Hodson v Hodson Hc Nap
| Jurisdiction | New Zealand |
| Judgment Date | 06 December 2011 |
| Neutral Citation | [2011] NZHC 1959 |
| Date | 06 December 2011 |
| Docket Number | CIV-2011-441-618 |
| Court | High Court |
[2011] NZHC 1959
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
CIV-2011-441-618
A J Davies with N J Booth for Appellant
C M Hickman and for Respondent
Introduction
The Hodsons 1 married in February 2001, and separated in August 2010. Thereafter Mrs Hodson and the couple?s two children occupied the family home. But in January 2011 they moved out, into rented accommodation. Mr Hodson moved back into the family home. Mrs Hodson has limited capacity 2 to earn a living. She is on a domestic purposes benefit. Mr Hodson, on the other hand, is head of a large family-owned business. In May 2011 Mrs Hodson applied for an interim maintenance order under s 82 of the Family Proceedings Act 1980 (the Act). A Family Court Judge granted those orders on 16 September 2011. He ordered
Mr Hodson pay maintenance of $770 a week, for six months. Mr Hodson now appeals.The appeal raises these issues:
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a) In calculating Mrs Hodson?s reasonable needs, should the Judge have included an allowance for legal expenses, given that she is legally aided? ( Issue 1).
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(b) Likewise, should the Judge have excluded Mrs Hodson?s domestic purposes benefit receipts in assessing her means to support herself? ( Issue 2).
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(c) Did the Judge omit consideration of relevant factors, or take into account irrelevant factors, in assessing Mr Hodson?s capacity to meet an interim maintenance order of this amount? ( Issue 3).
There are some subsidiary issues also requiring analysis.
Facts
The parties began living together in 1999 and married in 2001. They have two children, now aged 7 and 9. Mr Hodson is a successful businessman. He holds minority interests in a number of companies. The majority shareholders are family trusts. Mr Hodson is (in most, if not all, cases) a discretionary beneficiary of these trusts. During the marriage these trusts and companies contributed substantially to the family income. The parties? joint lifestyle was described as “lavish”. Mrs Hodson?s clothing budget was “easily” $15,000 per annum. 3 Hair stylists and beautician?s bills accounted for another $4,000. Joint gym and health club memberships were another $10,000. Following these expensive physical exertions, entertainment consumed another $20,000.
Now, all that is done for. Mrs Hodson lives in rented accommodation. She has no car, Mr Hodson having had the family car towed away. She has to borrow a vehicle from her daughter by a previous marriage. She earns $173 a week from part-time work. She is on the domestic purposes benefit, which provides her with $376 a week. Allowing also for family tax credits, her total weekly income is $773.
Mrs Hodson?s post-separation, pared-back living expenses are $1,310 per week. This includes some expenditure on the children, 4 including half of their school fees. 5 I exclude from this total a further $150 per week budgeted for legal expenses. 6 The budgeted costs include $96 per week for clothing for Mrs Hodson and her children, $10 a week for her own entertainment, $11 a week for bus fares, and so forth. It is the antithesis of a “lavish” budget. It is chalk to the cheese of the lifestyle Mrs Hodson used to enjoy during the marriage.
Mrs Hodson sought interim spousal maintenance for six months of $1,500 per week. 7 Mr Hodson opposed. The essence of his position was that he has suffered significant economic reversals of his own. There is something of a “Four Yorkshiremen” 8 argument going on between the parties here, as Mr Hodson?s evidence competed with that of his wife for reduction in circumstance. Neither of them, it seems, has been lucky. Mr Hodson claims his income is now no more than $44,000 per annum. Little more than his wife?s, in fact. He says that he draws just $400 per week from the business interests he runs. But it did not escape the Judge?s?s attention that, whereas Mrs Hodson has to borrow a car from her daughter, Mr Hodson has the use of a new $137,000 Audi Q7 motor vehicle supplied by one of the family trust-owned companies. So to that extent at least, Mr Hodson?s vantage point in middle of road is somewhat better than Mrs Hodson?s.
