Picard v Martin
[2020] NZHC 1206
•3 June 2020
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://www.justice.govt.nz/family/about/restriction-on-publishing-judgments/
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2019-463-000106
[2020] NZHC 1206
BETWEEN CHYNELLE TUI FRANCIS PICARD
Appellant
AND
ALEC ROBERT MARTIN
First Respondent
ANNABELLA TANYA MARTIN
Second Respondent
Hearing: 13 May 2020 Appearances:
J Hosking for Appellant A R Martin in person
K Patterson for Second Respondent
Judgment:
3 June 2020
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Wednesday, 3 June 2020 at 3:00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: The Law Shop, Rotorua (S Northey) for the Appellant Counsel: J Hosking for the Appellant
K J Patterson, Tauranga, for the Second Respondent Copy to: A R Martin (First Respondent)
PICARD v MARTIN & ANOR [2020] NZHC 1206 [3 June 2020]
[1] Ms Chynelle Picard appeals a judgment of Judge S J Coyle delivered on 17 October 2019 in relation to the division of relationship property and constructive trust issues.1 Mr Alec Martin cross-appeals.
[2] In the Family Court, the principal issues that required determination related to a rental property and the home in which Ms Picard and Mr Martin lived for the five years immediately prior to their separation. In particular, the issues were:
(a)Whether the sum of $50,000 utilised by Ms Picard and Mr Martin towards the purchase of the rental property was a loan or a gift from Mr Martin’s father, Mr Robert Martin.
(b)Whether Ms Picard and Mr Martin had an equitable interest in the home in which they had lived, which is now owned by Mr Martin’s mother, Mrs Annabella Martin. Principally, Ms Picard asserted that she and Mr Martin had an equitable interest in the home by virtue of a constructive trust.
[3] There were also some minor issues relating to other property such as shareholdings, bank accounts and cars. Ms Picard says Judge Coyle was wrong to find against her on the two principal issues. She also challenges the Judge’s findings on some of the minor issues. Mr Martin cross-appeals on the basis that the Judge overlooked dealing with other minor issues.
Principles governing this appeal
[4] This is a general appeal. I therefore apply the principles articulated by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar:2
(a)I must make my own assessment of the merits of the parties’ cases;
(b)The appellant bears the onus of satisfying me I should differ from Judge Coyle’s conclusions;
1 Martin v Picard [2019] NZFC 6259.
2 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
(c)I am justified in interfering with Judge Coyle’s judgment only if I consider his judgment was wrong;
(d)If my view is different from the conclusions of Judge Coyle, then his decision is wrong in the only sense that matters, even if it was a conclusion upon which minds might reasonably differ; and
(e)In such circumstances I should not defer to Judge Coyle’s assessment of the acceptability and weight to be accorded to the evidence rather than my own judgement.
Factual background
[5] Ms Picard and Mr Martin lived in a de facto relationship from at least February 2000. They separated on 30 November 2014. They have two children, being a daughter, Courtnee, born 4 March 2001, and a son, Ashton, born 12 September 2007. They both worked during the relationship.
[6] In the early years of their relationship Ms Picard and Mr Martin lived in rental properties and, at times, with family including Ms Picard’s mother. In 2007, Ms Picard and Mr Martin purchased a property at 72 Sunset Road, Rotorua, at the instigation of Mr Robert Martin. Mr Robert Martin says he lent $50,000 to enable his son and Ms Picard to obtain a loan to complete the purchase. The property was tenanted until 2016, when Ms Picard and the children moved into the property from April 2016 until November 2016, when it was sold.
[7] In 2009, again at Mr Robert Martin’s instigation, Ms Picard and Mr Martin became involved in a project to move a house from Taupo to a property owned by Northdale Holdings Ltd (Northdale) at 628 Paradise Valley Road, Rotorua. The sole shareholder of Northdale was Mr Robert Martin. The directors were Mr Robert Martin and Mrs Martin. Although consents were obtained either in the name of Mr Robert Martin or Northdale and the cost of relocation was initially paid by Mr Robert Martin, either personally or through one of his companies, Ms Picard and Mr Martin obtained a $100,000 loan, which was utilised in part to repay Mr Robert Martin for relocation of the house and to refurbish the house and connect
it to services. The loan was not secured over the property on to which it was relocated, but over other property owned by another of Mr Robert Martin’s companies. Ms Picard, Mr Martin and their two children moved into the house once it was habitable. Mr Robert Martin fenced off the house from the rest of the property, using fencing materials purchased by Northdale, to protect it from stock.
[8] The property on to which the house was relocated totalled 26.9 hectares and was not subdivided. In 2013, the property was transferred to Mrs Martin as part of a relationship property settlement with Mr Robert Martin.
[9] Ms Picard and Mr Martin lived in the house at 628 Paradise Valley Road from 2009 until they separated on 30 November 2014. During that time, they did not pay any rent to Northdale or Mrs Martin. Nor have they paid any rates or insurance on the property. Nor have they made any contributions to paying off the mortgage on the property. They did, however, consider the $100,000 loan secured over other property owned by another of Mr Robert Martin’s companies as their own and have continued to pay it off.
Family Court decision
[10] After setting out the issues for determination, Judge Coyle firstly dealt with a number of minor relationship property issues, being a KiwiSaver account, a number of bank accounts, a small share portfolio, a number of motor vehicles, a Sky account and other adjustments.
Rental property at 72 Sunset Road, Rotorua
[11] The Judge then considered the rental property at 72 Sunset Road, Rotorua. He noted that the rental property had now been sold and the net sale proceeds of
$109,883.05 were held in the trust account of Key Conveyancing Ltd. He noted the issue as to whether the total sum was available for distribution between the parties as relationship property or whether $50,000 of that sum was a debt owed to Mr Robert Martin.
[12] The Judge said that the property had been purchased in 2007 in the name of Ms Picard and Mr Martin from Everard Developments Ltd (Everard), a company which was principally controlled by Mr Robert Martin. Mr Robert Martin had previously purchased the property through the vehicle of Everard. The Judge recounted Mr Martin’s evidence that his father approached them to discuss the possibility of buying a house as an investment property. Mr Martin said that he told his father that they could not afford the property as they did not have any money saved for a deposit. Mr Robert Martin then offered them a loan of $50,000 to use as a deposit, to be repaid upon the sale of Sunset Road and with the balance of the purchase price being funded by way of a mortgage to the ANZ Bank of $165,000.
[13] The Judge states that what became apparent during Mr Robert Martin’s cross- examination was that Everard had in fact purchased the Sunset Road property and Ms Picard and Mr Martin had subsequently purchased the property from Everard. He noted that Mr Robert Martin was unclear whether he lent $50,000 to Ms Picard and Mr Martin or whether he simply left equity in the property on the basis that upon the sale he would be refunded the $50,000. He referred to the evidence of Mrs Martin, who was responsible for preparing the company’s accounts and accepted her evidence that $50,000 was left in the property as vendor equity so as to give the appearance to the ANZ Bank that Ms Picard and Mr Martin had a deposit. The Judge said that it was Ms Picard’s position that the monies were gifted by Mr Robert Martin to her and Mr Martin. The Judge saw that as a clear factual issue that needed to be resolved.
