ENGEL & STARLING

[2019] FCCA 1793

FEDERAL CIRCUIT COURT OF AUSTRALIA

ENGEL & STARLING [2019] FCCA 1793

Catchwords:
FAMILY LAW – De facto property proceedings – applicant seeks an order for sale of the property – small property pool – assessment of contributions – assessment of section 90SM(3) & (4) factors – just and equitable.

Legislation:

Evidence Act 1995 (Cth) s.140

Family Law Act 1975 (Cth), ss.4, 39B, 79, 90RD, 90SF, 90SM, 106A

Cases cited:

Bevan & Bevan [2013] FamCAFC 116

Fox v Percy (2003) 214 CLR 118

Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143

Pierce & Pierce (1999) FLC 92-844

Stanford v Stanford [2012] HCA 52

Watson & Ling [2013] FamCA 57

Applicant: MR ENGEL

Respondent: MS STARLING

File Number: ADC 2286 of 2018

Judgment of: Judge Brown

Hearing date: 14 June 2019

Date of Last Submission: 14 June 2019

Delivered at: Adelaide

Delivered on: 4 July 2019

REPRESENTATION

Counsel for the Applicant: In person

Solicitors for the Applicant: Not applicable

Counsel for the Respondent: In person

Solicitors for the Respondent: Not applicable

ORDERS

1. The application filed 13 June 2018 be dismissed.

2. That within thirty days (30) of the dates of these orders the applicant and the respondent each take all necessary steps and execute all necessary documents to transfer the applicant’s interest in the property located at A Street, Suburb B (hereinafter referred to as “the property”) to the respondent alone, at her sole expense.

3. As and from the date of this order the applicant retain for his sole use and benefit, absolutely free from any further claim or demand of the respondent:

   (a)all furniture and effects in his possession, power and control;

   (b)all motor vehicles in his possession;

   (c)any savings and investments in his sole name;

   (d)any superannuation entitlement, long service leave, annual leave or other work related benefits;

   (e)his personal effects;

   (f)the items referred to in order (5) hereof; and

   (g)any other real and/or personal property and/or financial resources of the applicant or in the applicant’s name and/or possession not otherwise specified herein.

4. As and from the date of this order the respondent retain for her sole use and benefit absolutely free from any further claim or demand of the applicant:

   (a)all furniture and furnishings in her possession, power and control;

   (b)any motor vehicle in her possession;

   (c)any savings, shares and investments in her name;

   (d)any superannuation entitlement, long service leave, annual leave or other work related benefits;

   (e)her personal effects;

   (f)the property known as and situated at A Street, Suburb B; and

   (g)any other real and/or personal property and/or financial resources of the respondent or in the respondent’s name and/or possession not otherwise specified herein.

5. The respondent deliver to the applicant to a place as nominated by the applicant, at his expense, the following items:

   (a)Dismantled tool box;

   (b)Clamps x 10;

   (c)Red extendable racks x 2;

   (d)Bar fridge;

   (e)Drill press;

   (f)Roller stands x 2;

   (g)Ryobi metal drop saw;

   (h)Ladder;

   (i)Patio heater;

   (j)Blue point jack;

   (k)Jack manual and part; and

   (l)Documents and photos.

6. The respondent shall do all acts and sign all documents necessary to refinance into her sole name the mortgage loan secured on the property in the parties’ joint names with Commonwealth Bank and thereafter the respondent shall indemnify the applicant and forever keep him indemnified against any liability in respect of the home including but not limited to the payment of water and council rates, mortgage repayments and insurance payments.

7. That each party do all such things and acts and sign all such necessary documents to give effect to the terms of these orders.

8. In the event that either party refuses or neglects to sign or execute any deed or instrument in accordance with these orders, the Registrar of the Family Court at Adelaide be appointed pursuant to section.106A of the Family Law Act 1975 (Cth), to sign or execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument, upon lodgement of the deed or instrument and the filing of an affidavit of the requesting party as to said neglect or refusal.

IT IS NOTED that publication of this judgment under the pseudonym Engel & Starling is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 2286 of 2018

MR ENGEL

Applicant

And

MS STARLING

Respondent

REASONS FOR JUDGMENT

Introduction

1. These reasons for judgment concern the settlement of de facto property issues.  Each party has been self-represented in the case, which concerns a small pool of property.  The parties currently mistrust each other and require the court’s order to end their financial relationship with one another.

2. Mr Engel “the applicant” and Ms Starling “the respondent” began to live together in 2013, at a property then owned by Ms Starling located at A Street, Suburb B .  This property was and remains the most valuable item of property relevant to these proceedings. 

3. A definitive valuation of the property has not been produced.  Mr Engel seeks that the property be sold.  Ms Starling resolutely resists such an outcome on the basis that it would be grossly unfair to her, given she owned the property prior to the commencement of the relationship between the parties and it remains her home and that of her children. 

4. Ms Starling is of the opinion that the property is worth, at best, somewhere around $200,000.00.  Mr Engel has obtained appraisals of the property, from two local real estate agents, which attribute a value somewhere between $210,000.00 and $259,000.00.  The absence of a formal valuation creates difficulties for the court, in the exercise of what is to be characterised as an equitable jurisdiction.

5. Obviously, the most efficient way to ascertain the value of any particular piece of property, at any given time, is to place it on the market for sale and see what sum it secures.  However, to follow such a process, in proceedings such as these, may occasion an inequitable outcome for one of the parties concerned, depending on the nature of any idiosyncratic circumstances prevailing.

