From the Bad Supreme Court Decisions file comes this latest missive: Fiona Margaret Mead v Lilach Paul and Brett Paul.
A relationship property case starring one guy (Brett) and two women (Fiona and Lilach) all sharing the same bed for 15 years, temporarily swapping in and out other partners, before finally pulling up stumps and suing the bejesus out of each other for assets accumulated over the relationship period.
Economic Inequality and Equal Property Division
The distaste from this case stems from the courts overreaching into what is a contentious political area: the social policy governing property distribution beyond the traditional boundaries of a relationship between two people.
Three or more people might form a relationship, but it’s not entirely clear that an equal distribution of property on the cessation of the relationship is fair. The equality presumption was established to address economic inequality stemming from property traditionally owned exclusively by the husband of a relationship. There’s no presumptive reason why equal splitting is needed to address economic inequality in a 3-party relationship.
In fact, there’s no presumptive reason why it’s needed in a 2-party relationship, except for the outcome that Parliament has decreed that it should.
In 2016, the New Zealand Law Commission recommended the equal sharing regime for the family home be replaced. Currently the family home is always treated as relationship property and usually divided equally, regardless of when or how it was acquired. If the family home was owned by one partner before the relationship began or was received as a third-party gift or inheritance, only the increase in the value of the home during the relationship should be shared.
The Law Commission’s recommendations have not been adopted, but they illustrate the bluntness of the PRA equal distribution principle is by no means universally accepted as fair.
Judicial Preference Towards Equal Sharing
While the High Court decision got it right, the subsequent appeals up to the Supreme Court shows a clear politically left bias in the Court of Appeal and the Supreme Court and their appetite for “getting right in there” and twisting clear and unambiguous legislation to impose their elitist preferences and political bias. Rather than create good law, this decision from New Zealand’s highest courts introduces uncertainty into other areas, as identified by Justices Glazebrook and France in the dissenting judgement.
It’s hard to get past the idea that the Court wanted equal sharing to be imposed rather than the default position under the common law that contributions to the asset would need proven. That’s why it stayed away from equity and deliberately misconstrued the legislation to make “couple” mean three: it didn’t want contributions (or lack of) to matter.
While this is the PRA’s principles, it is also a very left-wing presumption that the fruits of one’s labour ought to be forcibly redistributed to others as “fair”.
Identities Exposed for All to See
The background to the case is completely inconsequential because this appeal, all the way up to the Supreme Court, was on issues of statutory interpretation and Family Court jurisdiction.
The facts of this case literally – at every stage of this appeal do not matter.
Once jurisdiction was ascertained then the case would have been heard in the Family Court or the High Court and then the facts of the case would matter. But now – in this series of appeals – the identity of the parties and the facts of the care are completely irrelevant.
Except, the Courts made it matter and fully identified all parties.
The name of the case identifies the appellant as Fiona Margaret Mead, not just Mead (as in Mead v Paul and Paul) , nor “M” (as in M v P and P), but by her full name. Worse still, there’s no doubt whatsoever about who the parties are and where they lived. There is no hiding in the shadows:
[8] In November 2002 the parties moved into a four-hectare property in Kumeu which had just been purchased in Fiona’s name for $533,000.
….
[10] Fiona practised as a veterinarian throughout the relationship. Brett established a paintball business on the property. Brett and Lilach had a lawn mowing business. Lilach also practised as an artist.
PAUL v MEAD [2020] NZHC 666 [31 March 2020]
I wonder how many female vets there are in Kumeu…?
Again, none of this was relevant for interpreting the Property (Relationships) Act 1976 (PRA), nor necessary for addressing the question posed by the Family Court to the High Court, Court of Appeal or the Supreme Court:
Does the Family Court have jurisdiction under the Property (Relationships) Act 1976 to determine the property rights of three persons in a polyamorous relationship, either on the basis of that relationship or by dividing that relationship into dyadic parts?
The irrelevance of the party’s identities makes the decision of the higher courts to dive into the details of the case all the more telling of the Court’s intentions.
Were they trying to make this decision something which future courts could distinguish on the facts? The 15 year duration might become an important factor in future cases. Or the farm-based house asset and its common usage might mean future cases that feature shares or equities might become less “relationship” in nature because they’re not commonly enjoyed.
