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Court of Appeal of New ZealandLast Updated: 18 December 2011
IN THE COURT OF APPEAL OF NEW ZEALAND
CA189/03BETWEEN HENRY JOHN ESDAILE
NATION
Appellant
AND NICOLA MARY
NATION
Respondent
Hearing: 21 and 22 April 2004
Coram: McGrath, Glazebrook, Hammond, William Young and O’Regan JJ
Counsel: M E J Macfarlane
for Appellant
G R J
Thornton and B A Toy-Cronin for Respondent
Judgment: 26 November 2004
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JUDGMENT OF THE COURT
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REASONS
(Given by Hammond, William Young and O’Regan JJ)
Table of Contents
Para No
Introduction [1]
Facts [3]
Family Court decision [25]
High Court decision [36]
This appeal [50]
Issues on appeal [52]
(a) Section 9A [56]
(b) Section 10(2)
(Cattle) [83]
(c) Section
10(2) (Farm) [117]
(d) Section 17(2) [124]
(e) Section 44C [136]
(f) Sections 15 and 15A [157]
Further evidence or
submission [164]
Disposition [168]
Introduction
[1] This is an appeal from a decision of the High Court allowing, in part, an appeal from a Family Court decision on the division of property following the parties' separation after a marriage of 28 years.
[2] The appeal requires consideration of a number of provisions of the Property (Relationships) Act 1976 (the PRA). For convenience, we have set out the text of these provisions in an appendix to this judgment. The PRA incorporates a number of amendments to the Matrimonial Property Act 1976 (including the change of name to the Property (Relationships) Act) effected by the Property (Relationships) Amendment Act 2001, which came into force on 1 February 2002.
Facts
[3] Mr and Mrs Nation married in June 1972. For convenience, we will refer to them as “the husband” and “the wife”. The previous year, the wife had successfully completed her first year of study for a science degree at university. She discontinued her studies when they married. The husband had returned to his family’s farm a few months before the wedding and commenced farming on the property in partnership with his father, after some years of working on other farm properties, and a previous stint of working on the family farm.
[4] Mr and Mrs Nation were married for 28 years. They have four children, three sons and one daughter, all of whom are now in their twenties.
[5] Much of this case focuses on the farming property known as Punawaitai Station at Pourerere, east of Waipawa in Hawkes Bay. (We will refer to this as “the farm”). The farm has been in the Nation family in one form or another since 1917. There has been a considerable degree of complexity in the ownership structures for the farm and the entities carrying on the farming operation on it.
[6] At the time of the marriage, the farm was owned as to one half share by the Estate of E C Nation (the husband’s grandfather) and as to one half share by the Trustees of the H A Nation Children’s Trust. H A Nation was the husband’s father, known as Andy Nation.
[7] The beneficiaries in the Estate of E C Nation were Andy Nation as to a one half interest and the husband’s two aunts, Dinah Nation and Pen Nation, as to a quarter interest each.
[8] There was no evidence before us as to the terms of the H A Nation Children’s Trust apart from the fact that it was described in contemporary correspondence as a discretionary trust and the husband was one of the beneficiaries of it.
[9] There are a number of significant transactions which affected ownership of the farm and other property, particularly stock, which occurred during the marriage. It is convenient to deal with these in chronological order.
[10] In 1975 Andy Nation transferred to the husband 119 cattle. A similar transaction took place in 1976. This time 128 cattle were transferred, making a total of 247. There is a dispute about these cattle. The Family Court Judge determined that these transactions were gifts of cattle by Andy Nation to the husband, though this was disputed by the wife. He also purchased some stock about this time from his aunts, Dinah and Pen Nation.
[11] In 1978 the husband acquired a half share in the farm from the Estate of E C Nation. The husband said in evidence that it was intended that in due course he would take over the whole farm. The family accountant, Mr Reaney, who gave evidence on behalf of the husband, said that the background to this acquisition was that the family wanted to pay out Dinah and Pen Nation and have the husband, the intended ultimate owner of the farm, take over their interests and his father’s prospective share of the farm from the Estate of E C Nation. He said that the husband bought stock from his aunts and bought the estate’s share of the farm. The Family Court Judge determined that the half of the farm which was acquired in the 1978 transaction became relationship property. This finding was not challenged in this Court. The price determined for the half interest in the farm in 1978 was $163,719.
[12] In 1979 five acres of orchard were planted on the farm.
[13] Major renovations of the family home, which was on farm land, were undertaken in 1983.
[14] The H A Nation Children’s Trust was wound up in 1988/1989. The husband acquired the half share of the farm he did not already own from that trust in 1990. Mr Reaney said that the husband obtained this half of the farm “as the appointed beneficiary”. Contemporary correspondence from the lawyer for the trust to one of the trustees describes the transaction in the following terms:
...the H A Nation Family Trust has appointed its land to John [the husband] and pursuant to that the Memorandum of Transfer for it is enclosed herewith. This transfers the other half of the land to John as arranged.
[15] In another contemporary letter there is a reference to a Deed of Appointment and Distribution pursuant to which the remaining half share in the land was transferred to the husband. As the trust deed for the H A Nation Children’s Trust was not before the Court, the nature of any interest which the husband had in the half share of the farm held by the trustees of this trust prior to the distribution in 1990 is difficult to determine. We will revert to this later.
[16] After the husband acquired a half interest in the farm in 1978, he and his father carried on the farming operation through a partnership known as the Punawaitai Partnership. Cattle and sheep owned by the husband and his father were put to the use of the Punawaitai Partnership. This included the 247 cattle which are the subject of dispute in this case. The Punawaitai Partnership came to an end when Andy Nation died in 1998. However there is a similar “put to use” arrangement with the Punatoka Joint Venture, which is a partnership between Punawaitai Farming Company Limited (a company owned by the husband which was formed in 1999: see para [22] below) and Waitoka Trust (an entity not related to the Nation family).
[17] A forestry block was planted on the land in 1978. Further plantings on the land occurred in 1993. There is approximately 10 hectares of forestry on the farm.
[18] A new trust, the Punawaitai Trust, was established in 1999. The trustees were the husband, Mr Reaney and the family’s solicitor Mr Wares. Under the trust deed, the “principal family member” is the husband, and in that capacity he had power to appoint discretionary beneficiaries, remove discretionary beneficiaries and power to appoint and remove trustees.
[19] The Punawaitai Trust purchased the farm from the husband for $991,813. The price of $991,813 was set after obtaining a market appraisal from a rural sales officer for a stock and station agent who was not a valuer. That appraisal indicated three possible valuations, with the $991,813 figure being the second highest of those. A registered valuer who gave evidence of behalf of the wife said the farm had a value of $1,375,000 at the date of separation, 31 July 2000, and $1,725,000 at the date of his valuation (1 March 2002).
[20] At the time it purchased the farm, the Punawaitai Trust borrowed $300,000 from the Bank of New Zealand and received a gift from the husband of $27,000. $415,803 of the sale price was left owing to the husband by the Punawaitai Trust.
[21] The wife knew that the sale to the Punawaitai Trust was to take place before it occurred and obtained independent legal advice at her husband’s suggestion. However she said that this advice was obtained in circumstances where she had been told by the husband that he wished to end the marriage, and that she went along with it because she did not wish to do anything that would jeopardise the chances of rescuing the marriage.
[22] Just before the Punawaitai Trust was created, a new company was formed. This company was known as Punawaitai Farming Company Limited. It has 100 shares, all of which are owned by the husband, and is the entity carrying on a farming operation on the farm.
[23] Another company, Punawaitai Holdings Limited, in which all the 100 shares are held by the husband, is a property investment company, developing lifestyle blocks.
[24] The parties separated in July 2000. After the separation the wife left the farm and now lives in Taupo. The husband remains on the farm.
Family Court decision
[25] The Family Court Judge, Judge von Dadelszen, determined that half of the debt of $415,803 owing to the husband as a result of the sale of the farm to the Punawaitai Trust in 1999 was relationship property. This was because it represented the half interest in the farm which the husband acquired from the Estate of E C Nation in 1978, which was relationship property. We will call this the “relationship half interest”. He found that the other half was the husband’s separate property. That was because it represented the half interest in the farm which the husband acquired as a result of the distribution made to him by the H A Nation Children’s Trust in 1990 and which therefore became the husband’s separate property at that time. We will call this the “husband’s half interest”. One half of the husband’s current accounts with, and shares in, Punawaitai Holdings Limited and Punawaitai Farming Company Limited were classified as relationship property. The transportable cottage on the farm was also classified as relationship property. A debt of $62,394.33 owed to the husband by the estate of his father Andy Nation was determined to be separate property.
Claim under s 9A
[26] The Family Court Judge rejected the wife’s claim under s 9A of the PRA that any increase in value in the husband’s separate property (the husband’s half interest in the farm) was attributable to her actions, or to the application of relationship property. He accepted there was evidence of improvements and developments done on the farm during the marriage but said there was no evidence as to how they impacted on the value of the farm. He said it was incumbent on the wife to provide at least some general indication from the valuer as to the likely impact of the application of relationship property or her actions.
Claim under s 10(2) : 247 cattle
[27] The Judge determined that the 247 cattle which were put to use with the Punatoka Joint Venture were separate property. He found the cattle could be separately identified throughout the marriage and there was no intermingling of the kind contemplated by s 10(2).
Claim under s 10(2) : Farm
[28] The Judge rejected the wife’s claim under s 10(2). He said the husband’s separate property interest in the farm persisted and could be traced into the debt owing to the husband by the Punawaitai Trust after the sale of the farm to the Punawaitai Trust in 1999.
Section 2G
[29] The Judge rejected the wife’s claim that the debt of $415,803 did not reflect the true value of the farm. He said the power under s 2G of the PRA provided for valuation of property at a different date, but that this could not apply where the property had been sold – this issue would need to be dealt with under s 44C of the PRA.
Chattels
[30] The Judge set values for a motor vehicle and livestock which were relationship property, and no issue was taken with those in the High Court or in this Court. He rejected the wife’s claim for compensation for plant and equipment transferred to the Punawaitai Farming Company at a price of $141,543, and again this was not challenged in the High Court.
