Stuart v Stoneham
[2021] NZHC 3316
•6 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1946
[2021] NZHC 3316
UNDER the Property (Relationships) Act 1976 BETWEEN
NEIL GORDON STUART
Appellant
AND
ANNETTE LISA STONEHAM
Respondent
Hearing: 7 July 2021 Appearances:
S R Mitchell for Appellant
S J McCarthy QC for Respondent
Judgment:
6 December 2021
JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 6 December 2021 at 3 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date: ...................................
Solicitors: Berman & Burton, Auckland
Murdoch Price, Auckland
Counsel: S R Mitchell, Auckland
S J McCarthy QC, Auckland
STUART v STONEHAM [2021] NZHC 3316 [6 December 2021]
[1] This is an appeal against a decision of Judge Pidwell dated 16 September 2020 determining issues as to the parties’ relationship property.1
[2]The appellant, Mr Stuart, appeals against the Judge’s orders:
(a)that the increase in value of Mr Stuart’s interest in a partnership with his brother, Bruce Stuart, and which owned the “Kupe St properties”, was relationship property to which Ms Stoneham was entitled to a half share;
(b)that $202,000 of a debt owed by the David Stuart Trust (“DST”) to Mr Stuart was relationship property to which Ms Stoneham was entitled to a half share;
(c)that the circumstances of s 17A Property (Relationships) Act 1976 (“Act”) were not engaged;
(d)that a property situated at Mono Place, Auckland, should be sold in the absence of payment of the sums due to the respondent, Ms Stoneham, within 42 days of the date of judgment.
[3] Mr Mitchell, counsel for Mr Stuart at the hearing, informed me that Mr Stuart was no longer appealing the Judge’s order that Mr Stuart was to pay the sums due to Ms Stoneham within 42 days.
[4] Ms Stoneham cross-appeals in respect of the Kupe St properties and otherwise opposes the appeal.
Representation and proposed affidavit evidence
[5] After the appeal was heard, Mr Stuart informed the Court that he was no longer represented by Mr Mitchell, and he also sought leave to file fresh evidence. This fresh evidence took the form of an affidavit and exhibits. Some of the exhibits were in fact before the Family Court and before me on appeal. However, to the extent the evidence
1 Stoneham v Stuart [2020] NZFC 7936.
was not before the Family Court, I decline to grant leave to file it. It is not fresh, and nor is it cogent, i.e. it could not affect the outcome of this appeal.
Approach on appeal
[6] In large part, this appeal is governed by the principles in Austin, Nichols & Co Inc v Stichting Lodestar.2 That means it is for the appellant, Mr Stuart or Ms Stoneham as the case may be, to satisfy me that I should differ from the Judge’s decision.
[7] To the extent the Judge exercised discretion in any matter appealed against, the principles in May v May apply. On those points it is for the appellant to satisfy me that the Judge acted on a wrong principle, took into account some irrelevant matter, failed to take into account a relevant matter, or was plainly wrong.3
Parties
[8] Mr Stuart and Ms Stoneham met in 1985. Ms Stoneham was an administrator and Mr Stuart a builder.
[9] The parties began living together in 1987. At about this time, the couple’s “Able Stairs” business commenced. The parties married in April 1991.
[10] At the end of 1994, the parties became shareholders and directors of Able Stairs Services Ltd (“ASL”). Ms Stoneham commenced working for ASL in 1995, taking over book-keeping and administration roles previously undertaken by Mr Stuart’s father, Mr David Stuart.
[11] In 1996, Mr Stuart and David Stuart formed the “Mono Place Partnership”. Each was an equal partner. The assets of the partnership comprised a site at Mono Place, Auckland, and plant and machinery, all of which ASL employed in its business.
[12] David Stuart settled the DST in 1996. He died in 2003, and Mr Stuart and his brother, Mr Lindsay Stuart, were the executors of his estate.
2 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
3 May v May (1982) 1 NZFLR 165 (CA) at 170.
[13] Mr Stuart and Ms Stoneham separated in or about October 2010 and their marriage was dissolved in December 2012.
