Goldstone v Goldstone [2021] NZCA 664 (8 December 2021)

Last Updated: 14 December 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA383/2019 [2021] NZCA 664

	BETWEEN	ANDREA JEANETTE MARY GOLDSTONE Appellant
	AND	SHARON MARIE GOLDSTONE AS ADMINISTRATOR OF THE ESTATE OF REECE CLIVE GOLDSTONE First Respondent
	AND	THE MINISTER OF FINANCE ON BEHALF OF THE CROWN Second Respondent

Hearing:	3 November 2021
Court:	Courtney, Duffy and Dunningham JJ
Counsel:	V A Crawshaw QC, S M Wilson and T Bartlett for Appellant M S King for First Respondent No appearance for Second Respondent
Judgment:	8 December 2021 at 10.30 am

JUDGMENT OF THE COURT

1. The appeal is allowed.
2. The vesting order made in the High Court is set aside.

100. An order is made vesting the property in Sharon Goldstone as administrator of the estate of Reece Goldstone and in Andrea Goldstone as tenants in common in equal shares.

4. The High Court’s costs order is set aside.
5. We decline to make an order for costs in this Court under s 45(2) of the Legal Services Act 2011.

____________________________________________________________________

REASONS OF THE COURT

(Given by Courtney J)

Introduction

• [1] Under s 119(3) of the Insolvency Act 2006 the High Court may order that property formerly belonging to a bankrupt but disclaimed by the Official Assignee be vested in the bankrupt if satisfied that it is fair to do so. This appeal concerns competing claims for vesting under s 119(3).
• [2] The subject property is a lifestyle block in Tauranga. Reece and Andrea Goldstone purchased the property in 2003.^[1] Their plan was to live in the existing cottage with their three young sons while Reece, a builder, constructed a new house for the family. In November 2014 Reece and Andrea were both adjudicated bankrupt. Their debt exceeded their equity in the property and the Official Assignee disclaimed the property under s 117(1) of the Insolvency Act.
• [3] Notwithstanding their bankruptcy, Reece and Andrea continued to make the mortgage payments until April 2015, when they separated and Andrea moved away with the children. Reece, who also moved off the property, continued to make the mortgage payments himself.
• [4] Reece and Andrea’s marriage was dissolved in October 2017. In December 2017 Reece and Andrea were both discharged from bankruptcy. Andrea subsequently applied for an order under s 119(3) that the property be vested in her and Reece equally. She also filed proceedings in the Family Court seeking a division of the property under the Property (Relationships) Act 1976 (PRA). Reece applied for an order that the property be vested in him alone.
• [5] Toogood J made an order that the property be vested in Reece alone.^[2] Andrea appealed. Shortly after Andrea filed her appeal, Reece died intestate. His mother, Sharon Goldstone, is the administrator of the estate. Given the changed circumstances, Andrea now seeks to have the property vested in her alone.^[3] The Family Court proceedings are still on foot, awaiting the outcome of this appeal.
• [6] For the reasons we come to shortly, we consider that the appeal is a general appeal. The issues to be determined are therefore:

  (a) Was the Judge’s approach to the fairness test under s 119(3) of the Insolvency Act 2006 correct?
  (b) Did the Judge err in holding that the Family Court would have no jurisdiction in respect of the property in proceedings brought under the PRA?
  (c) What is a fair outcome under s 119(3) in light of Reece’s death and the evidence sought to be adduced on the appeal?

Approach on appeal

• [7] Mr King, for Sharon, contended that the decision made in the High Court was the exercise of a discretion, relying on the statement by Moore J in Robinson v IAG New Zealand Ltd that the Court acting under s 119 “enjoys a broad and largely unfettered discretion”.^[4] Ms Crawshaw QC, for Andrea, argued that the Judge was undertaking an evaluative judgment and the appeal was a general appeal.
• [8] Identifying whether a decision involves the exercise of a discretion or an evaluative judgment has long been recognised as difficult. If the former, the appellant must show that the Judge took account of an irrelevant consideration, failed to take account of a relevant consideration, made an error of law or principle or was plainly wrong.^[5] If the latter, provided the appellant can persuade the appellate court that the first instance court was wrong, they are entitled to a fresh assessment by the appellate court.^[6]
• [9] The basis on which the nature of the decision can be correctly identified has been considered in a variety of contexts and broad principles are evident. In Ophthalmological Society of New Zealand Inc v Commerce Commission McGrath J said:^[7]

