Dabney and Laird
[2013] FCCA 214
•4 June 2013
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DABNEY & LAIRD | [2013] FCCA 214 |
| Catchwords: FAMILY LAW – Property – de facto – when cohabitation commenced and ended – whether there was an intention to separate – assessment of contribution and future needs. |
| Legislation: Evidence Act 1995 (Cth) s.140 |
| Cases cited: Simonis v Perpetual Trustee Co. Limited (1987) DFC 95-052 Stanford & Stanford (2012) FLC 93-518 Williams & Williams [2007] FamCA 313 |
| Applicant: | MR DABNEY |
| Respondent: | MS LAIRD |
| File Number: | SYC 984 of 2011 |
| Judgment of: | Judge Altobelli |
| Hearing dates: | 12 & 13 March 2013 |
| Date of Last Submission: | 13 March 2013 |
| Delivered at: | Sydney |
| Delivered on: | 4 June 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Givney |
| Solicitors for the Applicant: | Adrian Twigg & Co Solicitors And Conveyancers |
| Counsel for the Respondent: | Ms Christie |
| Solicitors for the Respondent: | Armstrong Legal |
ORDERS
The Respondent shall pay to the Applicant the sum of $150,740.00 within 90 days of the date of these Orders.
The Applicant be declared sole and beneficial owner of:-
(a)Property at P.
(b)Bank accounts in his name.
(c)2001 Hyundai motor vehicle.
(d)Household contents.
(e)Superannuation entitlements in his name.
The Respondent be declared sole and beneficial owner of:-
(a)Property at Property K.
(b)Bank accounts in her name.
(c)Artworks in her possession and control.
(d)Household contents in her possession.
(e)Superannuation entitlements in her name.
In the event the Respondent fails or neglects to pay the sum of $150,740.00 [the principal sum] in accordance with Order 1 then the Respondent shall do all acts and things necessary to sell the property at Property K and in respect of such sum the following shall apply:-
The Respondent shall place the property in the hands of a licensed auctioneer to sell the property by way of public auction within sixty days of the expiration of the 90 days referred to in Order 1.
Both parties shall do all things to facilitate the sale.
In the event the parties cannot agree as to the reserve price at auction or either fail to accept any offer to purchase the property prior to or subsequent to auction then the parties or either of them shall appoint the President for the time being of the New South Wales Real Estate Institute or his or her nominee to assess the reserve price at auction and/or whether any offer made is the best price reasonably obtainable and the parties shall be bound by such assessment and shall equally bear the cost.
In the event that the offer so made is assessed to be the best price reasonably obtainable then the Respondent shall sell the property to the person or persons making that offer or any person offering a sum equal to or above the best price reasonably obtainable as assessed.
Upon sale the proceeds of sale shall be paid as follows:-
(a)In payment of agent’s commission and legal fees occasioned by the sale.
(b)In payment to the Applicant of the sum of $150,740.00 together with interest from the expiration of the 90 day period referred to in Order 1.
(c)In payment of the balance to the Respondent.
Any application for costs to proceed by way of written submissions. The applicant for costs to file and serve within 21 days, the respondent within a further 21 days. Submissions not to exceed 500 words.
IT IS NOTED that publication of this judgment under the pseudonym Dabney & Laird is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 984 of 2011
| MR DABNEY |
Applicant
And
| MS LAIRD |
Respondent
REASONS FOR JUDGMENT
Introduction
When two adults enter into a non-marriage relationship that later breaks down the legal consequences of their relationship breakdown are determined by reference to family law and not by reference to their own subjective notions about when the relationship started and ended, how they perceived the nature of their relationship, and the value of the roles they played in it.
In the present case the applicant, who is nearly 66 years old and is retired, and the respondent, who is 47 years and is an [occupation omitted], cannot agree on when their de facto relationship started and ended, cannot agree on what they respectively contributed to their relationship and, unsurprisingly, cannot agree as to what is a just and equitable alteration of their property interests.
Background
The applicant contends that his relationship with the respondent commenced on a full-time basis on 18 December 1996. He acknowledges there were breaks in their relationship which included what turned out to be short periods of separation, and periods when the respondent returned to her home in South Korea. He contends that they separated on 25 June 2009 when the respondent communicated to him by email in an unequivocal way that their relationship was over. He was in Australia at this time, and she was in Korea. The applicant thus contends that their relationship subsisted for about 12 ½ years.
The respondent contends that their relationship did not commence until November 1999 when they commenced to reside together in their jointly owned property at [M]. She contends that their relationship ended in October 2008 when she informed the applicant that she wanted to return to Korea, but that it was clear that the relationship was ending from 2006 onwards.
The significance of the start and end of the relationship relates to assessment of contribution, and credibility. The court will need to make findings in this regard. The applicant had property that he brought into the relationship, irrespective of when it commenced, and the respondent does not dispute this. From January 1997 the parties purchased real estate together, operated a [omitted] business together as well as several [businesses] in different places. The respondent contends that her mother in Korea provided substantial sums to her from January 1997 which was contributed to the purchase and renovation of properties. She says her mother provided a total of $220,000 between 1997 and 2003, $50,000 of which was returned in 2005. The applicant concedes that the respondent contributed money received from her mother, but not the amount the respondent contends for. For the most part the real estate transactions the parties entered into were profitable for them, the [omitted] business conducted at U was also profitable, but the later [omitted] businesses were not.
What became a major issue in this case was the legal consequence, if any, of post-separation financial transactions by both of them. The respondent contended that withdrawals made by the applicant from various bank accounts totalling nearly $130,000 should be added back into the pool for alteration of property purposes, as well as legal fees he paid. The applicant resists this, and contends that an amount of nearly $136,000 received by the respondent as rental from a property purchased at K before the relationship ended must be taken into account if not as an add-back, then as a contribution or other relevant factor. He also contends that there should be an add-back for legal fees she paid. These issues are rendered more complex by virtue of the dispute as to when the relationship ended, the delay in commencing proceedings, and the further delay until the hearing itself in March 2013.
There are a number of other relatively minor issues about the balance sheet that will be discussed in that context.
The applicant submits that there should be a 60:40 split in his favour in which case there would need to be no further adjustment in his favour based on his needs. If contribution were assessed at less than 60%, the final outcome should still be 60% because of needs he has that the respondent does not.
