Flanagan, Angela Joy v Ubavin, Milan
[2010] VCC 114
•5 March 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL - FAMILY PROPERTY DIVISON
Case No. CI-09-06167
| ANGELA JOY FLANAGAN | Plaintiff |
| v | |
| MILAN UBAVIN | Defendant |
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| JUDGE: | HIS HONOUR JUDGE MISSO |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 26 February 2010 |
| DATE OF JUDGMENT: | 5 March 2010 |
| CASE MAY BE CITED AS: | Flanagan, Angela Joy v Ubavin, Milan |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0114 |
REASONS FOR JUDGMENT
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Catchwords: PROPERTY LAW – Relationships Act 2008 – adjustment of interests in property – direct and indirect contributions – relationship between order for adjustment pursuant to section 45(1) and factors relevant to an order for maintenance pursuant to section 51(1) and (2) – global approach in determining an order adjusting interests in property: section 45(1) and 51.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms E M Swart | Sharrock Pitman Legal |
| For the Defendant | In Person | - |
| HIS HONOUR: |
Introduction
1 The plaintiff filed an Originating Motion on 23 December 2009 seeking an order for adjustment of interests with respect to property pursuant to section 45 of the Relationships Act 2008.
2 I made orders, among other things, providing the parties with a date for trial on 26 February 2010 because it seemed to me that both were in serious financial difficulty, and it was in their best interests to have the proceeding heard expeditiously.
3 Ms E Swart of counsel appeared for the plaintiff. The defendant appeared in person.
4 The plaintiff gave evidence and was cross-examined by the defendant. The defendant chose not to give evidence, but with the consent of the plaintiff, tendered a large body of documentary evidence.
5 The documentary evidence tendered by both parties is set out in the Schedule annexed to these Reasons for Judgment.
The Issues
6 The plaintiff and the defendant agreed that they had entered into a domestic relationship; however, the defendant contended that it commenced in about May 2004 and came to an end in about February 2008.
7 The plaintiff admitted that she commenced living full-time with the defendant in about May 2004. However, she contended that the domestic relationship commenced at an earlier time, as the parties grew closer emotionally and began to treat each other as domestic partners.
8 The real question which emerged in the course of the trial was the extent to which there should be an adjustment of interests . The plaintiff contended that an adjustment should be made in her favour to the extent of 75 per cent of the asset pool of the domestic relationship. The defendant contended that an adjustment should be made in his favour to the extent of 70 per cent from a much smaller asset pool.
A Domestic Relationship
9 It was very evident to me during the course of the trial that there is great animosity between the plaintiff and the defendant.
10 It was very evident that the plaintiff is very apprehensive of the defendant. Whilst the defendant denied the allegations that he was violent during the domestic relationship, he glared at the plaintiff on a number of occasions in a most threatening way during the trial, and became angry during his cross- examination of the plaintiff.
11 However, on the occasions on which I cautioned the defendant to moderate his conduct, he did so rapidly and was apologetic.
12 Despite my impression of both the plaintiff and the defendant, it became very apparent to me at the end of the trial that there was not much dispute between the plaintiff and the defendant regarding the commencement and duration of the domestic relationship; the children born of the domestic relationship; the children of the plaintiff who became children of the domestic relationship, and the assets said to comprise the assets of the domestic relationship.
13 The plaintiff was born on 20 August 1973. She is now thirty-seven years of age. The defendant was born on 26 March 1965. He is now forty-five years of age.
14 Before commencing the domestic relationship with the defendant, the plaintiff had been in a previous relationship, during which two children were born, namely, Reece Michael Paranihi, who was born on 18 June 1994, and Raymond Damien Paranihi, who was born on 27 October 1992.
15 At first the plaintiff alleged that she and the defendant were in a domestic relationship between 1997 and February 2008.
16 They did not live in a common residence. A sexual relationship existed, but was infrequent before May 2004. They lived in New South Wales, but subsequently the defendant moved permanently to Victoria. Although there was an issue as to whether the defendant was providing the plaintiff with any financial support before May 2004, he probably was, but the arrangements were hardly formal or consistent with a domestic relationship.
17 Furthermore, before May 2004, both the plaintiff and the defendant treated their assets as their own. They had not yet developed a community interest in their assets.
18 The plaintiff was responsible for the care of Reece and Raymond, and the first child of the domestic relationship, Callan Nikola Ubavin, who was born on 3 May 2001.
