KINDER v CARTER [2018] NZHC 319

KINDER v CARTER [2018] NZHC 319 [5 March 2018]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2017-409-000679[2018] NZHC 319BETWEEN C A KINDERPlaintiffAND P M CARTERDefendantHearing: 26 February 2018Appearances: P F Whiteside QC for Applicant (Defendant)S N van Bohemen for Respondent (Plaintiff)Judgment: 5 March 2018JUDGMENT OF ASSOCIATE JUDGE OSBORNEon strike out applicationIntroduction[1] The parties lived together in a de facto relationship until 16 October 2016. On16 March 2016, they had entered a contracting out agreement (the agreement) unders 21 Property (Relationships) Act 1976 (the Act). It was the third such agreementbetween them. It is common ground that the agreement binds the parties.[2] Since their separation, the parties have come to have a number of differencesrelating to property matters.This proceeding[3] The plaintiff, Cheryl Kinder, sues the defendant, Philip Carter, in relation tofour property matters. By her statement of claim:(a) Ms Kinder seeks an order of specific performance requiring Mr Carterto execute an agreement document prepared for Ms Kinder and signedby her on 27 July 2017. This document is stated to be an agreemententered into pursuant to s 21A of the Act. It would deal with the otherthree components of Ms Kinder's claims as pursued in this proceeding,namely funds held in a solicitor's trust account representing:(i) the proceeds of sale of the family home (clause 4.1);(ii) the Porsche motor vehicle retained by Ms Kinder and funds heldin the parties's joint bank account (clauses 3.1 and 5.1); and(iii) other family chattels (clause 3.1).(b) Ms Kinder seeks an order that the family home sale proceeds held inthe solicitor's trust account be paid in equal shares to the parties;(c) Ms Kinder seeks a setting off of what she asserts to be the value ofproperty receipts of each party – $19,200 transferred by Mr Carter fromthe parties's joint account to his personal account; $29,000 representingthe value of the Porsche retained by Ms Kinder; and $873.02representing the outgoings on the family home incurred by Ms Kinderwhile in exclusive occupation. Ms Kinder then seeks an order that thefunds held in the parties's joint bank accounts be paid equally to theparties subject to a deduction of $20,273.02 from Ms Kinder's shareand an increase of $20,273.02 to Mr Carter's share.1(d) Ms Kinder seeks an order that relationship property family chattels(defined in the agreement) be sold by public auction at the shared costof the parties and that the net proceeds of sale be distributed to theparties equally.1 The adjustment of $20,273.02 identified in the Statement of Claim differs from the adjustmentfigure identified in Ms Kinder's 27 July 2017 (s 21A) agreement document by reason of furtheradjustments brought into account by Ms Kinder.The strike out application[4] Mr Carter applies for orders striking out Ms Kinder's statement of claim anddismissing the proceeding.[5] Mr Carter invokes r 15.1(1)(d) High Court Rules which provides:15.1 Dismissing or staying all or part of proceeding(1) The court may strike out all or part of a pleading if it—(d) is otherwise an abuse of the process of the court.[6] The alleged abuse of process is explained in the application as follows:(a) Ms Kinder's claim is an abuse of the process of the High Courtbecause it is essentially for orders under the Property (Relationships)Act 1976 and must be heard and determined in the Family Court;(b) Even the Plaintiff's first claim for specific performance involvesconsideration of the parties' rights under the Property (Relationships)Act 1976 as a result of the further actions of parties since the March2016 agreement was completed.[7] Ms Kinder opposes the strike out application. She asserts:(a) The Plaintiff seeks enforcement of the parties' agreement which iswithin the jurisdiction of this Court.(b) The Plaintiff is not seeking orders for classification of property asrelationship property or determination of shares in relationshipproperty or division of relationship property (which orders are withinthe exclusive jurisdiction of the Family Court).Striking out a claim – the principles[8] High Court Rule 15.1 makes provision for orders striking out all or part of apleading. In this case the defendant invokes r 15.1(1)(d) (abuse of the process of thecourt).[9] I adopt the meaning of the "abuse of process" identified by Paterson J in Ghosev Ghose:22 Ghose v Ghose (1997) 12 PRNZ 149 (HC) at 152.The term "abuse of process" means that the process of the Court must be usedbona fide and properly and must not be abused.[10] I adopt the following as principles applicable to the consideration of thisapplication:(a) The Court is to assume that the facts pleaded are true (unless they areentirely speculative and without foundation).(b) The jurisdiction is to be exercised sparingly and only in clear cases.(c) The jurisdiction is not excluded by the need to decide difficult questionsof law, even if requiring extensive argument.