now empty. The respondent had disclosed that he had funds in the ASB accounts. So the Judge concluded that it was reasonable that an interim distribution of $20,000 from the ASB accounts be made to the respondent.
[13] The idea of replacing the solicitor’s trust account with the ASB bank accounts arose in the course of the hearing. The appellant contends that they are accounts that he opened after the parties separated, and that they held post-separation funds, which should be viewed as separate property.
[14] The power to make an interim distribution order is to be found in ss 25(3) and
(4), though in the present case s 25(4) is not directly applicable here:
25 When Court may make orders
(1) On an application under section 23, the Court may—
(a) make any order it considers just—
(i) determining the respective shares of each spouse or partner in the relationship property or any part of that property; or
(ii) dividing the relationship property or any part of that property between the spouses or partners:
(b) make any other order that it is empowered to make by any provision of this Act.
(2) The Court may not make an order under subsection (1) unless it is satisfied,—
(a) in the case of a marriage or civil union,—
(i) that the spouses or civil union partners are living apart (whether or not they have continued to live in the same residence) or are separated; or
(ii) that the marriage or civil union has been dissolved;
or
(b) in the case of a de facto relationship, that the de facto partners no longer have a de facto relationship with each other; or
(c) that 1 spouse or partner is endangering the relationship property or seriously diminishing its value, by gross mismanagement or by wilful or reckless dissipation of property or earnings; or
(d) that either spouse or partner is an undischarged bankrupt.
(3) Regardless of subsection (2), the Court may at any time make any order or declaration relating to the status, ownership, vesting, or possession of any specific property as it considers just.
(4) To avoid any doubt, but without limiting subsection (3), if proceedings under this Act are pending, the Court, if it considers it appropriate in the circumstances, may make an interim order under that subsection for the sale of any relationship property, and may give any directions it thinks fit with respect to the proceeds.
(5) This section is subject to the other provisions of this Act.
(6) In proceedings commenced after the death of 1 of the spouses or partners, this section is modified by section 91.
[15] Once an interim distribution order is made, its effect is final so that the property that is affected by the order becomes the separate property of the recipient, and apart from appeal, the making of the order cannot be revisited: see BJB v PB [2012] NZHC 1951 at [12].
[16] The power to make orders under s 25(3) can only be applied to “any specific property”. Two questions are relevant to the exercise of this power: (a) whether the “specific property” must be relationship property or can an order under s 25(3) affect separate property as well; and (b) whether funds in a bank account can be seen to be “specific property” under s 25(3).
[17] Fisher on Matrimonial and Relationship Property (online ed) at [14.9] takes the view that orders made under s 25(3) are not confined to relationship property.
[18] In Cossey v Bach [1992] 3 NZLR 612 at 639, Fisher J opined that:
Although I have by this stage concluded that all of the relevant assets constitute separate property, s 25(3) of the Matrimonial Property Act permits the Court to "make such declaration or order relating to the status, ownership, vesting, or possession of any specific property as it considers just". The jurisdiction appears to extend to separate property. Orders may therefore be made vesting particular assets in their entirety in particular parties notwithstanding the existing state of the legal title, with compensating monetary adjustments in favour of other parties.
Whilst Fisher J concluded that such orders may prove to be appropriate in the case before him, he ultimately decided that it was premature for him to make any specific orders. Thus the view he expressed on the scope of s 25(3) was obiter; and, because it was unnecessary to determine the issue, the question of whether s 25(3) would allow orders that affected separate property to be made by way of interim distribution was not fully considered.
[19] In Reed v Reed HC Hamilton CIV-2006-419-592, 21 August 2006 at [30], Williams J referred to a passage in Fisher on Matrimonial and Relationship Property, which states:
[30] … The relationship between ss 25(1) and 25(3) is as described by the learned authors of Fisher on Matrimonial and Relationship Property para
18.56 p 23,351 as follows:
Orders with respect to property may be global (s 25(1) or specific (s 25(3)). Section 25(1) is concerned only with “the” property, while s 25(3) is concerned with “specific property”. The intention evidently is that under the former the property may be referred to in global terms, while under the latter each asset must be specifically identified. In fact, there is a considerable degree of overlap. There is no limit to the number of items which can be specified and dealt with in one application under s 25(3). Conversely, s 25(1)(a) permits an order with respect to “any part” of the relationship property.
