Te Hei v Bradford
[2020] NZHC 1418
•23 June 2020
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2018-412-90
[2020] NZHC 1418
UNDER the Property Law Act 2007 BETWEEN
REANA GAYE TE HEI
PlaintiffAND
JONATHAN LEE BRADFORD
Defendant
CIV-2019-412-126 UNDER
the Property (Relationships) Act 1976
BETWEEN
JONATHAN LEE BRADFORD
Applicant
AND
REANA GAYE TE HEI
Respondent
Hearing: 11 June 2020 Appearances:
D J More for J L Bradford (Defendant/Applicant)
L A Andersen QC for R G Te Hei (Plaintiff/Respondent)
Judgment:
23 June 2020
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 23 June 2020 at 11.30am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 23 June 2020
TE HEI v BRADFORD [2020] NZHC 1418 [23 June 2020]
[1] Jonathan Bradford (Jonathan) and Reana Te Hei (Reana) were in a short-term de facto relationship. Jonathan has issued proceedings under the Property (Relationships) Act 1976 (PRA), seeking a division of their relationship property. Reana has issued proceedings under s 339 of the Property Law Act 2007 (PLA), seeking an order that the property they purchased together at 32 Arawa Street, Tainui Dunedin (the property), be sold.
[2] Jonathan’s proceedings originally in the Family Court were transferred by consent to this Court.
[3] As I recorded in a minute of 6 May 2020, counsel consider there is value in a judicial settlement conference to resolve property issues between the parties. However, there remains the issue as to which Act will apply to the division of the property.
[4] While there is no formal application to have the applicable Act determined, counsel in the interests of avoiding unnecessary costs have co-operated in an informal application aimed at resolving the issue.
[5] The issue arises because of s 14A of the PRA which applies to relationships of short duration (and it is common ground this de facto relationship was of short duration). Section 14A starts from the position that an order cannot be made under the PRA unless certain preconditions are met. Section 14A of the PRA provides:
14A De facto relationships of short duration
(1)This section applies if a de facto relationship is a relationship of short duration (as defined in section 2E).
(2)If this section applies, an order cannot be made under this Act for the division of relationship property unless—
(a)the court is satisfied—
(i)that there is a child of the de facto relationship; or
(ii)that the applicant has made a substantial contribution to the de facto relationship; and
(b)the court is satisfied that failure to make the order would result in serious injustice.
(3)If this section applies, and the court is satisfied that the grounds specified in subsection (2) for making an order on an application under this Act are made out, the share of each de facto partner in the relationship property is to be determined in accordance with the contribution of each de facto partner to the de facto relationship.
(4)Nothing in this section prevents a court from making a declaration or an order under section 25(3), even though the de facto partners have lived in a de facto relationship for less than 3 years.
(5)This section is subject to sections 15 to 17A.
[6] Mr Andersen QC, counsel for Reana, does not dispute that Jonathan made substantial contributions to the de facto relationship. Mr Andersen submits that having the parties’ respective entitlements to the property determined under the PRA would not cause serious injustice to Jonathan.
[7] Had the relationship not been one of short duration, it seems the issue would have to be resolved under the PRA.1
[8] In resisting the suggestion that Jonathan’s PRA proceedings should be in a practical sense stayed Mr More, counsel for Jonathan, noted the PRA proceedings also include an application under s 14A(4). A reliance on that section, in my view, does not directly assist the issue I have to resolve.
[9]In S v W, the court observed after a review of the decided cases that:2
[133] … Clearly the expression “serious injustice” indicates a relatively high threshold and the issue in this case is whether that threshold has been met. This requires consideration of the consequences for the parties if the Court declines to order a division of relationship property under section 14A. When addressing that question it needs to be kept in mind that section 14A(4) specifically authorises the Court to make orders or declarations under section 25(3) relating to the status, ownership, vesting, or possession of any specific property. But that could not have been intended to provide a backdoor method of dividing relationship property in situations where the section 14A(2) threshold cannot be met.
[134] I therefore proceed on the basis that regardless of 14A there can be orders under 25(3) confirming the status of the separate property earlier identified, which means that the separate property can be removed from the equation. Thus the issue is whether there will be serious injustice if there is
1 Shirtliff v Albert [2011] NZFLR 971, (2011) 8 NZCPR 551.
2 S v W [2006] 2 NZLR 669.
no order dividing relationship property and the parties were left to pursue any civil remedies that might be available to them.
[10] Mr Andersen’s submission in short is that there is no serious injustice to Jonathan as his interests in the property will be recognised when the court makes orders under s 339 of the PLA.
