Davis v Tayles

***
B

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

No. 4285 of 2004

SUSAN JOY DAVIS	Plaintiff
v
IAN TAYLES & ANOR	Defendants

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JUDGE:	SMITH J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 and 30 November, 1, 2, 5, 6, 7, 8, 9, 12, 13, 14, 19, 20 and 21 December 2005
DATE OF JUDGMENT:	21 June 2006
CASE MAY BE CITED AS:	Davis v Tayles & Anor
MEDIUM NEUTRAL CITATION:	[2006] VSC 219

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Property – domestic relationship – four years duration – different financial contributions – use of one parties’ assets by the other in businesses and retaining property – increase in value of properties – appropriate adjustments threats of litigation – injunctions to restrain.

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APPEARANCES:

Counsel

Solicitors

For the Plaintiff

Miss C. Molyneaux QC

Eales & MacKenzie

For the Defendants

Mr D. Brown SC and

Mr C. Northrop

Secombs

HIS HONOUR:
The proceeding

Susan Joy Davis has brought proceedings against Ian Tayles and Lighthouse Peak Pty Ltd (Lighthouse Peak) pursuant to Part IX of the Property Law Act 1958 (the Act). She alleges that she and Mr Tayles co-habitated in a de-facto relationship from September 1999 until September 2003. She seeks such orders as are just and equitable in adjusting his interests in real and personal property in her favour. She also seeks the following injunctions:

(i)An order that the first defendant (personally and in his capacity as a director of Biztek Pty Ltd, Taycorp Two Pty Ltd, Taycorp Three Pty Ltd, MHD Pty Ltd, Miller Street Pty Ltd) his servants or agents or howsoever otherwise be restrained from causing Biztek Pty Ltd, Taycorp Two Pty Ltd, Taycorp Three Pty Ltd, MHD Pty Ltd and Miller Street Pty Ltd from commencing any proceeding against the plaintiff.
(ii)An order that the second defendant its servants or agents or howsoever otherwise be restrained from commencing any proceeding against the plaintiff.

The parties and their property

In September 1999, Susan Davis was the sole registered proprietor of a property at Harrison Avenue Burwood. It had an estimated value of $330,000 and was subject to a registered first mortgage on which was owing some $10,000. She was 39 years old. She had been previously married but was divorced. She was the mother of two children – Sarah aged 11 years and Sam aged 9 years. They were attending Ashburton Primary School. She had completed a Bachelor of Teaching at Deakin University and was doing a Bachelor of Education Sciences degree. She worked as a self-employed education consultant. This involved liaising with schools around Australia about mathematics resources.

Mr Tayles was aged 50 years. He had been previously married but was divorced. He had no children. He was the sole director of a number of companies in which he beneficially held all the issued shares. The companies in turn owned properties of various kinds:

a.Lighthouse Peak Pty Ltd (Lighthouse Peak), the second defendant, owned Stockyard Station, a farming property, at Bringenbrong valued at the time at approximately $1,000,000. Mr Tayles conducted a farming business at Bringenbrong,
b.Taycorp Two Pty Ltd owned vacant land in Laverton valued at the time at approximately $2,000,000,
c.Taycorp Three Pty Ltd owned a building in Millers Street Sydney which was leased out and valued at approximately $3.4M, and
d.Biztek Pty Ltd (Biztek) which operated as a service company for Mr Tayles and his other companies and also owned the livestock, plant and equipment on the farm at Bringenbrong.

Bringenbrong was situated near Corryong and Mr Tayles would divide his time between Melbourne and Bringenbrong.

Mr Tayles also personally owned some land on Andersons Road, Echuca South, the value of which was approximately $340,000. In September 1999, the above properties secured borrowings of approximately $2.12M.

On 25 November 2000, Mr Tayles and Mrs Davis purchased 31 Howard Street Glen Iris for $1.2m. The purchase money and expenses were provided by Biztek pursuant to a facility negotiated by Mr Tayles with the Commonwealth Bank. It comprised a temporary excess of $120,000 for the Biztek overdraft, increasing it to $320,000, and a Variable Rate Bill Facility of $1,155,000, making a total of $1,475,000. They moved into that home in January 2001. In addition to a mortgage over the Glen Iris property, part of the security provided for the purchase money was Mrs Davis’ property at Burwood. Subsequently, on 16 December 2001, the Burwood property was sold for $443,000. Issues arise out of those dealings and are discussed below. In September 2004, the property at Bringenbrong was sold for $1.2M. Otherwise, at the time the relationship ended the properties held by the parties and companies were as stated above. Mrs Davis and her children have continued to live at the Glen Iris property. Mr Tayles last lived there in about December 2003.

The parties agree that the present value of the remaining properties are:

Glen Iris                    $1,600,000
Echuca  $   340,000
Miller Street             $3,960,000[1]

[1]Different information was conveyed by counsel as to the agreed values. For example $3.4 million in 1999 and $3.8 million in 2005, a rise of $400,000. But it was also said that the current agreed valuation of the North Sydney properties was $3.96 million. I will proceed with the lesser figure of $400,000 as the increase.

As to the Laverton property, Mrs Davis has relied upon a current valuation provided by her valuer Mr Lawrence of $4,706,000. While Mr Tayles provided valuations from another valuer they have not been relied upon by his counsel. I am not surprised. That valuer was less than persuasive. In any event, in cross-examination of that valuer, counsel for the Mrs Davis demonstrated that applying his approach to determining the value of the Laverton property in 2000 and comparing that with his valuation of the Laverton property in 2005, the increase in site value was $1.8M. The valuation of Mr Lawrence appeared to me to be realistic and should be relied upon. It demonstrated an increase of $2.706M from the commencement of the relationship.

The use of company structures by Mr Tayles introduces complications into the case. The parties have taken different and inconsistent positions in these proceedings. Mrs Davis has tended to treat the assets owned by the companies controlled by Mr Tayles as his assets but has argued that payments made and liabilities incurred related to Biztek. Mr Tayles has tended to treat the payments and liabilities of his companies as if they were his own but resisted any attempt made on behalf of Mrs Davis to access the assets of his companies.

It is reasonable to proceed on the basis that Mr Tayles’ assets include the net value of the companies and that he has ultimately felt the effect of liabilities incurred by Biztek and payments made by it of various domestic and other expenses either through their effect on the net worth of the companies or because they have been charged to him – notably by Biztek. The precise details, however, are not available because Mr Tayles has not kept up to date and satisfactory financial statements. He has also tended to treat the financial affairs of the companies as if they were his own.

As a result, in determining what is just and equitable, it is appropriate to proceed on the basis that Mr Tayles has received the full benefit of any increase in the value of the assets owned by the companies. In addition, it is appropriate to proceed on the basis that any payments made by Biztek from which Mrs Davis has benefited, are in effect his payments. This, in any event, appears to be the only practical way forward in resolving the questions raised in the case and to carry out the duty imposed by the Act to avoid so far as practical the risk of further litigation.[2]
[2]Section 284.

It should be noted that, during the hearing, the Commonwealth Bank discharged its mortgage over the Glen Iris property. As a result the Glen Iris property can be dealt with free of any encumbrances and the personal covenants contained in the mortgage agreement that imposed liabilities on Mr Tayles and Mrs Davis personally for the debts of Biztek have been released. Those covenants and the mortgage are discussed below.

Claims and counterclaims

In determining what order should be made adjusting the interests of the domestic partners in their property, counsel for Mrs Davis submitted that there were two approaches that could be taken, both leading to the same result.

●Narrow approach The identifiable property in which Mr Tayles had a direct legal interest comprised the Glen Iris property and the Echuca property. He was the registered proprietor in respect of each. Counsel for Mrs Davis submitted, however, that if the order that was made for an adjustment of Mr Tayles’ interests was confined to his interests in the Glen Iris property, a transfer of those interests to Mrs Davis would be a just and equitable adjustment having regard to their financial and non financial contributions, both direct and indirect, towards the acquisition, conservation or improvement of property, their financial resources and the contributions made in the capacity of home maker or parent.
●Global approach In the alternative, it was put that a global approach to the assets would be proper having regard to the way in which Mrs Davis’ assets became interlocked with Mr Tayles’ assets and resources. Counsel submitted that the figures revealed increases in value in the Sydney and Glen Iris premises and Laverton over the relevant period of the order of approximately $3M. Counsel submitted that because Mr Tayles had failed to produce any evidence of any detail of the financial position of the trusts and assets, the failure to do so was something he had to live with and that any adjustment would have to be made on the basis of the asset valuations. Counsel submitted that making adjustments between the parties on the basis of the asset valuation would result in a similar result. The appropriate practical adjustment in respect of their property rights would again involve passing his interests in the Glen Iris property to Mrs Davis.

Counsel for the defendants submitted that no adjustment should be made in Mrs Davis’ favour and that Mrs Davis’ interest in the Glen Iris property should be limited to her contribution – 25%. Counsel argued that the relationship was at the most of four years duration. During that time, Mr Tayles and Mrs Davis did not live with each other continuously and Mr Tayles maintained a separate residence at Bringenbrong. Counsel submitted that the adjustment he proposed reflected the respective contributions of both parties. Counsel submitted that there should be an order for the sale of the Glen Iris property and a division of the proceeds according to the parties’ interests.

Mr Tayles originally raised specific counterclaims in respect of moneys spent by him or his companies on school fees, legal fees and a computer for Sarah Davis. These sums were claimed as moneys lent. Those claims are no longer pursued as money lent claims but the payments are relied upon as financial contributions made by Mr Tayles which benefited Mrs Davis. The amount claimed for school fees is $27,000 or $33,000. Counsel for Mrs Davis submitted that these payments should all be treated as payments made in the course of a domestic relationship.

Counsel for Mr Tayles also submitted that a counterclaim by Lighthouse Peak should be allowed in respect of the expenses associated with the lodging by Mrs Davis of a caveat alleging an equitable interest in Bringenbrong. This counterclaim was introduced during the hearing by amendment to Mr Tayles’ pleadings. Counsel submitted that the caveat was one that could not be sustained and that the caveat was lodged for the purpose of forcing Mr Tayles to negotiate rather than to advance a claim to an interest in the property.

