Zwicker v Zwicker HC Auckland CIV 2010-404-3497

[2010] NZHC 1610

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-003497

UNDER  The Property (Relationships) Act 1976

IN THE MATTER OF     an appeal against a decision of the Family

Court at North Shore

BETWEEN  ANTONI ZWICKER Appellant

ANDCATHERINE MAREE GOLDSMITH ZWICKER

Respondent

Hearing:         26 August 2010

Appearances: S M Kilian for the Appellant

K C Buchanan for the Respondent

Judgment:      31 August 2010

RESERVED JUDGMENT OF ELLIS J

This judgment was delivered by me on 31 August 2010 at 11.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:           Duncan Cotterill, PO Box 5326, Auckland 1141

Rosedale Law, PO Box 303472, North Shore City 0751

Counsel:            K C Buchanan, PO Box 302795, North Shore City 0751

ZWICKER V ZWICKER HC AK CIV-2010-404-003497  31 August 2010

[1]      Mr and Mrs Zwicker have been involved in proceedings under the Property (Relationships) Act 1976 in the Family Court.  On 10 November 2009 Judge Ryan delivered a judgment in which he determined the extent of Mrs Zwicker’s interest in the family home.  This, in turn, raised the issue of how to recognise post-separation contributions made by Mr Zwicker.

[2]      At [13] and [14] of the judgment Judge Ryan said:

In my view justice can be done between the parties by adopting a hearing date value for the family home and by compensating the respondent for his post-separation contributions in respect of the improvements undertaken by him.

I intend to allow the applicant [Mrs Zwicker] to get the full benefit of the increase in land value between the date of separation and hearing date and I am satisfied that the increase was not a result of any post-separation efforts of the respondent [Mr Zwicker] but rather a reflection of the general increase in land value.   She should also receive compensation for her share in the value of improvements as at the date of separation by providing for interest to be paid on that amount.

[3]      It will be observed that a distinction is being drawn here between the value of the family home and the value of the land upon which it was built.  The intention referred to in [14] of Judge Ryan’s judgment thus required him to ascribe a sum to the increase in the value of the land.  He set out the means by which he arrived at that sum under the heading “Methodology”.  Under that heading he first determined the value of the equity in the land as at the date of separation.  He recorded that:

a)       The market value for the property was fixed at $320,000, which was

8.6% less than the QV;

b)The  QV  rating  valuation  fixed  the  land  value  at  $205,000  which reduced by 8.6% gave an adjusted value for the land of $187,400;

c)       Five months before the parties’ separation the land had been valued at

$95,000;

d)At    the    date    of    separation    the    mortgage    indebtedness    was approximately $115,000;

e)        The value of the land at the date of separation was 65.5% of the total value of the property;

f)        65.5%  of  the  mortgage  indebtedness  at  date  of  separation  was approximately $75,000;

g)        The remaining equity in the parties’ land as at the date of separation was $20,000, which was to be divided equally.

[4]      Judge Ryan then turned to the value and division of the increase in value of the land between the date of separation and the date of the hearing.  At [21] of the decision he said:

As I have said land value has increased by 97% so the hearing date net equity increases to approximately $40,000.   The applicant’s half share is

$20,000.

[5]      It is the relationship between this last paragraph and Judge Ryan’s stated intention at [14] recorded above that is at the heart of the present dispute between the parties and of this appeal.

[6]      On receipt of Judge Ryan’s decision Mrs Zwicker formed the view that there was a clear discrepancy between Judge Ryan’s stated intention and his methodology. Her view was that Judge Ryan’s stated intention could only be achieved by halving the difference between the $95,000 value at date of separation and the $187,400 value at the date of hearing and adding that to Mrs Zwicker’s half share of the pre- existing $20,000 equity.  That would result in Mrs Zwicker receiving not $20,000 as indicated by Judge Ryan at [21] but approximately $56,000.

[7]      Mrs Zwicker’s concern about the apparent disparity between Judge Ryan’s intention and the result led to her filing an application for partial rehearing in the Family Court in relation to the “methodology” issue.   In a minute subsequently issued by Judge Ryan he intimated his view that the matter was more appropriately dealt with by way of an application for recall and this led Mrs Zwicker to file a further application.

