K v V

• Jurisdiction: New Zealand
• Judge: Collins J
• Judgment Date: 24 May 2012
• Neutral Citation: [2012] NZHC 1129
• Docket Number: CIV-2011-485-002682
• Court: High Court
• Date: 24 May 2012

Under the Property (Relationships) Act 1976

In The Matter Of an appeal against the decision of the Family Court at Wellington

Between

K

Appellant

and

V

Respondent

[2012] NZHC 1129

Collins J

CIV-2011-485-002682

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

Appeal from a Family Court (“FC”) decision which held the parties had not made a relationship property agreement in respect of a farm pursuant to s21P Property (Relationships) Act 1976 (“PRA”) (agreements made before 1 August 2001 between de facto partners) — FC also set aside transfer of an apartment to a family trust by respondent under s44 PRA (dispositions may be set aside) — draft agreement set out ownership and contributions — apartment transferred shortly after announcement that PRA would be extended to de facto couples — whether an agreement had been made under s21P PRA — whether the FC had properly determined the value of farm (value based on use as lifestyle block by parties and not as farm land) — whether appellant had transferred apartment to defeat respondent's rights under the PRA.

Counsel:

R C Laurenson and A Kothroulas for Appellant

T G Stapleton for Respondent

In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 3.00pm on the 24th day of May 2012.

RESERVED JUDGMENT OF Collins J

Collins J

TABLE OF CONTENTS

Introduction	[1]
Background	[4]
Appellant	[7]
Respondent	[9]
Property and assets acquired during the relationship	[10]
Tamana Farm	[11]
Terrace	[12]
Trusts	[14]
The PR business	[16]
Proceedings	[19]
Summary of the Family Court judgment	[21]
Date when the parties' de facto relationship ended	[22]
Was there a relationship property agreement?	[24]
Were there extraordinary circumstances that would make equal sharing repugnant to justice?	[26]
Division of property and assets	[27]
Tamana	[28]
Terrace apartment	[30]
BK Investment Trust	[32]
Balance of BK Family Trust	[33]
KS Communications Ltd	[34]
Miscellaneous assets	[35]
Determining an appeal under the Act	[37]
First ground of appeal: was there a relationship property agreement made pursuant to s 21P of the Act in relation to Tamana?	[41]
Relevant provisions of the Act	[42]
Evidence relevant to the first ground of appeal	[43]
Competing submissions	[44]
Analysis	[49]
Second ground of appeal: what is the true value of Tamana?	[61]
Third ground of appeal: Did the Family Court err when it ordered that the transfer of the apartment to the BK Family Trust be set aside under s 44 of the Act?	[70]
Relevant legislation	[72]
Relevant evidence	[73]
Passage of legislation	[76]
Appellant's evidence	[81]
Cross-examination	[83]
Answers to questions from the Family Court Judge	[86]
Accountant's cross-examination	[88]
Respondent's cross-examination	[90]
Parties' competing positions	[92]
Respondent	[94]
Legal principles applicable to reviewing a lower court's findings of fact	[95]
Why did the appellant transfer the apartment to the BK Family Trust?	[99]
Did the appellant intend to defeat the respondent's claims?	[106]
Conclusions	[115]

Introduction

1 This is an appeal from a decision of the Family Court at Wellington and concerns the parties' respective shares in two properties following the conclusion of their de facto relationship.

2 The issues on appeal have been helpfully refined by counsel for the appellant. There are now three issues which I am required to consider, namely:

• (1) Whether there was in this case a relationship property agreement made pursuant to s 21P of the Property (Relationships) Act 1976 (the Act) in relation to a farm called Tamana.

• (2) Whether the Family Court properly determined the value of Tamana.

• (3) Whether the Family Court erred when it held that the transfer of an apartment to a trust should be set aside under s 44 of the Act.

3 To understand the issues it is necessary to examine:

• (1) the background to the dispute between the parties; and

• (2) the judgment appealed from.

Background

4 The parties met in June 1997 and commenced living together in September that year. A considerable amount of time was spent in the Family Court determining exactly when the parties ceased their de facto relationship. Ultimately the Family Court determined that the parties ceased living together in June 2009. That finding of fact has not been challenged in this Court.