The position of the Mrs Davis on this issue is unclear. Counsel submitted that it should not be taken into account in determining a just and equitable distribution or adjustment between the parties and should be treated as a commercial matter. Counsel subsequently submitted that it should be collapsed into and be seen as part of the Part IX application. Counsel also submitted that no accounts had been presented in evidence and floated the possibility that some gain in price may have flowed from the delay caused by the caveat.

In relation to the injunctions that are sought, counsel for Mrs Davis submitted that they are required because of the threats of legal proceedings made by Mr Tayles in his evidence. Counsel referred again to s 284 of the Act and its requirement that the courts so far as practicable avoid the risk of further litigation.

Principles to be applied in Part IX application

Section 285 (1) the Property Law Act 1958 provides as follows:
1) A court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to -
(a)the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners; and
(b)the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the domestic partners to the welfare of the other domestic partner or to the welfare of the family constituted by the partners and one or more of the following-
(i) a child of the partners;
(ii) a child accepted by one or both of the partners into their household, whether or not the child is a child of either of the partners; and
(c)any written agreement entered into by the domestic partners.
These provisions have been considered in a number of cases[3]. From these authorities it may be stated that the Court should:

(1) identify and value the assets of the parties;
(2)determine whether any, and if so, what relevant contributions have been made by each partner;
(3)determine whether in the circumstances the contributions of a partner have already been sufficiently recognised and compensated for;
(4)what order is called for so that a partner’s contribution be sufficiently recognised.

[3]In particular, Conn v Martusevicius (1991) V Con v R para 54-413; Robertson v Austin [2003] VSC80 Findlay v Besley [2003] VSC 247; Evans v Marmont (1997) 42 NSWLR 70.

In considering what contributions have been made, the Court must have regard to, and only to, the financial and non-financial contributions made by each partner of the types referred to in the legislation. In respect of non-financial contributions such as the homemaker or parent, it is no longer accepted that that contribution is to be valued by reference to wage levels applicable to a person supplying such services commercially. It is also established that the contribution of the homemaker is to be recognised in a substantial way not a token way.[4] It cannot now be contended that the contributions of a de-facto partner as homemaker and parent should be regarded as in some way inferior to the corresponding contributions of a spouse and full and proper value must be given to that kind of contribution.[5]
[4]Con v Martusevicus 14 FAM LR 751, 758; Finlay v Besley, above, [47].
[5]Finlay v Besley, ibid.

In considering what is just and equitable, the Court will consider the contributions in context. The context may include the financial circumstances of the parties, the length of the relationship, the extent to which the financial affairs of the parties have been integrated and opportunities lost by a party by reason of their contributions. Contextual matters will also include the consumption enjoyed by a domestic partner as a result of the financial and non-financial contributions of the other. It is also relevant to have regard to the benefits enjoyed by domestic partner as a result of a contribution. At the same time the concept[6] of contributions should not be confined narrowly. It is a flexible concept.[7] At all times it must be borne in mind that the Act is “not about compensation”.[8]
[6]In considering the issues regard should be had to the state of affairs presently existing. Robertson v Austin, above, [52], [53].
[7]Robertson v Austin, above [40]; Findlay v Besley above, [56].
[8]ibid, [60].

The credibility of the key witnesses

Before addressing the issues and the facts, it is desirable that I indicate the view that I have formed about the credibility of the two principal witnesses, Mrs Davis and Mr Tayles.

Mr Tayles is a man of great drive, enthusiasm and passion. Unfortunately for him those qualities have adversely affected his evidence.

I regret to say that I formed an unfavourable view of his credibility as a witness. Throughout his evidence he appeared to want to fight the case at any cost. He constantly chose to be unco-operative and difficult in responding to cross-examination. He was evasive, quibbled with questions and gave non-responsive answers. He fought the cross-examiner and argued his case.

He plainly is extremely angry with Mrs Davis. He appears to hold her responsible for the fact that he had to sell the farm at Bringenbrong. He claims that this followed from her contacting the Commonwealth Bank in the middle of June 2003 to seek information about her position and the state of the accounts. He described this on several occasions as like throwing a “hand grenade”. I am satisfied that his view is incorrect. The need to sell the farm arose because of cash flow problems identified 12 month earlier. The Bank was very concerned about Mr Tayles financial situation before Mrs Davis contacted the Bank. Part of the explanation for his anger and hostility may lie in the acute sense of loss he has felt with the termination of the relationship. On more than one occasion he became extremely emotional in dealing with questions about Mrs Davis’ two children. He plainly not only fell in love with Mrs Davis but fell in love with her children. The photographic evidence points to a very warm relationship between them all for much of the period of the relationship. He is plainly still grieving for that loss.

His obsession to win the case and deprive Mrs Davis of any adjustment in her favour resulted in him going to absurd lengths to deny the existence of a de-facto relationship and any relationship of a domestic nature for the relevant time of two years. The question of the nature and duration of the relationship is discussed further below. I find it difficult to understand how anybody could say (as he initially attempted) that he and Mrs Davis did not commence a de-facto relationship in late 1999 when he moved into her home, set up his office in her home and commenced a sexual relationship with her. In addition, he assisted her in late 1999 by holding himself out to be the step-father of her children for the purpose of seeking entry for them into Wesley College. As discussed below, his changes of position during the trial on the duration of the relationship were tortuous. Unarguably, it seems to me, Mr Tayles and Mrs Davis formed what is normally called a de-facto relationship in late 1999 and yet he refused to concede that this was so. In the end he was driven to explain his position on the basis that he has sexual relationships with women and he marries women but he never has de-facto relationships. By applying his definition of reality, he was not in a de-facto relationship with Mrs Davis because “I don’t do de-facto relationships”.

I am satisfied that his hostility towards Mrs Davis and his desire to win the case has been so extreme that he has also attempted to mislead the court in a number of areas. I refer, for example, to his protestations of ignorance about the nature of mortgages and the obligations of the mortgagor. At the same time he claimed to know that what had been provided by Mrs Davis was not a guarantee. He also acknowledged that he had executed at least eight mortgages in the course of conducting his various enterprises. He was also aware of some finer points of discretionary trusts and the like. Another example is the evidence given in cross-examination initially to the effect that there was an agreement that the Bank would call on all his other assets ahead of the house, something he said was confirmed by two Bank officers, John Sercia and Neil Cowie and which he described as a “very stringent requirement”. I am satisfied that there was no such requirement. At its highest, Mr Cowie indicated that the Bank was likely to call up securities other than the house in Glen Iris because it was likely that there would be an attempt by Mrs Davis to assert her rights over that property which could make the sale more costly and difficult. Mr Tayles also said that the arrangement with the Bank was that Mrs Davis was not liable for Biztek’s debts. Again this appeared to be relying upon the proposition that the Bank was unlikely to sell the Glen Iris house first up but would realise other securities – a different matter. Later, he stated that she was a limited guarantor to the extent of $300,000 until her house was sold. He said that was his understanding of it and was the Bank’s also. I am satisfied that he fully understood the extent of her liability, having himself negotiated a limit of $700,000 on her liability. I am also satisfied that he attempted to persuade a witness, Dr Horkin, to give evidence relevant to the duration of the relationship which evidence would have been false. I make that finding having due regard to the gravity of the allegations involved.

Mrs Davis in her evidence provided a complete contrast. She attempted to co-operate, she attempted to answer the questions, she rarely if ever argued her case and she understated her position. She revealed no hostility towards Mr Tayles and on occasion praised him. Her care at times resulted, however, in answers that were non-specific or complex.

Counsel for Mr Tayles challenged her credibility on several bases. One was that she had made inconsistent statements on different issues at different times depending on the circumstances.

(a)Reference was made first to an e-mail sent to Wesley College in late 2002 in which she stated she had left a message on voice mail
“advising that due to circumstances I now find myself in, that is separating from Ian, I will not able to afford Wesley fees for Sarah and Sam to attend Wesley in 2003.”

Challenged on the assertion that she was separating from Ian at that time, an assertion contrary to her case and evidence, she said the statement as to separation wasn’t truthful. She said that the truthful part was that she could not continue to pay the fees. She said that she was in fact considering separation, but they did not and Sarah in fact went to Korowa and Sam to Wesley. She said she was angry because she was so tired from working so much on the farm and was very sick with pneumonia. But they remained together and had a holiday in January 2003.

The accuracy of her assertion that she could not pay the fees was also challenged on the basis that at that stage she had money on deposit with ING. Assuming that to be the balance of proceeds of the sale of the Burwood property totalling approximately $100,000, it is understandable that Mrs Davis did not see herself as able to afford the school fees for her two children. She had been planning to send them to secondary school using the equity in the Burwood property. That equity, however, was of the order of $350,000. Further, whatever money she then had with ING was the only asset she could gain access to at that time for herself and her family. Even that was subject to possible appropriation by the Commonwealth Bank because of her personal responsibility for Biztek’s debt to the Bank to the extent of $700,000. It is understandable that she would have the view that she could not continue to pay the fees.

(b)Next it is alleged that a letter she wrote to the father of the children in November 2000 was inconsistent with her evidence. In that letter she had stated that Mr Tayles had agreed to lend to her the amount of her husband’s share of the fees to enable the children to continue at Wesley until he came to accept his responsibilities. Counsel submitted that Mrs Davis now says the money was paid as a gift.

The precise basis upon which this money was paid was unclear. Mrs Davis gave evidence that in 2000, Mr Tayles paid Sarah’s fees saying he wanted to do so because he had no children of his own and education was the greatest gift a child could be given. Thereafter they split them for a time until she paid them. After they separated in late 2003, she in fact drew on the funds in ING to pay the then debt to Wesley of $34,000. Mr Tayles’ outline of evidence stated that his payments of half the school fees were a loan that became payable to him once Mrs Davis was reimbursed by her former husband. If that be the case there is no inconsistency – the statement is supported by

Mr. Tayles. At the same time a loan in those terms is not yet repayable. Mrs Davis, however, denies there was any loan arrangement with Mr Tayles. The letter puts forward a proposal which Mrs Davis and Mr Tayles could well have agreed would not come into operation unless Mr Davis agreed. I am not satisfied on Mr Tayles evidence that any loan discussion went beyond that. The moneys were paid by Biztek. Mr Tayles claims that the books charged the debt to him. The situation is confused, but I accept Mrs Davis’ account and that the payments by Mr Tayles were a gift. They must, therefore, be considered as a contribution made to him.

