M v G [2012] NZHC 1798 (23 July 2012)

Last Updated: 27 July 2012

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION PLEASE SEE WWW.JUSTICE.GOVT.NZ/FAMILY/LEGISLATION/RESTRICTIONS.

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2011-454-000796 [2012] NZHC 1798

UNDER the Property (Relationships) Act 1976

BETWEEN M Appellant

AND G Respondent

Hearing: 12 July 2012

Counsel: R P Harley for Appellant

A R Bell and D I Sheppard for Respondent

Judgment: 23 July 2012

In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 3.00pm on the 23rd day of July 2012.

_{RESERVED JUDGMENT OF COLLINS J}

Introduction

[1] Ms M appeals four findings made by the Family Court in a decision delivered on 17 October 2011 (substantive judgment). She also appeals a costs decision made

_{by the Family Court on 27 January 2012 (costs judgment).}

M V G HC PMN CIV-2011-454-000796 [23 July 2012]

[2] The four aspects of the substantive judgment which Ms M challenges are:

(1) The conclusion that the parties lived together as a couple from November 2005. Ms M says that the parties commenced their de facto relationship in January/February 2005.

(2) The consequential finding that an interest in a farm acquired by Mr G

in May 2005 was not relationship property.

(3) The Family Court’s finding that s 9A(1) of the Property (Relationships) Act 1976 (the Act) was not applicable in the circumstances of this case. The Family Court ruled that Ms M did not directly contribute to an increase in the value of the farm.

(4) The calculation of the award made under s 17 of the Act, concerning

Ms M’s contribution to the “sustenance” of the farm.

Determining an appeal of this nature

[3] An appeal of this nature is conducted as a rehearing pursuant to s 39 of the Act, ss 72 and 75 of the District Courts Act 1947 and r 20.18 of the High Court Rules. The Court is not bound to accept the Family Court’s findings of fact and is entitled to exercise any power or discretion available to the Family Court. The Court must exercise its own judgement but, where appropriate, the Court may give weight to the findings of the Family Court.

[4] In Austin, Nichols & Co Inc v Stichting Lodestar, the Supreme Court said that when considering a general appeal from a decision of the Trade Marks Commissioner, the High Court is required to:1

... come to its own view on the merits. The weight it gives to the decision of the Commissioner is a matter of judgment [sic]. If the High Court is of a different view from the Commissioner and is, therefore, of opinion that the Commissioner’s decision is wrong, it must act on its own view.

1 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3]

[5] The Court went on to say:2

Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment [sic]. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.

In the present appeal there was no basis for caution in differing from the assessment of the tribunal appealed from. The case entailed no question of credibility. It turned on a judgment [sic] of fact and degree, not the exercise of discretion entrusted to the tribunal. We are of the view that the Court of Appeal was not correct to suggest that, because the decision turned on a value judgment [sic] apparently open to the Assistant Commissioner, “the High Court Judge ought not to have embarked on a reconsideration of the issue without considering, and giving weight to, the Assistant Commissioner’s conclusion”. The High Court Judge was obliged to reconsider the issue. He was entitled to use the reasons of the Assistant Commissioner to assist him in reaching his own conclusion, but the weight he placed on them was a matter for him.

[6] The same approach is required of the High Court when it hears a general appeal from the Family Court.3

Background

[7] Mr G and Ms M have suffered from a number of debilitating conditions:

(1) Mr G has been heavily dependent upon drugs, including morphine.

He has also been a heavy drinker. Mr G has also suffered significant depression.

(2) Ms M starting receiving ACC benefits in June 1997 for radical tunnel syndrome. In July 1999 she suffered a wrist injury that resulted in her continuing to receive ACC benefits. Ms M has also suffered from

_{gambling and drinking issues.}

2 _{At [16] – [17].}

3 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 and G v G HC Auckland CIV-2011-404-

4265, 11 January 2012.

[8] It appears Ms M and Mr G met in 1994. They maintained a casual friendship over the next 20 years. Shortly after Ms M and Mr G met, Mr G married SG. That marriage ended in 1993. In 1995 Mr G formed a relationship with Ms E. That relationship ended in 2004.

[9] At the time Mr G’s relationship with Ms E came to an end he was living on and farming a property in Bunnythorpe. Mr G leased that property from his parents. The details of Mr G’s acquisition of his parents’ farm is considered in [52] – [55]. Suffice for present purposes to record that Mr G had acquired most of his parents’ farm by December 2004. He acquired the balance from his mother in May 2005. At the time Mr G and Ms E’s relationship was coming to an end Ms M was living in a house which she owned in Bunnythorpe.

