S v W HC Christchurch CIV 2005-409-663

[2006] NZHC 1672

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NAMES OF PARTIES SUPPRESSED

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2005 409 663

UNDER  the Property (Relationships) Act 1976

BETWEEN  S Appellant

AND  W Respondent

Hearing:         5, 14, 25 and 26 October 2005

Appearances: PHB Hall for Appellant

D H Hicks and J M Avery for Respondent

Judgment:      20 March 2006

JUDGMENT OF CHISHOLM J

Introduction	CONTENTS	Para [1]
Background Family Court Judgment	Para [4] Para [14]
This Appeal Categorisation Of Assets	Para [22] Para [28]

Statutory Provisions  Para [29] Authorities  Para [32] Texts  Para [46] Discussion  Para [51] Intermingling  Para [55] BNZ Term Deposit Account  Para [59] Alpacas  Para [67] Darfield Land  Para [75] Respondent’s Alaskan Bank Account  Para [81]

Contributions Of The Parties To The Relationship  Para [84]

S V W HC CHCH CIV 2005 409 663 [20 March 2006]

Relationship Property As At Date of

Separation  Para [86] Appellant’s Monetary Contributions  Para [87] Respondent’s Monetary Contributions  Para [109] Non Monetary Contributions  Para [112] Household Management And Duties – s 18(1)(b)  Para [114] Performance Of Work Or Services In Respect

Of The Relationship Property – s 18(1)(f)     Para [116] Foregoing Of A Higher Standard of Living

- s 18(1)(g)  Para [119] Assistance Or Support To The Other Partner

- s 18(1)(h)  Para [122] Overall Assessment of Non Monetary

Contributions  Para [125] Combining Monetary And Non Monetary

Contributions  Para [126]

Whether Section 14A(2) Grounds Made Out  Para [128] Application Of Section 14A(3)  Para [137] Outcome  Para [139]

Introduction

[1]      This appeal arises from the Family Court’s determination of the respondent’s application for a division of property under the Property (Relationships) Act 1976 (PRA).  It is common ground that the de facto relationship between the appellant and respondent was one of short duration, having lasted two years and ten months.  There are no children.

[2]      Given the short duration of the relationship, s 14A applied and the primary issue was whether the Family Court was entitled to make an order under that section which provides:

“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 s25(3), even though the de facto partners have lived in a de facto relationship for less than 3 years.

…”.

Being satisfied that the grounds specified in subs (2) had been made out, the Family Court Judge determined that the respondent was entitled to two thirds of the relationship property and the appellant to one third of such property.

[3]      On 5 October 2005 I heard an application by the appellant for leave to adduce further evidence which was opposed by the respondent.  Although leave was granted, it was confined to two memoranda provided by the respondent to IRD which had not been disclosed to the appellant.  The fact that the hearing of the substantive appeal extended over several days reflects the number of issues that were raised and, in some cases, their complexity.

Background

[4]      Both parties are American citizens who gained permanent New Zealand residency in 2001.  When they met in late 1999 they were in their late forties.  At that time the appellant, who holds a PhD degree, was a university professor (and also a practising artist) in California.  The respondent was living in Alaska where he was involved in a wilderness business.  They began living together in California during October 2000.

[5]      In December 2000 the parties moved to New Zealand where the appellant took up a visiting appointment as a lecturer at Lincoln University.  The respondent was not in employment.  Each party held personal bank accounts.  Late in December the appellant opened a cheque account in her name with BNZ and on 29 January

2001 this account was converted into a joint account.  It has never been disputed that this account is relationship property.  Later a joint term deposit account was opened with BNZ.  There is a dispute about whether this account is relationship property or the respondent’s separate property.

[6]      Initially the appellant supported both herself and the respondent.  However, after the respondent’s mother died in the United States in May 2001 he inherited a substantial sum of money.   He made several deposits into the joint BNZ cheque account, with some of those deposits being transferred to the BNZ term deposit account and later used in the acquisition of assets.   One of the central issues is whether the assets acquired by utilising the respondent’s inherited funds that had been on term deposit are relationship property or the respondent’s separate property.

[7]      Apart from pursing her role as a lecturer at Lincoln University the appellant also produced art works.  In January 2002 a partnership was established in relation to the appellant’s art business and the respondent’s wilderness business (although the wilderness business was effectively dormant during the period of the relationship). Later the partnership was extended to include an alpaca farming business.  Although there was no written partnership agreement the existence of the partnership can be verified by reference to GST and taxation returns.  There is a major dispute between the parties about the implications, if any, of the partnership in relation to the determination and division of relationship property.

[8]      In May 2002 a lifestyle block at Motukarara was purchased in the joint names of the parties at a total cost of $230,345.   Up to this time they had been living in rented accommodation.  The sum of $169,000 was borrowed from the BNZ and the respondent contends that he provided the balance from inheritance monies.   It is common ground that this lifestyle block is relationship property.  Eight alpacas were purchased for $67,500 (one died and was replaced) and these animals were farmed on the Motukarara property.   Again the respondent  maintains that he funded the

purchase from his inheritance.  Although the respondent conceded that the progeny and profits arising from the alpaca farming operation are relationship property, the classification of the initial alpaca herd is disputed.

[9]      Also in May 2002 the respondent’s grandfather died in the United States.  He inherited further funds.

[10]     The appellant returned to California in June 2002.   The evidence indicates that there were three underlying reasons for this trip.   First, the appellant’s initial contract at Lincoln University had ended without any immediate offer of renewal. Second, she needed to consult her doctor about a hip problem (she ultimately had an operation in the United States).  Third, there were issues between the appellant and respondent about their relationship and it had been suggested during counselling that it would be best for them to take time out.  While the appellant was in California the respondent visited her on three occasions.  The appellant returned to New Zealand in December 2002 and  shortly thereafter  secured  a  permanent  position as a  senior lecturer at Lincoln University.

[11]     In May 2003 a block of land at Darfield was purchased in the joint names of the parties for $112,500.  GST input tax was claimed on the basis that the land was a partnership asset.  The respondent maintains that he funded this purchase and that he intended to build a house and sell the property for a profit but that he was unable to do so because the appellant would not permit him to withdraw funds from the joint bank account.  The status of this land is in issue.

[12]     After  the  relationship  between  the  parties  ended  in  August  2003  the respondent  made  application  to  the  Family  Court  for  orders  under  the  PRA. Although he acknowledged that the appellant had made a contribution to the relationship,  the respondent  maintained that  it  was  nowhere  as  extensive  as  his contribution.  He claimed that the BNZ term deposit, initial alpaca herd and Darfield land are his separate property and asked the Family Court to divide the remaining property so that his share is significantly more than the appellant’s.

[13]     Three affidavits were filed by the respondent in support of his application and the appellant filed two affidavits in opposition.  The matter was heard in the Family Court on 8 and 9 December 2004.   Both parties gave supplementary evidence and were extensively cross-examined.  The judgment of the Family Court was delivered on 4 February 2005.

Family Court Judgment

[14]     Having summarised the history of the relationship the Judge assessed the reliability of the parties and concluded that the respondent’s evidence should  be preferred because the appellant seemed to be consumed by her dislike for the respondent  to  such  an  extent  that  she  had  denied  patently obvious  matters,  for example, that the respondent had received inheritances from his mother and grandfather.   In the Judge’s view the appellant’s evidence was “lacking in clarity and precision”.  He rejected her assertion that the respondent’s Alaska World Wide Adventures (AWWA) bank account was the same as his Alaskan account.  Amongst other things the appellant  claims that  the Judge’s criticism of her  evidence  was inaccurate and unfair.

[15]     Contributions to the de facto relationship were considered.  While the Judge accepted that the respondent’s monetary contributions totalled $741,972, he failed to reach any specific conclusion about the appellant’s monetary contribution.  He noted that her contention that she had made a net contribution of $251,809 was denied and he said that he was not satisfied that her calculations in a schedule attached to her second affidavit (exhibit D) were totally accurate.   During his discussion of that schedule the Judge commented that her calculations were “generally  vague  and lacking in precision” and he noted in passing that throughout her calculations the respondent had used a flat conversion rate of 40 cents to the US dollar.  Again it is contended by the appellant that the Judge was inaccurate and unfair.

[16]     The Judge “assumed” that the non-monetary contribution put in by each of the  parties was approximately equal.    He  held  that  the  respondent  had  made  a

substantial contribution to the de facto relationship, that failure to make an order under s14A would result in serious injustice to him, and that the discrepancy in monetary contributions was sufficient to activate the provisions of s 14A(2)(a)(ii) and (b).  Although there is a contest in relation to the finding that the non-monetary contributions were approximately equal and that the respondent’s contribution amounted to $741,972, there does not seem to be any direct challenge to the Judge’s conclusion that s 14A(3) applied.

[17]     Then the Judge considered whether the fact that the respondent’s inherited funds had been placed in the joint BNZ accounts was sufficient to render those funds relationship property.  After referring to paragraph 11.62 of Fisher on Matrimonial and Relationship Property, Jackson v Jackson [1984] 1 NZLR 382 at 383 (CA), Allan v Allan (1990) 7 FRNZ 102 (HC), and Gough v Gough (1996) 14 FRNZ 660 (CA), the Judge said:

“[43] … Given the disparity of contributions between the parties, I hold that the character of the applicant’s funds as separate property has not been converted into relationship property by virtue of them being placed in the joint Bank of New Zealand accounts.”

Both the reasoning process adopted by the Judge and his conclusion are challenged by the appellant.

[18]     In relation to the alpacas the Judge reached several conclusions.  He accepted that the alpacas had been purchased by the respondent from his inherited funds, that the respondent had provided “the vast majority” of the care of the animals, and that the alpaca herd was the respondent’s separate property.   On the other hand, the income from that farming operation was held to be relationship property by virtue of the fact that the alpacas were farmed on the Motukarara land which was relationship property (and presumably by virtue of the concession that the respondent had made). The appellant challenges the conclusion that the initial alpaca herd is separate property.

