FEATHERSTONE & REYNOLDS

[2019] FCCA 3655

FEDERAL CIRCUIT COURT OF AUSTRALIA

FEATHERSTONE & REYNOLDS [2019] FCCA 3655

Catchwords:
FAMILY LAW – Application for division of property – application out of time – application allowed – disputed de facto relationship – de facto relationship found – small pool – disability support pension – superannuation – contributions – adjustment factors – poor health of both parties – just and equitable – division of 12.5% in favour of the applicant.

Legislation:

Family Law Act 1975 (Cth), ss.4AA , 44, 90SB, 90SF, 90SM

Applicant: MS FEATHERSTONE

Respondent: MR REYNOLDS

File Number: MLC 2003 of 2019

Judgment of: Judge Riethmuller

Hearing dates: 15 and 16 August 2019

Date of Last Submission: 16 August 2019

Delivered at: Melbourne

Delivered on: 13 December 2019

REPRESENTATION

The Applicant appeared in person.

The Respondent appeared in person.

ORDERS

1. Pursuant to section 90RD of the Family Law Act 1975 the Court declares the applicant and respondent were in a de facto relationship.

2. Pursuant to section 44(6) of the Family Law Act 1975 the applicant is granted leave to apply for property settlement orders after the end of the standard application period.

3. The respondent pay to the applicant either:

   (a)12.5 per cent of the net proceeds of the sale of the property at B Street, Town C, provided the payment is made by 30 June 2020; or

   (b)the sum of $20,625.

4. The applicant be granted a charge over the property securing her interest therein, pursuant to these orders. 

5. The applicant not be at liberty to execute order 3(b) until the earlier of 1 July 2020 or the sale of the property at B Street, Town C.

6. Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these orders:

   (a)Each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the property being deemed to be in the possession of the party occupying the property at the date of these orders).

   (b)Insurance policies remain the sole property of the owner/beneficiary named thereon/in;

   (c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders and;

   (d)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

7. All extant applications be dismissed and the matter be removed from the list of pending cases.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SHEPPARTON

MLC 2003 of 2019

MS FEATHERSTONE

Applicant

And

MR REYNOLDS

Respondent

REASONS FOR JUDGMENT

Background

1. The applicant brings proceedings seeking orders for the division of property pursuant to the Family Law Act1975 (Cth) (‘the Act’) as a result of a period of time during which the applicant says she was in a de facto relationship with the respondent.

2. The respondent denies that the parties were in a de facto relationship, and if it is found that they were in a de facto relationship, relies upon the time limit set out in the Act which expired before the applicant brought proceedings. The respondent also disputes the nature of any contributions that the applicant alleges that she made to any relationship.

3. The parties were unrepresented and sought to have the whole of their dispute resolved at a trial on the Shepparton circuit.

4. On the respondent’s case the applicant moved into his house as a friend who became his carer (for the purpose of social security entitlements), and is therefore not entitled to make a claim under the de facto provisions of the Act. Whilst the respondent alleged that the applicant paid $120.00 per week in rent, it was said that this was in the form of contributions to food in the household and that the amount was not declared to social security. The respondent says that it was not necessary to declare this income as it was an amount less than the threshold for which a pension change would follow. It is not suggested that the respondent paid any wage or salary to the applicant for the services she provided if they were not in a de facto relationship. I note, of course, such caring is often provided without expectation of payment even if there is no spousal relationship, at least between family members and close friends.

5. The applicant is a 47 year old woman born in 1972, a couple of months after the respondent was born in the same year.  The applicant says that they commenced a relationship having met on Facebook, when both were residing in country Victoria.  At the time that they met, both appear to have been in receipt of a disability pension from Centrelink. As the applicant was renting a property at that time, she also received rent assistance.

6. There is no dispute that the applicant resided at the respondent’s house for a period of time. The applicant says this period was from 1 April 2014 until 18 February 2017, a period a little under three years.  The respondent does not set out in his affidavit material any specific dates or take issue with the dates alleged by the applicant.

