R L H v T M M
[2015] NZHC 1050
•19 May 2015
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.
THIS JUDGMENT MAY BE CITED AND REPORTED AS
PICTON V UXBRIDGE IN ACCORDANCE WITH PARAGRAPH [104] OF THIS JUDGMENT
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
CIV-2015-476-001 [2015] NZHC 1050
BETWEEN R L H
Appellant
AND
T M M Respondent
Hearing: 5 May 2015 Appearances:
D A Wood for Appellant
C O'Connor for RespondentJudgment:
19 May 2015
JUDGMENT OF MANDER J
[1] Mr H appeals an order made by Judge Strettell in favour of the respondent, Ms M, regarding the division of relationship property under s 14A of the Property (Relationships) Act 1976 (the Act).1
Background
[2] Ms M and Mr H met in late 1993. Sometime in 1994 they commenced living together. Their relationship produced a child in March 1996.
1 M v H [2014] NZFC 10160 [The Division Judgment].
PICTON v UXBRIDGE [2015] NZHC 1050 [19 May 2015]
[3] When the parties commenced living together, Mr H sold his farm property to a company owned by a trust, of which he and his accountant were the trustees. A lease of a neighbouring property with an option to purchase was acquired in 2001. Following separation, Mr H exercised the option to purchase the property.
[4] The parties’ relationship between 1993 and 2004 was difficult. There were several occasions when they lived apart and subsequently reconciled. On two occasions, Ms M sought and obtained protection orders against Mr H. The first, in
2000, was withdrawn following reconciliation. A subsequent order was made in
2004. Around that time, both parties acknowledged they needed to separate. In May of that year, a property agreement was signed between them. Essentially, the agreement provided that Mr H would, on behalf of the company, pay Ms M the sum of $30,000. This represented funds she had advanced to Mr H’s company. She would also retain her car and chattels. Mr H would retain all other property.
[5] Ms M subsequently applied to have the agreement set aside, and, in July
2013, Judge Strettell annulled the agreement on the basis it would cause serious injustice.2 The Judge noted that, in the ordinary course, the Court would then consider Ms M’s claim for a division of relationship property. However, there was insufficient information available to allow that second stage of the process to occur. The matter was adjourned for further directions regarding the final disposition of the proceeding.
[6] Before the hearing could be reconvened, application was made by Mr H for recall of the judgment on the basis that Judge Strettell had not taken into account the impact of s 4C of the Act. That section provides as follows:
4C Application to existing and future de facto relationships
(1) This Act applies to—
(a) de facto relationships that began before 1 February 2002;
and
(b) de facto relationships that begin on or after 1 February 2002.
2 TMM v RLH [2013] NZFC 5428 [The Setting Aside Judgment].
(2) This Act does not apply to de facto relationships that ended before 1
February 2002
[7] The issue raised by the application was whether there was an existing de facto relationship as at 1 February 2002, or a qualifying relationship that began after 1 February 2002.
[8] In his Setting Aside Judgment, Judge Strettell made the following factual findings regarding the couple’s relationship(s) between 1994 and the signing of the agreement in May 2004:
[57] In between those dates, there were periods when the parties lived apart, sometimes for several months. M admits to living with a third party for a period of time. Yet, on each occasion there was a reconciliation and the parties returned to live together. There was more than one de facto relationship over the period but, having considered all the evidence, including the supporting information provided by M, I find that the first de facto relationship was for a period of more than three years. M was adamant, when the matter was put to her, that she was still living in the home during the 1997-1998 harvest and for some considerable period after that. There was then a second de facto relationship of over three years that followed.
[9] Judge Strettell acknowledged that he had not related his finding of a second de facto relationship to an end date. The parties accepted that the length of the de facto relationship, and its potential relevance, was not an issue that had been addressed. Unless the Court was satisfied there was a de facto relationship of three years or longer to which the Act had application, then any entitlement of Ms M had to be considered, if at all, in terms of a de facto relationship of short duration governed by s 14A of the Act.
[10] While the parties had proceeded for the purpose of determining the application to set aside the agreement, on the basis that the date of the agreement,
14 May 2004, marked the end of the de facto relationship, Judge Strettell did not consider it fair that the parties should necessarily be held to that agreed fact for the purpose of considering the entitlement of either party in the event the agreement was set aside. Judge Strettell, rather than recalling his judgment in relation to the
agreement, recommenced the hearing, with the central issue being whether in terms of s 4C of the Act there was a “qualifying relationship”.3
[11] Ultimately, Judge Strettell found on the evidence that there was no “qualifying relationship” in terms of s 4C, and he proceeded to consider Ms M’s claim under s 14A of the Act.4 Mr H’s appeal lies against the Judge’s finding, that s 14A applies and the order made in favour of Ms M that her contribution to the relationship should be recognised by an award of $42,000.
Issues to be determined
[12] The issues to be determined on the appeal can be broken down under two broad headings. Firstly, whether Judge Strettell was correct in the circumstances to apply s 14A of the Act. This requires determining whether the parties were in a de facto relationship on or after 1 February 2001, and whether the Family Court erred in its application of that provision; specifically whether the statutory preconditions required of that section were established, and whether serious injustice would result in the absence of an award in favour of Ms M.
[13] Secondly, whether the award pursuant to s 14A(3) was the subject of proper assessment. Mr H has raised a number of issues regarding Judge Strettell’s assessment of the period of the de facto relationship, and the evidence supporting the Family Court’s findings regarding the respective contributions of the parties to the relationship.
[14] Ms M has cross-appealed, raising a number of issues incidental to Judge Strettell’s decision. It is also necessary to clarify the status of the $30,000 payment made by Mr H to Ms M.
Approach on appeal
[15] Appeals to the High Court from the Family Court are governed by s 39 of the
Act, which imports ss 74-78 of the District Courts Act 1947. Such appeals are
3 M v H [2014] NZFC 4957 [The Recall Judgment].
4 The Division Judgment, above n 1, at [92].
therefore “general appeals” which proceed by way of rehearing. The Supreme Court has held in relation to such appeals that:5
Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court's opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court's assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.
