Tab v Gjh Fc Chch

 
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IN THE FAMILY COURT AT CHRISTCHURCH

FAM-2008-009-003631

BETWEEN
TAB
Applicant
and
GJH
Respondent
Counsel:

P C Maciaszek for Applicant

D H Dawson for Respondent

Application for orders settling outstanding issues between parties as to division of relationship property — consideration of whether property sharing agreement ought to be set aside on ground(s) of duress, undue influence and/or unconscionable bargain — consideration of whether compensation payable to applicant for respondent's use of relationship property post-separation — whether valuation of relationship home for purpose of division should be taken at the default date of hearing.

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION PLEASE SEE WWW2.JUSTICE.GOVT.NZ/FAMILY/LEGISLATION/RESTRICTIONS.

The three major issues requiring determination were: (a) whether a property sharing agreement (“the agreement”) executed by the parties ought to be set aside on the ground(s) of duress, undue influence and/or unconscionable bargain, as contended by the applicant (TAB); (b) whether compensation was payable to TAB for respondent's (GJH) use of relationship property post-separation; and (c) whether valuation of relationship home for the purpose of division should be taken at the date of hearing.

Held: (a) The correct approach in determining whether duress and undue influence were present in the execution of an agreement were stated in Attorney-General for England and Wales v R and Pharmacy Care Systems Ltd v Attorney-General. On the issue of duress, it was essential for the court to consider (amongst other things) whether: (i) there was any threat or pressure amounting to compulsion of the will of the victim; (ii) the effect of the threat or pressure was sufficient to overbear the victim's freewill and judgment; (iii) the threat or pressure was illegitimate or improper, with the duress needing to have at least partly induced assent; and (iv) whether the threat or pressure left the victim with no reasonable alternative. Duress rendered the agreement voidable, unless affirmed. Affirmation may flow from a victim not taking action ‘timeously’.

TAB admitted that GJH made no threat to the continuation of their relationship if TAB did not sign the agreement. More importantly, TAB initiated the process of getting the agreement under way to protect her own position and GJH signed on account of his legal advisers arguing prudence in conjunction with the wish of TAB to have the agreement. There was no overt or even covert threat or pressure exerted by GJH upon TAB to sign the agreement. Although there was at least one instance of violence inflicted by GJH upon TAB during their relationship, there was no causal relationship between that or other purported threat of violence and TAB signing the agreement. Furthermore, although TAB complained that GJH exerted pressure upon her to sign the agreement by reiterating his view that he ought to retain as his separate property what flowed from his own efforts or family monies, any pressure there was not illegitimate or improper.

On the issue of undue influence, it was necessary for there to have been: (i) a relationship of trust, reliance, vulnerability or dependency at the time the agreement was executed; and (ii) conscious or unconscious use by GJH of power over TAB to induce entry into the agreement. TAB could not satisfy the first limb of the test – although the relationship was unpleasant for her at times, the parties remained together for a long period except for a brief separation. TAB also had an independent income and means throughout the relationship and there was no sign that the execution or otherwise of the agreement would have threatened the parties’ relationship at the time. Finally, TAB was, if anything, the more intelligent and sophisticated of the parties.

The doctrine of unconscionable bargain required a contract on unfair terms involving the taking advantage of the weaker party to a point where it would be unconscionable for the other to take the benefit of the contract. The weaker party's capacity to contract must have been affected and the other party must have had actual or constructive knowledge of the disability/disadvantage. The purported disadvantage/disability which TAB was under was never adequately articulated and any anxiety she felt over the seeming insecurity of her position without the execution of the agreement did not diminish her ability to assess the merits of whether to execute the agreement. All three grounds for setting aside the agreement must fail.

