IN THE Court of appeal OF new Zealand
	
CA498/2014
[2015] NZCA 409

BETWEEN	
NGAIRE JANE ELIZABETH AVISON
Appellant	

AND	
WAYNE JAMES MCFARLANE, NGAIRE JANE ELIZABETH AVISON AND DAVID WILLIAM BUTLER AS TRUSTEES OF THE AVIAN TRUST 
First Respondents

WAYNE JAMES MCFARLANE
Second Respondent	

Hearing:	
16 June 2015	

Court:	
Cooper, Venning and Williams JJ	

Counsel:	
J C Gwilliam for Appellant
R J Fowler QC for Respondents	

Judgment:	
4 September 2015 at 12.30 pm	

JUDGMENT OF THE COURT

A	The appeal is allowed.
B	The appellant is entitled to the following orders by way of summary judgment:
(a)	a declaration that the assets of the Avian Trust available for resettlement in terms of cl 8.12 of the Avian Trust deed include Nos 29 and 31 Avian Road; and
(b)	an order by way of specific performance against the first respondents as trustees of the Avian Trust requiring them to resettle one half of the assets of the Avian Trust (or their money equivalent) on the Peony Rose Trust.
C	The appellant is entitled to costs in this Court calculated for a standard appeal on a band A basis.
D	Costs in the High Court should be dealt with in accordance with this judgment.
____________________________________________________________________

REASONS OF THE COURT

(Given by Williams J)
[2]	The appellant appeals against Associate Judge Smith’s refusal in the High Court at Wellington to grant her declarations and specific performance by way of summary judgment against the first respondents, the trustees of the Avian Trust.  The orders would have the effect of requiring the trustees to re-settle one half of the trust’s assets (or their money equivalent) on a second trust established by the appellant.
Background
[3]	The facts are fully set out by the Associate Judge in his judgment, and we have taken the liberty of borrowing heavily from his comprehensive summation. 
[4]	The appellant (the wife) and the second respondent (the husband) lived together from 1996.  They married in 2006 and separated in 2011.  There are no children of the relationship, but the husband had two daughters from a previous relationship. 
[5]	The husband brought three properties to the relationship — the family home at 33 Avian Road, Upper Hutt and two adjoining sections at 29 and 31 Avian Road.  The adjoining sections were paddocks and used for grazing stock, although on one section was located a small cottage. 
[6]	The husband’s former partner, Annette Galgey (now Annette Mazzeo), owned a half share in the home at 33 Avian Road, but in 1997 the husband and the wife bought out Ms Mazzeo.  The wife purchased a quarter share of 33 Avian Road in that process.  
[7]	On 19 September 1997, the husband and wife executed a deed recording the wife’s purchase of that quarter share for $41,500, and setting out what would happen to the land should they separate.  The deed recorded separate certificates from separate solicitors for the husband and wife, certifying that they had given their respective clients independent advice with respect to the arrangement contained in the deed. 
[8]	The husband and wife settled the Avian Trust in 2002.  They appointed themselves trustees and were joined by Mr David Butler, solicitor, as an independent trustee.  Discretionary beneficiaries included the husband and wife, the husband’s two daughters and their descendants for two generations; together with the wife’s nieces and nephews and their descendants, also for a further two generations.  The husband and wife sold 33 Avian Road to the trust for $170,000 in 2002.  Contemporaneous deeds of acknowledgement of debt were executed by each spouse for half of that value.  The husband and wife began a gifting programme in accordance with the applicable gift duty rules at the time.  The entire debt was duly forgiven by 2005.  
[9]	The husband then sold 29 and 31 Avian Road to the trust in October 2005.  The purchase prices were $54,000 for 29, and $94,000 for 31 Avian Road.  It was common ground that these were genuine values.  The trustees executed deeds of acknowledgement of debt for $148,000 and the husband set about forgiving that sum in annual increments of $27,000, the maximum then allowable.  A balance of $17,000 remained owing when the husband ceased his gifting programme.
