Collier v VANDERLAND - [2011] SADC 12

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
COLLIER v VANDERLAND
[2011] SADC 12
Judgment of His Honour Judge Barrett
22 February 2011
FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - ADJUSTMENT OF PROPERTY INTERESTS - RELEVANT CONSIDERATIONS
The relationship between the parties lasted for just over 6 years. There were two children. The plaintiff was a pilot based overseas. The defendant was the homemaker. The principal assets acquired during the relationship were the house in South Australia and the plaintiff's superannuation. The parties sought orders for the division of their property pursuant to the Domestic Partners Property Act.
Held: i) the savings, shares and superannuation held at separation are to be shared equally; ii) the plaintiff is to compensate the defendant for the diminution in the equity of the house caused by his changing the currency of the mortgage from Australian dollars to Japanese yen without consulting her; iii) otherwise the equity in the house is to be shared between the parties in the proportions that each contributed to its purchase from their pre-relationship savings.
Domestic Partners Property Act 1996 s 9(3); s 10; s 11; De Facto Relationships Act 1996 s 11, referred to.
Hogg v Roberts [2003] SASC 410; 87 SASR 248; Parker v Parker (1993) 16 FAMLR 863; Karpathiou v Clemente [2008] SASC 316; Cressy v Johnson [2009] VSC 52; Pigott v Walker [2002] ACTSC 40; Norbis v Norbis (1985-6) 161 CLR 513, considered.

COLLIER v VANDERLAND
[2011] SADC 12
Introduction

The parties are suing each other seeking, first, a declaration that their relationship was a domestic partnership within the meaning of the Domestic Partners Property Act 1996(“the Act”) and, second, an order for the division of their property.
Background
The couple lived together for just over 6 years, from September 2001 to November 2007. They have two children, a son born in January 2002 (now 9) and a daughter born in March 2003 (nearly 7).
The plaintiff is 43. He is a pilot employed by an American company. He is contracted to work for a Japanese airline. He was so employed throughout most of the relationship. He earns a substantial tax free income. He now lives in Tokyo with his wife whom he married on 1 November 2007 (the plaintiff explained that a Japanese marriage takes place in two stages, a civil procedure followed by a social or religious ceremony. The civil procedure occurred on 1 November 2007. The ceremony took place in January 2008). The plaintiff has a son from that marriage born in June 2008. The couple are expecting another child in March 2011.
The defendant is also 43, some 5 months younger than the plaintiff. She was a manager when the couple met and when they first started living together. She was made redundant from her employment in October 2001, about a month after cohabitation began. By then she was about 7 months pregnant with their first child. For the remainder of their relationship she stayed home looking after the children. The children were aged 5 and 4 when the parties separated. The couple had agreed that the defendant should remain at home during their relationship partly because of the plaintiff’s work routine. Usually he would work 20 or 21 days each month, then have 10 days off. While working he would be overseas, principally in Japan. In his 10 days off the couple would sometimes travel. They lived in the Netherlands between May 2003 and April 2004, and, during that period, they travelled frequently around Europe.
The parties returned to Australia in April 2004. They purchased a house at Flagstaff Hill in October 2004. This was the first property purchased by them. They had lived in rental accommodation in Queensland, when they first cohabited, and when they lived in the Netherlands.
The defendant continues to live with the children in the Flagstaff Hill property. The property is agreed to be valued at $680,000 both at separation and at the time of the trial. The house was purchased in the defendant’s name. That was partly so that the plaintiff might avoid being regarded by the Australian Tax Office as being resident in Australia. If he was regarded as being resident in Australia he would be liable to pay Australian income tax.
There is a mortgage over the house of approximately $284,000. The mortgage is in the plaintiff’s name. He has always made the mortgage payments. He is presently required to make the mortgage payments pursuant to an order of the Federal Magistrates Court dated 26 June 2009. The court order relating to the mortgage payments is one of four components of maintenance payments he is required to pay. The other three components are that he pay the children’s school fees, their health insurance and a monthly sum.
The circumstances of the house mortgage assume prominence in the dispute between the parties. I will refer to those circumstances shortly.
Another significant dispute between the parties is the extent to which each contributed to the purchase of the house. The plaintiff says that he paid the deposit on the house and made all mortgage payments. He met all substantial expenses relating to the purchase, maintenance and renovation of the house. In addition he met all significant household expenses incurred during the relationship. Insofar as the defendant had any assets of her own, she did not contribute them to any significant extent to the purchase of the house or the family’s expenses.
The defendant says that she had assets of her own which she did apply to the purchase of the house and to meet the couple’s living expenses. She was, by agreement between the parties, the principal care giver of the children. The plaintiff has diminished the equity in the house by changing the currency of the mortgage from US dollars to Japanese yen. He made that change for his own purposes and without consulting her. He is solely responsible for the equity in the house being reduced and that fact should substantially reduce his entitlement to a property adjustment.
