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High Court of New Zealand Decisions |
Last Updated: 12 June 2023
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CIV-2022-404-000441
[2023] NZHC 1297 |
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BETWEEN
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STUART JAMES LOBB
Plaintiff
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AND
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VERENA COLLEEN RYAN
Defendant
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Hearing:
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18 April 2023
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Appearances:
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K Kommu for the Plaintiff L Dixon for the Defendant
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Judgment:
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29 May 2023
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JUDGMENT OF WALKER J
This judgment was delivered by me on 29 May 2023 at 4 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
LOBB v RYAN [2023] NZHC 1297 [29 May 2023]
[1] The issue before this Court concerns the scope and application of s 4 of the Property (Relationships) Act 1976 (the Act). Mr Lobb claims equitable contribution from his former wife, Ms Ryan. Ms Ryan argues that a claim to contribution (if any) must be made within the exclusive jurisdiction of the Family Court under the Act. She has filed a protest to jurisdiction. Mr Lobb’s application before the Court seeks to set aside Ms Ryan’s protest to jurisdiction. If I decline to set aside the protest, it follows that I must dismiss the proceeding.1
Background
[2] The parties were married. They separated on or around 29 October 2016. Their marriage was dissolved on 29 August 2019.
[3] During their marriage they entered into a loan agreement with Westpac for the purpose of buying a residential property (Westpac Property Loan). They were each jointly and severally liable for the full amount under the Westpac Property Loan which was secured by a mortgage over the acquired property. Subsequently, the parties settled a trust (Lothbury Trust). Both were trustees, along with the Public Trust. The property was transferred to the trustees. The security was re-registered but the trustees did not take over the principal liability for the Westpac Property Loan. That liability remained with the parties. The trustees entered into a Deed of Guarantee and Indemnity to Westpac in respect of Mr Lobb and Ms Ryan’s obligations under the Westpac Property Loan and acknowledged that the mortgage on the property secured the trustees’ liability under the Deed of Guarantee and Indemnity.
[4] There is no dispute that the Westpac Property Loan was a relationship debt until its repayment.
[5] Over the next decade or so, the credit limit under the Westpac Property Loan increased. Repayments were varied to interest only payments. On 25 February 2015, the Public Trust retired as trustee of the Lothbury Trust and was replaced by Lockhart Trustee Services No. 56 Ltd (Lockhart). The trustees of the Lothbury Trust provided
1 High Court Rules 2016, r 5.49.
a guarantee and indemnity to Westpac in relation to Mr Lobb and Ms Ryan’s obligations under the Westpac Property Loan.
[6] By late April or early May 2015, the Westpac lending facility had been restructured into a two-part facility of $150,000 and $1,100,000. On 22 May 2015, the mortgage was discharged and replaced with a new mortgage (Instrument 9977107.3) in favour of Westpac.
[7] Following separation and during his occupation of the property, Mr Lobb made interest payments towards the Westpac Property Loan. Ms Ryan did not make any payments. The Westpac Property Loan fell into arrears. Westpac served a Property Law Act 2007 notice. In August 2019, the parties’ marriage was dissolved.
[8] On or about 27 July 2020, Mr Lobb, Ms Ryan and Lockhart were removed as trustees of the Lothbury Trust and a receiver was appointed.2
[9] Mr Lobb took steps to refinance and repay all amounts due and owing under the Westpac Property Loan. His evidence is that the sum paid by him, including all refinancing costs and legal fees, was $1,505,963.75 (Repaid Sum). He says that this was to avoid a mortgagee sale.
[10] As explained by Mr Lobb, the refinancing involved the following:
(a) On or about 26 August 2020, WAG Trustees (2020) Limited (WTL) was incorporated to be the trustee of the WAG Family Trust, of which Mr Lobb is a beneficiary. Mr Lobb’s father, Warwick Lobb, is the director and shareholder of WTL.
(b) On or about 1 September 2020, WTL was appointed as trustee of the WAG Family Trust.
(c) On or about the same date, WTL took the title of two freehold properties of the WAG Family Trust, being recorded as a major transaction.
2 Lockhart Trustee Services No. 56 Limited v Ryan [2020] NZHC 1823.
(d) WTL, as trustee of the WAG Family Trust, borrowed funds from Norfolk Mortgage Trust secured against the two freehold trust properties of the WAG Family Trust, and with Mr Lobb being a guarantor in his personal capacity.
