Campbell and Schmidt
[2016] FCCA 336
•19 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CAMPBELL & SCHMIDT | [2016] FCCA 336 |
| Catchwords: FAMILY LAW – De facto property – whether a de facto relationship existed at law – whether the Applicant’s contributions to the Respondent’s property and business, and to the welfare of the family were “substantial” pursuant to s.90SB(c) of the Family Law Act 1975 – contributions not found to be “substantial” within the meaning of the Act – declaration that no de facto relationship existed at law – application dismissed for want of jurisdiction. |
| Legislation: Family Law Act 1975, ss.90SB(c), 90RD(1), 90SF(3), 44(5), 4AA, 4AA(2), 4AA(3), 4AA(4), 90RD(2), 90SM, 90SB |
| V & K [2005] FCWA 80 Jacob & Lawrence [2013] FamCA 188 Wall & Mitchell [2012] FamCA 114 |
| Applicant: | MS CAMPBELL |
| First Respondent: | MR SCHMIDT |
| File Number: | MLC 6363 of 2014 |
| Judgment of: | Judge Small |
| Hearing dates: | 28, 29 & 30 September 2015 |
| Date of Last Submission: | 30 September 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 19 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Dr Kovacs |
| Solicitors for the Applicant: | MST Lawyers |
| Counsel for the Respondent: | Mr Mellas |
| Solicitors for the Respondent: | Forte Family Lawyers |
DECLARATION
Pursuant to section 90RD(1) of the Family Law Act1975 (Cth) (“the Act”), the Court declares that a de facto relationship which would attract the jurisdiction of the Court never existed between the Applicant Ms Campbell and the Respondent Mr Schmidt.
ORDERS
The court having declared that no de facto relationship, as defined by the Act, existed between the parties, the Amended Initiating Application filed 16 September 2014 is dismissed for want of jurisdiction.
All other extant Applications are hereby dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Campbell & Schmidt is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 6363 of 2014
| MS CAMPBELL |
Applicant
And
| MR SCHMIDT |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a property dispute arising out of the breakdown of the relationship between Ms Campbell (“Ms Campbell”) and Mr Schmidt (“Mr Schmidt”).
Ms Campbell and Mr Schmidt cohabited in Melbourne between September 2010 and May or July 2012 (there is a dispute about the date of separation), a period of less than two years.
Ms Campbell seeks a declaration under section 90RD of the Family Law Act1975 (Cth) (“the Act”) that a de facto relationship existed between the parties, and orders for a property settlement.
Mr Schmidt seeks that Ms Campbell's Application be dismissed on the ground that the court does not have jurisdiction to hear the matter because there was no de facto relationship in existence under the Act, or, alternatively, because Ms Campbell made her Application out of time, or, alternatively, that it would not be just and equitable for the Court to make orders for a property settlement.
The issues to be decided in this case, therefore, can be stated as follows:
A.Does the court have jurisdiction to hear this matter?
B.If the court does have jurisdiction, should the application be dismissed because it was filed out of time?
C.If the court does have jurisdiction, and the application ought not to be dismissed because it was filed out of time, is it just and equitable to make orders for a property settlement between the parties?
D.If it is just and equitable to make orders altering the parties’ property interests, what were the contributions of the parties to the acquisition, maintenance and improvement of their property?
E.Should the contribution-based entitlements of the parties be adjusted by reason of the matters set out in s.90SF(3) of the Act?
F.In light of the above findings, what orders ought to be made to effect a just and equitable settlement between the parties?
Background
Ms Campbell was born on (omitted) 1970 and is 45 years old. Mr Schmidt was born on (omitted) 1967 and is 48 years old.
The parties met in (omitted) 2010 and began living together in Mr Schmidt’s home at Property K (“the Property K property”) in (omitted) of that year.
Both have children from previous relationships: Ms Campbell has a son, X, born (omitted) 2005; and Mr Schmidt has two daughters, Y born in 1996 and Z born in 2000. All three children lived with the parties on a full-time basis during the relationship.
Ms Campbell’s mother died in early 2010, before the parties began their cohabitation relationship, and Ms Campbell received an inheritance from her estate. There is dispute between the parties as to how some of that inheritance was spent, although it is not disputed that Ms Campbell bought out her two sisters’ shares in their mother’s property at Property W (“the Property W property”) in early 2011.
