RMA v JB
[2013] NZHC 2984
•12 November 2013
NOTE: PURSUANT TO S 169 OF THE FAMILY PROCEEDINGS ACT 1980, 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.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-003972 [2013] NZHC 2984
IN THE MATTER of the Family Proceedings Act 1989
BETWEEN RMA Appellant
ANDJB Respondent
Hearing: 10 October 2013
Counsel: JH Hunter for Appellant
VA Crawshaw for Respondent
Judgment: 12 November 2013
JUDGMENT OF BREWER J
This judgment was delivered by me on 12 November 2013 at 3:00 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors: Norris Ward McKinnon (Hamilton) for Appellant
Claudia Elliott (Auckland) for Respondent
RMA v JB [2013] NZHC 2984 [12 November 2013]
Introduction
[1] On 26 July 2013, Judge JH Walker ordered the appellant to pay the respondent interim maintenance in the sum of $6,000 per month.1 The first payment was to be made within seven days. The appellant has not made any payments. On
23 August 2013, he appealed the decision.
The Family Court decision
[2] The Family Court Judge was faced with a difficult situation. The parties had been living together in a house owned by a Trust controlled by the appellant. They had two children together, a girl born 21 May 2010 and a boy born 21 November
2012. When the parties separated, their relationship had endured between two years
10 months (the appellant’s contention) and three years plus some months (the respondent’s contention). The application for interim maintenance was brought by the respondent pursuant to ss 64, 65, 69 and 82 of the Family Proceedings Act 1980 (the Act).
[3] There were procedural complications arising from the fact that neither of the parties knew very much about the other’s financial situation. Both came to their relationship with assets protected by Trusts and with their Trusts controlling limited liability companies. In each case the companies owned rental properties. I understand the evidence to be that the appellant’s company owned six rental properties and the respondent’s company owned five rental properties. A sixth rental property was purchased by the respondent’s company during the course of the relationship.
[4] The appellant sought discovery of the respondent’s overall financial position. He had not obtained all the material he wanted at the time the application came before the Family Court Judge on 27 June 2013. A day or so before the hearing, the respondent filed some accounts. At the hearing, the Family Court Judge allowed the respondent to give evidence for the very limited purpose of producing a letter from her accountant commenting on her financial affairs. The appellant filed a
rudimentary statement of his financial position and an affidavit which explained his current financial state.
[5] Accordingly, at the commencement of the hearing, the Family Court Judge had the following difficulties:
(a) A factual dispute over whether the relationship between the parties was technically of short duration;
(b)A legal dispute as to whether, as a result, s 82 of the Act was available or whether s 70B of the Act applied;
(c) Limited evidence as to the parties’ financial positions and a party (the appellant) who did not consider that there was adequate information on which the Judge could make a decision.
[6] The Family Court Judge made the following decisions:
(a) Section 82 of the Act applies. The relevant parts of the section are:
(1) Where an application for a maintenance order or for the variation, extension, suspension, or discharge of a maintenance order has been filed, any District Court Judge may make an order directing the respondent to pay such periodical sum as the District Court Judge thinks reasonable towards the future maintenance of the respondent’s spouse, civil union partner, or de facto partner … until the final determination of the proceedings or until the order sooner ceases to be in force.
...
(4) No order made under this section shall continue in force for more than 6 months after the date on which it is made.
(b) The facts before her required the exercise of the Family Court Judge’s
discretion to make an interim order in favour of the respondent.
(c) The evidence put before the Court was insufficient for a determination
as to the length of the parties’ relationship:2
There is no basis before the Court whereby in terms of s 70B I can determine that the relationship between the parties was a de facto relationship as defined in s 2 of the Property (Relationships) Act
1976.
(d)The discretion granted by s 82 of the Act is sufficiently wide as to make it unnecessary to determine the status of the relationship between the parties in terms of its duration.
(e) If, to the contrary, s 70B of the Act applies then it would authorise the making of a maintenance order in any event:3
[180] In these proceedings I take into account the very young age of the children, aged three years and seven months, and [the respondent’s] primary role in their care. In addition, I take into account that the mother and the children are not residing in the family home and that [the respondent] is not in a position to easily obtain employment or generate income.
[181] Given that any order made is interim only in nature, it would be a serious injustice to [the respondent] if the Court was not in a position to provide for her needs at this stage.
(f) The monthly sum required by the respondent to meet her reasonable needs is $9,000. This takes into account child support payments of
$1,695 per month. The respondent is able to pay $3,000 per month towards meeting these needs, leaving a shortfall of $6,000 per month. This is the amount to be paid by the appellant.