(c)It was also put that Mrs Davis had given differing accounts of the caveat on the farm property. Counsel referred to the following:
●that it was to ensure the proceeds from the sale of the farm were used to reduce the debt on the Glen Iris property,
●according to Dr Horkin, Mrs Davis told him that the caveat was the first step in negotiations,
●the caveat included a statutory declaration by Mrs Davis claiming an interest in the farm under a constructive trust, a claim not pursued.

In my view the statements are not inconsistent. To ensure the proceeds from the sale of the farm were used to reduce the debt on the Glen Iris property, it would be necessary to enter into negotiations relying upon the claim in the caveat to a constructive trust. Whether that claim, which has not been pursued, had substance or not was dependent upon establishing, inter alia, that Mrs Davis had by her labour or by money contributed to the value of the farm. There was no inconsistency.

(d)The next matter raised was that Mrs Davis had made no mention in her evidence that she had been concerned at different times about whether Mr Tayles was having affairs with other women. Counsel referred to the evidence of Dr Horkin, Mrs Potocky and Mrs McMananmy. Counsel criticised her because she did not give evidence of her concerns.

If anything, her failure to mention her concerns reflects favourably on her. She did not have direct evidence and so could not substantiate her concerns. I can understand her having concerns, however, because Mr Tayles clearly saw himself (and still does) as a latter-day Casanova and at the start of his relationship with Mrs Davis had, as he put it, some “fires” to put out. He conceded that he put them out at her insistence.

(e)Mrs Davis is also criticised for inconsistency between a note on the back of a photograph of 2001 and the case put to Mr Tayles by counsel that the picture was taken in April 2003. There is no evidence whether the error was that of counsel or whoever gave the instruction to counsel. Assuming there was a wrong instruction by Mrs Davis, there is no evidence that it was deliberate.
(f)Counsel suggested the evidence of Mrs Davis about a visit to a nursery in September 1999 was that of a person intimately involved with decisions concerning the farm and that this was highly improbable at that time. I am satisfied, however, that Mr Tayles would have approached their new relationship with great enthusiasm and encouragement. I can well understand that, at that early stage of the relationship, he would have encouraged her to be involved.
(g)Counsel also sought to rely upon evidence given by Dr Horkin about the Mrs Davis’ concerns in mid 2003, suggesting that they showed her true motivation. The points raised were that:
●she was concerned that the proceeds from the sale of the Burwood property had not been applied against borrowings,

●         she was concerned about losing her “investment”,
●         she was suspicious of a farm worker,
●         a caveat was put on the farm to try to get negotiation going.
I find nothing particularly significant in these matters. Firstly, these concerns were raised in mid 2003 when Mrs Davis had legitimate concerns about her financial position. Mr Tayles had failed to sell the Laverton and Echuca properties and so they were in breach of the terms of the loan agreement with the bank. It was also clear that the proceeds from the sale of the Burwood property had not been applied to reduce her indebtedness to the Bank. To speak of her “investment” was not inconsistent with her evidence about the intention of the parties and their plans for their home in Glen Iris. There would be few people who did not regard their home as a form of investment. Her suspicion of the farm worker remained that. Finally, the caveat was placed on the farm, inter alia, to try to get negotiations going.

Counsel raised one matter of particular significance, however, - the fact conceded by Mrs Davis, that she did not tell Centrelink of her de-facto relationship until February 2001. Counsel put that she misstated her arrangements with Centrelink to secure her pension. Thus she had been guilty of serious dishonesty when it served her financial interests. For this reason, and because of the other false statement mentioned, it is necessary, to consider her evidence with care. In the end, however, I have concluded that, as a witness, she was conscientious and that the evidence she gave was honest and credible.

The nature and the period of the relationship - submissions

The first major issue to consider is the nature and period of the relationship.

For most of the proceedings Mr Tayles has maintained that if a domestic or de-facto relationship existed, it did not exist for a period in excess of two years. At the commencement of the hearing, his position was that a relationship commenced when they moved into premises in Glen Iris in January 2001 and terminated in about the middle of 2002. On the fifth sitting day, the period was extended to the end of 2002. On the sixth day of sitting , after a period of cross-examination, Mr Tayles indicated through his counsel that he now conceded that there had been a domestic relationship within the meaning of the Act in the period from January 2000 to June 2002 and a de-facto relationship from January 2001 to June 2002. He also conceded that Part IX of the Property Law Act had application to him and Mrs Davis. He continued, however, to vigorously contest, the issues of the nature of the relationship and its history and the duration of the “domestic relationship”.

In final submissions as to the duration of the relationship, counsel for Mr Tayles argued that a relationship did not begin in September 1999 but in the later months of 1999 and did not become a domestic relationship until early 2000.[9] Counsel further submitted that it came to an end by June 2002, the occasion when Mrs Davis declined to go to the farm with Mr Tayles for the Queen’s birthday weekend. He also put forward several longer alternatives:

●December 2002, when Mrs Davis wrote to Wesley College about the inability to keep her daughter at Wesley College and referred to her and Mr Tayles separating and a conversation occurred in which it was alleged that she told Mrs Potocky about the relationship having finished. As to the latter conversation, Mrs Potocky’s evidence in fact was that Mrs Davis spoke to her in a distressed state because of suspicions she had about Mr Tayles and another woman and how she had had enough. She also gave evidence, however, that at the same time Mrs Davis wanted the relationship to continue.
●April 2003, when Mrs Davis visited Bringenbrong and left a note for Mr Tayles and departed. The note complained of instructions given to her at the farm by a Ruth Burston which Mrs Davis had found offensive. It was also put that after April 2003, they did not sleep together. Mrs Davis said that she left the main bedroom at times around July or August 2003.
●June 2003, when Mrs Davis instructed solicitors to write to the Bank about her financial position and, when meeting Mr Redfern, the agent about the sale of the Glen Iris property, declined to consider a sale until she and Mr Tayles had organised a property settlement.

[9]Mr Tayles and his counsel were faced with the difficulty, among other things, that Mr Tayles stated in a letter to the bank in 2003 that the relationship began in late 1999.

It was put for Mr Tayles that there was no event in September 2003 which marked the end of the relationship and the fact that Mrs Davis left the bed they had shared was not an event which marked the end. Counsel conceded, however, that up until September 2003, a sexual relationship continued. Mrs Davis in fact said the last occasion was August 2003 and that they still had “beautiful” times up until August 2003. I note that in evidence Mr Tayles said that she left the bedroom several times after June 2002, and that a series of reconciliations were attempted.

Relationship of the parties - analysis

I am satisfied that from late September 1999 to September 2003, Mrs Davis and Mr Tayles lived in what would normally be described as a de-facto relationship. Initially, for some 16 months they lived together at her home in Burwood when he was in Melbourne. By the end of 1999 Mr Tayles had had installed two Telstra business lines for his purposes and had his home office in the family room which formed his Melbourne office and was keeping business records on the premises. Mrs Davis fulfilled the traditional role of home maker in addition to attempting to conduct a business from home as a consultant. Mr Tayles assisted her in setting up a company and helped her by bringing up to date her financial records and six years of tax returns. They lived as a couple and presented to their friends, family and the public as a couple. They slept together whenever Mr Tayles was in Melbourne until at least mid 2003. When Mrs Davis joined him at the farm, they lived there as a couple with her again fulfilling the home maker role. In addition, however, she worked hard on the property performing tasks in relation to the cattle, fencing, vineyard and nursery. She received no payment at the time for this work and there is no evidence of any contemporaneous discussion about payment for that work.

In August 2000, Mrs Davis and Mr Tayles agreed to marry. They discussed purchasing a home together instead of extending the house at Burwood. The engagement was announced in October 2000 at a party at the home of Ian Tayles’ sister Helen. The occasion was the celebration of Susan Davis’ 40^th birthday, Ian Tayles’ 50^th birthday (he having turned 50 the previous year) and his sister Helen’s 50^th birthday.

Initially, they were very happy and a close bond was formed between Mr Tayles and Mrs Davis and her children. The children started to call him “Dad” in about September 2000. He spent a considerable amount of time with her and the children; in Melbourne,[10] at the farm and on holidays. This changed in 2002 for a number of reasons and the relationship came under stress.
[10]By his calculations, 59% in 2000, 63% in 2001, 36% in 2002 and 18% between January and September 2003. I am satisfied that these figures are conservative. In addition they do not include time spent together at the farm or on holidays.

In 2002 the farm was in difficulty because it became affected by drought conditions which began that year and which worsened in 2003. Mr Tayles thought it necessary to give more personal attention to the farm and long separations resulted. At the same time, by the end of 2002, Mrs Davis was exhausted, in particular, by the travelling to and from Bringenbrong (a five hour journey) and the domestic and farming work at Bringenbrong. In addition her health was not good. She had been experiencing back pain (for which she wore a brace) and at times her lungs were causing her difficulty. Thus, from near the end of 2002 through 2003 she made few visits to the farm – there would appear to have been two visits, one in early January and the other in the Easter period. Another problem was financial issues about which she had legitimate concerns. They are discussed in more detail below.

The relationship continued into 2003, however, although it was experiencing difficulties. Mr Tayles tried to maintain it. In September 2002, for example, Mr Tayles spent at least $8,000 purchasing equipment for a home theatre. Mrs Davis and Mr Tayles spent Christmas day together, at her parents’ home, and New Year’s Eve together. They had a holiday early in January 2003 as a family as well as spending time at the farm. The children went back to school at Korowa and Wesley. In April or May 2003 Mr Tayles purchased a replacement speaker for the home theatre. Mr Tayles writing to the Bank in July 2003 described the relationship as ebbing and flowing with his absences.[11] Eventually they separated in September 2003. They both continued to live at Glen Iris, until there was an assault in December 2003.
[11]Letter dated 17 July 2003.

In my view a de facto relationship, and therefore a domestic relationship, existed for close to four years between Mr Tayles and Mrs Davis. I turn to the next issue, the contributions made by Mrs Davis and Mr Tayles.