[11] If the court makes an order for sale or partition under the PLA, s 343 of the PLA gives the court further powers. Section 343 provides:
343 Further powers of court
A further order referred to in section 339(4) is an order that is made in addition to an order under section 339(1) and that does all or any of the following:
(a)requires the payment of compensation by 1 or more co-owners of the property to 1 or more other co-owners:
(b)fixes a reserve price on any sale of the property:
(c)directs how the expenses of any sale or division of the property are to be borne:
(d)directs how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied:
(e)allows a co-owner, on a sale of the property, to make an offer for it, on any terms the court considers reasonable concerning—
(i)the non-payment of a deposit; or
(ii)the setting-off or accounting for all or part of the purchase price instead of paying it in cash:
(f)requires the payment by any person of a fair occupation rent for all or any part of the property:
(g)provides for, or requires, any other matters or steps the court considers necessary or desirable as a consequence of the making of the order under section 339(1).
Discussion
[12] What is required when considering whether there is a serious injustice for the purposes of s 14A(2)(b) is a comparison of the position Jonathan would be in if s 14A(2) was satisfied, and the position he would be in under the PLA.
[13]As Judge Ingles QC said in Gibbons v Vowles:3
The only appropriate comparison, therefore, is between the result mandated by s 14A(3) if the requirements of subs (2) have been made out, and, if they have not, the likely result of reliance on the civil remedies …
[14] From that starting position, it needs to be recognised that s 14A is concerned with contributions to the de facto relationship, not only contributions to a specific item of property. It is in respect of this issue, that I am satisfied the PRA proceeding should proceed.
[15] In considering the outcome of the comparison that I have referred to, the contributions taken into account are those recognised by s 18 of the PRA. Again, they are contributions to the relationship and not to the property.
[16] Mr More submits that Jonathan’s contributions to the de facto relationship were substantially greater than those of Reana. He submitted that Jonathan’s contribution to the joint account were 63.58 per cent as opposed to Reana’s 36.42 per cent. The parties established a joint account (a requirement of the bank at the time they purchased the property) and both their salaries were paid into the joint account. Save for each being allocated $100 personal funds per week from the account, the joint account was used for household expenses and other costs.
[17] Mr More emphasises the joint account paid for at least eight trips for Reana and her son to travel to Tauranga and Auckland, school fees, school uniform and afterschool care for Reana’s son.
[18] Mr More refers to a joint credit card debt that existed at the end of the relationship which was paid by Jonathan.
[19] In the context of the equity the parties brought to the purchase of the property (purchase price $330,000; Jonathan’s contribution $62,828, Reana’s contribution
$15,419 – the balance on mortgage), in my view, Jonathan’s other financial contributions to the de facto relationship were also substantial.
3 Gibbons v Vowles [2003] 22 FRNZ 946 at [9].
[20] As I have said, Mr Andersen realistically recognised Jonathan’s contributions to the purchase of the property were substantial. I find Jonathan’s financial contributions to the de facto relationship by way of his payments to the joint account were also substantial.
[21] Substantiality does not require that a party’s contribution be greater than the other party’s contribution to the relationship.4
[22] The jurisdiction the Court exercises under s 343 of the PLA is not apt to recognise Jonathan’s financial contributions to the de facto relationship (leaving to one side non-financial contributions made by him and Reana). Section 343 of the PLA is not aimed at recognising the full range of contributions to a relationship contemplated by s 18 of the PRA.
[23] I am satisfied the financial contributions to the joint account were substantial contributions to the de facto relationship. I am left in the position that if I require Jonathan to pursue relief only through the PLA, the substantial contributions he has made to the de facto relationship will not be taken into account as s 343 of the PLA does not permit the court to undertake an assessment of all claims between the parties when it comes to division of a house or its proceeds.
[24]In Lawson v Perkins, Asher J said:5
Although the concept of serious injustice is distinct from the concept of a substantial contribution, it would be unusual for there to be no serious injustice if there were a failure to make an order recognising a substantial contribution. However, in considering serious injustice, a comparison of the contributions of each party can be relevant, as can the total value of the relationship property estate. It is only by considering the broad picture in this way that injustice can be evaluated.
[25] I am satisfied that leaving Jonathan (and indeed, Reana) without the ability to have all their contributions to the relationship taken into account in the division of their property would result in serious injustice.
4 At [17].
5 Lawson v Perkins [2008] NZFLR 401 at [72].
[26] Given this application has proceeded informally and in the absence of affidavit evidence on the exact nature of the contributions of both parties, my conclusion that there is a substantial injustice is necessarily based only on the limited material put forward by consent in counsels’ submissions.
Conclusion
[27] It follows that orders are necessary in respect of the PLA proceedings. I propose to adopt the course adopted by Associate Judge Bell in Shirtliff where he stayed the PLA proceedings pending resolution of the RPA proceedings and there is an order of stay accordingly.
[28] The parties sought I allocate a settlement conference date. I can allocate a half day judicial settlement conference commencing at 2.15pm on Thursday 27 August 2020 in Dunedin. Can counsel confirm that is acceptable. I record Mr Andersen’s client would be attending by video link.
Associate Judge Lester
Solicitors:
Clearwater & Associates, Takapuna, Auckland Solomons, Dunedin
Copy to counsel:
L A Andersen QC, Barrister, Dunedin D J More, Barrister Dunedin
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