ROSS LIONEL TAYLOR v ALEXANDRA ANNE WATSON [2002] NZCA 189 (6 August 2002)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca271/01

	between	ROSS LIONEL TAYLOR
		Appellant

	and	ALEXANDRA ANNE WATSON
		Respondent

Hearing:	29 July 2002
Coram:	Anderson J Baragwanath J Panckhurst J
Appearances:	G M Cameron and C M Earl for Appellant
	M S McKechnie for Respondent
Judgment:	6 August 2002

judgment of the court delivered by BARAGWANATH J

Table of Contents
	Paragraph Number
Introduction and result	1
Background to appeal	2
The assets	3
The decision of the High Court	6
Mr Taylor's submissions	7
Ms Watson's submissions	8
Discussion	9
Conclusion	21

Introduction and result

[1] Mr Taylor challenges on appeal the division of assets ordered by the High Court following his 13-year de facto relationship with Ms Watson.He submits that the order unduly favours Ms Watson, by granting her some two-fifths of the parties' property at the date of separation (as compared with the 21.8% assessed by the Judge) and leaving him with about three-fifths. Ms Watson cross-appeals, claiming greater recognition of her entitlement. For reasons that follow we consider that the actual division effected by Priestley J is closer to three-quarters and a quarter; that the result of the Judge's decision was one fairly open to him; and that both appeal and cross-appeal must be dismissed.

Background to appeal

[2] In May 1984 Ms Watson, then 34 years of age, and her younger son Benjamin, then aged 18 months, commenced living with Mr Taylor, aged 33, on his 400-acre sheep and beef farm at Te Pahu.In November 1984 Mr Taylor and Ms Watson became engaged.From 1987 they agreed that she should call herself Lexi Taylor; from then on Mr Taylor introduced her to others as his wife.The Judge found that, until 1995/96 when the parties' respective interests began to diverge and emotional stress developed, they exhibited a high degree of commitment to each other, regarded themselves as true partners and help mates, loved and respected each other, and worked co-operatively to the best of their respective abilities as a family and as a household.Mr Taylor treated and in practical terms regarded Ben as the loved son of the relationship, which was in all respects that of devoted spouses, save that he never agreed to conversion of its legal status to that of marriage.As the parties separated before 1 February 2002, the case is to be considered not under the Property Relationships Amendment Act 2001 but under the pre-existing judge made law.

The assets

[3] By the end of the relationship the assets in Mr Taylor's name had grown from the Te Pahu farm, sold for $375,000 in June 1989 (which in terms of changes in the Consumer Price Index may be expressed as $731,585 in 1997 currency), to $1,078,605.Those in Ms Watson's name increased from $1,600 ($3,124 in 1997 currency) at the outset to $168,000 at the conclusion.The figures can be stated with some precision; the parties at the behest it seems of Mr Taylor maintained meticulous records of what assets were owned by each. At the date of separation in 1997 the parties respectively owned the following assets

Mr Taylor

Benner Road kiwifruit property (where the parties had established their home)660,000

Quarry Road kiwifruit property390,000

Subtotal1,050,000

Less debt65,000

985,000

Other assets26,605

Total1,011,605

Ms Watson

House at Papamoa175,000

Less mortgage14,000

Subtotal161,000

Car7,000

Total168,000

(disregarding furniture)

By the date of hearing in 2001 the values of the kiwifruit properties had increased markedly.

Benner Road1,091,000

Quarry Road696,000

Subtotal1,787,000

Less debt65,000

1,722,000

Other assets26,605

Total1,748,605

[4] By then Ms Watson had sold the Papamoa property, which realised only $120,000 after payment of mortgage and bank debts.That result may have been due to sale at less than valuation, to incurring additional debt, or to both. While something was made of the point both before Priestley J and in this Court we accept the Judge's view that, given the fact that the market was flat during the period prior to sale, the issue of whether or not Ms Watson could have done better makes no real difference to the overall result.

[5] After separation Mr Taylor made payments of something over $40,000 to Ms Watson, some $18,000 representing monthly ex gratia payments of $1,200 in the nature of maintenance and the balance capital payments to assist with furniture and the Papamoa mortgage.