[14] Ms Stoneham filed an application under the Act in May 2012. The Judge heard the case over five days in March 2020 (so almost eight years later), with a further day in June 2020. The Judge had a wealth of evidence before her in the form of numerous affidavits (from the parties and their experts) and she heard their evidence. The parties’ written submissions were comprehensive, as is the Judge’s decision. Although not represented at trial, Mr Stuart had been represented at various times in the lengthy lead up to trial, and one of those legal advisers acted as a McKenzie friend to Mr Stuart at trial.
Preliminary comments
[15] The first two matters under appeal are the Judge’s determination that a portion of the proceeds of sale of the Kupe St properties, and that $202,000, being all or part of a debt due from the DST to Mr Stuart, were relationship property.
[16] Mr Stuart maintains both of these assets are separate property. As I have said, Ms Stoneham cross-appeals the Judge’s finding in respect of the Kupe St properties.
[17] In the first instance, the Judge’s findings in respect of these assets derive from the fact that, although some funds used or applied in the course of the various relevant transactions were Mr Stuart’s separate property, they had, with Mr Stuart’s consent, been so intermingled with relationship property that it was unreasonable or impracticable to regard the property as separate property, as per s 10(2) of the Act.
Statutory provisions
[18] The statutory provisions relevant to Mr Stuart’s appeal on these two aspects are ss 8(1)(e), 9(1) to (3), 9A and 10, which provide:
8Relationship property defined
(1) Relationship property shall consist of—
...
(e) subject to sections 9(2) to (6), 9A, and 10, all property acquired by either spouse or partner after their marriage, civil union, or de facto relationship began; ...
9Separate property defined
(1)All property of either spouse or partner that is not relationship property is separate property.
(2)Subject to sections 8(1)(ee), 9A(3), and 10, all property acquired out of separate property, and the proceeds of any disposition of separate property, are separate property.
(3)Subject to section 9A, any increase in the value of separate property, and any income or gains derived from separate property, are separate property.
...
9A When separate property becomes relationship property
(1)If any increase in the value of separate property, or any income or gains derived from separate property, were attributable (wholly or in part) to the application of relationship property, then the increase in value or (as the case requires) the income or gains are relationship property.
...
10Property 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 partner acquires from a third person—
(i)by succession; or
(ii)by survivorship; or
(iii)by gift; or
(iv)because the spouse or 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 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.
...
Kupe Street properties
[19] The first issue concerns the Judge’s determination as to how Mr Stuart’s interest, or the net proceeds of sale of that interest, in a partnership with his brother, Bruce Stuart, was to be apportioned.
[20] Mr Stuart’s share of the net proceeds of sale was $807,880.19. The Judge determined that the relationship property portion of this sum was $474,555 to which each party was entitled to a half share of $237,277.50. The Judge determined that the balance of the proceeds of sale were Mr Stuart’s separate property.
[21] On appeal, Mr Stuart contends the entire sum of $807,880.19 is his separate property and Ms Stoneham contends that it is all relationship property.
Relevant background
[22] The Kupe St properties formed part of the residue of the estate of Mrs Stuart, Mr Stuart’s mother, who died in 2007. By her will, Mrs Stuart directed that the residue was to be held on trust for her sons as tenants in common in equal shares, the sons being Mr Stuart, Bruce Stuart, and Lindsay Stuart. As at the date of death, the combined value of the Kupe St properties was agreed to be $1,000,000.
[23] Lindsay Stuart wished to sell his one-third share. Mr Stuart and Bruce Stuart agreed that they would purchase this share for $333,333.34, with the result that each would then own a half share in the properties.
[24] The parties entered into a Deed of Family Arrangement on or about 9 October 2007 (“deed”). By this time, the Kupe St properties had been transmitted to the executors, being Mr Stuart and Lindsay Stuart. The deed recorded that the beneficiaries had directed the executors to sell the properties to Mr Stuart and Bruce Stuart and that a registered valuer had valued the properties at $1,000,000. The deed also recorded that the beneficiaries’ shares in the properties had already vested.
