Vaifo'ou v Vaifo'ou

[2023] NZHC 3092

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,

11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1700

[2023] NZHC 3092

BETWEEN

EVALINGI VAIFO’OU

Appellant

AND

SIAOSI VEUKI TAU VAIFO’OU

Respondent

Hearing:	1 November 2023
Appearances:	S T Fonua for Appellant D Kumar for Respondent
Judgment:	2 November 2023

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Thursday, 2 November 2023 at 3:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors / Counsel:

Sione T Fonua, Auckland

Gibbs Mills Livingstone (S Khalesi), Auckland D Kumar, Auckland

VAIFO’OU v VAIFO’OU [2023] NZHC 3092 [2 November 2023]

[1]    Evalingi  Vaifo’ou (the appellant) appeals against  the  decision  of  Judge A G Mahon in the Family Court at Manukau, dated 17 July 2023, in which he fixed the net value of the family home, ordered its sale and granted the respondent’s application for occupation rent.1

Factual background

[2]The following facts are largely taken from the Family Court decision.

[3]    The parties married on 12 August 1982. They separated in December 2008. There were no children of the marriage, but each party has adult children from previous marriages. The marriage was dissolved on 31 July 2020.

[4]    The respondent filed proceedings seeking an order for the sale of the family home under the Property (Relationships) Act 1976 (the Act) on 22 December 2021.

[5]The parties’ relationship property on separation was:

(a)The family home at 68 Boundary Road, Clover Park, which was subject to a mortgage with ASB Bank Limited;

(b)Family chattels;

(c)The respondent’s Holden Commodore motor vehicle; and

(d)Bank accounts.

[6]    The family home was purchased in the parties’ joint names in about 1988. The respondent was primarily responsible for payment of the mortgage. Both parties contributed to the costs of food.

[7]    The respondent left the family home in December 2008 to live with his current partner. He has incurred the cost of rental accommodation since that time. The

1      Vaifo’ou v Vaifo’ou [2023] NZFC 7448.

respondent and his partner currently pay rent of $260 weekly. In 2013 the respondent had a stroke. His only income since that time has been the Supported Living Payment.2

[8]    In the period since separation, the appellant has had family members and boarders staying in the property. The costs recovered from these parties have been minimal. Most have only stayed in the property for a short time. The appellant is also reliant on a benefit.

Family Court judgment

[9]    After reciting the factual background, the Judge noted a dispute in the evidence about whether the respondent told the appellant of his wish to sell the family home. He found as a matter of fact that the respondent did advise the appellant that he wanted to receive his share in the family home at some point within a year of separation.

[10]   The Judge recorded the agreement of the parties that the family home should be valued at $650,000 as at the date of the hearing, in line with a valuation by Seager & Partners dated 18 November 2022.

[11]   The Judge also recorded the appellant’s evidence that she had incurred the following documented costs in relation to the family home in the period since separation.

Mortgage interest	$64,338.10
Principal	$73,577.51
Rates	$15,431.80
Insurance	$12,243.58
Total	$165,590.99

[12]   Breaking that sum down to an annual or weekly payments for each of  the   14 full years of separation from January 2009 until December 2022 equated to

$11,827.93 per annum, or $227.46 per week.

2      A weekly benefit supporting those unable to work due to long term health conditions, injuries and/or disabilities.

[13]   In addition, the appellant gave evidence of paying $4,000 for replacement of the bathroom flooring and a kitchen sink unit as well as other general maintenance, including painting the house and fence and mowing the lawn.

[14]   The Judge then recorded the respondent’s evidence that he had paid $7,210 in mortgage repayments on the family home from the date of separation until September 2009. He made no other payments in relation to the family home.

Respondent’s case

[15]   The respondent did not seek credit for the mortgage repayments he made totalling $7,210 but did however seek occupation rent from the appellant. The Judge noted the respondent’s calculation of occupation rent, which the respondent said was properly payable from 1 January 2009 to 1 June 2023 (a period of over 14 years) as the sum of $189,450, using generic rental values for properties equivalent to the family home.

[16]   However, the Judge recorded the respondent’s acknowledgment of his delay in pursuing his claim for occupation rent and noted that he only sought compensation for the period from 1 January 2015 to 1 June 2023 (a period of eight-and-a-half years), a sum of $124,996. As noted above, he also did not seek any credit for continuing to pay the mortgage from the date of separation until September 2009. Further, he agreed to credit the appellant for half the payments made by her for rates and insurance since separation ($27,675.38), the half-sum being $13,837.69.

[17]   However, the respondent did not agree to crediting the appellant for half the payment of principal and interest on the mortgage after September 2009 because he understood she received rental income and/or board to assist in meeting those outgoings.

