Hunter v Copland [2001] NZCA 352; (2001) 21 FRNZ 28 (6 September 2001)

Last Updated: 12 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 271/00

	BETWEEN	K M G HUNTER
		Appellant

	AND	F M COPLAND
		Respondent

Hearing:	19 July 2001
Coram:	McGrath J Fisher J Chambers J
Appearances:	D M Sim for the Appellant R O Parmenter for the Respondent
Judgment:	6 September 2001

JUDGMENT OF THE COURT DELIVERED BY CHAMBERS J

A de facto relationship breaks down

[1] In 1986 Fiona Copland and Keith Hunter, both then employees of Television New Zealand, started living together. Their de facto relationship continued for over 11 years. It finally broke down in 1997. By that time the couple had a child. Unfortunately, on the breakdown of their relationship, Ms Copland and Mr Hunter were not able to resolve amicably how their property was to be divided.
[2] By the time of their separation they owned between them four properties. Their main property was at Te Araroa Drive, Paremoremo, near Auckland. After the couple separated Ms Copland continued to live in that property with their baby. Their other three properties were all in Auckland, in Ardmore Road, Russell Street, and Poynton Terrace. These three properties were rented. After the parties separated Mr Hunter lived in one of them.
[3] When the parties could not agree on a division of their property, Ms Copland commenced a legal proceeding. She argued that she had a reasonable expectation to share in all these properties, given the contributions she had made to their acquisition. Mr Hunter disagreed. He said that the three rental properties were his. He conceded that Ms Copland had an interest in the Paremoremo property. He mounted, however, a counterclaim in which he sought a share in Ms Copland’s future earnings. The basis of that counterclaim was not clear, but at least in part, the claim appears to have been founded on an assertion that Ms Copland’s success “in her chosen career” would not have occurred without his “direct and indirect financial support and his commitment to providing [her] with the necessary skills and knowledge and encouragement”.
[4] The trial took three days before Doogue J. His Honour heard evidence from both Ms Copland and Mr Hunter, among others. The primary dispute centred on entitlement to the four Auckland properties. The Judge was told that the parties agreed that those properties had a net value of $730,000. It is now conceded that the parties’ agreement was an error and that the net value should have been $685,000. The Judge concluded that Ms Copland should have a one-third interest in the property. In reaching that conclusion, he took into account the parties’ incomes which they contributed and, to Mr Hunter’s credit, the fact that he brought into the union a property (later sold) and over a period an inheritance worth $160,000. The Judge ordered that Ms Copland’s interest should be recognised by Mr Hunter paying to Ms Copland $240,000. On that basis, of course, Mr Hunter would take all four properties and would assume liability for the loans secured by mortgage. Mr Hunter’s counterclaim was dismissed.
[5] Ms Copland does not seek to challenge Doogue J’s decision. She also accepts that because of the error in the net worth of the property the judgment in her favour should be varied. A one-third interest in the revised net worth would mean her entitlement is reduced to $225,000. She accepts a variation in the judgment to that effect.
[6] Mr Hunter is not at all happy with Doogue J’s decision. He still insists that he should have all three rental properties, together with a two-third’s interest in Paremoremo. He proposes that Ms Copland’s one-third interest should be recognised by his paying her $90,000. Mr Hunter has not appealed against the dismissal of his counterclaim.

Issues on the appeal

[7] Essentially the issues on the appeal come down to two:

• [a] Did Doogue J err in approaching the matter on a global basis rather than analysing the parties’ contributions to each item of property separately?
• [b] Did the Judge err in refusing to allow Mr Hunter to re-open the cross-examination of Ms Copland?

[8] The second issue requires some brief further explanation at this stage. In the High Court Mr Hunter was initially represented by a senior barrister, Mr Carden. After Ms Copland’s case was closed, Mr Hunter decided to dispense with Mr Carden’s services. After that he conducted his case himself. He sought to have Ms Copland recalled for further cross-examination. The Judge, after hearing his submissions as to why that course was necessary, declined the application. Mr Hunter argues that he was thereby deprived of a fair hearing.