[14] The Judge accepted and preferred the evidence of Mr Robert Martin and Mr Martin. Ms Picard was not an integral part of the conversations between Mr Martin and his father. She had no knowledge of what had been agreed and the first time she knew about it was when she was asked to go to the bank to sign the mortgage documentation. The Judge found that Mr Robert Martin had left $50,000 equity in the property through Everard, that there was an express agreement that when the property was sold he/Everard would be repaid the $50,000 and any profit on sale would be retained by Ms Picard and Mr Martin.
[15] The Judge noted counsel’s criticism that there was no formal written documentation, but the Judge said it was clearly an interest free loan motivated out of
a desire by Mr Robert Martin to see his son and Ms Picard get ahead in life and eventually be able to purchase their own property.
[16] The Judge also referred to counsel’s submission that the limitation period had expired and that as the debt was therefore unenforceable, it was no longer a valid debt, referring to DFC New Zealand Ltd v McKenzie.3 The Judge said, however, that there was clear evidence that there was an express condition that the loan would be repaid upon sale of the Sunset Road property. The oral contract was not silent about repayment. It expressly provided for repayment. Thus, the action to enforce the loan could not be commenced until sale of the house. That sale had recently occurred. Accordingly, the limitation period which commences from the date of sale had not expired. He directed that the $50,000 was a relationship debt as defined in s 20(1) of the Property (Relationships) Act 1976. Thus, of the monies held in the solicitor’s trust account, he directed that the first $50,000 was to be repaid to Mr Robert Martin or his company, with the balance to be divided equally between the parties.
Residence at 628 Paradise Valley Road
[17] The Judge looked first at the value of 628 Paradise Valley Road. He had two valuations before him. The Judge noted that the valuations were not identical because one was a valuation of the land without any improvements, and the other was a valuation of the land plus improvements. Leaving that issue aside, in reality, the Judge said there was little difference between the two valuations on a per square metre basis. The Judge noted that the relevance of the valuation undertaken by Mr Craven, a registered valuer, was with reference to s 12A of the Property (Relationships) Act, which sets out the approach to be adopted in valuing a homestead. A homestead is defined in the Act as meaning a family home where the dwelling house that comprises the family residence is situated on an unsubdivided part of land that is not used wholly or principally for the purposes of the household. Mr Craven’s fixing of the curtilage at 2,500 square metres was informed by the provisions of the 2012 District Plan, which describes the minimum subdivision as being 2,500 square metres. The Judge accepted that that was the appropriate bench mark by which to determine the size of the curtilage.
3 DFC New Zealand Ltd v McKenzie [1993] 2 NZLR 576 (HC).
[18] He noted that as at 7 March 2019, Mr Craven valued the house and curtilage at $500,000, comprising of land value at $276,000 and improvements at $224,000. As at the same date, Mr Craven gave an indicative value of the whole property as being
$1 million. However, the Judge noted that Mr Martin’s cross-examination of Mr Craven revealed his failure to factor the flood risk into his valuation. Because of the recent flooding of the property and the on-going flood risk, he conceded a discount of five to 10 per cent may be appropriate. As a consequence, the Judge fixed a discount of five per cent and found that the value of the house and curtilage as at 7 March 2019 was $475,000.
[19] The Judge then considered the crucial question whether there was a constructive trust in relation to the Paradise Valley Road property. He noted Mr Martin’s assertion that he and Ms Picard did not own the property and it was therefore outside the relationship property pool. The Judge said that Ms Picard acknowledged that, at the time of the relocation of the house, the property was owned by Mr Robert Martin’s company, Northdale. However, she asserted that a constructive trust was established by virtue of the work they undertook on the property and the monies they expended upon the property.
[20] The Judge referred to how Mr Robert Martin had found a relocatable house in Taupo and decided to move it on to the property at 628 Paradise Valley Road. He accepted Mrs Martin’s evidence that any discussions between Mr Robert Martin and Mr Martin about the relocation of the house all occurred without her knowledge. At the time, there were on-going discussions between her and Mr Robert Martin about resolution of their relationship property and she held an expectation that 628 Paradise Valley Road was to form a substantial part of her relationship property settlement. She described in her evidence a discussion she had with her solicitor, Mr Briscoe, in which Mr Briscoe advised her that she should seek an injunction to force Mr Robert Martin to remove the house from her property given it was placed on “her land” without her knowledge or consent.
[21] The Judge acknowledged that Mrs Martin appeared to accept that she might now consider subdividing the house that was relocated and the curtilage around it from her block of land if her son paid the cost of the subdivision. The Judge said this offer
was made in the context of her cross-examination and was of no relevance or bearing on the argument advanced by Ms Picard as to the existence of a constructive trust.
[22] Similarly, the Judge noted that counsel for Ms Picard sought to question Mrs Martin on her testamentary intention. The Judge said that her evidence in that regard was entirely irrelevant.
[23] The Judge noted the assertion of Mr Robert Martin and Mr Martin that there was a discussion before the house was moved from Taupo, in which Mr Robert Martin offered to let Ms Picard and Mr Martin live in the property rent free in exchange for them connecting it to services, such as power, water and sewerage and getting the relocatable house into a liveable state. By living there rent free, Mr Robert Martin’s intention was to enable them to save money and to, in time, be in a position to purchase their own property. The Judge noted that Ms Picard and Mr Martin subsequently obtained finance from the ASB Bank by way of a $100,000 loan. From that, $33,000 was used to repay Mr Robert Martin for the cost of relocating the home and a further sum was used to refurbish the property and connect it to services. It was agreed that security for the loan from the ASB Bank would be over two other properties owned by Everard. On receipt of $100,000, $50,000 was immediately transferred to an Orbit Home Loan account, in effect, a revolving credit facility. Of the remaining $50,000, only $40,000 was drawn down. This left a debt of about $90,000 as at separation.
[24] The Judge noted that while Ms Picard appeared to be asserting that the entire loan was used towards improving the property, the Judge did not accept that on the evidence. It is clear, he said, from the evidence of Mr Martin that some of the loan monies was used for an overseas trip, to purchase motor vehicles and other general living expenses. However, it appeared that from the loan monies the sum of about
$25,000 was used towards connecting the property to essential services and some partial renovations.
[25] The Judge thought that Ms Picard had exaggerated the extent to which there were improvements to the land. In most respects, he found her evidence to be unreliable and exaggerated. However, it was clear that a significant sum was advanced by Ms Picard and Mr Martin to repay Northdale for the cost of the relocatable home
and for the cost of partial renovation and connection of services. The Judge fixed this at $58,000.
[26] The Judge noted that Mr Robert Martin was emphatic in his evidence that he retained ownership of the house. He was not challenged in relation to his assertion in cross-examination, although Mr Martin was. Mr Robert Martin’s assertion had to be weighed against the evidence of Ms Picard and Mr Martin that the sum of $33,000 was transferred from their bank account to Northdale. There was no formal agreement in place and thus any claim must be centred in equity, rather than contract. It was on the basis of the work and the monies expended by them as a couple that Ms Picard asserted that a constructive trust had been established.