I consider this an important point, as it means the three brothers owned the beneficial interest in the properties.
[25] The deed provided that the executors would sell the properties to Mr Stuart and Bruce Stuart on their paying $333,333.34 to the executors, which the executors would pay to Lindsay Stuart in satisfaction of his interest. The deed also provided that Mr Stuart and Bruce Stuart would hold the properties as tenants in common in equal shares but that Mr Stuart would be the sole registered proprietor, holding a half share for Bruce Stuart on trust.
[26] Following payment of the $333,333.34, the executors transferred the properties to Mr Stuart, who held a one-half share for himself (or for himself and Ms Stoneham), and a one-half share for Bruce Stuart.
Funding
[27] The purchase price for Lindsay Stuart’s share was funded by a cash payment of $159,400 made from an account opened at the ASB in April 2005 in Mr Stuart’s sole name (“Mr Stuart’s account”), and an advance of $178,000 by the ASB bank. These sums total $337,400 and so slightly exceed the purchase price.
[28] The Judge found the $159,400 to which I have referred was relationship property, and that is in issue on appeal.
[29] Mr Stuart and Bruce Stuart sold the properties in 2013. Although the evidence does not include the settlement statement, I take it from the judgment that the net proceeds of sale were not less than $1,615,760.
[30] By the time of the sale, the debt due to the ASB had been repaid in full. The Judge determined that at least $60,000 of the funds required to repay the ASB was also relationship property. The balance came from Mr Stuart and Bruce Stuart’s separate property being further inheritances or distributions.
[31]Ms Stoneham’s case to the Judge was that Mr Stuart’s half share of
$807,880.19 was relationship property pursuant to s 8(1)(e) of the Act, being property
acquired by Mr Stuart after the couple’s marriage, alternatively that Mr Stuart had intermingled his one-third share with relationship property, rendering the whole relationship property pursuant to s 10(2) of the Act. The Judge rejected both submissions.
[32] Mr Stuart submitted to the Judge that his entire interest in the partnership was separate property pursuant to ss 10(1) and (2) of the Act. The Judge likewise rejected this submission.
[33] The Judge was satisfied that Mr Stuart’s original one-third share was and remained his separate property but held that the increase in the value of that property, from $333,333 to $807,880.19, was attributable in whole or in part to the application of relationship property (cash) and thus the increase was relationship property pursuant to s 9A(1) of the Act, and to be divided equally.
$159,400
[34]It is necessary to say more about the $159,400 referred to above.
[35]In or before 2005, Mr Stuart received several sums by way of inheritance.
[36] The first two of these were from David Stuart’s estate: $95,000 in about October 2003 and $45,000 in March 2005, being a total of $140,000. These funds were paid into the parties’ joint account (“joint account”). The judgment records that the joint account was used for day-to-day spending by and for the family and that it received funds from various sources.
[37]Two further inheritances were paid into Mr Stuart’s account. The first of these,
$114,803, was deposited to Mr Stuart’s account on 1 April 2005, and the second of
$31,107 on 15 August 2005. These sums total $145,910.
[38] These latter two inheritances likewise were not kept intact. On the contrary, the evidence is that, after their receipt, there were numerous transfers from Mr Stuart’s account to other accounts, and vice versa. These other accounts were the joint account,
ASL’s current account (relationship property), and two accounts in the name of the Mono Place partnership (also relationship property).
[39] Mr Beylefeld, Ms Stoneham’s expert accountant, analysed the transactions between the various accounts from 1 April 2005 to 8 October 2007, being the date the
$159,400 was paid out of Mr Stuart’s account. His evidence was that payments totalling $71,000 were deposited into Mr Stuart’s account from ASL and the Mono Place current account just prior to the payment out. Of the remaining $88,140, Mr Beylefeld concluded that a further $37,000 derived from deposits from the joint account to Mr Stuart’s account.
