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Watson v Taylor HC Tauranga CP5/99 [2001] NZHC 1006 (23 October 2001)

Last Updated: 13 November 2013

IN THE HIGH COURT OF NEW ZEALAND
TAURANGA REGISTRY CP5/99

BETWEEN ALEXANDRA ANNE WATSON
Plaintiff

AND ROSS LIONEL TAYLOR
Defendant

Hearing: 4, 5, 6, 7 September and 23 October 2001

Counsel: M S McKechnie and A Gordon for Plaintiff
C M Earl and M O’Neill for Defendant

Judgment: 23 October 2001

JUDGMENT OF PRIESTLEY J

Solicitors:
Davys Burton, PO Box 248, Fax 07 347 9500, Rotorua
Cooney Vosper, Alpha House, Alpha St, Fax 07 827 4953, Cambridge

Counsel:
M McKechnie, PO Box 1227, Fax 07 348 3574, Rotorua
C M Earl, First Floor, 240 Victoria St, Fax 07 838 9319, Hamilton

The issue

[1] The parties lived together in a de facto relationship for over 13 years from May 1984 until November 1997. They had no children but the plaintiff’s younger son, who was under 2 at the time the relationship commenced, was a member of the parties’ household.

[2] The plaintiff (“the wife”) commenced proceedings in this Court against the defendant (“the husband”) claiming an interest in the husband’s assets alleging that the husband holds a proportion of his assets on trust for her arising out of a constructive trust and/or a resulting trust and invoking generally the doctrine of unjust enrichment.

[3] Until such time as the Property (Relationships) Amendment Act 2001 comes into force, property disputes between de facto couples can only be resolved through proceedings of this type invoking the Court’s equitable jurisdiction. The Court of Appeal decision of Lankow v Rose [1995] 1 NZLR 277 establishes the jurisdictional route whereby a de facto spouse can perfect such a claim.

[4] The issue before me is whether the wife has a claim against the husband’s assets arising out of the de facto relationship and, if so, the quantum of such a claim.

The facts

[5] Both parties called evidence the hearing of which occupied 3.5 days. Inclusive of the parties the wife called seven witnesses and the defendant eight.

[6] Predictably perhaps, there were no fundamental areas of evidentiary conflict. The evidence of the parties themselves provided the Court with by far the greatest assistance. As is inevitably the case in family disputes each party had a different perspective on certain aspects of their relationship. By and large each party acknowledged the importance of the other, both to the relationship and to their respective lives. There were criticisms by each of the actions and approach of the other, such criticisms inevitably being exaggerated or embellished as a result of the situation of financial conflict in which the parties now find themselves.

[7] Seen in a continuum of family disputes, however, the conflict for this couple is average rather than severe. Animosity between them is fortunately at a low level. It is nothing short of tragic that the parties were unable to negotiate a settlement.

[8] I intend to deal with the evidence under four heads being “property”, “the relationship”, “contributions” and “expectations”.

Property

[9] At the start of the relationship the husband owned a farm property at Arthurs Road, Te Pahu. This was a farm of approximately 400 acres on which he ran beef cattle and sheep. The husband had initially acquired this property in partnership with another farmer in approximately 1977. He subsequently took over the entire property in 1980.

[10] At the end of the relationship in 1997 the husband owned two properties in the Bay of Plenty. Both are planted as kiwifruit orchards. One is situated at 372 Benner Road, Pongakawa, which was purchased in 1993 and was the site of the parties’ home where they lived up to the separation. The husband’s second property was purchased in February 1996 at Quarry Road, Te Puke. The current combined market value of those two properties is $1.787 million. The sum secured against those properties at separation date was approximately $65,000. The Benner Road home contains furniture worth around $8500.

[11] The wife at the date of separation owned a residential property at Emery Place, Papamoa which was purchased in her sole name in May 1996 and sold in January 2000 for $160,000. She has retained possession (with his consent) of a vehicle of the husband, worth about $7000 at the end of 1997 and now worth around $3000.

[12] There were, of course, intermediate properties and assets to which I shall shortly refer. A detailed history of the parties’ property transactions is not, however, necessary. The overall picture is clear and undisputed. At the start of the relationship the husband owned the Te Pahu farm. The wife had no assets other than the proceeds of an insurance claim for a motor vehicle being approximately $1100. She also received a modest gift of $500 from her grandmother around this time. Neither party brought any external capital into the relationship. One intermediate property, a section at Ohope, was owned jointly by the parties. The wife’s capital contributions to that jointly owned asset were derived from both her earnings during the relationship and loans made to her by the husband which were subsequently repaid. Another property, Lexie’s Orchard, held for just over nine months in 1995, was in the wife’s sole name. The wife’s share of the sale proceeds of Lexie’s Orchard flowed into the purchase of the wife’s property at Papamoa.

[13] The parties’ counsel were able to agree on a history of relevant property transactions which was submitted to me in memorandum form. Having identified the principal asset owned by the husband at the outset of the relationship and the assets owned by the parties at the end of the relationship it is convenient to summarise the transactions:

[a] Te Pahu Farm. This property which was owned solely by the husband was sold in June 1989 for approximately $375,000.