[27] The Judge then noted the four requirements of a constructive trust set out by Tipping J in Lankow v Rose.4 The Judge also referred to the more recent decision of Wakenshaw v Wakenshaw, which clarified the position relating to the issue of contributions.5
[28] In this case, the Judge found it was clear that Ms Picard and Mr Martin’s contributions were more than minor. In relation to the house, it is clear, said the Judge, that Ms Picard and Mr Martin made it liveable, although all parties accepted that it was certainly not fully renovated prior to the parties’ separation. The Judge referred to bank statements, which showed that money in the ASB Bank Orbit Home Loan account was also used for the purchase of motor vehicles and overseas travel. The Judge found that a total of at least $58,000 had been expended by Ms Picard and Mr Martin. That, he said, was a substantial contribution and clearly enhanced their house. There was, therefore, in terms of Wakenshaw, a causal nexus between the contributions and the enhancement of the house at 628 Paradise Valley Road.
[29] The Judge stated that there were, however, further hurdles for Ms Picard’s claim of a constructive trust. First, as the Court of Appeal set out in Wakenshaw, any contribution causally linked to acquisition, preservation or enhancement must be an
4 Lankow v Rose [1995] 1 NZLR 277 (CA).
5 Wakenshaw v Wakenshaw [2017] NZCA 252.
amount that is “manifestly exceed any benefits … derive[d] from the arrangement”.6 In this case, Ms Picard and Mr Martin had lived rent free in the house for five years. No contributions were made by them to rates and insurances. He noted that Ms Picard had initially contributed $125 per week, which had increased to $270 per week by the end of the relationship, which sum was used to repay the parties’ mortgage. The Judge noted it was not a mortgage over 628 Paradise Valley Road, thus was not increasing the equity in that property at all and was not a contribution towards the acquisition or preservation of the house. It could be argued that it was a contribution towards the enhancement of the house, but even if that were true, the Judge found that Ms Picard’s claim failed because she did not establish that her contribution was manifestly in excess of the benefits derived.
[30] The Judge found that the rental foregone over the five-year period was approximately $64,000, which exceeded their contributions of $58,000. Thus, the parties’ contributions did not exceed the benefits to them of living rent free.
[31] Secondly, the Judge said that even if he was wrong in relation to that issue, the claim must fail on the issue of expectation. Ms Picard needed to establish an expectation of interest and that such an expectation was a reasonable one. What was clear, according to the Judge, was that there was a discussion between Mr Robert Martin and Mr Martin (which Ms Picard acknowledged she played no part in at all) during which Mr Robert Martin offered to let them live rent free in the property on the basis that they would pay the cost of relocating the house and connecting it to services. Mr Robert Martin saw it as an opportunity for Ms Picard and Mr Martin to save some money and use the money saved together with the profit from the sale of the Sunset Road property to enable them to build their own home on other land owned by the family. The Judge accepted Ms Picard’s evidence that their long-term intention was to build their dream home on the land adjoining the house and curtilage in dispute, that is, on another portion of 628 Paradise Valley Road.
[32] Mr Robert Martin and Mr Martin were adamant that at no stage was there any expectation that Ms Picard and Mr Martin in contributing to the costs of relocation
6 At [25].
and the connection of services would gain an interest in the house. Although Ms Picard accepted that she was not part of those discussions, she repeated several times during her evidence that she would not have contributed money towards repayment of the $90,000 mortgage if she did not think that she was getting an interest in the property. Thus, her position was that she had a clear expectation that by connecting the house at 628 Paradise Valley Road to essential services and partially renovating it, she was gaining an interest in it. She asserted that part of the reason for her expectation of the benefit was that Mr Martin’s siblings had all, in effect, been gifted land by Mr Robert Martin and Mrs Martin. The Judge said, nevertheless it may well be reasonable for Ms Picard to expect that there was some financial benefit to them both in establishing the relocated house on 628 Paradise Valley Road, but as Lankow v Rose established, the test was whether that was a reasonable belief when viewed objectively. The Judge determined that it was not. If Ms Picard had an expectation then it was her unilateral expectation and not an expectation shared by her partner, Mr Martin. There was no evidence that she ever even discussed her expectations with Mr Martin. The Judge concluded that Ms Picard’s unilaterally held expectations had to be given lesser weight than the objective evidence of the express intentions of Mr Martin and his father.
[33] Thirdly, there was an additional issue which, in the Judge’s view, was also fatal to Ms Picard’s claim: he noted that in 2013 the property was transferred to Mrs Martin by way of partial settlement of her relationship property issues with Mr Robert Martin. The issue was therefore whether Mrs Martin had received the property subject to a constructive trust claim, which was at the time of transfer, entirely unknown to her.
[34] The Judge proceeded to distinguish two High Court decisions relied upon by Ms Picard — Smith v Hugh Watt Society Inc,7 and Taylor v Naera.8 The Judge noted that in the hearing before him, Mrs Martin was not cross-examined as to her knowledge at the time of the transfer. Thus, it was not clear to the Judge whether she knew about the contributions by Ms Picard and Mr Martin in terms of the connection of services and/or a payment to Mr Robert Martin and whether this was at the time of, or prior to, the transfer. Therefore, it was not clear whether she ever became aware of
7 Smith v Hugh Watt Society Inc [2004] 1 NZLR 537 (HC).
8 Taylor v Naera [2019] NZHC 1862.
those facts until she was served with the pleadings in relation to the current claim by Ms Picard against her. In the absence of any evidence as to when she obtained that knowledge, the Judge was unable to conclude that she had either expressed or imputed knowledge at the time of transfer to her. She was, therefore, entitled to the presumption that she took title pursuant to the Land Transfer Act 1952 unencumbered by a constructive trust. The Judge found, therefore, for those three reasons, that Ms Picard’s claim against Mrs Martin seeking a declaration of a constructive trust must fail, and her application was dismissed.
[35] Finally, the Judge noted that there remained a debt of around $90,000 owed to the ASB Bank. It was a debt in the name of both parties and they were jointly liable for it. Effectively, therefore, half of that debt was to be repaid by both parties. The Judge said that to Mr Martin’s credit, he recognised the unfairness of that. He, in response to cross-examination from counsel for Ms Picard, conceded that he and Ms Picard should not share equally in that debt. As to what exactly he meant by that, he indicated he would leave it to the Court to resolve. It did seem unfair to the Judge that Ms Picard should be responsible for the portion of the debt, that is, $58,000, which had been utilised towards the relocation and services for the property at 628 Paradise Valley Road. It did seem fair to him that the balance of that debt should be shared equally between them as the monies were used for relationship purposes and thus it was a relationship debt. Thus, given the acceptance by Mr Martin of that issue, the Judge determined that he was to be solely responsible for $58,000, with the balance of that debt to be shared equally between the parties.
Mr Robert Martin and the $50,000 loan/gift
[36] In her narrative affidavit of 5 September 2016, Ms Picard said that she disagreed with the proposition that Mr Robert Martin had loaned them the deposit of
$50,000 for the purchase of 72 Sunset Road. She said that until Mr Martin started to negotiate relationship property matters with her in May 2016 through legal counsel, she was unaware that there had been a loan of $50,000 to Mr Martin. She was only aware that there was a mortgage to the ANZ Bank in their joint names secured over the property. At the hearing, Ms Picard asserted that if any money was advanced in
some way to assist with the purchase of 72 Sunset Road, it was a gift rather than a loan.