(See also paras 8.21 p 13,136; 14.5 p 19.043 and 18.49 p 23,353 in the last of which the text makes the point that s 25(1)(a) is confined to relationship property while s 25(3) extends the Court’s powers to make orders relating to any property, that is including separate property).
[20] However, the property that Williams J was considering was relationship property. Accordingly, his approval of the text authors’ comments on the scope of s 25(3) is obiter.
[21] In SM v LFDB [2013] NZHC 1056, Ellis J made an order under s 25(3) in relation in part to a debt owed to LFDB by a company, in which LFDB held shares. LFDB argued that the debt was separate property and so it should not be subject to a s 25(3) order. At [31] Ellis J stated that the plain words of s 25(3) in her opinion allowed an interim order to be made in respect of separate property so that even if the debt was not relationship property, it could still be affected by an order under s 25(3). However, later at [64] Ellis J decided on the balance of probabilities that the company debt was relationship property. LFDB was ordered to pay $250,000 to SM following his receipt on 15 May 2013 of a payment of the debt that the company owed to him: see [62] of the judgment.
[22] I have less confidence than did Ellis J in SM v LFDB on whether orders under s 25(3) can affect separate property. I acknowledge that on the face of it, s 25(3) applies to any specific property, which could suggest that the provision could apply to specific property, be it relationship property or separate property. However, when s 25(3) is read in the context of s 25 in its entirety, in my view it becomes more difficult to read s 25(3) so broadly.
[23] Section 25(1) is directed at the distribution of relationship property, as is s 25(2). Section 25(4) refers to interim orders directing the sale of relationship property. Given the specific references in ss 25(1), (2) and (4) to relationship property, it could be said that the specific property referred to in s 25(3) is property that would fall within the other parts of s 25, and that the purpose of s 25(3) is simply to enable orders affecting specific relationship property to be made at any time rather than at the time a final determination on distribution is made.
[24] On the other hand, s 25(1)(b) authorises a Court to make any other order that it is empowered to make by any provision of the Property (Relationships) Act. The Act contains provisions which enable a Court to make findings regarding the treatment of separate property. For example, s 9A provides for when separate property becomes relationship property. Section 15A empowers a Court to make orders where a spouse or partner has contributed to an increase in the value of separate property. Section 17 relates to sustenance of separate property, and s 17A to diminutions of separate property.
[25] On one view, therefore, once a Court has made decisions under those provisions in the Property (Relationships) Act that have the effect of adjusting or drawing what would otherwise be separate property into the pool of relationship property for distribution, those findings may then be put into effect by an order made under s 25(1)(b). In this way, the Court’s ability under s 25(1) would not be constrained to ordering division of property that prima facie was relationship property. If s 25(1) were to be read this broadly, it would also allow for s 25(3) to be read as applying to specific property that was separate property of the type that would be susceptible to being drawn into the pool of relationship property. However, in that case, an order under s 25(3) that affected specific separate property could only be made once a Judge was satisfied that the circumstances of the parties justified the separate property of one party being drawn into the pool of relationship property to be divided under s 25(1). Unless the separate property had this character, I cannot see how a Judge could use s 25(3), because otherwise it would mean that s 25(3) enabled a Judge to order an interim distribution of property that could not be distributed by way of a final order. This way of reading s 25(3) is consistent with the view expressed by Paterson J in Burton v Burton (2001) 21 FRNZ 454 (HC) at [18]
that the purpose of s 25(3) is to give the Court the discretion to make an order on an interim application that it is able to make on a final distribution. It is also consistent with the interpretation given to the provision by Gilbert J in BJB v PB.
[26] In BJB v PB, Gilbert J found that it would be inappropriate for a Judge to order an interim distribution from foreign currency accounts prior to the determination of their proper classification. I agree with this approach because to do otherwise could lead to property that was truly separate property being distributed as if it were relationship property.
[27] It follows that before any order could be made under s 25(3) that affected funds in the ASB bank accounts, Judge Riddell needed to be satisfied that those accounts held relationship property or separate property that was susceptible under other provisions of the Property (Relationships) Act to being drawn into the pool of relationship property. However, Judge Riddell did not make this enquiry.
