Cleary and Sarno
[2018] FCCA 96
•25 January 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CLEARY & SARNO | [2018] FCCA 96 |
| Catchwords: FAMILY LAW – Whether a de facto relationship existed between the parties – length of de facto relationship – de facto relationship more than two years – s.90SM(4) substantial contributions declaration – declaration of a de facto relationship. |
| Legislation: Family Law Act 1975, ss.4AA, 90RD, 90SB, 90SK, 90SM |
| Cases cited: Harriott & Arena [2016] FamCAFC 69 |
| Applicant: | MR CLEARY |
| Respondent: | MS SARNO |
| File Number: | MLC 1077 of 2016 |
| Judgment of: | Judge Hartnett |
| Hearing dates: | 8, 9, 10 & 11 May 2017 |
| Written submissions received: | 23 June 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 25 January 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Stoikovska SC |
| Solicitors for the Applicant: | Westminster Lawyers |
| Counsel for the Respondent: | Mr Triaca |
| Solicitors for the Respondent: | Chaim Geron Solicitors |
THE COURT DECLARES THAT:
Pursuant to ss.90RD and 4AA of the Family Law Act 1975 (Cth) (‘the Act’) a de facto relationship existed between the Applicant and the Respondent during the following periods:-
(a)late November 2010 for a period of approximately two months;
(b)28 February 2011 until 6 May 2011, a period of approximately two months and one week;
(c)from October 2011 to early September 2013 for a period of approximately 22 months;
(d)11 April 2014 to 25 March 2015 for a period of approximately eleven and a half months; and
(e)19 June 2015 for a period of approximately two and a half months.
Pursuant to s.90RD(2)(e) of the Act each of the parties was ordinarily resident in the State of Victoria during the de facto relationship.
Pursuant to s.90RD of the Act, the Applicant made substantial contributions of a kind mentioned in s.90SM(4)(a) and (b) of the Act.
THE COURT ORDERS THAT:
The parties attend for property mediation with an accredited Family Dispute Resolution Practitioner (“FDRP”) as nominated by Relationships Australia (Victoria).
Within fourteen days each legal representative or self-represented litigant is to contact Relationships Australia (Victoria) (contact detail omitted) to confirm arrangements for mediation.
Within fourteen days of being notified of the nominated FDRP, each party send to the FDRP documents outlining the dispute including the following:-
(a)a copy of the amended application filed on 22 February 2017 and Response filed on 14 April 2016;
(b)a full list of assets (including any superannuation) and liabilities including values;
(c)details of alleged financial contributions;
(d)relevant factors pursuant to section 90SF of the Family Law Act 1975 (Cth), i.e. future needs;
(e)the proposal for property settlement; and
(f)any current intervention or restraining orders.
Unless otherwise exempted from payment the Applicant must pay the Conciliation Conference fee in accordance with the Family Law (Fees) Regulation 2012 (Cth) prior to the property mediation.
Each party exchange a market appraisal or valuation of any asset in dispute no later than fourteen days before the mediation event conducted by the FDRP. (Indicate which of the parties should bear the cost of any valuation.)
Each party is to provide to the nominated FDRP any market appraisal or valuation of any asset in dispute no later than seven days before the mediation.
The matter be adjourned to 19 April 2018 at 10.00am for final hearing with an estimated hearing time of one day.
The parties file and serve any further affidavit material they intend to rely upon not less than seven days prior to the final hearing.
IT IS NOTED that publication of this judgment under the pseudonym Cleary & Sarno is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 1077 of 2016
| MR CLEARY |
Applicant
And
| MS SARNO |
Respondent
REASONS FOR JUDGMENT
The issue which the Court is determining in these reasons is the limited threshold issue of whether the parties were in a de facto relationship and if so, for what period or periods of time.
The Applicant proceeds on an amended initiating application filed 22 February 2017. The final orders sought are as follows:-
“1. That this Honourable Court make a declaration pursuant to Section 90RD of the Family Law Act 1975 (“the Act”) that a de facto relationship existed between the Applicant and the Respondent between November 2010 and September 2015.
2. That a declaration be made that the Applicant made a substantial contribution of the kind mentioned in paragraph 90SM(4)(a) to (c) inclusive of the Act.
3. That a declaration be made that each of the parties were ordinarily resident in Victoria during the de facto relationship.
4. That by way of consequential property Order pursuant to Section 90SM, the Respondent pay to the Applicant, within 30 days of Order (‘the date’) a sum equivalent to 40% of the increase in equity of the Respondent's assets from the date of cohabitation (‘the payment’).
