Ipsofactoj.com: International Cases [2001] Part 8 Case 4 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Horsfield

- vs -

Giltrap

BLANCHARD J

DOOGUE J

GODDARD J

28 MAY 2001


Judgment

Blanchard J

  1. This appeal involves a long-standing relationship in the nature of a partnership between a man and a woman. The unusual feature is that, although they were in many respects a couple, and regarded by their friends as such, for religious reasons they did not at any stage co-habit nor even have a sexual relationship. Their relationship began in 1976 and, by the time it broke down in 1998, the parties had together acquired various investments consisting of six residential properties, a 50% interest in an ocean-going charter yacht, a motor vehicle and a modest shareholding. Three of the properties were held in their joint names, two in the name of Mr Horsfield, the appellant, and one in the name of Ms Giltrap, the respondent. For significant periods during the latter portion of the relationship both parties were working and were members of superannuation schemes operated by their respective employers.

  2. In the High Court a judgment was given dividing all of their property equally between them. This appeal relates only to the finding that Ms Giltrap was entitled to a 50% interest in the appellantís superannuation benefits from a scheme which was wholly employer funded. This was in fact the only property really in contest in the High Court. Mr Horsfieldís superannuation had a value of $205,000. Ms Giltrapís superannuation was worth $53,000. The dispute relates therefore to the sum of $76,000, being the one-half share of the difference between those values, which has been awarded to Ms Giltrap.

    FACTS

  3. Mr Horsfield was married with two children when his marriage broke down in 1976. Upon division of his then matrimonial assets, he was left with very little. He met Ms Giltrap through a church. They became close friends and indeed emotionally committed to each other. Throughout the period of their relationship they regarded themselves, and were regarded by others, to be a close and devoted couple. The respondent spent most of her waking hours, when she was not at work, at the appellantís home. She cooked, performed household tasks and was to all intents and purposes a stepmother to the Horsfield children and acted like a wife towards the appellant. However, because of their belief in certain biblical teachings, they did not actually live together or have a sexual relationship. Ms Giltrap maintained her own accommodation to which she returned every evening.

  4. In early 1998 the appellant was seconded by BP New Zealand Ltd, his employer, to work in Australia. The posting was temporary: expected to be for no more than three years. Furniture, largely provided by the respondent, was moved to Australia. It was agreed that the respondent would visit regularly. However, in May 1998, the appellant met another lady, broke off his relationship with the respondent and advised her that he intended to remarry. The appellant initially brought a proceeding seeking orders for division and payment to him of a one half share in the realty which the parties had acquired. The respondent, whilst agreeing to the proposed division of realty, counterclaimed seeking further orders, particularly in relation to superannuation.

    THE HIGH COURT JUDGMENT

  5. Gendall J considered the length and nature of the relationship. He held that to all outward appearances, and certainly at least as understood by the respondent, the parties had committed themselves to each other for their joint lives. Their investments, including their superannuation benefits, were designed to provide for their eventual retirement. The Judge considered this view to be well supported by the evidence, including the partiesí corresponding wills. That maintained by the appellant provided that the respondent should have free use of income and occupation and enjoyment of his estate during her lifetime.

  6. The Judge also noted that in 1987 Mr Horsfield had nominated Ms Giltrap his "designated dependant" under the terms of the BP New Zealand staff pension fund. While the appellant argued that the respondent was merely to hold that superannuation in trust for his children, the Judge considered this hard to reconcile with the appellantís will mentioned above. There was also evidence, not substantially disputed by Mr Horsfield, that he had expressed from time to time his intention of looking after the respondent in their joint retirement and that, from about the ages of late 50s or early 60s, they could expect to enjoy each otherís company without financial worries.

  7. In Gendall Jís view the parties had both unequivocally expressed a common intention that upon retirement both would share in the investment properties and other assets, including the savings and superannuation that were being built up. The Judge considered such an express agreement sufficient to give the respondent a half share in the appellantís superannuation entitlement. He cited the observation of Cooke P in Gormack v Scott [1995] NZFLR 289, 293:

    Where there has been an express common intention applicable to the circumstances that have arisen, it is unnecessary to fall back on reasonable expectations.

  8. Because of the express agreement and common intention he found to have existed between the parties, Gendall J saw no need to resort to constructive trust principles. Nevertheless, he held that the respondentís claim could be justified also either on the basis of a constructive trust in her favour, or on the basis that the appellantís retention of the superannuation moneys would result in unjust enrichment, although he said he was "reluctant to apply labels to the remedy."

  9. He had earlier cited the four elements which Tipping J in Lankow v Rose [1995] 1 NZLR 277 (CA) said were necessary before a de facto claimant could establish a claim based on reasonable expectations:

    1. Contributions, direct or indirect, to the property in question;

    2. The expectation of an interest therein;

    3. That such expectation is a reasonable one; and

    4. That a defendant should reasonably expect to yield the interest.

  10. The Judge said that, as in Burney v Burney [1995] NZFLR 787 (HC), the respondent had made sufficient indirect contributions to the appellantís superannuation entitlement by way of care, service and assistance to give rise to a reasonable expectation that she would share equally in that property. In looking at the length of the relationship (22 years), the extent of the appellantís and respondentís respective contributions, both financial and otherwise and, most critically, looking at what he found to be an express common intention to share the superannuation payments, the Judge considered a 50 percent share of all assets to be appropriate in the interests of justice.