6. There is no controversy that the A Street, Suburb B property is subject to a mortgage, in favour of the Commonwealth Bank, in an amount of $170,719.52.  The mortgage is in the parties’ joint names, as is the property itself.  It is also apparent that this mortgage is currently in arrears in an amount of $5,919.70. 

7. As Mr Engel does not occupy the dwelling, he has not attempted to pay the mortgage.  However, he does receive documents in respect of it.  This is, of itself a matter of controversy between the parties, as Ms Starling perceives the fact that Mr Engel has directed mail to his current address and not to her is evidence of his desire to exert an unacceptable level of control over her and her affairs.

8. However, from both parties’ perspectives, it is important that the mortgage issue be sorted out as soon as possible and the property either sold or steps taken to remove Mr Engel from the title and related mortgage. Otherwise, the Bank will move in and sell the property compulsorily, resulting in a mutual downgrade in their respective credit rating. 

9. Although there is no dispute between Mr Engel and Ms Starling that a de facto relationship existed between them and a declaration should be made to this effect pursuant to the provisions of section 90RD of the Family Law Act 1975 (Cth), they disagree as to the precise date on which that relationship began.

10. Mr Engel asserts that the relationship began in 2010; Ms Starling asserts it was at the end of 2011.  It does seem clear, however, that the parties were “dating” throughout 2011, during which period they kept separate residences. 

11. Mr Engel and Ms Starling do not have children together.  However, both have children from earlier relationships.  In Ms Starling’s case, these children are [H] aged about 12 years and [J] aged about 15 years.  In Mr Engel’s case, his children are [K] aged 11 and [L] aged 15. 

12. At present, [H] and [J] continue to live with their mother at the A Street, Suburb B property, which has been their home for many years.  From Ms Starling’s perspective, it would be both upsetting and unsettling for both her and the children, if this property had to be sold.  Given her current financial circumstances, it would be difficult for her to re-enter the property market.

13. [K] and [L] live with their mother.  In the past, they spent time with Mr Engel (and indeed with Ms Starling, [H] and [J]) at the A Street, Suburb B property.  It is Mr Engel’s case that he and his children have a close relationship with Ms Starling’s children.

14. There is no dispute that the parties separated, in extremely difficult circumstances, in early January of 2017.  Ms Starling asserts that Mr Engel was in the grip of a serious mental illness at the time and was behaving in a violent and erratic manner, which posed a threat to her safety and that of her children. 

15. She further alleges that Mr Engel did significant damage to the A Street, Suburb B property, prior to separation, particularly by punching and kicking holes in walls at the property, which have reduced its value.   She characterises Mr Engel as being a violent and dangerous person in the latter stages of their relationship.

16. In these circumstances, Ms Starling felt she had no alternative but to seek the removal of Mr Engel from the home in early 2017.  Since this date, Mr Engel has lived with his parents, at D Street, Suburb B.  This situation is a source of some bitterness for Mr Engel and he wishes to have some funds to re-house himself independently of his parents.

17. Whatever is the actual value of the A Street, Suburb B property, it is clear that the parties do not have a significant level of equity in it.  If the property is sold, there will be selling costs. 

18. If the relevant mortgagee seeks to realise its security, through a forced sale – a probability which cannot be excluded, given a default notice has been served – it is likely to be financially disastrous for the property’s registered proprietors – Mr Engel and Ms Starling, as it is likely the property would be realised in a fire sale situation. 

19. In addition such an outcome would not be helpful to either party’s individual credit rating or their capacity to borrow, from other prospective lenders, in the future.  Ms Starling wishes to avoid such an outcome.  It is her case that she has hitherto been successful in owning real property.

20. Ms Starling is not in a secure financial position.  She is employed as a health care worker.  She works on a part-time basis, working different shifts across a thirty-five to forty-five hour fortnight.  She estimates her annual salary to be around $32,000.00.

21. In addition, Ms Starling receives some social security payments and some limited child support from each of the fathers of [J] and [H].  Given her situation, her capacity to borrow is non-existent. 

22. Accordingly, even if she considered it was appropriate for her to pay Mr Engel any money, which she does not, she has no capacity to pay him any money.  This is the central issue in the case.

23. In settlement of his claim for settlement of de facto property issues, Mr Engel seeks the payment to him of a sum of $30,000.00 from Ms Starling.  If Ms Starling is unable to raise such a sum, which he accepts appears to be highly probable, he would pursue the sale of the A Street, Suburb B property. 

24. Where Ms Starling, [H] and [J] would live is uncertain.  It was not an issue canvassed in the proceedings before me.  However, the most likely scenario would appear to be that, in the short term, they would be dependent on either emergency accommodation or the kindness of friends and family, before having to have recourse to the private rental market.

25. Mr Engel seeks such a sum in order to be able to secure independent accommodation for himself.  In due course, when he is re-housed, he hopes that [L] and [K] will be able to stay over at his home.  At present, Mr Engel is in receipt of social security on sickness grounds. 

26. When I asked him, during the trial, what his particular illness was, with refreshing candour, he informed me he was a recovering drug addict, who had been addicted to methamphetamines (ice) between 2015 and 2017. 

