TURNER v DEL LA VARIS [2021] NZHC 776

TURNER v DEL LA VARIS [2021] NZHC 776 [13 April 2021]NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHERINFORMATION, PLEASE SEEhttps://www.justice.govt.nz/family/about/restriction-on-publishing-judgments/IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-2398[2021] NZHC 776UNDER the Property (Relationships) Act 1976BETWEEN LEWIS JOHN TURNERAppellantAND ANTONIA CAMILLE SHOTA COPPELIADEL LA VARISRespondentHearing: 24 February 2021Further submissions 3, 4, 8, 16, 18, 24 and 30 March 2021Appearances: Appellant on own behalfA Malone for the RespondentJudgment: 13 April 2021JUDGMENT OF GORDON JThis judgment was delivered by meon 13 April 2021 at 4 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors: Snedden & Associates, AucklandCounsel: A Malone, Grey Lynn, AucklandCopy to: The AppellantIntroduction[1] The appellant, Lewis Turner, appeals orders made by Judge Burns in theFamily Court at Auckland on 19 November 20201 in relation to Mr Turner'sapplication for interim distribution of relationship property under s 25(3) of theProperty (Relationships) Act 1976 (the Act).[2] In his judgment, the Judge ordered the sale of a Grey Lynn residential propertyowned by a company, Serene Limited (Serene) which is owned by Mr Turner and therespondent, Antonia del la Varis (Mr Turner's former partner). The Judge also orderedthe sale of a section on Waiheke Island owned by the Turner del la Varis Trust (Trust)of which the parties are both trustees and discretionary beneficiaries.[3] In the Family Court, the need for interim relief was not in dispute (nor was itin this Court). The issue in the Family Court (and again in this Court) was the formof relief.[4] Although the Family Court Judge made orders in favour of Mr Turner,Mr Turner submits on appeal that both orders for sale were made outside thejurisdiction of the Family Court and create prejudice. Mr Turner submits the relief hehad sought in the Family Court should have been granted and he seeks that relief onappeal.[5] Ms del la Varis seeks to uphold the orders made by Judge Burns.The properties[6] The properties owned by the parties, Serene and the Trust are as follows:(a) It is common ground the shares in Serene are relationship property.Mr Turner legally owns a 95 per cent share in Serene andMs del la Varis owns a 5 per cent share, but Serene's shares are owned50/50 for relationship property purposes. Serene owns:1 Turner v del la Varis [2020] NZFC 10016.(i) 77 Sussex Street, Grey Lynn (Sussex Street) valued at$2.15 million as at September 2019. It comprises a mainresidential dwelling and another dwelling, both of which wererented at the time of the Family Court hearing. Ms del la Varisreceived rental income from the main house and Mr Turnerreceived rental income from the subsidiary dwelling. By thetime of the hearing in the High Court, neither of the dwellingswas rented out; and(ii) 22 Richmond Road, Grey Lynn (Richmond Road) valued at$2.1 million as at September 2019. Ms del la Varis lives in thisproperty;(b) A residential property at 94 Fairview Crescent, Omiha, Waiheke Islandwith a CV of $850,000 as at September 2019. Ms del la Varis is theregistered proprietor. Mr Turner claims this property is relationshipproperty. Ms del la Varis claims it is one-third separate property andtwo-thirds relationship property; and(c) Sections at 90 and 92 Fairview Crescent, Omiha, Waiheke Island, bothof which are owned by the Trust, estimated at a combined value of$900,000.[7] All properties are mortgage free save for a revolving credit of $200,000 in thename of Serene.[8] Mr Turner and Ms del la Varis were joined to the proceeding in the FamilyCourt as directors of Serene and as trustees of the Trust.Background[9] Mr Turner, and Ms del la Varis were in a de facto relationship for 26 years fromlate 1993 until, Ms del la Varis says, the end of May 2019. Mr Turner says he endedtheir relationship on 27 March 2019.[10] Mr Turner is a commercial barrister. Ms del la Varis [redacted] describesherself as a homemaker.[11] [redacted][12] The parties lived in Sussex Street from 1994 to 2002; Richmond Road from2002 to early 2015; and 94 Fairview from 2015 to 2017.[13] [redacted][14] As noted, Ms del la Varis lives in the Richmond Road property. Mr Turner hasacquired another property where he lives with his new partner and her children. Hehas mortgage liabilities that have been deferred and other financial commitments. Heneeds an interim distribution to alleviate the financial pressure he is currently under.The Family Court[15] In the Family Court, Mr Turner submitted that the relief that best accorded withjustice and the purposes of the Act would be for 100 per cent of the shares in Sereneto be vested in him, without prejudice to a final division of relationship property, onthe basis that:(a) he would, within 14 days, transfer title to Richmond Road toMs del la Varis; and(b) he would provide undertakings to the Court, pending final resolution ofthe proceeding:(i) that he would not sell Sussex Street;(ii) he would limit the priority sum of any security given overSussex Street to a maximum of $1 million;(iii) he would not incur more than a maximum of $500,000 in debtagainst Sussex Street (and hence would preserve all otherremaining equity); and(iv) should the Court subsequently require him to make any paymentto Ms del la Varis, he would (if required) have recourse toSussex Street, including by procuring Serene to sellSussex Street to make any such payment.