Burgess v Beaven

JurisdictionNew Zealand
CourtSupreme Court
JudgeWilliam Young J
Judgment Date09 August 2012
Neutral Citation[2012] NZSC 71
Date09 August 2012
Docket NumberSC 9/2011

[2012] NZSC 71

IN THE SUPREME COURT OF NEW ZEALAND

Court:

Elias CJ, Blanchard, Tipping, William Young and Chambers JJ

SC 9/2011

BETWEEN
Gary Owen Burgess
Appellant
and
Susan Natalie Beaven
Respondent
Counsel:

Appellant in person

S J Shamy and A M Corry for Respondent

Appeal relating to approach Court of Appeal (“CA”) took to separation date adopted in parties' relationship property proceedings — parties were only married for a year — dispute as to division of relationship property resulted in drawn-out litigation process through Family Court (“FC”) to Supreme Court — FC held wife's contribution to relationship had “clearly been disproportionately greater” than husband's — relationship property divided (after appeal) 62:38 in wife's favour — CA allowed husband's challenge and made resulting adjustment in favour of husband — CA recalculated property division on the basis of separation date value, and not hearing date value — appropriate valuation date at issue.

At issue was the appropriate valuation date.

Held: The statutory default position was set out in s2G Property (Relationships) Act 1976 (“PRA”) (date at which value of property to be determined). This provided for property to be valued as at the hearing date of the application, unless the Court in its discretion decided otherwise. Given the enactment of s18B PRA (compensation for contributions made after separation) and s18C PRA (compensation for dissipation of relationship property after separation) which specifically addressed post-separation contributions and dissipation, there was less need than in the past to depart from the default position of the hearing date valuation.

In the FC the relationship property had been divided using hearing date values. The parties had not invited the CA to proceed on any other basis and the CA had not, at least in any specific terms, set out its justification for departing from that position. This departure was not justified by the fact that the CA had focused on separation values in relation to the contributions issue under s14 PRA (marriages of short duration). The practical effect of the separation date approach was to exclude changes in value due to inflation associated with Ms B's post-separation dealings with the relationship property derived from the Woodbury sale. This was not a good reason for departing from a hearing date valuation and was in fact a very good reason for insisting on a hearing date valuation. The CA had been wrong to adopt a separation date valuation approach. The appropriate valuation date was the January 2007 hearing date when the case was heard substantively in the FC and in accordance with usual practice.

Appeal allowed.

JUDGMENT OF THE COURT
  • A The appeal is allowed and the cross-appeal is dismissed.

  • B Orders B, C and D of the decision of the Court of Appeal [2010] NZCA 625 are set aside.

  • C The awards of costs made against Mr Burgess by John Hansen J in the Stream A litigation are set aside and in their place Mr Burgess is awarded $5,000 costs in respect

  • D Ms Beaven's gross liabilityto Mrn Burgess is:

(a) Balance due on division of property

3,716.10

(b) Refund of money paid to Ms Beaven

36,804.31

(c) Costs and disbursement on first appeal

5,000

Total

$15,474.16.

  • E Ms Beaven is entitled to set off outstanding awards of costs in her favour totalling $15,474.16 against her gross liability producing a net figure which she must pay, and on which Mr Burgess may now execute judgment of $30,046.25. Interest will run on that sum from the date of this judgment in terms of r 11.27 of the High Court Rules.

  • F Ms Beaven is to pay Mr Burgess usual disbursements in relation to this appeal.

REASONS

(Given by William Young J)

The appeal
1

In the judgment under appeal, the Court of Appeal 1 (a) allowed Mr Burgess' challenge to an unequal division of relationship property under the Property (Relationships) Act 1976 as directed by the Family Court 2 and upheld by the High Court, 3 (b) divided the relationship property based on separation date valuations rather than the hearing date approach adopted by the courts below and (c) made certain consequential orders.

2

Mr Burgess' further appeal to this Court is directed at the separation date approach adopted by the Court of Appeal, which is the primary point of principle on which leave to appeal was granted. 4 If the Court of Appeal's separation date approach to valuation is wrong, it will be necessary to provide for a division of property based on the correct valuation date and to determine what, if any, consequential orders are required. As will become apparent, such division must proceed on the basis that (a) all assets were relationship property, (b) all debts were relationship debts and (c) the contributions of the parties were roughly equal. 5 As well, there is one additional aspect of the case, a claim for compensation by Mr Burgess against Ms Beaven, which we will also address.

The facts
3

Mr Burgess and Ms Beaven married on 18 May 2002. They both owned properties in Christchurch. Mr Burgess' property was in Wychbury Street (Wychbury), while Ms Beaven's was in Woodbury Street (Woodbury). Wychbury was subject to a mortgage (of around $55,000) whereas Woodbury was unencumbered. Ms Beaven, however, owed her mother $40,000 which was treated as a relationship debt 6 within the meaning of s 20(1) of the Act. 7 Both properties were of approximately equal value as at the date of acquisition 8 and if Woodbury is treated as encumbered by the debt to Ms Beaven's mother, there was not much difference in the net equity each brought to the marriage.