[b] Shell Te Ngae Service Station, Rotorua. The husband invested the sale proceeds of the Te Pahu farm on various deposits. The family depended on the generated income in large measure for household purposes although for a period of just under two years (of which more will be said) the couple lived in Whitianga and Tauranga with occasional employment. In May 1991 the husband committed $105,000 to purchase a service station business in Te Ngae Road, Rotorua. The couple lived in rented accommodation in Rotorua during the operation of the service station business which was sold for a $20,000 loss (realising $85,000) in February 1994.

[c] Lenro, - Old Coach Road Orchard. This property was purchased on 25 November 1992 for $200,000 and was registered in the sole name of the husband. At that stage the parties still resided in Rotorua. It was a kiwifruit orchard which the husband retained until January 1996. Approximately 18 months after purchase, in April 1994, the husband completed a subdivision of the property selling off a portion of it for $50,000. The investment in this property proved to be a good one. The balance of the property was sold in January 1996 for $420,000. (Over a period of three years, this transaction represented a profit of $270,000 on a capital outlay of $200,000).

[d] Ohope Section. Whilst in Rotorua the parties found a section of bare land at Ohope. They contracted to buy this property in late 1992 and settled the purchase for $60,000 in May 1993. This property was registered in the parties’ names as joint tenants, although as a result of a complicated series of loans and repayments between the parties, the capital contributions made to the Ohope purchase price by the wife approximated two-thirds ($40,000) and by the husband one-third ($20,000). The Ohope section was sold in November 1994 and yielded $96,000 of which the wife received $66,000 and the husband $30,000.

[e] 372 Benner Road. This property too was purchased whilst the couple still lived in Rotorua on 11 May 1993 for $210,000. Two months later 2.19 hectares was subdivided off and realised on sale $70,000. This property became the couple’s home. The husband still lives there.

[f] Lexie’s Orchard. This property represented a shrewd investment. It was purchased on 1 March 1995 for $140,000 and registered in the sole name of the wife. The purchase price represented a combination of the wife’s capital (her share of the sale proceeds of the Ohope section) and a $65,000 loan from the husband which was to be repaid to him by the wife drawing down on a bank loan which the husband had organised. The property was sold nine months later in December 1995, taking advantage of rising kiwifruit orchard prices, for $250,000. After repayment of the mortgage, reimbursement to the husband for various capital improvements made (a frost protection system), and other fees, the sum received by the wife was $126,000.

[g] Quarry Road. This property, which is still owned by the husband, was purchased in his sole name in February 1996 for $503,000. A portion of the property was subdivided off and sold for $180,000 in March 1997.

[h] Emery Place, Papamoa. This residential property was purchased in May 1996 in the wife’s sole name for $166,000. It was sold after the parties separated, in January 2000, for $160,000.

[14] This bald recital of the purchases, sales, subdivisions and figures could be amplified and indeed the parties in their evidence amplified at considerable length. Little is to be gained, however, by concentrating on the minutiae of 16 years of property transactions. The big picture is clear and compelling. In the course of the relationship the husband’s capital (effectively the farm which sold in June 1989 inclusive of stock for $375,000) had grown into a capital investment represented by two kiwifruit properties of $1.787 million plus the additional asset of the wife’s Papamoa property which sold for $160,000.

[15] As will be apparent in subsequent portions of this judgment I have no doubt that this satisfactory investment history is attributable to a number of causes. The husband is frugal. He loved the land and had an eye for a good purchase. On sale of the Te Pahu farm he kept significant portions of his capital in liquid form. In respect of some realty purchases he was able to increase the potential of his investment by subdivision. He was able to take good profits as a result of shrewd timing and rising land prices. He never over committed himself or borrowed heavily. He has indeed been a good steward. The legal issue is whether his partner and friend for 13 years is entitled to a share in the fruits of his stewardship.

The relationship

[16] The relevant substantive principles which govern property disputes between de facto couples do not require findings of fact about the nature and quality of a couple’s relationship. The driving criteria (infra paras [41-46]) are contributions and expectations. Nonetheless a couple’s relationship provides the context within which contributions are made and expectations form.

[17] Judicial caution is needed to ensure that factual and legal assessments are not coloured by the imminent arrival (on 1 February 2002) of the regime of the Property (Relationships) Act 1976 which will cover a de facto relationship of this type. The Court is required to make an assessment of the relevant qualifying criteria (contributions and expectations) and make an order, if a claiming party is eligible, which reflects those contributions and which is just and equitable. Such an order must be tied back to relevant legal principles and in particular must be informed by the nature and extent of a party’s contributions and the degree of expectation created. An order, even in these dying days of the old substantive rules, ought not to reflect the principles of the new legislation or indeed (as counsel for the defendant has submitted) be a mechanism for crude wealth transference.

[18] I have no hesitation in finding that, until 1995/96 when the parties respective interests began to diverge and emotional stress for each arrived on the scene, the couple exhibited a high degree of commitment to each other, regarded themselves as true partners and help-mates, loved and respected each other, and worked co-operatively together to the best of their respective abilities as a family, as a household, and in and around the various enterprises which they operated.

