Bagonas & Mestri
[2021] FedCFamC2F 349
•9 November 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Bagonas & Mestri [2021] FedCFamC2F 349
File number(s): MLC 1746 of 2020 Judgment of: JUDGE HARLAND Date of judgment: 9 November 2021 Catchwords: FAMILY LAW – property – dispute as to whether or not the de facto relationship ended in 2013 or 2019 – whether or not the applicant requires leave out of time to proceed with application of property adjustment – whether or not there should be any adjustment of the parties’ property interests Legislation: Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth) ss 4AA; 79; 90RD; 90SM(1); 90SM(3); 90SM(4); 90SF(3)
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth)
Cases cited: Crick & Bennett [2018] FamCAFC 68
Delamarre & Asprey [2015] FamCAFC 159
Gallo & Dawson (1990) 93 ALR 479
Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143
In the Marriage of Whitford (1979) 4 Fam LR 754
Lynham v Director-General of Social Security (1983) 52 ALR 128
Moby & Schulter (2010) FLC 93-447
Sinclair & Whittaker [2013] FamCAFC 129
Stanford & Stanford (2012) 247 CLR 108
Watson & Ling (2013) 49 Fam LR 303
Division: Division 2 Family Law Number of paragraphs: 96 Date of last submission/s: 14 October 2021 Date of hearing: 30 September 2021, and 14 October 2021 Place: Melbourne Counsel for the Applicant: Applicant appeared in person Counsel for the Respondent: Mr Stavris Solicitor for the Respondent: Baraka Lawyers ORDERS
MLC 1746 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS BAGONAS
Applicant
AND: MR MESTRI
Respondent
ORDER MADE BY:
JUDGE HARLAND
DATE OF ORDER:
9 NOVEMBER 2021
THE COURT ORDERS THAT:
1.The application for final orders filed on 18 February 2020, amended on 1 September 2021 be dismissed.
2.Order 3 of the consent orders made on 28 April 2020 be discharged and within 7 days of the date of these orders, the trustee release the $100,000 currently held on trust to the trust account of the respondent’s solicitor for the sole benefit of the respondent absolutely.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Bagonas & Mestri has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE HARLAND:
The parties agree that they were in a de facto relationship from 2001 to 2013. The issues I am asked to determine are:
(1)Did the parties’ de facto relationship end in 2013 or 2019?
(2)If the de facto relationship ended in 2013, should the applicant be granted leave to proceed with her application seeking property adjustment orders out of time?
(3)In the event the Court finds the relationship ended in 2019, or grants leave to the applicant to proceed out of time, should there be any adjustment of the parties’ property interests?
At the commencement of the trial the parties confirmed that they wished for the threshold issue and the substantive property adjustment application to be heard at the same time. This was reflected in the notations to the orders made on 28 April 2021.
The applicant’s case is that she and the respondent were in a de facto relationship from 2003 up until 2019. She seeks a property adjustment. She says she made greater initial contributions and made significant contributions during the relationship including the homemaker role, such that it would be unjust if no property adjustment order is made.
The respondent’s case is that the parties’ de facto relationship ended in 2013 and whilst they remained living in the same house following this, they remained friends. He argues that the applicant’s application is out of time. He argues that she should not be granted leave to proceed out of time. He further argues that even if the applicant is granted leave to pursue her application out of time, or the Court finds the relationship ended in 2019, it would not be just and equitable to make any adjustment of the parties’ property interests.
The applicant relied on the following material:
(1)Affidavit of Ms Bagonas filed 1 September 2021;
(2)Affidavit of Ms X filed 1 September 2021; and
(3)Financial statement of Ms Bagonas filed 1 September 2021.
The respondent relied on the following material:
(1)Affidavit of Mr Mestri dated 13 September 2021;
(2)Financial Statement of Mr Mestri dated 13 September 2021;
(3)Affidavit of Ms B dated 20 March 2020;
The issue of leave was only dealt with cursorily during the hearing. This is not as important in circumstances where the threshold hearing and the substantive hearing proceeded together. This is particularly so, as the respondent’s position is that even if the applicant does not need leave, it would not be just and equitable to make any order for adjustment of the parties’ property interests.
For the reasons I shall explain, I will dismiss the initiating application. I am not satisfied that the parties were in a de facto relationship after 2013. The evidence before the Court does not support a finding that the de facto relationship continued after 2013. Although the parties did continue to live together after 2013, this in and of itself is not enough to satisfy that the de facto relationship continued. When considering the overall circumstances and evidence more holistically, I am not satisfied that they were in a de facto relationship after 2013.
