B and S

[2008] FCWA 62

[2008] FCWA 62

JURISDICTION	:	FAMILY COURT OF WESTERN AUSTRALIA
ACT	:	FAMILY COURT ACT 1997
LOCATION	:	PERTH
CITATION	:	B and S [2008] FCWA 62
CORAM	:	CRISFORD J
HEARD	:	20 - 21 MAY 2008
DELIVERED	:	29 MAY 2008
FILE NO/S	:	PT 7035 of 2006
BETWEEN	:	B
Applicant
AND
S Respondent
Catchwords:

De facto property settlement - contributions- short relationship

Legislation:

Family Court Act 1997, s 205ZD(3)

Category: Not Reportable

[2008] FCWA 62

Representation:

Counsel:

Applicant:	Mr L Durand
Respondent:	Mr S Moncrieff

Solicitors:

Applicant:	Durand Gangemi
Respondent:	Shann Family Lawyers

Case(s) referred to in judgment(s):

C v C (1998) FLC 92-824

[2008] FCWA 62

1 [Ms B] and [Mr S] separated in early 2006 after a de facto relationship of around

two years and four months duration. I am asked to determine how their property
should be divided.

2 On 4 January 2008 the parties agreed to a partial property settlement. These

Court orders dealt with property that was readily identifiable as belonging to one or other of the parties. The orders also dealt with property each party had acquired prior to their relationship commencing.

3 After the evidence it was agreed that the one item of property left to divide was the home they shared at [a suburban address]. This is now worth $950,000.

4 [Ms B] says that she made a contribution to that property which can be

quantified at 75%. Additionally she says there should be an adjustment of a further 10% in her favour due to the primarily prospective factors set out in s 205ZD(3) of the Family Court Act 1997. She wishes to retain the property and pay [Mr S] $225,000.

5 [Mr S] says that the value of the [suburban] property should be divided equally

between the parties after an initial payment of $90,000 to [Ms B]. This reflects a payment she made to discharge the mortgage on the property after the date the parties separated. He says there should be no further adjustment pursuant to s 205ZD(3) of the Act. He says she can keep the property and pay him $430,000.

6 Both parties mounted what the Full Court in C v C (1998) FLC 92-824 (at 85,398) pejoratively called “the Eliza Dolittle” argument. This argument goes thus:

“She came from Covent Gardens selling flowers in the street, your Honour. At the end of our marriage why should she leave with far more than she could have aspired had she remained (to use the words of Professor Higgins) ‘a prisoner of the gutter’?”

7 Counsel for [Mr S] set out that [Ms B]’s income has improved significantly

since the commencement of the relationship and she is also in a substantially better capital position. She has been able to acquire property due to [Mr S] financing most of their day to day living expenses, thus freeing up money to pay an investment property mortgage.

8 [Ms B] has deposed to [Mr S]’s limited contributions to the relationship and the

fact that if she had not been present to care for his daughter [A] his business interests would not have improved during the period of cohabitation as they have. He previously had a modest interest in a property and she said it would not take much to return him to that modest position – meaning she should pay him a modest amount only.

9 Both positions, without more, invite the Court to embark on a course of social engineering – something warned against in the authorities.

[2008] FCWA 62

Property settlement approach

10 I am required to follow a four step process in dealing with an application for property settlement pursuant to the Family Court Act 1997. These are:

• to make findings as to the identity and value of the assets and liabilities of the parties;

• to identify and assess the contributions made by the parties to the assets;

• to identify and assess a range of factors set out in sub- s 205ZG(4)(d) to (g) of the Act; and

• to consider whether the order proposed is just and equitable.

Pool of Assets

11 In September 2003 [Ms B] entered into a contract to purchase the property at

[a suburban address]. The parties who had known each other from about 1998 decided to purchase a property in which they could live together. It was agreed the home would be in [Ms B]’s sole name. Initially Mr [S] and [A], then about 12 years of age, moved into the property. Some renovations and general cleaning up was undertaken. [Ms B] moved in and they commenced cohabitation on 21 November 2003. Her daughters [C] and [L], aged about 15 and 13 years respectively, moved in at that time as well.

