Dover and Mosely and Anor
[2019] FCCA 2488
•5 September 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DOVER & MOSELY & ANOR | [2019] FCCA 2488 |
| Catchwords: FAMILY LAW – De facto property application – relationship less than two years – consideration of substantial contributions – consideration of serious injustice. |
| Legislation: Family Law Act 1975 (Cth), ss.4, 90SB, 90RD, 90SM Evidence Act 1995 (Cth), s.140 |
| Cases cited: Creese & Lapthorne [2017] FamCA655 |
| Applicant: | MS DOVER |
| First Respondent: | MR MOSELY |
| Second Respondent: | MR SMITH & MR VERNON AS TRUSTEES OF THE BANKRUPT ESTATE OF MR MOSELY |
| File Number: | BRC 3360 of 2018 |
| Judgment of: | Judge Lapthorn |
| Hearing date: | 2 April 2019 |
| Date of Last Submission: | 2 April 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 5 September 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Taylor |
| Solicitors for the Applicant: | Michelle Porcheron Lawyers |
| Solicitors for the First Respondent: | Self represented |
| Solicitors for the Second Respondent: | Robinson Locke Litigation Lawyers Pty Ltd |
DECLARATION
That a Declaration be made pursuant to s.90RD of the Family Law Act 1975 that the Applicant, Ms Dover and the First Respondent, Mr Mosely, were in a de facto relationship from … 2016 to February 2018;
ORDERS
That the Initiating Application filed 27 March 2018 and Amended 7 June 2018 be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Dover & Mosely & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 3360 of 2018
| MS DOVER |
Applicant
And
| MR MOSELY |
First Respondent
And
| MR SMITH & MR VERNON AS TRUSTEES OF THE BANKRUPT ESTATE OF MR MOSELY |
Second Respondent
REASONS FOR JUDGMENT
Introduction
I am asked by the applicant, Ms Dover to make a Declaration pursuant to s.90RD of the Family Law Act 1975 (“the Act”) that she and the first respondent, Mr Mosely, were in a de facto relationship from … 2016 to February 2018. If so persuaded I am asked to make orders for property adjustment pursuant to s.90SM of the Act. Mr Mosely is an undischarged bankrupt. The second respondents, Mr Smith and Mr Vernon who are the trustees of the Mr Mosely’s bankrupt estate, oppose the application.
Section 90SM(15) of the Act reads:
“If a bankruptcy trustee is a party to property settlement proceedings in relation to the parties to a de facto relationship, then, except with the leave of the court, the bankrupt party to the de facto relationship is not entitled to make a submission to the court in connection with any vested bankruptcy property in relation to the bankrupt party.
The bankruptcy trustee is a party to these proceedings and leave was not sought by the first respondent in accordance with s.90SM(15). I did not hear submissions from Mr Mosely although he was cross examined by the applicant and the second respondent.
The hearing proceeded on the basis of determining as preliminary issues: the issue surrounding the making of the Declaration sought; and the jurisdictional issue as to whether the provisions of s.90SB(c)(i) and (ii) have been satisfied.
Material relied upon
The applicant relied on the following material:
a)The Amended Initiating Applicant filed 7 June 2018;
b)Her affidavit filed 19 February 2019;
c)Her Updated Financial Statement filed 19 February 2019;
d)The affidavit of Ms Robinson filed 22 October 2018; and
e)Written submissions dated 2 April 2019.
The second respondent relied upon:
a)The Response filed 25 July 2018;
b)The Outline of Case filed 12 October 2018;
c)The affidavit of Ms C filed 28 September 2018;
d)The affidavit of Mr Mosely filed 26 March 2019; and
e)The affidavit of Mr D filed 30 January 2019.
The second respondent tendered into evidence the applicant’s affidavit filed 27 March 2018.[1]
[1] Exhibit R1
In determining this matter I have had regard to the written evidence referred to above along with the oral evidence given. Throughout these reasons I will refer to a number of facts. Any such reference should be regarded as a finding of fact unless a contrary intention is clear from the context. In determining disputed questions of fact the court is required to assess the evidence on the balance of probabilities.[2]
[2] Section 140 Evidence Act
Legal Approach
The applicant and second respondent were in agreement that a de facto relationship existed as defined by s.4AA(1) although they disagreed as to the length of that relationship which is an important consideration in this case.
