BOOTH v BOOTH [2020] NZCA 451

BOOTH v BOOTH [2020] NZCA 451 [25 September 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA529/2019[2020] NZCA 451BETWEEN TANIA BOOTHAppellantAND JASON BOOTHFirst RespondentRAY CHARLES BOOTHSecond RespondentANN BOOTHThird RespondentHearing: 16 June 2020, further submissions received on 30 June 2020Court: Goddard, Ellis and Katz JJCounsel: J J Delany for AppellantJ W Maassen for First RespondentA N Isac QC and G M Richards for Second and ThirdRespondentsJudgment: 25 September 2020 at 3.00 pmJUDGMENT OF THE COURTThe appeal is dismissed.____________________________________________________________________REASONS OF THE COURT(Given by Ellis J)[1] Ray and Ann Booth are embroiled in what is essentially a relationship propertydispute between their son, Jason, and his former wife, Tania.1 The aspect of that1 Because all the parties have the same surname, we will refer to them by their first names.dispute presently at issue is Tania's claim under s 182(1) of the Family ProceedingsAct 1980 (the FPA) that there was a post-nuptial settlement by which Ray effectivelymade available to Jason and Tania some $1.5 million. That claim was the subject ofsuccessful applications for summary judgment (by Jason) and for strike-out (by Rayand Ann) in the High Court.2 Tania now appeals.Background[2] In 1998, Ray and Jason formed Booths Farming Ltd (BFL), a company thatbought and sold farmland. In 2001 Ray formed an operational company throughwhich he ran the family farming business. This company became Booth AgricultureLtd. An asset of the wider farming enterprise was farmland situated at Poplar Road,Opiki, owned by Ray personally.[3] Jason and Tania married in 2001. The couple then moved onto the Opiki farmproperty. Jason and Tania were both heavily involved in farming the property.3They had three children there together.[4] In 2011, the family agreed to a generational handover of the farming operation.They settled on a restructuring plan proposed by Peter Savage, an accountantinstructed by the Booths. The corporate entities were reorganised and the farmingbusiness (including, in particular, the Opiki farm) was sold to a company incorporatedby Jason and Tania for that purpose: Poplar Road Farms Ltd (PRF). Jason and Taniaare 50:50 shareholders in PRF.[5] The reorganisation left the balance of the Opiki farm purchase price as a debtowing by PRF to Ray. This debt was recorded in a deed dated 1 November 2011(the Deed) and signed by both Tania and Jason, as directors of PRF. In the Deed,PRF was described as the "Debtor" and Ray was referred to as the "Creditor".Recital A recorded that Ray had advanced $1,150,251.99 to PRF. Recital B recordedthat he had done so to help PRF to purchase the farm. The operative provisions wereas follows:2 Booth v Booth [2019] NZHC 2424, [2019] NZFLR 225 [High Court judgment].3 Ray and Ann also have a daughter, but she is not involved in the farming operations.1. THAT the said sum of $1,150,251.99 has been advanced by theCreditor to the Debtor repayable "upon demand" 2. PENDING repayment of the advance or any part thereof interest onthe advance or so much of it as shall from time to time remain owing will bepayable by the Debtor to the Creditor at a rate to be decided between themfrom time to time or if no rate is agreed then at the Government Stock ratethen prevailing in New Zealand calculated from the date of advance withannual rests and payable on the 31st day of March in each year ("the interestpayment date").3. NO such interest shall be payable pursuant to preceding clause 2unless demanded by notice in writing by the Creditor from the Debtor on orbefore each interest payment date.4. THIS deed shall constitute an agreement to mortgage and in the eventthat the Creditor requires security the Debtor will provide in favour of theCreditor a subsequent registered mortgage over the land in Certificate of TitleWN469/53 and WN469/51. The intention of this clause is to createa caveatable interest in favour of the Creditor.[6] The $1,150,251.99 debt figure used in the Deed was indicative only, becausethe transaction occurred halfway through the financial year. The idea was that thefinal amount owing would be ascertained at year end by Mr Savage. That processbecame slightly complicated due to cash payments received by Ray and Ann, and dueto transfers of assets and liabilities between the various Booth entities and individuals.[7] In any event, in March 2012, Mr Savage prepared a final statement of position,which was used to calculate the final quantum of the debt. Mr Savage recorded inan 8 March 2012 email to the lawyer, Mr Wadham, that the "final difference of$1,150,251.99 [could] be confirmed as a debt owing between the parties". The emailalso noted that Ray, Jason and Tania had agreed on the figure and that it would bea "loan between Poplar Road Farms Limited and R C Booth". This figure was —rather surprisingly — exactly the same as the "indicative" figure first recorded inthe Deed.