IAT v SJG [2013] NZHC 2976 (12 November 2013)

Last Updated: 26 December 2014

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 HTTP://WWW.JUSTICE.GOVT.NZ/COURTS/FAMILY- COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-001363 [2013] NZHC 2976

UNDER	the Property (Relationships) Act 1976
BETWEEN	I A T Appellant
AND	S J G Respondent

Hearing:	30 October 2013
Counsel:	T G Stapleton QC for Appellant F M L Gush for Respondent
Judgment:	12 November 2013

_{JUDGMENT OF COLLINS J}

Introduction

[1] Mr T has appealed, and Ms G has cross-appealed, a judgment of Judge Walsh delivered on 21 May 2013.¹ That judgment addressed issues arising from the parties’ dispute about their relationship property.

[2] The appeal and cross-appeal raise five key questions:

(1) Whether Judge Walsh erred when he awarded compensation under s 18B of the Property (Relationships) Act 1976 (the Act) to Ms G for

¹ _{SJG v IAT [2013] NZFC 4040.}

T v G [2013] NZHC 2976 [12 November 2013]

contributions she made to the care of the parties’ children post- separation and if not, what amount should have been awarded?

The relevant portions of s 18B(2) of the Act provide that if between separation and the hearing of an application under the Act a spouse has done anything that would have been a contribution to the marriage if it had not ended, the Court can order compensation of that spouse by the other spouse.

(2) Whether Judge Walsh erred when he awarded compensation under s 44C of the Act to Ms G in respect of certain shares that had been disposed of to a family trust.

The relevant portions of s 44C of the Act provide that if, since the beginning of the marriage, either spouse has disposed of relationship property to a trust with the effect of defeating a claim or the rights of the other spouse, then the Court can order the payment of a sum of money to the other spouse out of relationship property or separate property.

(3) Whether Judge Walsh erred when he classified a bank account and certain shares as being relationship property.

(4) Whether interest can be awarded under s 33(4) of the Act to compensate Ms G for her inability to use the family home post- separation when that home is held by a family trust.

The relevant portions of s 33(4) of the Act provide that where a spouse is liable to pay the other spouse a sum of money, “the Court may direct that [the sum] shall be paid ... in such manner and subject to such conditions (including a condition requiring the payment of interest) as the Court thinks fit”.

The relevant interest is calculated from the date of separation to the date the principal is paid.

(5) Whether Judge Walsh erred when he awarded Ms G interest at a rate of three per cent instead of five per cent on the amount payable to her under the Family Court judgment?

[3] In addressing these questions I shall:

(1) summarise the background to the parties’ dispute; (2) summarise the key findings made by Judge Walsh; (3) analyse and determine the grounds of appeal;

(4) analyse and determine the grounds of the cross-appeal; and

(5) summarise my findings.

Background

[4] Mr T and Ms G met in 1987 and began living together the following year. They married on 3 February 1990 and have two children, one born on 12 February

1995 and the other born on 27 March 1997.

[5] Mr T and Ms G separated on 1 June 2006 and their marriage was dissolved on 21 July 2009.

[6] In about 1980 Mr T received shares from the distribution of a trust established by his grandfather (grandfather’s trust). In 1981 Mr T sold some of his share investments and purchased a section in Horokiwi for $34,000. In 1987, just prior to meeting Ms G, Mr T sold some further shares and purchased a house in Karori for $175,000. Mr T purchased that property by paying $145,000 in cash and taking out a mortgage for $30,000.

[7] In 1984 Ms G set up a landscaping business. She continued with this business as a full-time occupation until the birth of the couple’s first child. At that stage the parties agreed Ms G would stay home and care for their child. This arrangement meant Ms G reduced the amount of time she could devote to her landscaping business.

[8] After the parties’ second child was born, Ms G sold most of her landscaping business but retained the landscape design portion of that business. This further reduced Ms G’s income.

[9] On 26 August 1998 Mr T’s father established a family trust. The

beneficiaries of that trust were Mr T, Ms G and their children.