[16] In B v F, Heath J remarked that the application of the Austin Nichols principles is not altogether easy in the context of appeals from the Family Court, which will often represent a mixture of findings of fact, evaluative judgment and the exercise of statutory discretion.6 Heath J determined that the appropriate approach to such an appeal was on the following basis:7
(a) first, I must take account of the advantage that [the Judge] had of hearing and seeing the witnesses give evidence before him (see Austin, Nichols at para [13]);
(b) secondly, to the extent that the Judge exercised any discretion in reaching his decision, I must determine whether those discretionary decisions were or were not open to him, based on May v May [1982]
1 NZFLR 165 (CA) and Blackstone v Blackstone [2008] NZCA 312 at para [8];
(c) otherwise, I am free to reconsider the Family Court’s decision and to substitute my own view on questions of fact and evaluation, if I were convinced that the first instance decision was wrong.
[17] I proceed on a similar basis, whereby questions of fact and evaluation remain matters for my assessment, although I should be cognisant of the findings or views of the lower Court, particularly where the Family Court Judge had the advantage of hearing and seeing the witnesses. I am, however, entitled to draw my own
conclusions from the evidence.
5 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].
6 B v F [De facto relationship] [2010] NZFLR 67 (HC).
7 At [8].
Were the parties in a de facto relationship on or after 1 February 2002?
[18] Mr H submitted that Judge Strettell had fallen into error by proceeding to consider a claim under s 14A on the presumption that the provision applied regardless of s 4C. He submitted the Judge had found there was no de facto relationship to which the Act applied, and that the condition precedent to the application of s 14A(1), namely the existence of a de facto relationship, had not been satisfied.
[19] I do not read Judge Strettell’s judgment in that way, and the submission, in my view, is misconceived. In identifying the central issue before him, as to whether under s 4C there was a qualifying relationship, the Family Court observed:8
[10] Unlike many of the cases requiring consideration relating to de facto couples, there is little dispute as to the fact that the parties were, from time to time, in a de facto relationship. The central issue in this case is at what time and for what length of time were the parties in a de facto relationship, given the conflicting nature particularly of the parties evidence but also of the corroborative evidence produced by each party.
[20] Section 4C requires that for the Act to have application the de facto relationship (of a type defined in s 2D) must be in existence at 1 February 2002. Alternatively, the Act applies to a de facto relationship which commenced on or after
1 February 2002. Judge Strettell was unable to be satisfied, given the periodic nature of the parties’ de facto relationships, that there was a continuing de facto relationship of more than three years which survived or straddled the 1 February 2002 date.
[21] Similarly, in relation to a finding of a de facto relationship post February
2002, the Court could not be satisfied that the de facto relationship endured for a period of at least three years. The Family Court was, however, satisfied the parties were in a de facto relationship at some stage after February 2002, and as observed by Judge Strettell, potentially of up to two years in duration.9
[22] I acknowledge that Judge Strettell’s conclusion, framed as it was as a ruling that no “qualifying relationship” in terms of s 4C was present, is open to
8 The Division Judgment, above n 2.
9 At [102].
misinterpretation.10 It is apparent, however, from the Court’s evaluation and, indeed, Judge Strettell’s explicit acknowledgment that, in the absence of a factual foundation for the existence of a de facto relationship, s 14A cannot have application. It is also apparent that the Court proceeded on the basis of a finding that the parties had been in a de facto relationship at times, both before and after February 2002.
[23] Mr H sought to rely upon Judge Strettell’s discussion of relevant considerations required to be taken into account under s 2D for the purpose of assessing the existence of a de facto relationship. In particular, he placed reliance on a number of elements that raised concern for the Judge as to whether or not a de facto relationship had satisfactorily been proven. These included the post February
2002 receipt by Ms M of a domestic purposes benefit and the payment of child support by Mr H. Reference was also made to independent accommodation and bank accounts and limited evidence to indicate any mutual commitment to a shared life.
[24] Mr H submitted that it was not open on the evidence for the Judge to conclude that there was no de facto relationship before February 2002, but that there was one post that date. He submitted such a conclusion would require evidence of an improvement in the parties’ relationship which is not available on the evidence. It was submitted the evidence demonstrated a decline well before 2002, rather than an improvement in the parties’ relationship. Accordingly, it was not open for Judge Strettell on the evidence to treat the s 2D criteria for a de facto relationship as being unfulfilled prior to 1 February 2002 but satisfied after that date.
[25] Mr H’s submissions, however, rest, in my view, on an incomplete review of Judge Strettell’s approach to the issues before him. The Family Court’s consideration of such factors as the receipt of the domestic purposes benefit and payment of child support post February 2002, were made in an endeavour to determine whether there was a qualifying de facto relationship post that date. That is, whether post February 2002 there was a de facto relationship of at least three years. Judge Strettell specifically concluded that the Court needed to be satisfied
there was a continuing relationship, despite the parties having lived apart for
10 At [92].
something cumulatively over two years. Judge Strettell rejected Mr H’s evidence that there was no relationship post 2002, and noted Mr H’s affidavits to the contrary. However, Judge Strettell concluded that it was difficult to draw the conclusion from any of the available evidence that post 2002 a relationship continued for a period of three years. The Family Court was satisfied there was a de facto relationship in existence for at least some period post February 2002, albeit one that was not sustained for at least three years.