I have also determined not to grant leave to the applicant to proceed out of time, as I am not satisfied that it would be just and equitable to make an adjustment of the parties’ property interests.
EVIDENTIARY ISSUES
The applicant was legally represented when she commenced the proceedings. At the trial, the applicant represented herself and prepared her affidavit in support of her case. The applicant annexed emails from four individuals who she say support her contention that they were in a de facto relationship until 2019. As I explained to her at trial, none of these are admissible as evidence because each deponent would have been required to swear or affirm an affidavit and be available for cross-examination.
The trial was adjourned part-heard to enable the applicant to receive pro bono legal advice. During that period, she filed an affidavit of Ms C, one of the individuals who had provided an email previously. I did not allow the applicant to rely on this affidavit as it would be entirely unfair to the respondent to allow the applicant to put on evidence during the course of the trial, whilst she is under cross examination.
As is common when self-represented litigants prepare their affidavits, and also in instances where affidavits are prepared by lawyers, the applicant expresses several opinions and conclusions in her affidavit which are not evidence. For example, she complains about the respondent selling the property located at D Street, Suburb E (“D Street, Suburb E property”) in December 2020. Further, she states in her affidavit she believes that he may have sold it for less than what he could have obtained because of the COVID-19 pandemic. This is an unqualified opinion and not based on any evidence.
Both parties expressed unqualified opinions about their respective medical conditions in their trial affidavits. The respondent annexed several medical reports to his affidavit. These are not admissible. In order to rely on such opinions, his doctors needed to swear or affirm affidavits and be available for cross-examination.
Shortly after the cross-examination of the applicant began, it was necessary to issue her a warning. I granted her a certificate pursuant to s 128 of the Evidence Act 1995 (Cth) adjourned the hearing to enable the applicant to receive pro bono legal advice with respect to the effect of the certificate. The hearing could not proceed the following day as she had not yet received independent legal advice.
The certificate was granted with respect to her evidence concerning her representations to the Australian Taxation Office (“ATO”) and Centrelink about her relationship status.
LEGAL PRINCIPLES
Threshold issues for de facto relationships
Section 90RD of the Family Law Act 1975 (Cth) (“the Act”) enables the Court to declare that a de facto relationship existed or never existed. It also enables the Court to determine the periods of the relationship, when the relationship ended and where each of the parties were ordinarily resident during the de facto relationship. The applicant has the burden to prove on a civil standard that they were in a de facto relationship. The determination of whether or not a de facto relationship existed after 2013 is a matter for factual determination and not an exercise of discretion.
The de facto relationship must have existed for at least two years before the Court may make financial orders and must have existed until at least 1 March 2009 when the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) commenced.
As Mushin J pointed out in Moby & Schulter (2010) FLC 93-447 (“Moby & Schulter”), the definition of a de facto relationship in section 4AA of the Act is a very broad one.
In Lynham v Director-General of Social Security (1983) 52 ALR 128 at page 131 Fitzgerald J said:
Each element of a relationship draws its colour and its significance from the other elements, some of which may point at one direction and some in the other. What must be looked at is the composite picture. Any attempt to isolate individual factors and to attribute to them relative degrees of materiality or importance involves a denial of common experience and will almost inevitably be productive of error. The endless scope for differences in human attitudes and activities means that there will be an almost infinite variety of combinations of circumstances which may fall for consideration. In any particular case, it will be a question of fact and degree, a jury question, whether a relationship between two unrelated persons of the opposite sex meets the statutory test.
This passage has been quoted with approval by the Full Court of the Family Court in Sinclair & Whittaker [2013] FamCAFC 129 and Crick & Bennett [2018] FamCAFC 68. I also have regard to the comments of the Full Court of the Family Court in Delamarre & Asprey [2015] FamCAFC 159 at paragraph 18:
It must also be pointed out that there is no requirement in the Act that a court in applying s 4AA is required to carry out a specific evaluation and/or weighing up of the factors in favour of and against a finding of a de facto relationship. Indeed, s 4AA(3) may well suggest to the contrary.
Section 4AA of the Act defines a de facto relationship and includes a number of criteria which may be relevant to the Court to consider in determining whether or not a de facto relationship exists between the parties. There are two preliminary matters and that is that the parties must not be legally married to each other and must not be related by family. Neither of those apply here.
Two people are defined to be in a de facto relationship “having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.”
Section 4AA(2) of the Act includes a number of criteria which the Court may consider in determining whether or not a de facto relationship exists. It is not necessary to make a particular finding about all or any of the matters listed. The court is entitled to attach such weight as any of the matters as may be appropriate in the circumstances of the case: section 4AA(5).
