X V X CA CA68/2009

X V X CA CA68/2009 14 December 2009NOTE: NO PUBLICATION OF THIS PROCEEDING IS PERMITTED UNDER S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, EXCEPT WITH THE LEAVE OF THE COURT THAT HEARD THE PROCEEDINGS, AND WITH THE EXCEPTION OF PUBLICATIONS OF A BONA FIDE PROFESSIONAL OR TECHNICAL NATURE IN THE COURT OF APPEAL OF NEW ZEALAND CA68/2009 [2009] NZCA 590BETWEEN X Appellant AND X Respondent Hearing: 7 December 2009 Court: O'Regan, Robertson and Ellen France JJ Counsel: M J Southwick QC and J H Hunter for Appellant A E Hinton QC for Respondent Judgment: 14 December 2009 at 2.30 p.m.JUDGMENT OF THE COURT A We make the following orders: (a) the date of separation of the appellant and respondent is 18 April 2003; (b) the Long Term Incentive Plan ("LTIP") of the appellant is relationship property, the benefits of which are to be shared by the parties equally;(c) salary and benefits (excluding long service leave) received by the appellant subsequent to the date of separation are the separate property of the appellant; (d) the appellant will pay to the respondent the sum of $240,000 within seven days pursuant to s 15 of the Property (Relationships) Act 1976; (e) the Tairua property owned by the parties (at a separation-date valuation of $870,000) and the Parnell property purchased from the X Family Trust (at a separation-date value of $1.9m) are the property of the respondent effective from the date of separation; (f) the appellant retains the net proceeds of the shares issued by his former employer which were received by him, effective as at the date of separation at the value at that time; (g) furniture and chattels will remain with each party without adjustment and will be that party's separate property; (h) all other relationship property shall be valued as at the date of hearing and shall be shared equally; and (i) in the event of the parties being unable to agree by 28 February 2010 as to the outstanding issues, the following matters will be remitted for determination in the Family Court:• post separation withdrawals from the parties' NAB/BNZ accounts;• post separation tax paid by either party with respect to any relationship property asset;• any interest accrued on relationship property retained by each party post separation, excepting the items which have vested at separation;• the date on which NAB bank deposits vest; and• the final adjustment figure required to achieve overall equal division in respect of all relationship property. B The appellant will pay the respondent interest on the s 15 award, at a rate of four per cent per annum from 19 March 2008 to the date of payment. C The appellant will pay to the respondent costs in respect of the November 2008 hearing on a band A basis with usual disbursements. D Each party will bear their own costs in respect of the May 2009 hearing and this hearing.____________________________________________________________________REASONS OF THE COURT(Given by Robertson J) [1] What is hopefully the final hearing on this file was held on 7 December 2009. The purpose of the hearing was to deal with formal orders in respect of the judgments delivered by this Court on 19 February 2009 ([2009] NZFLR 956) and 11 September 2009 ([2009] NZFLR 985), to make some final determinations in respect of issues outstanding from those judgments, and to identify matters which still require attention in the Family Court. [2] In light of the submissions made, we were able to make the following orders:(a) the date of separation of the appellant and respondent is 18 April 2003; (b) the Long Term Incentive Plan ("LTIP") of the appellant is relationship property, the benefits of which are to be shared by the parties equally; (c) salary and benefits (excluding long service leave) received by the appellant subsequent to the date of separation are the separate property of the appellant; (d) the appellant will pay to the respondent the sum of $240,000 within seven days pursuant to s 15 of the Property (Relationships) Act 1976 ("the Act"); (e) the Tairua property owned by the parties (at a separation-date valuation of $870,000) and the Parnell property purchased from the X Family Trust (at a separation-date value of $1.9m) are the property of the respondent effective from the date of separation; (f) the appellant retains the net proceeds of the shares issued by his former employer which were received by him, effective as at the date of separation at the value at that time; (g) furniture and chattels will remain with each party without adjustment and will be that party's separate property; (h) all other relationship property shall be valued as at the date of hearing and shall be shared equally; and (i) in the event of the parties being unable to agree by 28 February 2010 as to the outstanding issues, the following matters will be remitted for determination in the Family Court:• post separation withdrawals from the parties' NAB/BNZ accounts;• post separation tax paid by either party with respect to any relationship property asset;• any interest accrued on relationship property retained by each party post separation, excepting the items which have vested at separation;• the date on which NAB bank deposits vest; and• the final adjustment figure required to achieve overall equal division in respect of all relationship property. [3] The case has always been litigated on the basis that there should be an equal division, between the parties, of all relationship property which included the amounts owing to them by the Trust. We also understood that the intention was that the value of the property (owned by them or purchased from the Trust) vested as at separation date in each party would be roughly equivalent, but there may be a need for some adjustment to be made to give effect to that intention. [4] There remained for determination by this Court the questions of interest on the s 15 award, and costs in respect of the hearings in the Court of Appeal. [5] The determination and resolution of outstanding issues between these parties is complicated by the fact that a significant part of the property acquired during the relationship is owned by a discretionary trust. In addition, for a variety of reasons, issues of post separation maintenance have not been before the courts. [6] Having observed those difficulties, we turn to the issues which were in contention before us.Interest on the s 15 award[7] This Court determined that the sum of $240,000 should be paid by Mr X to Mrs X. [8] Mrs X contends that the award should attract interest at 6.5 per cent per annum from, at the latest, 19 March 2008 (the date of the Family Court judgment determining that Mr X was to pay Mrs X $240,000) down to the