Sutton v Bell

[2020] NZHC 327

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1613

CIV-2019-404-1616 [2020] NZHC 327

IN THE MATTER

of an appeal from a Decision of the Family Court at Auckland dated 17 July 2019

of an appeal from a Decision of the Family Court at Auckland dated 27 July 2018

UNDER

the Property (Relationships) Act 1976

BETWEEN

TODD WILLIAM FRANK SUTTON

First Appellant

TODD WILLIAM FRANK SUTTON and HOFFMANN TRUSTEES LIMITED as

trustees of the Todd Sutton Trust Second Appellants

AND

JOANNA ELISIA BELL

Respondent

Hearing:	20 February 2020
Counsel:	LJ Kearns for appellants BN Snedden for respondent
Judgment:	28 February 2020

JUDGMENT OF FITZGERALD J

[As to application for leave to appeal out of time and to adduce further evidence]

This judgment was delivered by me on 28 February 2020 at 2:30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar ……………………………….    Date………………………….

Solicitors:           Wynyard Wood, Auckland

Belvedere Law, Auckland (G Bodle)

Sutton v Bell [2020] NZHC 327 [28 February 2020]

Introduction and summary

[1]        Mr Sutton and Ms Bell were in a de facto relationship from 2004 until September 2012, when they separated. There are two children of the relationship.

[2]        The parties have not been able to resolve their relationship property disputes. There have been various proceedings in the Family Court in this context, as well as in relation to the care of the two children.

[3]        The relevant Family Court decisions for present purposes are a decision of Judge Clarkson delivered on 27 July 2018 (the First Decision) and of Judge Druce delivered on 17 July 2019 (the Second Decision). The First Decision determined whether Ms Bell (as the applicant in those proceedings) ought to be granted leave to seek relief under the Property (Relationships) Act 1976 (the Act) out of time, and if so, the commencement and end date of the parties’ de facto relationship.

[4]        Judge Clarkson granted leave to commence the proceedings out of time, and determined that the de facto relationship commenced in February 2004 and ended in September 2012.1

[5]        Those factual findings were then relied on in the Second Decision, which addressed Ms Bell’s claims under s 44 of the Act. In essence, Ms Bell sought relief under ss 44(1) and 44(2)(a) of the Act in relation to Mr Sutton’s transfer of the home in which the parties were then living (the Property) into a trust (the Sutton Family Trust) in November 2004.

[6]        Judge Druce granted Ms Bell’s application, and ordered the trustees of the Sutton Family Trust to transfer the Property to each of Ms Bell and Mr Sutton as tenants-in-common in equal shares.2 That order was to take effect on 18 September 2019 (or such later date as may be agreed between the parties). As far as I understand matters, that is yet to occur.

1      Bell v Sutton [2018] NZFC 5556.

2      Bell v Sutton [2019] NZFC 5363.

[7]        The appellants have appealed to this Court against the Second Decision. That appeal is to be heard on 11 March 2020.

[8]        After delivery of the First Decision, but before the hearing before Judge Druce, Mr Sutton located and produced in the second hearing emails written by Ms Bell in mid to late 2004, which he says support his position that the de facto relationship did not commence until December 2004 at the earliest. Mr Sutton says that had these emails (which ought to have been produced by Ms Bell) been available to Judge Clarkson at the first hearing, her decision on the commencement of the de facto relationship may well have been different. This will in turn have influenced and been relevant to the subsequent determination of Ms Bell’s claim pursuant to s 44.

[9]        The appellants did not appeal the First Decision at the time it was given. However, having located the emails referred to in the preceding paragraph, and upon receipt of the Second Decision, at the same time as filing the appeal against the Second Decision, they also filed an application for leave to file an appeal against the First Decision eleven months out of time. They have also filed an application to adduce further evidence on both appeals.

[10]There are three categories of such further evidence:

(a)First, the emails referred to earlier, to be adduced into evidence on the appeal against the First Decision.3

(b)Second, certain financial records relating to Ms Bell’s business in 2004 to 2006.

(c)Third, evidence from Mr Sutton of statements alleged to have been made by Ms Bell to the children, and their resulting behaviour (all said to have occurred after receipt of the Second Decision).

[11]      During oral argument on the application for leave to adduce further evidence, Ms Kearns, counsel for the appellants, confirmed that that application was no longer

3      Having already been produced in evidence in relation to the Second Decision.

pursued in relation to the alleged statements made by Ms Bell to the children, and their behaviour, after the Second Decision. I accordingly say nothing further on that topic.