[10] In 2003 the Karori property was transferred to the family trust. This was done by transferring the title of that property into the joint names of Ms G and Mr T. The parties then transferred the property to the trust with the trust becoming indebted to the parties for the entire purchase sum. The parties then implemented a gifting programme over six years. At the time the parties separated the gifting programme had not been completed. A debt of $30,000 was still owed by the family trust to the parties at the time they separated.

[11] After the parties separated Ms G and the children moved from the Karori property into rental accommodation. It appears Ms G was the primary caregiver to the children. Ms G fulfilled her responsibilities through the assistance of a domestic purposes benefit. She received some support from the family trust to pay for the children’s sports subscriptions and extra-curricular activities. However, the assistance from the family trust stopped in September 2006.

[12] Mr T did not pay any child support or spousal maintenance between October

2006 and September 2008. This appears to have been due to an administrative error at Work and Income New Zealand.

[13] In October 2006 Mr T sold the Horokiwi section for $210,000 and at this time paid Ms G $10,000 on account of her relationship property entitlements. Mr T

earned $45,714 in interest from the balance of the proceeds from the sale of the

Horokiwi section.

[14] On 9 June 2010 Mr T agreed to pay Ms G $285,000 for her interest in the

Karori property. Payment was made on 22 August 2010.

[15] After the parties separated Mr T retained a number of share investments which he maintained were his separate property because they had been acquired by him from the distribution of his grandfather’s trust in 1980.

The Family Court judgment

(A) Claim for compensation under s 18B of the Act

[16] Judge Walsh reasoned that Ms G was able to be paid compensation under s 18B of the Act to recognise:

(1) her contribution to the care of her children; and

(2) the standard of living Ms G sacrificed by giving up a significant part of her income to care for the parties’ children.

[17] Ms G claimed $75,000 compensation under s 18B of the Act. Judge Walsh determined Ms G should be awarded $40,000.

[18] Mr T appeals this aspect of Judge Walsh’s judgment.

(B) Claim for compensation under s 44C of the Act

[19] Ms G sought compensation in relation to that portion of the parties’ share portfolio that she said was relationship property and which had been transferred to the family trust.

[20] Mr T had argued that a significant part of his share portfolio was derived from his grandfather’s trust and as such was his separate property.

[21] Judge Walsh concluded that Mr T did not establish the shares in question were his separate property because he had failed to provide “corroborative evidence” that they were separate property. Judge Walsh decided that the value of the shares in question was close to $75,000. Judge Walsh awarded Ms G $40,000 compensation under s 44C of the Act in relation to the shares that had been disposed of to the family trust in recognition of her half interest in those shares.

[22] Mr T appeals this aspect of Judge Walsh’s decision.

(C) Classification of a bank account and shares as relationship property

[23] Judge Walsh classified as relationship property: (1) a Bendigo bank account; and

(2) David Jones shares

which Mr T claimed were separate property.

[24] In rejecting Mr T’s claims that these items were his separate property Judge Walsh said that Mr T had failed to discharge the onus on him to prove those items were his separate property because he had failed to produce “corroborative evidence” to support his claim.

[25] Mr T appeals this aspect of Judge Walsh’s judgment.

(D) Interest on the $285,000

[26] Judge Walsh declined Ms G’s claim for interest on the $285,000 paid to her on 23 August 2010. Judge Walsh decided Ms G could not be paid interest on the sum because the $285,000 was for Ms G’s share in the Karori property which was owned by the family trust. Judge Walsh reasoned there was no jurisdiction that allowed him to award interest in relation to property that was held by a trust.

[27] Ms G has cross-appealed this aspect of Judge Walsh’s decision.

(E) Interest on the judgment sum

[28] Judge Walsh awarded Ms G interest at three per cent per annum on the final amount payable to her from the date of the judgment.

[29] Ms G cross-appeals this aspect of Judge Walsh’s judgment. She submits that

the correct interest rate should have been five per cent.