7. The applicant filed the proceedings on 26 February 2019, some eight days outside of the two-year time limit provided for in the Act. It may be that the parties actually separated on 16 February 2019, a date which appears on a domestic violence order, however it would still leave the applicant in a position that she filed within a fortnight after the expiration of the time limit.

8. The applicant seeks a division of property providing 55 per cent in her favour and 45 per cent in the respondent’s favour. The applicant also seeks a number of consequential orders and a costs order. 

9. The respondent simply opposes any orders being made.

The nature of the relationship of the parties

1. There is no dispute in this case that the parties resided together for in excess of a two year period. Nor is it in dispute that the applicant cooked meals and undertook household duties for the respondent. Indeed, she was listed as a carer for the respondent with Centrelink and received a social security allowance on the basis that she undertook caring duties. It is clear that the respondent was on a disability pension before they met and had suffered injuries in the past. Neither party appeared to be in a position of being able to work, hence the pensions of which they were both recipients. 

2. The applicant was adamant that the parties shared one bed and one bedroom in the household, a position confirmed by her adult daughter who also gave evidence. The respondent preferred to characterise what he said were occasional sexual interactions as that of “friends with benefits” rather than a relationship.

3. As both parties represented themselves it was difficult to assess the quality of their evidence and there was little effective cross-examination.  Both were quite fixated on portraying the other as an abusive and violent person. 

4. The applicant gave evidence that she and the respondent had travelled to see a mutual friend (who had been a friend of the respondent’s prior to the relationship) in City D on the day that they ended the relationship.  It appears that they had at least one mutual friend whom they interacted with together, in a way that would be consistent with them being a viewed as a couple.

5. They also purchased two second-hand motorcycles together through eBay, as they enjoyed undertaking motorcycling activities when together.

6. It appears clear that the applicant managed the finances of the household during the relationship, although this would also be consistent with some degree of incapacity on the part of the respondent.

7. The applicant also gave evidence that she had withdrawn her total superannuation (her only asset aside from furniture and household items), an amount of $12,000 during the relationship. The applicant produced at the hearing copies of bank statements which demonstrated that the amount referred to in the superannuation company’s letter annexed to her affidavit was deposited into her account. Thereafter the amount was dissipated through purchases that appear to have been for food and household supplies.  Importantly, a number of withdrawals were made thereafter at the hardware store at Town C. This is consistent with renovations being undertaken at the respondent’s home, pictures of which are annexed to the affidavits. The applicant confirmed that she withdrew her superannuation money so that they would have funds to make the renovations possible.

8. The applicant produced a document annexed to an affidavit filed on 11 May 2019 which was said to be a Valentine’s Day note to the applicant from the respondent in the following terms:

   Happy Velentines [sic] [D]ay Ms Featherstone all house work is done for you aw ya

   I love you so much xoxox

   but where is my tea you know you don’t get a day off.

9. The respondent denied that the document was his or in his handwriting.  In the absence of handwriting evidence, and indeed any significant samples of the respondent’s handwriting, it is difficult to make a finding in this regard. The terms of the Valentine’s Day document are so bizarre they could be some attempted humorous aside, however the applicant alleges that the relationship was such that the document should be read as a serious reflection of the respondent’s views.  Having seen both the parties in court, and bearing in mind the lack of surrounding evidence relating to this document, I am ultimately not persuaded that the document itself assists me in this case as evidence that I ought to place reliance upon. 

10. The respondent alleged that the applicant had stolen $7,000 from him during the time that she was with him, although produced no evidence by way of bank statements identifying any particular withdrawals or amounts that were said to be taken. It appeared that he may have been referring to the outstanding debt to the local authority for rates and charges. However, the amount of that debt, in comparison to the amount of the yearly rates and charges, demonstrates that there must have been a significant debt to the local authority even before the applicant commenced living with the respondent. This proposition is confirmed by a letter that has been annexed in the bundle of documents tendered by the respondent where the council identifies that since the respondent took possession of the property he had been in arrears in his rates and charges payments.  I am not persuaded that the applicant stole from the respondent.