The global approach

[9] Ms Copland’s case was brought in equity on the now familiar grounds exemplified by cases like Gillies v Keogh [1989] 2 NZLR 327 (CA) and Lankow v Rose [1995] 1 NZLR 277 (CA). Ms Sim, who appeared for Mr Hunter before us and who presented his case with care and skill, did not challenge this court’s reasoning as exemplified in those two leading cases. Her complaint was that the principles enunciated in those cases had been misapplied in one crucial respect. She submitted that Doogue J had fallen into error because, in assessing the parties’ contributions, he looked at the contributions globally rather than analysing the parties’ respective contributions to each of the four properties.
[10] There is, and could be, no challenge to the proposition that a global approach is an available approach. There are clear references to such an approach in Lankow v Rose: ibid at 282, 286, 295. Ms Sim accepted that. But she argued the Judge’s adoption of such an approach in this case was wrong. There were two grounds given as to why it was wrong. The first was that it was contrary to the parties’ “express intentions and expectations”. The other was that the Judge “confused contributions to the properties with contributions to the partnership”. Ms Sim went on to analyse the judgment and to highlight what she submitted were “errors in findings of fact”. These alleged errors do not require separate analysis in this judgment, however, as all of them relate to one or other of the two grounds on which it is said the Judge wrongly adopted a global approach.
[11] We turn now to Ms Sim’s primary submission, namely that a global approach was not possible in this case because it was contrary to the express intentions of the parties. We accept immediately that, if it could be shown that the Judge’s approach was contrary to the parties’ express intentions, then it could not stand. This remedial equitable jurisdiction, whether it is seen as founded on unjust enrichment, unconscionable conduct, inferred common intention or estoppel, is always to be exercised so as not to defeat the parties’ express intentions. But for such intentions to be decisive they must, of course, have been freely formed with the understanding on both sides that they are to bind in the event of a breakdown of the relationship.
[12] It is, perhaps unfortunately, all too common for de facto couples not to turn their minds to what is to happen if things do not work out. They may decide, while things are going well, that a particular piece of property should be held in the name of one of them. It does not follow, however, that the other is thereby and without more waiving any expectation to a share in that piece of property in the event of the partnership breaking down.
[13] Before looking at the evidence on which Ms Sim relied with respect to the four properties in question, we make two observations.
[14] First, we have not been referred to any evidence to the effect that the parties generally agreed that, in the event of the breakdown of their relationship, each item of property would be divided according to the parties’ respective financial contributions to that particular item.
[15] Secondly, Ms Sim made clear that for the purposes of the appeal Mr Hunter placed no reliance on events that occurred between April and August 1997. At that time, at Mr Hunter’s urging, Ms Copland signed an agreement under which she purported to transfer her interest in the three rental properties to Mr Hunter alone. There was much evidence concerning the circumstances surrounding the signing of that agreement. Doogue J accepted Ms Copland’s evidence that she went along with Mr Hunter’s wishes to placate him and to try to ensure that their union remained stable and workable. For the reasons he gave, Doogue J placed little importance on these documents. We do not need to traverse the details of what happened in light of Mr Hunter’s acceptance that his case does not depend on the 1997 agreement. Rather, his argument is that the parties had previously agreed exactly what was to happen to the property in the event of the partnership breaking down.
[16] We can deal with the Paremoremo property in short order as in this case Mr Hunter accepts that Ms Copland did and does have a legitimate expectation to a share in it.
[17] The first rental property bought was Ardmore Road. That property was originally bought in Ms Copland’s name. Mr Hunter’s case was that in 1992 he and Ms Copland agreed that it would become his property. In exchange Ms Copland would acquire a share in the Paremoremo property. Doogue J concluded that this thought may well have passed through Mr Hunter’s mind at the time. The Judge also considered it possible that, for reasons of amity in what both then regarded as a lifelong commitment, Ms Copland went along with the idea. The Judge noted, however, that there was certainly no formal step of any description to perfect such “agreement”, at least not until 1997. The Judge also noted that there was nothing in writing at the time to substantiate the alleged purchase. There was no endeavour at any time truly to evaluate the nature of her equity in the property. Those conclusions were clearly open to Doogue J on the evidence. The most telling point, however, is that there is no suggestion that, even if such an understanding were reached, it was the parties’ intention that such understanding would enure even in the event of the partnership breaking down. Ms Copland in 1992 still firmly believed that she and Mr Hunter had made a lifelong commitment to one another. There were tensions in the relationship. The Judge found that Mr Hunter was primarily responsible for their creation and that Ms Copland’s response was often to yield to Mr Hunter’s wishes as a means of preserving the peace. The evidence surrounding the “purchase” in 1992 is a mile away from establishing an express common intention with respect to Ardmore Road so as to make the Judge’s global approach inappropriate.
[18] The Russell Street and Poynton Terrace properties were both bought in March 1996. Mr Hunter’s argument was that it was agreed right from the start that both these properties were to be entirely his. Doogue J did not accept Mr Hunter’s evidence to that effect. In the case of Russell Street the Judge noted that the purchase price was entirely borrowed from a bank. The parties’ solicitor’s letter to the bank indicated that it was their mutual wish that the property be in their joint names. Mr Hunter asserted that the only reason for joint ownership was bank requirements, but, as the Judge observed, that assertion was contrary to the contemporary record. Poynton Terrace was also purchased in the parties’ joint names. Half of the purchase price came from an inheritance Mr Hunter received. The balance was provided by bank financing. We are unable to find on the evidence any justification for Mr Hunter’s assertion that the parties’ arrangements with respect to these two purchases amounted to an understanding that in the event of a breakdown of their relationship Ms Copland was to have no interest in either property.
[19] We do not accept that Doogue J’s approach was contrary to the parties’ “express intentions and expectations”. We consider that the Judge was entirely correct in finding that the parties did not at any stage form a clear view as to what was to happen in the event of their partnership’s breakdown. This de facto union was like most de facto unions where the parties do not give detailed consideration to their respective property rights in the event of partnership breakdown. Also like most de facto unions there was give and take between the partners. It may well be that Mr Hunter was keener on purchasing Russell Street and Poynton Terrace than Ms Copland was. It may be that she went along with those purchases because he wanted to make them, but it does not follow that because these purchases were essentially Mr Hunter’s idea Ms Copland had no reasonable expectation to share in them in the event of partnership breakdown.
[20] Ms Sim’s second ground of attack was that the Judge “confused contributions to the property with contributions to the partnership”. That criticism is not justified. It is not a necessary pre-condition for the exercise of this equitable jurisdiction that a party in order to establish an expectation must have made a direct contribution to the property in question. This court made it clear in Lankow v Rose that indirect contributions can qualify. Tipping J put it in these terms: ibid at 295:

“At the simplest level one partner might have paid for all the groceries with the other servicing and reducing the mortgage. That is an indirect contribution by the former, no less real than if the roles were reversed.”

[21] That is precisely what Doogue J found happened in the present case. Apart from Ms Copland’s direct contributions to the properties, there were her indirect contributions. The Judge accepted Ms Copland’s evidence that the way this relationship worked, much of her income went on household matters while much of Mr Hunter’s covered things to do with the property. Much of her income had “gone down the plumbing”, to use Ms Copland’s graphic phrase. As the Judge noted, there was nothing to suggest that Ms Copland’s income, slightly greater than Mr Hunter’s over the period of their relationship, was expended other than for the benefit of them both, as was Mr Hunter’s income. There was no suggestion of expenditure on private interests or private assets other than those at the heart of the litigation.
[22] This ground of attack therefore fails as well. There was nothing wrong in the Judge’s adopting a global approach. Indeed given the nature of the relationship and the inter-related nature of the properties in question, we consider the Judge’s approach to be not only within jurisdiction and discretion but also plainly sensible.

The Judge’s refusal to allow cross-examination to be re-opened

[23] Ms Sim submitted that Doogue J erred when he refused Mr Hunter’s application to have Ms Copland recalled for further cross-examination.
[24] The Judge clearly had power to have Ms Copland recalled if that were necessary in the interests of justice. The Judge himself clearly recognised that as he considered Mr Hunter’s application and his submissions in support of it. He ruled that Ms Copland was not to be recalled for further cross-examination. In so ruling he was exercising a discretion. Mr Hunter now faces the difficulty any appellant faces when arguing an appeal from the exercise of a discretion. In order to succeed, Mr Hunter must show that the Judge misunderstood the law, took into account irrelevant matters, failed to take into account relevant matters, or was otherwise plainly wrong: see Fitzgerald v Beattie [1976] 1 NZLR 265 (CA) at 268. Clearly it is irrelevant on this issue that Mr Hunter had chosen to dismiss his counsel and to argue the matter himself. A party does not secure any procedural advantages simply because he or she chooses to change representation midstream. This issue gives rises to two questions:

• [a] What additional material needed to be put to Ms Copland?
• [b] If there was additional material which needed to be put, why was it not put at the appropriate time and would a miscarriage of justice arise if it was not put?