[37] On appeal, Ms Picard first criticises the Judge’s finding that Everard was the original owner of the property at 72 Sunset Road, Rotorua. The surviving contemporaneous documents make no reference to Everard at all. Mr Robert Martin was also unsure from whom the money was given. Ms Picard then notes that there is no extraneous evidence of the “express oral condition” that the loan would be repaid upon the sale of the Sunset Road property. Mr Robert Martin had said in his affidavit that the loan was to be repaid when Ms Picard and Mr Martin were “financially capable of doing so”. Both Mr Martin and his father were clear that the money was provided to enable Ms Picard and Mr Martin to obtain a mortgage. Yet Mr Martin had never disclosed the loan application to the ANZ Bank in 2007 or the later ASB Bank application in 2009 (which would have included a declaration of assets and liabilities).
[38] Ms Picard submits that the evidence in this case was insufficient to displace the presumption of advancement. In all cases where an advance of money to a child has been found to be a loan and not a gift, there has been some documentary evidence consistent with that fact. Ms Picard submits that in this case Mr Robert Martin did all he needed to make a valid gift to Ms Picard and Mr Martin. He did not produce any financial records for himself, Everard or any other company with which he was associated, which should have contained evidence of the loan as an asset if it was loan, rather than a gift.
[39] Ms Picard submits that it is imperative that there be proper reliable evidence before the Court makes a determination of a relationship debt based solely on testimony of unreliable witnesses.
[40] Having carefully considered all the evidence, I am not persuaded that I should differ from Judge Coyle’s finding that the provision of $50,000 to Ms Picard and Mr Martin in 2007 to assist them with the purchase of 72 Sunset Road was a loan or relationship debt that needs to be repaid.
[41] There is some contemporaneous documentation generally supportive of the fact of the loan. First, there is a solicitor’s settlement statement showing the date of settlement as 28 September 2007, which shows the initial purchaser as RW Martin, the purchase price of $215,000 and the balance to settle, after the deposit of $5,000 is deducted, as $210,049 (including a proportion of the rates). Mr Robert Martin appears to have obtained a loan of $212,000 from the Westpac Bank secured over both the Sunset Road property and another property in Hall Road to enable him to purchase the Sunset Road property.
[42] There is then a solicitor’s statement dated two months later, on 30 November 2007, showing the receipt of $165,000 from the ANZ Bank and the payment of the funds minus solicitor’s fees of $945 into Northdale’s account. In the narration of an invoice for $945 from the solicitors, also dated 30 November 2007, the solicitors refer to “drafting of partial discharge of mortgage (unregistered) with R Martin”, which suggests a loan rather than a gift.
[43] Secondly, the fact that Mr Robert Martin had to borrow almost all of the funds to initially purchase the Sunset Road property ($212,000 of the purchase price of
$215,000) also supports the Judge’s finding that Mr Robert Martin was not in a position to simply gift Ms Picard and Mr Martin $50,000.
[44] Thirdly, and more significantly, financial statements for the years ended 31 March 2008 and 31 March 2009 prepared by chartered accountants, Kusabs Lasike, for Ms Picard and Mr Martin as partners in relation to the rental property at 72 Sunset Road have now been admitted in evidence. They were not formally produced as exhibits at the hearing in the Family Court. In each set of accounts under the heading “Non Current Liabilities”, two creditors are recorded — the ANZ term loan in the sum of $165,000 and the loan from RW Martin in the sum of $50,000.
[45] Although the entry in the financial statements does not disclose the terms of the loan, I do not see much difference between repayment when “financially capable of doing so” and “upon sale of the property”. The financial position of Ms Picard and Mr Martin was such that they would only be capable of repaying the loan when the property was sold. Although there is no extraneous evidence of the terms of the loan,
an oral agreement that it should be repaid on sale of the property makes sense in the context of the hopes of Ms Picard and Mr Martin to later build a family home for themselves on property owned by Mr Martin’s parents.
[46] Accordingly, I see no reason to depart from Judge Coyle’s direction that the sum of $50,000 be now repaid to Mr Robert Martin. No error has been demonstrated.
628 Paradise Valley Road
[47] The question of how this house should be dealt with was most significant of the two major issues at the hearing. Mr Martin and Ms Picard, together with their children, had lived in the house for the last five years of their relationship.
[48] All parties were unsure of the legal position. Mr Robert Martin acknowledged that the property was owned by Mrs Martin, but thought that he still owned the house because it had not been “signed off” by the Rotorua Lakes Council. If it had been “signed off”, the house would also be owned by Mrs Martin. As it was, he thought that Mrs Martin could ask him to shift the house off the property or charge him a storage fee.
[49] Mrs Martin says that although she was a director of Northdale, which owned the property at the time, she was unaware that her husband had arranged to relocate a house on the property until it arrived on site. At no stage of the house relocation or while her son and Ms Picard were living in the house was there any discussion about the transfer of the land ownership to her son and Ms Picard as during that time the entire property consisting of 26.9 hectares was being processed as part of her relationship property settlement with Mr Robert Martin.
[50] Mrs Martin thought that her son and Ms Picard owned the house, but had no interest in the land. She would, however, have considered gifting the land on which the house stood to her son and Ms Picard if they had offered to pay the subdivision costs.
[51] In his affidavit of assets and liabilities dated 26 July 2016, Mr Martin disclosed an interest in what he described as a relocatable house situated at 628 Paradise Valley
Road. He valued the house at $20,000. He said his father offered to initially pay for a relocatable house, which would be placed on a property owned by Northdale and in which Mr Martin and Ms Picard could choose to live. However, the understanding was that neither Mr Martin nor Ms Picard would have any proprietary interest in the land on which the house was to be placed. Mr Martin said he and Ms Picard agreed to take out a loan of $100,000 from the ASB Bank to repay his father for the relocation costs and to refurbish the house as well as connect it to services.
[52] In a draft relationship property agreement prepared in 2016 on Mr Martin’s instructions and provided to the lawyers acting for Ms Picard, it was stated:
4.1Alec and Chynelle lived at 628 Paradise Valley Road, Rotorua in a relocatable house which does not have a title. The legal owners of the land on which the dwelling is located are Alec’s parents, Robert William Martin and Annabella Tanya Martin. Neither Alec nor Chynelle has any legal interest in the land itself.
4.2The relocatable house is the family home and is relationship property which Alec and Chynelle own as tenants in common in equal shares.
4.3The agreed value of the family home is $20,000 although neither party has obtained a formal valuation nor do they wish to do so.
4.4The family home is subject to two mortgages being:
(a)The Orbit Mortgage of $46,576.
(b)The Prime Mortgage of $43,716.
4.5The parties agree that the current balance of indebtedness in regards to the family home is $90,292.00.
4.6Alec and Chynelle agree that from the settlement date:
(a)Alec will retain the family home as his separate property over which Chynelle has no claim.
(b)Alec will be responsible for outgoings in respect of the family home including rates and insurance payments.
(c)Chynelle will be released from all obligations in respect of Orbit Mortgage and the Prime Mortgage, including her personal covenant.
[53] In a statement of financial position for child support purposes, Mr Martin confirmed ownership of the house (valued at $20,000) and the mortgage attributable to it ($92,250.24). When asked at the hearing whether it was his position that his
father owned the house, Mr Martin said that he did not know any more because it was now his mother’s property.
So I don’t know if between her and the old man through their matrimonial property if it now belongs to him, it’s still not settled.
