Gfm v Jam

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeWild
Judgment Date17 December 2013
Neutral Citation[2013] NZCA 660
Date17 December 2013
Docket NumberCA566/2012

[2013] NZCA 660

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Randerson, Stevens and Wild JJ

CA566/2012

Between
GFM
Appellant
and
JAM
Respondent
Counsel:

M J McCartney QC for Appellant

M W Vickerman and Z L Wackenier for Respondent

Appeal from a High Court (“HC”) decision which had valued the parties’ relationship property at the date of hearing in the Family Court (“FC”) instead of at separation date values as adopted by the FC — parties owned family home valued at $1.5m and three businesses valued at $1.7m at date of separation — at date of hearing agreed business assets were $970,000 and the house was valued by wife at $1.3m and by husband at $1.8m — husband had also acquired assets post separation — whether the presumption for hearing date in s2G Property (Relationships) Act 1976 (“PRA”) (date at which value of property to be determined) had been rebutted — whether losses had to be incurred deliberately under s18C PRA (compensation for dissipation of relationship property after separation) — whether the HC erred in dividing post-separation losses equally and in not taking into account the value of assets acquired post-separation — whether parties had reached an enforceable informal agreement regarding the relationship property.

Held: Section 2G PRA (date at which value of property to be determined) contained a presumption rather than giving an open discretion. There was a discretion to depart from that presumption, but it was a fettered one.

The following summarised the current position of s2G PRA and s18C PRA;

  • • Overall aim: the Court's overall aim should be to achieve a just division of relationship property between the parties having regard to the purposes and principles of the PRA;

  • • Presumption: the presumption under s2G PRA was been for valuation at the date of hearing. That presumption was strengthened by the introduction of s18B PRA (compensation for contributions made after separation) and s18C PRA;

  • • Basis for s2G(1) presumption: the presumption reflected the basic premise of the PRA that parties shared equally in the “product” of the relationship, and that the value of that product was to be assessed by the court at contemporary and not historic values to achieve equal sharing;

  • • Onus: the onus of persuading the Court to depart from the default or presumptive position in s2G(1) PRA rested on the party contending for a different valuation date;

  • • Use of s18B and s18C rather than the s2G discretion: s2G PRA was not expressly subject to s18B PRA and s18C PRA. Nevertheless, where a court desired to attribute to one party the benefits or losses that party had brought about post-separation, that was “more directly” achieved under s18B PRA and s18C PRA respectively, and there was less need than in the past to depart from the default position of hearing date valuation.

Where, prior to division of relationship property, a party continued to deal with that property with no intention to diminish its value, it would be unjust that s18C operated to penalise that party. That result would not accord with the aim of a just division of relationship property. The purpose of s18C(2) was to give the court a discretion to compensate a party whose spouse or partner had deliberately diminished the value of relationship property by actions or inaction during the period between separation and first instance hearing. The actions or inaction had to be deliberate and had to be done with the intention of diminishing the value of the relevant property for s18C(2) to become operative.

When the parties separated they had remained entangled in their jointly owned business interests. It was not until a year and eight months after separation that all those businesses were either sold or ceased trading. This was not an unreasonable length of time in the circumstances. An immediate, clean break with all the parties’ assets valued at the point of separation, was simply at odds with the reality of their situation.

There was no justification for departing from the s2G(1) PRA presumption of hearing date values. The separation date values adopted by the FC had resulted in an unjust division of the parties’ relationship property. If adjustment were required for the losses incurred post-separation by the parties’ businesses, then s18C PRA was the appropriate mechanism. It was not reasonable for JAM to bear all the post-separation business losses.

The evidence did not support the conclusion that JAM had deliberately incurred the post separation losses. These were the result of poor market conditions and bad business decisions.

Section 21F(1) PRA (agreement void unless complies with certain requirements) aimed to ensure that agreements were clear and just to the parties. The informal agreement contended for had not complied with s21F(1) PRA (must be in writing, signed by both parties and witness and certified by a lawyer). JAM's application for equal division of all the parties’ relationship property was inconsistent with the asserted informal agreement. Equally inconsistent was GFM's application for an interim injunction restraining JAM from dealing with the parties’ businesses and her application for interim maintenance where she had been critical of JAM's post-separation taking “de facto control of all income earning businesses comprising the relationship property”.

The underlying premise of the informal agreement or promise was that it would produce equality, but GFM's proposition had not contained within it the necessary alternative that, if in the end the businesses were worth less than the home, JAM would be entitled to a share of the home. GFM had only asserted the existence of the informal agreement four years after separation.