[18]   The total claim sought by the respondent for occupation rent was therefore a net credit of $111,158.31, being $124,996 less the $13,837.69 referred to above. The respondent requested that this sum be deducted from the appellant’s share of the net proceeds of sale of the family home.

Appellant’s case

[19]   The Judge noted that the appellant sought the opportunity to buy the respondent’s share in the family home, but her position was that the respondent’s share should be calculated based on a formula prepared by her lawyer, which was not half the current market value of the property. The Judge recorded counsel’s formula as follows:

Registered valuation	$650,000
Current principal balance outstanding on mortgage	$38,886
Net value of family home	$611,114
÷ 35 years of ownership of the family home	$17,460
x 20 years the parties lived together in the family home	$349,208
÷ by 2 to determine an equal share under s 2F	$174,604
Respondent’s share at date of separation	$174,604

[20]   The appellant’s case was that the respondent’s share of the family home was therefore:

½ share (above calculation)	$174,604
+ compensation under s 18B for mortgage paid for period 1 January to 31 September 2009 (which the respondent was not claiming)	$7,210
Total (30%)	$181,814

[21]On the other hand, the appellant said her share of the family home was:

½ share (above calculation)	$174,604
+ compensation under s 18B for mortgage paid for period 1 October 2009 to 31 May 2023, rates, insurance, and maintenance	$254,696
Total (70%)	$429,300

Analysis

[22]   After setting out the parties’ respective positions, the Judge rejected the appellant’s submissions on the application of the Act to the determination of the share and valuation of that share in the family home. He noted that the result of the

appellant’s formula was a 70/30 percent division of the family home, which was an unequal sharing in terms of the Act, under which a party needed to establish extraordinary circumstances which meant that equal sharing would be repugnant to justice.3

[23]   The Judge stated that the Act was drafted on the presumption of equal sharing, determination of the share in relationship property being at the date of hearing or in some circumstances at an earlier date, and adjustments for the period between the dates of separation and hearing addressed under s 18B, or in rare cases under s 2G.

[24]   The Judge noted the appellant’s submission that the Court should not exercise its discretion to compensate the respondent by way of occupation rent for the period the appellant had continued to occupy the family home from the date of separation. The Judge added, however, that the respondent was not seeking compensation for the entire period of the appellant’s occupation, but only seeking compensation from 2015, some six years later.

[25]   The Judge stated that in cases where the outgoings paid by the party in possession of the family home exceed the sum for which the property would be rented, occupation rent was not required to be paid. However, in this case, the appellant had the benefit of occupation of the family home for nearly 15 years with only eight of those years being the subject of an application for occupation rent.

[26]   The Judge noted the submissions of the appellant that the respondent enjoyed the benefit of two incomes after leaving the appellant. However, the Judge clarified that the respondent was in receipt of a benefit rather than income from paid work since he had a stroke in 2013, and additionally that, while it was not clear on the evidence, it appeared that the respondent’s partner was also in receipt of a benefit.

[27]   The Judge acknowledged that any division of relationship property between two parties with very limited income may be seen as unfair when an order for occupation rent is made but was of the view that the proportionate way in which the

3      Property (Relationships) Act 1976, s 13.

respondent had approached the issue of occupation rent (by only seeking it from 2015) was a significant concession to the appellant.

[28]   The Judge agreed with submissions of counsel for the respondent that given the small weekly cost to the respondent in meeting mortgage payments and other outgoings, it was not appropriate that she be reimbursed for reduction of the principal. She would not be reimbursed for payments by way of interest, rates, and insurance in any event.

[29]   The Judge also did not accept the submissions on behalf of the respondent that the Court should take into account the rental income and/or board received over the years to assist the appellant. The appellant had been on a very limited income throughout the period after separation and the Judge accepted her evidence that payments from family members and boarders were minimal and unreliable.

[30]   In assessing overall fairness in determining quantum of the occupation award, the Judge determined that the appellant was to pay the respondent $100,000 from her share of the net proceeds of sale.

[31]   Finally, the Judge noted that it was still open to the appellant to purchase the respondent’s share in the family home. The Judge therefore made the following orders and directions:

(a)Confirming the applicant was granted leave to commence the proceedings out of time;

(b)Finding that the net value of the family home was $611,114 and each parties’ half share was $305,557;

(c)Granting the respondent’s application for compensation under s 18B in fixing the compensation sum at $100,000 to be deducted from the appellant’s net share of the family home sale proceeds; and

(d)Declining the appellant’s application for compensation under s 18B.