5. That contemporaneously with the payment, the Applicant provide the Respondent with a Withdrawal of Caveat registered on the real properties at Property A and Property B (“the real properties”.)
6. That in default of payment by the due date the real properties be forthwith sold by public auction and the net proceeds applied as follows:
(a) Payment of agent's commission and advertising expenses and legal expenses of the sale;
(b) Payment of any money due and owing to discharge the mortgage registered in favour of the (bank omitted);
(c) The sum referred to in paragraph 3 hereof to the Applicant together with interest thereon at the rate of 7.50% adjusted monthly from the date to the date of payment to the Applicant; and
(d) The balance to the Respondent.
7. In the event that the Respondent fails to sign any documents to facilitate the sale of the real properties within 48 hours of being requested to do so, then pursuant to Section 106A a Registrar of this Court be appointed to execute the documents on behalf of the Respondent.
8. That in the event that a declaration is made pursuant to Section 90RD the Respondent pay the Applicant’s costs incurred in these proceedings on an indemnity basis.
9. Such further or other Orders as this Honourable Court deems fit.”
The Applicant argues that the Court should find that a de facto relationship existed between the parties from November 2010 to September 2015.
The Respondent proceeds on a Response filed 14 April 2016. She seeks final orders as follows:-
“1. That the Caveats lodged against the Respondent’s property situate at Property A and Property B be removed.
2. There be a declaration pursuant to s90RD of the Family Law Act 1975 that the parties were not in a de facto relationship.
3. That the application be dismissed.
4. That the Applicant pay the respondents costs.
5. Such further or other Order as the Court shall deem appropriate.”
The Respondent argues that the Court should find that no de facto relationship ever existed between the parties.
The Applicant relied upon the following affidavits of evidence:-
a)amended Initiating application filed on 22 February 2017;
b)affidavit in chief sworn 21 February 2017;
c)affidavit of Mr T sworn 21 February 2017;
d)affidavit of Ms M, sworn on 21 February 2017;
e)affidavit of Mr J sworn 21 February 2017
f)affidavit of Mr R sworn on 21 February 2017; and
g)affidavit of Mr D sworn 22 February 2017.
The Respondent relied upon the following affidavits of evidence:-
a)affidavit sworn 2 March 2017;
b)affidavit sworn 4 May 2017; and
c)affidavit of Mr H sworn 3 March 2017.
Each of the parties were cross-examined by the other. All of the witnesses of the parties were cross-examined by the other party.
Statements of fact in these reasons are findings of fact on the balance of probabilities.
Was there, at any time a de facto relationship existing between the Applicant and Respondent? How a court makes that determination is as set out in s.4AA of the Family Law Act 1975 (Cth) (‘the Act’). The Court may determine the parties are in a de facto relationship if, amongst other requirements, the Court determines that in all the circumstances of the parties’ relationship, they are a couple living together on a genuine domestic basis. Section 4AA of the Act sets out the list of circumstances that may be included. It is a question of fact and degree in each case.
Section 4AA of the Act is as follows:-
“FAMILY LAW ACT 1975 - SECT 4AA
De facto relationships
Meaning of de facto relationship
(1) A person is in a de facto relationshipwith another person if:
(a) the persons are not legally married to each other; and
(b) the persons are not related by family (see subsection (6)); 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.
Paragraph (c) has effect subject to subsection (5).
Working out if persons have a relationship as a couple
(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.
When 2 persons are related by family
(6) For the purposes of subsection (1), 2 persons are related by family if:
(a) one is the child (including an adopted child) of the other; or
(b) one is another descendant of the other (even if the relationship between them is traced through an adoptive parent); or
(c) they have a parent in common (who may be an adoptive parent of either or both of them).
For this purpose, disregard whether an adoption is declared void or has ceased to have effect.”
Section 90SB of the Act has as one requirement, though not one which must be satisfied, that a relationship be a de facto relationship for two years. However, the authorities make it clear that periods can be aggregated.[1] The parties must have a mutual intention to have such a relationship and one of them may even maintain simultaneous relationships.[2] This was often the case as discussed hereafter in these reasons, between the Respondent and Mr C.
[1] L & C [2005] FCWA 23; Jonah v White (2012 FLC 93-522, Full Court at 86,683
[2] Jonah and White at p. 86,682
Even were the Court to determine that the parties lived together for less than two years, it was submitted in these proceedings by the Applicant that he made substantial contributions of the kind set out in s.90SM(4)(a), (b) and (c) of the Act and a declaration as sought in his application ought be made. It was further submitted the evidence is such, that a failure to make such declarations would result in a serious injustice to the Applicant.