It is Ms Campbell’s evidence that when the parties began to live together, she borrowed monies in order to buy her sisters’ two thirds share of the Property W property, and that she had then rented out that property, with the rental income covering the mortgage repayments. She also applied the loan monies to the purchase of a Toyota Kluger motor vehicle which was registered in the name of Mr Schmidt’s business for tax purposes.
In May 2012, Ms Campbell moved into the Property W property, of which she was by then the sole title holder, and the parties’ relationship ended either then (according to Mr Schmidt) or two months later, on 23 July 2012 (according to Ms Campbell).
That dispute is relevant only to the question of whether Ms Campbell's Application was filed out of time – that Application being filed on 22 July 2014. It is accepted between the parties that their personal relationship did not continue after 23 July 2012, but if the court were to find that the date of separation was in May 2012, Ms Campbell's Application would have been filed after the two year time limit provided for under s.44(5) of the Act.
During the relationship, Ms Campbell performed work for Mr Schmidt’s company, (omitted) Pty Ltd (“the company”), although the extent and significance of that work is in dispute between the parties. Mr Schmidt, too, worked for the company.
After separation, Ms Campbell was in receipt of Centrelink benefits until August 2013, when she obtained a part-time position as a (occupation omitted) in the (omitted) sector. She was thus employed at the time of trial, although she was receiving WorkCover payments as a result of an injury sustained in a fall at work.
Property W property was sold in late 2013 well after the relationship ended. Ms Campbell began renting in January 2014, which was her situation at the time of trial. She repartnered in January 2015 and she and her new partner purchased a property together in July 2015.
Mr Schmidt has continued to work for the company since separation, although he says the business sector in which it operates has suffered a downturn since the parties separated.
He continues to live in and work from the Property K property.
It is not disputed between the parties that as a result of certain taxation arrangements made during the relationship, considerable sums were distributed to Ms Campbell from Mr Schmidt’s family trust, and that she has now incurred not only a taxation debt in relation to those distributions, but a debt to Centrelink for the repayment of monies otherwise properly paid to her during the relationship.
The Issues and the Law
Under the Act, the Federal Circuit Court of Australia has jurisdiction to determine property disputes between parties if those parties are or were married, or if they are or have been engaged in a de facto relationship.
Section 4AA of the Act states as follows:
4AA(1) a person is in a de facto relationship with another person if:
(a)the persons are not legally married to each other; and
(b)the persons are not related by family; and
(c)having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
4AA(2)Those circumstances may include any or all of the following:
(d)the duration of the relationship;
(e)the nature and extent of their common residence;
(f)whether a sexual relationship exists;
(g)the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(h)the ownership, use and acquisition of their property;
(i)the degree of mutual commitment to a shared life;
(j)whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(k)the care and support of children;
(l)the reputation and public aspects of the relationship.
Section 4AA(3) states that it is not necessary for any particular finding to be made in order to establish the existence of a de facto relationship, and section 4AA(4) states that the court 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” in determining whether a de facto relationship exists.
Section 90RD sets out the law in relation to the making of declarations about the existence of a de facto relationship and I will set out the relevant parts of that section here in full:
90RD(1) If:
(a)an application is made for an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL; and
(b)a claim is made, in support of the application, that a de facto relationship existed between the applicant and another person;
the court may, for the purposes of those proceedings (the primary proceedings), declare that a de facto relationship existed, or never existed, between those 2 persons.
90RD(2)a declaration under subsection (1) of the existence of a de facto relationship may also declare any or all of the following:
(a)the period, or periods, of the de facto relationship for the purposes of paragraph 90SB(a);
(b)whether there is a child of the de facto relationship;
(c)whether the parties to the de facto relationship made substantial contributions of the kind mentioned in paragraph 90SM(4)(a), (b) or (c);
(d)when the de facto relationship ended;
(e)where each of the parties to the de facto relationship was ordinarily resident during the de facto relationship.
So in this case, the first thing to be determined is whether a de facto relationship ever existed between these parties under the Act, as the existence of such a relationship is necessary to found the court’s jurisdiction to hear and determine any property dispute between them.