[10] In June 2005 Mr G leased the farm he had acquired from his parents to his brother and moved to Kalgoorlie to take up work in the mining industry. Ms M visited him for a two to three week period in August/September 2005.

[11] After returning to New Zealand Ms M sold her home in Bunnythorpe and moved to Kalgoorlie to be with Mr G. She left New Zealand on 20 November 2005.

[12] The parties’ relationship was at times very strained.

[13] Soon after Ms M moved to Kalgoorlie she started paying $250 per week from her New Zealand bank account into Mr G’s farm account to cover the farm mortgage. This arrangement was entered into to save Mr G the costs associated with transferring money from Australia to New Zealand. Later in this judgment I will give further consideration to the parties’ financial contributions during their time as a de facto couple.

[14] Ms M also paid the rent on the home that the parties rented in Kalgoorlie. This was a further $250 per week.

[15] The couple’s daughter J was born on 31 January 2006.

[16] There were periods in early 2006 when Mr G moved out of the couple’s

rented property in Kalgoorlie.

[17] By April 2006 the couple were sharing the same home again. In April 2006

Mr G began paying Ms M $500 per week by automatic payment to cover the farm mortgage and to contribute to the couple’s living expenses (including those of their daughter).

[18] Between April and October 2006 Mr G moved from the couple’s rented

property on two occasions.

[19] The parties and their daughter returned to New Zealand in December 2006. [20] On returning to New Zealand the parties and their daughter stayed with

friends of Ms M at Colyton. In February 2007 Ms M moved into a farmhouse at

116 TN Road, which she rented from Mr G’s former wife. Mr G joined Ms M about a week later. These living arrangements lasted until July 2008 when Mr G moved into a cottage at Rangiotu.

[21] After Mr G had moved into the Rangiotu cottage he and Ms M continued to spend time together, although they do not agree about the extent of contact they had with each other during this period.

[22] Ms M said in her evidence that these arrangements lasted until January 2009 when she says that she decided to end the relationship because she thought Mr G was having the best of both worlds, namely that he would stay half the week at Rangiotu and drink in an unconstrained manner and then return “to this lovely family unit at

_{the weekend, where everything was done for him”.}4

4 EHM v JOG FC Palmerston North FAM-2009-015-92, 17 October 2011 at [48].

Summary of Family Court decision

[23] The Family Court Judge concluded that the parties commenced their de facto relationship on 20 November 2005 when Ms M moved to Kalgoorlie to be with Mr G.

[24] The Family Court Judge also concluded that the de facto relationship came to an end in January 2009.

[25] In his judgment the Family Court Judge concluded that between November

2005 and December 2007 Ms M paid various expenses, including household expenses, a contribution towards the farm mortgage and rent. He held that after the parties returned to New Zealand in December 2006 Ms M paid most of the household expenses and rent in relation to 116 TN Road.

[26] The Family Court Judge also held that Mr G’s three-fifths interest in the home and curtilage at 116 TN Road was relationship property. He valued that property at being $115,000 of which three-fifths, or $69,000 was relationship property. The Family Court Judge concluded Ms M was entitled to half of that sum, namely $34,500.

[27] The Family Court Judge also concluded that Mr G acquired the family farm in two stages, namely December 2004 and May 2005 and that the farm increased in value by $108,000 during the period of the parties’ de facto relationship.

[28] The Family Court Judge held that Ms M contributed $3,500 towards repayment of the farm mortgage between 5 December 2005 and 1 November 2006 but that these financial contributions did not constitute an increase in the value of the farm property and that accordingly Ms M was not entitled to any recovery under s 9A(1) of the Act.

[29] The Family Court Judge also concluded that relationship property totalling

$13,500 was contributed by the parties to payment of the farm mortgage during the duration of their de facto relationship and that Ms M’s contribution for the purposes

of s 17 of the Act was half that sum, which the Judge adjusted up to $10,000 to take account of inflation.

[30] The Family Court Judge’s principal orders in his substantive judgment were that Mr G was to pay Ms M $45,115 comprising:

$34,500 being half the value of the land and curtilage at 116 TN Road;

$10,000 for Ms M’s sustenance of Mr G’s farm property; and

_{$615 being half the value of Mr G’s Australian superannuation scheme.}

[31] In his costs judgment the Family Court Judge said that his resolution of the issues did not support an award of costs in favour of either party5 but that had s 45 of the Legal Services Act 2011 not affected Ms M’s ability to pay, he would have ordered her to pay costs in the sum of $20,000 and disbursements of $4,769.40.6

First issue on appeal: when did the parties’ de facto relationship commence?

Legal principles

[32] No issue is taken with the Family Court Judge’s recitation of the relevant

legal principles that govern when a de facto relationship exists.