27. Obviously, this period coincided with the latter years of the parties’ de facto relationship with one another, during which they were living together at the A Street, Suburb B home.  Mr Engel also acknowledged that he had suffered episodes of paranoid psychosis, during this period, which had resulted in some police involvement and medical intervention. 

28. In happier times, Mr Engel has been a tradesman by trade.  He has also turned his hand to other trades, during his working life.  As a consequence, it is his case that, over the last twenty years or so, he acquired a large collection of specialised tools, some of which have significant sentimental value for him.

29. It is Mr Engel’s case, that on separation, he left these tools behind at A Street, Suburb B in a couple of tool chests, which were stored in a shed.  He would like the tools back, not only because he regards them as his property, but also because he believes they will help him return more easily to employment in his trade.  Clearly, if he is able to return to work, this will help him, as he puts it, re-build his life. 

30. On the other hand, Ms Starling asserts that she does not have either the tool chests or the other tools, bars and hammers sought by Mr Engel.  She denies having sold them or giving them away.  It is more likely, she considers, that Mr Engel himself came to the shed at some time, given he had access to it, and took the items and now cannot recall doing so.  She would categorise Mr Engel’s life, both before and after the parties’ separation, as being largely out of control.

31. To say that the issue of the tools has created an emotional maelstrom, between the parties, would be something of an understatement.  Each previous court appearance has resulted in the parties having a vociferous argument, from their opposing ends of the bar table, in which each has asserted that the other is being disingenuous about the issue. 

32. I have observed to the parties that I do not have authority to order police to search the A Street, Suburb B property for the items of property in question.  Rather, if I am able, I must determine the issue by reference to my assessment of the respective credibility of the parties concerned.

33. Currently, there is only ill will between the parties, who can each see no good whatsoever in the other.  More significantly, each regards the other as a person likely to be economical with the truth and who is out to do the other down in respect of these financial matters.

34. Three other factual matters, which are largely agreed, are also central to the resolution of this case.  I accept that, notwithstanding the pool of assets relevant to the case is a modest one, the outcome of the case has momentous importance for each of the parties.  However, given the sums involved in the case, there can be no outcome, which will be satisfactory for all concerned. 

35. Ms Starling has previously been involved in two significant relationships.  During each of these relationships, she was able to purchase two other homes for herself and her children, prior to her acquisition of A Street, Suburb B. 

36. She retained each such property following the end of each of these previous relationships.  As a consequence, over time, she has been in a position to sell each of these properties, both of which had gradually appreciated in value, enabling her to access equity and trade up in the property market.  This process has culminated with her purchase of A Street, Suburb B.

37. Mr Engel concedes that Ms Starling owned the A Street, Suburb B property outright prior to the commencement of the relationship between the two.  Ms Starling’s evidence is that she purchased the property, in 2009, for $252,500.00.  She utilised the sum of $75,000.00, as a deposit for the purchase.  This sum was realised through the sale of her earlier properties.

38. In order to complete the sale of the A Street, Suburb B property, Ms Starling borrowed a further amount of around $188,000.00, from the Commonwealth Bank, which was secured by way of a mortgage on the property. 

39. It is the central feature of Ms Starling’s case that her initial contribution of her interest in the A Street, Suburb B property, at the commencement of the parties’ relationship – whether that was in 2010 or later in 2011 – is the most significant factor in the case and one which deserves the court’s special recognition. 

40. In these circumstances, given the hardship the sale of the property would occasion to both her and her children, she contends that it would not be a just and equitable exercise of the court’s discretion to force the sale of the property, particularly given that it is her position Mr Engel’s contributions were modest and limited in duration. 

41. In this context, she would categorise Mr Engel’s conduct, during much of 2015, as having a negative effect on the value of the A Street, Suburb B property.   She also disputes that Mr Engel ever made any significant financial contributions towards the maintenance of the mortgage on the property.

42. It was the tenor of Ms Starling’s evidence that the early years of the parties’ relationship were happy ones.  Initially, Mr Engel was employed, as a tradesman, at Employer E.  He brought home a reasonable wage. 

43. Ms Starling, who has a background in customer service, had employment as a customer service officer.  In 2014, after Mr Engel had lost his job, the parties swapped roles, with Mr Engel being responsible for home duties, whilst Ms Starling returned to TAFE to obtain her qualifications in health care. 

44. It was during this period that the parties decided to refinance the mortgage on the A Street, Suburb B property and transfer its title into their joint names.  This involved them notionally borrowing a sum of $190,000.00. 

45. It is Ms Starling’s perspective that this transaction had no strategic financial purpose whatsoever.  Rather, it was done because the parties were in love with one another; Mr Engel wished to be on the title and was insistent in expressing his desire to this end; and, against her better judgement (particularly with the benefit of hindsight), she acquiesced to his request, hoping for the best. 

46. It is further Ms Starling’s evidence that the additional moneys borrowed were largely consumed in government taxes and charges relating to the transfer.  It is her recollection that these amounted to some $5,100.00, which is gone. 

47. The other significant factor in the case concerns a motor vehicle injury settlement, which Mr Engel undoubtedly received in … 2012.  The sum concerned was $51,947.15 and related to injuries sustained in a motor vehicle accident in … 2009.

48. It is Mr Engel’s case that this sum was utilised for joint family purposes, particularly a number of renovations and repairs, which he undertook around the A Street, Suburb B property.  In particular, he claims that it was used to build sheds and retaining walls in the garden and otherwise to enhance the lifestyle of the parties. 