Background – more detail

[12]      The parties met in mid-July 2003. The First Decision records various activities and vacations Ms Bell and Mr Sutton took over the ensuing months, and as far as I presently understand matters, there was no dispute the parties began living together in February 2004. Ms Bell had her own property at that time, which she rented out until it was later sold in 2006 (thus receiving rental from at least March 2004).

[13]      At or around the same time, Ms Bell had commenced a new recruitment business. When she went to live with Mr Sutton, it was agreed that a room in his house would be made available to her from which she could run her business. It is not in dispute that her business paid Mr Sutton rent for the use of the room in this way.

[14]      As noted, the parties disputed the time at which their de facto relationship commenced. Ms Bell said it was in February 2004, when the parties started living together. Mr Sutton’s case, however, was that Ms Bell’s move into his house was, initially at least, more a “business” matter, to enable her to save money in the context of the start up of her fledgling business. The move had also been facilitated by one of Mr Sutton’s pre-existing flat-mates moving out.

[15]      Mr Sutton had originally said in affidavit material before the Family Court that Ms Bell was more akin to a flat-mate, and that she had her own bedroom and wardrobe. However, in cross-examination, he accepted that at all times, Ms Bell had shared his bedroom, despite having the extra room available for her work. Judge Clarkson accordingly found that his affidavit statement was “quite misleading”.4 She also noted that Mr Sutton had produced no evidence to support his view that Ms Bell’s tenancy of her own property failed shortly after March 2004.5

[16]      Mr Sutton settled the Sutton Family Trust on 9 November 2004 and the Property (in which the parties had then been residing since February 2004) was

4      Bell v Sutton, above n 1, at [12].

5 At [13].

transferred to the trust later that month. By that point, Ms Bell was pregnant with the parties’ first child, who was born on 17 September 2005.

[17]      In determining the commencement of the de facto relationship, Judge Clarkson considered those factors set out in s 2D(2) of the Act. Ms Kearns submits that a careful reading of her Honour’s judgment, and in particular paragraphs 39 to 41, demonstrates that a key matter influencing the Judge’s finding that the relationship commenced in February 2004 was the degree of the parties’ commitment to living together, which was confirmed by Ms Bell advertising her own property for rental. The Judge therefore rejected Mr Sutton’s evidence that the basis upon which Ms Bell originally came to live with him was a “business” opportunity for Ms Bell to save money.

[18]      In this context, it is relevant to note that Judge Clarkson’s decision records “by the time closing submissions were filed, [Mr Sutton] had conceded that the relationship had commenced in March 2004”.6 Ms Kearns, counsel for Mr Sutton in both the Family Court and on the present applications, explained this was a pragmatic and strategic decision in the light of the evidence then presented before the Court, and indications Judge Clarkson had given to the  parties at  that time.  In  other words, Ms Kearns submitted before me that it did not reflect Mr Sutton’s own subjective view as to when a de facto relationship commenced (to which I return at [37] below).

[19]      It is useful at this point to turn to the background to the discovery of the emails the appellants wish to adduce in evidence on the First Appeal.

[20]      Up to January 2018, Ms Bell had been in occupation of the Property. She vacated the Property in January 2018, and Mr Sutton returned there to live with the two children. Evidence before the Family Court was to the effect that Ms Bell had “cleared out” the Property when she left (she said she took possessions belonging to her). She accepted she had taken the computer from that Property, which she said by that point was hers and used for her business purposes.

[21]      At the second hearing, Mr Sutton gave evidence that after the First Decision but before the second hearing, he had found some old computer hard drives in a

6 At [38].

cupboard, and thinking that they might contain material relevant to the matters then before the Family Court, sent them away to be “unlocked”. Those efforts were, however, unsuccessful. Some time later, about two weeks before the second hearing, Mr Sutton said that he identified computer software which enabled him to “unlock” the hard drives. It was as a result of this process that he located the emails which are now sought to be adduced on the appeal against the First Decision (if leave to appeal out of time is granted).

[22]      Mr Sutton’s affidavit before this Court explaining the efforts taken at the time to access the hard drives is relatively “thin”. There is no detail as to whom he sent the hard drives in the first place, on what dates they were sent, what the new software was that he used and so on. But despite the “thinness” of that information, given the emails were actually produced in evidence in the second hearing, Mr Sutton,  and indeed  Ms Bell, gave evidence and were cross-examined about them quite extensively, and Mr Sutton was also questioned by the Judge as to how he had come to be in possession of the emails. Cross-examination of Ms Bell also focussed on whether she had in fact had these emails in her possession at all times, but had failed to produce them in evidence in either Family Court hearing. It was said that the hard drives from which Mr Sutton had extracted the emails were an exact copy of the hard drive of the computer which Ms Bell had taken with her when she left the Property in January 2018.