[8] In 2016, Jason and Tania separated. Jason commenced proceedings in theFamily Court for the division of relationship property under theProperty (Relationships) Act 1976 (the PRA). In those proceedings, Tania alleged itwas never intended that the debt owed by PRF to Ray would be repaid, so the PRFshares were worth some $1.1 million more, and her share of the relationship propertyshould be increased by some $550,000.[9] Next, Ray and Ann commenced proceedings against PRF in the High Court(the rectification proceedings). They sought rectification of the amount owing underthe Deed, which they said Mr Savage had undercalculated by over $400,000. As wellas rectification of the Deed itself, they sought a declaration that, under the Deed,PRF owed Ray a debt of $1,579.134.94.[10] The Family Court then transferred the PRA proceedings to the High Court sothey could be case-managed with the rectification proceedings. At the first casemanagement conference, Associate Judge Johnston indicated to Tania that if shewished to maintain her claim on behalf of PRF that the Deed was unenforceable,she should apply for leave to bring a derivative action under s 165 of the Companies Act1993.[11] Although Tania did then file such an application on behalf of PRF — by wayof defence to the rectification proceedings — she later abandoned it, just prior to thehearing. She then filed new proceedings under s 182 of the FPA, naming Ray and Annpersonally as defendants as well as Jason. Section 182 relevantly provides:182 Court may make orders as to settled property, etc(1) On, or within a reasonable time after, the making of an order underPart 4 of this Act or a final decree under Part 2 or Part 4 of theMatrimonial Proceedings Act 1963, the Family Court may inquire intothe existence of any ante-nuptial or post-nuptial settlement madeon the parties, and may make such orders with reference to theapplication of the whole or any part of any property settled or thevariation of the terms of any such settlement, either for the benefitof the children of the marriage or of the parties to the marriage or either of them, as the court thinks fit.(3) In the exercise of its discretion under this section, the court may takeinto account the circumstances of the parties and any change in thosecircumstances since the date of the agreement or settlement and anyother matters which the court considers relevant.(5) An order made under this section may from time to time be reviewedby the court on the application of either party to the marriage or ofeither party's personal representative.[12] Essentially Tania's pleading was that:(a) She had an expectation that the debt owed under the Deed would notbe repaid, based on her understanding that the loan was to be gifted andthat Ray did not require it to be repaid.(b) If Ray and Ann were successful in the rectification proceedings(which had not at that point been determined), then:(i) the value of PRF would be reduced by the amount of the debt,which would reduce the value of Tania and Jason's relationshipproperty; and(ii) Tania, Jason, and their children would no longer have anexpectation of receiving any benefit from the debt not having tobe repaid.(c) The Court should therefore make orders under s 182 in relation to theoutcome of any successful claim by Ray and Ann in the rectificationproceedings.[13] Because PRF's shareholders, Jason and Tania, were fundamentally at odds(Jason supported the claim; Tania opposed it), PRF did not defend the rectificationproceedings. A formal proof hearing took place before Clark J in early 2019.After a thorough analysis Clark J:4(a) ordered that the Deed was to be rectified so that it recorded the amountowing as $1,579,134.94; and(b) declared that PRF owed Ray the sum of $1,579,134.94 on the terms inthe Deed.4 Booth v Poplar Road Farms Ltd [2019] NZHC 807 at [47]–[48].[14] After Clark J's decision, Jason applied for summary judgment on the FPAclaim. Ray and Ann applied to strike it out.5 It was those two applications that camebefore the Associate Judge on 12 August 2019.The decision under appeal[15] The Associate Judge summarised the substantive pleading of Tania's FPAclaim in the following way:6[25] Paragraph 8 focusses on the 1 November 2011 deed. In thisparagraph, Tania says that, although the deed records a loan between [Ray]and Poplar Road Farms, she "had an expectation that the loan would not berequired to be repaid to [Ray], and she would receive the full benefit of thewider family business restructuring arrangements between all the parties thattook place in 2011".[26] In paragraph 9, Tania says that her "expectation that the loan wouldnot have to be repaid results from her understanding that the loan was to begifted and that [Ray] did not require it to be repaid".