Principles that govern this appeal

[30] I approach my task on the basis that I have:

(1) The responsibility of arriving at my own assessment of the merits of

the parties’ cases.

(2) The appellant and cross-appellant bear the onus of satisfying me that I

should differ from the decision under appeal.

(3) It is only if I consider that the judgment of Judge Walsh is wrong that

I am justified in interfering with it.

(4) If my opinion is different from the conclusion of Judge Walsh then his decision is wrong in the only sense that matters, even if it was a conclusion upon which minds might reasonably differ.

(5) In such circumstances I should not defer to Judge Walsh’s assessment

of the acceptability and weight to be accorded to the evidence rather than form my own opinion.²

² Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [4]- [5]

and [16].

The appeal by Mr T First ground of appeal

[31] Mr T submits Judge Walsh erred when he awarded Ms G $40,000 compensation under s 18B of the Act.

[32] In explaining his reasons for awarding Ms G compensation under s 18B of the Act Judge Walsh said that “the relevant period” for the purposes of the s 18B award was from 1 June 2006 to 20 March 2013 (approximately six years and ten months).

[33] Judge Walsh also recorded that “there is well established case law

recognising the care of children, after separation, is a contribution under s 18B”.³

[34] Judge Walsh reasoned it was just to award Ms G compensation under s 18B

because:

(1) when the parties separated Ms G left the family home and had to live in rented accommodation;

(2) Ms G had cared for the children 85 per cent of the time between the parties’ separation and the hearing in the Family Court;

(3) the child support that Mr T was required to pay did not cover all of the costs of the care of the children, nor did it compensate Ms G “for the time, responsibility and commitment required to care for the children on a daily

basis”;⁴ and

(4) because she had to care for the children 85 per cent of the relevant period Ms G sacrificed the higher standard of living

³ _{SJG v IAT, above n 1, at [32].}

⁴ At [33](3).

she would have enjoyed if she had been able to return to full- time employment.

[35] Judge Walsh also reasoned that Ms G had established that from the date of separation until June 2011 (five years and three months), she had incurred expenses totalling $181,975.50 in relation to the care of the children. She compared this to what she said was just the $29,900 Mr T paid in child support during this period.

[36] A major factor in awarding compensation under s 18B of the Act was the significant role played by Ms G during the relevant period. Taking that and “other factors” into account, Judge Walsh said Ms G should be awarded $40,000.

[37] Mr T has advanced the following reasons in support of this aspect of this ground of appeal:

(1) Section 18B was not mentioned by Ms G in her application to the

Family Court.

(2) Judge Walsh did not refer to the leading Court of Appeal case on s 18B of the Act, namely X v X [Economic disparity]⁵ and he failed to follow the principles articulated in that judgment.

(3) Judge Walsh overstated the relevant period.

(4) Judge Walsh erred when he relied on Ms G’s evidence about the

amount she believed she had spent in caring for the children.

(5) The sum awarded by Judge Walsh was not supported by any calculations and is out of line with awards made in other cases.

Analysis

[38] It is convenient to deal with the first of the points relied upon by Mr T as a distinct ground of this part of his appeal. There is some degree of overlap between

⁵ X v X [Economic disparity] [2009] NZCA 399, [2010] 1 NZLR 601.

the second to fifth submissions in Mr T’s first ground of appeal, and they can be conveniently dealt with together.

(A) The failure to mention s 18B in Ms G’s application

[39] I do not think a serious objection can be taken to the fact Ms G’s application to the Family Court did not mention s 18B of the Act. As Mr Stapleton QC, counsel for Mr T, properly acknowledged, this part of Ms G’s claim was addressed in her counsel’s opening and closing submissions in the Family Court. Mr T has not been able to suggest that he was in any way prejudiced by the fact Ms G’s application did not specifically refer to s 18B of the Act.

(B) Principles governing s 18B of the Act

[40] In X v X Mrs X sought an order under s 18B of the Act to reflect the fact that Mr X had not personally paid maintenance to support the family since the parties’ separation.