Contributions

12 The parties are at odds about almost all aspects of the contributions each made to

the property. The understanding between the parties was they would contribute equally to the property. Whilst [Ms B] made a greater initial payment, [Mr S] was to service the balance owing under the mortgage and pay certain fixed expenses.

(i) Direct financial contributions to [suburban] property

13 The purchase price of the property was $408,000. [Mr S] paid a deposit of $20,000 and the balance was borrowed from the ANZ bank. A mortgage for $394,000 was registered over the property. [Mr S] paid the stamp duty on the contract of $18,977.

14 On 9 January 2004 when [Ms B] sold a property she had previously owned in

[another suburb] she paid an amount of $217,344 in reduction of the mortgage
registered over the property. The balance outstanding was then $176,883.

15 On 5 April 2006 [Mr S] paid an amount of $66,696 in reduction of the mortgage. The balance outstanding was then $100,000.

[2008] FCWA 62

16 In or about mid 2007 [Ms B] sold an investment property she had in

[the Eastern states] and from the proceeds discharged the balance owing under the
mortgage in an amount of $89,779.

17 Until 17 July 2006 [Mr S] made fortnightly loan repayments of principal and

interest at the rate of $625. He paid, at times, more than the amount required. The balance at that time was $96,857. From then until the mortgage was discharged [Ms B] made the loan repayments of about $550.

18 There is a dispute over the amount of money paid by [Mr S] in relation to improvements and renovations on the property.

19 [Mr S] deposes to paying for significant improvements to the property to a total of $79,203. After cross-examination he conceded that he had contributed $71,503. [Ms B] said that receipts had been provided to show that $52,099 had been spent on renovations - $1,800 of which she had paid leaving [Mr S]’s contribution at $50,299.

20 The discrepancy arises from [Mr S] alleging he paid some of the accounts in

cash. [Ms B] says that although she accepts the renovations were done and that [Mr S] paid for them she does not admit any cash component. There is a difference of around $21,204 in this respect.

21 I generally found [Mr S] to be a credible witness. He made appropriate

concessions in the giving of his evidence especially in relation to the quality of care provided by [Ms B] to his daughter [A]. He did not attempt to deliberately exaggerate matters and if he was successfully challenged in relation to any payments he corrected his position. Given the type of improvements made and the evidence generally in relation to some of the items I do accept there were likely to be some cash payments for which no receipts were provided. The difficulty for the Court is to estimate the exact amount of such cash payments. That is not an easy or precise task. Even [Mr S] was unable to pin point with precision just exactly what he paid.

22 I take into account the fact that [Ms B] does not dispute the renovations were

done and that they were paid for by [Mr S]. However, given his concessions, I find that the estimates are highly unlikely to be less than what was actually paid. In all the circumstances and doing the best I can, I intend to fix the total amount spent on renovations and improvements at $60,500.

23 Both parties allege that in paying the mortgage on a regular basis for various

periods of time each has actually reduced the principal. [Mr S] says he paid more than he needed to on a fortnightly basis during the period the parties were in the house together thus reducing the principal owing on the mortgage by $20,000. Counsel for [Ms B] says that her payments from July 2006 reduced the principal by $8,000.

24 [Ms B] annexed a full history of the mortgage repayments and it appears that,

apart from lump sum payments the principal owing was reduced by approximately $13,000 by [Mr S] and $7,000 by [Ms B]. This is not the total amount each paid but simply the reduction of the principal amount owing only.

[2008] FCWA 62

25 Thus, the parties have an unencumbered property with an agreed value of

$950,000.

26 In summary the direct financial contributions to the property are:

Description of payment Date Amount

[Ms B]

Reduction of mortgage (lump sum)	9 January 2004	$217,344
Reduction of mortgage (by periodic	17 July 2006 onwards	7,000
payments)
Discharge of home loan	8 August 2007	89,779
TOTAL	314,123
[Mr S]
Deposit	September 2003	20,000
Stamp Duty	24 October 2003	18,977
Reduction of mortgage (lump sum)	5 April 2006	66,696
Reduction of mortgage (by periodic	24 October 2003 – 17 July	13,000
payments)	2006
Renovations and improvements	various	60,500

TOTAL	179,173
TOTAL OF ALL PAYMENTS	493,296
Indirect contributions

27 [Mr S] said that during the period of cohabitation he did certain other

improvements to the property. This involved completing sheep fencing around the perimeter of the property and dividing the paddocks with such fencing. He also cleared trees with a borrowed tractor and cherry picker. He constructed a cool room and had a friend either do some external painting or remove some mould from tiles. In any event he was able, through his business associates to have tradespeople assist him at a cheaper rate than would otherwise have been the case.