[16] Tania's case, then, was that if Ray was entitled to recover the debt, herexpectation that it was not to be repaid would be thwarted. The Associate Judgeinferred that Tania also contended that this would differentially affect her and Jason,and would detrimentally affect their children because she had day-to-day care of them.The Associate Judge noted that, while expressed obscurely, Tania's claimed relief wasa s 182(1) FPA order that alleviated the alleged unfairness resulting from the divorce.7[17] As far as the application for summary judgment was concerned, after outliningthe terms of s 182(1), the Judge noted that the issue here related to a potentialpost-nuptial settlement. He reviewed the relevant authorities: Ward v Ward (CA) and5 In the alternative, they applied to be removed as parties to the proceeding pursuant to r 4.56(1) ofthe High Court Rules 2016 on the basis that their presence was unnecessary to determine the claim.6 High Court judgment, above n 2.7 At [27] and [30].Clayton v Clayton in particular.8 He noted that in Clayton the Supreme Court hadconfirmed that s 182(1) involves a two-stage test, namely:9(a) whether the transaction constitutes a nuptial settlement; and(b) whether (and, if so, in what manner) the Court's discretion under s 182should be exercised.[18] The Associate Judge recognised that the Court of Appeal in Ward hademphasised that there "should be a generous approach to the interpretation of the term'settlement'".10[19] Mr Maassen's submission (on behalf of Jason) was that the Deed — a recordof debt — was the antithesis of a settlement in favour of Jason and Tania. But theAssociate Judge noted that Tania's position had developed since her pleading.The Associate Judge said she now claimed that, alongside the Deed, there wasa collateral agreement: if she and Jason stayed together, there would be no demand forrepayment. It was this collateral agreement that (Tania said) constituted the relevantsettlement.11[20] As to the existence of a settlement, the Judge said that the arrangements couldpotentially constitute a disposition:[54] Although Tania's case is not very adroitly pleaded, if her evidence asto the terms of the arrangements were to be accepted, then, adopting a liberalapproach to the notion of a settlement under s 182(1), and recognising thatthere are cases in which arrangements well short of an express trust,or anything that looks like a trust, have been found to constitute settlements,the view I take is that it would not be appropriate summarily to dismiss thepossibility of a court concluding that those arrangements involved or includeda disposition that "makes some form of continuing provision for both or eitherof the parties to a marriage in their capacity as spouses, with or withoutprovision for their children".12 The arrangements were arguably continuing innature because they depended upon the on-going commitment of [Ray] not to8 Ward v Ward [2009] NZCA 139, [2009] 3 NZLR 336 [Ward (CA)]; and Clayton v Clayton[2016] NZSC 30, [2016] 1 NZLR 590.9 Clayton, above n 8, at [27].10 Ward (CA), above n 8, at [22]; cited in Clayton, above n 8, at [32].11 High Court judgment, above n 2, at [50].12 This is a quotation from Clayton, above n 8, at [33].call in the loan, and the on-going anticipation that one day the loan would beforgiven, potentially in parts over a period of time.[21] He noted that proving such an arrangement (and so, a collateral agreement)would be difficult for Tania, but concluded that it was not so impossible as to warranta summary judgment on this point:[55] Of course, Tania would face difficulties in advancing such a case.Although such arrangements are not uncommon within families, the formaldocuments here contain no suggestion of any such agreement, and herevidence will be contradicted by [Ray], Jason and others.[56] However, assessing the evidence — both what the various deponentssay and the contemporaneous material — the view I have reached is that Jasoncannot establish to the necessary degree of certitude that Tania's contentionthat the arrangements involved or included a settlement cannot succeed or thatthere is no issue worthy of trial. [22] Next, and proceeding on the assumption that a collateral agreement/settlementcould be established at trial, he turned to the question of whether that agreement couldbe said to be "nuptial" in nature. He noted that the essential test was whether thesettlement was "premised on the continuance of the marriage" and whether it madesome form of continuing provision for one or both of the partners "in their capacity asspouses"; there must be "a connection or proximity between the settlement and themarriage or civil union".13[23] The Judge concluded that the (assumed) settlement here was arguably ofa nuptial character:[60] On Tania's case, the alleged settlement was expressly contingent onthe continuation of their marriage. That, in my view, could render it nuptialin character. The fact the debt was owed by Poplar Road Farms, and not Taniaand Jason personally, would not detract from the reality of the transaction, ifTania could prove it at trial. There have been other cases where transactionsconducted through corporate entities have been recognised as nuptial incharacter. Nor does the fact [Ray] would be the person providing the benefitunder the settlement prevent it from being nuptial in character. The SupremeCourt has made it clear that the focus is on whether there is sufficientconnection to the marriage and not on the identity of the settlor. In any event,it is common for nuptial settlements to involve dispositions by parents or otherfamily members.(Footnotes omitted.)13 High Court judgment, above n 2, at [59]; citing Ward v Ward [2009] NZSC 125, [2010] NZLR 31at [20]; and Clayton, above n 8, at [33]–[34] and [86].