Cleese & Colburn
[2022] FedCFamC1F 282
Federal Circuit and Family Court of Australia
(DIVISION 1)
Cleese & Colburn [2022] FedCFamC1F 282
File number(s): SYC 2480 of 2016 Judgment of: ALTOBELLI J Date of judgment: 2 May 2022 Catchwords: FAMILY LAW – DE FACTO RELATIONSHIP – Where the Applicant seeks a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) that she and the Respondent were in a de facto relationship during various specified periods from 1990 to 2014 – Where the Respondent concedes the parties were in a de facto relationship from 1995 to 2000 only – Where the Court finds the parties were in a de facto relationship during various specified periods from 1991 to 2014.
FAMILY LAW – JURISDICTION – De facto relationship – Whether the Federal Circuit and Family Court of Australia has the jurisdiction to vary or set aside the Agreement as to Judgment made by the Supreme Court of New South Wales – Single justiciable controversy – Finding that a de facto relationship existed following 1 March 2009 empowers the Federal Circuit and Family Court to determine whether the Agreement as to Judgment should be varied or set aside – Agreement as to Judgment set aside.
Legislation: Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth) ss 4AA, 79, 79A, 90RD
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) s 86
Commonwealth Powers (De Facto Relationships) Act 2003 (NSW)
Property (Relationships) Act 1984 (NSW) ss 4, 5, 15, 16, 17, 19, 20, 41
Cases cited: Arnautovic & Sutherland t/as Jirsch Sutherland & Co v Cvitanovic [2011] FCA 809
Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344
Cirillo & Cirillo (No 4) [2022] FedCFamC1F 208
Colburn & Cleese (2020) FLC 93-995; [2020] FamCAFC 278
Dupas v R (2012) 40 VR 182; [2012] VSCA 328
Gebert and Gebert (1990) FLC 92-137; [1990] FamCA 105
Jaeger v Bowden (No. 2) [2016] NSWSC 897
Kafataris v Deputy Commissioner of Taxation (2008) 172 FCR 242; [2008] FCA 1454
Kokl & Kokl (1981) FLC 91-078
McCabe and McCabe (1995) FLC 92-634; [1995] FamCA 147
Moratic Pty Ltd v Gordon [2007] NSWSC 5
Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd’s Rep. 403
PNJ v R (2009) 252 ALR 612; [2009] HCA 6
Radecki & Fairbairn (2020) FLC 94-001; [2020] FamCAFC 307
Somerville and Somerville (2000) FLC 93-042; [1999] FamCA 958
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Taylor and Taylor (1977) FLC 90-226; [1977] FamCA 31
Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49
Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28
Watson v Foxman (1995) 49 NSWLR 315
Division: Division 1 First Instance Number of paragraphs: 165 Date of last submission/s: 8 October 2021 Date of hearing: 2–13 August 2021 Place: Sydney (via videoconference) Counsel for the Applicant: Mr Geddes QC with Mr Stewart Solicitor for the Applicant: Dorter Family Lawyers and Mediators Counsel for the Respondent: Mr Schonell SC with Mr O’Brien Solicitor for the Respondent: Bryant McKinnon Lawyers ORDERS
SYC 2480 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CLEESE
Applicant
AND: MR COLBURN
Respondent
order made by:
ALTOBELLI J
DATE OF ORDER:
2 MAY 2022
THE COURT ORDERS THAT:
1.Pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”), it is declared that the Applicant and the Respondent were in a de facto relationship during the following periods:
(a)1991 to 1994;
(b)1995 to end of 2000;
(c)September 2006 to July 2010;
(d)January 2011 to October 2012; and
(e)April 2013 until May 2014.
2.The Agreement as to Judgment entered by the Supreme Court of New South Wales (Case Number … of 2004) in November 2006 is set aside.
3.The matter is listed for final hearing to determine the Applicant’s application pursuant to s 90SM of the Act on a date to be fixed no earlier than 6 June 2022.
4.Any application for costs be filed within 28 days of the date of these orders.
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 the pseudonym Cleese & Colburn has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
This case is about the relationship between Ms Cleese (“the Applicant”) and Mr Colburn (“the Respondent”) and whether they were in a de facto relationship during certain periods of their life. These reasons for judgment explain why the Court has found that they were in a de facto relationship during the periods contended for on behalf of the Applicant, and why the Court has made consequential orders flowing from that finding.
BACKGROUND
The Applicant is 76 years old. The Respondent is 75 years old. They both live on the far north coast of New South Wales. It is possible that they first met as early as 1974 or 1975, but they commenced dating in 1989 at a time when the Respondent was an educator. The date of the commencement of their de facto relationship is a matter in respect of which the Court has made findings, doing the best it can on the available evidence. Before their relationship they had both been married before and in the Applicant’s case, she was in a previous de facto relationship as well. They both have adult children from previous marriages or relationships, and they each now have grandchildren. The relationship between the Applicant and the Respondent became intimate at some time between 1990 and 1992. As will be seen below, there is a period when both parties agreed that they were in a de facto relationship. Their relationship, howsoever described, waxed and waned over many years. Indeed, that is one of the great complicating factors in this case. They each purchased and sold real estate, often after developing and/or improving the property. They owned property together. They borrowed funds together and lent each other money. They cohabited together in properties at various different times including during times when the Applicant does not contend that they were in a de facto relationship. On 22 November 2006 both parties signed and caused to be filed in the Supreme Court of New South Wales a document entitled “Agreement as to Judgment” (“agreement as to judgment”). In 2006 orders were made by the Supreme Court of New South Wales to reflect that document. One of the issues for the Court is, if the existence of a de facto relationship is established as at 1 March 2009, whether to set aside the orders as contended for by the Applicant. This is a complex fact-rich case that was heard over 10 days and involved difficult questions of fact and law. The delay in delivering these reasons for judgment is regrettable, but reflects the complexity and difficulty of the case.
AGREED CHRONOLOGY
The parties submitted an agreed chronology, which has been marked as the Court’s exhibit C1. The Court found this to be a very helpful document.
THE ORDERS SOUGHT
The orders sought by the Applicant are contained in her Further Amended Initiating Application filed 29 November 2018. She seeks a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Family Law Act”) that she and the Respondent were in a de facto relationship during various specified periods, and that the agreement as to judgment be varied or set aside. The Applicant also sought an order for costs.
The Respondent in his Amended Response to Initiating Application filed 14 March 2017 sought that the Applicant’s application be dismissed with costs.
JURISDICTION
Consistent with the decision of Aldridge J in Cirillo & Cirillo (No 4) [2022] FedCFamC1F 208 I am satisfied that the Court has jurisdiction in this matter.
THE EVIDENCE
In support of her case, the Applicant relied on the following documents:
(a)Her Further Amended Initiating Application filed 29 November 2018;
(b)Her affidavit filed 21 September 2018;
(c)Her affidavit filed 19 November 2018;
(d)Her affidavit filed 2 July 2021;
(e)Her affidavit filed 27 July 2021;
(f)Affidavit of Ms E filed 21 September 2018;
(g)Affidavit of Mr F filed 21 September 2018;
(h)Affidavit of Ms G filed 21 September 2018;
(i)Affidavit of Ms H filed 12 October 2018;
(j)Affidavit of Ms J filed 12 October 2018;
(k)Affidavit of Dr K filed 12 October 2018;
(l)Affidavit of Ms L filed 24 October 2018;
(m)Affidavit of Ms M filed 11 December 2018;
(n)Affidavit of Ms N filed 21 March 2019;
(o)Affidavit of Ms P filed 27 July 2021;
(p)Her outline of submissions filed 9 July 2021;
(q)Her list of authorities filed 9 July 2021;
(r)Her closing submissions filed 20 August 2021;
(s)Her submissions in reply filed 28 September 2021; and
(t)Various documents tendered and marked as exhibits A1–A133.
In support of his case, the Respondent relied on the following documents:
(a)His Amended Response to Initiating Application filed 14 March 2017;
(b)His affidavit filed 4 March 2019;
(c)His affidavit filed 9 June 2021;
(d)Affidavit of Ms C filed 3 March 2019;
(e)Affidavit of Mr O filed 4 March 2019;
(f)Affidavit of Ms D filed 4 March 2019;
(g)Affidavit of Mr Q filed 4 March 2019;
(h)Affidavit of Mr R filed 4 March 2019;
(i)Affidavit of Mr S filed 4 March 2019;
(j)Affidavit of Mr T filed 4 March 2019;
(k)Affidavit of Mr U filed 5 March 2019;
(l)Affidavit of Mr V filed 29 March 2019;
(m)Affidavit of Mr W filed 2 August 2021;
(n)His outline of case document filed 14 July 2021;
(o)His list of authorities filed 14 July 2021;
(p)His closing submissions filed 27 August 2021;
(q)His further submissions in reply filed 8 October 2021; and
(r)Various documents tendered and marked as exhibits R1–R30.
Applicable Law
The recent Full Court decision in Radecki & Fairbairn (2020) FLC 94-001 contains a useful summary of the law which is adopted in this case.
26.A de facto relationship exists where a Court finds that the parties were “a couple living together on a genuine domestic basis” (s 4AA(1)(c) of the Act), which is to be decided by reference to the matters set out in s 4AA(2) of the Act, which are as follows:
(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.
27.In addition, the Court “is entitled to have regard to such matters… as may seem appropriate to the court in the circumstances of case” (s 4AA(4) of the Act).
28.In a passage which has been frequently quoted and applied when determining the existence of a de facto relationship (see, for example, Sinclair & Whittaker (2013) FLC 93-551 (“Sinclair & Whittaker”) at [55] and Cadman & Hallett (2014) FLC 93-603 (“Cadman”) at [48]), albeit in a different legislative context, Fitzgerald J said in Lynam v Director-General of Social Security (1984) FLC 91 577 at 79,663:
Financial arrangements cannot be taken in isolation and considered of particular importance in determining the nature of relationship. Their materiality, like each of the other elements of the relationship, stems from the impact which they have as part of an overall situation. Each element of a relationship draws its colour and its significance from the other elements, some of which may point in 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.
29.Although not expressly mentioned in s 4AA(2) of the Act, an intention to enter into a de facto relationship or to end one is powerful evidence to be taken into account under s 4AA(4) of the Act, in determining whether such a relationship exists or has ended. Whilst evidence of such intention is not required and, in many cases, is not present, where such an intention can be identified, it can be telling.
30.In Hibberson v George (1989) 12 Fam LR 725 at 740, Mahoney JA said in relation to the De Facto Relationships Act 1984 (NSW):
… The essence of the present relationship lies, not in law, but in a de facto situation. I do not mean by this that cohabitation is essential to its continuance: holidays and the like show this. But where one party determines not to “live together” with the other and in that sense keeps apart, the relationship ceases…
31.After referring to this passage in S v B (No 2) (2004) 32 Fam LR 429, Dutney J said:
48.… [A] de facto relationship ends when one party decides he or she no longer wishes to live in the required degree of mutuality with the other but to live apart. It does not seem to me that it is necessary to communicate this intention to the other party providing the party that is desirous of ending the relationship acts on his or her decision…
32.Thus, for a person intentionally to end a de facto relationship, that person must both make the decision to separate and clearly act on it. See the explanation of these propositions in Clarence & Crisp (2016) FLC 93-728 (“Clarence”) at [45]–[51].