[32]   Finally, the Judge approved the draft order for sale annexed to the submissions of counsel, subject to slight amendments.

Approach on appeal

[33]   Section 39 of the Act confers a right of appeal to the High Court against a decision of the Family Court. Originally, the Court of Appeal took a limited approach to the appellate role as shown by the decision in May v May in which the Court noted that the appellant must show that the Judge acted on a wrong principle; or that he or she failed to take into account some relevant matter or that he or she took account of some irrelevant matter or that he or she was plainly wrong.4

[34]The Supreme Court decision in Austin, Nichols & Co Inc v Stichting Lodestar

has widened the appellate role and has been applied to appeals from the Family Court.

The Supreme Court stated:5

[16] Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.

[35]   However, there is still a distinction between questions of fact and the exercise of a discretion. Austin, Nichols applies to the former. With respect to the latter, the test in May v May applies. In other words, an appellate court will continue to be slow to upset a lower court’s exercise of discretion unless the lower court acted wrongly in an administrative law sense.6

Appellant submissions

[36]   Counsel for the appellant submits that the Judge’s decision is wrong because it contradicts the intention and purpose of s 2F of the Act, which was inserted into the

4      May v May (1982) 1 NZFLR 165 (CA) at 170.

5      Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.

6      B. Atkin Relationship Property in New Zealand (3rd ed, LexisNexis, 2018) at 11.3.3.

Act in 2002. Before then, counsel submits that it was a matter of dividing the net value of the family home, in this case $611,114, by two, giving the two parties $305,557 each. Any compensation would then be worked out and deducted from the opposing party’s share. Counsel submits that s 2F changed this approach. The intention of s 2F is to limit the equal share principle in s 11 to the period the marriage exists.

[37]   Counsel acknowledged he made a slight error in the formula he put forward in the Family Court. The net value of the family home should be divided by 41, being the number of years the parties have owned the family home, then multiplied by 26, being the number of years before separation.

[38]Counsel explains as follows:

7.Division of Relationship Property – s 2F

7.1Your Honour may note that counsel submissions in the lower court were 70% for Mrs Vaifo’ou and 30% for Mr Vaifo’ou. These percentages were a mistake on the part of counsel. The mistakes relate to the percentage only but not to the formula used.

7.2The calculation is as follows: the net registered valuation is divided by the years the parties owned the family home, from 1982 to the date of hearing in May 2023 (41 years), to get the amount each year.7 Such amount is multiplied by the years the parties lived together as husband and wife (26 years 1982- 2008) before separation. This figure represents the amount to be shared equally under s 11 of PRA.

Calculation

1)Registered Valuation  = $650,000

2)Less balance of mortgage             = $38,886

3)   Net value  = $611,114

4)÷ 41 years (valuation hearing date) = $14,905.22

5)x 26 years before separation         = $387,535.70 (63% of net value)

6)   ÷ 2 equal sharing (s 11 PRA)         = $193,767.85

7      I note that the parties are said to have owned the family home for 41 years from 1982 to 2023 but the family home was only bought in 1988. Counsel acknowledges the error but submits the net value of the house should still be divided by 41, being the number of years from the date of their marriage to the present.

7.3Counsel deducts $387,535.70 (63% of net value) from

$611,114, leaving a balance of $223,578.30 (37% of net value) to be distributed to the parties for post-separation compensation.

[39]Counsel for the appellant also submits that the Judge was wrong to grant

$100,000 occupation rent to the respondent.  The respondent left the family home   14 years ago to live with his partner. He did not contribute in any way to the family home after September 2009. Proportionally, the income of the respondent and his partner was considerably higher than the single income of the appellant. The payment of occupation rent is discretionary and in this case the respondent has been unjustly enriched by the exercise of that discretion.

Discussion

[40]   I am of the view that s 2F of the Act has not changed the approach to division of relationship property as argued by counsel for the appellant. The reference to “the share of a spouse or partner in the relationship property” does not mean the value of a spouse or partner’s entitlement. It means the proportion of the total share that is his or her entitlement. Section 11 goes on to state that “each of the spouses or partners is entitled to share equally in the family home”, while s 13 states that “if the court considers that there are extraordinary circumstances that make equal sharing under s 11 repugnant to justice, the share of each spouse or partner in that property is to be determined in accordance with the contribution of each spouse to the marriage …”. All references to “share” are to the proportion of entitlement.

[41]   Section 2G of the Act then refers to a different concept altogether and provides a rule for the date at which the value of property is to be determined.

[42]   Although the Judge does not explicitly state that there are no extraordinary circumstances which mean that equal sharing would be repugnant to justice, he impliedly says so. I agree.