[16] He submitted in the Family Court that the proposed relief would allow him tomitigate his current financial position and allow him to clear debt, including to theIRD and on credit cards.[17] The Judge noted that in his application, Mr Turner had applied for analternative order vesting 94 Fairview Crescent in his name. But the Judge said thisoption was abandoned at the hearing (disputed by Mr Turner on appeal).[18] As noted, Ms del la Varis consented to an order being made on the basis thatMr Turner was experiencing hardship, but she opposed the specific orders sought. Shesuggested there be an order for sale of one item of property (Sussex Street).Ms del la Varis proposed that Sussex Street be immediately placed on the market forsale with appropriate conditions relating to its marketing and sale. From the proceedsof sale, $650,000 by way of interim distribution to be paid to each party with thebalance, anticipated to be about $1,000,000 to be held in trust pending further order ofthe Court.[19] Mr Turner opposed that proposal. The judgment records that Mr Turnersubmitted that the preferable option was for the shares in Serene to be vested in himso that he could transfer Richmond Road back to Ms del la Varis, effectively leavinghim with sole control over Sussex Street on account of his entitlement to relationshipproperty. That would leave him free to raise additional mortgage facilities againstSussex Street to deal with his immediate needs and to provide him with an ongoingrental stream as income.[20] The Judge did not agree with Mr Turner's proposal and ordered the sale ofSussex Street and the sale of the section at 90 Fairview Crescent.2 The Judge's reasonfor ordering the sale of Sussex Street as opposed to retention was because of the closeproximity of the Sussex Street property to the Richmond Road property.3 The Judgehad earlier stated he detected that Ms del la Varis was concerned that Mr Turner couldpossibly return to Sussex Street to live (disputed by Mr Turner).4 The Judge also statedthat he could see no benefit to both parties in the retention of Sussex Street, referringto the clean break principle.5[21] The Judge stated the sale process in relation to Sussex Street would meet theneeds for the short to medium-term, coupled with a further order he made givingMr Turner the ability to raise a mortgage secured against Sussex Street to meet hisimmediate needs. The orders permitted Mr Turner to immediately draw down$325,000 which was to be repaid from his $650,000 distribution following the sale ofSussex Street. Ms del la Varis was also to receive a $650,000 distribution from thesale of Sussex Street.[22] In relation to the section at 90 Fairview Crescent, the Judge said that bothparties, as trustees, agreed to the sale. He directed that the parties were to cooperateto resolve the driveway or right-of-way issue.6[23] The Judge ordered that the net proceeds of sale were to be divided equallybetween the parties and there was to be distribution from the Trust to themindividually.Grounds of appeal and relief sought[24] Mr Turner says, in summary, that the orders the Judge made for the sale ofSussex Street and 90 Fairview Crescent were outside the jurisdiction of the FamilyCourt as they are properties owned by third parties, Serene and the Trust respectively.2 The judgment of the Family Court refers to and makes an order for sale of 92 Fairview Crescent.That was later corrected by the Judge to 90 Fairview Crescent.3 Turner v del la Varis, above n 1, at [15].4 At [15].5 At [21](i).6 There is no legal access to the section at 90 Fairview Crescent. A driveway or right-of-way wouldhave to be provided through the section at 92 Fairview Crescent.He also says the orders create prejudice. Additionally, he submits the Judge erred inhis judgment by taking into account irrelevant considerations and by failing to takeinto account relevant considerations, which prejudiced him.[25] The prejudice in particular is that: the orders tie up a significant asset(Sussex Street) by placing well over $1 million in a solicitor's trust account for anindefinite period; rental income that would otherwise be generated is lost; an assetwould be sold in a rising market; real estate agent and legal fees would be incurred;and the orders did not provide for recovered depreciation.