NEVILLE SHAUN RICHARDSON V MARY ELIZABETH CASSIN CA CA24/03

NEVILLE SHAUN RICHARDSON V MARY ELIZABETH CASSIN CA CA24/03 27 November 2003IN THE COURT OF APPEAL OF NEW ZEALAND CA24/03BETWEEN NEVILLE SHAUN RICHARDSON Appellant AND MARY ELIZABETH CASSIN Respondent Hearing: 4 November 2003 Coram: Tipping J McGrath J Glazebrook J Appearances: J A L Gibson QC and N Levy for Appellant G J Toebes for Respondent Judgment: 27 November 2003JUDGMENT OF THE COURT DELIVERED BY TIPPING J Introduction[1] This appeal and cross appeal from France J concern her determination that the assets in dispute on the breakdown of the parties' de facto relationship were to be shared equally. The case is governed by the law as it stood before the coming into force of the recent relationship property legislation. The leading authority is therefore Lankow v Rose [1995] 1 NZLR 277.Background[2] The appellant, Mr Richardson, and the respondent, Ms Cassin, lived together from 1990 to 1999. They separated on 3 November 1999 having never married. Their relationship therefore lasted some 9½ years. During its course two childrenwere born, the first in May 1994 and the second in May 1996. Mr Richardson worked as a consultant in the computer industry. His employment was not, however, continuous. His consultancy work was carried out through a company called Business Emphasys Ltd (BEL), all but one of the shares in which were held by him. Ms Cassin was in a fulltime salaried position until the end of 1993. She then had the children and returned to work in May 1999. At that point she began contracting work fulltime and her services, like those of Mr Richardson, were contracted through BEL. Initially the parties lived in Ms Cassin's flat, each contributing to the expenses. They bought their first home in May 1992. It is not necessary to examine the real estate transactions in which the parties engaged in any detail because there is no longer any issue about the equal division of their real estate portfolio. [3] The first business venture upon which the parties embarked together was a mail order business in the United Kingdom called Kiwi Slippers. It too was operated through BEL. Mr Richardson's father assisted in the running of this business, which also involved trips to England primarily by Mr Richardson but also, on two occasions, by Ms Cassin. These occurred during the northern winter. [4] The main outstanding issue between the parties, which arises on this appeal, concerns the shareholding in BEL. The Judge decided that it should be divided equally. On his appeal Mr Richardson contends that Ms Cassin should not have been awarded any interest in his shareholding on the basis that she has already been compensated via the real estate portfolio and otherwise at a level which was more than enough to reflect her contributions to the assets in question. [5] There are two lesser but still significant issues raised on the appeal. They concern a debt which Ms Cassin is said still to owe Mr Richardson, amounting to nearly $31,000.00, and the Judge's conclusion that the parties should share equally three shares purchased in 1999 in a Hong Kong Racing Syndicate. [6] Before addressing the factual issues in greater detail, we will briefly refer to the legal position. It is sufficient for the purposes of this case and the way it was argued to note that, in terms of Lankow v Rose, Ms Cassin had to demonstrate, as regards the shareholding in BEL, first that she contributed to the value of that asset.Ms Levy, who argued this part of the case for Mr Richardson, accepted that this had been demonstrated via Kiwi Slippers. Second, Ms Cassin had to show that she expected an interest in the BEL shares. Ms Levy acknowledged that this too had been shown. Ms Levy also accepted that Ms Cassin's expectation of an interest in BEL was reasonable. On the final issue Ms Levy similarly accepted that it was reasonable for Mr Richardson to expect to have to yield an interest in BEL, albeit not, she contended, at the level of a 50% share. As noted earlier, Ms Levy also submitted that overall the Court should have been satisfied that Mr Richardson had already yielded to Ms Cassin more than enough elsewhere to satisfy her expectation of an interest in BEL. This of course was primarily a reference to the Judge's decision awarding Ms Cassin a half interest in the real estate portfolio or SAM as the parties called it, despite the contribution which funds from BEL had made to SAM. [7] Against that background the first issue which logically arises in this Court is Ms Cassin's contention on her cross appeal, or notice to support the judgment on other grounds, that the Judge was wrong not to find that the parties held a common intention that all assets which they each owned should be shared equally if they separated. If that were their common intention then clearly, as Mr Gibson QC and Ms Levy for Mr Richardson accepted, Ms Cassin would have had a reasonable expectation of a general 50% share and it would also have been reasonable for Mr Richardson to expect to yield such a share on separation in accordance with the common intention.Common intention[8] This is what the Judge said on the subject of common intention:[51] In relation to BEL, it is quite possible that there was a common intention. I accept the defendant's evidence which was that the parties started out with the idea of running various businesses together. They, of course, brought different skills to those businesses. They used BEL as a vehicle because it was convenient to do so. They had explored the possibility of setting up a "shelf" company but did not pursue that; the reason for that is not clear but that is not critical. Even if there was no express common intention, the alternative basis advanced by the defendant succeeds. That is because I find that there were contributions by the defendant to the property; a reasonable expectation of an interest; and that the plaintiff should reasonably expect to yield the defendant an interest.