[23]      Having reviewed the relevant extracts of the notes of evidence in the second hearing, and discussed matters with counsel, Mr Snedden, counsel for Ms Bell, could not take me to anything particular in the notes of evidence to suggest that the emails were not “fresh” in so far as the First Decision is concerned.

[24]      With that background in mind, I turn now to address the applications. Given the application for leave to appeal out of time is largely based on the late discovery of the emails, and their relevance to the question of the commencement of the de facto relationship, it is helpful to address the application for leave to adduce further evidence first. This is because if I am satisfied that leave to adduce the emails on appeal ought to be granted, this largely informs the outcome of the application for leave to appeal against the First Decision out of time.

Leave to adduce further evidence on appeal – legal principles

[25]The legal principles are not in dispute.

[26]      Section 39B(3)(b) of the Act provides that this Court may, if it thinks the interests of justice so require, receive further evidence on an appeal from the Family Court. Under r 20.16 of the High Court Rules 2016, a party to an appeal may adduce further evidence only with leave of the Court, which will only be granted if there are special reasons to admit it. The new evidence must generally be fresh, cogent and credible.7

[27]      The Court of Appeal has held there is no practical difference between the tests in s 39B(3)(b) of the Act and in r 20.16 of the High Court Rules.8 In Hodgson v Hodgson, the Court of Appeal stated, however, that although the discretion to admit further evidence under both tests is broad, admitting further evidence on appeal is “exceptional rather than routine”.9

[28]      When considering whether or not to grant leave to adduce leave on appeal, the Court will generally consider:10

(a)whether the evidence could have been obtained with reasonable diligence for use at the trial;

(b)whether evidence appears to be cogent and credible;

(c)whether the evidence would have an important influence on the outcome of the case – in other words, whether it is material; and

(d)whether admitting the evidence would require evidence from other parties in cross-examination.

7      Rae v International Insurance Brokers  (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192; affirmed in Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 1) [2006] NZSC 59, [2007] 2 NZLR 1 at [6].

8      Hodgson v Hodgson [2015] NZCA 404, (2015) 30 FRNZ 336 at [45].

9 At [40].

10     VP v RH [2015] NZHC 260, (2015) 22 PRNZ 545 at [7].

Parties’ submissions

[29]      Ms Kearns notes that the disputed emails were in evidence in the second hearing, and both  Mr Sutton  and  Ms Bell  were  cross-examined  on  them,  and  Mr Sutton questioned by the Judge about how the emails came to be in his possession. Ms Kearns submits that not only is there no suggestion the emails could or should have been found by Mr Sutton at an earlier point in time, there are real questions around why Ms Bell did not put the emails into evidence herself, being a contemporaneous record relating to the parties’ relationship in 2004.

[30]      On the basis the Court accepts that the emails are sufficiently “fresh” in the context of the First Decision, Ms Kearns submits that they are cogent and credible. First, Ms Bell accepted in the second hearing that they were an authentic record. Further, Ms Kearns highlights that Mr Sutton’s inability to produce any contemporaneous records to support his case on the start of the de facto relationship, versus Ms Bell’s ability to produce a tenancy agreement and a bank statement evidencing the rental received from renting out her property, were plainly material factors taken into account by the Judge when determining the start date. From this, Ms Kearns submits that the emails could well have made a difference to the Judge’s assessment of the start date of the de facto relationship. And while acknowledging that the Sutton Family Trust was only settled one month prior to when Mr Sutton accepts the de facto relationship commenced (and the Property transferred to it around the same time), Ms Kearns says that in the context of the broad assessment to be carried out under s 44, the fact the de facto relationship started as late as December 2004 may have an influence on the outcome of the appeal under s 44. In terms of whether other parties would need to be cross-examined on the new material, she highlights that both parties have already been cross-examined at some length on these emails.

[31]      As to the financial information regarding Ms Bell’s business, Ms Kearns says those documents confirm that Ms Bell’s business was paying rent to Mr Sutton and are consistent with Mr Sutton’s evidence in the first hearing that the business was experiencing financial difficulties. Ms Kearns therefore submits that this is supportive

of Mr Sutton’s version of events and may, if it had been available to Judge Clarkson, have influenced her views of the parties’ respective credibility.

[32]      In response, Mr Snedden for Ms Bell queried why the emails could not have been found earlier, and notes the thinness of Mr Sutton’s evidence on the present application on that topic. Nevertheless, in his oral submissions, Mr Snedden responsibly accepted that there was a full opportunity to cross-examine Mr Sutton about these matters at the second hearing, and that there was nothing particular in that cross-examination which impeached Mr Sutton’s evidence as to how and when he came to discover the emails.

