Adm v Djn
IN THE FAMILY COURT AT HASTINGS
In the Matter of The Property (Relationship) Act 1976
BS King for the Applicant
K Monk for the Respondent
FOR FURTHER INFORMATION PLEASE SEE WWW2.JUSTICE.GOVT.NZ/FAMILY/LEGISLATION/RESTRICTIONS.
RESERVED JUDGMENT OF Judge A J Twaddle
[Regarding Divison of Relationship Property]
This case is about division of relationship property.
The broad background is that Mr M and Ms N started living together at the end of 1989. They separated just over 14 years later in March 2004. There are two children of the relationship, R born in September 1996 and A born in February 1999. Since the separation the boys have primarily been in the day to day care of Ms N.
Having travelled overseas for some months in 1990, Mr M and Ms N returned to New Zealand and lived with Ms N's parents on their farm. During her absence, Ms N's parents had purchased a business known as The Hair Salon with a view to Ms N operating it, which she did on her return.
Ms N's father died in 1992. Her mother paid off a loan on the hair salon business and formed a partnership with Ms N, known as the MJ N & DJ N Partnership, to run the business.
Mr M and Ms N continued to live with Ms N's mother for about 15 months. They moved from her home around November 1992 and after living briefly with BD, in March 1993 moved onto a farm owned by MC where they lived for about four years.
Mr M bought 50 head of breeding cows which he grazed and around 1994 he purchased his father's interest in a tree contracting business. Subsequently, in Mr M's words, “the cattle market crashed”, Mr M incurred significant debts and was adjudged bankrupt.
In December 1994 Ms N bought a property at M Street Hastings which became the family home. The home was purchased with a bank loan secured by a mortgage over the property and $30,000 from Ms N's mother. The property was registered in Ms N's name.
Until he was discharged from bankruptcy Mr M worked for Mr and Mrs O'Connor in their tree contracting business. On his discharge from bankruptcy he set up a company called A & D C (XXXX) Ltd.
In 2002 Mr M sustained leg and back injuries and obtained weekly compensation from ACC. He returned to paid employment in December 2002 but did not advise ACC. He continued to receive ACC payments until 29 September 2003, resulting in an overpayment of $4,301.51 and a claim totalling $9,033.17 against him by the ACC.
In July 2003 Mrs N transferred her interest in the salon business to Ms N who relocated the business into a kitset garage building on the home property. She obtained a bank loan to build and fit out the kitset building.
At the date of separation in 2004, the relationship property consisted of:
a) The M Street home.
b) Household chattels.
c) Ms N's interest in the hair salon business.
d) Shares in A & D C (XXXX) Ltd.
e) Three vehicles, including a Nissan Terrano, a Ford and a Morris Eight.
f) An AXA insurance policy.
g) An AMP insurance policy.
h) Money in a Credit Union account.
There were a number of debts including $6,000 owing to Chainsaws Sales and Service and the money owing to ACC.
Following the separation Mr M remained in the house until December 2004 when Ms N obtained protection, occupation and parenting orders. Ms N carried out extensive renovation work. She and the children moved back into the home in March 2006. The agreed value of the home ($230,000) is based on a valuation as if the property was presented in the same condition it was in as at July 2004 which gives Ms N full credit for the increase in value as a result of her renovation work.
Various matters are agreed. These are:
a) The M Street home:
i) The home is to vest in Ms N.
ii) Ms N is to account to Mr M for $81,586, being half of the equity in the home (the agreed value of $230,000 less the mortgage at separation of $66,828).
iii) No adjustment is required on account of Ms N's principal payments since the separation as the separation date mortgage balance is accepted for division purposes.
b) The salon business:
i) The business assets are to vest in Ms N.
ii) Ms N is to account to Mr M for $5,500, being half the agreed value of the business.
c) A & D Contracting (2002) Ltd:
i) Ms N's shares in the company are to vest in Mr M.
ii) Mr M is to account to Ms N for $3,165, being half the total value of the shares.
