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Potter v Horsfall

Potter v Horsfall

Case [2016] NZCA 514 25 October 2016

Contract Formation

Unconscionable Conduct

Fiduciary Duty

Res Judicata

Specific Performance

Admissibility of Evidence

Unjust Enrichment

Family Law

Property Law

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA720/2014
[2016] NZCA 514

BETWEEN	DIANA JANE POTTER Appellant
AND	MARK ALBERT HORSFALL First Respondent
AND	168 GROUP LIMITED Second Respondent

Hearing:	2 August 2016
Court:	Wild, Mallon and Williams JJ
Counsel:	J R Billington QC and R A Newberry for Appellant T G Stapleton QC for First Respondent RJB Fowler QC for Second Respondent
Judgment:	25 October 2016 at 11.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe judgment of the High Court is set aside.
CThe proceeding is referred back to the Family Court for the remaining issues affecting the second respondent under s 44 of the Property (Relationships) Act 1976 to be determined.
DThe first respondent must pay the appellant costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Wild J)

Introduction

In the course of the appellant and first respondent’s relationship, a commercial property in College St, Wellington, was registered in their joint names. It was sold profitably about a year later for $1.575 million (GST inclusive). All but $50,000 of the sale proceeds were disposed of by Mr Horsfall for his separate commercial interests. The money went to 168 Group Ltd (168 Group), a company he controlled.
The parties subsequently separated and sought orders for the division of the relationship property. Ms Potter was successful in her claim in the Family Court for a half share of the net sale proceeds. Judge A P Walsh ordered 168 Group to transfer half the net proceeds to Ms Potter, with interest.[1] The Judge made that order under s 44(2)(c) of the Property (Relationships) Act 1976 (the PRA).
[1]DJP v MAH [2013] NZFC 4577 [Family Court judgment] at [223].
Mr Horsfall appealed successfully to the High Court. Simon France J held:[2]
… Mr Horsfall disposed of the proceeds of the sale [of the College St property] not to defeat Ms Potter’s interest but because Ms Potter did not have a beneficial interest in the property. … The key point is that Ms Potter was not entitled to [the proceeds], and in my view knew that to be so.

Accordingly, Simon France J held Ms Potter had not established that the Family Court had jurisdiction to make the order it had under s 44(2) of the PRA, and set that order aside.[3]

[2]MAH v DJP [2014] NZHC 1520 [High Court judgment] at [41]. We have substituted names for initials in the passage cited.

[3]At [42].

In a judgment delivered on 10 June 2015 this Court granted Ms Potter leave, under s 67(1)(a) of the Judicature Act 1908, for a second appeal on the following question of law:[4]
Was the High Court correct to find that the disposition of the proceeds of sale of the College St property was not made by the first respondent in order to defeat the claim or rights of the applicant for the purposes of s 44 of the Property (Relationships) Act…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Potter v Horsfall

Details

AGLC: Potter v Horsfall [2016] NZCA 514
Case: [2016] NZCA 514
Decision Date: 25 October 2016 at 11.30 am

CaseChat Overview and Summary

Potter v Horsfall involved a dispute over the division of property after the separation of Diana Potter and Mark Horsfall. The central issue was the disposition of the proceeds from the sale of a commercial property registered in their joint names. Horsfall appealed a Family Court order that he transfer half of the net sale proceeds to Potter under section 44 of the Property (Relationships) Act 1976. The High Court allowed the appeal, finding Potter did not have a beneficial interest in the property. The Court of Appeal, however, allowed Potter's further appeal, holding that she did have a claim or right to the property and that Horsfall's disposition of the sale proceeds was intended to defeat those rights. The Court of Appeal set aside the High Court's judgment, referred the case back to the Family Court, and ordered Horsfall to pay Potter's appeal costs.

The appeal hinged on whether Potter had a claim or right to the property and whether Horsfall's disposition of the sale proceeds was made to defeat her rights. The Court of Appeal found that, despite Potter not contributing directly to the purchase price, the property was effectively relationship property because Horsfall registered it in their joint names. The Court also held that Horsfall's disposition of the sale proceeds was intended to defeat Potter's rights, as he knew the effect it would have on her ability to assert her rights to a share of the proceeds. The Court of Appeal's decision was based on the principle that a party cannot avoid the consequences of a deliberate course of action by claiming it was taken for an unlawful purpose, such as avoiding tax.

Orders