[19] Even four years after the eventual collapse of the relationship the parties retained positive feelings about the years they spent together. The failure of the relationship causes both of them grief when that failure is brought to the forefront of their minds. Such grief was appropriately exhibited on occasions in the witness box.

[20] Something of the flavour of how each party regarded the relationship is apparent from the following passages of evidence. (In each case the questions were posed by the Court).

[21] The wife saw it thus:

“Q. Now you’ve described your general relationship and the way you both operated inside that relationship did he express gratitude to you?

A. Yes

Q. How would he do that?

A. He had a term of he could actually tell me you could work really well. He was complimentary about much of what I did. He referred to me as his mate, as his best friend and how he liked to be with me and wanted me with him as a mate all day and working on the farm together and whatever we did.

Q. Did that approach of his tail off at any stage or disappear?

A. I think as our relationship became more strained from around 1995, yes.

Q. Did you love him?

A. Yes I did I loved him to bits.

Q. When did that stop for you?

A. 1996.

Q. Did he love you?

A. I believed he did.

Q. You’ve told me in the Te Pahu phase he was very protective of you, is that a characteristic which lasted through most of the 13 years?

A. Yes.

Q. Men sometimes show these things in a different way from women, but do you believe he loved you as well?

A. Yes.

Q. You’ve told me about meetings and discussions you had after 27 November 1997, did you get the impression that he wanted you back?

A. Yes he did, yes.

Q. What reasons did he give?

A. Because he loved me because he said he loved me, he still loved me. He didn’t want to be on his own without me.”

[22] The husband explained his approach in this way:

“Q. You’ve painted a very clear picture for me of a 13 and a half year relationship and if I may say so you have worked commendably hard to preserve and maintain your assets and done very well and part of that process has been your desire to provide a secure environment for Lexie and her son is that right?

A. Yes.

Q. Although in questions you have been asked you may have detected some sort of criticism in fact the way you’ve carried out your life has been one of prudence and avoiding extravagance?

A. Yes.

Q. You haven’t gone in for flash cars or gin palace boats or holidays overseas?

A. No.

Q. That’s the way you are?

A. Yes.

Q. Some people might say that over 13 and a half years you’ve made sacrifices of a financial nature by just that not being extravagant, do you agree?

A. Yes.

Q. And I get the distinct impression in fact if we were to get you and Lexie around a table to have a conversation you would probably both agree there are areas where you both have got very different interests and approaches, would you agree?

A. Yes.

Q. You for your part that is, felt that she could have pulled her weight from time to time a little bit more enthusiastically or more enthusiastically at the Te Pahu farm situation and the shearing situation and Te Ngae Road?

A. Yes.

Q. I guess also you said so you really couldn’t see much benefit in her going on with her Arts degree at Massey or Victoria could you?

A. No.

Q. Just take a step back for a moment and tell me what sort of sacrifices over that 13 and a half year period do you think Lexie might have made?

A. Probably her studies purely looking at it from now, if she had stayed which I desperately wanted her to, she wouldn’t have had any need for studies but may have done it anyway.

Q. I get the impression that she has some skills with teaching would you agree?

A. Excellent with little kids yes.

Q. And you have never had any criticisms of her as a mother have you?

A. No.

Q. I guess without Ben you wouldn’t have had the same joys and experiences of a kid growing up in your household would you?

A. No.

Q. I think you value that don’t you?

A. Definitely.

Q. Would you agree with me that again still taking this step back a bit looking at Lexie now, or if you like November 1997, that her ability to fend for herself economically out in the big wide world wasn’t as great as yours, she had no qualifications to fall back on did she?

A. This is meaning when she left.

Q. Yes?

A. No not at all.

Q. And no work experience of any significance for 13 years correct?”

A. Yes.

. . .

Q. Summarising the exchange we had this morning, you felt very protective to her and one of the goals you had was to help her build up assets of her own?

A. Yes.

Q. She knew what you were doing?

A. Yes.

Q. And agreed with it?

A. Yes.

Q. If, although it didn’t happen, but if the two of you had stayed together that pattern would still be continuing, you looking after her encouraging her economically?

A. Yes.

Q. Also of course you recognised obligations to her in the event of your death because the will as I understand it operated for about 8 years?

A. Yes.

. . .

Q. These feelings towards Lexie of protecting her and making sure she was properly provided for with assets in her own name was really conditional upon or on your view provided she stayed with you?

A. That’s the only way we could have improved the assets by her staying yes.

Q. Are you living with someone else?

A. I have a partner yes.

Q. If that hadn’t happened you were still living in Benner Road with Lexie and she had with your help bought another kiwifruit block which had done well, let’s say that was worth $300,000 you would be totally unfussed by that?

A. Absolutely we actually talked about doing exactly that.”

[23] The personalities and backgrounds of the parties were different. It is trite to observe that such differences are present in every relationship. Ultimately, instead of being able to accept those differences and employ them to strengthen their relationship, this couple found the differences drove them apart. In those differences lie the source of the current conflict. The husband was a competent farmer. He loves the land. He works hard. He has an eye for good land and its potential. He is committed to financial prudence and economic self-sufficiency. He is not extravagant. He has little interest in cultural or academic pursuits. He saw the relationship as something which required a team or joint effort working steadily towards his financial goal. Economic security for both him and the wife had a high priority.