A key indication of a discretion is whether the area for personal appreciation by the first instance Court or decision maker is large. In the context of the orders and decisions of Masters, whether the interests involved in a particular matter are purely procedural or concern wider issues of principle in relation to the application of the law to the facts, will also be relevant to whether a decision is discretionary in nature. In the latter type of case it may more readily be seen that ultimately only one view is legally possible, even if there is scope for considerable argument as to what it is. If that is the case the decision maker does not have the margin of appreciation inherent in discretion.

(Citation omitted.)

• [10] Having considered that statement and cases in other contexts,^[8] this Court (in the context of a bail appeal) made the following observations:^[9]

[49] These decisions show that the classes of case which appeal courts classify as an exercise of a discretion are dwindling. Three possible indicia of the presence of discretion emerge. First, the extent to which the decision‑maker can apply his or her own “personal appreciation” has been identified as a “key indication”. Clearly, the greater the level of prescription in terms of what is required of the decision-making process the more likely the decision is an evaluative process, rather than the exercise of a discretion. Second, procedural decisions are more likely to be an exercise of discretion than wider issues of principle involving the application of law to the facts. Third, if only one view is legally possible, that points away from a discretion. In other words, where there is scope for choice between multiple legally “right” outcomes, that points towards a discretion.

(Footnotes omitted.)

• [11] We consider that the discretion under s 119(3) can only be exercised once the Court has undertaken an evaluative assessment of the case and reached the point of being satisfied that to do so would be fair. The “fairness” test constitutes a threshold to be met before the discretion could be exercised. In this sense similar issues arise as were considered in R v Hughes (discharge without conviction) and R v Rajamani (proceeding with only 10 jurors).^[10]
• [12] We do not accept that, in the context of the Insolvency Act, determination of what is fair could turn on the Judge’s discretion. It is unlikely that Parliament intended to allow the vesting of property to be made on a discretionary basis, particularly where there are competing claims to the property. The concept of fairness allows for objective assessment of competing interests. As in the comparable assessment of the interests of justice, the evaluation is one to be made having regard to the all the relevant facts. The particular features may differ in each case, but consideration of the relevant features will lead a Judge to the point of being satisfied, or not, that vesting is fair. Whether that evaluation is correct is capable of objective assessment by reference to the factors that are relevant in the particular context.
• [13] We consider that in determining that it was fair to vest the property in Reece alone, the Judge was making an evaluative judgment and the appeal against that judgment is a general appeal. We therefore proceed on the basis that the appeal is to be conducted on the basis of Austin, Nichols: it is for Andrea to satisfy this Court that the Judge erred and, if she does so, she is entitled to a fresh assessment by this Court.

Application to adduce further evidence

• [14] Andrea and Sharon have both applied for leave to adduce further evidence on the appeal. The evidence relates substantially to issues arising from Reece’s death and developments in Andrea’s life. It includes uncontested valuation evidence for the property. Sharon also puts forward evidence intended to impugn Andrea’s credibility. The parties both consent to the evidence being adduced. Neither deponent was required for cross-examination.
• [15] Given we have determined that the appeal is a general appeal, the unusual circumstances of the case and the fact that the parties consent to the evidence being adduced, we grant leave.

