Flood v Dockerty
[2010] VSC 233
•4 June 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6176 of 2006
| JAQUELINE FLOOD | Plaintiff |
| v | |
| ANTHONY RICHARD DOCKERTY & ORS | Defendants |
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JUDGE: | HOLLINGWORTH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9-11 February 2010 | |
DATE OF JUDGMENT: | 4 June 2010 | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 233 | |
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Property – De facto relationship – Adjustment of property interests – Parties’ direct and indirect contributions to acquisition and maintenance of property – Parties’ contributions to welfare of other domestic partner – Dispute as to period of relevant relationship – Date for assessing value of property – Property Law Act 1958, ss 275(2), 281(1), 285
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Brett | Lander & Rogers |
| For the Defendants | Mr G R McCormick | Hogg & Reid |
HER HONOUR:
Introduction
The plaintiff, Ms Flood, and the first defendant, Mr Dockerty, lived together in a de facto relationship for many years. In their pleadings, each of them sought orders for the adjustment of their respective property rights under Part IX of the Property Law Act 1958 (Vic) (“the Act”).[1] At trial, Mr Dockerty’s claim with respect to Ms Flood’s property was not pursued, but he continued to resist any order for adjustment being made with respect to his property.
[1]The applications were commenced before the enactment of the Relationships Act 2008 (Vic). By virtue of s 74(3) of the Relationships Act, the applications are therefore governed by the Act.
The second and third defendants are companies which are owned and controlled by Mr Dockerty. The second defendant is the corporate vehicle through which Mr Dockerty conducts his car dealership, known as Classic Cars Victoria (“Classic Cars”). The third defendant is the trustee of the Tony Dockerty Family Trust and owns the premises from which the Classic Cars business operates. Although Ms Flood pleaded that the second and third defendants hold assets on trust for Mr Dockerty and/or herself, any claim based on the existence of a trust was abandoned at trial. By the end of the trial, the only apparent relevance of the second and third defendants related to the value of Mr Dockerty’s interest in them, and whether they could be seen as “financial resources” of Mr Dockerty (a concept which will be considered later in these reasons).
The fourth defendant is R F Holdings Pty Ltd. It seems that the correct name of the fourth defendant should be R Ferguson Holdings Pty Ltd; that company is the trustee of the Dockerty Family Trust No 1 (“the Dockerty Family Trust”) (a trust whose beneficiaries include Mr Dockerty’s parents and their children, including Mr Dockerty).[2] Ms Flood’s counsel indicated in opening address that a claim against the fourth defendant was not pursued.
[2]In his defence, Mr Dockerty pleaded that the fourth defendant, the alleged trustee of the Dockerty Family Trust, was not “known to him or associated with him”. That was an unhelpful (if not evasive) pleading, in circumstances where his solicitors and counsel have appeared for all of the defendants, including the fourth defendant, and where he knows perfectly well the correct name of the trustee of the pleaded trust, being one of its two directors.
Section 285 of the Act relevantly provides that:
(1) A court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to—
(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners; and
(b) the contributions, including any contributions made in the capacity of homemaker …, made by either of the domestic partners to the welfare of the other domestic partner …;
“Property” includes real and personal property, money, and any right with respect to property.[3] “Financial resources” includes:
[3]Section 275(1).
(a) a prospective claim or entitlement in respect of a scheme, fund or arrangement under which superannuation, retirement or similar benefits are provided; and
(b) property which, under a discretionary trust, may become used for the purposes of or vested in one or both of the domestic partners; and
(c) property, the alienation or disposition of which is wholly or partly under the control of one or both of the domestic partners and which is lawfully capable of being used for the purposes of one or both of the domestic partners.[4]
[4]Ibid.
The exercise of the court’s power under s 285 ordinarily involves the following steps:
(a) Identify and value the property of the parties, which determines the pool which may be the subject of an adjustment order;
(b) Take account of the financial and non-financial contributions made by each of the parties to the acquisition, conservation or improvement of their property and financial resources;
(c) Have regard to contributions, including homemaker contributions, made by either partner to the welfare of the other partner;
(d) Adjust the parties’ property interests on a just and equitable basis, having regard to such contributions; and
(e) Determine what form of order is needed to reflect that adjustment.
The court is not required to undertake a reductionist process, analogous to the taking of partnership accounts, by examining each and every alleged contribution with a view to putting a monetary value on it; rather, the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind.[5] Mathematical calculations, whilst not determinative, are of use in guiding and testing conclusions about what is just and equitable, and in promoting transparency and consistency in decision-making.[6] However, an “asset-by-asset” approach almost always carries the risk of undervaluing domestic contributions, which are not reflected in any particular asset.[7]
[5]Kardos v Sarbutt [2006] NSWCA 11 at [36].
[6]Howlett v Neilson [2005] NSWCA 149.
[7]Kardos v Sarbutt op cit at [37], [51], [55].
It is necessary to resolve some preliminary issues before considering the evidence as to the parties’ property, financial resources and contributions.
What was the relevant period of the domestic relationship?
Ms Flood and Mr Dockerty met in May 1985. They were both unmarried and had no children. She was then 31 years old (having been born in January 1954), and he was 34 (having been born in September 1950).
There is no dispute as to the relevant dates of the three periods in which they lived together. However, there is a dispute as to which of those periods constitutes the relevant “domestic relationship” for the purposes of the Act.
They first lived together in a de facto relationship from November 1985 until July 1986 (“the first period of cohabitation”), at which time Ms Flood left and went to live on her own in a rented flat in Ivanhoe. She said she left at that time because Mr Dockerty was not easy to live with, and she regarded the relationship as over.
In December 1988, Ms Flood moved back in with Mr Dockerty, and they continued living together until March 1991 (“the second period of cohabitation”). Ms Flood then moved out and went to live with a friend in Hurstbridge.
She moved back in with Mr Dockerty in December 1992, after Mr Dockerty finally agreed to get engaged (although they never did in fact marry). This third period of cohabitation continued until February 2005, when Ms Flood moved out for good.[8]
[8]This proceeding was commenced by Ms Flood in April 2006.
Ms Flood later moved in with her current partner, Peter Selfe.
Between the second and third periods of cohabitation, there was an initial period when the parties had little or no contact. However, whilst living apart, they started dating again and subsequently resumed an intimate, sexual relationship (which Mr Dockerty agreed could be characterised as that of boyfriend and girlfriend), which grew in intensity to the point where they got engaged and resumed living together. There is no suggestion that either of them had a sexual relationship with any other person during the period of their separation, or left in order to do so.
It is agreed that the first period of cohabitation does not form part of the domestic relationship.[9] However, Ms Flood argues that the court should have regard to both the second and third periods of cohabitation, whereas Mr Dockerty argues that only the third period of cohabitation is relevant.
[9]Although Ms Flood’s statement of claim also relied on the first period, that was abandoned in oral submissions.
