Summers v Summers HC Hamilton CIV-2010-419-1319
[2011] NZHC 987
•12 April 2011
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2010-419-1319
BETWEEN STEVE SUMMERS Appellant/Applicant
ANDSVITLANA SUMMERS Respondent
Hearing: 12 April 2011
Appearances: K L Hoult for the Appellant/Applicant
R D Clark for the Respondent
Judgment: 12 April 2011
ORAL JUDGMENT OF PRIESTLEY J
Counsel:
K L Hoult, Niemand Pebbles Hoult, P O Box 1028, Hamilton 3240. Fax: 07 959 1817. Email: [email protected]
R D Clark, P O Box 931, Waikato Mail Centre, Hamilton 3240. Fax: 07 839 0591
Email: [email protected]
SUMMERS V SUMMERS HC HAM CIV-2010-419-1319 12 April 2011
[1] This hearing is in essence a threshold hearing to decide whether the appellant should be granted special leave to appeal.
[2] The hearing was directed by Brewer J last November, who correctly assessed that there were various factual issues which made it inappropriate to hear the leave application (as is so often the case) in tandem with the substantive appeal.
[3] The application is brought pursuant to r 20.4(3) of the High Court Rules and s 39(3) of the Property (Relationships) Act 1976.
[4] Leave is sought in respect of a signalled challenge to a reserved decision delivered in the Family Court in Hamilton by Judge Riddell in July 2010.1
Grounds
[5] Counsel agreed as to the correct approach. I do not need to set out relevant authorities. In essence a special leave application involves a discretionary evaluation which must include consideration inter alia of the reasons for the delay, the merits of the appeal and, overarching all that, the interests of justice.
[6] In general terms the more egregious the delay and the feebler the reasons advanced for delay, the less likely will it be that leave is granted. At the other end of the scale if grounds for appeal are far from hopeless then leave is more likely to be granted. Other important factors include whether there are issues of public importance (not the case here) and also prejudice to either party.
The Judgment
[7] I do not intend to traverse in any detail Judge Riddell’s decision. It comprises
[58] paragraphs and is methodical and, in substantive terms, free from any obvious error.
1 SS v SS FC HAM FAM-2008-019-000235 [14 July 2010].
[8] The parties had been married for approximately eight years by the time the hearing took place. Separation occurred in May 2007.
[9] The relationship property pool was unremarkable. There was a family home which appears to have an agreed value in the region of $224,000 less a mortgage, and a garage or workshop which somehow or other was owned by a company. Both parties owned shares in that company, Summerbilt Products Limited. There was a modest vehicle and a boat. On the Judge’s calculations the net relationship property pool was $154,754 which entitled each party to a presumed half share of just over
$77,000.
[10] Although the appellant at an earlier stage had engaged a lawyer, he was unrepresented at the hearing. The Judge specifically records that the appellant’s decision placed him at a distinct disadvantage. Although the appellant would have derived a measure of assistance from his accountant who gave evidence at the hearing, nonetheless the finer points of the Act, weight and relevancy issues, might well have passed the appellant by.
[11] In any event the Judge made a number of orders and directions. The ones which are centre-stage so far as this application is concerned are the various monetary adjustments which she ordered. The hearing (and presumably submissions) proceeded on the basis that the appellant would retain as his separate property the parties’ interests in the company and the respondent wife would move into and take title to the family home. But assessing arithmetically the adjustments required, the Judge’s final order was that the sum payable by the respondent to the appellant was $26,780.31. That sum was payable on the transfer of title to an unencumbered family home to the wife.
[12] Regrettably, since that judgment nothing much has occurred. The respondent wife, who had been out of occupation of the home now for almost four years, is in rental accommodation. The husband is in a position to move out. As his counsel responsibly accepts, he has not filed for a stay. The respondent’s solicitors have made it clear over recent months that they are ready to proceed with settlement.