[19]     The Darfield land was also held to be the respondent’s separate property.  As the Judge saw it, the issue was whether the situation was governed by s 8(1)(c) or s 10 of the Act.   After considering P v P (2002) 22 FRNZ 380 (FC), Skerten v Skerten (1978) 1 MPC 193 (HC), Lewis v Lewis [1993] 1 NZLR 569 (HC), Stark v

Stark [1996] NZFLR 36 (FC) and Waller v Hider [1997] NZFLR 936 (HC) the

Judge said:

“[47]   Given the conflict between the cases on this particular point, I have given consideration to the merits of the matter and will endeavour to take those into account in making a decision.  It is the applicant’s evidence that he decided to purchase the section at Darfield as an investment.  He intended to build a house on it for such a purpose.  He was precluded from doing so by virtue of the actions of the respondent who at that time had frozen the bank account which was in the joint names of the parties.  The vast majority of the funds in the joint bank account had come from the applicant’s inheritances.  I have already made a finding that those inheritances were not intermingled to the extent that they lost their separate identity as far as the applicant was concerned.  It appears to me that on the merits of this particular situation, and noting the conflict between the superior Courts on this particular point, that justice would be done by holding that the Darfield property is the applicant’s separate property.”

It seems to be implicit that the Judge decided that s 10 prevailed over s 8(1)(c). Again there is a contest about his reasoning and conclusion.

[20]     On the basis that there was no dispute about such items, the Judge declared the appellant’s superannuation, her other investments in the United States, and art works completed by her before the relationship commenced, were her separate property.  Art works completed by the appellant during the period of the relationship were held to be relationship property.  Those findings are not in dispute.  As already mentioned, the Judge had earlier found that the joint term deposit account, initial alpaca herd, and Darfield land were the respondent’s separate property.

[21]     In  the  end  result  the  following  was  held  to  be  relationship  property  (in addition to the art works completed by the appellant during the course of the relationship):

•   Appellant’s bank accounts with Wells Fargo and Westpac.

•   Joint BNZ cheque account.

•   Motukarara property and chattels.

•   Art work retained by the appellant.

•    Monies in the trust account of Clark & Co arising from art works sold since separation.

For the purposes of s14A(3) the Judge decided that the contributions of the parties to the relationship property were:   respondent two parts;  appellant one part.  Subject to the reservation of leave to apply further, the matter was left on the basis that the parties would be able to resolve any outstanding matters.

This Appeal

[22]   Numerous matters have been raised.   Some factual errors have been acknowledged by the respondent.   Neither party wishes the matter to be referred back to the Family Court for a re-hearing and both have adopted the pragmatic stance that this Court should do its best to resolve any factual issues that have to be revisited.

[23]     Errors conceded by the respondent can be summarised.   First, the AWWA account is the same as the respondent’s Alaskan bank account.  Second, the appellant did not  use a flat  40 cent  conversion rate throughout.   Third, in arriving at  his conclusion that the respondent’s total monetary contribution to the relationship was

$741,972, the Judge included the alpaca herd, Darfield land and BNZ term deposit account (totalling $299,383) despite having found that they were the respondent’s separate  property.    Fourth,  the  Judge  did  not  attempt  to  put  a  figure  on  the appellant’s monetary contribution.  Fifth, the appellant’s Westpac accounts could not have been relationship property because they were not open when the relationship ended;  and finally, the figures used by the Judge for the appellant’s BNZ rapid saver account and her Wells Fargo account were incorrect.

[24]     Apart from those errors it is common ground that two Toyota motor vehicles, which are accepted by both parties to be relationship property, were overlooked by the Judge.  Each party has possession of one of those vehicles.  The appellant also contends that the Judge failed to address whether the partnership was relationship

property and whether the respondent’s Alaskan bank account was relationship property.

[25]     On behalf of the appellant Mr Hall contended that the acknowledged errors are fundamental and that they not only undermined the Judge’s credibility findings but also predisposed him to an outcome that was wholly unfair to the appellant.  Mr Hall argued that in all the circumstances the only course that would be compatible with justice would be to make a fresh start in resolving all disputed items.

[26]     Mr Hicks rejected those propositions.    He denied that  the acknowledged errors had  produced  an  inappropriate  outcome  and  maintained  that  on  a  proper analysis of the law and evidence the two thirds/one third ratio arrived at by the Judge was actually generous to the appellant.

[27]     This appeal requires the following matters to be addressed:

(a)    The categorisation of disputed assets as either relationship property or separate property.   This is necessary to ensure that the separate property of the parties is excluded when considering s 14A(2).

(b)    The respective contributions of the parties to the relationship.  This is also necessary to enable an assessment to be made about whether the grounds in s  14A(2) have been made out.

(c)     Given the findings under (a) and (b), whether the grounds in s 14A(2)

have been made out.

(d)    If  the  grounds  under  s 14A(2)  have  been  made  out,  whether  the Judge’s two thirds/one third order under s 14A(3) was appropriate and, if not, the order that should have been made.

Categorisation Of Assets

[28]     In  this  appeal  there  is  a  contest  between  the  parties  about  whether  the following assets are relationship or separate property:

•    BNZ term deposit account

•    Initial alpaca herd

•    Darfield land

•    Respondent’s Alaskan bank account.

Before addressing  those  individual assets  it  is  necessary to  resolve  a  matter of statutory interpretation relating to the jointly owned assets (the term deposit account and the Darfield land).   The issue is whether s 8(1)(c) prevails over s 10 or vice versa.  As far as I can see that issue does not arise in relation to the alpacas because they would appear to fall within s 8(1)(e) which is expressly made subject to s 10. Nor can it arise in relation to the Alaskan bank account which is not a joint account.

Statutory Provisions

[29]     Relationship property is defined by s 8 which for present purposes relevantly provides:

“8  Relationship property defined

(1)    Relationship property shall consist of—

(a)    the family home whenever acquired; and
(b)    the family chattels whenever acquired; and

(c)      all property owned jointly or in common in equal shares by the husband and the wife or by the de facto partners; and

(d)    all property owned by either spouse or de facto partner immediately before’ (e)         their marriage or de facto relationship began, if—

(i)       the property was acquired in contemplation of the marriage or de facto relationship; and

(ii)     the property was intended for the common use or common benefit of both spouses or de facto partners; and

(e)       subject to sections 9(2) to (6), 9A, and 10, all property acquired by either spouse or de facto partner after their marriage or de facto relationship began; and (ee)         subject to sections 9(3) to (6), 9A, and 10, all property acquired, after the marriage or de facto relationship began, for the common use or common benefit of both spouses or de facto partners, if—

…”.

(i)     the property was acquired out of property owned by either spouse or de facto partner  or by  both  of  them  before  the  marriage  or  de facto relationship began; or

(ii)    the property was acquired out of the proceeds of any disposition of any property owned by either spouse or de facto partner or by both of them before the marriage or de facto relationship began; and

In terms of s 8(1)(c) the joint term deposit account and jointly owned Darfield land are clearly relationship property.

[30]     On the other hand those assets were funded by the respondent’s inheritances which triggers s 10:

“10     Property acquired by succession or by survivorship or as a beneficiary under a trust or by gift

(1)     Subsection (2) applies to the following property:

(a)    property that a spouse or de facto partner acquires from a third person— (i) by succession; or

(ii)     by survivorship; or
(iii)     by gift; or

(iv)     because the spouse or de facto partner is a beneficiary under a trust settled by a third person:

(b)    the proceeds of a disposition of property to which paragraph (a) applies: (c) property acquired out of property to which paragraph (a) applies.

(2)    Property to which this subsection applies is not relationship property unless, with the express or implied consent of the spouse or de facto partner who received it, the property or the proceeds of any disposition of it have been so intermingled  with  other relationship property that it is unreasonable or impracticable to regard that property or those proceeds as separate property.

(3)     Property that 1 spouse or de facto partner acquires by gift from the other spouse or de facto partner is not relationship property unless the gift is used for the benefit of both spouses or de facto partners.

(4)     Regardless of subsections (2) and (3) and section 9(4), both the family home and the family  chattels  are  relationship  property,  unless  designated  separate  property  by  an agreement made in accordance with Part 6.”

The respondent’s inheritance from his mother (which was derived through a trust) is covered by either s 10(1)(a)(i) or (iv) and the inheritance from his grandfather falls within s 10(1)(a)(i).  It follows that under s10 the term deposit and Darfield land will be the respondent’s separate property unless there has been intermingling in terms of s 10(2).

[31]     Thus s 8(1)(c) and s 10 produce conflicting outcomes and it is necessary to determine which provision prevails.   A similar conflict under the Matrimonial Property Act 1976 (MPA) gave rise to conflicting decisions of this Court and the Family Court.  When the PRA was enacted in virtually the same terms (the current s 8(1)(c) is the same as s 8(c) under the MPA and s 10(1) under the MPA has been split into two subsections under the PRA) there was no attempt by Parliament to resolve the uncertainty.

Authorities

[32]     With specific reference to the following passage at 194, Skerten v Skerten (1978) 1 MPC 193 has been frequently cited as authority for the proposition that s 8(c) should prevail over s 10:

“Mr Parker, quite properly, conceded that this section was “matrimonial property”. I think he had little option to so concede in view of the clear wording of s.8(c) of the Act which states that “matrimonial property” shall consist, inter alia, of “all property owned jointly or in common in equal shares by the husband and the wife”. Were it not for s.8(c), then there might have been argument under s.10(1) that this property, having been acquired with the proceeds of a bequest, was not to be treated as “matrimonial property”. However, that is not the case.”

It needs to be kept in mind that this observation was made in the context of counsel’s concession.   In my view the decision is of limited assistance in establishing a principled response to the conflict between the two sections.

[33]     Holland J concluded in Z v Z (1988) 3 FRNZ 64 that s10 prevailed over s 8(c) largely on the basis that s 10 created a code in terms of the property falling within that section.  In this respect he derived support from Syme v Wilson (1978) 2 MPC

185, Barnard v Barnard (1980) 3 MPC 6 and Reid v Reid (1980) 4 MPC 170.  At 72

Holland J commented:

“Were it not for the provisions of s 10 any property  acquired by a  spouse during the marriage would be matrimonial property.  Section 10 is a clear statement of intention that property acquired by succession or by way of gift was not to be matrimonial property and likewise  the  proceeds  of  any  disposition  of  such  property  was  not  to  be  matrimonial property.  It is a matter of logic and common sense that the Legislature should have intended s 10 to be a code in respect of property of such nature and property acquired from it. There is no question that property acquired from separate property not used for the matrimonial home or family chattels and not mixed with any other property remains separate property no matter how often its nature is changed and no matter what may be the purpose of the investment for which it is used.”