Minor Assets owned by the parties at the beginning of the relationship
Each had a car. The plaintiff says he had a Falcon worth about $1,200. The defendant received a severance payment when she was retrenched in October 2001, just after the co-habitation began. There were some negotiations with her former employer, the result of which was that she nominally received a severance payment of $20,000 but out of that she paid $3,000 for a heavily depreciated Falcon, which she was later able to sell for $12,000. She deposited that money in her bank account. Shortly after the plaintiff’s return from his overseas pilots training in February 2002, the car was sold and the plaintiff put in $US17,000 towards the purchase of a Nissan. I will disregard the contribution of each party to the purchase of motor vehicles for the purposes of the property division.
Each party had some furniture. The plaintiff says his furniture was worth about $2,000 and that of the defendant was worth about $5,000. Although the furniture remained in the house when the plaintiff left, he makes no claim in relation to it. I will ignore furniture.
The plaintiff makes no claim in relation to jewellery owned by the defendant.
Legal principles
The Act governing the division of property is the Domestic Partners Property Act 1996.
Pursuant to s 9(3) an application for the division of property must be made within one year after the end of the relationship. I find that the relationship ended on 1 November 2007. That is the date on which the plaintiff underwent the civil marriage ceremony in Japan. He did not tell the defendant of that fact until 23 November 2007 but I find that it cannot be said that the relationship with the defendant continued beyond the date of his marriage. Both parties agree with that proposition.
The plaintiff filed his summons on 12 December 2008, some 5 weeks out of time. The defendant filed her original defence and counter-claim later.
Section 9(3) provides that I may extend the time, if, after considering the interests of both parties, I am satisfied that it is necessary to do so to avoid serious injustice to the applicant. I am satisfied that such an injustice would be caused to both parties (each is an applicant) if I did not grant an extension. Each party submits I should do so. I extend the time within which each should have filed his or her application. I extend the time to the day after each application was filed.
Section 10 provides the court with power to make orders. Section 10 reads:
(1)On an application for the division of property after the end of a domestic partnership, the court may make such orders as it considers necessary to divide between the domestic partners the property of either or both partners in a way that is just and equitable.
(2)     For example, the court may make orders for—
(a)     the transfer of property from one domestic partner to the other; or
(b)     the sale of property and the division of the net proceeds between the domestic partners in proportions decided by the court; or
(c)     the payment by one domestic partner of a lump sum to the other.
Section 11 sets out the matters for consideration by the court when contemplating such orders. I reproduce sub-section (1).
(1)In deciding whether to make an order for the division of property under this Part, and if so the terms of the order, the court—
(a)     must consider the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to—
(i)the acquisition, conservation or improvement of property of either or both partners; or
(ii)the financial resources of either or both partners; and
(b)     must consider the contributions (including homemaking or parenting contributions) made by either of the domestic partners to the other partner or to children of the partners or either of them; and
(c)     must have regard to the terms of any relevant domestic partnership agreement; and
(d)     may have regard to other relevant matters.
The Full Court of South Australia has provided guidance in the application of this legislation, albeit, that the court was considering the predecessor of the present Act. In Hogg v Roberts [2003] SASC 410; 87 SASR 248 the court was considering the provisions of the De Facto Relationships Act 1996, but in material respects its terms are identical to those of the present Act. His Honour the Chief Justice (with whom Perry and Gray JJ agreed) said at [11]:
My understanding of the Act is that the requirement to make an order that is "just and equitable" does not give rise to a general and unfettered discretion. First of all, the court is dividing property, not settling all outstanding financial issues as between the partners. Secondly, s 11(1) indicates that the contributions referred to in that provision are important considerations in deciding what is just and equitable. The initial and primary focus must be on the property in question, contributions to that property, contributions to financial resources and then contributions by one party to the other and to the children.
His Honour also suggested what limits there might be on the courts having regard to “other relevant matters”, contemplated in s 11(d). His Honour concluded that the expression was not so broad as to mean that the court might have regard to such matters as it thought fit[1].
[1] at [12].
His Honour gave instances of the sorts of considerations which would not be relevant.
13 Bearing that in mind, I consider that it is not the role of the court to use the division of property to remedy any justified grievances that one party may have against the other, or to compensate one party for disappointed or unfulfilled expectations. The focus appears to me to be on a just and equitable distribution of property, after considering primarily contributions of the kind identified by s 11(1) of the Act. The task of the court is a narrower one than the task of the court under s 79 of the Family Law Act 1975 (Cth). The relevant considerations are more narrowly confined. Matters that are likely to be relevant are the length of the relationship and the immediate needs of the parties. I say "immediate needs" because the court's focus is on the division of property. In deciding what is "just and equitable", the needs of the parties at that time will be relevant. However, the court is not dividing property with a view to providing, for example, for the continuing maintenance of the parties, or taking into account their future financial prospects.