Claim under ss 15 and 15A
[31] The Judge rejected the wife’s claim under either s 15 or s 15A of the PRA on the basis of economic disparity. He found that the wife had not discharged the onus on her to satisfy him on the balance of probabilities that the husband’s income and living standards were likely to be significantly higher than hers, so that her s 15 claim failed. The s 15A claim failed for the same reason.
Claim under s 17
[32] The Family Court Judge also rejected the wife’s claim for compensation under s 17, which provides for compensation to be paid if separate property of one spouse is being sustained by the application of relationship property or the actions of the other spouse. He said that the wife had failed to satisfy the onus on her to establish that she was entitled to an increase in her share of the relationship property or compensation under s 17. He said he was being asked to make the assumption that, because of the work which the wife did, the husband’s half interest in the farm must have been sustained. He declined to do so.
Claim under s 44C
[33] The Judge rejected the wife’s claim for a payment under s 44C of the PRA, which was based on her allegation that the transfer of the farm to the Punawaitai Trust in 1999 had the effect of defeating her claim or rights. As he understood it, the basis of the wife’s claim was that the price of $991,813 was inadequate and led to a lower amount being owed to the husband than would have been the case if the price had been the true market value. The Judge noted that the wife’s valuer had provided a valuation as at 31 July 2000, which was a year after the transfer to the Punawaitai Trust. He said he had no evidence of farm price movements in the intervening period. It may be that the Judge did not appreciate the significance of the date of this valuation: that the wife’s claim was not necessarily focussed on the sale being at an undervalue, but on the broader basis that the disposition of the farm in exchange for interest-free debt had defeated her claim. Given the rather equivocal submissions made by counsel for the wife on this topic, the Judge could not be fairly criticised for that. In any event, he dealt with the matter on the narrow basis outlined above. The Judge noted that the three values determined by the stock and station agency market appraisal was $1,042,400, $991,813 and $958,770. He said the gap between the highest valuation and the figure actually adopted for the sale to the Punawaitai Trust was only $49,875 or about 5% of the highest valuation and in those circumstances he could not be satisfied that a disposition of the farm to the Punawaitai Trust had the effect of defeating the wife’ claim or rights.
Maintenance and interest
[34] The Family Court Judge made an award of $10,000 for past maintenance to the wife. He also ruled that interest of 6% should be paid on the wife’s entitlement for the period commencing six months after separation until payment.
Result
[35] The Family Court Judge said he envisaged that the outcome of his decision would be a payment to the wife of between $270,000 and $300,000 plus interest at 6%. However the actual outcome was that the wife would receive a figure in the order of $220,000, plus interest at 6% on the sum of $196,836.44 from 9 April 2002 until payment. This difference appears to have arisen from a mistake by the Family Court Judge in his calculations. He expected that the final figures would incorporate an award made in relation to a debt of $62,394.43 owed to the husband by the Punawaitai Farming Company Limited, but it transpired that no such debt existed.
High Court decision
[36] The wife appealed to the High Court. There was also a cross-appeal by the husband in relation to the award of interest at 6%. The appeal was heard by a Full Court (Gendall and France JJ). The judgment of the Court was delivered by France J.
Claim under s 9A
[37] The High Court determined that the Family Court Judge had been wrong in his conclusion that there was no evidence as to how the wife’s work on the farm had impacted on the value of the farm. Similarly, his ruling that the wife had an obligation to put forward at least a general indication from a valuer as to the likely impact of the application of relationship property or her actions on the value of the farm was incorrect.
[38] The High Court indicated that the changes to the old s 9(3) effected by s 9A were more significant than the Family Court Judge had indicated, and required a different approach. We will revert to this issue later.
[39] Having considered the actions of the wife during the marriage and the applications of relationship property to the farm which had occurred during the marriage, the High Court concluded that part of the increase in value of the farm during the marriage must be attributable to the application of relationship property and/or directly or indirectly attributable in part to the actions of the wife. The Judges decided that valuation evidence of a nature envisaged by the Family Court was not necessary for the Court to be satisfied of that. They determined that the wife was therefore entitled to an equal share of the increase in value of the husband’s share of the farm. They calculated the wife’s entitlement to be $158,872, but there was an arithmetical error which made this figure twice as high as it ought to have been (the correct figure would have been $79,436).
Claim under s 10(2) : Farm
[40] The High Court said that the wife’s claim for a share of the separate property was better dealt with in terms of s 9A, and that the claim based on s 10(2) was not directly argued. However the Court found it unnecessary to decide whether the relationship half interest in the farm was so intermingled with the husband’s half interest that it was unreasonable that the Court treat it as being separate.
Claim to Punawaitai Holdings Limited
[41] The High Court rejected the wife’s appeal against the Family Court finding that half of the current account and of the shares held by the husband in Punawaitai Holdings Limited was relationship property. She contended that all of this should have been relationship property. However the High Court determined that the Family Court’s reasoning followed logically from its conclusion about the separate status of the husband’s half interest in the farm and that there was no basis for the High Court to intervene in those findings, and this was not contested in this Court.
$62,000 debt by the Estate of H. A. Nation
[42] The High Court upheld the Family Court ruling that this was an asset of the husband which was sourced from the estate of his father and was therefore rightly classified as separate property. Again, this was not contested in this Court.
Claim under s 10(2) : 247 cattle
[43] The wife challenged the Family Court decision that the 247 cattle acquired by the husband from his father in 1975 and 1976 were separate property. The Court rejected the wife’s contention that the cattle were not gifted to the husband by his father, but were purchased. The Court said that there was no basis to interfere with the Family Court’s finding in that regard.
[44] That meant that the 247 cattle comprised property acquired by gift, which meant that s 10 of the PRA applied. Under s 10(2), gifted property is not relationship property unless, with the express or implied consent of the spouse who received it, the property has been so intermingled with the relationship property that it is unreasonable or impracticable to regard it as separate property.
[45] The High Court determined that the cattle originally gifted to the husband were untraceable, since the stock had died or had been sold and been replaced over time. In that regard the Court preferred the approach in Scott v Scott (1980) 3 MPC 162 at 163 over that in Bowen v Bowen (1981) 4 MPC 22. The cattle were now so intermingled with relationship property that it was impractical and unreasonable to treat them as separate property, and accordingly they were to be treated as relationship property in which the wife was entitled to a half share.
Claims under ss 15, 15A, 17 and 44C
[46] The Court noted that the wife’s counsel said the appeal was run on a “staggered basis”. This meant that some claims were run only on the basis that earlier ones had failed. Since the claims under s 9A and in relation to the 247 cattle succeeded, the Court found it unnecessary to address the wife’s claims under ss 15, 15A, 17 and 44C.
Maintenance
[47] The Court upheld the Family Court finding on maintenance, and this is not contested.
Interest
[48] The Court rejected the cross-appeal against the Family Court Judge’s award of interest at 6% for the period commencing six months after separation until payment. Again, this was not in issue in this Court.
Result
[49] The sealed judgment of the High Court provided that the amount which the husband was required to pay to the wife was $362,907.69 (plus interest), compared to the $196,836.44 awarded to the wife by the Family Court. But it is apparent that this did not properly reflect the High Court’s decision. The High Court judgment made two adjustments to the Family Court judgment: it increased the award for one half of livestock from $28,955 to $140,105 (an increase of $111,150) to reflect the value of the 247 cattle, and it awarded the wife $158,872 under s 9A. So the Family Court award of $196,836.44 should have been increased by $270,022 ($111,150 + $158,872) to $466,858.44 to reflect the High Court decision. If the arithmetic error made in the High Court judgment (see para [39] above) were corrected, the award of $158,872 under s 9A would reduce to $79,436 and the High Court award would be $387,422.44.
This appeal
[50] The husband appealed to this Court against the High Court’s findings in relation to the application of s 9A of the PRA and the application of s 10(2) to the husband’s interest in the 247 cattle.
[51] The wife cross-appealed claiming that, if the husband was successful in defeating her entitlement under s 9A of the PRA, then she claimed an entitlement to compensation under ss 15, 15A, 17 and 44C of the PRA, and claimed that there was an intermingling of the husband’s half interest in the farm with the relationship half interest in the farm for the purposes of s 10(2) of the PRA. The wife also sought to support the High Court’s finding in relation to the 247 cattle on grounds not outlined in the High Court judgment.
Issues on appeal
[52] The issues we are required to determine are:
(a) Section 9A: is any increase in the value of the husband’s half interest in the farm attributable (wholly or in part) to the application of relationship property and/or the actions of the wife? If the latter, what shares should the husband and wife have in the increase in value?
(b) Section 10(2) (Cattle): has there been an intermingling of the husband’s interest in the 247 cattle with relationship property with the express or implied consent of the husband?
(c) Section 10(2) (Farm): has there been such intermingling of the husband’s half interest in the farm with relationship property?
(d) Section 17(2): has the husband’s half interest in the farm been sustained by the application of relationship property or the acts of the wife and, if so, should the share to which the wife would otherwise be entitled in the relationship property be increased?
(e) Section 44C: did the sale of the farm to the Punawaitai Trust in 1999 have the effect of defeating the wife’s claim and, if so, what compensation should be paid?
(f) Sections 15 and 15A: are the husband’s income and living standards likely to be significantly higher than the wife’s because of the division of functions within the marriage while the parties were living together and, if so, what compensation should be paid to the wife? If the answer to the former question is affirmative, was any increase in the value of the husband’s separate property attributable to the actions of the wife while the parties were living together and, if so, what compensation should be paid to the wife?
[53] There is a considerable degree of overlap in the wife’s claims under s 9A, s 10(2) and s 17(2). Counsel for the wife, Mr Thornton, said that the wife seeks to establish a claim to a half share of the husband’s half interest in the farm, which is now represented by his separate property interest in half of the debt of $415,803 owing to him by the Punawaitai Trust. Accordingly the wife seeks to establish that she is entitled to $103,950 (being half of the husband’s half interest in the debt of $415,803) on one of the following bases:
(a) Under s 10(2), on the basis that the husband’s half interest in the farm was intermingled with the relationship half interest in the farm; or
(b) On the basis that she is entitled to a share in the increase in value of the husband’s half interest in the farm under s 9A (and to the extent that this claim amounts to less than $103,950, the remainder would be claimed under s 17(2)); or
(c) In the event that the claims under s 10(2) and s 9A fail, under s 17(2) on the basis that the husband’s half interest in the farm has been sustained by the application of relationship property or the actions of the wife.