The challenge on appeal
[7] The grounds of appeal specified in the notice of appeal were synthesised by Ms Hunter before me to three headings. The first is that the Family Court Judge erred in her consideration of s 70B of the Act. The second is that the Family Court Judge failed to properly assess the means of the respondent. The third is that the hearing was procedurally unfair in that the appellant was forced to participate in the proceeding without having proper discovery of the respondent’s financial information, or without having a proper opportunity to test the information provided by her.
(a) Section 82 or s 70B?
[8] The Family Court Judge held that s 82 of the Act gives an unfettered discretion to award interim maintenance which is not subject, in the case of de facto relationships, to s 70B of the Act.
[9] Part 6 of the Act deals with the maintenance of spouses and de facto partners. In most respects, the Part does not distinguish between parties to a formal marriage and parties to a de facto union. Thus, s 64 provides for “maintenance after marriage or civil union dissolved or de facto relationship ends”. It was under this section that the respondent made her substantive application to the Family Court.
[10] Section 64 sets out the liabilities and responsibilities of parties to each other after their relationship ends. The power to make orders after a relationship ends is conferred by s 70 of the Act. With one exception, it does not distinguish the natures of relationships.4 The exception is that the power of a Court to make an order under s 70 does not arise for relationships of marriage or civil union until there has been an order dissolving such relationship. However, the power arises under s 70(1)(b) “at
any time after a de facto relationship ends”.
[11] Section 70 is subject (inter alia) to s 70B.5 Section 70B places restrictions on maintenance orders in favour of de facto partners. It applies to a de facto relationship that is of short duration (i.e. for a period of less than three years).6
[12] The restrictions imposed by s 70B are expressed in subs (2) in this way:
If this section applies to a de facto relationship, the Court cannot make an order under section 70 in favour of a de facto partner to that relationship unless—
(a) the Court is satisfied—
(i) that there is a child of the de facto relationship; or
4 The section is headed “Order for maintenance after marriage or civil union dissolved or de facto
relationship ends”.
5 Family Proceedings Act 1980, s 70(5).
6 Property (Relationships) Act 1976, s 2E. I note that a relationship of three years or longer can still be classified as a relationship of short duration “... if the Court, having regard to all the circumstances of the de facto relationship, considers it just to treat the de facto relationship as a relationship of short duration”.
(ii) that the de facto partner seeking the order 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 to that de facto partner.
[13] On its face, therefore, s 70 confers a general power to make orders in relation to maintenance after a de facto relationship ends subject to the restrictions imposed by s 70B. Section 70 does not mention interim orders. However, s 82 does. It provides (as quoted at [6]) a discretion on the part of a District Court Judge to make an order directing a party to pay such periodical sum as the Judge thinks “reasonable” towards the future maintenance of the party’s de facto partner. Because such order is interim, it cannot go beyond the final determination of the substantive proceedings between the parties or beyond six months, whichever is the sooner.
[14] Counsel for the appellant submits that because the appellant’s contention is that the parties’ relationship was one of short duration then s 70B must be followed. The submissions then concentrate on the submitted error of the Family Court Judge in holding that, if s 70B does apply, a failure to make the order would result in serious injustice to the respondent. The appellant did not, in his memorandum, make any submission on why s 82 of the Act does not apply, even though it is directed specifically towards interim maintenance whereas ss 70 and 70B are not. In oral submissions, Ms Hunter put it that s 82 applies only where there is a valid application for substantive maintenance already filed. If s 70B is in issue, there can be no valid application until that issue is decided.
[15] There is a clear necessity for the Family Court to have a power to make interim maintenance orders upon the breakdown of a conjugal relationship. In the immediate aftermath of such a breakdown there can be unmet economic needs which must be addressed urgently if hardship, absolute or relative, is not to be visited upon one of the parties. That is why s 82 exists. I accept also the respondent’s submission that the jurisdiction exercised by a Judge considering an order under s 82 is not the same as the jurisdiction to be exercised under s 70. The latter requires a substantive decision to be made after hearing all of the relevant evidence and in accordance with the principles as mandated by s 61. To obtain all of the relevant evidence might be a
lengthy process. Resolution of the issues between the parties might take years. The principles to be taken into account under s 61 require careful decision made on considered argument. None of this applies to a decision made under s 82. Section
61 specifically excludes s 82.7
[16] I find that the jurisdiction afforded by s 82 is separate from the jurisdiction afforded by s 70. Whether or not a de facto relationship was of short duration is a factor that can be considered by a Judge exercising the s 82 jurisdiction; but it does not have to be determined as a prerequisite for its exercise.