It  made  sense  to  Holland  J  that  Parliament  would  have  intended  that  separate property which had been intermingled should nevertheless remain separate property unless it was unreasonable or impractical for it to retain that status.

[34]     In Lewis v Lewis [1993] 1 NZLR 569 Williams J decided that s 8(c) should prevail over s 10. He noted the conflict between Skerten v Skerten and Z v Z and that both Fisher on Matrimonial Property (2nd  edition, 1984) and Webb et al, Family Law New Zealand (5th  edition, 1992) preferred the Skerten approach.   For him the most telling argument was that unlike ss 8(e) and 8(ee), s 8(c) was not expressly made subject to s 10.  He considered that if Parliament had intended s 8(c) to yield to s 10 a subordinating “subject to” would have been provided and that there was

insufficient reason for the Court to imply such qualification.

[35]     Williams J also considered that a spouse electing to place separate property into  joint  names  would  expect  there  to  be  equal  sharing  which  could  only  be achieved if s 8(c) prevailed.  On the other hand, if property is held in unequal shares it would remain separate property under s 10(1).  The Judge was sceptical about the proposition that s 10 was a code and noted a number of ways that the status of such property could be changed, namely, by agreement under s 21, increasing in value under s 9(3) or by Court order under s 33.  Williams J also felt that there was force in the argument expressed in Fisher (which has not been repeated in the latest edition), that because of the potential for argument about co-owned property, there may be a preference for classifying it as matrimonial property to allow for its just division.

[36]     In Waller v Hider [1997] NZFLR 936 Fraser J accepted without discussion that the analysis and reasoning in Lewis v Lewis was correct.   He noted, however, that even if this view of the law was wrong he was satisfied that the inherited money had become so intermingled with the matrimonial property that it would be unreasonable to regard the property as separate property.   Thus his view about the priority between s 8(c) and s 10 is probably obiter.

[37]     Leave to appeal to the Court of Appeal was refused by the Court of Appeal in

Waller v Hider [1998] 1 NZLR 412 because that Court considered it was unlikely

that  the  question  of whether  s 8(c)  was  subject  to  s 10  would  arise  on  appeal. Nevertheless the Court commented at 414:

“Moreover, as Mr Whiteside, for the wife, pointed out, the question of law now seems to be settled at High Court level in favour of the view that s 8(c) takes precedence over s 10: Lewis v Lewis [1993] 1 NZLR 569, following Skerten v Skerten (1978) 1 MPC 193. We should not be taken to have determined that question but, as at present advised, see no reason to doubt the soundness of the position apparently now accepted in the High Court: see Fisher on Matrimonial Property, para 14.7.”

Although those remarks have been interpreted as indicating the likely attitude of the Court of Appeal if the issue should come before it, the Court expressly stated that it should not be taken to have determined the question.  It is also significant that there is no reference to Z v Z which might suggest that the priority issue was not argued or considered in any depth.

[38]     The  following  year  Salmon  J  decided  in  Millington  v  Millington  [1999] NZFLR 829 that s 10 prevailed over s 8(c).  Having considered both Z v Z and Lewis v Lewis in some detail the Judge decided that it was appropriate to consider the matter afresh.  His starting point was the long title to the Act and the objective of providing a just division of matrimonial property between the spouses when the marriage ended.  Although the Judge accepted that there was force in the argument that if Parliament had intended s 8(c) to be subject to s 10, it would have specifically said so as it had in relation to ss 8(e) and 8(ee), he noted that a counterbalancing argument arose from s 10(3) (now s 10(4)) which expressly excludes the matrimonial home and family chattels.   He saw no need to read down the very clear terms of s 10(1) (now s 10(2)) and observed that if parties avoided intermingling that was an indication that they intended the property to remain separate property.

[39]     An in depth analysis was undertaken in the Family Court by Judge Inglis QC in P v P (2002) 22 FRNZ 380.  Unlike the decisions discussed up to this point, this case was decided under the PRA.  The Judge did not consider that the passage of the PRA could be construed as an implicit acceptance of either interpretation.   With reference  to  the  legislative  history  he  noted  that  the  property  covered  by  s 10 represented a special category of separate property, a feature of which was that it was not a product of parties’ contributions to their relationship.   Thus he believed

that it was logical to treat s 10 as an exception to the more generalised provisions of s 8.  The Judge also noted that the draftsman had gone out of his way in s 10(4) (and earlier in s 10(3)) to exclude the family home and chattels regardless of how they had been acquired, yet had refrained from saying anything about property within s 8(1)(c).

[40]     At paragraph [29] Judge Inglis discussed a further reason for treating s 10 as an exception to s 8(1)(c):

“Consider a case where  a third  party bequeaths or gives  an investment  property  to  a husband and wife as tenants in common in equal shares.   In the absence of any relevant intermingling with “other relationship property”, in terms  of  s10 each party’s  share is expressly declared to be not relationship property.  One searches for any logical or indeed sensible reason why the bequest should be transformed into relationship property simply because of the fact that the property had been bequeathed to the spouses in equal shares, or, for that matter, why no such question would arise if the bequest to them had been in unequal shares.”

He also considered that to read s 8(1)(c) as overriding s10 involved interpreting s 8(1)(c) as if it read “all property, however acquired” owned jointly or in common in equal shares by the husband and the wife.

[41]     The underlying structure of the MPA and PRA was analysed by Judge Inglis. He noted that whereas under the MPA matrimonial property that was not the matrimonial home or chattels would potentially be shared unequally under s 15, the emphasis had changed under the PRA to the extent that prima facie all property is to be shared equally.  The Judge considered that this change in policy underscored the importance  of  the  exception  provided  in  s 10(4)  while  the  distinction  between s 8(1)(c), on  the one  hand,  and  s 8(1)(a)  and  s 8(1)(b), on  the other,  tended  to disappear.

[42]     After outlining the various High Court and Family Court authorities, Judge Inglis turned his attention to the dicta of the Court of Appeal in Waller v Hider to the effect that the settled view at High Court level appeared to be that s 8(c) was to prevail over s 10.  While accepting that it may demonstrate the way in which “the wind might be blowing”, he did not accept that it could be treated as a definitive ruling on the question.

[43]     Given the divergence in authority, Judge Inglis expressed his preference for the view that s 10 was intended to be treated as an exception to s 8(1)(c), so that property acquired by one of the means outlined in s 10 can only become relationship property by way of the routes expressly stated in s 10 (or possibly through s 9 or s 9A).  At [35] he said:

“I am not persuaded that there are any compelling reasons why the Legislature should have seen it as advantageous for the purposes of the Act that s10 property, or property acquired out of s 10 property, should become relationship property simply because the spouses are or become joint owners of it or co-owners in equal shares.  I have already drawn attention to the strange result of a bequest or a gift of property to spouses as tenants in common in equal shares (separate property  of each  in  terms  of  s10)  if  it  were  automatically  to  vest  as relationship property because of the supposed effect of s8(1)(c).  Resolution of the apparent conflict between the two sections is more than a matter of semantics;   it is a matter of identification of the  spirit of the legislation by tracking the  reasoning  processes of the draftsman.  The draftsman’s intent was clearly enough aimed at placing s10 property in a special category, a view which as I have said is reinforced by the express terms of s10(4) …It is a logical progression to provide for general purposes that jointly  owned  property is matrimonial or relationship property but then to provide  expressly  a  general  rule  that property specifically acquired by any of the routes in s10 does not have that classification … In none of the cases preferring the predominance of s8(1)(c) has it been explained why s10(4) should  be necessary  if s8(1)(a) and  (b) had  been  intended  by  the  draftsman  to predominate over s10.  If s8(1)(a) and (b) did not predominate, why should s8(1)(c)?  In the absence of any obvious and convincing reason why it should, to treat s10 as predominant in the situations to which it applies saves the need to speculate why the draftsman might have wished s8(1)(c) to predominate when he obviously did not have the same view about s8(1)(a) or (b).”

In the end result, however, Judge Inglis decided that the property in question was relationship  property by  virtue  of s 10(3).    Thus  his  remarks  about  the  priority between s 8(1)(c) and s 10 are obiter, a point that seems to have swayed the authors of some of the texts to be discussed shortly.  In my view, however, the fact that the remarks are obiter cannot detract from the valuable analysis undertaken by this very experienced Family Court Judge.

[44]     Judge  Inglis’s analysis  has been adopted  in two  relatively recent  Family

Court decisions.   In Coley v Coley (FC, Manukau, FP 055/253/02, 24 December

2003) Judge Malosi agreed that s 10 should operate as an exception to s 8(1)(c).  He considered that if Parliament had intended s 10(2) to be subordinate to s 8(1)(c), it would have said so.   It was also his view that there was no rationale for placing property acquired by succession or by one of the other methods outlined in s 10 out of the reach of relationship property in one section, only to have it automatically clawed back by another section.   The other decision is M v M (FC, North Shore, FAM-2003-044-1842, 29 June 2004) in which Judge Ryan agreed that the purpose of

s 10 is to place inherited property in a special category of its own which reflects that property in this category is not the product of the parties’ contributions to their relationship.

[45]     The foregoing reveals that three decisions of this Court (Skerten v Skerten, Lewis v Lewis and Waller v Hider) support the view that s 8(1)(c) has priority and two decisions of this Court (Z v Z and Millington v Millington) plus three recent decisions of the Family Court (P v P, Coley v Coley and M v M) support the opposite view.  Significantly the last four decisions, all of which have had the benefit of the competing views expressed in earlier decisions, have reached the same conclusion, namely,  that  s 10  prevails.    Moreover, the  fact  that  after  due  consideration  the specialist Court has adopted a consistent approach under the PRA should not be lightly disregarded.

Texts

[46]     Having  acknowledged  the  conflict  between  s 8(1)(c)  and  s 10  the  latest edition of Fisher on Matrimonial Property (2005) comments at paragraph 11.17:

“The statute gives no obvious solution … Probably s8(1)(c) is intended to prevail but the issue is not free from doubt on [sic] the light of recent decisions of the Family Court and the conflicting decisions of the High Court.”