11. The failure of the applicant to notify social security that she was in a

    
    

    de facto relationship is likely a breach of the relevant rules and regulations relating to social security and it seriously diminishes her credibility, as it is an inconsistent position to that taken at trial.  However, this does not create an estoppel that prevents her from bringing this claim. 

12. The respondent denied that the applicant cooked or cleaned at the house, although this seems unlikely if the applicant was his carer and supplying the food to be purchased with her “rent” money, at least on the case put forward by the respondent.

13. I found the evidence of the applicant’s daughter persuasive and I accept that evidence.

14. As for the day to day life in the household I generally found the applicant’s evidence more persuasive than that of the respondent who presented as garrulous and dismissive.

15. I am persuaded that the applicant and the respondent commenced cohabitating in the respondent’s house, sharing a bedroom and living together on a bona fide domestic basis for slightly less than three years. I am persuaded that their relationship did fall within the meaning of the term de facto relationship in section 4AA of the Act for the following reasons:

    a)the relationship was in excess of two years;

    b)the parties shared a common residence and a common bedroom;

    c)the parties engaged in a sexual relationship;

    d)there was a significant financial interdependence between them, as evidenced by the applicant withdrawing her superannuation money and applying it to household expenses and in particular hardware expenses during the renovation of the property;

    e)they used the property as their home (although it was registered and owned by the respondent prior to the relationship);

    f)a room in the property was made available for the use of the applicant’s daughter for a short period;

    g)the parties appeared to have undertaken a shared life, having hobbies such as motorcycle riding together, the renovation project, shared arrangements with respect to at least foods and at least one mutual friend who was previously a friend of the respondent; and

    h)the applicant took on the role of carer for the respondent, at least for the purpose of notification of social security, without payment in circumstances where they had no other extended family relationship or other long term friendship relationship.

16. In the context of the evidence in this case I am persuaded that the applicant was in a de facto relationship with the respondent. 

17. The factor that tells against the parties in a de facto relationship was the failure of the parties to notify the Department of Human Services that they were in a de facto relationship during this period of time. The respondent says that this was because there was no relationship and attempts to rely upon social security letters in his case. The letters from social security demonstrate the information social security had received from the parties, rather than any independent inquiry by Centrelink.

Application filed out of time

1. At the end of the relationship, the parties continued to struggle on social security with various small debts. The applicant has no household goods or contents from the time when they were together, and no longer has any superannuation (having applied her superannuation to the benefit of the parties during the relationship). The respondent continues to have household goods and contents, and continues as the registered owner of the house which has had some renovations. 

2. On the evidence it is clear that the de facto relationship was for a period in excess of two years as referred to in section 90SB of the Act.

3. Under section 44(5) of the Act an application may not be made after two years following the end of the de facto relationship, unless the court grants leave on the basis that the court is satisfied that hardship would be caused to a party if leave were not granted: see section 44(6).

4. In this case I am persuaded that the applicant has reasonable grounds for bringing an application for a de facto property settlement. She contributed her household goods, and importantly her superannuation money, as well as caring for the respondent (at the least by becoming the homemaker).

5. The length of the delay is small. The context of the delay involves significant proceedings in the state courts with respect to family violence. It is not unlikely that these proceedings distracted attention from the need for property proceedings but, at the very least, the other proceedings show that this was not a case where the parties had moved on with their lives and assumed that no proceedings would be following. 

6. Nothing indicates any prejudice to the respondent as a result of the delay in this case. The applicant would be prejudiced through the loss of a capacity to make her claim.

7. Whilst the applicant’s case is for a modest amount in comparison to the average property claim seen in the courts, it is an amount that is significant in the very impoverished circumstances of the applicant.

8. The costs of the proceedings are limited in that both parties represented themselves. 

9. The delay in this case does not appear to have any real impact upon the capacity of the parties to present their case or on the capacity of the court to adequately deal with the matter. 