Section 90SB sets out the preconditions for the making of an order or declaration under the Act:
“S.90SB When this Division applies--length of relationship etc.
A court may make an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL, in relation to a de facto relationship only if the court is satisfied:
(a)that the period, or the total of the periods, of the de facto relationship is at least 2 years; or
(b)that there is a child of the de facto relationship; or
(c)that:
(i)the party to the de facto relationship who applies for the order or declaration made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c); and
(ii)a failure to make the order or declaration would result in serious injustice to the applicant; or
(d)that the relationship is or was registered under a prescribed law of a State or Territory.”
The power for the Court to make a declaration about the existence of a de facto relationship is to be found in s.90RD which reads:
“Section 90RD Declarations about the existence of de facto relationships
(1)If:
(a)an application is made for an order under section 90SE, 90SG or 90SM a declaration under section 90SL; and
(b)a claim is made in support of the application, that a de facto relationship existed between the applicant and another person;
the court may, for the purposes of those proceedings (the primary proceedings), declare that a de facto relationship existed, or never existed, between those 2 persons.
(2)A declaration under subsection (1) of the existence of a de facto relationship may also declare any or all of the following:
(a)the period, or periods, of the de facto relationship for the purposes of paragraph 90SB(a);
(b)whether there is a child of the de facto relationship;
(c)whether one of the parties to the de facto relationship made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c);
(d)when the de facto relationship ended;
(e)where each of the parties to the de facto relationship was ordinarily resident during the de facto relationship.”
The applicant bears the onus, on the balance of probabilities, of establishing that a de facto relationship existed.[3] There was however agreement between all parties that a de facto relationship had existed and that the period of it was less than two years. Consequently s.90SB(a) does not apply. The parties agreed their relationship commenced in … 2016 however they were in dispute as to the date of separation. The applicant asserted separation occurred in February 2018 which would make the relationship one of 19 months duration. She sought a declaration to that effect. The first respondent gave evidence that they separated in December 2017 after a 16 month relationship. The second respondent relied on the first respondent’s evidence.
[3] Creese & Lapthorne [2017] FamCA655; Ricci & Jones [2011] FamCAFC 222. See also s.140(1) of the Evidence Act 1995 (Cth)
There is no child of the relationship and therefore s.90SB(b) does not apply.
The relationship is not and was never registered under a prescribed law of a State or Territory and therefore s.90SB(d) does not apply.
The applicant’s case rested on the provisions of s.90SB(c)(i) and (ii). She invited the court to find that she had made substantial contributions of the kind referred to in s.90SM(4)(a), (b) or (c) and that a failure to make the declaration and an order for property adjustment would result in a serious injustice to her.
Section 90SM(4)(a), (b) or (c) reads as follows:
“90SM(4) [Matters to take into account] In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent;”
What is meant by the term ‘substantial contributions’? The Full Court of the Family Court of Australia in Redmond & Mullins[4] cited and affirmed the following view of Holden CJ in V & K :[5]
In my view, substantial means something more than usual or ordinary. In my view [the section] is aimed at more exceptional circumstances where serious injustice may be caused by the application of [the relevant provision].
[4] [2015] FamCAFC 69
[5] [2005] FCWA 80 at p42
Johnston J addressed substantial contributions in Wall & Mitchell.[6] After referring to the decisions of Miller & Trent[7] and V & K he said:
[303] With respect to both Coates FM and Holden CJ, I agree. If usual or ordinary contributions were sufficient to amount to “substantial contributions” within the meaning of s 90SB(c), there would be little purpose in the two years requirement in s 90SB(a) of the Act. This is because in most de facto relationships to some extent usual or ordinary contributions would be a feature of such relationships.