He confirmed that the house was not his, although he was not sure whether it was his mother’s or his father’s.
[54] On appeal, Ms Picard first criticises the Judge for “guessing” what actual funds were applied to the purchase and relocation of the house. She submits that he failed to step back and recognise that what was put on the property to the benefit to Northdale and later passed to Mrs Martin was a house and curtilage that was assessed as being worth $500,000.
[55] Ms Picard also submits the Judge did not take in to account all the work undertaken by her and Mr Martin to develop the land, at times, with the help of family. Ms Picard acknowledged that her direct efforts were not as great as Mr Martin’s, but she was working and caring for their young children throughout the period in which the house was being refurbished. Ms Picard then takes issue with the various credibility findings which the Judge made.
[56] Ms Picard then submits that it is the uplift in value that ultimately went to Mrs Martin, which is the relevant contribution because that is what Northdale gained as a result of the efforts of her and Mr Martin. This is the benefit that accrued to the legal owner that ought to be disgorged. Had the Judge taken that approach, he could not have concluded that the benefit to her (being less than five years of rent free accommodation) exceeded the benefit to the legal owner.
[57] Ms Picard notes that it appears the Judge accepted that she did have an expectation of an interest in the house, but submits that he failed to assess the reasonableness of the expectation based on what a reasonable person in Ms Picard’s and Mr Martin’s position might have expected when they committed the capital and effort they did to the refurbishment of the house. Instead, Ms Picard submits that the Judge focused on the evidence of Mr Martin and his father and their purported
expectations. Despite stating that he was treating their evidence with caution, he accepted what was objectively implausible and self-serving evidence as truthful.
[58] Ms Picard submits that it is difficult to understand why the Judge accepted that Mr Robert Martin was the owner of the house. Ms Picard disputes the Judge’s finding that Mr Robert Martin and Mr Martin were adamant that at no stage was there any expectation that Ms Picard and Mr Martin, in contributing to the cost of relocation and connection with services, would gain an interest in the house. Ms Picard says that that was not the evidence of Mr Martin as demonstrated through his affidavit evidence.
[59] Ms Picard submits that the Judge disregarded her expectations as not being reasonable because they did not accord with those expressed by Mr Martin after separation. Ms Picard submitted that the Court’s task in assessing this evidence is to look at the objective evidence as a whole and assess whether a reasonable person in the shoes of the claimants would have expected an interest. No one in Ms Picard or Mr Martin’s shoes would have committed the amount of money, time and effort in to the purchase and refurbishment of a house if they had not expected that they would have an interest in it.
[60] Ms Picard also submits that the Judge erred by rejecting as irrelevant two significant pieces of evidence. The first, that of Mrs Martin, who said that recognising the work that her son had done on the house and curtilage, she would give it to him on the basis that he simply paid for the cost of subdivision. Ms Picard also submits that the Judge was wrong to equate Mrs Martin’s evidence to a testamentary intention when Mrs Martin made it quite clear that she would give the house and curtilage to her son gratis, while she was alive. Ms Picard submits that as the owner, Mrs Martin accepted that the expectation of an interest in the house was reasonable.
[61] Ms Picard submits that the fourth requirement of a constructive trust, that is, that it is reasonable for the respondent to yield an interest to Ms Picard and Mr Martin, is easily met. Mrs Martin accepted that she would yield the interest as long as she was not required to meet the cost of doing so.
[62] While Mrs Martin may not have been consulted when the house was relocated on to the property in 2009, by the time the property was transferred into her ownership in 2013, on her own evidence she was aware of the work undertaken by Ms Picard and Mr Martin and was aware that Ms Picard and Mr Martin had made significant financial contributions and participated herself in painting 90 per cent of the interior of the house. Ms Picard submits that the Judge set the bar far too high in terms of knowledge.
[63] Finally, Ms Picard submits that if, on appeal, the Court finds a constructive trust existed in favour of Mr Martin and Ms Picard, that interest is property under s 2 of the Property (Relationships) Act. It follows, says Ms Picard, that she ought to be compensated for occupation rent under s 18B, which applies when there is a post- separation contribution. That can include the use of relationship property of any kind. Mr Martin has lived in the house since separation and there is no reason why Ms Picard should not be compensated for that in the same way as she might if the home was owned by them as a family home. Ms Picard has had to provide accommodation for herself from her income since separation. She submits the Judge was in error in concluding that capital in the form of an equitable interest was not capable of attracting compensation under s 18B.
[64] Having carefully considered all the evidence, I am persuaded I should differ from Judge Coyle’s finding that no constructive trust exists. The fact that the Judge considered it unfair that Ms Picard should be responsible for that portion of a joint debt owed to the ASB Bank which had been utilised towards the relocation and refurbishment of the house at 628 Paradise Valley Road speaks volumes. Ms Picard had been initially paying $150 a week off the loan. That sum was later increased to
$270 a week. She says she would not have paid anything if she thought that she was not going to get an interest in the house.
[65] The Judge gave three reasons for rejecting Ms Picard’s claim of a constructive trust. First, the Judge held that Ms Picard’s claim failed because she did not establish that her contributions were manifestly in excess of the benefits received. The Judge determined that Ms Picard and Mr Martin had repaid Mr Robert Martin $33,000 for relocating the house together with a further $25,000 to refurbish and connect the relocated house to services. That is probably an understatement. There is no forensic
analysis of the ASB account, but even on Mrs Martin’s own analysis, the sum of
$27,787.03 could have been spent on items which could be attributed to renovation of the house. There were also substantial payments to pay off credit card debts.
[66] In his affidavit dated 26 July 2016, Mr Martin did initially say that after reimbursing his father for the relocation costs, the rest of the $100,000 loan was used “to put the house together, get utilities connected and a waste water system installed”. Although that is strictly not accurate because there are, for instance, payments to Budget Car Auctions of $4,000 on 9 October 2011 and $5,000 on 10 August 2014, presumably for the purchase of two motor vehicles, the ASB Orbit Home Loan account was not generally used for household expenses.
[67] The Judge also seems to have given little weight to the contributions made by Ms Picard in time and effort in refurbishing the house. Ms Picard acknowledged the hard work done by Mr Martin, but her contributions should have been recognised as equal, given that she worked full-time and took care of their two small children as well.
[68] It also seems to me that the Judge was misled by using the figure of $64,000 as the rental of the house over five years and as the benefit received by Ms Picard and Mr Martin. The benefit to Ms Picard and Mr Martin may, in fact, be more properly seen not as rental of the house, which they themselves had paid for, but as ground rental forgone by the land owner. Mr Robert Martin thought he owned the house itself and that he could be charged, what he said was, a storage fee for placing the house on the land. The current landowner, Mrs Martin, thought the house was owned by her son and Ms Picard, but that the land was hers. Mr Martin in his initial affidavit claimed a half share in the house. In evidence, however, he acknowledged he was unsure as to who owned the house, whether it be his father, mother or himself. No one led any evidence about the quantum of the storage fee or, more properly, ground rental, but it must be considerably less than $64,000.