The respondent submits that there should be a 60:40 split in her favour, and that there was no evidence to justify any further adjustment under s.90SF(3).
The parties relied on affidavits filed – for the applicant on 22 February and 12 March 2013, and for the respondent on 8 March 2013. The applicant read in his case paragraphs 52 and 53 of the respondent’s affidavit sworn 21 June 2011. A significant quantity of documents were tendered in evidence, and reference will be made to these where relevant.
Mr Givney of counsel appeared for the applicant, Ms Christie for the respondent. The hearing was conducted efficiently.
Legal issues
There are a number of legal issues in this case that must be determined.
The first issue is whether, and if so in respect of what period, the parties were in a de facto relationship. Section 4AA of the Family Law Act 1975 deals with this:
Meaning of de facto relationship
(1) A person is in a de facto relationship with another person if:
(a) the persons are not legally married to each other; and
(b) the persons are not related by family (see subsection (6)); and
(c) having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Paragraph (c) has effect subject to subsection (5).
Working out if persons have a relationship as a couple
(2) Those circumstances may include any or all of the following:
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g) whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship.
(3) No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship.
(4) A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
(5) For the purposes of this Act:
(a) a de facto relationship can exist between 2 persons of different sexes and between 2 persons of the same sex; and
(b) a de facto relationship can exist even if one of the persons is legally married to someone else or in another de facto relationship.
When 2 persons are related by family
(6) For the purposes of subsection (1), 2 persons are related by family if:
(a) one is the child (including an adopted child) of the other; or
(b) one is another descendant of the other (even if the relationship between them is traced through an adoptive parent); or
(c) they have a parent in common (who may be an adoptive parent of either or both of them).
For this purpose, disregard whether an adoption is declared void or has ceased to have effect.
In Taisha & Peng [2012] FamCA 385 (24 May 2012) Cronin J made a number of important observations about this section:
6. Because the Court can only exercise its powers to deal with the parties’ property if there existed a de facto relationship, the declaration of the existence of that de facto relationship is in the nature of a jurisdictional fact (see Jonah and White [2011] FamCA 221). The onus is on the applicant to establish that the Court has that jurisdiction.
7. The definition of a de facto relationship is set out in s 4AA(1) of the Act. It provides:
(1) A person is in a de facto relationship with another person if:
(a) the persons are not legally married to each other; and
(b) the persons are not related by family (see subsection (6)); and
(c) having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
8. Section 4AA(2) provides certain circumstances that might give rise to a conclusion that people were having a relationship as a couple. No particular finding in relation to any of the defined circumstances is to be regarded as necessary (see s 4AA(3)).
9. Section 4AA(2) is prefaced by a heading which reads “Working out if persons have a relationship as a couple”. In my view, it is not necessary to look to s 4AA(2) unless there is some definitional uncertainty from a literal reading of s 4AA(1). The latter section has mandatory requirements but the wording of the former, indicates it is to be used as a guide for the purposes of s 4AA(1).
10. Albeit the requisite elements of s 4AA(1) must be proved, interestingly, s 4AA(4) provides:
(4) A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
11. Thus, while the onus is on the applicant to prove on the balance of probabilities that a de facto relationship existed, the Court may attach whatever weight it considers appropriate. The Evidence Act 1995 (Cth) applies (see s 4(1)) and s 140 requires the Court to apply the standard of proof which is described as the balance of probabilities although it would seem that the weighting and the balancing task is much less formal than in other civil proceedings. In my view, s 4AA(4) does not ameliorate the requirement for the applicant to prove her case on that transparent standard.
12. In Moby and Shulter [2010] FamCA 748 Mushin J looked at s 4AA(1) and said:
137. ...in Simonis v Perpetual Trustee Co. Limited (1987) DFC 95-052, Kearney J agreed with the approach of Powell J referred to in the previous paragraph and held (p 75,589):
I consider that the expression under consideration constitutes a single composite expression of a comprehensive notion or concept, and therefore has to be approached by considering the expression as a whole and not in several parts.
138. The approaches of both Powell J and Kearney J quoted above were adopted by the Court of Appeal of the Supreme Court of New South Wales in Light v Anderson (1992) DFC 95-120.
139. While I respectfully agree with the approach of their Honours, before the definition may be considered as constituting "a single composite expression of a comprehensive notion or concept", there are two specific elements of that definition which require individual consideration. The first of those is the concept of "a couple". For the purposes of the definition, "a couple" is constituted by two people, whether of the same or opposite sexes.
140. The second specific element is the concept of "living together".
13. It has also been said that it is the composite picture that must be looked at and any attempt to isolate individual factors and attribute to them relative degrees of ...importance involves a denial of common experience and will almost inevitably be productive of error (see Barry and Dalrymple [2010] FamCA 1271 referring to the Full Court of the Federal Court of Australia in Lynam v Director-General of Social Security (1983) 52 ALR 128). Whilst a composite picture is clearly the only way any case can be determined here, these are mandatory requirements because they go to jurisdiction. Without proving that the parties were a “couple”, there can be no de facto relationship just as conversely, if a couple of people live together but there is no domestic relationship, the section is not satisfied.
14. In Moby and Shulter (supra) Mushin J went on to examine s 4AA(2) as it applied to the parties in that case. With respect, in my view, that exercise is not necessary unless the jurisdictional fact cannot be established from a consideration of s 4AA(1) alone. That is supported by the explanatory memorandum to the Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008 where in respect of s 4AA(1) the memorandum referred to the requirements whilst s 4AA(2) was referred to as providing a list of circumstances for a court to consider.
15. Turning then to the two requirements. The applicant must establish that the parties were a couple and then establish that the couple lived together in a domestic relationship. The word “genuine” in my view, adds nothing to the definition.
16. The word “couple” is not defined.
17. The Australian Bureau of Statistics defines a “couple relationship” as:
…being two people usually residing in the same household who share a social, economic and emotional bond usually associated with marriage and who consider their relationship to be a marriage or marriage-like union. This relationship is identified by the presence of a registered marriage or a de facto marriage. (See website DBS).
I note that that definition is used for census purposes.