[9] Mr Toebes argued for Ms Cassin that the Judge, having come close to finding a common intention to share equally, should on the evidence have gone further and found that such an intention had been established on the balance of probabilities. Mr Gibson QC and Ms Levy argued that the Judge had been correct in stopping short of the point for which Ms Cassin was contending. It is apparent from the judgment as a whole that the Judge formed a favourable view of Ms Cassin as a witness. In several respects she expressly accepted her evidence. Because of the approach she took, the Judge did not need specifically to address Ms Cassin's evidence on this topic. Had she done so we think it likely the Judge would have gone further than she did on the common intention point. We also note that, no doubt for the same reason, the Judge confined her attention to the question of express common intention. As Ms Levy rightly accepted a common intention may be implicit from conduct or statements made, as well as being express in the sense in which that word is normally used. [10] There was some confusion in the submissions made for Mr Richardson on this topic. We understood Mr Gibson to accept that "at the start" the parties did have a common intention to share equally the assets they owned; but that Mr Richardson's consultancy income had to be excluded from that intention. During her submissions Ms Levy suggested that there had never been any common intention to share assets equally, save in respect of the businesses the parties ran together, primarily Kiwi Slippers. In this situation Ms Levy argued that there was no relevant common intention as regards BEL, because only part of it, Kiwi Slippers, was run jointly. [11] Be all that as it may, we consider the evidence leads to a clear inference that the parties, at least implicitly, agreed to share assets and discharge liabilities on an equal basis, and that this intention, which they each shared, extended to what would happen if their relationship broke down. This conclusion is supported by evidence which demonstrates that in many respects the parties contributed on an exactly equal basis to the payment of outgoings and other indebtedness. Mr Richardson's basic complaint, as regards sharing the BEL shareholding equally, is that he channelled a great deal of his consultancy income into BEL. His contribution was in that way, he contended, nowhere near matched by Ms Cassin.[12] In opposition to Ms Cassin's common intention argument, Ms Levy drew attention to her evidence:2.25 Shaun returned to New Zealand in March 1991 and shortly thereafter got a short-term contract position. Shaun went back to contract computer consultancy. I was never aware of how Shaun treated his consulting income as against our joint income from the slipper business. I had assumed that he kept his consulting income separate from our joint income from the slipper business as we had kept my income separate.[13] We do not read this evidence as necessarily directed to what was to happen by way of asset sharing if there was a separation. Indeed, in respect of the same time period as that to which she was referring in the foregoing evidence, Ms Cassin said:2.12 From the beginning of our relationship, I paid the rent of $250.00 per week approximately at our home in Mallam Street, and the household expenditure, which would have been in excess of $200.00 per week. Shaun paid a contribution to the rent of $100.00 - $125.00 approximately per week. I cannot remember the exact figures. It was recognised that Shaun should preserve his money for the business and I would pay for a large amount of our living costs – e.g. I paid all our weekly food costs, which was about $150.00 per week, gas, power and phone. There were occasions where I paid an account and Shaun claimed on the business for those accounts.[14] And, importantly, Ms Cassin also deposed:2.18 I had my birthday in the UK in November 1990. Shaun gave me a birthday card that I still have saying "To my wife on her birthday". Shaun always said we were the same as a married partnership and that we were doing everything for our joint benefit. (original emphasis)[15] We can see no reason to doubt the veracity and reliability of Ms Cassin's evidence in this respect, particularly in the light of the Judge's favourable impression of her as a witness. Our attention was not called to any evidence in which Ms Cassin resiled from the evidence we have cited, nor was any suggestion made that she had erred in what she said. We therefore consider that we can properly go further than the Judge's assessment, particularly as regards the implication which can and should reasonably be drawn from all the evidence. We are satisfied that, on the balance of probabilities, the parties did form, at least implicitly, a common intention to share all their assets equally. They were working together for their joint benefit on this basis. They each contributed in different ways, but each recognised that they were embarked on a joint enterprise as equal partners in both the domestic and business sense of that word.