19 Their relationship did not appear to me to have a reputation as a domestic relationship because there were little public aspects to it which demonstrated that they were a couple in a domestic relationship.
20 The foregoing are some of the relevant considerations referred to in section 35(2) of the Act, which conveniently gathers together a number of matters which are relevant to the determination of whether a domestic relationship existed. The preface to subsection (2) provides that in determining whether a domestic relationship existed, I am to consider all the circumstances of the relationship, including each of those matters.
21 The plaintiff and the defendant were clearly at odds concerning when the domestic relationship actually commenced. The plaintiff gave evidence that it commenced much earlier than May 2004, yet admitted during cross- examination that she was living in New South Wales before May 2004, and that the plaintiff was living in Victoria before that date for some time.
22 Where the plaintiff and the defendant do agree is that they met when both were living in New South Wales. They obviously developed a relationship which involved a sexual relationship. It was during that relationship that the plaintiff conceived and gave birth to Callan.
23 In her affidavit sworn 21 December 2009,[1] the plaintiff said that after she met the defendant in New South Wales in about 1997, that they commenced a domestic relationship. However, what is abundantly clear is that whatever the relationship was between 1997 and the birth of Callan, the defendant had moved permanently to Victoria.
[1] Exhibit A
24 The plaintiff first moved to Victoria in about 2002 with Reece, Raymond and Callan. She lived in rental accommodation. The defendant visited the plaintiff and stayed overnight. They had a sexual relationship. The defendant provided the plaintiff with some money. The plaintiff cooked meals for the defendant and did his washing.
25 After being reminded of a number of matters during cross-examination, the plaintiff readily conceded that she did not commence a full-time domestic relationship with the defendant until about May 2004 when she moved in with the defendant under the same roof, together with Reece, Raymond and Callan.
26 I am not satisfied that the characteristics of a domestic relationship existed before May 2004. The plaintiff may have thought so, but the defendant did not. Furthermore, the fact that they lived separately and kept their assets apart until May 2004 demonstrates that there was a relationship which persisted, but falling short of a domestic relationship.
27 During the domestic relationship a second child was born, namely, Dana Lisa Joyce Ubavin, who was born on 8 January 2007.
28 The defendant owned a property at 116, 1-3 Dodds Street, Brunswick. He sold the property for $280,000 in May 2004. There was a mortgage over the property in favour of the Commonwealth Bank. At the time of sale the mortgage stood at $181,550.72.[2]
[2] Exhibit 18
29 The net proceeds of sale of $69,386.32 were applied to the purchase of 5 Held Street, Vermont (“Held Street”). It was purchased for $340,000 on 22 November 2005.[3] The balance of the purchase moneys were obtained through finance from the Commonwealth Bank.
[3] Exhibit 12
30 The defendant sold Held Street for $582,500 on 4 September 2009.[4] He received the deposit of $46,536. The balance of the sale moneys, less the moneys owed to the mortgagee of $289,757.18, were deposited into a trust account of the firm of Holt & McDonald, solicitors.
[4] Exhibit 17
The Asset Pool
31 The potential asset pool identified amounts to the following:
• balance of the sale proceeds of Held Street $289,757.19 • the deposit moneys on the sale $46,536.00 • Heritage Golf Club membership $17,000.00 • Tarago motor vehicle $5,000.00 • the defendant’s superannuation $77,271.41 • chattels in the possession of the defendant $15,000.00 32 The foregoing represents the plaintiff's assessment of the asset pool from which she applies for an adjustment to be made in her favour.
33 Not all of the identifiable assets were the subject of agreement by the plaintiff and the defendant. I will deal with these submissions seriatim.
34 Firstly, the defendant submitted that following separation in February 2008, he undertook substantial renovations to the property at Held Street. He tendered:
[5] Exhibit 2, and photographs demonstrating the renovations - Exhibit 20
[6] Exhibit 3
• a schedule of the renovations.[5] • an estimate of the value of the property at Held Street as at February 2008 of about $480,000.[6] 35 The defendant submitted that the sale price he obtained of $582,500 on 4 September 2009 was largely achieved through the renovations he conducted. He submitted, therefore, that the asset pool should be reduced by $100,000, being the difference between its value at February 2008 and its sale price in September 2009.
36 Ms Swart submitted that in the absence of an analysis of the renovations and the extent to which they actually added to the value of the property at Held Street, that the capital gain on that property might well have simply been a reflection of an overall increase in property values in Melbourne.