[41] In the Court of Appeal’s principal judgment on s 18B in X v X, Robertson J noted that the authorities were divided on whether it was appropriate to make awards under s 18B to parties who have taken on a primary child care role. His Honour referred to:

(1) Stapleton v Stapleton in which Judge Boshier said s 18B “... requires that non-monetary contributions such as custodial arrangements be taken into account”.⁶

(2) Loader v Loader in which Judge Somerville said it was not appropriate to build financial or relationship property into child care

_{responsibilities.}⁷

⁶ _{Stapleton v Stapleton (2004) 23 FRNZ 314 (FC).}

⁷ Loader v Loader [2003] NZFLR 553 (FC).

(3) JA v SNA [Economic disparity] in which Ronald Young J said s 18B is not intended to compensate a party for the financial costs of child care.⁸

[42] In X v X Judge Clarkson in the Family Court had declined to use s 18B to award Mrs X what would in effect have been retrospective maintenance. Robertson J endorsed this approach but in doing so said:⁹

... it might at first blush [have been] thought desirable to utilise s 18B to award Mrs X a lump-sum payment reflective of her care and support of the children. This might seem appropriate particularly when Mr X has acknowledged his obligation, and expressed a willingness to pay maintenance, but there has been no Court order to compel payment.

... not a case in which Mrs X has been abandoned with sole responsibility for the children, or left in a hopeless financial position by her sole care of them.

[43] The approach taken by Robertson J in X v X is consistent with contemporaneous explanations as to what Parliament intended when it passed s 18B of the Act. Section 18B was introduced by amendments made to the Act in 2002. Prior to then, s 17 of the Matrimonial Property Act 1976 recognised the substance or diminution of separate property, but there was no equivalent for matrimonial property. Instead the courts used s 2(2) of the Matrimonial Property Act 1976 to vary the date of valuation of relationship property so as not to create too much disadvantage to those who made post-separation contributions.

[44] Section 18B reflects the recommendations of the Report of the Working Group on Matrimonial Property and Family Protection.¹⁰ The Working Group noted that the disadvantage of s 2(2) of the Matrimonial Property Act 1976 was that it was being used for a purpose for which it was not intended and accordingly, the Working Group recommended courts be expressly empowered to consider contributions made post-separation.

_{[45] From X v X and the contemporaneous parliamentary materials it is clear that:}

⁸ _{JA v SNA (Economic disparity] [2008] NZFLR 297 (HC).}

⁹ _{X v X, above n 5, at [159]-[160].}

¹⁰ Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

27-28.

(1) Section 18B of the Act should not be used as a substitute for maintenance payments that might otherwise have been made. Nor should s 18B of the Act be used as a means of compensating for the inadequacy of any maintenance payments that have been made.

(2) Section 18B provides the Court with a wide discretion to compensate a spouse or partner for contributions they have made from the end of the marriage, civil union or relationship to the date of the hearing of the application under the Act.

(3) Section 18B of the Act is a mechanism to compensate the spouse or partner who has made a contribution and not to punish the other spouse or partner.

(4) The overriding consideration is whether an award under s 18B is just.

(C) Did Judge Walsh fail to properly apply these principles?

[46] Although Judge Walsh did not refer to X v X in his judgment, he did understand the principles that govern s 18B of the Act. In particular, Judge Walsh:

(1) clearly understood the “relevant period” to which awards under s 18B

of the Act relate;

(2) recognised that care of children, after separation is a contribution for the purposes of s 18B of the Act;

(3) decided that Ms G provided a very large portion of the care and support of the children during the relevant period;

(4) recognised Ms G faced very difficult financial circumstances during the relevant period.

[47] I understand Judge Walsh’s reference to the amount which Ms G said she

spent on the children compared to the amount of maintenance paid by Mr T was

simply to illustrate the significance of the contribution Ms G made to the care and support of the children. I do not understand Judge Walsh was attempting to compensate Ms G for any specific portion of the amount she said she spent on the children during the relevant period.

[48] In these circumstances, Judge Walsh was fully entitled to conclude that it was just for Ms G to be compensated for her significant contribution to the care of the parties’ children over a long period of time following the parties’ separation.

