Doyle v Doyle [2003] NZCA 216; [2004] NZFLR 43 (4 September 2003)

Last Updated: 17 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA1/03

BETWEEN ROLAND MICHAEL DOYLE
Appellant

AND MICHELE ANNE DOYLE
Respondent

Hearing: 20 August 2003

Coram: Anderson J Glazebrook J Paterson J

Appearances: K F Gould for Appellant
A S Kuran for Respondent

Judgment: 4 September 2003

JUDGMENT OF THE COURT DELIVERED BY GLAZEBROOK J

Introduction

[1] Mrs Doyle’s application to remove a notice of claim of interest, pursuant to the Property (Relationships) Act 1976 (the “Act”) registered by her husband against a property at Albany, was granted by Laurenson J on 5 December 2002. Mr Doyle appeals against that decision.

Facts

[2] Mr and Mrs Doyle were married in 1978. The Albany property was registered in the name of Mr Doyle in 1988. In 1991 the Bank of New Zealand (BNZ) obtained judgment against Mr Doyle for a sum in excess of $11,000,000 and, as a consequence, Mr Doyle undertook a rearrangement of his assets. This included the completion, on 29 August 1991, of a Matrimonial Property Agreement (the “Agreement”) pursuant to s21 of the Act, which was formerly called The Matrimonial Property Act 1976.
[3] The recitals of the Agreement provided that the parties had agreed that the Albany property was matrimonial property and that “they have resolved all questions outstanding between them as to their respective rights in respect of such matrimonial property so that each will have an exclusive right to hold and deal with their respective property unfettered by any matrimonial claim from the other”. The Agreement provided that the Albany property was to be the separate property of Mrs Doyle. It also provided that the Agreement was to be binding on the parties in all respects in which their property rights would otherwise be determined under the Act. The Albany property was registered in Mrs Doyle’s name in September 1991. Mr Doyle deposed that he took legal advice at the time of executing the agreement to ensure that it would not have the effect of defeating his creditor (the BNZ being the sole creditor) and that it would ensure that Mrs Doyle received some of the matrimonial property.
[4] Mr Doyle was adjudicated bankrupt at the suit of the BNZ in May 1993 and was discharged from bankruptcy in May 1996. On 9 September 1996 Mr Doyle registered the notice of claim against the Albany property and in September 1999 the parties separated. In August 2000 Mr Doyle made an application to apportion the matrimonial property and to set aside the 1991 Agreement. He deposed that he believes that the Agreement unfairly benefited Mrs Doyle, given his indebtedness at the time of entry into the Agreement and his subsequent bankruptcy. For a variety of reasons, the Family Court has not yet heard his application. On 11 September 2002 Mrs Doyle’s application to remove the notice of claim was filed.

The Legislation

[5] Mr Doyle’s notice of claim with regard to the Albany property was filed pursuant to s42 of the Act. That section provides as follows:

42. Notice Of Interest Against Title

(1) A claim to an interest, pursuant to this Act, in any land subject to the Land Transfer Act 1952 shall be deemed to be a registrable interest for the purposes of that Act.

(2) Notice of a claim under subsection (1) of this section shall be effected by lodging a duly completed notice in the form set out in the Schedule 1 to this Act with the District Land Registrar.

(3) Every notice so lodged shall have effect as if it were a caveat in Form N in the Schedule 2 to the Land Transfer Act 1952 lodged pursuant to section 137 of that Act and the provisions of that Act except subsections (3) and (4) of section 141, shall apply subject to the following modifications-

(a) Any application under section 143 or section 145 of that Act in respect of any notice under this section may be made to either a District Court or the High Court; and

(b) An order under section 148 of that Act authorising the receipt of a second notice under this section may be made by a District Court or the High Court.

(4) In the case of land that is not subject to the Land Transfer Act 1952, notice of a claim to an interest pursuant to this Act may be registered in the manner in which deeds and other instruments affecting the land may be registered.

