Stephens v Johnson
[2021] NZHC 423
•8 March 2021
NOTE: PURSUANT TO S 169 OF THE FAMILY PROCEEDINGS ACT 1980, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B, 11C AND 11D OF THE FAMILY COURT ACT 1980. THIS IS AN ANONYMISED VERSION OF THE JUDGMENT. FOR FURTHER INFORMATION, PLEASE SEE
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2020-404-001670
[2021] NZHC 423
IN THE MATTER OF An appeal against a decision of Her Honour Judge Manuel dated 19 August 2020 in the Auckland Family Court in FAM 2020-004- 164 BETWEEN
STEPHENS
Appellant
AND
JOHNSON
Respondent
Hearing: 2 December 2020 Appearances:
N S Tabb for the Appellant
S T Bennett for the Respondent
Judgment:
8 March 2021
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 8 March 2021 at 3:30 pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel: Natalie Tabb, Auckland
Waitakere Chambers, Waitakere Presland & Co, Auckland
STEPHENS v JOHNSON [2021] NZHC 423 [8 March 2021]
Introduction
[1] On 19 August 2020, in the Family Court at Auckland, Judge Manuel made an interim spousal maintenance order under s 82 of the Family Proceedings Act 1982.1 The order required Mr Stephens to pay his former wife, Ms Johnson, $692 per week for 26 weeks.2 Mr Stephens appeals Judge Manuel’s decision.
Background
[2] After a period living together, Mr Stephens and Ms Johnson married in April 2009. They separated in September 2014. Their marriage was dissolved in December 2019.
[3] Mr Stephens and Ms Johnson have two school-aged daughters. After separation Ms Johnson and the daughters remained living in the former family home in Avondale. Mr Stephens remained closely involved in the care of the daughters. In August 2019, a final parenting order was made, under which the daughters are in Ms Johnson’s care slightly more than in Mr Stephens’s.
[4] The parties did not take any formal steps to resolve their relationship property issues for many years after their separation. The main assets at issue are the Avondale home (worth about $1 million to $1.1 million) and a rental property consisting of two units (together worth about $950,000 to $1 million). Mr Stephens claims that the rental property is his separate property. Ms Johnson says it is relationship property.
[5] There are debts owing to the ANZ Bank of about $250,000 on the Avondale home and about $600,000 on the rental property. The debts are secured by mortgages over both properties.
[6] Mr Stephens did not pay child support to Ms Johnson, but for many years continued to service the debt on both properties. He collected the rent paid on the rental property and used this to help pay the debt. With the debts paid in this way, Ms Johnson was able to make ends meet.
1 [Johnson] v [Stephens] [2020] NZFC 7048.
2 With the parties’ consent, fictitious names have been used in this judgment.
[7] For about two months from about June 2019, Mr Stephens was not in paid work. In September 2019, Mr Stephens commenced a proceeding under the Property (Relationships) Act 1976, seeking an order for the sale of the Avondale home. In December 2019 he moved into one of the two rental units. At about that time he also stopped servicing the debt owed to the ANZ.
Ms Johnson’s application for interim spousal maintenance
[8] Once Mr Stephens stopped servicing the ANZ debt, Ms Johnson was concerned that the Avondale home and the rental property might be sold at a mortgagee sale. On 27 February 2020 she applied, without notice, for an interim spousal maintenance order against Mr Stephens. She asked for an order that Mr Stephens pay to her directly the sum of $32,757, “being the amount required to pay the mortgage on [the Avondale property and the rental property] for the 12 months”.
[9] In support of her application, Ms Johnson provided an affidavit dated 18 February 2020. She deposed that the amount she sought in an interim order was the amount she needed to ensure that the ANZ mortgages were serviced. Ms Johnson also provided an affidavit of her financial means.
[10] The Family Court directed that Ms Johnson’s application proceed on notice. Mr Stephens opposed the application. He provided an affidavit in support of his opposition. Among other things, he said that in February 2020 he had remarried, and his new wife had just stopped working as she was expecting their first child in late April 2020. He said that given his income and the number of people he financially supported, he was no longer able to pay the mortgage on the Avondale home.
[11] Ms Johnson responded with an affidavit in reply dated 15 April 2020. The hearing of her application took place on 8 June 2020 before Judge Manuel. The Judge noted that Mr Stephens had not provided an affidavit of financial means, and directed him to remedy this. Mr Stephens provided such an affidavit on 12 June 2020.