The history of the property and of the family

• [16] Before we record the relevant history, we note that Reece and Andrea made a variety of allegations against one another which cannot be determined in the present context and, in any event, do not assist in determining what a fair result would be in this case. We confine ourselves to the relatively uncontested facts, save for some of the allegations dealt with in the new evidence adduced for the purposes of the appeal.
• [17] Reece and Andrea started a de facto relationship in 2000 and were married in late 2002. They had two sons, Sabastian (born in 2007) and Zakhery (born in 2009). They also had permanent day-to-day care of a third child, Lorenzo (born in 2011). The evidence is clear that both Reece and Andrea regarded Lorenzo as their own child.
• [18] In 2003 Reece and Andrea purchased the subject property and lived in the existing cottage until Reece could build a new house for the family. Between November 2006 and November 2007 Reece took time off work for this purpose. During that period Andrea was the sole income earner. She stopped work in June 2007 to care for Sabastian but returned to work a few months later out of financial necessity.
• [19] The couple borrowed from Credit Union North to buy the property. A mortgage was registered over it in November 2003. Eventually the couple ran into financial difficulties, particularly in relation to unpaid tax. When they were adjudicated bankrupt the valuation obtained by the Official Assignee showed the value of the property at between $350,000 and $400,000 as against the amount owing to Credit Union North of $442,707.17.
• [20] After the Official Assignee disclaimed the property in December 2014, the family remained living there and continued to meet mortgage payments and other outgoings. On 5 April 2015 they separated and Andrea left the property with the children. She rented accommodation for herself and the children and, for periods when she was unable to afford that, stayed with friends. She was primarily responsible for the children’s day-to-day care. She worked in a variety of jobs.
• [21] Although Reece stayed at the property for a time following separation it seems clear that for most of the post-separation period he was not living there but nor was he paying for accommodation elsewhere. For at least part of the time he was living with his parents. Reece continued to meet the outgoings on the property including the payments under the mortgage. He also made some child support payments and contributed to school fees.^[11]
• [22] In early 2018 Andrea applied to the Family Court for an occupation order. We note that her affidavit in support of the application made no mention of her and Reece’s bankruptcy or the Official Assignee’s disclaimer of the property. In October 2018 she made her application under s 119(2) and also filed the proceedings in the Family Court seeking an order under the PRA dividing the property in the event of it being vested in her and Reece.
• [23] Since the High Court decision was issued in July 2019, Andrea has obtained two valuations for the property. As at 18 January 2019, the property was valued at $710,000 “as is” and $920,000 as if complete. As at 17 December 2020 the property was valued at $740,000 “as is”. Since Reece’s death in October 2019, his parents have continued to meet the mortgage payments and outgoings on the property. There was $381,210.53 owing on the mortgage as at June 2021.

Vesting under s 119(3)

• [24] Section 119 provides:

119 Position of person who suffers loss as result of disclaimer

(1) A person suffering loss or damage as a result of disclaimer by the Assignee may—

(a) claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of the effect of an order made by the court under paragraph (b):

(b) apply to the court for an order that the disclaimed property be delivered to, or vested in, that person.

(2) The bankrupt may also apply for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

(3) The court may make an order under subsection (1)(b) or (2) if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant.

• [25] The Insolvency Act gives no guidance as to what factors ought to be considered in determining whether vesting is fair under s 119(3). In Robinson v IAG New Zealand Ltd Moore J considered that the assessment should be made “in an holistic manner and in light of all the surrounding circumstances the Court considers relevant”.^[12] In this case, the Judge considered that:^[13]

... all of the surrounding circumstances should be taken into account so far as they bear on what the Court may consider just, but the Court’s decision must reflect the context in which the application is made.

• [26] We agree that the assessment of fairness must take in all the circumstances of both the applicant(s) and the property. These are likely to vary greatly. It is only by taking a broad view of what is relevant that a proper evaluation of what is fair can be reached.
• [27] As the Judge discussed, the wording of s 119(3) is directed towards vesting in a single applicant.^[14] However, joint applications or competing applications in which the fair outcome would be joint vesting must have been contemplated. In at least one previous case, Fish Man Ltd (in liq) v Hadfield, joint vesting was regarded as an available option.^[15] The Judge held s 119(3) permitted an order vesting property jointly in two or more parties if that was the appropriate outcome.^[16] We agree that this is the correct approach.

