Jacobson v Jacobson [2012] NZHC 2292 (6 September 2012)

Last Updated: 18 September 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 AUCKLAND REGISTRY

CIV-2012-404-1877 [2012] NZHC 2292

BETWEEN SALLY HELEN JACOBSON Appellant

AND PETER BRUCE JACOBSON Respondent

Hearing: 7 August 2012

Counsel: J McCartney SC for Appellant

JH Hunter for Respondent

Judgment: 6 September 2012

_{JUDGMENT OF TOOGOOD J}

This judgment was delivered by me on 6 September 2012 at

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:

G Skeates, Graeme Skeates Law, Auckland

J Hunter, Hunter Law, Auckland: [e-mail]

Copy:

J McCartney SC, Barrister, Auckland: [e-mail]

JACOBSON V JACOBSON HC AK CIV-2012-404-1877 [6 September 2012]

Introduction and result

[1] This appeal is about whether Judge Burns erred in the Family Court at Auckland by refusing to order under s 22(3) of the Property (Relationships) Act 1976 (“the PRA” or “the Act”) that proceedings between the parties which were before him should be transferred to this Court for determination.

[2] The Judge considered that the only ground on which proceedings could be transferred was their complexity and that there will be only a limited number of cases which are sufficiently complex to justify a transfer.

[3] The appellant submitted that the Judge misdirected himself by adopting a test which was too narrow. It was said that the Judge’s views were not informed by the more recent judgment of this Court in H v H,1 in which Fogarty J held that the statutory test was not merely one of complexity but one which “requires a characterisation and evaluation of the complexity against consideration of whether or not the High Court is the more appropriate venue.”2

Result

[4] For the reasons which follow, I am satisfied that, although Judge Burns did not express the test in the terms articulated by Fogarty J, he did not approach the issue on an incorrect basis. I dismiss the appeal.

The relevant statutory provision – s 22, Property (Relationships) Act 1976

[5] Section 22 of the PRA, so far as is relevant, reads:

22 Jurisdiction

(1) Every application under this Act must be heard and determined in a

_{Family Court.}

1 _{H v H [2012] NZHC 537.}

2 At [29].

(2) This section is subject to any other provision of this Act that confers jurisdiction on any other court.

(3) Regardless of subsections (1) and (2), a Family Court Judge may order that proceedings be transferred to the High Court if the Judge is satisfied that the High Court is the more appropriate venue for dealing with the proceedings, because of their complexity or the complexity of a question in issue in them.

(4) The Family Court Judge may transfer proceedings on the application of a party to the proceedings or on his or her own initiative.

(5) Proceedings transferred to the High Court continue in that Court as if they had been properly commenced there.

The factual background and summary of property in issue

[6] To put into context the arguments Ms McCartney SC advanced on behalf of the appellant, it is necessary to describe briefly the background to the Family Court proceedings and the nature of the relationship property at issue.

[7] The parties married in 1981 and separated in 2007. They have two adult children. The respondent husband is a partner in a small but, it seems, successful law firm. The appellant wife has accounting and law degrees and says that, by agreement, she did not take formal employment outside the home. Instead she took the role of caring for the children, both of whom are high achieving. The appellant says that she contributed to the husband’s law practice on the accounting side and had a major role in the acquisition, management and development of the relationship property.

[8] I infer that the appellant has continued to reside in the former matrimonial home since the separation. The parties hold shares in a company which owns property in Fiji; they were shareholders in another company which owned a beachfront holiday home (now disposed of); there is a trust owning shares in another company; and there is said to be other property owned by them personally, as well as the respondent’s interest in his law partnership.

[9] The main items of property, some of which have been sold and some of which have been retained, were listed in Ms McCartney’s submissions as comprising:

Various commercial properties, some of which are or were

_mortgaged;

The interest in the law practice;

The profits derived from the law practice since separation; The beach property, which was formerly mortgaged;

A section in Fiji;

Bank accounts, including one in Fiji;

Cars, insurance policies, furniture and other chattels;

An item described as a loan of the “appellant’s inheritance monies”;

_{Shares in a private company owning tax losses.}

Summary of the matters said to be in issue

[10] In general terms, the issues for determination in the proceedings are said by the appellant to be:

The valuation of and division of the former matrimonial home and

_{adjoining section which the appellant seeks to have vested in her;}

The value of the law practice, with sub-issues related to sustainable earnings, work in progress and the appropriate valuation multiple to