[43]   There is nothing to displace the equal sharing of the family home in terms of s 11 of the Act. Extraordinary circumstances which would dictate a different approach

are not established. The formula put forward by counsel for the appellant has no basis either in legislation or caselaw.

[44]   As noted, the family home has been valued by Seager & Partners at $650,000 in a report dated 18 November 2022. It is accepted by the parties that that reflects its market value at the date of the hearing at first instance. Each party’s share of the family home is therefore $305,557, calculated as follows:

Value of family home	$650,000
Less mortgage	$38,886
Net equity	$611,114
½ each	$305,557

[45]   As to occupation rent, the Judge directed that the appellant credit the respondent with the sum of $100,000 for occupation rent under s 18B, to be deducted from the appellant’s net share of the sale proceeds of the family home.

[46]   The order was made notwithstanding the Judge’s acknowledgement that any division of relationship property between two parties with very limited income may be seen as unfair when an order for occupation rent is made.

[47]   I am respectfully of the view that the Judge fell into error when granting the respondent’s application for compensation under s 18B. First, the Judge acknowledged that occupation rent was inappropriate when the outgoings paid by the party in possession exceeded the sum for which the property would be rented. This principle applies also to situations where property outgoings and works to improve the family home approximately balance any occupation rental.

[48]   In the present case, documented outgoings established by bank statements, council records and insurance records disclose that the appellant has paid $165,590.99 over 14 years. She also gave evidence of paying approximately $4,000 for replacement of the bathroom flooring and the kitchen sink cabinet.8 The outgoings therefore total approximately $169,590.99.

8      Counsel claimed the sum of $50,777.31 as maintenance including renovation, painting, and lawn mowing, but without any documentary evidence.

[49]The occupation rent said to be appropriate for the 14 year period totals

$189,450 although because of his delay in making a claim, the respondent claims only

$124,996, considerably less than the outgoings paid for by the appellant. The calculation of what the family home could be rented for over a 14 year period is also quite artificial. The family home was never going to be sold voluntarily. It must also be viewed in the Tongan cultural context as a home that was available for family members to stay, even for considerable periods of time (with some recompense). The respondent’s brother stayed with them for a number of years, as did his sister.

[50]Second, in his affidavit sworn on 22 December 2021, the respondent states:

I accept that [the appellant] is entitled to receive a credit for half of any share of the mortgage payments, land rates, and insurances.

[51]   Notwithstanding that concession, it appears that at the hearing counsel for the respondent submitted that given the small weekly cost to the appellant in meeting mortgage payments and other outgoings, it was not appropriate that the appellant be reimbursed for reduction of the principal. The Judge agreed with counsel’s submissions, notwithstanding his own calculations that the payment of $165,590.99 over 14 years equated to $227.46 per week. With respect, this is not a “small weekly cost” for a person on a benefit, without which the family home would likely have been sold by mortgagee sale. The Judge should have taken account of the substantial and regular payments by the appellant.

[52]   Third, there is no challenge to the Judge’s finding that he should not take into account the rental income and/or board as he accepted the appellant’s evidence that payments from family members and boarders were minimal and unreliable.

[53]   Fourth, the preferable approach in the present case is to compare the outgoings paid by the appellant on the family home ($169,590.99) with the cost to the respondent of living away from the family home. The respondent gave evidence that at present he was paying $260 per week for rented accommodation he shared with his partner. He had in earlier years paid $200 per week. Taking the sum that he now pays and multiplying that for the 14 years he has been living away from the family home, arrives at total rental payments of $189,280, although the total will undoubtedly be less

because of the increase in rents over the years. Credit should also be given to the respondent for the short period of time he made mortgage repayments when they first separated.

[54]   I am of the view that, in the present case, the fairest way to assess what is just in terms of s 18B is to compare the costs incurred by the parties. It seems to me that the costs incurred by the appellant (documented outgoings on the family home) and those incurred by the respondent as outlined above more or less balance each other out. I decline to take a more arithmetical approach.

[55]   In those circumstances, there is no basis for ordering compensation under s 18B and I allow the appeal to the extent of qualifying the order in favour of the respondent for $100,000 compensation.

Result

[56]I make the following orders:

(a)There are no extraordinary circumstances that make equal sharing of the family home repugnant to justice under s 13 of the Act.

(b)The relationship property (inclusive of the family home) is to be shared equally.

(c)The appeal is allowed to the extent that order [63](c) directing that the sum of $100,000 be deducted from the appellant’s net share of the proceeds of sale of the family home under s 18B of the Act is quashed.

(d)The judgment of Judge A G Mahon dated 17 July 2023 is otherwise confirmed.

Woolford J