18. The Shorter Oxford Dictionary defines “couple” as a union of two. (See 6th edit (2007)). The very word “couple” comes from the Latin which is a tie or a bond.
19. In Jonah and White (supra) Murphy J defined the relationship as being a de facto relationship when the parties had so merged their lives that they were for all practical purposes, living together as a couple which he thought was the “manifestation of coupledom”. His Honour said that it was the nature of the union that lay at the heart of the statutory considerations. I cannot add to what Murphy J said and I respectfully adopt his view.
20. But there must still be evidence of a domestic relationship. Mushin J in Moby and Shulter (supra) at para 167 said it was not a term of art but had to be given its ordinary meaning. I respectfully also adopt that because, having regard to s 4AA(4), the Court can take a wide discretionary view of the way in which the parties themselves conducted their relationship. Even having said that however, a domestic relationship must be one in which there are activities of running a household or shared households. That is, something must be seen to be related to domesticity which refers to home conditions and arrangements. For example, it could be indicated by people coming and going as if entitled to use and share the home’s facilities which is quite distinct from a boarding house or backpacking hostel where individuality reigns.
21. A couple therefore living in a domestic relationship is the opposite of a couple of individuals.
The second issue, albeit related to the first is whether, and if so when, the relationship ended, or in other words when the parties separated. In Aitken & Deakin [2010] FMCAfam 35 (21 January 2010) McGuire FM (as he then was) said about this:
9. Those authorities make it clear that there are three elements
of separation in a legal sense. They are:
a. The development of an intention to separate. That intention need not be mutual.
b. The communication of that intention to the other party. In my view such communication should be unambiguous and unconditional.
c. Some form of action upon the determination to separate.
10. I am of the view that the test of the element of “communication” is an objective one.
11. As Watson J stated in Todd and Todd (No. 2) at [75,079]:
· Separation can only occur in the sense used by the Act where one or both of the spouses form the intention to sever or not to resume the marital relationship and act upon that intention, or alternatively act as if the marital relationship has been severed.
12. The communication of the intention is an absolute requirement. Whilst that communication can be spoken or unspoken, it should be unequivocal, unconditional and unambiguous.
13. Whilst there are guiding principles, it remains that each case must be determined upon its own facts. As the Full Court of the Family Court of Australia said in Pavey and Pavey at [75,214]:
· ...it is not possible to apply some mathematical formula to these activities and determine whether a “separation” has occurred. Rather the evidence should examine and contrast the state of the marital relationship before and after the alleged separation.
14. There is also an issue of corroboration of fact of separation under the one roof. Some corroboration is usually required. In the case of Fenech and Fenech the parties lived in a strained relationship and there was no intimate relationship between them. However, her Honour Evatt CJ did not consider such evidence sufficient. Her Honour said at [75,133]:
· I am satisfied that the breakdown has been continuing for at least a year, but that is not enough...
· Marriage comes in many shapes and sizes and many families are living in a strained relationship like this. To the outside observer, matters go on much as usual, and only within the family itself —between the husband and wife — is there any acknowledgment of the breach. To comply with the Act there must be some overt separation, some evidence that there are two households, not one...
15. In summary, therefore, I must find that at the relevant time there has been a breakdown of the relationship as distinct from a “breaking down” of that relationship.
See also Clisbey & Viges [2011] FamCA 611 (8 August 2011) per Stevenson J.
The third issue arises if the court finds that there was a de facto relationship, and that is how to alter the parties’ interests in property. In this regard s.90SM(1)-(4) provides:
Alteration of property interests
(1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
Note 1: The geographical requirement in section 90SK must be satisfied.
Note 2: The court must be satisfied of at least one of the matters in section 90SB.
Note 3: For child of a de facto relationship, see section 90RB.
(2) If a party to the de facto relationship dies after the breakdown of the de facto relationship, an order made under subsection (1) in property settlement proceedings may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(3) The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SF(3) is incorporated by s.90SM(4)(e). Thus 90SF(3) provides:
(3) The matters to be so taken into account are:
(a) the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and(o) the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p) the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s) the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.
In terms of the approach to a case under ss.90SM and 90SF it is similar to the approach under s.79 of the Act. In that regard the preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
Another issue in this case is how, precisely, I should weigh and assess the contribution made by both parties in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
In relation to add-backs, the applicable law can be found in decisions such as the Full Court's decision in AJO v GRO (2005) FLC 93-218 where the Court said:
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.”
31. As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
“44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.”
The High Court of Australia’s recent decision in Stanford & Stanford (2012) FLC 93-518 also applies to proceedings under s.90SM: Watson & Ling (2013) FLC 93/527. In this case it is clearly just and equitable to make and order. The parties have separated on a final basis. Each seeks orders for alterations of property interests. Their legal and equitable interests in property will be identified in considering the balance sheet.
Credit issues
The evidence of the parties is quite different about the period of their cohabitation, about aspects of the contribution they claim to have made, and about various post-separation matters including the nature of the respondent’s current relationship with Mr K. Some of these issues can be determined by reference to documents, some by reference to documents and credit findings, and some by credit findings alone. It is necessary therefore to make findings about whether or not the court accepted the evidence of the parties.
The applicant gave evidence in a straight-forward manner. He was very strong on dates. When confronted in cross-examination with his failure to disclose in his financial statement income he had received from sub-letting the [business], he agreed and gave a plausible explanation. When confronted with some of his own actions that were referable to a date of separation much earlier than what he contended for, he was able to provide plausible explanations that make those same actions referable to the continuation of the relationship. He was confident, cooperative and responsive in his evidence. As a general proposition, unless documents indicate to the contrary, the court accepts the applicant’s evidence.
By contrast, the respondent was an unimpressive witness. There were inconsistencies in her evidence. She was unresponsive, evasive, and plainly unconvincing in her evidence about the nature of her relationship with Mr K. These matters cast a shadow over the rest of her evidence, particularly as to the period of cohabitation though the court acknowledges that her different perspective on cohabitation and separation might also reflect a subjective view of what is a relationship. Thus, for example, in evidence in chief she categorically stated that she made none of the withdrawals from the [G business] bank account with the NAB, but all the deposits, the strong inference being that only the applicant made such withdrawals. Notwithstanding this, and within a few minutes later in cross-examination, she agreed that she drew a cheque for $10,370.60 from that account in order to pay for [omitted].