(2)Those circumstances may include any or all of the following:
(a)The duration of the relationship;
(b)the nature and extent of their common residence;
(c)whether a sexual relationship exists;
(d)the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e)the ownership, use and acquisition of their property;
(f)the degree of mutual commitment to a shared life;
(g)whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h)the care and support of children;
(i)the reputation and public aspects of the relationship.
(3)No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship.
(4)A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
(5)For the purposes of this Act:
(a)a de facto relationship can exist between 2 persons of different sexes and between 2 persons of the same sex; and
(b)a de facto relationship can exist even if one of the persons is legally married to someone else or in another de facto relationship.
These factors are to be considered holistically.
Moby & Schulter also involved a dispute about whether or not the parties were in a de facto relationship and if they were there was a dispute over the periods they were in such a relationship. In that case the parties disagreed about many of the material facts. As a consequence of this the credibility of the parties and their supporting witnesses was very important. Credibility is important in this case as well.
Principles applying to property cases
Part VIIIA is the part of the Act dealing with property, spousal maintenance and maintenance agreement between de facto partners. The major provisions relating to de facto property division are contained in ss 90SM(1); 90SM(3), 90SM(4); and 90SF(3) of the Act.
Until the High Court decision in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”), the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court considered the operation of s 79 of the Act (which has almost identical terms to s 90SM) in the matter of Stanford. In this case, the majority stated at [35]-[36] that:
35. “It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.”
36. The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [Footnotes omitted]
The High Court found three fundamental propositions with respect to the application of s 79, which can be summarised as follows:
1. Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word ‘existing’.
2. Secondly, although s.79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
3. Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).
In Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of s 79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation.
The High Court also pointed out that what is just and equitable is different in every case.
The principles referred to in Stanford are equally applicable to de facto property matters. See Watson & Ling (2013) 49 Fam LR 303.
Principles applying to applications for leave to proceed out of time
The principles with respect to an application out of time are well known.
The Full Court of the Family Court in In the Marriage of Whitford (1979) 4 Fam LR 754, commented that there are two questions arising in these types of applications, being:
(a)whether the Court is satisfied that the applicant or child of the marriage would be caused hardship if leave were not granted;
(b)if the Court is satisfied that hardship would be caused, then whether or not the Court should exercise its discretion to grant or refuse leave to institute proceedings out of time.
The Full Court said that the Court’s discretion in granting an application out of time should be exercised liberally in order to avoid hardship, but nonetheless needs to be exercised in a manner that would not render nugatory the requirement for proceedings to be instituted within time and the time limits have been imposed by the courts in various contexts for centuries.
I also refer to the High Court decision of Gallo & Dawson (1990) 93 ALR 479 and, in particular, McHugh J’s comments, with respect to the purpose of the rules to allow for an extension of time is to enable the Court to do justice between the parties. In order to determine whether or not there would be an injustice to the parties if leave were not granted. Again, it is necessary to consider the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties for either the granting or the refusal of the application whilst also bearing in mind the purpose behind such time limits.
CONTRIBUTIONS
Initial contributions
There was no dispute between the parties about their respective initial contributions. They also largely agree with respect to the current table of assets and liabilities.
The parties agreed the following about their respective initial contributions: When the parties met the applicant was 48 years old. She has 3 adult children. She owned a property at F Street, Suburb G (“F Street, Suburb G property”) which was worth approximately $280,000 with a mortgage of $60,000. The applicant had superannuation interests of approximately $70,000 and a car worth approximately $10,000.
The respondent was 40 years old and the parties agreed he had approximately $65,000 in savings and superannuation of about $30,000. Shortly after the relationship commenced the respondent received an inheritance from his father’s estate of approximately $27,000. The applicant agrees that the respondent received this.
Current assets and liabilities
The respondent’s lawyer prepared a document entitled “table of asserts, liabilities, contributions and future needs” which appears at pages 1-7 of the Court Book. At the beginning of the trial, the parties identified the issues that were agreed and which were disputed. The parties agreed that their assets and liabilities at time of trial are:
Table of Assets and Liabilities Applicant’s individual assets H Street, Town J $850,000 Motor Vehicle 1 $10,000 Applicant’s total individual assets $860,000 Applicant’s individual liabilities Credit card debt $3,000 Applicant’s total individual assets less liabilities $857,000 Respondent’s individual assets K Street, Suburb L $680,000 Motor Vehicle 2 $10,000 Sale proceeds from D Street, Suburb E $100,000 Respondent’s total individual assets: $790,000 Respondent’s individual liabilities Mortgage on K Street, Suburb L Property $99,622 Loan from Ms B $30,000 Respondent’s total individual liabilities $129,622 Respondent’s individual assets less liabilities: $660,378 Total combined assets less liabilities $1,517,378 Applicant’s superannuation held with Super Fund M $104,503 Respondent’s superannuation held with Super Fund N $209,279 Total superannuation $313,782 Total combined assets less liabilities plus superannuation $1,831,160
The applicant conceded that her $3,000 credit card debt was accrued after separation and is not a relationship debt.