[8]      Both the application for rehearing and for recall was opposed by Mr Zwicker, whose position has consistently been that the “methodology” issue is one that can only be resolved through an appeal to this Court.

[9]      On  4  May  2010  Judge  Ryan  reconvened  to  consider  Mrs  Zwicker’s applications.   At the beginning of the hearing Mrs Zwicker’s then counsel sought leave to withdraw the application for a rehearing and advised that it was to be regarded  as  having  been  replaced  by  the  application  for  recall.    The  hearing proceeded on that basis.

[10]     While the application for recall contained in its title the word “recall” it did not refer to Rule 197(6) of the Family Court Rules 2002 which provides that a judgment may be recalled by the Judge at any time before a formal record of it has been drawn up and sealed.  Rather, the application invoked Rule 204 of the Family Courts Rules 2002 which relates to clerical mistakes and slips and states:

204 Clerical mistakes and slips

(1)      This rule applies to a judgment –

(a)       that contains a clerical mistake or an error arising from an accidental  slip  or  omission,  whether  or  not  the  mistake, error, slip, or omission was made by an officer of the Court; or

(b)that is drawn up in a way that does not express what was actually decided and intended.

(2)The judgment may be corrected by the Court or, if the judgment was made be a Registrar, by the Registrar.

(3)The correction may be made by the Court or the Registrar, as the case  requires,  on  his  or  her  or  its  own  initiative  or  on  an interlocutory application for the purpose.

[11]     In the course of the hearing Judge Ryan said on a number of occasions that he was of the view that if the matter that was of concern to Mrs Zwicker was an incorrect application of a “formula” he had put in place for determining her share of the increase in the value of the land, then that was a matter which could only be fixed on appeal.  However, it is evident from reading the transcript that his view on that changed over the course of the hearing and indeed in the reserved judgment issued

by him on 13 May 2010 he treated the matter as an application for recall under

Rule 197(6).

[12]     Judge  Ryan  went  on  to  consider  the  standard  recall  authorities  and  in particular the decision of Wild CJ in Horowhenua County v Nash (2)[1] and Patrikios Holdings Limited v United Fisheries Limited.[2]He then said:

[1] Horowhenua County v Nash (2) [1968] NZLR 632 (SC).

[2] Patrikios Holdings Limited v United Fisheries Limited (1986) 1 NZBLC 102, 592 (HC).

[9]       By deciding that the parties should share equally in the increase in land value between separation date and hearing date I was effectively ruling that for the purposes of assessing the applicant’s entitlement in the relationship property pool, land value was to be hearing date value.

[10]      However  in  that  part  of  my  judgment  headed  “Methodology”  I began discussing the net equity at the date of separation. I decided that the net  equity  at  the  date  of  separation  was  $20,000.  Land  value  doubled between separation date and hearing date. I then concluded that in order to ascertain the applicant’s entitlement in the relationship property pool I would simply need to double the equity. That was undoubtedly an error. There is no question about it. The error was to confuse equity with value resulting in a failure to recognise my intention to allow the applicant to share equally in the hearing date value of the land.

[11]     I had already fixed hearing date value for the land at $187,400. In order to ascertain the applicant’s share in the land I needed only to have deducted the amount owing on the mortgage as at the date of separation, apportioned in terms of paragraph [20] of the judgment. That portion of the mortgage loan outstanding as at the date of separation applicable to land value I fixed at $75,325. That means that the applicant’s share of net land value as at hearing date is half of $112,075, namely $56,037.

[12]     The methodology adopted and expressed in paragraph [21] of my judgment failed to fully and accurately express my intentions. As such I am satisfied  that  this  amounts  to  a  very  special  reason  requiring  that  my judgment be recalled. The judgment is recalled accordingly. I fix the applicant’s share in the relationship property pool at $56,037 plus $7500 being the compensated figure for improvements, a total of $63,537.

[13]     Because of my error the respondent is going to have to find further funds in order to satisfy this judgment. He was entitled to rely on the original judgment even though it was in error. He should not be penalised for having done so. I vary the order in paragraph [24] of the judgment as follows:

The respondent is to pay to the applicant the sum of $63,537 within 30 days of the date of the delivery of this recalled judgment. Thereafter interest will run on any unpaid sum at the rate of 7% per annum calculated on a daily rate.