Reasons for appeal
[13] The appeal was substantially out of time. It should have been lodged within the normal period of 20 working days. The appellant has filed a candid and comprehensive affidavit setting out the reasons for his delay. At the conclusion of the Family Court hearing he was, on his own assessment understandably perhaps, physically and mentally exhausted. He represented himself at the Family Court because, so he says, he had insufficient funds to instruct counsel. He did, however, in the wake of the 14 July judgment seek legal advice within the 20 day working period. He was advised by a solicitor that he would have to lodge an appeal within that 20 day period which expired on 11 August 2010. The appellant deposes that he did not have sufficient funds to engage a solicitor for that purpose.
[14] In the exercise of the normal discretionary approach the fact that the appellant knew that an appeal period was running is of some significance.
[15] On the appellant’s calculations, which are not disputed, the appeal, by the time it was lodged, was some 44 working days out of time.
How strong is the appeal?
[16] There are a number of points which have been raised in a thorough fashion by Mrs Hoult. The major ground is that the Judge erred in calculating the balance payment due and owing to the wife. That error, counsel submits, is sourced in the treatment which the Judge made of various monetary adjustments.
[17] The total sum of these monetary errors is a shade over $72,000. Thus, it is submitted, the balance figure to which I have referred (supra [11]) should be some
$36,000 greater.
[18] I interpolate, to give some coherence to the issues, that it was common ground at the hearing that Summerbilt was to be valued at its May 2007 separation date. As is frequently the case with modest companies trading in a family context,
both the value of the shares and the shareholders’ accounts were treated as one for valuation purposes.
[19] I have perused the company’s accounts for the 2006-2008 financial years. It is clear that the shareholders’ accounts fluctuate between modest credit and debit balances.
[20] The significance of this is, that up to the date of separation, the outgoings on the family home appear to have been paid by the company and debited to the appellant’s shareholder’s account. Post-separation, however, the home’s outgoings have been debited equally to the accounts of both parties.
[21] The other valuation issue related to the family home. There appears to have been no dispute over that figure. However, the appellant was concerned about, and certainly seems to have brought to the Judge’s attention, post-separation work or improvements which had been carried out. One such item, which apparently took place after valuation, was the addition of paving stones to the property. In respect of that there was an adjustment in the appellant’s favour.
[22] Turning to the alleged adjustment errors in the judgment, the major item alleged to be wrong is $49,710 which is expressed to be outgoings on the home (rates, loan repayments, insurance, et cetera). These have, as I have said been met by the company. The other major item, $14,383 notated at “GE Creditline”, relates to kitchen equipment for which the debt had been incurred, on the appellant’s evidence in the Family Court, before the separation occurred. Unfortunately, neither counsel have been able to assist with my inquiry as to whether there was any evidence as to when that sum was paid or by whom. I think Mrs Hoult is on strong grounds, however, if, as her instructions suggest, that sum was probably incurred before separation with payment made after. If so the status of the sum would clearly be a relationship debt with the appropriate sharing requirement.
[23] Mr Clark, for his part, legitimately makes the point that, with the exception of the paving stones, all these improvements had been completed by the time the valuation was carried out and would thus be reflected in large measure in the
valuation. In broad terms this is so, though occasionally some adjustment might be needed. It is obvious, that a sum of money spent on a home maintenance or improvements will very rarely lift the value of the property by the same amount.
Discussion
[24] Mrs Hoult strongly submitted that there was an error and indeed unfairness relating to the manner in which the Judge treated the post-separation outgoings on the home. The parties had both accepted a valuation date of Summerbilt at May
2007. By debiting 50% of the post-separation outgoings against the respondent’s shareholder’s account, the value of the company had arguably been diminished. The end result was that the respondent had benefitted from a higher valuation figure for the company than might otherwise have been the case. It was thus fair that the appellant be reimbursed (presumably wearing his corporate hat) post-separation outgoings, which the company had paid, to keep the joint asset afloat.
[25] I make the following brief comments on that approach. The first is that the value of the company or business was $33,378 of which sum $29,000 was attributed to the value of the garage/workshop. Thus the 2007 value of the company would have been pretty miniscule in comparison to the entire pool. The second observation is that although the appellant had the benefit of operating the company post- separation and although the appellant’s accountant had initially sought an adjustment to recognise the company payments to which I have referred, it seems to have been conceded by the respondent’s accountant that it was not unreasonable for her current account to be debited half of the costs involved. This figure is expressed to be
$8,285 per annum. That figure is the amount which was debited off each shareholder’s account for each post-separation year.