[24] But then came the clincher: whether the Court might (arguably) exercise itsdiscretion and make an order of the kind sought by Tania under s 182. After referringagain to the decisions in Ward (SC) and Clayton, the Judge said:[65] In short, the discretion under s 182(1) exists to remedy injusticesresulting from changes in circumstances that arise from the failure of thepremise upon which the nuptial settlement was based. Typically, all partiesassume the marriage will continue, or at least do not turn their minds to whatwould occur in the event of divorce. As a consequence, when divorce occursthe nuptial settlement no longer fulfils the purpose contemplated by theparties.[25] And so (the Associate Judge found) the difficulty with Tania's position wasthat the alleged collateral agreement (settlement) was expressly conditional on themarriage continuing. There had, accordingly, been no failure of the premise on whichthe nuptial settlement was made because the premise was that Jason and Tania couldonly rely on receiving the anticipated benefit — the value of the loan — for theduration of their marriage. There was no relevant change in circumstances and noinjustice to remedy. The Associate Judge concluded:14Accordingly, in my judgement, there is no realistic possibility of the Courtexercising its discretion to vary the nuptial settlement for Tania's benefit.For that reason, even if Tania could establish a nuptial settlement at trial, herclaim could not succeed.[26] In light of his conclusion on the summary judgment, the Associate Judge wasable quickly to dispose of the strike-out. He said:[78] To the extent that an application pursuant to r 15.1(1)(a) is focussedon the pleadings, I accept Mr Isac's submission that Tania's pleading as itcurrently stands does not capture accurately the essential basis for her claimand does not disclose a tenable cause of action. There is of course ampleauthority for the proposition that a court will be slow to strike out a claim onthe basis of infelicitous pleading if it appears that the pleading could beamended so as to articulate a tenable case. However, in this case, I have takenTania's case as Mr Delany has advanced it — notwithstanding that this goeswell beyond the pleading — and concluded that it cannot succeed.14 At [66].JurisdictionThe problem[27] Before turning to consider Tania's appeal, it is necessary to say somethingabout jurisdiction, which was an issue we raised at the hearing. The question waswhether the High Court had jurisdiction to hear and determine the application unders 182.[28] As noted earlier, in June 2018, Jason's PRA proceedings were transferred tothe High Court. That transfer was effected in accordance with s 38A(2)(b) of the PRA,which permits a transfer where there are High Court proceedings with related issues(as there were here, in the form of Ray's rectification claim).[29] It was at a case management conference in December 2018 that counsel forTania first signalled that she intended to file proceedings under s 182 of the FPA.She filed those proceedings in the High Court; the High Court then directed that theybe joined with the PRA proceedings.15[30] The problem arises because s 182 of the FPA specifies that it is theFamily Court that may inquire into and vary a nuptial settlement. On the face of thatprovision, therefore, it would seem that an application to vary a nuptial settlementmust be filed in the Family Court. That is what led us to raise the question ofjurisdiction with counsel.[31] Having invited and received further submissions on the issue, we are nowsatisfied that the High Court did have jurisdiction. We briefly set out our reasonsbelow.The solution[32] We begin by noting that it seems plain — notwithstanding the specificreference to the Family Court in s 182 — that the Family Court does not have exclusive15 All parties agreed that all proceedings concerning claims affecting family property should bebefore the High Court.jurisdiction under s 182. That is because proceedings filed in the Family Court unders 182 may be transferred to the High Court by virtue of the general power containedin s 14 of the Family Court Act 1980 (the FCA):1614 Transfer of proceedings to High CourtSubject to the Act under which any proceedings are brought, the Family Courtmay, on the application of any party to the proceedings, or of its own motion,order that the proceedings be transferred to the High Court if it is satisfiedthat, because of the complexity of the proceedings or of any question in issuein the proceedings, it is expedient that the proceedings be dealt with by theHigh Court; and in any such case the High Court shall have the same powerto adjudicate on the proceedings as the Family Court had.[33] If the s 182 application had been filed in the Family Court, then it could (andalmost inevitably would) have been transferred under s 14 of the FCA to theHigh Court. This is because of the clear policy concern underlying family lawlegislation that related proceedings should be managed and determined together. It isonly in that way that the court could have a complete and clear view of the litigationlandscape affecting a particular family — and only then can the court properlycalibrate the property distributions. This policy is evidenced by s 38A of the PRA,under which Jason's proceedings under that Act were originally transferred.