C v B

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeWinkelmann J
Judgment Date09 September 2015
Neutral Citation[2015] NZCA 421
Date09 September 2015
Docket NumberCA297/2014

[2015] NZCA 421

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Randerson, Wild and Winkelmann JJ

CA297/2014

Between
C
Appellant
and
B
Respondent
Counsel:

D R I Gay for Appellant

J H Hunter for Respondent

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.

The issues were: whether the agreement should be given a wide-scope interpretation so that it provided “a code” for the parties' property rights; and 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..

Held: The approach to interpretation of contracts in general governed the interpretation of agreements for the purposes of the PRA. In line with this approach, text of the operative clauses supported the Judge's interpretation. The whole of cl 1, of which cl 1.3 formed part, was prefaced with the present tense statement “the property owned by the parties shall be divided as follows”, suggesting that cl 1 addressed the rights of the parties to property owned by the parties as at the date of the agreement, and not in the future. If it had been intended to regulate the parties' entitlement to property acquired in the future, it could be expected that there would be express reference to that. The structure of cl 1 provided strong support for the conclusion that it was directed to providing for three categories of existing property, leaving the work in respect of future property to cl 2.

The relevant context for the purposes of interpreting the provisions of the agreement was as identified by the HC.

The legislative history was relevant. The impact of the proposed legislative regime for property sharing was a critical aspect of the background to the agreement. When the the De Facto Relationships (Property) Bill was first introduced the presumption of equal sharing was only to apply to the family home and chattels. Shares in the remainder of the relationship property were to be determined by reference to the parties' contribution to the relationship. There was also provision to allow parties to keep property separate, so it did not become relationship property. The resulting legislation was quite different and provided that all relationship property was to be divided equally, unless there were extraordinary circumstances which make equal sharing repugnant to justice.

When entering into the agreement, the Bill the parties had in mind created a statutory presumption for equal sharing only in respect of the relationship home and chattels. Although it contained other property sharing rules, there were no other statutory presumptions. If the parties had then intended to create a code for their property rights, displacing any statutory sharing regime, then the parties would have used language which conveyed that intention. They had not done so.

Dr B also argued that conduct by the parties after the agreement was entered into was relevant to its construction, because on his case it was conduct consistent with his wide-scope interpretation. Extrinsic evidence of pre-contract and post-contract conduct: was admissible if it tended to establish facts or circumstances capable of demonstrating objectively what meaning both parties intended their words to bear (Vector Gas Ltd v Bay of Plenty Energy Ltd). In this case, how the parties treated property during their relationship was not good evidence of the proper interpretation of the agreement. It was common ground that the agreement was entered into in anticipation of legislation that would regulate the allocation of their assets on separation. In the context of an ongoing relationship the parties were free to deal with their property as they saw fit.

The text, when considered in light of the context in which the agreement was made, did not support a wide-scope interpretation. The agreement had not excluded all claims under the PRA.

As noted by the HC, the parties had failed to address what was to happen if, for example, one of them applied their separate property to increase the value of what otherwise would have been relationship property or made contributions to the separate property of the other in terms of s 17A PRA. Section 21R PRA did not prevent a claim under the PRA in respect of such issues. The expression “as if this Act had never been passed” in s 21R meant no more than that agreements under s 21P that were valid and capable of enforcement before 1 August 2001 had effect despite the amending legislation. The validity of s21P agreements did not therefore depend on compliance with the formal requirements of the Act. Section 21R did not however mean that any property dealt with under an agreement constituted some third category of property, beyond the reach of the PRA. The issue was whether, as a matter of contractual interpretation, the agreement displaced the operation of the Act.

Where the agreement did not by its terms, expressly or by necessary implication, displace the operation of particular statutory rules, those rules applied. The agreement had not created a comprehensive regime for sharing of existing and future property. It was not an issue of fairness in that the parties could not have foreseen the final consequences of the legislation but one of contractual interpretation. It had always open to the parties to revisit the terms of the agreement once the final form of the statutory regime was known. It was for the HC to determine in light of the judgment the nature of any claims C might still have available under the PRA.

Appeal dismissed.

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...

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1 cases
  • Montgomerie v Montgomerie
    • New Zealand
    • Court of Appeal
    • 28 January 2020
    ...above n 2, at [74]. 17 See Mackenzie v Duke of Devonshire [1896] AC 400 (HL) at 407 per Lord Watson; cited in Moor v Marston [2015] NZCA 421, [2015] NZFLR 863 at 18 For the record, we note Mr Templeton's submission that common sense should only justify a particular reading of a contract wh......

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