[26] Judge Strettell’s reference to the circumstances, set out in s 2D, which are to be taken into account in determining whether two persons were living together as a couple, was for the purpose of evaluating whether such circumstances had endured for a three year period. Judge Strettell concluded that the evidence did not permit such a finding for such an extended period. The Act could not therefore apply, except to the extent that s 14A had potential application in respect of a de facto
relationship of short duration.11
[27] I also reject Mr H’s submission of inconsistency in Judge Strettell finding the existence of a post February 2002 de facto relationship when there was no de facto relationship found to exist prior to that date. This submission is based on a false premise. Judge Strettell did find that the parties had been in a de facto relationship before February 2002, and, in fact, had been involved in several de facto relationships. The recommencement of a de facto relationship post February 2002 was a continuation of the pattern of relationships that had commenced prior to that date. The evidence does not show a single declining relationship but, rather, the repetition of a series of de facto relationships, at least one of which was entered into after February 2002.
[28] I am satisfied, therefore, that the Family Court did not err in its finding that a de facto relationship existed post February 2002, albeit that it was one of short
duration in terms of s 2E of the Act, being for a period of less than three years.
11 At [91].
Did the Family Court err in its application of s 14A?
[29] Section 14A of the Act provides as follows:
14A De facto relationships of short duration
(1) This section applies if a de facto relationship is a relationship of short duration (as defined in section 2E).
(2) If this section applies, an order cannot be made under this Act for the division of relationship property unless—
(a) the court is satisfied—
(i) that there is a child of the de facto relationship; or
(ii) that the applicant has made a substantial contribution to the de facto relationship; and
(b) the court is satisfied that failure to make the order would result in serious injustice.
(3) If this section applies, and the court is satisfied that the grounds specified in subsection (2) for making an order on an application under this Act are made out, the share of each de facto partner in the relationship property is to be determined in accordance with the contribution of each de facto partner to the de facto relationship.
(4) Nothing in this section prevents a court from making a declaration or an order under section 25(3), even though the de facto partners have lived in a de facto relationship for less than 3 years.
(5) This section is subject to sections 15 to 17A
[30] Where the de facto relationship is one of short duration an order cannot be made under the Act for the division of relationship property unless the Court is satisfied there is a child of the de facto relationship, or Ms M made a substantial contribution to the de facto relationship. If either of those preconditions are satisfied, the Court is only empowered to make an order if it is satisfied that the failure to do otherwise would result in serious injustice.
The approach to be taken to the statutory preconditions
[31] Mr H acknowledged there is a child of the de facto relationship, however, he submitted the Family Court conflated the two jurisdictional prerequisites by considering whether Ms M had made a “substantial contribution” to the de facto
relationship after, having already found that jurisdiction arises from their being a child of the relationship.
[32] The Court’s jurisdiction is triggered either by there having been a child of the de facto relationship or as a result of the applicant having made a substantial contribution to the de facto relationship. The two prerequisites are not mutually exclusive. The first was conceded by Mr H, and the second was found satisfied by Judge Strettell on his review of the evidence. The existence of a child of the relationship does not preclude consideration of Ms M’s contribution to the de facto relationship, which, as is evident from the circumstances of this case, may very well be linked to the care of the child.
[33] In terms of the second element of the test under s 14A, Mr H submitted there was no detailed or specific evidence before the Court upon which to conclude that serious injustice would occur in the absence of an order being made. He relied on the observations of Potter J in X v Y, to the effect that because s 14A orders for the division of relationship property in a de facto relationship of short duration are the exception rather than the rule, there is an implicit requirement for the applicant to adduce sufficient evidence that one of the threshold requirements has been met, and
that serious injustice would result from the failure to make an order.12
[34] In X v Y, Potter J approved the cautious approach expressed by Judge Inglis in Gibbons v Vowles, that “serious injustice” should not be found as a matter of broad impression.13 Rather, Potter J held that “detailed and specific evidence” is required to invoke the exception provided under s 14A(3) to the general rule that where the de facto relationship is of short duration ordinarily no order for division of relationship property is required.14 It will be for the applicant to ensure that the
relevant evidence is before the Court.15
12 X v Y [Short duration de facto relationship] [2010] NZFLR 395 (HC) at [95].
13 At [96], citing Gibbons v Vowles (2003) 22 FRNZ 946 at [13].
14 At [97].
15 At [98].
[35] Ms M relied upon the observations of the learned authors of Fisher on
Matrimonial and Relationship Property, to the following effect:16
“Substantial contribution” is not defined in the Act, although “contribution” is comprehensively defined in s 18(1), but it is no doubt intended to disqualify claimants who can only demonstrate a minor total “contribution” to the de facto relationship under all the categories of s 18(1). The phrase “substantial contribution” is yet another example of a semantic difficulty created by the Act. Similar difficulties have arisen in regard to the phrases “clearly disproportionately greater” (s 14(2)(c)) and “clearly greater” (s
14(4)) in the case of marriages of short duration. No guidance has been given as to how the contribution of one de facto partner is to be assessed to determine whether it is sufficiently “substantial” for the purposes of s
14A(2)(a)(ii) to give the Court jurisdiction to make an order under s 14A(3). The Courts can be expected to approach this qualitative exercise in a robust
fashion and without over-refinement, so that cases which appeal to the presiding Judge as calling for relief under the section will be readily
classified as involving a “substantial contribution” by the claimant.
“Serious injustice” is also not defined in the Act and appears only in ss
14A(2) and 21J(1). The meaning of “justice” has already been discussed
(para 12.25) in relation to the phrase “extraordinary circumstances repugnant to justice” in s 13(1). It is suggested that “serious injustice” probably means a degree of injustice less serious than “repugnant to justice”, but the difference (if any) between those two concepts must be somewhere between slight and infinitesimal, for it is hard to conceive of a serious injustice which is not also repugnant to justice. As with the construction of the phrase “substantial contribution”, judicial pragmatism will no doubt prevail.
[36] Ms M submitted that this was consistent with the approach taken by Judge Strettell, requiring as it did a qualitative evaluation involving some level of judicial pragmatism in the circumstances.
[37] The issue of what was required to establish a “substantial contribution” was considered by this Court in PH v GH.17 Katz J referred to previous varying judicial approaches to “substantial contribution”.