Family Court decision
[12] Ms Johnson’s application was under s 82 of the Family Proceedings Act 1982 (the Act). This provides:
82 Interim maintenance
(1) Where an application for a maintenance order or for the variation, extension, suspension, or discharge of a maintenance order has been filed, any District Court Judge may make an order directing the respondent to pay such periodical sum as the District Court Judge thinks reasonable towards the future maintenance of the respondent’s spouse, civil union partner, or de facto partner until the final determination of the proceedings or until the order sooner ceases to be in force.
…
(4)No order made under this section shall continue in force for more than 6 months after the date on which it is made.
(5)An order made under this section may be varied, suspended, discharged, or enforced in the same manner as if it were a final order of the Family Court.
[13] Judge Manuel said that under s 82 the Court has a wide discretion to provide interim relief. Her Honour referred to Ropiha.3 There the Court of Appeal described the discretion as “unfettered”, and stressed that the purpose of s 82 was to protect the position of an applicant who had inadequate means, to the extent protection was reasonable.4
[14] Mr Stephens argued that Ms Johnson’s application was ill-founded, because she could not point to a “qualifying circumstance” under the Act. This was a reference to s 64(1), which provides:
64 Maintenance after marriage or civil union dissolved or de facto relationship ends
(1)Subject to section 64A, after the dissolution of a marriage or civil union or, in the case of a de facto relationship, after the de facto partners cease to live together, each spouse, civil union partner, or de facto partner is liable to maintain the other spouse, civil union partner, or de facto partner to the extent that such maintenance is necessary to meet the reasonable needs of the other spouse, civil union partner, or
3 Ropiha v Ropiha [1979] 2 NZLR 245 (CA).
4 [Johnson] v [Stephens] [2020] NZFC 7048 at [24].
de facto partner, where the other spouse, civil union partner, or de facto partner cannot practicably meet the whole or any part of those needs because of any 1 or more of the circumstances specified in subsection (2).
…
[15] Judge Manuel dealt with that argument by beginning with s 61 of the Act. This provides that in proceedings under the Act (other than proceedings under s 79 or s 82) the court shall apply the principles set out in ss 62 to 66. The Judge said that, despite s 82 proceedings being carved out from s 61, in an application under s 82 the court will often pay “some heed” to the principles in those sections of the Act that would apply if the application were for past or future maintenance, rather than for interim maintenance.5 She then referred to ss 64 and 64A (which would be the applicable provisions on an application for past or future maintenance, given that the marriage had ended). After summarising the parties’ competing contentions, the Judge concluded:
[39] In summary, I find that [Ms Johnson] may well have established a qualifying circumstance under s 64 FPA and that her application is not precluded by s 64A FPA.
[16] The Judge then turned to the assessment of any interim maintenance that might be payable. Section 65 of the Act provides that such an assessment should have regard to the parties’ needs and means. In her application Ms Johnson had included, as part of her expenses, the mortgage payments on the Avondale home and the rental property. Mr Stephens argued that those payments were not properly included as expenses, relying on the decision of this Court in Lobb v Ryan.6 Her Honour found that Lobb v Ryan was distinguishable, and that the mortgage payments were properly included as part of Ms Johnson’s reasonable expenses. She noted that if those payments were not paid, a mortgagee sale process might commence.
[17] Finally, the Judge assessed whether Mr Stephens had sufficient means to contribute towards Ms Johnson’s reasonable needs. In that respect, the Judge had earlier noted that the Court often does not have an accurate financial picture in an interim maintenance application, and must work with anecdotal evidence and broad
5 [Johnson] v [Stephens] [2020] NZFC 7048 at [26].
6 Lobb v Ryan [2020] NZHC 834.
brush figures, not precise ones. Her Honour said that was so in the application before her.7
[18] Judge Manuel concluded that Mr Stephens had sufficient means to pay weekly maintenance to Ms Johnson. She ordered that he pay her $692 per week for a period of 26 weeks. This was higher than the weekly amount that Ms Johnson had sought ($629). Her Honour explained that this was because Ms Johnson’s application had assumed that the weekly mortgage payments were $793, whereas Mr Stephens had said those payments were $856. Her Honour assumed that Mr Stephens’s figure was likely the more accurate.8
Mr Stephens’s Appeal
[19] Mr Stephens’s notice of appeal says that Judge Manuel erred in 16 different respects. In summary, however, Mr Stephens says that the Judge erred:
(a)By failing to correctly apply and follow Lobb v Ryan;
(b)By deciding that Ms Johnson had established a qualifying circumstance in terms of s 64; and
(c)In assessing that Mr Stephens had sufficient means to contribute towards Ms Johnson’s reasonable needs.