[28] Moreover, the idea of ordering a payment of money under s 25(3) faces further and more serious difficulties. Ordinarily, money is not viewed as specific property. In Money World New Zealand 2000 Ltd v KVB Kunlun New Zealand Ltd [2006] 1 NZLR 381 (HC), this Court stated at [50]:
… one of the essential features of money is that it cannot be recovered in specie by a true owner if the particular money has passed into currency, that is to say, into general circulation or use.
Funds that move in and out of bank accounts like the ASB 00 and 50 accounts are susceptible to general circulation, and so for this reason they will not readily fit the description of “specific property”.
[29] I acknowledge that Burton v Burton and Murray v Murray (1989) 5 FRNZ
177 (CA) are cases where funds in solicitors’ trust accounts were the subject of orders made under s 25(3). It is not clear to me from those decisions if the funds in the trust accounts were frozen by Court order, or by the parties’ agreement. In each case, the funds were the proceeds of sale of the matrimonial home, and so they were clearly relationship property. When such funds are frozen, they and the account in which they are held will be sufficiently specific for them to be identified as specific
property under s 25(3). But if funds in either a trust account or a bank account are not frozen, the reality is that such funds can move in and out of the accounts to be replaced by funds of a different character, or even of mixed character in terms of being either relationship or separate property. In such circumstances, I have difficulty seeing how they can be characterised as “specific property” in terms of s 25(3).
[30] In Burton at [21], Paterson J recognised that no one can take possession of money. He also recognised (at [21]) that money in a bank account or trust account is a chose in action. This may be so in relation to the account holder’s rights vis-à-vis the bank or the solicitors responsible for the trust account. But so long as money can move freely in and out of those accounts, the character of those funds can change from relationship property to separate property, or to a mix of the two, depending upon the source of the funds.
[31] What actually occurred here is one step removed from what the respondent first sought, which was an order that funds in a specific account be distributed. Because here, once Judge Riddell learned that the subject funds in the solicitor’s trust account were no longer available, Judge Riddell then ordered that substitute funds in other accounts be distributed. This is no different from the Judge exercising a power to order interim payments of money from out of the general pool of property, which is something that s 25(3) does not permit a Judge to do without first making the inquiries that I have described at [25]. I am satisfied, therefore, that the interim order that she made is ultra vires and for that reason it should be set aside in its entirety.
[32] I have not decided whether s 25(3) applies only to relationship property or whether it can be applied to property that prima facie is separate but susceptible to being drawn into the pool of relationship property. I have not needed to do so because on either view, the funds in the ASB accounts would not qualify. Their character was not determined by Judge Riddell and I do not have enough evidence available to me to make that type of determination.
[33] The view that I have reached in [31] and [32] means that it is unnecessary for me to reach a firm view on whether the funds in the ASB accounts would qualify as “specific property” for the purpose of s 25(3), or whether they would be viewed as no more than money that is in general circulation.
[34] The parties were agreed that an appeal against the making of an interim distribution order is an appeal against the exercise of a discretion. A finding that a discretion has been exercised ultra vires falls within the category of occasions when an appellate court can interfere with the exercise of a discretion. Often in an appeal against the exercise of a discretion, the appellate court will then go on to make its own determination of how the discretion should be exercised. However, here I have found that there is simply no power available to a Judge under s 25(3) to make an interim distribution order that has the effect of requiring one party to make a payment of money that is in general circulation or use to the other party. No one has referred me to any other provision under the Property (Relationships) Act that would allow such a distribution, nor have I been able to identify any such power. In addition, the arithmetical error described earlier entails that the order is ultra vires.
Interim maintenance
[35] At [27] of her judgment, Judge Riddell referred to the respondent’s change of circumstances since separation, which required her to live at a “very frugal level”. The respondent had deposed in her affidavit evidence that her monthly shortfall in income was $8,509, or $1,963.61 per week. Her evidence was that she had to resort to loans in order to fund her expenses. From time to time, she had sought assistance from the appellant for payment of expenses. He had done so and kept a record in order to have that funding taken into account in the final relationship division.