(d) The onus is on the defendant/applicant to establish that the process ofthis Court is being abused.3The jurisdiction of the High Court[11] For this Court's jurisdiction over the subject-matter of the proceeding, MsKinder relies on s 21L of the Act which reads:21L Enforcement of agreements(1) Remedies that, under any enactment or rule of law or of equity, areavailable for the enforcement of contracts may be used for theenforcement of agreements under section 21 or section 21A or section21B.(2) This section is subject to the provisions of this Part.[12] I adopt the discussion of enforcement jurisdiction by Associate Judge Bell inEdwards v Edwards where his Honour observed:4[22] Courts exercising civil jurisdiction, the High Court and the DistrictCourt, have overlapping jurisdiction with the Family Court for theenforcement of agreements to divide property following the break-up of a3 The defendant's position might also have been asserted through a protest to jurisdiction underr 5.49 High Court Rules. In that event, the onus to establish that the Court does not havejurisdiction would equally have been on the defendant. See Andrew Beck and others McGechanon Procedure (online looseleaf ed, Thomson Reuters) at [HR 5.49.14].4 Edwards v Edwards [2012] NZHC 1630 at [22]; applied in Glaister v Harris [2014] NZHC 2153,[2014] NZFLR 987 at [19].marriage. The High Court's jurisdiction arises generally under s 16 ofJudicature Act 1908. The District Court's civil jurisdiction under s 29 of theDistrict Courts Act 1947 is subject to claims for no more than $200,000. It hasan equitable jurisdiction and may give equitable relief.5 Before the reformsunder the Property (Relationships) Amendment Act 2001, the Family Courthad jurisdiction to enforce s 21 agreements by way of applications for divisionof property which sought orders in terms of the agreement.6[13] Responsibly, Mr Whiteside QC for Mr Carter conceded that this Court mayhave jurisdiction to determine an application for specific performance of a relationshipproperty agreement. In his written synopsis, he suggested, however, that the decisionin Edwards v Edwards may be seen as contrary to the 1981 conclusion of Holland J inThaisen v Thaisen.7 The analysis of Holland J in Thaisen v Thaisen, in relation to theMatrimonial Property Act 1976 as it then stood was that, by reason of the Act beingan exclusive code, specific performance was not available as it was not included in therelief prescribed by that Act. The Thaisen decision was, in its own time, of doubtfulauthority – Greig J, a year later, refused to follow it in Newport v Cook. Greig J insteadupheld a husband's right to pursue in the High Court specific performance of amatrimonial property agreement.8 Associate Judge Bell's analysis in Edwards vEdwards, as set above at para [12], serves to explain that the Property (Relationships)Amendment Act 2001, by enacting s 21L, removed any doubt as to the jurisdiction ofthis (and the District) Court to hear applications for enforcement.9The exclusive jurisdiction asserted by Mr Carter[14] In his submissions for Mr Carter, Mr Whiteside identifies three components ofMs Kinder's claim as involving "significant new points". These are the claims inrelation to the Porsche car, the cash adjustment and the proposal for an auction saleprocess. Mr Whiteside submits that what is involved in relation to each of those is a"transaction between partners in respect of property", and therefore, pursuant to s4(1)(a) of the Act, falls within the code represented by the Act. Mr Whiteside submits5 District Courts Act 1947, ss 34 and 41.6 R L Fisher (ed) Fisher on Matrimonial and Relationship Property (looseleaf ed, LexisNexis)("Fisher") at [5.14], citing Thaisen v Thaisen (1981) 4 MPC 198, Bishop v Bishop (1981) 4 MPC17, Newport v Cook (1982) 1 NZFLR 439, Belt v Belt (1989) 5 FRNZ 258 and Wicksteed vWicksteed [2002] NZFLR 28. See also P E S v D N S (2006) 25 FRNZ 863 at [20] – [24].7 Thaisen v Thaisen, above n 6, at 200.8 Newport v Cook [1983] 1 NZLR 118. See also the discussion in Fisher, above n 6, at [5.15] fn 2.9 Since applied to order specific performance in Richter v Huber HC Napier CIV-2004-441-784, 17March 2005 at [44], [46].that Ms Kinder's claims (pursued in this proceeding) must be heard and determined inthe Family Court by reason of s 22(1) of the Act. Mr Whiteside refers to Shirtliff vAlbert,10 as an example of a summary judgment application made in the High Courtthat was stayed because the application (for sale of the property owned by the plaintiffand her former partner) fell within the jurisdiction of the Family Court pursuant to s22(1) of the Act.[15] Mr Whiteside submits that other aspects of Ms Kinder's four sets of claimsseek an order for division of relationship property funds or involve transactionsbetween the partners in respect of their property or a mixture of the two.Discussion[16] Section 21L of the Act establishes this Court's jurisdiction to enforceagreements made under s 21 of the Act, notwithstanding that in other relationshipproperty matters the Family Court will have exclusive jurisdiction.[17] What the Court must determine is whether Mr Carter has discharged the onusof establishing that Ms Kinder's application to this Court does not involve a bona fidereliance upon the Court's enforcement jurisdiction.