The nadir of the respondent’s case was the evidence she gave about her relationship with Mr K. In cross-examination she agreed that they met in 2007, became friends in 2008, and that by 2008 he was her “boyfriend, not partner”. When asked whether the nature of their relationship had changed today she explained that it was “a bit more concrete” but denied that she was living with him. There are at least two difficulties with this evidence. Firstly it is inconsistent with paragraphs 52 and 53 of her affidavit sworn 21 June 2011 which suggests a cohabiting relationship in 2009 onwards. Secondly, in cross-examination she agreed that she had been being living in Mr K’s house since January 2010, started paying rental in 2011, signed a lease after June 2011 but back-dated it to February 2011. Her evidence was that she rented a bedroom and a studio within the house that he otherwise owned (together with his former wife) and occupied (without his former wife). She agreed that they slept on the same bed sometimes, would go out socially sometimes, would share and/or alternate the cost of such social outings, and that the last time she stayed overnight with Mr K was the night before she left Germany, where she now lives, to come to Australia for the present hearing. Notwithstanding all of the above, and putting aside for one moment her thoroughly unconvincing demeanour whilst she gave this evidence, she maintained that their relationship was landlord and tenant and boyfriend/girlfriend. The court does not accept this. At the very least it demonstrates an intensely subjective view of the nature of relationships that seems to acknowledge a commonality of interests but limited if no commitment, but which is quite inconsistent with the legal notion of a de facto relationship. The more likely conclusion, and the one the court in fact reaches, is that it demonstrates a willingness to distort evidence so that it is not interpreted in a way that harms the respondent’s case i.e. it reflects poorly on her credit.
In relation to credit, therefore, the court finds that whenever the evidence of the applicant and respondent conflicts, and in the absence of corroborative evidence to the contrary, the evidence of the applicant should be preferred.
Balance sheet issues
At the commencement of the case counsel presented the following Joint Balance Sheet:
| Joint Balance Sheet | a) | Name | Dabney & Laird | |
| File No | (P)SYC984/2011 | |||
| Before | Judge Altobelli | |||
| ASSETS | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 1 | Husband | Property P | $18,250 | $18,250 | |||
| 2 | Wife | Property K | $500,000 | $500,000 | |||
| 3 | Husband | NAB Account # [1] | $1,323 | $1,323 | |||
| 4 | Husband | USaver Account # [2] | $186,000 | $186,000 | |||
| 5 | Wife | NAB Flexi Account #[3] | $2,383 | $2,383 | |||
| 6 | Husband | NAB Account # [4] | $100 | $100 | |||
| 7 | Wife | NAB iSaver Account #[5] | $10,704 | $10,704 | |||
| 8 | Husband | Santander Account # [6] | $4,675 | $4,675 | |||
| 9 | Husband | 2001 Hyundai Lantra | $2,400 | $2,400 | |||
| 10 | Wife | [G] | NIL | NIL | |||
| 11 | Wife | Artworks | $5,500 | $5,500 | |||
| 12 | Husband | Artworks including works by [omitted] | $20,000 | $5,000 | |||
| 13 | Husband | Household content | $5,000 | $5,000 | |||
| 14 | Wife | Household content | $1,500 | $1,500 | |||
| 15 | Wife | Woori Bank Account #[7] | $0 | $NK | |||
| Total | $ 757,835 | $ 742,835 | |||||
| ADDBACKS | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 16 | Husband | Legal Fees | $NK | $26,000 | |||
| 17 | Wife | Legal Fees | $45,600 | NIL | |||
| 18 | Husband | Husband withdrawal from [G] account on 13 January 2010 | $46,000 | NIL | |||
| 19 | Husband | Withdrawals from husband’s NAB account #[4] | $19,900 | NIL | |||
| 20 H | Husband | Withdrawals from husband’s NAB account #[1] in December 2012 | $12,600 | NIL | |||
| 21 | Husband | Withdrawals by husband from wife’s NAB Classic Banking Account on 12 November 2008, 17 November 2008 and 31 December 2008 | $51,000 | NIL | |||
| 22 | Wife | Various Artworks sold post separation | $0 | $NK | |||
| 23 | Wife | Income derived and expended post separation from rental of K property | $0 | $135,938 | |||
| Total | $ 175,100 | $ 161,938 | |||||
| LIABILITIES | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 24 | Wife | NAB Visa Card | $6,915 | $6,915 | |||
| 25 | Husband | NAB MasterCard # [8] | $691 | $691 | |||
| 26 | Wife | Personal Loan | $16,822 | $0 | |||
| 27 | Wife | HECS debt | $6,697 | $NK | |||
| 28 | Wife | Personal income tax Debt for financial year ending 30 June 2012 | $2,672 | $NK | |||
| 29 | Wife | GST liability | $1,983 | $NK | |||
| 30 | Wife | 28 Degrees MasterCard | $Minimal | $NK | |||
| Total | $ 35,780 | $ 7,606 | |||||
| SUPERANNUATION | ||||||||
| Member | Name of Fund | Type of Interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 31 | Husband | U Super | eligible annuity | $39,447 | $39,447 | |||
| 32 | Husband | C Superannuation | $89,862 | $89,862 | ||||
| 33 | Wife | F Super | $2,951 | $2,951 | ||||
| Total | $ 132,260 | $ 132,260 | ||||||
The first dispute about assets appearing in the balance sheet, item 12 relating to artworks, was resolved by the making of consent orders. Hence item 12 should read nil.
Another issue arose about item 15, an account allegedly held by the respondent in a Korean bank account. If there is such an account, the court finds it had a zero balance. Item 15 should therefore be nil.
Items 16 and 17 relate to legal fees. The evidence of the applicant in fact indicates that he has spent about $84,000 in legal fees compared to the respondent’s $45,600. The only possible source of these monies was assets available to the parties at the date of their separation. This is not a case where the evidence suggests that either of them earned any significant funds after separation that could explain the source of these funds. The applicant had well and truly moved into the retirement stage of his life cycle. The respondent’s own evidence indicates that she made little or no money from her activities as a [occupation omitted]. Because of the significant disparity between the legal fees paid by the parties and having regard to the source of these funds, the court finds that these sums must be added back and treated as the notional property of each party. Item 16 should read $84,000, and item 17 $45,600.