[10]	Central to this appeal is cl 8.12 of the Avian Trust deed.  In the following terms, the clause allowed one or other of the husband or the wife to trigger a mandatory division of the trust assets in the case of separation: 
8.12 	Separation of settlors
Should the settlors at any time separate either may, by notice in writing (“the Notice”) require the Trustees to resettle half of the assets of this trust at the date of the Notice on a separate trust established by the Settlors giving notice.  The Trustees shall upon receipt of the Notice attend to the resettlement as soon as reasonably practical and in such manner and with such assets as they in their sole discretion deem appropriate.  The other Settlors shall be deemed by operation of this clause to be the sole Appointer of this trust from the date that resettlement is effected.
[11]	As noted, the husband and wife separated in 2011.  Two years later the wife settled a separate trust and triggered, by notice in writing to the trustees, the asset division process in cl 8.12.  
[12]	Around that time, the husband’s adult daughter, Janaya, wrote to the trustees claiming an interest in 29 and 31 Avian Road on behalf of herself and her sister, Carrie.  Janaya’s letter provided: 
These sections were purchased by my father [Mr McFarlane] for myself and my sister.  While he never transferred them to us there was a definite understanding that the properties were ours and he was holding them as Trustee on our behalf.  I understand that my father transferred the properties into a trust but only to take them out of his personal name in case he ever had financial problems.  Even though he held them as trustee for us, it was apparently thought it would provide us additional protection by transferring them to a trust.
I contributed to the purchase.  My quad bike was sold and the proceeds used to make a payment on the sections.
I understand the trust is to be wound up or resettled and on behalf of me and my sister I put the trustees on notice that the sections should be transferred to us immediately.
[13]	The husband then refused to give effect to cl 8.12.  The independent trustee, Mr Butler, advised the husband and wife that he would not take sides in any ensuing dispute.  Since the trustees could not act except unanimously, it was necessary for directions to be sought from the High Court. 
[14]	Relying on cl 8.12, the wife then filed an application for summary judgment.  She sought a declaration that the assets of the trust included all three properties, together with an order by way of specific performance directing the trustees to 
re-settle half of the assets (or their money equivalent) on the wife’s new trust. 
[15]	The husband opposed the application on two grounds.  First, that 29 and 31 Avian Road were subject to a trust in favour of his two daughters; and second, the transfer of 29 and 31 Avian Road, and/or the husband’s subsequent gifting programme, were void for non-compliance with the requirements of s 21F of the Property (Relationships) Act 1976 (the PRA).  
The High Court decision 
[16]	Associate Judge Smith refused to grant the orders sought in relation to the Avian Trust, despite doubting the merit of the husband’s grounds of opposition.
[17]	On the first of the two grounds of opposition, the Judge rejected any suggestion that 29 and 31 Avian Road could be subject to an express trust.  He considered there was no evidence of a written declaration of trust as required by s 49A(2) of the Property Law Act 1952.  The Judge also found that the evidence in support of the proposition that the land was impressed with an institutional constructive trust was “very thin”.  He set out and applied the criteria for a constructive trust as articulated by this Court in Marshall v Bourneville.  Those requirements are: 
(a)	contributions, direct or indirect, to the property;
(b)	expectation of an interest in the property; 
(c)	such expectation is reasonable; and
(d)	the defendant should reasonably expect to yield the claimant an interest. 
[18]	In this case, the Judge reasoned that the husband had not produced sufficient evidence of a more than minor contribution from his daughters, but he nonetheless concluded that judgment should not be entered in favour of the wife.  He reasoned as follows: 
[51]	However I think there is enough in the evidence that it would be wrong to deprive the daughters, who appear [to] be adult and sui juris, of the right to be heard on their claims.  Their interests may have been adequately represented by their father at the hearing, but that is not a conclusion the court can reach without the daughters at least being given the opportunity to be heard.  In my view they should be joined as defendants in the proceeding, and for that reason it is not appropriate to dismiss the constructive trust defence at summary judgment stage.
[19]	Moving to Associate Judge Smith’s treatment of the second leg of the husband’s case, s 21 of the PRA allows parties in a relationship to agree to contract out of the PRA as to division of property on separation.  Section 21F sets out the requirements as to form, failure to comply with which would render the contracting out agreement void.  In the High Court, the husband argued that the transfer had the effect of changing the status of 29 and 31 Avian Road from separate property to relationship property and so amounted to contracting out of the PRA. 