The High Court decision

The parties’ positions

• [28] In the High Court Andrea argued that if the property were vested in her and Reece under s 119(3) it would become relationship property for the purposes of the PRA and the Family Court would have jurisdiction to make a division of the property and other ancillary orders, taking into account any circumstances that might make equal sharing of the property repugnant to justice,^[17] the respective contributions to the marriage,^[18] post-separation contributions,^[19] the interests of the children of the marriage,^[20] any occupation rights,^[21] and the value of the property.^[22]
• [29] Reece agreed that if the property were vested jointly it would be become relationship property but maintained that outcome would be unfair. Instead, he argued that vesting in him alone would be fair because Andrea could still seek to have the property treated as relationship property under s 9(4)(a) of the PRA. He accepted that under s 9(4) the various issues raised by Andrea in the relationship property proceedings were amenable to determination taking into account property vested in either or both of the parties under s 119(3).
• [30] Section 9(4)(a) of the PRA provides that:

  (4) The following property is separate property, unless the court considers that it is just in the circumstances to treat the property or any part of the property as relationship property:

(a) all property acquired by either spouse or partner while they are not living together as a married couple or as civil union partners or as de facto partners:

...

• [31] In Thompson v Thompson this Court explained the purpose and function of s 9(4):^[23]

[71] The starting point for the ascertainment of property resulting from a marriage partnership is the date of separation. Property acquired after that date is usually considered the separate property of the acquiring spouse.

[72] Circumstances may however warrant an exception to this general principle. The Act recognises the need to make provision for the period, whether months or years, which normally elapses between separation and final determination of property rights. Section 9(4) is one statutory means of doing so. The legislative policy behind this provision (and the other provisions which complement it) is to ensure each party gets their rightful share in the net assets of the relationship, together with the benefit or burden of any post‑separation changes in the form of, or value inherent in, the assets themselves. Additionally, and conversely, the legislative policy is to ensure that post-separation assets, liabilities and changes in value that have been due to the post-separation conduct of, or changes in, fortunes of one party alone, are not shared. ...

[73] The key factor in deciding whether to attribute to one or both parties, the benefit or burden of changes in assets and liabilities after separation is the presence or absence of a causal link with the relationship, and the assets and liabilities that link has produced. This is consistent with the objectives listed in the long title: to recognise the equal contribution of the husband, wife or partners to the relationship; to provide for a just division of property when the relationship ends; and to give the parties a clean break from the relationship. ...

[75] Accordingly assets acquired after separation will usually be separate property, unless their acquisition was directly or indirectly due to past or present relationship property. Careful recognition must be given to the post‑separation contributions of the parties when this inquiry is undertaken. The discretion involved in that assessment has been consistently emphasised to be broad.

(Footnotes omitted.)

The Judge’s decision

• [32] The Judge reviewed the recent cases in which s 119 applications had been determined, noting that none involved competing claims by bankrupts who were formerly joint owners of the subject property.^[24] The Judge concluded from his survey of cases that the relevant circumstances to be considered in determining an application under s 119(1) are those that relate to the disclaimed property. He identified, on a non‑exhaustive basis, the following relevant factors:^[25]

  (a) the applicant’s former interest in the property, if any;
  (b) how and when the interest was acquired;
  (c) if the applicant had no interest in the disclaimed property, what other relationship previously existed between the applicant and the property;
  (d) whether the applicant has maintained or increased the value of the property to be vested or prevented its transfer to a third party;
  (e) the circumstances in which the disclaimed property became vested in the Official Assignee through bankruptcy;
  (f) the rights and interests of third parties, if any, and, in particular, whether they consent to the vesting; and
  (g) the consequences of any vesting for the applicant and any other persons.

• [33] The Judge held that the vesting of the property in the Official Assignee resulted in the extinguishment of Andrea’s and Reece’s rights in it with the consequence that the property ceased to be relationship property in November 2014 when they were adjudicated bankrupt.^[26] Vesting of the property now could not revive that status. There is no challenge to that conclusion.
• [34] The Judge went on to conclude that a vesting order would result in the party in whom the property is vested acquiring the property afresh, and without any rights they may have had under the PRA arising from their marriage.^[27] He did not accept that vesting the property in Reece alone would render it separate property for the purposes of s 9(4)(a) of the PRA. Nor did he accept that if the property were vested in Reece alone Andrea to able to pursue a claim in the Family Court that the property should be treated as relationship property.^[28] The Judge considered that:

[62] ... an order vesting the property in Reece, or in Reece and Andrea jointly, would result in the same outcome for the purposes of the PRA as if, for example, Credit Union North had obtained a vesting order on an application under s 119(1)(b) and on-sold the property to one or both of them after the date of separation.