14 Other matters may be relevant. It would be dangerous to try to draw a line here in the abstract. I go no further than to say that the focus is on the just and equitable division of property and not on an order that is fair having regard to all the circumstances surrounding, and everything that happened during, a relationship.
15 I agree with the observations made in decisions in other States that the court is not concerned with attributing fault for the breakdown of the relationship; that contributions as homemaker and parent are not to be treated as inferior to material or financial contributions, they are to be taken into account in a substantial way; that contributions of a non-material kind are to be assessed in a broad way, rather than by reference to the rate of remuneration payable to commercial providers of such services, and that there is no reason to approach the matter on the basis of an assumption that an equal division is appropriate, unless there is good reason to depart from that position. I draw those propositions from the reasons of Gleeson CJ and McLelland CJ in Equity in Evans v Marmont(1997) 42 NSWLR 70 at 74. Although the legislation under consideration there was relevantly different, I consider that these basic principles apply to the Act.
While recognising that other approaches to determining the issues at trial might be appropriate, His Honour commended as helpful the approach taken by Young J in Parker v Parker (1993) 16 FAMLR 863 at 870. There a four stage approach was taken, as follows:
Identify and value the assets;
Determine the contributions of each party;
Determine whether the contribution of each has been sufficiently recognised and compensated;
Make appropriate adjustments.
In Karpathiou v Clemente [2008] SASC 316 a differently constituted Full Court applied the principles referred to by Doyle CJ in Hogg v Roberts[2]. I will respectfully adopt the approach commended by the Full Court in Hogg v Roberts.
[2] [29] to [31].
Identification and value of assets
I begin by putting aside some assets from further consideration. I have already put aside motor vehicles, furniture and jewellery. Each party had some Australian superannuation entitlements at the beginning of the relationship which each retains. Neither party seeks to have those entitlements considered.
The position is different with the plaintiff’s US superannuation entitlement. I will return to that topic.
For the purpose of identifying and valuing the relevant assets, it is necessary to have regard to assets at the end of the relationship on 1 November 2007, their value at trial and even possibly their value at the time of judgment. I explain why.
The value of the house at Flagstaff Hill in May 2008 was $635,000 (Exhibit P1). I will treat that as the value of the house at separation, some 7 months earlier. The outstanding mortgage on the house as at 9 November 2007 was AU$219,795.50 (Exhibit 24). At that date the mortgage is shown in Japanese yen because the plaintiff had changed the mortgages from Australian dollars to Japanese yen on about 6 November 2007. At that time the mortgage was being repaid by the plaintiff on an interest and principal basis. Thus the equity in the house at the time of separation was $415,204.50.
The plaintiff says that in August 2007 he decided to change the currency of the loan from US dollars to Japanese Yen. The actual change did not occur until about 6 November 2007 (Exhibit D24). The plaintiff says he discussed the proposed change with the defendant in July or August of that year[3]. The defendant denies any such discussion took place. She said the first she knew of the change was in May 2008. I will have to return to that topic, but for present purposes it is sufficient to note that the currency change of the loan occurred on about 6 October 2007, a few days after the separation. The plaintiff says that the bank’s advice at the time was that its expectation was that the value of the yen would decline in relation to the US dollar. In those circumstances it would be advantageous to change the currency to yen. There was no independent evidence of these matters. Subsequently the change became disadvantageous. At the time of trial in September 2010, the value of the Yen had increased in relation to the US dollar. As at 23 September 2010 the Australian dollar equivalent of the outstanding balance in Yen was $284,399.59. The value of the house had increased. The valuation date 4 August 2010 puts the value of the house at $680,000. However the increase in the mortgage reduced the equity in the house by about $20,000 to $295,600.41.
[3] T33.
The terms of the loan were further changed some time in 2008 so that it became an interest only loan, ie repayments are not reducing the principal owing. The defendant does not suggest that this change has caused any significant alteration in the equity.
As mentioned earlier, each party had Australian superannuation entitlements when the relationship began. The defendant did not work during the relationship and so has no other superannuation. The plaintiff has made no further contributions to his Australian superannuation entitlements. At the beginning of the relationship the plaintiff’s superannuation was $33,123.47 and the defendant’s was $54,272. The plaintiff does not suggest that these sums should become part of the asset pool for division[4].
[4] T40.
The parties are however at odds about the inclusion in the asset pool of the plaintiff’s US superannuation accumulated during and following the relationship. The plaintiff has two superannuation policies. At the time of separation, one was worth $42,305.19. It had increased slightly by the time of trial to $43,527.80. The other superannuation entitlement has reduced in value from $130,557.18 to $107,962.65. The reason for the reduction is that after the parties separated the plaintiff borrowed $30,000 from the latter fund. He said that he is obliged to repay that amount within 5 years.