Without embarking on any detailed analysis the footnote supporting that view mentions the decisions discussed above (plus two other decisions that do not appear to directly bear on the issue).   Further reference to the priority issue appears in paragraph 11.65 which again indicates that the issue has now been resolved on the basis that s 10(2) and (3) are subordinated to the relationship property provisions in s 8(1)(c).   The relevant footnote refers the reader back to the footnote relating to paragraph 11.17.

[47]     Relationship Property on Death by Peart, Briggs and Henaghan (2004) also mentions the  conflict  at  paragraph 6.3.   The  authors comment  at  p162 that the Judge’s analysis in P v P is effectively obiter and that:

“… given that the weight of authority under the Matrimonial Property Act 1976 inclined to the view that s8(1)(c) overrode s10, it is suggested that the comments in P v P carry little weight.”

Footnote 157 refers the reader to Brenssell v Brenssell [1998] NZFLR 28 (CA). However, on my reading of that decision s 8(e), not s 8(c), applied and I struggle to understand how this decision advances the proposition that s 8(c) prevails over s 10. I also note Judge Inglis’s comment  in P v P at paragraph [34] that he had also searched in vain for any reference in Brenssell to the point in issue.

[48]     The authors of Webb et al, Family Law in New Zealand (Vol 2, 12th edition,

2005) also rely on Brenssell v Brenssell to support  the following proposition at paragraph 7.335:

“The  general issue may now be considered resolved because  the  Court  of Appeal  has accepted  that  the  rule  classifying  such  property  relationship  property  (s8(1)(c))  should prevail over s10.”

An earlier reference to the same matter at paragraph 7.323 cites both Brenssell v Brenssell  and  Waller  v  Hider  for  the  same  proposition.    Again  I  struggle  to understand how either decision can justify the proposition advanced.   Brenssell v Brenssell does not address the point in issue and the comments of Court of Appeal in Waller v Hider were not intended to constitute a definitive ruling.

[49]     The final text is Trapski’s Family Law.  It notes that the legislation does not state  whether  s 10  takes  priority  over  s 8(1)(c)  and  refers  to  various  decisions supporting each interpretation.   No  view  is expressed as to  which section takes priority.

[50]     All in all, I have derived limited assistance from the texts.

Discussion

[51]     The wording of the legislation is not capable of conclusively resolving the issue one way or other and strong arguments can be advanced to support  either interpretation.  Counsel did not come up with any arguments that have not already

been traversed in the authorities.  And I have unsuccessfully resorted to Hansard in the hope that it might help resolve the deadlock.

[52]     I  have decided  that  the  interpretation  most  likely  to  reflect  the  text  and purpose of the legislation is the interpretation that s 10 prevails over s 8(1)(c).  The underlying  statutory  intention  would  seem  to  be  that  s 10  should  govern  the classification  of property acquired  by  succession,  survivorship,  as  a  beneficiary under a trust, or by gift, because property acquired in any of those ways has not been produced by the efforts of the parties to the marriage or de facto relationship.  Once it is accepted that s 10 is an exclusive code it logically follows that it should prevail over  s 8(1)(c)  in  situations  where  that  provision  would  have  otherwise  applied. While joint ownership or ownership in common in equal shares in terms of s 8(1)(c) reflects a prima facie intention by the parties to share property equally, this presumption is displaced in situations where s 10 applies, unless the intermingling test contained in s 10(2) allows the presumption to be recognised.  That subsection provides a relatively straightforward test for separate property to be converted into relationship property in appropriate cases.

[53]     This interpretation is supported by the fact that the manner in which property is acquired is an important statutory factor in determining its classification:  see, for example, ss 8(1)(e), 8(1)(ee), 9(2), 9(4).   To bypass this factor in situations where property is jointly owned or is owned as tenants in common in equal shares would seem to cut across the legislative policy.  Moreover, as Judge Inglis pointed out in P v P at paragraph [29], it is difficult to find any logical reason for treating bequests or gifts in equal shares differently to those in unequal shares.   Finally, while I acknowledge that the argument based on s 10(4) can be met with the countervailing argument based on the fact that ss 8(e) and (ee) are expressly made subject to s 10, it seems to me that the argument based on s 10(4) is stronger.

[54]     Having reached the conclusion that s 10 prevails over s 8(1)(c), it becomes necessary to address the issue of intermingling under s 10(2).

Intermingling

[55]     In terms of s 10(2) the term deposit account, Darfield land and alpacas (the respondent’s Alaskan bank account will be considered separately later) will be the respondent’s separate property unless:

“… with the express or implied consent of the … partner who received it, the property or proceeds of any disposition of it have been so intermingled with other relationship property that  it  is  unreasonable  or impracticable  to  regard  that  property  or  those  proceeds  as separate property”.

The Judge seems to have concluded that the deposit  account  is  not  relationship property purely on the basis that there is a disparity in the contributions of the parties.  This also appears to have provided a springboard for his conclusion that the Darfield land and alpacas are not relationship property.

[56]     Section 10(2) gives rise to the following questions:

•    Has there been intermingling with other relationship property in the sense that there has been a mixing of one with the other;  if so

•    Did the intermingling occur with the express or implied consent of the respondent;  if so

•    Does the intermingling render it unreasonable or impracticable to regard the property as the respondent’s separate property?

Although these are primarily issues of fact to  be determined on the evidence, a number of principles already developed need to be taken into account.

[57]     It is well settled that in applying s 10(2) the Court should concentrate on substance rather than form or technicality:  Gerbic v Gerbic (1982) 5 MPC 40 at 42. It is also worth noting the comments at paragraph 11.62 in Fisher on Matrimonial and Relationship Property:

“… Fundamentally, the question is whether the identity of the original separate property capital is still recognisable in its new form.

Although this is primarily an evidentiary question, certain matters of principle seem discernible.   First, intermingling is based on what has in fact happened to the separate property, not what the parties intended.

Secondly, the fact that a disposition for inadequate consideration results in relationship property can be explained on the basis of intermingling quite apart from the meaning of “gift” already discussed (para 11.59).   No independent item of property capable of being labelled as the exclusive subject of the gift can be identified.

Thirdly, it is the identity of the property that is in question when considering intermingling. The use to which property is put, or securities taken over the property, can therefore never form a basis for intermingling.

…

Fifthly, in establishing the use to which a mixed fund has been put, there is no presumption that household expenses have been paid from earned income.

Sixthly, once separate property has been intermingled with relationship property, there is no onus upon the spouse or de facto partner alleging conversion to relationship property to establish that the part of  a mixed fund used to purchase an investment  included funds emanating from a relationship property source;  this would negate the purpose of the proviso to s10(2).  Where a spouse or de facto partner pays separate property funds into a single all purpose bank account into which relationship property has also been paid, the character of those funds as separate property is prima facie lost.”

Counsel proceeded on the broad basis that these observations accurately reflect the principles to be applied.  I agree, subject, however, to the following.

[58]     Fisher suggests that the fundamental question is whether the identity of the original separate property capital is still recognisable in its new form.  However, this tends to downplay the requirement that it must not only be impracticable, but also unreasonable, to regard the property as separate property, a point noted by Holland J in Z v Z at 72 - 73.  Even in situations where the original separate property is still identifiable, I cannot  see any justification for reading down the “unreasonable” requirement.

BNZ Term Deposit Account

[59]     Prior to separation a total of $423,386.75 had been deposited into the term deposit account, two deposits having been made by the respondent and one by the appellant (a further deposit of $8,000 was made the day after separation).   The following table summarises the passage of funds into the term deposit account.

SOURCE	CHEQUE ACCOUNT	DEPOSIT ACCOUNT
27/9/01 US$100,035 withdrawn from respondent’s Alaskan bank account	28/9/01 NZ$246,477.55 deposited 9/10/01 NZ$240,000 withdrawn	9/10/01 NZ$240,000 placed on term deposit
2/5/02 US$70,000 withdrawn from respondent’s Alaskan bank account	3/5/02 NZ$155,511 deposited 10/5/02 NZ$155,000 withdrawn	10/5/02 NZ$155,000 placed on term deposit
Appellant’s separate account (details not provided)	17/3/03 NZ$28,386.75 deposited 17/3/03 NZ$28,386.75 withdrawn	17/3/03  NZ$28,386.75 placed on term deposit

After allowing for withdrawals and accrued interest the balance remaining in the term deposit account as at the date of separation was $113,553.61.

[60]     In summary Mr  Hall submitted:    interest  income allocated to  the parties jointly represented  relationship  property  in  terms  of s 8(1)(c);    that  relationship property (the interest) had been intermingled with the capital;   each party had the right  to  withdraw  funds  and  both  had  exercised  that  right;    separate  funds  of

$28,386.75  had  been  placed  in  the  deposit  account  by  the  appellant;     the respondent’s  funds  had  come  via  the  Alaskan  account  which  was  arguably partnership  property;    by the  time  of separation  a  significant  proportion  of the balance standing in the term deposit account represented relationship property which had been intermingled with the respondent’s inheritance money;    the respondent’s inheritance money had lost its identity as separate property and it would be unreasonable or impracticable to so regard it.

[61]     Mr Hicks’s response can also be summarised:  a comprehensive record of the transactions arising from the respondent’s inheritances had been provided by him and accepted by the Judge;   use of his Alaskan bank account could not give rise to intermingling;   the joint BNZ cheque account had simply acted as a conduit and in this respect an analogy could be drawn with Flay v Flay (1990) 6 FRNZ 131; when the funds reached the term deposit account there was no intermingling with relationship property because the only other funds were the appellant’s separate property;   on a commonsense application of what was reasonable and practicable the balance remaining in the term deposit account was clearly the respondent’s separate property.

