Dallison v Van Dyk [2015] NZCA 580 (1 December 2015)

Last Updated: 13 December 2015

IN THE COURT OF APPEAL OF NEW ZEALAND
CA461/2015 [2015] NZCA 580
BETWEEN	IAN WILLIAM DALLISON Applicant
AND	JAN VERONICA VAN DYK Respondent

Hearing:	23 November 2015
Court:	Harrison, Stevens and Wild JJ
Counsel:	A M Corry for Applicant A Manuel for Respondent
Judgment:	1 December 2015 at 10.00 am

JUDGMENT OF THE COURT

1. The application for leave to adduce further evidence is declined.
2. The application for leave to appeal is declined.

100. The applicant must pay the respondent costs for each application for a standard application on a band A basis and reasonable disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Stevens J)

Introduction

[1] Mr Dallison applies for leave to appeal the judgment of Mander J in the High Court at Christchurch.^[1] That judgment allowed in part his appeal from a decision in the Family Court, dealing with relationship property claims under the Property (Relationships) Act 1976 (PRA).^[2] Leave to appeal was declined by the High Court and is accordingly sought from this Court.^[3]
[2] The proposed appeal concerns the valuation and division of relationship property following the separation in 2006 of Mr Dallison, an eye surgeon, and Ms van Dyk, a nurse. The primary dispute between the parties related to the valuation of three business entities comprising part of the relationship assets: an ophthalmology practice (the practice), and two separate companies, Laser Vision Company Ltd (Laser Vision), and Eyequip Ltd (Eyequip). In the Family Court, Judge David Smith assessed the value of the relationship assets and awarded Ms van Dyk her share, being $1,151,731.^[4] Significantly, the Family Court valued the assets by adopting a capitalised earnings approach.
[3] In the High Court this sum was reduced to $1,025,151,^[5] but otherwise the valuation methodology applied in the Family Court was upheld. The Family Court had also made an order under s 44 of the PRA, that a Papanui Road property formerly owned by Eyequip Ltd, which had been transferred by Mr Dallison to a family trust in his name had been so transferred to defeat a claim under the PRA. Accordingly, that Court ordered and the High Court upheld that the property was to be transferred to Ms van Dyk by Mr Dallison’s family trust unless Mr Dallison paid the amount due to Ms van Dyk within a set period.^[6]
[4] The essential thrust of Mr Dallison’s proposed appeal is against the valuation methodology and expert opinion accepted by the Family Court and essentially upheld in the High Court. In order to advance the appeal, Mr Dallison also applies for leave to adduce further evidence in the form of an affidavit from an independent expert accountant, Mr Weber. This evidence comprises an opinion that a net assets valuation approach should have been used generally instead of capitalised earnings, and a one entity approach should have been taken to the valuation of the practice, Eyequip and Laser Vision.
[5] Prior to the hearing counsel for Mr Dallison was invited to file a short synopsis setting out the key question(s) of fact or law sought to be advanced on appeal.^[7] Both the application for leave to appeal and the application to file further evidence are opposed by Ms van Dyk.

Applicable legal principles

[6] There is no dispute as to the legal principles applying to an application for leave to appeal under s 67(2) of the Judicature Act 1908. This Court in Waller v Hider emphasised the purpose of a second appeal is not the general correction of errors, but rather to clarify the law and determine whether it has been properly interpreted and applied.^[8] Thus the Court must be satisfied the proposed appeal:^[9]

• (a) raises some question of law or fact capable of bona fide and serious argument; and
• (b) involves some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal.

[7] Section 39B(3) of the PRA permits this Court hear further evidence if in the interests of justice to do so. Usually the evidence must be fresh.^[10] The interests of justice require a broad assessment of all the circumstances to determine whether the need for finality and risk of full blown relitigation are outweighed by the cogency of the evidence, the circumstances of its omission at first instance and the prospect that its exclusion would produce a miscarriage of justice.^[11]