[40] All in all, the Judge accepted Mr Beylefeld’s evidence that at least 67.8 percent of the $159,400 was relationship property. This left a further $51,400. The Judge considered that it was not clear even that sum had derived purely from separate property, being inheritance, but even if it had, it had lost its status as such by virtue of s 10(2) of the Act. Thus the Judge held the entire $159,400 was relationship property.
Submissions
Ms Stoneham
[41] I shall address Ms Stoneham’s cross-appeal first, which is that Mr Stuart’s entire interest, and not just a portion of it, is relationship property.
[42] Ms Stoneham accepts that, at the outset, Mr Stuart’s one-third share in the Kupe St properties was separate property pursuant to ss 10(1) and (2). Ms Stoneham also agrees with the Judge’s finding that Mr Stuart’s cash inheritances were intermingled with relationship property, so as to lose their status as such (s 10(2)).
[43] Ms Stoneham submits, however, that with the express or implied consent of Mr Stuart, his one-third share was itself intermingled with relationship property (the
$159,400) in the course of the purchase of Lindsay Stuart’s share, such that it is unreasonable or impracticable to continue to regard that one-third share as separate property.
[44] I do not accept this submission. As I have said, each of the brothers’ one-third share had vested by the time of the deed. Accordingly, and contrary to the submission by Mr McCarthy QC, Mr Stuart and Bruce Stuart did own two-thirds of the Kupe St properties at the time of the deed. They owned two thirds of the beneficial interest in the properties. The deed was solely concerned with the sale and purchase of Lindsay Stuart’s share of the beneficial interest. Accordingly, I do not accept that in purchasing part of Lindsay Stuart’s interest, Mr Stuart intermingled his separate property with relationship property, let alone that it is unreasonable or impracticable to continue to regard that one-third share as separate property.
Mr Stuart
Primary submission
[45] Turning to the submissions for Mr Stuart, the starting point is that his one-third share remains his separate property. I accept this submission, as I have just said.
[46] There are several planks to Mr Mitchell’s next submission, i.e. that the remainder of the $807,880.19 is also Mr Stuart’s separate property.
[47] First, Mr Mitchell submits that Mr Stuart received sufficient funds, i.e. separate property, in or prior to 2005 to meet his share of the purchase price for Lindsay Stuart’s interest. This too is correct.
[48] Secondly, Mr Mitchell submits that the two pre-requisites to the application of s 10(2) were not met, so that the funds Mr Stuart inherited did not lose their status as separate property. The first pre-requisite is that Mr Stuart has given express or implied consent to intermingling and the second is intermingling to such an extent that it is unreasonable or impracticable to continue to regard the funds as separate property.
[49]Mr Mitchell submits that consent requires:4
... more than mere acquiescence or reticence; and it require[s] an active rather than a passive role e.g. the initiation or undertaking of the relevant transaction
...
4 Fraser v Buxton HC Wellington CIV-2008-485-1101, 3 December 2008 at [32].
[50] As to the point at which it becomes unreasonable or impracticable to continue to regard separate property as such, Mr Mitchell referred me to Allan v Allan and Lavery v Lavery.5 Mr Mitchell submits that it would not be unreasonable or impracticable to continue to treat Mr Stuart’s funds as retaining their separate character.
[51] The third plank in the argument is s 9(3) of the Act which provides that, subject to s 9A, any increase in the value of separate property is separate property. Hence the submission that all of Mr Stuart’s share of the proceeds of sale is separate property.
Alternative submission
[52] If I do not accept the submission that the entire $807,880.19 is separate property, Mr Mitchell submits as an alternative that the Judged erred in her characterisation of Mr Stuart’s share in the Kupe St properties for the purposes of s 9A(1).
[53] The Judge found that Mr Stuart had applied relationship property to increase his original $333,333 share in the Kupe St properties to a half-share. Mr Stuart’s share of the proceeds of sale was therefore relationship property, less Mr Stuart’s separate
$333,333.