33.For an example of a matter where an intention to separate played a significant role, see Cadman, an appeal from Cadman & Hallett [2013] FamCA 819.
34.Evidence of an intention to separate is of course not the only means by which it can be established that a de facto relationship has broken down. Some relationships simply peter out so that the concatenation of relevant factors that pointed to a de facto relationship no longer exist. Thus, where a de facto relationship has existed, an analysis of “the nature and character” of that relationship and what had changed to the extent that the relationship no longer existed is required (Herford & Berke (No 2) (2019) FLC 93-919 at [25]). The identification of the impact of the changes on the existence of the de facto relationship is key.
35. As the Full Court said in Clarence:
51.Ultimately, however, we consider the real test (since it conforms with the statute as a matter of logic) was that identified by Murphy JA earlier in H v P [[2011] WASCA 78]:
56.… a de facto relationship is inherently terminable at any time, and continues to exist only insofar as the indicia which give the relationship its … character continue to exist.
52.Looked at in this way, the task of determining whether a relationship has ended at or before a particular date is precisely the same task that must be performed when determining whether a de facto relationship exists in the first place – i.e. by reference to the indicia laid down in the legislation…
(Emphasis in original)
Credit Issues
The issue of the credit of the parties and their witnesses was a significant issue in the closing submissions by senior counsel for both parties. A number of significant points were made from which the Court is able to make the following observations that apply to this case:
(1)In a case like this where the Court is called upon to make findings of facts, it is trite that where versions of events differ between witness accounts, the Court must decide which is the more probable version, and this is affected by the credibility of the witness. The Dictionary to the Evidence Act 1995 (Cth) defines “credibility of a witness” as:
the credibility of any part or all of the evidence of the witness, and includes the witness’s ability to observe or remember facts and events about which the witness has given, is giving or is to give evidence.
In some contexts this has been described as reliability, rather than credibility (Dupas v R (2012) 40 VR 182 at [265]). It is axiomatic that concepts of credibility and reliability apply to all parties and their witnesses.
(2)All witnesses, but especially the parties, were giving evidence in respect of events that occurred from early 1990 to 2015. This case demonstrates the truism that human memory is notoriously unreliable. As referred to in paragraph 6 of the Respondent’s closing submissions, Katzmann J observed in Arnautovic & Sutherland t/as Jirsch Sutherland & Co v Cvitanovic [2011] FCA 809 at [73]:
73…Human memory is notoriously unreliable. As Spigelman CJ recently observed (“Truth and the Law”, The 2011 Sir Maurice Byers Lecture, 26 May 2011):
Witnesses can, without any dissimulation or propensity to lie, confidently assert the truth of conversations, observations and events which did not happen. The plasticity of memory impedes the truth finding process. This is not an uncommon phenomenon[.]
(3)A poor memory of past events does not mean that the evidence of a witness should not be accepted because that witness is dishonest. A poor memory does mean that the evidence given may be unreliable, and needs to be closely scrutinised and compared to more objective and reliable evidence pertaining to the same issue or events. There is a big difference between a witness who is a liar, and a witness who is a poor historian.
(4)Experience indicates that the representations by witnesses in cross-examination as to their own memory are rarely reliable, and very little turns on it.
(5)This Court respectfully adopts the comments of Lord Pearce in his dissenting speech in Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd’s Rep. 403 at 431 (cited in the Respondent’s closing submissions at paragraph 7):
“Credibility” involves wider problems than mere “demeanour”, which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.
Likewise, the Court adopts the comments of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 at 319 (cited in the Respondent’s closing submissions at paragraph 8):
Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
(6)Having spent most of the 10 days of this hearing observing the parties and their witnesses giving evidence, this Court can safely conclude that the present case is clearly a case where all of the witnesses who gave evidence, to varying degrees, are guilty of “unconscious bias or wishful thinking” in relation to their evidence. Moreover, the parties, and almost all of their witnesses, gave evidence in an emotional context. For example, where the children of the parties gave evidence, the emotional overlay was both apparent and understandable. The risk is that this emotional overlay made them partisan witnesses with an emotional, and possibly other stake in the proceedings. The evidence of the children, in particular, needs to be carefully assessed and weighed.
(7)The litigation between the parties, whether in the Supreme Court of New South Wales or this Court, has been ongoing since November 2004 when the Applicant commenced proceedings against the Respondent under the Property (Relationships) Act 1984 (NSW) (“State Act”). It is hardly surprising, therefore, that there are inconsistencies in the evidence given by the parties over 17 years, especially when the legal representation has changed in that time. The inconsistencies go to the reliability of the evidence.
(8)Mendacity, or untruthfulness, is like Aristotle’s proverb about “one swallow does not a spring make”. One piece of evidence does not mean that something is definitely or always the case. A witness may say something in cross-examination that is plainly absurd. That does not mean, of course, that the rest of the evidence of the witness cannot be accepted, especially when the context of an absurd answer in cross-examination is a highly charged emotional one.
(9)In cases like the present one there is an inherent difference in the evidence of the parties about their relationship, and the evidence of the witnesses about the parties’ relationship. The parties lived out their relationship. They gave evidence about their experience and recollection of day-to-day life. All of the witnesses in this case, other than the parties, gave evidence about the fragments of the lives of the Applicant and Respondent that they observed at sporadic times (of various length) and in differing contexts (for example, interactions that were social, familial, professional or work-related). The weight to be given to the evidence of the witnesses must be carefully assessed especially when it is contended that the evidence is corroborative of the evidence of one of the parties.
(10)Cross-examination on the evidence contained in an affidavit is not a memory test. It is hardly surprising that a witness would not recall, or would incorrectly recall, what they said in an affidavit they made several years ago. This is particularly so in a complex and highly emotional case like the present one. Where the evidence given is inconsistent, that is a matter to be taken into account in the overall assessment of the evidence.
(11)When the cross-examination of one witness in a party’s case reveals that the party (or indeed another witness) may have assisted that witness in preparing their affidavit, it neither means that the entirety of the evidence of that witness must be rejected, nor does it mean that the party in question assisted all or some of their other witnesses in the same fashion. All the evidence must be assessed having regard to context, and the other evidence available to the Court. For example, in this case it is clear that one witness, Dr K, spoke with the Applicant in relation to the chronology of events that are deposed to in her affidavit. Likewise, it is clear that two of the Respondent’s children, Ms D and Ms C, also spoke with each other about the chronology of their evidence.
(12)At paragraph 101 of the Respondent’s written submissions in reply filed 27 August 2021, senior and junior counsel for the Respondent made the entirely appropriate concessions that the Respondent was “by no means a flawless witness”. They conceded that his memory was imperfect, but submitted that it was better than the Applicant’s. They also acknowledged that the Respondent “was not the consummate witness…” The Court agrees.
(13)At paragraph 2.1 of the Applicant’s closing submissions filed 20 August 2021, senior and junior counsel for the Applicant made the entirely appropriate concessions that there is “warranted criticism of the [Applicant’s] truthfulness, in particular her desire to advocate her case rather than answer questions at times…”. The Court agrees to a certain extent. It does not necessarily follow that an argumentative witness is not telling the truth, either about the fact in issue, or generally. It is reductionist thinking to believe that fact-finding is either a binary or linear process.
(14)Because of the issues identified above, it is quite likely that the most significant evidence in this case in terms of its reliability will be firstly, documents (including but not limited to business records, letters, photographs and videos) and, secondly, corroborative oral evidence.
Competing contentions about existence of de facto relationship
The Applicant contends, and the Respondent concedes, that they were in a de facto relationship between 1995 and the end of 2000.
The Applicant’s contentions, of course go much further. One difficulty in this case is that the Applicant’s own evidence, let alone the objective evidence, is sometimes inconsistent with her contentions about the existence of a de facto relationship at specific times.
The Applicant sought pursuant to s 90RD of the Family Law Act, a declaration that a de facto relationship existed between the Applicant and Respondent for the following periods:
i.Early 1990 until November 2002; and
ii.September 2006 until July 2010; and
iii.January 2011 until October 2012; and
iv.April 2013 until May 2014.[1]
[1] Paragraph 3.1 of the Applicant’s outline of submissions filed 9 July 2021 extracts the orders sought by the Applicant in her Further Amended Initiating Application filed 29 November 2018, but erroneously contains an additional time period, being “Any other dates this Honourable Court deems a de facto relationship existed.”
The Court is satisfied that the Respondent was not prejudiced by having to deal with what may have felt like the Applicant’s “movable feast” about when, exactly, they were allegedly in a de facto relationship. Indeed, if anything the Respondent’s case was potentially assisted by the inconsistencies revealed, and often conceded, in the Applicant’s evidence on this issue. Counsel for the Applicant quite properly made the observation that in the family law jurisdiction “human relationships are often messy”. Indeed they are.
There can be no doubt, with the greatest of respect to the parties, that their relationship was a messy one. It had many unusual aspects. For example, the Applicant and Respondent’s financial and real estate affairs were commingled at almost every stage of their relationship (howsoever characterised), even when, for example, the Applicant was not contending they were in a de facto relationship. In this regard, it should be noted that the Court does not accept the Respondent’s evidence that he did not commingle his finances with the Applicant. Indeed, the documentary evidence to the contrary is almost overwhelming. One suspects that what he was actually contending was that such commingling of finances did not amount to financial interdependence. The Respondent does not deny that he had a close and often intimate relationship with the Applicant, both before and after he contends that they were in a de facto relationship. It is clear from the evidence of the Applicant that even at times when she contends that she was in a de facto relationship with the Respondent, she nonetheless engaged lawyers and made threats of litigation against the Respondent in relation to their financial dealings. Indeed, as the closing submissions of all counsel seemed to acknowledge, this is a case where many, if not all of the indicia set out in s 4AA(2) of the Family Law Act were present at all relevant times, including during periods when no de facto relationship was alleged.
The starting point, however, must be to determine whether the parties were in a de facto relationship that ended after 1 March 2009. If the answer to that question is no, then this Court lacks jurisdiction to determine the application. If the answer to that question is yes, then having heard the evidence the Court must decide whether to make the declaration sought by the Applicant, or any other declaration based on the evidence (Colburn & Cleese (2020) FLC 93-995 at [25]–[26]).
Were the parties in a de facto relationship that ended after 1 March 2009?
Having regard to the difficulties with the oral evidence identified above, the initial focus will be to examine the more objective and independent evidence that goes to this issue, and this evidence mostly relates to the parties’ financial relationship. The Court accepts that in making findings about aspects of the parties’ relationship that existed after 1 March 2009, it is necessary to consider the same aspects of the parties’ relationship that existed before that date. It is the composite picture of this relationship that ultimately informs the final judgment.
Findings
The following findings are available from the evidence about their financial relationship.