[6] [2012] FAMCA 114
[7] [2011] FMCAfam 324, a decision of Coates FM
The Full Court[8] decision in Harriot & Arena[9] is instructive in considering the meaning of “substantial contributions”:
[8] Thackray CJ, Ryan and Murphy JJ
[9] [2016] FamCAFC 69
59. If the appellant’s contribution of the net proceeds of her home constituted a “substantial” contribution, it will be unnecessary for us to determine the somewhat more vexed question of whether the actions taken by the appellant in relation to her career and her child should be characterised as “contributions”.
60. The trial judge made no finding as to whether the appellant’s contributions were “substantial”. However, he did record that the appellant relied on the decision of Altobelli FM (as his Honour then was) in Webb & Douglas [2012] FMCAfam 1049 to support the assertion that “substantial” means “something more than usual or ordinary”, this being the view of Holden CJ in V and K [2005] FCWA 80 when dealing with equivalent legislation. (Holden CJ’s formulation has been followed in other cases, some of which were cited by Watts J in Lee v Hutton (2013) 50 Fam LR 322 at [180]–[182]).
61. Rather than agreeing with Holden CJ, it seems to us that Altobelli FM disagreed with him, as appears from this extract from Webb & Douglas (original emphasis):
21. The cases therefore seem to suggest that before a contribution can be substantial, it must be more than usual or ordinary. This is a vague and subjective standard. In the diversity of relationships that present before courts exercising jurisdiction under the Family Law Act how is “usual” or “ordinary” to be determined other than by reference to the facts of the case before the court at the time? How could a judicial officer make the comparisons that need to be made by using this standard without referring to extrinsic evidence ie. the judicial officer’s own perception of contribution in other cases?
22. By contrast it is interesting to note that FM Coates in Miller & Trent referred to dictionary definitions of “substantial” at paragraph 59 of his judgment. He noted, for example, that the Macquarie Encyclopaedic Dictionary defined substantial as “an ample or considerable amount as well as something having real worth or value”. His Honour also referred to the Concise Oxford Dictionary meaning of “having real importance or value and to a considerable amount”. Federal Magistrate Coates also referred to a Family Provision Act (1982) (NSW) decision in Wentworth & Wentworth (1995) 37 NSWLR 703 where the court held that substantial “means not illusory, something considerable or large”.
23. Whereas the V & K and Miller & Trent definition of substantial invite comparison to other cases, the dictionary definitions invite a more contextual analysis. In other words the question is whether the contribution is substantial in the context of the case being determined, and not by reference to other cases.
62. While Altobelli FM erroneously assumed in Webb & Douglas that a court could have jurisdiction to deal with a de facto property dispute where it was common ground that neither s 90SK(1)(a) or s 90SK(1A) had been satisfied, his Honour’s discussion draws attention to deficiencies in the “something more than usual or ordinary” formulation. Noting that the matter was not the subject of proper argument, as presently advised we are not attracted to the “something more than usual or ordinary” definition, since it would, for example, seem to exclude parent and homemaker contributions in a lengthy marriage. This could not be right, as Holden CJ implicitly acknowledged at [20]–[21] in V and K. We would therefore be inclined to treat anything said in V and K as being confined to its own unusual facts, which involved two self-represented litigants, and where the issue was whether “substantial contributions” had been made in the 22 days the parties spent living in Western Australia.
63. To the best of our knowledge, the meaning of “substantial contributions” has not been the subject of careful consideration by this Full Court, although the matter was touched on in Redmond & Mullins [2015] FamCAFC 69, where V and K was cited. However, the meaning of “substantial” has been the subject of much discussion by other courts. Our review of those authorities indicates support for these observations of Deane J in Tillmans Butcheries Pty Ltd v The Australasian Meat Industry Employees’ Union (1979) 27 ALR 367 at 382:
The word “substantial” is not only susceptible of ambiguity: it is a word calculated to conceal a lack of precision. In the phrase “substantial loss or damage”, it can, in an appropriate context, mean real or of substance as distinct from ephemeral or nominal. It can also mean large, weighty or big. It can be used in a relative sense or can indicate an absolute significance, quantity or size. The difficulties and uncertainties which the use of the word is liable to cause are well illustrated by the guidance given by Viscount Simon in Palser v Grinling ( … [1948] AC 291 at 317) where, after holding that, in the context there under consideration, the meaning of the word was equivalent to “considerable, solid or big”, he said: “Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can according to the circumstances of each case…
64. Clearly the “substantial contributions” test is a subjective one. Any effort to elucidate its meaning by use of other words or phrases will simply replace one subjective test with another. It will remain a matter of impression whether the contributions are considered to be “substantial”. While recognising that the test is subjective, we are nevertheless inclined to agree with Thackray J, who said in Thorburn and Oswald [2007] FCWA 43 at [54] that a trial judge
would need to interpret the word “substantial” in the context of the financial position of the parties. What might appear to be a “substantial contribution” for people of limited financial resources, might not be substantial in a case involving very wealthy parties.