[63] It also follows that, if the Mountain Road property is vested in Andrea and Reece jointly by an order under s 119 of the Insolvency Act, the Family Court will not have jurisdiction to make any orders, either in connection with that property or otherwise between the parties that might appropriately recognise and compensate Reece for the payments related to the Mountain Road property he has made since the separation.

...

[65] I conclude, therefore, that the Mountain Road property is not now, and cannot become, either relationship property or separate property that would come within the jurisdiction of the Family Court under the PRA, whether on the basis of the current PRA proceedings in that court, or on the basis of any fresh application to it made by either Andrea or Reece.

• [35] As we discuss later, the parties agree that the Judge’s conclusion that the Family Court would have no jurisdiction in relation to the property following a vesting order was incorrect.
• [36] The Judge then identified the relevant factual basis for the assessment required under s 119(3):^[29]

  (a) The property was acquired jointly by both Andrea and Reece contributing to the deposit and assuming the mortgage liability.
  (b) The family lived at the property for almost 12 years prior to Andrea’s and Reece’s separation in April 2015.
  (c) Until separation Andrea and Reece had shared responsibility for meeting household expenses, including mortgage payments, rates and insurance on the property jointly.
  (d) After the date of separation Reece paid the rates, insurance premiums, mortgage payments and some maintenance. Andrea’s ability to make financial contributions was limited, in part at least, because she was the primary caregiver for the children and needed to provide accommodation for herself and them. Reece met expenses such as school fees.
  (e) As at the date of the adjudication Andrea’s and Reece’s joint liability to Credit Union North exceeded the estimated value of the property by between $40,000 and $90,000.
  (f) At the date of separation the balance owing under the mortgage had been reduced by $3,374.17 and the value of the property was around $425,000. This meant that payments made between the date of adjudication and date of separation had little or no effect on the value of their equity.
  (g) Since separation Reece paid approximately $123,000 under the mortgage, though it was not clear how much was paid as interest and how much as principal.
  (h) Reece’s payments since the date of separation had the effect of preventing a mortgagee sale, thereby preserving the availability of the property for a vesting application under s 119.

• [37] The Judge viewed (a), (b) and (c) — the contributions of both Reece and Andrea to the purchase of the property, the fact that it was the family home which they occupied for almost 12 years and that it was relationship property, and the joint sharing of household expenses — as factors favouring the parties equally and therefore neutral in his assessment.^[30]
• [38] The Judge then identified factors that he regarded as irrelevant.^[31] These were mostly allegations of wrongdoing by the parties against one another which either could not have been relevant or were not amenable to resolution. They included Reece’s argument that Andrea had caused their bankruptcy through mismanaging their financial affairs, the circumstances in which a temporary protection order was made against Reece in April 2015 and disagreements between the parties over the way the children were brought up. There is no challenge to this aspect of the Judge’s reasoning.
• [39] Having dismissed the argument that issues over the fair disposition of the property were best resolved by the Family Court and having held that the prior status of the property as the family home (and therefore relationship property) and the parties’ respective contributions to the property were neutral because they favoured both parties, the Judge considered the only relevant considerations to be the mortgage payments and payments of rates, insurance premiums and some maintenance costs since the adjudication.^[32]
• [40] Up to April 2015, Andrea and Reece had made those payments jointly. From April 2015 to the date of hearing, March 2019, Reece had made those contributions without any contribution from Andrea. Although they totalled approximately $130,000 they had little impact on the differential between the value of the property and the amount of indebtedness to Credit Union North. The market value of the property had, however, increased significantly due to inflation or a general increase in property values. The Judge concluded that:^[33]

[75] The payments made by Reece, therefore, have not increased what would have been the owners’ equity in the Mountain Road property had it not been vested in the Assignee and then the Crown. The payments, however, have had the highly material effect of avoiding a mortgagee sale. As a result, during the period in which the market value of the property has increased by over 50% of the value at the time of adjudication, the property has remained as bona vacantia vested in the Crown and, therefore, susceptible to a vesting order under s 119. I note in passing that, for PRA purposes, the property had no value or, if anything, a negative value, at the date of separation.