10. In these circumstances, I grant leave under section 44 of the Act for the applicant to proceed with a property settlement claim.

Property

1. The applicant is on a disability support pension, her average weekly income from this source was $525.00 as at 15 February 2019 and $499.52 as at 12 June 2019. She has no other source of declared income. The applicant has no superannuation funds and $3,588 in liabilities, made up of: (i) a E Finance personal loan of $1,395; (ii) $1,193 in a Radio Rental hire purchase; and (c) a Centrelink loan of $1,000.  The applicant’s only asset appears to be a car she values at $7,000 and boat valued at $500.

2. The respondent is also on a disability support pension, his weekly income is $463.10 and his only main asset is his property at B Street, Town C, of which he has a 100% share. The respondent says it is valued at $176,000 although at trial they estimated it had a value of $160,000 to $170,000.  I prefer the more recent estimate as it was made following the property being listed for sale. He also owns a motor vehicle that he values at $900. The respondent has no superannuation and has stated he has $2,800 in liabilities that require personal loan repayments (to lender ‘E Finance) averaging $60 a week. The respondent recorded the remaining amount of his personal loan debt as $1800, but  in his financial statement he has mistakenly recorded the amount he has so far paid off from that loan, rather than his remaining due balance which is actually $3,085. The respondent also has a declared Centrelink loan of $1,000. This brings the correct figure for liabilities to $4,085 rather than $2,800.

Goods and chattels

1. Following the separation of the parties, there were considerable disputes with respect to the goods and chattels of the applicant that were left in the household of the respondent. In substance she left with little or nothing. 

2. A police officer was called to give evidence. The officer was assigned the task of attending at the respondent’s residence with the applicant for the applicant to collect her goods and chattels. A large amount of goods and chattels were made available in the garage for the applicant to collect, however the respondent refused permission to the applicant’s daughter and another associated person to enter upon the property to take the goods and chattels. 

3. The police officer gave evidence that he offered to assist the applicant to take the things from the garage, but that she refused.  The applicant said that it was not the responsibility of the police officer to have to assist her and so she declined that assistance. The result was that none of her goods and chattels were taken that day and appear to have since been disposed of by the respondent. 

4. The applicant provided a list of household items, however there were no valuations provided, and there is no evidence upon which I could make a finding that any particular value should be attached to those items. It is clear, however, on the case as put forward, that the applicant’s household goods and chattels including furniture and television were taken to the respondent’s household when she moved in, and that the relationship ended with her moving out with little or nothing in this regard.

Superannuation

1. When the applicant commenced the relationship she says she had over $12,000 in superannuation.  The applicant submitted to the court an annexure attached to an affidavit filed on 15 February 2019 a superannuation letter dated 6 May 2015 which showed $12,791.62 in her account. This money was expended by the end of the relationship. Her evidence that the moneys were in part applied to renovations is compelling. The applicant did not plead a trust claim and the evidence as led would be thin to ground a claim by way of a constructive trust or promissory estoppel, or other obvious equitable remedy in this regard. There is no evidence before me that there was an increase in value in the residence caused by the renovations (if an increase in fact followed), nor evidence showing the proportion of the superannuation money used for renovations.

1. The parties currently estimate the value of the property at around $160,000 to $170,000 and it is presently listed with a real estate agent, as the respondent had intended to sell it in order to purchase a new property, in conjunction with his current spouse. Notably, at trial the respondent stated that the sale had been blocked by the applicant because of the proceedings and that at this stage he was unsure whether he would continue with the plan to purchase a different property with his new spouse.

2. In simple terms, it seems that both parties were struggling to survive on social security at the commencement of and throughout their relationship.  At the commencement of the relationship each had household furniture and effects. Each had debts from living expenses and modest furniture and motor vehicles. The respondent owned his home, of modest value.  The applicant held over $12,000 in superannuation.