[62]   The first question is whether the respondent’s inheritances have been intermingled with relationship property.   There are three possible points at which intermingling  might  have occurred:   in the Alaskan bank account;   in the  BNZ cheque account;   and in the BNZ term deposit account.   For reasons that will be given later (see paragraphs [81] to [83]) I reject  the appellant’s submission that payment into the respondent’s Alaskan bank account gave rise to intermingling.  At all relevant times that account represented the respondent’s separate property and there was no possibility that passage of the inheritance through that account could have given rise to intermingling with relationship property.   On the other hand, I accept that payment into the joint BNZ cheque account gave rise to intermingling with relationship  property,  but  I  accept  Mr  Hicks’s  submission  that  the  cheque account simply served as a conduit.   Finally, despite an issue about whether the appellant had withdrawn the $28,386.75 plus all the interest that had accrued on that sum, my interpretation is that this is in fact what happened.  Thus all the other funds in the account represented the respondent’s inheritances which virtually rules out any possibility of further intermingling in the term deposit account.

[63]     Having accepted that there was intermingling it  is necessary to determine whether such intermingling occurred with the respondent’s express or implied consent.  I have no doubt that it did.  It is clear from the evidence that he retained control of his inheritances and was responsible for their passage through the cheque account and into the term deposit account.

[64]     The next issue is whether it would be unreasonable in all the circumstances for the balance remaining on term deposit to be regarded as the respondent’s separate property.  I do not think so.  As I have already indicated, any intermingling was of a purely technical nature.   There is no evidence to suggest that the passage of these funds through the cheque account or their presence in the term deposit  account significantly influenced any business activities of the parties.   The inherited funds remaining in the term deposit account at the time of separation had always been preserved as a separate entity.  It seems to me that a determination that they are the respondent’s separate property is entirely consistent with the purpose of s 10(2).

[65]     The   same   result   follows   from   an   assessment   of   the   impracticable requirement.  It would not be impracticable to regard the funds remaining in the term deposit account as the respondent’s separate property.

[66]     I therefore conclude that the Judge was right when he found the term deposit account was the respondent’s separate property.

Alpacas

[67]     The  alpacas  cost  $67,500.    On  23  April  2002  the  sum  of  $13,500  was transferred from the BNZ term deposit account to the BNZ cheque account and the following day the first payment of $13,500 was made to Southern Alpacas in part payment of the purchase price.   The balance of $54,000 was transferred from the term deposit account to the cheque account on 27 May 2002 and paid to Southern Alpacas the same day.

[68]     Under cross-examination the respondent conceded that the alpacas were part of a business that he was operating jointly with the appellant.  He also conceded that the business was registered with the Inland Revenue Department as a partnership. And the evidence admitted on appeal records that on 17 June 2002 the respondent advised the Inland Revenue Department:

“We have recently purchased a small farm at Motukarara.  We plan on raising Alpacas on the property and have purchased eight of these animals.  I have talked with … at the IRD. He has advised me that I can add the farm GST expenses to my current GST registration

number … Some of these GST expenses will include the GST on the animals purchased and the land value.”

The memorandum went on to detail the cost of the alpacas and the current market value of the Motukarara property.  Documentation supporting the GST claims was included with the memorandum.

[69]     Mr Hall claimed that the Family Court Judge’s conclusion that the alpacas were the respondent’s separate property was plainly wrong and that the Judge had failed to take into account that:

•      The animals were purchased jointly by the parties;

•      They were paid for from the BNZ joint cheque account;

•Expenses relating to the alpaca operation came from the joint cheque account into which the appellant was depositing her salary;

•Outgoings on the Motukarara property on which the alpacas were being run were also funded from the joint cheque account;

•At the insistence of the respondent the alpaca farming business had been dovetailed into the partnership in which name GST refunds were sought and paid in respect of the alpaca business;

•Both the appellant and respondent were involved in the alpaca business which was a joint operation and partnership.

It  was also  contended by Mr  Hall that  it  was  illogical to  categorise the alpaca business as relationship property but the original herd as separate property.

[70]     On the other hand, Mr Hicks argued that there was clear evidence that it was the respondent’s separate property that was used to purchase the alpacas.   He maintained that there is no evidence to suggest that the respondent had paid anything towards the purchase price and he commented that the respondent’s concession that

the income and progeny are relationship property was very fair to the appellant because it could have equally been argued by the respondent that the income and progeny are separate property under s 9(2).  He also argued that any GST refunds are separate property.

[71]     Given that the Judge has not specifically articulated the basis on which he decided that there had been no intermingling in relation to the alpacas, it is necessary for me to consider the issue afresh.  It seems to me that a number of features of the operation are significant.   The alpaca  farming operation was  integrated into  the partnership and became part of the overall business operation which,  of course, included  the  art  business.    GST  and  income  tax  returns  reflect  the  integrated operation and the appellant’s analysis of the BNZ cheque account  indicates that expenses of $91,446.09 directly or indirectly relating to the alpacas came from that account.  By the time the parties separated the value of the alpacas had increased to

$79,235.  Finally, to a greater or lesser extent, both parties were involved in caring for the animals.

[72]     By the time the parties separated the alpaca operation had been well and truly intermingled with the overall partnership operation which included relationship property.  While it is true that the surviving animals were still physically identifiable at the time of separation, I doubt that there is the slightest possibility of unravelling the implications of the intermingling in relation to the overall business operation. Thus I am satisfied that there was intermingling in terms of s 10(2).   I am also satisfied that this intermingling took place with the express or implied consent of the respondent who not only determined the structure of the business operation but also implemented that structure.

[73]     Arguably it is practicable to regard the surviving animals in the original herd as the respondent’s separate property, but I am satisfied that in all the circumstances it would be unreasonable to do so.   There was a high level of intermingling with relationship property in a business that the respondent acknowledged under cross- examination was jointly operated.   Clearly the respondent saw advantages in structuring the operation as he did and in all the circumstances I think it would be unreasonable to regard the alpacas as the respondent’s separate property.

[74]     My conclusion is that the alpacas are relationship property and that the Judge erred when he found them to be the respondent’s separate property.

Darfield Land

[75]     As already mentioned, this land was purchased in both names for $112,500. The deposit of $10,000 was withdrawn by the respondent from the joint term deposit account on 13 May 2003.  Although Mr Hall raised issues about the precise manner in which the deposit was paid to the real estate agents, it is clear that it did not pass through the joint  cheque account  after  it  was withdrawn  from the  term deposit account.   On 30  June 2003  $107,950.87 was transferred  from the  term deposit cheque to the cheque account and on the same day the sum of $103,330.55 was paid to enable the purchase to be settled.  After separation a refund of GST input tax in the sum of $13,546.15 was obtained on the basis that the land was part  of the partnership farming operation.

[76]     Mr Hall submitted that the Darfield land is relationship property because:

•    It is registered in both names;

•    It was intended to be part and parcel of the farming operation/partnership as is confirmed by the claim for GST refund;

•    Payments made in connection with the purchase were intermingled with relationship property;

•    The respondent’s evidence has proved to be inaccurate and misleading.

[77]     In response Mr Hicks emphasised that the purchase price of the land was supplied by the respondent from inherited funds.   He claimed that the partnership and GST refund are irrelevant.   Mr Hicks submitted that in fact the GST refund represented the respondent’s separate property.

[78]     Again the Judge has not specifically articulated his reasoning in relation to intermingling and it is necessary for me to start from scratch.  I do not think that the

appellant is on strong grounds in relation to this land.  I find it difficult to identify any intermingling with relationship property.   While there is evidence that the respondent intended to extend the alpaca operation to the Darfield property and to bring it within the umbrella of the partnership operation, this intention does not seem to have been implemented.  On 20 August 2003, the day before the parties separated, the respondent said in a memorandum to IRD relating to GST (which was also admitted on appeal):

“We have recently purchased land on Clinton’s road in Darfield.  We plan on expanding our farming operations onto this land …”.

Intermingling is based on what has in fact happened, not on what the parties might have intended.  The evidence indicates to me that by the time the parties separated nothing had happened in relation to the Darfield land that could be construed as intermingling with relationship property.

[79]     Even I am wrong in those conclusions it  does not  seem to  me that  it  is impracticable  or  unreasonable  to  regard  the  Darfield  land  as  the  respondent’s separate  property.     This  reflects  that  the  property  was  purchased  from  the respondent’s inherited funds shortly before separation and that it did not lose its identity as the respondent’s separate property.  Whether the matter is viewed in the narrow context of the Darfield land or the wider context of the overall relationship between the parties, I cannot see that it would be unreasonable to regard the Darfield land as the respondent’s separate property.

[80]     I agree with the Judge that the Darfield land is the respondent’s separate property.  The GST input tax is also the respondent’s separate property.

Respondent’s Alaskan Bank Account

[81]     It is alleged by the appellant that the respondent’s Alaskan bank account is relationship property because it was used as part of the partnership operation.   Mr Hall claimed that it would be inconsistent to include the appellant’s bank accounts as relationship  property while  the  Alaskan  bank  account  retained  its  status  as  the respondent’s separate property.

[82]     Again I do not think that the appellant  is on strong ground.   Despite the appellant’s analysis of the  respondent’s Alaskan bank  account, I  have  not  been persuaded that there is a plausible foundation for the appellant’s allegation that that bank account was used for relationship revenue or expenditure.  The only item that seems to have any direct  connection with the alpaca operation  is a payment  of

$46.99 to Alpaca Services Limited.  But in the context of the overall Alaskan bank account that minor expenditure cannot transform the account from separate property into relationship property.   I do not think there is any inconsistency between this conclusion and the conclusion that the appellant’s bank accounts are relationship property.

[83]     The Alaskan bank account is the respondent’s separate property.

Contributions Of The Parties To The Relationship

[84]     At the close of submissions on 26 October 2005 I asked Mr Hall to provide a written response to the matters raised in a schedule attached to the respondent’s submissions.  This schedule detailed the basis on which the respondent challenged many of the monetary contributions the appellant claimed to have made.   Written submissions in response were duly provided by Mr Hall but in some respects they went beyond the respondent’s schedule.  Without any invitation from the Court Ms Avery then lodged further submissions in response to Mr Hall’s submissions.

[85]     Mr Hall has submitted by way of memorandum that Ms Avery’s submissions should be ignored or that he should be given an opportunity to lodge further submissions.  Both parties have already had more than enough opportunity to debate the  issues  and  I  am  not  prepared  to  contemplate  a  further  proliferation  of submissions.  The appellant is entitled to the final right of reply.  By the same token I am not prepared to take Mr Hall’s written submissions into account to the extent that they go beyond the response invited by the Court.