The applicant disputes the inclusion of a $30,000 loan the respondent claims he owes to his sister Ms B for the stamp duty on the home he purchased at K Street, Suburb L, (“K Street, Suburb L property”). Despite this the applicant did not cross examine Ms B on this topic. Given this I accept that the respondent owes his sister this debt.
The respondent sold the D Street, Suburb E property for $770,000 on 24 December 2020. He says he used the proceeds to pay his former lawyers and the mortgage. He used the rest of the proceeds to purchase the K Street, Suburb L property. He took out a mortgage for $100,000. He says that is the limit of his borrowing capacity because he is reliant on the disability support pension and prior to that was in receipt of job seeker payments. The respondent says that he was granted the disability support pension on 21 January 2021 after appealing an initial refusal.
Other contributions
The respondent says that when they started the relationship in 2001 they agreed to keep their finances separate as they met when they were older and wanted to keep their assets separate. He says the applicant kept the rental income from the F Street, Suburb G property and was also responsible for any expenses for the F Street, Suburb G property.
Both parties were employed throughout the relationship. The parties kept their bank accounts separate for the entire period they lived together.
The applicant’s youngest son remained living at the F Street, Suburb G property until he moved overseas in 2003. The applicant rented out the F Street, Suburb G property from 2003 until 2013. The applicant says there were leftover funds from rental income after the mortgage on the F Street, Suburb G property was paid and that those funds were used for the parties’ joint benefit for things such as holidays, entertainment, and living expenses.
The respondent’s counsel put to the applicant that while she was living with the respondent she was renting out her F Street, Suburb G property, which effectively was a small business on the side. The applicant responded stating that her contributions to the respondent’s property and to the relationship would far exceed the rent that she received from the home. She also maintains that she contributed the proceeds of the rent to the relationship.
The respondent’s counsel put to her that as she was renting a property whilst living with the respondent, she would have been liable for capital gains tax (“CGT”) upon sale of the F Street, Suburb G property. She initially said she did not pay CGT and then said she may have been liable for CGT. There is no evidence before me to establish whether or not she was not liable for CGT and that would depend on a number of factors.
The applicant says that at the beginning of the relationship she was earning about $65,000 as an educator. The tax assessments and returns she has produced show her income being considerably less for a significant proportion of the period they lived together. The applicant says that in 2014 she was 61 and at that point, she was working less and her income was variable from year to year.
The applicant was cross-examined about the income tax assessments and tax returns she produced which were tendered and marked as exhibit 1. She did not have tax returns and assessments for all of the years that she says covers the relationship. This is not a criticism as there is no obligation to keep these documents beyond five years and the relationship dates back considerably further than that. She does not have tax returns for the 2012 and 2013 financial years. Her taxable income is shown the years produced as follows:
(1)a notice of assessment for the year ending 30 June 2009 shows a taxable income of $33,763. She did not produce a tax return for that year. As a consequence, a breakdown of her income sources are not available.
(2)a notice of assessment for the year ending 30 June 2010 shows a taxable income of $38,218, again without the tax return. The only figure available is for her total taxable income.
(3)her taxable income for the year ending 30 June 2011 is $22,364.
(4)her taxable income for the year ending 30 June 2014 is $17,727. The only figure available is for her total taxable income.
(5)her taxable income for the year ending 30 June 2015 was $14,193. The only figure available is for her total taxable income.
(6)her taxable income for the year ending 30 June 2016 was $20,858. Her income was made up of earnings from casual work and the Newstart allowance.
(7)her taxable income for the year ending 30 June 2017 was $24,171. Her income was made up of earnings from casual education work and the Newstart allowance.
(8)her taxable income for the year ending 30 June 2018 was $27,897. Her income was made up of earnings from casual work and the Newstart allowance.
(9)her taxable income for the year ending 30 June 2019 was $23,403. Her income was made up of earnings from casual work, the Newstart allowance and age pension for that year.