Contributions

1. In this case, as set out above, both parties contributed their social security entitlements and brought their goods and chattels to the relationship. The applicant contributed her superannuation moneys and the respondent had his home. There were also a number of motor vehicles and debts involved in the case. It is difficult to ascertain with precision the exact financial circumstances of the parties at the commencement of the relationship on the limited evidence that is before the court, at least with respect to debts and the motor vehicles. 

2. It is clear from the evidence in the council letters that the respondent did have debts to the local authority at the time of the commencement of the relationship.  It also appears likely that he had other debts, as did the applicant. 

3. During the period of the relationship the applicant acted as the respondent’s carer and received a social security benefit on that basis. I prefer her evidence that she undertook the housework, washing and cooking as well as caring for the respondent’s finances. The respondent disputes the quality of the work undertaken by the applicant with respect to his finances, however, it seems that he was in a parlous financial position when they met, owning his house only as a result of an injury payout, and that both remain in a difficult financial position with minor debts and no income except social security entitlements. Little has changed in this regard.

4. I accept that the bulk of the renovation work was undertaken by the respondent although at least part of the moneys of the applicant were applied towards that. 

5. Neither party had dependent children from a former relationship that needed to be cared for, nor did they have children together. The applicant’s adult daughter stayed at the house for only a short time. It does not appear that either will have an earning capacity in the future. 

6. Doing the best that I can on the limited evidence available it appears to me that the parties’ contributions ought to be assessed in the order of around 85-90 per cent in favour of the respondent. 

Adjustment factors

1. I must then turn to consider the matters set out in section 90SF(3). 

2. Both parties are close in age. Neither is in good health, although I accept that the respondent’s health is probably worse than the applicant’s.  Neither has an income and both rely upon the meagre assets that are currently available to them and social security benefits.  Neither has the care of a child under 18 or an adult child in need of assistance. The parties both have day-to-day commitments. 

3. The applicant must pay rent and the respondent has the benefit of owning his home, but must meet the upkeep, rates and commitments with respect to it. Recently the respondent had his house on the market, intending to buy a different property together with a new partner or friend, however the current status of this relationship is unclear.

4. Neither party appears to have responsibilities to support another.

5. Ultimately I am not persuaded that the future needs of the parties are sufficiently different as to call for an adjustment to the assessment that I have made with respect to their contributions. 

Just and equitable

1. I am persuaded that it is just and equitable to make orders given the result of the relationship and the separation is that the applicant has effectively none of her chattels or superannuation moneys and is without anything but a modest motor vehicle (which the applicant values at $7,000), a boat worth $500, and has a number of loans, whilst the respondent retains a house in his name and furnishings. 

2. The appropriate order in accordance with section 90SM(1) appears to me to be an adjustment in the applicant’s favour of twelve and a half (12.5) per cent of the net proceeds of the sale of the house in the respondent’s name, provided that the house is sold on or before 30 June 2020. I would not provide for interest if the payment is made by that date, as it seems unlikely that such a modest property in Town C will increase in value, and it does seem likely that it will be difficult to sell. I am satisfied that such an adjustment is just and equitable.  It is also appropriate that the orders allow for the respondent to retain the property if he can pay the applicant an equivalent sum.

3. I therefore make orders for the respondent to pay to the applicant (at the respondent’s option): (a) 12.5 per cent of the net proceeds of the sale of the property at B Street, Town C, provided the payment is made by 30 June 2020, or (b) the sum of $20,625 (12.5 per cent of the mid point of the parties value of the property); and (c) that the applicant have a charge over the property to secure her interest therein, in order to support a caveat to secure the said sum.

4. Finally, I will make an order that the applicant not be at liberty to execute these orders until the earlier of 1 July 2020 or the sale of the property, and that she be entitled to secure her interest in the property by way of a caveat, in order to preserve the parties’ positions.

5. I find that the orders I will make are just and equitable and otherwise appropriate. 

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller

Associate:  

Date:  13 December 2019