(e) WTL then lent Mr Lobb sufficient funds to repay all amounts claimed by Westpac as due and owing under the property loan agreement and to acquire from Westpac the interest as mortgagee.
(f) Once Mr Lobb was the registered mortgagee of the property, WTL would then accept from Mr Lobb a transfer of his interest as mortgagee.
[11] As a consequence of the refinancing, all sums owed to Westpac under the Westpac Property Loan were paid, the obligations of Mr Lobb and Ms Ryan to Westpac fell away and WTL became the registered mortgagee of the property, having acquired the security interest.
The Proceedings
[12] Mr Lobb issued proceedings on 25 March 2022. The claim is for equitable contribution from Ms Ryan towards the refinancing of the Westpac Property Loan. Mr Lobb relevantly pleads:
(a) The defendant owed a common and/or joint obligation with the plaintiff as joint borrowers to pay at least half of the sums owing under the Westpac Property Loan.
(b) The plaintiff has paid a disproportionate share of this common obligation by paying all sums owing, being the Repaid Sum and all the monthly costs of this joint debt since April 2016.
[13] The prayer for relief seeks half of the Repaid Sum (or a higher proportion as the Court decides is fair) along with a sum representing half of the payments made by Mr Lobb under the Westpac Property Loan between April 2016 and September 2020 (or such higher proportion as the Court decides is fair).
[14] Ms Ryan’s protest to jurisdiction contends that:
(a) The money owed under the Westpac Property Loan for which the plaintiff and the defendant were jointly liable was a relationship debt as defined by s 20(1) of the Act;
(b) Section 4 of the Act provides that the Act is a code which applies instead of all the rules and presumptions of the common law and equity to transactions between spouses in respect of property; and
(c) Section 22 of the Act provides that every application under the Act must be heard and determined in a Family Court.3
[15] Mr Lobb has applied to set aside the appearance.4 There are three main limbs to his argument:
(a) The monies for which the plaintiff seeks equitable contribution are not relationship property debts under s 20(1) of the Act;
(b) The refinancing and subsequent Repaid Sum paid by Mr Lobb is entirely separate to the Property Loan Agreement, though the latter provides factual context as to why the refinancing was incurred; and
(c) Even if the refinancing and Repaid Sum is considered a relationship debt or transaction between the parties (which is not accepted) the claim is still within the jurisdiction of the High Court.
Issues
[16] The essential issues for consideration are:
(a) What is the scope and application of s 4 of the Act?
3 That application was made under r 5.49 of the High Court Rules 2016.
(b) Is there a transaction which engages s 4 of the Act?
(c) Is the doctrine of equitable contribution abolished by s 4(1) of the Act and if so, what is the consequence on the question of jurisdiction.
[17] Each issue has a number of sub-issues.
What is the effect of the judgment in Ryan v Lobb?
[18] An antecedent matter arises. The day after Mr Lobb’s submissions were filed, Hinton J delivered a decision in a separate proceeding issued by Ms Ryan against Mr Lobb.5 This concerned the resettlement of the Lothbury Trust and determined the interpretation of the resettlement clause in the trust deed. It addressed how contributions should be interpreted under the resettlement clause in the trust deed.
[19] In that proceeding, Ms Ryan volunteered that the only debt to be taken into account in a resettlement is a $1.4 million debt owed to Westpac at the date of repayment by Mr Lobb. (It was voluntary because the Westpac Property Loan is not a liability of the trustees. It is owed by Mr Lobb and Ms Ryan personally.)
[20] Relevantly for present purposes, Hinton J took the $1.4 million debt to Westpac under the Westpac Property Loan into account as a liability of the Lothbury Trust, made orders to sell the property and determined that one half of net sale proceeds less
$700,000 be resettled on Ms Ryan’s new trust. She stated:6
Ms Ryan accepts that a debt of $1.4m (that is a deduction of $700,000) should be taken into account in a resettlement under cl 2.5(3), albeit that the trustees are not principal debtors. Mr Lobb says that the debt now owed to his father’s trust is significantly larger than $1.4m. So far as I am aware no further advances have been approved by the trust/receiver and Mr Lobb has been liable for interest payments. The mortgage could therefore only legitimately secure $1.4m. In any event, only $700,000 is to be deducted for purposes of the resettlement.