[76] Those considerations weigh heavily in favour of the fairest outcome being a vesting of the property in Reece solely.

• [41] The Judge acknowledged that Andrea’s ability to contribute financially to the mortgage was limited by her having principal responsibility for the care of the children, but was not satisfied that her financial position weighed sufficiently against Reece’s actual financial contribution to make joint vesting the fairest outcome.^[34]
• [42] Finally, the Judge considered that because the Family Court would have no jurisdiction to make orders that would resolve the practical issues arising from joint ownership of a family home, vesting the property in Reece and Andrea jointly would be “not only impractical but wholly unworkable”.^[35] The Judge identified the problems as who would have the right to occupy the property, who would be responsible for carrying out and funding maintenance, how decisions about completing the construction of the house on the property would be made, who would meet the continuing outgoings on the property and when and on what terms the property would be sold.^[36] He concluded:

[80] In the absence of the ability of the Family Court to determine these issues under the PRA an elaborate ownership structure and decision-making framework would need to be included in the terms of the vesting order. It would overreach the reasonable scope of the Court’s implied power to make a vesting order subject to terms and conditions to make the complex orders that would be necessary to produce a fair and workable outcome for the vesting of the Mountain Road property in Andrea and Reece jointly.

[81] And it is not clear either how the value of Reece’s financial contribution of $130,000 since the date of separation should be compensated in circumstances where the payment of those funds has led fortuitously to an increase in the property’s value of more than $200,000. Would fairness dictate that Reece should be credited with the full value of the increase? It is difficult to see why not but, in that case, the net value of the property in which the joint owners would share would be nil because the liability to Credit Union North would more or less equate to the owners’ shared equity.

...

[82] For these reasons I am satisfied that the fairest way in which the Court may exercise its discretion under s 119(3) in respect of the cross-applications is to vest the Mountain Road property in Reece solely.

Appeal

A fresh assessment?

• [43] Both parties agree that the Judge erred in his view that the Family Court would have no jurisdiction in relation to the property. If the property were vested in Reece it would be property acquired after the parties ceased to live with one another and therefore separate property for the purposes of the PRA. But its status as former relationship property to which both parties had contributed means that it would be open to the Family Court under s 9(4)(a) to treat it as still being relationship property in order to resolve the issues relating to the parties’ respective contributions to the marriage and the property, including post-separation contributions raised in the Family Court proceedings.
• [44] Andrea asserts that, in wrongly proceeding on the basis that the Family Court lacked jurisdiction under s 9(4) to consider the property, the Judge failed to take into account all the relevant factors weighing in favour of each party’s application and considering those factors in light of the surrounding circumstances, the context in which the applications were made and the consequences of any vesting for the applicant and other persons.
• [45] There is some dispute over exactly what factors the Judge took into account in determining what would be fair in terms of vesting. Ms Crawshaw contended that, by treating the factors relating to the parties’ joint acquisition and use of the property and joint mortgage payments up to separation as neutral, the Judge had effectively treated Reece’s post separation mortgage payments as the only relevant consideration.
• [46] Although the Judge said that “the only relevant considerations” were the post‑separation mortgage payments and payments of rates, insurance and some maintenance costs,^[37] we are satisfied that, read in its entirety, the Judge did not proceed on the basis that those were literally the only relevant considerations. Rather, he viewed the history of joint acquisition, use and mortgage payments as favouring both parties equally and Reece’s post-separation payments as the only additional factor that could be taken into account. It might be more accurate to say that the Judge treated that factor as the most influential.
• [47] Nevertheless, we accept that the Judge’s error regarding the effect of s 9(4)(a) warrants a fresh assessment under s 119(3) because his view that the Family Court lacked jurisdiction to deal with the property was clearly a significant factor in his reasoning that joint vesting would not properly recognise Reece’s post-separation contributions or allow for the practical difficulties of occupation, maintenance and sale of the property.^[38] Moreover, Reece’s death has significantly altered the landscape against which the s 119(3) assessment would be made. The Judge’s conclusion can only be revisited in a meaningful way by taking into account the changed circumstances.