[16] That being our view on the common intention issue, Ms Cassin's cross appeal or, more accurately, her notice of intention to support the judgment on other grounds, must succeed. The common intention point clearly results in there being no separate indebtedness owed by Ms Cassin to Mr Richardson. Similarly the Judge's determination that the Hong Kong Racing Syndicate shares be shared equally must be upheld on the same basis. The contrary argument depended on a finding that BEL was to be held in other than equal shares. [17] It is not strictly necessary for us to examine the so-called alternative basis on which the Judge reached her 50/50 decision. We will, however, briefly address that issue and indicate why we consider the Judge was justified in the way she approached the matter. The sole issue as earlier noted, in terms of Lankow v Rose, and on the assumption that there was no common intention, is whether it was reasonable for Mr Richardson to expect to yield Ms Cassin a 50% interest in BEL. That question really resolves itself into whether it was reasonable for Mr Richardson to expect to yield Ms Cassin a 50% interest overall. If it was, he cannot claim to have satisfied her BEL interest by means of the 50/50 sharing of the SAM portfolio or otherwise. The matters which were relevant to the implication of a common intention to share equally are relevant again to this aspect of Lankow v Rose. [18] Mr Richardson's argument was based substantially on subdiving BEL into its subsidiary elements, albeit all its business was conducted under the same corporate structure. His essential thesis was that on this basis Ms Cassin had contributed in a material way only to Kiwi Slippers. He alone had contributed to that part of BEL which was based on his consultancy work. We consider there is an artificiality in this approach which is not consistent with the equitable underpinning of Lankow v Rose, or with the fact that BEL was one company with no clear differentiation made between the different activities within it. [19] While the contributions must be to assets rather than to the relationship, it is, as Lankow v Rose recognised, often the case that contributions to the relationship qualify also as indirect contributions to assets. Lankow v Rose does not mandate a purely mathematical approach to contributions, let alone to the quantification of the ensuing interest. If partners have children the activities of one in maintaining thehousehold and caring for the children will usually amount to an indirect contribution to the assets acquired by means of the commercial activities of the other. Had the roles been reversed, it is highly likely that the non-domestic partner would see it that way. [20] Mr Richardson's cost accountancy approach to the Lankow v Rose exercise overlooks the point made in that case that while contributions are the foundation of the jurisdiction, the constructive trust is imposed because it would be unconscionable, in the light of the nature of the relationship and the parties' reasonable expectations, for the party with the legal title not to acknowledge the other's equitable title to the extent of what is a reasonable expectation on each side. [21] The Judge found on the facts that Ms Cassin contributed to the assets in the way she said she did. The Judge then observed:[56] While the plaintiff seeks to minimise the contributions and differentiate between his role and that of the defendant, there is no reason for me to doubt the essence of the defendant's account. Indeed, to some extent at least, the plaintiff does not dispute that the defendant assisted in some ways. Rather, speaking generally, he disputes the extent of the "contributions" and does not consider they were contributions to the assets. I accept that an occasional contribution identified by the defendant (e.g. obtaining a hawker's licence) may not have involved a great deal of time and so to that extent some "contributions" may be a little inflated. However, both parties put considerable efforts into their business ventures. [57] The defendant's evidence as to her contributions is consistent with both her work history and her own property/business experience prior to meeting the plaintiff. It is also consistent with the increase in value in the Kiwi Slippers business over time and with undisputed evidence. For example, there is no dispute the defendant took leave from her employment to go to the UK on one of her two trips there to assist with the Kiwi Slippers business. Also, in June 1994, when the plaintiff wrote to the UK Customs and Excise over VAT for the Kiwi Slippers business he described it as a small "family" business "run" by his wife (the defendant) and himself. Further, although the venture was short-lived, the documentary material (such as the defendant's workbook) relating to Recruitment (USA) also supports the defendant's view of events. Again, the plaintiff acknowledges the defendant's role in this venture but is dismissive of its impact on what was a venture of short duration. [58] I accept, as the defendant essentially accepted, that the parties had different roles. However, this does not mean there was no contribution in the Lankow v Rose sense from the defendant. Even if at the "operational" level, the defendant's contributions have assisted in the building up and maintenance of the assets in the business.