5 Ryan v Lobb [2023] NZHC 689.
6 At [53].
[21] The effect appears to be that Ms Ryan has or at least will contribute $700,000 in respect of the amount due to Westpac as at the date of the repayment by Mr Lobb once the property is sold.7
[22] Mr Dixon suggested in a memorandum filed with the Court prior to the hearing that Hinton J’s decision rendered the equitable contribution claim otiose. In oral submissions, Mr Dixon walked back from this proposition. He acknowledged that the decision does not go directly to jurisdiction but submits that it bears on the outcome of the claims in that the parties’ joint liability under the Westpac Property Loan has been quantified at $1.4 million. First, to the extent that Mr Lobb seeks more than
$700,000 from Ms Ryan, this proceeding is a collateral attack on the judgment. Secondly and relatedly, Hinton J’s judgment also dealt with payments made by Mr Lobb during his occupation of the property including mortgage and interest costs. Thirdly, it relates to matters properly relevant to the equitable jurisdiction.
[23] Mr Kommu acknowledges only that there is some overlap between the issues decided by Hinton J and this substantive claim which may necessitate amendment to the statement of claim. However, he contends the overlap is limited to quantum and the equitable contribution claim is not extinguished. He submits that Hinton J crystallised the loan obligation only but not the refinancing quantum, that the refinance was designed to avoid the sale of the property and to preserve the property for the Lothbury Trust and the equitable contribution claim includes costs and interest which are incidents of the refinancing of the Repaid Sum rather than the original borrowing.8
[24] Clearly the judgment of Hinton J is material to the underlying substantive claim. I agree that it does not mean it is necessarily relevant to the question of jurisdiction, as Mr Dixon concedes. I therefore put it to one side.
Arguments
[25] Mr Kommu’s submissions characterised the claim against Ms Ryan as focused on the refinancing of the Westpac Property Loan rather than the loan itself. He suggests that the loan merely provides context as to why the refinancing was undertaken. The Repaid Sum is not a relationship debt and not a transaction between the parties which engages s 4 of the Act.
[26] As a fallback, he submits that even if the sum repaid by Mr Lobb is considered a relationship debt or transaction between the parties which engages s 4 of the Act, the High Court still has jurisdiction because there is no application under the Act. He relies on cases in which various equitable, contractual and statutory causes of action have been permitted in the High Court between spouses.9
[27] Mr Lobb’s motivation in invoking the jurisdiction of the High Court may be that any claim he may have under the Act is now time barred. While that may be so, there is provision to obtain leave from the Family Court where circumstances warrant and any time bar cannot restore jurisdiction where there is none.
[28] Mr Dixon submits that s 4(1) abolishes the doctrine of equitable contribution. Mr Lobb’s claims relate to a property transaction between spouses in the form of discharging obligations under the Westpac Property Loan so the Act applies instead of the equitable rules. Thus, Mr Lobb’s only remedy (if any) is to obtain orders under the Act. That claim must originate in the Family Court. He argues that to allow the plaintiff to obtain contribution by invoking the High Court’s equitable jurisdiction contravenes not only the text of s 4(1) of the Act but subverts the Act’s scheme and policy.
[29] Mr Dixon’s principal argument does not depend on this Court finding that earlier decisions of the High Court were wrongly decided. However, he argues as a fall-back that they are inconsistent with the Court of Appeal decision in Kerridge v Kerridge.10 His first submission is that because s 4 is substantively engaged, no claim
10 Kerridge v Kerridge [2009] NZCA 14, [2009] 2 NZLR 763.
to equitable contribution subsists, being supplanted by the Act. Consequently, the only remedy which Mr Lobb could seek is an order under the Act.11 Pressed by the Court to address whether that proposition fell within the bounds of a jurisdiction argument Mr Dixon hinted at an expansive view of jurisdiction. He submitted that jurisdiction means what a Court has authority to do. If there is no substantive claim as it has to be made under the Act rather than in equity, and any claim under the Act has to be in the Family Court, then there is no jurisdiction.
The legal principles
[30] Rule 5.49 of the High Court Rules 2016 relevantly provides:
5.49 Appearance and objection to jurisdiction
...
(a) if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss the proceeding; and
(b) if it does not dismiss the proceeding under paragraph (a), set aside the appearance.