[49] I also do not accept Judge Walsh erred when he determined Ms G was entitled to the award of $40,000 under s 18B of the Act. That was a global assessment based on the fact Ms G provided the majority of the care and support of the parties’ children over a long period of time during which she faced significant financial difficulties.

[50] The award made by Judge Walsh was higher than awards made under s 18B

of the Act in S v S [Compensation]¹¹ and JA v SNA [Economic disparity].¹²

However, I do not accept Judge Walsh erred when he determined in light of all the relevant circumstances Ms G was entitled to be awarded $40,000 under s 18B of the Act.

Second ground of appeal

[51] Judge Walsh awarded Ms G $40,000 under s 44C of the Act to compensate her for shares that were transferred to the family trust. Judge Walsh reasoned that the shares in question were relationship property and that they had been transferred by Mr T to the family trust with the effect of defeating Ms G’s claim or rights to

_{those shares.}

11. S v S [Compensation] [2005] NZFLR 218 (FC) ($18,000) and JA v SNA [Economic disparity] [2008] NZFLR 297 (HC) ($15,000).

¹² JA v SNA [Economic Disparity], above n 6.

(1) that there was dispute between the parties as to the classification of the shares transferred to the family trust;

(2) Mr T maintained that at the date of separation shares in various public companies in Australia and New Zealand were received by him in his capacity as a beneficiary of his grandfather’s trust and were his separate property which he transferred to the family trust;

(3) on the other hand, while Ms G accepted that Mr T acquired share investments from his grandfather’s trust, various shares were acquired by the parties during their marriage and transferred to the family trust. Ms G therefore contended that a portion of the shares transferred to the family trust were relationship property.

[53] Judge Walsh found:

(1) Mr T had “not made full disclosure of share investments transferred to

the family trust”;¹³

(2) “as [Mr T] asserted the shares were his separate property, the onus was on him to make full and proper disclosure”;¹⁴

(3) the majority of the shares transferred to the family trust were not

Mr T’s separate property because his evidence was “not supported by

_{corroborative evidence”.}¹⁵

¹³ _{SJG v IAT, above n 1, at [43].}

¹⁴ _{At [46] and [53].}

¹⁵ At [41] and [53].

(1) Judge Walsh erred when he found that the onus was on Mr T to establish that the shares that were transferred to the family trust were his separate property;

(2) Judge Walsh erred when he said Mr T was required to provide “corroborative” evidence to support his claim that the shares in question were separate property;

(3) It was for Ms G to take whatever steps she thought necessary by way of interrogatories or by seeking discovery under rr 397 to 404 of the Family Court Rules 2002 if she wanted to prove her claim;

(4) The evidence does not support the factual findings Judge Walsh made against Mr T in relation to his claim that the shares in question were her separate property.

Analysis

(A) Who had the onus under s 44C of the Act?

[55] Section 8(1)(e) of the Act creates a statutory presumption that all assets acquired during a qualifying relationship are relationship property unless the property in question is subject to an exception in the Act. Section 8(1)(e) provides that relationship property consists of –

(e) subject to sections 9(2) to (6), 9A, and 10, all property acquired by either spouse or partner after their marriage ... or de facto relationship began ...

[56] Mr T relies on s 10(1)(b) of the Act which provides that the proceeds of a distribution of property acquired by a spousal partner as a beneficiary under a trust settled by a third party is the separate property of that spouse or partner.

... the dominant purpose of the Act is nonetheless to treat all property [acquired after the marriage] as matrimonial property unless it is shown to be separate property.

Similarly, in Allan v Allan Tipping J said:¹⁷

There is thus an onus on the party seeking to exclude property from the prima facie provisions of s 8(e) by reliance on s 9(2) to demonstrate on the facts that s 9(2) applies.

[58] Judge Walsh’s approach was entirely consistent with that articulated by Hardie Boys and Tipping JJ. The onus was on Mr T to establish that any shares acquired since the commencement of the parties’ marriage was his separate property.