[17] In this case, the Family Court Judge had the difficulties I have described in [2]-[5]. In my view, the Family Court Judge was right to use her discretion under s 82, and taking into account the evidence before her, to make an interim order.
[18] Against that view, I do not need to address counsel’s arguments on whether or not the Family Court Judge was justified also in holding that even if s 70B applied, the test of serious injustice was met.
[19] I will comment, however, that it was beyond doubt that the respondent came before the Family Court Judge with the primary care of a three year old child and a seven months old child. The respondent was not in employment, and had not been in employment during the course of the de facto relationship.8 Her home during the course of that relationship was a home controlled by the appellant and which she had left. Since then, she and her children had been living with family and friends. On
her affidavit, the respondent did not have the means to provide for her needs.
[20] The financial data were incomplete. However, there was enough for the Family Court Judge to conclude, as she did, that the appellant had means to provide at least interim maintenance for the respondent. I could not criticise the Family
Court Judge’s conclusion that it would do serious injustice not to make an order.
7 Compare Ropiha v Ropiha [1979] 2 NZLR 245 (CA) at 247.
8 I do not consider the acquisition of another rental property as constituting employment.
(b) Assessing the means of the parties
[21] The appellant’s submissions under this heading were directed towards the submitted requirement to find serious injustice under s 70B before an interim maintenance order could be made. However, I have ruled that the Family Court Judge’s decision that s 82 applied was correct. I will consider the appellant’s submissions against the exercise of the s 82 discretion.
[22] The s 82 discretion is broad and unqualified. The Judge must look at the circumstances and may make an order as the Judge thinks reasonable.
[23] This is an appeal, therefore, against the exercise of this discretion. I will intervene only if I find that the Judge took into account irrelevant facts, failed to take into account relevant facts, delivered a decision unsupported by evidence, or was plainly wrong.
[24] Ms Hunter submits that the Family Court Judge erred in failing to take into account:
(a) The appellant’s evidence in his affidavit that he had $10,000 drawings
a month available to him to meet all needs;
(b) The appellant’s evidence in his affidavit that his employment situation
had changed, including that he was made redundant in July 2012.
[25] Ms Hunter also submits that the decision of the Family Court Judge on the respondent’s means is unsupported by the evidence. Ms Hunter took me through the accounts provided by the respondent, pointing to ambiguities or contradictions which, she submits, found an inference that the respondent has available to her far greater resources than she has deposed to.
[26] The Family Court Judge made a careful assessment of the evidence before her using the structure now well-settled in the Family Court:9
9 JB v RMA, above n 1, at [31].
In respect to making an interim order the steps are set out in M v M and referred to in subsequent decisions including that of Judge JR Russell in LKN v TRM. This involves making the following enquiries:
1. What can be identified as [the respondent’s] reasonable needs?
2. What means does [the respondent] have to meet these needs?
3. What can be identified as [the appellant’s] means?
4. What is the ability of [the appellant] to meet the reasonable needs?
5. Should the Court exercise its discretion? [Footnotes omitted]
[27] In the analysis of the respondent’s means to meet her needs, the Family Court Judge refers to the appellant’s affidavit, the respondent’s affidavit and the letter from the respondent’s accountant produced on the day of the hearing. The Judge was aware of, and referred to, the criticism by the appellant’s then counsel of the accounts produced by the respondent.10
[28] The Family Court Judge held:11
[132] [The respondent’s] assets will undoubtedly receive attention in the course of later full examination by the Court.
[133] However, in determining the means that she does have available I find the most reliable figure to take into account for these purposes is the net amount that has been drawn down by her for the period of up to 31 March
2013 as set out in the accountant’s letter.
[134] This shows net drawings for the year from the company and the trust as $42,108.00.
[29] The Family Court Judge then went on to identify the appellant’s means,
beginning as follows:12
In [the appellant’s] affidavit of his financial means and their sources there is considerably less information available than in respect to [the respondent]. His stated income for the preceding 52 weeks is $369,083.00.
[30] The Family Court Judge went on to note:13
10 Ibid, at [122]-[129].
11 Ibid.
12 Ibid, at [139].
13 Ibid.
[141] It has also been alluded to in the course of the proceedings that there are at least six rental properties in the Hamilton area which he owns or has an interest in. In addition he refers to various items of salary, wages and other personal earnings from various entities including Allied Farmers Limited, Hynds Pipe Systems Limited, Nelmac Limited and Waters & Farr. He states that his income tax is unknown and various bank account balances including Commonwealth Bank, BNZ, Wachovia (Houston) USD are all unknown.