[26] The Judge records these concessions in [38] of her judgment and returns to it in the context of the current account issue in [47](c). At the end of the day the Judge did not consider any further adjustments necessary under that heading.
[27] It seems to me that the financial reality was that any value which may have attached to the shares of either party was being eroded year by year post-separation
by the company meeting the outgoings on the parties’ most substantial asset, their home. There were all manner of ways this conceptual issue could have been approached. At the end of the day the financial worth of the company was minimal. I do not see any error arising out of the Judge’s.
[28] I remind myself that the Judge fixed an occupational rent figure in favour of the respondent in the sum of $22,820, 50% of which was adjusted off the appellant’s share. Given that the appellant was in control of the company; that it was the company which was paying the outgoings on the home; and that the respondent wife for her part had to live and rent elsewhere, I do not see any difficulties with that approach. Mrs Hoult, to her credit, accepted that it was not the occupational rent figure which would be challenged on the appeal. Rather it was the approach to post- separation repayments. Again I do not see any injustice or error in the approach the Judge has taken here.
[29] The other figures of alleged errors are small and the evidence relating to them seems to be obscure. I have referred to the GE Creditline sum of $14,383 which is not small (supra [22]). Unfortunately in respect of that payment, although I rather suspect that the Judge overlooked the figure and should have treated it as a relationship debt, there seems to be no precise evidence on the topic. If, as may well have been the case, the GE Creditline debt was paid by the company rather than by the appellant personally, then the reasoning process which the Judge adopted to the shareholders’ accounts, and which I myself see sense in, will probably apply.
Result
[30] A previous section of this judgment deals with the strength of the appeal. I do not consider that the appeal has substantial merit. Possibly some of the appeal points (i.e. post-separation figures) could be improved were the appellant to be given leave to adduce evidence on the appeal. That, however, is a separate exercise, the outcome of which would be largely determined by whether or not the evidence was readily accessible at the time of the Family Court hearing. Were it to be accessible but had been overlooked, a topic for a subsequent application and submissions, then fresh evidence for an appeal would probably be refused.
[31] I have thought long and hard about the appellant’s predicament. I assess as is inevitably the case, he feels emotionally bruised and hurt by the separation which took place almost four years ago. It is also apparent he was at something of a disadvantage in running his own case before Judge Riddell. However, I see nothing on the face of the judgment which suggests that the Judge has overlooked important or relevant facts. I am also reassured in part by Mr Clark’s submission that there was both before and subsequent to the Family Court hearing something in the nature of a dialogue between him and the appellant. This is not a situation where the appellant has been confronted by robust counsel or where unfair advantage has been taken of him.
[32] Were the appeal points indicated by the appellant somewhat stronger; were the relationship property pool and particularly the value of the company to have been greater; and were there some extra reasons as to why the appellant had delayed lodging the appeal (he knowing, as I have stated that the appeal period was running) then the result might have been different.
[33] The most potent factor, of course must be my assessment, which coincides more or less with Judge Riddell’s assessment, of the relationship property pool, its value and its division. On the best case scenario there might perhaps have been a three or four thousand dollar increase in the adjustment payment payable to the appellant. That, however, is conjecture.
[34] Thus, for the reasons I have stated, I do not consider that special leave should be granted. The application is dismissed.
Costs
[35] Neither party is on legal aid. Mrs Hoult’s submission was that costs should lie where they fall. Mrs Hoult observes that the appeal has not been vexatious or frivolous; that the appellant’s concerns have been genuine; and that, to some extent, this appeal might have been inevitable given the delay which occurred in obtaining competent legal advice.
[36] Mr Clark, for his part, seeks costs on the 2B scale.
[37] It is hard to resist the conclusion, that having been successful, the appellant should be ordered to pay the respondent’s costs on the normal 2B scale. In the exercise of my discretion, however, I consider this needs to be tempered somewhat. I am uncertain exactly what the 2B components would produce. I therefore direct that the appellant is to pay the respondent’s costs in the sum of $3,500, inclusive of disbursements, or 2B costs plus disbursements, whichever is the lesser.
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Priestley J
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