[18] Mr Carter has not satisfied the Court that Ms Kinder's proceeding is to beviewed as improper or pursued in bad faith.[19] Both parties accept that their s 21 agreement remains on foot. Allegationsmade by one against the other as to breach of aspects of the agreement are a distraction– they do not affect the Court's jurisdiction to entertain an application for theenforcement of the agreement which neither has purported to cancel. Aspects of theagreement have been performed, including, importantly, the sale of the couple's homeand the conversion of its equity into cash now controlled by a stakeholder.[20] Each component of Ms Kinder's claims may be properly viewed as focused onenforcing the provisions of the s 21 agreement:10 Shirtliff v Albert [2011] NZFLR 971.• The claim for disbursement of the proceeds of sale of the home derivesfrom a clause providing for equal distribution of such funds.• The claim for distribution of funds held in joint bank accounts (subject toadjustments for benefits obtained by each party) derives from the sameclause providing for equal division of such funds.• The recognition or claiming of adjustments flows from various clausesdealing with equal division of chattels, equal division of the joint bankaccount and the obligation of the occupant of the family home to pay foroutgoings associated with their occupation.• The claim for the sale of chattels derives from the clause providing forequal division or, failing agreement on equal division, the sale of thechattels and equal distribution of their value.• The claim for specific performance of an (implied) agreement to execute as 21A agreement derives from the clause whereby the parties agreed toequal division of the funds held in the joint account but with distributionto occur "on the signing of a s 21A agreement".[21] Conceptually, Ms Kinder's claim for orders by way of enforcement of the s 21agreement is plainly within the jurisdiction of this Court. Whether or not this Courtwill grant all the orders sought in their present form or amended form will be a matterfor further argument and possibly evidence. What the parties committed themselvesto through the s 21 agreement was (amongst other things) the identification of fouritems of relationship property that were to be shared equally. Those were the familyhome, the family chattels, the joint bank account of the parties and any asset acquiredusing funds sourced from the joint bank account. The parties also committedthemselves to taking detailed steps to determine how the division of their equallyowned property would be achieved, for example, by the specific clauses invoked byMs Kinder. Ms Kinder is entitled to pursue in this Court her proposition that thematters on which the parties disagree can be properly dealt with as part of orders whichthe Court might make in order to ensure the parties complete the process of divisionto which they committed themselves in their s 21 agreement.[22] What distinguishes this case from authorities cited in submissions for thedefendant is that the parties here have already committed themselves to divisionthrough a s 21 agreement. Ms Kinder seeks orders enforcing that agreement. Theparties in Shirtliff v Albert, relied upon by Mr Whiteside, had not entered a s 21agreement.11 Rather, the plaintiff had commenced the proceeding in order to obtainorders as to how property owned by herself and her former partner should be divided.[23] Mr Carter has not satisfied the Court that Ms Kinder's application is an abuseof process.Costs[24] Counsel agree that the costs of this application are appropriately to be dealtwith on a 2B basis. There does not appear to be a sound reason for departing from theapproach that Mr Carter, as the unsuccessful party, should pay costs.[25] Mr Whiteside nonetheless submitted that in the event the application wereunsuccessful, I should reserve the incidence of costs. He took that position becauseMs Kinder had initially commenced this proceeding with a summary judgmentapplication, subsequently withdrawn after a notice of opposition was filed. MrWhiteside wishes to make submissions as to the fixing of costs now on the summaryjudgment application with the consequence that a setting off may occur.[26] In the circumstances, I will reserve the incidence of costs of this applicationwith the Court to deal with the costs of both this application and the summaryjudgment application upon the papers upon receipt of submissions.11 See the argument presented above at para [14], citing Shirtliff v Albert, above n 10.Orders[27] I order:(a) The defendant's application dated 9 November 2017 is dismissed;(b) The costs of the application are fixed on a 2B12 basis;(c) The incidence of costs and disbursements is reserved, with submissionsto be filed:(i) by the plaintiff within 10 working days (six page limit);(ii) by the defendant within five working days thereafter (six pagelimit);(iii) by the plaintiff (in reply on the costs of the summary judgmentapplication) (within five days thereafter).Associate Judge OsborneSolicitors:Kearney & Co, ChristchurchCounsel: S N van BohemenMalley & Co, ChristchurchCounsel: P Whiteside QC, Christchurch12 High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).