The respondent contends that items 18-21 represent funds the applicant expended after separation for his own benefit and which represent a premature distribution of relationship assets. Items 18-21 total $129,500. Whilst there is some dispute about the quantum, and indeed the characterisation of some of the payments as post-separation, the applicant’s main contention was that none of the payments represent a premature distribution of assets, and all of the money was used for the reasonable living expenses of the applicant, or both of them. Counsel for the applicant submitted that the characterisation and treatment of these payments must be understood in the context of how both parties led their lives, and arranged their affairs, in the post-separation period. When this process is undertaken, what is noticeable is that the respondent had access to the only real income-producing asset available to them ie. item 2, the K property. There is no dispute that she has received over $130,000 from this source, and that it has probably been her main and possibly only source of income since separation. The husband’s only source of income in this period was Centrelink benefits, annuity payments, and the proceeds of what seems to be limited and ad hoc sales of chattels and artwork. In 2012 the respondent’s evidence is that she was receiving $3,595.44 per month inclusive of GST as rental from the K property, a monthly income considerably higher than the income available to the applicant in that period.
The court is, moreover, satisfied with the applicant’s explanation of the withdrawals referred to in items 18-21 and that the monies were in fact used for reasonable living expenses which included some overseas travel. The court rejects the respondent’s implied criticism of the applicant’s post-separation travel in circumstances where his was, in fact, comparatively modest and irregular compared to the respondent who enjoyed regular travel to Korea, China and Germany.
The court ultimately accepts the applicant’s contention that in the circumstances of this case both parties were entitled to use what they had at the time of separation to get on with the living of their lives. Any add-back is inappropriate. Items 18-21 should read nil.
There was no evidence to support the applicant’s contention of the add-back claimed at item 22. This should read nil. Item 23, the rental income received from K, was ultimately not pressed, and the reasons for this should be apparent from the discussion above.
An aspect of the respondent’s case that was less than clearly articulated to the court is her evidence at paragraphs 64-71 of her affidavit under the heading “Transfer of funds from my accounts by [Mr Dabney] without my consent”. Here she refers to transfers from an account in the respondent’s name to or for the benefit of the applicant on 12, 17, 20 November 2008, 18 and 31 December 2008, and 13 January 2010. The applicant deals with this evidence in his affidavit of 12 March 2013. As it turns out, all of the 2008 transfers took place before the date the court finds the parties separated, and the explanation given by the applicant strongly contra-indicates any purported add-back. As for the 13 January 2010 payment of $46,000 the applicant explains this at paragraph 60 of his affidavit sworn 22 February 2013. The court accepts his explanation of why and how he used these funds but declines to make an add-back. To the extent that this money was used to pay legal fees it has already been added back. To the extent that the money was used to pay rental on the [R business], which was clearly a joint venture of the parties, there was nothing inappropriate about this in the circumstances of this case. To the extent the money was used to preserve the [M] property, this is reflected in the sale proceeds and thus in the balance sheet. The court does not have evidence about how much of the $46,000 was used for the applicant’s “general living expenses” and in these circumstances cannot allow an add-back.
There is a dispute about item 26, the respondent’s personal loan. It should be included in the balance sheet as it was incurred for the purposes of preserving the K property, the most valuable item on the balance sheet.
The applicant contended that item 27, the respondent’s HECS debt, should not be included because it would never be paid back. This was never put to the respondent. There is no other evidence to support the contention. Item 27 should remain.
The court does not allow items 28 and 29 however. Both these debts bear the characteristic of being personal to the respondent and to having been incurred, in all probability, well after separation. These are personal debts of the respondent and should not appear on the balance sheet.
Having regard to the findings made above, the court finds the balance sheet to be as follows:
| Balance Sheet incorporating court’s findings | b) | Name | Dabney & Laird | |
| File No | (P)SYC984/2011 | |||
| Before | Judge Altobelli | |||
ASSETS
| Ownership | Description | Court’s findings | ||||
| 1 | Husband | Property P | $18,250 | |||
| 2 | Wife | Property K | $500,000 | |||
| 3 | Husband | NAB Account # [1] | $1,323 | |||
| 4 | Husband | USaver Account # [2] | $186,000 | |||
| 5 | Wife | NAB Flexi Account #[3] | $2,383 | |||
| 6 | Husband | NAB Account # [4] | $100 | |||
| 7 | Wife | NAB iSaver Account #[5] | $10,704 | |||
| 8 | Husband | Santander Account # [6] | $4,675 | |||
| 9 | Husband | 2001 Hyundai Lantra | $2,400 | |||
| 10 | Wife | [G business] | NIL | |||
| 11 | Wife | Artworks | $5,500 | |||
| 12 | Husband | Artworks including works by [omitted] | NIL | |||
| 13 | Husband | Household content | $5,000 | |||
| 14 | Wife | Household content | $1,500 | |||
| 15 | Wife | Woori Bank Account #[7] | NIL | |||
| Total | $737,835 | |||||
ADDBACKS
| Ownership | Description | Court’s findings | ||||
| 16 | Husband | Legal Fees | $84,000 | |||
| 17 | Wife | Legal Fees | $45,600 | |||
| 18 | Husband | Husband withdrawal from [G] account on 13 January 2010 | NIL | |||
| 19 | Husband | Withdrawals from husband’s NAB account #[4] | NIL | |||
| 20 H | Husband | Withdrawals from husband’s NAB account #[1] in December 2012 | NIL | |||
| 21 | Husband | Withdrawals by husband from wife’s NAB Classic Banking Account on 12 November 2008, 17 November 2008 and 31 December 2008 | NIL | |||
| 22 | Wife | Various Artworks sold post separation | NIL | |||
| 23 | Wife | Income derived and expended post separation from rental of K property | NIL | |||
| Total | $129,600 | |||||
TOTAL ASSETS (including notional assets) $867,435.00
LIABILITIES
| Ownership | Description | Wife/de facto partner’s value | ||||
| 24 | Wife | NAB Visa Card | $6,915 | |||
| 25 | Husband | NAB MasterCard # [8] | $691 | |||
| 26 | Wife | Personal Loan | $16,822 | |||
| 27 | Wife | HECS debt | $6,697 | |||
| 28 | Wife | Personal income tax Debt for financial year ending 30 June 2012 | Not allowed | |||
| 29 | Wife | GST liability | Not allowed | |||
| 30 | Wife | 28 Degrees MasterCard | $Minimal | |||
| Total | $31,125 | |||||
SUPERANNUATION
| Member | Name of Fund | Type of Interest | Court’s findings | ||||
| 31 | Husband | U Super | eligible annuity | $39,447 | |||
| 32 | Husband | C Superannuation | $89,862 | ||||
| 33 | Wife | F Super | $2,951 | ||||
| Total | $132,260 | ||||||
Thus, the total net assets of the parties (including notional property) amounts to $968,570. Of this, $132,260 represents superannuation.