(b) The concept of notional occupational rental is available under s18B of the Act (compensation for post-separation contributions) as stated in C v C. However, its availability involves a consideration of a wide range of factors such as the loss of capital use or benefit. However that must correspondingly be balanced with any contributions the occupying party may have made and any money or effort devoted to reasonably preserving relationship property or otherwise. There was insufficient examination and exploration of these matters to allow the Court to find that justice required occupational rental to be awarded, and in any event TAB's complaints extended beyond the relationship home. What was just was for TAB to be awarded interest on her unpaid capital, which would reflect GJH's use of the majority of relationship property post-separation. Interest at the rate of 5% was fixed for the unpaid amounts due to TAB from the date TAB filed proceedings.

(c) Both parties were mutually responsible for some of the delays. Although GJH did for a period unnecessarily delay response to valuations posed by TAB, TAB herself contributed to the delays by her arguments to invalidate the agreement and over-optimistic valuations. There was no evidence that GJH deliberately sought to delay settlement to take advantage of a declining property market.

The property sharing agreement was upheld, TAB was awarded interest to reflect GJH's post-separation use of relationship property. The value of the relationship home was fixed as at the date of the hearing.

RESERVED JUDGMENT OF JUDGE E Smith

The Applications
1

The parties were in a relationship between 1990 until December 2007 (reaching “de facto” status likely in August 1992). The parties have been unable to completely reach resolution of the division of their relationship property pursuant to The Property (Relationships) Act 1976 (“the Act”) as a result of that separation.

2

The parties have reached resolution regarding most matters. Six discreet matters have not been agreed, for which the parties seek the Court's determination. The contested issues are, namely:

2.1
    Whether a property sharing agreement executed between them on 21 January 1997 is valid and enforceable; 2.2 Should the amount of a relationship debt owed to the estate of the respondent's father be fixed at either $48,570.97 or $45,000; 2.3 What ought to be the date at which the relationship home should be valued for the purpose of division, i.e. the date of hearing or at some time prior? 2.4 The valuations to be ascribed to some miscellaneous items, namely: (i) a Hilux Surf; (ii) items of plant and machinery of respondent's business; (iii) items of personal farm plant; 2.5 What, if any, ought to be the compensation paid to the applicant by the respondent for delayed settlement, be that by way of interest and/or occupational rental or other? 2.6 Ought inter-party costs to be awarded?
3

Once determinations regarding the above are known, the parties agree all calculations for the division of relationship property can then be settled between them in accordance with prior agreements and the Court is invited to issue one comprehensive order incorporating its findings to those contested matters at paragraph [2] hereof together with the agreements reached on all other issues.

Background to Relationship and Proceedings
4

It is disputed when exactly the parties met, but likely it was in or about 1990. Initially, the Applicant sought this date to be set as the beginning of their de facto relationship, but during the fixture confirmation from WINZ came to hand suggesting the applicant's DPB ceased in August 2002, which better corroborates the respondent's view that they began living together from this date, although they stayed at each other's homes prior to this date from time to time.

5

Accordingly, I find in August 1992 the applicant, together with her two children A (born in May 1983) and L (born in May 1986) shifted into a home owned by the respondent at I Road, Christchurch (“I Road property”). At the beginning of the parties then de facto relationship the applicant brought with her a Mini, furniture, savings of $3000 which were used to purchase a Mitsubishi in substitution of the Mini.

6

The I Road property was registered in the sole name of the respondent, he having purchased it in May 1989 for $135,000. The purchase price was settled by monies advanced to him from his mother, an inheritance from a great uncle, and from savings he had accumulated from wages over the years. As at 1992 the respondent worked for wages as a mechanic and the applicant cared for A and L full time but gained part time work at some stage after 1992.

7

After some discussion as to location, and both parties thinking a change of address advantageous particularly to be more proximate to work and the children's schools, the I Road property was sold and the respondent purchased a new property at A Place (“A Place”) on 15 October 1993, thereafter the parties and the applicant's children began to reside there. A Place was registered in the respondent's sole name and the purchase price of $205,000 was made up of the net proceeds of sale of I Road (approximately $163,000) and the balance by way of mortgage advance to the...

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