d) The vehicles: The vehicles are to vest in the party having possession of them, subject to Mr M accounting to Ms N for half the value of the Nissan Terrano as determined by the Court.
e) Chattels: The chattels are to vest in the party having possession of them, subject to the resolution of issues relating to some of the chattels.
f) Credit Union account: The account is to vest in Ms N subject to her accounting to Mr M for $551.23 being half the value of the account.
g) The value of the contributions made by Ms N to the AXA Insurance policy following the separation are her separate property.
h) Mr M is to account to Ms N for $4,497.90 being half the debts which are accepted as relationship debts, namely:
ASB Visa credit card
National Visa credit card
A D Joseph
i) Mr M is to account to Ms N for $1,989.00 in respect of the following debts of Mr M paid after the separation by Ms N:
Half share valuation fee
The agreed issues are:
a) The value of the Nissan Terrano motor vehicle.
b) The classification and division of the AXA policy.
c) The classification and relationship property value of the AMP endowment policy.
d) Classification and treatment of the ACC debt.
e) Classification and treatment of the chainsaw sales and services debt.
f) Status and treatment of $30,000 provided by Ms N's mother.
g) Whether Ms N is entitled to compensation for any post-separation contribution (s 18B of the Act).
h) Division of certain chattels.
Mr M's evidence is that he bought the Nissan in 2003 for $2,400. He used it as a work vehicle. It had no inside panels and was a vehicle “in below average condition with approximately 180,000 on the odometer”.
Through Lemon Check Ms N obtained a wholesale valuation of $4,800 for a 1989 Nissan Terrano with approximately 180,000 on the odometer. Her evidence was at the time of the separation the family were using the vehicle and it was “quite acceptable”.
I agree with Mr King's submission that the Lemon guide is not vehicle specific and is at best a broad guide and that there is no evidential basis for assessing the value of the vehicle other than at the price Mr M paid for it.
I value the vehicle at $2,400.
The policy was taken out during the marriage and was valued at $7,033.59 at the date of the separation. Ms N has continued to pay the premiums on the policy since the separation.
Accepting that the original purpose of the policy was to provide an education fund for the boys, Mr M contends that the fund is relationship property and claims half the value of the policy at the separation date. He says he and Ms N “will never be able to agree on anything” and he cannot see how they would be able to manage the fund for the benefit of the boys. In his view the most practical and pragmatic way of dealing with the policy would be for it to be divided equally; he and Ms N could then reinvest the money for the boys in accounts over which they each have sole responsibility.
Referring to the evidence of Mr MAs, an insurance advisor, Ms N's position is that the policy was established as a trust and the value of the policy at the date of separation belongs neither to her nor to Mr M. The money was not solely to provide education at H School but was for “any education that would have been coming up, whether it be tertiary or university”. During the marriage the premiums were paid by the hairdressing business.
I find that the intention of Ms N and Mr M when they took out the policy was to provide for the education of the boys. While they envisaged initially that this would occur at H, their intention was broader than this. The boys are still being educated and are incurring costs in respect of their schooling. I find that there is an implied trust in respect of the monies paid towards the policy and that the separation should not cause the initial purpose of the policy to be frustrated. On this basis the value of the policy at the date of separation is not relationship property.
The relationship of Ms N and Mr M is acrimonious and the continued involvement of both in the administration of the fund would not work. A clean break is required.
In my assessment Ms N is a child focused person who can be trusted to act in the interests of the boys. To enable the original intention to be carried out, the policy is to vest in Ms N, subject to the condition that the value of the policy to the extent of $7,033.59 is to be used only for the costs of the boys' schooling and related tuition.
The policy was taken out by Ms N's father on her life in 1976 before her relationship with Mr M started and he paid the premiums until he died in 1992. Mr M's understanding was that Ms N paid the premiums from the salon account for at least 12 years during the relationship. But in cross-examination he accepted he could not argue if the evidence established that Ms N's mother had paid the premiums except for the period March 2003 to March 2004, when they were paid from relationship property.
Ms N's evidence is that after her father's death, her mother...
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