Relationship Property As At Date Of Separation

[86]     As a result of uncontested findings in the Family Court and findings in this Court the relationship property of the parties as at the date of separation appears to be:

ITEM

VALUE

Art works

Retained by appellant   $35,000
Sale proceeds, retained by appellant                  $  3,160

$38,160

Motukarara property

At valuation           $330,000
Less mortgage        $165,000

$165,000

Chattels

$23,608

Toyota vans

Van one   $20,000
Van two   $11,000

$31,000

Alpaca herd

$79,235

Bank accounts

Wells Fargo joint savings account               $     606
Appellant’s Well Fargo cheque account       $  2,342
Appellant’s BNZ Rapid Saver account        $36,772
BNZ joint cheque account   $15,593

$55,313

Net value of relationship property

$392,316

This provides a background for the assessment of the contributions of the appellant and respondent.

Appellant’s Monetary Contributions

[87]     In the Family Court the appellant claimed that her monetary contributions to the relationship totalled $295,378 (on my arithmetic there is an error in addition of

$100 and the total should be $295,478).   The respondent rejected the appellant’s assessment and maintained that her gross contributions totalled $134,770 and that she had withdrawn $43,569 thereby producing a net contribution of $91,201.  By the time the matter was argued in this Court both parties had revised their stances.  The appellant  had  revised  her  figure  upward  to  $334,467  and  the  respondent  had conceded that her contribution was slightly greater than he had been prepared to concede in the Family Court.  And in his final written submissions Mr Hall further increased the figure to $363,474.

[88]     Unfortunately  I  have  not  been  able  to  derive  much  assistance  from  the judgment under appeal which did not attempt to analyse exhibit D to the appellant’s second affidavit (which provided the foundation for her alleged contributions).  Nor did the Judge attempt to arrive at a final figure for the appellant’s monetary contributions.   Apart  from his comment  that the appellant’s evidence about  her contributions was vague and lacking in precision, it seems that the only other direct reference by the Judge to exhibit D related to the conversion rate of 40 cents in the dollar.  As already noted, it is common ground that the Judge’s observation in this regard was wrong.

[89]     The following table summarises the monetary contributions claimed by the appellant, the concessions (if any) made by the respondent, and my findings.

REFERENCE	CONTRIBUTION CLAIMED BY APPELLANT	AMOUNT ACCEPTED BY RESPONDENT	FINDING
1.1	$40,952	Nil	$40,952
1.2	$9,000	Nil	$9,000
1.3	$10,000	Nil	Nil
1.4 & 1.4B	$66,198	$64,670	$66,198
1.5	$28,730	Nil	$28,730
1.6	$36,502	Nil	$36,502
1.7 & 1.8	$37,107	$37,771	$37,107
1.9	$5,000	Nil	$5,000
1.10	$1,013	Nil	$1,013

1.10B	$2,398	Nil	$2,398
1.11	$10,000	$10,000	$10,000
1.12	$9,340	Nil	$9,340
1.13	$39,328	$32,328.	$32,328
Sub-Totals	$295,478	$144,769	$278,568
2.1	$28,386	Nil	$28,386
2.2	$13,712	Nil	$13,712
2.3	$2,342	Nil	$2,342
Total	$339,918	$144,769	$323,008

Down to the sub-totals the first column refers to the item number in exhibit D to the appellant’s second affidavit.  The three items below the sub-totals (2.1 - 2.3) were raised in this Court by the appellant.

[90]     Before considering specific items it is appropriate that I make some general comments.  Many of the contributions are disputed by the respondent on the basis that there is “no evidence”.   However, I note that in paragraph 11 of her second affidavit the appellant exhibits a spread sheet (exhibit D) which records the direct monetary contributions totalling $295,478 she claims to have made and that exhibits E to M provide further information in relation to various items.  I also note that the appellant deposes that she has disclosed the relevant bank or credit card documentation and is able to produce them if required.

[91]     There was no attempt to specifically cross-examine the appellant about any of the contested items.  Given that the relevant bank or credit card documentation had been discovered I would have thought that the appellant would have been cross- examined about any items where it was seriously contended by the respondent that the documentation did not support the claimed contribution.  In my view the absence of cross-examination counts heavily against the respondent’s bald assertion that there is no evidence in relation to particular items.  I now turn to the items in issue.

[92]     Item 1 - $40,952:  According to exhibits D and E to the appellant’s second affidavit this monetary contribution of US$16,381 (which equates with NZ$40,952) relates to initial living expenses met by the appellant while the parties were living together  in  California  plus  the  expenses  of  moving  to  New  Zealand  (shipping, storage, air tickets etc).  The respondent rejects this claim on the basis that there is no evidence of the contribution and on the further basis that, judging from exhibit E, the appellant has taken into account expenditure incurred before the relationship began. I cannot accept the proposition that there is no evidence.  The appellant’s evidence is contained in paragraph 13 of her  first  affidavit  and paragraph 11 of her second affidavit as well as in exhibits D and E to the second affidavit.  The appellant was not specifically cross-examined about this item.  While I accept that the reference in exhibit E to pre-relationship expenditure is confusing, it does not indicate to me that the pre-relationship expenditure was taken into account in arriving  at  the  figure claimed.  I accept that this expenditure was actually incurred by the appellant.

[93]     Item 1.2 - $9,000:  This is described in exhibit D as “Moving to NZ, cash”. In United States dollars the amount alleged to have been incurred is $3,600.  Again the respondent disputes this expenditure on the basis that no evidence was provided. Again I reject that submission.   I have no difficulty in accepting the appellant’s proposition that the move to New Zealand required cash.

[94]     Item 1.3 - $10,000:   It does not appear to be disputed that the appellant advanced the respondent US$4,500 (NZ$10,000).  The issue is whether those loans were repaid.   The respondent claims that the loans were repaid from his Alaskan bank accounts and supports his contention by reference to the two cheques exhibited to his second affidavit, the debits in his Alaskan bank account, and the respondent’s concessions under cross-examination.  It is not disputed by the appellant that a total of US$4,500 was paid  by the respondent  to the appellant  in June 2001 but  she maintains that it was in repayment of different advances.  Making the best that I can of that evidence I accept the respondent’s contention that the loan was repaid.  Thus it needs to be deleted as a contribution by the appellant on the basis, of course, that there is a corresponding adjustment to any contribution that the respondent claims in relation to the repayments.

[95]     Item 1.4 - $66,198:  This item relates to the appellant’s salary from Lincoln University until her return to USA in June 2002 plus rental payments made by her to the university.  Obviously there has been confusion about whether or not the rental component of $12,800 is included in the overall figure.  The appellant acknowledges that it is and I proceed on that basis.  As far as I can see the respondent has not taken into account that some of the salary was paid into the appellant’s BNZ rapid saver account (which was declared to be relationship property).   I am satisfied that the figure of $66,198 is correct.  In his final written submissions Mr Hall suggested that the figure should in fact be increased to $76,429.17 (the gross salary figure before tax) to take into account that the respondent’s tax was paid out of the joint BNZ cheque account.   Two factors count against that submission.  First, I am attempting to arrive at actual monetary contributions, not notional contributions.   Second, the issue should have been raised in the Family Court or at the very latest during the viva voce hearing in this Court.

[96]     Item 1.5 – $28,730:  This item relates to a total of US$12,067 alleged to have been paid out of the appellant’s Wells Fargo account from January 2001 to January

2002 to meet living expenses.   The respondent claims that there is no evidence of living expenses having been paid by the appellant from her separate funds.  In fact except for a discrepancy of $100 (which I am disregarding as de minimus) evidential support for each withdrawal detailed in Mr Hall’s final written submissions can be found in the Wells Fargo bank statements produced in the Family Court as Exhibit B.   I accept this item.

[97]     Items 1.7 & 1.8 -  $37,107:  The difference between the figures is minimal.  I

will use the appellant’s figure which is slightly lower than the respondent’s. [98]     Item 1.6 - $36,502: The explanation in exhibit D is:

“Carol returns to USA on June 22/02, professorship CSUS and hip replacement lives on NZ savings modestly until salary started mid Oct, then goes to full sick leave pay from 18 years of service CSUS.”

In other words, it relates to expenditure totalling US$18,251 that the appellant claims she  incurred  while  in USA  from June  to  December  2002.    This  is  part  of the relationship period as determined by the Family Court.   Supplementary evidence

showing the breakdown of the sum of US$18,251 claimed to have been spent is contained in exhibit J to the appellant’s affidavit.  There was no cross-examination.  I reject the respondent’s submission that there is no evidence and I accept that this contribution was made.

[99]     Item 1.9 - $5,000:  In exhibit B this item is described as “Lincoln relocation fund Feb 03”.  It is rejected by the respondent on the basis that there is no evidence. Again, there was no cross-examination and I am satisfied that the contribution has been established.

[100]   Item 1.10 - $1,013: This contribution is accepted in the respondent’s analysis and there does not seem to be any duplication or other reason for rejecting it.   I accept that it is a valid contribution.

[101]   Item  1.10B  –  $2398:    This  reflects  a  payment  of  expenses  by  Lincoln University into the BNZ joint cheque account on 31 July 2003.  This payment does not seem to have been reflected elsewhere.   The contribution has been established and should be recognised.

[102]   Item 1.12 - $9,340:  The expenditure of US$5,137 is described in Appendix D as “January 03 Wells USA relational spending”.    The respondent denies that there is any evidence that such spending occurred.  There was no cross-examination and I accept that there is sufficient evidence to establish this item.

[103]   Item  1.13  -  $39,328:    This  item  is  intended  to  reflect  the  appellant’s university salary from January 2003 to separation. However, it is acknowledged by the appellant that the figure actually reflects her salary through to 8 October 2003. Notwithstanding this mistake Mr Hall claimed in his written response that her gross salary should have been used, which would produce a figure of $45,763.37.   For reasons already given with reference to item 1.4, I reject that proposition and accept the respondent’s figure of $32,328 which reflects the appellant’s actual salary from January 2003 to the date of separation.