[24] The wife had spent most of her life in towns and cities. She had no farming experience. She prioritised the needs of her young son. She was an excellent mother. She had an eye for beauty and detail which was particularly valuable in the refurbishment of the Benner Road home and the creation of its garden. She had teaching experience. She was interested in academic and cultural pursuits and would have liked to spend more time on her extramural university degree. She was accepting of the husband’s priorities and supported him in them with the exception of the staged refurbishment and improvements on the Benner Road home to which she would have given much higher priority. One significant conflict occurred in early 1995 when the wife deposited $65,000 or $66,000 which she had received from the sale proceeds of the Ohope section in the husband’s bank account because she would have preferred to use that sum on the restoration and improvement of the Benner Road home. The husband returned the money to her and refused to use it for that purpose.

[25] These differences, as I have said, lie at the heart of the property dispute and have prevented its resolution. The husband for his part considers that the wife walked away from a productive and successful partnership. He considers that if she wishes to enjoy its fruits she should have stayed where she was. He has a tendency to minimise the value of the wife’s contributions to his assets which he understandably sees in financial terms. The wife, whilst acknowledging that the husband was a good provider and fair, still resents the stress which what she sees as parsimony caused her, and is resentful of the sacrifices which flowed from the relationship particularly in areas of frugal living and an inability to pursue her own interests.

Contributions

[26] This assessment of the parties’ relationship points clearly to the areas of their respective contributions. Because this proceeding constitutes a claim by the plaintiff wife I necessarily focus on her contributions. In so doing I do not underestimate or minimise the husband’s contributions which on any analysis were dominant and largely causative of his current wealth. His Te Pahu farm represented a significant capital asset at the start of the relationship. He has augmented that asset through a combination of hard work, prudent management, frugality, focus, and a good eye for potential investments in land.

[27] The wife’s financial contributions are insignificant in comparison. Throughout the relationship she was in receipt of child maintenance and child support which did not (particularly in the early years) constitute a large sum. It was, however, a regular sum which she expended on family expenses. She also received a wage for the duration of the Te Ngae Road Service Station venture. Arguably that wage was generous having regard to her work responsibilities. As so often is the case with family businesses her wage may have had an income splitting/tax advantage dimension to it. Her accumulated savings, coupled with profits which she received from the sale of the Ohope section and subsequently Lexie’s Orchard, eventually flowed through to the Papamoa property. The purchase of the Ohope section and subsequently Lexie’s Orchard were ventures which the husband supported, encouraged, and to a large extent controlled. The wife had greater input into the decision to buy the Papamoa house, a property over which the husband was unenthusiastic and which he now asserts was sold at a slight undervalue.

[28] In terms of the Lankow v Rose analysis, however, (infra paras [41-46]) the focus is not limited to monetary contributions alone. There must certainly be a nexus between contributions and the property in respect of which a claim is mounted. Contributions can be either direct or indirect and must assist in the acquisition, improvement or maintenance of the property and its value. Sacrifices can constitute indirect contributions in these areas. Furthermore the contributions must manifestly exceed the benefits conferred on the contributing party by the relationship itself.

[29] Against the background of the relationship as I have described it, the wife has in my judgment made contributions over the 13 years the relationship was afoot which qualify. Her contributions have been both direct and indirect. They have in the main been contributions which have assisted with the improvement and maintenance of the property concerned. Although her contributions do not match the husband’s in dollar terms those contributions were in their way valuable and certainly cannot be described as insignificant or outweighed by the benefit of the relationship itself.

[30] The child support payments received by the wife, although small, were regular and constituted a saving to the husband throughout the relationship. On the Te Pahu farm, although the husband was irritated that the wife’s contributions were in his view irregular, there were nonetheless contributions. She assisted in the shearing shed; like many farmer’s wife she fed the shearers; she planted trees and grubbed thistles.

[31] During the period of approximately four or five months during which the couple lived in Coromandel and Tauranga (prior to purchasing the Te Ngae Service Station) they lived for some of that period in the wife’s mother’s home. Although the major source of income during this period was the husband’s investment income the wife obtained paid work.

[32] During the Te Ngae Road Service Station phase the wife was solely responsible for the running of the household. Indeed, throughout the relationship the couple observed a traditional division of roles. Role division in itself must constitute an indirect contribution to the husband’s assets whose time and energies were thereby saved. It is no answer to domestic contributions of this sort, nor should they be devalued, by the argument that the husband, both before the wife’s arrival on the scene and after her departure, was able to cope for himself.

[33] The wife was also employed at the Te Ngae Road Service Station. I tend to the view that the wage she received was probably generous having regard to the duties she performed. Nonetheless there are obvious advantages both to the husband and to the family unit in being able to split business income in this way. Furthermore the wife’s saved wages led to the creation of modest capital in her own right and the acquisition of the jointly owned Ohope section in the profit of which the husband as a co-owner shared.