[26] Mr Turner also appeals in relation to discrete factual findings,7 including:(a) The statement that he was no longer seeking the vesting of 94 FairviewCrescent Omiha Waiheke on the basis that Ms del la Varis has aparticular connection to that property;(b) The statement that the Family Court needed to find a solution that metthe objectives sought by both parties (when Ms del la Varis had notmade any application); and(c) (Unless the Family Court confirms that its intention was to order thesale of both of the sections owned by the Trust at Fairview Crescent,Omiha, Waiheke), the further holding that one Trust section be placedon the market for sale (with related orders) and the statement that theparties agreed to that course.[27] Mr Turner submits that the relief he sought in the Family Court should begranted on appeal (refer [15] above).7 I do not include all of the findings challenged but only those that pertain particularly to the saleoptions available.Approach on appeal[28] This appeal is brought under s 39 of the Act. It is a general appeal and istherefore to proceed by way of rehearing.8 This Court must therefore form its ownview on the merits, including as to matters of evaluation and degree, althoughMr Turner bears the onus of satisfying the Court that the decision under appeal iswrong and should be departed from.9Procedural history[29] Before I discuss the merits of the appeal, I need to mention part of theprocedural history in this Court.[30] At the hearing on 24 February 2021, I indicated my view that I acceptedMr Turner's submission that Judge Burns did not have jurisdiction to make the ordersfor the sale of the two properties, given that the properties concerned were notrelationship property or separate property. I will discuss this issue more fully belowbut mention it here as context for what then followed. At the conclusion of the hearingat 1 pm I reserved my decision. Over the course of the luncheon adjournment, at myrequest, the registry contacted Mr Turner and Ms Malone for Ms del la Varis askingthem to further appear at 2.15 pm. At that time, I made a suggestion regardingpotential consent orders, namely that Serene might raise a loan on the security of theproperty owned by the company and that Serene might then on-lend to Mr Turner.[31] Ms Malone and Mr Turner then conferred, and as a result: I allowed the appeal;quashed the orders made by Judge Burns on 19 November 2020; and made consentorders. In making the orders, I reserved leave to either party to apply to the Court, "ifthere was any difficulty implementing this agreement".[32] Mr Turner filed a memorandum and an affidavit in support, both dated 8 March2021. In short, the position is that neither his bank nor four other banks he hasapproached, is willing to lend funds whether to Serene or to him. In those8 Property (Relationships) Act 1976, s 39(3).9 Austin Nichols & Co Inc v Stitching Lodestar [2008] 2 NZLR 141 (SC).circumstances, because the consent orders cannot be implemented, he asks that theCourt proceed to judgment.[33] Ms Malone opposes, submitting first, that leave was restricted to theimplementation of the orders only and does not extend to asking the Court to set asidethe consent orders in their entirety and issue a remedies judgment in their stead.Second, she submits the proper course is for this Court to remit the matter back to theFamily Court for further consideration with a direction that the Judge be guided by myview expressed in my minute of 24 February 2021, that the Judge did not havejurisdiction to make the orders sought, given the properties were not relationshipproperty or separate property. Third, Ms Malone submits that if Mr Turner wishes toset aside the consent orders, the proper course is to file a formal application.[34] I do not accept Ms Malone's submission that the reservation of leave shouldbe restricted in the way in which she submits. There is difficulty in implementing theorders. The difficulty is to such an extent that the orders cannot be implemented. Iconsider the reservation of leave extends to cover this situation. I consider the Courthas jurisdiction to set aside the consent orders on the basis of either or both of, theorder reserving leave made as part of the consent orders and/or the Court's inherentjurisdiction.10[35] Second, if I were to remit the matter back to the Family Court, there wouldremain in existence orders of this Court which cannot be, and which will therefore notbe implemented. That creates a procedural difficulty in itself and may well causeprocedural difficulties for the Family Court in considering further orders. Finally,while I agree Mr Turner should have filed a formal application, I am prepared toproceed on the basis of his memorandum which is supported by an affidavit.