65. To like effect, see Oakley and Roche [2009] FCWA 132 at [15] per Crisford J.
66. As noted, the trial judge made no finding as to whether the appellant’s submissions [sic] were “substantial”. We consider that the contribution of $80,000 from the sale of the appellant’s home was “substantial”, and we note that the respondent effectively conceded as much, since his counsel accepted that the application of those funds in Vanuatu represented a “substantial” contribution. That being the case, it is unnecessary for us to come to a concluded view about the other “contributions” upon which the appellant relied.
I am satisfied that it is important to look at the whole of the circumstances surrounding the parties to the de facto relationship and consider the contributions made in that context. Having said that the contributions need to be at a level above the ordinary otherwise there would be no point in treating relationships of less than two years duration differently to longer relationships. I propose to determine this matter on that basis.
Uncontested Factual Background
The applicant is 38 years of age having been born on … 1980 and the first respondent is 54. He was born on … 1964. The applicant has one child from a previous relationship, J, who is now 14 years old. The first respondent also has a child from a previous relationship, K who is aged 10.
The first respondent acquired real estate in Town L on … 1998. A market appraisal carried out in April 2018 valued this property as between $16,000 and $19,000. On 16 May 2016 the first respondent, as trustee for the E Street, Town F (“the Trust”) purchased a property at E Street, Town F (“the E Street, Town F property”). A market appraisal of this property was obtained by Valuers G on behalf of the second respondents, in their capacity as Trustees in Bankruptcy, on 13 April 2018. According to that appraisal the E Street, Town F property was valued at between $600,000 and $650,000. The following month an offer to purchase that property was made for the amount of $900,000. This offer was not accepted.
The Trust, which is a discretionary trust, was settled on 2 March 2012 with the first respondent the Appointor and sole Trustee. He and his daughter were the income beneficiaries and corpus beneficiaries however by virtue of clause 9(c) of the Trust Deed the first respondent was precluded from making any distribution of capital to himself as beneficiary whilst he remained the sole Trustee. Upon the first respondent becoming bankrupt on 5 April 2018 he ceased to be the Trustee and on 1 May 2018 the second respondents were appointed as the new Trustees of the Trust. Their appointment as such was declared valid by the Supreme Court of Queensland on 27 September 2018. Consequently on 6 November 2018 they became the registered proprietors of the E Street, Town F property as Trustees of the Trust.
The first respondent ran a farm business from the E Street, Town F property using a business entity known as Company A (“the business”). This business was registered in his sole name. The first respondent also worked as a tradesman and property developer.
In … 2016 the first respondent advertised for a farm hand on a website. The applicant applied, was subsequently interviewed and hired. The terms of the applicant’s employment were somewhat informal with the pair negotiating an oral agreement:
a)The applicant would work five days a week;
b)The first respondent would pay the applicant $500 per week;
c)The first respondent would provide the applicant and her son accommodation; and
d)The first respondent would allow the applicant to keep her pets on the E Street, Town F property.
The applicant commenced working for the first respondent in … 2016 and moved with her son into separate quarters on the E Street, Town F property. Within a month however they had commenced an intimate relationship and by … 2016 they were living together as a de facto couple.