[54] Mr Mitchell submits that Mr Stuart inherited a one-third share in the Kupe St properties, and that he applied relationship property to an additional one-sixth share, being half of Lindsay Stuart’s one-third share. The acquisition and increase in value of this one-sixth share may be attributable to the application of relationship property, but the increase in value of his separate one-third share is not.
Discussion
[55] I do not accept Mr Mitchell’s primary submission. For the reasons set out below, I am satisfied that Mr Stuart did consent to the intermingling of his separate property (cash) with relationship property (cash) in the context of the purchase of
5 Allan v Allan (1990) 7 FRNZ 102 (HC) and Lavery v Lavery [2018] NZHC 3235.
Lindsay Stuart’s one-third share, and that it was unreasonable or impracticable to regard that separate property as retaining its character as such.
Consent
[56] On the issue of consent for the purposes of s 10(2), the Judge described the manner in which, between them, the parties conducted their financial affairs:6
[59] ... [Ms Stoneham] was asked many questions about individual banking transactions, as she was the “book-keeper” for the various legal entities, and the party to the marriage who did the banking and payment of bills. She processed the everyday transactions and wrote labels on bank statements (where appropriate) to describe the transaction so that the accounting was clear when financial accounts were prepared by their accountant. When she was unsure of a transaction, she was honest about that. When she could recall a transaction, she was clear in that recall. She approached her bookkeeping in a pragmatic way. I was left with the view that Annette was the practical spouse: “I’m a practical person. You don’t leave cheques lying around. You either bank it or rip it up.”
[60] Neil put to Annette that she had transferred “his” money without authority, with the intention of merging it with joint funds so that it would lose its separate statues. In his submissions and own evidence, he submitted that she had stolen or laundered funds. I saw no evidence of that. He did not own a separate bank account for the majority of their marriage. They only operated one personal account in their joint names. Funds were moved between bank accounts and entities as needed; when money was received and when bills or loans needed to be paid: “I was doing the things I was doing because we were married, and that’s just how our marriage worked.”
...
[63] Despite attempting to uphold the legal classification of entities, it was overwhelmingly evident that Neil treated all property under his control as his, irrespective of the underlying entity. The best example of this is the settlement document he signed to resolve the litigation with his father’s estate in 2009. Neil agreed to pay his brother, Lindsay, an amount “to be paid by (as Neil shall elect) either Neil in his personal capacity or the David Stuart Trust or the David Stuart Estate or the A & K Stuart Trust or Able Stairs Services Limited.” Neil signed on behalf of his father’s estate, administrators of DST, administrators of the A and K Stuart Family Trust, the DST and Neil Stuart partnership, Able Stairs Ltd, and himself personally. This shows the extent of his power over all these entities and how merged they were in his mind. In his view, they are all “his”.
…
[176] Annette was the administrator for the various entities. Both parties’ experts concluded that the financial boundaries of these entities were very blurred. I accept Annette’s evidence that she acted with bona fide intent for
6 Stoneham v Stuart, above n 1.
the good of the parties’ overall financial position, including the company and partnership, which was their livelihood. It is inconceivable that the estate lawyers would have transferred those funds [$140,000] without Neil’s express or implied consent.
[177] There was no deliberate act which had the effect of diminishing Neil’s inheritance. They were all poured into the entities from 2003 until 2010 in various transactions. Neil cannot stand back from those transactions now and assert he had no control or responsibility.
[57] Aside from these findings as to how, between them, the parties’ conducted their financial affairs, the funds — in all of the accounts, including Mr Stuart’s — were transferred or intermingled over some four years, that is between Mr Stuart’s first receipt in 2003 to the time of the payment out on 8 October 2007. From 2005 when it was opened, Mr Stuart’s account was the payer on some occasions, and the payee on others. Mr Stuart, working in and being a shareholder and director of the ASL business, and an equal partner in the Mono Place Partnership, must have known that funds in the accounts were being combined in this way. As the Judge determined, that is sufficient to constitute “consent” for the purposes of s 10(2) of the Act, or a sufficient basis on which to infer that consent.
