H, M v C, L - [2012] SADC 44

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
H, M v C, L
[2012] SADC 44
Judgment of Her Honour Judge McIntyre
13 April 2012
FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - ADJUSTMENT OF PROPERTY INTERESTS
H, M and C, L lived in a domestic relationship for approximately 12 years. They had one child together. After the relationship ended the plaintiff brought an application for a division of property pursuant to the Domestic Partners (Property) Act 1996.
Held: Division of property under the Domestic Partners (Property) Act 1996 undertaken.
Domestic Partners (Property) Act 1996 s3, s9(2); Commonwealth Powers (De Facto Relationships) Act 2009 (SA) s90RA(2); Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 s86(1) , referred to.
Arnold v Dalton 84 SASR 482; Hogg V Roberts (2003) 87 SASR 248; Karpathious v Clemente [2008] SASC 316; H v G [2005] SASC 344, considered.

H, M v C, L
[2012] SADC 44
Application for division of property

MH (the plaintiff) and LC (the defendant) lived together in a domestic relationship for some years until their separation on 30 December 2008. There is one child of the relationship, born in May 2003.
MH issued proceedings in this court on 23 December 2009 seeking a division of property under the Domestic Partners (Property) Act 1996 (the DPP Act). For the reasons that follow I find that the plaintiff is entitled to recover from the defendant the sum of $630,000 by way of a lump sum division of property.
The proceedings
The defendant initially instructed solicitors. They filed a Defence on his behalf on 23 March 2010 inter alia admitting that the parties had lived together on a genuine domestic basis as husband and wife although not legally married to each other and that there is one child of that relationship. The defendant further agreed that the parties commenced living together on 1 November 1996 and that they separated on or about 30 December 2008. The defendant terminated his first solicitors’ instructions. His new solicitors filed a notice of address for service on 8 December 2011.
This matter was listed for trial commencing 9 February 2012 at a listing conference on 8 September 2011. The defendant’s second solicitors sought an adjournment of the trial. Master Norman delivered reasons for refusing to grant an adjournment on 31 January 2012.
On 8 February 2012 the defendant’s second solicitors applied for leave to withdraw on the basis that the defendant had not complied with the terms of his retainer and had failed to provide instructions. I granted leave to withdraw on 9 February 2012. The defendant then applied for an adjournment of the trial so that he could instruct new solicitors. The plaintiff opposed the adjournment. I refused that application and ordered that the trial proceed on Friday 10 February 2012.
On 10 February 2012 the defendant requested further time to organise his documents. I delayed the commencement of the trial until 2.15pm. At 2.15pm it became apparent that the defendant had brought a considerable quantity of documents to court which had not been discovered. He also said that there might be some additional relevant documents. I adjourned the commencement of the trial until Monday 13 February 2012 to enable the defendant to locate all of his documents and to enable the plaintiff to inspect the newly discovered material. The defendant also indicated that, notwithstanding his defence, he disputed that the parties started cohabiting on 1 November 1996 but was unable to say when they started to live together. He said he needed to check his documents before making an application to amend his defence.
On Monday 13 February 2012 the defendant’s documents remained in disarray. He said that his first solicitors had many of the documents that had been discovered and that he required those documents for the trial. He further indicated that there might be more relevant documents that he had not yet brought to court. I adjourned the trial until Tuesday 14 February 2012 to enable the defendant to obtain documents from his former solicitors and to produce any further documents that he might have in his possession that were relevant to the trial. I indicated that this was his last opportunity to produce documents and that he would be precluded from producing further material after that time.
On Tuesday 14 February 2012 the defendant said that he now had all of the documents that he sought to rely upon. The defendant sought leave to amend his defence, inter alia, to withdraw the admission that the parties commenced cohabiting on 1 November 1996 and to substitute a date in or about June 2001. the plaintiff opposed that application to amend. Following evidence and submissions on that issue I delivered a ruling refusing the application to amend. The trial proceeded on the basis of the pleadings as filed.
The Witnesses
Oral evidence was given by the plaintiff, the defendant and Mr Peter McKay an expert valuer. A large number of documents were tendered as exhibits.
I found the plaintiff to be an honest and reliable witness. There were some limits to her evidence because she generally left the financial arrangements to the defendant. He ran their business. The plaintiff said that whilst she prepared the profit and loss books and paid the bills associated with the business and properties she just inserted figures the defendant gave her for the business takings and rent receipts. He dealt with the rental of various investment properties. He organised the financing of property purchases. The plaintiff, whilst plainly doing her best to assist the court on these matters, did not have a full appreciation of the nature and extent of the parties’ rather complex financial arrangements.
Unfortunately the defendant was either unable or unwilling to cast much light on these arrangements. This was surprising in view of the fact that he is an experienced businessman who has run his own business and invested in property for many years. The state of the records relating to the parties’ financial affairs is such that many aspects are most unclear. The records have been in the possession of the defendant since separation. There are plainly some documents that are missing – for example loan statements and the defendant’s bank statements have been tendered but these are plainly incomplete. There is also a surprising lack of records for some aspects of their financial affairs. The defendant gave evidence that it was his practice to use cash in all of his business dealings where this was possible. This included rent. He did not maintain records of rent receipts. There were no rent books for any of his properties or tenants. He said that his tenants would come into his shop and pay rent in cash that he would put into “the pot”. The only exception to this is B. Street which has been rented out through a commercial agent since February 2011. Some of the rental statements have been tendered but these are incomplete.
The plaintiff also gave evidence about “the pot”. It appears to have been the parties’ term for their joint finances. The plaintiff described a kitchen drawer where the parties maintained a cash float including the proceeds of their business although she did not specifically refer to rent forming part of that float. Bills were often paid using money from “the pot”.
The defendant was in many respects an unimpressive witness. His evidence was often contradictory, confusing and unhelpful. A few examples will illustrate the point:
·As I have indicated the defendant applied to amend his defence in order to withdraw the admission that the parties commenced cohabitation on 1 November 1996 and to substitute a date in or about June 2001. His evidence on the interlocutory application was unconvincing and was moreover inconsistent with an affidavit he had sworn in Federal Magistrate Court proceedings in which he said that the parties commenced living together in November 1996. To compound matters the defendant, contrary to the proposed amendment of a date of co-habitation in or around June 2001, contended on a number of occasions during the course of the trial that the parties commenced cohabiting in about 1998 when the renovations on a property in E. Street were completed.