[38] In Schmidt v Jawad, Judge Grace defined “substantial” as being something of “real importance or value”, or a “considerable amount”.18 Notably, the Judge held that it was necessary to show that the applicant had made a contribution to the de
facto relationship which would go “far beyond the norm”. Judge Ulrich in LS v ZJ,
16 Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.88] (citations omitted).
17 PH v GH [De facto relationship: no substantial contribution] [2013] NZHC 443, [2013] NZFLR
387 at [49]-[57].
18 Schmidt v Jawad [2003] NZFLR 1050, (2003) 23 FRNZ 101 (FC).
considered that to define “substantial” as “far beyond the norm” was to change the normal meaning of the word. In the Judge’s view, the contribution needed to be of real importance, real value, or of a considerable amount; while it may need to be beyond the norm, it need not be far beyond.19
[39] Asher J, in L v P, after referring to the earlier Family Court decisions, took the view that references to variances from a supposed “norm” of contributions was not of particular assistance.20 To postulate a supposed norm of contributions or, indeed, a “norm” for a de facto relationship was difficult. Asher J considered it more helpful to focus on the natural meaning of the word “substantial”, noting that its definition in the New Zealand Oxford Dictionary was one of “real importance or value”, and that there was no need to refine the meaning further. Wild J, in Linskey v Donovan, having referred to the respective approaches of Asher J and Judge Grace,
both of whom resorted to dictionary definitions of “substantial”, considered that the term was a well-understood word, “it means substantial”.21 It was that approach which Judge Strettell applied to his assessment in the present case.
[40] In PH v GH, Katz J did not find the “real importance and value” tests particularly useful in the context of the facts present in her case. She noted that important matters such as the management of a household, and performance of household duties, support of the other partner, and financial contributions to a relationship were all important and capable of constituting contributions of “real importance or value”. Katz J considered, however, that to justify a departure from the general principle that the Act does not apply to de facto relationships of less than three years, the word “substantial” required a threshold set high enough to be consistent with Parliament’s intention that a de facto relationship that lasts for less than three years will usually fall outside the scope of the Act. Katz J concluded that, in her view, a “substantial contribution” is a contribution of importance or value that is “over and above” what would usually be expected from the parties in the normal course of their relationship as a couple, noting, however, that each case will
necessarily turn on its own facts.
19 LS v ZJ [2005] NZFLR 932 (FC).
20 L v P [2008] NZFLR 401, (2007) 26 FRNZ 946 (HC).
21 Linskey v Donovan HC Blenheim CIV-2006-406-293, 2 November 2010.
[41] While I acknowledge the need to interpret the word “substantial” in its particular statutory context, and that the application of s 14A should be viewed as the exception rather than the rule, as was the legislature’s intention when dealing with relationships of less than three years, I am not convinced that it is necessary to limit the natural meaning of “substantial contribution”, as it was in PH v GH.22 An alternative prerequisite provided by s 14A(2)(a) is there having been a child of the de facto relationship. While the need for a “substantial” contribution is a not an insignificant requirement, as with the presence of a child of a de facto relationship,
the fact that an applicant has made a substantial contribution may not be an unusual feature of a relationship of short duration and ought not require that term to be unduly circumscribed.
[42] Recognition that a remedy under s 14A(3) will not ordinarily be available in the context of a de facto relationship of short duration is provided by the requirement that a Court be satisfied that failure to make such an order would result in “serious injustice”. The resulting injustice must be sufficiently serious to justify the departure from the general rule that where the de facto relationship is of short duration no order will be made.23 In my view, therefore, the contribution by the applicant need not be out of the ordinary or far beyond the norm, and that it is sufficient if it is substantial in the sense of being of real importance or value.
Was there “serious injustice”?
[43] Judge Strettell, in recommencing the hearing, had the benefit of the evidence heard in the course of the earlier two day hearing relating to Ms M’s application to set aside the property agreement. In his earlier judgment, which resulted in the setting aside of that agreement, Judge Strettell held that he was satisfied that Ms M’s contributions were those that might be expected of a partner with a young child. He found there was nothing to suggest other than that Ms M’s contributions to the relationship were those of a supportive partner, both on the farm, in the home, and in
relation to their child.
22 PH v GH, above n 17.
23 Gibbons v Vowles, above n 13, at [13], cited with approval in X v Y, above n 12, at [96].
[44] The Judge also accepted Ms M’s evidence of work done on the farm, and that her overall contribution to the relationship was complementary to that of Mr H. While Mr H’s contribution to the farming operations may have been significantly greater because of his farming knowledge and experience, and the time he dedicated to that work, his contributions in that area were only possible as a result of Ms M’s support, her care of the home and their child, together with the physical work that she contributed to the farm.
[45] In focussing on the period of the de facto relationship post 2002, Judge Strettell observed that Ms M had cared for the parties’ child almost single-handedly, managed the household environment and household duties, again almost single- handedly, provided services and work to support Mr H’s separate farming interests, and generally assisted him throughout the relationship.
[46] Judge Strettell found that Mr H’s contribution to the de facto relationship was in fact less overall than Ms M’s. While noting Mr H’s hard work and that he provided an income for the parties’ de facto relationship, Judge Strettell considered that the primary long term beneficiary of this effort was in fact Mr H himself, given the fact that Ms M had no claim against his separate farm property.
[47] An unusual feature of the present case is that the parties’ periodic de facto relationships date back to sometime in 1994. Throughout the relationships, the bulk of the work on the farm was undertaken by Mr H. Though Ms M assisted with farm work, she generally looked after the home and the child. As already noted, the relationship was a difficult one, and over the course of the following 11 years, on several occasions and for lengthy periods, they lived apart, but subsequently reconciled. While the Family Court was satisfied that the parties had again engaged in a de facto relationship after February 2002, it was not satisfied there was a continuing three year de facto relationship.