In around October 2017 documents were prepared by a firm of accountants on behalf of the Trust to include the applicant and her son as income and corpus beneficiaries however these documents were never signed by the first respondent.
In the course of assisting the second respondents in their role as trustees in bankruptcy, Valuers G received information suggesting creditors have claimed debts owed by the first respondent totalling $1,249,505 with proofs of debt totalling $982,974. These figures include a claim by the applicant for $115,000 being her claim in these proceedings.
Date of Separation
The parties were in dispute as to when their de facto relationship ended. It was the applicant’s case that separation occurred in February 2018 whereas the respondent said it was in December 2017. In her affidavit filed 19 February 2019 she said that she initially told the first respondent that she wanted to separate in December 2017 but she continued to stay at his property to see if things would improve and to look after his daughter, the pets and the business as well as the construction of a deck and other renovations. She said they were still in a relationship until February including a sexual relationship. On 19 February she applied for a domestic violence protection order with a temporary order being made on 23 February.
The solicitor for the second respondent put to the applicant the evidence she gave in that affidavit was inconsistent with her evidence in an earlier affidavit filed 27 March 2018.[10] In paragraph 7 of the earlier affidavit she described the de facto relationship as being from … 2016 to December 2017. Paragraph 4 set out a chronology in table format that included the following:
[10] Exhibit R1
“December 2017
I told Mr Mosely that I wanted to separate and moved out of Mr Mosely’s house
December 2017 – January 2018
I continued to stay intermittently on Mr Mosely's Town F property to look after the pets, assist with looking after K, and assist with Mr Mosely’s business and the construction of a deck”
In cross-examination the applicant said that the most recent affidavit was more accurate. She said her son moved out of the E Street, Town F property in December and was living with his grandmother. She would spend some nights with him there. Otherwise she continued to work at the first respondent’s property caring for the animals and his daughter. She said she slept in the same bed as the first respondent during this time.
In evidence were two text messages sent by the first respondent to the applicant on 12 and 14 February 2018. The message of 12 February 2018 was accompanied by a picture of a snake and read:
Nice visitor to our house just found in our bathroom
The text message sent on 14 February 2018 was as follows:
To my valentine you are my world my dreams my lover and my best mate I know we are going through hard times at the moment but please allow us to work through this get counselling and have a loving enjoyable life together with our kids – Happy Valentine’s Day my love – love you with all my heart and sole – Your best mate and life time lover Mr Mosely.
He said he sent those messages in an attempt to repair their relationship. It was his evidence that the applicant started moving out of the former relationship home in mid to late October 2017 and she would only attend the property sporadically between that time and 22 January 2018 when she removed her animals from the E Street, Town F property. He confirmed that the applicant told him in December that she wanted to separate. This was after she returned from a holiday in Country M. She undertook this travel on her own and the trip was paid for by the first respondent. He denied having a sexual relationship with the applicant after October 2017.
When some couples separate a definitive event becomes the catalyst for the separation and they are easily able to ascribe a date to the break-up. For others it is not so easy to determine. In this case I am satisfied that in December 2017 the applicant had arrived at the realisation that her relationship with the first respondent was over and began to take steps to move on by moving her son out of the E Street, Town F property and by telling the first respondent that she wanted to separate. However I accept her evidence that she stayed to see if things would improve between them. Although she would spend some nights with her son she would return to the E Street, Town F property and continued to care for the first respondent’s daughter, the animals and assisted with renovation works on the E Street, Town F property. The parties continued to share a bed until she finally left the E Street, Town F property in February. On the balance of probabilities I am satisfied that the applicant’s version as to the end of the de facto relationship is more accurate. I therefore find that the de facto relationship was of some nineteen months duration having ended in February 2018.
Contributions
The applicant deposed that she made substantial contributions both of a financial and non-financial nature during the relationship. These contributions included working for the business in various roles such as marketing, developing the business plan and assisting the first respondent in his proposed property development. She also gave evidence of previously having worked as a professional for Employer H which she continued during the relationship with her wages then being invoiced through the business but not on-paid to her. Her other contributions included assisting with renovations and building work on the E Street, Town F property, assisting with domestic duties and caring for the first respondent’s daughter including providing her with hobby coaching.