[33] Section 2D of the Act provides:

2D Meaning of de facto relationship

(1) For the purposes of this Act, a

de facto relationship

is a relationship between 2 persons (whether a man and a woman, or a man and a man, or a woman and a woman)—

_{(1) who are both aged 18 years or older; and}

5 _{EHM v JOG FC Palmerston North [2012] NZFC 384 at [30].}

6 At [50].

(2) who live together as a couple; and

(3) who are not married to, or in a civil union with, one another.

(2) In determining whether 2 persons live together as a couple, all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case:

(a) the duration of the relationship:

(b) the nature and extent of common residence: (c) whether or not a sexual relationship exists:

(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties:

(e) the ownership, use, and acquisition of property:

(f) the degree of mutual commitment to a shared life: (g) the care and support of children:

(h) the performance of household duties:

(i) the reputation and public aspects of the relationship. (3) In determining whether 2 persons live together as a couple,—

(a) no finding in respect of any of the matters stated in subsection (2), or in respect of any combination of them, is to be regarded as necessary; and

(b) a Court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the Court in the circumstances of the case.

(4) For the purposes of this Act, a de facto relationship ends if—

(a) the de facto partners cease to live together as a couple; or

(b) 1 of the de facto partners dies.

[34] In L v P7 Asher J recorded that the three criteria set out in s 2D(1) of the Act are the starting point to assessing whether a de facto relationship exists. That is to say, a de facto relationship involves two people over the age of 18 living together as a couple. The Family Court Judge correctly noted that the concept of “living

_{together” is at the heart of a de facto relationship. The s 2D(2) factors are to be}

7 L v P [2007] NZHC 1037; [2008] NZFLR 401 (HC).

taken into account in determining whether parties are living together as a couple, but they are not themselves determinative of whether there is a de facto relationship.

[35] In L v P Asher said:8

Of course, s 2D(2) makes it explicit that the parties do not actually have to continuously cohabit. This is made explicit in s 2D(3), which states that no finding of any matter (which includes the nature and extent of common residence) is to be regarded as necessary. This factor assumes a common residence, but invites an examination of the nature of it. It is also consistent with the focus in decisions regarding when a de facto relationship ends, on whether the parties have ceased to live together ...

[36] Asher J made reference to Scragg v Scott where the Court said:9

In determining whether a de facto relationship exists Courts are often required to assess multiple pieces of circumstantial evidence. That is why the indicia set out in s 2D are inclusive but not exhaustive. If sufficient pieces of evidence exist which, when viewed cumulatively, and through the application of common sense and proper reasoning, satisfy the finder of fact that the relationship is a de facto relationship then the statutory test is met. Weight to be given to individual pieces of circumstantial evidence may vary. If both parties say they are in a de facto relationship that may well be decisive direct evidence, depending upon the existence of other characteristics. Parties may simply present to the outside world in a particular way. They may share an emotional bond or association over an extended period and act in a way, inconsistent with any view other than that they are in a de facto relationship. It is the cumulative weight of all factors whether specified in the Act or not ... which is decisive. The approach must be broad, with various factors to be weighed up in an evaluative task, similar to those the Courts are frequently called upon to undertake when drawing conclusions from circumstantial evidence.

The parties’ respective contentions

[37] It is Ms M’s case that she and Mr G formed a de facto relationship in January/February 2005. Her argument in support of this proposition is based upon the following contentions:

(1) That she and Mr G began to see each other after his father died in July

_2004.

8 _{At [38].}

9 Scragg v Scott [2006] NZFLR 1076 (HC) at [64].

(2) That she and Mr G began to spend a lot of time together during Christmas 2004, although they continued to live in their separate houses.

(3) That in January 2005 Ms M and Mr G discussed the possibility of them moving to Australia together.

(4) That in February 2005 Mr G and Ms M commenced their sexual relationship.

(5) Ms M became pregnant in March 2005.

(6) That after Mr G travelled to Kalgoorlie in June 2005 he and Ms M

maintained close telephone contact with each other.

(7) That Ms M travelled to Kalgoorlie on 26 August 2005 and spent two weeks with Mr G, during which time Mr G asked Ms M to marry him. This was not mentioned by Ms M in her affidavit evidence. She only made reference to this event when she was giving her oral evidence.

(8) During her visit to Kalgoorlie Ms M says that she initiated several discussions with Mr G about placing their forthcoming baby up for adoption but that Mr G was opposed to that idea.

(9) Ms M explained that approximately two weeks after she returned to

New Zealand she accepted Mr G’s assurances that he:

(a) had found another job; (b) stopped using drugs;

(c) was not drinking as heavily as before; and

(d) did not want their future baby to be adopted out.