[31] Rule 5.49 is to be given its ordinary meaning. The Supreme Court observed in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd that the Court below had adopted an overly restrictive view of the scope of what can be addressed in an objection to jurisdiction.12 The r 5.49 procedure is applicable in wider situations than only where the matter is extraterritorial, when by law the case can only be determined by a different court or authority, and where the operation of a contractual term or
12 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94 at [25].
failure to comply with a statutory requirement precludes the High Court having jurisdiction. The Court referred at [25] to the classic expression of the meaning of jurisdiction set out by Diplock LJ in Garthwaite v Garthwaite:13
In its narrow and strict sense, the “jurisdiction” of a validly constituted court connotes the limits which are imposed upon its power to hear and determine issues between persons seeking to avail themselves of its process by reference
(1) to the subject-matter of the issue or (2) to the persons between whom the issue is joined or (3) to the kind of relief sought, or to any combination of these factors.
[32] And the remarks of Lord Scott in Tehrani v Secretary of State for the Home Department:14
When issues are raised as to whether or not a court of law has jurisdiction to deal with a particular matter brought before it, it is necessary to be clear about what is meant by “jurisdiction”. In its strict sense the “jurisdiction” of a court refers to the matters that the court is competent to deal with. Courts created by statute are competent to deal with matters that the statute creating them empowered them to deal with. The jurisdiction of these courts may be expressly or impliedly limited by the statute creating them or by rules of court made under statutory authority. Courts whose jurisdiction is not statutory but inherent, too, may have jurisdictional limits imposed on them by rules of court. But whether or not a court has jurisdictional limits (in the strict sense) there are often rules of practice, some produced by long-standing judicial authority, which place limits on the sort of cases that it would be proper for the court to deal with or on the relief that it would be proper for the court to grant.
[33] This tends to support Mr Dixon’s more expansive approach to a jurisdictional challenge.
Discussion
[34] Section 22 of the Act provides that every application under the Act must be heard and determined in the Family Court.15 A long-standing line of authority has held that s 22 applies only to cases in which parties are seeking orders under s 25(1) of the Act and the exclusive jurisdiction of the Family Court is limited to such applications.16
13 Garthwaite v Garthwaite [1964] P 356 at 387.
14 Tehrani v Secretary of State for the Home Department [2006] UKHL 47, [2007] 1 AC 521 at [66].
15 Section 11 of the Family Courts Act 1908 also provides that a Family Court shall hear and determine all such proceedings under or by virtue of any of the provisions of the Property (Relationships) Act 1976.
16 Beginning with Jew v Jew [2003] 1 NZLR 708; Palmer v Official Assignee [2010] NZHC 2093; [2011] 1 NZLR 846; Kake v Napier, above n 8; Houston-Quay v Henson [2013] NZFC 658 (2013); Lung v Liu, above n 8; Nation v Nation [2004] NZCA 288; [2005] 3 NZLR 46 (CA); and AB v EF [2012] NZHC 722.
[35] In Kake v Napier,17 the High Court allowed an appeal from a District Court decision that a claim against a de facto partner for breach of contract was within the exclusive jurisdiction of the Family Court. Justice Campbell held that though the contract breach was a transaction in respect of property, meaning that the substantive rules of the Act may have to be applied, it does not mean that the Family Court had exclusive or any jurisdiction over the claim. He referred to and applied the line of authority commencing with Jew v Jew.18 He said that s 4 of the Act deals with substantive law, not with jurisdiction. Section 4(4) contemplates that proceedings raising questions relating to relationship property may be commenced and determined in courts other than the Family Court. As long as the proceeding is not an application under the Act, that other court will have jurisdiction but will have to determine the question as if it was raised in a proceeding under the Act.19
[36] Similarly, in a recent jurisdiction challenge to a claim under s 339 of the Property Law Act 2007 between former spouses, the High Court recognised there were divergent approaches but preferred the line of cases holding that s 4 does not exclude the jurisdiction of the High Court. It only requires the Act be applied where any question relating to relationship property arises.20
[37] The scope and application of s 4 of the Act is the crux of this application. It relevantly reads:
4 Act a code
(a) to transactions between spouses or partners in respect of property; and
(b) in cases for which this Act provides, to transactions—
(i) between both spouses or partners and third persons; and
(ii) between either spouse or partner and third persons.