The reasons may lay within how the facts coloured the interpretation of the PRA. Had this been a shorter duration, or a more fluid relationship, then arguably the Courts would not have bent over so far backwards. But for this piece of statutory interpretation, the Courts made these facts matter to cover the radicalness of their interpretation in a cloak of fairness derived from the very ordinary nature of the day-to-day relationship of the parties.
These parties could be any average couple of three.
Legislative Background and the First Hit in the High Court
The contentious legal issue was whether the Property (Relationships) Act 1976 (PRA) applied to “polyamorous relationships”.
The PRA governs asset division for “qualifying” relationships. Not every co-habitation relationship qualifies under the Act. Flatmates or family members living together do not qualify under the Act.
As the High Court noted, qualifying relationships are:
[23] For completeness however, I first record that the relationships that do qualify under the Act are marriages, de facto relationships and civil unions, as defined. Each of these is plainly limited, for the purposes of the Act, to relationships between two people only.
[24] The definition of “marriage” in s 2 provides that “marriage” has the meaning given to it in s 2A. That is an inclusive definition provision only. The provision does not purport to define the concept of “marriage” in and of itself. But it supposes that marriage is a dyadic relationship; referring to a “married couple” and “both spouses”.
This is consistent with the definition of “marriage” in s 2 of the Marriage Act 1955 (as amended) as “the union of 2 people, regardless of their sex, sexual orientation, or gender identity” (emphasis added).
[25] “Civil union” is similarly defined and limited to two people.
[26] The definition of de facto partner and de facto relationship is similarly dyadic in effect. A person is a person’s de facto partner “if they have a de facto relationship with each other”, and a de facto relationship is “a relationship between two persons” both aged eighteen years or older, “who live together as a couple” (emphasis added), and are not married to, or in a civil union with, one another.
[27] Plainly, more than two people cannot be married to each other, and, at least for the purposes of the Act, more than two people cannot form a qualifying de facto relationship. That would be even more so here, where two members of the polyamorous relationship are married. The definition of a de facto relationship excludes persons who are married to each other. So, such people could not form part of a single qualifying de facto relationship also comprised of one or more others.
That’s pretty straight up and down first year legals statutory interpretation: parliament hasn’t agreed on multiple person marriages and their property division principles so neither should the courts.
On the letter of the law, the PRA doesn’t apply, and the High Court rightly held so.
[56] Nonetheless, Parliament has premised the Act on the notion of coupledom, as the scheme of the Act makes clear. Whether this is difficult to justify as a matter of policy is a matter for Parliament. Statutory interpretation must always have regard to the text and scheme of the Act in question.
[58] For all of the above reasons, not only does the Act on its face not apply to a polyamorous relationship such as the parties’, but it would be unworkable to stretch the legislation to ‘fit’ this case.
So if the PRA doesn’t apply, what does?
[61] I conclude by saying that the claimants here are not without remedy. The issues between them can be addressed at equity.
Most of the evidence filed, acknowledging it is incomplete, would be relevant in that context. It will be a matter for the Judge hearing the case, but in my view it would be appropriate to pay regard to the principles expressed in the Act, such that judge-made law properly develops in response to the guidance offered by statute law.
After all, as noted above, the relationship here has many of the hallmarks of a qualifying relationship, albeit, fatally in terms of the application of the Act, one between three persons.
Development of the law informed by the principles of the Act may help those in polyamorous relationships and afford them some clarity as to their property arrangements pending any future legislative review.
Court of Appeal: Are PRA “Couples” necessarily “Exclusive”?
The Court of Appeal (CoA) next waded in.
It hated the idea that equity and constructive trusts should be the solution.
…. It would be odd to decline to apply the principles established by the PRA, and revert to property law concepts (legal and equitable), when dividing their property following a separation.
Neat commercial balance sheets remain both unachievable and irrelevant in this context, as between those two partners. The many forms of contribution that characterise a committed intimate relationship are no less relevant in this scenario: they should all be taken into account, and treated as equal. The “curious medium of money” cannot, and should not, be the lens through which their disparate contributions are analysed.
The formation of a multi-partner relationship does not provide any rational basis for reverting to an approach focused on money and property rights as between the spouses if and when things go wrong, they separate, and solutions are required.
The equitable principles developed by the courts in cases such as Lankow v Rose go some way to addressing the unsatisfactory consequences of an approach focused on money and property rights. But as this Court explained in Lankow v Rose, a claim based on a constructive trust remains a proprietary claim. It is necessary to show a causal relationship between the claimant’s contributions and the acquisition, preservation, or enhancement of the assets of the defendant, and a reasonable expectation of an interest in the claimed property. The frame remains much narrower than under the PRA.