The applicant’s main point

[8] Among the many points advanced by Ms Corry in her written submissions and the short additional synopsis, the key one is that Laser Vision should not have been valued separately from Eyequip and the practice. The contention is that Laser Vision had no separate existence and was dependent on the applicant’s skill and reputation to attract business. The approach of separately valuing the three entities taken in the Courts below involved ignoring the industry practice of specialist surgeons charging a fee per operation and instead determined a notional salary for the applicant.
[9] Ms Corry submits the “theory” that Laser Vision was a standalone business capable of generating profit was not reality-based and does not sit well with the approach of this Court in M v B.^[12] The approach to valuation must include “clear and unambiguous reality checks”.^[13] Ms Corry also cites in support the judgment of this Court in Hatrick v Commissioner of Inland Revenue.^[14]
[10] Ms Corry submits Mander J on appeal in the High Court erred when he rejected a net asset basis for valuation of Laser Vision because it would be unfair to Ms van Dyk by not recognising the benefits of the company to Mr Dallison in the production of his income.^[15] Further, the High Court erred in accepting the view of Mr Innes-Jones, the independent expert called by Ms van Dyk, that the company structure was relevant to the laser surgery income. Thus Mander J erred when he referred to “the need for a consistent approach to the accountancy treatment of the business entities and the obvious interrelationship between the companies and the ophthalmology practice ...”.^[16] Further, Ms Corry contends the Judge erred in concluding:

[63] The Family Court accepted that Mr Innes-Jones’ approach to the valuation of Laser Vision by applying a capitalisation of earnings method was appropriate. To do otherwise, in the Family Court’s view, would be to value Laser Vision at a level considerably below what it was worth to the husband due to the high income he was able to receive through his practice, as a consequence of the company’s operation. The net asset method or going concern method, which Mr Crichton favoured, would have unfairly prejudiced the wife as it would not have recognised the benefit the husband received from the income generated by the company.

[64] Laser Vision as an item of relationship property needs to be distinguished from the husband’s ophthalmology practice. It was separate from the practice and was not dependent on the husband’s skill and reputation to attract business. It operated from separate premises and was a self-contained business in its own right. Clients came to the laser surgery business as a result of its advertising and the sophisticated laser equipment it provided. The value of the business was not therefore personal to the husband. The services of another surgeon apart from the husband had also been utilised. Therefore, in the absence of the husband’s individual skills needing to be recognised, the capitalisation of earnings of the company as a commercial business provided an appropriate valuation method.

Our evaluation

Application for leave to adduce fresh evidence

[11] Ms Corry accepted at the hearing the evidence of Mr Weber was not fresh. It could have been called at the trial in the Family Court. At the very latest, it could have been advanced when Mr Dallison’s then counsel (not Ms Corry) argued the appeal before Mander J in the High Court.
[12] We do not accept Ms Corry’s argument that Judge Smith in the Family Court was “inconsistent” by requiring the valuation witnesses, Mr Crichton (for Mr Dallison) and Mr Innes-Jones (for Ms van Dyk) to meet pre-trial, but then attributing minimal weight to Mr Crichton’s evidence because he was found not to be independent. We consider the onus lay squarely on each party to adduce evidence from an expert witness who they could advance as having both the necessary expertise and the requisite independence.^[17]
[13] We also reject Mr Dallison’s complaint that there was not a fair process because the lack of independence on Mr Crichton’s part was only raised shortly before the trial.^[18] We consider any concerns as to lack of independence on Mr Crichton’s part were properly raised before the Family Court Judge.
[14] We agree with counsel for the respondent that Mr Weber’s evidence is effectively the same evidence as that already given by Mr Crichton for Mr Dallison, albeit presented slightly differently and given by a new deponent. Importantly this evidence and the arguments now advanced by Mr Dallison have been considered and rejected on three previous occasions: by the Family Court at first instance, on appeal in the High Court, and then again on application to the High Court for special leave to appeal to this Court.
[15] We consider the evidence of Mr Weber is therefore neither cogent nor credible in the sense that there is a genuine likelihood it would affect the result. The mere possibility that it might affect the outcome is not enough to displace the principle of finality, especially when the evidence is not fresh.
[16] The application for leave to adduce further evidence is declined.

