Melanie Ann Clayton v Mark Arnold Clayton

JurisdictionNew Zealand
JudgeGlazebrook J,Elias CJ
Judgment Date23 March 2016
Neutral Citation[2015] NZSC 30
Docket NumberSC 38/2015
CourtSupreme Court
Date23 March 2016
BETWEEN
Melanie Ann Clayton
Appellant
and
Mark Arnold Clayton
First Respondent
Mark Arnold Clayton and Bryan William Cheshire as Trustees of the Claymark Trust
Second Respondents

[2015] NZSC 30

Court:

Elias CJ, William Young, Glazebrook, Arnold and O'Regan JJ

SC 38/2015

IN THE SUPREME COURT OF NEW ZEALAND

Appeal from a Court of Appeal decision which held a trust was not a nuptial settlement and therefore that no order under 182 Family Proceedings Act 1980 (“FPA”) (Court may make orders as to settled property) or s44C Property (Relationships) Act 1976 (“PRA”) (compensation for property disposed of to trust) should be made as the trust was created for business purposes, the appellant had no expectation of acquiring an interest in business assets and there was a pre-nuptial agreement specifically excluding the appellant from claiming a share in her husband's business interests — whether the trust was a nuptial settlement — whether there should have been orders made with regard to the trust under s182 FPA and s44C PRA — definition of “settlement”.

Counsel:

D A T Chambers QC and J R Hosking for Applicant

  • A The appeal is allowed

  • B There is no order of costs.

JUDGMENT OF THE COURT
REASONS

(Given by Glazebrook J)

Table of Contents

Para No

Introduction

[1]

Section 182

[4]

Factual Background

[7]

Claymark Trust

[7]

Trust assets

[13]

Trust financing

[16]

Distributions from the Trust

[19]

Decisions below

[21]

Family Court

[21]

High Court

[24]

Court of Appeal

[26]

Preliminary Point

[27]

Nuptial settlement

[31]

What is a nuptial settlement?

[31]

Is the Claymark Trust a nuptial settlement?

[39]

Discretion

[43]

This Court's decision in Ward

[44]

Factors to be considered

[57]

Effect of ss 44 and 44C

[61]

Did the courts below apply the proper approach?

[69]

Should the discretion have been exercised?

[75]

Summary

[85]

Nuptial trust

[85]

Discretion

[89]

Other issues

[91]

Result

[93]

Introduction
1

Mr and Mrs Clayton began a de facto relationship in 1986. They married in 1989, separated in December 2006 and the marriage was dissolved in 2009. They have two adult daughters. The Court of Appeal dealt with various appeals by Mr and Mrs Clayton and associated parties with regard to various trust and relationship property issues arising out of the marriage breakdown. 1

2

On 18 June 2015, leave to appeal from part of that judgment was granted by this Court to both Mr Clayton and Mrs Clayton. 2 The appeal by Mr Clayton has been dealt with in a judgment to be released on the same date as this judgment. 3

3

This judgment deals with the appeal by Mrs Clayton and concerns two issues: first, whether, as regards the Claymark Trust (the Trust), the Court of Appeal was correct in its interpretation and application of s 182 of the Family Proceedings Act 1980; and secondly, whether the Court of Appeal was correct not to make an order under s 44C of the Property (Relationships) Act 1976.

Section 182
4

The first issue is whether there should have been an order made with regard to the Trust under s 182 of the Family Proceedings Act 1980. That section provides:

182 Court may make orders as to settled property, etc
  • (1) On, or within a reasonable time after, the making of an order under Part 4 of this Act or a final decree under Part 2 or Part 4 of the Matrimonial Proceedings Act 1963, 4 a Family Court may inquire into the existence of any agreement between the parties to the marriage or civil union for the payment of maintenance or relating to the property of the parties or either of them, or any ante-nuptial or post-nuptial settlement made on the parties, and may make such orders with reference to the application of the whole or any part of any property settled or the variation of the terms of any such agreement or settlement, either for the benefit of the children of the marriage or civil union or of the parties to the marriage or civil union or either of them, as the Court thinks fit.

  • (2) Where an order under Part 4 of this Act, or a final decree under Part 2 or Part 4 of the Matrimonial Proceedings Act 1963, has been made and the parties have entered into an agreement for the payment

    of maintenance, a Family Court may at any time, on the application of either party or of the personal representative of the party liable for the payments under the agreement, cancel or vary the agreement or remit any arrears due under the agreement.
  • (3) In the exercise of its discretion under this section, the Court may take into account the circumstances of the parties and any change in those circumstances since the date of the agreement or settlement and any other matters which the Court considers relevant.