The onus of proving the existence of such a relationship lies, of course, with Ms Campbell as the applicant, and she must prove that circumstance on the balance of probabilities.
A.Does the court have jurisdiction to hear this matter?
In her Amended Initiating Application filed 16 September 2014, Ms Campbell seeks the following order:
That the respondent pay to the applicant such sum by way of adjustment of property interests between the parties as deemed appropriate by this Honourable Court.
That is an application for an order for a property settlement between her and Mr Schmidt. As the parties were never married, it is an order which can only be made under section 90SM of the Act.
Section 90SB of the Act states:
a court may make an order under section 90SE, 90SG, or 90SM, or declaration under section 90SL, in relation to a de facto relationship only if the court is satisfied:
(a)that the period, or the total of the periods, of the de facto relationship is at least two years; or
(b)that there is a child of the de facto relationship; or
(c)that:
(i)the party to the de facto relationship who applies for the order or declaration made substantial contributions of the kind mentioned in paragraph 90SM(4)(a), (b), or (c); and
(ii)a failure to make the order or declaration would result in serious injustice to the applicant; or
(d)that the relationship is or was registered under a prescribed law of a State or Territory.
In this case, although Ms Campbell asserts that the relationship ended in July 2012 and Mr Schmidt says that it ended when Ms Campbell moved back into her own property in May 2012, on either party’s evidence the relationship was of less than two years’ duration.
There is no child of this relationship, although Mr Schmidt’s daughters, Y and Z, and Ms Campbell’s son X lived with the parties while they cohabited.
The relationship between the parties was not registered under any State or Territory legislation.
Therefore, if Ms Campbell is to be successful in clearing the first hurdle standing in the way of her obtaining the orders she seeks, she must prove, on the balance of probabilities, that she has made substantial contributions of the kind set out in paragraph 90SM(4)(a), (b), or (c) and that a failure to make the order she seeks would result in serious injustice to her.
Section 90SM(4)(a), (b) and (c) states as follows;
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last mentioned property;
Whether or not that last mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on the behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last mentioned property;
whether or not that last mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent
In summary then, Ms Campbell must prove that she has made substantial financial or non-financial contributions to the acquisition, conservation and improvement of the property of the parties or either of them, and/or to the welfare of the parties’ family, if she is to show that a de facto relationship existed between her and Mr Schmidt under the Act.
If she is successful in that endeavour, the court will then need to address the further questions set out in paragraph 5 of these Reasons.
The question of what the phrase “substantial contributions” means has been considered in this court and other Australian courts exercising jurisdiction under the Act on many occasions.
In V & K [2005] FCWA 80, Holden CJ of the Family Court of Western Australia said:
In my view, substantial means something more than usual or ordinary. In my view, [the section] is aimed at more exceptional circumstances where serious injustice may be caused by the application [of the relevant provision].
In Wall & Mitchell [2012] FamCA 114, Johnston J indirectly quoted that passage with approval and went on to say:
With respect to……Holden CJ, I agree. If usual or ordinary contributions were sufficient to amount to “substantial contributions” within the meaning of s90SB(c), there would be little purpose in the two years requirement in s90SB(a) of the Act. This is because in most de facto relationships to some extent usual or ordinary contributions would be a feature of such relationships.
In Jacob & Lawrence [2013] FamCA 188, Macmillan J dealt with a case very similar to the current one on the facts. In that case the applicant asserted that she had made “substantial contributions” to the respondent’s business, to the maintenance and improvement of the respondent’s home, and to the welfare of the family.
Having set out the applicant’s contributions in that case, Her Honour said, at para 53:
Even if I accept the applicant’s evidence at its highest her contributions are not, in my view, substantial as envisaged by the Act. I find that her contributions to the C suburb property were minimal at best. I accept that she made contributions to the household and to the parties’ lifestyle generally but in my view there was nothing exceptional about those contributions. They must also be viewed in the context of the contributions made by the respondent.
In that case, the Applicant had made financial contributions worth tens of thousands of dollars to the parties’ lifestyle in the form of holidays, household expenses, the Respondent’s mobile phone, and entertainment costs. She had also made some non-financial contributions to the Respondent’s business.