NN Street, Y City
The Applicant owned in her own right a property that later became known as NN Street, Y City which she had acquired in 1995. In June 2009 the Applicant borrowed money from PP Limited on the security of a mortgage over that property.
The Respondent concedes that, at the very least, his involvement in the loan was to provide his income so that the Applicant could obtain the loan. This concession minimises the extent of his involvement. The loan application was made by the Applicant as borrower, and the Respondent as co-borrower. He corresponded with the lender and provided detailed information about his assets and income (exhibit A16). There was, in fact, joint correspondence by the Applicant and Respondent to the lender in relation to the loan. The bank statements indicate that the Respondent made payments in respect of a distinct part of the loan, but there is no suggestion anywhere that his liability was so limited. In cross-examination, the Respondent contended that he had been “coerced” by the Applicant to sign the loan documents. This contention was not specifically put to the Applicant in cross-examination. Both parties blithely suggested at times in cross-examination that the other had exercised some form of coercion on them without any meaningful reference to how, precisely, their will was overborne. The Court does not accept the Respondent’s contention.
What the evidence does establish, however, is that the Respondent contended that he believed that if he did not join in with the Applicant in refinancing the ANZ facilities, the Applicant would reopen the 2006 family law proceedings, presumably their agreement as to judgment in the Supreme Court. That is not coercion, but it may well be how the Respondent interpreted it.
Nonetheless, in the Loan Application Information form dated 22 September 2009 (exhibit A11), the Respondent is described as “Co-borrower” and “Friend” in the columns entitled “Borrower Type” and “Relationship to First Borrower” respectively. Moreover, in the same form, in the section dealing with “Borrower Details”, the marital status of the Applicant is described as: “Single”. The Respondent is likewise described as “Single”. The Applicant agreed in cross-examination that she prepared the loan application. Based on this evidence, the parties were clearly commingling their finances, but this is consistent with other financial transactions both before and after 2009. The clear representation that the Applicant made to the lender is that she and the Respondent were both single, and that the Respondent was a friend of the Applicant.
Aspects of this particular financial transaction, viewed in isolation, does not support the Applicant’s case that they were in a de facto relationship as at 1 March 2009. When the composite picture is examined, however, it may look quite different. The representations made to the lender as to their relationship status becomes less significant, compared (for example) to the reality of the personal liability undertaken by the Respondent for no, or very little, obvious benefit to him. Even if he only serviced a part of the loan, there is no evidence suggesting that his total liability was so limited. There was a clear commercial disadvantage to the Respondent in entering into this loan. A reasonable inference is that it is the Respondent’s de facto relationship with the Applicant that explains why he would enter into such a disadvantageous and risky transaction.
1QQ Street, Y City
In May 2000, the Applicant and Respondent purchased 1QQ Street unencumbered, as tenants-in-common. The purchase as tenants-in-common is not a definitive indicator of absence of mutual commitment to a shared life together, as was submitted on the Respondent’s behalf. The Respondent concedes that a de facto relationship existed at this time.
The evidence indicates that with the assistance of finance obtained from the Commonwealth Bank of Australia and from members of the Applicant’s family, they were able to substantially renovate the property. The Applicant and the Respondent lived there. The Respondent concedes that he was in a de facto relationship with the Applicant until the end of 2000.
The Applicant, of course, contends that the relationship continued until November 2002. Insofar as the Respondent’s case is that after late 2000 he moved downstairs, the Court does not accept that this factor, per se, is indicative of the end of the de facto relationship. This is because the evidence establishes that during the period when the Respondent concedes they were in a de facto relationship, and living at 1RR Street, Y City, the Applicant lived upstairs, and he lived downstairs. This was consistent with a similar living arrangement when the Applicant first moved into a unit at 2RR Street, another property owned by the Respondent.
The evidence of the Applicant’s witness, Dr K was that between 2001 and 2003, she visited the parties at 1QQ Street, observed they had one bedroom, and overheard both of them referring to it as “our bedroom”. Dr K’s evidence was controversial. She was a feisty witness. She agreed that the Applicant had discussions with her about relevant dates prior to the making of the affidavit. She was a general practitioner who treated both parties. She also knew them on a personal basis, over many years. The cross-examination of Dr K left the Court with concerns about the reliability of her memory, particularly as to dates. Her evidence does not assist the Court to establish when the de facto relationship that existed between the parties at that time ended.
The significance of the joint purchase of 1QQ Street is that it occurred during a period when the Respondent concedes that there was a de facto relationship. Indeed, the evidence establishes that the only other joint purchase of real estate by the parties, at B Street, Y City, also occurred during an acknowledged period of de facto relationship.
The evidence establishes that the parties jointly borrowed further funds to renovate and develop the property and ultimately subdivided it into two strata title blocks, namely 1QQ Street, and 2QQ Street.
In June 2003, 1QQ Street was sold for $765,000 with the sale proceeds being divided equally between the parties. It is common ground that the de facto relationship had ended by then. Viewed in isolation, the sale, and the division of the net sale proceeds in that manner, is consistent with the de facto relationship having ended by that time, with the Applicant saying in cross-examination that this occurred in November 2002.
As for 2QQ Street, a property owned by both parties as tenants-in-common with equal shares, the Applicant moved in in early 2003. When the parties entered into their agreement as to judgment on in late 2006, the Respondent’s interest in the property at 2QQ Street was transferred to the Applicant as part of the settlement.
The evidence about the parties’ transactions in relation to 1QQ Street and 2QQ Street does not, of itself, assist this the Court to determine whether they were in a de facto relationship on 1 March 2009, but it is an indicator of the acknowledged de facto relationship ending later than the end of 2000 contrary to the Respondent’s assertion. It may be thought that the agreement as to judgment is an indicator that no de facto relationship existed at that time. As will be seen, however, when the evidence is closely considered and this event viewed as part of the composite picture, even this indicator is weakened. The property at 2QQ Street becomes relevant in relation to later joint financial transactions. The property is used as security for a joint ANZ loan in 2007 and between September 2013 and May 2014, the parties lived together at 2QQ Street and 3QQ Street while there were renovations ongoing at 2QQ Street.
3QQ Street, Y City
The Respondent owned the property at 3QQ Street since 1983 or 1984. It was a vacant block of land at that time. The development of this property was assisted by a boundary adjustment involving the Applicant’s property at 1QQ Street, and a neighbouring property at 4QQ Street. The Respondent subsequently obtained approval to build a dwelling on the land, and constructed it with a final occupation certificate granted in September 2009, though the Court accepts that occupation may have taken place beforehand.
It is common ground between the parties that the Applicant resided with the Respondent in this property until about March 2010. The Applicant contends that they were in a de facto relationship in the period September 2006 to July 2010 and that she made contributions to this property by way of landscaping and gardening, and applied joint funds towards the property. The Applicant’s evidence about contribution made during this period is sparse, other than her own generalised assertions, but the present proceedings are under s 90RD and so this factor is neutral. Doing the best the Court can to understand the Applicant’s case, however, she was not contending that they were necessarily cohabiting in the same residence throughout this entire period. She had her home at NN Street which, the Court accepts, was only a few minutes away from 3QQ Street. The Respondent denies that they were in a de facto relationship during this period, but seems to accept that they cohabited for some time during this period. As a result of cross-examination the Court formed the view that they had an intimate relationship until about mid-2010. Some of the Respondent’s own evidence suggests a much closer relationship than he conceded. For example at paragraph 254 of his affidavit filed 4 March 2019, he “observed how [the Applicant’s hernia, shingles and prolapsed uterus] affected her during times [they] lived and worked together”. This is remarkably intimate knowledge to be possessed by a mere friend, landlord or business partner. Moreover his description at paragraph 269 of their domestic arrangements is hardly a description of separate arrangements.
2RR Street, Y City
The Respondent purchased the property at 2RR Street, Y City in 1996, in his own name, at a time when he concedes that the parties were in a de facto relationship. The parties then cohabited there, and renovated the property which consisted of a number of holiday style apartments. The Respondent retains this property. These facts do not assist in determining whether a de facto relationship existed on or after 1 March 2009, but this property does become relevant to subsequent financial transactions. For example, in a 2007 joint loan application the parties declare that they lived at this property.
B Street, Y City
The property at B Street, Y City has a relatively complex history. It was originally purchased by the Applicant and her daughter, Ms L in 1998 during an accepted period of the de facto relationship. During this time Ms L sold her 25 per cent share in this property to the Respondent. He eventually became an equal owner with the Applicant. Two other investors were invited to become owners. The property was then transferred to a company, B Pty Ltd, which was to be the vehicle for the investment and property development. The other investors were bought out and so in 2007 the ownership of the property had reverted to the Applicant and Respondent in equal shares, and they transferred their respective interests into two self-managed superannuation funds that had been established for that purpose. The property was eventually sold in 2015.
As will become more apparent, the purchase, financing and attempts to develop this property involved a clear intermingling of the parties finances. The Respondent argued that there are aspects of the dealings relating to B Street that manifest indicia of a business or commercial relationship rather than a personal one. For example, at least two unrelated third parties were involved. There were multiple changes to the ownership of the property. A company was incorporated. Two separate self-managed superannuation funds were established. There was litigation that eventually led to a sale of the property. Of all the financial dealings of the parties, this was the most problematic, the most expensive and complex, and the riskiest. It was also profitable. For the Applicant in particular, there was substantial emotional investment, as well as financial investment. In relation to this property, in comparison to other property transactions, there are more business (rather than personal) aspects surrounding the parties’ dealings. Even the manner in which this property was dealt with in the agreement as to judgment contains some indicia of a business arrangement.
The Court must be wary of being drawn into false binaries. It is inappropriate reductionist thinking, especially in family law, to categorise the transactions that persons enter into as either personal or business when they could be both. From the Court’s perspective, admittedly with the benefit of hindsight and having had the benefit of extensive evidence about the financial and personal affairs of the parties (the composite picture), it is hard to see how either party could have purchased and developed the property without the other. Even if the overall impression created from the totality of the evidence about B Street was consistent with the Respondent’s contention that this property exemplified a business relationship, rather than a de facto one, that does not, per se, demonstrate that there was no de facto relationship at the time, or on or after 1 March 2009. Indeed paragraph 117 of the Respondent’s affidavit filed 4 March 2019 clearly indicates that a business relationship could evolve into a personal one. The initial transactions occurred during an acknowledged period of de facto relationship. The buying out of the other two business partners (2003), the setting up of super funds (2007), and the eventual sale of the property (2015) occurred outside of the period the Respondent accepts they were in a de facto relationship. That does not necessarily alter the fundamental character of the relationship between the parties. The motivation for entering into even a business relationship may be the trust and emotional bonds inherent in a de facto relationship. The willingness to take the risks involved in this transaction generally, let alone the risk of entering into it with the Applicant, is more referable to an emotional, rather than a commercial relationship. Thus the Court finds that the B Street purchase and development were an aspect of the personal and de facto relationship of the parties at the time into which it was entered.