[54] In the event of the wife’s claim under ss 9A, 10(2) or 17(2) and the wife’s claim to a half interest in the 247 cattle was also successful, then the wife would not pursue her claim under s 15 or s 44C.
[55] We will deal with the issues set out in para [52] above in the same order as that in which they appear in that paragraph.
(a) Section 9A
Family Court
[56] The Family Court Judge found that half of the farm was the husband’s separate property, and that this was now represented by a half interest in the debt owed to the husband by the Punawaitai Trust of $415,803. That conclusion was reached by the application of s 9 of the PRA. Section 9(3) says that any increase in the value of separate property, and any income or gains derived from separate property are themselves separate property, but that principle is expressed to be subject to s 9A.
[57] Section 9A replaced the previous s 9(3), which had been the subject of an extensive analysis in the decision of this Court in Hight v Hight [1997] 3 NZLR 396. Blanchard J, giving the judgment for the majority in that case, set out at 406 the following seven propositions which are relevant to an application of the old s 9(3):
1. When the subsection speaks of an increase in the value of separate property it is referring to an increase in nominal terms. Depreciation of the currency over the period of the marriage is not to be taken into account in determining whether there has been an increase in the value of an asset.
2. If any part of that (nominal) increase is shown to be traceable to the action of the non-owner or results from the application of matrimonial property, then the whole of the increase occurring upon or after the first such action or application becomes matrimonial property. The onus of proof is on the non-owner spouse.
3. Actions or applications of a trivial nature are disregarded because they make no clearly measurable difference to subsequent value and cannot be said to be causative of any increase.
4. A contribution by the non-owner spouse to the marriage partnership, including one which is of a domestic character, may also be causative of an increase in value of separate property of the other spouse so that the increase becomes matrimonial property.
5. There must be recognisable in the increased value a factor attributable to the actions of the other spouse or to the application of matrimonial property. It must be a contribution which has caused the value at the date of the hearing (or other date at which value is assessed) to be higher than it would have been in dollars of the day simply by reason of inflation or other causes. The Consumers' Price Index or another index which measures movements in property values or contains a component for such movements may be of some assistance.
6. An abstract formula such as the Judge used will not measure the increase in value of an asset and therefore is of very limited value. If the increase in the value of the asset is less than the movement in an index or the amount which would have been earned on a notional investment, that may have been because of circumstances which affected all assets of that kind (for example, the depression in the kiwifruit market in the 1980s at a time when other investments were, before the market crash of 1987, doing well) or affected the individual asset (for example, the effects of a storm or other peril). Equally, if the asset has outpaced the notional investment, that may have been because the asset was of a type which tended do well during the period under observation (e.g. public listed shares before the crash).
[58] The Family Court Judge proceeded on the basis that these seven propositions also applied to the new s 9A, with the exception of Proposition 2. The reason that that proposition does not remain completely applicable is that, under s 9A(2), where the increase in value of the separate property is attributable to the actions of the non-owning spouse, the increase in value is relationship property, but the share of each spouse or de facto partner in that relationship property is determined in accordance with their respective contributions to the increase in value. Under s 9(3) it became relationship property and subject to the general division of relationship property (usually 50/50). The Judge also noted that, under s 9A(2), it is sufficient that an increase in value is attributable directly or indirectly to the actions of the other spouse or de facto partner, whereas under s 9(3) it was necessary to establish that the increase in value was directly attributable to the actions of the other spouse.
High Court
[59] This Family Court approach of applying those seven propositions (with modification to the second proposition only) was criticised by the High Court on the basis that it failed to give recognition to the change brought about by the enactment of s 9A in place of the old s 9(3), and also the purposes and principles set out in the new ss 1M and 1N which were inserted into the PRA by the 2002 amendment.
[60] The High Court said that s 9A differed from the old s 9(3) in two important respects, which affected the analysis applied to the old s 9(3) in Hight v Hight. At [50], the Court said those changes were:
(a) An increase in value which is indirectly, not just directly, attributable to the actions of a non-owner will qualify. Section 9(3) provided that any increase in the value of separate property, was separate property unless the increase in value were attributable “wholly or in part” to the actions of the non-owner spouse or to the application of matrimonial property. Accordingly, under s9(3), the increase had to be directly attributable to the actions of the non-owner. It is not the actions that are direct or indirect but rather whether their connection to the increase in value is attributable directly or indirectly;
(b) The parties’ shares (where an increase is attributable to one party’s actions) are determined in accordance with the contributions of each to that increase. Under s9(3) the whole of the increase in value was matrimonial property to be shares equally whatever the contribution.
[61] The Court said that the changes made in s 9A were designed to overcome difficulties with s 9(3), particularly in cases involving contributions by a non-owner spouse to a farm owned by the other spouse.
[62] The High Court said that the changes effected by the enactment of s 9A mandated an approach reflected in the minority judgment of Thomas J in Hight v Hight. In that dissenting judgment, Thomas J expressed concern that the actions of a spouse could be considered too remote from any increase in value in the separate property where there was no direct physical connection between the spouse’s activity and the increase in value (at 414). The High Court expressed the view that the new s 9A expressly overcame that problem.
[63] The High Court said that the Family Court approach had the effect of overly favouring the concept of separate property in legislation which has as one of its principles a recognition of equality of contributions. The Judges said that concepts of formal legal onus may not be altogether helpful when dealing with matters such as these, because, in the end the Court has to be satisfied that the wife’s case is made out. They said that there was an onus but it was not as difficult to overcome or achieve now as it had been under the old s 9 (at [59]).
Submissions for husband
[64] Counsel for the husband, Mr Macfarlane said that the High Court was wrong to adopt an approach which was inconsistent with Hight v Hight. In particular he criticised the High Court’s comments about the reduced onus on the non-owner spouse which he said was not necessary to reflect the changes effected by s 9A and by the new purpose and principles provisions in ss 1M and 1N.
[65] Mr Macfarlane also submitted that the High Court had been wrong to consider actions taken by the wife prior to 1990, when the husband’s half interest in the farm had been distributed to the husband by the H A Nation Children’s Trust. He said that prior to this distribution occurring, that half share in the farm was not separate property of the husband, and the husband had no interest in it other than as a discretionary beneficiary under the terms of the H A Nation Children’s Trust.
[66] For the same reason, he was critical of the approach taken by the High Court in assessing the change in value between 1977 and 2000, when the parties separated. He said that the correct approach would be to assess any change in value between 1990, when the husband acquired the husband’s half interest in the farm, and 1999 when the farm was sold to the Punawaitai Trust, because the husband’s half interest in the farm was “separate property” only during that period. As there was no evidence of the value of the farm in 1990, there was no evidence before the Court which would provide a basis for a claim of increase in value. He said there was no evidence before the Court that there had, in fact, been any increase in value in the husband’s half interest in the farm between 1990 and 1999 and, even if there had been, there was no evidence of the wife’s contribution to any such increase in value.
Submissions for wife
[67] On behalf of the wife, Mr Thornton supported the High Court judgment. He said the High Court had been correct to calculate the increase in value of the farm from 1978. He said it had always been intended that the half of the farm would be transferred to the husband from the H A Nation Children’s Trust: the contributions made by the wife to the farm had been made in the light of that expectation. He also supported the approach taken by the High Court to the determination of the actions by the wife which had contributed to the increase in value of the husband's half interest in the farm. He drew support from s 1N(d) of the PRA, which says that the principle that questions arising under the PRA about relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice should guide the achievement of the purpose of the PRA.
Discussion
[68] We agree with the High Court that the changes made to the old s 9(3) by the new s 9A (as outlined in para [60] above) are significant, and must be seen as being intended to be remedial of the anomalies (which particularly affected non-owing spouses in cases involving farm properties) identified in Fisher on Matrimonial Property, 2ed 1984 (as quoted in the High Court judgment at [51]).
[69] We agree with the High Court that some guidance as to the interpretation of s 9A as with other provisions of the PRA, can be taken from s1N, particularly s 1N(d), which, in our view, indicates that the Court should look at matters in the round and not take an overly technical approach.
[70] Mr Macfarlane was particularly critical of the comment in the High Court judgment that concepts of a formal legal onus may not be altogether helpful when dealing with matters arising under s 9A. But in our view this did no more than recognise the legislative change in s 9A(2), which has been broadened to incorporate an increase in value of separate property which is only indirectly attributable to the actions of the non-owning spouse. The High Court was entitled to see this as a substantive change from the law which applied under s 9(3) where the burden on the non-owning spouse to prove that an increase in value was directly attributable to his or her actions was significant.
[71] It should be noted that the High Court did not suggest that the onus of proof had switched away from the non-owning spouse – it is clear from the judgment (at [59]) that there is an onus, but what needs to be established is easier to prove. The High Court also correctly identified (at [62]) that the position in respect of s 9A(1), which has not been amended to deal with increases in value indirectly attributable to the application of relationship property, is unchanged from the old s 9(3) so that the onus of proof remains the same. We agree with the High Court’s formulation that a causal connection which is more than trivial is required, and we also agree that matters must be looked at in totality.
[72] Accordingly, we reject Mr Macfarlane’s criticisms of the High Court’s approach.
[73] Although we agree with the approach taken by the High Court, we accept Mr Macfarlane’s submission that the High Court did not have an appropriate evidential foundation for the findings which it made in this case, even applying the relaxed approach to which we have referred above. The essential problem with the High Court approach is that it proceeds on an assumption that the husband’s half interest in the farm was his separate property from 1978. In fact, the half share in the farm which the husband acquired in 1978 (from the Estate of E C Nation) was the relationship half interest in the farm. Accordingly that half interest was irrelevant for the purposes of determining issues relating to separate property under s 9A. The other half share of the farm was acquired by the husband from the H A Nation Children’s Trust in 1990: see paras [14] – [15] above. So, in the period between 1978 and 1990, this half share in the farm was not the husband’s separate property. It was held by the trustees of the H A Nation Children’s Trust, which appears to have been a discretionary trust, though, as mentioned earlier, the trust deed was not in evidence before us.