The decision of the High Court

[6] In a carefully prepared oral judgment Priestley J determined that in addition to the proceeds of Papamoa and the car, valued at $7,000 at the time of separation, Ms Watson should receive an additional sum of $275,000 which he calculated as some 21.8% of the parties total assets.He assessed those at $1.857m (employing the $1.722m trial date valuation figure, rather than the $1.078m separation value, for Mr Taylor's farms).His figure for Mr Taylor's total assets at date of trial does not explicitly refer to his other assets, and should therefore be increased by $26,605 to $1,748,605; bringing the total of both parties' assets to something over $1.875m.But the change is not material: on that basis Ms Watson's percentage benefit of $402,000 ($275,000 in addition to the proceeds of Papamoa and the separation date value of the car) is some 22%.

Mr Taylor's submissions

[7] Mr Cameron and Mr Earl challenged the reasonableness of the Judge's award. They submitted that the Judge had not taken the $40,000 odd figure and had therefore overstated Mr Taylor's assets and thus significantly understated those of Ms Watson.They further challenged as wrong in principle the Judge's approach that the global assets of the parties should be assessed as some $1.857m, taking into account the significant increase in value in the Benner Road and Quarry Road properties between the dates of separation and of hearing. They submitted that in the absence of updated figures for Ms Watson's assets the Judge was applying inconsistent tests to Mr Taylor's and Ms Watson's respective assets. They submitted that taking the $40,000 figure properly into account and using separation date figures for the value of the orchards the result was

Mr Taylor's assets964,505

Ms Watson's207,100

Total1,171,605

so that her legal interest was 17.68% of the whole.The Judge's award of $275,000 increased her share to $482,100 or 41% - well above the Judge's own assessment of 21.8% of the total pool.Accordingly the award should be substantially reduced.

Ms Watson's submissions

[8] On behalf of Ms Watson Mr McKechnie defended the Judge's approach, save to submit that the result failed to do full justice to his client.In support of the cross-appeal he contended for an award of 30% of the pool, or some $557,000, instead of the Judge's figure.

Discussion

[9] The Judge's responsibility was rather like that of a jury in assessing general damages.He was required to take into account all relevant considerations; to reject irrelevancies; and to reach a conclusion that was within a reasonable range.We do not accept Mr Taylor's challenges to the award, both for specific and for more general reasons.

[10] As to the increase in orchard values, the fact that the kiwifruit farms were in Mr Taylor's name did not make them exclusively his as against Ms Watson.They were the product of a process of contributions by both partners, albeit of quite different kinds.To say that Mr Taylor owned the farms at the time of separation, and was thus entitled to their increase in value over the period to trial, begs the essential question of whose farms they were.For the reasons that follow we endorse the Judge's conclusion that Ms Watson enjoyed such interest in them at separation as to be entitled to a share in the increase in value that was more a function of rises in export prices of kiwifruit, rather than of contributions by Mr Taylor.There is greater weight in the argument about the $40,000.But to determine that the Judge's decision was wrong would require us to be satisfied either that the ultimate result exceeded a standard of reasonableness; or that there is such error in his approach that the case must be wholly reconsidered.

[11] Our legal system combines two streams of judge-made principle: that of the common law and that of equity. The principles of equity by which this case falls to be determined are not limited by legal forms and even common law rights but require a deeper and different analysis of how parties' contributions and entitlement to property acquired during a family relationship are to be determined.As against strangers, in terms of the common law Mr Taylor's assessment of the respective property rights of the parties would have been accepted as correct.Starting with the valuable contribution of Mr Taylor's Te Pahu property, his application of the qualities of perception, competence and hard work were a major cause of the satisfactory ultimate result which the common law would recognise as his ownership of Benner Road and Quarry Road.The same qualities and his commendable concern for the well-being of Ms Watson led to his enabling her to acquire Papamoa as its owner in terms of the common law.