[36] For the above reasons, I cancel the consent orders made on 24 February 2021.10 Stead v The Ship "Ocean Guest of Arne" [1995] 3 NZLR 415, (1995) 8 PRNZ 610 (HC) at 420;Smallbone v London [2019] NZHC 1298 at [48]; and SCC (NZ) Ltd v Samsung Electronics NewZealand [2016] NZHC 2630 at [11]–[12].Did the Family Court have jurisdiction to make the orders (sale of Sussex Streetand sale of section at 90 Fairview Crescent)?[37] The Court has power under s 25(3) of the Act to make orders at any timerelating to the ownership or vesting of any specific relationship property "as itconsiders just". The Court also has broad discretionary ancillary powers under s 33of the Act in respect of the s 25(3) jurisdiction, including to make all such orders asmay be necessary or expedient to give effect to any order including under s 25, to orderthe vesting of any property.[38] There are judgments of this Court that hold that interim orders may also bemade in respect of separate property. I will refer to those decisions later in thisjudgment. However, this does not extend to making orders in respect of propertyowned by third parties.[39] Fisher on Matrimonial and Relationship Property states:1110.23 Nature of Interest in companyBecause of the statutory relationship property regime can be applied only toproperty owned by the spouses or de facto partners themselves, only thespouses' or de facto partners' shares, current accounts and any other rightswhich the spouses or de facto partners may have as individuals in or againstthe company are of consequence under the Act Thus a company'sownership of the family home, family vehicles, or household chattels removesownership of those assets by the spouses or de facto partners themselves andthus prevents classification as relationship property and division under ss 11and 13. the Court's powers in implementing a division of relationshipproperty appear to be limited to orders affecting a spouse's or de factopartner's shares in a company, as distinct from the company's assets.[40] In Hedley v Hedley,12 the Court of Appeal stated:Technically, of course, it was the shares of the parties in the company whichconstituted matrimonial property. With respect to that latter argument itoverlooks the fact that the item of matrimonial property in question was theshares in the company. That separate legal entity of the company cannot bedisregarded and its assets and liabilities treated as the assets and liabilities ofits shareholders.11 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed,LexisNexis) at [10.23] at 15,261.12 Hedley v Hedley (1980) 4 NZFLR 33 at 34.[41] In Reid v Reid, Greig J stated:13The whole of the land and buildings so occupied are owned by the Company.The home in which the parties have lived is part of the Company's assets. Thewife claims that it is a matrimonial home and that it is beneficially owned bythe husband in terms of the definition of "owner" in the Matrimonial PropertyAct. I do not consider that the definition, having regard to the intent of theAct, alters the ordinary law as to companies. A shareholder is not the owneror the beneficial owner of the assets of the separate entity of the company.That is an aspect of the fundamental basis of incorporation and follows fromthe principles declared in Salomon v Salomon [1897] AC 22. There is nothingin the Matrimonial Property Act which could be said to affect that firmprinciple either expressly or impliedly. In the result there is no matrimonialhome within the meaning of the Act.[42] Neither party referred me to any authority which holds that a court may orderthe sale of property owned by a third party and I am not aware of any such authority.I therefore conclude that Judge Burns erred when he made an order for the sale ofSussex Street, which is neither relationship property nor separate property, butproperty owned by Serene, a third party. The same principle applies to the sale of90 Fairview Crescent. It is not relationship property or separate property. It isproperty owned by the Trust. The Judge also erred when he ordered the sale of 90Fairview Crescent. He did not have jurisdiction to make either order.What is the appropriate form of relief?[43] The parties made extensive submissions on various issues including a largenumber of alleged discrete errors made by the Judge in his factual findings. I intendno discourtesy to the parties by not referring to those submissions. It is unnecessaryto do so because there are effectively only two options available for consideration(given that it is accepted that interim relief should be granted):(a) Mr Turner's preferred option that all the shares in Serene be vested inhim; or alternatively(b) The sale of 94 Fairview Crescent.13 Reid v Reid HC Wellington M503/79, 20 December 1982 at 2.