Neither the Applicant nor the Respondent were married persons between 2010 and 2015. They were not related by family. They never registered as a de facto couple. There are no children of the relationship. The Applicant bears the onus of proof and must prove on the balance of probabilities the existence of the de facto relationship.
As to the existence of a de facto relationship, in Regan & Walsh [2014] FCCA 2535 Judge Coker said:-
“In S v B (No 2) (2004) 32 FamLR 429, Dutney J, sitting as a member of the Court of Appeal of the Supreme Court of Queensland said at paragraph 49:
In a de facto situation, it is the party asserting the relationship that must prove cohabitation of the required quality.
His Honour went on in paragraph 50 of that judgment to note that:
The party asserting a de facto relationship must prove the “positive aspects” of the relationship rather than the party denying it being required to prove the negative.”
In Jonah & White [2012] FamCAFC 200, Murphy J referred to the decision in Moby & Schulter [2009] FamCA 1285 together with various decisions in State jurisdictions as to the meaning “living with... on a bona fide domestic basis”. His Honour said:
“60. In my opinion, the key to that definition is the manifestation of a relationship where “the parties have so merged their lives that they were, for all practical purposes, ‘living together’ as a couple on a genuine domestic basis”. It is the manifestation of “coupledom”, which involves the merger of two lives as just described, that is the core of a de facto relationship as defined and to which each of the statutory factors (and others that might apply to a particular relationship) are directed. …
66. The issue, as it seems to me, is the nature of the union rather than how it manifests itself in quantities of joint time. It is the nature of the union – the merger of two individual lives into life as a couple – that lies at the heart of the statutory considerations and the non-exhaustive nature of them and, in turn, a finding that there is a “de facto relationship”.
Sub-sections 90SM(4)(a), (b) and (c) of the Act are as follows:-
“(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(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 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; and …”
As to s.90SM(4) of the Act, the Full Court of the Family Court of Australia comprising of Thackray, Ryan and Murphy JJ in Harriott & Arena [2016] FamCAFC 69 examined “substantial contributions” as that description appears in s.90SM(4) of the Act, noting that the Full Court had not previously given the subject careful consideration. The Full Court said at [62] that their Honours “are not attracted to the ‘something more than usual or ordinary’ definition”, preferring a subjective assessment of contributions. The Full Court said:-
“64. Clearly the “substantial contributions” test is a subjective one. Any effort to elucidate its meaning by use of other words or phrases will simply replace one subjective test with another. It will remain a matter of impression whether the contributions are considered to be “substantial”. While recognising that the test is subjective, we are nevertheless inclined to agree with Thackray J, who said in Thorburn and Oswald[2007] FCWA 43 at [54] that a trial judge would need to interpret the word “substantial” in the context of the financial position of the parties. What might appear to be a “substantial contribution” for people of limited financial resources, might not be substantial in a case involving very wealthy parties.”
Background
The Applicant is now 70 years of age, shortly to turn 71 years. He resides alone in rental accommodation in (location omitted) and is self-employed as an (occupation omitted), conducting his practice in a corporate structure. His income in the last financial year was approximately $156,000 gross. Additionally, he had the use of a fully maintained company car.
The Respondent is now 50 years of age. She is not employed. She has the care of her two children [X], now aged nearly 12 years and [Y], now aged 11 years (‘the children’). She earns no income outside the home save for the receipt by her of rental income which is applied to repayment of a mortgage. She received rental income of $650 per week from a real property owned by her in the period between 2010 and approximately mid-2012, being part of the relevant period in these proceedings. She is in receipt of limited child support payments from the father of [X]. [Y]’s father, and the Respondent’s former partner, Mr C, pays to the Respondent an allowance for the children, being approximately $320 a week. Additionally he pays for [Y]’s school fees; the children’s clothing and other incidental expenses on an as needs basis. The Respondent is otherwise financially supported on a day to day basis by her current partner, Mr O, with whom she and the children have resided since approximately December 2015. They reside at Property B, a property owned by the Respondent, as is Property A, and in respect of which the Respondent has (secured over both properties) a mortgage of approximately $1.6 million. The mortgage repayments are met out of rental receipts from the adjoining property, Property A. Mr O manages, on behalf of the Respondent, all of the finances of the Respondent. Mr O also pays for some of the Respondent’s non day to day expenses such as the Respondent’s current ongoing legal expenses in relation to a pending trial on fraud charges brought against her.