[34] That policy is also reflected in s 160 of the FPA, which contemplates thejoinder of proceedings under that Act with related PRA proceedings and allows a courtto hear and determine such proceedings together:160 Applications may be heard together(1) An application under this Act may be joined with an application underthe Property (Relationships) Act 1976, and, subject to any rules ofprocedure made under this Act or under the Family Court Act 1980, itshall not be necessary to file separate applications.(2) A court may hear and determine any proceedings before it under thisAct in conjunction with any other proceedings under this Act or under16 Section 182 may be contrasted with other provisions in the Family Proceedings Act 1980 wherethe jurisdiction of the Family Court is expressed in more mandatory terms — see for examples 21: "Every application for a separation order shall be heard and determined in the Family Court"and also ss 28, 30, 33, 50, 68, 80 and 145F (emphasis added).the Care of Children Act 2004 or under the Property (Relationships)Act 1976 in any case where—(a) all the proceedings are between the same parties; or(b) all the proceedings are in respect of members of thesame family.(3) Subsection (2) shall apply whether or not any other person is alsoa party to the proceedings.[35] Where related applications under the FPA and the PRA have both beentransferred from the Family Court to the High Court, s 160 undoubtedly gives theHigh Court the power to join, hear and determine them together. The more difficultquestion is whether s 160 can be interpreted as giving the High Court "original"jurisdiction to receive and hear the s 182 application — jurisdiction absent any suchprior transfer.[36] In Marshall v Bourneville Peters J concluded that the High Court did not haveoriginal jurisdiction to make orders under s 182.17 But in that case there were norelated PRA proceedings before the High Court and the Court did not, therefore,consider the possible impact of s 160 of the FPA.[37] More recently, in Preston v Preston, Fitzgerald J was faced with circumstancesmore closely aligned to the present.18 As here, an application under s 182 wasancillary to a PRA proceeding that the Family Court had transferred to the High Court.It appears, however, that the question of jurisdiction may not have been raised bycounsel as (again) s 160 of the FPA is not mentioned and, indeed, the jurisdictionalissue is only discussed by the Judge in a footnote, where she said:19While jurisdiction for such claims ordinarily lies with the Family Court, suchclaims can be made in the context of proceedings which have been transferredto the High Court, as in this case: Marshall v Bourneville And while thes 182 claim was strictly made after the proceedings had been transferred tothis Court, I do not consider that alters the jurisdictional position.The alternative would have been for Mrs Preston to have commenced thatclaim in the Family Court, and then applied to have it transferred to this Courtin conjunction with the [PRA] proceedings, as it inevitably would have been.17 Marshall v Bourneville [2014] NZHC 2334 at [11].18 Preston v Preston [2019] NZHC 3389.19 At [56], n 10.[38] This footnote suggests that the Judge may have misapprehended the relevanceand import of Marshall. As we have said, that case did not involve a prior transfer ofrelated proceedings and it did not determine that the High Court could exercise firstinstance jurisdiction under s 182. But we nonetheless agree with Fitzgerald J'sconclusion, for that reasons that follow.[39] The wording of s 160(2) of the FPA suggests that consolidation of relatedproceedings can only occur if the related proceedings are already properly before therelevant court. And if Tania's application under s 182 of the FPA was required to befiled first in the Family Court then it was not properly before the High Court.[40] But s 160(1) also contemplates that where there is an extant application underthe PRA, a related application under the FPA may be made without the need forseparate application. In practical terms, that means a party could add a s 182 FPAcause of action to PRA proceedings properly before the High Court. Equally, anapplication under s 182 could take the form of a counter-claim in PRA proceedingsproperly before the High Court. Jurisdiction to hear the FPA claim cannot depend onwhich party makes the application. So in the present case, we think it would havebeen open to Tania to pursue her s 182 application in the form of a counter-claim toJason's claim under the PRA. And if that is so then the fact that she happened to filethe application later, and separately, must be a matter of form rather than jurisdictionalsubstance.20[41] For these reasons, we consider that the parties were right to proceed on thebasis that the High Court had the requisite jurisdiction to hear and determine thes 182 FPA proceedings alongside the PRA proceedings.