(5) A notice under subsection (2) or subsection (4) of this section may be registered notwithstanding that no proceedings under this Act are pending or in contemplation, and notwithstanding that there is no dispute between the parties.

[6] Pursuant to s97(2) of the Property (Relationships) Act 1976 that Act, as amended from 1 February 2002, applies to the application to remove the notice of claim filed by Mrs Doyle as well as to Mr Doyle’s applications that are to be heard in the Family Court. Section 42 remains essentially in the same terms as it was before the Act was amended and renamed. The provisions relating to setting aside matrimonial property agreements have, however, been altered. Under the Act before its amendment the Court had to consider whether it would be “unjust to give effect to the agreement”. Under the current s21J the Court must consider whether giving effect to the agreement “would cause serious injustice”. Section 21J reads as follows:

s21J Court may set agreement aside if would cause serious injustice

(1) Even though an agreement satisfies the requirements of section 21F, the Court may set the agreement aside if, having regard to all the circumstances, it is satisfied that giving effect to the agreement would cause serious injustice.

(2) The Court may exercise the power in subsection (1) in the course of any proceedings under this Act, or on application made for the purpose.

(3) This section does not limit or affect any enactment or rule of law or of equity that makes a contract void, voidable, or unenforceable on any other ground.

(4) In deciding, under this section, whether giving effect to an agreement made under section 21 or section 21A or section 21B would cause serious injustice, the Court must have regard to—

(a) the provisions of the agreement:

(b) the length of time since the agreement was made:

(c) whether the agreement was unfair or unreasonable in the light of all the circumstances at the time it was made:

(d) whether the agreement has become unfair or unreasonable in the light of any changes in circumstances since it was made (whether or not those changes were foreseen by the parties):

(e) the fact that the parties wished to achieve certainty as to the status, ownership, and division of property by entering into the agreement:

(f) any other matters that the Court considers relevant.

(5) In deciding, under this section, whether giving effect to an agreement made under section 21B would cause serious injustice, the Court must also have regard to whether the estate of the deceased spouse or de facto partner has been wholly or partly distributed.

High Court judgment

[7] Laurenson J concluded that Mr Doyle did not have a reasonably arguable case to support the retention of his notice of claim. The Judge noted that it was clear that Mr Doyle had been the instigator of the Agreement, had obtained an advantage from it in relation to his creditors, and had been content to accept its advantages for some five years before registering his notice of claim and with a further four years elapsing before he filed the substantive application.
[8] In addition, the Judge said that Mr Doyle had failed to pursue his substantive claim expeditiously following the registration of his notice of claim and Mrs Doyle had no assets other than the property in question. The Judge concluded that Mr Doyle’s refusal to remove his notice was so unreasonable as to lead to the conclusion that he was not acting bona fide and was using the notice of claim of interest for purposes other than the genuine protection of his interest in the property.
[9] Laurenson J noted that the determination of the substantive proceedings fell to be determined by the Family Court but considered that it would be contrary to the interests of justice to allow Mr Doyle to maintain his notice of interest solely on the ground that those proceedings were extant. Laurenson J added that, if his assessment of the outcome of the substantive proceedings was wrong, then any benefit to Mrs Doyle from dealing with the property would be able to be taken into account in the final resolution of the substantive claim.

Submissions of the parties

[10] Mr Gould for Mr Doyle submitted that Laurenson J could not conclude on the evidence available to him that Mr Doyle did not have a reasonably arguable case for setting aside the Agreement. For these purposes it was sufficient for Mr Doyle to show that Mr Doyle had been married to Mrs Doyle and that a claim had been made. In any event, it was submitted that the Agreement was not entered into to defeat his creditors and thus Mr Doyle did not receive any advantage from the Agreement. He also submitted that it was not open to Laurenson J to conclude that Mr Doyle was not acting bona fide. Finally he submitted that Laurenson J appeared to have resorted to the principle of balance of convenience, which is inappropriate in this context.
[11] Mr Kuran, for Mrs Doyle, submitted that the correct test had been applied to the setting aside of a notice of claim, that the findings made by Laurenson J were reasonably open to him on the facts with the result that he was entitled to exercise his discretion in the manner he did, and that Mr Doyle could not maintain his notice of claim because he had failed to establish an arguable case that the Agreement would be set aside in the substantive proceeding, Mr Doyle having entered into the Agreement intentionally and with legal advice.