Cohabitation
The parties commenced their relationship in about August 2010. The Applicant claimed a de facto relationship commenced between the parties in late November 2010, when he moved into the Respondent’s rental accommodation at Property C (‘Property C ’). The Respondent concedes the Applicant moved into the rental premises to live with her, but in early December 2010. The Court prefers the evidence of the Applicant as to the commencement of the cohabitation period. The parties’ exclusive sexual relationship commenced at this time, and save for a period of five to six weeks between 21 December 2013 and late January 2014, it continued to exist until early September 2015.
The Applicant remained residing in the Property C premises for approximately two months. He paid no monies toward the rental payments but gave to the Respondent an “allowance” of $400 to $500 per week to cover daily living costs which included his own. In this time, the parties and the Respondent’s children had a holiday to (country omitted) in January 2011, funded by the Applicant. The Applicant’s overall interaction with the Respondent’s children in this two month period however was somewhat limited, and not very successful. The Applicant’s evidence was that he didn’t ‘cope very well’ with having young children in the house. In January 2011, the Applicant left the rental property. He made no further financial provision for the Respondent or her children. Mr C moved into the rental property and provided the Respondent with rental monies which the Respondent transferred to the Applicant on 7 February 2011 for him to pay on her behalf, to the letting agents. The Applicant did so on 16 February 2011. Five weeks passed and on approximately 28 February 2011, Mr C having departed, the Applicant returned to the Respondent’s rental premises to again take up residence with her and the children. Two months and one week later, the parties physically separated and the Applicant again left the premises. During this second period of cohabitation, the Applicant interacted to some extent with the children. The parties and children spent four or five days in April 2011 together at the Applicant’s (omitted holiday property). He provided financial support to the Respondent by making payments of rent on 28 February 2011 of $5,380; on 4 April 2011 of $4,780; on 6 May 2011 of $4,780; and payments for food and other household expenses. He was of course living in the household and receiving a benefit from his contributions.
When the Applicant moved back into the Respondent’s rental accommodation in Property C in late February 2011, he remained there until 6 May 2011. The parties thus resided together at Property C for two separate periods which totalled approximately four months and one week. They did not reside together again until approximately 16 August 2013. The period between 6 May 2011 and mid-August 2013 was a period of approximately two years and three months.
Following the Applicant’s departure from Property C, the Respondent moved into a unit in (location omitted) where she and the children remained living until March 2012. During this period, the Applicant provided the Respondent with no ongoing financial support other than one rental payment on 3 August 2011 in the sum of $4,780. The Respondent could have resided with the Applicant during any part or the whole of this period, but the evidence is that the Respondent “didn’t want to”. The Applicant said the Respondent’s decision “was a source of disagreement between us”. Instead, the Respondent lived with her mother in Yarraville from April until November 2012. She needed her mother’s support and that of Mr C, as she had health difficulties as a consequence of her being a type one diabetic and thus requiring insulin. The Respondent then elected to move in with Mr C at his rental premises in (location omitted). She remained there for approximately eight months, supported by him. The Respondent was still significantly involved with Mr C, who resided at the Property C property in the period immediately following the Applicant’s departure in May 2011, and who met the rental and other outgoings with respect to the home save for the amount paid by the Applicant of $4,780 on 3 August 2011.
The Respondent received Centrelink social security benefits (as a single unemployed parent) from March 2012 until October 2013. The Applicant was unaware of these payments as the Respondent had not told him, and he expressed his surprise upon discovering this. However, this supported the argument of the Respondent that the parties were not a couple living together on a genuine domestic basis. The Applicant was not contributing financially to the everyday needs of the Respondent and the children, which included their accommodation costs when incurred. The Respondent’s receipt of Centrelink benefits was not necessarily a matter that would ordinarily be known to him given this aspect of the relationship. Counsel for the Respondent put to the Applicant that “…during this period of time in 2012 you say you’re not supporting her and you say that you – the relationship just wasn’t ready to take the next step. Is that how you – you would describe it?” The Applicant responded in the affirmative.
The Respondent did not want Mr C to know her relationship with the Applicant was continuing and thus the parties, to that extent, conducted the relationship in a ‘secretive’ manner. The children were not aware of the parties’ continuing relationship for most of this two year and three month period. The parties did however remain in their committed sexual relationship and constantly saw each other. They also remained in constant communication. The parties text messages to each other in this lengthy period when they did not reside together revealed both a close and loving relationship of a sexual nature with plans for a future life together; discussions of daily minutia; and a “stormy” relationship as described by the Applicant with haphazard plans and a tenuous future. In a text message dated 26 May 2012 the Applicant said to the Respondent “you only want a business hours relationship with me” and further “Even when I have wanted to take you out, you were not into going out or you can’t be bothered going out.” The Respondent lived with Mr C for a considerable period. During this time, the Respondent and the children holidayed with Mr C twice, once in (country omitted) and once (omitted). The Applicant conceded that at this time the outside world may have perceived that the Respondent, Mr C and their children (one a step son) were a family unit. The Respondent also holidayed with the Applicant. In January 2012, at the Respondent’s request, the Applicant followed the Respondent to (country omitted) to support her following a medical procedure the Respondent underwent in (country omitted).