[74] Mr Thornton argued that it was clear that it was always the intention of the trustees of the H A Nation Children’s Trust to distribute the half share in the farm to the husband, and that the actions taken by the wife which increased the value of the farm between 1978 and 1990 were taken in anticipation of that occurring. We accept there is evidence which supports the contention that such an intention existed (for example, see paras [11] and [14] above). In a letter written in 1978 by the husband’s lawyer, there is a reference to the intention that the husband would acquire the remaining half share of the farm. So the intention appears to have been a longstanding one. However, there is no evidential basis for a determination that the husband had an interest in that half share in the farm greater than that of any discretionary beneficiary of a trust in the period between 1978 and 1990. The conventional view is that a discretionary beneficiary has no legal or equitable interest in the assets of the trust until the trustees have exercised their discretion in favour of the particular beneficiary: Hunt v Muollo [2003] 2 NZLR 322 and Johns v Johns and Holloway CA 108/03 31 March 2004.
[75] We discussed with counsel whether the intention that the husband would receive the half interest in the farm from the H A Nation Children’s Trust could have been sufficient to found a legally enforceable interest or a claim based on estoppel. Another possibility we discussed was that the husband would have had a claim based on constructive trust given that he and his wife had undertaken valuable improvements to the farm in the period between 1978 and 1990 in the expectation of the distribution of the half share in the farm to the husband by the H A Nation Children’s Trust.
[76] There is not a sufficient evidential basis in this case for a finding that the husband had any such interest in the half share in the farm prior to the appointment of that half share to him by the trustees of the H A Nation Children’s Trust in 1990. The only evidence before the Court is that the H A Nation Children’s Trust was a discretionary trust, but without seeing the trust deed itself and knowing the arrangements between the husband, the other discretionary beneficiaries and the trustees, it is impossible to determine whether the husband had any property rights in the half share in the farm prior to 1990.
[77] We have considered whether actions taken by the wife prior to 1990, in anticipation of the husband’s acquisition of the half share in the farm, can be taken into account for the purposes of s 9A(2). We have concluded that they cannot. Section 9A is effectively an exception to (the new) s 9(3), which says that any increase in value of separate property is, itself, separate property. That general rule is subject to s 9A, which allows for an increase in value of separate property to be treated as relationship property in certain circumstances. In our view, when s 9(3) and s 9A are read together, it is clear that the focus of s 9A(2) is on actions taken by the non-owning spouse at the time the owning spouse owns the separate property – actions which increase the value of property which is later acquired by a spouse will not be an action which increases the value of the separate property, rather it would in this case have increased the value of property owned by the H A Nation Children’s Trust. If it could have been established that the husband had an interest in the half share in the farm prior to 1990, the position may well have been different, but for the reasons we have already been given we do not believe that that can be established in the circumstances of this case.
[78] The calculations undertaken in the High Court were based on the changes in value between 1978 and 2000, when the separation occurred. The High Court judges were able to make those calculations because there was evidence of the price at which the husband purchased the relationship half interest in the farm in 1978, and it could be assumed that an identical half interest would have had exactly the same value at that time. That meant that there was a base point from which to assess any increase in value of the husband’s half interest in the period between 1978 and 2000.
[79] However once it is established that any measurement of increase in value needs to be made from 1990, a gap in the evidence before the Court emerges. There is simply no evidence before the Court as to what the property was worth in 1990. As Mr Macfarlane pointed out, there is not even any evidence that the property increased in value between 1990 and 2000, though it would be surprising if it did not.
[80] We agree with the High Court that a non-owning spouse will not necessarily need to produce evidence from a valuer giving the valuer’s view on the extent to which the actions of the non-owning spouse have contributed to an increase in value. But it is necessary to establish by evidence that there has, in fact, been an increase in value, and to provide the Court with an evidential basis for assessing how much the increase in value has been. Without evidence as to the value of the farm in 1990 (from which the Court can assess the value of the husband’s half interest in the farm at that time), it is not possible for the Court to undertake the kind of calculation which the High Court undertook in the assessing the increase in value of the farm between 1978 and 2000.
[81] We also accept Mr Macfarlane’s submission that, even if such a calculation were possible, the proper end point of the calculation was the date at which the farm was sold to the Punawaitai Trust. The calculation undertaken in the High Court should have used as an end point the value of the farm at that time. The value of the farm a year later, when the separation occurred, was not relevant to the calculation because, by then, the farm had not been relationship property or separate property of the husband for some months. However, such value may be relevant to the wife’s claim under s 44C: see paras [136] – [156] below.
Conclusion
[82] Accordingly, we agree with the High Court’s approach to the application of s 9A, but not with its application of s 9A to the facts of this case. We therefore allow the husband’s appeal on this point and set aside the High Court award.
(b) Section 10(2) (Cattle)
Family Court
[83] The Family Court Judge found that the husband’s father had gifted to the husband 119 cattle in 1975 and 128 cattle in 1976. The wife’s contention that these cattle had been purchased by the husband was rejected, and that finding was not disturbed by the High Court. There is no challenge to it in this Court.
[84] As the 247 cattle were acquired by gift, s 10(2) of the PRA applies to the cattle and to the proceeds of their disposition.
[85] The Family Court Judge accepted the submission by counsel for the husband that there was an “unbroken chain of ownership of particular cattle replaced with new equivalent as required from time to time”. He found that they could be separately identified and that there had not been any intermingling of the kind contemplated by s 10(2). He found this approach was consistent with the decision of Hardie Boys J in Bowen v Bowen.
High Court
[86] This finding by the Family Court Judge was reversed by the High Court.
[87] In the High Court, the husband submitted that the husband had put the cattle to the use of the Punawaitai Partnership and then to the Punawaitai Farming Company for the purposes of its participation in the Punatoka Joint Venture (we will refer to each of the partnership and company as a “farming entity”). That meant that, at any point in time, the husband’s entitlement was only ever to take back the equivalent of 247 cattle (whether from the farming entity’s current stock or purchased in by the farming entity). However, the Court applied the High Court decision of Scott v Scott, which dealt with actual livestock, and did not give further consideration to the argument that the husband did not own livestock but rather had a right to receive livestock in the future. It determined that it was impractical or unreasonable to treat the 247 cattle as separate property, and therefore determined that they were relationship property by the application of s 10(2).
Chose in action?
[88] In this Court, Mr Macfarlane renewed his argument that the separate property was the right to receive 247 cattle from the farming entity with which they were put to use, rather than 247 cattle beasts. He said that the High Court had wrongly identified the property to which s 10(2) could apply, and had therefore reached the wrong result. Mr Macfarlane accepted that, if the separate property was, indeed, cattle beasts rather than a right to receive such beasts in the future, then the High Court had correctly formulated the issue. Thus, the principal point at issue in this Court is the true nature of the separate property to which the s 10(2) analysis must be applied.
[89] There is no evidence before the Court as to the actual terms of any “put to use” arrangement nor was there any clear articulation of the nature of the chose in action (right to receive cattle) which the husband was said to have had. The “put to use” arrangement was not documented, so it is necessary to consider the evidence relating to the cattle to determine what can be properly deduced from it.
[90] In his affidavit of assets and liabilities, the husband said that his assets included “livestock” which, he said, was all relationship property “except 247 cattle”. It seems clear from that description that he considered his property to be livestock rather than the chose in action described by Mr Macfarlane in this Court. Similarly, Mr Macfarlane’s submission to the Family Court, reported in the Family Court judgment at [66], that there was an unbroken chain of ownership of cattle appears to be a claim of ownership of livestock, not of a chose in action.
[91] In his narrative affidavit dated 12 April 2001, the husband said “my own stock (both purchased and gifted) is put to the use of the company [Punawaitai Farming Company]”. Again, this suggests ownership of cattle, not of a chose in action. He did not give details of the put to use arrangement.
[92] The “put to use” arrangement was described as follows by Mr Reaney in his affidavit of 12 April 2001:
He [the husband] put all his stock to the use of the partnership. That stock comprised 344 sheep bought from his aunts, and 288 cattle (acquired from his father (247) and bought from his aunts (41)), and has always been recorded as such in the partnership books – in other words they have always been identifiable as such, the partnership always having the obligation to account to [the husband], and similarly for other stock to Andy, for that stock...These 247 cattle remained in the partnership until Andy’s death and the winding up of the partnership thereafter, having for all that time been put to the use of that partnership. The same stock are included as part of the Punatoka Joint Venture in which the partnership had a half share. The partnership’s interests in this entity were taken over by the Punawaitai Farming Co Ltd. The stock is put to the use of that Company.
[93] In cross-examination, the husband was asked if the company paid for the use of the livestock put to its use and answered that he was not sure whether the company paid, but that it did use the livestock.
[94] A letter dated 18 October 1977 from the husband’s solicitors to the Rural Bank said that the husband would bail livestock purchased from Dinah and Pen Nation to the Punawaitai Partnership. However, the letter also says that the “partnership between John and Andy is merely based on livestock contributions”.
[95] There is a journal entry in the husband’s accounting records for 1978 referring to 247 cattle: “48 3½ year Angus cows and 199 mixed age Angus cows”. The financial statements for the husband for the year ended 31 July 2000 show as a current asset “Beef cattle $58,180.83” and there is an identical entry in the draft accounts as at 31 July 2002. Similarly the statement of beef cattle trading in the accounts of the husband for the year ending 31 July 2000 refers to 247 mixed aged breeding cows as part of the 288 animals comprising the opening stock and also as part of the 288 animals comprising the closing stock. That indicates that there was, in fact, no cattle trading undertaken by the husband himself, but that he was the owner of 288 animals including the 247 mixed age breeding cows. Mr Macfarlane argued that this accounting evidence showed the husband’s right to the 247 cattle remained as separately identified property throughout the marriage. But it is notable that the asset identified in his accounts is “livestock”, not a chose in action.