    ARGUMENT FOR APPELLANT

  11. Counsel for the appellant, Mr Dewar, first focused on the Judgeís findings of an express common intention or agreement between the parties that, upon retirement, each would share in the assets they were accumulating, including their respective superannuation funds. Counsel submitted that the label of "common intention" necessitates finding an express trust with the formal requirements that entails: certainty of intention, certainty of subject matter and certainty of beneficiary. As the parties did not make an objectively binding declaration of trust as to the status of the superannuation moneys, no express trust could be found. It was submitted that the Judge had erred in finding that the partiesí agreement alone could impart a share of the appellantís superannuation scheme to the respondent and vice versa.

  12. Counsel submitted that the partiesí statements of general intention were nothing more than expressions of a wish for the future. The appellantís representations to the respondent as to their retirement, the making of his will and making the respondent his "designated dependant" for the purposes of his superannuation scheme were all acts done when the parties were still together. It was submitted that, as contemplated in Cossey v Bach [1992] 9 FRNZ 300, 316, the partiesí common intention or agreement was purely precatory and failed to allow for the possibility of their relationship ending. As the sharing of their assets in retirement was conditional on their still being together, counsel submitted that the respondent could have no claim to the appellantís superannuation scheme. The respondent had failed to show that the appellant had unequivocally divested himself of his beneficial interest in favour of a trusteeship; no express trust had been declared in favour of the respondent.

  13. Mr Dewar argued that if, instead, the matter were approached on the basis of Lankow v Rose [1995] 1 NZLR 277, it could be seen that the High Court had misdirected itself by translating the finding that the parties had an expectation that they would retire together and share their property into a mutual declaration of trust. The Court had imposed a property division as if they had been married.

  14. Counsel also submitted that the High Court Judge failed to distinguish between contributions to a relationship as a whole and contributions to the property in issue, the appellantís superannuation scheme. It was submitted that, before a claim based on reasonable expectations could succeed, a claimantís contributions must have directly or indirectly led to the acquisition or accumulation of the property in question. As the appellantís superannuation fund was entirely employer funded and did not require any contributions from the appellantís income, it was submitted that the respondent had failed to show that she had made any direct or indirect contributions towards that asset. No reasonable expectation was therefore possible on the part of the respondent that she was entitled to share in the appellantís superannuation scheme.

    ARGUMENT FOR RESPONDENT

  15. Counsel for the respondent, Ms Ullrich QC, submitted that the common intention of the parties did amount to a declaration of trust (Hayward v Giordani [1983] NZLR 140), so as to constitute an express trust with both parties holding their respective superannuation funds in trust for the benefit of each other equally. It was submitted that the third requirement in Cossey (that the trust must be pertinent to current circumstances) could not have been intended to override all previous expressions of intention if the parties were subsequently to separate. In this case, the relationship continued for 11 years after the appellant first joined the BP superannuation scheme. The respondent had injected at least $50,000 into joint funds on the understanding that, upon retirement, the appellantís superannuation would be shared equally by the parties. Counsel submitted it would be unconscionable for the Court to sanction a unilateral withdrawal from that agreement.

  16. In the alternative, Ms Ullrich QC submitted that the common intention of the parties could nevertheless justify imposing a constructive trust on both the appellant and respondent in favour of each of the parties equally. There were expressions of intention and conduct to support that intention, it was submitted, and direct contributions by each party to the otherís superannuation scheme were unnecessary before a constructive trust could be imposed.

  17. In a further argument, it was submitted that the respondent had contributed, albeit indirectly, to the appellantís superannuation fund. It was part of the appellantís overall salary package and was therefore "property to which an indirect contribution can be made by the way of care, service and assistance" (Burney at p793). The fact that he did not make direct contributions from his income was irrelevant. The respondent had contributed indirectly to the appellantís employment through her ongoing care, service and assistance, which had enabled him to meet his employment responsibilities. It was submitted that the respondentís contributions were therefore sufficient to establish a reasonable expectation on her behalf to a half share in the appellantís superannuation benefit.

  18. Counsel further submitted that restricting the respondentís entitlement to a half share of the partiesí other assets would unjustly enrich the appellant (citing Peters v Beblow [1993] 1 SCR 980, and referring also to the judgment of Gault J in Lankow at 289). The appellant had represented to the respondent that she was a beneficiary of his superannuation and that he would look after her in retirement. This had given rise to an expectation on her part that she would share in the product of their relationship, including his superannuation. In reliance on that, she had made substantial contributions to their investments. If she were not now to receive any share of the superannuation, the appellant would be unjustly enriched unless the 50/50 sharing of the other assets was adjusted.