[34] The wife’s contributions to the Benner Road property were also significant. She was involved in the design and furnishing of the homestead. Even after the separation the husband saw the need to consult her on the final selection of carpets and curtains. She had a major input into the creation and layout of the garden which, on the photographic evidence, improves and enhances the property to a significant extent. She mowed the lawns around the house. She occasionally assisted in the orchard. She cleaned the motorcars. Having a greater facility with words than the husband, the wife also assisted him on occasions in preparing submissions and documents during negotiations involving the husband and other kiwifruit farmers with the Kiwifruit Marketing Board. At Benner Road too, the traditional division of roles applied. She is responsible for running the household.

[35] There were also indirect contributions represented by the sacrifices which the relationship entailed. Commitment and sacrifice overlapped to a large extent. The old adage that the cock can feather the nest because he does not have to sit on it obviously applies to the traditional role division of this couple. Many of the feathers in this case had their origins in the husband’s frugal lifestyle. The couple had no holidays of any significance. They seldom travelled. The husband gave no encouragement to the wife’s desire to branch out into tertiary education. He saw no point in it. The wife’s acceptance of the husband’s priorities and frugality and her support for him were central to his own contributions of locating and developing his assets. Without the wife’s loyalty and commitment the husband would have had to make other arrangements and would have had less time and energy to devote.

[36] On the facts of this case, and in the context of the parties’ relationship, I am not attracted to Mr Earl’s submission that the wife’s domestic contribution should, for award purposes, receive a minimal value. Certainly such contributions must be measured against the emotional and financial benefits of a de facto relationship. But an examination of the cases over the past 15 years shows a trend to recognise the significant value of domestic contributions rather than minimise them. The facts of Gray v Rose [1998] NZFLR 350, 356, its dicta and a 25% award in respect of a commercial asset by a Full Bench of the High Court, where the claimant had made no direct financial contributions, is a case in point.

[37] I have described the husband’s lifestyle as frugal. That is not a pejorative term. He was not extravagant. His current assets, his low debt, and his whole approach to life and asset management suggest to me that he was frugal rather than “average” as his counsel contended. He did not penny-pinch, but he certainly was not extravagant or indifferent to expenditure.

Expectations

[38] In the area of expectations the husband is really hoist on his own petard. His approach to the wife and his sense of obligation towards her throughout the relationship are both commendable and understandable. She came to him virtually penniless and vulnerable. He loved her. He looked after her. One of his priorities was to help her build up assets in her own name. He both paid her money (wages) and lent her money for that purpose. To make her economically self sufficient was one of his priorities. In terms of his 1989 will she was to be his sole beneficiary and should she predecease, the husband’s assets would have passed to the wife’s son.

[39] These factors establish in my judgment a clear pattern of conduct and create a legitimate expectation on the part of the wife that she would share in and benefit from the husband’s assets. The couple worked and co-operated together. They regarded themselves as partners. That was certainly the way they presented themselves to the outside world. Although the couple never married they announced their engagement at an early stage in November 1984. Within a few years the wife had adopted the husband’s surname. Title to property she owned was registered in that name. The husband understandably regarded himself as the father of the wife’s son. He was indeed the child’s father figure and the relationship between the two was valued by both of them. It was a role the father took seriously.

[40] The parties’ dealings with each other, the way they operated their relationship, and in particular the encouragement and support both in an emotional and financial nature which the husband gave to the wife throughout, inevitably in my judgment rode with a reasonable expectation by both parties that the wife would share in the husband’s assets.

The law

[41] A thorough examination of the relevant law is not required for the purposes of this case. There is no dispute between counsel as to the relevant principles.

[42] The starting point and indeed the dominant authority is the Court of Appeal’s decision of Lankow v Rose [1995] 1 NZLR 277. As is apparent from my foregoing factual analysis there are two essential pre-requisites to a successful claim. The first is contribution, direct or indirect, by a plaintiff in more than a minor way to the acquisition, preservation or enhancement of the defendant’s assets. The second requirement is that in all the circumstances the parties must be taken reasonably to have expected that the plaintiff would share in the result.

[43] Hardie Boys J put it this way (p 282):

“The essential requirements I see to be twofold: that the plaintiff contributed in more than a minor way to the acquisition, preservation or enhancement of the defendant’s assets, whether directly or indirectly; and that in all the circumstances the parties must be taken reasonably to have expected that the plaintiff would share in them as a result. Both statements need some amplification. In the first place, by contributions to assets one is not referring to those contributions to a common household that are adequately compensated by the benefits the relationship itself confers. The contribution must manifestly exceed the benefits. Putting it in conventional estoppel terms, the plaintiff’s contributions must have been to his or her detriment; or in Canadian terms they must have resulted by the end of the relationship in the enrichment of one to the juristically unjustified deprivation of the other. Further, the contributions need not be in money; they may be in services or in any other respect. But there must be a causal relationship between the contributions and the acquisition, preservation or enhancement of the defendant’s assets for, as a claim to a constructive trust is a proprietary claim, a claim to an interest in property, the contributions must have been made to assets; not necessarily to particular assets, but certainly to the defendant’s assets in general. The contributions may then be recognised by the imposition of a trust over a particular asset or particular assets, which may in turn be quantified or satisfied by a monetary award.”