Z Ltd loan
The evidence indicates that in late 2003, at a time when it is common ground that they had separated, the parties jointly borrowed $350,000 from the company known as Z Ltd. The Applicant contends, consistent with most of their joint financial transactions, that this is evidence of financial commingling and interdependence and was, in effect, an aspect of their de facto relationship. The context of the loan confirms this. The loan of $350,000 was for the purpose of buying out one of the partners in the B Street property development. The Court infers that a conscious choice was made not to invite external equity partners and to keep the project in their personal control and within their relationship. The security offered was that property even though they each had other property at the time. This joint borrowing, therefore, has the same quality as the B Street investment generally i.e. a business transaction that was an incident of a personal and de facto relationship, albeit one in suspension at the time. In the following year, 2004, the Respondent paid out his half share of the loan, and the Applicant agreed that she would be responsible for the rest of the loan. This does not change the fundamental character of the financial intermingling that had occurred until then. It does, however, suggest a material change to their relationship, namely a suspension of the same. Of course the Court accepts that, were it not looking at the composite picture, with the benefit of hindsight, an entirely different view could be formed i.e they commingled their finances in this way despite not being in a de facto relationship at the time, which thereby suggests that this transaction and other similar transactions may not be borne out of a contemporaneous personal (or at least not a de facto) relationship. It could be a business relationship, or the Respondent may have been more willing to enter a jointly and severally liable loan due to his relationship history (personal and/or de facto) with the Applicant. It is only by taking the composite view of the relationship, and having regard to the totality of the evidence, that this alternate hypothesis is seen to be less plausible.
ANZ loans and accounts
In December 2007 the Applicant and Respondent borrowed $315,000 from ANZ, using the mortgage broker AA Company. It was a joint loan. This occurred during a period when the Applicant contends, but the Respondent denies, that they were in a de facto relationship. Under the heading “Loan Purpose” on the loan offer from ANZ (exhibit A5), it states: “Funds to Set Up Investment Portfolio”. The security offered was 1QQ Street, their jointly owned property (which became known as 2QQ Street after subdivision). The loan document was signed by both parties on 31 December 2007 and they each state their address to be 1/2RR Street, Y City, the Respondent’s property. A bank statement for the period 9 January to 10 July 2009 addressed to both parties establishes that the closing balance was $311,089.41 (exhibit A7). The statement shows regular monthly payments, including from the Respondent’s account.
In October 2009 both parties signed a discharge authority which ultimately led to the ANZ mortgage being discharged in November 2009. The ANZ loan was refinanced with the PP Limited loan discussed at [19] above. It will be recalled that the PP Limited loan documents contain representations from both parties that they were both single, and the Respondent was described as the Applicant’s friend.
Correspondence associated with the loan creates the strong impression, consistent with the Respondent’s evidence, that only $70,000 out of the $315,000 borrowed was attributable to the Respondent, and that he made the repayments in relation to this amount only. The splitting of the repayments in this manner may seem an indicia of a business-type arrangement, even though it was clearly a commingling of finances. The evidence surrounding the ANZ loan, consistent with the evidence surrounding the PP Limited loan, viewed in isolation, does not support the Applicant’s contention that there was a de facto relationship as at that time, or at 1 March 2009. When one stands back, however, and views the composite picture of this relationship, it was a joint refinancing and consolidation of loans in the course of which the Respondent assumed a legal obligation that he plainly did not need to assume. His actions cannot be reconciled with his case theory that theirs was merely a relationship of friend, landlord or business partner.
Increase in PP Limited loan facility in 2012
On 29 March 2012 and 2 April 2012, the Applicant and Respondent respectively signed a mortgage loan application from PP Limited requesting $80,000 for the stated purpose of additions to NN Street, Y City, the Applicant’s property (exhibit A16). In this application the Applicant describes herself as “divorced”, and the Respondent as “separated”. Nothing turns on this. The Applicant was never married to the Respondent so she clearly could not have been referring to him when she described herself as divorced. The Respondent described himself as separated, but the mere fact of the joint loan application contra-indicates an inference that he was referring to being separated from the Applicant. They both give their residential address as 3QQ Street, Y City. This property became the Respondent’s sole property pursuant to their 2006 property settlement. In the loan application, the Applicant represents that her previous address was NN Street, Y City, and that she had been there for five years. The Respondent represents that his previous address was 2RR Street, Y City, and that he had been there for six years. They both give the same home phone number.
In evidence, there is correspondence relating to the loan application which comes from the Applicant only, but which provides information to the lender in relation to the Respondent. When the Applicant was cross-examined about this document, she agreed, in effect, that other than with respect to the Respondent’s signature, the document was completed by her and contains only her handwriting. She acknowledged that the sum borrowed was in fact about $74,000 and that she retained all of the funds. In cross-examination of the Respondent, however, he agreed that it was likely that the information about his finances came from him. He also contended that the Applicant would have been aware of his income as they had talked about it.
To complicate matters further, there is a document entitled “Loan Application Information” (exhibit R16). This document refers to the Applicant as having the marital status of de facto. It refers to the Respondent in an identical way. The Court has the benefit of hindsight and of being able to see the composite picture. The description of the status of the relationship is more consistent with the overall evidence. The Respondent questions the provenance of this document. It is a business record of the lending institution relating to the same loan, and is signed by both the Applicant and Respondent on 23 August 2012, four months after the mortgage loan documents discussed above. The Respondent contends that it is a document prepared by the bank, and not the parties.
In cross-examination, the Applicant conceded that the document contained a number of errors. For example, the document referred to “home buyer”, which did not reflect the transaction. She agreed that her address, and the Respondent’s details as to when she and he lived at a particular place were wrong. In cross-examination, the Applicant initially agreed that the lender “got all the dates wrong”. It was then suggested to her that information other than dates on the document was also “wrong”, to which she agreed. Accordingly, the Respondent contends that no weight can be placed on the assertion in the latter document as to the parties’ relationship status. The Respondent also conceded in cross-examination that the document contained a number of errors.
When the two documents are carefully examined there are inconsistencies in the documents and clear errors. The Court accepts that it is more likely than not that the second document (i.e. the Loan Application Information document), was prepared by the lender, based on information given by the Applicant and Respondent. Both parties signed the document. The submission made on behalf of the Applicant is that on 23 August 2012 the Respondent declared to the lender that he was in a de facto relationship. This may well have been the Applicant’s interpretation of their relationship. It is nonetheless a document that the Respondent signed. Like so much of the evidence before the Court the documents do not clearly support the contentions made by either party. What is clear about the transaction, however, is that it once again demonstrates the intermingling of finances between the Applicant and the Respondent. The Applicant’s knowledge of the Respondent’s financial affairs suggests an intimacy of knowledge that goes beyond a friendship or business relationship. A joint borrowing, which exposes to risk the property offered as security suggests a level of mutual trust that is once again beyond mere friendship or a business relationship. It is only when the composite picture is viewed, that it becomes more apparent that this loan transaction was an incident of the de facto relationship that existed between the Applicant and the Respondent at this time.
Family and personal loans and payments
There is a history of loans and payments between the Applicant and Respondent, and between the parties and other members of their family.
The Respondent contends that in April 1992 he lent to the Applicant $6,000.
The Applicant contends that she lent to the Respondent $60,000 on 18 December 1992, repayable 12 months later. The fact of the loan is not in dispute. Exhibit A28 is a letter dated 15 February 1995 from the Applicant’s solicitor to the Respondent which, in effect, calls in the loan and threatens enforcement action.
On 3 November 1993 the Respondent, by way of a document entitled “Deed of Acknowledgement” which became exhibit A25 acknowledged his agreement to pay the Applicant the sum of $10,000 as acknowledgement for the advice she had given to him in relation to the renovation of his house at BB Street, LL Town. This was at a time when the Applicant contended they were in a de facto relationship.
In September 1996 the Respondent lent to the Applicant $15,000. This is evidenced by the document entitled “Loan Agreement” which became exhibit A30. This transaction occurred during a time when both parties agree they were in a de facto relationship.
On 28 November 1997, during a period of acknowledged de facto relationship, the parties entered into a document entitled “Deed of Acknowledgment” (exhibit A39) in which the Respondent acknowledged receiving $23,000 from the Applicant in full repayment of all sums owed by her.
On 12 May 2000, again during a period of acknowledged de facto relationship, the Respondent lent the Applicant $45,000 pursuant to a document entitled “Private Loan Agreement” which became exhibit A31.
On 4 December 2001, in a document that became exhibit A70, the Applicant signed a document which appears to relate to the $45,000 loan referred to immediately above, for which she requires repayment. By way of a handwritten document dated 4 January 2002 which became exhibit A71, the Applicant acknowledges receipt of the $45,000. The facts about the $45,000 loan are not in dispute.
On 27 April 2004, in a handwritten document which became exhibit A40, the parties acknowledged that the Respondent had lent to the Applicant $1,000, and further acknowledged that the Applicant paid the amount back in full by way of cheque on 26 September 2004.
In January 2006, the Respondent lent the Applicant the sum of $20,000. This is in a period when the Applicant does not contend that they were in a de facto relationship. The agreement between the parties is in writing, is described as a “Loan Agreement”, and became exhibit A1. The repayment of this loan is referred to in the parties’ agreement as to judgment.
In July 2007, during a period when the Applicant contends that a de facto relationship existed, the Respondent borrowed $70,000 from the Applicant’s daughter, Ms G. This is evidenced by a statutory declaration made by the Respondent on 23 July 2007 which became exhibit A19. In this document the Respondent describes it as a “family loan”. The Court interprets this as a representation by the Respondent that he was part of a “family” that included Ms G and must, therefore, have included the Applicant.
The Applicant contends that in March 2008 there was a loan from her then daughter-in-law Ms N of $164,921 to both the Applicant and the Respondent. This is robustly denied by the Respondent. The Court is not satisfied from the evidence, however, that any payment that may have been made from Ms N was received by, or benefited the Respondent. Indeed, the evidence of both the Applicant and Ms N about this transaction was unsatisfactory.
Thus between 1992 and 2007 there were several loan transactions between the parties which present as being in some way referable to the relationship between them. As late as 23 July 2007, only six months after they entered into an agreement as to judgment in the NSW Supreme Court, the Respondent represented that the relationship between the parties was “family”. This is much more consistent with the Applicant’s case for the existence of a de facto relationship at that time, than it is the Respondent’s denial of the same. Even so, it is important to look at the composite picture i.e. consider the significance of these transactions in totality, and in context, and not in isolation.
Tentative conclusions about financial transactions
This review of the evidence of the significant financial transactions entered into by the parties during the period referred to above is complex and, when each transaction is viewed in isolation, establishes little clear, objective and unequivocal support for the contentions that the parties make as to the status of their relationship in the period covered, other than in the conceded period of 1995 to late 2000. There are a number of caveats to this tentative conclusion. It must be remembered that the task of the Court is to apply s 4AA of the Family Law Act. Thus, when the other s 4AA(2) circumstances are considered, the evidence about financial transactions may look entirely different because of the broader context. When one considers the composite picture, patterns become clearer, and themes more apparent.