37 I see no reason why I cannot take notice of the fact that property values in Melbourne have increased markedly over the last two years.
38 In a general sense, I accept that the defendant probably added to the value of the property at Held Street. However, I am not prepared to accept his submission that the asset pool should be reduced by $100,000 to reflect the renovations he undertook.
39 Secondly, the deposit of $46,536 was deposited by the defendant into his personal banking account. The defendant has been unemployed since 9 April 2009. He was previously employed as an IT project manager with United Health Care Group. He has been living off the deposit moneys which been reduced down to $39,770.61.[7]
[7] Exhibit 4
40 Thirdly, the defendant purchased The Heritage Golf Club membership for $27,000. The value has diminished substantially. The defendant tendered documents which suggests that such a membership can now be purchased for about $17,000.
41 The defendant submitted that I should accept $15,000 as a fair value. However, the documents he tendered suggest a minimum of $17,000, and indeed, other members have advertised their memberships for sale for between $19,750 and $33,000. I accept the figure of $17,000 as a fair reflection of the current value of the golf club membership.
42 Thirdly, Ms Swart submitted that the whole of the defendant’s superannuation should be part of the asset pool.
43 Ms Swart submitted that in the absence of evidence from the defendant regarding his contributions to superannuation, and the period over which the accumulation in his superannuation fund has occurred, that I should not accept the defendant’s submission that it should be regarded as resource only.
44 I think it would be doing a serious injustice to the defendant to regard the whole of his superannuation as part of the asset pool.
45 I infer from the description given by the defendant of his former occupation, that he must have obtained some post-secondary school training in order to have proficiency in the world of IT, and to obtain a job as a manager in that field.
46 It is probable that the defendant has worked for at least twenty years of his adult life, over which time (or at least part of that time) he has made contributions to superannuation.
47 I think the only basis upon which I can have regard to the defendant’s superannuation is that some of it must have been earned during the domestic relationship, but primarily it should be treated as a resource of the defendant and taken into account in that way.
48 Fourthly, the estimate made by the plaintiff of the value of the chattels was premised on what price the chattels would sell for at a garage sale rather than as a replacement value.
49 The valuation of chattels is a constant issue of contention between parties in domestic partnership disputes. The cost of valuation is in excess of what parties can normally afford, and as a result, estimates are made which are inevitably woolly.
50 Rather than include it in the asset pool, I will treat it as an asset of the defendant and make some adjustment in favour of the plaintiff.
51 The last matter of contention was the evidence of the plaintiff that she contributed lump sums to the domestic relationship.
52 The plaintiff's former partner was liable to make child support payments to the plaintiff for the benefit of her two older children. The plaintiff was paid two lump sums by way of arrears. The first was a payment of $6,000 made on 10 November 2005, and the second of $8,675.97 made on 12 November 2005.
53 The payments were received during the domestic relationship. The plaintiff said that the moneys were paid into a banking account in the name of the defendant at his insistence. The defendant denied that he received those moneys. He did not produce any banking accounts to demonstrate that he did not receive those moneys at around the time they were paid to the plaintiff.
54 The only evidence is that of the plaintiff, who repeatedly denied that she deposited the moneys into her own banking account.
55 I accept the plaintiff’s evidence that she not only received those moneys, but deposited all but $2000 into a banking account in the name of the defendant. Therefore, the lump sum contribution made by the plaintiff during the domestic relationship is about $12,675.97.
An Adjustment
56 Before turning to the principal submissions made by Ms Swart, it is necessary now to determine the composition of the asset pool.
57 The conclusions I have reached are that the asset pool comprises the sale price of Held Street; the deposit moneys received by the defendant; the value of The Heritage Golf Club membership, and the value of the Tarago motor vehicle. These assets total $358,293.19.
58 I will treat the defendant’s superannuation as a resource, and I will treat the chattels in much the same way. That is, I do not intend to ascribe a particular value to superannuation or the chattels because of the lack of evidence upon which I can make any certain findings in that regard.
59 Ms Swart submitted that the factors which militate in favour of the adjustment for which she contended are as follows:
• The plaintiff made a direct financial contribution of $12,675.97. •
The plaintiff made non-financial contributions, both directly and indirectly, through her role as the domestic partner of the defendant.
•
The plaintiff made non-financial contributions, both directly and indirectly, to the financial resources of the defendant, and in this case, his superannuation.