During the relationship the applicant was financially dependent on the first respondent as he supplied her accommodation and food as well as basic necessities and outgoings including her holiday to Country M. The applicant however gave evidence that the first respondent did not always pay the bills he said he would and she would have to ask for help from her mother. Her mother did not file an affidavit corroborating the applicant’s evidence. Once the parties commenced their relationship the applicant did not receive any pay from the first respondent for her work as a farm hand. She did receive some payment which she described as nominal, for her work on the property development project but I have no evidence as the extent of this. Her evidence was that she agreed not to receive regular wages but rather to work with the first respondent in improving the business and the E Street, Town F property on the basis that she would receive 50% of any increase in value of the property. This was denied by the first respondent. I accept the applicant’s evidence that the parties discussed these arrangements and that there was a verbal agreement. Although they also discussed a binding financial agreement in October 2017 and the inclusion of the applicant and her son in the Trust, neither actions were followed through to completion.
Whilst the first and second respondents conceded contributions were made by the applicant it was argued that they did not amount to “substantial” as required under s.90SB(c)(1). The second respondent also contended that the E Street, Town F property is not property of the first respondent and any contributions made to it should not be considered for the purposes of this application. Whilst the husband’s bankruptcy and the ownership of the E Street, Town F property being subject to the Trust add a level of complication to the determination of the pool of assets I do not accept the argument that any contributions made by the applicant towards the maintenance and improvement of the property cannot be considered. When those contributions were made, the first respondent was the legal proprietor of the property as trustee and was one of the discretionary beneficiaries. Section 90SM(4) makes it clear that contributions to a property must be considered even if since the making of the contributions the property ceased to the property of a party to the relationship. In any event even now it cannot be said he has no interest in the property. Although he is no longer the registered proprietor he remains a beneficiary albeit subject to the discretion of the trustees. It is open to the trustees to sell the real estate and to then make a distribution to the first respondent to meet his significant debts.
The second respondents also challenged the weight to be given to contributions made towards business activities that did not bear fruit such as the property development project. I do not accept that argument. Even if a business fails the contributions to it are relevant considerations in the overall assessment.
I will address the significant alleged contributions individually.
Farm hand employment
The applicant met the first respondent through being employed by him to work on his property as a farm hand. There was no dispute that she continued to undertake this work when their de facto relationship started. She also undertook work as an animal trainer for the first respondent’s daughter. Her evidence was that she worked between 12 and 13 hours every day, seven days a week. Whilst I accept she worked long hours, I consider this evidence to be somewhat embellished.
The second respondent argued that applicant’s work as a farm hand and animal trainer was covered by contractual employment and not by the concept of contributions of the kind found in s.90SM(4). This argument is rejected. There is no dispute that the parties moved from an employer/employee relationship to a de facto relationship. Her physical labour and the utilisation of her skills in animal training and coaching were contributions to their joint enterprise as a couple. As such they can be considered contributions made by her.
Counsel for the applicant argued that these contributions could be valued by reference to what she would have been paid but for the relationship, that is $500 per week or between $36,000 and $44,000. I do not accept the argument that her efforts can be given a monetary value in this way. The nature of the relationship changed when the applicant ceased to be an employee. It is not possible to ascribe a monetary value to these contributions because they formed part of their joint enterprise although I accept that if the applicant did not do this work the first respondent would have had to pay someone else to do so. I accept her evidence that the first respondent did not undertake these tasks leaving them to her and other employees.
In relation to the work undertaken with Employer H the applicant’s evidence, which I accept, was that she alone undertook this work and did not personally receive any of the income as it was invoiced through the business. The evidence shows that the business received $7,338 from Employer H between July 2016 and December 2017.