49. On the other hand, it is Ms Starling’s position that Mr Engel largely retained the sum for his own purposes and has exaggerated the amount of moneys spent on both the home and on family activities.  She concedes that holidays were taken but asserts that she also contributed to their payment. 

50. Essentially, it is her case that the money was largely spent by Mr Engel and there is nothing to show for it.  For his part, Mr Engel resolutely refutes any suggestion that the moneys were allocated to the purchase of ice, although he concedes that he was dependant on the drug in the latter stages of the parties’ relationship.

1. As is invariably the case, in matters of this kind, the parties also vehemently disagree about either of their contributions during their relationship.  It is Ms Starling’s case that she was the main homemaker and discharged many varied parenting responsibilities for not only her own children, but also Mr Engel’s, when they came to stay. 

2. She concedes that Mr Engel did perform some household tasks and incidents of maintenance at the A Street, Suburb B property.  However, from her perspective, it was she who maintained the family’s finances and looked out for it. 

3. In this context, she asserts that Mr Engel has overstated the work done at A Street, Suburb B, particularly in the garden.  It is her case that many friends were involved in this work and, in any event, these efforts have not resulted in any significant improvement in the property’s value.  On her case, the value of A Street, Suburb B has declined since she purchased it. 

4. Mr Engel concedes that he left the payment of bills and the general management of household affairs to Ms Starling because he was not greatly interested in such things.  When he was working, he asserts he provided $200.00 per week, from his wages, to pay for his living expenses and from time to time contributed other sums in respect of bills.

5. These reasons for judgment are directed to resolving these various disputes and, as far as is possible, severing the parties’ financial relationship with one another.  Potentially, the proceedings concern the interests of a third party, which is not formally a party to the case.

6. That third party is the Commonwealth Bank, which holds the mortgage on the A Street, Suburb B property and which is currently threatening foreclosure.  I have not been provided with any evidence that the Bank is willing to release Mr Engel from the relevant mortgage if the property concerned is transferred from the parties, as joint tenants, to Ms Starling alone.

7. Whether it is willing to do so will depend on the Bank’s assessment of Ms Starling’s capacity to service the mortgage in question, given her level of income and other asset backing; and its view of the value of the relevant security.  I am not in a position to take it as a given that the Bank will be open to the transfer of the property and mortgage to Ms Starling alone, particularly given the mortgage is currently in arrears.

The evidence

1. In these reasons, which follow, findings of fact are made on the balance of probabilities, from my observation of the demeanour of each of the witnesses concerned.[1]  I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and importantly, on the apparent logic of events.[2]

   [1]  See Evidence Act1995 (Cth) at section 140

   [2]  See Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ

2. Both parties presented as pleasant and apparently truthful witnesses, who had been the victim of the other’s deceit and control.  Ms Starling portrayed Mr Engel as a manipulative wastrel, who had essentially conned and coerced her, during their brief relationship.  On the other hand, Mr Engel portrayed himself as having been a trusting person, who had given everything he had to Ms Starling, with nothing to show in return, after he had been thrown over.

3. In these circumstances, it is impossible that each of them is completely reliable in respect of their individual accounts of what occurred during their relationship, particularly whether they completely intermingled their funds – as Mr Engel maintains; or apart from some intermittent but modest payment of board received from Mr Engel, each kept their own money – as Ms Starling maintains.

4. These are difficult issues to resolve on the basis of an assessment of the respective credibility of each of the parties alone.  Neither has provided any corroborative witness nor have I been provided with any independent financial records, in the form of a bank statement, to indicate regular payments into a joint account.

5. This is most controversial so far as Mr Engel’s compensation payment is concerned.  Ms Starling asserts that Mr Engel utilised it for his own purposes and its implications for her and the upkeep of the household were close to negligible.

6. Other significant areas of dispute centre on the level of their individual contributions so far as home maintenance and improvements are concerned.  Ms Starling contends that the level of maintenance provided by Mr Engel was not significant.  Mr Engel contends otherwise.

7. What was clear from the manner in which both parties presented their respective cases is that both feel highly aggrieved at the conduct of the other during their relationship and afterwards.  In particular, Mr Engel perceives himself to be the victim of an egregious piece of conduct, so far as his tools are concerned.

8. As such, each is likely to view the other through a distorting prism of hostility.  This is likely to have consequences for the overall objectivity and reliability of each of their respective testimonies.  In addition, inevitably, in cases of this kind, each spouse is inclined to the self-serving consequences of cognitive bias, which render each liable to believe that his/her contributions should, in the light of hindsight, be considered to be more valuable or significant than those of the other.

9. However, it is necessary for me to reach some form of conclusion regarding the overall veracity of each of the parties in the context of what is more likely than not to have occurred during their relationship.  In this context, Ms Starling seemed to me to be the more reliable witness.  She made concessions.  She did concede that Mr Engel did some household tasks around the home and did some repairs.

10. More significantly, she deposed that the early period of the parties’ relationship had been happy.  It was only when Mr Engel started using ice that the wheels fell off.  This rang true to me.  Ms Starling did not attempt to exaggerate the failings of Mr Engel in this regard or present herself as being guiltless. 

11. It is also, I think highly significant that, prior to becoming involved with Mr Engel, Ms Starling had been able to acquire property and service a mortgage, whilst being a modest wage earner and largely a sole parent.  In my view, this is to her great credit.  It is I think more indicative that Mr Engel had a corrosive effect on her life and finances than vice versa.