The plaintiff submits that his superannuation should not be included in the asset pool because superannuation is designed to provide income after retirement. It should not be considered as part of the property acquired during the relationship. In my view the legislation makes it clear that superannuation entitlements are to be taken into account. The definition of “property” in s 3 of the Act includes “(a) a prospective entitlement or benefit under a superannuation or retirement benefit scheme”. It may be that no order should, or could, be made liquidating any part of the plaintiff’s US superannuation entitlement, but that is not a reason for disregarding it in the division of property.
Normally the appropriate time to fix the value of divisible property is the point of separation[5]. I will have to be careful to avoid double counting in this aspect of the property division. If, for example, the loan of $30,000 became part of the plaintiff’s present savings it would be unfair to include for division the plaintiff’s superannuation at separation and his savings at trial.
[5] Cressy v Johnson [2009] VSC 52 at [201] and Pigott v Walker [2002] ACTSC 40 at [88].

In my view the correct approach is to have regard to the value of property at point of separation. I put to one side for the moment the question of whether the erosion of the equity in the house since separation by reason of the currency change should be taken into account.
I find that the assets in Australian dollars at the time of separation which are subject to division are:
House equity $635,000 minus $219,795.50   $415,204.50
Plaintiff’s US superannuation
1)     Mass Mutual 401(K) $42,305.19
2)     Mass Mutual 401(K) Co $130,555.18  $172,860.37
Plaintiff’s savings
1)     Level 1 Hawaii $4,427.46
2)     Bonus rates Hawaii $4,899.06  $9,326.52
Defendant’s shares   $16,875.08
Defendant’s savings   $293.69
Contributions made by each party
As can be seen the two principal assets are the house and the plaintiff’s superannuation. There are disputes about the contributions each has made to the purchase of the house. I will regard contributions to the conservation or improvement of the house as equal because of the agreed roles they had in the relationship.
There is a disagreement about how much each party contributed to the purchase price. Settlement of the house occurred on 29 October 2004 (Exhibit P8 Settlement Statement). The purchase price, including the adjustment of rates and taxes, was $547,177.62. A deposit of $179,821.38 was paid. A further cash payment of $41,912.84 was made. The plaintiff borrowed $325,443.40. The loan was from the ANZ Bank in Singapore. The plaintiff made all payments on the mortgage.
By agreement between the parties the defendant did not take paid work during the relationship. It was agreed she would stay home and look after the two children. She was about 5 months pregnant with the elder child when the parties began co-habitation. It is common ground that the parties are to be taken to have contributed equally to the mortgage payments by reason of that agreement and the contribution the defendant has made as homemaker. The plaintiff was able to make the payments on the mortgage because the defendant stayed home to look after the children.
What is not common ground is how much each contributed to the deposit and further cash payment making up the purchase price at settlement. The plaintiff says he paid all of it. During the trial he gave evidence that he wired two sums to the defendant’s NAB account for the purpose of paying the deposit. Exhibit P8 includes two land agent’s receipts showing that the defendant paid $9,985 on 9 September 2004 and $169,836.38 on 20 September 2004. The plaintiff said that those two sums were the approximate sums he sent to the defendant for the purpose of paying the deposit. During the trial the plaintiff produced no bank records of his own to substantiate this claim. He did however produce letters of instructions to his own bank to wire those two sums (Exhibits D19 and D20).
Towards the end of addresses I gave each party leave to put further submissions in writing on the topic of the contributions of the parties to the deposit on the house[6]. By letter of 24 November 2010, the plaintiff’s solicitors advised that they wished to tender two of the plaintiff’s Bank of Hawaii bank statements.
[6] T434.
The first bank statement is for the period of 2 to 31 August 2004. It shows an entry on 5 August suggesting an outgoing wire transfer of US$7,105 which is said to correspond first with the fax request of 7 August (Exhibit D19) from the plaintiff to his bank and the deposit by the defendant of AU$9,985 on 9 September (the plaintiff’s solicitors explain the discrepancy between the plaintiff’s fax to his bank of 7 August and the bank’s wire of money on 6 August by an international date time difference between Japan where the plaintiff was at the time and the US where the bank is located).
The second bank statement is for the period of 3 to 27 September 2004. There is an entry on 17 September which records an “outgoing wire transfer” of US$120,000. That transfer would appear to correspond to the fax instruction from the plaintiff to his bank dated 15 September 2004 (Exhibit D20). The plaintiff asks me to draw the inference that the wire transfer is approximately equivalent to the deposit of AU$169,836.38 made by the defendant to the land agent on 20 September 2004 (Exhibit P8).
With this additional information I draw the inference that supports the plaintiff’s evidence. I find he transferred those two sums to the defendant for the purpose of paying the deposit.
In her evidence the defendant denied that those transfers took place. Her recollection is that the only money the plaintiff probably wired for the purpose of buying the house was the $41,912.84, which was the cash paid in addition to the deposit. She gave no real reason for doubting the plaintiff’s evidence and has produced no records to confirm her doubts. I find that the plaintiff wired the monies as he said he did for the purpose of paying the deposit. The total paid in cash for the house was $221,734.22. ($179,821.38 plus $41,912.84.)