The family home would undoubtedly have increased in value since the hearing in the FC and on appeal in the HC. It was a substantial family home in a desirable inner suburb of Auckland. That increase in value was passive. It was the result of the rising Auckland property market, not the endeavours of either party. It would be unjust if the windfall of that increase in value accrued wholly to GFM who had had the benefit of living in the home rent free since the parties separated.

Racehorses had not featured in the HC's judgment so could not be a point on appeal. GFM was attempting to re-litigate the FC's finding by the side wind of arguing that the alleged value of the husband's racehorse interests made a hearing date valuation unfair.

Appeal dismissed.

JUDGMENT OF THE COURT
  • A The appeal is dismissed.

  • B Orders are made in respect of the former family home as set out in [119] of the judgment.

  • C The costs of the appeal are reserved on the terms set out in [135].

REASONS OF THE COURT

(Given by Wild J)

Table of Contents

Para No

Introduction

[1]

Background

[3]

Other issues

[11]

High Court's approach to the appeal

[13]

Approach on this second appeal

[19]

Second memorandum of counsel for the wife

[25]

Hearing date values

The issue

[29]

Sections 2G and 18C of the Property (Relationships) Act 1976

[30]

The High Court judgment

[36]

Wife's submissions on appeal

[45]

Our decision

[51]

Post-separation business losses

The issue

[54]

The High Court judgment

[55]

Wife's submissions on appeal

[59]

Our decision

[62]

Separation agreement about relationship property

The issue

[89]

Legislation

[91]

The High Court judgment

[93]

Wife's submissions on appeal

[101]

Our decision

[106]

Sale of family home

The issue

[111]

The High Court's orders

[112]

Submissions for wife on appeal

[113]

Our decision

[114]

Assets acquired post-separation

The issue

[120]

Tax losses

[122]

Racehorses

[130]

Result

[134]

Introduction
1

The primary issue on this second appeal is whether the High Court erred in valuing the parties' relationship property at the date the proceeding was heard in the Family Court. In adopting hearing date values the High Court differed from the separation date values selected by the Family Court.

2

This appeal is pursuant to leave granted by Woodhouse J, in a judgment he gave on 17 August 2012, 1 to appeal his substantive judgment of 3 May 2012. 2 That judgment had reversed a decision of Judge Burns given in the Family Court on 4 November 2010. 3

Background
3

The parties married in 1985 and separated on 2 October 2004. When the parties separated, their three children were aged 11, nine and seven. Two had significant health problems. 4

4

Upon separation the husband moved out of the family home. The wife and children have remained living in the home ever since.

5

From the time of the birth of the parties' second child, the wife's role was that of mother and “home maker”. The husband was a businessman. In 1987 he set up a company called Video Unlimited NZ Ltd (VUL). The parties were equal shareholders in VUL, the husband the sole director. A particularly valuable asset of VUL was a licence from the World Wrestling Federation (WWF) for the exclusive rights to distribute its videos in Australasia. VUL's profits were the source of most of the parties' asset base when they separated.

6

During the marriage four other companies of relevance to this proceeding were formed. Tandem Investments Ltd owned a video shop in Christchurch and also sold library rentals. Video Busters Ltd owned a residential investment property next door to the family home in Auckland. Entertainment Properties...

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3 cases
  • Hayward v Commissioner of Police
    • New Zealand
    • Court of Appeal
    • 18 December 2014
    ...n 1, at [105]. 13 At [105]. 14 At [106]–[111]. 15 Footnote omitted. 16 PRA, ss 1M and 1N; Clark v Clark [1987] 2 NZLR 385 (CA) at 386; GFM v JAM [2013] NZCA 660, [2014] NZFLR 418 and see Robert Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at ......
  • Scott v Williams
    • New Zealand
    • Court of Appeal
    • 29 July 2016
    ...from the whole increase post-hearing accruing to her. The Judge followed (and declined to distinguish) the decision of this Court in GFM v JAM. 13 The reasons why Ms Scott should retain the properties — disruption to her business, preserving her connection with the properties, preserving th......
  • Thompson v Thompson and Others
    • New Zealand
    • Court of Appeal
    • 8 April 2014
    ...9( 5) and 17. 53 Robert Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [16.3]. 54 See GFM v JAM [2013] NZCA 660 at [35]; Application for leave to appeal to the Supreme Court was recently declined in GFM v JAM [2014] NZSC 32. The principle is......

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