[33]      Mr Snedden accordingly directed his oral submissions to the emails’ relevance to the question of the start date of the de facto relationship. He notes they are a small selection only of contemporaneous communications between the parties, which are far outweighed by the other factors Judge Clarkson took into account in determining the commencement date of February 2004.

[34]      In relation to the financial records concerning Ms Bell’s business, Mr Snedden noted that the documents in fact say very little about the business, and simply demonstrate that at a particular point in time, it had no cash on hand and was, as would be expected, incurring monthly expenditure. He says the documents do not disclose the business’ turnover, its income, profits or anything else which might shed light on whether the business was in financial difficulties as Mr Sutton suggests.

Should the further evidence be adduced on appeal?

[35]      I am satisfied that the new emails are sufficiently fresh, in so far as they could not have reasonably been adduced by Mr Sutton at the hearing before Judge Clarkson. As noted, his evidence at the second hearing was that he had only found the hard drives after the First Decision had been given, and that initial attempts to extract the material from them were unsuccessful. He was only able to extract the emails with new software applied to the hard drives around two weeks prior to the second hearing.  Mr Sutton was cross-examined on these topics and, as noted, I was not taken to any aspect of the notes of evidence which demonstrated this evidence was incorrect or unreliable.

[36]      I am also satisfied the emails are credible, in the sense of being an authentic record of Ms Bell’s views at the relevant time. In terms of cogency, the contemporaneous documentary record is often helpful in determining issues before the Court. It also appears Judge Clarkson put some weight on Ms Bell’s ability to produce contemporaneous documents consistent with her case during the first hearing, and conversely Mr Sutton’s inability to do so.

[37]      Having reviewed the emails, they do shed some light on the nature of the parties’ relationship at that time. Ms Bell was cross-examined on them. Whether they might have influenced Judge Clarkson’s decision on the start date of the de facto relationship is not a matter on which I should express any firm view. What I can say, however, is that I consider they are at least relevant to that inquiry. At the hearing before me, Ms Kearns also emphasised that on the basis of these emails, Judge Druce said in the Second Decision that:11

[Mr Sutton] may not subjectively have believed that the couple [were] living in a de facto relationship at the time of the disposition in November 2004, notwithstanding, as a question of law, they have been found to have been living in a qualifying de facto relationship from February 2004.

[Emphasis added]

[38]      Ms Kearns’ point is that if the Court hearing any appeal against the First Decision was satisfied that Mr Sutton’s subjective view was, objectively, a reasonable view for him to have held, it may influence the outcome of the appeal on the start date of the relationship.

[39]      Despite the above observations, however, a matter relevant to the cogency of the emails is that they are a selection only of a broader set of materials, which might contain other information or emails which put them in context. Ms Kearns therefore accepted that if the Court were to grant leave to permit the emails to be adduced in evidence on an appeal against the First Decision (if leave to appeal out of time is granted), a condition of such leave could be that the balance of the emails/hard drives are to be made available to Mr Snedden for review, to ensure there is no other material

11     Bell v Sutton, above n 2, at [53].

which casts the selected emails in a different light. I consider that to be a proper and sensible approach.

[40]      I am therefore satisfied it is in the interests of justice for the further emails to be adduced in evidence on the first appeal, if leave is to be granted to appeal out of time. The emails are sufficiently fresh, cogent and credible. Further, they are limited in number, and there will be an appropriate opportunity for Ms Bell’s counsel to ensure that they have not been inappropriately selected out of context.

[41]      Leave to adduce those emails will be on the condition that the hard drive is made available as soon as possible to Mr Snedden, together with instructions on how to extract the emails, so he can ensure there are no further emails which Ms Bell may wish to adduce on the appeal. I make a direction that pending further order of the Court, the hard drive and the information on it is made available to Mr Snedden only, given I anticipate there is likely to be other personal, irrelevant material belonging to Mr Sutton on it. Should Mr Snedden find any additional emails which he says ought to be adduced on appeal and that he wishes to discuss these with his client, he should file a memorandum which should be brought to my attention so I can make the necessary ruling.

[42]      As to the accounting records in relation to Ms Bell’s business, I decline leave for these to be adduced on an appeal against either the First or Second Decision. The majority of these documents are simply monthly spreadsheets of expenditure, which say nothing about the overall state of Ms Bell’s business. Nor does the summary information about cash on hand and the like take the matter any further, given it does not disclose anything about turnover, profit and so on. Further, it is not immediately apparent why these documents could not have been adduced in evidence in the second hearing (and thus the parties able to be cross-examined on them), given the information was found at the same time as the further emails discussed earlier. Ultimately, I conclude that to permit this material to be adduced on the appeal, when it has little to no relevance or probative value, risks becoming an unnecessary distraction.