Nevertheless, Macmillan J considered those contributions to be “minimal” in light of the Respondent’s contributions, which included furniture, an overseas holiday, household expenses, restaurant charges, improvements to and interest payments and outgoings on his property, as well as the overwhelmingly major role in the business.
Therefore, only if the evidence shows that Ms Campbell made “substantial contributions” to the parties’ property during the relationship (or after its demise) in the sense that her financial and non-financial contributions to the property of the relationship and to the welfare of the family (as defined in section 90SM(4)(c)) were unusual, or out of the ordinary, or exceptional, will she have shown that the relationship was a de facto relationship within the meaning of the Act.
The Evidence
Ms Campbell’s contributions to Mr Schmidt’s property
I will first consider the evidence about Ms Campbell’s contributions to the acquisition, conservation or improvement of the Property K property.
It is not disputed that she made no contributions to the Property K property’s acquisition, Mr Schmidt having acquired it considerably prior to the parties meeting.
Ms Campbell says that when she received monies from her mother’s estate in late 2010, Mr Schmidt persuaded her in early 2011 to transfer $25,000 to an account from which, she says, mortgage payments and family expenses were taken.
In her Affidavits, Ms Campbell deposes that that sum was a loan to Mr Schmidt, and she sought repayment of that amount in these proceedings. She could provide no documentary or other corroborative evidence of the funds transfer being a loan.
In those circumstances, I will treat that transfer as a contribution on Ms Campbell’s behalf.
Over the next few months, Ms Campbell transferred certain sums between that account, her personal account, and an account she held in trust for her son X.
At trial, under cross-examination from Mr Schmidt's Counsel, Ms Campbell was forced to concede that the sum ultimately applied to joint purposes when the various transfers were considered was $22,500 and that it had been used to pay for the family’s living expenses.
In her affidavit sworn 3 September 2015 and filed 10 September 2015 (“her trial affidavit”), Ms Campbell says that she spent approximately $58,000 of inheritance monies she had received from her mother’s estate for “living expenses our entire family (sic) during this year”.
However, at trial, when she was cross-examined about the distribution of her inheritance monies, Ms Campbell was unable to show that any monies from that source, other than the $22,500 provided to Mr Schmidt in early 2011, were applied to the family’s living expenses.
The contribution of $22,500 to the lifestyle expenses of the parties over a 20 or 22 month period is not, in my view, out of the ordinary, unusual or exceptional. The transfer of monies from one partner to another for various joint purposes is common in domestic relationships and the amount transferred in this case is not of a quantum that would bring it within one of those definitions.
Dr Kovacs, Counsel for Ms Campbell, urged me during her final submissions to find that the contribution from Ms Campbell’s inheritance was actually $30,000, that being the remainder of the inheritance after its partial application to the purchase of the Property W property was made.
While there is no particular evidence about that issue, Dr Kovacs said:
…we say that there seems to have been around $30,000 cash that she was able to dispose of during the relationship, and it’s not suggested that she disposed of monies other than within this household.
That the amount of $30,000 was expended on the parties is at best an inference as there is no evidence that supports that proposition. There are many ways people spend money, and there is just as strong an inference that the extra $7,500 in this case could have been spent on Ms Campbell’s personal expenses or recreation.
Even if I were to consider that she had contributed the amount of $30,000 to the expenses of the family over the 20 or 22 months of the relationship, that would not, in my view, amount to a “substantial” contribution.
Dr Kovacs also urged me to consider the issue of proportionality in relation to that sum, saying in submissions:
The matter of quantum of contribution, I think, has to be taken into account in accordance with the proportion of what was there in the relationship…
In this case, at the commencement of the relationship, on his evidence, Mr Schmidt owned the Property K property worth approximately $900,000 with a mortgage liability of $308,500 and was employed by a business which he subsequently bought, and which was then operated by both parties.
During the parties’ cohabitation, Ms Campbell received from the estate of her late mother approximately $150,000 in cash, shares worth $17,000 and a one-third share in the Property W property worth $105,000.
In proportional terms, Ms Campbell applied only a small fraction of her inheritance to the parties’ joint lifestyle and I do not consider that proportion to have been “substantial” in the context of what each party brought to the relationship.