[20]	Associate Judge Smith first found that s 21 of the PRA did not apply to the transfer of the two properties to the trust.  The trustees were effectively third parties not contemplated by s 21 and in any event, the Judge reasoned, the transfer was by way of sale at true value.  
[21]	Secondly, the Judge found the gifting programme was in fact a series of unilateral acts by the husband in favour of the trustees.  The fact that the wife was also a trustee did not change the trustees’ essential character as third parties to the relationship.  
[22]	But, the Judge found, these conclusions did not render the husband’s case unarguable.  Instead, the Judge pointed to the possibility of an underlying oral agreement that preceded and underpinned both the transfer and the gifting programme:  
[55]	But it does seem to me to be reasonably arguable for Mr McFarlane that there was some understanding or agreement between Ms Avison and himself which led to his decision to transfer the two sections into the Avian Trust and to subsequently embark on gifting programmes to ensure the Avian Trust would receive the full value of the two sections.  First, Ms Avison was clearly well aware of what Mr McFarlane was doing: she was one of the purchasers of No 29 and No 31 in her capacity as a trustee of the Avian Trust, and it appears that she participated in the relevant discussions with [the couple’s accountant] Karen Marshall.  Secondly, she and Mr McFarlane had previously carried out a very similar ownership restructuring in respect of the home.  In all of those circumstances, it may be arguable for Mr McFarlane that there was an oral agreement between him and Ms Avison under which it was agreed that Mr McFarlane would transfer No 29 and No 31 into the Avian Trust and subsequently carry out the gifting programmes.  The question of whether there was or was not such an agreement is not in my view suitable for determination on this summary judgment application.
[56]	Assuming that there was such an agreement, made in 2005 when the two sections were transferred, the agreement was arguably an agreement made between Ms Avison and Mr McFarlane as de facto partners, with respect to the ownership of Mr McFarlane’s property.
[23]	It was common ground that the husband’s sole purpose in transferring the land to the Avian Trust was creditor protection.  The Judge further considered whether such an underlying agreement having the effect of avoiding the provisions of the PRA amounted to contracting out for the purposes of s 21.  The Judge recorded the husband’s argument, that if such an agreement had the effect of contracting out of s 21, that was enough to satisfy the “purpose” requirement of the section.  The Judge concluded, “in the absence of any reference to specific authority on the point, I cannot rule out this defence as inarguable.” 
[24]	Applying a purpose-based test could, in the Judge’s view, render ss 21 and 21F ineffective in many cases, or at least arguably so, and the issue deserved full consideration at trial.  The application for summary judgment against the Avian Trust was dismissed accordingly.
Arguments on appeal
[25]	In this Court, Mr Gwilliam for the wife raised a number of detailed arguments challenging the judgment, but the essence of the case for the wife can be reduced to three propositions: 
(a)	Having found the husband’s case for a constructive trust was effectively not arguable on the evidence advanced by him, the Judge was wrong to decline to enter summary judgment on the basis of possible arguments that may eventually be advanced by third parties.  In circumstances where an arguable defence cannot be established, the Court’s discretion to nonetheless decline to enter judgment is limited to cases where the defendant can point to genuine injustice.  There was, Mr Gwilliam submitted, no evidence at all of any likelihood of injustice to the daughters in this case.  And even if the daughters’ case was arguable, the interests of third parties cannot prevent judgment being entered against the defendant if the defendant has no arguable case.  In that respect, Mr Gwilliam cited Inner City Properties Ltd v Mercury Energy Ltd.
(b)	The Judge was wrong to conclude that there was arguably an underlying oral contract between the husband and wife to transfer 29 and 31 Avian Road to the Avian Trust at nil cost.  There was no evidence of such an agreement and certainly no evidence that the husband and wife consciously used the transfer and gifting programme for the purpose of contracting out of the PRA rules as to the division of property at the end of a relationship.  
(c)	Section 21 of the PRA allows parties to a relationship to contract out of the provisions of the PRA, and s 21F provides the formal requirements for any such contract.  But the s 21F requirements only apply to an agreement entered into with the objective of contracting out.  They do not apply, Mr Gwilliam submitted, where avoidance of the PRA is merely an unintended effect of an arrangement entered into for an entirely different purpose.  In this case, the reason declared by the husband for the transfer was protection from creditors of his construction business.  Section 21F therefore had no application and could not void the transfer.  