[25] The relevant exchange between Doogue J and Mr Hunter is not recorded in the notes of evidence. Nor has Mr Hunter filed an affidavit as to what he says was said in the exchange. All we have got is counsel’s submission - and what is more a submission from counsel who was not herself present during the exchange. That is a most unsatisfactory way for a matter of this sort to come before this court. It is particularly inappropriate given that the Judge made the following comment in his judgment on this topic: “As Mr Hunter was unable to identify to my satisfaction any material matter upon which Ms Copland had not already been cross-examined, I refused such leave.” What Ms Sim is now asking us to do, without any affidavit evidence in support, is to say that, contrary to the Judge’s assertion, Mr Hunter did identify material matters on which there had not been cross-examination and on which there needed to be cross-examination.
[26] Ms Sim’s written submissions were very light as to what the additional cross-examination would have been. The only concrete matter referred to was that Mr Hunter wanted to cross-examine Ms Copland on some “income figures given in two former briefs of evidence submitted by [her] but not read at trial”. We are not sure even now what the nature of the questions would have been but in any event we fail to see why Mr Hunter could not have covered that matter himself. He had the opportunity to give what he said the relevant income figures were. It is accepted that the Judge gave an opportunity to Mr Hunter to make such additions to his evidence-in-chief as he wished and to produce other documents upon which he wished to rely. The Judge also gave Mr Hunter an opportunity to make a further statement at the commencement of the third day of the trial, should he wish to do so, to give him the same privilege as if he had been re-examined. We consider the Judge dealt very fairly with this issue.
[27] Following the hearing before us, Mr Hunter personally filed two memoranda for our consideration. Those memoranda, which we are certain were filed without Ms Sim’s knowledge, should not have been filed without leave first being obtained. Notwithstanding that, we have considered them.
[28] In the first of them, Mr Hunter said that he had given Ms Sim a 26 page document with 118 cross-examination points listed on it. While he did not detail those 118 points, we can say immediately that the fact that Mr Hunter did produce a 26 page document with 118 cross-examination points shows graphically how distorted his view of the relevant issues in this case has become. We can quite understand why Ms Sim would not have referred that list to us when we enquired of her what the further points of cross-examination would have been.
[29] In his second post-hearing submission, Mr Hunter referred at length to a document which became exhibit 1. This was a chart to which Ms Copland had referred in her supplementary evidence-in-chief. She said that she had drawn it up while sitting at the table with Mr Hunter when, shortly after they had bought Poynton Terrace, they talked about rationalising their banking. Mr Hunter’s contention is that the document is a forgery and he is critical of Mr Carden for having failed to expose it. Presumably this is one of the 118 points of cross-examination Mr Hunter now says he wishes to make. Mr Hunter’s argument is that this document was of fundamental importance in the case being, in his words, “the only document which assists his [the Judge’s] argument involving ‘intermingled’ or ‘mixed’ finances which underlay his judgment”.
[30] We make a number of comments about Mr Hunter’s submission. First, the document was not referred to by the Judge anywhere in his judgment. He did not rely on this document in the formulation of his views. This document has been irrelevant to us in our confirmation of the Judge’s findings of fact.
[31] Secondly, Mr Hunter, when asked by the Judge what additional questions he wished to ask, did not refer to this document.
[32] Thirdly, Mr Hunter was asked a question about the document in cross-examination. He had an opportunity to give all the evidence he wanted on the topic.
[33] Fourthly, the detailed explanation he now makes as to why the document is a forgery could easily have been made in the course of the effective re-examination the Judge allowed him. The document did not come as a surprise to him. It had been discovered by Ms Copland in her list of documents back in 1998.
[34] We are not persuaded that the Judge erred in refusing to allow Mr Hunter to re-open the cross-examination of Ms Copland. From our reading of Mr Carden’s cross-examination, it was adequate and correctly put those matters which were at the heart of this litigation.

Result

[35] We dismiss Mr Hunter’s appeal. We do, however, vary the High Court judgment as discussed with counsel. First, for the reasons given in paragraphs [4] and [5] above, Ms Copland’s one-third interest should convert to $225,000, not the $240,000 she was awarded by Doogue J. Mr Hunter must pay that sum to Ms Copland. In addition, he must pay interest on the sum of $225,000 at a rate of 7% p.a. from 2 November 2000: see High Court Rules, r 538(1).
[36] Secondly, under the High Court judgment, because Mr Hunter was to take all four properties, he assumed liability for all outstanding loans. It was implicit in the judgment that he would indemnify Ms Copland in respect of her potential liability under those loans. One of the outstanding loans is a loan of $100,000 to Ms Copland’s parents. The parties are now agreed that it is more sensible if Ms Copland assumes responsibility for the repayment of that loan to her parents. Accordingly, we order that Mr Hunter should pay to Ms Copland, in addition to the $225,000, a further $100,000. In return for that payment, Ms Copland has given an undertaking that she will indemnify Mr Hunter in respect of all his potential liabilities, whether as to principal or interest, under that loan. While this sum of $100,000 is payable by Mr Hunter now, it will not carry interest for the first three months after delivery of this judgment. That is because the parties have agreed that Ms Copland’s parents’ loan was “upon demand”. There was an understanding, however, that Ms Copland and Mr Hunter “would have at least three months to repay if demand were made”. Interest will start to run at the rate of 7% p.a. three months from the date of this judgment.
[37] There was no dispute about the Judge’s order for costs in the High Court. That order stands and will bear interest at 7% p.a. from 2 November 2000. We order Mr Hunter to pay costs to Ms Copland in respect of the appeal in the sum of $6000, together with disbursements which, in the absence of agreement, are to be fixed by the Registrar.

Solicitors
Greg Presland, Auckland, for Appellant
Daniel Overton & Goulding, Auckland, for Respondent