[104]   Item 2.1 - $28,386.75:   This item, which was not  included  in exhibit  D, represents the sum placed on term deposit in the BNZ term deposit account by the appellant until 10 June 2003 when it was withdrawn and paid into her BNZ rapid saver account which was declared to be relationship property.  There is no dispute that  these  funds  came  from  the  appellant’s  separate  funds  and  ended  up  as relationship property as at the date of separation.  Given the appellant’s stance in the Family Court that the rapid saver account was her separate property, I do not think she  should  be  penalised  for  overlooking  this  item.    Obviously  it  represents  a monetary contribution by her that should be taken into account.

[105]   Item 2.2 - $13,712.72:    The fact that this sum was deposited into the BNZ rapid saver account on 10 June 2003 is verified by exhibit C (BNZ rapid saver bank statements).  In his written response Mr Hall belatedly asked that this item be taken into account to reflect the Judge’s ruling that the rapid saver account is relationship property.   Given that the evidence verifying the deposits was before the Family Court and that it is plainly a contribution that should be taken into account, I am also prepared to include this item.

[106]   Item 2.3 - $2,342:   This sum represents the balance  in the  Wells  Fargo cheque  account  as  at  the  date of separation.    The  appellant  seeks  to  have  her contribution  to  that  account  recognised  because  it  was  held  to  be  relationship property.  That is logical and it would be unfair to ignore this item.

[107]   The  final  issue  is  whether  there  should  be  any  deductions  to  reflect withdrawals.     In  the  Family  Court  the  Judge  accepted  that  there  had  been withdrawals of $43,569.  This seems to have been based on the respondent’s closing submissions to the effect that there should be a deduction of $43,569 to reflect the following amounts that it was claimed had been already received by the appellant:

From BNZ fixed deposit  $28,412.55

From BNZ cheque account  $  5,000.00 “     $  6,778.00

“  $  3,378.73

Total  $43,569.28

However, before those withdrawals could affect the appellant’s monetary contributions as at the date of separation they would have had to have been taken by the appellant before separation for other than relationship purposes.

[108]   It is clear from the documentary record that the withdrawal of $28,412.55 went into the appellant’s rapid saver account which was declared to be relationship property.  Thus there should not have been a deduction.  The next two amounts of

$5,000 and $6,778 were withdrawn on 1 September and 11 September 2003 respectively.   Given that those withdrawals were after separation there should not have been any deductions.   Finally, I am satisfied on the evidence that the $3,378 was used during the course of the relationship for relationship purposes and again there should not have been any deduction.

Respondent’s Monetary Contribution

[109]   Fortunately this topic is relatively straightforward.   The Judge’s figure of

$741,972 for the respondent’s monetary contribution comprises:

Inheritances provided from Alaskan bank account               $561,192

Half share of income  $ 37,771

Other contributions from Alaskan bank account                   $143,009

$741,972

Apart from an acknowledgement on both sides that this figure would need to be adjusted to reflect the respondent’s separate property, there does not appear to be any challenge to the accuracy of the figure.

[110]   In his final written submissions Mr Hall challenged various components of the  respondent’s  contributions  from  the  Alaskan  bank  account.    Except  in  the respects mentioned below I am not prepared to revisit that issue.  If such issues were

to be raised they should have been raised earlier.  My invitation to the appellant to provide further submissions was confined to the schedule prepared by counsel for the respondent which related to the appellant’s contributions.

[111]   Having said that it is obvious that three deductions need to be made:   a deduction to reflect the matters discussed in paragraph [94] (I am satisfied that the repayments have been included in the monetary contributions claimed by the respondent); a deduction to reflect that the term deposit account is separate property; and  a  deduction  to  reflect  that  the  Darfield  land  is  separate  property.    These deductions give rise to the following calculation:

Contribution accepted by Family Court  $741,972

Less                Repayment of appellant’s advance     $  10,000

Term deposit account  $113,553

Darfield land  $113,330

$236,883

Net monetary contribution  $505,089

In  other  words,  the  respondent’s  monetary  contribution  to  the  relationship  was

$505,089.

Non Monetary Contributions

[112]   The only reference to non monetary contributions that I have been able to find in the judgment is at [39]:

“I have assumed for the purposes of this portion of the judgment that the effort put in by each of the parties to be undertaken [sic] was approximately equal, the respondent being engaged in lecturing at Lincoln University for the majority of that period.”

Counsel  for  the  appellant  challenges  that  assumption  and  contends  that  the appellant’s non monetary contributions are “very significant and … enough to offset the disparity of financial contributions”.   On the other hand, counsel for the respondent seem to have proceeded on the basis that allowance needs to be made for “the agreement of the parties that their non financial contributions were approximately equal” and the assumption of the Judge to the same effect.

[113]   I cannot find any indication of an agreement between the parties.   To the contrary, the affidavit and viva voce evidence seems to indicate that they were very much at odds on this matter.  Consequently I must address the issue, beginning with s 18:

“18      Contributions of spouses or partners

(1)       For the purposes of this Act, a contribution to the marriage, civil union or de facto relationship means all or any of the following:

(a)  the care of-

(i)   any child of the marriage, civil union or de facto relationship:

(ii)  any aged or inform relative or dependant of either spouse or partner: (b)  the management of the household and the performance of household duties:

(c)  the provision of money, including the earning of income, for the purposes of the marriage, civil union or de facto relationship:

(d)  the acquisition or creation of relationship property, including the payment of money for those purposes:

(e)  the payment of money to maintain or increase the value of-

(i)   the relationship property or any part of that property; or

(ii)  the separate property of the other spouse or partner or any part of that property:

(f)   the performance of work or services in respect of-

(i)   the relationship property or any part of that property; or

(ii)  the separate property of the other spouse or partner or any part of that property:

(g)  the forgoing of a higher standard of living than would otherwise have been available:

(h)  the giving of assistance or support to the other spouse or partner (whether or not of a material kind), including the giving of assistance or support that-

(i)   enables the other spouse or partner to acquire qualifications; or

(ii)  aids the other spouse or partner in the carrying on of his or her occupation or business.

(2)       There is no presumption that a contribution of a monetary nature (whether under subsection (1)(c) or otherwise) is of greater value than a contribution of a non-monetary nature.”

Given the brevity of the submissions in this Court on the issue of non monetary contributions, I have resorted to the submissions advanced in the Family Court plus, of course, the evidence in that Court.

Household Management And Duties – s 18(1)(b)

[114] The respondent claims that he was largely responsible for household management and that he did most of the household chores except when he was away from Christchurch.  He claims that while the appellant was at work he planted the garden, looked after the house, and undertook domestic chores like shopping and cooking.  He maintains that his contribution represented 95% of the contribution of the parties to housekeeping and domestic chores.   This is denied by the appellant

who claims that the respondent was away for 2.5 months of every year and that he used to insist on her helping in the garden every night.  While she acknowledges that the respondent did more administrative work, she considers that the household work represented an even division of effort.

[115]   Without having heard or seen the parties it is difficult to resolve the conflict in their evidence.  Nevertheless I am satisfied that the respondent’s contribution in this regard significantly outweighed the appellant’s contribution.  By the same token I do not accept that disparity is anywhere as great as the respondent has asserted.

Performance Of Work Or Services In Respect Of The Relationship Property – s 18(1)(f))

[116]   The respondent  claims that  he  did  all the  farm  work  and  all  the  alpaca maintenance and development.   He asserts that  the appellant’s contribution was restricted to feeding the alpacas during a three week period while he was away on a guiding trip.  He estimated that he had spent 3,600 hours of work on the farm since its purchase including building the studio, paving and fencing, domestic chores and care of the alpacas.   While he accepts that the appellant attended some national alpaca conferences,  he  claims  that  she  went  and  looked  at  art  work  instead  of attending sessions.  On the other hand, the appellant claims that she played her part in the alpaca farming operation including naming them, going to conferences as well as helping with daily care.   Under cross-examination she characterised her involvement with the alpacas as “about a third”.

[117]   If  it  is  appropriate  to  take  into  account  the  parties’  contributions  to  the farming operation, it must also be appropriate to take into account the art business. According to the appellant about 50 paintings were created after their arrival in New Zealand.    Her  evidence  was  that  considerable  effort  involving  many  hours  of thinking and preparatory work was required to produce the paintings.   She put her contribution at 80% and the respondent’s at 20%.  The respondent conceded that she was a talented artist and that the retail value of the paintings produced during the relationship was in the vicinity of $75,000.  He described his role in relation to the art business as preparation, framing, setting up displays, co-ordination, correspondence and accounts.

[118]   To the extent that the efforts of the parties in relation to the alpaca farming operation and the art  business  have  not  already  been  reflected  in  the  monetary contributions, I am satisfied that such efforts should also be regarded as being equal. In effect the respondent’s greater contribution to the alpaca operation is offset by the appellant’s greater contribution to the art business.

Foregoing Of A Higher Standard Of Living – s 18(1)(g)

[119]   The appellant claims that by coming to New Zealand with the respondent she gave up a fully tenured professorship at an annual salary of US$70,000 and that her chances of promotion to this level at Lincoln are slim.  She also claims that she gave up a medical, dental and eye care package and that she retired from a university pension scheme (although it seems that she still receives a reduced pension).   The appellant also claims that by moving to New Zealand she gave up a consulting practice with an income of around US$10,000 per annum.   Although the appellant accepts that she is unable to assign an accurate figure to the loss of rights and status, she maintains that it would have not been less than NZ$1 million.

[120]   Those allegations are rejected by the respondent who does not believe that the appellant’s professional status or monetary stability have been compromised.  He asserts that as a senior lecturer at Lincoln she is teaching the same discipline as she did in the United States.   On his assessment,  which takes into  account the US university  pension  that  she  is  drawing,  her  New  Zealand  income  is  around NZ$98,000 per annum.

[121]   Under cross-examination Mr Hicks put it to the appellant that she was no worse off financially in New Zealand .  Her reply:

“Totally worse, I have taken an extreme decrease in salary, and I have lost, I was full professor in the United States, I am a senior lecturer here.  I work 12 months contract for the first year and a half.  I worked for about $50,000 a year.  I make $80,000 in the US, that’s USD and that’s for nine months. Also with that salary I am included benefits with full health care, eye care, urine care, full medical, matched health care and a $15,000 life insurance and long term disability for life.  I have none of those benefits here in New Zealand, none.  I, I, I sacrificed hugely for our relationship and took that lowered status and lowered amount of money for us, because I wanted us to work and Steve wanted us to work and Steve wanted me here so I did that for us.”

