Scott v Williams

• Jurisdiction: New Zealand
• Judge: Kós J
• Judgment Date: 29 July 2016
• Neutral Citation: [2016] NZCA 356
• Docket Number: CA58/2015
• Court: Court of Appeal
• Date: 29 July 2016

Between

Scott

Appellant

and

Williams

Respondent

[2016] NZCA 356

Court:

Ellen France P, Harrison and Kós JJ

CA58/2015

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against a High Court (HC) decision concerning division of property under the Property (Relationships) Act 1976 (PRA) and maintenance under the Family Proceedings Act 1980 (FPA) — the parties married in 1981 and separated in 2007 after 25 years' marriage — the respondent had a successful law firm — the HC overturned a vesting order in the Family Court (“FC”) and ordered the properties to be sold, reduced the FC award for economic disparity under s15 PRA from $850,000 to $280,000 and rejected a claim for spousal maintenance — whether the HC erred in ordering sale of the properties — whether the facts justified any adjustment having regard to the provisions of s 2G PRA — what quantum should awarded under s15 PRA (Court may award lump sum payments or order transfer of property) on grounds of economic disparity — whether the appellant was entitled to spousal maintenance under s64 FPA (maintenance after marriage or civil union dissolved or de facto relationship ends) — the parties names were anonymised.

Counsel:

Appellant in person

S L Robertson for Respondent

A The appeal is allowed in part. The quantum of compensation payable under s 15 of the Property (Relationships) Act 1976 is increased from $280,000 to $470,000.

B The appeal otherwise is dismissed.

C No order for costs is made in this Court.

JUDGMENT OF THE COURT

Table of Contents

Background	[3]
Outcome below	[9]
Leave for second appeal in relationship property cases	[10]
Orders for sale	[15]
Judgments below	[16]
Did the High Court err in ordering sale of the Remuera properties?	[21]
Do the facts justify any adjustment having regard to the provisions of s 2G of the Property (Relationships) Act 1976?	[35]
Valuation of legal practice	[44]
Judgments below	[44]
Was the High Court determination that the legal practice interest of the appellant had a value of $300,000, correct?	[52]
Section 15 award	[60]
Judgments below	[61]
Appeal	[76]
Should an order allocating a share of super profits from separation date to hearing date be taken into account in fixing compensation for this period?	[79]
Should any award be reduced having regard to a change in the non-claiming party's position brought about by retirement?	[95]
Was the High Court in error in the actual calculation undertaken for super profits because it did not take into account a contingency or present value discount?	[101]
Is an enhancement award justified in this case?	[103]
What considerations should a court take into account in fixing a percentage of property as the basis for a s 15 award?	[112]
Maintenance	[114]
Judgments below	[114]
If a share of super profits is awarded, should that be taken into consideration when determining a party's obligation to maintain and the other partner's entitlement to maintenance?	[120]
Summary	[129]
Costs	[130]
Result	[133]

REASONS OF THE COURT

(Given by Kós J)

Ms Scott and Mr Williams separated in June 2007 after 25 years' marriage. Nine years later they are still embroiled in a relationship property dispute. Most issues have now been resolved in the Family Court 1 and High Court. 2 But Ms Scott was

granted leave by the High Court 3 to appeal against four aspects of the High Court judgment

• (a) the correct valuation of Mr Williams' partnership interest in a law firm;

• (b) whether there should have been an order that the family home be sold;

• (c) the quantum of an award in Ms Scott's favour under s 15 of the Property (Relationships) Act 1976 (PRA) on grounds of economic disparity; and

• (d) whether Mr Williams was obliged to pay Ms Scott maintenance under the provisions of the Family Proceedings Act 1980 (FPA).

2 This judgment anonymises the parties. We are satisfied good reasons exist to maintain the anonymisation directed in the courts below. Essentially that is because of some of the content of the earlier judgments.

Background

3 The parties married in 1981. Mr Williams is a lawyer, currently aged in his early 60s. He started his own practice in the 1980s. The practice prospered. He eventually merged with another practitioner to form a successful two-partner firm.