[20] I will address each of these alleged errors. I will also address a further issue that emerged during the hearing. But first, I need to say something about the approach to an appeal against a decision under s 82.
Approach on appeal
[21] Ms Tabb, who appeared as counsel for Mr Stephens, submitted that this was a general appeal – that is, one governed by the principles in Austin, Nichols & Co Inc v Stichting Lodestar.9 She therefore said that I had the responsibility of considering the
7 [Johnson] v [Stephens] [2020] NZFC 7048 at [20].
8 [Johnson] v [Stephens] [2020] NZFC 7048 at [49].
9 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
merits of the case afresh, and that I must substitute my own decision if I reach a different decision from that reached by Judge Manuel. For this proposition Ms Tabb relied on CAM v JMP.10
[22] I do not accept that submission. Determination of an application under s 82 involves the exercise of an unfettered discretion. Accordingly, on an appeal against a decision under s 82, the approach in May v May applies.11 To succeed on the appeal, Mr Stephens must show that the Judge acted on a wrong principle, failed to take into account a relevant mater or took into account an irrelevant matter, or was plainly wrong.12 CAM v JMP is inapplicable. It involved an appeal against a final maintenance order, not an appeal against an interim order under s 82.
First alleged error: failing to apply and follow Lobb v Ryan
[23] In Lobb v Ryan, Mr Lobb appealed against a decision declining his application, under s 63 of the Act, for spousal maintenance. Mr Lobb had continued to reside at the former shared home in Orakei. That was a valuable property, which Ms Ryan considered the couple could not afford even when they were living together. In making his application for spousal maintenance, Mr Lobb claimed his reasonable needs included $12,500 per month in interest and principal payments on the parties’ joint debts, so that he could continue to live at the Orakei property.
[24] Powell J dismissed Mr Lobb’s appeal. In the course of so doing, his Honour said:13
[To continue to reside at the Orakei property Mr Lobb] needs to get Ms Ryan to contribute to meeting the costs of a range of expenses Mr Lobb considers to be relationship debts. The fundamental problem with this approach is that this is not what spousal maintenance was intended to cover.
10 CAM v JMP [2013] NZHC 592.
11 May v May (1982) 1 NZFLR 165 (CA); Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
12 Hohaia v Caldwell [2019] NZHC 102, [2018] NZFLR 974; Able v Able [2020] NZHC 177, [2020] NZFLR 8.
13 Lobb v Ryan [2020] NZHC 834 at [50].
[25] Powell J held that the fact that Mr Lobb could not make the mortgage payments out of his own resources did not make those payments a “reasonable need” in terms of s 63.14
[26] Ms Tabb submitted that the present case was similar to Lobb v Ryan. She said that Ms Johnson was, like Mr Lobb, attempting to require Mr Stephens to contribute to payments of what Ms Johnson considers to be relationship debts. As I understood it, Ms Tabb was submitting, in reliance on Lobb v Ryan, that the mortgage payments to the ANZ should not have been included within Ms Johnson’s reasonable expenses.
[27] I reject this submission. First, in a limited (May v May) appeal such as this, little is to be gained from a mere comparison with the facts of another case. The principle underlying the other case may be relevant, if it is argued that the Judge below proceeded on a wrong principle. But Ms Tabb did not put forward such an argument. Secondly, in my view Judge Manuel was correct to distinguish Lobb v Ryan. Mr Lobb claimed a large sum for mortgage payments, it was unlikely that his wish to remain in the Orakei home was financially realistic, and Mr Lobb’s application was not triggered by Ms Ryan ceasing to pay the mortgage payments. Moreover, Mr Lobb’s application was not one for interim maintenance. Ms Johnson’s application is very different.
Second alleged error: deciding that Ms Johnson had established a qualifying circumstance
[28] Mr Stephens’s second ground of appeal was that Judge Manuel had erred by deciding that Ms Johnson had established a “qualifying circumstance” in terms of s 64.