Continued status as separate property
[58] The issue of when it becomes unreasonable or impracticable to regard separate property as such is a question of fact. The cases to which I was referred are useful illustrations of when the line is crossed.
[59] In Allan v Allan, Mr Allan’s separate property was paid into the couple’s only bank account.7 Funds in this account were used to make investments pending the purchase of the farm in dispute, and to defray all sorts of domestic expenditure, such as income tax, electricity bills, and so on. Two years after the payment in, funds in the account were applied to purchase the farm.
[60] Tipping J held that the separate property had been so intermingled as to become relationship property, saying it was “quite unreasonable and indeed impracticable to
7 Allan v Allan, above n 5.
regard the inherited money as having remained sufficiently identifiable to retain its original character as separate property”.8 Tipping J went on to say:9
I agree with Thorp J in Gerbic v Gerbic (1982) 5 MPC 40, that the fact that separate property moneys are paid into a blended fund does not automatically involve their loss of identity as separate property or the kind of intermingling which is covered by s 10 either directly or by analogy. However in my view where a party pays separate property moneys into a single all purpose bank account the character of those moneys as separate property should be regarded as prima facie lost.
[61] In Lavery v Lavery, the appellant deposited separate property into a home loan account, and then withdrew it to buy bonus bonds.10 The Judge held that money deposited and withdrawn in similar quantities within a matter of days remained separate, but money which remained in the account for six years or more was sufficiently intermingled as to lose its character as separate property.11
[62] Given these authorities, and Mr Beylefeld’s evidence, I do not consider it reasonable or practicable to continue to regard some or all of the $159,400 as Mr Stuart’s separate property. It is not to the point that, overall, Mr Stuart inherited sufficient funds to purchase his part of Lindsay Stuart’s share. The intermingling, which occurred with Mr Stuart’s consent, was so extensive that I am satisfied the Judge was correct to hold that it would be unreasonable and impracticable to regard any portion of the $159,400 as Mr Stuart’s separate property.
[63] The evidence relating to the repayment of the ASB loan was equally complex. However, it is clear from the judgment that the experts agreed that at least a third of the debt to the ASB was repaid from relationship property sources.
[64] Accordingly, to conclude on this point, the Judge was correct to find that, to the extent that Mr Stuart’s separate property (cash) was intermingled with relationship property (cash), he consented to the same and that it was unreasonable or impracticable to regard that separate property as identifiable as such.
8 At 107.
9 At 108.
10 Lavery v Lavery, above n 5, at [75].
11 At [88] and [95].
Legal analysis
[65] I turn now to the Judge’s analysis of the legal position as a result of those findings, which brings me to Mr Mitchell’s alternative submission.
[66] The Judge held that Mr Stuart’s interest in the partnership was the $807,880.19, and that this was an increase on Mr Stuart’s original and separate $333,333.33, attributable to capital gain and to Mr Stuart’s use or application of relationship funds
— the $159,400 and the one third repayment of the ASB debt. The Judge held:
[168] Section 9A(1) of the PRA provides that any increase in value of separate property, which is attributable (in whole or in part) to the application of relationship property, becomes relationship property. This is exactly what has occurred here. Neil’s separate property (being his inheritance from his mother) increased in value from the application of relationship funds to buy his brother, Lindsay, out. Therefore, the increase in value is relationship property.
[169]I quantify that as follows: Initial inheritance: $333,333.33 became
$807,888.00. The increase is $474,555.00 which is relationship property. Annette’s half share is $237,277.50.
[67] I am not persuaded that Mr Stuart’s separate property increased in value as a result of the application of relationship property. Rather, I accept Mr Mitchell’s submission that Mr Stuart’s one-third share remained his, as does any increase in its value; that relationship property was used to fund the acquisition of Mr Stuart’s share of Lindsay Stuart’s share, i.e. to fund the acquisition of a further one-sixth share; and that one-sixth share and any increase in its value likewise is relationship property.
[68] The result is that Mr Stuart’s three-sixths falls to be divided as to two-sixths to him as his separate property ($538,586), and one-sixth ($269,293) is relationship property, to be divided equally.