4

Mr Burgess and Ms Beaven decided to pool their financial resources to purchase Medbury, a run-down North Canterbury rural property of around 23 hectares. They were interested in developing a vineyard and also contemplated operating a homestay business. An informal partnership was formed for these purposes. Mr Burgess sold Wychbury in July 2002. This produced a net $69,000 which funded part of the $144,000 purchase price. The balance, some $75,000, was borrowed. Working capital and plant were funded by a GST refund and assistance from Ms Beaven's parents.

5

A caravan was put on the site. A small vineyard was developed and Mr Burgess ran a small flock of sheep. When working on the property, Mr Burgess and Ms Beaven stayed in the caravan. For the balance of the time, they occupied Woodbury. In March 2003, about two months before separation, Ms Beaven entered into an agreement to sell that property.

6

Settlement of the Woodbury sale was effected in June 2003, the month after separation. After discharge of debts and payment of costs of sale, Ms Beaven received a net sum of $156,642.11. In September 2003, Ms Beaven used $110,000 of the proceeds of sale to buy a property in Cranford Street, Christchurch. She sold it three years later, in November 2006, and received $166,113.09 (net of commission and other expenses). The balance of the Woodbury sale proceeds were not kept separate. It is, however, clear that Ms Beaven did meet a joint liability of $4,000 on the cancelled purchase of relocatable homes and it has been held that she repaid her mother the $40,000 advance. 9 Complicating the picture slightly is that some of the Woodbury proceeds of sale 10 were put to the purchase of a property in Geraldine. No valuation of this property was provided and it was not taken into account in the division of relationship property. As will become apparent later, 11 all but a little over $2,000 of the Woodbury proceeds can be accounted for and given this, there would be little point in trying to analyse the possible relevance of the Geraldine property to the division. 12

7

Between separation (May 2003) and the hearing (January 2007) Mr Burgess occupied Medbury. He met the outgoings and incurred various maintenance expenses. His standard of living was low (given the absence of a house and Ms Beaven's removal of the caravan which had been placed there) and he plainly worked hard on the property. By January 2007 (which is when the hearing in the Family Court commenced) the property was worth $252,000 not including stock and plant, which was $77,000 more than it had been worth as at separation (which was $175,000). It was subject to a mortgage of approximately $75,000. Mr Burgess accepted that the appreciable increase in value between May 2003 and January 2007 was largely due to a general lift in rural property values over that period. On the other hand, as he pointed out, that increase in value would not have been available for division without his efforts which ensured that the property was retained.

The process to date
8

In the first substantive judgment this dispute has generated, Judge Strettell addressed Ms Beaven's argument that for the purposes of s 14 of the Act, her contribution to the relationship had been “clearly disproportionately greater” than that of Mr Burgess. 13 In quantifying the respective contributions of the parties, Judge Strettell valued (a) Mr Burgess' contribution through Wychbury at the net price for which it was sold early in the marriage but (b) Ms Beaven's contribution through Woodbury by reference to the sale price later received (which included inflationary gains). 14 And in carrying out this exercise, he did not allow anything to Mr Burgess for the increase in value of the Medbury property as at the date of separation over its acquisition cost. 15 These conclusions provided the foundation for his finding that Ms Beaven's contribution to the relationship had “clearly been disproportionately greater” than that of Mr Burgess 16 and his decision that the relationship property should be divided 65:35 in her favour. 17

9

Mr Burgess appealed to John Hansen J against Judge Strettell's decision but was only modestly successful. The result was an order for a limited...

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23 cases
  • Mark Arnold Clayton v Melanie Ann Clayton Hc Rot
    • New Zealand
    • High Court
    • 22 February 2013
    ...and s18C (post separation dissipation) meant there was less need to depart from the default position of a hearing date value under s2G ( Burgess v Beaven). That was certainly the case here where the remedy of a change to the date of valuation was not effective to do justice to the parties. ......
  • Gfm v Jam
    • New Zealand
    • Court of Appeal
    • 17 December 2013
    ...historic values, because otherwise equal sharing would not be achieved. 21 Specifically, delivering the judgment of the Supreme Court in Burgess v Beaven, William Young J observed: 22 The general approach, however, was that hearing date values were conducive of equity and in particular that......
  • Scott v Williams
    • New Zealand
    • Court of Appeal
    • 29 July 2016
    ...property with confidence, they are to be contemporary values at the hearing date. 19 As William Young J observed in the Supreme Court in Burgess v Beavan: 20 The general approach, however, was that hearing date values were conducive of equity and in particular that both parties should usual......
  • Burgess v Beaven
    • New Zealand
    • High Court
    • 12 March 2020
    ...the amount determined by Judge Strettell and his efforts to correct that were frustrated by the proposed defendants. 4 5 Burgess v Beaven [2012] NZSC 71, [2013] 1 NZLR Burgess v Beaven FC Christchurch FAM-2005-009-8126, 23 April 2010. [9] Mr Burgess said his victory in the Supreme Court was......
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