·The defendant gave evidence that when the plaintiff left the relationship she had not paid a large number of utility and household bills and had left him with 5 months worth of outstanding bills. During his cross-examination however it became apparent that this was not the case. The only accounts that remained outstanding were those that had arrived shortly prior to the separation. These totalled $647.12.[1] Despite this evidence the defendant continued to maintain that the plaintiff had left him with extensive overdue accounts. He was unable to produce these or identify what they might have been.
·During the course of his evidence in chief the defendant tendered three taxation returns.[2] He gave evidence about the content of those tax returns and indicated that they accurately reflected the amounts that had been received by way of rent for his rental properties and the amounts expended on each of those properties.[3] In cross-examination however he appeared to change that evidence and to assert that the returns had been prepared by his former accountant who had dementia. His evidence reached a point where I thought it necessary to give him a warning as to self incrimination in respect of the content of the taxation returns. After a period of reflection the defendant said that the taxation returns were not prepared by his former accountant. Rather his current accountant and his father had extracted the documents from the accountant with dementia. His present accountant had prepared the returns and the defendant said that these returns were accurate.[4]
·The defendant said that he rented a house property at Klemzig to “An Anthony guy” for about 6 or 7 years from about 2000 following the departure of a tenant called “Raelene”.[5] The property was vacant following “Anthony’s” departure. Some repairs and maintenance were attended to and then he rented the property to a Mr Bowyer. He said that Mr Bowyer’s tenancy commenced during the period 2007 to 2008 and that he left in 2011. The property had not been tenanted since as it required repairs and maintenance.[6] The defendant was also having difficulties he said with an insurance company over those expenses. The defendant said that Mr Bowyer was an unsatisfactory tenant who did not pay rent regularly. The defendant said he paid utility bills to help Mr Bowyer out during a period of financial difficulty. He was not reimbursed for those. It then became apparent from documents that he had tendered that the defendant had paid utility bills for the Klemzig premises in the name of Mr Bowyer during the period 2005 to 2008.[7] This time frame was inconsistent with the defendant’s previous evidence. He was unable to give a coherent explanation for the discrepancy.
·In his evidence about placing rent receipts into the pot the defendant said that if there were any surplus funds after paying bills this would be banked. When taken through his bank statements the defendant was however unable to identify deposits that related to rent. There was no evidence of rent receipts other than the limited information contained in the defendant’s taxation returns and the defendant’s oral evidence.
·The defendant’s taxation returns do not sit very comfortably with the defendant’s evidence in many respects. For example his evidence was that he did not commence to rent B. Street until February 2011. His taxation returns declare that that he received rent for the B. Street premises during the financial year ended 30 June 2008 in the sum of $2,850.00; during the financial year ended 30 June 2009 in the sum of $8,995.00; and, for the financial year ended 30 June 2010 in the sum of $18,165.00.
[1] Transcript pp 841, 844, 854 & 855
[2] Exhibit D7
[3] Transcript pp 653-659
[4] Transcript pp 880-893; 895-896
[5] Transcript pp 762-766
[6] Transcript pp 756; 758-9
[7] Transcript pp 775-6
These difficulties with the records and the defendant’s evidence have made some aspects of the case considerably more challenging to decide than might have been expected. I will deal with these in context. In summary however I formed the conclusion that the defendant’s evidence was generally unreliable and, whether deliberately or not, unhelpful. On the other hand the plaintiff’s evidence was generally both honest and reliable. I prefer the plaintiff’s evidence to that of the defendant where there is conflict except in relation to some aspects of the parties’ financial arrangements where I find the plaintiff to have been mistaken. I will also deal with these issues in context.
The valuer Mr McKay was jointly instructed by the plaintiff and the defendant whilst the defendant was still represented. It is unfortunate that the joint instructions to Mr McKay did not specify a date at which the properties ought to be valued. The valuations are therefore as at the various dates on which he inspected the properties in 2011. Mr McKay conceded that some of the valuations may have varied by the date of the trial owing to market fluctuations. The plaintiff sought to have Mr McKay give evidence about the likely valuation of various properties as at November 1996 when the parties commenced to cohabit. The defendant opposed that. Whilst this would have been useful information it was my view that it was too late for this expert evidence to be obtained and I refused the application to call that evidence. Mr McKay’s evidence was contested by the defendant on the basis of a general downturn in property values. No other valuation evidence was called to support that proposition. Mr McKay made appropriate concessions in cross examination about the state of the property market which I will discuss in context. For present purposes I indicate that I found Mr McKay to be an impressive witness and that I have no hesitation in accepting his evidence.
The relationship of the parties
The parties met as teenagers in the mid-1980s. They had a boyfriend/girlfriend relationship for some 5 years until about 1987. After this relationship ended the plaintiff worked interstate for a period of time. Shortly after her return to Adelaide, in about July 1996, she bumped into the defendant. She met him again a couple of months later and in about October 1996 they commenced a relationship. The plaintiff says that they began living together in her flat at Kilkenny on 1 November 1996. Whilst the date of cohabitation was not strictly speaking in contention owing to my refusal of the application to amend the defence I have no doubt that the parties did commence cohabiting in November 1996 as the plaintiff contended. The defendant’s evidence on that topic was inconsistent and confusing. At various times he suggested dates in 1998 and 2001. The plaintiff on the other hand gave cogent, consistent evidence saying, amongst other things, that she remembered the date because the parties used it for their security alarm code.
There is no dispute that the relationship ended when the plaintiff moved out of the parties’ home at B. Street Prospect on 30 December 2008 with their son.
Jurisdiction
The Commonwealth Powers (De Facto Relationships) Act 2009 (SA) commenced on 1 July 2010 and referred financial matters relating to the breakdown of de facto relationships to the Commonwealth.[8] The Commonwealth passed the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (the FLA). South Australia is a referring State within the meaning of that Act.[9] The Commonwealth Act does not apply in relation to a de facto relationship that broke down before the commencement of the Act.[10] The FLA came into operation on 21 November 2008. However the South Australian legislation did not refer power to the Commonwealth until 1 July 2010. Accordingly, in the light of my finding that the parties separated on or about 31 December 2008 this matter falls to be determined under the State legislation, namely the DPP Act.