[29] With respect, this ground is misconceived. As the Judge made clear, an applicant for an interim order under s 82 does not have to establish a qualifying circumstance in s 64. However, in the exercise of the unfettered discretion under s 82, the Court can take into account whether a qualifying circumstance under s 64 might be established. That is all Judge Manuel was doing. This is reflected in her conclusion on this topic, which was that Ms Johnson “may well have” established a qualifying
14 Lobb v Ryan [2020] NZHC 834 at [60].
circumstance.15 That approach was principled. Ms Tabb has not shown that the Judge’s conclusion was based on ignoring relevant matters or taking account of irrelevant matters, nor that it was plainly wrong.
Third alleged error: assessing that Mr Stephens had sufficient means to contribute towards Ms Johnson’s reasonable needs
[30] Under this ground of appeal Ms Tabb submitted that Judge Manuel had made numerous factual errors in her analysis of the parties’ statements of financial means. Ms Tabb’s written and oral submissions analysed those statements, and the parties’ affidavits, in considerable detail.
[31] This detailed examination of the affidavits reflected Ms Tabb having approached this appeal as if it were a general appeal. As I explained earlier, this is a limited appeal. It is not a forum for a wholesale re-examination of the evidence (particularly where, as the Judge said, she had to work with “anecdotal evidence and broad brush figures”).16
[32] There was only one matter raised by Ms Tabb properly within the scope of a limited appeal such as this. Ms Tabb said that the amount claimed by Ms Johnson as her weekly telephone and internet charges, $103.50, appeared unreasonably high. Ms Bennett (counsel for Ms Johnson) confirmed that that was an error in Ms Johnson’s statement, as $103.50 was the monthly expense. Ms Bennett said that this had been explained to Judge Manuel at the hearing.
[33] Unfortunately, it is clear from her judgment that Judge Manuel proceeded on the basis that $103.50 was the weekly expense. Her Honour therefore overstated Ms Johnson’s weekly expenses, and therefore her weekly shortfall, by about $80. This was plainly wrong. This error was, in turn, reflected in the amount of interim weekly maintenance that her Honour ordered. It should have been $612, not $692.
15 [Johnson] v [Stephens] [2020] NZFC 7048 at [39].
16 [Johnson] v [Stephens] [2020] NZFC 7048 at [20].
A further issue: lack of conditionality
[34] During the hearing of the appeal Ms Tabb informed me that Mr Stephens had, since Judge Manuel’s decision, reverted to making the mortgage payments to the ANZ, but had not paid the interim spousal maintenance ordered by the Judge. Ms Bennett confirmed this.17
[35] I suggested to counsel that the interim order should have been made conditional on Mr Stephens not making the mortgage payments. After all, the basis upon which Ms Johnson had sought the interim order was that she would suffer a shortfall if she were expected to make all the mortgage payments. So long as Mr Stephens makes the mortgage payments there will be no shortfall for Ms Johnson, and the basis for an interim order would fall away.
[36] The interim order does not reflect this. As matters stand, Ms Johnson could enforce the interim order, notwithstanding that Mr Stephens has made the mortgage payments. Effectively, Mr Stephens could be forced to pay twice.
[37] Ms Bennett told me that was not Ms Johnson’s intention, and that if Mr Stephens made the mortgage payments Ms Johnson would not enforce the interim order. But in my view, this should be reflected in the interim order. Mr Stephens should be ordered to pay Ms Johnson weekly spousal maintenance of $612, but only if (or to the extent that) he does not make the mortgage payments to the ANZ.
Costs
[38] Although I will be allowing the appeal, the reality is that Mr Stephens has enjoyed minimal success. In my view it is appropriate in those circumstances that no order as to costs be made.
Result
[39]The appeal is allowed.
17 I note that, according to Judge Manuel’s judgment, the weekly mortgage payments that Mr Stephens has been paying would be higher than the weekly interim spousal maintenance that was ordered.
[40] Judge Manuel’s interim spousal maintenance order is set aside, and is substituted with the following order: Mr Stephens is to pay Ms Johnson weekly spousal maintenance of $612 commencing on 21 August 2020 for a period of 26 weeks, but only if (or to the extent that) Mr Stephens does not make the payments due to the ANZ Bank over that same period in respect of the mortgage over the Avondale home and the rental property that are the subject of the parties’ relationship property dispute.
Campbell J
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