In February 2012 the Respondent purchased a property at Property D (‘Property D’). The purchase price was $1.6 million. The Respondent obtained a mortgage in her name for $1,280,000 secured over the Property D property; borrowed a further $960,000 which was secured against real property otherwise owned by her; and applied $100,000 from the sale of a property previously owned by the Respondent and Mr C. She paid stamp duty of $88,000. All of the outgoings with respect to the property were in the name of the Respondent solely. The Respondent was however assisted both before the purchase, and after, by the Applicant in his capacity as a (occupation omitted) and as her partner. Whilst (omitted) fees were calculated in respect of the work undertaken, no bill was ever rendered to the Respondent on the basis that the Applicant considered his work as work done for “his partner” and their “mutual benefit”. No discussion as to costs that might be charged ever occurred. Otherwise the Applicant paid amounts on behalf of the Respondent totalling approximately $31,000. In his affidavit evidence affirmed 21 February 2017, the Applicant sets out the work performed by him, which is accepted by the Court, as follows:-
“In relation to the Property D property, I say that I undertook the following work on behalf of the Respondent. Many of these tasks were undertaken in addition to the time spent and recorded in the time sheets annexed as “LC10”:
(a) Prior to her purchasing the property in February 2012, I made enquiries with the Council regarding its heritage overlay. I was responsible for drawing up all (omitted) plans, obtaining Council approval and dealing with the trade’s people. I also assisted the Respondent in obtaining finance to settle the property by making enquiries with lending institutions and finance brokers in relation to construction loans. I made enquiries with:
(i) Mr N of (omitted financial company);
(ii) Mr F of (omitted);
(iii) Mr B of (omitted financial company);
(iv) Mr A of (omitted financial company).
(b) Other work I undertook involved me obtaining recommendations for a building surveyor, obtaining quotes from (omitted), engaged and corresponded with (omitted), liaised with Mr K about entering into a fixed price contract for demolition works and the renovations and extensions, communicated regularly with Mr K regarding various matters concerning the project including insurance, paving and tiling samples, Miele appliances, skylights, picket fence, joinery, updated drawings showing reduced roof height, construction details of the BBQ areas, specifications for the heaters, timber floors and shower screens etc, my employee Mr V and I prepared revised drawings which were sent to suppliers in relation to doors and windows; I obtained roofing quotations from (omitted) and I liaised with the Building Commission and various issues.”
The Property D property was purchased with the parties intending that they would renovate that property and reside in it with the Respondent’s children. Many other properties had been considered by the parties as potential purchases as they made plans for their lives together. In respect of some of those, from October 2011, they had made written offers to purchase property. The Applicant’s evidence, that the parties sought to live together prior to August 2013, when they in fact next resumed cohabitation, is supported by such offers; the parties constant communication; ongoing sexual relationship; and the purchase of Property D.
The fixed price contract for the renovations and extensions of Property D as entered into by the Respondent in mid-2012 was in the sum of $469,595 inclusive of GST. The Respondent was involved in the day to day overseeing of the project with the Applicant the supervising (occupation omitted). The Respondent freely used the (omitted) offices of the Applicant and was known to the employees in that office as the Applicant’s partner. She was also considered by the children (with whom she had no relationship), friends and work colleagues of the Applicant as his partner, though none of them knew to any real extent what that precisely involved. Only Mr J had any real knowledge of the parties relationship, as he observed its domestic and committed, albeit “off-on” nature, over some years. The Respondent, during the Property D renovation, determined to complete same as an owner builder. This was because the Applicant’s selection of Mr K as a builder was not a success. The parties terminated his services in October 2012, later discovering that he had rendered false invoices to the Respondent for materials acquired and/or work done. The Respondent’s subsequent difficulties with tradesman resulted in multiple replacements, cost increases and delay in the renovation project. Disputation in respect of the payment of accounts rendered for works done followed. The Applicant dealt extensively with these issues on behalf of the Respondent. The renovations continued until September 2013. The parties were involved in every aspect of the other’s lives save they did not live together.