[69]I shall vary the Judge’s orders to reflect the above.
Debt due from the DST
[70] By a settlement agreement of 17 February 2009, it was agreed that Lindsay Stuart would be paid $303,000, by way of instalments of $101,000 in each of March, April, and May 2009. This was to settle disputes between Mr Stuart and Lindsay
Stuart personally and in their capacity as executors and trustees of the estate of David Stuart and as trustees of the DST.
[71] In [56] I quoted various paragraphs from the judgment, including [63] in which the Judge summarised the provisions in the settlement agreement about how the funds would be paid. As it turned out, the settlement sum was ultimately treated as having been paid by the DST.
[72] No relationship property was included in the first instalment. However, the Judge found that Mr Stuart used relationship property to put the DST in funds to pay the second and third instalments. The Judge also found that, to the extent any of those funds may have been Mr Stuart’s separate property in the first instance, Mr Stuart had consented to them being intermingled and that it had ceased to be reasonable or practicable to regard them as separate property.
[73] On appeal, Mr Mitchell submits that, in reaching this conclusion, the Judge again gave insufficient consideration to the “consent” and “unreasonable or impracticable” requirements of s 10(2).
[74] I do not accept this submission. The Judge considered the status of the debt due from the DST after she had analysed the application of s 10(2) in relation to the Kupe St properties. By this point in the judgment, the Judge had found that Mr Stuart consented to the intermingling of funds generally. The Judge had also given consideration to the issue of when it becomes unreasonable or impracticable to continue to regard what may have been separate property as retaining that status. The Judge also addressed Mr Beylefeld’s evidence as to how the two instalments were sourced. There is no suggestion that she misunderstood that evidence.
[75]It follows that I do not accept the Judge omitted to consider the relevant issues.
Section 17A Property (Relationships) Act 1976
[76] The Judge dismissed an alternative submission that Mr Stuart made, apparently for the first time in his closing submissions, that the Judge should exercise her discretion under s 17A, which provides:
17A Diminution of separate property
(1)If the separate property of one spouse or partner has been materially diminished in value by the deliberate action or inaction of the other spouse or partner, the court may, to such extent as it thinks just, diminish the share to which the other spouse or partner would otherwise be entitled in the relationship property.
(2)This section overrides sections 11 to 14A.
[77]It was in the context of this submission that the Judge made the remarks in
[176] and [177] of her judgment that are quoted at [56] above. As the Judge said, before s 17A could even arise, it would be necessary for her to be satisfied that Ms Stoneham had acted deliberately to effect a material diminution in Mr Stuart’s separate property. Not being so satisfied, the Judge dismissed the application.
[78] There is nothing in the ground of appeal on this point. On the evidence she heard, the Judge made a clear finding of fact that Ms Stoneham’s actions were bona fide. There is no basis on which to revisit that finding of fact.
Sale of Mono Place, Auckland
[79] The Judge ordered that this property was to be sold in the absence of Mr Stuart paying Ms Stoneham the sums due within 42 days of the judgment.
[80] On appeal, Mr Stuart submits that the Judge was unable to make this order, as the trustees of the DST which own a half share in the property were not represented at trial.
[81] There is also nothing in this submission, which the Judge addressed early in her judgment. At the outset of the proceedings the trustees of the DST were Mr Stuart and a Mr D Bevan, and both swore affidavits in the proceedings. There was a change in trustee(s) subsequently, but Mr Stuart remained a trustee, and the Judge was satisfied the DST’s position was so intertwined with Mr Stuart’s that all relevant issues in relation to the DST had been tabled and fairly considered.
Result
[82] I vary the order made by the Family Court in [190(b)] of the judgment, so as to substitute $269,293 and $134,646.50 for the sums of $474,555 and $237,277.50 respectively.
[83]I dismiss the appeal in all other respects, and dismiss the cross-appeal.
[84]The parties may make brief submissions on costs if they wish.
Peters J
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