During the relationship, there were funds distributed to Ms Campbell from the (omitted) Family Trust. If any of the monies distributed to her from the Trust were applied to the mortgage held over the Property K property, those payments cannot be seen as an unusual or exceptional contribution by Ms Campbell.
Ms Campbell’s evidence was that she had also contributed to Mr Schmidt’s property by assisting with renovations, but again, on the evidence before the court, I cannot find that that assistance amounted to an unusual or exceptional contribution.
On the basis of the above evidence, I find that Ms Campbell made no financial contribution to the acquisition, conservation or improvement of the Property K property that was “substantial” within the meaning of s.90SB(c).
Ms Campbell’s contributions to Mr Schmidt’s business
I will now consider Ms Campbell’s contributions to Mr Schmidt’s company, (omitted) Pty Ltd (“the company”).
I note that it is really these contributions which, apart from the $22,500, form the basis of her claim of “substantial” contributions.
The company was set up in 2007 and Mr Schmidt is its sole director and shareholder.
The company owns the business trading as (omitted) (“(omitted)” or “the business”), and is the trustee for the (omitted) Family Trust (“the family trust”), whose beneficiaries during the relationship were Mr Schmidt, Ms Campbell, Mr Schmidt’s two teenaged daughters, and Ms Campbell’s young son.
The company bought (omitted) from Mr Schmidt’s former employer in late 2010 for $50,000. That sum was raised by a deposit of $5,000 paid by Mr Schmidt, and the balance was paid by way of monthly instalments of $2,000 paid from the company account. It appears that at the time of separation, the company still owed some $7,000 to Mr Schmidt’s former employer.
All income earned by (omitted) after December 2010 was paid into the company account and those funds were applied in paying the expenses of the business (including the monthly repayments of the balance of the purchase price) and the living expenses of the parties and their respective children.
It is Mr Schmidt’s evidence that before he entered the relationship with Ms Campbell the company paid him a wage, but that from the beginning of 2011 until the end of the relationship the expenses of the family were taken directly out of the company account. Those expenses were noted on the company’s accounts as “drawings” and were notionally distributed among the beneficiaries of the family trust for the purposes of the company and family trust tax returns.
It is not disputed between the parties that while the relationship was on foot, Ms Campbell performed work for the company in the form of office and business administration tasks, as well as some labour tasks on site. While the parties were cohabiting, she was not paid a weekly wage. When Ms Campbell moved to the Property W property in May 2012, she was paid the sum of $300 per week until she ceased all connection with the company and the business a few months later.
Ms Campbell began working for the company in early 2011, shortly after Mr Schmidt’s company purchased (omitted) from his employer.
In her trial affidavit, Ms Campbell deposes as follows:
6(k) I did major work setting up the computer and other office systems for the company, which I refer to at 25 below. I consider that my work for the company without pay, and by supplying and making all the payments of the loan for the Kluger motor vehicle from my rental income from my Property W property, I made an essential contribution to the company’s establishment and its on-going success.
In paragraph 25 of her trial affidavit she states as follows:
25. I admit paragraph 6 of the Respondent’s Affidavit, I am not, and never have been, a trained bookkeeper. I am a (occupation omitted) by trade, having completed an (studies omitted) course in 1999. Nonetheless, my computer skills and knowledge were utilised extensively by me when I established and maintained proper office systems for the Respondent’s company following the commencement of our relationship. Other than dated cash flow software, no such systems were in place before this time. This contribution on my part was crucial, as it comprised the foundation for the success which the company now enjoys, and from which the Respondent will continue to financially benefit into the future.
From the evidence it is apparent that the “setting up of the computer systems” consisted of the purchase and installation of commercially available software, and thereafter she performed the data entry necessary to utilise the software for the company’s purposes.
It is Ms Campbell’s further evidence that when the relationship between her and Mr Schmidt began, his work involved providing (omitted). Mr Schmidt would invoice his employer for that work. His employer concentrated on the (omitted) component of the business. At the time of trial, the business mainly comprised of (business omitted), a more lucrative but less physically demanding means of generating income.
Thus, on her evidence, Ms Campbell worked for the company between early 2011 and September 2012. She was only paid a wage between May and September 2012.