(B) What was Mr T’s onus of proof?

[59] Mr T only had to establish on the balance of probabilities that the shares in question were his separate property. There were a number of ways he could have discharged that onus. Providing documentary evidence to support his claim was one way he could have discharged the onus of proof he faced.

[60] Mr Stapleton was very concerned that Judge Walsh had referred to Mr T’s failure to provide corroborative evidence. Mr Stapleton referred to s 121 of the Evidence Act 2006 which specifies that “it is not necessary in a criminal proceeding for the evidence on which the prosecution relies to be corroborated” except in relation to the offences of perjury, false oaths, false statements or declarations and treason. Mr Stapleton submitted that by importing the criminal law requirements of “corroboration” into his reasoning Judge Walsh misdirected himself on the standard of proof that was required.

[61] In my assessment, Judge Walsh’s reference to “corroboration” has to be

_{viewed in the following context:}

¹⁶ _{Walsh v Walsh (1984) 1 FRNZ 262 (CA) at 267.}

¹⁷ Allan v Allan (1990) 7 FRNZ 102 (HC) at 105.

(1) The parties had lived together for 18 years from 1988 until 1 June

2006.

(2) During this time both parties traded on the stock exchange. Some of the shares the parties acquired were purchased by Ms G. Most of the shares were purchased by Mr T.

(3) In exhibit D to her narrative affidavit dated 10 June 2011 Ms G methodically listed shares in 25 companies listed in Australia and New Zealand which she identified as having been acquired during the course of the parties’ marriage. That schedule was based on what she described as “partial share disclosure” made by Mr T in 2008.

(4) Based on the shares disclosed, Ms G claimed that ten specific parcels of shares were subject to her claim under s 44C of the Act. The value of those shares was $74,944.54 based on research Ms G had undertaken in 2011. It is to be emphasised, that the total value of all shares in the family trust was significantly greater than $74,944.54.

(5) When cross-examined Mr T accepted that most (but not all) of the shares identified in the schedule provided by Ms G were acquired during the course of the parties’ marriage.

[62] When viewed in this context Judge Walsh’s reference to a lack of corroborative evidence was not a reference to a criminal law evidential concept. Judge Walsh’s reference to a lack of corroboration from Mr T was intended to mean Mr T had not attempted to refute Ms G’s claims by presenting any evidence that supported his submission that the shares in question were his separate property.

(C) Was Judge Walsh’s findings supported by the evidence?

[63] In my assessment, Judge Walsh was entitled to conclude that approximately

$75,000 worth of shares that were relationship property had been transferred to the family trust. Those shares were valued in 2011. It was therefore appropriate for Judge Walsh to decide that Ms G was entitled to $40,000 in 2013 by way of

compensation for the shares that were relationship property and which had been transferred to the family trust.

Third ground of appeal

[64] Mr T submits Judge Walsh erred when he determined a Bendigo bank account and shares in David Jones were relationship property.

[65] Judge Walsh made a $7,120 adjustment to Ms G’s entitlement to relationship property to reflect her interest in the Bendigo bank account. He also awarded her 50 per cent of the David Jones shares.

[66] In reaching his conclusions about these items, Judge Walsh said that the onus was on Mr T to prove that the items in question were his separate property and that in the absence of “corroborative-evidence”, Mr T had failed to discharge the onus he bore.

[67] Mr T bases his third ground of appeal on:

(1) Judge Walsh’s reference for the need for Mr T to provide corroborative evidence to support his claim the items were his separate property.

(2) The evidence that Ms G did not dispute that the David Jones shares

were Mr T’s separate property.

Analysis

[68] I have already determined in relation to the second ground of appeal that the onus was on Mr T to establish that property acquired during the course of the parties’ marriage was not relationship property. I have also decided in relation to the second ground of appeal that nothing hinges on Judge Walsh’s reference to the absence of “corroborative-evidence” to support Mr T’s claim.