17 Kake v Napier, above n 8.
18 Jew v Jew, above n 15.
19 At [18].
20 Lung v Liu, above n 8.
(a) the presumption of advancement does not apply between husband and wife:
(b) the presumption of resulting trust does not apply between spouses, civil union partners, or de facto partners:
(c) the presumption that the use of a wife’s income by her husband with her consent during the marriage is a gift does not apply between husband and wife.
...
[38] The intention of s 4 is to cause the Act to predominate over all other legislation (and equitable and common law rules and presumptions) which might otherwise apply to the extent that issues are dealt with by the Act.21 It does not mean there is no room for common law or equitable remedies between spouses. I respectfully agree with Campbell J’s view in Kake that this provision deals with substantive law. Applications made under the Act are within the exclusive jurisdiction of the Family Court by virtue of s 22 of the Act, but s 22 is directed only to an application under the Act. It does not in its terms cover every proceeding before a court which may involve questions under the Act. A proceeding which is not an application under the Act but which does raise a question under the Act is expressly envisaged in s 4(4).22
[39] The question then is whether the fact that Mr Lobb’s claim is not, in form, an application under the Act is determinative or whether the substance of Mr Lobb’s claim is to be considered in the light of the substitution of the Act in place of the rules and presumptions of the common law and of equity.
21 Official Assignee v Williams [1999] NZCA 364; [1999] 3 NZLR 427 (CA) at [20].
22 Palmer v Official Assignee [2010] NZHC 2093; [2011] 1 NZLR 846 (HC). This involved an application under s 58 of the Insolvency Act 1967 which is not an application under the Property (Relationships) Act 1976 and cannot be made in the Family Court.
[40] Mr Dixon relies on Burt v Yiannakis.23 That was a case about substantive jurisdiction rather than a challenge to procedural jurisdiction. One of the key issues was whether the New Zealand Court had jurisdiction to consider claims in equity relating to overseas immovables in the property relationship context. Family Court proceedings had been transferred to the High Court. One party then commenced a High Court proceeding advancing various claims based in equity in relation to properties overseas—constructive trust, estoppel and resulting trust. The counterparty applied to strike out those claims relying on ss 4(1) and 7(1) of the Act. That application was earlier dismissed on the basis it was at least arguable that the Court has jurisdiction. In delivering judgment following a substantive trial, Asher J held:
(a) If equitable claims involve property transactions between spouses or partners, the Act applies as a code.
(b) “Transaction” is a word with broad meaning and means all exchanges or interactions concerning property between spouses and partners that have material consequences, or would have if implemented. It also has the wider meaning of a property related event that occurs between partners during a qualifying relationship.24
(c) Section 4(1) is not limited to relationship property but applies to “property” generally and can be seen as deliberately drafted broadly to cover all or any claims that arise between spouses or partners.25
(d) Section 4(3) operates to give examples of some equitable presumptions that do not apply but it is highly unlikely that the legislature would have intended some equitable doctrines to apply, but others to be excluded.26
(e) Section 4 functions as a jurisdictional bar in respect to claims brought in the common law or equity that relate to foreign immovables.27
23 Burt v Yiannakis [2015] NZHC 1174.
24 At [29].
25 At [27].
26 At [34].
27 At [48].
(f) The equity proceeding proposes a back door avenue for a party to a relationship property claim to obtain financial compensation for dealings with a foreign immovable. It would wrench the purpose and text of the Act to allow claims against foreign immovables by the back door. The intention of the Act was to create a complete regime for all relationship property claims with an exception in relation to foreign immovables.28
[41] I agree with Mr Kommu that Burt primarily deals with the issue of immovable foreign property which is not on all fours. Nonetheless, the principles set out have some application to the issues before the Court.
Qualifying transactions
[42] The Act is the principal source of law for determining property disputes between spouses and de facto partners, not an exhaustive code.29 Section 4 does not operate to bar all equitable claims between spouses or partners, only those applying to:
(a) transactions between spouses or partners in respect of property; and
(b) in cases for which this Act provides, to transactions between both and third persons and between either spouse or partner and third persons.