Where, as here, there are no children involved, the court can only adjust property rights if the domestic partners have “lived together in a domestic relationship for a period of at least 2 years” (s 281(1)). And, in determining whether or not a domestic relationship exists, the court may have regard to the various factors set out in s275(2), including “the nature and extent of common residence”. But the Act does not expressly address the question of how the court should treat periods of separation (of residence or otherwise) in a domestic relationship in which the parties have undoubtedly lived together for a period of at least 2 years.
The circumstances in which couples may live together in a relationship less formal than marriage can vary enormously. Obviously, each case must depend on its own facts; but it is useful to have regard to a number of cases to which I was referred, in which the court found that there was a single domestic relationship between the parties, notwithstanding varying periods of separation, and varying intentions at the time of separation.
For example, in Fotheringham v Fotheringham[10], Beazley and Stein JJA in the NSW Court of Appeal ignored a six week interruption in cohabitation, in determining the period of the relationship. In Robertson v Austin,[11] Nettle J (as he then was) found that there was a single relationship of just over 4 years, even though there had been “some significant breaks” of several months at a time in the periods of cohabitation.[12] And, in Robertson v Fox[13], Cummins J found that there was a single relationship lasting almost 20 years, notwithstanding that there was a period of separation of some three months, during which the male partner had attempted a reconciliation with his former wife.[14]
[10][1998] NSWCA 83.
[11][2003] VSC 80.
[12]At [4], [9] and [10].
[13][2008] VSC 135.
[14]Compare with the situation in Lipman v Lipman (1989) DFC 95-068, where the court decided that there were two separate de facto relationships (and not one continuing one, albeit with a five month separation) because the male party had asked the female party to move out of the house, so that another woman could move in, in her place.
Here, the period between the second and third periods of cohabitation was almost 2 years, a significantly longer period than in any of the cases to which I was referred.
Ms Flood moved out at the end of the second period of cohabitation, because she perceived that Mr Dockerty was not prepared to make a long-term commitment to her, and she regarded the relationship as over. After she moved out, he was the one who eventually pursued the resumption of the relationship, dropping by her place for meals, staying overnight, and acting as a couple, until the point at which he finally agreed to get engaged and she agreed to move back in.
The evidence is not clear as to the precise period of time during which they had no contact, however, at one stage, Ms Flood said that they saw each other “intermittently” from about “the middle of the separation” until they got back together. That suggests that they had no relationship for a period of possibly up to one year after the separation, before they started seeing each other again.
Given the lengthy periods of separation and non-contact, and Ms Flood’s intention at the time she moved out, it is not appropriate to combine the second and third periods of cohabitation into a single domestic relationship. In the circumstances, I find that the relevant domestic relationship was from December 1992 until February 2005, a period of just over 12 years.
Date for valuing property
There was a dispute as to whether the parties’ property should be valued as at the date of separation or as at the date of trial. Although both counsel accepted that what is “just and equitable” in a particular case is to be determined on its own facts, they nevertheless argued that there was a general rule which ordinarily applied. Mr Dockerty’s counsel said that general rule was that all property be valued at the date of the trial. Ms Flood’s counsel argued that personal assets were ordinarily to be valued at the date of separation, and real property at the time of trial.
In exercising its power to adjust the property interests of de facto partners, “the court normally values the property as at the date of the trial.”[15] That is said to be because the jurisdiction to adjust interests “speaks from the date at which the jurisdiction is exercised, so that what is in issue is the property of the parties and each of them at the date of trial. Establishing the divisible pool at any other date may lead to a failure to have regard to relevant assets available for division, or to the bringing into account of property no longer available”[16] If the date of trial is adopted as the valuation date, separate and special consideration may need to be made to contributions to value made between separation and trial.[17] However, that rule is not absolute, and “the ultimate task of evaluating the respective contributions of the parties may sometimes be facilitated by adopting the date of separation for identifying and valuing the property.”[18]
[15]Giller v Procopets [2008] VSCA 236 at [317] per Neave JA, citing Young J of the Supreme Court of New South Wales in Parker v Parker (1993) 16 Fam LR 863 at 875.
[16]Kardos v Sarbutt op cit at [30].
[17] Ibid at [30].
[18]Ibid at [31].
For example, in Giller v Procopets,[19] the relationship ended in 1993, but the trial was not heard until 2004; this was partly due to the plaintiff’s delay in bringing the action and other delays that occurred after the proceeding had been commenced. In those circumstances, the court had regard to the value of the assets at the date of separation, rather than the date of trial.
[19]Op cit.
In fact, in respect of most of the property in this case, I do not have evidence of value as at the trial date, only at the date of separation, or at some date between the date of separation and the trial date. I will deal with this aspect further, later in these reasons.
General observations about the evidence
Much of the evidence led at trial was less than ideal, in that the events in question occurred up to 25 years ago and the witness’s memories had faded, and/or they were unsupported by any documentary evidence. In particular, many of the dates and figures provided on both sides (where they were provided at all) were only an approximation or “guesstimate.” The court has had to do the best it can, with such evidence as it has, bearing in mind that Ms Flood, as plaintiff, bears the onus of adducing evidence sufficient to enable the court to conclude that it is just and equitable to adjust the interests of the parties in Mr Dockerty’s property.
As the precise amount is, in most cases, not material to my conclusions, financial figures have generally been rounded off in these reasons to the nearest $1,000.
The BDO report
On 17 August 2007, Smith J ordered, pursuant to order 50 of the Supreme Court (General Civil Procedure) Rules 2005, that Michael Smith of BDO Kendalls, accountants, be appointed as a special referee, to prepare a written report as to the income, property and financial resources of the parties, at the commencement of the first period of cohabitation (November 1985) and as at the date of the report. His Honour clearly envisaged that the report would be capable of adoption as evidence of its contents.
His Honour also ordered that the parties were to comply with the reasonable requests of Mr Smith including, but not limited to, the production of all documents as and when requested.
On 26 March 2009, BDO produced a 50 page report (including attachments) as to the parties’ financial affairs. There is no dispute as to the general accuracy of the BDO report, in so far as it deals with Ms Flood’s financial affairs. However, due to the failure by Mr Dockerty to provide BDO with all necessary information, and the provision by him of some clearly or apparently inaccurate information, the BDO report does not present an accurate reflection of Mr Dockerty’s financial affairs.
Another problem with the BDO report is that Mr Smith was asked to use November 1985 (the start of the first period of cohabitation) as one of the two valuation dates. Accordingly, the report does not address the parties’ respective financial positions as at what I have determined to be the start of the domestic relationship, namely, December 1992.
In the circumstances, pursuant to r 50.04,[20] I declined to adopt the BDO report in whole. Instead, I have relied only on those parts of the BDO report in respect of which the parties expressly or impliedly agreed on its accuracy.