Paragraph 68, PAUL v MEAD [2021] NZCA 649 [3 December 2021] (Highlighting mine)
They CoA could have easily reframed the requirements for a constructive trust to reflect the automatic asset splitting principles of the PRA, as the High Court invited the Family Court to do. Constructive trusts are judge-made law, and courts have more flexibility to shape it.
But for its own curious reasons, it decided not to, and continued to head down a statutory interpretation path. It just liked the idea that assets should be equally split between the parties, without anyone having to justify why an equal share is “fair”.
Dirty Money
And I loved the weight the Court gave the financial contribution made to purchase assets: the “curious medium of money” with neat commercial balance sheets being “unachievable and irrelevant”.
Or, “reverting to an approach focused on money and property”.
Absolutely written like someone who is on $510,100 per year and who can afford to have a disdain for the dirtiness of money, because they might have way too much of it. If money didn’t matter, then the parties would not be suing each other.
You, me, plus he, he and / or she
The CoA then proceeded to engage in an odd piece of interpretive judicial dance:
[58] We agree with the Judge that the PRA is concerned with relationships between two people, and that a polyamorous relationship (or multi-partner relationship — we use the terms interchangeably) as such is not a qualifying relationship under the PRA.
There are numerous indications in the text of the PRA that it applies as between two spouses or partners. It is, as the Judge said, premised on “coupledom”.
[59] But is coupledom — for the purposes of the PRA — exclusive coupledom? It seems to us that the key issue in this appeal is whether, as between two people in a wider multi-partner relationship, there may be a qualifying relationship to which the PRA applies. And whether, if so, there may be multiple qualifying relationships between couples within that broader multi-partner relationship.
And then down the garden path we go, considering whether the relationship with Fiona “ended” the marriage between Lilach and Paul for PRA purposes because Paul and Lilach “cease to live together as a married couple”.
[63] Were they, however, a married couple? At one level, plainly they were: they were a couple who had married, and remained married. But does the use of the term “couple” require that the parties live together as a couple exclusive of others?
…
[70] When s 2A(2) is read in its wider statutory context, and in the light of the purpose of the PRA, it is in our view clear that the marriage of Lilach and Brett did not end in 2002 when the multi-partner relationship with Fiona began. They continued to live together as a married couple for the purposes of the PRA.
A very bizarre piece of judicial navel spelunking…
But What about the New Zealand Bill of Rights Act?
Of COURSE the Bill of Rights Act applies to the interpretation of the Property (Relationship) Act, right? It wouldn’t be a good left-wing decision without citing the Bill of Rights.
The CoA sees discrimination everywhere…
[79] We also consider that NZBORA supports the adoption of an interpretation that does not distinguish between married and de facto partners in this context. Section 6 of NZBORA provides that an available interpretation that is consistent with NZBORA should be preferred to any other meaning. Section 19(1) of NZBORA provides that everyone has the right to freedom from discrimination on the grounds set out in the Human Rights Act. The prohibited grounds of discrimination identified in the Human Rights Act include “family status”, which includes being married to, or being in a civil union or de facto relationship with, a particular person.
Section 2D of the PRA can be given a meaning consistent with the right to freedom from discrimination on the grounds of family status by adopting a consistent approach to whether two people are living together as a couple, regardless of whether they are married, or unmarried but otherwise in an equivalent (de facto) relationship. So it must be given that rights-consistent meaning.
heh heh heh…
[80] We do not accept the argument that this approach would be unworkable in practice.
…lol
When Couple means Three
And finally… at the end of a long piece of writing to convince itself it’s right, the CoA found:
[101] We therefore answer the question as follows:
The Family Court has jurisdiction under the PRA to determine claims to property as between two persons who were married, in a civil union, or in a de facto relationship, and also in a polyamorous relationship. That jurisdiction extends to determining claims among three people in a polyamorous relationship, where each partner in that polyamorous relationship is either married to, in a civil union with, or in a de facto relationship with, each of the other partners in that polyamorous relationship.