Submissions as to contributions
Domestic contributions - Melbourne

Counsel for Mrs Davis submitted that as home maker, Mrs Davis fulfilled her role in its entirety and in doing so left the first defendant in a position to get on with his business affairs. Counsel accepted that as Mr Tayles spent less time in Melbourne, particularly as the drought worsened at Bringenbrong in 2002 – 2003, Mr Tayles had less benefit from her homemaker role. Counsel argued, however, that Mrs Davis continued to look after their Melbourne home but bore the burden on her own. While the purchase of the Glen Iris property in early 2001 conferred benefits it being a bigger house with garden and swimming pool and tennis court, it meant a bigger job for her as home maker.

Counsel also submitted that in assessing the contribution of Mrs Davis it should be borne in mind that for the first 16 months of the relationship, Mr Tayles had the use of the Burwood property as his home and all outgoings were paid by Mrs Davis.

Counsel argued that Mrs Davis’ contributions needed to be recognised by an appropriate adjustment of Mr Tayles’ interests in the Glen Iris property.

Counsel for Mr Tayles, on the other hand, submitted that there was nothing to suggest that Mrs Davis was the sole contributor or that she had to take care of all of Mr Tayles’ domestic needs. Counsel argued that the evidence of Sarah Davis, Mrs Davis’ daughter, was that the parties contributed equally at the outset in dealing with washing, ironing, cleaning and cooking but thereafter Mrs Davis did more. It was put that this was consistent with the deterioration over time and the increasing time spent apart. It was put that Mr Tayles spent much of his time away from Melbourne and was but one of the four members of the household. It was argued that it was not contended that the presence of Mr Tayles significantly increased the tasks required.

It was also put that Mr Tayles had made significant contributions physically and financially. These included work done to improve the Burwood property, through Biztek Pty Ltd, but in respect of which he did not charge for his labour. Counsel submitted that the improvements were a selling point and resulted in a higher price than expected. Counsel also submitted that Mr Tayles had paid school fees, legal fees, buying a computer for Sarah Davis, rates, utilities, food, groceries, holidays and contributed as a father figure. It was put that Mrs Davis had received substantial benefits from these contributions and from financial contributions made by Mr Tayles including the improvement to the Burwood property, the receipt of $100,000 from the sale of that property, assistance in enrolling children at Wesley, the benefits of a larger house and facilities, payment of interest amounting to $60,000 per annum on the Biztek loan used to purchase the Glen Iris property, use of a Ford LTD, sole use of the Glen Iris property since 2003 and no need to borrow funds.

Plaintiff’s contributions - Bringenbrong

Counsel for Mrs Davis also submitted that as the home maker both in Melbourne and at the farm and having regard to the work done at the farm, Mrs Davis’ contributions should be recognised. Counsel argued that an adjustment should be made equal to a reasonable portion of the increase in capital value that occurred in the farming property from the commencement of the relationship to the time of its sale – in the sum of approximately $1M to $1.2M. Counsel put that, viewed as simply a domestic contribution, she would be entitled to at least half the increase but here there was a greater contribution than that. Counsel had to concede that, on an annual basis, she could not say that her contribution was equal to or greater than that of Mr Tayles at Bringenbrong. When there, however, she contributed significantly. Counsel also referred to the increases in the credit limits of Biztek secured in January 2002 of $20,000 and July 2002 of $100,000 by Mr Tayles without the knowledge or agreement of Mrs Davis and for which she was liable. The latter was apparently obtained by Mr Tayles for the purpose of preparing Bringenbrong for sale.

Counsel for Mr Tayles acknowledged that Mrs Davis did some work in respect of the farm at Bringenbrong but argued that it was, on the evidence, very little. Mr Tayles compiled a time sheet in March 2004 which recorded a total of 323 hours of work for which she was subsequently paid $4840 (a rate of $15 per hour). Counsel for Mr Tayles submitted that there was no evidence to suggest that Bringenbrong was seen as a joint venture between Mrs Davis and Mr Tayles.

Mrs Davis’ contribution to Glen Iris, Laverton and Echuca

In relation to the Glen Iris, Laverton and Echuca properties, Mrs Davis seeks a 28% share of the present value of those assets less the amount representing the balance of her contribution of $700,000, namely $400,000, she having contributed $300,000 of the $700,000 personal guarantee she had agreed to put in. The total value of the Burwood, Laverton and Echuca properties as at 2000 was calculated as follows:

1.        Laverton       $1,860,000 (equity)
2.        Burwood       $300,000
3.        Echuca          $340,000
Total     $2,500,000
The figure of 28% is arrived at on the basis that in purchasing the Glen Iris property, Mrs Davis contributed by committing herself to an effective personal guarantee of $700,000. That amount represented 28% of the value of the properties mentioned above in the year 2000.

As to the increases in value by 2005, Mrs Davis submits that the relevant properties had the following values:

Laverton       $4,706,000 (equity)
Glen Iris        $1,600,0000
Echuca          $340,000
Total              $6,646,000

Applying the percentage of 28% to the value of the properties in 2005, a figure of $1,860,880 is arrived at. From that figure is deducted the $400,000 mentioned above and the sum of $800,000 representing her half share of the value of the Glen Iris property leaving, it is argued, an adjustment in favour of Mrs Davis of $660,880.

I note that counsel for Mr Tayles interpreted Mrs Davis as seeking 28% of the increase in value over the period of the relationship. In my view the claim in this area should be confined to any increase in value over that period. At the same time, the plaintiff’s contribution was more than the $700,000 guarantee. She contributed $300,000 and, having done so, remained personally liable to the Commonwealth Bank for $700,000. Her contribution can be said to have increased in payments and liabilities to $1M.

Counsel for Mrs Davis submitted that prior to the purchase of Glen Iris in late 2000, Mrs Davis and Mr Tayles had kept their assets separate. To purchase the property, however, they combined their assets to enable a borrowing to take place to purchase the Glen Iris property. In particular, the Burwood, Echuca and Laverton properties became one for the purpose of the borrowing. That borrowing covered an amount greater than that needed to purchase Glen Iris. The exercise also involved a mortgage of the Glen Iris property to secure the borrowing by Biztek under which Mrs Davis and Mr Tayles were personally liable as third parties. This, it was said, effectively created a personal guarantee to which they were subject. Mr Tayles disputed the accuracy of describing the obligation as a guarantee. Nothing turns on that dispute although it should be contrasted with his claimed ignorance of other legal distinctions. Mrs Davis also gave a registered first mortgage over the Burwood property to secure the debt. Counsel submitted that, prior to this transaction, Mrs Davis was in a position of financial security in that she owned the Burwood property which was at that time subject only to a mortgage of some $10,000 and was worth at least $300,000. As a result of this transaction, however, she lost that position and incurred a personal liability of up to $700,000 in respect of Biztek debts secured by the mortgages over the Burwood and Glen Iris properties. If the Bank called up its securities, she would be left with nothing – unless the Bank called on Mr Tayles to meet fully the loan facilities and he did so. If this occurred, he, by contrast, would nonetheless still have had some substantial assets remaining. Counsel submitted that the result of this exercise was that the parties had in fact directly pooled four assets – Laverton, Burwood, Echuca and Glen Iris. Counsel put that it became a joint venture.

Counsel also drew attention to the fact that the original agreement with the Bank, and Mrs Davis’ expectation was, that by February 2003, she and Mr Tayles would hold a clear title to the Glen Iris property.[12] This was because it was a term of the loan made to facilitate the purchase of the property in Glen Iris that the Burwood, Laverton and Echuca properties would be sold and the loan paid out. Counsel also submitted that it should, however, be found that Mr Tayles never intended to sell his own properties and was relying upon addressing the Bank's requirements without doing so. In particular, the loan facility involved a temporary extension of an overdraft which had to be paid out within 12 months. This obligation was met by selling the Burwood property. As to the Bill facility, Mr Tayles was intending, as he usually did, according to his evidence, to try to roll over that Bill rather than sell any property. He stated proudly that he had acquired his wealth by not selling his assets. Counsel submitted that by providing her property and submitting to the risk of losing everything, Mrs Davis had made a significant contribution to the purchase of Glen Iris and the continuation of loan facilities to Biztek and the retention of three properties rather than their sale which would have been necessary to purchase the Glen Iris property. Counsel submitted that Mr Tayles did not tell Mrs Davis of his intentions not to sell his properties at any time.
[12]Exhibit P16.

Counsel for Mrs Davis also submitted that Mrs Davis did not fully understand the ramifications of what was occurring. Counsel submitted that she was fairly uninformed and inexperienced, her previous dealings having only involved mortgages. Counsel for Mr Tayles criticised Mrs Davis’ suggestion that she had little idea of financial transactions when comparison is made of a note of a meeting in July 2002 with the Commonwealth Bank made by Mrs Davis. Counsel referred to the detail of the options discussed including the payment of “interest only for the next couple of years”. I do not see any inconsistency. The note does not record technical details. In any event, I am satisfied that Mrs Davis did not have an understanding in late 2000 and early 2001 sufficient to understand the intricacies of the financial arrangements entered into. It was not until mid 2003 that she started to gain some understanding. Counsel submitted that by June 2003, Mrs Davis was becoming concerned about the security of herself and her children and retained lawyers. Her solicitors who wrote to the Bank on 18 June 2003 seeking information about her liabilities. She also received help from Dr Horkin in 2003.

Further, counsel for Mrs Davis submitted that Mrs Davis trusted Mr Tayles and that was demonstrated by the fact that she handed over to him all her assets. Counsel submitted that in January 2002 she still thought the arrangement was some form of mortgage and was encouraged in that view by the document he supplied to her at the time when she was asked to sign an authority to release the sale proceeds of the Burwood property to the Bank. She agreed to do so under pressure from Mr Tayles who said that, if the release was not given, Glen Iris would have to be sold. There were other options – the sale of Laverton or Echuca. He typed up a document and signed it and this gave her comfort. The document is discussed below. There was no express representation from Mr Tayles to Mrs Davis that the mortgage would be reduced but, in my view, the impression was given that in some fashion the money had been linked to the Glen Iris property to protect her position. This had not in fact occurred. Instead $120,000 was used to meet the commitment of Biztek to the Bank to pay out the overdraft extension and the balance used to reduce its debt. Her liability for $700,000 remained and was fully secured by her interest in the property.