[20]Having regard to the principles conveniently summarised in Wenco Industrial Pty Ltd v WW Industries Pty Ltd and Whitehead [2009] VSCA 191, especially at [17] per Redlich and Bongiorno JJA and Beach AJA.
Ms Flood’s evidence
Ms Flood impressed me as an honest witness, who gave a credible account of relevant events, which was consistent with such documentary evidence as exists. She was also prepared to make concessions against her own interests.
In so far as she was unable to recall specific details of certain transactions or events, I am satisfied that she gave the best evidence which she could of those matters.
Mr Dockerty’s evidence
On the other hand, Mr Dockerty was an unimpressive witness, for a variety of reasons. His manner was frequently evasive, defensive or argumentative; unfortunately, the transcript does not really capture the rude and dismissive tone in which much of his evidence was given. In some instances, the falsity or improbability of his evidence was demonstrated by documents; in other instances, his failure to produce all relevant documents made it difficult for Ms Flood’s counsel to specifically challenge his evidence.
At times, Mr Dockerty also made offensive remarks about Ms Flood, which had not been put to her in cross-examination and were clearly designed to disparage her character.
I have already mentioned Mr Dockerty’s failure to provide all necessary information to BDO. There were also serious deficiencies in the discovery which Mr Dockerty had given, particularly in relation to his financial records. Asked to justify their non-production, he asserted that none of the six solicitors, who have acted for him over the years since this proceeding was commenced, had told him that he needed to produce financial information relating to his business income - a state of affairs which I find highly improbable, given the nature of the proceeding.
During the course of the trial, the defendants finally produced a large amount of documentary material, which should clearly have been produced earlier. The volume and lateness of the delivery made it difficult for Ms Flood’s counsel to deal with the material comprehensively. This late material was particularly relevant to the income earned by Mr Dockerty or his companies during the relevant period. The documents will be considered in more detail later in these reasons.
At times, Mr Dockerty was prepared to make confident, self-serving assertions, and then, when pressed to substantiate them, to respond that the court would have to ask his accountant to explain. Whilst I accept that Mr Dockerty did rely heavily on his accountant, Mr Dockerty’s professed lack of knowledge of relevant information at times seemed unconvincing, and appeared to be part of his general approach of not providing (to his ex-partner, BDO or the court) information which he perceived to be contrary to his interests.
I am satisfied that Mr Dockerty consistently overstated his financial and non-financial contributions, and understated Ms Flood’s.
Graham Dace
Mr Dace is a partner of Waters Dace Pty Ltd. He has acted as the accountant for Mr Dockerty and his related entities for around 25 years.
He did not personally prepare the defendants’ tax returns or BAS statements; they were prepared by somebody else within the firm and reviewed by him. Mr Dace did not purport to have any personal knowledge of the financial affairs of Mr Dockerty or his companies; he simply relied on the information which Mr Dockerty provided to his firm.
Mr Dace produced several complex documents to the court, which he had recently prepared, based partly on the late-produced financial records, and partly on various undiscovered documents (such as loan accounts and ledgers), which were not produced to the court. Ms Flood’s counsel attempted to deal with this situation as best he could, but some matters were simply not explained adequately to the court.
Peter Davison
Mr Davison is a partner in Rundles Chartered Accountants. He has been the accountant for Mr Dockerty’s mother and late father, for more than 20 years. He gave evidence about loans made by Mr Dockerty’s mother and the Dockerty Family Trust to Mr Dockerty and his brother.
The documents upon which he relied were incomplete and had not been discovered or produced prior to trial. Cross-examination was, accordingly, hampered. Once again, the evidence was left in an unsatisfactory state, due to these problems.
The parties’ employment and income
Ms Flood
Ms Flood began working with Victoria Police in 1974, and became a serving police officer in 1976. In 1979, she was promoted to Senior Constable, a rank which she held when she first met Mr Dockerty in 1985.
In 1991, during the period of separation between the second and third periods of cohabitation, she was promoted to Detective Senior Constable.
In June 2005, she was first diagnosed as suffering from depression, anxiety and stress, arising from her employment (which had, for many years, included investigating highly distressing sex-offence cases). In June 2006, she went on WorkCover, and in June 2008 she retired on the grounds of ill-health.
Unsurprisingly, Ms Flood’s hours of work as a police officer were not always regular, although some of the positions which she held over the years offered more regular hours than others. Towards the end of the relationship, she was only working four days per week, spending Fridays doing housework.
Throughout each of the three periods of cohabitation, she tended to leave for work before Mr Dockerty, and to get home from work before him.
The BDO report recorded her average annual income for the 1984 to 1986 financial years as $26,000.
It seems that her income continued to increase steadily over the years, so that she was earning $54,000 by the 2004 financial year. The BDO report recorded her income for the 2007 financial year as $65,000, which is about as high as her income ever got. At the time of her retirement in 2008, her income was $56,000.
Mr Dockerty
Mr Dockerty has been a licensed motor car trader since 1974. He restores and sells classic cars, particularly Jaguars. He originally operated under his own name, then in 1996 changed the name of the business to Classic Cars.
Throughout the different periods of the relationship, Mr Dockerty regularly worked six or seven days per week.
The second defendant, ARD Holdings, was incorporated in May 1994, but did not actually do anything for a number of years. ARD Holdings started receiving some income from the business in 1998, through some sort of licence arrangement which continued for a number of years. Eventually, the business was transferred from Mr Dockerty to ARD Holdings for no consideration. According to the tax returns, the business was still being run by Mr Dockerty (with the licence arrangement) until some time in the 2004 financial year. Since then, ARD Holdings has been the entity through which Mr Dockerty conducts his business.
When the parties first met, Mr Dockerty was conducting his business from premises in Whitehorse Road. After several changes of location, he leased premises on Darebin Road, Thornbury, which the third defendant, Ferguson, was in the process of purchasing when the parties finally separated in early 2005. Ferguson remained the proprietor of the Thornbury premises at the time of trial.
Since ARD Holdings took over the business in the 2004 financial year, Mr Dockerty has never drawn a wage on the company. Instead, he has received money by way of dividends or loans. Money is moved between Mr Dockerty and his companies as and when he wants funds. The two companies and the trust were only set up for taxation and asset protection purposes. Mr Dockerty clearly treats the assets and income of ARD Holdings and Ferguson as his own.
According to his tax returns, Mr Dockerty apparently earned relatively modest amounts for most of the years of the relationship. In the late 1980s and early 1990s, there were several years in which he had a taxable loss for the year. Then, for most of the third period of cohabitation, his tax returns showed modest taxable incomes, about the same as or less than Ms Flood was receiving, for example: 1993 = $39,000, 1994 = $31,000, 1995 = $30,000, 1996 = $4,000, 1997 = $28,000, 1998 = $32,000.