[36] Judge Riddell noted that before they separated, the parties had enjoyed a high standard of living. She referred to their wedding and honeymoon, which cost somewhere between $150,000 to $175,000. The appellant’s career as a surgeon saw him working in various hospitals in his home country. He retains a property there, as well as a condominium in the United States. He derives rental income from those properties. His evidence was that since moving to New Zealand, he has had to
develop a private surgical practice, which had required liquidation of certain assets. Nonetheless, he conceded that his practice had grown since he came to New Zealand, though he asserted that he was “far from secure or wealthy”. His affidavit of financial means and sources disclosed an annual income of $283,039.17, and expenses for the past year totalling $424,952.24. Nearly $100,000 was estimated for various legal fees, and he had allocated $54,557 for certain house expenditures relating to property acquired by his family trust.
[37] Judge Riddell stated that she was not bound to consider the qualifying factors in s 64 of the Family Proceedings Act 1980 when determining an application for interim maintenance, but that nonetheless she found they were a relevant consideration in the present case. The Judge referred to the division of function during the parties’ relationship where the respondent then had primary responsibility for the care of the children. The Judge found that the respondent’s potential earning capacity was significantly less than that of the appellant and that has continued to be the case. The Judge referred to the respondent’s attempt at retraining in another profession (she had begun that study while the parties were living overseas), but this was not completed. The Judge recognised that for the appellant to continue that training in New Zealand, she would have to reside out of Hamilton. The appellant proposed the respondent move away from Hamilton during the week and return to Hamilton at the weekends. Judge Riddell’s view was that given the respondent’s presently constrained financial situation, this was not realistic. The suggestion that she improve on her nursing skills was also in Judge Riddell’s view impeded by current arrangements for the children and the one year required to obtain an updated practising certificate.
[38] Judge Riddell noted that the appellant had a significantly superior income to the respondent. He also had control over the assets in dispute in the relationship property proceedings. She referred to funds of $74,507 held in a solicitor’s trust account, which he had expended. Further, she noted that the appellant had access to funds through family trusts in which he was a beneficiary. His present home, which cost $1.45 million, was apparently funded by a family trust or his mother.
[39] Judge Riddell found that the respondent’s budget “sets out her reasonable needs as applied when the parties were living together”. Judge Riddell also found that “given the shared care of the children and [the respondent’s] need to retrain if she is to acquire qualifications [in another profession] she is presently unable to meet her reasonable needs”. Judge Riddell then found that the appellant’s income was sufficient “were he to undertake some pruning of his budget to meet the wife’s interim spousal maintenance needs”. Those findings led Judge Riddell to conclude that the appellant should pay the respondent interim spousal maintenance for six months of $8,509.22 per month, payment to be made for the months of June to November 2014.
[40] The authority to make interim maintenance orders is to be found in s 82 of the Family Proceedings Act, which provides:
82 Interim maintenance
(1) Where an application for a maintenance order or for the variation, extension, suspension, or discharge of a maintenance order has been filed, any District Court Judge may make an order directing the respondent to pay such periodical sum as the District Court Judge thinks reasonable towards the future maintenance of the respondent's spouse, civil union partner, or de facto partner until the final determination of the proceedings or until the order sooner ceases to be in force.
(2) Repealed. (3) Repealed.
(4) No order made under this section shall continue in force for more than 6 months after the date on which it is made.
(5) An order made under this section may be varied, suspended, discharged, or enforced in the same manner as if it were a final order of a Family Court.
[41] The authority to make maintenance orders after dissolution of marriage is to be found in s 64 of the Family Proceedings Act; also relevant is s 64A:
64Maintenance after marriage or civil union dissolved or de facto relationship ends
(1) Subject to section 64A, after the dissolution of a marriage or civil union or, in the case of a de facto relationship, after the de facto partners cease to live together, each spouse, civil union partner, or de
facto partner is liable to maintain the other spouse, civil union partner, or de facto partner to the extent that such maintenance is necessary to meet the reasonable needs of the other spouse, civil union partner, or de facto partner, where the other spouse, civil union partner, or de facto partner cannot practicably meet the whole or any part of those needs because of any 1 or more of the circumstances specified in subsection (2).