28 [Mr S] also says that [Ms B] was able to purchase an investment property in

[the Eastern states] around October 2004 due to his financing the majority of the

[2008] FCWA 62

mortgage payments and living expenses for the parties and their respective children in [suburban]. This enabled [Ms B] to pay any shortfall on [the Eastern states] investment property. When this property was sold the proceeds were utilised to discharge the [suburban] mortgage.

29 [Ms B] says that [Mr S]’s superannuation and business interests have increased

during the period of cohabitation. She says that rather than put extra money into their lifestyle he was able to increase other assets. She says he was able to do this because she only worked part-time and was instrumental in the running of the household and most importantly caring for his daughter [A]. This allowed him to work full-time and travel freely.

30 [Ms B] says she was responsible for the inside of the home and did outside tasks when [Mr S] was away.

Contributions generally to the household and the family

31 It is not in dispute that [Ms B] made a greater contribution in this regard. Firstly

her work hours were more flexible than [Mr S]’s and she was more available for the children as a result. Overall she did more of the child related duties although [Mr S] assisted depending on his work commitments.

32 Both parties had been previously married. [Mr S]’s daughter [A] born [in]

October 1991 lived in the household. Her mother died [in] 2003 and, understandably, she required attention. Additionally two of [Ms B]’s children, [C] born [in] September 1988 and [L] born [in] August 1990 lived within the household.

33 [Mr S] travelled on a frequent basis throughout the relationship and [Ms B] ran

the household including all aspects of caring for the children during his absence. [A]’s grandmother assisted in [A]’s care after the first year of cohabitation but it is not in dispute [Ms B] provided excellent care for all the children. She was paid appropriate child support by her former husband. However, I accept [Mr S] made some financial contribution to her children.

34 [Mr S] paid for the majority of the household outgoings. He paid the power bill,

telephone and internet accounts, rates and insurance and for entertainment and holidays. He paid for private health cover. [Ms B] paid for food and groceries. I do accept that [Mr S] sometimes contributed to the meat and groceries. He bought [Ms B] a motor vehicle.

Contributions after separation

35 [Mr S] left the property in around May 2006. He made his last loan repayment

on 17 July 2006. Thereafter repayments were made by [Ms B] until the mortgage was discharged on 8 August 2007. [Ms B] has lived in the property since May 2006. [Mr S] has rental accommodation.

[2008] FCWA 62

Assessment of contributions

36 Overall I find that [Ms B] has made a greater contribution to the property in

[the suburbs].

37 It was put to the Court that the final payment made by her to discharge the

mortgage on 8 August 2007 should be returned to her rather than being included as a payment made by her overall. I can see no justification for this approach and do not accept it “skews” the figures.

38 The agreement as far as the evidence reveals is that [Mr S] would pay the mortgage remaining after [Ms B] had paid the sum of $217,344 on 9 January 2004. He continued to make payments after the parties separated but stopped this in July 2006. Thereafter [Ms B] made the payments. This was initially the responsibility of [Mr S]. On 29 November 2004 he made a lump sum payment of $100,000 to the mortgage. This he redrew on 6 January 2005 to purchase a mobile home that he retains.

39 He may not have been aware that [Ms B] was going to discharge the mortgage

but as she had been left to make the payments I am not satisfied any criticism can be made of her. [Mr S] is likely to have had the income and financial resources to pay the mortgage instalments or discharge it if he wanted to.

40 I find her direct financial contribution to the property is approximately 64%.

41 It is likely that [Mr S] made a slightly greater indirect contribution to the

property itself especially in relation to the work he did around the surrounds to the house. He had the assistance of friends and the nature of the work, such as fencing, cannot be underestimated.