Affidavits[1] were sworn by Mr T, who worked for the company between April 2011 and September 2012, and Ms F who worked for Ms Campbell between January 2009 and mid-2010, and who worked for the company between 1 March 2011 and May 2012.
[1] The affidavit of Mr T sworn 1 September 2015 and filed 10 September 2015; and the affidavit of Ms F sworn 1 September 2015 and filed 10 September 2015.
Both of these witnesses described Ms Campbell as working diligently and professionally for the company during the relationship, evidence which supports that of Ms Campbell.
Mr Schmidt and his sister, who also filed and Affidavit and was cross-examined at trial, dispute the level and quality of the work performed by Ms Campbell, and his sister also gave evidence that she could perform the same tasks in much less time than Ms Campbell spent on them. Nevertheless, I accept that Ms Campbell used her best endeavours and professional skills in working for Mr Schmidt’s company during the last 18 months of the relationship.
It is Ms Campbell’s evidence that from the date of cohabitation through to September 2011 she received no money from Mr Schmidt either in the way of housekeeping monies or pay for the work she was performing for the company.
However, in the 2010-2011 financial year, the (omitted) Family Trust set up by Mr Schmidt distributed the sum of $18,000 to Ms Campbell and $12,000 to Mr Schmidt, as well as the maximum allowable $400 to each of the three children. Those monies were applied to the family’s living expenses.
In the 2011-2012 financial year, the family trust distributed $60,000 to Ms Campbell and $77,000 to Mr Schmidt. Those monies too were used for general living expenses for the family, including in payment of the mortgage.
It is her share of those monies which has resulted in Ms Campbell’s tax and Centrelink debts.
Ms Campbell concedes that both parties had the benefit of those funds as they paid for the parties’ living expenses. In my view, those funds constitute payment for both parties for the work they performed for the company. In other words, the parties both worked in the company’s business and received income on which they lived throughout the last 18 months of the period of cohabitation.
While Ms Campbell did not receive a wage from the company during the relationship, she did benefit from monies generated by the company which were distributed to her as a beneficiary of the family trust. In those circumstances I cannot find that she worked for the company without pay during the relationship.
The tasks Ms Campbell performed were the usual tasks of an office manager, and even if I accept her evidence at its highest, I do not consider the performance of those tasks to have been out of the ordinary, unusual or exceptional in the circumstances.
It is Ms Campbell’s evidence that she paid for a Toyota Kluger motor vehicle (“the Kluger”) which was registered in the name of the company so that the parties could deduct its running expenses from the company’s income.
Ms Campbell says that when she borrowed monies from the bank to pay her sisters out with respect to their shares in the Property W property, Mr Schmidt persuaded her to borrow an extra $42,000 for the purchase of the Kluger.
The additional borrowings used to purchase the Kluger, which formed part of the loan secured over the Property W property, were also repaid from the rental income from the Property W property. Ms Campbell argues that she has therefore made an indirect contribution to Mr Schmidt’s company in relation to those payments.
There is no evidence before the court as to what, if any, tax advantage the company derived from the Kluger, which makes it impossible to say whether any contribution made by Ms Campbell from its purchase was “substantial”.
At trial, Ms Campbell conceded that she had retained the Kluger after separation. She sold the vehicle for $31,500 after separation and she retained the proceeds. She has, subsequently, applied about half of the proceeds towards the purchase of a new vehicle.
In those circumstances there is no evidence before the court that the purchase of the Kluger contributed to Mr Schmidt’s business, either directly or indirectly.
Ms Campbell claims a further contribution made to Mr Schmidt’s business which says is “substantial”. She says that during the time that she was working for the company, the company’s income increased dramatically, and that that can only have been a result of her work.
In submissions, Ms Campbell's Counsel referred to that situation as “the standout contribution” made by Ms Campbell.
As already stated, in the financial year 2010-2011, the distributions from the family trust to its beneficiaries amounted to about $31,200, while in 2011-2012 those distributions had risen to $133,000, a significant increase.
However, for the first half of the 2010-2011 financial year, the business was owned by a third party. Mr Schmidt’s company did not purchase (business omitted) until December 2010. There is no evidence before the court about the income of (business omitted), or its financial position in general prior to its purchase. All that is known is that the business was purchased for $50,000.