5 At the time the parties started living together the appellant was 57 and the respondent 41. They are now 72 and 56 respectively. There are no children from their relationship.

6 Both the appellant and respondent had been married before they met.

Appellant

7 For a significant portion of his working life the appellant was a public relations consultant. When the appellant commenced living with the respondent he was in a business called KR Public Relations. At that time the business was based in premises which the appellant had purchased in early 1992. Those premises were an office suite in Dixon Street, Wellington.

8 Prior to meeting the respondent the appellant had, in addition to his business interests:

• (1) purchased with his then wife a matrimonial home in Wellington. The appellant estimated that his share in that property was worth approximately $200,000 at the time he and the respondent commenced living together;

• (2) purchased a beach home in Riversdale. He purchased that property from his parents in January 1996;

• (3) made a number of investments which he estimated were worth approximately $150,000 at the time he and the respondent commenced living together;

• (4) had a life insurance policy which was later capitalised;

• (5) owned a 1991 Toyota Camry; and

• (6) owned various chattels.

Respondent

9 The respondent's assets at the time she and the appellant commenced living together comprised:

• (1) various chattels;

• (2) $50,000 from the sale of a property owned by the respondent and her former husband; and

• (3) a 1991 Mazda Astia motor vehicle.

Property and assets acquired during the relationship

10 The parties met in June 1997. At that stage the appellant was still living with his wife in Wellington. The parties' relationship developed quickly. Within approximately three months they were living together in a rented property in Newlands.

Tamana Farm

11 Within a matter of weeks of living together the parties decided to purchase Tamana Farm in the Wairarapa. That farm comprises approximately 31 hectares and is located approximately 37 kilometres east of Masterton and approximately 20 kilometres west of Riversdale. The purchase price was $282,000. The agreement for sale and purchase dated 2 October 1997 was the focus of considerable attention in the Family Court because it recorded the parties' property shares as tenants in common. The appellant's share was recorded as 85 per cent and the respondent's share was recorded as 15 per cent. The settlement of Tamana took place on 28 November 1997. It was common ground that the purchase price was paid by way of a $50,000 contribution from the respondent with the balance coming from the appellant (substantially from his share of the sale of his matrimonial home in Wellington). It was the parties' intention at this time to live at Tamana on the weekends and continue to live in Wellington during the working week. The parties made Tamana their principal home in about March 2001. They also formed a partnership to manage the farm business throughout the time that they managed the farm together.

Terrace apartment

12 In November 1997 the parties commenced looking for a suitable place for them to live in Wellington. In early December 1997 they found an apartment on The Terrace, which they thought was ideal for their purposes. That apartment was purchased by the appellant in March 1998. The respondent made no financial contribution to the purchase of that property. The parties lived at the apartment during the week up until March 2001.

13 The parties moved to Tamana on a fulltime basis in March 2001.

Trusts

14 On 30 March 2000 the appellant formed two trusts:

• (1) BK Family Trust; and

• (2) BK Investment Trust.

15 At the time these trusts were created the apartment was transferred to the BK Family Trust. The apartment was transferred to the BK Family Trust for $260,000 (paid by way of annual deeds of forgiveness of $27,000). The Riversdale property, the premises at Dixon Street and a property which the appellant had purchased for his daughter to live in were transferred to the BK Investment Trust.

The PR business

16 The appellant's PR business underwent changes during the course of the time the appellant and respondent lived together. In early 2000 the business name was changed to KS Communications Ltd and a new company was incorporated using that name.

17 The respondent commenced working at the appellant's PR business in November 1998. She performed a variety of administrative roles for which she was paid an annual salary of $34,199.

18 In March 2001 the appellant's business was moved to Tamana. The appellant and respondent worked together in the business and in developing Tamana. These arrangements continued through to December 2006 when the appellant retired from the business. By this stage the business had lost a major client. Also, by this time the appellant had turned 67. From his perspective it was an appropriate time to retire. The business, however, continued to exist “in name only” during the course of 2007. The respondent continued to be paid her annual...