Section 4AA(2)(d) refers to financial dependence or interdependence. These words must be given a meaning. The evidence above creates the impression that the parties, at different times, were financially interdependent. The fact that they both made loans to each other leads to the necessary inference that they were in need of funds, and found it preferable to borrow from each other rather than from some other source. One party had need, and the other party had the ability to provide that need. Another inference is that there was a motivation to provide that need which involved at times altruism, love or affection, at other times a commercial benefit, and at times a combination of the foregoing. To that extent, and at those times, they were financially interdependent. There was often the mutuality that is inherent in interdependence and common in de facto and married relationships.
In relation to the loans from financial institutions, the situation is slightly different. For example, the strong impression formed from the evidence is that but for the Respondent’s support of the Applicant’s loan applications (in the form of making available his income and assets) the Applicant would not have been successful in obtaining the loans. Certainly in relation to the B Street acquisition and proposed development, the reverse is equally true. Thus, it seems unlikely that the Respondent could have proceeded independently of the Applicant and was to that extent, dependent on her. It is interesting to observe that over the period that the Applicant and the Respondent were in some form of a relationship howsoever characterised, their respective financial circumstances waxed and waned. Thus, it would seem that early in their relationship the Applicant was in a stronger financial position than the Respondent, but towards the end he was in an overall stronger financial position than her. In all of this there is once again an apparent mutuality that is so common in de facto and married relationships.
Of course, all of the above does not of itself necessarily answer the question as to whether the parties were in a de facto relationship. These are indicative factors only. This evidence in its totality, however, renders less plausible the Respondent’s contention that their financial dealings reflected a business/partnership type arrangement. The absence of any formal documentary recognition of a business/partnership type arrangement is surprising in a case where the parties acknowledged in writing loans for relatively small amounts of money. Both parties used lawyers at different times, so it is not as if there was a paucity of opportunity to obtain advice and to have proper documentation prepared.
It is appropriate at this stage to deal with the Respondent’s contention that in so many of the financial transactions he merely acceded to the Applicant’s demands, and was, in effect, an unwilling participant. In his affidavit filed on 4 March 2019, for example, the Respondent deposed to conversations where he asked the Respondent to “stop blackmailing” him, in reference to the Applicant’s threats to disclose to the Respondent’s children his past marital infidelity unless he assisted her in her borrowings. He asserted that the Applicant told him that she had recorded an admission he had made of infidelity in his marriage and was prepared to use it against him if he refused to comply with her various demands of him. In cross-examination, however, the Applicant firmly denied that she had ever recorded any conversation with the Respondent. She was specifically confronted with the proposition that in 1998 she had told the Respondent that she had recorded what he said about an affair with his former wife’s cousin, and that she had threatened to reveal the recording on a number of occasions to members of his family. The Applicant was very firm, and convincing, in her denials of this. The Court accepts her evidence in this regard. Another threat was to re-open the 2006 property settlement. This has been discussed at [21]. The Court finds no evidence that there was any element of direct or indirect pressure on the Respondent exerted by the Applicant, in relation to their financial dealings. The Respondent presented as an astute man who, notwithstanding periods of physical illness, anxiety and depression, has had considerable success in his chosen profession and in his property investments and commercial dealings.
Agreement as to judgment in the Supreme Court of New South Wales, in late 2006
As foreshadowed above, the fact of these orders presents an interesting conundrum in relation to the state of any de facto relationship at the time the judgment was entered into by consent. The Applicant maintains that the relationship resumed in September 2006 through to July 2010. Viewed in isolation, it may seem implausible that the parties resumed a de facto relationship before in late 2006, given the agreement that they reached about their property settlement. On this view, the mere fact that the parties had dinner together at NN Street on the evening when the orders were made in the Supreme Court, and indeed had sexual intercourse that night, does not of itself establish the resumption of their de facto relationship from that night. The composite picture, however, is more complex.
The documents relating to the agreement as to judgment were signed by the Applicant at a conference with her solicitor on 24 November 2006. The note records: “She moved out of house yesterday”. The Court accepts this as an accurate file note made by the solicitor which was made based on instructions given by the Applicant. This means that as at 23 November 2006 the Applicant and Respondent were residing in the same residence. The evidence of advice given about a cohabitation agreement at the very least implies that there was more than just physical cohabitation. The Court does not, however, accept the Applicant’s evidence in cross-examination that the note was not a reference to moving out of the Respondent’s home but rather a reference to moving out of her home at NN Street.
The Court notes the Respondent’s evidence that by mid-November 2006, the Applicant had moved out of his home. The Court further notes the letter written by one of the Applicant’s later solicitors dated 7 November 2014 (exhibit R13). In this letter, her solicitor, Mr CC, writes to the Respondent on the Applicant’s instructions, and asserts that in or about July 2008 the parties had reconciled, and she commenced living with him at 3QQ Street. This letter is not a contemporaneous record. Perhaps viewed in isolation, it creates difficulty with the Applicant’s contention of a resumed relationship at or about the time of the agreement as to judgment. But as the Applicant deposed to in her affidavit filed 21 September 2018 and in her oral evidence, she and the Respondent had a brief separation from about February 2008 to July 2008 and so the letter is not necessarily inconsistent with the relationship resuming in 2006.
When the composite picture is observed, another impression is formed. It seems clear that at about this time the Respondent continued to attend social occasions with the Applicant. For example, he attended the Applicant’s birthday in 2005, and the Applicant’s mother’s funeral in 2006. This is at a time when he contends he was not in a de facto relationship with her, and was negotiating the terms of their de facto property settlement which resulted in the agreement as to judgment made in November 2006. In this regard the Court will prefer at [99] below the evidence of Ms L over the evidence of the Respondent about a conversation they had shortly after the Applicant’s mother’s funeral which strongly signified a commitment to the Applicant. It is clear that the parties had a sexual relationship in November 2006. Indeed, at paragraph 181 of the Respondent’s affidavit filed 4 March 2019 he deposes to having had occasional sex in the period 2004–2006. The totality of this evidence renders implausible the contention that, for example, attendance at the Applicant’s birthday and her mother’s funeral late in 2006 is merely suggestive of a friendship, rather than a much more committed relationship. Moreover the Respondent concedes that in 2007 he continued to socialise and travel with the Applicant, a fact inconsistent with his contention about the de facto relationship, but entirely consistent with that of the applicant.
The reputation and public aspects of the relationship
The manner in which both the Applicant and Respondent presented themselves to others assumes importance in this case. In order for their relationship to have been a de facto relationship at stated times, it would be important for there to have been public aspects to their relationship. In other words, they must have been known as a couple and, for example, to have socialised in a manner considered usual or typical for couples (including with family and friends) and attending significant family events such as birthday and Christmas celebrations, holidays, and public outings etc. As will be seen, apart from admissions made principally by the Respondent, most of the more relevant and probative evidence comes from third parties who have, at best, observed fragments of the life of the Applicant and Respondent (i.e. at particular times and places). This does not necessarily detract from the value of this evidence, so long as the fragmented nature thereof is acknowledged.
Mr V, a witness in the Respondent’s case, moved into 2RR Street in 2000. It was revealed in cross-examination that he was engaged to Respondent’s daughter, Ms C, for two years. His evidence is that he never thought the parties were anything more than friends or business associates. This opinion evidence is of little assistance to the Court and there was no need for this opinion to be challenged in cross-examination. He worked at various points for one or both of the parties, deposes to hearing arguments between them, and deposes at paragraph 22 of his affidavit to a conversation with the Respondent, wherein the Respondent said he was helping the Applicant to avoid potential impacts on the B Street development. This evidence is at best equivocal. For example, having an argument is as consistent with the Applicant’s case as the Respondent’s case. Observing the Applicant come and go merely observes an acknowledged feature of their relationship.
Mr R was another witness in the Respondent’s case. He deposes that the Respondent told him he moved in with Applicant in 1995/1996. Around that time, he observed them to be quite affectionate physically, but to also argue. In 1998/1999, he recalls the Respondent living alone. From around 2000, he observed no physical affection, but thought that the parties were just business partners. In cross-examination, when asked about the Applicant staying at 3QQ Street, he says she had a double bed in the studio, while the Respondent had a “temporary bed…Something like a camp bed” in the main bedroom. Mr R further gave oral evidence that the parties seemed to be business partners from around 2000 to 2001 onwards. He agreed that he was “amazed” that the Applicant moved back in, but would not go so far as to say that this was because it suggested something more than a business partnership. Again, this evidence is largely equivocal. Affection and arguments, even if occurring proximately, more strongly indicate the existence of a personal relationship than the business one to which this witness refers. Bedding is but one small aspect of a relationship. This witness, like so many others, observed fragments of the lives of the Applicant and Respondent and then sought to draw ex post facto conclusions about the nature of the relationship. The weight of this evidence is minimal.
There are limits to the weight that can be given to the evidence of Mr T. His affidavit only assists with the early 1990s, in which he says he does not recall seeing the Applicant during the time he lived at the Respondent’s farm in 1994 for a period of six to 12 months. Curiously, the Respondent’s own evidence is that from about 1993, he and the Applicant were occasionally staying over at each other’s houses. This is another common characteristic of their relationship, and one not easily observed by any third party.
For the most part, the Respondent quite properly concedes that for most, but not necessarily all of the time that they were in a relationship (howsoever described), they did socialise together. Indeed, Ms H (the Applicant’s sister), Ms G, Ms E (the Applicant’s friend), Dr K, and several other witnesses all give reliable evidence about the public aspects of the relationship between the parties from as early as 1990. The Respondent admitted in cross-examination that he attended the funeral of the Applicant’s father in 1994. Once again, when this event is viewed in the broader context of the other evidence including that set out above, it is more likely than not that the Respondent’s attendance at the funeral was in the context of a relationship with the Applicant which was more than a mere friendship, even a friendship with the benefit of a sexual relationship. The Court finds that the public aspects of the relationship commenced in 1991 and continued until at least December 2013 when the parties attended Christmas drinks at the home of Ms G. Exhibit A50 contains a number of photographs from as early as 1991, showing the Applicant, Respondent and their children on holidays, or at family functions (e.g. Applicant’s grandson’s birthday party) which are consistent with the Applicant’s assertions about the public aspect of their relationship, particularly before 1995.
Indeed the Respondent deposes to also attending Ms G’s birthday party in 2012 and describes their relationship as “convivial” (affidavit filed 4 March 2019, paragraphs 324–325). The Court does not place any weight on the Respondent’s ex post facto rationalisation at paragraph 326 that his relationship with Ms G was no different to his convivial relationship with his former wife. The present context is entirely different, and the relationship with Ms G is exclusively attributable to his relationship with the Applicant. The public aspect of the relationship is also evidenced by the three videos tendered in evidence in the Applicant’s case (exhibit A51), all recorded in 2012, and which depict much more than a convivial friendship, but rather a couple in a committed relationship. Of course these videos are but fragments, but when these fragments are viewed in the context of other similar evidence, they form a more cohesive picture indicative of a de facto relationship.