[12] The challenge to the legal system - to provide a just outcome for parties to a terminated de facto relationship of such duration, is a demanding one. That is because in most cases, of which this is one, the parties made their decisions and engaged in their respective conduct not as dealers in a market place concerned only with optimising their individual financial position at the expense of the other, but as loving partners concerned no less, and very likely more, for the well-being of the other.The point is illustrated by Mr Taylor's conduct, throughout the 13 years of the relationship, of providing the cash flow needed to meet the family's outgoings; of enabling Ms Watson to secure assets in her own name; and of the wills made by each partner in favour of the other.Equally, throughout the relationship Ms Watson acted loyally and supportively in an environment that she did not find easy.The judiciary, like the New Zealand Parliament in enacting last year's legislation, have come to realise that a narrow focus on contributions of finance and direct dealing with assets, that disregards the human contributions which facilitate the process of asset acquisition, is a flawed economic perception and also unjust.The topic has received careful consideration and somewhat different treatment in the jurisdictions with which ours has most in common.It may be noted that the English Law Commission has recently found the issues to be of such difficulty and complexity as to be beyond the scope of legislation; instead they have been left to the continuing development of the judge-made principles of equity.In New Zealand the courts in developing and applying such principles have sought to steer a just and sensible course between on one side what has been called"an exercise in general wealth distribution" (see Nuthall v Heslop (1995) 13 FRNZ 518, 521) and on the other a futile search for certainty; futile because it is not feasible to retrace each contribution of each party and its enduring result.The courts' approach is conventionally expressed in terms of making an award corresponding to the reasonable expectation of the parties as generally commensurate with their respective contributions to the property: see Lankow v Rose [1995] 1 NZLR 277 (CA).But regard must be had to the reality that in the case of a lengthy relationship, to which both parties have committed their complementary talents and resources, a just result can be depicted only in primary colours employing a broad brush.The issue for this Court is whether the judgment of the High Court was fairly open to it on a proper application of the principles of equity.

[13] In the present case the Judge, after a five-day hearing in which he took a close interest, formed a favourable impression of each of the parties.In the case of Mr Taylor he found

The husband's contributions... on any analysis were dominant and largely causative of his current wealth.His Te Pahu farm represented a significant capital asset at the start of the relationship.He has augmented that asset through a combination of hard work, prudent management, frugality, focus and a good eye for potential investments in land.

[14] It is understandable that, in a claim which is necessarily expressed in money terms against assets, particular attention should be given to the directly financial aspects of the parties' contributions.They are obvious, important, and fairly readily assessed.Measured in that fashion, as Mr Cameron and Mr Earl submitted, and as Priestley J indeed found, Mr Taylor's contributions were predominant and Ms Watson's insignificant in comparison.It was their submission that the Judge did not go far enough in recognising Mr Taylor's contributions.

[15] We accept the detailed analysis of counsel for Mr Taylor concerning the property history of the relationship.From 1984 to 1989 the couple lived on the Te Pahu farm.After its sale they spent approximately six months at Whitianga managing a motel business.From late 1989 to March 1991 they were resident in Tauranga, initially staying with Ms Watson's mother although Mr Taylor met normal living expenses.Then there was a move to Rotorua followed by the purchase of a service station, which they operated until about mid 1993. The first kiwifruit farm was purchased at Pongakawa (near Te Puke) in November 1992.At much the same time a section at Ohope was acquired, and subsequently on-sold at a profit.In about May 1993 the Benner Road kiwifruit farm was purchased, also in the Te Puke area.At this point the family moved from Rotorua to that property.A sale of the service station followed.In 1995 "Lexie's" orchard was purchased in Ms Watson's name.At the end of that year it was sold for a considerable profit.From the proceeds of sale Ms Watson purchased a house property at Papamoa which she retained through to the date of separation.Finally, the first of the kiwifruit properties was sold to advantage and, in 1996, the Quarry Road kiwifruit farm was acquired, also in the Te Puke area.This bare description of the property history indicates a feature of the relationship of this couple.In order for Mr Taylor to seize and exploit property investment opportunities several geographical shifts were made.Each necessarily entailed the establishment of a new family household. Rhetorically it might be asked whether Mr Taylor would have made these shifts and achieved the property advantages which accompanied them without the involvement of his partner?We think it unlikely.