[26]	For the husband, Mr Fowler QC supported the Judge’s decision, but challenged some aspects of his reasoning.  Mr Fowler pointed to the fact that the daughters had now applied to be joined as defendants, and had filed affidavits.  The affidavits deposed that both daughters had made significant contributions to the land over the years.  Mr Fowler submitted that this evidence confirms the arguability of the daughters’ case, even if the evidence before Associate Judge Smith in the High Court was “more exiguous”.  The Judge was therefore right, he argued, to exercise his residual discretion in favour of the husband.  
[27]	As to the argument in relation to s 21 of the PRA, Mr Fowler differed from the Judge by submitting that the agreement between the husband and trustees to transfer 29 and 31 Avian Road involved the wife, both in her capacity as trustee and as spouse.  In either capacity, he submitted, there was plainly an agreement between the husband and wife (without having to search for an underlying oral agreement) and the Judge was wrong to conclude that the trustees (including the wife) should be treated in law as third parties not covered by s 21.  The transfer therefore satisfied the three requirements of s 21: it involved an agreement between spouses even if the wife acted in her capacity as trustee; it purported to contract out of the PRA because the transfer prevented the two sections from becoming relationship property through co-mingling; and it related to the ownership of the property.  The husband, Mr Fowler argued, therefore had to comply with the formal requirements of s 21F but did not. 
[28]	In the alternative, Mr Fowler supported the Judge’s finding in relation to an underlying oral agreement between the husband and wife.  It was, Mr Fowler submitted, arguable that the wife was fully aware of the husband’s transfer and gifting programme, particularly since, as the Judge noted, the same process had been undertaken three years earlier with respect to 33 Avian Road.  
[29]	More generally, Mr Fowler argued, s 21 will be triggered whenever the effect of the agreement in question is to change entitlements otherwise applicable under the PRA.  Mr Fowler’s submission was in these terms: 
It would be a cruelly restricted construction if the word “purpose” in s 21 were to be read down so narrowly that the spouses always needed to be actually aware that they were contracting out of the provisions of the Act in making the agreement.  The whole purpose of the protections of s 21F must be to safeguard those who may be in danger of signing away legal entitlements without proper advice.  It would seem strange if a spouse who was unaware that he or she was contracting out of the provisions of the Act did not have the protection of s 21F because it was not an agreement within the meaning of s 21 for that reason alone – i.e. that lack of awareness.  …
Constructive trust
[30]	We agree with the Judge that the evidence the husband filed in response to the wife’s application disclosed no arguable case with respect to the daughters’ claim to a beneficial interest in 29 and 31 Avian Road.  The evidence before the Judge established: 
(a)	The husband originally purchased 29 and 31 Avian Road as an investment for his daughters, although 29 was jointly purchased with his then partner, Ms Mazzeo.
(b)	In order to help buy out Ms Mazzeo’s interest in 29 Avian Road, a quad bike was sold (there was no direct evidence of who did the selling).  The quad bike was either owned by or reserved for the use of Janaya.
(c)	When the husband and wife formed a relationship, the outgoings on the property were met from jointly held resources, work on the property was carried out jointly (and, as will become clear, with regular help from the daughters), and the benefits of the property were jointly enjoyed. 
[31]	Just what was meant by the husband when he deposed that he had purchased the land “as an investment” for his daughters is not clear.
[32]	The husband’s accountant, Karen Marshall, swore an affidavit in support of his defence.  She described the position in this way:
Wayne had always stated that these sections had been purchased as an inheritance for his daughters.  He had been married previously and wanted to have something quite separate to the jointly owned property.  He was quite clear the sections were something that would go to his daughters on his death. 
It has been my knowledge for many years that the intentions relating to the sections were the way I have set out.  As I never saw Wayne separately from [the wife], clearly she was part of those discussions and she never dissented in any way.  
(Emphasis added).
[33]	On this evidence, the settled requirements for a constructive trust as prescribed in Lankow v Rose and affirmed in the present context in Marshall v Bourneville are not made out.  There is evidence of the husband’s then intention to devise the land to the daughters on his death, and no doubt an expectation on the daughters’ part in that respect.  But there is no evidence of an expectation of immediate vesting or entitlement and the husband gave no evidence of contribution by the daughters that can be described as more than minor.  As Hardie Boys J said in Lankow v Rose, “the contribution must manifestly exceed the benefits”.