Leave is still reserved in terms of paragraph [25] of the original judgment.

[14]     Because the error was mine it would be inappropriate to make any order for costs in respect of either the application for a re-hearing which was withdrawn or in respect of the successful application for recall of my judgment.

[13]     Mr Zwicker now appeals to this Court from that judgment in relation to both the decision to recall and the costs award.  Each will be discussed in turn.

Recall

[14]     As  regards  the  recall  Mr  Kilian  maintained  Mr  Zwicker’s  position  that Judge Ryan’s “error” was a matter which should have been dealt with through the usual appellate process and not something that could properly be cured through a decision to recall.   More particularly, he submitted that there was no necessary conflict  between  Judge  Ryan’s  stated  intention  and  the  methodology  he  then adopted.  He submitted that the methodology simply reflected Judge Ryan’s genuine view as to how that intention was to be achieved, albeit in a rather idiosyncratic way.

[15]     Mr  Kilian  further  submitted  that  Mr  Zwicker  was  effectively  taken  by surprise by the Judge’s decision to rely on Rule 197 rather than Rule 204, that Rule 197 was not “before” Judge Ryan and that there were therefore natural justice issues arising.   Nonetheless he quite fairly and properly accepted that if I were to form the view that the recall discretion had been properly exercised by Judge Ryan any such procedural defects or errors of process would effectively be cured.

[16]     Ms Buchanan for Mrs Zwicker naturally supported Judge Ryan’s approach and submitted that there was an obvious disjunct between his stated intention at [14] and the mathematics then deployed by him to achieve that intention.  She submitted that it was precisely the kind of mistake that could properly be dealt with by way of an application for recall and that a decision had been taken that was the most expeditious and cost-effective course for remedying the problem.

[17]     Ms Buchanan relied in particular on the decision in Lawson v Schroder[3]in which  the  Court  was  dealing  with  an  appeal  in  what  she  submitted  were

[3] Lawson v Schroder HC Auckland CIV 2003-404-3155, 22 August 2003.

circumstances very similar to the present.   Those circumstances were set out by

Fisher J as follows:

[2]       The substantive judgment  had  made  an  award to the  respondent widow under the Family Protection Act 1955.  In his substantive reasons for decision the Judge recorded that in the interval between the deceased’s death and the date of the judgment the appellants had paid the widow $59,483.00 by way of maintenance and support. The Judge awarded her $400,000 to provide for her future income needs in addition to a legacy and loan of

$400,000. He did not expressly state whether the $400,000 was inclusive of, or cumulative upon, the $59,483.00 already paid.   In his supplementary

judgment of 14 March 2003 the Judge made it clear that the two figures were

cumulative.  From that judgment the trustees now appeal.

[18]     The legal issue with which the Court was confronted in that case was whether the Family Court’s supplementary judgment “accorded with jurisdiction and principle”.  In that respect Fisher J said:

[8]       All that remains is the question whether the clarification effected by the Judge in his supplementary judgment accorded with jurisdiction and principle.   The supplementary judgment had to be based on, or at least compatible  with,  the  Family  Court  Rules  2002  -  see  the  applicable transitional provision R435(4).  It is important to note that as at the date of the supplementary judgment no formal judgment had been sealed. In my view there were three potential sources of jurisdiction.

[9]       The first was that because the reasons for decision left an unresolved ambiguity,  the  proceedings  were  still  incomplete  when  they  came  back before the Judge for further consideration in March 2003. Notwithstanding my interpretation of the reasons for decision read as a whole, the point was open to misinterpretation and argument as the subsequent dispute between the  parties  demonstrated.  The  Judge’s  job  was  not  over  until  he  had produced an unambiguous judgment which could be reliably acted upon and, if necessary, executed. Until that was done the Judge was not functus officio and the matter was not res judicata.

[10]      The second was that if the concluding words of the judgment are not regarded as ambiguous, and do mean that the $400,000 included the prior payments, R204(1) gave the Court the jurisdiction to correct an accidental slip. Concluding words having that meaning would not have accorded with the earlier reasoning and would necessarily have been the result of an oversight.