present time. Mr X contends that there should be no interest payable on the award. His position was that the appropriateness of the s 15 award has been measured against the total pool of relationship property and the extent to which the division of the pool will be affected by the size of the award. On that basis Ms Southwick QC submitted that interest would have a skewing impact on the calculations that preceded the award. [9] Although this Court, in its judgment of 11 September 2009, was not unanimous as to the methodology for determining s 15 payments, all the Judges agreed that this Court should not interfere with the assessment made by Judge Clarkson in the Family Court. In making that determination, regard was had to the present day value of funds where they were in part compensating for lack of future earning capacity. [10] When we issued judgment, we reserved the question of interest. We were not sure whether the s 15 award of $240,000 would be money that had been controlled by Mrs X throughout the proceedings, or whether a new payment by Mr X to Mrs X would need to be made. As Ms Hinton QC submitted, the equal division of the parties' relationship property (taking into account the particular items of property that vested at separation date) will require a balancing payment from Mr X of more than $240,000. In those circumstances, we consider that there should be interest paid on the award for the period since Judge Clarkson's judgment of 19 March 2008 until the payment is received. [11] Such interest should be compensatory only and should recognise that Mrs X has not had the use of the money for the period since Judge Clarkson'sdetermination. An annual rate of four per cent interest is, we consider, an appropriately fair and compensatory rate. [12] Accordingly, we order that there should be interest on the sum of $240,000 at four per cent per annum from 19 March 2008 to the date of payment which should be seven days from the date of this judgment.Costs[13] Ms Southwick suggested that this case had the hallmarks of public interest litigation and that a costs award was therefore inappropriate. We are not persuaded that there is any reason why, in this case, costs should not follow the event in the normal way. Although there was a degree of uncertainty as to the metes and bounds of both s 15 of the Act and s 182 of the Family Proceedings Act 1980, that does not bring this case into the category where some wider interest is being served by the litigation, such that normal costs rules should not apply. [14] We were addressed by Ms Southwick on whether an offer made by Mr X prior to the initial hearings in the Family Court would have meant that Mrs X would have been in a better financial position than she has ended up in at the end of the litigation. The letter containing the offer said that it was "Without Prejudice", so the offer was not made on a Calderbank basis. [15] Ms Hinton QC objected to us considering this possibility, on the basis that it relied on "Without Prejudice" communications made by then senior counsel involved in the case, and could not be taken into account by the Court. Further, she contended that the assessment was wrong and the situation was not as Ms Southwick submitted it had been. [16] We have concluded that the underlying issue of reference to "Without Prejudice" communications after liability has been fixed need not be determined in this proceeding. What is permitted in this Court as opposed to the High Court and the District Court under amended rules is a matter for another day.[17] At the stage that the particular communication was made it was envisaged that the parties would treat, as if their own, the property held by the Trust and would deal with questions of maintenance themselves. [18] As it has transpired, we have held that the Court cannot treat the Trust property simply as the absolute property of the parties, and questions of maintenance remain unresolved. The communications in question do not, therefore, afford insight into the parties' respective positions on the matters that were subject to determination by the Courts before the litigation, and cannot sensibly inform the justice of costs awards to be assessed now. [19] Ms Southwick also submitted that the respondent had taken unnecessary procedural steps and had repeatedly failed to meet timetabling directions. [20] The appropriate course is to evaluate what happened in the two hearings and assess the outcome of each. We do not overlook the fact that the parties had, at the first hearing, anticipated that the Court would have jurisdiction to deal with all issues. But that was not the case. Costs must be determined on the basis of what actually occurred. [21] On 11 and 12 November 2008, we heard argument from the parties in respect of the application under s 182 of the Family Proceedings Act, and the classification, valuation and division of the LTIP. We issued judgment in respect of those matters on 19 February 2009 and held against Mr X in respect of the substantive issues advanced. We declined to interfere with Rodney Hansen J's decision under s 182; we agreed that the LTIP was relationship property; and we held that no compensatory payment ought to be made to Mr X under s 18B of the Act. [22] On 7 May 2009, we heard argument from the parties in respect of the award under s 15 of the Act, an application by Mrs X for maintenance under s 18B of the Act, and the date of valuation of property under s 2G of the Act. We issued judgment in respect of those matters on 11 September 2009, further submissions having been filed after the hearing. Mrs X was successful, after that hearing, in upholding the s 15 award which had been made in her favour, but she wasunsuccessful in having the award increased. She was also unsuccessful in her application for maintenance under s 18B, and in having this Court make a fresh determination under s 2G of the Act. [23] We treat the second hearing as being one in which each party had a degree of success. We are not prepared to make fine distinctions as to the significance of each matter, but treat the proceeding as a "draw". No order is made for costs. [24] In respect of the first matter, heard in November 2008, there is nothing which would justify other than the normal approach to the costs. We award Mrs X costs for a two day hearing on a band A basis with usual disbursements. We certify for two counsel. [25] In respect of this hearing, which has been necessary to achieve some finality, costs will lie where they fall. [26] Leave is reserved to either party to apply for clarifications that may be necessary.Solicitors: Morgan Coakle, Auckland for Appellant Haig Lyon, Auckland, for Respondent