I turn to examine the deposits each party made to the NAB Account before the house was purchased.
The defendant had monies of her own in the NAB account. She made identifiable deposits into her Coop Building Society account which was then later transferred to the NAB account. At the time the relationship began the defendant said that she had savings of $50,000. She produced no bank records to confirm that. The plaintiff was therefore unable to challenge that figure. In addition the defendant said that she banked the net proceeds of the sale of her house in Leabrook. She sold that house in April or May 2000, some 16 or 17 months before the parties’ co-habitation began. In addition she said she deposited a further $10,000 from the sale of the sports car. She was not clear when that sum was deposited. She said these sums were in addition to the $50,000 she had saved. The defendant said that she received a separation package of about $20,000 but paid $3,000 of that for the Falcon motor vehicle. The net deposit paid into her account was in the vicinity of $17,000. On 4 June 2004 she sold some BT shares realising $23,000. She deposited that sum in her NAB account. The plaintiff is unable to challenge any of this evidence because the defendant has not supplied bank records. The plaintiff does not concede that those deposits were made. The plaintiff’s attitude is quite understandable. However I found the defendant generally a credible witness. She was particularly frank about the evidence of the value of her shares. She acknowledged that the value of the shares was not $50,000, as appeared in her pleadings, but $20,000 because she had been unable to recover $30,000 of them from a former partner. In those circumstances I accept her evidence about the deposits made by her into the NAB account.
It is of course unclear how much of the sums deposited into her account by the defendant were left by the time the house was purchased. What I do find however is that generally any reduction in the balance in the NAB account was as a result of the defendant meeting household expenses. I appreciate that there was a period between the sale of her house and the beginning of the relationship with the plaintiff, but the defendant was not cross-examined on that topic beyond a challenge to her failure to provide bank records. The defendant conceded that if she had been in a position to pay for the relevant bank records, she could have obtained them.
There is disagreement between the parties about whether the defendant contributed to the family’s living expenses. The defendant said she did and the plaintiff said that any contribution she made was very minor.
However it is clear that by the time co-habitation finished the defendant had virtually no savings left. She said her savings were expended over the years on family expenses. She said she paid household expenses from the beginning of the relationship until February 2002 when the plaintiff completed his pilot’s qualifications. (That is a period of about 5 months.) The plaintiff eventually conceded that. The defendant said she made other payments but was unable to identify them.
I digress to mention shares the defendant possessed. They were worth about $20,000 at the beginning of the relationship. She sold them after separation to pay for legal fees. The defendant says that she had shares worth $16,875.08 at separation. That sum is accounted for separately from savings.
The plaintiff denies that the defendant ever contributed to the family’s expenses to any extent. He says he paid all expenses. He gave quite detailed evidence on that topic and generally I accept his evidence. He criticises the defendant for being extravagant. I make no finding on that topic. It appears the family lived comfortably but in my view that observation cannot assist me in determining the appropriate property division.
The plaintiff contributed one identifiable sum to the defendant’s NAB account. He sold his house in Western Australia and deposited the net proceeds of $100,000 into her account[7]. The house was sold in July 2003 (Exhibit P6). The defendant thinks the deposit was less than $100,000 but she is unable to say how much less. Her evidence on that topic was vague[8]. She produced no evidence casting any doubt on the plaintiff’s evidence. I accept that he deposited approximately $100,000 into her account when he sold his house in Western Australia.
[7] T31.
[8] T254.
The parties were living in Holland between June 2003 and April 2004. They lived in rental accommodation in Adelaide between returning to South Australia in April and moving into the Flagstaff Hill house around about settlement on 29 October.
In the absence of the defendant’s NAB bank statements it is impossible to determine how much money there was in the account from which the withdrawals to pay for the house were made. I find that the sums I have referred to were paid into the account before settlement by each party. I am unable to find how much money was spent before settlement. I do find that the defendant spent the money on household expenses. The plaintiff says, and the defendant does not dispute, that after the plaintiff had finished his pilot’s training in February 2002 he paid most of the household expenses until they separated in November 2007. He made these payments either by enabling the defendant to withdraw cash from one of his accounts or he paid her monthly credit card balances. However she says that during their co-habitation she spent all her savings on household expenses.