_{be applied;}

Calculation of super-profits derived from the law practice, with a sub- issue as to the determination of base earnings;

The claim by the appellant under s 15 of the Act for compensation for

loss of earnings and for enhancement of the husband’s earning

_capacity;

Whether the claim by the appellant to a share in super-profits and her claim under s 15 are mutually exclusive, and the date from which

_{interest on any award under s 15 should apply;}

The value and disposition of/compensation for the Fiji section;

Accounting for the loan of the appellant’s inheritance;

Post-separation adjustments for:

- the appellant’s claim for maintenance/child support;

- the appellant’s claim for losses incurred on the holiday home

through the failure to sell it at an earlier date;

- the respondent’s claim for payment of costs post-separation;

- the appellant’s counterclaim for non-monetary contributions post-separation;

- the appellant’s claim for costs on account of the respondent

_{not accepting an early settlement offer.}

Determining the extent and value of the relationship property, including whether a residential property in which the respondent lived post-separation, and to which he is said to have made contributions, is relationship property;

A claim by the respondent of incapacity and an application for the appointment of a litigation guardian, which order was made on an

_{interim basis and has since expired.}

[11] The appellant submitted that delays in the progress of the proceedings through the Family Court and the arguably more efficient case management regime applied in this Court are also relevant grounds for the transfer of the proceedings.

The proceedings so far

[12] The proceedings were commenced in the Family Court in 2009. According to Ms McCartney SC, numerous interlocutory applications have been filed and some, but not all, of the interlocutory issues addressed. Ms McCartney said that when she became engaged in the case she suggested proceeding immediately to a substantive hearing without the filing of further interlocutory applications but resolving by agreement interrogatory and discovery processes. Notwithstanding that suggestion, there have been a number of further applications filed; a number of further conferences or hearings, and the application by the respondent for the appointment of a litigation guardian, an interim order having been in place for a three-month period. The parties have been to mediation with an experienced mediator without resolution. No date has been set for the substantive hearing of the issues.

The appellant’s arguments

[13] Ms McCartney submitted that the parties are substantially apart in terms of the valuation evidence, particularly in relation to the former matrimonial home and neighbouring section, and it appears that the appellant’s claim to have those properties vested in her is strongly opposed. On that basis, counsel says that issues of economic advantage or disadvantage and the application of the objectives in ss 1M and 1N of the Act will have to be resolved.

[14] There are also said to be significant valuation issues arising in respect of the law practice, with the parties proposing different interpretations of the leading

authority of M v B,3 and disagreeing as to the appropriate multiple to be applied in the valuation exercise. Matters of principle and approach are said to arise also in relation to the issue of super-profits. There is disagreement between the parties as to whether the wife is entitled to claim under s 15 for both compensation for loss of earnings and compensation for the enhancement of the respondent’s earnings. It is said that there will also be an issue of costs related to settlement offers made by both parties. Counsel also referred to issues regarding post-separation contributions, spousal maintenance and child support, and the application of s 18B of the Act.

[15] Ms McCartney also placed considerable emphasis on what she argues is a less efficient approach to case management by the Family Court than the approach now taken in this Court under the pilot scheme currently being used to manage complex disputes. In essence, Ms McCartney argued that it will not be possible to obtain a hearing date for the substantive proceedings in the Family Court until after all interlocutory issues have been resolved; whereas, in this Court, it would be possible for the parties to be given a date for hearing almost immediately with any outstanding interlocutory issues to be resolved in the intervening period.

[16] Summarising the complexity of the case or questions arising in it, Ms McCartney said that the amount in issue is somewhere between $8 million and

$9 million, and that the amount claimed by the wife for compensation under s 15 is three times that of the highest award made by the Courts under that section to date.4

She referred also to the number of issues and the fact that the parties have been unable to resolve matters themselves, notwithstanding the assistance of a highly qualified and experienced mediator. She pointed also to the fact that one of the properties at issue is overseas and that complexity arises from the different property ownership arrangements, they being personal ownership, a partnership, a trust, an overseas company, and other property-owning companies.