[48] As a result of this pattern of separation, reconciliation and further relationship, and because, in particular, the lengths of the acknowledged separations in 1999 and again in 2001, the Court was not able to accept there had been a continuing de facto relationship. The Act had no application to the relationship prior
to February 2002, and the assessment of the contributions made by the parties is limited to the period that the parties were in a de facto relationship of short duration post that time.
[49] When assessing whether the failure to make an order under s 14A would result in serious injustice, the Family Court was no doubt cognisant of this background and the history of their relationship as a couple, with a child, living and working on the farm property. During these periods when the parties were living together, raising their child, Mr H was provided the opportunity to grow his farming business. As Judge Strettell observed, both before and after February 2002, Mr H had the benefit of that contribution. This allowed him to be the long term beneficiary of his own work and effort in respect of his separate or trust property. While the Court’s assessment under s 14A is confined to the de facto relationship to which the Act has application, it would be artificial to ignore this context when assessing the nature of that relationship and the contributions made by the parties during that de facto relationship post February 2002.
[50] In my view, there was sufficiently detailed and specific evidence before Judge Strettell to draw the conclusion that Ms M made a substantial contribution to the de facto relationship post February 2002. Similarly, in the unusual circumstances of this case, there was a sufficient evidential foundation to be satisfied that a failure to make an order would result in serious injustice. Whether based on there having been a child of the de facto relationship, or on Ms M’s substantial contribution to the de facto relationship, and whether, assessed separately or in combination, the evidence before the Court met the threshold requirement for a finding of serious injustice.
Was the award pursuant to s 14A(3) the subject of proper assessment?
The length of the de facto relationship
[51] Mr H submitted that, in order for the Family Court to determine each de facto partner’s share in the relationship property in accordance with their contribution to the de facto relationship, as required by s 14A(3), it was necessary for the Family Court to ascertain the length of the post February 2002 de facto relationship. He
submitted that the Family Court failed to define the period of the de facto relationship, which, in his submission, remains unknown.
[52] The contribution of each de facto partner is limited to the period of the de facto relationship and therefore there must be some assessment of the duration of the relationship. In that regard, Judge Strettell concluded that he was left with “an impression” that the period of the de facto relationship post 2002 “could have been for something up to two years in duration”. Mr H is critical of what he describes as the “ambiguous” timeframe arrived at by the Judge. He submits that the Family Court’s description of the period of the de facto relationship could range from one month to 24 months.
[53] That literal interpretation of Judge Strettell’s conclusion when taken in isolation may have some force. However, when the Family Court’s conclusion is assessed in the context of the judgment as a whole, it is apparent that Judge Strettell concluded that on balance the de facto relationship post 2002 was for two years. He proceeded on that basis.
[54] In approaching his task of determining whether there existed a qualifying de facto relationship, Judge Strettell observed that the approach required of him was an evaluative one.24 The Court needed to be satisfied both of the existence of a de facto relationship and one of three years duration in order for the Act to have application. While there was no formal onus, inevitably it was for the party arguing for a position to satisfy the Court on the available evidence of the position contended
for. Whether that position was made out would ultimately depend on the effect of the totality of the evidence.25
[55] Judge Strettell noted some internal inconsistencies in the parties’ affidavits and expressed considerable disquiet and distrust of their content. He noted that it appeared that the parties’ position, in relation to the circumstances of their
relationship, appeared to change depending upon the reason for the swearing of the
24 Scragg v Scott [2006] NZFLR 1076 (HC) at [37].
25 M v B [2006] 3 NZLR 660 (CA) at [38]-[50]; X v X [Economic disparity] [2009] NZCA 399, [2010] 1 NZLR 601 at [96]; Hyde v Hyde [2009] NZCA 125, [2010] 1 NZLR 224 at [45]; Minister of Immigration v Al-Hosan [2008] NZCA 462, [2009] NZAR 259 (CA); Faafae v Minister of Immigration HC Auckland M1434/969, May 1987.
particular affidavit in question. The Judge found it difficult in the circumstances to place reliance on what each party maintained, given the often contradictory positions in the various affidavits.
[56] In turning to the claim under s 14A, Judge Strettell again expressed shortcomings in the evidence. It is apparent, however, when the judgment is read as a whole, that Judge Strettell, while not being able to safely conclude there was a de facto relationship of three years, was prepared to find that for the period post February 2002 a de facto relationship of what he described as “up to two years” had existed. He could not be satisfied as to any longer period. I accept that, if Judge Strettell’s conclusion is read in isolation with his reference to “an impression” that the de facto relationship post 2002 “could have been for something up to two years in duration …”, it is open to the interpretation that he made no definitive finding. In my view, however, Judge Strettell’s conclusion, despite being couched in those terms, has to be read in light of his findings as to the unsatisfactory nature of the evidence as a whole. The residue of this, once distilled, while preventing Ms M’s primary application from succeeding, resulted in a finding of a de facto relationship in the region of some two years. The Court therefore was satisfied, on the state of the evidence, of a de facto relationship but only of limited length. On my reading of the available evidence, I reach a similar conclusion.
[57] In my view, the Judge’s finding was sufficient to circumscribe the period for the purpose of assessing the contributions of the de facto partners.
The assessment of the value of relationship property and the parties’ contributions
[58] Mr H submitted the Family Court was not entitled to conclude that $70,000 had been contributed to the relationship during the period of the de facto relationship of short duration. He submitted, in order to ascertain what contributions were made to the de facto relationship, it was necessary to determine the value of the relationship property that was available to be divided between the parties. In the absence of doing this, Mr H contended the respective contributions of the parties to the de facto relationship could not be calculated, and that the $70,000 figure arrived at by Judge Strettell was without foundation.
[59] Section 14A(3) empowers the Court, where it finds the statutory prerequisites fulfilled, to determine the share of the respective de facto partners in the relationship property in accordance with the contribution each has made to the relationship. This requires the Court to identify and remove from its assessment contributions to separate property and then determine the overall contributions to the relationship,
combining non-monetary and relationship property contributions.26 The purpose of
the award is to balance the respective contributions made by the parties during the relationship.
