Able v Able

• Jurisdiction: New Zealand
• Judge: Gault J
• Judgment Date: 14 February 2020
• Neutral Citation: [2020] NZHC 177
• Date: 14 February 2020
• Docket Number: CIV-2019-404-791
• Court: High Court

UNDER the Family Proceedings Act 1980

Between

John Able

Appellant

and

Katherine Able

Respondent

[2020] NZHC 177

Gault J

CIV-2019-404-791

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Family — appeal against interim spousal maintenance order — maintenance paid from appellant's capital — inclusion of legal costs in maintenance order — Family Proceedings Act 1980 — Property (Relationships) Act 1976

Appearances:

S J McCarthy and D Turk for the Appellant

D Chambers QC for the Respondent

JUDGMENT OF Gault J

This judgment was delivered by me on 14 February 2020 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

1 Mr John Able appeals against the judgment of Judge F J Eivers in the Family Court dated 20 March 2019 ordering interim spousal maintenance in favour of the respondent Mrs Katherine Able as follows: 1

• (a) to continue payment of $1,200 per week;

• (b) to continue to pay monthly expenses as listed;

• (c) to pay $12,000 per month as a contribution toward her legal costs, to commence 1 April 2019.

2 At the outset of the hearing, Ms Chambers QC, for Mrs Able, addressed her application for leave to adduce a further updating affidavit. Mr Able had opposed the application but, in the alternative, provided his own further affidavit. The volume of further material was substantial. Ms Chambers submitted that Mrs Able's updating affidavit passed the “special reasons” test for further evidence and that Mr Able's affidavit did not. 2 But Ms Chambers accepted that, if identified, the parts of Mr Able's affidavit that addressed the same updating issues might also be admitted if an oral application were made. Recognising the limited relevance of the further evidence to the appeal, Mrs Able's application was withdrawn by consent and neither further affidavit was admitted.

Factual background

3 The parties were married in 2004. 3 They had two children, born in 2005 and 2006. Mrs Able ceased full-time paid employment after their first child was born and ceased paid work after their second child was born. She was their main caregiver.

4 Mr Able worked in a market gardening business from 1994, initially in partnership with his father. In 1999 Mr Able's father settled the John Able Trust (the Trust). In 2003 A Ltd was incorporated. It became the trading entity for the business, growing the vegetables. The Trust owns land and leases it to A Ltd. Initially, 98% of

A Ltd's shares were owned by the Trust. After various transfers, all the shares are now owned by the Trust. Mr Able is the managing director

5 In 2008 AB Ltd was incorporated. It leases a building from the Trust and operates a packhouse. All its shares are also owned by the Trust. Mr Able is the sole director.

6 The parties separated in January 2015. Following separation, Mrs Able and the children remained living in the family home (owned by the Trust). Mr Able voluntarily paid maintenance of $1,200 per week plus expenses of approximately $8,000 per month. Shortly before the Family Court hearing, Mr Able proposed that the $1,200 per week payment should be reduced to $500 per week on the basis of a proposed interim distribution of $300,000.

Issues

7 There are essentially two issues on appeal: whether the Judge was correct to order payment of:

• (a) $1,200 per week (rather than $500); and

• (b) $12,000 per month towards Mrs Able's legal costs. 4

Approach on appeal

8 There is no real dispute about this Court's approach on appeal. Orders for interim maintenance under s 82 of the Family Proceedings Act 1980 involve the exercise of discretion. Accordingly, on appeal the approach taken in May v May applies. 5 As the Supreme Court said in Kacem v Bashir, in this kind of case the criteria for a successful appeal are: (1) error of law or principle; (2) taking account of irrelevant considerations; (3) failing to take account of a relevant consideration; or (4) the decision is plainly wrong. 6 The appellant seeking to appeal against the exercise of a discretion, particularly an unfettered discretion, has a difficult task.