It seems clear that even at times when the Respondent contends that he was not in a de facto relationship with the Applicant, he continued to attend social occasions with her. For example, he attended the Applicant’s birthday in 2005, and the Applicant’s mother’s funeral in 2006. This is at a time when he contends he was not in a de facto relationship with her, and was negotiating the terms of their de facto property settlement which resulted in the orders made in November 2006. Nonetheless, they were actively pursuing the development of the B Street property, and obviously working together to further this project. Indeed, at paragraph 198 of his affidavit filed 4 March 2019 he describes the intensity of their involvement with this project. At paragraphs 205–206 the Respondent admits that the Applicant stayed with him, supposedly on a short-term rental basis. It is clear that they had a sexual relationship in late 2006, indeed at paragraph 181 he deposes to having occasional sex in the entire period 2004–2006. The totality of this evidence renders implausible the contention that, for example, attendance at the Applicant’s birthday and her mother’s funeral late in 2006 is merely suggestive of a friendship, rather than a much more committed relationship.
Nonetheless the Court acknowledges that these social events, which are part of the public aspects of the relationship with the Applicant, did not necessarily occur either on a continuous, or exclusive basis from the Respondent’s perspective, but the Court is satisfied that overall, between 1991–2014 (though not necessarily continuously) the relationship of the parties was one that was, or would reasonably have been apparent in public. In this regard what the Respondent thought, or did not say to others (e.g. at paragraph 181 of his affidavit filed 4 March 19), or what the Applicant did not say to others, is evidence that receives little weight because of its subjectivity.
The existence of a sexual relationship
The existence of a sexual relationship in this matter was not in contention. In closing written submissions counsel for the Respondent quite properly acknowledged the absence of any doubt that the parties had a sexual relationship at various times over the periods in which the Applicant contended they lived in a de facto relationship. Equally, however, it was also undisputed that the parties had a sexual relationship at times when the Applicant contended that they were not in a de facto relationship. The Respondent gave plausible evidence as to periods when they did not have sex as a result of him suffering a viral illness, prostate issues, sleep apnoea and the state of the relationship being a poor one at times. He concedes sexual intimacy with the Applicant from as early as late 1991 or early 1992. The Applicant contends that their intimate relationship commenced as early as 1990, and became exclusive as from 1992. The exclusivity, or otherwise, of their sexual relationship is not a matter that weighs heavily. It is not entirely clear to the Court when the Respondent asserts that the sexual relationship ended. A possible impression is the end of 2006. The Court doubts this very much. It is common ground that the parties spent time at each other’s home well after that date. The Applicant’s assertion is that their sexual relationship resumed between April 2013 and May 2014. The Court is, having regard to other evidence, inclined to accept the Applicant’s evidence that their sexual relationship resumed in 2013. Thus, the parties had a sexual relationship that started as early as late 1991, and ended as late as 2013. Clearly, it was a long-term sexual relationship even if there were periods of abstinence, and non-exclusivity.
If this factor were viewed entirely in isolation, it would not necessarily be indicative of a de facto relationship. Arguably, and on one view of accepting the Respondent’s perspective as to their relationship, it was a friendship and business relationship with the benefit of sexual intimacy. If that were the case, it would be a remarkably long friendship and business relationship with the benefit of sexual intimacy. Viewed in this light, however, the mere duration of the sexual relationship makes his contention implausible. The existence of a long-term sexual relationship is an indicator of a long-term de facto relationship. The Court observes that their sexual relationship was not necessarily linked to cohabitation. A reasonable inference to be drawn, however, is that the consummation of a regular sexual relationship was an integral feature of cohabitation.
Nature and extent of common residence
Even though the core definition of de facto relationship involves a couple “living together” on a genuine domestic basis, it is clear that the parties do not need to physically live together all of the time, or even for a majority of the time. In this case it is clear that the parties did live together at some time, and indeed shared a common residence during the period of their relationship (howsoever characterised).
In the Respondent’s counsel’s closing written submissions, the concession was quite properly made that the evidence demonstrates that in periods during which the parties resided in a de facto relationship as contended for by the Applicant, the parties at times lived in the same home and at times separately. Moreover, the Applicant lived in the Respondent’s home at times that she contends she was not in a de facto relationship with him, and the Respondent lived in the Applicant’s home at times when the Applicant contends the parties were not in a de facto relationship. These concessions clearly reflect the evidence.
The Applicant contends that as early as 1990 they started staying at one another’s properties. The Respondent contends that this commenced from about 1993. He also plausibly contends that in the same year he was staying overnight at the home of another woman friend. He contends that there were times after their de facto relationship ended in late 2000 when the Applicant did stay at his home, but it was in the context of a tenancy, rather than, inferentially, common residence. In these periods he contends that their domestic arrangements were separate including as late as 2011. Senior counsel for the Respondent put to the Applicant in cross-examination that she finally left the Respondent’s residence at 3QQ Street in October 2012. As this must have been on instructions, it must be the Respondent’s case that they shared this residence until October 2012, in one capacity or another. The Applicant agreed, but explained that she did not leave voluntarily, rather she was locked out. It was suggested to her that she never returned, but she insisted that she moved back in, in April 2013. Indeed, the Applicant contends that as late as April 2013 she moved back into 3QQ Street with the Respondent. Ms G deposes to her mother having told her this in about April 2013. Mr F, the partner of Ms L also deposes that by Easter 2013 the Applicant, who had moved into their home because of relationship problems with the Respondent, then moved back to 3QQ Street to live with the Respondent. The Court does have some concerns about the evidence of Mr F whose oral evidence was inconsistent, confusing, and his recollection of dates may have been dependent on what he was told by his partner, Ms L. However, on this issue his evidence is based on events rather than what he may have been told by someone else. It is, therefore, plausible that as late as the period after Easter 2013 the Applicant had moved into the Respondent’s home at 3QQ Street.
Common residence may well have existed between 2013–2014 but the issue is: what was the nature of that common residence? The Respondent contends that the domestic arrangements were kept separate as they did not cohabit. The Applicant deposes that the relationship resumed and they did cohabit and shared domestic chores and other household duties and cooking, but she did all the household washing. Specifically, she contends that between September 2013 and May 2014, they as a couple slept alternatively at 2QQ Street and 3QQ Street, due to ongoing renovations at 2QQ Street. However, on almost all evenings they would cook dinner and eat together. The Applicant maintained this in cross-examination. Resolving the divergences in the evidence is assisted by the document that became exhibit R13, a letter dated 7 November 2014 prepared by the Applicant’s solicitor on instructions given to him by the Applicant, and sent to the Respondent. The letter contains the following statement:
I have advised [Ms Cleese] that it does not matter that for two periods during the resumption of your relationship (between July 2010 and January 2011 and between August 2013 and May this year) that you lived in separate residences.
This is a more contemporaneous account of comparatively recent events. Here the Applicant is representing, through her solicitor, that during the period of the contended resumed relationship, there were periods of living in separate residences including between August 2013 and May 2014. This letter presents a very different picture, and arguably a more reliable indication of the nature of whatever common residence existed between the parties between 2013 and 2014. If they were living in separate residences, as the Applicant herself represents in the letter in question, the nature of the common residence would be limited in its scope. Overall, and having regard to the totality of the evidence, the Court concludes that between 1990 and 2013 there were periods when the parties shared a common residence. The nature of that common residence varied significantly. There were many periods when the nature of the parties’ common residence was akin to that of two persons living together on a bona fide domestic basis. The zenith of this was certainly the period of agreed de facto relationship, but the Court’s overall impression of the evidence is that it continued well after that date, but ended by May 2014 as suggested in exhibit R13.
The ownership, use and acquisition of property
In closing written submissions, counsel for the Respondent acknowledged that during the course of the de facto relationship periods contended for by the Applicant, the parties borrowed money from each other and documented this, both formally and informally. Again, however, the point is made quite accurately, that these loans also took place at times when the Applicant contends that they were not in a de facto relationship. In substance, the submission was that the mere borrowing of money in the circumstances was neither a compelling nor persuasive indication of the existence of the fact of the de facto relationship. This is an interesting submission that has relevance to many of the others 4AA considerations.
At first glance, the submission is compelling. Nonetheless, it must be acknowledged that the compelling nature of the submission is that the making and receiving of the loans, per se, is not compelling, persuasive nor determinative of the legal issue that must be determined, that is, is there a de facto relationship? Of course that does not rule out the legal issue being determined by reference to a number of considerations that include the making and receiving of the loans in question.
However, on deeper analysis and reflection, the submission loses some of its potency. The fact that human relationships are messy, and that this particular relationship was messy, has already been acknowledged. In this relationship the behaviour of the parties in, for example, making and receiving loans to each other seemed oblivious to the issue of the legal status of their relationship. In other words, they were not thinking to themselves at the time of making and receiving the loans: “Am I in a de facto relationship with this person?” The fact that the giving and making of loans continued over periods when they both seem to acknowledge that they were, and were not, in a de facto relationship suggests that it did not matter very much at all to them. In reality what is happening is that the law is retrospectively seeking to interpret and give meaning to the behaviour of a couple who had given no consideration to the legal consequences of their actions. The law requires the Court to give meaning, or attribute significance, to the actions between certain actors, and then make an ex post facto determination of legal status of the actors. Perhaps far too often family law seeks to carefully examine the entrails of a failed human relationship in order to attribute a meaning that is artificial and probably bewildering for the parties.
One wonders whether a more realistic hypothesis is trust. The first recorded loan in this case was made in 1992 for $6,000, by the Respondent to the Applicant. This is during a period when the Applicant contends but the Respondent denies that they were in a de facto relationship. Later in 1992 the Applicant lent monies to the Respondent, but this time it was $60,000. According to the Respondent, he first met the Applicant in about 1974–75, played tennis with her, together with his then wife in 1976, and then next heard from her in around 1990 shortly after the breakdown of his marriage. At paragraph 7 of his affidavit of 4 March 2019 he deposes: “Sometime towards the end of 1990, I continued to spend time with Ms Cleese and developed a friendship with her.” At paragraph 9 of the same affidavit he deposes to his friendship becoming intimate in 1992. Thus, according to the Respondent himself, he had an intimate friendship with the Applicant in 1992 and, the Court infers, trusted her enough to lend her $6,000 on an unsecured and interest-free basis. Later that year according to the Applicant, but in 1993 according to the Respondent, the Applicant lent the Respondent $60,000 in view of the Respondent’s bank extending his home loan. Even on the Respondent’s version of this event a reasonable inference is that the Applicant trusted him with $60,000 of her money. It is true, of course, that this loan was secured. One could not reasonably expect the Applicant’s trust of the Respondent to capriciously abandon a sensible precaution such as taking security. It does not obviate the trust that underpinned the transaction.
The Respondent contends that the relationship was limited to the period from 1995 to the end of 2000. It was conceded by all counsel that this was a messy relationship. Indeed, the task that the Court confronts is akin to seeking to contain jelly with bookends. Any boundary drawn around this relationship must necessarily be fluid. Law seeks to ascribe a certainty to the ebb and flow of human relationships which is at odds with the reality.