[8] S4(1)(a)
[9] S90RA(2)
[10] S86(1)
An application for division of property under the DPP Act may only be made if the criteria in s 9(2) are met and must be made within one year after the end of the domestic relationship.
In view of the evidence of both parties, albeit the defendant contests the date of the commencement of cohabitation, it appears uncontentious that the criteria set out in s 9(2) are satisfied and I so find. The proceedings were issued within time.
Division of property – legal considerations
Section 10 of the DPP Act gives the Court power to make such orders as it considers necessary to divide the property of either or both partners between them in a way that is just and equitable. Section 11(1) provides:
11—Matters for consideration by court
(1)     In deciding whether to make an order for the division of property under this Part, and if so the terms of the order, the court—
(a)     must consider the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to—
(i)the acquisition, conservation or improvement of property of either or both partners; or
(ii)     the financial resources of either or both partners; and
(b)     must consider the contributions (including homemaking or parenting contributions) made by either of the domestic partners to the other partner or to children of the partners or either of them; and
(c)     must have regard to the terms of any relevant domestic partnership agreement; and
(d)     may have regard to other relevant matters.
I have found that the parties fall within the jurisdictional requirements of s9(2) of the DPP Act. They have not entered into a domestic partnership agreement.
Property is widely defined in s3 of the DPP Act as follows:-
property of a person includes—
(a)a prospective entitlement or benefit under a superannuation or retirement benefit scheme;
(b)property held under a discretionary trust that could, under the terms of the trust, be vested in the person or applied for the person's benefit;
(c)property over which the person has a direct or indirect power of disposition and which may be used or applied for the person's benefit;
(d) any other valuable benefit.
The DPP Act has been the subject of a number of decisions of the Full Court of the Supreme Court.[11] From those cases, the following principles can be stated:
1The Court should identify and value the assets; determine the contributions made by the parties and whether those contributions have already been sufficiently recognised and compensated for and finally make the appropriate adjustment.
2The requirement to make an order that is just and equitable does not give rise to a general and unfettered discretion.
3The Court is dividing property not settling all outstanding financial issues between the parties.
4The initial and primary focus is on the property, contributions to the property, contributions to financial resources and contributions by one party to the other and to the children.
5Other matters that ought to be taken into consideration include the length of the relationship and the immediate needs of the parties at the time of the hearing although it is not the role of the Court to provide continuing maintenance of the parties or their future financial prospects.
6Contributions as a homemaker and parent are not inferior to material or financial contributions and must be accounted for in a substantial way.
7There is no need to take a narrow approach involving careful tracking of income and expenditure, contributions made and benefits received. Mathematical precision is not required but a court in assessing contributions would normally have regard to particular assets. The legislation requires a reasonably broad and practical approach.
[11] Arnold v Dalton (2002) 84 SASR 482, Hogg v Roberts (2003) 87 SASR 248, Karpathious v Clemente [2008] SASC 316, H v G [2005] SASC 344.
The property identified

The property that is the subject of the application comprises interests that each of the parties have in family properties, a jointly owned house property, two investment properties in the name of the defendant, vehicles, furniture and effects. These are as follows:
Kilkenny Property
The plaintiff was gifted a quarter share in a property at Kilkenny whilst she was a child. She shares this property equally with her three siblings. The property comprises three shops and three residential flats. The plaintiff’s brother manages the rental of these premises. There is a bank account into which the rents are paid and from which the expenses are deducted. The plaintiff tendered bank account statements[12] together with a bundle of tax returns filed in respect of that property.[13] She gave evidence and tendered a document summarising the annual payments she received for her quarter share of the profits.[14] Whilst the parties were cohabiting the amount received varied from about $3,500 to about $8,000. The plaintiff gave evidence that her payment would be put into the “pot” or, to put it another way, the parties’ joint funds.
[12] Exhibit P6
[13] Exhibit P7
[14] Exhibit P8
The plaintiff said that when she returned from interstate in 1996 she went to live in one of the Kilkenny flats. She paid no rent but did not receive a share of the profits. At the commencement of their relationship the plaintiff says that the defendant moved into the Kilkenny flat and that they remained there, rent free, until renovations were completed on the E. Street property in 1998. The defendant denies that he lived at Kilkenny. I prefer the evidence of the plaintiff and find that the defendant did live at Kilkenny with the plaintiff.
The plaintiff is currently living at Kilkenny with the parties’ child. She again lives rent free but does not receive a quarter share of the profits from the rental premises.
Mr McKay prepared a valuation report on this property.[15] He valued the premises at $720,000 as at 18 March 2011. He gave evidence that the current valuation of the premises would be a similar sum plus or minus $10,000 to $20,000.
[15] Exhibit P3
The defendant agreed that he made no contribution to acquisition or maintenance of the Kilkenny property and said that he claimed no interest in it. Accordingly it can be excluded from the property division.
Lesvos Properties
During the course of the relationship the plaintiff inherited a share of property in Greece on the island of Lesvos. Again this was a quarter share with her three siblings. The plaintiff gave evidence that they sold this property last year due to the deteriorating Greek economy and the costs associated with maintaining it. The net proceeds were initially paid into the Kilkenny bank account before being divided between the four siblings. She was subsequently paid her quarter share which was an amount of $27,250 in August 2011. This evidence was not disputed by the defendant and in any event I accept it. The defendant does not claim that this property should be the subject of the property division. He accepts he made no contribution to the Greek property.
Main North Road Property
The defendant has an interest in a commercial property on Main North Road. This was purchased prior to the commencement of the parties’ relationship. The defendant had a quarter share however his father has recently died and accordingly he now has a one-third share of that property with his mother and sister. This property has two shops that are rented. Only limited financial details have been supplied in relation to the premises and the defendant’s evidence on this topic was somewhat confusing. He appears to have received some income from this property. It is likely this went into the parties joint funds. His tendered taxation returns for the financial years ended 30 June 2008, 2009 and 2010 show net annual returns ranging from $198 to $4,039.
