Ward v Ward Sc 40/

• Jurisdiction: New Zealand
• Judge: Tipping J
• Judgment Date: 08 December 2009
• Neutral Citation: [2009] NZSC 125
• Docket Number: SC 40/2009
• Court: Supreme Court
• Date: 08 December 2009

BETWEEN

Christopher Bede Ward

Appellant

and

Diane Mary Ward

Respondent

[2009] NZSC 125

Judges

Elias CJ, Blanchard, Tipping, McGrath and Wilson JJ

SC 40/2009

IN THE SUPREME COURT OF NEW ZEALAND

Variation of post nuptial settlement — the marriage was subsequently dissolved, resulting in a change of circumstances — whether there was jurisdiction to vary settlement under s182 Family Proceedings Act 1980

Counsel:

M E J Macfarlane for Appllent

H R Grayson for Respondent

• A The appeal is dismissed.

• B The appellant is to pay the respondent for her costs in this Court the sum of $15,000 plus disbursements, to be fixed if necessary by the Registrar. The Court of Appeal's costs order stands. Costs in the High Court and the Family Court are to be fixed in those Courts in the light of the determination of this Court, unless the parties can agree or unless that has already occurred.

JUDGMENT OF THE COURT

REASONS

(Given by Tipping J)

Introduction

1 This appeal involves the interpretation and application of s 182 of the Family Proceedings Act 1980. That section empowers the Court, subject to the constraints of subs (6), to vary the terms of ante and post-nuptial settlements when the marriage or civil union of the parties comes to an end. The parties in the present case, Mr and Mrs Ward, were married on 17 August 1991. They entered into a post-nuptial settlement on 29 June 2000. It took the form of a trust, primarily for the benefit of themselves and their two children, a daughter born on 23 February 1994 and a son born on 8 December 1995. The parties separated on 1 March 2003 and their marriage was dissolved on 26 September 2005. On the dissolution Mrs Ward applied for an order under's 182.

2 The Family Court 1 made an order in her favour dividing the trust into independent halves, one for the benefit of Mrs Ward and the children, and the other for the benefit of Mr Ward and the children. That order was set aside by Heath J in the High Court on Mr Ward's appeal. 2 The Judge considered that the order made by the Family Court was precluded by subs (6) of s 182. The Family Court order was reinstated by the Court of Appeal on Mrs Ward's successful appeal to that Court. 3

3 Mr Ward now appeals to this Court. He contends, first, that Heath J was right in his conclusion that s 182(6) precluded the making of the order. He contends, alternatively, that if there was jurisdiction to make an order, no order should have been made, or the order made should be varied because it went too far in Mrs Ward's favour. Our conclusion is that the Family Court did have jurisdiction to make the order; its making was not precluded by s 182(6). Furthermore, the order made by the Family Court was properly made, its terms being within a proper exercise of the discretionary power vested in the Family Court by s 182. Mr Ward's appeal should therefore be dismissed.

4 We will refer first to the basic facts of the case and the nature and terms of the post-nuptial settlement which is in issue. We will then examine the provisions of s 182 and its purpose. That will be followed by an examination of s 182(6) and our reasons for holding that its terms did not preclude the making of the order by the Family Court. We will finally explain why that order was properly made.

Basic facts

5 Following their marriage in 1991, the parties lived on a farm which had been in Mr Ward's family since 1959, when it had been acquired by his father and uncle. Mr Ward started working on the farm in 1983 and has continued working there ever since. Not long before the parties married, it was agreed that Mr Ward would have the opportunity to purchase the farm which, at all material times, has been owned by a family company, Lang Park Ltd. Before he married, Mr Ward already owned

16.7 per cent of the share capital in that company. In August 1990 Mr Ward entered into an agreement with the other shareholders under which he acquired an option to purchase their shares at any time within the next six years. At that time he acquired the stock and plant on the farm from other family members for $155,208. He also began farming the property under a lease from Lang Park Ltd.

6 In 1993 Mr Ward exercised his option and acquired the rest of the shares in the company for $312,000. He borrowed $200,000 from the National Bank. The rest of the purchase price was advanced to him by his father and uncle. The share capital of the company following this transaction was owned as to 10,099 shares by Mr Ward and as to 1 share by Mrs Ward, into whose name that share was transferred.