[142] In para [2(b)] of his financial means affidavit in respect to his assets he states that he has various money lent to various entities, including Plastico Limited, Alloway Rural Investment Trust and also Karamera Property Trust. There is no disclosure of the assets of any of these entities.
[143] In addition, in respect to government stock, shares, debentures and bonds he owns, he states these amounts are not known.
[31] The Family Court Judge referred specifically to the appellant’s evidence that
he draws $10,000 per month for his personal expenses.14
[32] The Judge did not refer to the appellant’s evidence of his changed financial circumstances. Her conclusion was that whilst the appellant’s exact means are not known, the record of his previous expenditure could be taken into account. The Judge was aware of, and referred to, the evidence that the appellant’s expenditure was in excess of his income.15
[33] In the exercise of her discretion, the Family Court Judge made an order for interim maintenance of an amount equal to approximately 60% of that sought by the respondent.
[34] I find that the Family Court Judge considered the points on which the appellant submits the Judge erred. I accept that the Judge did not refer specifically to the averment of changed financial circumstances – but the Judge did refer to the apparent fact that his expenditure exceeded his income.
[35] I cannot conclude that, in exercising her discretion, the Family Court Judge erred in a way, or to an extent, which would justify me intervening on appeal. To the contrary, in my view the decision made by the Family Court Judge was available to
14 Ibid, at [147].
15 Ibid, at [154].
her on the evidence before her and in the context of the jurisdiction to make an interim order.
(c) Procedural unfairness
[36] The appellant’s submission is that he was forced into a hearing with inadequate time and inadequate resources to put his case. The appellant’s view is that the respondent had not fully disclosed her financial position. He sought further and better discovery. His application was not dealt with prior to the hearing. Further, although the respondent gave oral evidence at the hearing, the appellant was not given an opportunity to cross-examine her. In the appellant’s submission, he was denied natural justice contrary to s 27 of the New Zealand Bill of Rights Act 1990.
[37] I do not accept these submissions.
[38] The context of the hearing must be borne in mind. This was an application for an interim order within a jurisdiction intended to allow a Judge to act swiftly in the aftermath of the breakup of a relationship to ameliorate hardship. The procedure followed was not only unexceptional but gave the appellant ample time to prepare. Indeed, I find some justification for the respondent’s submission that if there was a failure to properly assess the means of the appellant, it was because he did not take advantage of the time between application and hearing to fully inform the Court of his financial situation.
[39] Full disclosure is not a prerequisite for a hearing for an interim order. Obviously, if there is an apparent gap in a party’s evidence as to means then that is something a Judge will have to take into account. It depends on the circumstances.
[40] The procedure followed is set out in the Family Court Judge’s decision, as
follows:16
[3] [The respondent] filed the present application on 28 March 2013 and also sought a reduction of time for filing a notice of defence. This was filed simultaneously with an application for substantive spousal maintenance and an affidavit in support.
16 Ibid.
[4] There was an order made on 2 April 2013 reducing the time to
72 hours for the filing of a defence in respect to the application for interim spousal maintenance.
[5] A notice of defence was filed on 12 April 2013.
[6] There were considerable delays in [the appellant] filing affidavit evidence. He filed an application dated 16 May 2013 seeking further and better discovery.
[7] [The appellant] filed an affidavit dated 29 May 2013 relating to interim and final spousal maintenance and also in support of his interlocutory application for further and better discovery.
[8] On the same date he filed an affidavit as to his financial means and their sources.
[9] [The respondent] filed a further affidavit dated 24 June 2013 which had attached to it a considerable part of the documents sought to be disclosed in the application for discovery.
[10] Counsel for [the respondent], Ms Crawshaw, filed submissions on
24 June 2013. Counsel for [the appellant] filed submissions dated 26 June
2013. These were handed to me on the day of the hearing.
[11] At the hearing [the respondent] was present in person; [the appellant was not present.
[12] As the submissions from [the appellant] were only received on the day of the hearing, I allowed [the respondent] to be called briefly for the purpose of producing a letter from her accountant dated 27 June 2013 in response to matters that were raised in the written submissions.
[13] The hearing proceeded by submissions only.
[41] Neither party made an application to cross-examine the other party and the appellant was not even present at the hearing. The hearing itself lasted approximately two hours, as is usual, both counsel accepted, for hearings considering interim maintenance.
Result
[42] The appeal is dismissed.
[43] The respondent is entitled to costs. I fix these on a 2B basis and they may be calculated by the Registrar in the event of disagreement.
Brewer J
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