9 In the interim maintenance context, the discretion is unfettered in the sense that there are no mandatory considerations such as those that apply to final spousal maintenance orders. 7 Thus, the real question in relation to each of the two orders in issue is whether the Judge was plainly wrong.

Analysis

10 The purpose of interim maintenance is to protect the position of an applicant who may have inadequate means to meet current needs pending determination of the proceeding, if and so far as it is reasonable in all the circumstances to do so. 8

11 Mr McCarthy submitted that it is not just to allow Mrs Able to protect her capital while requiring Mr Able to pay maintenance, including legal costs, out of his capital. He submitted the payment of maintenance cannot be taken into account in the subsequent distribution of relationship property under s 18B of the Property (Relationships) Act 1976. Since relationship property is determined at the date of separation, Mr Able is effectively having to fund maintenance out of his share of relationship property.

12 There is no issue about Mrs Able's reasonable needs, which she is not able to meet, nor Mr Able's ability to meet them. The requirements for maintenance are accepted. The dispute, in relation to both the $1,200 per week (rather than $500) and the $12,000 per month contribution towards legal costs, is whether those needs should be met out of maintenance or the proposed interim distribution.

13 Mr McCarthy also submitted that the Judge misunderstood that the proposed $500 per week was based on the disputed value of money owed to Mr Able in his A Ltd's current account rather than the interim distribution offer. Ms Chambers submitted that in the Family Court Mr Able's position was rather that he would not be able to fund the weekly payment of $1,200 if the interim distribution was paid. In any event, it is true that the Judge linked the proposed reduction in weekly maintenance to

the disputed current account, but she also referred to the $300,000 offered by way of interim distribution

14 Mr McCarthy submitted that the proposed interim distribution in the Family Court was not conditional. He referred to Mr Able's updating affidavit in the Family Court dated 20 February 2019, two days before the hearing, in which Mr Able said: “I will call-up $300,00 (sic) from my current accounts and pay that to the applicant by way of an interim division of relationship property”. Although the affidavit went on to say that Mr Able's ability to pay the interim division of relationship property would depend on the ability of the trustees to pay him and that depended on the bank being prepared to lend funds to the trustees, which he was hopeful would be all resolved by the time of the hearing on 22 February 2019, Mr McCarthy said that at the hearing he advised the Judge that finance had been approved. Ms Chambers did not dispute that. Mr McCarthy confirmed the proposal again to me.

15 I consider that the offer in the Family Court was still conditional, in the sense that payment by the trustees was not assured and the offer was linked to weekly maintenance being reduced. Mrs Able did not accept the offer. The proposed distribution was therefore not available to her to meet her reasonable needs. I was told that Mrs Able had applied for an interim distribution of a significantly higher sum, the quantum of which was opposed by Mr Able, and that the parties were awaiting a hearing at the time of the maintenance hearing. The interim distribution application was not before the Judge with the interim maintenance application. I accept the Judge could have crafted an interim maintenance order to reflect Mr Able's offer, such that if Mr Able paid an interim distribution of $300,000 then the maintenance would be at the reduced level, and made clear this was without prejudice to Mrs Able's application for a higher interim distribution. But the question is whether the Judge was plainly wrong not to do so.

16 It is common ground that there is no ability to adjust the division of relationship property to take account of maintenance paid from the appellant's share. I accept that maintenance is effectively funded out of Mr Able's share of relationship property. In some circumstances, an interim distribution of relationship property may be preferable and hasten the path towards independence. But that is unlikely with the proposed distribution here and I consider the payment of interim maintenance out of capital is fair. Although the quantum is disputed, Mr Able currently has the use of Mrs Able's relationship property. The proposal that Mrs Able fund her own maintenance to the extent of $700 per week out of the proposed interim distribution of capital is less fair, including because she would need to find somewhere else to live. She would need to spend capital on maintenance, which would not assist her path towards independence. That proportion would be even higher now given that the proposed interim distribution is net of refunds for the overpayments pending appeal. Ongoing maintenance also...