In addition, there is no evidence before the court about the administrative arrangements for (business omitted) when it was owned by Mr Schmidt’s employer. We do not know, for instance, whether an office administrator was employed at all, or if so, what tasks that person might have undertaken.
In other words, there is no baseline measure from which to assess how the purchase of the business in itself, and/or the contributions of either party in particular, might have contributed to the family trust’s increased distributions in the 2011-2012 year.
In those circumstances I cannot find that the increase in the family trust distributions over the period of the relationship is due solely to the work of Ms Campbell.
Ms Campbell claims one further contribution to Mr Schmidt’s business. She says that the distribution to her of monies from the family trust (which she says either that she did not know about or that she did not understand in terms of their taxation implications), provided a taxation advantage to Mr Schmidt’s company, as the company did not have to pay tax on that income.
Ms Campbell was the company’s office manager. It is unlikely that she was unaware of the ways in which the company had arranged its affairs. Certainly after the 2010-2011 distribution to her she would have been so aware.
There is no evidence before the court about what the taxation liability of the company might have been without the claimed contribution, and therefore no amount that might be attributed to it. Absent that evidence, it is impossible to say what the contribution, if any, was, and whether it meets the criteria for a “substantial contribution”.
The use of a trust to distribute income to reduce taxation is a common vehicle and nothing out of the ordinary.
If I accept Ms Campbell’s evidence that she did not know of this trust distribution to her, and it was being done at the direction of Mr Schmidt or of the business accountant, it raises a number of questions. Why was Ms Campbell not told? Was the accountant not preparing tax returns for Ms Campbell as well as Mr Schmidt and the business?
The real beneficiary of the distribution of the income to Ms Campbell is Mr Schmidt. Absent Ms Campbell, the total income would have been distributed to Mr Schmidt, thereby increasing his tax liability. This is not however, a “substantial contribution” by Ms Campbell to the business.
For all the above reasons, I cannot find that Ms Campbell’s contributions overall to Mr Schmidt’s company or business overall were “substantial” within the meaning of the Act.
Ms Campbell’s contributions to the welfare of the family
There is no doubt that Ms Campbell contributed to the welfare of the family made up of the parties and the three children from their respective previous relationships.
Ms Campbell performed household duties such as cooking and cleaning (although the evidence shows that a professional cleaner was employed on a fortnightly basis). She spent time with the children and cared for their needs such as taking them to and from school and extra-curricular activities. There was clearly a warm relationship between her and Mr Schmidt’s daughters during the relationship.
However, that is not out of the ordinary in step-families. Those tasks constitute the ordinary, everyday life of any parent or step-parent. Mr Schmidt, too, made similar contributions to the welfare of the family.
Again, on the evidence before me I do not find that Ms Campbell’s contribution to the welfare of the family was out of the ordinary, unusual or exceptional.
Conclusion
Ms Campbell has found herself in an invidious position, where she owes considerable amounts to the Australian Taxation Office and Centrelink, arguably through no fault of her own.
Mr Schmidt’s tax debts, arising from the distribution to him of $77,000 in 2011-2012, have been paid by the company, presumably in the form of future distributions to him through the family trust, while hers remain.
No doubt she has also incurred significant costs in the course of these proceedings.
I have some sympathy for her plight, but on the basis of the evidence before the court, I cannot be satisfied that Ms Campbell made “substantial contributions” in the terms of the legislation to Mr Schmidt’s property, or to his company, or to the welfare of the family.
Having found that Ms Campbell’s contributions were not “substantial” within the meaning of the legislation, it is not necessary for me to consider whether denying her claim would result in a serious injustice to her.
It is not in dispute that the parties were in a relationship for less than two years and that there is no child of the relationship. Having found that Ms Campbell’s contributions were not “substantial” within the meaning of s.90SB(c), I find that the court does not have jurisdiction to hear the property dispute between the parties,
I will make a s.90RD Declaration to that effect with an Order that the Amended Initiating Application filed 16 September 2014, and all other extant Applications, be dismissed.
In those circumstances it is not necessary for me to make a decision about the remaining issues set out in paragraph 5 above.
I certify that the preceding one hundred and nineteen (119) paragraphs are a true copy of the reasons for judgment of Judge Small
Date: 19 February 2016
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