[69] Ms Picard also submits that the Judge failed to characterise the increase in value of the property as a contribution to the enhancement of it. Ms Picard submits that without the placement of the relocated house on the property, the 2,500 square
metres deemed curtilage had a value of $9,300. Mr Craven valued the 26.9 hectare block of land at $1 million. The 2,500 square metres deemed curtilage is 0.93 per cent of 26.9 hectares and, accordingly, can be valued at 0.93 per cent of $1 million, that is,
$9,300. Ms Picard submits that this can be contrasted with a value of the relocated house and the 2,500 square metres deemed curtilage, which Mr Craven values at
$500,000. Ms Picard, therefore, submits that the contribution made by Mr Martin and herself in relocating the house on the property can therefore be assessed at $490,700. This is manifestly in excess of the benefit of five years’ rent-free accommodation.
[70] While not necessarily agreeing with the figure of $490,700, I am of the view that Mrs Martin will have received a substantial windfall increase in value if she retains legal ownership of the property without recognising any interest that her son and Ms Picard may have in the house.
[71] The Judge valued the contributions by Ms Picard and Mr Martin in purely monetary terms at $58,000. He contrasted that to the rent-free accommodation for five years, which he valued at $64,000. He saw these as balancing each other out. By failing to recognise the contributions made by Ms Picard and Mr Martin to the substantial increase in value of the property (which would otherwise be to Mrs Martin’s sole benefit) and by failing to consider that the benefit of living on the property may not be rental of the house, but may instead be ground rental, the Judge, with respect, fell into error.
[72] When these two factors are taken into account, I am of the view that the contributions made by Ms Picard and Mr Martin manifestly exceed the benefits received by them. In reaching this view, I recognise that Mr Robert Martin also made a substantial contribution to the increase in value of the property. Mr Robert Martin was the sole shareholder and a director of Northdale which owned the property at the time. He came up with the proposal, sourced the relocatable house and initially paid for its relocation on land his company owned.
[73] The second reason the Judge gave for rejecting Ms Picard’s claim of a constructive trust was that her expectation of an interest in the property was not a reasonable one. The Judge found that she had never discussed her expectations with
Mr Martin. He concluded that Ms Picard’s unilaterally held expectations had to be given lesser weight than what he said was the objective evidence of the express intention of Mr Martin and his partner. The Judge accepted that Mr Robert Martin had offered to let Mr Martin and Ms Picard live rent-free in the property on the basis that they would pay the cost of relocating the house and connecting it to services. Mr Robert Martin saw it as an opportunity for Mr Martin and Ms Picard to save some money and to use the money saved together with a profit from the sale of the Sunset Road property to have sufficient monies to enable them to build their own home on other land he owned in Paradise Valley Road.
[74] The Judge accepted that Ms Picard did have an expectation of an interest in the house at 628 Paradise Valley Road. But so did Mr Martin. He consistently maintained he had a half share in the house itself, to which he ascribed the value of $20,000 both in his initial affidavit and then again in his declaration of assets and liabilities for child support purposes. Although, as the Judge noted, Ms Picard had never “even discussed her expectation with Mr Martin”, there is no requirement that there needs to be explicit discussion to satisfy the reasonable expectation test. The Court assesses all the surrounding circumstances. The claim was for an institutional constructive trust and not an express common intention trust.
[75] As to whether Ms Picard’s expectation of an interest in the property was a reasonable one, the Judge overlooked the evidence of the property owner, Mrs Martin. She thought that Ms Picard and Mr Martin owned the house, but that she owned the underlying land. In fact, she said in evidence she was willing to transfer the underlying land to her son if he was willing to pay the subdivision costs. The Judge erred in treating that evidence as being only relevant to a claim brought under the Testamentary Promises Act. Mrs Martin’s evidence was that she would give her son the underlying land when she was alive. Here, again, I am of the view, with respect, that the Judge erred in finding that Ms Picard’s expectation of an interest in the property was not a reasonable one.
[76] The third reason the Judge gave for rejecting Ms Picard’s claim of a constructive trust was that she had failed to prove that, as legal owner of the property,
Mrs Martin had express or imputed knowledge of a constructive trust at the time of transfer of the property to her.
[77] The Judge accepted Mrs Martin as a truthful witness. That is not challenged by Ms Picard. Although there may not have been cross-examination directly on the issue of her knowledge, Mrs Martin clearly knew of the background facts. She knew of the contributions made by her son and Ms Picard and accepted that they may have a reasonable expectation of an interest in the property. She was, after all, willing to transfer the house and underlying land to her son if he would pay the subdivision costs.
[78] Mrs Martin was a director of Everard, which owned property over which the ASB mortgage was secured. She deposes that she was a guarantor of that borrowing, so must have known of the loan and the intentions behind it at the time it was drawn down.
[79] Mrs Martin was also aware of the work undertaken by Ms Picard and Mr Martin as she was a regular visitor to the household. She herself also participated in refurbishment of the house, having painted 90 per cent of the interior. She did so not to further her own interest in the house, but to help her son and Ms Picard out with making their house habitable.
[80] I agree with counsel for Ms Picard that the Judge set the bar too high in terms of knowledge. There was ample evidence that Mrs Martin was well aware of the contributions made. She always accepted that the house belonged to Ms Picard and Mr Martin. She never asserted ownership of the house and did not accept that Mr Robert Martin owned it either.
[81] Here, again, I am of the view with respect to the Judge erred in finding that Mrs Martin did not have express or imputed knowledge of the constructive trust at the time of transfer of the property to her in 2013. I am therefore satisfied that all the elements of a constructive trust have been established.
[82] The question then arises — what is the quantum of Ms Picard’s interest in the constructive trust? Here, I have been assisted by the approach taken by
Judge MNE O’Dwyer in Waldorf v Hugglesitch, where the parties built a house on an undivided 21.5 hectare property originally owned by a trust associated with Mr Waldorf’s parents.9 At some stage, the property had been transferred to a trust associated with Mr Waldorf without any payment. The parties did not purchase the land on which the house was built.
[83] Mr Waldorf submitted that because the parties had not contributed financially to the acquisition of the bare land, their interest and therefore Ms Hugglesitch’s share was limited to the improvement value of the land itself. That is, the value of the bare land at $190,000 should be excluded as in the following valuation:
Improvements (dwelling house) $630,000 Plus improvements to the land $225,000 Less value of bare section (0.25 ha) $190,000 $35,000 Plus estimated chattels $20,000 Total $685,000
[84] Mr Waldorf’s position was therefore that Ms Hugglesitch’s interest was a half share of $685,000. Judge O’Dwyer stated:
[57] It should be recognised that the land on which Ms Hugglesitch and [Mr Waldorf’s] house was built was provided by his parents … from their trust to [Mr Waldorf’s] Trust. However I find that the Trust must recognise Ms Hugglesitch’s considerable contribution to the property and that should include recognition of her contribution to the acquisition, preservation and maintenance of the property as well as the improvements. Arithmetical precision is not attainable or necessary. Evidence of all the contributions to the property that the couple made is not only reflected in the improvements to the land through the house build, which I find cost approximately $650,000. The couple made an additional contribution through physical effort, designing, planning and maintaining the property. They paid rates and insurance which have not been quantified. The trust should yield a portion of the value of the bare land to the parties to reflect their contribution and maintaining and preserving it as well as improving it.
[58] I consider that the trust should yield a 50% interest in the value of the bare land to the parties to reflect their additional contributions to this property i.e $95,000.
[59] The result is that the value of Mr Waldorf and Ms Hugglesitch’s interest in the property (which is the value of their family home) is set at
$780,000. A half share to each party is $390,000.