[44] The sale of one or both of the sections at 90 and 92 Fairview Crescent, ownedby the Trust, is not an option. Mr Turner says he would cooperate in the two sectionsbeing sold. However, Ms del la Varis only consents to 90 Fairview Crescent beingsold, not 92 Fairview Crescent. Mr Turner does not consent to 90 Fairview Crescentbeing sold on its own. That then is the end of the matter in relation to the sectionsowned by the Trust.[45] But I add for completeness, that Mr Turner's objection to 90 Fairview Crescentbeing sold on its own does have a reasonable basis. The section does not have adriveway and legal access is only achievable from 92 Fairview Crescent. To arrangeand implement legal access would require the parties to work together, when theysimply cannot do so without conflict.[46] I now address Mr Turner's preferred option. There are at least two difficultieswith Mr Turner's proposal that all the Serene shares be vested in him. In his oralsubmissions Mr Turner said that if the order were made, he would then have the rightto remove Ms del la Varis as a director. However, Serene's constitution provides thatthe number of directors shall not at any time be less than two.14[47] In response to that evidence, Mr Turner submitted that by special resolution hewould be able to appoint another director, remove Ms del la Varis as a director andexecute the necessary bank documentation. He submits Ms del la Varis would remainfully protected by his undertakings.[48] I do not consider this Court should make orders that would lead toMs del la Varis being removed as a director. She has been joined to the proceedingsas a director of Serene.[49] But more importantly, (and while not overlooking Mr Turner's undertakings)once the shares vest in Mr Turner, they become his separate property. This optionremoves the ability of the Court to make orders in relation to that property at thesubstantive hearing.14 Which this Court received as fresh evidence on appeal.[50] The second difficulty is a practical one. Mr Turner concedes that if this Courtalso ordered the Sussex Street rental income be shared equally, he would not be ableto raise a loan.[51] Ms Malone confirms that Ms del la Varis does seek an equal sharing of theSussex Street rental income on an interim basis.15 This was reflected in one of theorders forming part of the consent orders which was that:The parties shall immediately take steps to rent out both dwellings at77 Sussex Street. The rental shall be applied to tax, rates, insurance andagreed outgoings. The balance shall be divided equally between the parties.[52] Mr Turner disputes that Ms del la Varis is entitled to receive anything on aninterim basis when it was his application that was heard in the Family Court.Ms del la Varis did not make an application for interim distribution.[53] That submission ignores s 34 of the Act which provides:34 Discretion of court as to ordersWhere application is made to the court for any order under any provision ofthis Act, the court may, subject to the provisions of the Act, make any otherorder under this Act which could have been made if application for that otherorder had been made when the first-mentioned application was made.[54] It also overlooks the draft orders filed by Ms del la Varis in the Family Courtproposing that each of the parties receive $500,000 from the proceeds of the sale ofSussex Street (on the basis that this sum would be 50 per cent of the net proceeds).[55] Mr Turner also argues that there is no evidential basis for financial hardship onthe part of Ms del la Varis and that Ms Malone is simply making statements from thebar. That is not correct. There was affidavit evidence from Ms del la Varis before theFamily Court that she was suffering financial hardship. Ms del la Varis says she doesnot work in paid employment and she has no career or independent source of income.[redacted] Ms del la Varis receives a benefit from Work and Income New Zealand.[redacted] She says she does not receive any additional funding from Mr Turner[redacted].15 The rental income is $1,575 per week.[56] When Sussex Street was rented out (at which time Ms del la Varis received theincome from the larger house on the property being $965.00 per week including $15for water) she said she diverted that income to her personal bank account and it wasapplied towards outstanding rates, insurances and property related expenses andtowards her legal fees.[57] I accept that given the likely passage of time before the substantive proceedingis heard, Ms del la Varis has established a need and it would be just as between theparties for the rental income from Sussex Street to be shared, if the Court were toaccept Mr Turner's preferred option, namely the vesting of the Serene shares in him.16But as noted in [50] above, the sharing of rental income means Mr Turner could notborrow against Sussex Street.[58] For all the reasons set out above, I do not accept that the Court should make,or is able to make, an order in terms of Mr Turner's preferred option.