[60] In relation to this issue, it is apparent that Judge Strettell was labouring under the disadvantage of limited evidence and assistance. The initial premise upon which the argument proceeded, that being the valuation of the homestead and curtilage under s 12 of the Act, did not apply as it constituted “relationship property” that had been created prior to 2002.
[61] Judge Strettell remarked on the shortcomings in the evidence, both in regard to the property the subject of the claim and the contributions made. The Family Court was aware of the paucity of information before it and clearly gave considerable thought to allowing further inquiry to be made to assess “precisely” the value of the relationship property. Judge Strettell, however, was very aware that the parties had been litigating this matter in the Family Court since 2006 and that progress had been painfully slow.
[62] One of the purposes of the Act had clearly not been achieved; there has been no inexpensive, simple and speedy resolution, consistent with justice, in this case.27
Judge Strettell was loathe to cause further delay by requiring further affidavits to be filed, and yet more Court attendances and hearings, in order to achieve greater precision in respect of a relatively limited claim. The learned Judge did not consider that it would be in the interests of the parties to delay matters further.
[63] It is therefore clear that the Family Court was cognisant that the approach being taken to the assessment of the relationship property acquired over the period of
26 S v W [2006] 2 NZLR 669 (HC).
27 Property (Relationships) Act 1976, s 1N(d).
the relationship of short duration was an approximate one, based on the available evidence before the Court. Neither in the written submissions or on the hearing of this appeal was my attention directed to the evidence which rendered Judge Strettell’s assessment of the value of the relationship property to be wrong, or that on the basis of the material before him the figure of $70,000 was unrealistic. It is apparent that the Family Court was aware, particularly having regard to Mr H’s focus on improving his own separate farming interests, that the relationship property was unlikely, in the circumstances of the parties’ relationship, to have been other than limited.
[64] Similarly, the Court’s assessment of the respective contributions of the parties to the de facto relationship was relatively conservative, arriving at a 60/40 per cent division in favour of Ms M. In reaching that conclusion, Judge Strettell was entitled to find that Ms M made a greater contribution in the areas of childcare, management of the household, and discharge of household duties. When those contributions were balanced against the lack of contributions by Mr H in those areas, and Ms M’s support of the work he undertook on his separate farming interests, the recognition of unequal contribution over the de facto relationship, albeit one of short duration, was seriously unjust.
[65] I do not find that Judge Strettell fell into error in adopting the approach he took in the circumstances of this case, either in his assessment of the value of the relationship property over the de facto relationship of short duration, or his assessment of the respective contributions of the parties. Overall, I am satisfied that the approach taken by Judge Strettell to these issues was available to him and was not unreasonable in the circumstances.
[66] In challenging Judge Strettell’s assessment of the contributions of the parties to the de facto relationship, Mr H submitted that the Family Court had failed to take into account the financial contribution he had made to the household. He referred to observations made by this Court in earlier cases, where monetary or financial
contributions were required to be acknowledged in the proportional balancing of contributions made by the parties to a relationship.28
[67] In support of this submission, Mr H made reference to child support payments which he made when estranged from Ms M and the couple’s child. He sought to place reliance on a short piece of evidence which he submitted supported the proposition that he cared for the child every day when they were separated.
[68] I do not find Mr H’s analysis convincing. Judge Strettell acknowledged Mr H’s hard work in providing an income for the parties’ de facto relationship and was clearly aware of that financial contribution, which allowed the parties to live as a family during the de facto relationship. The long term benefit, however, from that arrangement, or division of responsibilities, was that it allowed him to maintain and improve his separate property, to which Ms M had no claim. When examining the relative contributions to the de facto relationship, the Family Court was entitled to assess where the benefit of those contributions ultimately fell, and the value of those contributions to the parties individually.
[69] Ms M did receive some child support sourced from Mr H post February
2002. But as recognised in Mr H’s own submission, it was paid in respect of the period when the parties were separated and Ms M had full-time care of the parties’ child. It therefore has no relevance to any assessment under s 14A of the Act. In any case, the evidence is underwhelming. For the period between 7 February 2002 to 31
May 2004, Inland Revenue assessed Mr H’s child support contributions in respect of
the child of the relationship to be $405.55.
[70] Mr H also placed some reliance on Ms M’s receipt of the domestic purposes benefit between May 2003 and May 2004. It appears Ms M started receiving this benefit in January 2002. This was an indicator of the parties’ living apart, and was taken into account by Judge Strettell. Ms M’s evidence was that she did apply for a benefit following separation in January 2002, in order to provide an income for herself and her son. However, in her affidavit, she deposed that she and Mr H
reconciled, and she returned with their son to live with the respondent. She
28 X v Y, above n 12, at [160]; PH v GH, above n 17, at [58]-[61].
acknowledges that she did not later notify Work and Income of her ineligibility for this benefit, but observed that the income from this source was spent on food and living expenses, from which Mr H also benefitted.
[71] The Family Court took Ms M’s receipt of the domestic purposes benefit during this period into account in examining whether the parties were in a de facto relationship. That this piece of evidence was not decisive in concluding the existence of such a relationship post February 2002 is unsurprising, given Ms M’s acknowledgement of her failure to advise Work and Income of her ineligibility.
[72] Mr H’s reliance on a passage of evidence that he interpreted as a concession by Ms M, that when she was separated post 2002 from Mr H, she would drop their son off and pick him up from Mr H’s every day, is misplaced. The passage in question reads:
Q. Sorry, [Ms M], if you could just please read out that paragraph again
just so everyone’s-
A. “The respondent and I lived together from 1992 until February 2004, we have one child, [name and date of birth]. We separated for two years from 2001 to 2003.
Q. Excellent. A. That one?
Q. Yes. The comment made about you separated for two years between
2001 and 2003 what, what was your understanding of that part of your affidavit?
