Cullen v Cullen [2016] NZHC 2032 (30 August 2016)

Last Updated: 26 December 2018

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2015-441-97 [2016] NZHC 2032

UNDER THE	Property (Relationships) Act 1976
BETWEEN	BRIAN CULLEN Appellant
AND	CAROL ILEEN CULLEN Respondent

Hearing:	26 August 2016
Counsel:	G Thornton for Appellant M Macfarlane for Respondent
Judgment:	30 August 2016

JUDGMENT OF WILLIAMS J

(Application for interim orders)

[1] The parties were married for some years. Their marriage has ended. They are in dispute over relationship property, the primary assets of which are a home valued in the high $300,000s but subject to mortgages in the low $300,000s; and a crayfish quota valued around $400,000. The quota is unencumbered.

[2] On 9 September 2015, in the Family Court at Hastings, Judge Lendrum issued a lengthy reasoned judgment dividing the relationship property. The house and quota were to be transferred to Brian subject to the making of equalising payments in favour of Carol. Brian then appealed and his appeal was heard in March 2016 before Clark J. A decision is pending. The Family Court judgment was stayed by consent on 4 May 2016.

[3] The crayfish quota needs to be fished annually since that is its point. In the last crayfishing season, Brian and Carol eventually agreed that the quota could be

BRIAN CULLEN v CAROL ILEEN CULLEN [2016] NZHC 2032 [30 August 2016]

leased pending the outcome of the appeal. With the new season coming up, there is no agreement.

[4] The trigger for the current discussions is not the impending season (as it was last season) but the fact that Westpac issued a notice pursuant to the Property Law Act 2007 on 11 July 2016 requiring Brian and Carol to remedy mortgage repayment defaults of the order of $12,707.34, together with costs of $830 (a total of
$13,537.34) on or before 23 August 2016. Carol exhibited to her affidavit a further letter from solicitors for Westpac advising that as at 5 August arrears were
$17,056.05. Brian now urgently wants to lease the quota in order to remedy the default. He says he has an offer at around $29,000 and this will more than cover past arrears.

[5] Brian remained in the house. He was able to service the mortgage until about March this year because he had a lucrative contract allowing him to do so. He no longer has this work. His sole source of income is government superannuation. He withdrew his Kiwisaver superannuation savings to meet three months of mortgage payments, but, it seems, that has now run out. He says through his company Cray 3 Ltd, he has spent $200,000 servicing debts secured against the house.

[6] Brian says the situation is now urgent. He says the house will inevitably be lost unless income from the crayfish quota can be applied to mortgage repayments.

[7] Carol does not agree to the proposal. She says applying the income of the quota in this way will do no more than temporarily delay the inevitable mortgagee sale of the house, and it is better to get it over with quickly rather than throw good money after bad. She says a sale will remove all debt. She says (inter alia):

... Mr Cullen has a heavily financed nearly new utility vehicle. I do not know how he can keep up these payments if he cannot keep up the payments to the Bank on the house and the company assets he controls.

My position is that Mr Cullen cannot afford to keep the house, and will not be able to pay for half of the quota. One or both will have to be sold. I do want the quota and have Bank support for paying out Mr Cullen (after adjusting for my share of the company assets and house that he would keep). In order to do that I need to have access to the ACE (annual catch entitlement), so I cannot agree to the ACE being sold.

[8] Brian’s case is essentially that if the quota can be leased for $29,000, arrears can be paid and the loan serviced for a further five months ($2,265 per month), by which time he considers the judgment of Clark J will be to hand and entitlements will be able to be finalised in an orderly manner.

[9] Brian accepts that he has had occupation of the home but says he has also suffered significant financial hardship in bearing the burden of meeting loan repayments since May 2015 when the Family Court judgment was issued. This hardship, he submits, significantly outweighs whatever benefit might have accrued due to occupation. He says a $300,000 house in Mahia would not fetch the $500 per week he is paying if it were rented, so he is subsidising Carol through debt repayments.

[10] Carol points out that in fact Brian has had substantially all the relationship assets to his own use – the quota, the fishing company assets including a fishing vessel, as well as the house. This should not be allowed to continue, nor should she be required to subsidise its continuation by interim order of the Court.

[11] Mr Macfarlane also raised a jurisdictional argument. He submitted that any application to lease quota should have been made to the Family Court. Section 25(4) of the Property (Relationships) Act 1976 (PRA) gives that Court the power to make interim orders for the sale of relationship property, and HCR 20.19 relating to the jurisdiction of this Court, he submitted, does not contain such an express power and seems to be directed at final disposition rather than interim orders.

Analysis

[12] In my view, HCR 20.19 covers the position. That rule is to be read, in my view, so as to allow this Court to do that which the Family Court could have done. HCR 20.19(1)(c), enabling the Court to “make any order the Court thinks just ...” underscores this. It follows that if the Family Court under s 25(4) of the PRA has the power to make interim orders, then on appeal, once this Court has seized of the matter, it ought to have the same power. This is consistent with HCR 1.2 requiring me to interpret the rules so as to “secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.”
[13] I find there is no jurisdictional bar.

[14] I am satisfied that the order may be made as sought. There is, I accept, a risk that Brian (and by extension, Carol) must take that good money is being thrown after bad, but the more likely outcome is that Clark J’s judgment will be to hand before the lease money runs out, and an orderly transition can be facilitated.

[15] Should the lease affect the “equities” between Brian and Carol, these may be separately addressed by Clark J in her judgment so as to ensure that neither Carol nor Brian are prejudiced by the interim order I propose to make.

[16] I realise of course that the bank has, since the passing of 23 August (the trigger date in the Property Law Act notice) an entitlement to call in the entire debt, but the bank is unlikely to want to take advantage of that right if there are reasonable prospects of an orderly acquisition of the house at market value in due course whether by Brian or a purchaser on the open market, all provided repayments and arrears are met in the meantime. I consider it is appropriate to take a realistic and practical approach to the theoretical rights triggered by the notice.

[17] I make orders accordingly in accordance with paragraph 1 of the application. Costs are reserved.

Williams J

Solicitors:

Carlile Dowling Lawyers, Napier Sainsbury Logan & Williams Napier