On 16 August 2013 the parties again resumed residing with each other, upon the Respondent’s request, for another short period of approximately one month. This was in (location omitted), in rental accommodation of the Applicant. The rental was a one bedroom apartment. The children and the Respondent slept on the fold out couch. This was a temporary situation whilst the parties awaited completion of Property D. The parties and the children moved into Property D together, the parties going out to celebrate with friends on the night they moved in. The Applicant then resided at the Property D property for three weeks on his evidence. The Applicant departed Property D due to an argument between the parties regarding Mr C, and specifically that he “kept getting involved in the sort of, final, building works”.
By October 2013 the parties’ relationship was fraught and the Applicant thought it might end. He sought to recover monies he claimed he had ‘loaned’ to the Respondent which totalled $31,947. The Respondent confirmed in writing that such sum was owed by her to the Applicant in a document dated 23 October 2013. Much of that sum related to expenditure made by the Applicant on the Respondent’s behalf in respect to the renovation costs of the Respondent’s property in Property D. This sum was never repaid to the Applicant by the Respondent nor thereafter sought, and the parties in 2014 were again committed to building and living a life together.
In November 2013 the Respondent sold Property D for $2,600,000. The net proceeds of the sale were applied by her to pay out the registered encumbrances together with the costs of sale; and to repay monies borrowed by the Respondent from her mother. The sale of the property occurred because the Respondent had defaulted in the repayment of her (bank omitted) borrowings. The Applicant made no offer of financial assistance by either gift or loan or to secure any ownership of the property jointly with the Respondent. The Respondent needed to approach her mother for assistance to reduce her significant exposure to financial loss.
The Respondent’s evidence was that as a result of the Applicant’s actions, she lost about $70,000 on the Property D property and that the project cost $280,000 more than originally anticipated. The Respondent loaned $200,000 from her mother to complete the renovation. The Applicant claimed the cost of the renovation was approximately $80,000 more than originally anticipated, and he believed the Respondent had made a small profit. The parties blamed each other for the failings of the Property D property development, and it remained an issue between them to the end of the relationship, more so for the Respondent who had borne considerable financial risk and, as claimed by her, loss.
Then followed a further period where the parties did not reside together, being approximately a six month period. Again, the Respondent returned to reside with Mr C, this time in his rental accommodation in (omitted), their platonic relationship continuing. The Applicant claimed during this time the parties continued to be in a relationship, albeit it being a “stormy” one. The Applicant’s evidence in relation to this time is as follows:-
“HER HONOUR: November ’13, Property D settled. Yes. Thank you.
MR TRIACA: What she did was move back in with Mr C?‑‑‑Correct.
And it’s the same situation as before, where he is supporting her financially and you’re not supporting her financially. You agree with that?‑‑‑Yes.
And that arrangement continues on until April 2014?‑‑‑Yes.
Okay. And that’s when you move in to Property E?‑‑‑Correct.
Okay. So you got – what your claim is in this case is that you were in this de facto relationship for five years, but you would agree with this, that the first time you lived together for any extended period was in April ’14?‑‑‑Well, an extended period being longer than two or three months, yes.
HER HONOUR: Well, it never got to three months, on her evidence?‑‑‑Okay.
In fact, there’s dispute about whether it got to two months or not, but certainly never got to three months. And there’s no financial support in the periods where you’re not living together?‑‑‑Correct.”
The Applicant conceded the parties were not in a relationship of any sort between 21 December 2013 and the end of January 2014. The Applicant went on “coffee dates” with women in this period. The Applicant identifies this to be the only break in the relationship.
In April 2014 the parties signed a residential tenancy agreement for a term of 12 months on a property situate at Property E (‘Property E’). The Applicant’s evidence was that it was the Respondent’s idea to live together at Property E. The rental was $4,780 per calendar month and the bond payment was $5,500. The parties referred to themselves as ‘Mr and Mrs Cleary’. Mr C resided at the property for a “few days” initially with the Respondent before she asked him to leave. Mr C paid the bond and the first month’s rent for Property E (totalling $10,000) to (omitted). The Applicant repaid this sum in three payments to the Respondent.
From 11 April 2014 until 25 March 2015 a period of almost a year, the parties resided together, before an approximately two and a half month interlude where they did not reside together. The Respondent as was her habit, again took up residence with Mr C in his then rental premises in (omitted). Thereafter from 19 June 2015 for two and a half months until 9 September 2015, the parties resided together, first at Property E and then at (omitted). The parties then finally separated. In these properties, the Applicant paid approximately $68,000 to $70,000 in rental payments and approximately $29,000 in monies paid to the Respondent by way of an allowance and payment of all utilities and other outgoings with respect to the rental properties. In essence, he supported the household during this period.