9 Waldorf v Hugglesitch [2015] NZFC 3413, [2015] NZFLR 909.
[85] In the present case, Ms Picard and Mr Martin did not pay any rates or insurance on the property. Mr Robert Martin fenced off the house from the rest of the property to protect it from stock, using fencing materials purchased by Northdale. Any other improvements to the land were of minimal value. Some renovations to a sleepout and a metalled driveway are not substantial contributions. I am therefore of the view that the land value at $276,000 should be excluded from the value of the house and land, which together are valued at $500,000,10 that is, Ms Picard’s interest in the constructive trust can equitably be assessed as a half share of $224,000, being the value of the improvements (dwelling house, the provision of electricity and some renovation of the sleepout). That being the case, however, Ms Picard is to share equally in the debt of $58,000 to the ASB Bank in respect of which the Judge had determined that Mr Martin should be solely responsible.
[86] Ms Picard also claims occupation rent under s 18B of the Property (Relationships) Act as Mr Martin has occupied the house in which she has a half share in terms of a constructive trust since the date of separation. Section 18B provides:
18B Compensation for contributions made after separation
(1)In this section, relevant period, in relation to a marriage, civil union, or de facto relationship, means the period after the marriage, civil union, or de facto relationship has ended (other than by the death of one of the spouses or partners) but before the date of the hearing of an application under this Act by the court of first instance.
(2)If, during the relevant period, a spouse or partner (party A) has done anything that would have been a contribution to the marriage, civil union, or de facto relationship if the marriage, civil union, or de facto relationship had not ended, the court, if it considers it just, may for the purposes of compensating party A—
(a)order the other spouse or partner (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.
(3)In proceedings commenced after the death of one of the spouses or partners, this section is modified by section 86.
[87] Ms Picard submits that providing her half share in the house to Mr Martin to use is making a “contribution” in terms of s 18B. Section 18B requires a Judge to
10 Judge Coyle applied a discount of five per cent to this figure because of flood risk, but a close reading of the notes of evidence discloses that the valuer, Mr Craven, had recognised the fact that the house was situated near the Ngongotaha stream, which was liable to flood.
consider whether it is just for compensation to be made for this contribution. If the answer is yes, the Judge must then decide how much need be paid for the purpose of proper compensation. Payment of occupational rent has been a way in which a just payment of compensation is assessed for exclusive use of the partner’s capital tied up in the occupied family home. A Judge could, if seen as just and appropriate, instead order interest payable on the capital being used.11
[88] In the present case, I am of the view that further compensation in the form of occupation rent or interest, would be properly payable if the Court was to utilise the value of the house as at the date of separation ($140,000). However, because of the length of time since separation, it is more appropriate to utilise the value of the house as at 7 March 2019 ($224,000) to determine the quantum of Ms Picard’s interest in the constructive trust. Ms Picard is therefore to receive half of the increase in the value of the house (half of $84,000). No further adjustment is necessary under s 18B.
Minor issues
Shareholdings
[89] In his affidavit of assets and liabilities dated 27 July 2016, Mr Martin disclosed shareholdings in five listed companies in his name totalling $2,318.77. He says he held these shares for their daughter, Courtnee.
[90]In his judgment dated 17 October 2019, the Judge stated:12
There are also a number of shares that have been disclosed. Mr Martin asserted that the shares were his daughter’s and that he traded the shares to increase her assets. However, he did acknowledge that he used some of the funds himself to pay his legal fees. That the shares were in fact held on behalf of the parties’ daughter Courtney [sic] does not appear to be in dispute. It is my determination that the shares are owned by her. If Mr Martin has utilised some of those monies to pay legal fees, then he owes the money to his daughter and that is an issue between he and she. I determine they are not relationship property.
[91] On appeal, Ms Picard disputes this finding. She submits that there was no evidence provided by Mr Martin beyond his bare assertion to justify the finding that
11 E v G High Court Wellington CIV-2005-485-1895, 18 May 2006 at [24].
12 Martin v Picard, above n 1, at [6].
he held the shares on trust for Courtnee. In particular, there is no evidence that money belonging to Courtnee was transferred into Mr Martin’s account for the purchase of the shares. She submits that where a trust is asserted in the context of a relationship property dispute the onus ought to have been on Mr Martin to provide some reliable evidence that the shares were in fact owned on trust, otherwise it is simply a convenient assertion to avoid having to share assets.
[92] In response, Mr Martin points to two deposits made into the ASB Orbit Home Loan account in 2011. The first is referenced “IPO”,13 and the second is referenced “Courtnee”. Mr Martin says that these represented Courtnee’s savings, which Mr Martin used to purchase shares on her behalf. Mr Martin acknowledges selling shares in three of the listed companies. From the sale of shares in one company, he used $1,500 to pay his lawyers. The proceeds of sale of the shares in the two other companies were utilised to pay for Courtnee’s dance trip to the United States. He says he has paid Courtnee back.
[93] Ms Picard has not persuaded me that I should differ from the Judge’s conclusions on these shareholdings. Apart from the evidence from Mr Martin himself, which the Judge found credible and reliable, there is support for his evidence in the bank entries from December 2011, referenced “IPO” and “Courtnee”.
ANZ Go Account
[94] In his judgment dated 17 October 2019, the Judge found that there was an ANZ Go Account with a balance of $663.57 as at the date of separation, as disclosed in Mr Martin’s affidavit of assets and liabilities dated 27 July 2016. The Judge stated:14
While Ms Hosking tried to assert in cross-examination that the balance at separation was in fact $3245.77, I accept Mr Martin’s evidence that the mortgage and rates payments would have come out of that account and that a more accurate balance is the $663.57.
[95] Ms Picard disputes this finding too. She submits that the Judge accepted without any evidence what Mr Martin said was paid out of the bank account between
13 Initial Public Offering.
14 Martin v Picard, above n 1, at [4].
18 September 2014 (when the balance was $3,245.77) and 30 November 2014, being the date of separation. Ms Picard submits that Mr Martin did not provide the relevant bank statements and the figure of $3,245.77 is taken from Mr Martin’s bank statement at the most proximate date to the date of separation — 18 September 2014. Ms Picard submits that applying the principles in Clayton v Clayton, the inference should have been drawn against Mr Martin and the balance at 18 September 2014 ought to have been used.15 There was no basis for the Judge to accept Mr Martin’s evidence that mortgage and rates payments would have come out, but to ignore that income would also have been received into that account. Ms Picard was paying $270 per week to this account throughout this period.
[96] The relevant bank statements have now been admitted in evidence. They were not available in the Family Court. They disclose a credit balance of $1,246.19 as at 30 November 2014. An adjustment of the figure is therefore required to reflect the actual balance rather than the estimated balance set in the Family Court.
Motor vehicles
[97] In his affidavit of assets and liabilities dated 27 July 2016, Mr Martin disclosed three vehicles — a 2007 Nissan Skyline, a 1997 Mitsubishi Lancer and a 1996 Hyundai Tiburon. He acknowledged owning the Mitsubishi Lancer outright, but stated that he only owned 50 per cent of the Nissan Skyline and Hyundai Tiburon.