  • (4) The Court may exercise the powers conferred by this section, notwithstanding that there are no children of the marriage or civil union.

  • (5) An order made under this section may from time to time be reviewed by the court on the application of either party to the marriage or civil union or of either party's personal representative.

  • (6) Notwithstanding subsections (1) to (5) of this section, the Court shall not exercise its powers under this section so as to defeat or vary any agreement, entered into under Part 6 of the Property (Relationships) Act 1976, between the parties to the marriage or civil union unless it is of the opinion that the interests of any child of the marriage or civil union so require.

5

Section 182 has a long history. It can be traced back to s 37 of the Divorce and Matrimonial Causes Act 1867, which in turn was based on English legislation enacted in 1859. 5 It then became s 37 of the Divorce and Matrimonial Causes Act 1928 and s 79 of the Matrimonial Proceedings Act 1963, the immediate predecessor of s 182. The Matrimonial Proceedings Act came into force at the same time as the Matrimonial Property Act 1963.

6

Section 79 of the Matrimonial Proceedings Act was retained when the equal sharing regime in the Matrimonial Property Act 1976 was introduced. The only change was to insert s 79(5) of the Matrimonial Proceedings Act, the equivalent of s 182(6). Section 79 became what is now s 182 of the Family Proceedings Act in 1980. Section 182 was not amended when the Matrimonial Property Act was renamed the Property (Relationships) Act in 2001. 6 It was amended in 2005 to extend its coverage to civil unions, at the same time as the Property (Relationships) Act was extended to the same effect. 7

Factual background
Claymark Trust
7

The Trust was settled on 10 May 1994 just after the birth of Mr and Mrs Clayton's second child. Mr Clayton was the settlor. The original trustees were Mr Clayton, Kim Thompson (an accountant) and Richard Pryce (a solicitor). The power to appoint and remove trustees rests in the settlor, Mr Clayton. The current trustees of the Trust are Messrs Clayton and Cheshire, the second respondents in this appeal (the Trustees). Mrs Clayton's evidence (which does not appear to be disputed) was that she was responsible for keeping the ledger book of the Trust and communicating with third parties on behalf of the Trust until 2003.

8

The Trust is a discretionary trust, with the beneficiaries being the settlor, his wife, any former wife and his widow, together with any children of the settlor, grandchildren of the settlor and their spouses. 8 The Trustees are entitled to add “[a]ny other persons, corporations, trusts or other entities” as beneficiaries and to benefit any charitable, educational or religious organisations or purposes. The Trustees have the power to exclude any person as a discretionary beneficiary for such period as they determine.

9

Both income and capital can be paid out or applied to the “maintenance, education, advancement, well being or benefit in any way” of one or more of the discretionary beneficiaries at the Trustees' discretion. 9 The Trust can (either wholly or partly) also be resettled for the benefit of any of the beneficiaries. 10 Any capital or income remaining at the distribution date 11 is for the benefit of the final beneficiaries, being the children of the settlor. 12

10

There was evidence from Mr Cheshire, an accountant who helped Mr Clayton “identify and manage risk”, 13 that the primary purpose of the Trust was to keep “assets out of the circle of bank guarantees”, which had been required for the financing of various companies in the Claymark Group. There was also evidence to suggest that the secondary purpose of the Trust was to provide a buffer zone for resource consent purposes by acquiring property surrounding the Claymark Sawmill in Katikati. 14

11

The accounts for the period between the Trust's inception and 1999 were not in evidence before the Family Court. The accounts for the years 2000 to 2007 and 2009 to 2011 were in evidence, as were the Trust's tax returns for the years 2000 to 2004. 15 No minutes or resolutions of the Trustees of the Trust were produced.

12

Judge Adams in 2008, when dealing with discovery issues in the Family Court, said that Mr Clayton should identify the assets he owned when the de facto relationship began and prove how and to what extent they can be traced into existing assets. The Judge said that, to the extent Mr Clayton does not do this, assets will be deemed not to have been acquired out of separate property. 16

Trust assets
13

The properties owned by the Trust adjacent to...

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1 cases
  • Mccarthy v Mcmanamon
    • New Zealand
    • High Court
    • 26 Febrero 2021
    ...albeit not conclusive indicator of meaning.70 65 66 67 68 69 70 Family Proceedings Act 1980, pt 4. Clayton v Clayton (Claymark Trust) [2015] NZSC 30 [“Claymark Trust”] at At [31]–[36]. At [38]. Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]. At [6......

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