The plaintiff says that the defendant’s evidence of paying household expenses is false. I reject his evidence on that topic. I think he has minimised her contributions. I think that he must be unconscious of her contributions partly because his were so much greater than hers over the whole relationship and because he is adamant that she was extravagant. While I have found that both witnesses were generally doing their best to tell the truth and to be accurate in their recollections, I have found each to be more reliable than the other in certain aspects. In respect of the evidence of the defendant spending all her savings on household expenses, at least up to the end of the relationship, I prefer her evidence to that of the plaintiff. I accept that during the relationship the defendant spent all her savings on household expenses. That finding does not resolve the question of how much money was in the NAB account at the time of the withdrawals for the purpose of buying the house. I do find however that any diminution in the sums deposited by each party was due to household expenditure. While I find that the plaintiff wired to Australia the sum of $179,821.38 to be paid towards the deposit of the house, it remains to be determined how that sum is to be regarded for the purposes of determining the contribution made by each. The sum wired by him came from monies accumulated by him during the relationship. The defendant submits that in those circumstances the monies wired should be seen as a joint contribution to the purchase of the house because the defendant’s contribution as homemaker should be equated with his financial contribution. The plaintiff was able to accumulate those monies partly because the defendant remained at home looking after their two, then pre-school aged, children. I accept that submission. Shortly I will set out in tabular form the contributions made by each to the purchase of the house and I will show the monies wired by the plaintiff as an equal contribution of $90,000 by each. I will assume that the $100,000 deposited by the plaintiff into the NAB from the sale of his house in July 2003 was intact. Likewise I will assume that the defendant’s savings, her redundancy payout and the sale of her BT shares were intact.
I now set out in tabular form the approximate deposits by each party into the NAB account from which the cash paid for the house was withdrawn.
Plaintiff  Defendant
$90,000 (half money wired by plaintiff)  $90,000 (half money wired by plaintiff)
$100,000 (sale of plaintiff’s house in July 2003)         $70,000 (comprising savings, sale of house and     sports car)
$17,000 (redundancy October 2001)
$23,000 (sale of BT shares June 2004)
______________  ______________
$190,000  $200,000
I turn to determine the question of whether the plaintiff should effectively have setoff against his contribution the erosion of the equity in the house by his converting the mortgage from US dollars to Japanese yen in November 2007. I think it is a matter I may consider by virtue of s 11(1)(d) (“… other relevant matters”). It may also be seen as a negative financial contribution and therefore may be considered under s 11(1)(a).
I deal first with the question of whether the plaintiff consulted the defendant about the change. The answer to that question may not be determinative but I think it is relevant. I find that the plaintiff did not consult the defendant. I explain why.
The plaintiff’s own evidence of having consulted the defendant is unconvincing. In examination-in-chief he said that he made the decision to change the currency in about August 2007. He discussed it with the defendant. She had trouble understanding it. He said she “… more or less didn’t want to know, she’s happy that I was managing it …”[9]. He said those discussions took place in July or August.
[9] T32-33.
In cross-examination the plaintiff said he spoke to the defendant on three occasions. He said “… I think there’s you know, inception, floating the idea, discussion and then there is action”[10]. Unfortunately the questioner did not ask what was the defendant’s response each time. The cross-examiner returned to the topic later. The plaintiff said that “Logically there would have been three discussions”. He could not recall when the discussions took place but he thought it might have been in September or October. He thought it likely that there were further discussions on or after 2 November 2007[11].
[10] T88.
[11] T168.
The defendant was adamant that she had heard nothing from the plaintiff about a proposed change in the currency. She said the first she knew of it was when she received a letter from the plaintiff in May 2008. Having received the letter she rang the bank in Singapore to find out what was going on. It is not clear whether the letter she is referring to is Exhibit D25 which is a letter sent by the plaintiff to the defendant on 30 May 2008. In that letter the plaintiff refers to the currency change. He says:
I acknowledge your request for documentation related to the altering of the mortgage repayments. If I was not currently blocked as an email sender, they would be in your possession now. There is some good news; as the currencies have shifted again, it appears that there is not a major loss as what was previously thought by changing to Yen. As discussed with you previously, it depends upon if you change back to another currency realising the loss. The ANZ forecast bodes well for the current arrangement. The current value of the loan is roughly $AUD220K. Out of consideration, I will not change to another currency without first notifying you.
Mr McQuade highlights the last sentence which he submits is inconsistent with the plaintiff having earlier discussed the currency change with the defendant. I agree with that submission. I do not overlook the reference earlier in the excerpted passage to previous discussions about currency changes, but I think it likely that that reference is to the changes from Australian to US dollars, something the defendant agrees the plaintiff did discuss with her and to which she consented.
I found the defendant’s evidence on this topic convincing. She said frankly that if she had been consulted about the change to Yen she would have agreed if she thought it was commercially viable[12]. She had done precisely that with the change to US dollars. The defendant is guarantor for the mortgage although it is in the plaintiff’s name. I think she would have taken an interest in any proposal to change the currency to Yen if she had been told about it. I think she would have indicated clearly to the plaintiff what her attitude to the proposal was. I do not believe she would have brushed the topic aside as the plaintiff suggests she did. In her employment, and in the amassing of assets, the defendant had shown an aptitude for money matters. I find that the plaintiff did not consult the defendant about the change. The decision was his and his alone.
[12] T345.
I am uncertain what the defendant would have done if she had been consulted. If, as the plaintiff says, the banks were advising that the change was a viable one, then she might have agreed. She had done so with the transfer to US dollars. However I have no independent evidence of what financial advice was being given at the time by banks or by anyone else. Some financial advisers might have been cautious. I do not know. It would be speculation on my part to determine what the defendant might have done if she had been consulted.