[34]	The only evidence of contribution before Associate Judge Smith was of the sale of Janaya’s quad bike to buy out Ms Mazzeo.  The husband provided no proof of Janaya’s ownership of the bike.  Nor did he provide details of the bike’s make, model, year or value, details which must have been within his knowledge.  
[35]	It is theoretically possible that the quad bike was new and expensive (such that the contribution of it by Janaya could be said to manifestly exceed the benefits she received from the land as a part-time member of her father’s household), but we would have expected the husband to say this if it were so.  
[36]	As Somers J said in the leading decision of this Court on summary judgment in Pemberton v Chappell:
… If a defence is not evident on the plaintiff’s pleading I am of opinion that if the defendant wishes to resist summary judgment he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue.  In this way a fair and just balance will be struck between a plaintiff’s right to have his case proceed to judgment without tendentious delay and a defendant’s right to put forward a real defence.
[37]	And to similar effect is the judgment of Hillyer J in the same decision:
A question of law may however be apparent from the statement of claim or the plaintiff’s affidavit.  If that question can be resolved without determining disputed facts, the Court in its discretion may do so and normally will.  If however, a defence may depend upon some fact not established by the plaintiff’s affidavit, the obligation is on the defendant to go on oath to establish that fact.  It will not be sufficient to say at the summary hearing that the action will be defended on the basis of facts which are not deposed to by or on behalf of the defendant.
[38]	A more contemporary reflection of that sentiment is to be found in the following passage from the decision in Krukziener v Hanover Finance Ltd: 
… The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents.  But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 … (PC), at p 341.  In the end the Court’s assessment of the evidence is a matter of judgment.  The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[39]	The husband did not avail himself of the opportunity to set out fully the factual basis upon which it could be said that his daughters’ contributions to the property were more than minor, or at least arguably so.  It is not the role of the High Court to fill in the gaps for him.
[40]	Associate Judge Smith nonetheless denied summary judgment on what was, in the end, a procedural ground: the daughters, he considered, at least had a right to be heard before a defence from which they could benefit was dismissed as unarguable.
[41]	The daughters have since applied to be joined to the proceeding as the fifth and sixth defendants.
[42]	We certainly accept that the High Court has a residual discretion to refuse to grant summary judgment, even when the defendant can offer no arguable defence.  That discretion is inherent in the use of the word “may” as opposed to “shall” in r 12.2(1) of the High Court Rules — the operative rule in this case.  But Casey J in Pemberton adopted the view that such discretion was “of the most residual kind”, there relying on Goff LJ in European Asian Bank AG v Punjab & Sind Bank (No 2).  
[43]	This Court has indicated that proof of injustice or oppression is required to withstand the entry of summary judgment in the absence of an arguable defence, although it must be said, the cases refer to injustice or oppression to the defendant rather than third parties (such as the daughters in this case).
[44]	If the daughters did have an arguable case for a constructive trust against the trustees of the Avian Trust, it might well be that to direct the trustees to resettle half of 29 and 31 Avian Road in the wife’s separate trust would be unjust or oppressive, even if the husband himself had no defence.  The daughters could, of course, have brought their own independent proceeding against the trust, supported perhaps by the lodging of a caveat on the two titles.  But their failure to do so here by the time of the High Court judgment would not necessarily make unjust an order against the trustees that might defeat their arguable claim if it existed.  
[45]	It might be said that the transfer to the wife’s trust could not defeat the daughters’ equity because the wife had notice of their interest, but such an argument is by no means straightforward.  It is one thing to allow a constructive trust within a trust where the original owner of the claimed legal interest and source of the equity is also a trustee and beneficiary (the father in this case).  It is quite another thing to extend that principle to circumstances where the party now claimed to be a constructive trustee (the wife) is neither an original owner of the legal estate nor the original claimed constructive trustee.