[43] The Court of Appeal has previously held that the High Court has jurisdiction to hear proceedings brought in equity. In Mosaed v Mosaed,30 the wife claimed her husband had breached his fiduciary obligations when he failed to disclose receipt of an offer to purchase their co-owned property for a price double that recorded in a consent order dividing the relationship property. Section 4 was raised at trial as a bar to the recovery of profits, not as a jurisdictional challenge in its narrowest sense. The Court of Appeal rejected an argument that s 4 precluded an account of profits for
28 At [74] and [78].
30 Mosaed v Mosaed, above n 8.
breach of fiduciary obligation. Holding that the breach in question was an information failure and not a transaction between the husband and wife in respect of property, Richardson P for the Court said that “[s 4] is not directed to a breach of an equitable obligation of that kind resting on all fiduciaries.” And:31
In terms of s 4(1) the Act has effect in place of the rules and provisions of the common law and of equity to the extent, and only to the extent that they apply to transactions between husband and wife in respect of property. Its concern is with the identification and classification of interests in property, their value and division. Accounting for a profit arising from breach of fiduciary duty is a different inquiry from the just division of matrimonial property.
[44] Mosaed was approved and applied by the Court of Appeal in Kerridge v Kerridge.32 The wife sued the husband and trustees after the husband transferred the family home to a trust without her knowledge or agreement. One of the issues was whether s 4 of the Act barred the proceedings. At first instance, the Associate Judge declined to strike out the relevant causes of action. He applied Mosaed and said that the substance of the claimed wrong and the remedy sought are not matters that the Act provides for. It was only in the circumstance where the Act contains provisions that cover the same ground as the rules and presumptions of common law and equity, that it can displace them. On an application for review, Heath J upheld the first decision but relied on s 51 of the Act which relates to tortious claims between spouses which he said had primacy. He did not traverse the application of s 4.
[45] On appeal, the Court upheld the result for different reasons. It held that s 4 did not bar the wife from maintaining the proceedings in the High Court as the exchanges between the spouses on which the claims were based were not collectively a transaction between them and the tortious claims did not hinge upon an alleged transaction between the parties. The Court said:33
Mrs Kerridge’s claims of deceit, negligent misstatement and breach of duty of care, like Mrs Mosaed’s equitable claim for accounting of profits, is not in the category of property transactions caught by s 4 and is therefore not barred by the PRA.
31 At 102.
32 Kerridge v Kerridge, above n 9.
33 At [53].
[46] Mr Lobb’s claim for equitable contribution can be distinguished from these cases as I am satisfied there is a qualifying transaction under s 4(1). I set out my reasons.
[47] First, the Westpac Property Loan was a debt incurred by the parties jointly. It was a relationship debt within the meaning of s 20 of the Act. It was also a transaction as that term is understood in s 4 of the Act.34
[48] Secondly, I do not accept Mr Kommu’s submission that the only transaction before the Court is the separate repayment which does not fall within s 4(1).35 Mr Lobb is making a claim for equitable contribution. Contribution is a doctrine of both equity and the common law under which parties who share a coordinate liability are entitled to seek contribution, each from the other or others, for any payment or other detriment incurred in meeting that liability, so that the burden is shared properly among those liable for it.36
[49] The essence of the equitable duty to contribute then is that the liabilities of the parties are coordinate. In other words, that there is some obligation which both, or all, share and in respect of which a payment by one will relieve the other, or others, in whole or in part from a liability which they could otherwise be called on to meet.37
[50] Thirdly, but relatedly, in his statement of claim, Mr Lobb claims Ms Ryan is liable to repay Mr Lobb because they were jointly liable under the Westpac Property Loan. The basis on which a claim to contribution exists must hinge on the extinguishing of the Westpac Property Loan because only then would there be coordinate liability required for a claim to contribution. Ms Ryan is not a party to the refinancing which was a unilateral action by Mr Lobb. As Mr Dixon put it, the only reason why Ms Ryan could conceivably be in the picture is because of the connection between the repayment and discharge of the liability of both Mr Lobb and Ms Ryan
35 Mr Lobb also deposes that the refinancing is a separate transaction to the Westpac Property Loan.
37 At [85].
under the Westpac Property Loan.38 Mr Kommu’s submission that the claim against Ms Ryan is focused on the refinancing or Repaid Sum recasts the pleading. It is also artificial to suggest that the equitable contribution claim only falls out of the repayment rather than the original loan (relationship debt).