[17] Ms McCartney said that among the important issues requiring resolution are four which are novel and which will result in the Court’s judgment being one of

_{public importance. She submitted also that early resolution will be consistent with}

3 _{M v B [2006] 3 NZLR 660.}

4 X v X [2009] NZCA 399, [2010] 1 NZLR 601.

the statutory obligation to resolve the proceedings as speedily and economically as is consistent with the interests of justice.5

The Family Court’s decision

[18] So far as I can tell from the judgment in which the transfer of the proceedings was refused, these matters were put before Judge Burns for consideration. The Judge addressed them and held, in essence, that none of the issues referred to was other than an issue routinely dealt with by the specialist Judges of the Family Court. He did not consider the case involved such complexity as to justify transfer.

The nature of the test under s22(3) PRA

[19] I have already noted6 that, in H v H, Fogarty J held that the focus of the test under s 22(3) is on complexity but that it required consideration of the appropriateness of the High Court as the venue in the context of that complexity. I respectfully agree with Fogarty J that a case which is very complex may still be appropriate for determination in the Family Court.7

[20] Fogarty J rejected the notion that cases under the PRA should be dealt with in the Family Court “where at all possible”8. He concluded that there was no policy one way or the other as to how many cases and what sort of cases should be transferred to this Court.9 I respectfully agree with those views and would add only one observation.

[21] The test is not whether the High Court is an appropriate venue for dealing with the proceedings, but whether it is a more appropriate venue than the Family Court. The test requires an assessment of the relative appropriateness of both courts to deal with the particular proceedings. Bearing in mind the firm language used in

_{s22(1), the legislature must be taken to have intended that, in making the}

5 _{Property Relationships Act, s 1N(d).}

6 _{At [3] above.}

7 H v H at [29].

comparison, due recognition should be given to the specialist nature of the Family Court and to the warranting of Judges as being suitably qualified to sit in that jurisdiction.10

Applying the test to this case

Jurisdiction

[22] In H v H, Fogarty J concluded that the High Court was the more appropriate venue because the complexity in that case involved a challenge to the jurisdiction of the Family Court to deal with issues arising over the application of principles of equity and trusts in respect of property exceeding $200,000 in value.11 Further, it was held that there are limitations on the powers of the Family Court because the District Court Judges appointed to it do not have inherent jurisdiction and do not enjoy the statutory powers of High Court Judges under the Trustee Act 1956.12 The result would have been that, if the proceedings under the PRA were not transferred to the High Court, there would likely to be disparate and overlapping proceedings, touching on the same subject matter, before both the Family Court and the High Court contemporaneously. Fogarty J determined that, in principle, one Judge should be seized of such a complex dispute as that involved in the case before him.13

[23] It is not suggested in this case that the Family Court is without jurisdiction to deal with any of the issues which are said to arise. Whether or not the issues arising in this case are as complex as Ms McCartney SC submitted, this Court is no better clothed with the jurisdiction to deal with them than the Family Court.

Valuation issues

[24] I agree with the Family Court Judge that there does not appear to be anything in the valuation issues, whether in relation to the former matrimonial home, the

10. The advantages the Family Court enjoys as a specialist court have been highlighted by the Court of Appeal in other contexts. See for example: D v S [2003] NZFLR 81 (CA).

11 At [35] – [48].

property in Fiji, the holiday home or the husband’s law practice, which is of such complexity as to justify the conclusion that this Court is the more appropriate venue for dealing with them. The expert witnesses to be called by the parties and the views they express will not differ if the case is heard in this Court. To the extent that the experts may disagree, the Family Court Judge hearing the case will be required to come to his or her view in the same way as that Judge would come to a view on the value of real estate, or company shares, or of a partnership in any other case under the Act. Judges of the Family Court can be expected to be experienced in addressing valuation issues in the context of the statutory framework of the PRA, and there is nothing in this case to indicate that a Judge of this Court would be better equipped to decide such matters.

Novelty and the value of the property in dispute

[25] I am not persuaded either that in this case the novelty of any of the questions arising, or the value of the property in dispute, meet the test of complexity which is to be applied under s 22 of the PRA. Family Court Judges are frequently called upon to rule upon issues not previously determined by this or higher Courts, and the complexity of an issue is not determined by the amount at stake. If the novelty of the question or the amount at issue were factors favouring a determination that it is appropriate to transfer proceedings to this Court, Parliament could be expected to have said so.

[26] It is useful to compare s 22(3) of the PRA with, for example, s 178 of the Employment Relations Act 2000, which provides the Employment Relations Authority with a discretion to remove a matter before it to the Employment Court for determination:

178 Removal to Court

...