4 Ms Scott, now aged in her mid-50s, trained and worked initially as an accountant. She resigned from that work in 1984. She studied for a law degree, graduated in 1988, and commenced employment with a law firm.

5 The couple had children in 1990 and 1992. The second child was unwell and required extensive treatment and hospitalisation on several occasions. Ms Scott became primary caregiver and homemaker. She supported Mr Williams' practice by providing accounting services and legal opinions. Ms Scott recommenced work as

an accountant in 2001 for about a year. She continued to assist her husband with accounting for his firm

6 The parties separated in 2007, and their marriage was dissolved in 2010.

7 At the time of separation the parties had the following assets:

• (a) two properties in Remuera, one containing the family home and the other an adjoining empty section;

• (b) commercial property interests in Auckland;

• (c) a beach house at Omaha, a half share in a Fiji property, and another property;

• (d) Mr Williams' interest in the law firm; and

• (e) other personal assets including chattels, vehicles, life insurance policies and cash.

8 The present appeal, as it relates to specific items of property, concerns (a) and (d). The s 15 claim is for the relationship property generally.

Outcome below

9 It is convenient to consider the judgments of Judge McHardy and Faire J together when we address the issues that confront us on this appeal. But the final outcome in the High Court (compared with that in the Family Court) may be summarised now:

• (a) The Remuera properties were to be sold and the proceeds divided between the parties (rather than vesting in Ms Scott at an adjudicated 2013 value of $4.4 million).

• (b) Mr Williams' interest in the law firm was reduced to $300,000 (from $450,000) and Ms Scott was entitled to half of that.

• (c) The Family Court's calculation of the super profits derived from Mr Williams' interest in the law firm was confirmed. 4 Ms Scott was entitled to $546,500. This is not now challenged on appeal.

• (d) The s 15 economic disparity award was reduced from $850,000 to $280,000.

• (e) The Family Court's maintenance award (of $42,032 in respect of unpaid rates for the Remuera properties) was not challenged on appeal by Mr Williams. Ms Scott's cross-appeal claiming further maintenance failed.

Leave for second appeal in relationship property cases

10 Both parties applied for leave to appeal various aspects of the High Court decision, both in the High Court and then in this Court. Leave to bring a second appeal was granted by Faire J in the High Court only on the following questions:

Orders for sale

• (a) Did the High Court err in ordering sale of the Remuera properties?

• (b) Do the facts justify any adjustment having regard to the provisions of s 2G of the Property (Relationships) Act 1976?

  Valuation of legal practice

• (c) Was the High Court determination that the legal practice interest of the appellant had a value of $300,000, correct?

  Section 15 award

• (d) Should an order allocating a share of super profits from separation date to hearing date be taken into account in fixing compensation for this period?

• (e) Should any award be reduced having regard to a change in the non-claiming party's position brought about by retirement?

• (f) Was the High Court in error in the actual calculation undertaken for super profits because it did not take into account a contingency or present value discount? 5

• (g) Is an enhancement award justified in this case?

• (h) What considerations should a court take into account in fixing a percentage of property as the basis for a s 15 award?

  Maintenance

• (i) If a share of super profits is awarded, should that be taken into consideration when determining a party's obligation to maintain and the other partner's entitlement to maintenance?

11 Section 39B of the PRA permits a second appeal, to this Court, by leave only. In Waller v Hider, a relationship property appeal, this Court observed that in such cases a single appeal must usually suffice. 6 As Blanchard J noted: 7

Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.

When the disputed matter is entirely or largely a question of fact the task of the applicant under s 67 [of the Judicature Act 1908] is harder. An issue of fact in a matter falling within the jurisdiction of an inferior Court will seldom be of public importance. It is better that we make no attempt to define the circumstances in which a factual context can be taken to have private importance but obviously it may do so if the amount at stake is very substantial or the decision reflects seriously on the character or conduct of the would-be appellant or, as in Cuff, the judgment below has special consequences (for example, bankruptcy) for the losing party. Even then, however, leave cannot be anticipated if the applicant is seeking to disturb concurrent findings of fact in the lower Courts.

12 An “intensely factual inquiry” will not therefore generally be appropriate for a second appeal. 8 However where findings...