The picture becomes a bit more complex from the 1999 financial years onwards, when he started paying licence fees to ARD Holdings, in order to split his income. The picture becomes even more complex after 2004, by which time the Tony Dockerty Family Trust had been set up and money was moving regularly between Mr Dockerty and his companies.
Overnight, Mr Dace prepared a spreadsheet which purported to explain how much Mr Dockerty had actually drawn from the business over the years. Unfortunately, this document was prepared, at least in part, based on documents which had not been discovered or produced, which made it very difficult for Ms Flood’s counsel to cross-examine on the spreadsheet. There were also aspects to the spreadsheet which Mr Dace was simply unable to explain, either at all or without reference to documents which he had not brought to court.
Even though he acknowledged that his business involved a lot of cash payments, Mr Dockerty was adamant that he recorded all such payments in the business books.
Mr Dockerty was equally adamant that he paid for most of the parties’ household and living expenses, and that Ms Flood contributed very little. He said “apart from her buying some food, I think it’s realistic for me to say that I paid for every other single thing.” It is common ground that he was also paying costs in connection with the various properties discussed later in these reasons.
Mr Dockerty was asked: “On what basis are you able to swear on your oath that you were earning a lot more than her, and yet these tax returns show you were apparently earning less or significantly less than her?“ He answered “I would prefer my accountant to answer that…. I am completely unable to answer that question.”
Even making allowance for end-of-financial year accounting adjustments (such as stock write-downs), and amounts which he may have borrowed from his mother or the Dockerty Family Trust over the years, the documents produced to the court tend to suggest one of two conclusions, either:
(a) The tax returns are accurate, in which case Mr Dockerty has (amongst other things) overstated the amount of his financial contribution towards the couple’s expenses; or
(b) The tax returns are inaccurate, in that they have understated Mr Dockerty’s actual income in the relevant years.
Neither conclusion reflects particularly well on Mr Dockerty. Given the state of the evidence, it is not possible for the court to make any definite findings as to the amount of Mr Dockerty’s actual income or expenditure during the relevant periods.
Ms Flood’s property and financial resources
Ms Flood’s real property
The Yarraville property
The property at 74 Gamon Street, Yarraville was purchased around 1992 (during the break between the second and third periods of cohabitation), by Ms Flood, her brother and his wife. However, the property was only registered in the names of the brother and his wife, apparently because her brother wanted to claim it as an investment property. The purchase price was $136,000, to which Ms Flood and her brother contributed $20,000 each; she had saved the amount of her contribution in the time between the second and third periods of cohabitation.
The Yarraville property was subject to a Commonwealth Bank mortgage in an amount apparently around the $100,000 mark. The difference between the rent received for the property and the mortgage payments was paid equally by Ms Flood and her brother (although the persons legally liable to pay the mortgage were her brother and his wife, as registered proprietors).
The property was sold around June 1998 for $193,000. From the proceeds of sale, the then outstanding mortgage sum of $95,000 was paid out, and $7,000 was paid on legal and agents’ fees. Of the net proceeds of sale, $20,000 was retained by Ms Flood (which she lent to Mr Dockerty in 2000), and the balance was applied towards the repayment of the mortgage on the Colac property discussed below.
Mr Dockerty made no direct financial contribution or non-financial contribution towards the Yarraville property. He made some indirect financial contribution, in the sense that by his paying some of the couple’s joint living expenses, some of Ms Flood’s income was available to pay towards any shortfall on the mortgage for this property (after taking into account rent).
The Colac property
In 1997, during the third period of cohabitation, Ms Flood and her brother bought 7 Cardell Court, Colac from their parents, for around $75,000. They did so to help their parents pay off business debts. They allowed their parents to live there, rent-free, until their deaths.
Initially, there was a bank mortgage over the property, in the sum of $74,000. That loan was repaid in 1998, with the proceeds of sale of the Yarraville property.
The Colac property was sold in August 2005 (six months after the domestic relationship ended) for $165,000.
The settlement statement shows net proceeds of $156,000, which was split evenly between Ms Flood and her brother. After payment of capital gains tax of $8,000, Ms Flood would have had $70,000 left.
Mr Dockerty made no direct financial contribution or non-financial contribution towards the Colac property. He made a very small indirect financial contribution, in the sense that by his paying some of the couple’s joint living expenses, some of Ms Flood’s income was available to pay towards the mortgage for this property (for the year or so that the mortgage existed).
The Mirboo North property
In late 2006 or early 2007, Ms Flood and Mr Selfe became the joint registered proprietors of their current home at 162 Darlimurla Road, near Mirboo North, in country Victoria. They paid $255,000 for the property.
As at 30 September 2007, the amount outstanding under their mortgage in respect of this property was $239,000. As at February 2008, the property was valued at $290,000. Using those figures, BDO estimated the value of Ms Flood’s ½ interest in the equity in the property as at June 2007 at $25,000.
Mr Dockerty does not allege that he had made any direct or indirect contribution towards this property, which was acquired around 2 years after the end of the third period of cohabitation.
Ms Flood’s personal property
Furniture and household chattels
When she first moved in with Mr Dockerty, in late 1985, Ms Flood sold some antique furniture, gave some furniture away and put the rest into storage (as they did not need two sets of whitegoods and the like). At that time, she had household goods, jewellery and paintings which she valued at $8,000.
When she moved out of Mr Dockerty’s home at the end of the first period, she only took a lounge suite with her, and bought new furniture for the Ivanhoe unit.
The evidence is not entirely clear, but it seems that when Ms Flood moved in again with Mr Dockerty, at the start of the second period of cohabitation, she brought some of her furniture with her. When Ms Flood moved in with her friend in Hurstbridge, at the end of the second period of cohabitation, she did not take any furniture with her.
After the domestic relationship finally ended, Ms Flood took only a few items of furniture and household chattels with her. Otherwise, Mr Dockerty retained all the furniture and paintings in the Brinkkotter Road property, including all that they had jointly acquired during any of the three periods of cohabitation.
When Ms Flood moved in with Mr Selfe, she effectively had to start all over again with furnishings, whitegoods and the like.
The BDO report noted that as at June 2007, Ms Flood had a half share in furniture and household assets insured for $84,000, the other half of which was owned by Mr Selfe. This is an insured value, not a market value.
Car
At the start of the domestic relationship, Ms Flood owned a Mitsubishi Sigma Sedan, which she had bought in September 1985 for $4,000, using her own funds.
During the course of the relationship, apparently around 1996, Mr Dockerty purchased a Honda Prelude car for Ms Flood for about $25,000. It was bought in his name because he was able to obtain a trade discount. However, Ms Flood actually paid for the car, by means of a trade-in of her old car and a credit union co-op loan of $12,000. She made all of the loan repayments, save for the last $1,000, which Mr Dockerty paid.
Mr Dockerty paid for some, but not all of the registration, maintenance and insurance of Ms Flood’s car.