12. She acknowledged her own dabbling with methamphetamines, in concert with Mr Engel.  However, it was her evidence that she had a capacity to use and then draw back, which Mr Engel did not.  It also seems to be the case that he has a greater susceptibility to the malign influences of what is a very nasty drug indeed, the use of which seems to be currently in epidemic proportions in the Northern suburbs of Adelaide – a fact of which I am sadly well aware, given the subject matter of many cases which come before me in this court.  In this sense this case serves as yet another cautionary tale for others.

13. Overall, Mr Engel seemed to me to be the party with the bigger axe to grind and the bigger scores to settle.  It also seemed to be to be probable that his recollection of what actually happened, during the last chaotic period of the parties’ relationship with one another, had the greater susceptibility to having become flawed as a combination not only of his illness but also because of his considerable animosity for Ms Starling.

14. My impression is that Mr Engel blames Ms Starling for the fact that he has little to show for his activities over the last few years.  It appears likely to me that this situation is more likely to be attributable to his overall irresponsibility than to any manipulation, by Ms Starling, of his finances.

15. I accept Ms Starling’s evidence that she has no personal interest in Mr Engel’s tools and had no hand in their disposal.  Whatever actually happened to them remains for me a mystery, which these proceedings are unable to unravel.  

16. Interestingly, in the context of the tool issue, Ms Starling did provide to the court a list of items of personal property, from the shed, which she indicated she regarded as being Mr Engel’s property.  This is not the action of a person who wanted to thwart Mr Engel just for the sake of it.

17. Accordingly, all in all, on balance, I am more inclined to accept the evidence of Ms Starling over that of Mr Engel.  In any event, when everything is boiled down, the central issue in this case – whether it is just and equitable that the A Street, Suburb B property be sold – is not one which essentially turns on findings of fact.  At its root, it is a legal question.

Applicable legal provisions

1. Pursuant to section 39B of the Act, this court has jurisdiction conferred upon it in respect of what are termed de facto financial causes. This expression is defined by section 4 to include proceedings in respect of “the distribution, after the breakdown of the de facto relationship, of the property of the parties or either of them.” 

2. Part VIIIAB of the Act deals with financial matters relating to de facto relationships. In particular, pursuant to section 90RD, the court has authority to make a declaration about the existence of a de facto relationship, including when that relationship ended and pursuant to section 90SM, the authority to alter the proprietary interests of the parties to a de facto relationship, after the breakdown of that relationship.

3. Pursuant to section 90SM(1) the court is authorised to make such order as it considers appropriate in order to alter the interest of the parties to a de facto relationship in relevant property. 

4. The expression “property” is defined in section 4(1) in relation to the parties to a marriage or either of them as meaning “…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”

5. Pursuant to section 90SM(3) the court is actively prevented from making an order altering proprietorial interests, unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitive words “must not” in the relevant section.

6. This is the central legal issue arising in the case.  As indicated in the introductory section of these reasons, it is Ms Starling’s position that it would be fundamentally unfair if the court was to compel the sale of the A Street, Suburb B property, which she owned prior to the commencement of the parties’ relationship with one another, in all the circumstances of the case.

7. This was an issue analysed by the High Court in Stanford v Stanford.[3]  In the case, the majority stated that:

   “The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [4]

   [3]  Stanford v Stanford [2012] HCA 52

   [4] Ibid at [35] – [36]

8. Accordingly, whether it is just and equitable to make any individual property order, under the provisions of section 90SM(3), must depend upon the court’s analysis of the idiosyncratic circumstances of each particular case which comes before it. It is not an issue to be approached in a formulaic manner or on the basis of any assumptions regarding contribution issues.

9. Section 90SM(4) provides the mechanics of how a court is to make an order altering de facto property interests. The court is directed to ascertain the nature and extent of the respective contributions each party concerned has made to the relevant pool of assets, as calculated by it.

10. Contributions fall into two broad categories.  The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.  

11. The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.”[5] 

    [5] See Family Law Act s79(4)(c)

12. It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.

13. In Stanford, the High Court warned of the danger of the court conflating the jurisdiction conferred by section 90SM(3) and section 90SM(4) respectively. Although Ms Starling does not put it in such explicit terms, it is the underpinning of her case that Mr Engel’s claim should not proceed beyond the court’s consideration of section 90SM(3). Essentially, it would not be just and equitable to force a sale of the A Street, Suburb B property irrespective of other issues potentially arising under the rubric of section 90SM(4).

14. In the majority of cases, but clearly not all, the court is required to follow a stepped process, in respect of any potential division of property relevant to a de facto relationship, which can be summarised as follows:

    ·       identification and valuation of the property of the parties;

    · identification and evaluation of contributions to the property (including property, which may no longer be owned by the parties) – the contribution phase – section 90SM(4)(a) to (c);

    · identification and assessment of the various matters in section 90SM(4)(d) to (g) including to the extent they are relevant, the matters in section 90SF(3) – the prospective needs phase;

    ·       considerations of justice and equity.[6]

    [6]  See Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39] and Bevan & Bevan [2013] FamCAFC 116 at [60]

15. In Bevan the majority of the Full Court (Bryant CJ and Thackeray J) said as follows:

    “Although the High Court did not disapprove the four step process, we accept it was not approved either...However, the High Court’s decision serves to refocus attention on the obligation not to make an order adjusting property interests unless it is just and equitable to do so.

