Adw v Kar

 
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IN THE FAMILY COURT AT DUNEDIN

FAM-2009-012-001044

Under Property (Relationships) Act 1976

In the Matter of Section 23 Application for Order under Section 25

And in the Matter of Section 33 Ancillary Orders

Between
ADW
Applicant
and
KAR
Respondent
Appearances:

J Mirkin for the Applicant

J Beck for the Respondent

RESERVED JUDGMENT OF Judge M N E O'Dwyer

1

These proceedings under the Property (Relationships) Act 1976 (“the Act”) concern the division of relationship property following the ending of the parties' short duration relationship of approximately two years. Mr W is the applicant and Ms R the respondent. The issue in the case requires the Court to determine:

  • (a) Whether their de facto relationship of approximately two years is one which qualifies the applicant for relief under s 14A of the Act. In particular, whether failure to make an order would result in serious injustice; and

  • (b) If so, what were the contributions of each party to their de facto relationship.

2

The principal asset is the relationship home owned by Ms R prior to the relationship and in which both parties lived between June 2007 and June 2009. Mr W's case is that serious injustice would result if no order was made in light of any respective contributions to the de facto relationship. Mr W seeks an order that reflects his contribution, in particular, the provision of a special needs grant of approximately $12,237 used to refit and upgrade a bathroom of the property and landscaping, building work, and physical maintenance of the property.

3

Mr W has multiple sclerosis and is now confined to a wheelchair.

Background
4

The parties' de facto relationship began in approximately June 2007 when Mr W moved to live with Ms R in her home in A. Ms R had two children, a girl aged 11 and a boy aged 9. The property has two dwellings built on the land, the second one occupied by Ms R' mother.

5

Throughout the relationship Ms R worked largely in the evenings as a cleaner. Mr W did not have employment because of his multiple sclerosis. He is a qualified plasterer and undertook building work, as well as various landscaping jobs, on the property.

6

Ms R' income from employment was used to meet household expenses, including the mortgage in her name. Mr W received a modest invalid's benefit and other financial support from time to time. He generated some income from a stall selling merchandise at the speedway. During the relationship he contributed a portion of an inheritance of $930 that he received, and the proceeds of sale, approximately $1800, of a collection of die-cast models. Mr W says that this cash was used to meet general living expenses.

7

During the course of the relationship, Mr W received a grant of approximately $12,237 for housing modification. The couple agreed to use this grant to refurbish a bathroom in the house. The work was completed but the parties' relationship broke down and they separated in June 2009. Mr W left the relationship with some chattels and a vehicle which was a van modified for his use. The van was received at the end of the relationship, Mr W taking possession in the week he left the property. It is accepted that the van is his separate property.

8

Mr W approached Ms R early in July 2009 proposing a payment of $8,000 in settlement to provide some compensation for him to refit a new bathroom in another property. Ms R refused this offer and chose to defend the proceedings.

The law
9

It is accepted that the parties were in a de facto relationship of short duration within the meaning of s 2E(1)(b) of the Act.

10

To assess whether Mr W may be granted relief in respect to relationship property the Court must turn to s 14A of the Act. Subsection (2) provides:

14A De facto relationships of short duration

  • (2) If this section applies, an order cannot be made under this Act for the division of relationship property unless—

    • (a) the Court is satisfied—

      • (i) that there is a child of the de facto relationship; or

      • (ii) that the applicant has made a substantial contribution to the de facto relationship; and

    • (b) the Court is satisfied that failure to make the order would result in serious injustice.

11

The parties accept this was a de facto relationship and that Ms R had two children, A aged 11 and L aged 9, who were children of the de facto relationship.

12

The first issue for me to determine is whether it would cause serious injustice if no order were made. I have been referred to a number of authorities exploring the term “serious injustice”. The learned authors of Fisher on Matrimonial and Relationship Property at paragraph 2.24 reviewed the authorities in this area and conclude that to find serious injustice is a high test. I must ask whether injustice would result to the extent that it would be considered serious in light of the purpose and intention of the statute. I must assess whether failure to make an order would result in serious injustice to Mr W, the claimant, but I also must take into account the effect on Ms R of making an order. Ms R has not provided any evidence as to the effect that an order would have on her financial circumstances.

13

I must, therefore, assess the question of justice and the interests of both parties (see Gibbons v Vowles (2003) 22 FRNZ 946 (FC) at [17] and L v P (Division of property) [2008] NZFLR 401 (HC) at [82]). In L v P there were no children of the de facto relationship and Asher J considered, firstly, whether the claimant crossed the “substantial contribution” threshold. In the context of that hurdle Asher J held that substantial meant “of real importance and value”: at [69] – [71]. In the present case the hurdle that Mr W crosses is that there were children of the de facto relationship. He does not have to show a substantial contribution, although, of course, the nature and extent of his contribution is relevant to determining whether a serious injustice would result if no order were made.

14

In L v P Asher J examined the meaning of serious injustice. He noted that there had already been a good deal of judicial comment on the phrase. He noted that justice must be seen in the context of the purposes of the Act as set out at s 1N, which recognises the equal contribution of partners to a de facto relationship and provides for a just division of the relationship property between the partners when their relationship ends. He went on to say at [75]:

In assessing “serious injustice” it is legitimate to apply the concept of a party getting a just return for “contributions”, which is indeed the benchmark under s 14A(3) for making orders in the event of the s 14(2) thresholds being reached. It is also relevant to consider the concepts that have been developed in the constructive trust cases relating to de facto relationships, referred to in Lankow v Rose [1995] 1 NZLR 277 (CA). The concept of a return for contributions and the notion of a constructive trust can be seen as a benchmark of entitlement against which the position of the applicant if a Court does not interfere can be measured. If the status quo after separation without intervention of the Court results in a return that is less than the entitlement under s 14A(3) and Lankow v Rose, there will be a serious injustice.

15

Section 14A(3) provides:

(3) If this section applies, and the Court is satisfied that the grounds specified in subsection (2) for making an order on an application under this Act are made out, the share of each de facto partner in the relationship property is to be determined in accordance with the contribution of each de facto partner to the de facto relationship.

16

The main asset is the relationship home owned by Ms R before the de facto relationship began. The fact that Ms R owned the home prior to the de facto relationship and it became the family home and that she provided a substantial portion of the outgoings on the home will be factors to be taken into account in assessing the relative contributions of the parties, and also the question of serious injustice. In order to determine whether serious injustice would result I am required to consider the respective contributions of the parties to the relationship and the consequences if the Court were to decline, or alternatively to make, an order for division of relationship property under s 14A of the Act.

Relationship property and separate property
17

The relationship home at S, Dunedin, has a value of $312,000 subject to a mortgage of $234,000. The mortgage is in Ms R' sole name. Ms R owned the home for several years prior to her relationship with Mr W commencing. On the property is a separate...

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