On the evidence, I am only satisfied that Mr Dockerty contributed $1,000 towards the acquisition of this car. He also contributed in so far as he did make some payments towards registration, maintenance and insurance.
The BDO report noted that, as at June 2007, her car was worth $8,000.
Savings
When not living with Mr Dockerty, Ms Flood was able to save reasonable amounts of money, even on her relatively modest wage.
Apart from the relatively small amounts which went into the mortgages on the Yarraville and Colac properties, and some payments into her superannuation, I am satisfied that during the times when she was living with Mr Dockerty, Ms Flood had little opportunity to save money, as most of her income went on joint living expenses. She lived a more affluent and expensive lifestyle when living with Mr Dockerty than when she lived on her own.
When she left Mr Dockerty, she took the sum of $20,000 from the safe, in repayment of the loan she had made to Mr Dockerty in 2000. That money went towards buying new furnishings and whitegoods, and the purchase of a second car.
As mentioned earlier, after the sale of the Colac property in August 2005, Ms Flood received about $70,000. Some of that was apparently used in the purchase and furnishing of the Mirboo North property.
The BDO report noted that as at June 2007, Ms Flood still had $23,000 in various bank accounts.
Ms Flood’s financial resources
Superannuation is a “financial resource” for the purposes of the Act.[21] The BDO report certainly treated it that way, and counsel did not suggest any alternative treatment.
[21]Section 275(1) of the Act; see also Zegarac v Tomasevic [2003] VSC 150.
Ms Flood’s employer made superannuation contributions from March 1976 until her retirement in June 2008.
According to a letter from her fund manager, dated 28 January 2010, as at January 2006, her superannuation entitlements had a value of $346,000. BDO noted the value of Ms Flood’s withdrawal benefit entitlement as at June 2007 at $519,000. Unfortunately, the evidence does not show how much of the fund was built up before the commencement of the third period of cohabitation (the third period being about 12 of the 32 years of Ms Flood’s employment).
Mr Dockerty made no direct financial contribution towards her superannuation. In so far as Ms Flood made employee contributions during the period of the relationship (the number and amount of which is unknown), she was able to do so because Mr Dockerty was contributing towards household expenses; in that sense, he may have contributed indirectly towards her superannuation.
Ms Flood has been receiving a disability pension since January 2009. It appears that she has the option to convert her pension to a lump sum payment at 60 or 65.
Mr Dockerty’s property and financial resources
Mr Dockerty’s real property
The 141 Thompson property
In 1976, Mr Dockerty bought the property at 141 Thompson Crescent, Research. The parties lived in the property during the first and part of the second periods of cohabitation.
Mr Dockerty sold the property in late 1989 or early 1990, during the second period of cohabitation.
There was no evidence led as to the purchase or sale prices. Nor did Mr Dockerty provide that information to BDO. The property was subject to a mortgage to the ANZ Bank, the amount of which is not known to the court. However, it is common ground that Mr Dockerty made all the payments connected with the property, including the purchase costs and mortgage payments, and that Ms Flood made no direct financial contribution towards the acquisition, conservation or improvement of the 141 Thompson property.
It seems that the net proceeds of sale were used to fund the purchase and/or renovation of the Brinkkotter Road property discussed below.
There were extensive renovations carried out to the property. Ms Flood’s only contribution to the renovations was to strip and stain a wall. The cost of the renovations is unknown, but Mr Dockerty paid for them.
Ms Flood made an indirect financial contribution towards the property, in that by paying some of their joint living expenses, some of Mr Dockerty’s income was available to pay the mortgage and renovation costs.
She also made a non-financial contribution to the conservation of this property, through cleaning it. Continuing to live in the house during the renovations placed a considerable additional cleaning load on Ms Flood.
The Nicholson Road property
Mr Dockerty said that he bought the property at 5 Nicholson Road, Research, in the early 1980s and sold it after 3 or 4 years; he mentioned no purchase or sale amounts. In fact, according to his tax returns, he bought the property in the 1989 financial year for $105,000 (inclusive of purchase costs), and sold it on 16 March 1990 for $138,000 (all during the second period of cohabitation). It appears that there was a mortgage with the ANZ Bank in an unknown amount, which was presumably paid by Mr Dockerty. There is no evidence as to how much, if any, of the purchase price was paid by Mr Dockerty or what he did with the proceeds of sale.
There is no suggestion that Ms Flood made any direct financial contribution or non-financial contribution towards this property. She made an indirect financial contribution towards the property, in that by paying some of their joint expenses, some of his income was available to pay the purchase and mortgage costs.
The 136 Thompson property
In May 1989, Mr Dockerty and his friend, Peter Wright, bought the property at 136 Thompson Crescent, Research in equal shares.
The property was rented out until January 1990, when Mr Dockerty and Ms Flood moved into it, during the second period of cohabitation, after the sale of the 141 Thompson property.
The property was sold some time in 1991.
There was no evidence as to the purchase or sale prices. The 136 Thompson property was subject to a bank mortgage, the amount of which is not known to the court. It is common ground that Ms Flood made no direct financial contribution towards the acquisition, conservation or improvement of the property. Some of the mortgage was paid by rent received from the tenants, but otherwise Mr Dockerty and Mr White made all the payments connected with the property, including its purchase costs and mortgage payments.
It is not clear what happened to the proceeds of sale of this property.
During the period of about a year in which Ms Flood and Mr Dockerty lived in the property, she was primarily responsible for cleaning the house.
Ms Flood made an indirect financial contribution towards the property, in that by paying some of their joint living expenses, some of Mr Dockerty’s income was available to pay towards this property.
The Brinkkotter Road property
Mr Dockerty bought 41 Brinkkotter Road, Research in June 1989, during the second period of cohabitation, for $165,000.
The original house on the property was demolished within six to eight weeks of settlement, and in February 1990 construction of the current dwelling began. Ms Flood assisted in designing the new house. The builders took more than a year to construct the new house, and Mr Dockerty moved in around early 1991, around the time of the end of the second period of cohabitation.
Although Mr Dockerty estimated that the improvements cost $400,000, that appears to be a substantial overstatement on his part. Based on the list of payments recorded in schedule A to the defence, the figure is approximately one half of that. Mr Dockerty produced no other documents to substantiate his claim and I proceed on the basis that the cost of the demolition and construction was no more than $205,000.
The only mortgage which Mr Dockerty mentioned in connection with Brinkkotter Road was a loan of $75,000. He said he applied the net proceeds from the 141 Thompson property towards this property. How he funded the rest of the total cost of the property was not clear.
Ms Flood moved into Brinkkotter Road at the end of 1992 (the start of the third period of cohabitation), and lived there with Mr Dockerty for the next 12 years.
Mr Dockerty has continued living at Brinkkotter Road since the end of the relationship.