Property F
At the commencement of the parties cohabitation in November 2010, the Applicant had a one-third share in an apartment at (omitted) with a value of approximately $300,000; a minimal share portfolio of approximately $10,000; an interest in his (business omitted) of little or no value; a car and furniture.
At the commencement of the parties cohabitation in November 2010, the Respondent had an interest as a joint proprietor in real property situate at Property G. That property was held jointly with Mr C. It was encumbered by way of registered mortgage in favour of the (bank omitted) in the sum of $2,542,307. Mr C had further encumbered the property, and the property was required to be sold by mortgagee auction in 2011. The Respondent received $207,572.30 from the sale of the property. She applied some of these monies to repayment of debts owed to her family members and $100,000 of these funds toward the deposit on the purchase by her of Property D.
The Applicant claimed a contribution made by him to the Respondent receiving the funds that she did, rather than the (bank omitted) and other creditors of Mr C. Whilst he did send some emails and had some conversations, they were not sufficient to claim an interest in what was the Respondent’s equity in the property which existed independent of him, and which Mr C confirmed with the (bank omitted), when they made enquiries of him.
The Respondent, also at the commencement of the parties cohabitation in November 2010, had been a tenant in common in equal shares with her father of real property situate at Property A (‘Property A ’). The property was originally purchased by the Respondent and her father for $650,000 in approximately 2001. The Respondent’s father died in October 2009 on the Respondent’s evidence. The Respondent received her father’s one half share of the property from his estate in 2012. The Respondent then owned solely the Property A property subject to an encumbrance by way of mortgage loan of approximately $180,000. The Respondent had previously engaged a draftsman and made an application to the local council for the property to be developed into a dual occupancy. The Respondent started this process in 2007. In 2009 the Respondent was involved in VCAT proceedings in relation to the property and was unsuccessful. The Respondent then had the plans revised by (omitted) and resubmitted them to the council. The Respondent had paid approximately $38,000 to (omitted) to that time. The Applicant’s skills and experience as an (occupation omitted) enabled him to assist the Respondent to obtain the subdivision and planning approval she sought at VCAT in early 2012. He revised concept plans, met with town planners, the local council and a barrister. The Applicant prepared submissions for VCAT and appeared for the Respondent at the VCAT hearing. The necessary sub-division permits were obtained. During this period the parties were not living together but their relationship was continuing. All of the work performed by the Applicant was done on the basis of the parties being in a committed relationship of a genuine domestic type, where no professional fees were charged.
The Applicant asserted the value of the Property A property immediately increased by 33% when subdivided and provided as proof an application made by the Respondent to (bank omitted) in February 2012 listing the property as having a value of $1,300,000. That was however a self-serving estimate of the Respondent to achieve the end of obtaining finance. No proper valuation evidence was before the Court.
The Respondent was unable, due to her lack of income, save for Centrelink payments of approximately $8,000 per annum, to obtain a loan to develop the Property A property in her name. The Applicant had advised the Respondent to demolish the Property A property in mid-2012 which resulted in a loss of income from rental payments to the Respondent for a significant time. The parties determined, on the advice of the Applicant’s accountant, that the monies previously advanced by the Applicant to the Respondent in the period from March 2012 to November 2014 in the sum of $80,000 approximately, which included the $31,947 loan previously referred to in paragraph 31 above, and otherwise was a figure provided by the Applicant, could be characterised as a trust distribution from the Applicant to the Respondent. Whilst distributing his income in this way had tax advantages for the Applicant, the Applicant was concerned to have the Respondent sign a document acknowledging that she had already received the total sum distributed so as to prevent her making any claim against him in the future. The Respondent acquiesced to that demand. Some additional $30,000 of the distribution was said to be (omitted) fees foregone by the Applicant. This arrangement depended on the Respondent being the de facto wife of the Applicant. The parties confirmed to the Applicant’s accountant that they had been in a de facto relationship for the requisite period and thus it was resolved a trust distribution from the ‘(omitted) Trust’ in the sum of $110,000 would be made in favour of the Respondent for the financial year ended 30 June 2014. The Respondent paid tax on the trust distribution in the sum of $31,000. This distribution was then used by the Respondent in support of her application for a loan with the (omitted) Bank. This was coupled with a statement from the Applicant to the Respondent’s finance broker confirming his intention to continue making trust distributions of similar or higher income to the Respondent as his de facto wife. The Respondent was then able to borrow the necessary monies being $1,400,000 to redevelop the Property A property. Being the sole borrower was the Respondent’s wish. The parties had initially made a joint application for finance, followed by an application by the Respondent with the Applicant as guarantor for the loan. The Respondent however determined to solely borrow the funds, and the Applicant was happy to proceed in that manner. He never was a co-borrower of funds with the Respondent.