(10) Ms M put her home in Bunnythorpe on the market. It was sold in

November 2005.

(11) Ms M moved to Kalgoorlie on 20 November 2005. They stayed together briefly in a hotel and then found rented accommodation together.

[38] The submissions in support of Ms M’s position were succinctly summarised by her counsel, Ms Harley, in the following way:

The parties were longstanding friends. The parties shared common residence throughout the period Christmas 2004 to January 2009, notwithstanding brief periods of other residence. A sexual relationship existed between the parties throughout the period. There was a degree of financial interdependence in that Ms M paid all bills. There was a mutual commitment to a shared life with daughter J who was cared for and supported by her parents. Mr G bought Christmas presents in December

2008 for Ms M and J. ...

Ms Harley submitted that these circumstances apply with equal force to the period January/February 2005 through to November 2005 as well as to the period that the Family Court Judge decided was the time of their de facto relationship (November

2005 to January 2009).

[39] Three other matters are referred to by Ms M to support her argument that the

parties’ de facto relationship commenced in January 2005:

(1) The evidence of Ms SW

(1) Ms SW said in her affidavit that she met Ms M in 2005 through a mutual friend. Ms SW said that she and Ms M were staying at the same house in Colyton and that at that time Ms M was “... planning to move to Australia where [Mr G had been] working in the mining industry”.10

(2) Ms SW was cross-examined. In her oral evidence Ms SW told the Court that she saw Mr G and Ms M together “may be four”

10 Affidavit of T SW, 20 May 2011 at [3].

times in 2005 and that they “appeared to be together”, that “they were seeing each other”, that “they were definitely together as a couple”, but they weren’t living together in the one house.11

(2) The evidence of Mrs R

Mrs R is the mother of Ms M. She said in her affidavit:12

[Ms M] told me about her and [Mr G’s] idea of going to Australia in January 2005 when I was down from the Waikato on business. She told me she was putting her house on the market.

(3) Evidence of an ACC investigation

During her cross-examination in the Family Court Ms M said that ACC commenced an investigation into her in January 2005. Ms M’s evidence on this point was:13

I agree that [I] came to their [ACC’s] attention because [Ms E], [Mr G’s] ex-partner initiated that investigation in January. Well at least that’s what she told me and that’s what sparked their investigation and it started off as me doing taxis which I think if you’ve got that file you should be well aware that they were aware of . Um, that was me just trying to do something to return to work.

[40] Mr G rejects Ms M’s claim that they formed their de facto relationship in

January 2005. Mr G’s position is:

(1) That in May 2004 he was concerned about his drug use and depression. To address these issues he decided to take up a mining job in Australia where he says drinking and drug use are strictly

_{controlled. His plan was to go to Australia mid-2005.}

11 EHM v JOG FC Palmerston North FAM-2009-015-92 Notes of Evidence, 17 August 2011 at 50

_{Lines 10-27.}

12 _{Affidavit of H C R 4 March 2011 at [6].}

13 EHM v JOG FC Palmerston North FAM-2009-015-92 Notes of Evidence, 17 August 2011 at 11

Lines 1-6.

(2) That he went through a very difficult six months period when he weaned himself off morphine during which time he says it was not possible for him to form any relationship.

(3) That he and Ms M started to see each other in March 2005, which was when their sexual relationship commenced.

(4) He says that in fact during this time he briefly resumed his relationship with Ms E, and that he bought a ticket for her to travel with him to Australia but she decided that she did not want to go.

(5) In preparation for his departure Mr G arranged for the farm he had acquired in May 2005 to be leased to his brother. That leasing arrangement also took place in May 2005.

(6) Mr G moved to Kalgoorlie in June 2005.

(7) Mr G says that telephone contact between himself and Ms M at this time was sporadic (approximately once a month).

(8) That it was Ms M who raised the issue of her going to Australia and that he told her as he was working all the time it was for her to decide if she wanted to move and that he did not care whether she moved or not. His evidence was:14

When [Ms M] approached me to come to Australia, I was indifferent to the prospect. I did not truly know her at the time as we had never lived together. I neither encouraged her to come nor told her to stay. The drivers for this were that I had no feelings for [Ms M] but wanted to know our child and play a role in our child’s life. By letter, [Ms M] had threatened to place at that time our unborn child up for adoption unless she could live with me in Australia. I myself doubted my ability to both be in a relationship and to be a parent. At that point in my life for me it was about survival, recovering from addiction and depression.