[51] Fourthly, as the relevant transaction for the purposes of a claim to contribution is the extinguishing of the parties’ liability to Westpac, there is a transaction falling within either s 4(1)(a) or s 4(1)(b)(ii). It could fall under the latter because it can be characterised as a transaction by one spouse and a third party in respect of relationship property. The Act provides for these cases since payment of debts post separation for parties jointly responsible is a qualifying contribution under s 18B. Payment may be taken into account in the division of property under s 25 of the Act.39
[52] The Act therefore takes the place of the rules and principles of equitable contribution. As Mr Lobb’s claim (on the current pleading at least) is one that ceases to exist due to the operation of s 4(1), I find that this Court does not have jurisdiction to grant the remedy he seeks. Relying on the wider view on jurisdiction under r 5.49 set out in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd, a plaintiff who seeks equitable contribution from their spouse in these circumstances can only do so by making an application under the Act, rather than in the equitable jurisdiction.
[53] I am satisfied that the Act covers the same ground as the rules and presumptions of equitable contribution on which Mr Lobb relies. The remedy is one which the Family Court is not only empowered to make under the Act but, according to the legislative regime, may only be brought under the Act because the Act takes the place of the rules and principles of equitable contribution.40 An equitable claim for contribution is not available but has been displaced by s 4 of the Act in respect of qualifying transactions between spouses or de facto partners.
38 I note that Mr Dixon relies on the characterisation that this involves a relationship debt rather than the submission that there is no tenable claim because there is otherwise no coordinate liability.
39 Monks v Monks, above n 10; and Johnston v Johnston (1998) FRNZ 142 (CA) at 145–146. In Johnston, the Court said “The deduction of debt is part of the overall exercise of valuation, an exercise which is subject to discretionary adjustment under s 2(2) ... The fact that they may have been paid after separation cannot, in logic or in fairness, prohibit such an exercise. The scheme of the Act does not dictate otherwise.”
40 Flavell v Chote [2021] NZHC 2262 at [35].
[54] I do not read s 4(4) of the Act as creating any tension. At first blush this provision supports the view that the Family Court’s jurisdiction is exclusive only where there is an application under the Act. However, I accept the submission that, purposively construed, it is intended to ensure that inter-spousal rights are determined in accordance with the Act where they may arise in ordinary civil proceedings, not to circumvent the jurisdiction of the Family Court where the substance of the claim is one that has been subsumed by the Act and the Family Court is empowered to deal with.41 This interpretation does not undermine 4(4) of the Act.
[55] Finally, none of the cases cited to the Court are on all fours. In the line of cases starting with Jew v Jew where it has been found the High Court has jurisdiction to hear cases that involve relationship property, the applications were in respect of third party property,42 brought under another statutory provision,43 pleaded causes of actions that were not in substance covered under the Act,44 or in circumstances where it was questionable that a qualifying relationship existed.45
[56] In Kake, Campbell J expressly (and with respect correctly) noted that the breach of contract claim was not one which could be converted to an application under the Act.46 While he also considered that jurisdiction does not turn on whether there is a transaction in respect of property but whether it is an application under the Act, I consider that the analysis permits an “in substance” view to be taken.
[57] Similarly, Lung is distinguishable since the remedy sought by the applicant was one provided by statute rather than a common law or equitable rule.47 In Kerridge there was no transaction engaging s 4.48
41 See Official Assignee v Williams, above n 21, where it was held that the High Court had jurisdiction to hear the Official Assignee’s application to set aside a gift from the bankrupt husband to his spouse but it would be decided under the Matrimonial Property Act 1976 rather than the Insolvency Act 1967.
42 Jew v Jew, above n 20.
43 Palmer v Official Assignee, above n 20; Lung v Liu, above n 8.
44 AB v EF, above n 20.
45 Houston-Key v Henson, above n 20; Kake v Napier, above n 8.
47 The application was made under the Property Law Act 2007.
48 Kerridge v Kerridge, above n 9.
Result
[58] Accordingly, I decline to set aside the protest to jurisdiction. It follows that I must dismiss the proceeding.
[59] In the ordinary course, Ms Ryan is entitled to costs on a 2B basis. Agreement on costs is encouraged. If the parties cannot agree costs, they may file memoranda of no more than 3 pages including schedules no later than 14 working days after the date of this judgment. Any memorandum in response to be filed and served within a further seven days and any reply memorandum within three days thereafter.
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