Mr McKay valued the premises in the sum of $500,000 as at 31 May 2011.[16] His evidence was that there is no change to that valuation as at the current date. The plaintiff conceded that she had made no contribution to the acquisition or maintenance of these premises and agreed that this property can be excluded from the division of property.
[16] Exhibit P5
Klemzig Property
The defendant purchased a house property in Klemzig in the late 1980’s for $73,000. He had a deposit of about $15,000 and the benefit of a first home owner’s grant. He obtained a mortgage for the balance. His father was a guarantor. He had paid off the mortgage by the time the parties commenced to cohabit in 1996.
Mr McKay valued the property at $370,000 as at 1 June 2011. When giving evidence he said that the current range of values for the property was $350,000 - $390,000. I accept Mr McKay’s evidence and find that the current value of this property is the mid-point of those values - $370,000.
E. Street Property
The defendant purchased a property in E. Street on 17 June 1996 for $131,000. He obtained a mortgage from the State Bank of South Australia for $140,000.[17]
[17] Exhibit P16 and P51
Following extensive renovations, the property now comprises the defendant’s business premises, rooms that he rents and a flat in which he currently resides.
Mr McKay valued the property as at 31 May 2011 for the sum of $800,000.[18] His evidence was that the current value remains at $800,000. I accept his evidence.
[18] Exhibit P2
B. Street Property
The parties jointly purchased the B. Street property as their family home in June 2006 for $500,000. The financing arrangements for the purchase of this property are somewhat complex and impact the other properties. I will deal with them separately.
Mr McKay valued the property as at 26 May 2011 in the sum of $675,000.[19] He accepted in cross-examination that the current value may be slightly less owing to a flat property market for houses in that price bracket. He said that the range was currently in the order of $650,000 - $675,000. On the basis of this evidence I find that the current value of B. Street is the mid-point of that range being $662,500.
[19] Exhibit P1
Motor Vehicle
At the time of separation the parties had a Holden Vectra. The plaintiff retained this for three months before the defendant took possession of the vehicle. The current value is unclear however when proceedings were issued the plaintiff valued it at $30,000 and the defendant at $15,000. The plaintiff is now prepared to accept the defendant’s initial assessment whereas the defendant now asserts that the value of the Vectra is $10,000. In the absence of any other valuation evidence I assess the current value of the Vectra at $15,000.
Motor Cycle
Also in the defendant’s possession at the time of separation was a Honda CVR motor cycle purchased on 11 December 2008 for $18,990.[20] I find that the funds for the purchase came from the sale of the defendant’s previous motor cycle and the parties’ joint funds. The motor cycle was subsequently involved in a motor vehicle accident. The defendant received an insurance payment for the written off motor cycle of $14,000 in November 2011.[21]
[20] Exhibit P34
[21] Exhibit P35 and P36
Furniture & Effects
The plaintiff says, and I accept, that she left the bulk of the parties’ furniture and effects behind when she left the family home. She does not however pursue a claim in respect of those items and accordingly they will not form part of the division of property.
Plant & Equipment
The plaintiff claims an interest in the plant and equipment in the salon business. There was only limited evidence about this and no valuation. It is not clear what the plant and equipment comprises. The defendant contends it is all old and comes from his father’s business. The plaintiff gave no evidence about this topic. In view of the dearth of evidence, I am unable to assess the value of this property nor can I assess the contributions of the parties to its acquisition or maintenance. I therefore exclude the plant and equipment from the division of property.
Summary
In summary, I find that the following property should be taken into account:
·Klemzig property  $370,000
·E. Street property  $800,000
·B. Street property  $662,500
·Motor Vehicle  $ 15,000
·Motor Cycle payout  $ 14,000
The total value of these is $1.861 million.
The Loans
At the time the parties commenced cohabitation, the Klemzig property was unencumbered. The defendant had paid off the mortgage he had taken out to finance that property. The E. Street property was subject to a mortgage of $141,000. During the course of the parties’ relationship payments were made towards the E. Street loan. I accept the plaintiff’s evidence that these payments came from the parties’ joint funds. The defendant did not give evidence as to the source of funds but his evidence suggests that the payments were made from “the pot” comprising the profits from the business and rent from the various properties owned by the parties.
It is uncontentious that the B. Street property was purchased in June 2006 for $500,000. The financing arrangements are less clear.
The plaintiff left the financing arrangements to the defendant. Her understanding was that they had a substantial deposit and that they took out a loan from Club Finance to fund the balance of the purchase price and an amount of about $30,000 to pay the balance then outstanding on the E. Street mortgage to Bank SA.[22] It was her understanding that they borrowed about $500,000 by way of three individual loans. She did not know why there were three loans. She recalls only signing some documents at the request of the defendant.
[22] Transcript p305
She said that after they purchased B. Street they arranged for minor renovations, painting by contractors and they did some work in the garden. The renovation costs were met by the funds in “the pot”. Despite their minor nature, the renovations took some time and the parties did not move into B. Street until a year after its purchase. The plaintiff said that the loan repayments were made from the defendant’s bank account and that her understanding was that the source of the funds was the proceeds of the business.
During the course of the plaintiff’s evidence a number of documents were tendered relating to these loans:
·P18         Memorandum of Mortgage relating to B. Street together with                the standard terms and conditions.
·P19                  A bundle of statements for Club Financial Services in the name           of LC and MH for loan 288744.
·P20                  A bundle of statements for Club Financial Services in the name           of LC for loan 286844.
·P21                  A bundle of statements for Club Financial Services in the name           of LC for loan 286845.
The plaintiff gave evidence that these documents came from the defendant’s discovered documents. She never received statements personally. They were sent to the E. Street address. When she lived with the defendant she recalled seeing statements and filing them. She had not received any loan statements or correspondence about the loans following separation.
Surprisingly, in view of the fact that he arranged the loans, the defendant was unable to cast much light on the financing arrangements. Indeed his initial evidence was at odds with the documents in that he asserted there was only one loan which was secured over B. Street. After the discrepancy was pointed out to him, and he had some time to consider the documents, he agreed that there were three loans. One was secured by a mortgage over the B. Street property and the other two were secured by mortgages over E. Street.
