Strauss v Turner

[2014] NZHC 661

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV2013-419-000816 [2014] NZHC 661

UNDER THE  Property (Relationships) Act 1976

BETWEEN  WILHELM GEORG STRAUSS Appellant

ANDPATRICIA ANN TURNER Respondent

Hearing:                   3 April 2014

Appearances:           G C McArthur for the Appellant

G A Williams for the Respondent

Judgment:                3 April 2014

JUDGMENT OF GILBERT J

This judgment is delivered by me on 3 April 2014 at 4pm pursuant to r 11.5 of the High Court Rules.

………………………….

Registrar/Deputy Registrar

STRAUSS v TURNER [2014] NZHC 661 [3 April 2014]

[1]      Mr  Strauss  appeals  against  four  aspects  of  a  decision  given  by  Judge Whitehead in the Family Court at Hamilton in which he made orders for the division of relationship property.1     In particular, Mr Strauss appeals against the following compensation orders:

(a)      An order pursuant to s 44C of the Property (Relationships) Act 1976 requiring Mr Strauss to pay compensation totalling $407,500 in relation to a property at Kaukapakapa owned by the HMS Trust.

(b)An order pursuant to s 44C of the Act requiring Mr Strauss to pay compensation totalling $32,233.50 in relation to plant and equipment owned by the OKS Trust.

(c)      An order pursuant to s 44F of the Act requiring Mr Strauss to pay compensation in the sum of $4,780 in relation to McAfee Distributors New Zealand Limited (McAfee Distributors).

(d)An order pursuant to s 44F of the Act requiring Mr Strauss to pay compensation in the sum of $40,965.47 in relation to Anti-Virus & Encryption Centre Limited (AVEC).

[2]      Mr Strauss also appealed against an interest award made by the Judge but he abandoned that aspect of his appeal at the hearing.

[3]      At the conclusion of the hearing of the appeal, Ms Williams responsibly acknowledged that the judgment on the appealed issues cannot stand. She concedes that the compensation orders in relation to the two trusts must be set aside.  While she accepts that the compensation orders made in relation to the two companies must also be set aside, she submits that the appropriate course is to remit that aspect of the matter back to the Family Court because the shares in these companies are relationship property and will need to be divided.  Mr McArthur accepts this.  Given

this position, my reasons for allowing the appeal can be shortly stated.

1      Turner v Strauss [2013] NZFC 6348.

Kaukapakapa property – HMS Trust

[4]      Section 44C of the Act empowers the Court to make compensation orders where the Court is satisfied that since the marriage began, either or both spouses have disposed of relationship property to a trust and that disposition has the effect of defeating the claim or rights of one of the spouses.  The first prequisite for making an order under this section is that one or other or both of the spouses must have disposed of relationship property to the trust after the marriage began.  The Judge found that the parties had disposed of the property to the trust following marriage for reasons he gave at [45] of his judgment:

[45]      There is no evidence before the Court as to how the trust acquired the land.  The only inkling is found in Exhibit “A” to the husband’s affidavit of 15 December 2009 where it is stated:   “Interest in HMS Trust – which owns former “family home” at 236 Stoney Creek Road, Kaukapakapa”. Clearly therefore the home was purchased by the parties during the course of their marriage and occupied by them as the family home ever since. There is no evidence of any gifting-back programme or even whether the trust purchased the property, but clearly there was a disposition by the parties to the trust of the property at Kaukapakapa.

[5]      This finding is contradicted by the evidence and cannot stand.  The title to the property shows that it was never owned by the parties.   The trustees of the HMS Trust, being the parties to this proceeding and an independent trustee, took title to the property on 5 June 2002 having lodged a caveat to protect their interest as purchasers on 9 May 2002.  The trustees funded the purchase of the property from the proceeds of sale of another property which it previously owned in Picton.   Ms Turner acknowledged in her affidavit of assets and liabilities that she had no interest in this property.  Mr Strauss confirmed the same position in his affidavit.

Plant and equipment – OKS Trust

[6]      The Judge dealt with this issue at [70] of his judgment, as follows:

[70]      This is owned by the OKS Family Trust.  There is no evidence as to what happened to the plant and equipment other than that the husband indicated in his first affidavit that he would be prepared to dissolve the trust and divide the funds held by the trust.  As with the HMS Trust, the OKS Trust is for the same reason subject to s 44C. There was $64,467 in the bank account at Westpac for the OKS Trust at 21 September 2008 and accordingly the husband is to compensate the wife for half that sum in the amount of

$32,233.50.

[7]      Again, as Ms Williams accepts, there is no evidence to support a conclusion that  either  or  both  of  the  parties  disposed  of  plant  and  equipment  or  other relationship   property   to   the   OKS   Family   Trust   following   their   marriage. Accordingly, there was no jurisdiction under s 44C of the Act to make any order for compensation.  It follows that this order must be set aside.

McAfee Distributors New Zealand Limited

[8]      Section 44F of the Act empowers the Court to make compensation orders if either  or  both  spouses  have  disposed  of  relationship  property  to  a  qualifying company and the disposition has the effect of defeating the claim or rights of one of the spouses. There is no dispute that McAfee Distributors is a qualifying company.

[9]      However, there is no evidence that either or both of the parties disposed of relationship property to McAfee Distributors during the course of the marriage.  The Judge did not suggest otherwise.  In these circumstances, the order for compensation must be set aside.

[10]     The proper course was not to order compensation under s 44F in respect of property disposed of to McAfee Distributors as a qualifying company, but rather to recognise that the shares in the company are relationship property to be taken into account in the overall division of property between the parties.

AVEC

[11]     The position in relation to AVEC is the same.  Again, there was no evidence of any disposition of relationship property to this company during the course of the marriage.   There was therefore no jurisdiction to make any compensation order under s 44F. The proper course was to treat the shares as relationship property.

Result

[12]     The appeal is allowed.

[13]     The orders for compensation in respect of the Kaukapakapa property owned by the HMS Trust, the plant and equipment owned by the OKS Trust, McAfee Distributors and AVEC are set aside.

[14]   The proceeding is remitted back to the Family Court to determine the appropriate orders for the division of the shares in McAfee Distributors and AVEC. Counsel advise that the parties intend to issue a joint instruction to a forensic accountant to value the shares in these two companies so that appropriate orders can be made.

[15]     The respondent is legally aided.  However, if any order for costs is sought, a memorandum should be filed and served within 21 days of the date of this judgment. Any memorandum in response should be filed and served within 14 days thereafter.

[16]     I reserve leave to the parties to make further application as to the precise form of any order required to give effect to this judgment.

M A Gilbert J