Whilst the Applicant contends that her de facto relationship with the Respondent commenced in early 1990, the Court finds that it commenced as from 1991. It is not possible to be more precise than that. The photographs evidencing the public aspects of the relationship, the acknowledged sexual intimacy, the Applicant’s involvement in the Respondent’s finances evidenced by the cash books, and the love letters from the Respondent to the Applicant all cumulatively satisfy the Court that the relationship started in 1991.
It is common ground that they were in a de facto relationship between 1995 and the end of 2000.
The Court is satisfied that they were in a relationship between 1991 and 1994. In this regard, the Court relies on the same evidence about the commencement of the relationship in 1991 noting that all of these factors were a feature of the evidence through to 1994. Their financial affairs became increasingly interwoven. Loans were made. Assistance was rendered in developing property. They increasingly shared time together including on holidays, and with each other’s children. The Applicant became a member of the Respondent’s health insurance fund, even though they paid their own contributions. They went to counselling about aspects of their relationship. The Court accepts the Applicant’s evidence, however, that in 1994 they had “a short break where [they] did not live together”. During this period, there is insufficient evidence to find that the other aspects of their relationship continued. Accordingly, the relationship ended in early 1994 but resumed in 1995.
The Applicant contends that the relationship continued until November 2002. The Respondent deposes that he and the Applicant separated again and lived independently to one another from towards the end of 2000. The dispute effectively relates to a period of about one year. The Court finds that the relationship continued until November 2002, as asserted by the Applicant. The most persuasive evidence in this regard is the fact that they both entered into a joint loan from the Commonwealth Bank for $45,000 in July 2001 secured by way of mortgage over QQ Street. In the context of this case, this joint borrowing is inconsistent with the Respondent’s assertion that they lived independently to one another. There may well have been tension in the relationship including the frequent arguing to which he deposes, but that does not mean that the de facto relationship had ended.
The Applicant contends, but the Respondent denies, that they then resumed their relationship between September 2006 and July 2010.
For reasons that have been set out at length above, the Court finds that they did in fact resume their de facto relationship notwithstanding the settlement of the Supreme Court proceedings.
The continuance of this relationship was evidenced by a range of factual matters. Their finances continued to be closely interwoven and indeed they were financially interdependent in relation to the property development at B Street. They borrowed money together. They established self-managed superannuation funds. They had the same accountant. The public aspects of their relationship continued. They were sexually intimate. They were involved with each other’s family. They travelled together on holidays. The Respondent entered into a family loan with the Applicant’s daughter. They consolidated loans into a joint loan. They attended counselling together in relation to their relationship. They cohabited.
The relationship ended in 2010 and it is plausible that the Applicant’s contention that it was July 2010 is correct.
The Applicant contends that their relationship resumed, however, in January 2011 through to October 2012. They were cohabiting in the same residence apart from times when the Respondent was overseas, and the Applicant was away for a few months in GG City. It is more likely than not that sexual intimacy continued. It is more likely than not that they were both involved in domestic duties. They attended social occasions together and family holidays including at FF City, and Ms G’s birthday party. In August 2012 they made another joint application for a loan. In September 2012 they holiday on DD Place. Nonetheless, it is highly likely there were periods of tension between them and conflict over finances. On balance, the Court believes that the composite picture of the evidence of their relationship supports a finding that the relationship resumed between January 2011 and October 2012.
The Applicant contends that they resumed cohabitation between April 2013 and May 2014. The evidence of both parties indicates their relationship improved. The Respondent acknowledges that they became friends again, but seeks to limit this to the specific purpose of completing the B Street property development. This is consistent with his case that the relationship was a business one, not a personal one. Yet, they resumed cohabitation. The Court is satisfied that, more likely than not, they were sexually intimate. The email correspondence between the parties dated 12 and 14 July 2013 (exhibit A43) reads very much like a letter between lovers who have had an argument, rather than correspondence between two business partners. They socialised together and took holidays together. They spent time with each other’s family. Ultimately, it was the failure to progress the B Street development which, according to the Applicant, constituted the final breach of trust that she had in the Respondent and caused her to stop having any form of relationship with him other than in a business capacity after May 2014. The evidence indicates a dramatic change in their relationship thereafter. The Court thus finds that, on balance, and having regard to the composite picture, the Applicant and Respondent resumed their relationship between April 2013 and May 2014 for the last time.
Is the Court empowered to set aside the agreement as to judgment?
The Court had the benefit of comprehensive, well-considered written submissions from both parties on this issue. The Court has reached its conclusion about its powers to set aside the agreement as to judgment having had regard to those submissions.
The Applicant contends that this Court has the power pursuant to s 41 of the State Act to set aside the agreement as to judgment between the parties dated in late 2006. In short, the Applicant contends that as this Court is vested with jurisdiction to determine the justiciable controversy between the Applicant and Respondent, it follows that it has the power to set aside or vary the said agreement. This is said to be consistent with the decision of the Full Court, albeit obiter, in Colburn & Cleese (2020) FLC 93-995 at [31]–[37]. This Court has jurisdiction to make orders altering property interests between the parties because there was a breakdown of a de facto relationship after 1 March 2009. The Court may then also exercise the powers afforded to it under the state law pursuant to its accrued jurisdiction, to make declarations and/or orders to grant relief so as to determine the whole of the justiciable controversy between the parties. This includes the power under s 41 of the State Act to vary or set aside the agreement as to judgment. The Court acknowledges that the part of the decision of the Full Court cited above is obiter, but it is nonetheless persuasive and this Court considers itself bound by it. In any event, having carefully considered the submissions made in this regard on behalf of the Applicant, this Court respectfully agrees with those submissions.
The Respondent contends that neither Colburn & Cleese nor the authorities cited therein explain how the Court is empowered to exercise the powers under s 41 of the State Act. Any power to do so could only arise on the referral of power from New South Wales to the Commonwealth. It was argued that, when the legislative scheme in this regard is closely examined, the conclusion is that the power in question was not referred to the Commonwealth retrospectively by the Commonwealth Powers (De Facto Relationships) Act 2003 (NSW) (“Referral Act”) and thus this Court could not use the jurisdiction conferred on it by referred powers to set aside an order made prior to the powers having been granted to the Court in 2009. The Respondent’s argument is largely one of statutory interpretation.
This Court does not agree.
The Court does not accept the submission that the ordinary meaning of the Referral Act reflects a clear legislative intention that the powers are not referred to the Commonwealth retrospectively, and that this Court could not utilise the referred powers to set aside an order made prior to those powers being granted to it. That interpretation is not consistent with the statutory purpose. Moreover, the notes to s 86(1) of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (“Amending Act”) do not assist the Respondent’s submission. Even if the notes could be considered in interpreting other parts of the Amending Act, all that the note does is confirm, on the facts of this case, that s 41 of the State Act applies, rather than s 79A of the Family Law Act.
It is inconceivable that de facto powers would be referred to this Court but that, without express and unambiguous statutory limitation, those powers would be somehow limited to only some aspects of the de facto powers. Taking the Respondent’s submissions to their logical conclusion, this Court would be precluded from doing justice in circumstances where it is the only Court that has comprehensively heard the evidence of the Applicant and Respondent as to the nature and duration of their de facto relationship and made findings based on that evidence. One of those findings is that the Applicant and Respondent were in a de facto relationship at the time that they entered into the agreement as to judgment in the Supreme Court of New South Wales.
It beggars belief that this Court could not appropriately intervene to remedy an abuse of process (because the parties had resumed their de facto relationship) in which both Applicant and Respondent were complicit, notwithstanding a comprehensive scheme of referral of powers that was driven by public interest, and intended to avoid a multiplicity of proceedings. The existence of a single justiciable controversy in this case is clear.
This Court is empowered to set aside the agreement as to judgment.
Should the agreement as to judgment be set aside?
The power to set aside the agreement as to judgment and the grounds for doing so are set out in s 41 of the State Act:
41 Variation and setting aside of orders
Where, on the application of a person in respect of whom an order referred to in section 20 or 27 has been made, a court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance,
(b)in the circumstances that have arisen since the order was made, it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out, or
(c)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order,
the court may, in its discretion, vary the order or set the order aside and, if it thinks fit, make another order in accordance with this Part in substitution for the order so set aside.
(Emphasis in original)
The order in question is one made under s 20 of the State Act which is in the following terms:
20 Application for Adjustment
(1)On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:
(a)the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and
(b)the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely:
(i)a child of the parties,
(ii)a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties.
(2)A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a party to a domestic relationship in respect of the property.
(Emphasis in original)
The pertinent part of the relevant order in question, Order 4, provided as follows:
The plaintiff and the defendant shall do all such and things in their role as Directors and shareholders of [B Pty Limited] ACN … to sell and/or develop and/or market [B Street] ("the development")…
(As per the original)
Miscarriage of justice
The first ground is that there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance. It is clear that the first ground relates to circumstances in existence at the time the order was made, or before the original order was made.
In many cases, miscarriage of justice is established because the financial disclosure between the parties has not been full and frank, and this goes to the determination under s 20 that the order adjusting the interests of the parties “seems just and equitable”, having regard to the matters set out in that section. In this case, of course, the parties had resumed their relationship at the time the orders were made. This is a strong preliminary indicator towards a finding of miscarriage of justice predicated, of course, on making other essential findings.
The ground refers to fraud which, for the purposes of the equivalent s 79A of the Family Law Act, has been interpreted to mean “conscious wrongdoing or some form of deceit” (Kokl & Kokl (1981) FLC 91-078 at 76,557). The Court acknowledges that the Applicant did not argue that there was fraud. The Court observes, however, that in this case if there was any conscious wrongdoing or some form of deceit, it was not perpetrated by one party on the other, but by both parties on the Court. In many ways this could, perhaps, be better construed as an abuse of process, which will be discussed below.
The ground also refers to duress which has historically meant: “the compulsion of a person by physical or mental harm” (see, e.g., Kokl & Kokl (1981) FLC 91-078 at 76,557). In this case the Applicant asserts that she was placed under duress by the Respondent in the period September 2006–in late 2006. The Applicant’s case fails. Having regard to the High Court’s decision in Thorne v Kennedy (2017) 263 CLR 85 at [26]–[29] and [70], it is clear that the law remains as set out in the decision of the Court of Appeal of the Supreme Court of New South Wales in Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149. This requires that the concept of illegitimate pressure be restricted to the exertion of pressure by “threatened or actual unlawful conduct”. There is nothing in the evidence of the Applicant which approaches duress in this sense.
The ground also refers to the giving of false evidence. The only evidence in support of the making of the order in question was filed by and on behalf of the Applicant. The Applicant’s affidavit sworn 4 November 2004 verifying her Statement of Claim deposes to the effect that the relationship she had with the Respondent at the relevant time ended on or about 24 November 2002. Her case before this this Court is that the relationship resumed in September 2006 and continued through to July 2010. Her evidence in the affidavit of 4 November 2004 was not false for present purposes. Her failure to disclose to the Court that the relationship had resumed before the order was in fact made on in late 2006 is still relevant as will become apparent.
