Published 22 October 2024
Relationship property proceedings — dissipation of relationship property after separation — occupational rent — vary or suspend maintenance order — company shares — tax debts — nuptial trust — jurisdiction of Family Court — power to review trustee act, omission, decision — Property (Relationships) Act 1976, ss 1M, 1N, 2, 2G, 8, 15, 18, 18B, 18C & 44 — Family Proceedings Act 1980, ss 56, 62-66, 81, 99 & 182 — Trusts Act 2019, ss 22-39, 126, 127 & 141 — Family Court Act 1980, s 11 — K v K [2022] NZHC 3123, [2022] NZFLR 624 — Nygaard v Nygaard [2022] NZFC 11464 — Re Registered Securities Limited [1991] 1 NZLR 545 (CA) — Ward v Ward [2009] NZSC 125, [2010] 2 NZLR 31 — Clayton v Clayton (Claymark Trust) [2016] NZSC 30, [2016] 1 NZLR 590 — Preston v Preston [2021] NZSC 154, [2021] 1 NZLR 651 — Clayton v Clayton (maintenance payments) [2015] NZFLR 501 (HC) — Frost v Frost (1989) 5 FRNZ 655 (HC) — Briggs v Briggs (1996) 14 FRNZ 404 (HC) — Burgess v Beaven [2021] NZSC 71, [2013] 1 NZLR 129 — G v G (2002) 22 FRNZ 990 (FC) — Loader v Loader [2003] NZFLR 553 — Cullen v Cullen [2017] NZHC 42 — GFM v JAM [2014] NZFLR 418 (CA) — GFM v JAM [2014] NZSC 32, [2014] NZFLR 599 — Potter v Horsfall [2016] NZFLR 974 (CA) — Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 — Brainich-Felth-Eilander v Ward [2016] NZHC 2481 — Dyas v Elliott [2010] 11 NZCPR 252 (HC) — K v K [2022] NZHC 3132, [2022] NZFLR 624 — Preston v Preston [2021] NZSC 154, [2021] 1 NZLR 651 — X v X [Family Trust] [2009] NZFLR 956 (CA)— Ward v Ward [2009] NZSC 125, [2010] 2 NZLR 31 — Zhou v Lassnig & Ors [2024] NZCA 177 — Henry v Morgan [2024] NZHC 1841 — Frost v Frost (1989) FRNZ 655 (HC) — Johnson v Johnson (1982) 1 NZFLR 212 (HC). This hearing was to determine the division of relationship property between the parties under the Property (Relationships) Act (PRA), as well as orders under the Family Proceedings Act and potential orders under the Trusts Act. The parties had been married and had one child together. Upon separation, the respondent insisted that the applicant leave the family home. Some months later the respondent also excluded the parties' son from the family home, and shortly after this his new partner moved in. The house was subsequently sold and the respondent and his new partner moved overseas. The issues for determination were: the value of shares and the parties' interests in a company in the respondent's name; whether compensation for the diminished value of the company since separation was appropriate or whether the company should be valued at date of separation rather than the hearing; the status of tax debts of the company; status of chattels; whether the applicant should be paid occupational rent for having been excluded from the family home; whether the Court should make an order as to the trust property; and whether the Court should vary or cancel the existing spousal maintenance order which had been temporarily suspended. At date of hearing the company in issue had been wound up and the shares were worthless. At date of separation the value of the shares was calculated to be $1,172,749. The respondent had indicated to the applicant during their relationship that if they were to separate he would try to create debt within the company and trust so the applicant would be entitled to nothing. The Court found it appropriate to depart from the date of hearing for the valuation of the shares, instead adopting the date of separation, and for the respondent to pay the applicant $762,219 to equalise the relationship property pool and to compensate her for the deliberate diminution in the value of the company asset value. The applicant was to retain as her separate property: her KiwiSaver fund; proceeds of sale of a vehicle; and her bank account balance. The respondent was to retain as his separate property: the company shares; his KiwiSaver; his clothing collection and various other chattels. It was accepted that the house was in a trust and therefore not relationship property as defined by the PRA. As such, an order for occupational rent under the PRA was not available. The applicant therefore sought an order under the Trusts Act to compensate her and the parties' son for having been excluded from the home. This would require the Court to "review" the respondent's acts, omissions or decisions as trustee. The respondent had taken significant sums of money out of the trust account. The Court reasoned that there was no right or claim under the PRA that the applicant could point to that would enable the Court to make an order under the Trusts Act. The fiduciary duty that the respondent owed the applicant in relation to the trust funds was an equitable right. The Court did however make an order under s 182 of the Family Proceedings Act to "wind up" the family trust. The available funds on winding up were to then be used to repay $50,000 to the applicant's mother; $40,125 to the applicant as compensation for having been excluded from the family home, the balance was then to be divided equally between the parties, and the respondent was to pay the applicant from his half-share $264,946.38 to equalise her for the $529,892.76 he had withdrawn. Finally, the Court did not consider it appropriate for the respondent to make ongoing maintenance payments to the applicant, given his diminished income since moving overseas and starting a new family. The Court allowed the respondent's application in relation to the spousal maintenance, to the extent that he was liable to pay up to a particular date. Judgment Date: 4 October 2024. * * * Note: names have been changed to comply with legal requirements. * * *
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