7 On 29 June 2000, nearly nine years into their marriage, the parties entered into several related transactions of which the post-nuptial settlement in issue was one. The principal transactions were a deed of matrimonial property settlement, a deed of trust establishing the post-nuptial settlement, and a deed of partnership under which the parties were to run the farm. The effect of these transactions in broad terms was as follows:

• (1) Under the matrimonial property settlement Mr Ward's shares in Lang Park Ltd were vested in the parties equally. To achieve this Mr Ward transferred half of the share capital to Mrs Ward.

• (2) Mr Ward also transferred a half interest in the farming business to Mrs Ward and they henceforth farmed the property as equal partners.

• (3) The post-nuptial settlement in the form of a trust to be known as the Cahirdean Trust was established on terms to be described more fully below.

• (4) The parties transferred the half share that each now held in the capital of Lang Park Ltd to the Cahirdean Trust for a total sum of $540,000. Each party advanced to the Trust the sum of $270,000 to finance the Trust's acquisition of the shares. The parties intended to forgive this indebtedness at the maximum amount permissible each year without attracting gift duty. At the time of the hearing in the Family Court, the debt owing to each party by the Trust had been reduced to $198,000.

• (5) The matrimonial property settlement was expressed to be in full and final settlement of all claims which each party might have against the other under the Matrimonial Property Act 1976.

8 It is the Cahirdean Trust in respect of which Mrs Ward has been awarded relief under's 182 following the dissolution of the marriage. Its trustees are Mr and Mrs Ward, and a Mr Andrew Hildreth. The beneficiaries, who all take both income and capital at the sole discretion of the trustees, are primarily Mr and Mrs Ward and their children. Further beneficiaries are their children's direct descendants and any wife, husband, widow or widower of any of the previously identified beneficiaries, plus specified superannuation plans. The date of final distribution is 80 years from the date of establishment, with power in the trustees to bring that date forward as they may determine by unanimous resolution in writing. On the date of final distribution the trustees hold the trust property for such of Mr and Mrs Ward's children as they, the trustees, appoint, and in default of appointment equally for those children, with substitution of grandchildren if a child has predeceased the final date of distribution.

9 When the Trust was established Mr and Mrs Ward both signed a document which was entitled Memorandum of Intention and was addressed to the trustees. It reads as follows:

OBJECTIVE:

We have arranged our property in such a way as to benefit the survivor of us and after that our children. We believe that over the course of our personal and business lives we have contributed by way of taxation. We see no conflict in the preservation of our capital assets and income where that preservation does not conflict with the law. We are agreed on the priorities for our family and assets.

INTENTIONS:

1. During the remainder of our lives, or the life of the survivor of us, our interests and well being, or those of the survivor of us, shall be treated as paramount and of first priority.

2. We hope that the Trustees will exercise whatever discretion they may have to ensure that the sentiments expressed in 1. above are observed. That contemplates making available capital and/or income to either of us where appropriate. We don't want the financial affairs of the survivor of us to be restrained by the trustees taking a limited or negative interpretation of the powers conferred on them by our trusts or our Wills.

3. Our next priority is our children and grand-children. We hope that our trustees will exercise their powers so as to ensure that the interests of our children in relation to their health, education or advancement and benefit in life generally shall be benefitted by the use of our assets in whatever way our trustees think fit. In the event of an emergency involving our children or grand-children we hope that our trustees would be pro-active in supporting such child or grand-child. We anticipate that the trustees, where appropriate in their discretion, may disregard the normal criteria relating to security for monies advanced when dealing with our children, particularly in circumstances which they regard as an emergency. They may if they think appropriate disregard the inclination to treat our children equally in the distribution of funds.

4. Our third priority is to preserve our assets particularly in regard to capital imposts by any Government or other authority whether it be taxation, welfare or health schemes or otherwise or threats to our property from creditors or other claimants. We want our trustees to manage the affairs of our trusts and if necessary our affairs, where practicable, in such a way as to reduce or avoid such imposts or other claims.

5. Subject to the above we want our children to share equally in whatever assets we have been fortunate enough to accumulate during our lifetimes. We believe that our children will be fair and non-judgmental where one of them...