[96] The accounts for the Punawaitai Farming Company Limited for the year ended 31 July 2000 show, as a current asset, beef cattle having a value of $170,905.99 and, as a current liability, “H J E Nation – cattle 288, $58,180.83”. These 288 cattle apparently comprise the 247 cattle in dispute and 41 cattle which are accepted to be relationship property. In the statement of beef cattle trading for Punawaitai Farming Company Limited, the opening stock and closing stock both have as their last entry “bailed stock (500) (92,752.56)”. This indicates that the bailed stock is deducted from the total numbers which, in the case of the opening stock, leads to a negative opening stock figure of (–27). Thus the company would not have been in a position to account to the husband and the H A Nation Estate for the cattle put to its use if it had been called upon to do so from the livestock on the farm. The 500 bailed stock are comprised of the 212 cattle put to the use of the company by the H A Nation Estate and the 288 put to the use of the company by the husband.
[97] The draft accounts for both the husband and Punawaitai Farming Company for the year ended 31 July 2002 have the same entries relating to the 247 cattle as those for the year ended 31 July 2000.
[98] The accounts for the Punawaitai Partnership for the year ended 31 July 1999 have entries relating to the cattle which are essentially the same as those appearing in the accounts for the Punawaitai Farming Company Limited for the year ended 31 July 2000. The statement of partners’ current accounts records a payment of $5,121 by the Punawaitai Partnership to the husband as “Rent Livestock”. However, it is not stated whether this relates wholly or partly to the 247 cattle and the husband said in evidence that he did not know if rent was paid for the 247 cattle in dispute. The closing stock is shown as a negative figure (–27), corresponding with the opening stock figure in the accounts for the following year for Punawaitai Farming Company Limited, to which reference has just been made.
[99] Mr Reaney confirmed that there was a deficit of stock shown in the 1999 accounts for the Punawaitai Partnership because the stock put to the use of the Punawaitai Partnership owned by the H A Nation Estate and the husband was greater than the total number of stock shown in the Punawaitai Partnership accounts. He accepted that the deficit was recorded by an analysis of assets and liabilities i.e. stock units were shown as assets, but then there was a liability shown as owing to the H A Nation Estate and the husband. In all cases the values of individual stock units were taken as standard values which are considerably lower than market values.
[100] There is, on the face of it, some conceptual difficulty in the accounting treatment of the 247 cattle. Both the husband and the farming entity are said to own the same 247 cattle. If the put to use arrangement were a genuine bailment, one would expect the farming entity to have only a possessory interest, and for its accounts to reflect that. Or, if the put to use arrangement involved a transfer of ownership by the husband to the farming entity, coupled with an obligation on the part of the farming entity to return 247 cattle of similar kind upon termination of the arrangement, one would expect the husband to have a chose in action of the kind described by Mr Macfarlane, and for his accounts to reflect that.
[101] Mr Reaney was asked why stock which he said was put to the use of the Punawaitai Partnership was shown as an asset of the Punawaitai Partnership in the partnership’s financial statements. He said that it was recorded in this manner “for reconciliation of numbers...what we have recorded in there simply is the stock that is depasturing on the [farm], less the stock that is owned by the two individuals [the husband and Andy Nation] and then the net assets and liabilities at book value represent the deficit that is in the Punawaitai Partnership in the partners’ current accounts”.
[102] Mr Macfarlane said that the evidence from Mr Reaney and the financial statements of the entities involved demonstrated that the interest which the husband had in the 247 cattle was, in fact, a chose in action entitling him to the return of 247 mixed aged breeding cows of the same age range and type as those originally put to the use of Punawaitai Partnership in 1975/1976. Presumably this entitlement would arise only after the giving of reasonable notice of termination of the put to use agreement.
[103] On that basis, the property to which the s 10(2) analysis had to be applied was the chose in action, presumably on the basis that this represented the proceeds of disposition of the 247 cattle which were received by the husband by way of gift: s 10(1)(d). He said that this right had not been intermingled in any way with other relationship property, and that the chose in action therefore remained separate property.
Bailment?
[104] Mr Macfarlane also argued that the put to use arrangement was a bailment and called in aid the following observation of this Court in Hight v Hight at 410:
The Court has not been provided with a copy of the bailment of the cattle, if indeed it was recorded in writing, but the arrangement must have been that the stock sold by the company had to be replaced so that the number of the husband’s herd remained constant. The replacements were a substitute for the original herd and their character as separate property remained. There was no intermingling with matrimonial property; the bailment was to the company.
[105] Mr Thornton argued that the most that could be deduced from the evidence was that the 247 cattle were put to the use of the Punawaitai Partnership and the Punatoka Joint Venture (through the Punawaitai Farming Company), but that this was no more than a recording for accountancy purposes of the 247 cattle and was not a mechanism of which the wife was aware. He said the record of the cattle “in corporate form” should not be allowed to defeat the proper entitlement of the wife. He said the Court should set aside the corporate form and look to the cattle themselves, which would lead to the conclusion that the cattle were intermingled for the purposes of s 10(2), applying the analysis in Scott v Scott. The reference to “corporate form” evoked the statement by Thomas J in his dissenting judgment in Hight v Hight at 416 to the effect that the use of corporate form should not represent an impediment to achieving the policies of the PRA.
[106] The lack of precision in the evidence as to the nature of the arrangement relating to the 247 cattle makes the decision on this aspect of the case problematic. While Mr Macfarlane argued that the arrangement amounted to a bailment, the treatment of the 247 cattle in the accounts of both the husband and the farming entity as “bailee” is inconsistent with a true bailment.
[107] Mr Macfarlane urged us to follow the approach of the majority in Hight, but it appears to us that the arrangement in Hight differs from that contended for by Mr Macfarlane in this case. The extract from Hight referred to in para [104] above refers to a bailment under which stock had to be replaced so that the number of the husband’s herd remained constant, with the substitutes being replacements for the original herd. The evidence in this case is that no such replacement obligation applied, because the accounts of the farming entities disclose that the farming entity had a deficit of stock. Assuming the farming entity was not in default in respect of the put to use arrangement (and there was no evidence to suggest that it was), this tends to suggest that the put to use arrangement in the present case was of a different nature from the bailment in Hight.
Mutuum?
[108] One possible explanation is that the put to use arrangement was in the nature of a mutuum, or a quasi-bailment under which the 247 cattle were lent by the husband to the farming entity on the basis that they were not to be returned in kind (or through any replacement stock held during the term of the bailment by the farming entity), but were to be replaced by something similar and equivalent as and when the arrangement terminated. A mutuum is normally confined to chattels which are intended to be consumed and which are capable of being estimated by number, weight or measure, such as money, corn or wine (Laws of New Zealand: Bailment at 38). It is a feature of a mutuum that property in the “bailed” goods passes to the “bailee”, which would mean that property in the cattle would pass to the farming entity in the present case. That is consistent with the accounting treatment shown in the accounts of the farming entity, where cattle are accounted for on an asset/liability basis. However, that analysis is inconsistent with the treatment of the 247 cattle in the accounts of the husband, where he is shown as the owner of the 247 cattle, rather than the holder of a right to return of 247 beasts of a particular description as and when he makes demand for them. It is also inconsistent with the husband’s claim that he owns 247 cattle as separate property.
[109] The only evidence which assists in the resolution of this apparent inconsistency is the evidence of Mr Reaney explaining the accounting treatment in the accounts of the farming entity. It appears he was not asked to explain the entries in the husband’s accounts. However his explanation of the entries in the accounts of the farming entity, outlined in para [101] above, supports the view that the treatment in the accounts of the farming entity of the 247 cattle does not represent the underlying legal position. He says that the accounting treatment is only for the reconciliation of numbers, and that “the stock that is owned by the two individuals” (i.e. the husband and his father) are deducted from the total number of stock shown as depasturing the farm. This would support the view that any put to use arrangement between the husband and the farming entity did not pass legal ownership to the 247 cattle to the partnership, which would mean that the put to use arrangement was not in the nature of a mutuum or gratuitous quasi-bailment.
Partnership contributions?
[110] Another possible explanation is that the husband and Andy Nation contributed cattle to the Punawaitai Partnership as partner capital contributions. However, that explanation is hard to reconcile with what happened when the Punawaitai Partnership was dissolved, and the put to use arrangement was effectively novated with the Punawaitai Farming Company.
Discussion
[111] As with many aspects of this case, this is a situation where the evidence before the Court is insufficiently precise to provide a solid factual foundation for findings on the legal nature of the underlying arrangements. In the context of this aspect of the appeal, the husband seeks to overturn the decision of the High Court that the issue had to be determined on the basis that the asset in issue was 247 cattle, not a chose in action representing a right to receive 247 cattle in the future. The High Court decision was based on “the reality of a farming enterprise conducted by these parties” appeared to involve an acceptance of the submission relating to bailment as use of the “corporate form”.
[112] We would be prepared to accept that a case involving a bailment arrangement of the kind described in Hight v Hight or a case involving an arrangement in the nature of a mutuum could necessitate a departure from the approach taken in the High Court. But in the absence of clear evidence as to the nature of the arrangement between the husband and the farming entity, the High Court was entitled to conclude that the asset in question was 247 cattle.
Intermingling
[113] That leaves only the issue as to whether the High Court was correct to adopt the approach in Scott v Scott in preference to that in Bowen v Bowen.
[114] We uphold the High Court approach. Here the farming entity grazed cattle on the farm for over 20 years after the 247 cattle were gifted to the husband. The 247 cattle said to have been put to the use of the farming entity were part of a composite arrangement which included 41 cattle that were relationship property. There was a similar arrangement involving Andy Nation, and from time to time the farming entity had more cattle than the combined number of cattle put to its use by the husband and Andy Nation which would have been the farming entity’s own cattle. Mr Reaney said the entries in farming entity accounts for livestock were, in reality, a record of stock depasturing the farm.