The Family Court?s order required payments of maintenance to commence on 23 September 2011. In appealing that order, Mr Hodson first sought a stay of the payment regime. That application was refused by MacKenzie J on 19 October 2011. Despite that refusal, Mr Hodson made no payments to Mrs Hodson. By the time the matter came before me, his arrears stood at $6,930. I would not entertain the appeal unless Mr Hodson complied with the Family Court?s order. I made an order requiring him to pay the sum of $20,000 9 into the trust account of Willis Toomey Robinson no later than 1 December 2011. These funds are to be disbursed by the solicitors to Mrs Hodson in accordance with the Family Court?s order (as varied, if varied, by this Court).
Judge Callinicos directed himself to the leading Court of Appeal authority, Ropiha v Ropiha. 10 He noted that the discretion under s 82 is unfettered as to whether an order should be made, and as to quantum. The Judge noted that factors applying to final maintenance applications under ss 62 to 66 of the Act may be considered. But the Court is not bound to consider them. 11 Key factors identified as requiring consideration under s 82 were:
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(a) the reasonable needs of the applicant over the period for which the order would subsist;
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(b) the means likely to be available to the applicant to meet those needs herself;
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(c) the respondent?s reasonable means to meet any shortfall.
The Judge noted that the pared-back $1,310 per week budget 12 was reasonable, and “quite modest” in a number of respects. 13 The Judge concluded that the applicant's reasonable needs should not be set at a level so distant from that enjoyed during the marriage, that there would be a “sudden or traumatic end to that lifestyle, even if that is what the respondent might wish to occur”. The Judge concluded that reasonable needs for a standard of living comparable to that adopted by the couple would be approximately $50,000 for a six month period. 14 However, he then discounted that amount to $30,000 as he noted that “an unquantifiable portion of those needs were provided by third party entities”. That is, presumably, a reference to the family trusts and companies. The Judge felt he needed to discount Mrs Hodson's needs to “reflect, in some way, a proportion which might be attributable to assets or income of a relationship nature”. Given the state of the evidence, this had to be “somewhat arbitrary”.
It is not immediately apparent to me how the Judge concluded that source affected need. The availability of payments from family trusts might affect Mrs Hodson's means — to the extent that further payments are, if at all, “reasonably assured” — and Mr Hodson's ability to pay. I will return to this point later. 15
But the Judge concluded this:
Against that background I have determined that an approximate cost of her reasonable needs over a six month period would equate to $30,000.
So Mrs Hodson's reasonable needs were $30,000. At $1,310 per week, her pared-back budget would equate to $34,000 for that period. So still more paring back would be needed.
As to whether legal expenses should be included in Mrs Hodson?s needs, the Judge considered the Court of Appeal decision in C v G. 16 He noted that the parties
were “embroiled in a wide range of proceedings in addition to the interim maintenance application”. Care of Children Act proceedings were live. Relationship property proceedings were likely to commence shortly. The Judge concluded it was highly probable that legal costs would be an ongoing component of the parties? respective lives. The Judge said:Following C v G, in the circumstances of the case I determine that for the foreseeable future legal costs will be an on-going expense. That being the case, the applicant is entitled to include $8,000 per annum as anticipated legal costs. As it is unlikely her on-going costs will be free of legal aid charge, that will be a real expense for her. Such expenses are ones that I take into account under the unfettered discretion in s 82.
If allowance were made for legal costs in addition to the pared-back budget noted at [12], then Mrs Hodson?s budget would become $38,000 for the six month period. But the Judge allowed only $30,000 in any event.
The Judge asked himself what sums could reasonably be expected to be earned by Mrs Hodson from her own efforts during the six month period, along with other funds available or likely to be available during that period. The Judge determined that income derived by Mrs Hodson from the domestic purposes benefit should be excluded. He did this in reliance on the decision of the Court of Appeal in Ropiha v Ropiha17 and the decision of Rodney Hansen J in KMR v CMR. 18 He noted however, that in the same proceeding, Harrison J had earlier concluded that the domestic purposes benefit should not be excluded from the applicant?s available means. 19 Given choice, Judge Callinicos preferred to follow the decision of Rodney Hansen J.
Excluding the domestic purposes benefit, Mrs Hodson?s likely income for the six month period (based on part time work and tax credit income) amounted to $10,300. That was approximately $20,000 short of the reasonable needs assessed by the Judge.
The Judge then turned to Mr Hodson?s earnings and capacity. He noted:
[43] As a preliminary observation, the respondent appears to have organised his affairs in a way that has left him devoid of assets upon which a lifestyle could be sustained. In addition,...
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