What is fair in terms of vesting now?

• [48] The history of Reece’s and Andrea’s acquisition of the property, their joint assumption of the mortgage liability and their occupation of the property as a family home for a decade is the starting point for determining what is fair. It is relevant, too, that they continued to occupy the property and pay the mortgage for some months after the disclaimer.
• [49] The second significant consideration is Reece’s post-separation payment of the mortgage. In the High Court Reece rightly maintained that, if not for his efforts, the property would not have been available to be vested in either him or Andrea. In this Court, Sharon points out that she and her husband, Kevin, have been continuing to make the payments since Reece’s death. While these payments have not resulted in any (or any significant) increase in equity — the substantial increase in the value of the property resulting from the general increase in property prices over recent years — they have enabled the property to be retained long enough to allow it to be revested. In addition, prior to the applications for vesting, Kevin committed his own time and money towards improving the cottage on the property for Reece and the boys to use.
• [50] As against these factors, Andrea argues that Reece was able to make the mortgage payments because he did not have any accommodation costs himself, whereas she was responsible for housing the children and for their day-to-day care. She also points out that, while Reece accessed the property to work on, she herself was excluded from it.
• [51] Thirdly, the interests of the children now assume a different significance. In the High Court both parties were motivated to secure the property in order to provide a home for their children. Nevertheless, their respective claims to the property were personal to them. Now, as a result of Reece’s intestacy, it is Sabastian and Zakhery who hold the interest that Reece previously enjoyed. Under the Administration Act 1969 they will inherit Reece’s estate to the exclusion of Lorenzo, who is not Reece’s biological child and was not adopted by Reece.^[39] Strictly, the contest is between Sabastian and Zakhery on the one hand and Andrea on the other.
• [52] As we noted earlier, however, Reece regarded Lorenzo as his own child. Sharon’s appointment as the administrator of Reece’s estate was contested by Andrea but ultimately made by consent on the basis that the question whether Lorenzo could benefit from the estate would be reserved. Sharon has said that she would consent to the estate being used for the benefit of all three children; if the appeal is dismissed she intends to sell the property and use the proceeds for the benefit of the two older children and, if ordered by a court, Lorenzo as well. Whether Lorenzo can be accommodated will depend on the outcome of the Family Court proceedings, under which provision could be sought for Lorenzo as a child of the marriage.^[40]
• [53] Before us counsel advised that Andrea seeks to have the property vested in her alone on the basis that she is solely responsible for the care and support of the children. If the property is vested solely in her she proposes to sell it, reimburse Sharon and her husband for the outgoings they have met and use the proceeds for the benefit of all three children. This proposal engages questions raised in the new evidence which we consider ought to be taken into account.
• [54] Andrea has remarried and if the property is vested solely in her and the proceeds used to provide a family home for the children it will likely become relationship property. Andrea’s current husband would acquire an interest in it, which would be to the detriment of the children, especially to Sabastian and Zakhery. Moreover, Andrea has other, older, children so that, on her death, the property may be shared with those children, to the detriment of Sabastian, Zakhery and Lorenzo.
• [55] Finally, although Andrea says that she wishes to use the property for the benefit of the children, she stops short of expressing an intention to place the property on trust for them. This has some significance because in Sharon’s affidavit filed for the purposes of the appeal, she seeks to impugn Andrea’s honesty. She refers to Andrea’s previous convictions for dishonesty and to Andrea’s most recent marriage certificate on which it is stated that she had never been married or in a civil union. Andrea responds to the former that the convictions date back more than 20 years and arose from the circumstances of her first marriage when she was left alone with four young children. However, she makes no comment in relation to her marriage certificate.
• [56] In summary, the property was a family home for Reece, Andrea and the children for some 12 years. Both contributed to it and both assumed the liabilities that went with it. Reece, through commendable foresight, met the ongoing mortgage repayments and other costs of the property and thereby ensured that the asset is now available for his children. Andrea, on the other hand, had the burden of housing and caring for the children and must now continue do so without financial support from Reece. However, regardless of the result on this appeal, the final outcome will be determined in the Family Court proceedings, in which Reece’s and his parents’ contributions can be recognised, as can Andrea’s role as the primary (and now only) caregiver for the children and the wish of both Andrea and Sharon that all three children benefit from Reece’s estate.
• [57] Taking all these factors into account we consider that vesting the property jointly in Andrea and Sharon as tenants in common in equal shares is the fair result for the purposes of s 119(3).