    …

    Stanford will also serve as a reminder that the four step process ‘merely illuminates the path to the ultimate result’.”[7]

    [7]  See Bevan (supra) at [65] and [71]

16. From this, I take it, the four step process remains a valid approach in the vast majority of cases, provided care is taken not to overlook the requirement that all orders altering property interests in proceedings arising under the Act be just and equitable.  The ultimate goal of proceedings under Part VIIIAB of the Act is a just and equitable outcome.

17. In this context, I respectfully adopted what was said by Murphy J in Watson & Ling namely:

    “As a result of those matters, the Court’s approach to ss 79/90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the court’s reasons make that clear.”

18. As was discussed by the Full Court in Bevan, whether it is just and equitable to make any particular property order is very often inextricably interwoven with questions of contribution arising under section 90SM(4) and the parties’ financial and relationship history with one another.

19. Although the court must be careful not to combine issues arising under section 90SM(3) with the exercise arising under section 90SM(4), it is artificial to divorce them from each other. Section 90SM(3) does not, however, represent a formal threshold to be crossed prior to the undertaking of the section 90SM(4) exercise.

20. Rather, the overall task is a holistic one, to be informed by the idiosyncratic circumstances of each case concerned.  However, in most cases, it will be readily apparent that it is just and equitable to make an order altering the property interests of the parties concerned because of their circumstances or the manner in which each has presented their case and the orders sought.

Discussion

1. Mr Engel was born on … 1982.  Ms Starling was born on … 1984.  Neither party progressed beyond Year 10 at school.  Mr Engel has his trade qualifications.  More recently, Ms Starling has been able to obtain qualifications as a health care worker.  In the past, she has been engaged in the customer service industry.  Ms Starling did not indicate that she suffers from any health problems.

2. Apart from the fact that he is recovering from an addiction to ice, Mr Engel presents as enjoying good health.  He has presented documents which indicate that he has had some employment, since the parties separated, as a casual tradesman.  In mid-2017, he earned $1,092.00 gross, in this field of endeavour, for a week of work.  His taxable income for the year ending 30 June 2017 was $22,709.00.[9]

   [9] See Exhibit A

3. Although I found Mr Engel to be a basically honest person, he did not strike me as a good financial historian.  The documents he has submitted to the court are haphazard in nature.  As such, it is difficult to gain an accurate view of his overall financial circumstances, other than he is now living with his parents and is currently largely dependent on social security.

4. In his statement of financial circumstances, filed on 13 June 2018, he indicated he was then employed as a tradesman at a weekly wage of $500.00.  In these circumstances, I find that Mr Engel does have some capacity to support himself financially.   It is also clear from his oral evidence that his preference would be to return to work in his trade. 

5. His evidence was that he was able to earn at least $40,000.00 per annum, in this field, during the early part of the parties’ relationship.  He deposed to me that he “was good at what he did” in the trade area.  As previously indicated, it is Mr Engel’s position that the absence of his tools precludes him from easily returning to the trade industry.

6. At present, Mr Engel owns a vehicle of modest value; a Motor Vehicle F ($1,000.00).    He has superannuation to a value of just over $51,000.00.  In this context, he has provided documentary evidence as to his holdings as at 30 June 2016, when the figure was $43,147.30.[10]  Accordingly, his present estimate seems about right.

   [10] See Exhibit B

7. In her statement of financial circumstances, filed on 20 August 2018, Ms Starling has indicated having superannuation to a value of $5,745.49.  She owns a Motor Vehicle G, which she estimates to be worth $400.00 and which Mr Engel asserts is worth $1,500.00.  No formal valuations have been provided. 

8. Ms Starling has deposed that she earns around $650.00 per week or just under $30,000.00 per annum.  Her income is augmented by some social security payments and around $100.00 in total of child support from each of [J] and [H]’s respective fathers.  Her major recurrent expense is her weekly mortgage payment, which is $310.00.  She estimates other outgoings referrable to the property at $100.00 per week.

9. In all these circumstances, Ms Starling’s overall financial position is best described as parlous.  She has no nest egg to protect her from unforeseen financial exigencies.  By way of example, an unanticipated power bill or the need to repair her motor vehicle would be a financial catastrophe for her.  It must be the case that she, [J] and [H] live from week to week. 

10. Mr Engel concedes that he did not have any property, of significant value, when he commenced the relationship with Ms Starling.  He had his tools, which he estimates were worth around $25,000.00 and a motor vehicle.  At this stage of his life, the impression I have of Mr Engel is of a knock about person, who was not greatly concerned with his long term financial security, who largely spent what he earnt.  He did not strike me as being a person focussed on the long term.

1. This is not, I hope, to underestimate the significance of the two missing tool chests to Mr Engel.  I accept that they are of vital importance to him and he keenly feels their loss.  However, there is no formal valuation of these items and I accept Ms Starling’s evidence that, as far as she is concerned, their whereabouts is unknown.  On any view, the circumstances surrounding the parties’ separation were somewhat chaotic in nature.

2. As previously indicated, it is beyond the remit of these proceedings to conduct some form of inquisition into what has happened to the tools other than I am not in position to negate Ms Starling’s evidence that they are gone from the A Street, Suburb B property.  As such, it is not possible for me to take them into account, at Mr Engel’s nominated value, in these proceedings.