•
The plaintiff made contributions in her capacity as homemaker and parent to the welfare of the defendant, and the welfare of her two children by her previous relationship and the two children of the relationship, and continues to be the principal homemaker and parent for the three younger children.
60 Ms Swart also submitted that I must have regard to section 45(1)(d) which requires me to take into account any relevant matter referred to in section 51.
61 Section 51 deals specifically with an order for maintenance. No order for maintenance is sought by the plaintiff. Section 51 appears to me to establish matters which a judge must take into consideration in reaching a degree of satisfaction of the quantum of an adjustment.
62 I do not intend to set out each of these matters seriatim. It seems to me that the legislature intended to expand the considerations to be weighed up by a trial judge in addition to those referred to in section 45(1), however, it must be remembered that the subject matter of section 51 is an order for maintenance. It would be wrong, in my opinion, for the factors in section 51 to be taken into account, resulting in an adjustment of interests reflecting lump sum maintenance rather than an adjustment of interest with respect to property.
63 The findings I make, after considering the evidence and the submissions made by Ms Swart and the defendant, are as follows:
•
The plaintiff and the defendant entered into a domestic relationship in about May 2004. They separated in February 2008. Their domestic relationship lasted about forty-five months.
•
The defendant produced income which permitted him to have available sufficient moneys to purchase the property at Held Street.
•
The only direct contribution made by the plaintiff was the sum of $12,675.97.
•
The plaintiff made the substantial non-financial contributions both directly and indirectly through her role as the domestic partner of the defendant, and as homemaker and parent.
•
The plaintiff is in undoubted financial need, living in parlous circumstances in New South Wales. She has no income, save for child support payments from her previous partner and a social security pension. It is unlikely, given the plaintiff's need to look after the three younger children, that she will be able to return to the workforce in any significant way for many years in the future.
•
The defendant is also in parlous financial circumstances because he is unemployed, but he has no impediment preventing him from obtaining employment except for the current economic climate.
•
The plaintiff has no resources to speak of. The defendant has a significant resource in his superannuation, however, like all superannuation benefits, the defendant cannot call upon it until it reaches a state of maturity which I assume will probably be when he attains fifty-five years of age.
•
The defendant has the lion’s share of the chattels of the domestic relationship.
64 The balancing which I must undertake in determining what is just and equitable must, firstly, address each of the considerations in section 45(1) and section 51 (to the extent that they are relevant to an adjustment of interests with respect to property).
65 On the plaintiff's side the strength in her case is: that there was a domestic relationship of forty-five months; two children were born of the relationship, and two children of her previous relationship became part of the household; her undoubted financial contribution of a direct kind of $12,675.97; her undoubted non-financial contributions made directly or indirectly, and her lack of financial resources.
66 On the defendant’s side the strength in his case is: the domestic relationship was of only forty-five months’ duration; the greater proportion of the direct financial contributions made directly to the acquisition, conservation and improvement of Held Street was made by him, and he has provided the plaintiff with about $13,000 in financial support since separation.
67 The Court of Appeal approved of the approach taken by Vincent J in Conn v Martusevicius [8] and Kardos v Sarbutt [9] that the approach that a trial judge is to take is to, firstly, identify the value of the assets of the parties; secondly, to assess the contributions of each party; thirdly, to determine whether those contributions have been sufficiently recognized and compensated for; and fourthly, to determine the orders to be made to ensure that the parties’ contributions are recognized and compensated for.[10]
[8] (1991) 14 Fam LR 751
[9] (2006) 34 Fam LR 550
[10] Kenyon v Akeroyd [2008] VSCA 277 at paragraph 8, and Giller v Procopets [2008] VSCA 236, per Neave JA, at paragraph 314. The observations just referred to were relevant to proceedings brought under Part IX of the Property Law Act 1958 which did not have an equivalent provision to section 45(1)(d) of the Act which permits a trial judge to take into account an irrelevant matter in section 51.
68 In Kenyon v Akeroyd (supra), the Court of Appeal observed that the non- financial contributions made by a domestic partner of the kind made by the plaintiff in this case are not susceptible of valuation in monetary terms, and any attempt to do so ignores a critical factor that most domestic relationships operate as a shared undertaking where the maintenance of the family unit depends in equal measure upon a contribution by the plaintiff in her role as domestic partner, homemaker and parent, and the defendant as the breadwinner.[11]
[11] Paragraph 26-30. The Court of Appeal cited the judgment of Neave JA in Giller v Procopets (supra), at paragraph 330-331, with approval, where Neave JA made the same observations relevant to the assessment of contributions of homemaker and parent.