The date of cohabitation
The applicant contends that cohabitation commenced on 18 December 1996 when they started to live together on a full-time basis at Property A. He concedes that they were involved romantically before then and even cohabited for a period, but also that the respondent was in Korea for periods before December 1996. Perhaps the most persuasive evidence he gives in this regard is the fact that they jointly purchased a property at Property U, settling on 31 January 1997. There is no question that the property was jointly purchased, for $212,000, with a joint mortgage from NAB, which was also secured against the applicant’s existing property at S.
The applicant deposes that they then jointly renovated the U property, converting a commercial area into a [business omitted], and improving the residential part. He concedes that during 1997 the respondent paid about $80,000 off the mortgage, and paid for renovations to a value of $30-40,000 (matched by him) with her money originating from her mother.
The applicant asserts that the [business] commenced operating in November 1997 and that whilst he continued to work his full-time job, the respondent operated the business with his assistance on weekends and evenings. The business was eventually sold in 1999.
The respondent does not put these facts into contention, but characterises them differently. Thus, for example, she contends that in December 1996 she stayed in the spare room in the applicant’s flat “but we did not resume our relationship at this time”. She describes their relationship as “we were friends and had a business relationship”. Moreover she asserts that she was in another relationship in 1997 that lasted 8 months and ended with her being pregnant. She described herself as the “[occupation omitted]” who was paid by the respondent on an hourly basis. She acknowledges that without the applicant she could not have borrowed money from the bank, but that they agreed to the joint purchase “on the condition that as soon as the property is settled, [Mr Dabney’s] name would be removed off the title”. She says he later refused to do so.
It is interesting to note the respondent’s own evidence that in December 1996 “we did not resume our relationship”. Implicitly she concedes that a relationship did exist before them, but not one amounting to a de facto relationship for the purposes of the Family Law Act. Indeed the evidence to the effect that some sort of relationship existed between them before 1996 is overwhelming, not the least of which is that she obtained permanent residence in Australia in 1995 on the basis of a de facto relationship with the applicant which was, apparently, corroborated by several people. Whatever the relationship was before 1996, even the applicant concedes by the way his case was run, that there was a break in it and that re-cohabitation did not occur till December 1996. For present purposes, the fact of an existing relationship that ended but, at least according to the applicant, resumed in December 1996 provides an important context in which to assess the credibility of the respondent’s evidence.
She said in cross-examination that the applicant was “one of my best friends”, that she had several best friends at the time, but the applicant was the only “best friend” who was prepared to put up his own property as security for the purchase of the Property U property. She agreed that she returned to Australia between July – September 1996 and that before she once again left to return to Korea she had stayed with the applicant, had chosen the Property U property jointly by then, and then signed an agreement with the NAB to jointly borrow $220,000. She agreed, as exhibit A5 clearly shows, that as well as being a joint borrower, the applicant guaranteed the loan and provided the S property as security. That same document also provides that one of the applicant’s bank accounts was to be used to debit fees and charges.
The respondent agreed that during her absence in Korea the applicant pursued the development approval and that they were constantly in communication about this.
Curiously, when counsel asked her whether she maintained that she was not in a relationship with the applicant but just friends she said words to the effect: “Yes, I was not sleeping with him”. The answer provides some insight into the respondent’s perspective on the relationship issue, but a thoroughly subjective one.
The respondent’s evidence about their relationship at the time of the purchase of Property U was unconvincing.
The applicant was also cross-examined about their being in what he described as a “romantic, sexual relationship” from June 1996, about the circumstances of the Property U purchase, and of their cohabitation together in that property as soon as it became habitable. He firmly rejected any contention that their relationship was merely a business one, or one of friends.
When two adults have been in a relationship that one of them, the respondent, was prepared to represent as being a de facto relationship for permanent residence purposes in 1995, later separate, but then resume their relationship in 1996 and purchase property together that year, there is a strong inference that they are building on the foundation of their previous relationship rather than starting again. It is illogical on the facts of this case to conclude that their relationship resumed merely as friends when they were previously de facto partners, in circumstances where they enter into a financial enterprise that involves substantial legal, financial and personal commitment to each other. The definition of de facto relationship in s.4AA(2) is inclusive. In certain cases, such as the present one, the degree of financial dependence or interdependence evidenced by the Property U purchase, and their subsequent ownership and use of the property, are factors that strongly communicate the existence of a relationship as a couple being together on a genuine domestic basis as defined in the Act. Whether or not they were consistently in common residence, or shared a sexual relationship, is not necessarily as persuasive as these other factors. The respondent’s subjective perception of their relationship is probably disingenuous, but is in any event quite irrelevant.
Does it matter that the respondent was in another relationship in 1997 that led to her pregnancy? The answer is clearly no. As it turns out she was probably in a relationship with another man, Mr K, before the end of her relationship to the applicant. That too does not change the legal nature of her relationship to the applicant. The Act does not say that a de facto relationship must be exclusive in its nature. In any event the respondent leads so little evidence about her 1997 relationship that it is impossible to conclude that its existence contra-indicated the construction of the de facto relationship with the applicant.
It is useful to examine the respondent’s contention that their relationship did not commence till September 1999. She says it was evidenced by their joint purchase of the property at Property M, and the subsequent cohabitation there. On a conceptual level, therefore, the only difference between this transaction and the Property U purchase is that, she asserts, there was no cohabitation after the Property U purchase. In cross-examination counsel for the applicant confronted the respondent with the total absence of any evidence in her case corroborating her assertion of non-cohabitation till 1999. All she could say was that she did have a witness but decided not to call that person.