3. Apart from the missing tool chests, Mr Engel has provided a list of items of property, which he asserts are his and were last seen by him at the shed at A Street, Suburb B.  The list includes things such as a tent; a patio heater; whipper snipper; - in short the sort of things one would expect to find in a suburban shed.

4. Ms Starling has responded with her own list, which is significantly shorter than that of Mr Engel, which she asserts are the items of property, remaining in the shed, which are attributable to Mr Engel.[11]  I will make orders requiring these items to be delivered to Mr Engel, at a place to be nominated by him, at his expense.

   [11] See Exhibit E

5. Ms Starling came into the relationship as the sole registered proprietor of the A Street, Suburb B property.  She had purchased the property in 2009 for the sum of $252,000.00.  From her perspective, the property represented a good buy, as it was on a corner block. 

6. As previously indicated, over the preceding years, she had incrementally gathered equity in two other properties and was able to inject $75,000.00 capital into the purchase, borrowing a sum of $188,000.00 to complete the purchase.

7. I accept this aspect of Ms Starling’s evidence unequivocally.  For her the acquisition of this property and its predecessors was central to her plans to secure some form of financial and accommodation security for herself and her children. 

8. I further accept that its acquisition was the culmination of a protracted process of sacrifice on her part.  In her affidavit, Ms Starling deposes as follows in respect of her financial history:

   “Financially it was tight but manageable as I have had a mortgage since I was 18 and still met all requirements on my sole income for many years previously.”[12]

   [12] See Ms Starling’s affidavit filed 20 August 2018 at [6]

9. In my view, given the length of the relationship between the parties this is by far the most significant factor by way of contribution arising in the case.  If Ms Starling had not acquired the property, there would have been no utility whatsoever in Mr Engel bringing the proceedings.

10. It was Ms Starling’s efforts, expended over many years, prior to her having met Mr Engel, which resulted in her acquiring the A Street, Suburb B property.  In my view, in all the circumstances of this case, this is a contribution which must be central to how the court approaches the issue of how any order can be made equitably and is one which warrants some form of special recognition in the overall circumstances of the case.[13]

    [13]See Pierce & Pierce (1999) FLC 92-844

11. In my assessment, Ms Starling is likely to be a more accurate financial historian than is Mr Engel.  He himself concedes this to be the case as he has deposed that he left all aspects of financial management to Ms Starling.  On balance, it is more likely that Ms Starling has a greater ability to exercise financial discipline and restraint than Mr Engel.

12. It is clear that Mr Engel did receive a motor vehicle injury compensation payment in 2012.  This was used to purchase a car and other household goods and consumer items.  Regrettably, it seems to have been quickly consumed.  I do not accept that its receipt did much to improve Ms Starling’s overall financial bottom line so far as A Street, Suburb B was concerned.  Rather it provided a short term sugar hit of consumption.

13. Unlike a marriage, it is often difficult to delineate precisely when a de facto marriage comes into effect, particularly in terms of its financial ramifications.  In this case, cohabitation, at A Street, Suburb B, began in 2013, just after the receipt of the compensation payment. 

14. Prior to this time, the parties were clearly in some form of relationship, but it appears to me to be unlikely that there was any significant intermingling of their finances until they actually lived together.  Accordingly, in my assessment the de facto relationship between the parties was one of around four years in duration.

15. The year 2013 also coincided with Mr Engel losing his employment.  Ms Starling asserts it was for misconduct; Mr Engel that it constituted unfair dismissal.  Whatever explanation is more reliable, the fact remains between 2013 and 2016, Mr Engel concedes that he had only intermittent and casual employment, interspersed with social security payments.

16. This period also marked the parties changing roles.  After completing her studies, Ms Starling began to work in the health care field.  It is her evidence that she did “all home duties” as well as helping with the care of Mr Engel’s children, when they visited.  Although Mr Engel did perform some household tasks, it seems to be highly probable that Ms Starling continued to more than pull her weight in this regard. 

17. I accept that Mr Engel did provide his income and later when the parties swapped roles his social security payments.  However, he also received accommodation, at A Street, Suburb B.  Accordingly, his financial contributions went to his support.  No great inroads were made in respect of the mortgage.  It is Ms Starling’s evidence that she ensured the regular mortgage payments were kept up.  She also paid one of Mr Engel’s fines.

18. It is Ms Starling’s evidence that the period during which Mr Engel lived at A Street, Suburb B was a financial disaster for her.  During this period, she asserts that she constantly felt subject to control from Mr Engel, who telephoned her at work and accused her of “a range of different things”. 

19. This was the background to Ms Starling agreeing to re-finance the A Street, Suburb B property and place Mr Engel on its title.  With the benefit of hindsight, this was an act of financial madness on her part.  I find that the action was not commensurate with any financial contribution emanating from Mr Engel.

20. It was rather an act of misplaced generosity on Ms Starling’s part, which was engineered by Mr Engel.  In general terms, I accept that it was emblematic of the control and coercion Mr Engel exerted over her during this period.  In my assessment the act is not otherwise logically explicable.

21. The latter part of this period (between 2015 and 2017) also marked the period during which the parties began using ice.  Ms Starling concedes that she used the drug, but it is her case that she did not get as involved with it as did Mr Engel.  Given she maintained her job and did not experience the same deleterious medical consequences as Mr Engel, this seems more likely to be the case than not. 