While I accept that the evidence as to the appellant’s living standard in the USA is relatively skimpy, I am nevertheless satisfied that she has established that she has foregone a higher standard of living.   However, to the extent that it is possible to measure the issue in monetary terms I doubt that it would come close to the figure of

$1 million that she mentioned.

Assistance Or Support To The Other Partner – s 18(1)(h)

[122]   The appellant claims that when they came to New Zealand the respondent “tagged on to my visa” as her spouse, he had no work permit, she had agreed to and did support him for the first year from her salary and that he insisted that they apply for New Zealand residency.  Her evidence was that at the time she did not know that the respondent had been bankrupted in USA and suspects that part of the attraction of moving to New Zealand was the opportunity to gain a clean credit rating.  Under cross-examination the appellant said that it was “an absolute requirement” that the respondent had proof of support in New Zealand for a year as well as proof of savings and she agreed to satisfy both those requirements.  She claimed that he had been able to “piggy back” on his relationship with her to obtain the necessary credits to  qualify for  permanent  residency and  to  obtain the  mortgage  advance  for  the Motukarara purchase.

[123]   Under cross-examination the respondent agreed that he was bankrupted in

1996, was not discharged until 2003 and that he had not discussed his bankruptcy status with the appellant  until May 2001.   He also  accepted that at the time of moving to New Zealand he did not have many assets or savings and that there was an the understanding that they would live on her salary.   He also confirmed that he could not have obtained employment in New Zealand when they first arrived and that it was not until he applied for permanent residency that he was able to work here.  The respondent also accepted that for the first four and a half months in New Zealand the appellant shouldered the day to day expenses of the relationship.

[124]   In Lebajo v Lebajo [1995] NZFLR 385 (HC) Doogue J accepted that a wife’s sponsorship of her husband’s entry into New Zealand on a permanent  residency status could be characterised as a contribution under s 18(1)(h) on the basis that the

fact of residency in New Zealand allowed the husband to achieve employment and make contributions to the marriage partnership and its property.   I agree with that approach.     Given  the  appellant’s  evidence  and  the  concessions  made  by  the respondent under cross-examination, I am satisfied that the appellant has established a non monetary contribution by virtue of her initial support and assistance to the respondent in New Zealand.   However, in my assessment that support came to an end in September 2001 when the respondent  injected $246,477.55 into the  joint account.  Thus it could not have been a factor by the time the parties obtained the mortgage advance for the Motukarara purchase.

Overall Assessment Of Non Monetary Contributions

[125]   On the foregoing analysis the respondent’s contribution under s 18(1)(b) has been greater than the appellant’s but the appellant has made contributions under s 18(1)(g) and (h).  The overall assessment of non monetary contributions can only be a matter of impression.   I have the clear impression that the appellant’s contributions outweigh those of the respondent and in percentage terms I would put the appellant’s contribution at 60% and the respondent’s at 40% .

Combining Monetary And Non Monetary Contributions

[126]   It is inherent in s 18(1) that the Court needs to arrive at “a contribution” which requires a determination of the overall global monetary and non monetary contribution:   Williams v Williams [1980] 1 NZLR 532 (CA) at 534. There is no presumption that any monetary contribution is of greater value than a contribution of a non monetary nature (s 18(2)).

[127]   I  cannot  accept  Mr  Hall’s  submission  that  in  all  the  circumstances  non monetary contributions should carry the same weighting as monetary contributions. The monetary contributions were relatively large.   On the other hand, the short duration of the relationship meant that there had not been much time for the non monetary contributions to build up.   In this respect I adopt the reasoning of Judge MacCormick in Walker v Walker (2002) 22 FRNZ 452 at [56].  Stepping back and making an overall assessment it seems to me that monetary contributions should

represent 75% of the overall contribution and non monetary 25%.  On that basis the

calculation is:

PARTY	MONETARY CONTRIBUTION	NON MONETARY CONTRIBUTION	MONETARY AS PART OF TOTAL	NON MONETARY AS PART OF TOTAL	OVERALL CONTRIBUTION
S	$323,008 (39%)	60%	29.3%	15.0%	44.3%
W	$505,089 (61%)	40%	45.7%	10.0%	55.7%
Total	$865,868 (100%)	100%	75%	25%	100%

Whether Section 14A(2) Grounds Made Out

[128]   Section 14A(2)(a)(ii) requires the Court to be satisfied that the respondent has made a substantial contribution to the de facto relationship.   Notwithstanding the different factual findings reached in this Court, it is obvious that the Judge’s finding was right:  the respondent made a substantial contribution and the first requirement is met.

[129]   The next requirement under s 14A(2)(b) is that the Court must be satisfied that failure to make the order would result in serious injustice.   Virtually no submissions were advanced on this issue.

[130]   In Gibbons v Vowles (2003) 22 FRNZ 946 Judge Inglis QC noted that the phrase “serious injustice” also appears in s 21J of the Act but he was not prepared to assume that the meaning was identical in both contexts.   He considered that the concept  of  serious  injustice  must  be  interpreted  in  light  of  the  broad  statutory concepts of justice outlined in the Act and to the result that would follow if the requirements of subs (2) are not made out.   Judge Inglis noted that a finding of serious injustice represents an exception to the general rule laid down by the opening

words of s 14A(2) that “an order cannot be made under this Act for the division of relationship property unless …” and that in the absence of detailed and specific evidence no order apart from that mentioned in s 14A(4) could be made.

[131]   Section 14A was also considered by Ronald Young J in Schmidt v Jawad (High Court, Wellington Registry, CIV  2005-485-000851,  9 December  2005)  in which His Honour said at [34] that the expression “serious injustice” meant what it said and that it was unnecessary to consider its meaning in any greater detail.   He considered that although it meant more than an injustice there was a danger in trying to find synonyms for “serious”.

[132]   Finally, in TF v AH [2006] NZFLR 86 Judge Murfitt noted that the term “serious injustice” is also used in s 21J, s 85 and s 88(2).  The Judge considered Re Williams [2004] 2 NZLR 132 (HC) at 140, in which Heath J concluded in a different context that the expression suggested injustice of a type that the Court cannot tolerate, and Harrison v Harrison [2005] NZFLR 252 (CA) where the expression was held, also in a different context, to require one’s conscience to be materially disturbed.   Judge Murfitt approached the expression as connoting a considerable injustice which would be intolerable to the standards of justice within the Act.  He also concluded that the concept addresses the interests of both parties.

[133]   I do not find it necessary to expand the discussion.   Clearly the expression “serious injustice” indicates a relatively high threshold and the issue in this case is whether   that   threshold   has   been   met.     This   requires   consideration   of  the consequences for the parties if the Court declines to order a division of relationship property under s14A.  When addressing that question it needs to be kept in mind that s 14A(4)  specifically authorises  the  Court  to  make  orders or  declarations  under s 25(3)  relating  to  the  status, ownership,  vesting,  or  possession,  of any  specific property.  But that could not have been intended to provide a backdoor method of dividing relationship property in situations where the s 14A(2) threshold cannot be met.

[134]   I therefore proceed on the basis that regardless of s14A there can be orders under s 25(3) confirming the status of the separate property earlier identified, which

means that the separate property can be removed from the equation.  Thus the issue is whether there will be serious injustice if there is no order dividing the relationship property and the parties were left to pursue any civil remedies that might be available to them.

[135]   Two unusual features of this case need to be taken into account.   First, in determining this appeal it has been necessary to revisit most of the primary issues, including factual findings.  By asking this Court to resolve those issues rather than directing a rehearing both parties were obviously adopting a pragmatic approach in the interests of achieving finality.   Second, there was a notable absence of any submissions in this Court concerning the interpretation or application of s 14A(2). Both sides concentrated on the status of various assets and the respective contributions of the parties to the relationship.  Put another way, both sides seem to have proceeded on the basis that s 14A(3) applies.

[136]   If an order is refused and the parties are forced to pursue their civil remedies it is unlikely that those proceedings will be straightforward.  Many of the issues that have been traversed up to this point will have to be revisited in a civil context. Given the history of this matter that scenario would hardly be compatible with the principle contained in s 1N(d):

“… that questions arising under this Act about relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice.”

Taking all factors into account I am forced to the conclusion that in view of the highly unusual circumstances  surrounding  this  appeal,  failure  to  make  an  order dividing relationship property would result in serious injustice to both parties.   In other words, the grounds in s14A(2) have been made out.

Application Of Section 14A(3)

[137]   Given that outcome 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 in terms of s 14A(3).  I have found the respective contributions to be:  appellant 44.3%; respondent 55.7%.

[138]   Like  the  Family  Court  Judge  I  am  going  to  leave  it  to  the  parties  to implement this order.  I sincerely hope that it will be unnecessary for them to return to the Court other than for the purpose of recording formal orders.   On the information currently available it would seem logical that they proceed on the basis, first, that the appellant retains her art work, her motor vehicle, chattels in her possession and bank accounts in her name, second, that the respondent retains the Motukarara property, chattels in his possession, his van and the alpaca herd and, third, that the joint bank accounts are closed.  It should be possible for adjustments to be made to reflect income, expenditure and withdrawals since separation.

Outcome

[139]   The appeal is allowed and the following orders are made:

(a)      The declaration in the Family Court that the initial alpaca herd is the respondent’s separate property is replaced with a declaration that the herd is relationship property.

(b)      The respondent’s Alaskan bank account is declared to be his separate property.

(c)      The declaration in the Family Court that the Westpac bank accounts are relationship property is replaced with a declaration that they are the appellant’s separate property.

(d)      In other respects the declarations made in the Family Court as to the status of property as separate property or relationship property stand.

(e)      The declaration in the Family Court as to the contributions of the parties  under  s 14A(3)  is  replaced  with  a  declaration  that  their contributions are:  appellant 44.3%;  respondent 55.7%.

(f)       Leave is reserved to the parties to apply further should the need arise.

(g)      If the parties are unable to reach agreement as to  costs it  will be necessary for them to submit memoranda to enable that issue to be determined.

Solicitors:            Indira Sirisena, Christchurch for Appellant (Counsel:  PHB Hall) Corcoran French, Christchurch (Counsel:  D H Hicks)