Mr Dockerty made all mortgage payments, although no evidence was led as to the total that he borrowed or how much he actually paid by way of interest. The mortgage appears to have been paid out relatively quickly, certainly some years before the parties separated.[22] It is not possible to be more specific about these matters, given the state of the evidence.
[22]The BDO report notes that the property is now unencumbered, but no current title search or other document was tendered which showed when the mortgage was paid out.
It is common ground that Ms Flood made no direct financial contribution towards the acquisition or improvement of Brinkkotter Road. However, I accept that she made indirect financial contributions, by using her salary to pay for household items and joint living expenses, thereby allowing Mr Dockerty to apply such of his income as was necessary to make the mortgage repayments.
I also accept that Ms Flood made substantial, non-financial contributions to the conservation and improvement of the property, by applying her labour to cleaning the house and (very occasionally) doing some of the gardening. The house had four bedrooms and three bathrooms and spacious living areas. Even when she was working full-time, I am satisfied that Ms Flood did the lion’s share of the cleaning of the large Brinkkotter Road property, without any real assistance from Mr Dockerty.[23] In so far as they had a part-time cleaner for part of the third period of cohabitation, Ms Flood mainly paid for the cleaner.
[23]He loaded and unloaded the dishwasher from time to time.
The garden was designed and planted by Mr Dockerty and a landscape gardener. It had an inbuilt irrigation system. Most of the gardening (including lawn-mowing) was done by a gardener, for whose services Mr Dockerty usually paid. However, Mr Dockerty did some gardening himself, and cleaned the gutters.
Because the house was newly-built, there was not a large amount of home maintenance required. There would be the occasional incident, such as an appliance breaking down, which would require the attendance of a maintenance person.
As far as gardeners and maintenance contractors were concerned, both parties were involved in organising and supervising their attendances, whilst Mr Dockerty generally paid for their services.
Mr Dockerty also paid most of the bills for utilities such as gas, electricity and the like.
There is no dispute that, as at 26 March 2008, the property had a market value of $825,000. The parties did not provide a more up-to-date valuation at trial and both parties accepted that that figure should be used as the value of the property.
Mr Dockerty’s proven financial contributions to the purchase and improvement of the Brinkkotter Road property were $370,000.
Mr Dockerty’s personal property
The Timbercorp investment
During the third period of cohabitation, Mr Dockerty invested in various eucalyptus, almond and olive projects offered by Timbercorp. Participation in the projects apparently required both initial down-payments, subsequent instalment payments, and annual maintenance fees.
Mr Dockerty estimated that he had invested somewhere between $100,000 and $120,000 in Timbercorp, but there were no documents tendered to support such figures. I proceed on the basis of the figures provided in the BDO report, namely that, based on market prices as at November 2005 (which BDO regarded as still appropriate as at June 2007), the value of Mr Dockerty’s investment was $71,000.
At some time since the end of the third period of cohabitation, and since the preparation of the BDO report, the Timbercorp group of companies has collapsed, with its members going into liquidation. The value of the investment has undoubtedly dropped sharply, but, once again, the evidence as to current value was less than ideal. For example, Mr Dace understood that investors had received some sort of dividend before Christmas 2009, but Mr Dockerty had said nothing to the court about having received such a payment (asserting, instead, that his investment was now completely worthless). Mr Dace also understood that the liquidator had advised that a further dividend was expected to be paid, but Mr Dockerty had said nothing about receiving such advice.
At the end of the day, both counsel seemed to accept that the court should value the Timbercorp investment as at the date of separation.
Furniture and household possessions
Mr Dockerty’s evidence in relation to the value of his furniture and household possessions provides a good illustration of why I have found much of his evidence to be unsatisfactory.
Mr Dockerty pleaded that at the commencement of the third period of cohabitation, he owned chattels and personal effects worth about $50,000. No evidence was led on his behalf to substantiate such figures and he did not provide BDO with any information about his furniture and personal effects at any time prior to the end of the relationship, despite their request that he do so.
BDO also asked him to provide a figure for the value of furniture which he had at the end of the relationship. Mr Dockerty hand-wrote a detailed 3 ½ page list of all the furniture which he had in the Brinkkotter Road property, and then ascribed a single figure of “$4,850” to the lot. Ms Flood strongly disputed the accuracy of that figure.
Asked to explain in cross-examination where that figure had come from, Mr Dockerty initially said that his previous solicitor and barrister had basically told him to “put down whatever you like. Second hand furniture is worth nothing.” It seems that he had simply plucked that figure out of the air, and tried to give it some veracity by making it a specific figure, not a round number. Then, in re-examination, he tried to retrieve the situation by giving an implausible account of having gone through the house, room by room, a calculator in his hand, turning his mind to the second-hand value of each and every item of furniture, before coming up with $4,850 as the total.
Mr Dockerty also acknowledged that, in addition to the furniture, he also retained paintings which he valued at $13,000-$14,000.
Over the years, Mr Dockerty has represented to the ANZ Bank, through signed statements of his personal financial position, that he had very substantial household furniture and effects, with the following values:
12/11/98 $125,000 (described as “insured value”)
7/7/03 $190,000 (not described as “insured value”)
6/4/05 $209,500 (described as “insured value”)
Mr Dockerty tried to explain away the very substantial differences between $4,850 and the statements to the bank, by observing that people commonly insure for an amount higher than market value, particularly if they are living in a bushfire-prone area, such as Research. Whilst that general observation may be accepted, it still does not adequately account for a difference of more than $200,000 between what he asserts to be the insured and market values.
This evidence demonstrates how Mr Dockerty was prepared to modify figures to suit his own purposes, by adjusting them up (to persuade the bank that he was a person of substantial means), and by adjusting them down (to persuade the court that he received very little by way of furnishings etc at the end of the relationship).
I am satisfied that at the end of the relationship, Mr Dockerty retained sufficient furniture to furnish the large and comfortable home, to a good standard. On the other hand, Ms Flood had to start almost from scratch buying furniture with her new partner.
In order to compare like with like, I will adopt the insured value of Mr Dockerty’s furniture (namely $209,500 around the time of the final separation); the figure for Ms Flood’s furniture, adopted by BDO in their report, is also an insured value.
Borrowings
The Dockerty Family Trust is a discretionary trust essentially set up by Mr Dockerty’s mother and late father. Mr Dockerty and his brother are the sole directors of R Ferguson Holdings Pty Ltd, the trustee company, and are beneficiaries under the trust. The trusts has cash, shares and property. Mr Dockerty (a director of the trustee for six years) suggested that the current value of that trust “might be three to five million dollars”, but then said he actually had “no idea” whether those figures were correct or not.
What is clear is that Mr Dockerty (or his corporate entities) has been and continues to be able to draw substantial amounts of money from the trust and/or from his mother personally. Mr Dockerty said he could not quantify how much he had borrowed from his mother or the family trust over the years. He accepted that when his mother dies, he and his brother will have the sole benefit of the Dockerty Family Trust.
