Shannon v Shannon HC Tauranga CP13/98

[2001] NZHC 339

IN THE HIGH COURT OF NEW ZEALAND
TAURANGA REGISTRY CP13/98

IN THE MATTER of the Matrimonial Property Act 1976

AND IN THE MATTER of an Application for an Order dividing Matrimonial Property

BETWEEN CHRISTINE ROBYN SHANNON
Plaintiff

AND ALAN LINDSAY SHANNON
Defendant

(formerly CP16/99)

BETWEEN FOREST PARK (NEW ZEALAND) LTD
First Plaintiff

AND FOREST PARK FP2 LIMITED
Second Plaintiff

AND FOREST PARK HOLDINGS LIMITED
Third Plaintiff

CHRISTINE ROBYN SHANNON
First Defendant

AND CHRISTINE FORBES
Second Defendant

Date of Hearing: 27 April 2001

Counsel: G Cameron for Christine Shannon
P Mabey QC for Alan Shannon

Judgment: 4 May 2001

JUDGMENT OF NICHOLSON J

[1] Mrs Shannon has applied for orders:

[a] restraining Mr Shannon from any disposition of property that is subject of her claim under the Matrimonial Property Act; and

[b] directing that Mr Shannon pay into Court the proceeds from the sale of property already sold and in particular;

[i] the proceeds of the sale of the Hughes 300 helicopter

[ii] the proceeds of the sale of the Refrigerated truck unit

[iii] the proceeds of the sale of the Komatsu Excavator digger

[iv] the proceeds of the sale of the Kenworth Truck registration number CAT475.

[2] The pertinent base law is provided by ss 43 and 44 of the Matrimonial Property Act 1976 (“the Act”) which state:

“43(1) Where it appears to the High Court . . . that any disposition of property is about to be made, whether for value or not, by or on behalf of or by direction of or in the interests of any person in order to defeat the claim or rights of any other person under this Act, the Court may on the application of that second-named person . . . by order restrain the making of the disposition or may order any proceeds of the disposition to be paid into Court to be dealt with as the Court directs.

44(1) Where the High Court . . . is satisfied that any disposition of property has been made, whether for value or not, by or on behalf of or by direction of or in the interests of any person in order to defeat the claim or rights of any person under this Act, the Court may, on the application of that second-named person, make any order under subsection (2) of this section.”

[3] The parties married in 1974. There was an initial separation in the mid 1980’s. Mr Shannon lived overseas from 1991 until he returned to New Zealand in 1997. In 1996 he sold interests in an American company for US$4,500,000. Quite apart from that, he had a substantial income between 1993 and 1996. In 1995 he began to acquire significant assets in New Zealand.

[4] In 1998 Mrs Shannon commenced the present matrimonial property proceedings. A major point of contention was when did they cease to live together as husband and wife. Mr Shannon asserted June/July 1985 and Mrs Shannon asserted Easter 1997. This was decided as a preliminary issue by an eight day hearing by Cartwright J in May 2000. She ruled that the parties began to live apart for the purposes of the proceedings from Easter of 1997.

[5] Mrs Shannon’s application for restraining orders was filed in July 2000. It was supported by an affidavit which Mrs Shannon had sworn on 22 June 2000. In August 2000 an affidavit was filed by Mr Shannon relating to the property specified in part (b) of the application and the deer farming properties owned by companies in which he had an interest. The effect of his affidavit was that the property was subject to charges and sale proceeds went to, or were to go to, secured creditors.

[6] On 30 November 2000 Master Kennedy-Grant ordered consolidation of the proceedings CP 13/98 and CP 16/99. Mr Shannon’s appeal against the judgment of Cartwright J was dismissed by the Court of Appeal on 19 December 2000.

[7] In March 2001 Mrs Shannon filed a further affidavit stating that the asset position of Mr Shannon and his Forest Park group of companies had altered since her June 2000 affidavit and alleging moves to sell further property.