My position with [Ms M] was clear. There could be no guarantees but I would try to be there for our child. Despite

14 EHM v JOG FC Palmerston North FAM-2009-015-92, 17 October 2011 at [31].

this, [Ms M] was determined to come. She had few ties that kept her where she was. She had no job and had recently lost her brother. To a certain extent, I think she sought escape from her way of life in New Zealand.

Family Court Judge’s findings of fact in relation to first point of appeal

[41] The Family Court Judge carefully evaluated the conflicting evidence he was presented with. He observed that he needed to be cautious about the evidence of both Mr G and Ms M. His Honour noted:15

(1) During 2004 and early 2005 Mr G was withdrawing from morphine and was drinking excessively. At least during the latter part of 2004

Ms M was also, I find, drinking, although not to the extent of Mr G. This is likely to have affected their ability to recall with clarity the

events and conversations at that time.

(2) Mr G’s evidence was inconsistent in various respects, including:

i) In his affidavit evidence he said that his only income in 2004 was from income protection insurance but in cross-examination he accepted that he had been assessed by the Inland Revenue Department as having an income of $23,000.00 from his farming business;

ii) He said he and Ms M started seeing each other casually in March 2005 but that their sexual relationship started in February 2005;

iii) He said in paragraph [14] of his affidavit dated

29 April 2010 that apart from his telephone conversations with Ms M, they had no other contact between May and December 2005 which is not consistent with Ms M staying with him in Kalgoorlie in August and September 2005;

iv) He said he and Ms M returned to New Zealand early in 2007 but in other evidence said it was on

23 December 2006.

(3) Ms M said that during her trip to Kalgoorlie in August-September

2005, Mr G asked her to marry him but she declined his offer. She did not refer to this in her affidavit evidence and I found her reason

for not doing so to be unpersuasive. In the context of this case, it is

a very important piece of evidence and Mr G did not have the opportunity of responding to it. Either the evidence was not true,

_{and Ms M made it up, which does not reflect well on her credibility,}

15 At [50(a) – (c)].

or the evidence is true, which indicates that at the time the offer of marriage was made and declined, she lacked commitment to the relationship.

[42] After evaluating the evidence before him the Family Court Judge concluded that:16

A mutual commitment to a shared relationship did not develop until November 2005 when Ms M shifted to Kalgoorlie. After that, despite periods when the relationship was strained, the mutual commitment to a shared relationship continued until it was ended by Ms M in January 2009 ...

Analysis

[43] I have carefully reviewed the evidence presented in the Family Court and cannot fault the conclusions reached by the Family Court Judge. The evidence establishes the parties started seeing each other around Christmas 2004 and that their sexual relationship started in February 2005. Their relationship at this time did not have the hallmarks of a de facto relationship. In my assessment, the Family Court Judge’s conclusion that the parties commenced their de facto relationship when Ms M moved to Kalgoorlie on 20 November 2005 is cogent and the only realistic conclusion that can be objectively reached on the evidence that is available.

[44] In this Court, Ms Harley, counsel for Ms M submitted that Ms SW had told the Family Court “... that the parties were ‘living together as a couple in February/March 2005’”.17 In fact, a careful examination of the evidence given by Ms SW reveals that she did not say that the parties were living together as a couple in February/March 2005. Ms SW’s evidence is explained in [39(1)] above. While Ms SW says the parties were a couple at the relevant time she stopped short of saying they were living together. In my assessment a de facto relationship involves more than being observed together, acting as a couple. There needs to be a

demonstrated commitment to sharing lives together.

[45] The evidence that Ms M and Mr G had discussed moving to Australia may be correct but in my assessment it does not go nearly far enough to demonstrate the

16 _{At [54(a)].}

17 Submissions in support of appeal dated 4 July 2002.

existence of a de facto relationship in January 2005. At most, that evidence (such as it is) merely suggests the parties had discussed a possible future together in Australia.

[46] Similarly, the evidence of the commencement of an ACC investigation into Ms M’s circumstances in January 2005 (refer [39(3)]) is of little probative value. It falls well short of establishing the existence of a de facto relationship in January

2005.

[47] It appears the Family Court Judge made two minor errors in his judgment when:

(1) he said Ms SW had not been cross-examined. She was in fact briefly cross-examined;

(2) he said Mr G did not have the opportunity to reply to the suggestion that he had proposed to Ms M in August/September 2005. In fact, Mr G gave evidence after Ms M and could have addressed that matter when he gave his evidence.

[48] However, in my assessment these points do not detract from the overall accuracy of the Family Court Judge’s findings in relation to the first question of appeal which I agree with. I am therefore left with no alternative but to find against Ms M on her first ground of appeal.