[115] In those circumstances, the High Court was entitled to find intermingling of the kind described in Scott v Scott, and to find that it was impractical or unreasonable to treat the 247 cattle as separate property. The situation in this case resembles closely the facts of Scott v Scott, whereas Bowen v Bowen was not a case about intermingling of assets at all.
Conclusion
[116] We therefore dismiss this aspect of the husband’s appeal.
(c) Section 10(2) (Farm)
[117] On the conclusions we have reached, the half of the farm which was appointed to the husband in 1990 was within the scope of s 10(1). The effect of s 10(2) is that prior to the 1999 sale, this half of the farm was the husband’s separate property unless, with the husband’s consent, it became:
...so intermingled with other relationship property that it is unreasonable or impracticable to regard that property or those proceeds as separate property.
[118] The wife maintains that this is indeed the case. The farm throughout was operated as a single entity. Prior to 1990 no real thought was given to the different ownership of the half of the property owned by the HA Nation Children’s Trust and the half owned by the husband. From 1990 until 1999, the farm was solely in the ownership of the husband and there was no differentiation between the half interest that is plainly relationship property and the half interest which is said to have been the husband’s separate property.
[119] In the Family Court, the Judge rejected the s 10(2) argument. He held that the husband’s separate property interest in the farm persisted while he retained that interest and that it could practically and reasonably be traced into an appropriate proportion of the debt back to him on the sale of the farm.
[120] This issue did not arise for determination in the High Court given that the s 9A claim by the wife was allowed.
[121] The argument advanced on behalf of the wife is credible on a literal approach to s 10(2). The husband held the ownership of the farm in a way which did not distinguish between what is now said to be the different relationship and separate property interests and, in this way, undivided ownership might be thought to have intermingled those interests. Further, the property as a whole must have been seen as a single entity by both the husband and the wife. As a matter of evaluation, it might be thought unreasonable (although obviously not impracticable) to distinguish artificially between what are now said to be the different interests which the husband acquired in the farm. There is indeed authority which supports the wife’s argument: S v S (1982) 5 MPC 138.
[122] S v S was an uncontested estate planning case and, unfortunately for the wife, the preponderance of authority is against her argument. Indeed on facts virtually identical to those in the present case (save that the relationship property was acquired after the separate property interest), this Court in Jackson v Jackson [1984] 1 NZLR 382 rejected the contention that there had been intermingling. To the same effect is Reid v Reid (1980) 4 MPC 170. Somewhat further removed from the present facts is Murphy v Murphy (1989) 5 NZFLR 577 but the approach of Ellis J in that case is broadly consistent with the husband’s position.
[123] We see no reason to depart from these authorities. In accordance with them, the wife’s intermingling argument fails.
(d) Section 17(2)
[124] Section 17 of the PRA applies where the property of one spouse or partner has been sustained by the application of relationship property or the actions of the other spouse or partner. There is no definition of the word “sustained”. The concept however has been explained in French v French [1988] 1 NZLR 62 and Hebberd v Hebberd [1992] 3 NZLR 517.
[125] In the former case at 65, Cooke P noted:
In the ordinary sense, to sustain something is to keep it up or keep it going, and that is exactly what the wife helped to do with the farm, stock and plant.
He also suggested (at 66) that a “reasonably liberal use of the power under s 17” would go far to exclude injustice associated with the rigidities of the then s 9. Somers J (at 69) took the view that the word “sustained”:
carries with it the notion of keeping the separate property in being, that is preservation, and of keeping it in its existing condition, that is maintenance.
[126] The approach in Hebberd v Hebberd was broadly similar. McKay J at 521 observed:
...s17(1) should be regarded as it was in French v French as dealing with the maintenance or preservation of the asset in question, to “keep it up or keep it going” in the sense of ensuring its continuing existence or value.
[127] French v French and Hebberd v Hebberd involved farming situations broadly similar to the present. In each case the wife worked on the farm. In the former case the s 17 claim was allowed and in the latter case it was dismissed. Those cases – and there are others to the same effect – make it clear that a finding of sustenance in relation to a farm will not automatically follow from the conclusion that the non-owning spouse (usually the wife) worked on, or played a role in the running of, the farm.
[128] The wife’s argument is that she sustained the husband’s separate property interest and that relief ought to have been granted under s 17(2).
[129] This argument appears to have been pressed only lightly in the Family Court. The Judge concluded that there was little direct evidence of sustenance of the husband’s separate property by the actions of the wife and no sustenance involving the application of relationship property. He then cited the following passage from the judgment of Quilliam J in Buckman v Buckman (1979) 3 MPC 20 at 22:
I am prepared for the present to accept that the wife must have engaged in some of the farming activities but it is a different thing to conclude from that that she thereby sustained the property. She no doubt assisted in the production of income but there is nothing to suggest that without her assistance the ability of the husband to retain the 180 acre property would have been in jeopardy. It is necessary to observe that, unlike s9(3), s17(1) does not include the expression “wholly or in part”. What is required is simply that the property shall have been sustained. The act of paying the rates or a mortgage instalment would, in itself sustain the property because of the consequences if such a payment was not made. Taking a routine part in the work carried out on the property does not, in my view, amount to sustaining it.
The Judge concluded that the wife had not discharged the obligation to show that her work on the farm sustained the separate property interest of her husband in the farm. He accordingly declined to grant relief under s 17(2).
[130] This issue did not arise for determination in the High Court given the view taken of the wife’s s 9A claim. We are effectively determining an appeal from the Family Court judgment.
[131] In his judgment, Judge von Dadelszen recorded concessions made by the husband as to the work carried out by the wife. The husband accepted that “she was pretty involved in farm work”. She would be left in charge of the farm for up to four or five days at a time when he went away on fishing trips. She dagged sheep, worked the dogs and mustered sheep. She dealt with lambs when they had the staggers. She helped with fencing, general work and irrigation around the farm. She was involved in spraying, mowing and irrigating the orchard and, in the later years of the marriage, she cleaned and administered for shearers.
[132] On even the most literal view of s 17, it is difficult to see how her actions could not be regarded as sustaining the farm and thus her husband’s separate property interest in it. For instance the work she did fencing and irrigating the property must be regarded as at least maintenance and therefore involving sustenance. Spraying and mowing the orchard are in the same category. When the husband was away fishing and she was running the farm, she was necessarily responsible for keeping the farm going and thus, in accordance with the approach taken by Cooke P in French, sustaining the farm.
[133] Judge von Dadelszen was plainly influenced by the passage from Quilliam J’s judgment in Buckman, which he cited. It will be recalled that in that passage Quilliam J suggested that a spouse’s actions will not amount to sustenance unless, in the absence of such actions, the other spouse’s ability to retain the property in question “would have been in jeopardy”. We think that this approach poses a more exacting test for the non-owning spouse than the section requires. It seems to us to be clear that the wife’s work on the farm amounted to sustenance within the ordinary meaning of s 17(1) as interpreted in French. That this is so despite it being probable that the husband’s ability to retain the farm (and thus his separate property interest in it) would not have been “in jeopardy” in the absence of the work she did.
[134] Accordingly we regard the wife as having established a sustenance claim.
[135] It is by no means easy to fix an appropriate figure particularly as the evidence was at a very general level. After much deliberation, we propose to fix an allowance of $35,000.
(e) Section 44C
[136] At paras [18] to [21] above, we detailed the circumstances in which the Punawaitai Trust was established in 1999.
[137] In the Family Court, the Judge said (at [154]:
The wife asks me to order the husband to compensate her under s44C. The basis of the claim is that the sale price was inadequate and that it led to a lower amount being owed to the husband than would have been the case if that price was the true market value.
[138] In the result, the Judge held (at [159]:
I cannot be satisfied that the disposition of the farmer to the Punawaitai Trust had such an effect of defeating the wife’s claim or rights as to persuade me to exercise the discretion under s44C.
[139] It was not entirely clear to us how far or on what basis this claim was pressed in this Court. The High Court did not consider it necessary to deal with the point because the various claims were said to be “staggered”. By her cross-appeal to this Court the wife said that if the appellant was “successful in defeating [her] entitlement pursuant to s 9A as determined in the High Court judgment” then entitlement (inter alia) under s44C was sought.
[140] Subsequent to the oral hearing before us we thought it appropriate to obtain further submissions from counsel as to how, if at all, s 44C might apply to the circumstances of this case.
[141] A preliminary point needs to be dealt with here. Mr Macfarlane urged on us that the way in which the claim had been advanced in the Family Court was on a distinctly narrow footing and that the wife’s claim could not now fairly and appropriately be broadened. Mr Thornton submitted that the Family Court Judge “misstated the wife’s claim pursuant to s 44C”. He said the wife’s claim was not based solely on the farm being sold at an undervalue. He said: “The reference to the sale price [in his submissions to the Family Court] was a factor noted having a regard to the discretionary matters set out in s 44C(4)”. Mr Thornton acknowledged that his submission to the Family Court was not “refined by reference to particulars of how s 44C might be applied”, but he said the Family Court Judge nevertheless accepted that there was jurisdiction to make an order for compensation pursuant to the section. In the event, the Judge exercised his discretion against the making of any such order.
[142] The point is not an easy one. There is no doubt that a claim under s 44C was, in general terms, put to the Family Court but the basis on which it was put is less clear: see para [33] above. We think this Court has to do the best it can, in the difficult circumstances of this case, on the footing that a claim was advanced under this head.
[143] Section 44C was a new and important part of the relationship property reforms in 2001. The object of the provision was to strengthen the PRA in relation to trusts where a disposition of relationship property had the effect of defeating one of the party’s rights under the PRA, but where there was no intention, or at least no evidence of an intention, to defeat that party’s rights.
[144] The requirements of s 44C are that the disposition must be:
- to a trust;
- of relationship property;
- made since the marriage or de facto relationship began;
- by either or both spouses or de facto partners;
- one to which s 44 does not apply; and
- have the effect of defeating the claim or rights of one of the spouses or partners.