[46]	In the end, it is unnecessary for us to resolve that point, for the reasons we now explain.  The daughters have since applied to be joined as fifth and sixth defendants to the ordinary proceeding, and have filed three affidavits in support of their application, together with a draft statement of cross-claim.  The affidavits are from Janaya and her sister Carrie, together with that of Ms Mazzeo, who (as we have said) was the husband’s de facto partner at the time 29 and 31 Avian Road were purchased. 
[47]	The affidavits were handed up by Mr Fowler and accepted by this Court as proof that the daughters’ application had been made.  But even if treated as relevant to the substantive issues on appeal, they provide the husband with little assistance.  They confirm that what was generally treated as Janaya’s quad bike was sold when the husband and Ms Mazzeo separated.  This was in order to help pay out Ms Mazzeo’s share of 29 Avian Road.  Janaya was able to give no further details of the bike or the sale transaction, except that: 
(a)	The bike “was sold”.  We note in that respect that Janaya does not say she sold the bike.  She also states she does not know whether the bike was in her name or her father’s.  Janaya would have been a young child when the bike was purchased and around 15 or 16 when it was sold.  The obvious inference is that her father was the seller and that it was formally in his ownership but reserved for Janaya’s use.  
(b)	Janaya could not remember the price but understood the proceeds to have been “several thousands of dollars”.  
[48]	Additional evidence is provided of the daughters regularly working on the land when staying with their father one weekend per month, and during school holidays.  The work included clearing glass bottles and broken glass from around a small cottage located on 29 Avian Road, work that was done over the course of several visits to their father’s home.  It also included fencing, gate building, collecting firewood and general tidying of the sections.
[49]	Finally, Janaya’s evidence confirmed that of the accountant, Ms Marshall: the expectation was that the daughters would inherit 29 and 31 Avian Road on their father’s death. 
[50]	As we have said in relation to the evidence before Associate Judge Smith, an expectation that property will be devised on the death of a parent is not a relevant expectation for the purpose of establishing a constructive trust during the lifetime of that parent.  Testamentary intentions expressed by the living cannot logically create any expectation of present vested rights.
[51]	Nor, in our view, can evidence from the daughters of regular maintenance work on the land found an argument of relevant contribution where that work is within the bounds of reasonable expectations in a family context.  If it did, very many New Zealand children would be able to claim vested beneficial rights in their parents’ assets merely by carrying out reasonably expected domestic chores.  The necessary scale must therefore be out of the run of ordinary expectation in terms of contribution to family life.  
[52]	Finally, details around the quad bike remain unhelpfully hazy and will not improve at trial.  A realistic and robust assessment of the evidence is that the girls had use of the quad bikes but the father owned them and paid for them.  As the wife deposed in her reply affidavit, the daughters would have been too young to own the quad bikes in their own name, let alone purchase them with their own funds.  Janaya’s inability to recall price (an inability she shares with her father) reflects the very high likelihood that the proceeds of sale were modest; and certainly not at a level in relation to the value of the land to suggest that the cash contributed manifestly exceeded the benefit gained as required by the dictum of Hardie Boys J in Lankow v Rose.
[53]	We conclude that even on the best view of the evidence, there is simply no arguable case for constructive trust in favour of the daughters.
Contracting out
[54]	Section 21 of the PRA relates to contracting out of the Act’s property division rules.  The section relevantly provides as follows:
(1)	Spouses, civil union partners, or de facto partners, or any 2 persons in contemplation of entering into a marriage, civil union or de facto relationship, may, for the purpose of contracting out of the provisions of this Act, make any agreement they think fit with respect to the status, ownership, and division of their property (including future property).
(2)	An agreement made under this section may relate to the status, ownership, and division of property in either or both of the following circumstances:
(a)	during the joint lives of the spouses or partners:
(b)	when 1 of the spouses or partners dies.
…
[55]	Section 21D(1)(a) provides that an agreement may:
… provide that any property … is to be relationship property or is to be separate property …
[56]	Section 21F provides that any agreement under s 21 is void unless the requirements in subs (2) to (5) are complied with.  Those subsections provide as follows:
(2)	The agreement must be in writing and signed by both parties.
(3)	Each party to the agreement must have independent legal advice before signing the agreement.
(4)	The signature of each party to the agreement must be witnessed by a lawyer.
(5)	The lawyer who witnesses the signature of a party must certify that, before the party signed the agreement, the lawyer explained to that party the effect and implications of the agreement.