According to the applicant’s evidence, the F Street, Suburb G property was rented between 2003 and 2013. Her 2011 income tax return does not indicate any rent being claimed for that year. It is not possible to know whether or not she claimed rental incomes that year without the review of the actual returns for 2009-2010. When cross-examined, the applicant was unsure about the periods she received rent.
The applicant says the F Street, Suburb G property was damaged by tenants on several occasions and it was necessary for her and her children to clean and restore the property after the tenants vacated. The applicant incurred costs for repairs. The respondent says he had nothing to do with the F Street, Suburb G property and did not contribute financially or by undertaking any work to the property. The applicant conceded that she would have been required to pay for utilities on the F Street, Suburb G property during the periods it was not occupied by a tenant. The applicant complains about this but it is consistent with the respondent’s evidence as to the arrangements they agreed to.
The applicant paid out the modest $60,000 mortgage on the F Street, Suburb G property in 2013 by accessing her superannuation entitlements when she turned 60.
The applicant sold the F Street, Suburb G property in 2014 and bought the property at H Street, Town J. She agreed that she had to pay rates and body corporate fees for that property. She said they would have been approximately $3,000 per annum. She also had utilities. During this period her income was as low as $17,000. In her trial affidavit she referred to needing to support her children’s complex medical needs. It is unclear as to whether this refers to financial support or support more generally.
The applicant agreed that when she retired and started claiming the age pension. She also told Centrelink she was living at H Street, Town J, and whenever she had to attend Centrelink in person she went to the Town O office.
In 2002, the respondent bought a property at P Street, Suburb E with his sister Ms B. The parties lived in the property for about two years. Whilst it was being renovated, the applicant says that she provided significant assistance with respect to the renovations of that property, and says that her assistance increased the value of the property. This is an assertion only and is not supported by evidence. It is common for parties to make this type of argument. However, renovations to a property do not automatically improve its value and expert evidence in the form of a valuation is required. Such valuation evidence would be needed to assess the value of the property before the renovations were carried out and after they were carried out. It cannot be assumed that an increase in value of the home has occurred over time is necessarily attributed to renovation work, though of course, it would increase the value in certain circumstances.
The respondent and his sister sold the P Street, Suburb E property and bought the D Street, Suburb E property for $235,000. The property was purchased in the respondent’s name and he paid the deposit. The parties moved into that property and the applicant rented the F Street, Suburb G property between 2003 and 2013 before selling it.
In her trial affidavit, the applicant refers to several renovations to the D Street, Suburb E property that she says she assisted with over the years. She claims to have made payments for various items for the renovations. The respondent disputes this and says that if she paid for things it was without his knowledge and authorisation.
The respondent’s sister Ms B gave evidence in support of the respondent. In her affidavit she says that she met the applicant in about 2002 when the respondent told her that she was staying with him. She said she understood their relationship to be one of companionship. She confirmed that the applicant did not contribute to the purchase of the P Street, Suburb E property that she and the respondent bought in 2001. The respondent’s brother Mr Q lived in the property. Ms B referred to the renovations carried out on the property and said that she and the respondent agreed to renovate the property and draw down $20,000 from the mortgage in order to pay for those renovations. She says that the applicant did not contribute to the costs of renovations.
In cross-examination, the applicant conceded that she had never made any payments for the mortgage on the D Street, Suburb E property.
I accept that the applicant made financial and non-financial contributions, as did the respondent. I find that the applicant has exaggerated the extent of her contributions, particularly with respect to renovations of the D Street, Suburb E property and financial support she alleges she provided generally, in order to strengthen her claim for property adjustment orders. If the tax returns and assessments she has produced are accurate, then there are several years where her income was very modest. She was incurring costs from the H Street, Town J property, which she did not rent out as well as paying for living expenses for the parties. It appears that it was only during the pre-2014 period that the applicant was earning a higher income and was receiving rental income. The fact that she did not rent out the H Street, Town J property and spent at least part of the time living there is consistent with the nature of their relationship changing after 2013.
The respondent agreed when cross-examined by the applicant that she had suggested to him that rather than deciding on splitting bills, she would pay for his food and he paid for the bills and that was the agreement. He denied that renovating the house and contributing to those renovations was part of that agreement and maintained this position that she bought some things without his knowledge and did not help with the renovations to the extent that she claimed. He agreed that at no stage during the relationship did he financially support her. She asked him about periods of unemployment and low employment. He said that he was working casually to make ends meet and denied needing her assistance. He agreed that their financial arrangement did not change in 2013.