(2) The circumstances referred to in subsection (1) are as follows:
(a) the ability of the spouses, civil union partners, or de facto partners to become self-supporting, having regard to—
(i) the effects of the division of functions within the marriage or civil union or de facto relationship while the spouses, civil union partners, or de facto partners lived together:
(ii) the likely earning capacity of each spouse, civil union partner, or de facto partner:
(iii) any other relevant circumstances:
(b) the responsibilities of each spouse, civil union partner, or de facto partner for the ongoing daily care of any minor or dependent children of the marriage or civil union or (as the case requires) any minor or dependent children of the de facto relationship after the dissolution of the marriage or civil union or (as the case requires) the de facto partners ceased to live together:
(c) the standard of living of the spouses, civil union partners, or de facto partners while they lived together:
(d) the undertaking by a spouse, civil union partner, or de facto partner of a reasonable period of education or training designed to increase the earning capacity of that spouse, civil union partner, or de facto partner or to reduce or eliminate the need of that spouse, civil union partner, or de facto partner for maintenance from the other spouse, civil union partner, or de facto partner if it would be unfair, in all the circumstances, for the reasonable needs of the spouse, civil union partner, or de facto partner undertaking that education or training to be met immediately by that spouse, civil union partner, or de facto partner—
(i) because of the effects of any of the matters set out in paragraphs (a)(i) and (b) on the potential earning capacity of that spouse, civil union partner, or de facto partner; or
(ii) because that spouse, civil union partner, or de facto partner has previously maintained or contributed to the maintenance of the other spouse, civil union
partner, or de facto partner during a period of education or training.
(3) For the purposes of subsection (2)(a)(i), if the marriage or civil union was immediately preceded by a de facto relationship between the spouses or civil union partners, the effects of the division of functions within the marriage or civil union include the effects of the division of functions within that de facto relationship.
(4) Except as provided in this section and section 64A,—
(a) neither party to a marriage or civil union is liable to maintain the other party after the dissolution of the marriage or civil union:
(b) neither party to a de facto relationship is liable to maintain the other de facto partner after the de facto partners cease to live together.]
64A Spouses, civil union partners, or de facto partners must assume responsibility for own needs within reasonable time
(1) If a marriage or civil union is dissolved or, in the case of a de facto relationship, the de facto partners cease to live together,—
(a) each spouse, civil union partner, or de facto partner must assume responsibility, within a period of time that is reasonable in all the circumstances of the particular case, for meeting his or her own needs; and
(b) on the expiry of that period of time, neither spouse, civil union partner, or de facto partner is liable to maintain the other under section 64.
(2) Regardless of subsection (1), if a marriage or civil union is dissolved or, in the case of a de facto relationship, the de facto partners cease to live together, 1 spouse, civil union partner, or de facto partner (party A) is liable to maintain the other spouse, civil union partner, or de facto partner (party B) under section 64, to the extent that such maintenance is necessary to meet the reasonable needs of party B if, having regard to the matters referred to in subsection (3),—
(a) it is unreasonable to require party B to do without maintenance from party A; and
(b) it is reasonable to require party A to provide maintenance to party B.
(3) The matters referred to in subsection (2) are as follows:
(a) the ages of the spouses, civil union partners, or de facto partners:
(b) the duration of the marriage or civil union or de facto relationship:
(c) the ability of the spouses, civil union partners, or de facto partners to become self-supporting, having regard to—
(i) the effects of the division of functions within the marriage or civil union or de facto relationship while the spouses, civil union partners, or de facto partners were living together:
(ii) the likely earning capacity of each spouse, civil union partner, or de facto partner:
(iii) the responsibilities of each spouse, civil union partner, or de facto partner for the ongoing daily care of any minor or dependent children of the marriage or civil union or (as the case requires) any minor or dependent children of the de facto relationship after the dissolution of the marriage or civil union or (as the case requires) after the de facto partners ceased to live together:
(iv) any other relevant circumstances.
(4) If the marriage or civil union was immediately preceded by a de facto relationship between the spouses or partners,—
(a) for the purposes of subsection (3)(b), the de facto relationship must be treated as if it were part of the marriage or civil union; and
(b) for the purposes of subsection (3)(c)(i), the effects of the division of functions within the marriage or civil union include the effects of the division of functions within that de facto relationship.