[42] On that basis, we now turn to consider the substance of the appeal itself.20 There is no obvious countervailing purpose behind the specific reference to the "Family Court" ins 182. It appears simply to be a function of the provision's 1982 amendment, which reflected thatjurisdiction in divorce matters was transferred from what was then the Supreme Court to the newlycreated Family Court two years earlier. It is, perhaps, merely an example of what Dr BrinsleyDonald Inglis QC has called the "inexplicably tangled" jurisdictional "skein" in family lawmatters, arising from the updating of the pre-1980 statutes when the Family Court was created:Brinsley Donald Inglis New Zealand Family Law in the 21st Century (Brookers, Wellington, 2007)at 99.The appealAppellant's position[43] Tania's notice of appeal states:3. The Appellant appeals only against that part of the High CourtJudgment that relates to whether or not the Court would be able toexercise its discretion to make an Order in favour of the Appellantpursuant to s 182(1) of the Family Proceedings Act 1980.The specific grounds of the appeal are:In relation to the nuptial settlement Judge Johnston erred in finding• At [66] it included a condition that the Appellant and First Respondentwould only receive the benefit of the forgiveness of the debt so longas they remained married.• At [66] the Appellant and First Respondent could only rely onreceiving the anticipated benefit of the value of the loan for theduration of their marriage.• At [66] there were no changed circumstances for the Appellant at theend of the marriage and therefore no injustice to remedy.• At [72] there was no evidence of a change in its terms.• There were no adverse consequences for the Appellant that werebrought about by the end of her marriage to the First Respondent.[44] Mr Delany, for Tania, thus disowned any submission that there wasa "collateral agreement" of the kind posited in the judgment below. Rather, he saidthat there was an expectation that was integral to the overall family arrangement thatthe debt would not have to be repaid. And he challenged, too, the Judge's finding thatthe Court's discretion could not be exercised in Tania's favour because the allegedcollateral agreement (settlement) was expressly conditional on the marriagecontinuing. Mr Delany said that the factual basis for that finding falls away becausethe references in Tania's affidavits to her understanding that the debt would not becalled on "while the marriage remained on foot" were merely examples of "badassisted drafting".[45] Mr Delany also expressly:(a) confirmed that Tania's claim remained as pleaded; and(b) eschewed any argument that the Deed was not valid or that the debt wasnot owed by PRF to Ray.Respondents' position[46] As well as supporting the Associate Judge's judgment on the basis of thereasons he gave, the respondents also filed memoranda under r 33 of theCourt of Appeal (Civil) Rules 2005 seeking to support the judgment on other grounds.[47] Jason maintains that the s 182 claim cannot succeed and that there is no realquestion to be tried because:(a) The only "property" referred to in Tania's statement of claim is the debtrecorded in the 1 November 2011 Deed (as later rectified) between Rayand PRF.(b) That debt is not "property" in terms of s 182 but rather a liability, whichlacks the essential quality of provisioning.(c) Tania has accepted in her statement of claim that there is a debt recordedin the Deed, but says she had a (contrary) "expectation" and"understanding" that she would receive the full benefit of the widerfamily restructuring in 2011.(d) The Deed did not constitute or record a "settlement" by Ray on Jasonand Tania but was rather a consequence of the settlement of a propertytransaction between Ray and PRF.(e) Both the Deed and Clark J's decision estop Tania from denying the debtis owing — the judgment operates in rem and gives rights over PRF'sland like a mortgage under the Deed.(f) Objectively assessed, there can be no reasonable expectation of the sortpleaded.(g) On the contrary, Jason and Tania's only reasonable expectation was thatthe debt would have to be repaid if required — the fact that repaymentwas unlikely to be demanded from PRF while the marriage continuedcannot give rise to a reasonable expectation the debt would never berepayable.(h) Even if the relationship had continued, the debt remains Ray's propertyto dispose of as he wishes — even if it came by inheritance to Jason,it would be separate property under s 10 of the PRA.[48] Ray and Ann maintain that the pleading discloses no tenable cause of actionagainst them because:(a) It pleads nothing capable of constituting a nuptial settlement made onJason and Tania because there is no "settlement", and, in any event, itis not "nuptial" in character.(b) The claim is an abuse of process because it attempts to relitigate anissue that has been the subject of a final judicial determination, namelythat the Deed is valid and enforceable and that the debt is owed by PRFto Ray.(c) Ray and Ann have been improperly joined as parties to the proceedingbecause there is no pleaded cause of action against them, nor any reliefsought from them.