He said that he had repaid the original Bank SA loan he obtained to purchase E. Street prior to the B. Street purchase but that he did not close the loan so that he could redraw on it if he needed to. He said that he negotiated with Bank SA that he could draw up to $30,000 on this loan.[23] At the time the parties purchased B. Street the amount outstanding on that BankSA loan was $17,212. The BankSA mortgage was discharged when they obtained the loans to purchase B. Street.[24]
[23] Transcript pp704-6
[24] Transcript p705
The defendant said that B. Street cost $500,000 and that there was in addition $30,000 stamp duty payable.[25] He said that they had a deposit of $112,000 which was in a term deposit with Bank SA.[26]
[25] Transcript p705
[26] Transcript p713; Exhibit D9
The defendant said that they had difficulty borrowing further funds from BankSA for reasons that are not entirely clear to me. He contacted someone called “Damien” who I infer was a mortgage broker. Damien apparently arranged the loans with Club Finance.[27] The loans were interest only loans. The total loan facility was $703,938.08. The defendant gave evidence that all three loans were in their joint names but that he had changed the loan documents on two of the loans into his name following separation. He said however that he viewed all three loans as a joint debt and, in effect, as the one loan because it had been incurred so that the parties could purchase their home at B. Street.
[27] Transcript pp730 - 732
I have difficulty in accepting that the two loans in the defendant’s name were ever in the plaintiff’s name. They are secured over the E. Street property which is in the defendant’s name alone. Further there is no indication on any of the tendered material that the plaintiff’s name ever appeared on these loan documents. However, I do accept that no matter what appears on the documents that these two loans were part of financing arrangements for the parties’ joint purposes and that both parties considered that they were jointly liable for them.
The defendant said that they borrowed more than they needed for B. Street with the intention of purchasing another property that they could rent out and negatively gear.[28] This was not put to the plaintiff but I accept that it was the defendant’s intention and that the plaintiff would likely have acquiesced in this given she left financial arrangements to him. It is uncontroversial that the investment property was not purchased.
[28] Transcript p706
The loans were not fully drawn down at the time of separation. The tendered loan statements indicate as follows:
Loan 288744 is in the parties’ joint names. The loan amount is stated to be $351,969.04. The start date is 30 August 2006. The loan balance at the date of separation was $349,728.34. The last statement shows a balance of $351,732.64 as at 6 February 2012. Interest was credited monthly and payments were made weekly. Payments have been maintained on a regular basis since separation. This loan is secured by way of mortgage over the B. Street property.
Loan 286844 is in the defendant’s name. The loan amount is $60,000. The start date is 31 July 2006. The loan balance at separation was $61,554.12. The last statement shows a balance of $58,735.49 as at 29 December 2011. Interest is credited monthly and payments made weekly. Payments have been maintained on a regular basis since separation. This loan is secured by way of mortgage over the E. Street property.
Loan 286845 is in the defendant’s name. The loan amount is $291,969.04. The start date is 31 July 2006. The loan balance at separation was $156,871.61. The last statement shows a balance of $292,885.65 as at 31 December 2011. This loan is secured by way of mortgage over the E. Street property. There have been several large draw downs on this account since the date of separation.
In summary, it can be seen that the balance of the loans at separation was in the order of $568,000. In the last statements available for the period shortly prior to trial, the balance was in the order of $703,000. This is an increase in the parties’ indebtedness of just over $135,000 since separation.
The plaintiff gave evidence that she has not made any loan repayments or paid any bills associated with the B. Street, E. St and Klemzig properties since separation. She further said that she did not know anything about the draw downs on loan 286845 nor had she received any of those funds.
The defendant’s evidence about the loans following separation was rather difficult to follow. Doing the best I can with his evidence it appears that he says that he made all the loan repayments following separation. He says that the additional draw downs were spent “On payments and stuff”.[29] He was subject to extensive cross examination on this topic. His answers did not clarify matters. In effect he said that the draw downs were to pay loan repayments and bills associated with the various premises; B. Street, E. St and Klemzig.
[29] Transcript p743
For the reasons that follow I do not fully accept either party’s evidence on this topic. It is clear from the documents that the defendant did use some of the draw downs for loan repayments. If I also accept that he used the funds for accounts associated with B. Street, E. St and Klemzig as he asserts and that these expenses are as detailed in his tax returns, there is an amount of $52,832.98 unaccounted for. Given my finding that this loan comprised part of the parties’ joint indebtedness; the plaintiff is not correct when she says she made no contribution to loan repayments or payment of bills following separation. Certainly she did not knowingly do so but the effect of this use of the joint loan funds by the defendant is that the plaintiff made a substantial contribution to the upkeep of the B. Street, E. Street and Klemzig properties and the loan repayments.
The Contributions of the Parties
Prior to Separation
The relationship lasted from 1996 until separation in 2008. Accordingly, this is a lengthy relationship of about 12 years. The plaintiff’s assets when she entered the relationship were:
·Her interest in the Kilkenny property;
·Personal savings of $10,000;
·A Mazda 121 motor vehicle valued at $6,000;
·Nominal superannuation and personal effects.
She says that the personal savings and the income from Kilkenny formed part of the parties’ joint funds. She also says, and this was not disputed, that the Mazda became the parties’ sole motor vehicle and was later traded in when they purchased a new vehicle. The plaintiff had no debts. The defendant’s assets were:
·The Klemzig property;
·The E. Street property;
·His interest in the Main North Road property;
·Furniture and personal effects.
The defendant’s only debt at the time the relationship commenced was the loan of $141,000 for the purchase of E. Street. He had, by this time, paid the loan for Klemzig.
The defendant contends that he also had substantial savings which he subsequently used to renovate the E. Street property. The plaintiff disputes this. She says that the renovations were paid out of their joint funds being the income generated by their business, her savings, rental income from Klemzig and her distribution from Kilkenny. The defendant has provided no documentary evidence of the existence of his savings and his oral evidence on the topic was unconvincing.
