C v B

• Jurisdiction: New Zealand
• Judge: Winkelmann J
• Judgment Date: 09 September 2015
• Neutral Citation: [2015] NZCA 421
• Docket Number: CA297/2014
• Court: Court of Appeal
• Date: 09 September 2015

Between

C

Appellant

and

B

Respondent

[2015] NZCA 421

Court:

Randerson, Wild and Winkelmann JJ

CA297/2014

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against a High Court (“HC”) decision refusing to strike out claims under the Property (Relationships) Act 1976 (“PRA”) — the parties had been in a de facto relationship for 15 years — in 1998 they made a property agreement in anticipation of amendments to the PRA, which extended its application to de facto partners — the agreement stated that all property owned by each party remained separate property and assets purchased together were apportioned according to contributions to the purchase price — the HC found that the agreement was not comprehensive as it had not addressed the effect of a number of provisions of the PRA (such as contributions by one party to the assets of another, or where one of the parties bought the family home after the date of the agreement) — held that to the extent that the agreement did not exclude operation of the PRA, the provisions of the PRA continued to apply in those respects — whether the agreement should be given a wide-scope interpretation so that it provided “a code” for the parties' property rights — whether s21R PRA (agreements to have effect as if Act not passed) meant that any property dealt with under such an agreement constituted was beyond the reach of the PRA.

Counsel:

D R I Gay for Appellant

J H Hunter for Respondent

JUDGMENT OF THE COURT

• A The appeal is dismissed.

• B The appellant must pay the respondent costs for a standard appeal on a band A basis, plus usual disbursements.

• C This case may be cited as Moor v Marston.

REASONS OF THE COURT

(Given by Winkelmann J)

Table of Contents

	Para No
Introduction	[1]
Background	[2]
High Court judgment	[6]
Appellant's arguments	[12]
First ground of appeal: interpretation of agreement	[18]
(a) Text	[20]
(b) Context	[23]
(i) Legislative history	[27]
(ii) Effect of recitals	[36]
(iii) Conduct after the agreement	[40]
Second ground of appeal: effect of s 21R	[46]
Result	[52]

Introduction

1 Ms C and Dr B lived in a de facto relationship for many years. Following their separation Ms C commenced litigation seeking orders under the Property (Relationships) Act 1976. Dr B applied to strike out the proceeding on the ground that the parties had concluded an agreement providing for the division of all of their property, which precluded Ms C's claims. In the High Court Venning J dismissed the application to strike out. 1 Dr B now appeals that judgment.

Background

2 We gratefully adopt the summary of the relevant background facts set out in the judgment of Venning J as follows: 2

• [3] The parties lived together as a de facto husband and wife for a period of some 14 or 15 years.

• [4] On 31 July 1998 the parties made a property agreement (the agreement). It recorded they had been living in a de facto relationship for several years (and continued to do so) and that they wished to contract out of the then impending extension of the Act to de facto couples.

• [5] At the time they finally separated in October 2009 the agreement remained in effect.

• [6] In 2010 Ms [C] took proceedings (the 4221 proceedings) seeking to have the agreement set aside as invalid. She argued she had entered it

  unwillingly and to her disadvantage as a direct result of Dr [B]'s duress or undue influence, and that he took advantage of her vulnerability so that the agreement should be set aside as unconscionable.

• [7] Ms [C] then issued these proceedings in the Family Court in October 2011 seeking orders under the Act. The proceedings were transferred to this Court in 2012 and then put on hold pending the outcome of her application in the 4221 proceedings.

• [8] In a judgment delivered on 30 August 2013 in the 4221 proceedings Keane J found against Ms [C]. Keane J did not consider that at the time Ms [C] entered the agreement she was manifestly under undue influence or duress or in such a state of vulnerability that any pressure Dr [B] subjected her to had made the agreement unconscionable.