[59] That only leaves the possibility of the sale of 94 Fairview Crescent whichMr Turner seeks as the alternative form of relief. Ms del la Varis resists this option.First, Ms Malone submits that Mr Turner did not pursue his application for an interimorder for the sale of this property, in the hearing before the Family Court. She submitsit was only resurrected by Mr Turner during the course of the hearing before the HighCourt. Ms Malone submits Ms del la Varis was denied the opportunity to presentconsidered submissions to the Court.[60] Mr Turner's position is that he did not abandon this option in the Family Court.However, even if he did so (and it is not possible for the Court to determine whichparty is correct on this issue) this was an option this Court explored with counsel atthe hearing of the appeal. Ms Malone had the opportunity to make submissions at thattime. Additionally, subsequent to Mr Turner advising that the banks he hadapproached would not assist with a loan, Ms Malone filed a memorandum which16 For completeness, I note that as at 23 July 2020 Ms del la Varis had the sum of $93,521.66 in twobank accounts. That is balanced out by the amount of $109,500 Mr Turner received from theparties' joint bank account on separation.addressed this issue (among others). I do not accept that she has lacked the opportunityto make meaningful submissions to the Court.[61] Ms Malone further submits that in making orders for an interim distribution,"the Court should only vest such sum in one party as the Court is quite satisfied thatthe party would, at least, receive upon ultimate determination".17 Ms Malone submitsthe Court cannot be satisfied that Mr Turner will receive at least half of the propertyat 94 Fairview Crescent in the substantive hearing.[62] Ms Malone says Ms del la Varis' mother purchased 94 Fairview Crescent in1994 and it was registered in the name of Ms del la Varis and her two sisters as toone-third share each. In 2007, Ms del la Varis' sisters' shares were acquired by theparties and the whole of the property registered in Ms del la Varis' name. Ms Malonesubmits that Ms del la Varis' original one-third share of the property is her separateproperty pursuant to s 10(1)(ii) of the Act.[63] Ms Malone's submission is misconceived in two respects. First, the propertyat 94 Fairview Crescent (which was placed in the name of Ms del la Varis by the partiesin 2007) cannot have two separate characters. Mr Turner submits it is clear that94 Fairview Crescent is relationship property. He says it is uncontested that theproperty was purchased (to the extent cash was needed) with relationship funds,namely mortgage finance, and that it was purchased and funded for the benefit and useof the relationship, and later used as a home.[64] In any event, there are cases of this Court which have considered the issue ofwhether an interim distribution may be made from separate property.[65] In Cossey v Bach, Fisher J said:18Although I have by this stage concluded that all of the relevant assetsconstitute separate property, s 25(3) of the Matrimonial Property Act permitsthe Court to "make such declaration or order relating to the status, ownership,vesting, or possession of any specific property as it considers just". Thejurisdiction appears to extend to separate property. Orders may therefore be17 B Atkin Relationship Property: Orders of the Court, Family Law Service (NZ) at , [7.401], citingMDC v EJK FC Blenheim FAM 2004-006-159, 7 July 2004 at [35].18 Cossey v Bach [1992] 3 NZLR 612 (HC) at 639.made vesting particular assets in their entirety and particular partiesnotwithstanding the existing state of the legal title, with compensatingmonetary adjustments in favour of other parties [66] Then, in SM v LFDB, Ellis J said:19I note that there is authority that suggests that an order made under s 25(3)need not be limited to relationship property: Cossey v Bach. Although MrsHinton candidly expressed her reservations about the correctness of thatauthority, the plain words of the subsection do appear to admit that conclusion.The relevance of such a conclusion in the present case is that even if I couldnot be satisfied to the requisite standard that the debt owed by LFDB'scompany to LFDB was relationship property, I would not be precluded frommaking an interim distribution order in relation to it.