The renovations were extensive. There was a two story addition comprising living accommodation. The existing house was converted to a hair and beauty salon. The defendant planned these renovations and obtained all necessary consents prior to the parties commencing their relationship. The renovations were underway when they met.
The list of payments maintained by the parties in respect of the E. Street renovations shows that these were incurred over a two year period of time.[30] The expenses commenced on 7 July 1996 and concluded on 30 March 1998. Prior to the parties commencing to live together, the cost of renovations amounted to just under $3,000. These came from the defendant’s funds. After co-habitation the cost of the renovations was in the order of $150,000. The plaintiff’s evidence was that she generally attended to paying these accounts once the relationship commenced. This is borne out by the fact that her handwriting appears in the records maintained by the parties. She says that the money came from “the pot” or the visa card which was paid out of “the pot”. Either way, it came from the parties’ joint funds. I prefer the evidence of the plaintiff and I find that the defendant did not have extensive savings as he asserts.
[30] Exhibit P14

The plaintiff also gave evidence, which I accept, about her work on the Klemzig property both as to renovations when tenants vacated and as to repairs, maintenance and gardening.
The plaintiff was not in paid employment at the commencement of the relationship having just returned from interstate. The defendant was running his own hairdressing business and had been for some years.
The plaintiff says that shortly after the commencement of the relationship she commenced working in the defendant’s business. Initially the salon was in a shopping centre. Whilst at the shopping centre the defendant employed two apprentices, a senior hairdresser and a barber. When they moved the salon from the shopping centre to E. Street in about 1998 they did not take the two apprentices or the senior hairdresser with them. Only the barber, the defendant and the plaintiff moved to E. Street.
The plaintiff says that she and the defendant jointly attended to the E. Street renovations and both worked in the business. She said their day started with a site meeting with the builders. She would often be responsible for supervising work or getting supplies and equipment for the builders because the defendant was usually required at the salon. She said they both did physical work at E. Street such as sanding, cleaning and painting after business hours. The defendant did not appear to dispute this although he suggested that he did more of the work than the plaintiff. I prefer the plaintiff’s evidence.
The plaintiff is not a hairdresser. It appears common ground however that she helped in the shop doing what she could. There is some dispute over the period of time that the plaintiff worked in the salon, the hours she worked and possibly some dispute about the extent of her duties. The plaintiff says that she acted as the receptionist, answering the telephone, making bookings, greeting clients and making cups of coffee. She performed limited hairdressing duties such as washing hair and putting hair colour on. She cleaned the salon and washed the towels. She was responsible for stock taking and ordering products. She would on occasions go to hairdressing wholesalers to collect products. She was responsible for paying all of the bills associated with the salon and the Klemzig rental property. She also maintained the books – principally the salon “Profit and Loss” books. She says that she worked full time in the salon and did other work such as attending to book keeping and the renovations. She was also primarily responsible for housekeeping, cooking and cleaning.
Following the birth of the parties’ child in 2003 the plaintiff said that she was the primary caregiver and maintained the primary role of housekeeping, cooking and cleaning. In addition she continued to work in the hair salon albeit on reduced hours of about 15 – 20 hours per week due to her child care responsibilities. She continued to pay all the bills and do the book keeping.
The defendant’s evidence on this topic was not entirely clear. It appeared that he may concede that the plaintiff worked in the salon prior to the birth of the parties’ child. On one occasion he gave evidence that she had worked very hard prior to the birth of their child even when pregnant. Subsequently however he appeared to resile from this position. He seems to dispute that she washed towels and cleaned the salon but did not specifically dispute the other duties she described.
The defendant said that that after the birth of their child the plaintiff refused to work in the salon despite his encouragement. He did not however employ anyone to assume the plaintiff’s role following the birth of the child. He said that this made things very difficult for him which tends to suggest that the plaintiff did at least some useful work in the salon.
I note in passing, that the profit and loss book for the financial year 2005 – 2006 [31] has a loose document in it in the defendant’s handwriting entitled “P/L Statement – year ended 30 June 2006” which has as an item of expense “Wages (plaintiff’s name) $6000”. Both the plaintiff and the defendant denied that wages had been received or paid. The defendant was unable to give a coherent explanation for this entry.
[31] Exhibit P9
It was not entirely clear whether the defendant disputed that the plaintiff also had the role of book keeping and paying bills. Even if this was disputed the documentary material supports the plaintiff’s evidence that she did undertake this work. It is her handwriting in the profit and loss book and her handwriting on the various bills indicating that they were paid. Indeed it appears that she continued to maintain the profit and loss book for some months after separation until the defendant took over.
I prefer the plaintiff’s evidence about the nature and extent of her activities where it conflicts with the defendant’s. I find that from the commencement of the relationship she worked full time in the salon undertaking the duties that she described. I do not accept the defendant’s evidence that the plaintiff absented herself from the salon following the birth of their child. The plaintiff conceded that she worked less hours in the salon because of her child care responsibilities but I accept that she continued in her previous role for 15 to 20 hours a week.
The defendant also appeared to dispute that the plaintiff had the primary responsibility for child care and the household. Again his evidence was not entirely clear and in some respects contradictory such as his comment that he moved out of the E. Street flat and into the salon shortly after their son’s birth for a period of time as he could not get any sleep. I accept the plaintiff’s evidence that she was the primary carer for the child and that she did the bulk of the household work.
The plaintiff tendered the Hairdressers and Beauty Salon Award.[32] Whilst I do not consider it appropriate to allocate a monetary value to the plaintiff’s work in the salon business it is clear from the award that the receptionist duties she undertook are recognised duties which attract a salary in the order of $540 per week. The other duties she undertook such as cleaning and book keeping are not encompassed in the award but clearly had a value to the business. Likewise, the defendant as a qualified hairdresser of some years standing was plainly integral to the business.
[32] Exhibit P15
It is remarkable that there is no clear evidence of the income from the salon business. The plaintiff said that whilst she was undertaking the book work her assessment was that the net takings from the salon business were in the order of $2000 to $3000 per week.[33] The defendant disagreed with this and said that the net weekly takings were in the order of $500 to $1,500 per week.[34] Whatever the income from the business it is clear that the proceeds of the business enabled the parties to maintain a reasonably affluent lifestyle, to renovate E. Street, pay off the E. Street loan in the sum of $141,000 and save the B. Street deposit of $112,000 in the 10 years from 1996 until 2006.