Counsel for Mrs Davis also submitted that the use of the proceeds of sale of the Burwood property contributed to the assets and resources of Mr Tayles. Counsel referred to the evidence of Mr Tayles that the Burwood property was not needed as security for the purchase of the Glen Iris property and its sale was not required. Counsel submitted, however, that Biztek was obliged to reduce the temporary extension of the overdraft and this was done by selling the Burwood property. This could have been done by selling the Laverton property or the Echuca property. The Echuca property, however, had not increased in value and no steps had been taken to try to sell it and it was generally regarded as a difficult property to sell. On the other hand the Laverton property had a plan of sub-division prepared for 9 allotments but was not yet on the market. Counsel submitted that the sale of the Burwood property was the means by which Mr Tayles, through his companies, was able to retain both the Laverton and the Echuca properties. It was put that this sequence of events gave rise to Mrs Davis having an interest in the Laverton property because she had thereby contributed to its retention.

In assessing the contributions of the parties, counsel for Mr Tayles made a number of submissions.

(a)Counsel argued that Mrs Davis appeared to be contending that she had made a contribution to the working capital of Biztek Pty Ltd. He submitted that there was no contribution made by Mrs Davis to the working capital of Biztek Pty Ltd as a result of the financial arrangements made in late 2000 for the purchase of the Glen Iris property.
(b)As to the provision of a guarantee, counsel submitted there was no more than a liability under the covenant in the mortgages over the Glen Iris and the Burwood property. Counsel submitted they would not have come into existence but for the decision to purchase the Glen Iris property and form part of the transaction by which Mrs Davis obtained an interest in that property.
Counsel submitted they should not be used as a basis for claims in respect of other properties, arguing that they did not lead to the acquisition or conservation of any other property other than Howard Street.
Counsel further submitted that the evidence did not support the conclusion that the mortgages in fact influenced the Bank’s actions at any later time. Counsel submitted that it had not been demonstrated that the provision of the mortgages had contributed to the acquisition, conservation or maintenance of any property other than Glen Iris.
Counsel also challenged the use of the liability limit of $700,000 for the purpose of determining the interest in the assets. Counsel submitted that, if it was relevant, an examination of the list of security revealed the vast quantity of unlimited guarantees and mortgages over all property with which Mr Tayles was associated given in support of the transaction.
(c)Counsel submitted that the sale of the premises in Burwood did not result in the conservation of Laverton North. Again it was submitted that a link could not be demonstrated between the making available of the proceeds of the sale of Harrison Avenue in Burwood and the conservation of the Laverton property.

Preliminary issue – the parties’ interest in the Glen Iris property

A preliminary issue to be determined before considering the contribution issues raised by the parties is the nature and extent of the interests of Mrs Davis and Mr Tayles in the Glen Iris property. I turn to that issue.

Mrs Davis’ submission

Counsel for Mrs Davis submitted that on proper analysis of the whole transaction relating to the Glen Iris property, Mr Tayles had intended Mrs Davis to benefit to the extent of one half of a clear title of that property. Counsel also submitted that Mr Tayles intended her to benefit from the payments made by Biztek. It was put that Mr Tayles had stated in evidence that he knew there was no way she could buy such a property or make any significant contribution. Counsel conceded that under Part IX of the Act this represented his contribution.

Submissions of Mr Tayles

While it was common ground that the certificate of title for the property at Glen Iris records Mrs Davis and the first defendant as joint proprietors, counsel for Mr Tayles submitted that the parties hold the beneficial ownership of the property according to their contributions. Mrs Davis’ contribution to the acquisition of the Glen Iris property was allowing the Burwood property to be used as security and paying $300,000 in January 2002 to the Bank from the proceeds of its sale. This amounted to 25% or, on current values, $400,000. Counsel argued, however, that this contribution is recognised by a 25% interest in the equity of the Glen Iris property. Counsel submitted that there was no other evidence pointing to any other form of contribution in respect of that property.

In support of Mr Tayles’ argument reliance is placed upon the evidence of Mr Tayles and also upon the principles relating to resulting trusts. Reference was made in particular to the High Court decision of Calverley v Green[13] and the discussions in that judgment of the principles to be applied in determining whether a resulting trust applies. Counsel quoted the judgment of Mason and Brennan JJ[14] where their Honours stated:

“As both parties contributed to the purchase price, there could not be a resulting trust in favour of the defendant alone. It follows that the Court of Appeal was right to allow the appeal from Rath J. Then the Court of Appeal went on to hold that the legal estate prevailed unless there were an express trust created in favour of the defendant when the parties acquired the legal estate in the Baulkham Hills property. That was too large a step to take, for it was necessary to consider another equitable presumption which arises from the unequal contribution of the purchase price and which governs the present case unless some opposing presumption displaces it or the other facts of the case rebut or qualify it. Unless an equitable presumption of a trust is displaced by a counter presumption or it is rebutted or qualified by evidence of the intention of the party paying the purchase price or of the common intention of the parties who contribute that price, the presumption determines the conclusion to be reached. … Once it was found that both parties had contributed to the purchase price, the conclusion had to conform to the relevant equitable presumption unless it was displaced, rebutted or qualified. When two or more purchasers contribute to the purchase of property and the property is conveyed to them as joint tenants the equitable presumption is that they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contribution unless their contributions are equal … “

Their Honours went on to say that this is the “basic presumption” but stated that it could be displaced in appropriate cases by the presumption of advancement. Later their Honours stated:
“Where the contributors to the purchase price are not husband and wife, the taking of a conveyance in their joint names is less likely to support an inference that they intend the right of survivorship to govern their beneficial interests. In a case where a man and woman are cohabiting though unmarried there is no presumption, either of equity or human experience, that they intend their relationship to have the same consequences upon their individual property rights as marriage has upon the property rights of spouses. An assumption that the parties to such an arrangement intended to maintain independent control of money and property and to retain a testamentary power to dispose of assets in which they have an interest is more likely to coincide with reality than an assumption of joint ownership.”[15]

[13](1985) 155 CLR 242.

[14]At 258.

[15]At 260.

Counsel for Mr Tayles submitted that a contrary common intention to hold the property jointly was not shown. Counsel argued that it was significant that at no stage has Mrs Davis in evidence or submission said that there were any discussions that the parties would own the beneficial interest in the Glen Iris property equally. Counsel for Mr Tayles also referred to the pleadings in the case and argued that Mrs Davis referred in turn to contracts and agreements which contemplated unequal contributions to the purchase of the property. Further reliance was also placed upon Mrs Davis’ outline of evidence where she stated that prior to the purchase of the Glen Iris property, Mrs Davis and Mr Tayles entered into a financing agreement relating to its purchase under which Mrs Davis was to sell Harrison Avenue and contribute the net proceeds to the Glen Iris purchase. Reference was also made to another statement in the outline of evidence to the effect that when the property in Burwood was sold and its sale completed on 16 February 2002, the sum of $300,000 from the net proceeds of sale was applied pursuant to the collateral agreement by Mrs Davis to the purchase of the Glen Iris property and Mrs Davis’ equity therein.

In my view, Mrs Davis’ pleadings and evidence do not detract from the primary position of Mrs Davis that it was intended that the property be held jointly both legally and beneficially. I note that in her outline of evidence she stated that she and Mr Tayles agreed to jointly purchase a home. In her evidence in chief, she did not go into any detail about statements of intention but rather spoke of them looking at properties as a couple and purchasing the property as a couple. This is hardly surprising: they being in love, engaged to be married , confident about their future together and looking for a family home for the future. The issue was not explored directly in her cross-examination.

Counsel for Mr Tayles submitted that his evidence about the arrangements was contained in paragraph 15 of his outline and confirms that the agreement was that Mrs Davis would sell her property at Harrison Avenue, Burwood and contribute part of the proceeds, around $300,000, to the purchase of the new house. The outline of evidence, however, does not address the intention of the parties. In cross-examination, Mr Tayles denied any common intention that they held the property jointly but he gave no evidence of any relevant discussions at the time of the purchase.

The nature of the interests of the parties in the Glen Iris property

There is, however, strong contemporaneous evidence supporting the conclusion that the intention of both parties was that they would hold the property as joint proprietors both in law and in equity.

Reference should be made first to a document which was typed by Mr Tayles and signed by Mrs Davis on 25 November 2000. It was in the following terms:

“Authorisation
I, Susan Joy Davis hereby nominate Ian Tayles on my behalf to bid for, to negotiate for and if successful to enter into a contract as nominee to purchase a property at 31 Howard Street Glen Iris on the basis that the property is to be purchased by us jointly.”

Reference should also be made to the nomination document signed by both parties which stated inter alia:
“The purchaser and the nominee acknowledge that they will henceforth be jointly and severally liable for the due performance of the obligations of the purchaser under the contract and payment of any expenses resulting from this nomination including any stamp duty.”

I am satisfied that Mr Tayles was fully aware of the contents and meaning of the documents and that they accurately stated the parties’ intentions.

In determining the parties intentions, it should also be borne in mind that while it was Mr Tayles who had access to the companies’ considerable assets and income which enabled the large borrowing to be made, Mrs Davis was contributing to it by committing all her limited assets and more to the transaction. Not only had she provided a mortgage over the Burwood property, her sole asset, but she had also committed herself to selling that property and using the proceeds to reduce the outstanding debt. In addition, she had entered into a mortgage as a third party to secure the loans to Biztek and had accepted a personal liability for an amount of $700,000 – an amount that was in excess of half the anticipated purchase price and represented half the sum borrowed. Under the terms of the mortgage she would be personally liable for any future debts incurred between Biztek and the Commonwealth Bank. I note that Mr Tayles in fact negotiated that liability figure for her to reduce her liability to half of the debt. If the common intention was that her interest was to be 25% why not seek to limit her liability to 25% of the debt at that time?