(Citations omitted)[67] In Owen v Thomas, Duffy J, after referring to the above two cases and a passagein Fisher on Matrimonial and Relationship Property,20 stated that she had lessconfidence than Ellis J as to whether orders under s 25(3) of the Act can affect separateproperty.21 Duffy J concluded:22On one view, therefore, once a Court has made decisions under thoseprovisions in the Property (Relationships) Act that have the effect of adjustingor drawing what would otherwise be separate property into the pool ofrelationship property for distribution, those findings may then be put intoeffect by an order made under s 25(1)(b). In this way, the Court's ability unders 25(1) would not be constrained to ordering division of property that primafacie was relationship property. If s 25(1) were to be read this broadly, itwould also allow for s 25(3) to be read as applying to specific property thatwas separate property of the type that would be susceptible to being drawninto the pool of relationship property. However, in that case, an order under s25(3) that affected specific separate property could only be made once a Judgewas satisfied that the circumstances of the parties justified the separateproperty of one party being drawn into the pool of relationship property to bedivided under s 25(1) [68] For Ms del la Varis to require a determination that property is relationshipproperty would defeat the purpose of an interim distribution which is sought prior tothe ultimate determination. If a party could prevent interim distribution from19 SM v LFDB [2013] NZHC 1056 at [31].20 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed,LexisNexis) at [18.56].21 Owen v Thomas [2014] NZHC 2200 at [22].22 At [25].occurring by claiming that an asset is not relationship property, it would result inperverse incentives and unjust outcomes.23[69] The second misconception relates to the calculation of the value of therelationship property. The calculation made at the ultimate determination is in respectof all of the property in total, not in respect of each individual property comprising thetotal pool. In the substantive claim, Ms del la Varis says she has a substantial economicdisparity claim (or perhaps more accurately a claim for unequal sharing). Howeverthe claim is classified, the expert witness for Ms Del La Varis calculates, on a worst-case basis for Mr Turner, his entitlement to the relationship property pool totals$662,000. Mr Turner's expert disagrees. Without necessarily accepting the evidenceof Ms del la Varis' expert, it is apparent that the sale of 94 Fairview Crescent, whichis valued at $850,000, would produce $425,000 if distributed equally. This amounttherefore does not exceed, even on a worst-case basis, for Mr Turner the amount hewould receive on final distribution. Even adding in 50 per cent of the $1575 weeklyincome from Sussex Street does not exceed the figure calculated by Ms del la Varis'expert.[70] An order for the sale of 94 Fairview Crescent is the only available option forinterim distribution purposes. The parties accept that there is a need on Mr Turner'spart for interim relief. The Judge did not err when he found Ms del la Varis was alsoin need of interim relief.Application to admit fresh evidence on appeal[71] Finally, in the substantive proceeding Ms del la Varis claims that her separateproperty interests in both Richmond Road and Sussex Street were disposed of toSerene at Mr Turner's direction for inadequate or no consideration. In relation toRichmond Road, Ms del la Varis claims that its transfer to Serene occurred withouther having the benefit of independent legal advice.[72] Mr Turner strongly disputes that and sought to file fresh evidence on appealwhich he says proves otherwise. Even if I were to admit the evidence, the Court could23 See SM v LFDB, above n 19, at [33].not reach a view on the issue without cross-examination; and in any event, adetermination on this point is not necessary in order to dispose of the appeal. Itherefore do not admit the evidence.Result[73] The appeal is allowed. To the extent it is necessary to do so again, I quash theorders made by Judge Burns on 19 November 2020.24 I make orders:(a) directing the sale of the property at 94 Fairview Crescent, Omiha,Waiheke Island;(b) that the net proceeds of the sale are to be divided equally betweenMr Turner and Ms Del La Varis;(c) that the parties shall immediately take steps to rent out both dwellingsat 77 Sussex Street, Grey Lynn, Auckland;(d) that the rental income from 77 Sussex Street shall be applied to tax,rates, insurance and agreed outgoings; and(e) that any balance shall be divided equally between the parties.Costs[74] Mr Turner, as the successful party on the appeal, is prima facie entitled to costs.I did not hear from the parties on costs, and they are accordingly reserved.[75] In the unlikely event that the parties are able to agree on costs, they are to filea joint memorandum within 20 working days of the date of this judgment. In theabsence of agreement, Mr Turner is to file and serve his memorandum withinfive working days of the date for the joint memorandum. Ms del la Varis is to file andserve her memorandum in response within a further five working days.24 As noted in [31], the orders made by Judge Burns were quashed when I made the consent orderson 24 February 2021.[76] Costs memoranda should not exceed five pages (excluding attachments). I willdetermine costs on the papers.___________________________________Gordon J