[33] Transcript p606
[34] Transcript pp1013 - 14
It was my clear impression from the evidence of both parties that they worked diligently together and pooled their resources to achieve a common goal. That common goal was to secure their financial future by running their business profitably and by accumulating rental properties.
Following Separation
Following separation the plaintiff said that she had not made any payments towards the loans or the bills associated with the various properties. Without being in any way critical of the plaintiff I reject that evidence. The defendant’s evidence and the documents produced by him make it clear that that the plaintiff was making these payments jointly with the defendant by way of the draw downs from loan 286845.
As I have said, at the date the parties separated two of the loans, 286844 and 288744, were fully drawn. The third loan, 286845 was not. Since separation the parties’ indebtedness under that loan has increased from $156,871.61 to $292,885.65. The defendant says, as I have indicated above, that this is attributable to loan repayments or bills associated with the various properties.
It is apparent from the documents that part of the increase is attributable to loan repayments but the defendant has withdrawn additional amounts totalling $94,000. These draw downs commenced with an amount of $30,000 transferred to the defendant’s bank account on 22 January 2009 and concluded with an amount of $8,000 on 2 June 2010. It is apparent from a reading of the defendant’s bank account statements and the loan statement that the sum of $5,118.90 can be accounted for as a payment against loan 286844. The balance of these withdrawals is less easy to account for. Whilst the defendant asserts it is for bills he has been unable to point to bills of that magnitude.
For example the defendant sought to explain the draw down of $30,000 on 22 January 2009 by saying that the plaintiff left him with 5 months worth of bills on separation. As indicated above there was no evidence that this was the case – to the contrary the bills shown to be outstanding amounted to only $647.12. In addition the defendant paid a visa bill on 14 January 2009 in the sum of $6,547.00[35] which arguably represented bills attributable to the parties. He also made the payment of $5,118.90 to loan 286844. The defendant could not explain where the balance of the $17,686.98 was spent other than to assert that it was spent on bills. The situation is the same in respect of all of the draw downs.
[35] Exhibit P49
The defendant says that all of the expenditure on the various properties is set out in his taxation returns. He was only able to tender returns for the financial years ended 30 June 2008, 2009 and 2010. Given the dates of the loan draw downs however it is reasonable to assume that the property expenses requiring payment during the period of the draw downs are in the returns for the years ended 30 June 2009 and 2010.
The rental property schedules for Klemzig show total expenses, excluding interest on loans, of $3,957 in 2008/9 and $4,678 in 2009/10. The property schedules for E. Street show total expenses, excluding interest on loans, of $3,615 in 2008/9 and $3,797 in 2009/10. The rental property schedules for B. Street show total expenses, excluding interest on loans, of $6,801 in 2008/9 and $6,006 in 2009/10. The total declared expenditure over and above loan repayments is $28,854.
Accordingly there is a discrepancy between the amounts that are able to be accounted for and the amounts drawn down in the order of $52,832.98. The defendant claims that this has been spent on the properties and specifically claims to have spent a large sum renovating B. Street so that it could be rented out. He has not however produced any documentation to support this claim nor is it reflected in his tax returns.
Accordingly, whilst she was unaware that this was the case, the plaintiff effectively paid half of the loan repayments and half of the expenses on the property up to July 2010 when loan 286845 was fully drawn down.[36]
[36] Exhibit P21
The defendant left B. Street and moved back into the flat at E. Street shortly after the separation. As indicated above, his taxation returns suggest that B. Street was rented out in the financial year ended 2009 and that he received a rental income of $8,995 and in the financial year ended 2010 when he received an income of $18,165. Despite the content of his taxation returns, the defendant’s evidence was that he did not commence to rent B. Street until February 2011 when the property was rented for $575 per week.[37] The property has recently been re-let for a 12 month tenancy at $585 per week.[38] The plaintiff was not consulted about renting out B. Street nor has she received any payments by way of rent. Accordingly she cannot shed any light on this situation.
[37] Exhibit P32
[38] Exhibit P28
What is clear is that the defendant has been in a position to rent out B. Street in addition to Klemzig and the rooms at E. Street since separation. He says he did not do so until forced to that position in February 2011 by his financial circumstances because he wished to maintain B. Street as an alternative residence for the sake of the parties’ child. I do not accept this particularly in the light of the evidence that he changed the locks on the day the plaintiff left B. Street and refused to let the plaintiff take up residence there with the child when she requested this. I further note that he apparently allowed a person called AH and possibly another person MS to stay there for a period of time. I found his evidence about the financial arrangements concerning AH extremely difficult to follow. At one stage he suggested no rent or contribution was made, at another he suggested that AH was doing unspecified work on the property and at yet another that AH was making a financial contribution but that it was minimal.
Had B. Street been rented shortly after separation, at a proper market rental, the rent could have been applied to the loan repayments and the expenses of that property. This would have made a substantial difference to the current situation with the loans. Likewise although it is said that Klemzig was rented out prior to Mr Bowyer’s departure in 2011 it is not possible to trace those rental payments. The defendant’s taxation returns suggest that Klemzig was rented out in the financial year ended 2009 and that he received a rental income of $9,860 and in the financial year ended 2010 when he received an income of $9,968. It is not clear whether rent payments were applied to loan repayments and outgoings attributable to that property. The defendant asserted that they were. If however this was the case it would have been expected that the situation with the loans would be different.
The defendant’s evidence is that he sees the three loans as one loan and that this one loan was attributable entirely to the purchase of B. Street. He maintains that the plaintiff is jointly responsible for the whole of the loan but only has an interest in B. Street and a smaller interest in E. Street. His conduct suggests otherwise. The total loan amount is far more than was required to purchase B. Street. He explained it was their intention to buy an investment property. The defendant’s taxation returns apportion the loan repayments equally across B. Street, E. Street and Klemzig, albeit Klemzig is not subject to a mortgage. No doubt this is for negative gearing purposes to assist the defendant’s taxation position. However, if his tendered taxation returns are accurate as the defendant contended then the plaintiff has an interest in all three properties B. Street, E. Street and Klemzig given he also contends that she is jointly liable for the loans.