Once again, the evidence is unsatisfactory as to the precise amount owed to each at particular points in time. However, according to Mr Dace, between 1 July 2003 and 1 July 2007, the total amount owing by Mr Dockerty was around $270,000. Since then, Mr Dockerty has substantially increased his borrowings, so that as at 2008, Mr Dockerty (either personally or through the Tony Dockerty Family Trust) owed a total of around $700,000 to his mother and/or the Dockerty Family Trust.
Superannuation
Mr Dockerty does not have any superannuation, and did not make any superannuation contributions during the period of the relationship.
The business and business premises
The Classic Car business
ARD Holdings was set up for tax planning purposes (to keep the tax rate at 30 cents in the dollar), and for Mr Dockerty’s personal asset protection. There was what Mr Dace described as a “transition over a couple of years”, during which the Classic Cars business was transferred from Mr Dockerty to ARD Holdings, apparently for no consideration. According to the tax returns, the transfer was not completed until after the final separation with Ms Flood.
Mr Dockerty is the sole director and shareholder and treats the business, including its income, as his to deal with as he sees fit.
The Classic Cars business is potentially relevant for two reasons. First, Mr Dockerty is the sole owner of the company; BDO treated the value of Mr Dockerty’s interest in the company as essentially the same as the value of the business itself (an approach to which neither counsel took objection).
Furthermore, Mr Dockerty could cause the company to transfer the business back to him at no cost. I am satisfied that the Classic Cars business is “property, the alienation or disposition of which is wholly or partly under the control of [Mr Dockerty] and which is lawfully capable of being used for [his] purposes”, and therefore forms part of his “financial resources” within the meaning of s 275(1).
Ms Flood never worked in the business, or directly assisted in its operation in any way (such as by book-keeping or the like).
In August 2000, Ms Flood lent Mr Dockerty the sum of $20,000, as his overdraft was “a bit stretched.” She said it was a loan made towards the business. Mr Dockerty initially said that it had been a loan for the purpose of “purchasing a bigger car” (thereby giving the impression that this was a personal, not a business, purpose). It then became apparent during cross-examination that the car was bought as part of the business stock. I am satisfied that the sum of $20,000 was lent and used for the purposes of the Classic Cars business. When the parties finally separated in February 2005, the loan was effectively repaid by Ms Flood removing $20,000 from the home safe. The business had the benefit of the interest-free loan from Ms Flood in the intervening 5 year period.
The business’s primary assets are the cars which it holds as stock from time to time, and goodwill. The stock is financed by a business overdraft (with a limit of around $500,000) with the ANZ Bank and by Mr Dockerty.
BDO attempted to value Mr Dockerty’s interest in ARD Holdings as at 30 June 2007, by having regard to the company’s income tax returns for the 2004-2007 financial years. They did so on an “orderly realisation of net tangible assets” basis, having first deducted from the actual profit an amount to reflect notional market rate wages for Mr Dockerty. On that basis, BDO assigned a goodwill figure of nil, and a net asset value of $9,000.
The BDO valuation is based on the tax returns, but, as mentioned earlier, I have reservations as to the accuracy of the tax returns for the business. Ms Flood’s counsel did not seek to call any other evidence as to the value of the business. In the circumstances, it is difficult for the court to come to any conclusions as to the true worth of the business.
Mr Dockerty also gets the use of a car provided to him through the business.
The Thornbury premises
As mentioned earlier, the third defendant, Ferguson, was registered as a company in mid-December 2004 and acts as trustee for the Tony Dockerty Family Trust. The trust deed establishing the trust was not produced to the court. However, it seems to be common ground that it is a discretionary family trust set up by Mr Dockerty’s accountant, for Mr Dockerty’s benefit. Mr Dockerty treats the assets and income of the trust as his to deal with.
In early 2005 (the precise date is unclear), Ferguson became the sole registered proprietor of the property at 351A and 351B Darebin Road, Thornbury, being the premises from which Classic Car had been operating for six to eight years as tenant. The property was bought by the trustee for asset protection purposes
The purchase price was $880,000 plus GST plus stamp duty; being a total price of over $1 million. It seems that the ANZ Bank lent $500,000 towards the purchase, and the rest was funded by Mr Dockerty’s own funds.[24]
[24]Mr Dockerty denied that the money had been lent from his mother, but really did not satisfactorily explain where the balance came from.
Ferguson charges AFD Holdings sufficient rent to cover its costs.
As at 26 March 2008, the Thornbury premises had a market value of $900,000.
The Thornbury premises are “property which, under a discretionary trust, may become used for the purposes of … [Mr Dockerty]”, and therefore forms part of his “financial resources” within the meaning of s 275(1).
Ms Flood made no direct financial or non-financial contribution towards the acquisition, conservation or improvement of the Thornbury premises. However, in so far as Mr Dockerty apparently funded $500,000 from his own sources, that must have included funds which he had earned during the course of the domestic relationship. In so far as Ms Flood contributed towards joint household expenses, that freed up funds for Mr Dockerty to save or invest in real property.
Contributions towards the welfare of the other partner
I have already mentioned the contributions that both partners made towards the running of their home (through things such as cleaning, gardening, maintenance and the like). I have dealt with those matters as contributions towards the conservation and improvement of the Brinkkotter Road property, but they could also be seen as contributing towards the welfare of the other partner.
During the first period of cohabitation, the parties ate out at restaurants quite frequently. The frequency diminished during the second period and, by the third period of cohabitation, they ate out infrequently. Mr Dockerty seems to have paid for the majority of restaurant meals, and when they (only occasionally, by the third period) ordered takeaway.
Apart from cooking meat on the barbeque, Mr Dockerty did not cook. I am satisfied that Ms Flood cooked substantial meals most nights of the week, and on weekends, throughout the period of the relationship. The cooking was for the benefit of both of them, but I accept that Ms Flood went to much greater lengths when she was cooking for Mr Dockerty, than when she lived on her own.
The evidence in relation to food and liquor shopping provides a good illustration of the extent to which Mr Dockerty would seriously overstate his own contribution and understate Ms Flood’s. In his defence, Mr Dockerty alleged that Ms Flood only spent about $75 per week on groceries, and he paid for all other groceries and liquor. In his evidence in chief, he alleged that he “paid for everything except for some of the food” (although he did not attempt to explain how the pleaded figure of $75 per week had been arrived at). He also spoke of how he would go and spend “$500 or $600 or $700 or $1,000” to stock the cellar, while Ms Flood would go and buy the occasional cask or bottle of wine. However, when taken in cross-examination to schedule A to his defence, which is a summary of his alleged expenditure, it became apparent that he did very little food or liquor shopping during the relationship (maybe 3 or 4 times per year on average, none in some years, and nothing like the size of the purchases he had alleged). I am satisfied that Ms Flood did the overwhelming majority of the grocery shopping, and paid for it herself.
