Following the end of the relationship there was disagreement as to the division of property and Ms M brought proceedings in the Family Court.
The Family Court concluded the de facto relationship began in November 2005 when Ms M moved to Australia to be with Mr G. The judge in the Family Court concluded the relationship ended in January 2009. He also held Mr G’s three-fifths interest in a home was relationship property and Ms M was entitled to half of Mr G’s interest.
The Family Court determined that Ms M contributed $3500 towards repayment of the farm mortgage between December 2005 and November 2006 but these contributions did not constitute an increase in value of the farm property so Ms M was not entitled to any recovery under section 9A(1) of the Property (Relationships) Act 1976.
Mr G was ordered to pay Ms M $45,115, comprising half of the home and curtilage; $10,000 for Ms M’s sustenance of Mr G’s farm property; and $615, comprising half the value of Mr G’s Australian superannuation scheme.
Ms M appealed to the High Court arguing that:
- the parties had begun their de facto relationship in January/February 2005,
- as a result the finding that the farm interest was not relationship property was wrong,
- section 9A(1) did apply, and
- the calculation of the award made for Ms M’s contribution to the sustenance of the farm was wrong.
Justice Collins dismissed the appeal and upheld the Family Court decision, concluding that the evidence established the parties had started seeing each other around Christmas 2004 and begun a sexual relationship in February 2005. But their relationship did not acquire the characteristics of a de facto relationship until Ms M moved to Australia. Justice Collins held the farm was not relationship property and that the payment of the mortgage debt on the farm had not increased its value.
Tenants in common
In the case of K vs V, the couple began living together when the man was 57 and the woman was 41. Both parties had previously been married and there were no children from their 12-year relationship.
They began living together within three months and, soon afterwards, decided to buy a farm in the Wairarapa. The agreement for sale and purchase recorded the parties’ shares as tenants in common, with Mr K’s share being 85% and Ms K’s portion 15%. Settlement took place in 1997 and the parties made the farm their principal home from 2001. They also formed a partnership to manage the farm business during the time they ran the farm together.
The parties also wanted a place to live in Wellington and, several months later, found an apartment. Mr K paid for the whole cost of the apartment. In 2000, Mr K formed two trusts and transferred the apartment to one of them with other property later transferred to the second trust.
After the parties separated there was disagreement about how their property should be divided and proceedings were brought both in the Family Court and, subsequently, in the High Court.
The Family Court judge ruled that each party was entitled to an equal share of the farm and that the Wellington apartment had been transferred to the trust to prevent it from being the subject of a future claim under the act and to defeat Ms V’s claim. The Family Court held that other property was the separate property of Mr K.
The issues for the High Court to determine in the appeal were the following;
- Was there a relationship property agreement made under section 21P of the Property (Relationships) Act 1976 in respect of the farm?
- Had the Family Court properly determined the value of the farm?
- Did the Family Court err when it held that the transfer of an apartment to a trust should be set aside under section 44
Justice Collins held there was no property relationship agreement about the farm, rejecting Mr K’s claim that there had been. The judge said the parties had not focused on future division of the farm when they purchased it.
Justice Collins also held that the Family Court judge had misdirected himself as to the approach to be taken in assessing the value of the farm. The Family Court’s decision on valuation was accordingly set aside.
Justice Collins said the only way to determine the true value of the farm was for it to be sold. If it was not to be sold, the parties would have to reach agreement on what they thought it was worth. The court made no further orders in relation to this issue, stating that the parties might only reach agreement by compromising.
Finally, Justice Collins rejected the Family Court’s conclusion that Mr K had acted to defeat Ms V’s claim in relation to the apartment and concluded that the Family Court had erred in stating that the transfer of the apartment to the trust should be set aside under section 44.
Caveats
A third case, involving a family rather than a relationship dispute, illustrates how parties making claims to property can use caveats to protect their interests. Once a caveat has been placed on the title to a property, it freezes the existing position so the property cannot be sold or otherwise dealt with without the agreement of the caveator. This is to prevent the property being sold and the proceeds dispersed to defeat a claim.
In Hudson vs Robway Farms, Sheree Hudson applied to the High Court under section 145A of the Land Transfer Act 1952 for an order sustaining two caveats she had lodged against a farm property. An order sustaining a caveat is an order that the caveat cannot be removed, meaning if the property owner wants to sell or otherwise deal with the property, they must first resolve the caveator’s interest in the land.
Ms Hudson was the child of Robyn and Wayne Hastings and had two siblings, Troy and Tania. Mr and Mrs Hastings bought a farm and incorporated Robway Farms to hold the title to the property. Ms Hudson became the majority shareholder and sole director as a means of achieving first owner stamp duty exemptions valued at $20,000.
Several years later, Ms Hudson relinquished her directorship and shareholding to her parents. A further 22ha of land was bought later, with Ms Hudson arguing that it was purchased for her partly in recognition of her removal as a shareholder and director and to compensate for loss of benefits such as entitlement to a salary and director’s fees. She said the purchase for her also recognised a great deal of unpaid work she had done on earlier properties owned by her parents.
Ms Hudson said the additional land was to be held in trust by Robway Farms and that it became the registered proprietor partly to facilitate the raising of funds to improve the property and to place a house on it for her.
Later, there were family difficulties and Mr and Mrs Hastings decided to place the entire farm on the market. Ms Hudson lodged a caveat to protect her claimed interest.
Justice Allan held there was a sufficiently credible basis for Ms Hudson’s factual claims and her allegations must be accepted as providing prima facie evidence of a claim to the property. She was accordingly granted an order sustaining the caveats, on condition that she promptly lodged the substantive proceedings relating to her claimed interest in the property.
*These and other court decisions are available free of charge at www.justice.govt.nz/jdo.
M vs G [2012] NZHC 1798
K vs V [2012] NZHC 1129
Hudson vs Robway Farms [2012] NZHC 748
Catriona MacLennan is a south Auckland barrister and journalist.