What happened in between 1997 and 1999? On the respondent’s evidence she made substantial financial contributions towards the mortgage and costs of renovating the U property, worked 14 hours daily 7 days per week in the [business] at times with the applicant, but insists she did not live together with him at the time. It is curious, and somewhat illogical, that these very same contributions that the respondent asks the court to recognise in these proceedings are alleged to have taken place before their relationship started. Whilst that is not jurisprudentially impossible, it is probably the case that these contributions are further indicia of the existence of a de facto relationship in this period, as the statutory definition itself recognises. It is simply implausible that she would do all of these things on the basis of a “close friendship”, or on the basis of some undefined business relationship.
The court finds, having regard to all the evidence, that the parties commenced their relationship on 18 December 1996 as asserted by the applicant. They became, as at that date, de facto partners as defined in the Act.
The date of separation
The applicant contends that their relationship ended in June 2009. The respondent contends that it ended in October 2008. There can be no doubt on the evidence that before October 2008 the relationship was strained at times, that they were apart from each other at times, and that the respondent had probably commenced a relationship with Mr K from October 2008. Whether or not they were separated must be determined objectively, and not subjectively, by reference to all the evidence including what the parties said and did.
The respondent’s contention about the date of separation is quite vague. In her affidavit at paragraph 8 she says that they “separated on a final basis in 2008/2009”. At paragraph 64 she says that “In late 2008 my relationship with [Mr Dabney] was breaking down”. In April 2009 she travelled to Korea, and in cross-examination agreed that she did not return to Australia till October 2009, and then only stayed till January 2010.
The applicant’s evidence about separation is more precise. He relies on emails between them that became exhibit A6 and over the period 2 March 2009 to 25 June 2009. There is no doubt that they were physically apart in this period: he was in Australia, she was in Korea. There is also no doubt that at some time during the respondent’s stay in Korea in 2009 she shared an apartment with Mr K. There is no evidence to suggest the applicant became aware of this at that time. There is nothing in the email correspondence between the applicant and respondent which would communicate to the applicant, or which would suggest to the reasonable bystander, that the pre-existing relationship had changed in any way before 24 May 2009. All of the correspondence before then is consistent with the continuation of a close, personal relationship between two people, separated for reasons of work, who otherwise shared their lives together. The correspondence until 24 May 2009 is personal, long and intimate at times. Their finances were clearly still shared. On 24 May 2009 there is the first objective indication that the respondent wanted to end the relationship. When the respondent told the applicant “I want you to let me have my own space”, and “I want to start a new road in my life”, and “it is sad that you are not going to be with me”, and “leave me alone”, there can be no other reasonable interpretation but that she was ending the relationship with him.
Even this email correspondence needs to be seen in the context of what the parties were doing in 2009 which is set out at paragraphs 53-61 of the applicant’s affidavit. The respondent’s evidence about this period is minimalist, to say the least, and I prefer the applicant’s evidence. In January 2009 they found and leased [business] premises in R in the respondent’s name. The [business] was opened in February and the respondent’s [occupation omitted] in March. They talked of the possibility of both moving to Korea to pursue the respondent’s career. The applicant continued to manage the [business] whilst the respondent was in Korea. They secured a Government Export Grant in this period. The applicant helped the respondent with [omitted] even while she was in Korea. All of this is entirely consistent with the applicant’s contention that separation did not occur until mid 2009. Whilst he says it was not until June, the email of 24 May 2009 suggests it was that date. All of the above is inconsistent with the respondent’s contended date of separation.
The de facto relationship between the parties ended on 24 May 2009. They were thus together between 18 December 1996 and 24 May 2009, a period of 12 years and 6 months. The separation certainly took place after March 2009 so there was no issue about this court’s jurisdiction. To the extent that the respondent contended otherwise, at an earlier stage of these proceedings, she was wrong. She subsequently conceded the point and the costs implications of this need to be considered in due course.
Assets at cohabitation
The applicant had the assets and liabilities as at December 1996 set out at paragraph 15 of his affidavit:
ASSETS
| No. | Particulars | Value |
| 1 | Property situate at Property S (“the S property”) | $ |
| 2 | Property situate at Property P (“P property”) | $ |
| 3 | NAB Account #[1] | $20,000 |
| 4 | 2 motor vehicles | $8,000 |
| 5 | Home content | $2,000 |
| 6 | F Superannuation | $15,000 |
| 7 | S Superannuation | $6,000 |
| TOTAL | $ |
LIABILITIES
| No. | Particulars | Value |
| 1 | Mortgage of S property | $12,000 |
| TOTAL | $12,000 |
There was no serious challenge to this evidence so the court accepts the same.
The respondent contends that she had received an inheritance of about $250,000 from the estate of her late father in 1987 which was kept for her in Korea by her mother. The respondent is not precise, however, as to what she had as at 1996. She does assert, however, that what she had was contributed to the relationship and in particular to the purchase of the property at Property U. Given that the purchase of this property was settled in January 1997, her initial contribution may be assessed by reference to her evidence about this. She says that at the time of purchase her mother “gave me $100,000” and that she also had a term deposit for $54,679.50, and savings of $30,771.93. There is no question about the term deposit and savings. She says that she paid $90,000 off the mortgage, and spent $40,000 on renovations to Property U. The applicant said that he believed that “this money came from Ms Laird’s mother”. The respondent submits that this is an admission about the entire contribution asserted. The applicant contends it only relates to the $30-40,000. In cross-examination the respondent agreed that she could not identify any deposit by her mother of $100,000, and then asserted that “it came in bits and pieces” though she agreed that is not what she deposed to. It was only in re-examination that the respondent’s bank statements for 1997 were tendered as exhibit R8. These documents do not establish the receipt by the respondent of $100,000 from her mother “in bits and pieces”. The deposits only total $29,762. The opening balance is $30,776.93 at 8 January 1997. The applicant submits that exhibit R8 does not prove the source of the alleged $100,000 but it could prove the source of other funds the respondent alleges she contributed. That is quite possible, indeed likely, given that the term deposit of $30,771.93 is presumably the same amount referred to as the opening balance of exhibit R8.
