Passing
a Taranaki farm from parents to son was carefully structured with the result he
was $1.8 million better off after his marriage subsequently foundered. A loan back to the parents’ family trust when
purchasing farming assets was later gifted to the son and remained his separate
property.
The identity of husband and wife was
disguised in a High Court relationship property dispute to preserve their
anonymity with each given an alias. The
court was told the two were married for fifteen years, working hard to acquire
and build up a dairy farm. In 2008, some
112 hectares was purchased by their family trust from the husband’s parents in
two separate transactions. The price
payable was secured by two mortgages: one for just over $1.7 million; the other
for $1.8 million. His parents then gifted
the $1.8 million mortgage to the husband personally. As debtors under this mortgage, the husband’s
and wife’s family trust owed $1.8 million.
This money was now owed to the husband as new owner of the mortgage.
At the time the marriage ended there was
very little by way of relationship property.
The farm was heavily mortgaged.
The wife argued she was entitled to a share of the $1.8 million mortgage
now owned by her former husband. She
said this mortgage was transferred to the husband alone in order to defeat her
rights under the Property (Relationship) Act.
Justice Dunningham said the Act enables recovery of relationship assets
removed from the asset pool or diverted from becoming relationship property. In this case, the wife had no proved
entitlement to share in ownership of the mortgage, she said. It was the husband’s separate property and
had never lost this status. Separate
property can become relationship property if intermingled with relationship
assets.
Roberts
v. Henderson – High Court (22.06.16)
16.096