[69] For the reasons I have previously enunciated when dismissing Mr T’s second ground of appeal, I conclude that Mr T’s claim in relation to the Bendigo bank

account cannot be upheld and that Judge Walsh did not misdirect himself in explaining why Mr T had failed to discharge the onus that was upon him.

[70] I do however agree with Mr T’s claim in relation to the David Jones shares. My reading of the evidence establishes Ms G did not specify those shares were relationship property in the schedule she prepared which was annexed to her affidavit of 10 June 2011. At the time she prepared that schedule Ms G knew from paragraph [3](i) of Mr T’s affidavit of assets and liabilities dated 11 February 2010 that Mr T claimed the David Jones shares as his separate property.

[71] Ms G was not cross-examined about the David Jones shares and the cross- examination of Mr T on that issue was consistent with his position that those shares were his separate property.

[72] Accordingly, I am driven to the conclusion that Judge Walsh erred when he failed to recognise that the David Jones shares were the separate property of Mr T.

Cross-appeal

First ground of cross-appeal

[73] Ms G submits Judge Walsh erred when he declined Ms G’s claim for interest on the $285,000 she was paid for her share of the matrimonial home. Ms G’s claim for interest was made under s 33(4) of the Act.

[74] Judge Walsh reasoned that he had no jurisdiction to award interest under s 33(4).¹⁸

[75] Judge Walsh explained his conclusion on this point in the following way:

_{(1) The parties’ family home was transferred to the family trust in 2003.}

¹⁸ Or s 18B or 33(3)(i) of the Act in relation to the $285,000 paid to Ms G on 22 August 2010.

(2) The parties and their children were discretionary beneficiaries under the family trust. They therefore did not own the family home from

2003 onwards.

(3) The Act only applies to property owned, or beneficially owned by the parties (citing Keats v Keats).¹⁹

(4) At a settlement conference conducted before Judge Grace on 9 June

2010 Mr T agreed to pay Ms G $285,000 for her interest in the family home but the legal basis on which they agreed to do this was unclear. In the absence of a clear explanation of the basis of the agreement reached on 9 June 2010, it was not possible to make an order for the payment of interest on the $285,000.

Analysis

[76] The jurisdiction conferred on the Family Court by s 33(4) of the Act to order the payment of interest is broad and may be engaged when “one spouse ... becomes liable to pay the other a sum of money”.

[77] In this case, Mr T agreed on 9 June 2010 to pay Ms G $285,000 within 28 days of the date of the settlement conference. The orders sealed by the Family Court record:

Mr [T] will retain the home and will pay Ms [G] $285,000 representing the agreed half value of the home. Payment will be made within 28 days.

[78] Thus, as at 9 June 2010 there was a court order requiring Mr T to pay Ms G a sum of money. The Family Court therefore had the jurisdiction under s 33(4) to direct if it thought appropriate, that interest be paid on that sum. Clearly, the Family Court did not order the payment of interest on 9 June 2010. However, in his oral judgment recording the terms of the parties’ agreement Judge Grace said that Ms G “... is seeking an award for occupational costs or an interest factor on the amount that

_{she has received”.}

¹⁹ Keats v Keats [2006] NZFLR 470 (FC).

[79] I do not think that the arguments that have subsequently unfolded about the family trust owning the family home are relevant to the jurisdiction which existed under s 33(4) for the Family Court to have ordered that interest be paid on the

$285,000 Mr T was ordered to pay on 9 June 2010.

[80] The fact that the payment of $285,000 represented Ms G’s half share in the family home that was owned by a family trust does not alter the fact that under the provisions of the Act, she would have been entitled to a share in the home at the date of separation. On 9 June 2010 Mr T was ordered to pay Ms G a sum of money, which was agreed between them as representing that entitlement, and therefore under s 33(4) of the Act, the Family Court could, if it so wished, have ordered that interest be paid on that sum.

[81] An order to pay interest under s 33(4) of the Act compensates the recipient for their inability to use their capital. An order to pay interest under s 33(4) of the Act should not be confused with orders for compensation for lack of use of a family home, or occupational rent which might be made under s 18B of the Act, or s 343(f) Property Law Act 2007.