[98] In his judgment dated 17 October 2019, the Judge fixed the value of the Nissan Skyline as being $9,000. Ms Picard had taken the car upon separation and had sold it on TradeMe for that figure. There was no independent valuation.
[99] The Judge fixed the value of the Mitsubishi Lancer at $600. Mr Martin had bought the motor vehicle for $1,000 and had sold it for $600. The Judge noted that although Mr Martin had stated it was worth $2000 in his affidavit of assets and liabilities, the Judge was of the view that that was simply a “guesstimate” rather than a reliable valuation.
15 Clayton v Clayton [2015] NZCA 30, [2015] NZFLR 233.
[100] The Judge fixed the value of the Hyundai Tiburon as $3,500. He noted that Ms Picard had submitted it was worth significantly more, but had not provided a valuation. In the absence of a market valuation, he had only Mr Martin’s “guesstimate”, which was a value of $3,500.
[101] Finally, the Judge noted that Ms Picard asserted that the parties also owned a 1997 Subaru. The Judge accepted Mr Martin’s evidence that it was his mother’s car and therefore not relationship property after Ms Picard had conceded in cross- examination that she was vague on who owned the cars.
[102] On appeal, Ms Picard does not dispute the valuation of $9,000 in respect of the Nissan Skyline. This was the figure received on its sale. However, as far as the Mitsubishi Lancer is concerned, Ms Picard submits that Mr Martin only sold it in 2019, having had the benefit of it since separation four years before. She submits that where depreciating assets are retained by one party, they should account for those assets at their separation date value. While the value of the vehicle is small, the principle at issue is not. Ms Picard submits that the Judge wrongly placed an onus on her to obtain a valuation and notes that, at all times, Mr Martin had the ability to provide a valuation and chose not to. Both parties had estimated the value of the Mitsubishi Lancer on the date of separation as $2,000. Therefore, Ms Picard says this is the figure which should have been fixed by the Judge.
[103] Ms Picard also complains that Mr Martin did not provide a valuation of the Hyundai Tiburon. He had the ability to provide a valuation and chose not to. Finally, in respect of the Subaru, Ms Picard says it was incorrect of the Judge to say that she conceded in cross-examination that she was vague as to who owned the cars. In fact, her evidence was that Mr Martin had a number of cars which he did up and sold and had others take registration on his behalf to avoid classification as a car dealer. Again, this finding suggests that the onus was on Ms Picard to provide evidence that could have easily been provided by Mr Martin.
[104] In response, Mr Martin says that the Mitsubishi Lancer was not in a roadworthy state. He says that the car was purchased and towed back from Murupara with a seized engine. He got it working, but it was plagued with problems and the engine failed
again soon afterwards. His friend tried to get it working, but it got stolen from his place. Mr Martin says he recovered the car and sold it for $600. As to the Hyundai Tiburon, Mr Martin says that the motor vehicle was a gift from his brother prior to his relationship with Ms Picard and he sought a decision from the Court that it was outside the relationship property pool. The registered owners of the car are his mother and himself. Mr Martin says that he did present TradeMe valuations of similar vehicles. Finally, Mr Martin says that he is not the owner of the Subaru. He thinks that the motor vehicle Ms Picard refers to is his mother’s vehicle that Ms Picard used to borrow from time to time.
[105] Ms Picard has not persuaded me that I should differ from the Judge’s conclusion on the motor vehicles. There were no formal valuations provided by either party. The Judge did not impose a burden on Ms Picard to provide them. Nor was he wrong to have regard to the sale price achieved some time after the date of separation. The Judge used what information was available to make an assessment of value.
Cross-appeal
[106] Mr Martin has filed a limited cross-appeal. He submits that the following matters were not taken into account in the Judge’s decision:
Ms Picard’s KiwiSaver account
[107]Ms Picard does not oppose her KiwiSaver account with a credit balance of
$7,043.62 as the date of separation being taken in to account as it should have been. At the same time, however, she submits that there were other omissions in the judgment which were not addressed by the Judge including her credit card debt. Ms Picard owed $2,730.16 on a Kiwi Bank credit card at the date of separation. These assets and liabilities should be set-off against each other, which leaves a credit to be added to the pool of relationship property of $4,313.46.
Rental income from and occupational rent for 72 Sunset Road
[108] Mr Martin submits that Ms Picard needs to account for $8,850 received by her from rental income from the end of 2015 when she began to manage the rental property
at 72 Sunset Road until she moved in with their two children in April 2016. He says she did not use the rental monies to pay the mortgage. In addition to seeking compensation for the rent paid, Mr Martin also seeks occupational rent of $14,000 for the 35 weeks from March to December 2016 when Ms Picard and their two children occupied 72 Sunset Road.
[109]As to payment of the mortgage, the Judge found as follows:16
In fact, the evidence shows that Mr Martin’s assertion is not true in that the mortgage was paid by Ms Picard until the end of April 2016. Ms Picard accepts that there is a period in which she did not pay the mortgage. She states that she retained the rental monies because she had insufficient income to live on. She accepts she needs to compensate Mr Martin for the period from April 2016 until sale, including a deduction for mortgage and rates arrears. That amount is $1410 as the mortgage was in arrears only for the month of July.
[110] Mr Martin has not persuaded me that I should differ from the Judge’s conclusion on the rental property at 72 Sunset Road. During the same period during which she received $8,850 rental income from 72 Sunset Road (11 November 2015 to 13 April 2016), Ms Picard made 11 regular fortnightly mortgage payments of $475.52, totalling $5,230.72, and a rates payment of $557.55.
[111] As to the occupational rent, although the Judge did have a discretion under s 18B to deduct occupational rent from Ms Picard’s entitlement under the Property (Relationships) Act for the period she occupied 72 Sunset Road, he did not do so. There was good reason for the Judge not to do so. Ms Picard only lived in the property for a short period prior to its sale. She was caring for their two children when Mr Martin was not paying child support. She was struggling to pay the mortgage, but managed to pay most of it. The mortgage arrears were not significant. This was also at a time when Mr Martin was living rent-free on land owned by his mother at 628 Paradise Valley Road, where Ms Picard and their two children had lived for five years prior to their separation.
16 Martin v Picard, above n 1, at [15].
Son’s savings account
[112] Ms Picard acknowledges accessing their son, Ashton’s, savings account to use for his personal expenses, such as movies or clothes. She also acknowledges utilising some of it “to put food on the table”. Mr Martin characterises this as theft and submits that Ms Picard should account for it. There is, however, no basis on which the Court could make an order against Ms Picard in Mr Martin’s favour. Ashton’s savings account is not relationship property. It is a matter solely between Ms Picard and Ashton.
Costs
[113] Finally, although unrepresented, Mr Martin seeks costs on behalf of himself and his mother, who he says were successful and put through unnecessary lawyer expenses. Again, Mr Martin has not persuaded me that Judge Coyle erred in the exercise of his discretion not to order costs. Ms Picard has now been successful in her appeal on the major issue of the existence of a constructive trust and the principle known as “costs here and [in the court] below” will apply.17
[114] If costs are now sought, the parties are to file a memorandum of no more than five pages within 10 working days of the date of this judgment.
Court order
[115] The parties are to confer to settle the terms of a draft order reflecting the various findings on the appeal, which is to be submitted to Court for approval.
Woolford J
17 Beirne v Kidd [2015] NZHC 3118 at [11].
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