I also accept that she contributed to household expenses and bought groceries etc. and that she did not and the respondent did not require her to pay him rent. The parties kept the costs associated with their respective properties completely separate. As she was living in the respondent’s home she was able to rent out her home. I do not know how much rent she received and what she did with it.
LENGTH OF DE FACTO RELATIONSHIP
The respondent says that in 2013 the parties separated under one roof and from that point on they slept in separate bedrooms. In his trial affidavit, the respondent says the applicant told him the relationship was over and they would no longer have sex. He further says that towards the end of their relationship, the applicant was experiencing menopausal symptoms and was disinterested in sexual affairs. The applicant did not cross-examine the respondent with respect to this. The respondent says their friendship deteriorated from 2013 to 2019 and says they did not go to functions as a couple but attended some events as friends.
The applicant contends that there was no change in their relationship in 2013. The applicant claims the parties continued to have a sexual relationship after 2013. She says they slept in separate bedrooms from that time because of his sleep apnoea and the noise of the CPAP machine he has to use.
The applicant relied on the affidavit of her adult daughter Ms R who was cross-examined. In her affidavit she refers to the applicant continuing to provide support and care for herself and her brothers. Ms R and her brother Mr S both suffer from medical disorders. She says that her father never provided any emotional or financial support and her parents separated when she was 9. She claims that she saw her mother and the respondent together. She claims that she saw her mother take on all the work and responsibility of maintaining both the F Street, Suburb G property and D Street, Suburb E property without the respondent’s assistance. She makes general statements and does not provide the basis for those statements. When cross-examined she conceded that she did not live with them. She stayed with them for a couple of days recovering from an operation.
Understandably, Ms R is keen to support her mother’s case. Parts of her affidavit are vague and are not based on her direct observations.
The applicant annexes several photos to her affidavit which she says supports her contention that the de facto relationship continued after 2013. These include photos of them at Christmas and other occasions. She also tendered several text messages from 2019 which refer to the respondent asking about what she was making for dinner and referring to her in affectionate terms.
The applicant cross-examined the respondent’s sister, Ms B. Ms B said that she was close to her brother before he met the applicant and that they remained close until the applicant moved into the D Street, Suburb E property. Ms B said that she did not see her brother from that time until around 2013. She said that the respondent never really commented on his relationship with the applicant and only referred to her as a “boarder”. The applicant questioned Ms B about paragraph 11 of her affidavit, which says she knows the romantic relationship had ceased. Ms B responded that this was because her brother started visiting her again and also said that from that time he started complaining about wanting the applicant to leave the house. She also said the applicant was aware that the respondent wanted to sell and move to a smaller house for some time.
Ms B says that after they sold P Street, Suburb E Street property and the respondent purchased the D Street, Suburb E property, the respondent told her that the applicant would not be paying board. She refers to seeing the respondent at her niece Ms T’s wedding in 2013 and her niece Ms U’s wedding in 2017 and says that the applicant attended as the respondent’s friend and was not introduced as his partner.
The applicant claims that the parties split their time between the H Street, Town J property and the D Street, Suburb E Street property. She says she would go a day or two earlier or return a day or two later than the respondent at times, but that they spent considerable time at H Street, Town J together, particularly on weekends when the respondent would work in the local area.
The respondent says that the applicant increasingly spent longer periods of time alone at the H Street, Town J property and that he did not know when she would come or go from his D Street, Suburb E property. When questioned about this, the applicant said that potentially may have been the case in the past year and that the respondent was quite resentful about her coming and going.
The applicant was cross-examined about her allegations as to the breakdown of the relationship. The applicant refers to the respondent having a dispute with their neighbour at the D Street, Suburb E property in November 2019 with respect to renovations the neighbour was carrying out that was encroaching on their land and the confrontation which occurred between them, led to an intervention order being taken out by the neighbour against the respondent. The applicant says she was upset about this incident and on 14 November 2019 stayed at the H Street, Town J property. She said she had been injured after falling when walking her son’s dog and needed a rest break and was also worried about her daughter who was unwell.
The applicant says the respondent travelled to H Street, Town J on 22 November 2019 and stayed overnight. She says she became upset when he told her that his sister Ms B wanted him to sell the D Street, Suburb E property and planned to assist with the sale. She claims that the respondent asked her if she was going to return to the D Street, Suburb E property and alleges that she would not unless he told his sister to stop interfering in their relationship and that she complained to him that the decision to sell the D Street, Suburb E property should have been a joint one. The applicant also claimed that she told him that she wanted to see a solicitor and formalise their relationship and join the finances. She agreed that he gave her his key to the H Street, Town J property at that point. She conceded that she did not include this in her affidavit because she did not think the way they separated was relevant.