[82] Because orders for interest under s 33(4) of the Act compensate the recipient for their inability to use their capital, an appropriate interest rate should reflect what interest would have been paid to the recipient by a trading bank from the date of separation to the date the principal is paid having some regard to the rate of inflation over the relevant period, and the likely tax consequences for the recipient.²⁰ For this reason interest rates under s 33(4) of the Act should not exceed three per cent per annum.²¹

[83] However, because an award of interest under s 33(4) of the Act is discretionary, I will set out what factors I believe should influence the decision to

_{order interest.}

²⁰ RL Fisher (ed) Fisher on Matrimonial and Relationship Property (looseleaf ed, LexisNexis) at

_[18.46].

²¹ Mark v Mark [2004] NZFLR 72 (HC).

[84] In this case, there are two important factors that I would want to explore before I could order interest under s 33(4) of the Act. Those factors are:

(1) Did the value of the family home increase during the 50 month period from separation to the payment of the $285,000 to Ms G? If so, by what amount did it appreciate? And, if so, is that increase due to general inflation in the housing market, or mortgage payment, or other expenditure by Mr T? This inquiry is important because Ms G should not get the benefit of both the increase in value of her share of the family home and interest on the $285,000.

(2) Did Ms G contribute in any significant way to the 50 month delay from separation to the payment of the $285,000? This inquiry is important because Ms G should not be entitled to interest for periods of delay that are attributable to her.²²

[85] I do not have the evidence that I would require before I exercise the discretion to award interest under s 33(4) of the Act. For this reason, I am going to remit this aspect of the case back to the Family Court so that, if necessary, further evidence can be produced to enable a decision to be made on whether or not Ms G should receive interest on the $285,000.

Second ground of cross-appeal

[86] The second ground of cross-appeal concerns Judge Walsh’s order that Ms G was entitled to interest at the rate of three per cent per annum from the date of judgment to the date of payment on the amount payable to her under the judgment.

[87] Judge Walsh’s reference to three per cent was probably a typographical error.

The rate of interest that was payable on judgment sums over $3,000 as at the date of judgment was five per cent.²³

²² _{Lavas v Talino HC Auckland CIV-2008-404-5609, 31 March 2009 at [62].}

²³ District Courts Act 1947, s 65A(3); District Courts (Prescribed Rates of Interest) Order 2011.

[88] Thus, Ms G was entitled to an award of interest at the rate of five per cent per annum on the amount that she was entitled to receive under the judgment from the date of judgment until the time it was paid. However, she was only entitled to interest at a rate of three per cent per annum if the amount she was entitled to under the judgment did not exceed $3,000.

Conclusion

[89] Judge Walsh did not err when he awarded $40,000 compensation under s 18B of the Act to Ms G for contributions she made to the care of the parties’ children post-separation.

[90] Judge Walsh did not err when he awarded Ms G $40,000 compensation under s 44C of the Act in respect of certain shares that had been transferred to the family trust.

[91] Judge Walsh did not err when he classified the Bendigo bank account as relationship property. He did however err when he classified the David Jones shares as relationship property. I order that all the David Jones shares are the property of Mr T.

[92] Judge Walsh had the jurisdiction to award Ms G interest under s 33(4) of the Act in relation to the sum of $285,000 that she was paid. I remit this part of the case back to the Family Court for it to determine.

[93] Judge Walsh erred when he awarded Ms G interest at a rate of three per cent instead of five per cent on the amount over $3,000 payable to her under his judgment.

Costs

[94] In my assessment this is a case where the parties have evenly shared the honours in relation to both the appeal and cross-appeal. I am therefore ordering that the parties bear their own costs. In doing so, I hope the parties will quickly resolve

the outstanding issue and put this unfortunate aspect of their lives behind them and

_{focus on their futures.}

_{D B Collins J}

Solicitors:

Langford Law, Wellington for Appellant

Gibson Sheat, Lower Hutt for Respondent