In early 2015, the parties began the construction of two townhouses at Property A. Their mutual intent was to reside together in a de facto relationship in one townhouse. With the construction almost completed, the parties separated in September 2015. Following separation, the Respondent moved into one of the townhouses. The remaining townhouse was tenanted out by her.
Other matters
During those periods when the parties did not cohabitate, the Applicant’s financial contributions to the Respondent were limited. He did however advance monies to the Respondent from time to time by way of interest free loan, and the Respondent repaid such sums. Those sums totalled $58,434 approximately. The Respondent also repaid the Applicant $8,000 for the purchase of cabinets. The Applicant paid, on behalf of the Respondent, a sum of $6,448.30 for legal costs incurred by the Respondent in respect of litigation in which the Respondent was involved against the builder, Mr K. Further, the Applicant spent many hours collating documents and providing evidence to assist the Respondent in respect of that building dispute. Importantly, the Applicant calculated that his (business omitted) provided over $200,000 of (omitted) work to the Applicant without charge. There was never a bill rendered or client/(occupation omitted) agreement entered into because the Applicant and Respondent proceeded on the basis that they were in a partnership which was mutually benefitting the other.
Throughout the period of the relationship the Applicant frequently gave the Respondent monies additional to weekly sums paid to her during those times the parties resided together. Medical and educational costs, including religious, for the children, were met by the Applicant.
Whilst the parties were in a relationship, the Applicant paid for five overseas trips, being three to (country omitted) and two to (country omitted) at a cost of approximately $43,000. The Respondent’s children accompanied the parties on three of these trips, being to (country omitted) in 2011, (country omitted) in 2014 and (country omitted) in 2015. The parties’ trip to (country omitted) in 2015 was for the purposes of attending the wedding of a business associate of the Applicant.
The Applicant took [X] to (sport omitted) for a limited period. The Applicant also paid for the costs associated with the Respondent and the children accompanying him on (omitted) trips to (omitted) between 2010 and 2015. The ski trips were as follows:-
a)one in (omitted) 2010;
b)one in (omitted) 2011;
c)two in 2013, one for three days in (omitted), and the other for one week in the (omitted) school holidays. The children had (omitted) during the (omitted) trip;
d)two weeks in 2014 in the (omitted) school holidays with the children having (omitted) during this time; and
e)two weeks in 2015 in the (omitted) school holidays with the children having (omitted) during this time.
The total cost to the Applicant of those trips was approximately $8,000.
The Applicant also paid legal fees incurred by the Respondent of at least $24,000 and up to $33,000 in relation to fraud and obtaining a financial gain by deception charges brought against the Respondent.
The Applicant was also involved with the care of the Respondent’s children. He was a contact for all school events during the relationship. He was the point of contact to receive newsletters and notices in relation to (sport omitted) and the (sport omitted) in which [X] was involved. The Applicant also, whilst not living with the Respondent, continued to occasionally transport the children; and occasionally care for the children.
The parties rarely included each other in extended family events. The Applicant’s adult daughters did not like the Respondent. The Respondent did not socialise with her friends in the company of the Applicant when the parties were not living together, and otherwise did so in a very limited way. Whilst the Applicant would holiday and socialise without the Respondent from time to time, he generally sought that she be present in the company of his friends and colleagues and acknowledged her as his partner.
At the insistence of the Respondent, in 2014 the parties participated in relationship counselling sessions with Ms R, a qualified psychologist and psychotherapist.
The relationship between the parties, commencing in late November 2010 and ending in early September 2015 was an exclusive sexual relationship; a relationship that involved constant communication, often daily; frequent family holidays; a relationship that was mostly committed in fact and as represented to family, friends and others in the community, save for at times Mr C; and a relationship which involved the parties both living together continuously and permanently and at other times living in separate accommodation whilst spending considerable time with each other. There was an intermingling of their finances, in particular in the development of the real properties situate at Property A and Property D. There were however periods where it could not be said, that the parties relationship was as a couple living together on a genuine domestic basis as a consequence of their living separately in circumstances where there was not the mutual commitment necessary to establish a de facto relationship. The Court shall make declarations on the evidence and otherwise adjourn the proceedings for trial.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Date: 25 January 2018
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