The ground also refers to the suppression of evidence in the sense of giving one-sided evidence amounting to the wilful concealment of matters which it is the duty of the party to put before the Court (Taylor and Taylor (1977) FLC 90-226 at 76,197). It is clear that the Supreme Court was not appraised of the real status of the Applicant and Respondent’s relationship at the time the orders were actually made.
The ground also refers to any other circumstance. These words are not to be read ejusdem generis with the previously mentioned factors. The words should be given the wide natural meaning but are nonetheless not of unlimited scope. As there must be a miscarriage of justice, “any other circumstance” must relate to this (see, e.g., Gebert and Gebert (1990) FLC 92-137 at 77,935). Generally, this is limited to the integrity of the judicial process. It is the view of this Court that the integrity of the judicial process is undermined by the failure of the parties to disclose the true state of their relationship at the time the orders were made.
Impracticability
The second ground is that in the circumstances that have arisen since the order was made, it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out. The focus thus shifts to events that occurred after the order was made. Implementation of the order must be rendered impracticable. This is not the same as impossible.
In this case the evidence indicates that whilst the B Street property was sold, it was not sold by the parties, and it was certainly not sold by the parties as directors and shareholders of B Pty Ltd. Indeed, the parties’ respective shares in the property were transferred to trustees of their respective self-managed superannuation funds. The evidence indicates that this was at considerable cost to both of the parties. They, in effect, relinquished legal control of the property. It is highly unlikely that this scenario could have been achieved by virtue of the agreement as to judgment. The evidence gives no indication that this was even contemplated before, or at the time the order was made. Quite apart from the reality in this case that the outcome was not contemplated at the time of the order, the Court doubts very much whether it is an order that could have been made under s 20 of the State Act. Certainly in form, the outcome was completely different to that contemplated in the order. This Court concludes that the outcome was also completely different in substance. The parties relinquished their legal interest in exchange for an equitable interest, presumably as beneficiaries of the trusts with the right to require the trustees to enforce the terms of the said trust (Kafataris v Deputy Commissioner of Taxation (2008) 172 FCR 242 at [42]). Moreover, the sale of the B Street property was achieved by an application to the Supreme Court of New South Wales for an order for sale by Ms D as trustee for the Cleese Super Fund.
The Court concludes, therefore, that the implementation of this order became impracticable to be carried out. The subsequent events went far beyond mere inconvenience to be carried out, or problems of enforcement, but created an impracticability. The final outcome in relation to the B Street property was materially different to that contemplated by the order in question.
Default
The next ground is that a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order.
It was clearly a part of the Applicant’s case that the Respondent had defaulted in carrying out an obligation imposed on him by the order. The Applicant contended that the Respondent in his capacity as director and shareholder of B Pty Ltd failed to sell and/or develop and/or market the B Street property. Given that the Court has found that the order in question became impracticable to be carried out, it follows that the contention of default becomes redundant. In any event, however, the Court’s impression of the evidence in its totality is that neither of the parties was, at the relevant time, in a position to raise the capital needed to do anything other than sell and/or market the property. The Respondent’s default in this regard no greater than the Applicant’s default. In the circumstances of this case, the default by both parties makes it just and equitable to set it aside.
The Court is satisfied from the evidence that there are ample grounds to activate the provisions of s 41 of the State Act. For the reasons set out above, there has been a miscarriage of justice.
The Court retains a discretion as to whether or not to set aside or vary the order, notwithstanding the matters set out above. No compelling reason was advanced as to why, in these circumstances, the Court would not exercise its discretion to set aside or vary the order. The Applicant contends that the order should be set aside in its entirety or, in the alternative, that it be varied in the manner set out at paragraph 9.41 of the Applicant’s closing submissions. Having regard to all of the evidence before the Court, including its findings about the de facto relationship between the parties continuing for several years after the orders were made, the Court exercises its discretion by setting aside the order in its entirety.
It is possible that there is another basis on which the order should be set aside, that was not argued before the Court. The argument is predicated on a finding that the parties had resumed their de facto relationship at the time the orders were made, but failed to advise the Court of this.
Consistent with the decision of the Full Court in McCabe and McCabe (1995) FLC 92-634, and the decision of Nicholson CJ in Somerville and Somerville (2000) FLC 93-042, it is possible to conclude that the parties, either expressly or impliedly, or by their conduct, consented to the discharge of the agreement as to judgment, and rendered such orders unenforceable. They resumed their de facto relationship as manifested by many things. For example, they continued their sexual relationship. They cohabited together. They attended social and other functions together. They went on holidays together. They spent time with each other in the company of members of each other’s families including grandchildren. They entered into loans and mortgages together.
Moreover, consistent with the High Court’s decision in Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507, when the Applicant and Respondent failed to advise the Court that they had resumed their de facto relationship, an abuse of the Court’s process occurred. At [25] French CJ, Bell, Gagelar and Keane JJ stated:
Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.
(Footnotes omitted)
Their Honours referred to the High Court decision in PNJ v R (2009) 252 ALR 612, where the Court said at [3]:
It is not possible to describe exhaustively what will constitute an abuse of process. It may be accepted, however, that many cases of abuse of process will exhibit at least one of three characteristics:
(a)the invoking of a court's processes for an illegitimate or collateral purpose;
(b)the use of the court's procedures would be unjustifiably oppressive to a party; or
(c)the use of the court's procedures would bring the administration of justice into disrepute.
(Footnotes omitted)
In this case, the Court believes that the use of the procedures of the Supreme Court of New South Wales to enter into final property settlement orders in circumstances where the parties had resumed their relationship would bring the administration of justice into disrepute. For example, and without suggesting in any way that this is what happened in the present case, couples in an intact relationship could obtain orders of the Court altering their property interests, with consequential stamp duty benefits, but to the possible detriment of creditors including revenue authorities. This example clearly goes to the first of the three characteristics identified in PNJ v R but there is no suggestion that the three characteristics are mutually exclusive. In any event, the Applicant would, if she had turned her mind to this, no doubt submit that the use of the Supreme Court’s procedures on the facts of this case were unjustifiably oppressive to her.
Another possible basis for setting aside the agreement as to judgment is whether the making of the orders could have been just and equitable in the circumstances of this case given that the parties had resumed their relationship by the time the order was made. Section 20(1) of the State Act makes it very clear that any order made must seem just and equitable having regard to the factors referred to in (a) and (b). Any such application must be made by a party to a domestic relationship. This is defined in s 5 to include a de facto relationship as well as a close personal relationship. De facto relationship is defined in s 4, the terms of which are well-known and warrants no reproduction in the present context. Section 15 of the State Act sets out prerequisites for the making of an order, which are clearly satisfied in the present case. Section 16 then states:
16 Relevant facts and circumstances
Where a court is satisfied as to the matters specified in section 15 (1) (a) and (b), it may make or refuse to make an order under this Part by reason of facts and circumstances notwithstanding that those facts and circumstances, or some of them, took place before the appointed day or outside New South Wales.
(Emphasis in original)
The section thus enables the Court to take into account facts and circumstances notwithstanding that they are not prerequisite facts and circumstances. One such circumstance is that the parties in this case had resumed their de facto relationship before the order was made. The Court was deprived of considering this fact and circumstance because it was unaware of the same.
Section 17 then states:
17 Prerequisites for making of order—length of relationship etc
(1)Except as provided by subsection (2), a court shall not make an order under this Part unless it is satisfied that the parties to the application have lived together in a domestic relationship for a period of not less than 2 years.
(2) A court may make an order under this Part where it is satisfied:
(a) that there is a child of the parties to the application, or
(b) that the applicant:
(i)has made substantial contributions of the kind referred to in section 20 (1) (a) or (b) for which the applicant would otherwise not be adequately compensated if the order were not made, or
(ii)has the care and control of a child of the respondent,
and that the failure to make the order would result in serious injustice to the applicant.
(Emphasis in original)
Curiously, this section focuses on the existence of a domestic relationship for a period of not less than two years, but does not seemingly create as a prerequisite to the exercise of power and discretion that the domestic relationship has ended.
The final relevant provision is s 19:
19 Duty of court to end financial relationships
In proceedings for an order under this Part, a court shall, so far as is practicable, make such orders as will finally determine the financial relationships between the parties to a domestic relationship and avoid further proceedings between them.
(Emphasis in original)
This provision emphasises that an order made is intended, so far as practicable, to finalise financial aspects of the relationship between the parties. When an order is made under s 20, the Court’s jurisdiction is exhausted.
All of these sections inform the justice and equity of making an order.
In Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) the High Court considered the meaning of “just and equitable” in the context of s 79 of the Family Law Act. Nonetheless, it informs the meaning of “just and equitable” in the present context. It is noted that in Stanford the High Court was dealing with a separation that was involuntary but that does not detract from the value of the principles to be derived from this case. The following paragraph from the reasons of French CJ, Hayne, Kiefel and Bell JJ is informative:
[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)
Thus, it would have been quite appropriate for the Supreme Court to have considered the current state of the relationship between the parties at the time the order was made in order to consider whether it was just and equitable. It is unlikely, with respect, that such an order would have been found to be just and equitable if the Court had known that the parties had resumed their de facto relationship.
The High Court further states in Stanford:
[42]In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
(Emphasis in original)
This is an important paragraph in the present context. It points to the relevance of the state of the relationship of the parties seeking orders, at the time the orders are made. It clearly points to the significance of living in a relationship, and the express and implicit assumptions that arise by the end of the mutuality inherent in a relationship. In this case, the express or implicit assumptions of the parties at the time the order was made were based on the resumption of their de facto relationship, and not its termination.
The making of the order in the circumstances could not have been just and equitable because of facts not available to the Court at the time the order was made. An order was made which purported, consistent with s 19, to finalise the financial aspects of the relationship between the parties, but this was on a false premise that the relationship had in fact ended. The jurisdiction of the Court was exhausted, again on the basis of a false premise. With the benefit of the evidence that this Court enjoys, it is palpably clear that the order made on in late 2006 was not just and equitable as the parties had resumed their de facto relationship. The exercise of discretion under s 20 clearly miscarried because of this. A miscarriage of justice has occurred, and the order needs to be set aside.
The estoppel submission
In the alternative, the Applicant seeks a declaration estopping the Respondent from relying on the agreement as to judgment. The Applicant’s counsel describes this as conventional estoppel (see, e.g. Moratic Pty Ltd v Gordon [2007] NSWSC 5; Jaeger v Bowden (No. 2) [2016] NSWSC 897).
The Applicant cited Brereton J’s comments in Moratic Pty Ltd v Gordon at [33], at which his Honour observed:
…conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties’ relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding.
The Applicant contends that, in simple terms, neither the Applicant nor the Respondent treated the agreement as to judgment, or the entering of this by the Supreme Court, as an end to their de facto relationship or a final determination of their financial relationship.
The Court accepts that this contention is borne out by the facts generally. As it turns out, however, there is no need to rely on estoppel.
I certify that the preceding one hundred and sixty-five (165) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 2 May 2022
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