[42] The appellant argues that as s 174(1B) of the Family Proceedings Act provides that an appeal is a general appeal pursuant to s 72 of the District Courts Act
1947, the approach is as set out in Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141. The respondent contends that the appeal is an appeal against the exercise of a discretion, and therefore it should be approached in accordance with the principles determined in May v May (1982) 1 NZFLR 165 (CA).
[43] In FH v LH [2013] NZHC 1044, in RMA v JB [2013] NZHC 2984, [2014] NZFLR 169, and in Hodson v Hodson [2012] NZFLR 252, this Court has found that appeals against the making of an interim maintenance order are appeals against the exercise of a discretion. I agree with those views. The language of s 82 permits the Judge at first instance to order payments that the Judge considers are reasonable.
This is not a factual determination but a matter of opinion. Views on what a reasonable payment might be can vary, but such views will still meet the description of being reasonable. This is the very essence of a discretionary decision. Provided the payment is not one that no reasonable Judge could order or the decision-making processes does not offend one of the other principles identified in May v May, it is not for an appellate court to substitute its view of what a reasonable payment might be for the view of the Judge at first instance.
[44] The appellant argues that because Judge Riddell had said she would treat the considerations set out in s 64 as relevant considerations, she was then required to consider them, when in fact she did not do so. I do not accept this submission. Section 82 gives a Judge a broad discretion, which is to be exercised reasonably. As no relevant considerations are stipulated, there are no mandatory considerations for a Judge to take into account. Whilst Judge Riddell said she would take the s 64 considerations into account, this is not enough to elevate those considerations to the status of mandatory relevant considerations, which is what they are when it comes to making a decision under s 64. In the context of making a decision under s 82, Judge Riddell was free to take the s 64 considerations into account or, having done so, then to change her mind and put them to the side.
[45] Judge Riddell approached the appellant’s liability to pay maintenance on the basis that the respondent had established her reasonable needs as applied when the parties were living together and she was now unable to maintain those needs herself. The Judge treated the respondent’s reasonable needs now as equating to what were her reasonable needs when the parties were still married. No attempt was made to determine if the respondent’s current reasonable needs can be properly equated with what they were at the time the parties were together. I consider that this is an implied relevant consideration that Judge Riddell was obliged to take into account. Just over three years have elapsed since the parties separated, so in that time the respondent’s reasonable needs may have changed. This is not to say that they have done, but there needed to be some recognition that they may have done and thought given to whether that was the case or not. Only after a decision that the respondent’s reasonable needs remained at the level they were at during the marriage could Judge Riddell reasonably determine that the respondent’s needs at the time of the
marriage were an appropriate measure for determining if her present reasonable needs were being met. I have carefully considered the respondent’s submissions. She has referred to a number of relevant authorities on spousal maintenance. However, her arguments cannot cure this material omission on the part of Judge Riddell.
[46] It follows that Judge Riddell has erred in making the decision on interim maintenance in one of the ways identified in May v May that the Judge failed to take into account a relevant consideration. That is enough to allow me to interfere with the decision on appeal. This is not to say that the respondent has no entitlement to interim maintenance. But this can only be established after a proper enquiry has been made into her present reasonable needs. Ordinarily, an error of this type would result in the decision being set aside and sent back to the Family Court for rehearing. However, in this case, the hearing of the application for a final maintenance order will be heard on 13 October 2014. In the time between now and then, it is hard to see how the application for interim maintenance could be reheard, or if there would be any utility in doing so.
[47] I propose, therefore, to set the interim maintenance order aside and to give the parties leave to file memoranda on the next steps to be taken. The appellant should file and serve his memorandum within five working days of the date of delivery of this judgment. The respondent should file and serve her memorandum within five working days of receipt of the appellant’s memorandum.
Result
[48] The appeal against the interim distribution order made under s 25(3) of the
Property (Relationships) Act is allowed. The order is set aside.
[49] The appeal against the interim maintenance order made under s 82 of the Family Proceedings Act is allowed. The interim maintenance order is set aside. The parties have leave to file memoranda in accordance with the above timetable directions.
[50] Leave is reserved to the parties to file memoranda as to costs.
Duffy J
Counsel: S R Jefferson QC, Auckland
V A Crawshaw, Auckland
Solicitors: Wynyard Wood, Auckland
Beattie Rickman Legal, Hamilton
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