Farming business
The applicant and first respondent began selling hay in … 2017. She said it was her idea to begin selling hay and assisted in setting up the business including planning with an accountant. In her mind both she and the first respondent were the owners of this business even though it was conducted through the first respondent’s existing business. She said that she undertook the majority of the work associated with it. She advertised, liaised with clients and completed deliveries. The first respondent conceded the applicant undertook deliveries however, consistent with his overall attitude to the work done by her, he said she did this on about 20 to 30 occasions. I preferred her evidence that she undertook much more than 30 deliveries. The applicant said the first respondent was in charge of maintaining the day to day payments and expenses. In the summer months the business could return gross sales of $3,000 per week and $6,000 in the winter months.
During cross examination the second respondent questioned the applicant about various debts still liable to creditors from the business, specifically from hay sales. The applicant was asked if she considered herself jointly liable for such debts. Her reply was: “probably not technically because I wasn’t on that company because – like, I’m not on …”. The outstanding debts to creditors in relation to the hay business appear to be $24,000.
Capital improvements to the property
The applicant asserted she contributed between $4,000 and $5,000 of her savings towards improvements on the E Street, Town F property and undertook a number of activities towards these improvements. These included:
a)Concreting around the buildings and the extension;
b)Building fences and animal shelters;
c)Building areas for the animals around the yard;
d)Building garden beds and retaining walls;
e)Purchasing and laying turf;
f)Laying irrigation;
g)Pasture improvement; and
h)Building a deck and pool house;
Whilst the first respondent tried to down play the applicant’s efforts in working around the E Street, Town F property on improvements he did conceded that she assisted in some of these works. The second respondents did not challenge the applicant in relation to the purchases made by her towards these improvements. I accept her evidence.
Non-Financial Contributions
The applicant asserted she made significant non-financial contributions during the relationship including caring for the first respondent’s daughter, K. She said she assisted in school collection, meals, homework and was generally responsible for her care when the first respondent was absent. She was also K’s hobby trainer and coach, accompanying her to hobby events. Her evidence was that she also contributed in the role of homemaker but that the first respondent also contributed in this way. I accept her evidence.
Conclusion as to Contributions
There is no doubt the applicant made a number of contributions of the kind covered by s.90SM(4) however the determination of whether these contributions were ‘substantial’ is finely balanced. I am satisfied that by entering into the relationship the parties were committed to working together to build up the business and were hopeful of profiting from their joint efforts. This hope however did not last the test of time. Whilst it could be said therefore that the contributions made by the applicant were not out of the ordinary as they were part of the joint enterprise, when I take into account all of the contributions discussed above I have concluded that her contributions were substantial. Whilst the sum of $4,000 or $5,000 may seem inconsequential to some, the contributions must be seen in the context of the modest circumstances of the applicant and the de facto relationship overall. When that sum is considered along with the income from Employer H and all of the physical work and the support in the various business activities, I have concluded that these contributions should be recognised as substantial.
Serious Injustice
Finding ‘substantial’ contributions is however not enough. I must also find that a failure to make a property adjustment order would result in serious injustice to the applicant. It is in this consideration that I have concluded that the applicant’s case must fail.
If this matter was to proceed to a final hearing for property adjustment orders the applicant would be faced with the reality of a completely diminished property pool as a consequence of the first respondent’s bankruptcy. Putting aside for a moment the potential complications surrounding the ownership of the E Street, Town F property, the debts faced by the first respondent are in the vicinity of $868,000 to $1,135,000. I have arrived at those figures by deducting the applicant’s claim from the alleged debts set out in the affidavit of Ms C. Whilst I was not provided with a valuation of the real estate, given an offer to purchase the E Street, Town F property was made for $900,000 in May 2018 it is highly likely that the debts will exceed or come close to the assets even if the E Street, Town F property is included in the pool.
When this is taken into account with the contributions made by the first respondent during the relationship such as:
a)providing the applicant and her son rent free accommodation;
b)the ability for the applicant to keep her animals on the E Street, Town F property including their feeding and attention;
c)his financial support for her, albeit at times not consistent; and
d)his payment of her overseas holiday in which he did not accompany her.
I have concluded that a serious injustice would not occur to the applicant if a property adjustment order was not made.
Conclusion
For the reasons set out above I will make the declaration sought by the applicant but otherwise dismiss her application.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Judge Lapthorn
Date: 5 September 2019
2
9
3