Reference should also be made to the document prepared on 30 January 2002 by Mr Tayles in the following terms:

“I confirm that of the $320,000 to be provided by you to the Commonwealth Bank following the settlement of the sale of your property at 24 Harrison Avenue, $300,000 will be applied to your equity in the property at 31 Howard Street, and $20,000 will be applied towards the balance owing to Biztek for the refurbishment works carried out at 24 Harrison Avenue prior to sale.” [16]

[16]Exhibit B27, Court Book 2-375.

The document was drawn up by Mr Tayles after Mrs Davis had been told by Mr Tayles that she had to sign an authority to release the sale proceeds. The authority had been sent to them by Mr David Miles of the Commonwealth Bank. She said that the release really worried her. She had understood that the money was to be used to reduce the loan at the Commonwealth Bank. She said that Mr Tayles told her that $180,000 was going to the Bank and $120,000 was going to Biztek. She did not understand why the Bank would ask Mr Tayles to do what he was doing. She said she was very alarmed by this and asked why the proceeds should go to Biztek saying that they should go to the Commonwealth Bank because that was what they had agreed - to pay off the loan. She stated that they had a bit of an argument about it and as a result of that he brought her the above document to reassure her, as he put it, that $300,000 was going to the Commonwealth bank (not Biztek) and $20,000 was going to repay Biztek for the refurbishment of Harrison Avenue. She agreed that the sale proceeds exceeded $400,000 but said that at no time did Mr Tayles ask for more than $300,000. She said that the high price was achieved because it was sold later and because of the work that she and Mr Tayles had done. She said that Mr Tayles had been “fabulous” and done a tremendous amount of work.

In cross-examination she again repeated that she was concerned about Mr Tayles stating that $120,000 was to go to Biztek. Asked about the reference to the application of the money to her “equity in the property” she said she didn’t know what was meant by that. She said the letter did make her feel a bit better but she was not happy signing the document. She said that Mr Tayles told her that if she didn’t sign the document they would have to sell Glen Iris. She said she was very upset with the authority to release. She said it was a very stressful period. She said that the mortgage over the Glen Iris property was to be paid off. The money was intended to be used to pay off that mortgage. She didn’t see the payment as an investment but a repayment off the mortgage.

I accept her evidence about this transaction. At worst from Mrs Davis’ point of view, the document shows Mr Tayles attempting to deceive. I am satisfied that at the time these events occurred Mrs Davis did not fully understand and was still somewhat unsophisticated in the technicalities and niceties of the transactions. As a result she was somewhat confused as to the above third document itself and the reference to the application of $300,000 “to your equity in the property at 31 Howard Street”. What Mr Tayles set out to do was to appear to link the payment to her and the property rather than to the Biztek debt owed to the Bank. He did not set out to describe her equity in the property. The document was consistent with the parties having the common intention that she would have an equal beneficial interest in the property. What had been planned and intended from the outset was that she would receive such a half interest and her direct contribution to the purchase of her half interest, or equity, would be the provision of $300,000 approximately from the sale of the Harrison Avenue property. Thus the document is consistent with what was originally planned – namely that she directly contribute $300,000 and that they own the property jointly.

In my view the above documents and events point strongly to a common intention that Mrs Davis and Mr Tayles would own the Glen Iris property jointly. That conclusion is strengthened by the reality that Mr Tayles was well aware of the relevant concepts and distinctions and had ample opportunity to ensure that any document prepared made it clear that Mrs Davis was to have a 25% interest in that property. I note that at about the time of these transactions he showed his familiarity and ease with the concept of equities of different sizes in correspondence from February 2001 to September 2001 with his mother and siblings. It related to discussions prior to Christmas 2000 and during 2001 concerning the funding of the purchase of a unit in Melbourne for his mother. He acknowledges that in February 2001 he wrote a detailed letter stating that five people were to be on the title and that a transfer was prepared identifying four persons as tenants in common in equal shares. Throughout his cross-examination he was evasive on these matters. He was driven to claim that he had no idea of the ramifications of being a joint proprietor of real estate, notwithstanding an extensive past experience in dealing in real estate and having held property jointly with his two previous wives. I also note that in September 2001 he was circulating a draft agreement recording his mother holding 51.43% interest in the property and each of the other three holding a 16.19% interest. Ultimately, he said it finished up at one half and three one-sixths. A title search of the property revealed that as at 4 May 2001, Mrs May Tayles had a one quarter undivided share as tenant in common and Mr Ian Tayles, Helen Mary McManame and David William Tayles held the remaining three one quarter shares. Thus counsel made the further point that it was not a novel proposition for Mr Tayles to have the title recording a situation that did not match the agreement he claimed to exist between the parties.

It should be remembered that Mr Tayles himself said that he saw the action of Mrs Davis in making her property available as a loving gesture on her part. It was the act of someone placing her entire trust in the other for her financial future and financial security. In those circumstances, it is hardly surprising that Mr Tayles would respond and intend that they would be equal beneficial owners of the property.

Finally, on the evidence it would be surprising if Mr Tayles had not intended that Mrs Davis should receive an equal beneficial interest in the property. They were very much in love. They had announced their engagement to be married approximately one month prior to the purchase. Mr Tayles had formed a very strong bond with Mrs Davis and her two children. In September 2000, as noted above, they began calling him “Dad”. They had provided him with the family that, as he himself said, he had craved from his late 20s but thought he could not have. I am satisfied that at the time of the purchase of the property Mr Tayles and Mrs Davis had committed themselves to the marriage. What occurred was a pooling of resources in the context of a commitment between them for the future.

Once all the parameters are taken into account, it also seems to me that the provision of a joint interest was just and equitable. That issue is discussed further below.

Analysis of contributions – approach

The submissions and evidence reveal a complex situation involving contributions of different kinds and categories which inter-relate in different ways. It is necessary to explore the issues in more depth before any decision can be reached.

The situation does not lend itself to a classic global approach.[17] It is not the situation of a couple acquiring assets in the course of the relationship. Rather they brought to the relationship assets significantly different in value and nature and during the relationship, the only asset acquired was the Glen Iris property to which each contributed financially and in different ways.
[17]Norbis v Norbis (1986) 161 CLR 513; Black v Black, unreported, NSW C of A, 14 November 1991.

It seems to me that for Mrs Davis to be able to benefit from any increase in the value of assets held during the relationship, Mrs Davis needs to be able to demonstrate, among other things, a connection between her contributions and the preservation, or increase in the value, of assets concerned or the sharing of exposure to risk from the pooling of assets. An assessment also has to be made of what might be described as the domestic contributions of both.

I propose to consider the specific contributions alleged by Mrs Davis in three broad categories.

(a)Contributions in the acquisition of Glen Iris and the sale of Burwood.
(b)Contributions towards the retention of other assets to the benefit of Mr Tayles and other financial benefits.
(c)Domestic contributions including contributions made at Bringenbrong and Burwood and Glen Iris.

Contribution to the acquisition of the Glen Iris property including the contribution of the sale proceeds of Burwood

Mrs Davis made direct and indirect financial contributions to the purchase of the Glen Iris property. This is revealed by an analysis of the purchase of the Glen Iris property, the terms of the borrowings obtained for the purchase, the disposal of the Burwood property and the use of its proceeds. I note the following:

(1)As a result of the loan agreement entered into by Mrs Davis and Mr Tayles to enable the purchase of the Glen Iris property, Mrs Davis contributed by
·     giving a mortgage over her home in Burwood as security,
·     agreeing to its sale over the next two years to assist in repaying the loan, and
·     entering into a mortgage agreement under which she became liable for all Biztek’s present and future debts to the Commonwealth Bank over the next two years up to an amount of $700,000, secured over the Glen Iris property.
In doing so she became personally liable for the then overdraft of Biztek of $200,000 (previously $150,000) as well as the temporary extension of the overdraft of $120,000 and the Bill facility of $1.15M. Thus while her liability was limited to $700,000, she became personally liable for the next two years for the debts of Biztek including any debts in existence at the time.[18] Biztek, as noted above, serviced Mr Tayles businesses, in particular the farm at Bringenbrong.
(2)A year later the Burwood property was sold. As a result of the release of $320,000 from the proceeds,
●the Biztek bill discount facility was reduced by $180,000 to $975,000 face value,
●the Biztek overdraft limit was reduced back to $200,000 and the overdraft itself reduced from $281,545.37 to $153,833.90,
●Mrs Davis, having contributed $320,000[19] to the reduction of the Biztek debt, remained personally liable for its debt to the extent of $700,000 for the next 12 months, secured by the mortgage over the Glen Iris property.[20]

(3)The result of these transactions was that by the end of February 2002, the indebtedness of Biztek to the Commonwealth Bank had been reduced and the debt was now secured by the Glen Iris, Laverton and Echuca properties. Of those properties, the loan agreement, reflecting the agreement between Mrs Davis and Mr Tayles, required Mr Tayles to sell the Laverton and Echuca properties within the next 12 months to pay out the Bill facility.

[18]As at 23 November 2000, the debit balance of the Biztek cheque account as shown in its statement was $111,253.16. As at 6 December 2000 the debit balance was $240,965.98.

[19]$20,000 in reimbursement for work done at the Burwood property and used to reduce Biztek’s debt to the bank.

[20]This was the bank’s position referred to in Mr Cowie’s evidence and accepted by the parties.

It may be said that Mr Tayles provided significantly more security for the loan than did Mrs Davis and was liable for the whole debt, $1.175M after receipt of the Burwood property proceeds. He also faced the prospect of effectively paying the balance of the purchase money (75% of the purchase price) in 12 months time. That obligation was secured by extensive guarantees and mortgages and other arrangements involving all his business interests. But under the loan agreement, and the agreement between them, Mrs Davis did more than undertake to make her property available to cover 25% of the purchase price.

●Initially she accepted personal responsibility for some of Biztek’s pre-existing own debt by accepting liability for more than half the purchase price and agreed to become liable for Biztek’s indebtedness then, and for the next two years, to the Bank. To that extent she made a contribution to the working capital of Biztek which benefited Mr Tayles.
●Later, after the Burwood property sale proceeds were paid to the Bank, the nature and level of her contribution also changed. In addition to her contribution of $300,000 of the proceeds of sale and her half interest in Glen Iris as security, she remained personally liable for $700,000 of Biztek’s debts – as was agreed between them.