[44] The analysis of Tipping J is equally instructive (p 294):

“However, in my judgment it is not enough for the claimant to show a contribution to the relationship. In order to be awarded a beneficial interest in property owned in law by the defendant, the claimant must first show some contribution, direct or indirect, to the property at issue. A contribution to the relationship will not qualify unless it is also, as will often be the case, a contribution to that property. This is not as restrictive an approach as it may appear. I will return to the ambit of qualifying contributions a little later.

The second thing the claimant must establish is that she expected an interest in the property. If, for any reason, she had no such expectation, a constructive trust cannot be imposed in her favour. Thirdly the claimant must show that her expectation of an interest was reasonable in the circumstances. The fourth step is for the claimant to show that the defendant should reasonably expect to yield her an interest. The fact that the defendant is not willing to yield an interest or did not expect to have to do so is no bar to her claim if he should reasonably expect to do so. In that respect the Court stands as his conscience.”

[45] Tipping J had some pertinent observations on the issue of quantum (p 295):

“There seems to be a view in some quarters that once qualifying contributions have been shown which justify some interest, the amount of that interest is at large and is to be determined according to broad notions of justice with a greater or lesser degree of analogy with the matrimonial property regime which applies to legal marriages. Any such approach is, in my judgment, erroneous. It ignores the fundamental difference between a legal marriage and a de facto marriage. Broadly speaking, in the case of a legal marriage the Matrimonial Property Act 1976 requires equal division unless the spouse resisting equality can show grounds for a different division. Under the Act the status of wife or husband gives each spouse a presumptive half-share.

In the case of a de facto union, the claimant does not start from a presumptive half-share but rather from nothing. A de facto claimant must demonstrate first a case for an interest and then what that 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. By contrast with the Matrimonial Property Act regime the focus in de facto cases is on contributions to property not contributions to the partnership: of course contributions to the partnership will often also be contributions to property. In the end the Court must assess as closely as reasonably possible what weight the claimant’s contributions have had against the contributions of the defendant in the acquisition, improvement or maintenance of the property or its value.

[46] The same authority has a useful observation on the issue of expectation and findings thereof. I find it helpful when assessing the evidence about the relationship of 13 years duration and weighing the submissions of the defendant’s counsel.

“It was sufficient that the parties were living in a relationship of mutual dependence and mutual assistance in which she made the contribution which she did, and he accepted it, and nothing was said to exclude the obvious inference.” [McKay J at p 290]

Defendant’s submissions

[47] I do not intend to detail the full and helpful submissions which have been made to me by counsel. Because the defendant resists any further payment to the plaintiff, however, it is necessary for me to outline the defendant’s submissions.

[48] Mr Earl takes issue with the plaintiff’s pleading to the extent that it claims a resulting trust and pleads unjust enrichment. He submits that there is insufficient evidence to justify any finding of a resulting trust (normally a situation where an asset legally owned by one party has been acquired with another party’s money). In that regard Mr Earl is probably correct but nothing of substance hangs on the point. The plaintiff’s pleading in that regard is a hang-over from the “scattergun” approach of pleading required in de facto property claims prior to Lankow v Rose where a whole variety of equitable remedies were pleaded. Lankow v Rose has to a very large extent consolidated and refined the law. The plaintiff has correctly pleaded a constructive trust and in any event Mr Earl accepts the principles of Lankow v Rose apply to this proceeding.

[49] Mr Earl’s first submission is that the assets which the parties respectively owned at the end of their relationship properly indicate what their beneficial interest should be. Mr Earl points to the fact that the parties never operated a joint bank account and, particularly so far as the wife’s property acquisitions were concerned, kept their transactions separate. Those transactions included loans between the parties which were advanced and repaid.

[50] Mr Earl then developed his second submission which, as I understand it, endeavours to bring into play the principles of Gillies v Keogh [1989] 2 NZLR 327. That decision of the Court of Appeal suggests that if one party persistently and consistently throughout a relationship makes it clear that he or she will not share assets with the other party then such expression is sufficient to exclude any expectation that a plaintiff will receive an interest in a defendant’s property.

[51] In that regard Mr Earl refers again to the pattern of dealings between the parties and points to evidence which suggests that the Te Pahu farm was always regarded as the defendant’s; the evidence that the husband refused to allow the wife to contribute $65,000 to improvements on the Benner Road home; and the general separation of financial matters. Mr Earl correctly submits that if there is any expectation it must be directed towards a specific asset and that any reasonable expectation must be assessed against benefits already received by the plaintiff arising out of the relationship itself.

[52] Mr Earl understandably contrasted the respective contributions of the parties and in an analysis of the benefits which the wife has received referred to 13 years of “free” accommodation, food and clothing, the fact that she has retained a car, various post separation payments made by the husband and the fact that she owned the Papamoa property at the date of separation which in Mr Earl’s submission was worth $175,000.