22. That is not to say that the parties’ use of the drug did not have financial implications for them.  Mr Engel has deposed that he borrowed money from his father to meet living expenses due to the parties’ drug habit.  This period seems to have coincided with Ms Starling struggling to meet the mortgage payments as they fell due.  Ms Starling asserts that the mortgage was $3,500.00 in arrears at the end of 2015.

23. In this context, it seems to me to be more likely than not that the A Street, Suburb B property depreciated rather than appreciated in value.  At best it maintained its value.  I also consider Ms Starling’s evidence regarding the extent of maintenance and improvements provided by Mr Engel on the property is more likely to be accurate than his. 

24. She asserts that the shed erected at the home was a flat pack kit one, which was easily put up, largely with the assistance of friends; that there was not a great deal of landscaping done; and the only maintenance performed by Mr Engel was the replacement of a few facia boards.   Without wishing to appear unduly censorious, those in the grip of drug addiction are not usually particularly house proud.

25. What is striking about this period is that, after approximately ten years plus of being able to manage a mortgage, Ms Starling’s life and finances began to fall into chaos.  Obviously, she must assume some responsibility for the deterioration in her circumstances, but the coincidence of her involvement with Mr Engel is striking.  As such, I accept that he had an extremely corrosive influence on her financial situation and precipitated her making some very ill-judged decisions.

26. Nothing done by Mr Engel added to the value of A Street, Suburb B or acted in a manner to conserve its value.  Ms Starling made the overwhelming financial contributions and provided greater homemaking support to him than he did to her.

27. Essentially, in my assessment, Mr Engel’s non-financial and financial contributions, during the relatively short relationship, were slight, at best and outweighed, to a significant degree, by what can only be characterised as contributions of a negative nature, the most significant of which was the damage he did to the property, in the period prior to the end of the relationship.

28. I also accept that following the parties’ separation, Mr Engel has continued to attempt to exert control over Ms Starling by utilising his registration as a joint proprietor of the A Street property to have accounts and statements, relating to the property, directed to him.  This has created financial mayhem for Ms Starling and appears to me to be motivated by petty bastardry on Mr Engel’s part.

29. At present, both parties face an uncertain financial future.  Ms Starling is a modest income earner.  She does, however, enjoy good health.  I was also impressed by her dedication to her work and the fact that she gains a great deal of satisfaction from it.  Given she is in her mid-thirties, it seems to me to be likely that she has sufficient years of active paid employment before her to rectify the financial damage arising from her relationship with Mr Engel.

30. If no order is made in respect of the sale of the A Street, Suburb B property, Mr Engel will be in essentially the same position as he was when the relationship commenced, apart from his missing tools.  He will have his motor vehicle and his superannuation, which is significantly greater in value than Ms Starling’s.

31. Although Mr Engel is not currently in the workforce, in my assessment, it is more likely than not that he will be able to return to some form of employment, if he wishes to do so.  I would hope he could return to his trade but otherwise his employment is likely to be both unskilled and casual and so will not provide him with a great deal of financial security. However, in my view, this situation is not attributable to the relationship between the parties.

32. All in all, I have come to the conclusion that it would not be just and equitable if the court makes an order requiring the sale of the A Street, Suburb B property.  To the contrary, given the history of the matter and the fact that Ms Starling alone brought the property into the parties’ brief and turbulent relationship, it would be most unjust and unfair if this was to be the result of the case.

33. In my view, any assessment of contributions, under the Act, favours Ms Starling to a marked degree.  Although Mr Engel is currently living what can only be described as a hand to mouth existence, this is not a situation which can be attributed to Ms Starling, whose financial situation also is not without its difficulties.

34. In my view, the overall justice and equity of this case requires that Mr Engel transfer his interest in the A Street, Suburb B property back to Ms Starling alone and that she indemnify him in respect of the mortgage on the property.

35. The chief difficulty in this case is that it is unknown to me whether such an outcome will be acceptable to the Commonwealth Bank.  I would hope so.  It would seem to be unlikely that the maintenance of Mr Engel on either the title or the mortgage would assist, in any way, in respect of the Bank being repaid its debt in the longer term.  To the contrary, a continuance of the current status quo would seem to render a default inevitable with deleterious consequences for all concerned.

36. Given the fact that Mr Engel needs to be removed from the title, I have not approached the case from the perspective of Part VIIIAA of the Act. This Part enables the court to make an order in relation to the property of a party to a de facto relationship, under either section 90SM or 90SS (the injunction power) of the Act, which is directed to or alters the rights, liabilities or property interests of third parties.[14]

    [14] See Family Law Act section 90TA

37. However, it would appear to me to be both reasonable and fair that Ms Starling be substituted for Mr Engel in respect of the mortgage debt.  In addition, as indicated above, this seems to provide the mechanism best calculated to ensure the Bank receives full payment.

38. Mr Engel is likely to be aggrieved at the outcome of this case as I have determined it. In such circumstances, I have reason to consider that he will be uncooperative in respect of taking the action required to give effect to the orders relating to the transfer of the property from him and Ms Starling to Ms Starling alone. In these circumstances, I will make an order pursuant to section 106A of the Act.

39. In all the difficult and controversial circumstances prevailing in this case, I am satisfied that the outcome I propose represents a just and equitable outcome.

40. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding one hundred and forty-four (144) paragraphs are a true copy of the reasons for judgment of Judge Brown

Date: 4 July 2019

[8]  Watson & Ling [2013] FamCA 57 at [13]