There remains the question of whether the plaintiff should effectively bear the consequences of the erosion of the asset.
The plaintiff’s liquidity improved after the currency change. That is largely why he made the change. He reduced his quarterly mortgage payment from AU$12,500 to $500, a saving of $4,000 per month. That increase in liquidity has contributed to the increase in his savings. His savings rose from the time of separation in November 2007 ($9,326.52) to the trial in September 2010 ($64,469.81). It is plain that there is not a direct correlation between the reduction in outgoings and the increase in savings but the former has inevitably contributed to the latter. The plaintiff’s increased savings can be seen as being at the expense of the equity in the house.
I do not think I could characterise the plaintiff’s change of currency as reckless. I am sure that uppermost in his mind was the need to reduce his outgoings because he was plainly engaged in the relationship with his new wife when he was separating from the defendant. He was in effect supporting two households. He was loud in his complaints about the defendant’s extravagance. He may not have foreseen the reduction in the equity in the house, but I would not rule out the possibility of his contemplating that risk and deciding that he had to run it to reduce his outgoings. I would not characterise his behaviour as reckless but I think that increasing his liquidity was uppermost in his mind when he made the change.
Savings acquired by a party after separation would in general not be part of the asset pool for division. If I were to exempt the plaintiff’s savings from the asset pool it would appear unjust to reduce the asset pool by the reduction of the equity in the house. In other words it would be unjust to make the defendant bear any part of the erosion of the equity. It seems to me in the circumstances that it is just that the plaintiff effectively bear the cost of the reduced equity in the house. His savings have considerably increased but that increased savings will not be part of the asset pool for division. I will therefore regard the net value of the house at the time of separation (ie before the currency change) as the sum for division. I will order the plaintiff to compensate the defendant for the reduced equity. I will hear further from the parties about the date upon which I calculate the quantum of the mortgage and therefore the equity in the house.
Determine whether the contribution of each party has been sufficiently recognised and compensated.

There has been no property adjustment since the parties separated. The defendant has continued to live in the house with the children. The plaintiff has paid the interest only payments on the mortgage. He has paid maintenance in accordance with the order of the Federal Magistrate made on 26 September 2009 (Exhibit P3). That order includes the payment of the mortgage. I find that the contribution of each party has not been sufficiently recognised and compensated. I will make an appropriate adjustment.
Make appropriate adjustment
In approaching the question of what adjustment is necessary I must bear in mind the matters required to be considered pursuant to s 11(1) of the Domestic Partners Property Act, I must consider the financial and non-financial contributions made directly or indirectly to the acquisition, conservation or improvement of the property (s 11(1)(i)) and to the financial resources of the parties (s 11(1)(ii)). These considerations are directly relevant to the purchase of the house and the accumulation of the plaintiff’s superannuation. In relation to the house I have found that the parties paid the cash component of the purchase price from two sources:
1.The monies wired by the plaintiff from savings acquired by him during the relationship, and
2.The balance from the NAB account into which each party had deposited monies acquired largely, although not exclusively, before the relationship.
As to the former, I regard that sum as having been contributed equally by the parties. I have effectively equated the financial contributions of the plaintiff as breadwinner and the non-financial contributions of the defendant as homemaker and parent.
In relation to the later, smaller source, I have tried to identify the proportions in which the parties have financially contributed. I appreciate that there is imprecision in that exercise. Without bank records I cannot be entirely sure how much money was in the NAB account when the house was purchased. Nevertheless I have accepted the defendant’s evidence about the deposits she made. I have accepted the plaintiff’s evidence about the deposit he made. I have found that the outgoings from that account were for household purposes, largely during the relationship. On that basis I have found that the parties contributed to the purchase of the house in the proportions the plaintiff 19 to the defendant 20. I am conscious of the criticism of the High Court of an “over zealous attention to the ascertainment of the parties’ contributions”[13]. I appreciate that the court was there considering the wider discretion vested in the Family Court by the Family Law Act 1975 but I think this consideration would be no less applicable to the discretion provided for in the Domestic Partners Property Act.
[13] Norbis v Norbis (1985-6) 161 CLR 513 at 524 per Mason and Deane JJ.
The adjustment to be made in this case is, in my view, best approached in three parts.
The first part is an adjustment of the liquid assets; the superannuation and the savings. I find that these assets should be fixed at the time of separation and should be divided equally. They were accumulated equally by the direct and indirect contributions of the parties. The plaintiff had superannuation and savings worth $182,186.89. The defendant had shares and savings worth $17,168.77. To equalise those two sums, the plaintiff should pay to the defendant the sum of $82,509.06.