[57]	We agree with Associate Judge Smith that the transfer from the husband to the Avian Trust is not an agreement to which s 21 applies.  As the Judge pointed out, this transaction was a sale at full value.  The husband swapped the sections for a debt of equivalent value.  His net asset value remained unchanged.  The debt then took on the same status in PRA terms (separate or relationship property) as had been the position with respect to the land.
[58]	We also agree with Associate Judge Smith that the gifting programme to the trust is similarly not covered by s 21 because it is not an agreement between spouses.  Rather, it is an agreement between one spouse and the trustees of the Avian Trust.  It does not matter that one of the three trustees is also the wife in this case.  That does not render it an agreement between spouses as if s 21 required this Court to ignore the existence of the trust obligation pursuant to which the wife and two other trustees would hold the property.
[59]	The division of the legal and beneficial interests in property the subject of any agreement such that the real benefit of the property belongs not to the trustee but to a broad class of discretionary beneficiaries, is not in substance an agreement between spouses for the purposes of s 21.  Rather, implicit in the requirements of that section is an intention to control the redistribution of actual benefits between spouses, not to control all transactions between a spouse, the trustees, and that broader class of discretionary beneficiaries to whom the substantive benefit belongs.
[60]	Associate Judge Smith nonetheless found arguable the proposition that there was an underlying oral agreement between the husband and wife to transfer 29 and 31 Avian Road to the trust at no cost.  First, the Judge found that the wife knew what the husband was doing since, as a trustee, she received 29 and 31 into the trust and had been present when the plan was discussed with Ms Marshall.  Secondly, the same transaction had been effected three years earlier in respect of No 33, but then the wife was also a co-vendor of the land and co-donor under the gifting programme.
[61]	The evidence in support of this proposition is very thin.  We accept that the context identified by the Judge can perhaps support the inferences as suggested, but only by ignoring the husband’s direct evidence on the question.  He said he had no understanding of the structural details of the transaction he entered into; he simply signed where he was told to by his solicitor.  Secondly, the husband was very clear that the purpose of the transfer was to protect the land from future creditors of his business.  The trust vehicle was adopted on the advice of his accountant.  That is why the evidence of the wife’s involvement in the transfer goes no further than suggesting that she knew what was proposed.  The wife does not become a promisee in an oral contract merely because she knew of the husband’s plans.  Evidence of the wife’s active participation is missing.
[62]	In the end, it is unnecessary to decide the point, because we are well satisfied that none of the spectrum of transactions identified was “for the purpose of contracting out” of the PRA.  Neither s 21 nor s 21F can therefore apply to affect the transfer.  
[63]	We do not accept Mr Fowler’s argument that if an agreement for an unrelated purpose has the effect of adjusting PRA entitlements, then the agreement will be caught by s 21.  We do not agree with Associate Judge Smith that this was a matter needing to be assessed at trial.  The better view is that the phrase “for the purpose of contracting out” means exactly what it says.  The parties to the agreement must have the adjustment of PRA entitlements in mind.  In this case, the husband and his accountant confirmed that his only purpose was creditor protection.
[64]	It must be assumed that the phrase “for the purpose of” was intentionally used by the legislature to mean “having the objective of”.  Had the legislature preferred an effects-based test – “having the effect of” – it would likely have used that phrase in the section. 
[65]	This rather obvious point is further demonstrated by the approach that the legislature took in 2001 to reform pts 6 and 7 of the PRA.
[66]	Part 7 originally included (and still includes) two simple 
transaction-breaking provisions in ss 43 and 44.  Section 43 allows the court to restrain spousal dispositions before they are effected and s 44 relates to completed dispositions.  Section 44 allows the court to redirect a completed disposition, to award a sum to the disadvantaged spouse up to the value of the property disposed of, or to require a payment into court.
[67]	Under either section, the court can only act if the disposition is made “in order to defeat the claim or rights” of the other spouse.  The gateway test in both sections is thus purpose-based.