It is quite surprising that the respondent could not produce evidence corroborating her alleged contribution of $100,000 from her mother given the importance of this in her case, and having regard to the long period before the case was heard. Based on the available evidence, therefore, the court finds that at or shortly after the commencement of the relationship, the respondent had available to her a term deposit of $54,679.50, savings of $30,771.93, and further deposits into her account totalling $23,500.00. This amounts to about $109,000. Given the amount in question it is therefore more likely than not that the respondent paid $80,000 off the mortgage and about $30,000 towards the renovations.
The value of the applicant’s S property at cohabitation is not known. There seems no dispute that it was mortgaged to the sum of $12,000 at the time, and sold netting $410,449.72 in March 2005.
Contribution during the relationship
There are times during the relationship when both parties worked, and did not, and there were times when they were engaged in joint business ventures (irrespective of whose name the business was held) such as [omitted] etc. which either made some money, or no money. There were times in the relationship when the applicant was retired or rapidly heading towards retirement, and when the applicant was working as an [omitted]. The common theme of all these activities over the entire period is that they had a joint purpose, but were not necessarily productive of profit or income other than enough to meet or contribute to living expenses. Towards the end of the relationship they were clearly not making enough to make ends meet, and were living off accumulated capital. To the extent that the respondent sought to demonstrate the superiority of her contribution over that of the applicant’s by reference to when he worked and how much he earned, it was really quite disingenuous because the fact is that her personal exertions as an [omitted] did not earn much at all.
If there is to be any difference in the assessment of contribution during cohabitation, its foundation cannot be on the personal exertions of either of the parties, as diverse as these may have been.
They purchased and sold property during cohabitation and after separation. The details of these transactions are adequately set out in the affidavits and are not contentious for the most part. Generally these transactions generated profit, which are represented in the balance sheet.
The applicant contends that he sold a number of items from his parents’ estate between 2001-2005 which generated $25,000 which was “applied to the relationship”. He was not challenged on this in cross-examination so the court accepts the same.
The respondent contends that in about 2003 her mother gifted her $100,000 but $50,000 was returned to her in 2005. There is no dispute about this. The court doubts very much whether the initial gift of $100,000 was to the parties jointly, rather than to the respondent only. Nothing turns on this.
From a cash perspective, therefore, the $50,000 net introduced to the relationship by the respondent exceeds the $25,000 introduced to the relationship by the applicant, during the period of cohabitation. In all other respects, however, there is no other evidence that would lead to an assessment of the diverse contributions they both made in the relationship to be other than equal.
Contribution post-separation?
There is no evidence to justify making any assessment of contribution having regard solely to the post-separation period. To the extent that the post-separation financial transactions of the parties warrant any attention, these have been dealt with in considering add-backs and the constitution of the asset pool. The theme of the post-separation period really is a continuation of the theme pre-separation: the parties were mostly living off assets and whatever they could earn themselves.
Conclusion about contribution
When one has regard to the assets held by the applicant, at cohabitation, the respondent’s contribution to the Property U property, and their respective contributions during their cohabitation the applicant’s contribution must be assessed as greater. This allows for the fact that the value of the S property was unknown at the date of cohabitation, but the fact is that it was only subject to a mortgage of $12,000, and was sold for over $400,000 net in 2005 which, per se, represents 40% of the value of the net current assets. In all the circumstances of the case, and taking into account the diverse contributions made by both of them over a period of 12 ½ years, the court assesses contribution to be 55% to the applicant, and 45% to the respondent.
An adjustment under s.90SF?
The applicant submits that if contribution is not assessed at 60% in his favour, there should be an adjustment having regard to s.90SF of the Act which takes the final outcome to 60%. The respondent submits that neither party should be assessed for a s.90SF adjustment.
There is a significant age difference between the parties: he is nearly 66 years old, she is 46 years old.
The respondent earns almost twice the income of the applicant but most of this is derived from rental she receives from the K property, a property that might need to be sold in order to meet any order the court will make.
The court finds that, at the very least, the respondent’s relationship with Mr K provides her with a financial resource that is not available to the applicant. This is manifested most clearly by the very modest rental that she pays.
There is a significant difference between the parties’ physical and mental capacity for appropriate gainful employment, primarily by virtue of their age difference, through it must be recognised that the respondent’s capacity to earn as an [omitted] has not been very high to date.
The court does not accept as a relevant consideration any moral obligation that the respondent feels she owes to support her elderly mother in Korea.
The duration of the relationship has not adversely affected the respondent’s earning capacity – indeed the opposite is arguably true when one has regard to the training, education and experience as an [omitted] she achieved during the relationship.
The court finds that the respondent is cohabiting with Mr K but she has consciously declined to disclose the financial circumstances relating to that cohabitation. This also leads the court to find that she has not provided proper or adequate disclosure of her finances as a result of this.
In all the circumstances an adjustment under s.90SF in favour of the applicant is warranted, and 5% is appropriate in this regard.
Effect of orders
The applicant’s entitlement is therefore 60 per cent, and the respondent’s 40 per cent. This mean their entitlement, globally, is:
Applicant: $581,142.00
Respondent: $387,428.00
The assets in the respondent’s name currently comprise:
| Item number on balance sheet | Description | Value ($) |
| 2 | Property K | 500,000 |
| 5 | NAB Account | 2,383 |
| 7 | NAB Account | 10,704 |
| 10 | [G] | NIL |
| 11 | Artworks | 5,500 |
| 14 | Household contents | 1,500 |
| 17 | Legal fees paid | 45,600 |
| 24 | Visa Card | (6,915) |
| 26 | Personal loan | (16,822) |
| 27 | HECS debt | (6,697) |
| 33 | F Super | 2,915 |
| $538,168 |
On this basis the respondent would need to pay to the applicant $150,740. Is this just and equitable? In all the circumstances the Court finds that it is. It is not implausible that the respondent can retain the K property and still pay to the applicant his entitlement. In any event, the respondent is hardly in a position to assert lack of justice and equity when clear findings have been made against her as regards credit and financial disclosure.
The orders proposed by the applicant would give the respondent 90 days for payment, failing which the K property would be sold. These orders are appropriate in the circumstances.
I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of Judge Altobelli.
Associate:
Date: 4 June 2013
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