[49] In short, even though Tania's appeal focused on the Associate Judge'sconclusion as to the possible exercise of discretion, the respondents' respectivepositions require us to consider the tenability of Tania's s 182 application as a whole.Analysis[50] For convenience, we begin by setting out the relevant parts of s 182 again:182 Court may make orders as to settled property, etc(1) On, or within a reasonable time after, the making of an order underPart 4 of this Act or a final decree under Part 2 or Part 4 of theMatrimonial Proceedings Act 1963, the Family Court may inquire intothe existence of any ante-nuptial or post-nuptial settlement madeon the parties, and may make such orders with reference to theapplication of the whole or any part of any property settled or thevariation of the terms of any such settlement, either for the benefitof the children of the marriage or of the parties to the marriage or either of them, as the court thinks fit.[51] Section 182 is a provision of some antiquity.21 Indeed, in Thakurdas vWadsworth, this Court described it as "archaic",22 and the Law Commission hasrecently noted that some commentators have referred to it as a "relic of the past".23But as the Commission went on to observe:24Its resurgence in recent times is due to the PRA's failure to provide aneffective remedy for accessing trust property when relationships end. In theabsence of any evidence of a need to provide a remedy with wider applicationthan amended section 44C, we are not convinced that section 182 needs to beretained.[52] The high point of this "resurgence" was the Supreme Court's decision inClayton. There, the Court made it clear that the purpose of s 182 is to:25 empower the courts to review a settlement and make orders to remedy theconsequences of the failure of the premise on which the settlement was made.21 The history of s 182 is described by the High Court and the Court of Appeal in Ward v Ward [2008]3 NZLR 383 (HC) at [64]–[69]; and Ward (CA), above n 8, at [8]–[15]. The Supreme Court alsorefers to the history of s 182 to support its interpretation of the provision in Clayton, above n 8, at[5]–[6].22 Thakurdas v Wadsworth [2018] NZCA 516, [2018] NZFLR 835 at [13].23 Law Commission Review of the Property (Relationships) Act 1976 (NZLC R143, 2019)at [11.108(a)].24 At [11.108(a)]. The Law Commission has recommended the repeal of s 182, on the basis that itsproposed amendments to s 44C of the Property (Relationships) Act 1976 are designed to"eliminate the need for partners to rely on section 182 to achieve a just division of property at theend of a relationship".25 Clayton, above n 8, at [60].[53] As the Associate Judge noted, Clayton also clarified that s 182 involvesa two-stage inquiry:26(a) whether there is a nuptial settlement; and if so—(b) whether and in what manner the Court should exercise its discretion.[54] And to be a nuptial settlement, the arrangement must make some continuingprovision for both or either of the parties to a marriage in their capacity as spouses,with or without provision for their children. The phrase "in their capacity as spouses"requires "a connection or proximity between the settlement and the marriage".27Is there an arguable "nuptial settlement" here?[55] We agree with Mr Delany that the particular form an arrangement takes maynot matter and that the courts have taken a liberal approach as to what constitutesa nuptial settlement. We agree that the cases establish that the relevant spousal interestin settled property can be discretionary or contingent.[56] Here, Mr Delany maintained that it was the wider family restructuringarrangements in 2011 that constituted the relevant nuptial settlement, and that Ray'sforbearance in not demanding repayment of the debt constituted the relevant"provisioning".[57] That is where we and Mr Delany must part company. For reasons we shortlyexplain, the family restructuring arrangements did not involve the settlement ofproperty on Jason, Tania, PRF or anyone else. Nor is there any ongoing provision forany person under a legally binding arrangement, the terms of which could be variedby the Court under s 182 to remedy an injustice that giving effect to those terms wouldotherwise produce.[58] As to the first point, the family restructuring remains, at its core, an agreementfor sale and purchase between Ray and PRF, with Ray providing vendor finance, not26 At [27].27 At [33]–[34]; and Ward (CA), above n 8, at [27].a settlement of property. The relevant documentation — the Deed — is clear aboutthe debtor/creditor relationship. And however the debt may from time to time havebeen treated in the various financial statements, that it remains owing has been putbeyond doubt by Clark J's judgment in 2019.[59] Although Mr Delany submitted that authorities such as Bosworthick vBosworthick demonstrate that a debt can constitute a settlement, we think his relianceon those cases is misplaced.28 By way of example, in Bosworthick itself, the wife had— as a result of her marriage — an ongoing liability under a bond to pay her husbanda £300 annuity. Post-divorce, she sought (and obtained) a variation releasing her fromthat liability, under the then English equivalent of s 182.