The respondent’s counsel challenged her about this evidence suggesting that it was somewhat opportunistic to give this evidence now knowing that the issue of declaring their relationship status to the ATO is an important matter. She disagreed and said that “everybody knows that when you receive the aged pension the house you own is an asset and you have to live there.” This statement is self-serving and underscores the difficulty with accepting her evidence because she was either willing to lie to government agencies for years for financial advantage or lie to the Court. None of her tax returns refer to having a de facto spouse.
The applicant accepts the relationship was over on 26 November 2019 when Ms B changed the locks on the D Street, Suburb E property at the respondent’s request.
When asked if she told the ATO that she was in a relationship with the respondent the applicant replied no and when asked why not, she said she did not know she had to and was keen to say that the respondent also claimed to be single. Her evidence is difficult to accept. Taxpayers are obliged to indicate whether or not they have a spouse, either married or de facto, as this can affect the offsets and tax a taxpayer is liable to pay. The respondent’s counsel then suggested this was because she was single. She rejected that proposition. The fact that the respondent claimed to be single on his tax returns is entirely consistent with his case that they were not in a de facto relationship. The applicant conceded that she recorded the H Street, Town J Property as her residential address on her tax returns and not the D Street, Suburb E address. When questioned about this, she said she lived part of the time at H Street, Town J and part of the time in Melbourne during the 2017/2018 year she was cross-examined about.
The applicant cross-examined the respondent about several text exchanges marked as exhibit 2, which took place throughout mid-late 2019. Those text messages include exchanges about what the applicant was going to make for dinner and also refers to her washing his clothes. When the applicant asked the respondent if somebody renting would normally wash someone else’s clothes he said yes. This is not credible. It is suggestive of their relationship being more than housemates or friends.
The respondent agreed that they both suffered from health issues during the time they lived together and provided each other with care after those issues. The respondent had an operation on his foot and the applicant had a minor stroke.
The respondent denied having any knowledge of the applicant needing to live at H Street, Town J in order to qualify for the aged pension. He also denied their having any discussions about retirement and denied that they talked about buying a house together. He says for a long time he had been looking to downsize and they had talked about him buying a house in Town V. She asked him if he did the house work and gardening when she was not there and he said no, and clarified that as a single guy he would do his dishes and occasionally cut the grass. She also cross-examined the respondent about the medical reports annexed to his affidavit and his seeing psychologists in early 2020 and mentions Dr W referring to their marriage breakdown. The respondent said that there were a lot of things happening at that time in his life, including the IVO involving the next-door neighbour and that he discussed these various matters and general things with his psychologist.
The respondent denied the applicant’s suggestion that his financial circumstances changed greatly after she left which is why he had to sell the D Street, Suburb E property. The respondent said that he had health issues, was unemployed, and had been wanting to downsize for some time.
RELEVANT SECTION 90SF(3) FACTORS
The applicant acknowledges that the respondent had polio as a child and that he has post-polio syndrome. She says during the relationship he was working full time and was doing casual work on weekends. The respondent outlines the various jobs he had from 2001 to 2020. He does not give any evidence as to what income he earnt. The respondent says that his physical and mental health declined in 2020. The fact that the respondent qualified for the disability support pension is indicative of his having a long term mental and/or physical disability, such that he is entitled to the disability support pension, which is paid at a higher rate than the jobseeker payment. His current financial statement does not disclose any income earned from casual work which is consistent with his deteriorating health. I am not satisfied that he is currently earning additional income as a casual worker. There is no dispute that he was earning income from casual work during the relationship, but that was well before he qualified for the disability support pension.
The applicant is 68 years old and receives the aged pension. When cross-examined she said she did not think she was well enough to work part-time, and that education had changed significantly during the COVID-19 period. Given the applicant’s age, it is reasonable for her to be retired.
The income that they receive from their pensions is similar. The respondent is 8 years younger than the applicant, but given his entitlement to the disability support pension, any earning capacity would be very limited.
Turning to the parties’ assets, liabilities and financial resources, the applicant has the unencumbered property at H Street, Town J and her superannuation. The respondent has his home subject to mortgage and his superannuation.
WERE THE PARTIES IN A DE FACTO RELATIONSHIP AFTER 2013?