As a result, her financial contribution to the relationship represented significantly more than 25% of the purchase price of Glen Iris. She had placed herself in the position where she could end up being personally liable for a further $700,000 and effectively losing $1M – only marginally less than the liability to the Bank of Biztek and Mr Tayles - $1.175M. Plainly it was the credit obtained by Mr Tayles that put her in the position that she could in fact lose that much money. But the fact remains that the terms on which she made her contribution had the consequence that she could lose everything that she brought into the relationship. The Burwood property was her only asset. In taking this action, she tied her financial future and that of her children to that of Mr Tayles and his business interests. While she plainly benefited from Mr Tayles’ borrowing capacity in the form of a half interest in the property worth approximately $600,000, she agreed to place herself in the position where she ran the risk of losing everything if Mr Tayles financial affairs took a turn for the worse. Under the terms of the loan agreement, and as agreed between them, that situation would continue until late December 2002 when Mr Tayles was supposed to sell the Laverton and Echuca properties to pay out the loan facility – something that did not happen.

Counsel for Mr Tayles submitted that, if the Glen Iris property is held by Mrs Davis and Mr Tayles legally and beneficially as joint owners, then it would follow that Mrs Davis had received a benefit from Mr Tayles equal to the difference at the time of purchase between her then contribution, the Burwood property, and the value of the half interest in the property and that this benefit increased as time went on as the value of the property increased and Mr Tayles continued to pay the interest payments under the mortgage.

Accepting that analysis, it does not, however, take into account all of the above mentioned aspects of her contribution. Further, while Mr Tayles through Biztek paid the interest payable on the borrowings, at no time during the relationship did Mr Tayles make a personal capital contribution to match that of Mrs Davis as noted above. After Mrs Davis paid $300,000 to the Bank, both she and Mr Tayles stood to lose very similar amounts if the Bank chose to enforce the mortgage against them both. As to the interest payments, they are more appropriately considered with other contributions of a domestic nature such as that made by Mrs Davis in providing Mr Tayles with a home in Melbourne for the first 16 or more months of their relationship.

There are, however, other contributions to consider and take into account.

Since the expiration of the approved term of the Bill facility for the purchase of the Glen Iris property in late 2002, the debt has remained unpaid because Mr Tayles chose not to comply with his agreement with the Bank and Mrs Davis and did not sell the Laverton and Echuca properties. Since then, the liabilities under that loan agreement have remained as they were, with Mr Tayles personally liable for a little over $1.175M and Mrs Davis personally liable for $700,000 and at risk as to the loss of her $300,000 contribution in the event that the Bank exercised its rights as mortgagee. Moreover, as discussed below, during this latter period, the securities provided by Mrs Davis over the Glen Iris property along with the securities Mr Tayles provided over his and his companies properties, were relied upon and used by Mr Tayles in his negotiations and dealings with the Bank. This occurred without any agreement of Mrs Davis. Those events and circumstances in themselves constituted a contribution by Mrs Davis and support, inter alia, an entitlement in Mrs Davis to share appropriately in any increase in value of the Glen Iris property over that period on the basis of justice and equity.

As to whether there has been adequate reimbursement, I note that Mr Wilson gave evidence that he was paid $14 per hour when he was working without his own equipment. He was working generally around the farm with stock and the like. In those circumstances it is difficult for Mrs Davis to suggest that in respect of a total of 323 hours of work she had not been reimbursed. Accepting, however, that she worked more than 323 hours and that she also acted as homemaker, she has not been adequately reimbursed for such contributions and they are best considered when weighing up other domestic contributions, including those of Mr Tayles.

I have referred above to the financial contribution to the Bringenbrong property and its operations by Mrs Davis by providing the security which supported the loan facility of Biztek which was used by Mr Tayles to the extent of at least $100,000 for the purpose of improving the farm property for sale and $20,000 for the operation of the farm. But I take that contribution into account in looking at financial contributions to assets and businesses.

Contributions to the welfare of the parties of a domestic nature generally

Between approximately September 1999 and January 2001, it was Mrs Davis who provided the home in which she and Mr Tayles lived in Melbourne. Mr Tayles used half the family room as his office. In it he placed a desk, shelving and a filing cabinet.

Mrs Davis conceded that, overall, Mr Tayles made the greater contribution to the utilities and other charges and costs related to the properties occupied.

●Initially at Burwood, she paid the gas, electricity and her telephone line. Mr Tayles or Biztek paid for the two additional lines put in by Mr Tayles through Biztek. At Glen Iris, however, he or Biztek paid for the gas and electricity. He would not concede that this was done to reduce any taxes Biztek would have to pay. He conceded, however, that Mrs Davis had reimbursed some of the utilities’ costs through her business but claimed moneys were still owed. The amounts cannot be established.
●As to rates and other charges at Burwood, they were paid by Mrs Davis. At Glen Iris they were paid by Biztek.
●Mr Tayles did some minor handy man type of work from time to time at Glen Iris.After Mr Tayles left, Mrs Davis has paid for a number of items, including the fixing of leaking toilets, repairs to the spa and the tennis court, completing a watering system.

Mr Tayles contributed to the improvement of Harrison Avenue. Work was arranged through his company Biztek Pty Ltd but he did not charge for his labour. $20,000 was paid to Biztek out of the proceeds of sale but $9,000 remains unpaid. There is a dispute about the amount, Mrs Davis asserting that she had a contra credit of $6,000 relating to school fees. In the end it is not necessary to resolve these connected issues. Mr Tayles claims that this work was the reason for the increase in market value of the property – the benefit of which Mrs Davis received. There is no evidence, however, that the improvements contributed to the value of the property. Also property values were increasing over the relevant period. Nonetheless, it is reasonable to proceed on the basis that some increase in value was attributable to the improvements.

It is common ground, so far as the Glen Iris property is concerned, that Mr Tayles, through Biztek, has been paying the interest payable on the loans to purchase the property which totals approximately $60,000 per annum. This need not have been incurred, however, after 1 December 2002 if he had complied with the agreement with the Bank and Mrs Davis. In addition, paying that interest has enabled him to benefit from the substantial capital appreciation in the Laverton property. Nonetheless, it has been a cost he has borne and, in doing so, has enabled Mrs Davis and her children to remain in the Glen Iris property. Mrs Davis, of course, contributed capital from the sale of the Burwood property but that has already been addressed in the foregoing analysis.

Turning to the homemaker area, I am satisfied that, apart from attempts by Mr Tayles earlier on in the relationship, he and Mrs Davis settled quickly into a fairly traditional relationship in which Mrs Davis was the homemaker doing most of the domestic things such as cooking and cleaning and washing and ironing. At Burwood, Mr Tayles spent a lot of time working from his home office. Mrs Davis took the children to school, came home and cooked him breakfast, lunch and dinner. A similar pattern continued at Glen Iris. In the latter part of 2002 and in 2003, Mr Tayles was frequently away from Melbourne at the farm and accordingly the domestic benefits he obtained directly from Mrs Davis playing the role of homemaker decreased. But she continued to maintain his Melbourne home. I am satisfied, also that when at the farm she continued to perform that homemaker role. His absences at the farm meant that she carried the immediate responsibility and burden of looking after the house at Glen Iris.

In addition to performing the traditional homemaker role, I am satisfied that Mrs Davis generally paid for the food purchased for the family to eat – both in Melbourne, at the farm and on family holidays. Food for the four normally cost $200 to $250 per week. As to insurance, Mrs Davis paid contents insurance and Biztek paid the building insurance at Glen Iris. Mrs Davis bought items like bedding, sheets, towels and clothing including that of Mr Tayles – except for Mr Tayles farm clothing bought by Biztek. She also bought gardening materials like fertilizer and plants for the Glen Iris property.

Mr Tayles has made contributions to the school fees - $27,900 or $33,000 depending on whether $6,000 was deducted from Biztek’s invoice.

I note that Mr Tayles claimed that he paid for cleaners at Glen Iris and the farm, a gardener at Glen Iris and farm gear for the children. The only evidence of any detail that he was able to produce to support these contentions was a copy of two invoices from Heather Crane both dated 6 May 2002 in respect of cleaning work done in March, April and May totalling some 15 hours. I accept that evidence. There is no documentary evidence of any sort produced to support the gardener claim. I am not prepared to act on his evidence on these matters where it is not supported by other credible evidence.

Mrs Davis and her children and Mr Tayles enjoyed a number of holidays together. Their first holiday was in January 2000 at Wilsons Promotory. This was a holiday that Mrs Davis had organised and paid for. In June 2000 Mr Tayles took her to Sydney for a short period, paying the cost. In April and July 2000 they had family holidays at Falls Creek. Mrs Davis paid the cost of the lodge on the first trip and he paid the cost of the second and bought the necessary tickets. In 2001 they had a holiday at the home of a friend of Mr Tayles in Lakes Entrance. Mrs Davis paid for the food. In September 2001, Mr Tayles hired a four wheel drive camper van for a trip to Central Australia. Mrs Davis paid for the food and cooked for the whole group at times. In January 2002 they went with another family to Tasmania. They shared the costs of the motels with the other family. In July of 2002 they holidayed in Thredbo with Mr Tayles bearing the cost. Finally in January 2003 they had a family holiday in Tasmania. Mr Tayles paid the expenses and Mrs Davis paid for all food. Mr Tayles generally claimed to be the first to put his hand into his pocket to buy food and wine and practically everything needed by Mrs Davis and the children when he was with them. While there is no supporting evidence produced to support this assertion, and it is no doubt an exaggeration, I think it likely that he would have made a point of buying things, particularly early in the relationship, for Mrs Davis and the children including meals and wine.

Mr Tayles also played an active role as a father for the children until the demands of the drought took him away from Melbourne. He obviously greatly enjoyed the experience, as did the children. Importantly, of course, he provided Mrs Davis and the children, and himself, with a substantial home with pool and tennis court through his capacity to borrow. This was something they would not have otherwise experienced. He also gave them the experience of country living and farming life at Bringenbrong. He also at different times spent money on entertainment such as video tapes and DVD’s and in late 2002 acquired a home theatre facility for Glen Iris at a cost of more than $9,000. This reflected the difference in their roles as parents in that it was Mrs Davis who performed the day to day duties while Mr Tayles provided special things. That is not to say that the children and Mrs Davis did not derive pleasure and benefit from his spending – as he did too of course.