(2) The Authority may order the removal of [a] matter, or any part of it, to the Court if—

(a) an important question of law is likely to arise in the matter other than incidentally; or

(b) the case is of such a nature and of such urgency that it is in the public interest that it be removed immediately to the Court; or

(c) the Court already has before it proceedings which are between the same parties and which involve the same or similar or related issues; or

(d) the Authority is of the opinion that in all the circumstances the Court should determine the matter.

....

[27] I recognise that the removal of proceedings from the Employment Relations Authority to the Employment Court is not directly analogous to the position here. The Authority is an investigative body determining employment relationship problems in what is essentially a low level, inquisitorial process; the members of the Authority are not necessarily qualified in law. In contrast, proceedings under the Act are adversarial in nature and the Judges of the Family Court and the High Court must have been, at the time of their appointment, legal practitioners of not less than seven years’ standing. The point, however, is that the discretion for the transfer of proceedings under the Employment Relations Act has been drawn far more broadly by Parliament than the discretion under s 22(3) of the PRA.

[28] Similarly broad criteria to those in s 178 of the Employment Relations Act

2000 are provided in s 122A of the Human Rights Act 1993. The latter section concerns the removal of proceedings from the Human Rights Review Tribunal, a specialist statutory body, to the High Court and permits the Tribunal to make an order for removal when the High Court has granted leave and:

(a) an important question of law is likely to arise in the proceedings or matter other than incidentally; or

(b) the validity of any regulation is questioned in proceedings before the Tribunal (whether on the ground that it authorises or requires unjustifiable discrimination in circumstances where the statutory provision purportedly empowering the making of the regulation does not authorise the making of a regulation authorising or requiring unjustified discrimination, or otherwise); or

(c) the nature and the urgency of the proceedings or matter mean that it is in the public interest that they or it be removed immediately to the High Court; or

(d) the High Court already has before it other proceedings, or other matters, that are between the same parties and involve issues that are the same as, or similar or related to, those raised by the proceedings or matter; or

(e) the Tribunal is of the opinion that, in all the circumstances, the High Court should determine the proceedings or matter.

The asserted likelihood of appeals to this Court and beyond

[29] Ms McCartney SC submitted that, given the amounts at stake, the nature of the issues, and the gulf between the parties’ positions on them, it is inevitable that any decision of the Family Court in this case will be brought on appeal to this Court and beyond. She submitted that in such a case it is more appropriate to have the first instance hearing of the evidence and the legal arguments in this Court so as to remove a layer of decision-making. But that is an arguably pragmatic consideration and not one related to the complexity of the proceedings. In any event, given the array of property and issues identified by the appellant in this case, it may be that both parties are successful to an extent which would cause them to re-examine any pre-trial disposition to expend further resources on the litigation. Any pre-trial assessment of the prospect of an appeal by either party is likely to be highly speculative.

The management of the case to trial

[30] There is some force in Ms McCartney’s submission that the case management procedures available in this Court may enable the parties to have the comfort of a known date for the hearing of the substantive proceedings and, arguably, a tidier disposal of any unresolved interlocutory issues than if the proceedings were to

remain in the Family Court. Judge Burns appeared to acknowledge that possibility,14

but he did not accept that the Court was not capable of giving the matter a fixture, at least as soon as a fixture could be obtained in this Court, and indicated that he had given directions to ensure that the case received appropriate administrative attention

_{from registry staff.}

14 At [23].

The respondent’s neutral stance

[31] Finally I mention, to make it clear that I have not overlooked it, that the respondent’s position in respect of the application was neutral; he did not oppose transfer. Ms Hunter said, however, that the respondent considers that either Court is able to determine the case; that the issues faced by the Family Court are neither novel nor complex; and that the appellant’s assessment of the complexity is somewhat exaggerated.

[32] I agree with Judge Burns that the jurisdiction to transfer the proceedings from the Family Court to this Court is not conferred by agreement between the parties. The Family Court is not empowered to make an order for transfer unless it is satisfied that the only grounds upon which Parliament has conferred the discretion to transfer are made out. In this case the Judge concluded that they were not and I agree with him.

Costs

[33] Costs are reserved. The respondent is prima facie entitled to costs. If the parties are unable to agree, the respondent shall file and serve any memorandum as to costs on or before 28 September 2012. The appellant shall file and serve a costs memorandum in reply on or before 12 October 2012. Costs will then be determined on the papers.

..............................................

Toogood J