Second issue on appeal: acquisition of the farm at TN Road

[49] Ms M’s second ground of appeal is that the Family Court Judge erred when he concluded that the balance of the farm at TN Road acquired by Mr G in May

2005 was not relationship property under s 8(1)(e) of the Act.

[50] The Family Court’s finding was premised on its earlier finding that the parties’ de facto relationship commenced in November 2005, approximately six months after Mr G had acquired the balance of his interest in the family farm.

[51] The Family Court Judge noted that tracing the ownership of the titles of the

farm previously owned by Mr G’s parents was not an easy task.

[52] No issue is taken in this Court with the Family Court’s analysis of the ownership of the titles. I therefore adopt the analysis undertaken by the Family Court Judge.

116 TN Road

[53] This property consists of two sections:

(1) 1142 and 1443, both of which are part of the land described in CT WN 10D/1181 (the title comprises 35 sections).

(2) The sections were formerly owned by Mr G’s father as to an undivided three-fifths share and Mr G’s mother as to an undivided two-fifths share.

(3) Mr G’s father’s undivided three-fifths share was transmitted to his executors on 2 November 2004 and remains registered in their name.

(4) Mr G has a beneficial interest in an undivided three-fifths of the property held in the testamentary trust which he acquired when his father died in 2004.

(5) Mr G’s mother’s executors retained her undivided two-fifths share in the sections (the title still shows Mr G’s mother as the registered proprietor).

(6) The sections are part of a larger and more complex title which requires subdivision to give effect to the wills of Mr G’s parents.

148 TN Road

[54] This property consists of four sections:

(1) Section 1444 (formerly CT WN 10C/1309); (2) Section 1445 (formerly CT WN 10C/1310); (3) Section 1446 (CT WN 435/174); and

(4) Section 1447-48 (CT WN 435/172).

[55] The position in respect of sections 1444 and 1445 differs to that relating to sections 1446 and 1447-48 because an historic testamentary provision gave Mr B a life interest in sections 1444 and 1445.

Sections 1444 and 1445

(1) Mr G’s father acquired the total interest in the sections in 1972.

(2) Mr G’s father transferred a two-fifths interest in these properties to his wife in 1993.

(3) Mr B’s life interest ended when he died in 2000.

(4) Mr G’s father’s three-fifths share in the remainder was transferred to his executors on 2 November 2004 and then to Mr G on 20 December

2004.

(5) Mr G’s mother’s two fifths share in the remainder was transferred to

Mr G on 20 December 2004.

(6) Mr B’s life interest in both sections was transferred to Mr G on 31

May 2005.

(7) As from 31 May 2005 Mr G owned the sections.

Sections 1446 and 1447-48

[56] Mr G’s father’s three-fifths share was transmitted to his trustees on 2

November and then transferred to Mr G on 20 December 2004. Mr G’s mother

remains on the title as the registered proprietor of her two-fifths share.

[57] My finding that the Family Court Judge reached the right conclusion on the first point of appeal also determines Ms M’s second point of appeal. The farm at TN Road was not relationship property. Accordingly the second ground of appeal fails.

Third issue on appeal: section 9A Property (Relationships) Act 1976

[58] Section 9A of the Act provides:

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 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 partner in that relationship property is to be determined in accordance with the contribution of each spouse or 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 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 partner in, any property referred to in section 8(1).

(4) Subsection (3) is subject to section 10.

[59] Ms M submits that:

(1) The increase in rateable value of the farm ($108,000) was attributable to the application of relationship property of the parties in that she says, the mortgage on the farm was paid by income generated by both parties, and that Ms M’s payment of household bills allowed Mr G’s drawings from the farm to be applied to the farm mortgage; and

(2) The increase in value of the farm was attributable to actions of Ms M in using her funds to contribute to the mortgage and in paying household bills.

[60] In Rose v Rose18 the Supreme Court explained the correct approach to s 9A. Their Honours said that if the partner who does not own the separate property has made a contribution to an increase in the value of the separate property, either by the application of relationship property or by other conduct, that increase in value becomes relationship property and thus subject to the sharing rules. The words “wholly or in part”, which appear in both subsections, make it clear that any contribution, other than a minimal one, will result in the whole increase becoming relationship property.

[61] The Supreme Court noted three important differences between 9A(1) and (2):

(1) Under s 9A(1), an increase in value of separate property must be attributable to the application of relationship property, whereas under s 9A(2), the increase in value must be attributable to a claimant’s

_actions;

18 Rose v Rose [2009] 3 NZLR 1 at [25] – [26].

(2) Under s 9A(1), the causal nexus between the application of relationship property and the increase in value must be direct, whereas under s 9A(2) the nexus may be direct or indirect;

(3) If that casual nexus is established, both sections treat the increase in value as relationship property.