[59] The defendant's contribution in terms of looking after the children and the home also cannot be ignored. In this case, that contribution has assisted the plaintiff in terms of his ability to continue in consultancy work and in the Kiwi Slippers business. I believe the defendant as to the efforts she put in to the residential properties business whilst at the same time looking after the children. That evidence is consistent with the evidence about the parties' relationship and their work ethic.[22] Significantly the Judge then added, in a passage which also reinforces our conclusion on the common intention issue:[60] In terms of a reasonable expectation on the defendant's part, I prefer the defendant's evidence to that of the plaintiff. That is, that the parties were working on the basis that their businesses were joint ventures and that they would both share in the benefits. I cannot see how there is any other explanation for the parties' actions in the course of their relationship. The operation of the parties' bank account is also consistent with the defendant's approach. Funds were put to mutual use; funds from the sale of the Norwich and Awarua properties went into the joint account; BEL was used as a vehicle to claim deductions for household expenses; and so on. The same observations are applicable to the reasonableness of the plaintiff yielding to the defendant's claim.[23] The Judge squarely confronted the matters which Mr Richardson had argued made it unreasonable to expect him to yield any interest, let alone a half interest overall. She said, referring to Mr Richardson as the plaintiff:[62] The apparent obstacles are, first, that the plaintiff contributed the initial capital to Kiwi Slippers. It was his idea and the business was under way, albeit in a fledging way, when the parties' relationship commenced. The defendant largely accepts that although she maintains the business did not really get underway until she agreed to be part of it. Second, overall the plaintiff would have contributed the greater income stream in gross terms over the course of the relationship. The defendant accepts that. However, against these two factors, after their relationship commenced in early 1990, the plaintiff was unemployed, the defendant employed. At the start of the relationship, both had relatively little in financial terms although the defendant paid most of the bills for the first four years as she was more reliably employed. The plaintiff had periods when he was not receiving any consultancy income.[24] The Judge correctly directed herself in law on quantification issues. There was no submission to the contrary. She said:[68] In terms of quantification, as Tipping J observes in Lankow v Rose, the claimant (the defendant) does not start from a presumption of a half-share but rather from nothing:"A de facto claimant must demonstrate first a case for an interest and then what the interest should be. The interest must broadly reflect the contributions. Arithmetical precision will generally be unattainable and is in any event not necessary. The Court must, however, do its best to reflect in the assessed shares the value of the claimant's contributions. That value will represent, if uncompensated, the amount of the unjust enrichment accruing to the defendant which in turn is the amount of the claimant's sacrifice. The contributions must be judged from a proprietary point of view" (at 295). [69] In a recent judgment, the Court of Appeal described the courts' approach as, " conventionally expressed in terms of making an award corresponding to the reasonable expectation of the parties as generally commensurate with their respective contributions to the property: see Lankow v Rose (Taylor v Watson CA271/01, 6 August 2001) (per Baragwanath J, para [12])." [70] This can only be a general assessment based on an overview of the evidence, and on the impressions gained about the nature of the relationship between them. Such an overview reveals a couple working together and building up their assets by their individual, differing, contributions. Weighing those contributions I have concluded they share in this asset [BEL] on a 50/50 basis. It follows that the same approach applies to the HKRS shares and to the forestry rights.[25] We find ourselves unpersuaded that the Judge erred, either in law or in her assessment of quantum. As the case has turned on common intention, we do not propose to go further into Mr Richardson's more detailed quantum submissions. We reject his argument that the Judge's order for equal division did not accord with the contribution-based analysis in Lankow v Rose. We reiterate that Lankow v Rose does not require a rigid cost accountancy type of approach. Nor do we accept Mr Richardson's argument that the proper analysis shows that Ms Cassin's contributions are more than properly represented in the assets in which she now has an unchallenged 50% share. For the avoidance of doubt, we also reject the submission that there is any debt owed by Ms Cassin to Mr Richardson and confirm that it is the gross proceeds from the Hong Kong Racing Syndicate shares which are to be shared equally. [26] For the reasons given the appeal is dismissed. Mr Richardson is to pay Ms Cassin for costs in this Court the sum of $6,000.00 plus disbursements, to be fixed if necessary by the Registrar. All outstanding issues of detail orimplementation are to be dealt with in the High Court, where any further formal orders are to be sought if they are required.Solicitors: Sygrove Law Office, Wellington for Appellant Buddle Findlay, Wellington for Respondent