42 The role each party played in their relationship enabled the other to increase

their financial position. [Ms B] was able to acquire and maintain an investment property and [Mr S] was able to increase his business interests. However, [Ms B] used her investment gains towards the [suburban] property. [Mr S] retains his independently.

43 I accept that [Mr S] made a greater financial contribution to the running of the

household. However [Ms B] was more available to care for the family including [Mr S]’s child, [A] on an emotional and practical level. She made a much greater contribution in this respect.

44 I would assess contributions overall in [Ms B]’s favour at 67.5%.

S 205ZD(3) matters

45 [Ms B] seeks an adjustment of 10% in her favour. [Mr S] says there is no need

for any adjustment to be made. Both parties agree there is only one of the primarily
prospective factors I need to address. S 205ZD(3)(b) states:

[2008] FCWA 62

“(b). The income, property and financial resources of each of the de facto partners and the physical and mental capacity of each of them for appropriate gainful employment;”

46 [Ms B] works as an accounts officer with [a company]. With salary sacrificing

she earns around $52,000 per annum. She is in good health and expects to continue
her work.

47 Her financial statement sworn in December 2007 indicates she has some

savings, a motor vehicle and superannuation of approximately $23,000. She anticipates having to pay some capital gains tax on the sale of her [Eastern states] property.

48 [Mr S] earns approximately double what [Ms B] earns. His income is around

$100,000 and he has substantial business interests. He has been able to increase his superannuation during the course of cohabitation. It was generally accepted by [Mr S] that he was a wealthy man although the exact extent of his wealth was unquantified.

49 This was a very short relationship. Neither parties income, property or financial

resources have been disadvantaged by the relationship. I do not intend to make any
further adjustment in this regard.

The effect of the orders – are they just and equitable?

50 As a result of the orders I intend to make [Ms B] will be able to retain the

[suburban] property on the basis that she pays an amount of $308,750 to [Mr S]. She
retains a value in the property of $641,250.

51 If I had acceded to [Mr S]’s proposition to “re-pay” [Ms B] $90,000 and then

divide the property equally, the overall result of that would have been approximately 55% of the total value of [the suburban property] being attributed to [Ms B]. I am not satisfied that this reflects the manner in which the parties agreed the property be acquired or reflects her overall contributions.

52 Both parties keep the items of property the subject of orders of 4 January 2008. Both parties are in a better position than when they started to cohabit together in [the suburban property]. They have individually increased their separate assets and have, by and large, been successful in their joint financial endeavour. The relationship and its length has not impacted on the ability of either to continue their lives as they had done prior to their relationship. I am of the view there is no need for any further change to the orders given that their overall effect is just and equitable to each party.

Orders

53 The orders I intend to make are:

1.  Within 60 days of the making of these orders and contemporaneously:

[2008] FCWA 62

(a)	the Respondent transfer to the Applicant all his right, title and interest in the property situate at [the suburban address] in the State of Western Australia more particularly known as Lot xx on Diagram xxxx in Certificate of Title Volume xxxxx Folio xxx (“the [suburban] property”) to the Respondent;
(b)	the Applicant pay to the Respondent the sum of $308,750;
(c)	the Respondent do all such acts and things and sign all such documents as may be necessary to remove caveat number Kxxxxx registered over the [suburban] property.

2. In the event that the Applicant is unable to meet the payment required by sub-paragraph 1(b) hereof:

(a)	within 120 days of the making of these orders, the Applicant transfer to the Respondent all her right, title and interest in the [suburban] property;
(b)	contemporaneously with the transfer of the [suburban] property to the Respondent, the Respondent pay to the Applicant the sum of $641,250.

3. In default of compliance by the parties with paragraphs 1 and 2 herein the [suburban] property be placed on the market for sale and upon the sale thereof the net proceeds of sale be disbursed as follows:

(a)	in payment of the costs of sale inclusive of but not confined to selling agents fee and settlement agents fees;
(b)	the balance of proceeds of sale be divided as to 67.5% to the Applicant and 32.5% to the Respondent.

I certify that the preceding [53] paragraphs are a true copy of the reasons for

judgment delivered by this Honourable Court

Associate