Result

• [58] The appeal is allowed.
• [59] The vesting order made in the High Court is set aside.
• [60] An order is made vesting the property in Sharon Goldstone as administrator of the estate of Reece Goldstone and in Andrea Goldstone as tenants in common in equal shares.

Costs

• [61] Both parties were granted legal aid in the High Court. Toogood J held that there were no exceptional circumstances to justify an order of costs against Andrea under s 45(2) of the Legal Services Act 2011.^[41] He did, however, make an order specifying the amount of costs Andrea would have been liable to pay if s 45 did not apply. In light of Andrea’s success on appeal, we make an order setting aside the High Court’s order.
• [62] The parties were also in receipt of legal aid on appeal. We are satisfied that there are no exceptional circumstances justifying an award of costs against Reece’s estate and so we decline to make a costs order under s 45(2).

Solicitors:
Terangi Bartlett, Tauranga for Appellant

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^[1] To avoid confusion we refer to the parties by their first names.

^[2] Goldstone v Goldstone [2019] NZHC 1649.

^[3] Andrea did not seek leave to file an amended application. In submissions, Sharon’s counsel noted this point but did not oppose the appeal proceeding on this basis.

^[4] Robinson v IAG New Zealand Ltd [2016] NZHC 3149 at [50].

^[5] May v May (1982) 1 NZFLR 165 (CA) at 169–170; affirmed in Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].

^[6] Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].

^[7] Ophthalmological Society of New Zealand Inc v Commerce Commission [2003] NZCA 26; [2003] 2 NZLR 145 (CA) at [37].

^[8] R v Gwaze [2010] NZSC 52, [2010] 3 NZLR 734; R v Hughes [2008] NZCA 546, [2009] 3 NZLR 222; and Fagan v Serious Fraud Office [2013] NZCA 367.

^[9] Taipeti v R [2018] NZCA 56, [2018] 3 NZLR 308.

^[10] R v Hughes, above n 8, at [10]–[11]; and R v Rajamani [2007] NZSC 68, [2008] 1 NZLR 723 at [3]–[5].

^[11] Lorenzo’s care costs were met by the Ministry of Social Development.

^[12] Robinson v IAG New Zealand Ltd, above n 4, at [50].

^[13] Goldstone v Goldstone, above n 2, at [18].

^[14] At [43].

^[15] Fish Man Ltd (in liq) v Hadfield [2017] NZCA 589, [2018] 2 NZLR 428 at [91].

^[16] Goldstone v Goldstone, above n 2, at [45]–[47].

^[17] Property (Relationships) Act 1976, s 13.

^[18] Section 18.

^[19] Section 18B.

^[20] Section 26.

^[21] Section 27.

^[22] Section 2G.

^[23] Thompson v Thompson [2014] NZCA 117, [2014] 2 NZLR 741.

^[24] Goldstone v Goldstone, above n 2, at [22].

^[25] At [41].

^[26] At [57].

^[27] At [62].

^[28] At [64].

^[29] At [67].

^[30] At [68].

^[31] At [69]–[71].

^[32] At [73].

^[33] At [75].

^[34] At [77].

^[35] At [78].

^[36] At [79].

^[37] At [73].

^[38] At [80]–[81].

^[39] Administration Act 1969, s 77.

^[40] Property (Relationships) Act, ss 2 and 26.

^[41] Goldstone v Goldstone [2019] NZHC 1865.