[62] The recognition of a contribution which “indirectly” leads to an increase in value was designed to address situations where one party to the partnership contributed to an appreciation in value of separate property but not in any direct physical or financial way. A useful example is where a claimant’s actions free up time or expenditure of the other party, which he or she then devotes to increasing the value of their separate property.19

[63] To establish a claim under s 9A(1), the use of relationship property funds to repay the farm mortgage must be directly linked to the increase in the farm’s value. The contention that Ms M’s payment of bills allowed Mr G’s drawings to be applied to the mortgage is the kind of indirect contribution envisaged by s 9A(2). The argument under s 9A(2) would allow for an indirect casual nexus, if Ms M could show that her contribution to living expenses and part payment of the mortgage freed up Mr G’s time and money that he would not have otherwise had, which he then used to increase the value of his separate property. However the Family Court Judge found that the separate property was leased out by Mr G, and Ms M could not claim that by caring for J and managing the household she freed up Mr G to work on the farm. All that has been alleged is that the claimant’s actions allowed more of Mr G’s money to be money applied to mortgage repayments. Ms M has not been able to challenge these findings in this Court.

[64] Ms M’s claims under s 9A of the Act also face the basic problem that the increase in value of the farm was not achieved by making mortgage repayments. An increase in the equity of the farm does not constitute an increase in its value for s 9A

_{purposes. In V v V,}20 _{the Court considered whether a causal nexus could be}

19 _{At [44].}

20 At [33]. Contrast Portar v Portar [1982] 1 NZFLR 314 (HC).

established in these circumstances, and concluded that “property” in s 9A could not be read so widely as to include “equity the respondent owns in the land”. Contributions to the mortgage did not qualify as they simply allowed debt to be repaid and increased the equity in the land rather than the value of the land itself.21 In Hyde v Hyde, Ellis J also expressed reservations about the proposition that repayment of a mortgage could contribute, directly or indirectly to a property’s

value.

[65] Both of Ms M’s claims under s 9A rely on the proposition that relationship property or her conduct caused an increase in the equity in the property. In my assessment this does not suffice. I share the views expressed by Ellis J in Hyde v Hyde. The payment of the mortgage debt on the farm did not increase the value of farm. For this reason the third ground of appeal is dismissed.

Fourth issue on appeal: amount allocated as “sustenance” of the farm

[66] Section 17 of the Act provides:

17 Sustenance of separate property

(1) This section applies if the separate property of 1 spouse or partner

(party A) has been sustained by—

(1) the application of relationship property; or

(2) the actions of the other spouse or 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.

[67] The Family Court Judge held:22

... that relationship property totalling $13,500.00 was contributed by Mr G

_{and Ms M to the payment of the mortgage which sustained the property.}

21 _{At [37].}

22 EHM v JOG FC Palmerston North FAM-2009-015-92, 17 October 2011 at [114] – [117].

Throughout the de facto relationship the property was leased out by Mr G, who had employment off the farm, so this is not a case in which Ms M could be said to have indirectly sustained the property by caring for [their daughter] and managing the household, thereby freeing Mr G to work on the farm.

... Ms M did not carry out any work during the period of the de facto relationship which sustained the property and an appropriate basis for compensation, based on compensation for loss of use of funds for relationship purposes, would be half of $13,500.00, rounded up to

$10,000.00 for inflation.

... to award Ms M as compensation half Mr G’s share in the increase in value of the total property of $108,000.00 would be grossly disproportionate to the value of the relationship property used and would not be fair.

[68] In this Court Ms Harley submitted that the Family Court Judge was wrong. She submitted that Mr G’s drawings of $159,843 in the years ending 31 March 2005 to 31 March 2008 were income which also sustained the property. A half share of that is $86,491.50. In the alternative, Ms Harley submitted that the Family Court Judge erred in failing to award a half share in the increase in value of the total property of $108,000 would not be grossly disproportionate to the value of relationship property used in the event that Mr G’s drawings are accounted for.

[69] In Nation v Nation the Court of Appeal said the following in relation to the

meaning of “sustained” in s 17(1) of the Act:23

Section 17(1) should be regarded 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 will value.

Drawings

[70] Ms Harley submits that Mr G’s drawings for the year ending 31 March 2005 to 31 March 2008 amounted to $159,843. However, in my assessment, it is difficult to see how those drawings can be factored into this inquiry that is to be made under s 17 of the Act.

[71] Payments of a mortgage over separate property have been recognised as monetary sustenance of that property,24 where the mortgage has been repaid from

23. Nation v Nation [2005] 3 NZLR 46 at [124] – [127] citing French v French [1988] 1 NZLR 62 (CA).

relationship property. In this instance however, Mr G’s drawings should not be factored into the s 17 inquiry as they are not relationship property, and therefore not the kind of contribution recognised by s 17.