The parties’ current financial position
The plaintiff said that when she left the family home she rented a property in Bowden for $295 per week for a period of 12 months. She now lives rent free in one of the flats at the Kilkenny property she owns with her siblings. Because of this she does not receive a distribution from the Kilkenny partnership. Her only income is NewStart allowance. She did obtain some part time work in a florist business but has recently lost this due to downsizing. She has recently been accepted to undertake further study as a youth worker. The current course is for one year but she may do further study. She has some nominal superannuation from her pre-relationship employment in the order of $6000.
Since separation the plaintiff has had the primary care of their child and the primary responsibility for supporting him. The defendant does not pay child support in view of the parties’ agreement that he would pay the school fees. The defendant has made some contribution by way of shared care arrangements, assuming responsibility for payment of school fees (albeit these are in arrears and some that have been paid appear to have been paid out of loan funds for which the defendant asserts the plaintiff is jointly responsible) and sporting activities. I note that the defendant has an application listed before the Family Court for an increase in the hours he cares for his child to give him equal time to that of the plaintiff.
The defendant’s current financial situation is not clear. The taxation returns that he has filed show that his expenses exceed his income by a considerable margin. He claims to be impecunious because of the responsibility he has taken on to service the various loans. He is however still running his business and receives money from renting the various properties including the B. Street property in the parties’ joint names. He is not accounting to the plaintiff for those rent receipts. Contrary to his assertion, he has not made all the loan repayments. The loans have until July 2010 been paid by drawing down on the third loan. The defendant could have substantially reduced the outgoings by renting B. Street earlier than he did and also by more assiduously renting Klemzig and the rooms at E. Street.
I find that the defendant’s current financial position is at least as good as the plaintiff’s and likely better. I take into account that the defendant may have equal care of the child in the future.
Discussion
The defendant’s submissions about the just and equitable division of the property were not entirely clear despite my best efforts to clarify his position. It appears that he says that whilst the plaintiff did some minor renovation and maintenance work at Klemzig she has not contributed in any other way to that property. He says it was his and paid for by the time they commenced their relationship. He contends that she has no entitlement to that property.
He concedes that the plaintiff did make a contribution to the E. Street property by working on the renovations. He says she is entitled to between $100,000 to $150,000 for that property. She is entitled to 50% of B. Street and the motor vehicle. He says she should not receive anything for the proceeds of the motor cycle insurance claim because this has been “reabsorbed and its getting divided anyway into B. Street”.[39] His point appears to be that the $14,000 insurance payment was paid into the loan or property expenses. There is no evidence of this and I do not accept it.
[39] Transcript p1124
The defendant says that the plaintiff should be responsible for 50% of the loans. Putting the defendant’s position into figures he is suggesting that the plaintiff be paid a lump sum between $87,073.20 to $137,073.11 calculated as follows:
B. Street (50% of $662,500)  $331,250.00
         E. Street   $100,000.00 - $150,000
         Motor vehicle (50% of $15,000)  $     7,500.00
         Sub-total  $438,750.00 - $488,750.
         Less 50% loan balance  $351,676.89
         Total   $87,073.20- $137,073.11
I do not consider that this adequately reflects the plaintiff’s contribution to the acquisition and maintenance of the property, to the parties’ financial resources, to the relationship or to their child.
Whilst it is undoubtedly the case that the defendant owned the Klemzig property outright at the commencement of the relationship, the plaintiff contributed to the Klemzig property by working on renovations and maintenance. She also assisted in the management of the property by paying accounts that came out of the parties’ joint funds. E. Street was renovated and the initial loan paid off whilst the parties were together using their joint funds. The plaintiff also did work upon this property with the defendant. In addition, given the use to which the defendant has put the joint loan funds, the plaintiff has paid substantial sums towards these properties since separation both by way of loan repayments and outgoings. The defendant has, in his taxation returns, apportioned the three loans equally over the three properties in order to negatively gear them. In effect all three properties have become the investment properties on which the parties intended to spend the balance of the B. Street borrowings.

The parties operated throughout their 12 year relationship as a financial unit. Whilst the defendant was the primary income earner through his hairdressing skills, the plaintiff contributed to their joint financial well being by working in the business, undertaking the book keeping at the defendant’s direction and by working on their various properties. In addition she was the primary homemaker and parent. Her contributions both financial and non-financial were therefore substantial. It is my view that the plaintiff is entitled to 50% of Klemzig and E. Street together with the equal share of B. Street and the motor vehicle that the defendant conceded in his closing remarks. I also consider that she is entitled to 50% of the motor cycle payment. The plaintiff contributed equally to its purchase. She did not have the benefit of its use and the defendant has failed to establish that this amount was paid off the loans or indeed put to any use of benefit to the plaintiff.
Given my findings as to the value of each of these items of property the plaintiff’s 50% share amounts to $930,750.00. From this must be deducted the plaintiff’s 50% of the joint debt in the sum of $351,677.00 making a total of $579,073.00.
This is not however the end of the matter. Since separation the defendant has had the exclusive use of all of the property and the exclusive control of the joint funds. He has failed to account to the plaintiff for any amounts received by way of rent and has failed to make the best use of the properties by failing to properly rent the rooms at E. Street, B. Street and Klemzig. In addition he has used the loan funds to pay outgoings on the properties including loan repayments. He has allowed the parties’ debt to grow by $135,199.71. Some of that increase has been accounted for but the sum of $58,845.68 has not. The inevitable inference is that it has been used by the defendant for his own purposes. The plaintiff has not received any benefit from those funds and she is now jointly responsible for repaying them. In addition, these added borrowings have increased the parties’ interest burden. Doing the best I can with the available information I consider that the plaintiff is entitled to an additional payment of just over $50,000 to reflect these matters. I therefore assess the plaintiff’s entitlement to a lump sum division of property as $630,000.00
Orders
I make a formal declaration that the Plaintiff and Defendant were parties to a domestic partnership within the meaning of the Domestic Partners (Property) Act (“the Act”).
I will hear the parties as to the making of further orders to reflect adjustment I have found to be appropriate and as to the question of costs.