A. That we didn’t live together, cohabitate together, different addresses, separated. But-
Q. Sorry, you go on.
A. But it was on a daily – I would go up there to drop [child] off or pick him up or, you know, there was, yeah.
Q. Was it your intention to convey that you were living apart for the whole of the period of 2001 to 2003?
A. (no audible answer 11:11:49).
[73] I do not understand Ms M to be stating in evidence that Mr H looked after the
parties’ son while they were separated on a daily basis. Mr H has never made such a
claim. As is apparent from the passage of evidence in question, Ms M was replying to questions relating to the length of the parties’ separation. She did not finish the sentence “But it was on a daily –”, which was no doubt uttered in an attempt to show that the parties’ remained in regular contact.
[74] In her affidavit of 7 April 2014, Ms M makes specific reference to returning to the farm on “an almost daily basis”, and that she considered herself to still be in a relationship with Mr H, although briefly living apart during this period. Notwithstanding the sporadic episodes of alleged violence between the parties, Mr H continued to have access to the child of the relationship, but there is no evidence that this was for the purpose of full-time care on a daily basis. I do not find the passage in question supports the interpretation put forward on behalf of Mr H.
Inequality of Commitment
[75] Mr H was also critical of Judge Strettell’s finding of an “inequality of commitment” in relation to the de facto relationship. That critique is premised on a view that the Family Court’s finding was one of misconduct on the part of Mr H. Reference was made to s 18A of the Act, which allows a Court to take into account misconduct on the part of a party in proceedings under the Act which may diminish or detract from the otherwise positive contribution of that party to the relationship.
[76] It was submitted that by finding an inequality of commitment as a basis for concluding that it would be seriously unjust not to recognise that feature of the relationship in an award under the Act, the Family Court had deemed Mr H’s approach to the relationship as being one of misconduct. I do not interpret Judge Strettell’s conclusion in this regard as amounting to such a finding of misconduct by Mr H.
[77] The Family Court’s finding of an “inequality of commitment” is preceded by the observation that Mr H was a hard worker who did provide an income for the parties’ de facto relationship which may otherwise have been of equivalence to the contribution made by Ms M. However, as observed by Judge Strettell, the contribution made by Mr H went more to assisting himself in the maintenance and development of his own separate property, in which Ms M could not share. Ms M’s
contributions to the relationship were focussed upon, and went only to the de facto relationship itself. However, Mr H’s work on his farming properties, while providing an income for the relationship, was also directed at, and for the purpose of developing, his own separate property interests. It is in that context that Judge Strettell made the observation regarding the “inequality of commitment”.
[78] I accept that the Family Court’s description of “inequality of commitment” is open to misinterpretation. I am, however, satisfied that it was not used in the sense that was discussed by Asher J in L v P.29 In that case, this Court was critical of the Family Court’s reliance upon the length of the relationship and the high level of commitment by one party to that relationship as of itself constituting a contribution. As I have already observed, in my view, the Family Court did not refer to the term “commitment” in the sense of the respective levels of motivation of the parties in
regard to the relationship, but rather the uneven outcome of what each individually committed themselves to providing to the relationship.
$30,000 payment to Ms M
[79] Under the terms of the 2004 agreement, Mr H was required to pay Ms M
$30,000. This related to a sum which she had advanced to Mr H’s company, together with some interest. The treatment of the $30,000 is not specifically addressed by Judge Strettell in his final judgment.
[80] The issue is whether the $30,000 paid by Mr H to Ms M should be viewed as part of the compensation ordered by Judge Strettell to avoid a serious injustice arising out of the de facto relationship of short duration post February 2002. Alternatively, whether Mr H’s liability for the $30,000 arises independently of the application of s 14A.
[81] Ms M submitted that because the Family Court was not satisfied of a de facto relationship which had endured past 1 February 2002, the Court’s assessment of the contributions made by the parties was necessarily limited to the
subsequent de facto relationship of short duration. Ms M submitted that Mr H was
29 L v P, above n 20, at [92].
precluded from asking the Court to take account of the $30,000 debt as relationship property, as it was a product of their relationship prior to February 2002, to which the Act did not apply.
[82] Mr H submitted that because the 2004 agreement was annulled, he was under no obligation to pay the $30,000 to Ms M. Implicit in this submission was an argument that he was, in the absence of the agreement, under no liability to pay the
$30,000. Therefore, his position was that Ms M’s receipt of that money should be
considered as part of Judge Strettell’s $42,000 award.
[83] In my view, Mr H’s liability to repay the loan and interest arises separately
from the 2004 agreement. It is apparent from the terms of that agreement that the
$30,000 was not paid in settlement of Ms M’s perceived rights under the Act. Indeed, Judge Strettell’s finding in his July 2013 judgment was that the agreement had to be set aside because it was seriously unjust to her. Some background relating to this money is instructive.
[84] Between 1999 and 2001, Ms M operated a part-time business selling wholesale fresh fish. She purchased a small truck which she used in the business. When she terminated that employment, she sold the truck and the proceeds of the sale were loaned to Mr H’s company, which owned the farm. The 2003 financial accounts of the company showed a debt of $26,400 owed to Ms M. It was apparent therefore that the company owed her the funds that she had advanced to the company on the sale of her truck.
[85] This is the position that was reflected in the 2004 agreement. The proposal made by Mr H was that he would, on behalf of the company, pay Ms M the sum of
$30,000, which was recorded in the agreement as being repayment of the principal plus interest on the monies advanced by her.
[86] As a result of Judge Strettell’s finding that any de facto relationship which commenced before 1 February 2002 did not continue past that date, the Act did not have application to the parties’ earlier relationship(s). Equally, the money loaned to Mr H’s company by Ms M was clearly not a contribution made by her during the
course of the de facto relationship of short duration post February 2002. With the
2004 agreement extinguished, the question to be posed is whether there is any basis for Ms M retaining the $30,000 payment, other than pursuant to Judge Strettell’s order in relation to his findings regarding the de facto relationship of short duration.