Assessing Ms M’s interest in the increase in value of the farm

[72] The Family Court Judge assessed the increase in value of the farm as being

$108,000. Ms Harley submits that Ms M should receive a half interest in that sum.

[73] With the greatest of respect to Ms Harley it is difficult to see how an increase in the value of the property can be converted into a s 17 inquiry. An increase in the value in the farm property does not constitute “sustenance” of that property. Ms M’s approach involves a conflation of the inquiries that can be made under ss 9A and 17 of the Act. An award under s 17 does not require any increase in value of the property but, instead, is directed towards recognising actual contributions by the party that does not own the separate property. An award that enabled Ms M to recover half of the increase in value of the separate property would be entirely inconsistent with the distinction between ss 9A and 17 of the Act.

[74] In any event, I have examined the calculations made by the Family Court Judge when he undertook the s 17 assessment and believe they are fair and reasonable. Ms M says that she contributed directly to the payment of the farm mortgage from December 2005 to November 2006. The evidence suggests that her contributions came to $13,450 (for the period 5 December 2005 to 23 November

2006). If that contribution were relevant to a s 17 calculation then it is so close to the calculation made by the Family Court Judge that it is not necessary or appropriate to alter the Family Court Judge’s s 17 assessment.

[75] For these reasons the Court must dismiss Ms M’s fourth ground of appeal.

Fifth issue on appeal: judgment as to costs

_{[76] Ms M has appealed the decision declining to award costs.}

24 Hood v Hood (1993) 11 FRNZ 39, Hyde v Hyde at [45].

[77] This proceeding was commenced before 1 November 2009. Accordingly, the District Courts Rules 1992 apply. The relevant provisions of those rules are in all material respects the same as the District Court Rules 2009.

[78] Rule 46 of the District Courts Rules 1992 provided:

the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.

[79] Ms Harley submits that as Ms M received an award under the proceeding, she did not fail with respect to the proceeding and Mr G should pay costs to Ms M.

[80] In his costs judgment the Family Court Judge did note that:25

The party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.

[81] Mr Sheppard, who argued this portion of the case for Mr G emphasised that the Court of Appeal in Packing In Ltd (In Liq) v Chilcott pointed out that:26

... where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded. ...

[82] Mr G submitted that this was the approach which the Family Court Judge took in the present case and that it was an approach that he was entitled to take. In support of this submission Mr G points out that:

(1) Ms M succeeded in establishing that their de facto relationship was not of short duration (albeit only one of three years two months).

(2) The land and curtilage at 116 TN Road was relationship property. (3) Some MLF Fund units were relationship property.

_{[83] On the other hand, Mr G points out that he successfully argued:}

25 _{EHM v JOG FC Palmerston North [2012] NZFC 384 at [15(a)].}

26 Packing In Ltd (In Liq) v Chilcott [2003] NZCA 124; (2003) 16 PRNZ 869 (CA) at [5].

(1) The farm property was separate property. (2) The motor vehicles were separate property.

(3) The house situated at 116 TN Road was owned by a third party. (4) Section 9A of the Act was not engaged.

(5) That Ms M’s claim under the Child Support Act 1991 failed.

[84] The Family Court Judge also placed emphasis on the conduct of the parties and reached conclusions that Ms M had:

(1) Unreasonably pursued the argument that the house situated at 116 TN Road was relationship property

(2) Unreasonably pursued the argument that s 9A of the Act was engaged.

(3) Failed to produce sufficient evidence for an assessment of her claims under the Child Support Act.

(4) Had failed to make a genuine effort to settle the proceedings.

[85] In taking these matters into account the Family Court Judge was quite entitled to conclude that whilst Ms M did receive judgment in her favour in respect of some of the issues that he had to resolve, in the end, neither party could be said to have achieved an outcome that supported an award of costs in their favour.

[86] This was an approach that was available to the Family Court Judge and is an approach which this Court endorses.

[87] Accordingly, the fifth ground of appeal must be dismissed.

Conclusion

[88] All grounds of appeal are dismissed.

[89] Ms M was apparently on legal aid in the Family Court. I do not know if she continued to be on legal aid in this Court. If she was on legal aid then there is probably little point in me making a costs order in favour of Mr G. If Ms M was not on legal aid then counsel have 15 working days to make whatever submissions they

_{wish in relation to costs.}

_{D B Collins J}

Solicitors:

Terrace End Law Centre, Palmerston North for Appellant

Fitzherbert Rowe, Palmerston North for Respondent