[16] There is force in the submissions as to the value of Mr Taylor's contributions.But they do not in our view meet the fundamental point of the value of those of Ms Watson.Throughout the relationship she was the homemaker and in addition did whatever she reasonably could to assist with the practical work in which Mr Taylor was so heavily engaged.It is indisputable that in the latter sphere her contribution does not compare with his.But the intangible value to Mr Taylor of the constant company and loyal devotion of a loving partner who gave him and the relationship her all is to be characterised not as ancillary but as a core contribution to Mr Taylor's capacity to relocate, acquire, develop and maintain assets in his name.Here, as in Hunter v Copland [2001] NZCA 352; (2001) 21 FRNZ 28, it is simply impossible to unravel decision by decision and asset by asset how it was that the various properties came to be acquired and in some cases disposed of to advantage en route to the position as at separation.In King v Church [2002] NZCA 67; [2002] NZFLR 555, 567 the matter was put this way

[33]Here there was the very kind of division of family responsibilities that has in the past been common between husband and wife.The law has moved on from a presumption that only financial contributions to a matrimonial home are significant, towards one that the different contributions are complementary and of equal worth. The values that have led to the Relationships Act existed prior to its enactment. The performance of household duties is now taken for granted as warranting recognition on division of property following separation of the parties of a male-female relationship.While New Zealand judge-made law has not gone as far as the Canadian by treating all assets of the parties as components of a "joint family venture", the concept of a "family home" and the value of household duties as a contribution to it has long become deeply seated in the New Zealand values system.It would in our view be contrary to that values system, by which the Court must be guided in developing the common law, to excise from consideration of "contributions to the home" the performance of household duties - whether provided by a female or a male.

[17] That observation, while made in the context of a same-sex relationship of long duration, applies with even stronger force to this farming couple who lived and to the extent of their ability worked together for 13 years to secure what they conceived as a common future. In this case it would be artificial and unreal to characterise her contributions as limited to the parties' successive homes.Certainly as a woman brought up in an urban environment Ms Watson experienced some difficulty in coming to grips with aspects of rural life. But there was no lack of diligence or enthusiasm on her part.She threw herself loyally and diligently into doing what she could to assist her partner to perform his arduous tasks as well as caring for him lovingly and with devotion. She did so throughout their relationship and the inference is inevitable that by doing so she sustained and supported Mr Taylor in all his sustained and diligent activity that was more directly focussed upon the assets and their acquisition.

[18] By way of recompense the Judge awarded a sum which, crediting Mr Taylor with the $40,000 and using the trial date values for the orchards, yields Ms Watson

120,000(Papamoa)

7,000(car)

40,000

275,000(Judge's award)

$442,000

or some 24% of the parties' total assets of $1.875m.When allowance is made for furniture and for Mr Taylor's supervision, management and control of the orchards over the period post separation (as distinct from the value of their improvement, for which the Judge allowed), it would still be of the order of one quarter.We have not been persuaded that the award was excessive.

[19] Nor are we satisfied that in any material respect the Judge's decision showed some error of approach.The high point of the appeal was the argument over the $40,000 with which the Judge did not specifically deal in his oral judgment.But that was only one aspect of a complex of factors which the Judge analysed with care.We are not persuaded that the point is so vital to the necessary overall broad appraisal that justice requires a de novo reappraisal.

[20] Nor, for similar reasons, are we satisfied on the cross-appeal that the award is inadequate.While there may be a marked difference between what Ms Watson might have received in a claim under the Matrimonial Property Act or the Property Relationships Act the Court can neither stretch nor anticipate the application of legislation.The development of judge-made law must of its nature be incremental rather than abrupt.

Conclusion

[21] It follows that both appeal and cross-appeal are dismissed.There will be no order as to costs.

Solicitors

Cooney Vosper, Cambridge for Appellant

McKechnie Quirke & Lewis, Rotorua for Respondent