[68]	In 2001, the legislature decided that this gateway was too narrow and so introduced s 44C in relation to dispositions of relationship property to trusts and s 44F in relation to dispositions to companies.  In each case if the disposition is made by either or both spouses, the court can order the advantaged spouse under the disposition to pay money to the disadvantaged spouse (whether from separate or relationship property); to transfer property (whether separate or relationship property); or, in the case of s 44C, to pay the disadvantaged spouse all of the income from the trust.
[69]	These provisions apply where the disposition “has the effect of defeating the claim or rights” of the disadvantaged spouse.  Thus, the gateway under the new provisions was made intentionally wider.  If there was any doubt prior to 2001, it is clear that in the reform, the legislature was alive to the important distinction between subjective purpose-based tests and objective effects-based tests.
[70]	At the same time, extensive reforms were introduced in the area of contracting out regulated by s 21.  Among other matters, these new provisions regulate the point in the relationship at which agreements may be entered into; the subject matter of agreements; model contracting out agreements; the detailed requirements as to the form of agreements; the applicability of general rules of law and equity; the court’s role in approving agreements, in giving effect to otherwise void agreements or in setting aside otherwise valid agreements that occasion serious injustice; the consequences of invalidity; and the capacity of spouses to deal with their property during the course of relationships without constraint.
[71]	In contrast to pt 7, nowhere in these changes to pt 6 is an express 
effects-based regime introduced.  Nor is s 21 amended to include an express 
effects-based test for all transactions.  In other words, having explicitly introduced effects-based tests into pt 7, the legislature refrained from doing so in pt 6.
[72]	This approach makes sense.  Indeed to adopt any other approach would catch all transfers to trusts made for business, tax planning and credit protection purposes.  It would capture many thousands of trusts not created with the PRA in mind and potentially render all of them void for unintentional non-compliance with s 21F.  This plainly cannot have been Parliament’s intention.
[73]	The commentary to the Matrimonial Property Amendment Bill (as it was then named) as reported back from the Justice and Electoral Committee confirms this contextual analysis:
The [National Council of Women] submits that independent legal advice should be required before any relationship property is transferred to a trust or company.  …
It is only when a marriage or de facto relationship ends that the equal sharing regime comes into play.  Requiring the parties to have independent legal advice before relationship property is transferred into a trust would be contrary to this deferred sharing regime and would impose extra legal costs on the parties.  In addition, it would not prevent one party from transferring property that is owned solely by that party.  Therefore we do not recommend any changes in regard to this submission.
We also note that proposed new sections 44A and 44F (as inserted by clause 47 of the bill) give the Court greater powers with respect to the transfer of relationship property to a trust or company.  Proposed new section 44C provides compensatory measures where relationship property is transferred to a trust and the transfer has the effect of defeating a partner’s rights, even though at the time of the transfer there was no intention to defeat those rights. …
[74]	Since the Avian Trust was not established for the subjective purpose of contracting out of the PRA, s 21 has no application and s 21F does not operate to void the trust.
[75]	The effects-based provisions in pt 7 provide the level of protection Parliament considered appropriate in relation to trusts not established to defeat PRA claims.  But s 44C cannot have any useful application in this case because it applies only to dispositions of relationship property.  If No 29 and No 31 were indeed relationship property prior to transfer, cl 8.12 protects the substantive effect of that status on separation.  That clause, in other words contracts into the PRA.  If on the other hand, the land was separate property, s 44C does not apply because it does not control separate property.
Conclusion and disposition
[76]	The husband does not have an arguable defence to the wife’s application for summary judgment.  The appeal must be allowed accordingly.  The wife is entitled to the following orders by way of summary judgment in relation to the Avian Trust:
(a)	a declaration that the assets of the Avian Trust available for resettlement in terms of cl 8.12 of the Avian Trust deed include Nos 29 and 31 Avian Road; and
(b)	an order by way of specific performance against the first respondents as trustees of the Avian Trust requiring them to resettle one half of the assets of the Avian Trust (or their money equivalent) on the Peony Rose Trust.
[77]	The orders made in the High Court by consent in relation to the Oasis Trust remain unaffected.
[78]	The appellant is entitled to costs in this Court calculated for a standard appeal on a band A basis.  We note that costs in the High Court were reserved and should be dealt with in that Court in accordance with this judgment.

Solicitors: 
Main Street Legal Ltd, Upper Hutt for Appellant
JAG Legal, Lower Hutt for Respondents