The respondent had a poor memory when cross-examined, despite this his evidence was consistent. In both her written and oral evidence, the applicant was keen to state her case. Somewhat simplistically, though understandably, she looks at the parties’ respective initial contributions and says she brought in 75% of the assets at the commencement of the relationship. She compares their respective financial position now and says it is unfair to leave the parties in their respective financial positions because he is comparatively better off than she is compared to their respective starting positions. Whilst it is understandable that a lay person would take this approach is it not how the law applies the principles with respect to property adjustment under the Act. I did not find her to be a credible witness and am satisfied that she exaggerated parts of her evidence. Her representations about her relationship status to Centrelink and the ATO also significantly undermine her argument to the Court that the parties were in a de facto relationship.
Whilst I am satisfied that the parties continued to have some sort of relationship after 2013 and which ended in 2019, I am not satisfied that it was a de facto relationship. Relationships can take many different forms and some are not as easily defined as others. The nature of a relationship can also change over time and go through many different stages. The parties were not merely housemates as, if this were the case, one would expect that the applicant would pay rent or board. The domestic chores the applicant continued to undertake including washing the respondent’s clothes is more than what a housemate would ordinarily do.
Whilst the parties had a common residence after 2013, from the time the applicant purchased the H Street, Town J property, she declared that property as her principal place of residence and also held herself out to be single. These representations to Centrelink and the ATO would have affected her entitlements to income tested pensions and her tax liabilities whilst the parties maintained some sort of relationship. I think it is more likely that increasingly the applicant spent more and more time at the H Street, Town J property alone. The applicant denied being in a relationship when applying for Centrelink payments and when filing her tax returns for a number of years. Whilst she is keen to point out that the respondent did the same, as noted earlier, the critical difference is that the respondent’s actions are consistent with his case that they were not in a de facto relationship.
They did not continue to have a sexual relationship. The parties deliberately kept their finances separate. They never shared bank accounts and conducted themselves with the understanding that the applicant’s property at F Street, Suburb G and then H Street, Town J was hers alone. She was responsible for any costs associated with it and any income she received from the period the respondent was solely responsible for the mortgage and other expenses associated with the D Street, Suburb E property. I am satisfied that the applicant did not contribute to those expenses but did contribute to the parties’ living expenses. I am satisfied that she would have paid a greater proportion of these expenses, noting that she remained in the property rent-free. The parties did not acquire any property together during their relationship, noting that the applicant sold the F Street, Suburb G property and purchased the H Street, Town J property in her sole name.
I am not satisfied that there is evidence to show that the parties had a degree of mutual commitment to a shared life. I accept that they attended various family functions and functions of friends together as shown in the photographs the applicant annexes to her affidavit, and which is not denied by the respondent, but I am not satisfied that they attended as a de facto couple with respect to public aspects of their relationship.
SHOULD THERE BE ANY ADJUSTMENT OF THE PARTIES’ PROPERTY INTERESTS OUT OF TIME?
Being satisfied that the parties were not in a de facto relationship after 2013, I must consider whether or not the applicant should be granted leave to proceed out of time with her property application and as such, whether there should be any adjustment of the parties’ property interests.
As the threshold and substantive property application were heard together, my conclusions with respect to the substantive application inform the application for leave. Both parties had assets at the beginning of the relationship. The de facto relationship ended in 2013, being a relationship of 12 years. When the parties separated they remained living in the respondent’s D Street, Suburb E property.
The applicant rented her F Street, Suburb G property during the relationship and afterwards sold that property and bought the H Street, Town J property, which gradually became her primary residence. Both during the de facto relationship and the years that followed, the parties kept their financial assets separate.
The parties’ respective financial positions today are such that both have their own home. The applicant is mortgage free. As a result of the orders I shall make, the respondent will have a modest mortgage. Both receive similar income benefits and this is unlikely to change. In considering whether to grant leave out of time, it is necessary to look at the scope of the applicant’s claim to determine if hardship would be suffered. The respondent’s position is that they should keep the assets already in their possession and control. If no property adjustment is made, then the applicant has 56% of the non-superannuation pool and 33% of the superannuation pool and the respondent has 44% of the non-superannuation pool and 67% of the superannuation pool. The applicant seeks that the respondent pay her $100,000, and that they otherwise keep their assets, liabilities and financial resources. This payment would result in a 7% adjustment in favour of the applicant.
In all of the circumstances, noting that the applicant will retain $961,503 including superannuation and the respondent $929,657 also including superannuation, I am not satisfied that it would be just and equitable to make any adjustment to the parties’ property interests. Given this, the applicant will not suffer hardship if her leave is not granted.
I am satisfied that the applicant’s initiating application should be dismissed. As I explained even if I was satisfied that the de facto relationship continued until 2019, I am not satisfied that it would be just and equitable to make any adjustment of the parties’ property interests.
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Harland. Associate:
Dated: 9 November 2021
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