[11]     Thirdly,  given  that  no  formal  judgment  had  been  sealed,  the judgment  could  be  recalled  pursuant to  R197(6)  on the  basis that  there existed “a very special reason which, in the interests of justice, required that the judgment be recalled” – see in that regard Horowhenua County v Nash (No. 2) [1968] NZLR 632.

[12]      I do not find it necessary to explore further those alternative sources of jurisdiction.  In my view the Judge could have resorted to any one of them when the matter came back before him in March 2003.

[19]     On that basis Fisher J concluded that the route chosen by the Family Court judge, which was to express the supplementary judgment in terms of recalling the original  judgment  rather  than  clarifying  or  correcting  it,  was  a  route  that  was available to him.

[20]     Mr Kilian strove to distinguish Lawson on the grounds that there was no “ambiguity” in Judge Ryan’s decision.   Even if that were correct, however, the ability to clarify an ambiguity was only one of the three routes that Fisher J said was open to the Family Court judge in the Lawson case.  And in any event it appears to me to be a distinction without a difference in the present context.  This is because paragraph [14] and the methodology employed by Judge Ryan in his first judgment are logically irreconcilable; in my view his original judgment contained a very clear internal inconsistency.   Such an inconsistency could, if necessary, be termed an ambiguity.

[21]     In terms of the other two potentially available routes identified in Lawson, the fact that Judge Ryan was of the clear view that he had made a mistake in his first judgment is, I think, decisive.  If he had thought that a further $20,000 did in fact accord with his intention to give Mrs Zwicker “the full benefit of the increase in land value between the date of separation and hearing date” (as Mr Kilian suggested might be the case) then he would have said so.  But he very plainly indicated that the opposite was the case.   Thus the decision to recall reflected an identified need to clarify an issue or to correct a mistake, it did not involve a substantive change of mind on the part of the judge.

[22]     For that reason I consider that it was plainly open to Judge Ryan to recall his judgment.   While I accept that recall is a serious steps and that there are strong policy considerations that require judgments, once released, “to stand for better or worse” I think the Judge’s mistake here does constitute a “very special reason” warranting recall.  That view appears to me to be consistent with the other “category three” Nash (very special circumstances) cases noted in McGechan.

[23]     Finally, I also record my view that Judge Ryan was right to prefer the recall route over the R 204 error correction route.  While at first glance it might be thought that Judge Ryan’s original judgment was “drawn up in a way that does not express what was actually decided and intended” in terms of R 204(1)(b), it seems to me that (by contrast with R 204(1)(a)) the words “drawn up” suggest a judgment that has been perfected or sealed rather than the reasons for judgment such as those at issue here.

Costs

[24]     As  regards  the  costs  issue  Mr  Kilian  submitted  that  as  a  result  of Mrs Zwicker’s original application for a rehearing which was not ultimately pursued, Mr Zwicker had been put to additional expense which should have been reflected in Judge Ryan’s judgment.  He referred to two affidavits and the submissions that had been prepared in advance of the hearing.

[25]     While I do have a modicum of sympathy for Mr Zwicker’s position I do not consider that I should interfere with Judge Ryan’s approach to this issue.  Without in any way impugning the good faith of either Mr Zwicker or Mr Kilian, it is difficult not to regard the position they took in opposing both the rehearing and recall applications as a little opportunistic.   That is because in my view Judge Ryan’s methodology was obviously in error and at odds with what he had said quite clearly that he wanted to achieve.

[26]     While it is true that Mrs Zwicker’s approach to remedying Judge Ryan’s error could have been a little more legally focused, I consider Judge Ryan was entitled, when considering costs, to have regard to the fact that that issue was not entirely straightforward.  The Judge himself was unsure about whether an application for recall was the appropriate vehicle for remedying the matter.  And the fact that “very special circumstances” have been found to exist here suggests that the issue is not a particularly commonplace one.

[27]     Ultimately,  a  costs  award  is  a  matter  that  is  within  the  relevant  court’s discretion.  Judge Ryan clearly articulated his reasons for letting costs lie where they

fall.  He thought that Mrs Zwicker should not have to bear the cost of the mistake he had made.  There is no obvious error of principle in that approach.

Result

[28]     For the reasons I have given both Mr Zwicker’s grounds of appeal must fail. Like Judge Ryan, however, I direct that the costs of the appeal are to lie where they

fall.

Rebecca Ellis J