[145] In this instance, there was a disposition to the trust (it acquired the farm by way of purchase from the husband on 27 July 1999). Secondly, there was a disposition of relationship property – a half interest in the farm (which had been acquired from the estate of E C Nation) was relationship property, and that interest was sold to the Punawaitai Trust. The disposition was made after the marriage, and a year prior to the parties’ separation on 31 July 2000. The disposition was made by the husband. There has been no allegation that s 44 applies.
[146] The issue as to the application of s 44C in this case therefore turns on whether the disposition had the effect of defeating the claim or rights of the spouse. In our view the wife’s claim was defeated. She has been “denied”, by the disposition, a claim to an equal share of one half of the equity in the farm, valued as at the date of the hearing, in accordance with s 2G of the PRA. The wife would have been entitled to make that claim had it not been for the sale to the Punawaitai Trust by the husband. Instead, she has a claim to an equal half share of one half of the interest free debt owed to the husband by the Punawaitai Trust. The amount of the debt has remained constant from the time of the sale to the time of the hearing, while the value of the farm has increased significantly. Her potential claim has been defeated to the extent of the difference in value between the amount of her share of the debt and the value of the share of the equity in the farm to which she would have had a claim. The meaning of the word “defeat” is mechanical; it does not turn on bad faith or an improper motive.
[147] There has been some concern in the legal profession as to how far, if at all, orthodox discretionary trusts may be reached under this legislation. It is important to distinguish between a prospective claim against an interest in a trust; and the operation of s 44C.
[148] In general terms, under a discretionary trust a discretionary beneficiary has no legal or equitable interest in the assets of the trust until the trustees have exercised their discretion in favour of the particular beneficiary: see para [74] above.
[149] In an instance such as the present - really a paradigm case - the fact situation is that the husband has transferred a half interest in the farm (which was relationship property) to a discretionary trust in respect of which he has considerable power: see para [18] above. He has put that asset beyond the usual reach of the statute, and substituted an asset which is frozen in value because it is a debt instrument and no interest accrues on it. He has thereby “defeated” the wife’s claim in that respect. This is not a case where an asset has been exchanged for another asset of similar worth, with equal scope for increase in value and risk of loss of value. The section provides that the husband can be required to compensate the wife - on a personal basis - in cases where the wife’s claim is “defeated”. That is the very purpose of s 44C, and it is to that issue of compensation we now turn.
[150] As to the date at which the effect of the disposition is to be assessed, in our view that should be as at the date of hearing. That is the general rule as to the date at which the value of property is to be determined under s 2G of the PRA. It is true that the Court has a discretion to determine the value at another date. However there appear to us to be no discretionary factors which, in this instance, would militate against the application of the usual rule.
[151] Once the grounds for the exercise of the s 44C jurisdiction are made out, the Court has a discretion under s 44C(4), to award such compensation as the justice of the case may require, having regard to:
- the value of the relationship property disposed of to the trust;
- the value of the relationship property available for division;
- the date or dates on which relationship property was disposed of to the trust;
- whether the trust gave consideration for the property, and if so the amount of the consideration;
- whether the spouses or de factos or either of them or any child of the marriage or child of the de facto relationship is or has been a beneficiary of the trust;
- any other relevant matter.
[152] Some things are plain enough in this case. The value of the relationship property disposed of to the Punawaitai Trust is significant. It is 50 percent of the farm. On the figures we presently have before us, the relevant values of the whole farm were $991,812 (at date of disposition); $1,375,000 (at date of separation); $1,725,500 (at date of hearing). The transfer occurred one year prior to separation. Consideration was given for the disposition of the property, but the wife was not involved in the calculation of the consideration, though she was invited to take separate advice on the transfer of the farm to the Punawaitai Trust and did so. She did not attempt to stop the transfer, but said she did not wish to jeopardise the marriage by doing so (the husband had told her at about this time that he wanted the marriage to end).
[153] Beyond that point, all the information which may be needed to assess quantum is not before us. The husband should have the opportunity to make submissions on issues affecting the post-separation value of the farm, and to contest the wife’s valuer’s valuation of the farm at the date of hearing. There may well be other factors which will be relevant, but which, because this issue has not been dealt with in detail in either the Family Court or the High Court, have not been placed before this Court.
[154] We have been anxious throughout this case to resolve all matters that can be dealt with in this Court, and in some instances we have felt able to make robust adjustments. However, considerations of fairness and the lack of some important information, in this instance require that the assessment of quantum on the s 44C claim be remitted to the Family Court for determination. It will be open to that Court to receive such further evidence and submissions (as to quantum) as the Judge considers appropriate.
[155] In the result, with respect to the s 44C claim, we hold that the husband is required to pay compensation to the wife with respect to the half interest in the farm (being relationship property) which was disposed of by him to the Punawaitai Trust. There will be a declaration to that effect; the amount of the compensation is to be assessed by the Family Court.
[156] It may be possible, in view of the declaration, for the parties to agree a figure by way of compensation under this head in order to avoid further costly litigation.
(f) Sections 15 and 15A
[157] The new economic disparity provisions of the PRA are of great practical and social importance.
[158] Section 15 of the PRA allows the Court to order a lump sum or a transfer of property to the party who is economically weaker. The Court must be satisfied that, after the relationship ends, the income and living standards of one partner are likely to be significantly higher than the other partner because of the effects of the division of functions within the relationship while the parties were living together. The Court can have regard to the likely earning capacity of each partner; the responsibilities of each partner for dependant children; and all other relevant circumstances.
[159] Section 15A applies where the income and living standards of one partner will be significantly higher than that of the other because of the effect of the division of functions during the subsistence of the relationship. Where any increase in the value of the higher earning partner’s separate property was attributable wholly or in part, and whether directly or indirectly, to the actions of that same partner (while the spouses were living together), then the Court can compensate the other partner for the increase in the value of the other party’s separate property.
[160] In this instance, the trial Judge held that the claim for economic disparity compensation “must fail”. The Judge held that the wife had not discharged the onus “which is on her to satisfy me on the balance of probabilities that the husband’s income and living standards are likely to be significantly higher than hers”. And there was no evidence to satisfy the Court “that the wife’s living standards in the future will be affected because of the way this couple divided their functions between them during the time that they were living together”.
[161] There is the same difficulty under this head as under the s 44C head, as to precisely what is now being advanced. There is a formal cross-appeal under this head. But at the hearing Mr Thornton, as we understood him, said that if the wife could maintain the High Court award, and preferably increase it because of some other adjustments to what was relationship property, this issue is not further pressed.
[162] As with s 44C, there are some issues of distinct importance which will require curial resolution in relation to ss 15 and 15A. In particular, there is the conceptual problem whether the provisions are properly to be regarded as being directed to economic equalisation in the larger sense of that term, on the breakdown of the relationship; or whether they are to be regarded as being directed to the loss of opportunity (by way of earning capacity) that one party has had to embrace by reason of the division of functions in the relationship. There are then the consequential problems of the appropriate ways of calculating awards.
[163] It is not appropriate or feasible to address these sorts of issues in this case. The wife has, in broad terms, secured the level of award sought on her behalf; and, more particularly, we do not have appropriate evidence to enable this Court to undertake the kind of exercise which would be required. As there is nothing before us indicating any error in the conclusion reached by the Family Court Judge, we dismiss this ground of appeal.
Further evidence or submission
[164] We have commented in this judgment on the fact that there was insufficient evidence on a number of aspects of the case for the Court to make findings which were required to substantiate an argument made by one or other party. Although neither party asked us to do so (and no similar request appears to have been made in the High Court), we have considered whether we should allow the parties to adduce further evidence and make further argument or remit the matter to the Family Court so that that course could be followed in that Court.
[165] This Court has power under s 39B(3) of the PRA to receive further evidence if it thinks that the interest of justice require it to do so. This Court described the power under s 39B(3) as wider than the discretion to allow further evidence under (now) r 24 of the Court of Appeal (Civil) Rules 1997 in Castle v Castle [1980] 1 NZLR 14 at 17. But in the same case, this Court said it would be wrong to allow an appellant (or presumably any party to an appeal) to bolster his or her case with additional evidence that was available at the lower court hearing but not adduced because of the particular view of the case being taken at that time.
[166] In this case, the new evidence would be evidence that was available at the Family Court hearing. It would inevitably be used to bolster the case of one or other party. The evidence may itself be contentious, leading to the need for reply evidence (and possibly cross-examination). Further submissions on the new evidence, possibly necessitating a further hearing, would be required. There would be a real danger of triggering a substantial relitigation of issues in the context of a second appeal.
[167] We have concluded that, with one exception, the interests of justice require that finality be brought to these proceedings, and that we should not invoke the power under s39B(3) or remit the matter to the Family Court in this case. That exception relates to the wife’s s 44C claim. As we have indicated in para [154] above, we are satisfied that the claim has merit, but that it would be unfair to the husband to quantify the claim in this Court, on the evidence before us. It is clear from the submissions received from counsel on this issue that there is a significant difference of view on the compensation payable by the husband under s 44C. The way the s 44C claim was dealt with in the Family Court and High Court has meant that the husband has not had a fair opportunity to address the issue. We are satisfied that the interests of justice are best served by remitting this issue, and this issue alone, to the Family Court for determination. That will not prevent payment being made to the wife in respect of all other aspects of her claim, and so some degree of finality of this protracted saga will be possible.
Disposition
[168] We therefore dispose of the appeal and cross-appeal as follows:
(a) We allow the husband’s appeal against the High Court’s award of $158,872 under s 9A and set aside that award;
(b) We dismiss the husband’s appeal against the High Court’s determination that the 247 cattle were intermingled with relationship property and were therefore relationship property;
(c) We allow the wife’s appeal in relation to s 17(2) and award $35,000 under that provision;
(d) We dismiss the wife’s appeal in relation to ss 10(2) (with respect to the farm), 15 and 15A;
(e) We allow the wife’s appeal in relation to s 44C and make a declaration that the husband is liable to pay compensation to the wife with respect to the half interest in the farm transferred by him to the Punawaitai Trust. We remit the case to the Family Court for determination of such compensation in the light of this decision.