69 In Giller v Procopets (supra), Neave JA made a number of observations relevant to the contributions of one domestic partner responsible for raising children when compared with the other domestic partner who has paid maintenance not commensurate with the real cost of and effort in raising children.[12]
[12] Paragraphs 339-341 and 354
70 The payment by the defendant of about $13,000 since February 2008 to the date of trial in February 2010 is about 104 weeks, averaging out at $125 per week. There is no evidence before me demonstrating whether it represents a fair assessment of periodic maintenance or not, however, it strikes me as being an inadequate amount to maintain the children of the domestic relationship. However, balanced against that is the defendant’s unemployment which has undermined his ability to pay any further maintenance.
71 The plaintiff gave evidence that the defendant was a violent man.[13] I accept her evidence that he was a man given to some violence. The fact that she left the defendant and went to New South Wales to get away from him strongly points to a reaction by her directly related to the defendant’s violent nature.
[13] Exhibit A
72 In Conn v Martusevicius (supra), Vincent J, concluded that it would be just and equitable to take into account the detriment suffered by a party to a domestic relationship which occurred as a result of physical and verbal abuse during the life of the domestic relationship as constituting a negative contribution.[14]
[14] At 758
73 However, the mere presence of physical and verbal abuse does not per se give foundation to an additional adjustment of interests in property. In Giller v Procopets,[15] the Court of Appeal dealt with the nexus between physical and verbal abuse and the need to make an additional adjustment of interest in property. Ashley JA and Neave JA specifically accepted that the contributions made by a domestic partner might be rendered more arduous because that domestic partner is subjected to violence during the course of the domestic relationship.[16]
[15] (supra)
[16] Ashley JA, at paragraph 49, and Neave JA, at 288-300
74 The fact that the plaintiff was deprived of the expectation of a normal suburban life with her domestic partner and children is the basis upon which she contends that her role as homemaker and parent were made more arduous.
75 However, the question is whether any further adjustment should be made. Conceptually it is not a difficult proposition to understand, but a very difficult one in its practical application. I think, in this case, the dislocation from a family unit, the cost of the move to New South Wales and the relocation costs are a direct consequence of how the plaintiff’s role as homemaker and parent was made more arduous. I think a modest adjustment is called for.
76 Applying the considerations in section 45(1) and section 51, and also applying the authorities to which I have made reference, I have concluded that a just and equitable adjustment of interest with respect to property in favour of the plaintiff is 30 per cent of the asset pool of $358,293.19.
77 In summary, my reasons for making an adjustment of that order in favour the plaintiff recognizes the following:
•
the fact that the domestic relationship was only forty-five months duration.
•
that the defendant made a greater proportion of the direct financial contributions to the asset pool.
•
the fact that there are two children of the relationship for whom the plaintiff is responsible as homemaker and parent, and also responsible for their welfare, and in particular, having regard to the relevant matters in section 51 of the Act.
•
by having due regard to the non-financial contributions made directly and indirectly by the plaintiff during the period of the domestic relationship.
•
by having due regard to the lack of financial resources of the plaintiff, and the financial resource which the defendant has in his superannuation and possession of the chattels, and his ability to be re-employed in gainful employment at some point in the short-term.
78 In conclusion, I consider that it is just and equitable to adjust the interests of the plaintiff and the defendant with respect to the property of the domestic relationship in that way.
79 I adjust that amount by adding the interim sum which I ordered to be paid to the plaintiff, and the Tarago motor vehicle.
Conclusion
80 Therefore, the Orders I make are as follows:
(1) That from the moneys held in trust by the firm of Holt & McDonald, the
sum of $107,487.95 be paid to the plaintiff forthwith.(2) After payment of the sum referred to in paragraph 1 hereof, the balance
of the moneys be paid to the defendant forthwith.(3) The defendant forthwith signs all documents necessary to transfer his
right title and interest in the Tarago motor vehicle to the plaintiff.(4)
If the defendant fails to comply with paragraph 3 hereof, then pursuant to section 58(1)(c) of the Act, I order that the Registrar of the County Court execute any documents necessary to transfer the defendant's right title and interest in the Tarago motor vehicle to the plaintiff and do all things that are necessary to enable the Order to be carried out effectively.
(5) That each of the plaintiff and the defendant bear their own costs of the
proceeding.(6) I grant the plaintiff and the defendant liberty to apply. - - -
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