[60] As the House of Lords later explained in Brooks v Brooks, although suchperiodical payment provision lies at the controversial end of what a "settlement"can be:29 income provision from settled property would readily qualify, and it is onlya short step from this to include income provision which takes the form of anobligation by one party to the marriage to make periodical payments to theother.[61] That is a far cry from the present case. Here, there was no obligation imposedon Ray to make periodical payments to Tania or to Jason or to both of them.The closest that the arrangement comes to any continuing income provision is the factthat Ray did not, during the marriage, demand interest on the loan to PRF.We therefore agree with Mr Maassen that the debt here was not property of a kind thatmight constitute a settlement.[62] As to the existence of a legally binding arrangement that requires variation toremedy an injustice upon Tania and Jason's divorce, we make several points.[63] First, the only legally binding arrangement is the debt owed by PRF which hasnot been altered by the ending of the marriage. The relevant liability (the debt owedby PRF to Ray) cannot be seen as an arrangement that makes any kind of continuing28 Bosworthick v Bosworthick [1926] All ER Rep 198 (CA).29 Brooks v Brooks [1996] 1 AC 375 (HL) at 392.provision either for Tania or for Tania and Jason "in their capacity as spouses".PRF (in which Tania and Jason are shareholders) owes the debt. The obligation flowsfrom PRF, and thus in substance from the spouses, to Ray; not to the spouses. And PRFreceived value in return for its promise to pay, in the form of the farm property itself.[64] Secondly, this arrangement cannot be seen as giving rise to any inequity whenthe marriage ended. The core purpose of s 182 is to ensure pre-existing provision forthe spouses is not unfairly affected by the relationship breakdown. In this case, Jasonand Tania — as 50:50 shareholders of PRF — were both left in the same position.The value of their respective shares in PRF is equally diminished by the debt, as italways has been. The fact that Ray may later forgive the debt or gift the whole debtto Jason (and so, make later "provision" for him) has no bearing on that: an order unders 182 cannot be used to divide a possible gift that has not yet been made.[65] Thirdly, Ray's historical forbearance from calling up the debt cannot be suchan arrangement because it is not legally enforceable. And even if there was some formof understanding that Ray's forbearance would continue, then either:(a) the arrangement would, in substance, constitute a gift to PRF, whichwould not amount to a qualifying settlement;30 or(b) to the extent such forbearance gave rise to some other legal or equitablebar preventing Ray from calling up the debt, then there would be noneed for a s 182 variation at all.[66] Lastly, we think it is telling that, when pressed by the Court, Mr Delany wasunable to come up with a variation order that would both satisfy Tania's claim and betenable under s 182. Various possibilities were canvassed:(a) an order that Ray must forgive the debt owed by PRF (now or in future);(b) an order that Ray continue not to demand repayment of the debt; and30 See for example the discussion in Brooks, above n 29, at 391; and Ward (CA), above n 8, at [27].(c) an order that Jason be required to compensate or reimburse Tania forher half of the debt.[67] An order of the first kind is wholly contrary to the core of the "settlement"itself and would constitute an impermissible collateral attack on the High Court'sdecision that the debt is owing. Moreover, it would involve both depriving Ray —a third party — of a significant sum of money and granting Tania a significant gift.It would effectively be an order requiring Ray to make a settlement on Jason and Taniavia PRF, which confirms that no such settlement has yet been made. We agree withthe respondents that s 182 cannot be used in that way.[68] An order of the second kind would not only be of similar effect (from Ray'sperspective) but also would not give Tania what she wants — the value of her sharesin PRF would continue to be burdened by the debt. And it would beg the question ofwhat would happen when Ray dies. As noted earlier, he could simply give the debt toJason.[69] An order of the third kind bears no relationship to (and so cannot be seen asa variation of) the alleged "settlement" at all.[70] For all the above reasons we are of the view that it is not seriously arguablethat there was a nuptial settlement here. We do not therefore need to consider thequestion of discretion.31 We agree with the Associate Judge that summary judgmentshould be entered for Jason — and the claim against Ray and Ann should be struckout — accordingly.[71] The appeal is dismissed.Solicitors:Chapman Tong Law, Wellington for AppellantBritten's Lawyers, Palmerston North for First RespondentLe Pine & Co, Taupo for Second and Third Respondents31 As noted earlier, the basis upon which the Associate Judge concluded that it was not arguable thatthe Court's discretion would be exercised in Tania's favour fell away as a result of Tania's changeof position on appeal.