[87] In my view, it is clear that there is a strong foundation for Ms M’s retention of the $30,000, constituting the repayment of a debt owed by Mr H’s company to Ms M. In the absence of the Act having application to their relationship pre-February
2002, the debt can only be considered as separate property owed by the company independent of any contractual liability arising out of the 2004 agreement. The company’s liability for the money borrowed (plus interest) from Ms M was acknowledged at the time of the 2004 agreement as the reason for the payment of the
$30,000 to her.
[88] I am satisfied therefore that Judge Strettell proceeded in his assessment of the question of an award under s 14A on the basis that the status of the $30,000 was a separate matter, relating to a separate arrangement between the parties, in respect of which the Act had no application. I conclude that Judge Strettell’s award in the sum of $42,000 does not include the previous payment made by Mr H ostensibly pursuant to the annulled relationship property agreement. That finding is without prejudice to any steps that Mr H may wish to take to recover the $30,000 he has paid to Ms M, if he is of the view that he or his company was not obliged to make such payment in the absence of the 2004 relationship agreement.
Cross-appeal
[89] Ms M’s notice of response to Mr H’s appeal originally referred to three
possible areas of cross-appeal which can be dealt with in short order.
[90] Firstly, a finding by Judge Strettell that Ms M had failed to cross-examine Mr H regarding the content of one of his affidavits. It is uncontested that Mr H was in fact questioned by Ms M’s counsel about the affidavit in question. Mr O’Connor, however, on the hearing of the appeal, acknowledged that having regard to the issues which I must decide, which relate to matters post February 2002, the learned Judge’s error in respect of that part of the evidence is not material.
[91] Secondly, an issue was raised regarding the calculation of interest on the sum awarded by the Family Court in favour of Ms M as a result of not dating interest back to when the proceedings were issued. However, on the hearing of the appeal, Ms M acknowledged that interest only crystallises at the point when the amount of the relationship property is determined, and nothing now turns on this point.
[92] Finally, Ms M submitted that there had been a failure by Mr H to pay her costs in relation to her successful application to set aside the 2004 agreement. Mr H’s position’s is that any approach that may have been anticipated by Judge Strettell, in regard to an award of costs in respect of his decision relating to the property agreement was superseded by his subsequent s 14A decision, when he decided that costs should lie where they fall.
[93] In Judge Strettell’s earlier judgment relating to the relationship agreement, he stated:30
[137] In the meantime, it is appropriate for the Court to consider costs at this stage, in relation to the matter to date. Accordingly, I invite Counsel to make submissions in relation to the costs within 14 days.
[94] At that stage of the proceeding, Judge Strettell had made a ruling that the agreement was seriously unjust and it was set aside. As the Judge observed, normally, at that point, he would consider a claim for a division of relationship property in the absence of the annulled agreement. Judge Strettell, however, considered there was insufficient information for that second part of the process to occur, and he made a direction for arrangements to be made regarding the final disposition of the proceeding. It follows, therefore, that notwithstanding the need for the hearing to be reconvened, Judge Strettell took the view at that time that it was appropriate to consider costs.
[95] It was subsequent to that ruling that the importance of making a determination regarding the length of the de facto relationship(s) and the application
of s 4C became apparent. Mr H made application for Judge Strettell’s judgment to
30 The Setting Aside Judgment, above n 2.
be recalled. However, the Family Court Judge took the view that the appropriate course was for the issue to be addressed when the hearing reconvened.
[96] At the conclusion of Judge Strettell’s final judgment in December 2014, the
learned Judge stated in the final paragraph of his judgment:31
[117] I do not propose to make any award of costs. This is a case where each party should bear their own costs and, with respect, it is time for both to move on and put these protracted proceedings behind them.
[97] I have come to the clear view that Judge Strettell’s final statement in respect of the issue of costs was intended to have application to the proceeding as a whole. While I acknowledge that it was the learned Judge’s intention at the conclusion of his first judgment in July 2013 to consider an award of costs in respect of the application to have the relationship property agreement set aside, it is apparent that subsequent events overtook that approach. When regard is had to the sentiment expressed by Judge Strettell that the parties should now move on and put the protracted proceedings behind them, I consider that he thought it in the interests of both parties that any further dispute regarding costs was to be avoided. The revised approach that the learned Family Court Judge took to this issue was readily understandable in the circumstances.
Result
[98] The appeal is dismissed, as is the cross-appeal.
Costs
[99] Ordinarily, Ms M, having successfully defended the Family Court decision would be entitled to costs on Mr H’s appeal. In my view, however, costs should lie where they fall. The reason for my approach is fourfold.
[100] Firstly, almost inevitably, the issue regarding the status of the $30,000 paid by Mr H would have to be determined. In the absence of clarification, it would seem
inevitable that Mr H would have taken the position that the $42,000 award included
31 The Division Judgment, above n 1.
the earlier $30,000 payment. Ms M, on the hearing of this appeal, has received the benefit of that issue being clarified in her favour, albeit as a by-product of Mr H taking his appeal.
[101] Secondly, I am satisfied that a number of the matters raised by Mr H on his appeal were not unreasonably pursued in the circumstances. There were elements of ambiguity in the Family Court’s judgment which required clarification.
[102] Thirdly, the points raised by Ms M on her cross-appeal have also fallen on fallow ground. In particular, her application for an award of some $12,450 costs in respect of Judge Strettell’s first ruling setting the relationship agreement aside was declined.
[103] Finally, and importantly, however, I consider that the observations of Judge Strettell, when declining to make any award of costs at the conclusion of his final judgment, remain apposite.
[104] This judgment may be cited as Picton v Uxbridge.
Solicitors:
D A Wood, Timaru
Gresson Dorman & Co, Timaru
2
0