The second part of the adjustment relates to the diminution of the equity in the house by the plaintiff changing the mortgage from Australian dollars to Japanese yen. I have found that the plaintiff should compensate the defendant for that loss. After receiving written submissions from both parties, I discussed with counsel on 18 February how I should fashion orders to reflect this finding. I determined that I should make orders which allow the defendant a short time in which to decide whether the house should be sold or whether she will be in a position to pay the plaintiff for his interest. Both parties thereafter helpfully filed draft minutes of order reflecting their clients’ respective positions. I have largely followed the draft minutes of order of the plaintiff because I agree largely with the submissions counsel for the plaintiff makes in his footnotes. The only significant departure I have made from the plaintiff’s minutes is that I have not specified that a reserve price be fixed at $635,000. I see no reason for doing so. In my view it is not in the defendant’s interests to fix an unduly high or an unduly low reserve price. I think that question should best be left to the land agents to advise.
The third part of the adjustment relates to the equity in the house. I order that the parties are entitled to share the equity in the house in the proportions, the plaintiff 19/39, to the defendant 20/39.
I have accepted the plaintiff’s submission and proposed orders about interest. I have accepted that because the parties are required to restructure their situation, no interest should run whilst those arrangements are being attended to.
I have heard submissions from both counsel on the question of costs. The defendant submitted that I should order each party to pay his or her own costs. The plaintiff submitted that I should order the defendant to pay the plaintiff’s costs. The basis for that submission is that the defendant sought a larger property adjustment than she received. While that is true, I decline to accept that submission. Both parties sought division of property. Neither filed an offer. The resulting orders have depended on findings of fact, including findings as to credit. While I found that both parties were generally trying to tell the truth, the reliability of each varied about equally. Each was found more reliable than the other on an almost equal number of occasions. As is often the case in proceedings of this sort, neither party can be described as the winner or the successful party. I find that is so in this case. I will order that each party pay his or her own costs.
It may be that questions will arise about the implementation of the court’s orders, particularly if the house is to be sold. I will give the parties liberty to apply.
Court orders
1.The plaintiff (1) in the event that the defendant purchases from him his interest in the whole of the land comprised in Certificate of Title Register Book Volume 5051 Folio 794 (“the Land”) within 56 days of the date of this order (2) in the event that a third party purchases the Land upon it being offered for public auction as hereinafter order within 84 days pay to the Trust Account of the defendant’s solicitors the sum of $82,509.06;
2.In the event that the defendant elects to purchase the plaintiff’s equitable interest in the Land, being the whole of the land comprised and described in Certificate of Title Register Book Volume 5051 Folio 794 the defendant shall within 56 days of the date of this order pay to the plaintiff the sum of $202,279 less the difference between the payment in Australian dollars required to discharge the Memorandum of Mortgage no. 1011015 and the sum of $219,795.50 to the Trust Account of the plaintiff's solicitors.
3.In the event that the defendant does not within 14 days elect to purchase the plaintiff’s said interest or defaults in the payment referred to in paragraph 2 hereof it is ordered:
3.1    The property shall be listed for sale by public auction with such real estate agent as the defendant may determine within 7 days of the date hereof.
3.2    Such public auction shall take place thereafter within 6 weeks of the date of this judgment;
3.3    The parties are to cooperate in every way with the real estate agent in relation to the marketing of the property for sale including making the key readily available, allowing inspection of the property at all times reasonably requested by the agent and ensuring that the property is clean, neat and in good order at the time of inspection by any prospective buyer;
3.4    The plaintiff shall forthwith upon the property being offered for sale by auction cause the caveat upon the property to be removed.
3.5    That upon the property being sold at auction the def shall execute the Contract of Sale and all other documents necessary to complete the sale of the property including all Transfer documentation to be prepared and upon its submission to him by the agent or their solicitor;
3.6    The Contract of Sale shall provide for completion with 28 days after the date of the Contract;
3.7    The proceeds of sale of the property should be paid in the following manner and priority:
3.7.1To discharge in full Mortgage No. 1011015;
3.7.2Payment of agent’s commission and advertising or other expenses, if any, payable for the sale;
3.7.3Payment of the legal costs and outlays relating to the sale;
3.7.4The balance to be divided as follows;
3.7.4.119/39ths of the balance less 20/39ths of the difference between the amount in Australian dollars required to discharge Memorandum of Mortgage No. 1011015 and the sum of $219,795.50 with such sum to be paid to the Trust Account of the plaintiff’s solicitors.
3.7.4.2The balance then remaining to the defendant with such sum to be paid to the Trust Account of the defendant’s solicitors.
4.That the parties shall each sign, execute and do all such further acts or things that are reasonably required for securing the full force and effect of this Order.
5.That for the purposed of s 40(2) of the District Court Act 1991 interest shall not run on the sums due hereunder until:
5.1    Should the defendant make the election provided for in paragraph 3 hereof, from 6 weeks of the date of this order;
5.2    Should the defendant not make the election provided for in paragraph 3 hereof, from 12 weeks of the date of this order.
6.     That each party pay his or her own costs.
7.     Liberty to either party to apply.