So when the legislation says, 2 persons, couple, or man-man / man-woman or woman-woman:
“2D Meaning of de facto relationship
(1) For the purposes of this Act, a de facto relationship is a relationship between 2 persons (whether a man and a woman, or a man and a man,
or a woman and a woman)—”
2 persons actually means 3
Supreme Court Judicial “Gut-Decision” Making
The Supreme Court got into the whole idea of love triangles, asking itself:
Issues on appeal
[47] The fundamental question we must decide is whether the PRA may govern the parties’ relationship property rights. We answer this question by addressing two issues:(a) Issue 1: Can a triangular relationship itself be a qualifying de facto relationship?
(b) Issue 2: Can a triangular relationship be subdivided into two or more qualifying relationships (as the Court of Appeal thought)?
Another way of framing the second issue is to ask whether the statutory phrase “liv[ing] together as a couple” (as provided in s 2D—see [23] above) means individuals who live together in a triangular relationship cannot obtain the benefits or attract the responsibilities of the PRA.We will address counsel’s submissions, as necessary, as we analyse these issues. We record that Mr Duckworth (for Brett) simply supported the written and oral submissions of Ms Taefi and Ms Palairet (for Lilach).
I’ve highlighted the bit above because this turns out to be the Court’s focus for the remainder of the case. It paints a very clear picture that the Court wasn’t into ho-hum statutory interpretation. No siree… It had one goal, and one goal only – making the express words of the PRA fit what it considered to be a deserving factual case.
On Constructive Trusts
[13] Ahead of the 2001 legislative reforms to the PRA, equity had already recognised institutional constructive trusts in relation to some communal property of
de facto partners. But there were limits.First, equity proceeded on a contributions basis to particular assets (including indirect contribution). There had to be a causal connection between the acquisition, maintenance or improvement of particular assets and the applicant’s contributions.
Secondly, there had to be a reasonable expectation of an interest in those assets. Constructive trusts arise on the basis of deemed intention, “not on abstract ideas of equality”.
Equitable principles remain important in determining property rights outside a PRA-qualifying relationship. And also within one, where the target is property owned by a third party—such as an express trust.
The Supreme Court gave no mention to the High Courts invitation that the requirements of a constructive trust be interpreted with reference to the principles of the PRA, which might have offered a better path of least resistance to statutory interpretation principles. But it just didn’t go there.
Dancing on the Head of a Pin
And off the Supreme Court went on its own piece of judicial interpretative dance, convincing itself that the “true” questions (not the one about what does the word “couple” mean) needing addressed were:
[52] Reasoning iteratively in this way, we address the following five sub-questions:
(a) Must a de facto relationship be exclusive to qualify?
(b) What did Parliament mean by “liv[ing] together as a couple”?
(c) Can a vee arrangement (where A is in distinct relationships with B and C, not here involving mutual cohabitation) be subdivided into two qualifying relationships?
(d) Can a vee arrangement (this time involving mutual cohabitation) be subdivided into two qualifying relationships?
(e) Can a triangular relationship (with mutual cohabitation and sexual relations) be subdivided into three qualifying relationships?
All of which lead the court to ultimately conclude its right, and
[83] The statutory use of “couple” does not make it inappropriate to draw the plural curtain to one side so as to recognise the bilateral relationships that make up triangular polyamorous cohabiting families.
Whether any two people are “liv[ing] together as a couple” and are doing so despite one or both of them living with another or others is a direct, but not always simple, question of fact based on the factors in s 2D.
Sometimes qualifying couples will emerge, as for example in Williams where both female adult members had children with the male adult member of the household.
But sometimes, for other reasons, they will not: for example, where someone is only intermittently part of a relationship, has made no financial commitment, has not publicly committed and so on. In contrast, it is difficult to imagine circumstances where three people have so merged into a unity that functioning couples cannot still be discerned within it.
In any event, that is a matter of fact, not jurisdiction.
Read the decision
Especially the dissenting judgement in the Supreme Court:
[92] We would allow the appeal. We consider the High Court was correct to conclude that the Family Court had no jurisdiction to consider the parties’ claims. As we explain, there are two main reasons for adopting that view.
First, we are concerned at the artificiality of treating the parties’ relationship as subdivisible in order to be able to qualify under the Property (Relationships) Act 1976.
Second, we consider the practical ramifications of applying the Act, which is premised on coupledom, to the parties’ polyamorous relationship are such that it should be left to Parliament to decide whether to extend the Act and how to address the practical issues arising from an extension
There’s a lot going on in this case that needs to be read to be believed. In my view, it does not cast our judicial system in a positive light.