[8] On 14 March 2001 Master Kennedy-Grant made orders which included orders that:

“[c] Mr Shannon is to file and serve by 30 March 2001 an affidavit in the form of a MP1 affidavit in the Family Court in relation to his assets and liabilities as at the date of separation as determined by Cartwright J and upheld by the Court of Appeal, ie April 1997;

[d] Mrs Shannon’s application for restraint and other orders is to be listed for hearing before a Judge of this Court in Rotorua on 27 April 2001 at 2.15 pm . . . .”

[9] Master Kennedy-Grant reserved leave to Mr Shannon to apply for an extension of time for the taking of any of the ordered steps.

[10] On 4 April 2001, on the application of Mr Mabey, Master Kennedy-Grant ordered an extension of time to 12 April 2001 for compliance with the 14 March 2001 orders including the filing of the affidavit in relation to assets and liabilities.

[11] At the hearing of the application for the restraining orders Mr Mabey submitted that Mr Shannon’s August 2000 affidavit adequately explained the position concerning all the assets referred to by Mrs Shannon in her June 2000 and March 2001 affidavits and that Mrs Shannon had failed to meet the onus imposed by s 43 of the Act of proving that disposition of property was about to be made in order to defeat her claim or rights.

[12] Mr Cameron submitted that Mr Shannon had limited his affidavit response to dealing only with the property which Mrs Shannon had identified and that he had not disclosed the position relating to all his property and in particular had not explained what had happened to the US$4,500,000 which he had brought into New Zealand in 1997 and the money which he and the companies in which he had interests had raised. Mr Cameron submitted that this omission arose not only by reason of the narrow ambit of the affidavit in reply but also because of Mr Shannon’s failure to comply with the Court order requiring him to file an affidavit in relation to his assets and liabilities by the extended time of 12 April 2001. He submitted this created the inference that Mr Shannon was disposing of property in order to defeat Mrs Shannon’s claims under the Act.

[13] Mr Mabey said from the bar the reason that Mr Shannon had not filed the required affidavit of assets and liabilities was that his accountant had been overseas and that there was difficulty in obtaining information about overseas assets.

[14] In delivering the judgment of the Court of Appeal in Coles v Coles (1988) 4 NZFLR 621, 624 McMullin J said:

“The onus of proving that a spouse acted ‘in order to defeat’ the claim of the other spouse may be discharged by direct evidence of a state of mind or by necessary inference from all the circumstances”.

[15] Although this statement related to s 44 of the Act which applies when disposition of property has been made, I consider that the same rationale applies to the provisions of s 43 of the Act and the onus of proving that a disposition of property was about to be made in order to defeat a claim or rights of another party can be discharged by necessary inference from all the circumstances.

[16] From the circumstances of this case as stated earlier and in particular Mr Shannon’s limited affidavit response and his failure to disclose all his assets and liabilities as ordered by the Court, I draw as a necessary and proper inference that he intends to dispose of property in order to defeat Mrs Shannon’s claim or rights under the Act. I accordingly make the general restraining order sought in section (a) of the application, namely an order restraining Mr Shannon from making any disposition of property that is subject of Mrs Shannon’s claim under the Act. In light of Mr Shannon’s explanation about the proceeds of the sale of the property identified in section (b) of the application being applied to meet the interests of creditors, I do not make any order under s 44 of the Act relating to that property.

[17] In the circumstances I consider that it is appropriate for the order to apply for only a limited time, namely until 5.00 pm Friday 29 June 2001. If Mrs Shannon wants a further order to operate after that, then she will have to make a further application. That application would be dealt with on its merits and disclosure by Mr Shannon of his asset and liability situation and his dealings with assets after he received the US$4,500,000 would undoubtedly be taken into account.

[18] Mr Shannon is to pay costs to Mrs Shannon on this application. As it started before 1 January 2001, counsel should file memoranda on such costs. A costs memorandum by Mrs Shannon can be filed and served within 14 days of this judgment. Mr Shannon can file and serve a costs memorandum within 14 days of receiving that memorandum. Mrs Shannon can file and serve a limited costs memorandum in response dealing with matters raised by Mr Shannon within 7 days of receiving that memorandum.