Application for leave to file appeal out of time

[43]      As noted at the outset of this judgment, the outcome of the application for leave to adduce further evidence on appeal largely informs the outcome of the application for leave to file an appeal against the First Decision out of time.

[44]      I will therefore address this application briefly. Rule 20.4(3) of the High Court Rules provides that the High Court may, by special leave, extend the time for an appeal. In Almond v Read, the Supreme Court said that the ultimate question is what the interests of justice require, and that this necessitates an assessment of the particular circumstances of each case.12 Relevant factors informing the exercise of the discretion include:

(a)the length of the delay;

(b)the reasons for the delay;

(c)the conduct of the parties, and particularly that of the appellant;

(d)any prejudice or hardship to the respondent; and

(e)the significance of the issues raised.

[45]      The Supreme Court also said that the merits of a proposed appeal may, in principle, be relevant to the exercise of the discretion to extend time, but that there are three qualifications to this:13

(a)first, where the merits or otherwise of a proposed appeal are overwhelmed by other factors, such as length of the delay and prejudice to the respondent or others;

12     Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].

13 At [39].

(b)second, where there has been insignificant delay caused by a legal adviser’s error and there is no prejudice to the proposed respondent; and

(c)third, where it cannot be said with confidence that the merits of a proposed appeal are either very strong or very weak, because of the difficulty of reaching a view on the merits of the case in the context of an application to extend time.

[46]      Having found that the further emails are “fresh” in the sense discussed earlier in this judgment, I am satisfied there are genuine reasons for the delay in lodging the appeal against the First Decision. Indeed, up until two weeks prior to the second hearing, Mr Sutton was not aware of the emails.

[47]      The appellants did not, however, immediately file an application for leave to appeal out of time. That was only done after receipt of the Second Decision. That could arguably be characterised as a litigation choice, that is, waiting to see the outcome of the Second Decision before deciding what to do. However, given the proximity of the second hearing to when the emails were found (only two weeks later), and that there is no suggested prejudice arising from the time between the emails being found and when the application for leave to appeal was filed, I do not consider this further slight delay to be material.

[48]      In terms of the parties’ conduct, there are at least potential issues as to why these emails had not been disclosed by Ms Bell at an earlier point, but I emphasise this is not determinative.

[49]      No particular hardship to Ms Bell has been suggested, other than the obvious point that the appellants will argue that the emails support Mr Sutton’s position on the start date of the de facto relationship, which may then influence the outcome of the appeal of the Second Decision. However, this is really an example of where any suggested prejudice is simply coterminous with the emails’ relevance to matters in issue.

[50]      It was not suggested that an appeal against the First Decision (which would be confined to the Judge’s finding on the start date of the de facto relationship) will not be able to be accommodated within the existing one-day hearing for the appeal against the Second Decision. I am comfortable that it can. Indeed, the evidence of the parties’ relationship overall will need to be considered by the Judge on the appeal against the Second Decision, such that, other than the small number of additional emails to be produced, the same matters will need to be traversed in the relation to the First Decision as well. There is accordingly considerable overlap.

[51]      I am mindful of Mr Sutton’s concession made in the first hearing on the start of the de facto relationship, and whether the information contained in the further emails would be “overwhelmed” by the other factors considered by Judge Clarkson in determining the start date of the relationship. But it is very difficult for me, in a short interlocutory hearing which was not focussed on the merits, to come to any view on whether the appeal against the First Decision has merit. At best, it does not seem immediately apparent that the merits are either very strong or very weak.

[52]      Accordingly, and consistent with the outcome on the application to adduce further evidence on appeal, I am satisfied it is appropriate to grant leave to file an appeal against the First Decision out of time. That appeal is to be heard together with the appeal against the Second Decision on 11 March 2020.

[53]      The parties will obviously need to file submissions in relation to the appeal against the First Decision. That can be accommodated by each party’s submissions on the second appeal also including their submissions on the first appeal. Counsel for the appellants are to ensure that a common bundle of documents for the appeal against the First Decision is filed with the Court at the same time as any common bundle for the appeal against the Second Decision.

Result

[54] The application for leave to adduce the further emails in an appeal against the First Decision is granted, but on the condition set out at [41] above. The application is otherwise declined.

[55]      The application for leave to file an appeal against the First Decision out of time is granted. Those timetabling directions at [53] apply.

[56]      The costs of the present applications are reserved and are to be dealt with together with all other costs on the two appeals.

Fitzgerald J