[53] In counsel’s submission the wife’s contributions were “marital rather than proprietary”. The benefits which she has received from the 13 years of the relationship exceeded the contributions she had made. In the alternative Mr Earl submitted that if I was satisfied the Lankow v Rose criteria had been met then a proper award for the plaintiff should not exceed 15% of the total assets at their separation date value. In Mr Earl’s submission the Papamoa property (assuming a value of $175,000) when added to the then value of the car, approximated 14% of the total property pool and that on 1997 values subsequent payments made by the husband to the wife brought the total sum she had received up to 17%, a result which in counsel’s submission was equitable.

[54] The defendant’s final submission was that I should not be “mesmerised” by the current value of the defendant’s properties and the disparity between the current asset position of the couple. It was submitted that if I carried out a percentage award calculation on current values I would fail to do equity between the parties.

Decision

[55] I turn first to the submission that, throughout the relationship the husband had dealt with his assets in such a way as to negate any expectation that the wife would share in them.

[56] There is certainly evidence that the parties kept their respective finances separate and intact. There was no joint bank account. The only jointly owned asset was the Ohope section. Monies which the husband advanced to assist the wife in acquiring assets in her name, although not formally recorded as loans, certainly seem to have been treated as such.

[57] Two dicta from Gillies v Keogh (supra) assist. In my judgment the decision of Gillies v Keogh needs to be read in context. The Court of Appeal hearing was over 12 years ago. The asset under attack was the home of a de facto wife. The relationship, so far as cohabitation in the wife’s house was concerned, was just over two years. Findings of facts in the lower Court were critical:

“The case thus emerges as one in which it is substantially common ground in the evidence that, as well as taking title and making the contractual and financial arrangements in her own name, the appellant made it clear to the respondent at all times that she was asserting that the house was hers and hers alone. He was content not to argue. In these circumstances, applying the principles discussed earlier, in my opinion one cannot say that a reasonable person in his shoes would have understood that he was acquiring an interest; or that there was unjust enrichment; or that it is unconscionable on her part to repudiate his claim; or that she is any sense estopped.” (page 340 per Cooke P).

Then at page 352:

“In the absence of specific findings by the trial Judge, I would draw the conclusion that a reasonable person in the respondent’s position would not expect a benefit, nor would a reasonable person in the appellant’s position expect to have to concede a benefit, whether by way of an interest in the property or by way of compensation. There was no unjust enrichment of the appellant, nor unconscionable conduct by her when one considers the present benefits enjoyed by the respondent from the joint relationship.” (Per Bisson J).

[58] Findings of that type, as is apparent from the manner in which they were expressed, must now be read through the subsequent lens of Lankow v Rose (supra). Is there evidence, in the nature of claims, words, assertions or conduct, which clearly negates the second Lankow v Rose requirement of expectation? In my judgment the husband’s conduct falls well short of such a finding.

[59] The parties’ relationship spanned over 13 years. Although frugal, the husband shared his life, his property and his enterprises with the wife. One of his many goals in the relationship was to build up assets in the wife’s name so that she would be able to have a degree of economic security and independence, - assets which she could call her own. This goal he assisted through a combination of income splitting, joint ownership, loans and (with Lexie’s Orchard) a keen eye.

[60] Added to that was the fact that in 1989 the parties discussed their wills in the presence of each other with the same solicitor and, so far as the husband was concerned, the wife became his sole beneficiary. The will was unchanged between 1989 and the parties’ separation.

[61] Wills are, of course, ambulatory documents and do not, prior to a testator’s death, create legal rights. In the context of de facto relationships evidence provided by wills must be treated with some caution. It can be logically argued that making a will which leaves a party’s assets to a de facto partner is a strong statement that the assets in question are the testator’s alone. (See Hayward v Giordani [1983] NZLR 140). Such a will, however, is not necessarily inconsistent with an expectation. Disclosure of the terms of such a will can equally create an expectation.

[62] There is in my judgment an artificiality about examining the financial transactions inter se of this couple and the husband’s will in isolation. What is instead required is an examination of their conduct across the entire sweep of their relationship. A Gillies v Keogh based argument might well have been available to the husband on or shortly after the sale of the Te Pahu farm. But as the years went by the couple’s relationship and the husband’s assets became closely interwoven. The will remained in force. The family unit was the centre of the husband’s life and operation. The couple worked together as a team and consulted each other as various properties were bought and sold. Added to that is a clear pattern of conduct so far as the husband is concerned of encouraging and assisting the wife to acquire capital in her own name. Against all the evidence which I have heard it would in my judgment be a factual error to find that the wife had no expectation of a share in the husband’s assets. I decline to make such a finding and indeed unhesitatingly find that the wife had such an expectation.

[63] In terms of the Lankow v Rose analysis it inevitably follows from my findings that the wife has a claim against the husband’s assets. There have been contributions to those assets both direct and indirect, maintenance and sustenance of those assets, and such contributions have been against such a background as to give rise to a legitimate expectation that the wife would share in those assets.

[64] It remains to decide whether the assets which the wife had in her control when the relationship ended in 1997, which on calculations of the defendant’s counsel approximated 14% of the combined assets of the parties, is a fair and equitable result and consistent with the Lankow v Rose approach.