Application for leave to appeal

[17] Once the application for leave to adduce further evidence has been declined, the application for leave to appeal largely falls away. The claimed errors set out in the written submissions, the short synopsis and discussions with counsel at the hearing may be categorised as criticisms of the approach of both the Family Court and the High Court to valuation and its consequences for the parties.
[18] Quite apart from this, the questions sought to be advanced on appeal by Mr Dallison come nowhere near to being questions of law or fact of the requisite bona fides or importance, whether public or private, to meet the test for leave for a second appeal. First, most of the questions, to the extent they were actually formulated, are factual. If, despite being advanced as questions of law, these questions are truly questions of fact (as we consider they are), we are also satisfied that none of them involves an interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal. They are essentially issues of private concern as between Mr Dallison and Ms van Dyk. Even if these are questions of law, we consider they do not raise an issue of sufficient general concern to warrant consideration on a second appeal.
[19] With respect to the specific challenge to [63]–[64] in the judgment of Mander J, noted above at [10], this challenge is again not a question of law but rather a question of fact. The assessment of witnesses advanced as experts and the High Court’s approach to the valuation of Laser Vision in the circumstances of this case were matters for factual determination. We consider that Mander J gave careful and comprehensive consideration to the issues raised on appeal concerning the expert evidence of Mr Innes-Jones and the valuation methodology advanced by him as an independent witness whose evidence was accepted by the Family Court Judge.
[20] Apart from referring to this aspect of the High Court judgment, Ms Corry was unable to refer to any other properly articulated question of law. We cannot discern there would be any in the decision that would have qualified as being capable of bona fide and serious argument or being of sufficient importance to outweigh the cost and delay of further appeal.
[21] We also emphasise that essentially the same result was reached in the Family Court and the High Court. This is a case involving largely concurrent findings in the Courts below. As noted there was an adjustment of around $78,000 (in Mr Dallison’s favour) in the evaluation of Eyequip Limited and an adjustment downward to the value of Laser Vision by reducing the valuation by just over $100,000. This was on the basis that Mander J gave a greater allowance for a notional salary of Mr Dallison of $500,000 rather than the $400,000 allowed by the Family Court Judge in valuing Laser Vision. We note also that, while not expressly endorsing the finding, Mander J acknowledged that having reviewed the evidence, Judge Smith in the Family Court was entitled to reach the view he did that Mr Dallison had conducted his affairs in such a way as to deny his wife access to relationship assets and to maintain a high standard of living for himself.^[19]
[22] It is now over nine years since the parties separated and eight years since the proceedings were issued. The concept of finality in litigation of this type weighs heavily against grant of leave to have a third airing of the valuation issues on appeal.

Result

[23] For the above reasons the application for leave to call fresh evidence is declined. The application for leave to appeal is declined.
[24] The applicant must pay the respondent costs for each application for a standard application on a band A basis and reasonable disbursements.

Solicitors:
Dallison Stone, Christchurch for Applicant
Clarke Boyce, Christchurch for Respondent

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^[1] Dallison v van Dyk [2014] NZHC 2851 [High Court judgment].

^[2] Van Dyk v Dallison [2014] NZFC 8.

^[3] Dallison v van Dyk [2015] NZHC 1807.

^[4] Van Dyk v Dallison, above n 2, at [404].

^[5] High Court judgment, above n 1. In the Family Court, the ophthalmology practice was valued at $354,084 and this was confirmed on appeal; Laser Vision was valued at $519,915, but reduced by Mander J on appeal to $415,580 to reflect a greater notional salary for Mr Dallison; and Eyequip was initially valued at $1,014,345, but this was reduced on appeal to $936,475. When added to the balance of the relationship assets, this is halved to reach Ms van Dyk’s share. Added to this is the s 15 economic disparity award of $60,000 to reach the figure above, upheld in the High Court.

^[6] High Court judgment, above n 1, at [159]–[173].

^[7] Dallison v van Dyk CA461/2015, 18 November 2015 (Minute of Harrison J).

^[8] Waller v Hider [1997] NZCA 221; [1998] 1 NZLR 412 (CA).

^[9] At 413.

^[10] As this Court said in Nation v Nation [2004] NZCA 288; [2005] 3 NZLR 46 (CA) at [165], it would be wrong to allow the appellant to “bolster his or her case with evidence that was available at the lower Court hearing but not adduced because of the particular view of the case being taken at the time.

^[11] Hodgson v Hodgson [2015] NZCA 404 at [50].

^[12] M v B [2006] 3 NZLR 660 (CA).

^[13] At [55].

^[14] Hatrick v Commissioner of Inland Revenue [1963] NZLR 641 (CA) at 654.

^[15] High Court judgment, above n 1, at [69]–[71].

^[16] At [44].

^[17] It was incumbent on Mr Dallison and his advisors to call evidence that would meet the requirements for admissibility in s 25 of the Evidence Act 2006. Moreover, witnesses put forward as experts are required to comply with s 26 of the Evidence Act.

^[18] This was raised by Mr Innes-Jones in the context of his response to the Judge’s direction that he and Mr Crichton meet pre-trial.

^[19] High Court judgment, above n 1, at [157].