During the third period of cohabitation, the parties had a cat and dog. Both took care of the pets, however Ms Flood was primarily responsible for taking the pets to the vet and paying vet bills.
During the domestic relationship, the parties went on three holidays together: to Tasmania, Norfolk Island and Hong Kong.[25] I accept that Ms Flood paid for some of the accommodation, airfares and spending money, but that Mr Dockerty paid the larger share of the expenses. It is not possible to be more specific, given the state of the evidence.
[25]Although Mr Dockerty said that Ms Flood also went on two holidays by herself, to Alice Springs and Vanuatu, she was not asked about this, and he gave no evidence as to who paid for those holidays.
I am satisfied that, notwithstanding that she was holding down a stressful, full-time job for most of the period of the relationship, Ms Flood undertook the largest share of the domestic chores, particularly shopping, cooking and cleaning. She also arranged tradesmen and maintenance people, and visits to the vet. In winter, she would make sure the fire was lit for him to come home to. She did so in order to create a nice home environment for Mr Dockerty. Her substantial domestic contribution enabled him to work the very long hours which he did, and to have a very comfortable home life.
Although Mr Dockerty was dismissive of Ms Flood’s contribution and the suggestion that she had “kept the home fires burning”, thereby allowing him to devote himself to his business, it is interesting to note that his business has done badly since the end of the relationship, with a substantial drop in income from 2005 onwards.[26]
[26]The decline in income around 2008-9 may be referable to the global economic problems, but no such explanation could be provided for the earlier decline.
Contributions of a de facto partner as a homemaker are of real significance and not to be regarded as inferior to the financial contribution made by the other partner.[27]
[27]Kardos v Sarbutt op cit at [33]; Fotheringham v Fotheringham op cit at 19.
In his defence, Mr Dockerty alleged that Ms Flood contributed about 60% of the homemaker contributions and he contributed 40%. This is another example of Mr Dockerty overstating his contribution. I am satisfied that he played what might be described as a traditional male role in the relationship, and his actual contribution as a homemaker was minimal.
Mr Dockerty’s counsel argued that Ms Flood received the benefit of living rent-free in the 141 Thompson and Brinkkotter Road properties. But, she is “not to be treated as if she was a lodger or tenant in the couple’s … home; while the relationship continued [they] were part of a family” (to adopt the language of Neave JA in Tayles v Davis.).[28] Both parties contributed to the joint enterprise: her substantial contributions towards household expenses freed up some of his money to pay the mortgage, and her undertaking the bulk of the homemaker role enabled him to work the long hours that he did.
[28][2009] VSCA 304 at [133].
Just and equitable
Ms Flood’s counsel argued that it would be just and equitable to award her 40% of the Brinkkotter Road property. He said that but for Mr Dockerty’s capital contribution, he would have argued for 50% of the value of the property.
On the other hand, Mr Dockerty’s counsel argued that it would be just and equitable to make no adjustment.
In identifying and valuing the parties’ assets, I propose to commence by considering the position as at the date used in the BDO report, namely June 2007, or a date as close to that as the evidence allows. For real property, BDO generally relied on valuations dated early 2008. In respect of most of the property, that represents the most accurate evidence of value. It also reflects a position, almost midway between the date of separation and the trial, which is just and equitable having regard to what the parties have done since they separated.
As at June 2007, Ms Flood had the following property:
½ share in the Mirboo North property 25,000
½ share in household furniture and chattels 42,000
Car 8,000
Money in bank 23,000
Total98,000
She also had a financial resource available to her, in the form of superannuation, with a value of $519,000.
As at June 2007, Mr Dockerty had the following property:
Brinkkotter Road 825,000
Timbercorp investment 71,000
Furniture 209,500
Investment in ARD Holdings 9,000
Total1,114,500
At that date, he had liabilities to his mother and/or the Dockerty Family Trust of $270,000 principal, plus interest of $89,000, being a total of $359,000. That principal sum had been consistent since 2003, and also represented the balance as at the date of separation. From October 2007 onwards, Mr Dockerty borrowed very substantial additional amounts from his mother and/or the Dockerty Family Trust; they have been applied for his own purposes and not for the benefit of Ms Flood or any of their joint assets. Therefore, it would not be fair to have regard to his liabilities as at the date of trial.
So, as at 30 June 2007, Mr Dockerty had property with a net value of $755,500.
Mr Dockerty also had a financial resource available to him, in the form of the Tony Dockerty Family Trust. As at June 2007, the net equity in the Thornbury property was around $400,000. Although the property was acquired at or towards the end of the relationship, Mr Dockerty apparently funded $500,000 of the purchase price from his own funds (much of which must have been earned or saved by him during the third period of cohabitation, and to which Ms Flood has contributed indirectly as discussed earlier).
As mentioned earlier, the furniture valuations are not market valuations, but I have compared like with like, using insured values. The market value of each parties’ furniture is undoubtedly less than the insured figures. At the end of their relationship, Mr Dockerty got to keep almost all of the furniture and artworks which they had accumulated together, leaving Ms Flood to start again.
As also mentioned earlier, I have doubts about the accuracy of the valuation of Mr Dockerty’s investment in ARD Holdings, relying as it does on his tax returns, which may well understate his true income.
As far as their major asset, Brinkkotter Road is concerned, Mr Dockerty made financial contributions of at least $370,000 towards the purchase and renovation of the property. The amount he made by way of interest payments (against the loan of $75,000) is unknown. Some of his financial contributions came from the sale of the 141 Thompson property, to which Ms Flood had contributed indirectly, as discussed earlier. Although she made no direct financial contribution towards the Brinkkotter Road property, Ms Flood made indirect financial contributions and substantial non-financial contributions towards the property. The property has substantially increased in value over the course of the more than 12 years in which the parties made it their home; they should both share in that market increase.
The parties were in a domestic relationship for a period of just over 12 years, and contributed personally and financially to the relationship. Although they kept their real properties separately, they pooled their resources in terms of day to day living expenses.
Given the various problems with the evidence, which have been discussed earlier, it would be artificial and unrealistic to apportion particular proportions or figures to the parties’ indirect financial contributions to any particular property, although I have taken them into account in a holistic sense in deciding what is just and equitable.
I have also had regard to Ms Flood’s very substantial contribution as homemaker, a role which substantially outweighed Mr Dockerty’s domestic contribution. In a very real sense, the fact that she bore the brunt of the domestic load (on top of holding down a stressful full-time job) allowed Mr Dockerty to spend as much time at work as he did (thereby earning money which he could invest in properties), as well as providing him with a comfortable home life.
In all the circumstances, I consider that it is just and equitable that the parties’ property rights be adjusted so as to give Ms Flood a one quarter share in the Brinkkotter Road property.
I will hear from the parties as to the precise form of orders and as to costs.
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