[65] In this exercise I consider it is legitimate to have regard to the current value of the husband’s assets when assessing quantum. It is true that in respect of the Benner Road property there have been post separation improvements but the value of such improvements has properly been taken into consideration and factored into the valuation evidence produced by the defendant. As a matter of logic and common sense, if the wife had an equitable share in the husband’s assets at the date of separation then such share in dollar terms must increase or decrease if the assets in question rose or fell in value between separation and a Court hearing. In this particular case the husband’s kiwifruit orchards have increased in value significantly since the end of 1997. Their combined value was then approximately $1.043 million. It may well be, as the husband and his valuer contended in evidence, that kiwifruit properties are at or near the top of a cycle. I do not consider that fact to be a sound reason to reduce any award to which a claimant may otherwise be entitled. I do, however, consider the values of the properties in question, recent movements in those figures, and the possibility of a decline, to be legitimate factors to weigh in the exercise of arriving at an order which is just. I also consider it legitimate to weigh, and have done so, the value of the assets retained by the plaintiff in November 1997 as a percentage of the then value of the husband’s assets.

[66] The wife left the relationship with the Papamoa property which was subsequently sold. After payment of the mortgage and bank debts that sale realised approximately $120,000. She also retained a motor vehicle which remains in the husband’s name, he having re-licensed it and kept it insured since the separation, which at the date of separation was worth $7000 and may be worth today somewhere around $3000. The husband made payments to the wife totalling $40,100 from the date of separation until February 1999. $18,000 of that figure represented ex gratia monthly payments of $1200 in the nature of maintenance designed to help the wife establish herself. Capital payments to assist with furniture and the Papamoa mortgage were also made by the husband.

[67] In my judgment not much hangs on the fact that the Papamoa property was sold by the wife at a figure somewhat less than what its current fair market value may have been. I have considered the revised evidence of Mr J L Middleton that, as at the date of sale, the government valuation of 10 Emery Place was $168,000 and that comparable properties in the Papamoa area were selling at approximately 1% over government valuation in 1999. That evidence is entitled to respect (it was indeed unchallenged) but it does not detract from the fact that the wife had listed the property for 5 months and had received no offers or expressions of interest. In any event, even if I were to find (which I do not) that the Papamoa property was sold by the wife at between $8,000 and $25,000 less than its fair market value, such a finding does not at the end of the day make any significant difference to the award I intend to make.

[68] What is required in terms of the authorities is an award which is just, an award which corresponds to the expectations of the couple, and an award which is generally commensurate with the contributions which were made. In this particular case, of course, such an award must be fair to both parties and must also recognise the fact that it was the husband who provided the founding capital of the relationship and who through his efforts and good stewardship has increased significantly the capital which he had in 1984.

[69] In my judgment, having weighed all these factors as best I can, and having regard to my findings, I consider that an appropriate award in favour of the plaintiff is an award in the sum of $275,000. Such an award is in addition to the capital which the plaintiff has already received from the net sale proceeds of Papamoa and the motor vehicle which counsel have agreed should vest in the plaintiff.

[70] I test that figure by looking at it in global terms. If I were to treat the current net assets of the parties as approximating $1.857 million (being the defendant’s current net assets of $1.722 million) added to which is the 1997 value of the motor vehicle, the furniture, and the net sale proceeds of Papamoa), then the assets retained by the plaintiff plus an award of $275,000 approximates 21.8% percent of the total pool. It is clear from Lankow v Rose and also from the recent Court of Appeal decision of Hunter v Copland (CA 271/00, 6 September 2001) that a global award is permissible and indeed sensible having regard to the usual factual matrix of a de facto relationship.

[71] I regard a $275,000 award (being 21.8% of the total pool) as an appropriate global figure to reflect the plaintiff’s contributions to that pool and to the defendant’s assets in particular. By retaining the car, the net sale proceeds of Papamoa, and by an award of an additional $275,000, I consider that the plaintiff is receiving appropriate compensation for her contributions over the 13 years of the relationship. In awarding that figure I have not overlooked the various post-separation payments made by the defendant to the plaintiff. I have also weighed the 1997 valuation of the defendant’s assets.

Orders

(a) Judgment is entered for the plaintiff against the defendant in the sum of $275,000.

(b) Such sum is to be paid on or before 23 November 2001.

(c) The defendant’s motor vehicle currently in the plaintiff’s possession is to vest (by consent) in the plaintiff as her sole property.

(d) The defendant is to sign whatever documents are necessary to transfer ownership of that vehicle. There is to be no apportionment in respect of insurance premium or registration fees, nor is the defendant to cancel the insurance policy until such time as the vehicle is either reinsured by the plaintiff or the current insurance policy is taken over by her.

Costs

[72] Although analogous to Matrimonial Property Act cases in which costs are rarely awarded, property claims arising out of a de facto relationship currently require a different procedure and are inevitably more complex and costly to run. I consider that in this situation the plaintiff is entitled to costs which should reflect the 2B scale. The claim has been robustly opposed by the defendant but at the end of the day the plaintiff has been successful. Against those indications counsel are invited to submit memoranda on the question of costs within 21 days if they are unable to resolve that issue having regard to the 2B scale indication I have given. I hope, however, that counsel are able to settle costs without further intervention by the Court.