Finally, I note and accept that Mrs Davis has had the benefit of the use of a Ford LTD and of Howard Street, Glen Iris since 2003 together with her children. In the absence of evidence to the contrary, I assume that Mr Tayles through Biztek has covered the cost of registration and third party insurance of the motor car which Mrs Davis has been using.

Care must be taken to ensure that an adequate value is put on the homemaker role performed by Mrs Davis. As to financial contributions, both Mrs Davis and Mr Tayles have contributed financially to domestic charges and other items but Mr Tayles has plainly contributed more in the terms of financial and material contributions. This contribution has included something like $300,000 ($180,000 since 2003) in interest payments on the borrowings that gave him and the Davis family the opportunity to live in a substantial home with pool and tennis court. This opportunity has continued after the termination of the relationship. His wealth also enabled him to provide Mrs Davis and the children with the experience of country and farm living. I refer also to the items set out below from the counterclaim which are to be considered in the present context.

In the end, I have come to the conclusion that Mrs Davis cannot prove that her farming, homemaker and other domestic contributions amounted to more than those of Mr Tayles. At the same time, he cannot prove that his were greater. In those circumstances, the contributions of Mrs Davis and Mr Tayles of a domestic nature will not affect the outcome of the proceedings.

Conclusion on the Part IX claim

For the reasons advanced above, I am satisfied that Mrs Davis has a joint interest in the Glen Iris property in law and in equity. I am also satisfied, for the reasons stated above, that that situation is a just and equitable one having regard to their respective contributions as discussed above.

Also, for the above reasons, I am satisfied that it would be just and equitable for Mrs Davis to have her financial contributions recognised by sharing in the increase in value experienced by the assets held by Mr Tayles and his companies. Her contributions enabled him directly and indirectly to retain assets which increased in value. During the relationship, she shared the liabilities and the risks of the loan facility and the securities she gave were interlocked with the securities provided by Mr Tayles. This was for Mr Tayles’ benefit. Due recognition must be given to these aspects.

The above arithmetic exercises are of some assistance but the judgments to be made are not arithmetic. Ultimately, it is necessary to stand back from such detail and form a judgement of what would be a just and equitable adjustment having regard to the relative contributions of Mrs Davis in this case in light of all the circumstances over the entire period of the relationship.

In considering how important her contributions were, I suggest that it is important to bear in mind that Mr Tayles obviously saw them as important. It would have been a relatively simple matter at the end of 2001 to sell Laverton, but he pressured Mrs Davis to sell her property. It would have been a relatively simple matter at the end of 2002 to proceed as he had agreed with Mrs Davis, and sold the Laverton and Echuca properties and paid out the loan facility. He must have known that by not doing so he continued to place Mrs Davis’ financial position at risk. Yet he chose to do so. It is true that the relationship at that stage was experiencing difficulties but, both then and in the following year, Mr Tayles and Mrs Davis attempted to hold onto the relationship and tried to maintain it. Plainly to have first class appreciating residential property in the assets providing the interlocking security and to have Mrs Davis’ interests available as security to an extent of $700,000 was of real value to Mr Tayles in his dealings with the bank. In my view, it was a major reason for him refusing to proceed with the original agreement in late 2002 and sell the Laverton property.

Taking the properties other than the Glen Iris property, the capital appreciation in the remaining properties was Laverton, $2.746M, Miller Street $400,000, and Bringenbrong $200,000 making a total of $3.3M to $3.4M. For half of that period, from the end of 2002 when the Laverton property should have been sold, an increase of the order of $1.7M occurred in the above properties, assuming the increase in value was spread evenly over the six year period. To value Mrs Davis’ contribution as being of the order of $400,000 would be just and equitable in light of those figures. It would represent approximately 12% of the total increase in value and approximately 25% of the increase in value over the last three years. It is, I suggest, a just and equitable figure having regard to the opportunity Mrs Davis gave Mr Tayles to retain the Laverton property and the use and benefit derived by Mr Tayles from being able to retain his asset portfolio during the relationship and to have Mrs Davis continue to share the liability and risks of the loan facility through the money and securities she gave in support of that loan facility.

Mrs Davis has a half interest in the Glen Iris property. The ultimate question is what adjustment of Mr Tayles’ property would be just and equitable having regard to her contributions. It seems to me that a just and equitable adjustment of the assets of Mr Tayles would require that he transfer half of his half interest in the Glen Iris property to Mrs Davis. I should add that I have come to the conclusion that to require an adjustment greater than that to any material degree would enter into the field of compensation of Mrs Davis for the actions of Mr Tayles. I am also satisfied that no other adjustment of his assets should be required.

Other claims by Mr Tayles or his companies

The first defendant in his counter-claim raised a number of items which he alleged were loans to the plaintiff:

● legal fees paid to Middletons Moore & Bevins of $6,652.56,
●school fees totalling $27,489.68 for Mrs Davis’ children, paid in November 1999 through to June 2001
●$4,684.16 paid to purchase a computer notebook for Mrs Davis’ daughter.

As noted above, it appears that these matters are not pursued any further as loans but are relied upon as contributions made by the Mr Tayles benefiting Mrs Davis.

The legal fee and computer note book items are not challenged as items on which Mr Tayles has spent the monies claimed. The school fee situation is more complicated. I accept Mrs Davis’ evidence that Mr Tayles covered the first year of school fees in the relationship but from 2001 onwards the arrangement was to go halves on school fees for a period of time. Ultimately she has paid the school fees. She agreed that Mr Tayles did pay something of the order of $27,000, assuming no credit is given to him for the $6,500 figure which was a subject of a contra argument already mentioned in relation to the improvements at the Burwood property. I have taken these matters into account in considering the Part IX claim as contributions by Mr Tayles.

Lighthouse Peak Pty Ltd, the second defendant, does, however, pursue a claim based upon s.74 P of the Real Property Act 1900 New South Wales.

“74P Compensation payable in certain cases
(1) Any person who, without reasonable cause:
(a)lodges a caveat with the Registrar-General under a provision of this Part,

(b) procures the lapsing of such a caveat, or
(c)being the caveator, refuses or fails to withdraw such a caveat after being requested to do so,

is liable to pay to any person who sustains pecuniary loss that is attributable to an act, refusal or failure referred to in paragraph (a), (b) or (c) compensation with respect to that loss.
(2)Compensation referred to in subsection (1) is recoverable in proceedings taken in a court of competent jurisdiction by the person who claims to have sustained the pecuniary loss.
(3)A person who is a caveator is not entitled to bring proceedings under subsection (1)(b) if that person, having had an opportunity to do so, has failed to take all reasonable steps to prevent the caveat from lapsing.”

The amount claimed is $32,131.19 together with interest under the statute. It includes estimated legal fees of $3,000 and estimated travel expenses of $900, the latter relating to travel by Mr Tayles to the interstate court before which there were some hearings.

Counsel for Mrs Davis did not seek to challenge the items or argue that there was reasonable cause for the caveat. Rather, counsel submitted that the matter should simply be treated as part and parcel of the domestic relationship and that it should be collapsed into and seen as part of the Part IX application. Precisely what is meant by this is unclear but for present purposes it is sufficient to refer again to the matters noted above – namely that the items claimed were not challenged for accuracy and no attempt was made to justify the lodging of the caveat. Assuming that contributions to property and financial resources can include negative contributions,[24] it might be argued that the expenditures claimed involved a diminution of the financial resources of Mr Tayles because it diminished his resources or the financial resources of Lighthouse Peak Pty Ltd or Biztek. Nonetheless, it seems to me to be straining the language and intent of the legislation to treat this claim as something that can be taken into account in determining the just and equitable adjustment of interest in property of Mrs Davis and Mr Tayles. It is better treated as a separate claim.
[24]Finlay v Beasley, above, [56]

Mr Tayles produced a list of expenses which he had prepared it comprised:

(a)       a calculation of interest payments totalling $11,259.12,
(b)      bank fees totalling $2,901.16,
(c)       title search fees totalling $114 and process servers fee $50.
These sums total $28,231.19.

No other evidence was called to prove these items. They were the subject simply of Mr Tayles’ oral evidence to which no objection was taken. The same course was followed as to other items of estimated legal fees of $3,000 and travel expenses of $900. While objection was taken to the document being received into evidence, no argument was advanced that Mr Tayles evidence on these matters should be rejected. I propose to act upon it. It seems likely that the items of cost raised were incurred. The total counterclaim of $32,131.19 should be allowed.

Application for Injunctions

Mr Tayles has threatened that he will take unspecified action against Mrs Davis, for example, if she is successful in obtaining an adjustment in her favour which reflects any increase in appreciation of assets owned by him through his companies. It seems to me that his threats should be taken seriously. He appears to be a man of considerable means. He is also extremely aggrieved by what has occurred, particularly the loss of the relationship with the children. It is likely that he will be very unhappy with the conclusion I have reached and will look for ways to recover money from Mrs Davis. His threats may, of course, be bluster but they have not been withdrawn.

The injunctions seek to restrain him and Lighthouse Peak. They can go no further because the other companies are not parties to the proceedings. Counsel for Mrs Davis submitted that there is no prejudice to Mr Tayles in the form of the injunction proposed. In addition he has been given adequate opportunity to identify any claims he might have and plead them. I have referred to the counter-claims made both on his behalf and for one of the companies in which he was a shareholder and director – the second defendant. Counsel submitted that the companies are not prejudiced by the proposed orders.

It seems to me that the orders are justified and are in fact required if the obligation imposed on the court by s 284 of the Act is to be satisfied. That section provides as follows:

“284 Duty of court to end financial relationships.
So far as is practicable the court must make orders that will end the financial relationships between the domestic partners and avoid further proceedings between them.”

Proceedings have been threatened, the proposed injunctions are necessary and should be ordered.

Conclusion

Orders will need to be formulated to give effect to my decisions on:

(a)       the application of Mrs Davis under Part IX of the Act
(b)      Mr Tayles’ counterclaim
(c)       the injunction application.
I will hear submissions on those matters before making any orders.

[2006] VSC 219

21 June 2006