Discussion

[12] As a preliminary point, we accept that Mr Doyle was entitled to file a notice of claim in respect of the Albany property, even though it was the subject of the Agreement. Section 42(1) of the Property (Relationships) Act 1976 requires only that there be a claim to an interest, pursuant to the Act, in any land. In this case Mr Doyle has filed proceedings in the Family Court asserting such a claim, albeit contingent on his succeeding in having the Agreement set aside. We consider that this suffices to allow a notice of claim to be filed. See also on this point the decisions of Master Gambrill in Coxhead v Coxhead (1989) 5 FRNZ 130, of Master Williams QC (as he then was) in B v B (1992) 8 FRNZ 566.
[13] In considering an application such as this for removal of a notice of claim the parties were agreed that the principles that should be applied by a court are the same as those that apply to an application for the removal of a caveat. In accordance with these principles, in order to maintain his notice of claim, Mr Doyle must show an arguable case for its retention. While it will be for the Family Court to determine Mr Doyle’s final entitlement (if any), some evidence had to be adduced before the High Court to show that there is an arguable case in respect of the claim.
[14] It was common ground that, in order to succeed in his claim, Mr Doyle must first persuade the Family Court to set aside the Agreement. This means that he must show that giving effect to the Agreement would cause serious injustice. As indicated above, Mr Doyle has deposed that he considers the Agreement unfair but, apart from referring to his financial position at the time of entry into the Agreement, he has given no reasons for that view. In any event, the standard is serious injustice and not mere unfairness.
[15] In addition, there is nothing in the surrounding circumstances that were before the High Court to suggest that there would be serious injustice in giving effect to the Agreement. Mr Doyle is a businessman and was separately advised when he entered into the agreement. He has deposed that he did not enter into the Agreement with the intent to defeat creditors and that he wished his wife to have some share of the matrimonial property. We must assume therefore, absent any evidence to the contrary, that at the time he considered that this was a genuine estimate of Mrs Doyle’s entitlement.
[16] Mr Doyle applied to have further evidence adduced before this Court in the form of the accounts of his trading company. These accounts show a large trading loss. Such evidence would not, however, have advanced the matter further. The accounts were not group accounts. Although we understand that most, if not all, of the other companies in the group are not currently trading, we have no information on the asset position of the other companies in the group.
[17] In these circumstances Mr Doyle has failed to show that there is an arguable case for the maintenance of his notice of claim. We note that Fisher on Matrimonial and Relationship Property at para 9.28 suggests that, as notices of claim can be lodged in circumstances that would not sustain a caveat, the test for the removal of a notice should arguably differ from the principles applicable to caveats. It is suggested that the test should be whether or not continuance of the notice in question is reasonably required to protect rights of the claimant under the Act. Such a test might justify removal of a notice on grounds that would not justify the removal of a caveat. Whether or not that is the applicable test, it is clear that a notice of claim cannot be maintained unless the claimant shows an arguable case. Mr Doyle has failed to do so. As this is the case we do not need to examine the other matters relied on by the Judge.

Result and costs

[18] For the reasons given, the appeal against the decision of Laurenson J is dismissed.
[19] Costs of $5000 are awarded in favour of Mrs Doyle, plus reasonable disbursements (including travel and accommodation costs of counsel) to be set by the Registrar if necessary.

Solicitors:
Dennis M Graham, Auckland for Appellant
Lowndes Associates, Auckland for Respondent