[169] On this basis, the amount payable by the husband to the wife will comprise:
(a) One half of half the debt owed to the
husband $103,950.75
(b) One half of the value of stock (inclusive of 247
cattle) 140,105.00
(c) One half of half of the husband’s
current account in
Punawaitai Holdings Limited and one half of
the shares
in that company (50) 5,429.00
(d) One
half of the value of the transportable cottage 17,500.00
(e) The
adjustment necessary to secure payment by the
parties of their
valuation fees equally 1,575.00
(f) The sum calculated according to
Schedule C to the
Family Court judgment
39,426.69
(g) Amount awarded under s17(2) 35,000.00
$342,986.44
[170] The award under s 44C, as determined by the Family Court, will be in addition to this sum.
[171] The husband’s obligation to pay to the wife 6% p.a. interest will accordingly apply as follows: He must pay interest at 6% p.a. on $342,986.44 from 9 April 2002 until payment, and interest at 6% p.a. on $367,986.44 from 1 February 2001 to 9 April 2002. He will also be required to pay interest on the s 44C compensation payment from 1 February 2001 until payment.
[172] The Family Court’s award to the wife of $10,000 for past maintenance is unaffected by this decision.
[173] As the wife has been largely successful in upholding the amount awarded to her under the High Court judgment, we award her costs of $12,000 and disbursements.
[174] We reserve leave to apply in case we have omitted to address any matter which the parties consider needed to be addressed by this Court.
[175] In a joint memorandum dated 5 November 2004, counsel for the parties applied for a non-publication order, suppressing the parties’ names. There has been no such order made in the Family Court or the High Court, and, in view of that, there would be no practical utility in making such an order in this Court. We therefore decline the application.
Solicitors:
Sainsbury Logan & Williams, Napier for
Appellant
Carlile Dowling, Napier for Respondent
APPENDIX
Relevant Sections of the Property (Relationships) Act 1976
The purpose of this Act is—
(a) to reform the law relating to the property of married couples and of couples who live together in a de facto relationship:
(b) to recognise the equal contribution of husband and wife to the marriage partnership, and of de facto partners to the de facto relationship partnership:
(c) to provide for a just division of the relationship property between the spouses or de facto partners when their relationship ends by separation or death, and in certain other circumstances, while taking account of the interests of any children of the marriage or children of the de facto relationship.
1N Principles
The following principles are to guide the achievement of the purpose of this Act:
(a) the principle that men and women have equal status, and their equality should be maintained and enhanced:
(b) the principle that all forms of contribution to the marriage partnership, or the de facto relationship partnership, are treated as equal:
(c) the principle that a just division of relationship property has regard to the economic advantages or disadvantages to the spouses or de facto partners arising from their marriage or de facto relationship or from the ending of their marriage or de facto relationship:
(d) the principle that questions arising under this Act about relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice.
9A When separate property becomes relationship property
(1) If any increase in the value of separate property, or any income or gains derived from separate property, were attributable (wholly or in part) to the application of relationship property, then the increase in value or (as the case requires) the income or gains are relationship property.
(2) If any increase in the value of separate property, or any income or gains derived from separate property, were attributable (wholly or in part, and whether directly or indirectly) to actions of the other spouse or de facto partner, then—
(a) the increase in value or (as the case requires) the income or gains are relationship property; but
(b) the share of each spouse or de facto partner in that relationship property is to be determined in accordance with the contribution of each spouse or de facto partner to the increase in value or (as the case requires) the income or gains.
(3) Any separate property, or any proceeds of the disposition of any separate property, or any increase in the value of, or any income or gains derived from, separate property, is relationship property if that separate property or (as the case requires) those proceeds or the increase in value or the income or gains are used—
(a) with the express or implied consent of the spouse or de facto partner that owns, receives, or is entitled to them; and
(b) for the acquisition or improvement of, or to increase the value of, or the amount of any interest of either spouse or de facto partner in, any property referred to in section 8(1).
(4) Subsection (3) is subject to section 10.
[The old s9(3) of the Matrimonial Property Act provided as follows:
(3) Subject to subsection (6) of this section, any increase in the value of separate property, and any income or gains derived from such property, shall be separate property unless the increase in value or the income or gains (as the case may be) were attributable wholly or in part—
(a) To actions of the other spouse; or
(b) To the application of matrimonial property, —
In either of which events the increase in value or the income or gains (as the case may be) shall be matrimonial property.]
10 Property acquired by succession or by survivorship or as a beneficiary under a trust or by gift
(1) Subsection (2) applies to the following property:
(a) property that a spouse or de facto partner acquires from a third person—
(i) by succession; or
(ii) by survivorship; or
(iii) by gift; or
(iv) because the spouse or de facto partner is a beneficiary under a trust settled by a third person:
(b) the proceeds of a disposition of property to which paragraph (a) applies:
(c) property acquired out of property to which paragraph (a) applies.
(2) Property to which this subsection applies is not relationship property unless, with the express or implied consent of the spouse or de facto partner who received it, the property or the proceeds of any disposition of it have been so intermingled with other relationship property that it is unreasonable or impracticable to regard that property or those proceeds as separate property.
(3) Property that 1 spouse or de facto partner acquires by gift from the other spouse or de facto partner is not relationship property unless the gift is used for the benefit of both spouses or de facto partners.
(4) Regardless of subsections (2) and (3) and section 9(4), both the family home and the family chattels are relationship property, unless designated separate property by an agreement made in accordance with Part 6.
15 Court may award lump sum payments or order transfer of property
(1) This section applies if, on the division of relationship property, the Court is satisfied that, after the marriage or de facto relationship ends, the income and living standards of 1 spouse or de facto partner ( party B) are likely to be significantly higher than the other spouse or de facto partner (party A) because of the effects of the division of functions within the marriage or de facto relationship while the parties were living together.
(2) In determining whether or not to make an order under this section, the Court may have regard to—
(a) the likely earning capacity of each spouse or de facto partner:
(b) the responsibilities of each spouse or de facto partner for the ongoing daily care of any minor or dependent children of the marriage or, as the case requires, any minor or dependent children of the de facto relationship:
(c) any other relevant circumstances.
(3) If this section applies, the Court, if it considers it just, may, for the purpose of compensating party A,—
(a) order party B to pay party A a sum of money out of party B's relationship property:
(b) order party B to transfer to party A any other property out of party B's relationship property.
This section overrides sections 11 to 14A.
15A Orders where spouse or de facto partner has contributed to increase in value of separate property
(1) This section applies if, on the division of relationship property, the Court is satisfied—
(a) that, after the marriage or de facto relationship ends, the income and living standards of 1 spouse or de facto partner (party B) are likely to be significantly higher than the other spouse or de facto partner (party A) because of the effects of the division of functions within the marriage or de facto relationship while the spouses or de facto partners were living together; and
(b) that any increase in the value of party B's separate property was attributable, wholly or in part, and whether directly or indirectly, to the actions of party B while the spouses or de facto partners were living together.
(2) In determining whether or not to make an order under this section, the Court may have regard to—
(a) the likely earning capacity of each spouse or de facto partner:
(b) the responsibilities of each spouse or de facto partner for the ongoing daily care of any minor or dependent children of the marriage or, as the case requires, any minor or dependent children of the de facto relationship:
(c) any other relevant circumstances.
(3) If this section applies, the Court, if it considers it just, may, for the purpose of compensating party A for the increase in value of party B's separate property,—
(a) order party B to pay party A a sum of money, whether out of relationship property or separate property:
(b) order party B to transfer to party A any other property, whether the property is relationship property or separate property.
(4) This section does not limit section 15, but overrides sections 11 to 14A.
17 Sustenance of separate property
(1) This section applies if the separate property of 1 spouse or de facto partner ( party A) has been sustained by—
(a) the application of relationship property; or
(b) the actions of the other spouse or de facto partner (party B).
(2) If this section applies, the Court may—
(a) increase the share to which party B would otherwise be entitled in the relationship property; or
(b) order party A to pay party B a sum of money as compensation.
(3) This section overrides sections 11 to 14A.
39B Appeals to Court of Appeal
(1) The provisions of the Judicature Act 1908 relating to appeals to the Court of Appeal against a decision of the High Court apply to an order or decision of the High Court under this Act.
(2) Repealed.
(3) The High Court or the Court of Appeal may, if it thinks that the interest of justice so require,
(a) rehear the whole or any part of the evidence; or
(b) receive further evidence.
44C Compensation for property disposed of to trust
(1) This section applies if the Court is satisfied—
(a) that, since the marriage or the de facto relationship began, either or both spouses or de facto partners have disposed of relationship property to a trust; and
(b) that the disposition has the effect of defeating the claim or rights of 1 of the spouses or de facto partners; and
(c) that the disposition is not one to which section 44 applies.
(2) If this section applies, the Court may make 1 or more of the following orders for the purpose of compensating the spouse or de facto partner whose claim or rights under this Act have been defeated by the disposition:
(a) an order requiring 1 spouse or de facto partner to pay to the other spouse or de facto partner a sum of money, whether out of relationship property or separate property:
(b) an order requiring 1 spouse or de facto partner to transfer to the other spouse or de facto partner any property, whether the property is relationship property or separate property:
(c) an order requiring the trustees of the trust to pay to 1 spouse or de facto partner the whole or part of the income of the trust, either for a specified period or until a specified amount has been paid.
(3) The Court must not make an order under subsection (2)(c) if—
(a) an order under subsection (2)(a) or (b) would compensate the spouse or de facto partner; or
(b) a third person has in good faith altered that person's position—
(i) in reliance on the ability of the trustees to distribute the income of the trust in terms of the instrument creating the trust; and
(ii) in such a way that it would be unjust to make the order.
(4) The Court may make 1 or more orders under subsection (2) if it considers it just to do so, having regard to—
(a) the value of the relationship property disposed of to the trust:
(b) the value of the relationship property available for division:
(c) the date or dates on which relationship property was disposed of to the trust:
(d) whether the trust gave consideration for the property, and if so, the amount of the consideration:
(e) whether the spouses or de facto partners or either of them, or any child of the marriage or child of the de facto relationship, is or has been a beneficiary of the trust:
(f) any other relevant matter.
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