    DECISION

  19. In Gormack v Scott at p293 Cooke P remarked that the Court should be reluctant to disturb factual and discretionary conclusions in the field of de facto relationships where no error of principle can be demonstrated. He said that appeals in such cases are not to be encouraged, going on to observe that that case came very close to one of express common intention. Then followed the observation quoted by Gendall J in this case, that where there has been an express common intention applicable to the circumstances that have arisen, it is unnecessary to fall back on reasonable expectations. However, the President said, if the common intention was too vaguely expressed to receive implementation as such, the evidence bearing on common intention might still be relevant in considering the reasonable expectation of the parties.

  20. In his judgment in Lankow v Rose, which has come to be regarded as the leading judgment, Tipping J said that in this country we have founded the imposition of a constructive trust mainly on the notion of reasonable expectation. He contrasted this with the position in Canada where the concept of reasonable expectation is a necessary ingredient of the unjust enrichment which the Courts in that country have used as a touchstone. In Australia the injustice of the enrichment has been seen as leading to the proposition that to deny an interest to the claimant would amount to unconscionable conduct on the part of the party attempting to do so. Tipping J obviously regarded these approaches as leading to a very similar application and result in most, if not all, circumstances. He preferred them to the approach taken in England which was, as he said, still concerned with notions of express or imputed intention or undertaking which he thought to be "unnecessarily artificial".

  21. Guided by the foregoing observations and notwithstanding the submissions of Mr Dewar to the contrary, we have little difficulty in concluding that Gendall Jís judgment must be affirmed, though we prefer to do so on the basis of the imposition of a constructive trust giving effect to the reasonable expectations of Ms Giltrap. Before giving our reasons we should record that it was not suggested that the unusual features of the relationship, of which mention has been made, ought to influence the outcome of the appeal.

  22. Mr Dewar has persuaded us that it is doubtful that there was in this case sufficient evidence of an expression of a common intention that all of the property of each party to the relationship would henceforth unconditionally be held for the benefit of both. The statements made by Mr Horsfield that he would look after Ms Giltrap did not go so far as to amount to a declaration of trust of his property, even in an informal way. The intention was too vaguely expressed.

  23. But, as Cooke P indicated in Gormack, evidence directed to the question of common intention can be relevant to the issue of reasonable expectation and in this case the judgment below can clearly be supported on the latter basis. Ms Giltrap plainly made substantial contributions towards the building up of assets. Such contributions were more than sufficient, in a relationship of this length, to give rise to a reasonable expectation on the part of the respondent that she would be entitled to share in whatever assets each of them acquired. There was evidence that their respective savings, along with all other investments, were intended by both of them to provide for the joint benefits of each during their retirement. There was also evidence, supporting the conclusion reached by Gendall J, for example, that Mr Horsfield in quite recent years when his move to Australia was in contemplation, was urging Ms Giltrap to resign her employment and move to where they intended to retire on the basis that she was aware that he would look after her.

  24. As well as making a substantial financial contribution, Ms Giltrap played an important role in the running of the appellantís household, assisting him very materially in meeting his work commitments. Without her services, effectively as a housekeeper looking after the home and Mr Horsfieldís children, he would have needed to have devoted much more time to domestic responsibilities. That would have reduced his hours of work or perhaps he would have had to employ a housekeeper. Ms Giltrap was therefore assisting Mr Horsfield in earning his remuneration. In terms of Lankow v Rose, she was therefore making an indirect contribution towards the earning of the property in question.

  25. The appellantís superannuation fund was entirely employer funded with no contributions being made from the appellantís salary but there seems no logical basis for distinguishing between superannuation funds that are entirely employer funded and those that require some degree of employee contributions. An employeeís superannuation scheme, of whichever kind, is merely part of his or her overall remuneration package. The appellant was thus being assisted by the respondent, through her role in his household, to earn his superannuation entitlement. It should be treated the same as any of their other investment assets. To disallow the respondentís claim on the technicality which he relies upon would contradict his assurances to the respondent and would result in his unjust enrichment. In our view there was ample connection between Ms Giltrapís contribution and the property in question.

  26. The High Court Judge considered that the interests of justice required each party to have a 50 percent interest in any property accumulated during the partiesí relationship. For the reasons given above, we see no reason to treat the partiesí superannuation schemes any differently.

  27. The appeal is dismissed with costs of $5,000 to the respondent. The appellant must also meet the respondentís reasonable disbursements on the appeal, to be fixed if necessary by the Registrar.


Cases

Gormack v Scott [1995] NZFLR 289; Lankow v Rose [1995] 1 NZLR 277; Burney v Burney [1995] NZFLR 787 (HC); Cossey v Bach [1992] 9 FRNZ 300; Hayward v Giordani [1983] NZLR 140; Peters v Beblow [1993] 1 SCR 980

Representations

D G Dewar for Appellant (instructed by Helen Croft, Wellington)
V H Ullrich QC for Respondent (instructed by Thomas Dewar Sziranyi Druce, Lower Hutt)


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