• [9] The Judge was of the view that Ms [C] had effectively affirmed the agreement in the way she had generally acted until the parties finally separated in 2009. He also considered that she had expressly affirmed the agreement in 2007 when Dr [B] had advanced $250,000 to her business. Finally, the Judge concluded that when Ms [C] signed the agreement she was not in a state of particular vulnerability which Dr [B] knew of and exploited, so as to require the agreement be set aside as unconscionable.

• [10] Keane J accordingly dismissed Ms [C]'s application for a declaration that the agreement was invalid.

• [11] Following delivery of Keane J's decision Ms [C] attempted to pursue these proceedings. That was met by Dr B's submission that Ms [C]'s claims were barred by the agreement. Directions were made for the filing and service of this strike out application.

3 Although we attach the entire agreement to this judgment as Appendix A, it is common ground that the critical parts of the agreement are recitals B, F, G and cls 1 and 2. For ease of comprehension we set these out here:

RECITALS

…

• B. The parties have throughout their cohabitation maintained separateness of ownership of property and neither has any expectation of sharing or having any right or interest in any property owned by the other.

  …

• F. The parties are aware of impending legislation which is likely to provide persons in relationships such as theirs with certain presumed statutory property rights similar to those provided for in the Matrimonial Property Act 1976 to the property of their partner. Both [Dr B] and [Ms C] wish to contract out of and rebut such future provisions and instead define their present and future rights contractually pursuant to this Deed.

• G. The parties wish to record the incidence of property owned by each of them now and in the future.

  …

OPERATIVE PART

• 1. The property owned by the parties shall be divided as follows:

  • 1.1 Land, company shares, bank accounts and all other property in respect of which the incidence of legal title may be recorded in writing shall vest absolutely in that person who at the date of this Agreement has the legal title to that property, provided only that any life assurance policy not expressly described, shall become the separate property of the life assured.

  • 1.2 Each chattel shall vest absolutely in that Party who at the date of this Agreement has possession of that chattel.

  • 1.3 Each other item of property shall remain with the party who is the existing beneficial owner of that property in each case to be determined as if the Parties had never been living together.

• 2. In the event that the parties purchase any property together in the future that property shall be held in the shares in which the parties record the incidence of ownership of that property and failing such record the shares shall be in the proportions in which the parties have contributed in money to the purchase, but such ownership of that property shall have no effect on the ownership of all other property of the parties.

4 Significant reforms renamed the Matrimonial Property Act 1976 the Property (Relationships) Act 1976 (the Act), and extended its application to de facto partners. We address the relevant legislative history of the Act in some detail later, but at this point it is material to observe that the majority of the amendments came into force on 1 February 2002. 3

5 The Act as amended contemplates that spouses or de facto partners may contract out of its provisions. 4 Section 21P of the Act addresses agreements such as the agreement in this case, concluded before the amendments came into force and which deal with the status, ownership or division of the present or future property of

the parties to the agreement. It is common ground that s 21P applies to this particular agreement. Section 21R provides that a s 21P agreement has “effect as if this Act had not been passed.”

High Court judgment

6 The Judge applied the well-settled approach to an application for strike-out as identified in Attorney-General v Prince and Couch v Attorney General. 5 Those principles are not in dispute on this appeal.

7 The Judge said the background circumstances relevant to interpreting the agreement were that the parties were financially independent of each other, had maintained their property as their individual separate property from the outset of their relationship, were aware of the proposed or impending extension of the provisions of the Matrimonial Property Act (as it then was) to de facto couples and wished to avoid that consequence. 6 He said that Dr B in particular was anxious to keep the parties' property separate. 7

8 Against that background he found that the agreement dealt with the ownership of the parties' existing property as at the date of the agreement in cl 1, and also provided for the property the parties might jointly purchase in the future in cl 2. 8 However, he said that the agreement was not comprehensive. 9 It did not address the effect of a number of provisions of the Act. It did not, for example, address the issue of contributions by one or other of the parties to the separate property of the other. The agreement also did not address the situation where one of the parties bought the family home in his or her own name after the date of the agreement. He observed that if that happened, the home would be relationship property...