HOWLETT & PIKE
[2010] FMCAfam 845
•11 August 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HOWLETT & PIKE | [2010] FMCAfam 845 |
| FAMILY LAW – De facto property settlement – seven year relationship – no children – impact of initial contributions – assessment of financial contributions where one party applied the majority of their wage to reducing the mortgage whilst the other party paid for day to day living expenses – financial contributions of one party when the other party chose to be unemployed for long period of time – effect of a direct contribution by third party of building on the property which increased the property’s value but where third party chooses not to be party to proceedings, and does not pursue equitable rights – view of a party to the seriousness of de facto relationship not a relative factor in the alteration of property interests. |
| Family Law Act 1975 (Cth), ss.4AA, 39A & 39B, 90SF(3) (r), 90SL & 90SM |
| Hickey v Hickey & Attorney-General of the Commonwealth (Intervener) (2003) FLC 93-143 Wright v Wright and Adams (1997) FLC 92-761 |
| Applicant: | MS HOWLETT |
| Respondent: | MR PIKE |
| File Number: | DNC 251 of 2009 |
| Judgment of: | Turner FM |
| Hearing dates: | 9, 12 & 13 July 2010 |
| Date of Last Submission: | 13 July 2010 |
| Delivered at: | Darwin |
| Delivered on: | 11 August 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Holtham |
| Solicitors for the Applicant: | Holtham & Associates |
| Counsel for the Respondent: | Mr Peters |
| Solicitors for the Respondent: | Maleys Barristers & Solicitors |
ORDERS
That within 45 days from the date hereof the Respondent pay to the Applicant the sum of $281,634.85.
That upon such payment of the sum of $281,634.85 the Applicant relinquish all of her interest in Property H in the Northern Territory of Australia being Lot [omitted] and being more particularly described in Certificate of Title Volume [omitted] (hereinafter referred to as ‘the property”) and the Respondent be entitled to retain the property for his sole use and benefit.
That in the event the Respondent does not pay the sum of $281,634.85 to the Applicant as ordered in Order 1 within 45 days, then the Respondent shall do all things and sign all such documents as are necessary so as to cause the property to be sold by private treaty, with the property to be listed with [omitted] in Darwin.
In the event that the property does not sell by private treaty within
3 months then the Respondent shall forthwith do all things and sign all documents necessary so as to cause the property to be offered for sale by public auction at a reserve price recommended by the auctioneer, and in particular is to:
(a)Place the property with an auctioneer recommended by [omitted], for the sale of the property by public auction at the earliest possible date;
(b)Execute all documents requested by the auctioneers for the sale of the property;
(c)Pay to the auctioneers any sums requested for advertising expenses in relation to the auction;
(d)Attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of the auctioneers as to the acceptance of a price less than the reserve price;
(e)Execute a contract of sale;
(f)Co-operate in every way with the auctioneers in relation to the auction of the property;
(g)Execute all other documents necessary to complete the sale.
Pending sale of the property the Respondent is solely responsible for the payment of all rates charges and other outgoings associated with the property and must maintain the property.
Upon sale of the property the proceeds of the sale shall be disbursed in the following manner:
(a)In payment of reasonable legal expenses, agent’s commission, auction expenses (if any) and sale costs with respect to the sale of the property;
(b)The sum of $281,634.85 to the Applicant;
(c)The balance then remaining to the Respondent.
The Respondent to deliver to the Applicant within 14 days from the date hereof:
(a)Curtains hung by the Applicants mother;
(b)Outdoor table that was near the donga;
(c)Fridge that was in the donga;
(d)Double bed that was in the donga;
That the Applicant retain for her sole use and enjoyment:
(a)Supreme Caravan ( with the Applicant to take all steps necessary to transfer the caravan into her name);
(b)Holden ute;
(c)The benefit of any superannuation policies in the Applicant’s name.
That the Respondent retain for his sole use and enjoyment:
(a)Commodore motor vehicle;
(b)Quintrex boat;
(c)Metal detector;
(d)Sale proceeds from the motorbike;
(e)Ride on mower;
(f)Slasher;
(g)Welder;
(h)Model helicopter/airplane;
(i)The benefit of any superannuation policies in the Respondent’s name.
That otherwise each party retain all other property in their possession, and be responsible for any liabilities associated with such property.
Each party shall do all such things and sign all such papers and documents that are necessary to give effect to the orders provided that in the event a party unreasonably fails or refuses to sign pursuant to these orders, then a Registrar of the Court pursuant to s.106 (A) of the Family Law Act 1975 is authorised to sign any such document on behalf of the defaulting party.
That within 45 days from the date hereof the Respondent pay to the Applicant fixed costs in the sum of $1,500.00 for costs in respect to the oral application by the Respondent as to a Declaration as to the date of commencement of the de facto relationship.
IT IS NOTED that publication of this judgment under the pseudonym Howlett & Pike is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Darwin |
DNC 251 of 2009
| MS HOWLETT |
Applicant
And
| MR PIKE |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a matter in which there are competing applications concerning the division of property between the Applicant and the Respondent.
At the commencement of the trial, the Court declared that the de facto relationship commenced at the end of 2002, and concluded in or around March 2009 with the parties living under the one roof until the Applicant physically left in July 2009.
There is no dispute that the parties commenced cohabitation in or around March 2002.
Background
In these reasons all statements of fact comprise of findings of fact.
The Applicant is currently aged 47 having been born [in] 1963 and is currently employed. The Applicant is legally represented in these proceedings.
The Respondent is currently aged 48 having been born [in] 1961 and is currently employed. The Respondent is legally represented in these proceedings.
The parties commenced cohabitation in or around March 2002, were in a committed de facto relationship towards the end of 2002 and separated in or around March 2009.
There are no children of the relationship, nor did either party bring children into the relationship.
Brief History of the Relationship
At the commencement of the cohabitation in March 2002 the Applicant was the co owner of a house property at Property C, which by the end of 2002 was registered solely in the name of the Applicant due to a property settlement being reached with her former de facto partner.
Property C Court was acquired in 1999 and was subject to a mortgage.
The Applicant also owned furniture and a motor vehicle.
At this time the Applicant was employed as a [omitted[.
At the commencement of cohabitation in March 2002 the Respondent was the owner of two properties, his residence at Property O, which was acquired in 1999 and subject to a mortgage and an investment property at Property U, which was acquired in February 2002 and entirely funded by a mortgage.
It is not clear from the evidence as to what chattels were owned by the Respondent as at the date of cohabitation.
At this time the Respondent was employed with [omitted].
In March 2002 the Applicant moved in to live with the Respondent at Property O after having known each other for only a short period of time.
At the time the Respondent had a tenant living at Property O.
Property C was then occupied by the Applicant’s mother and stepfather. Improvements were conducted on the property by the stepfather.
In July 2002 the Respondent refinanced the two mortgages over Property O and Property U into one mortgage.
Arrangements were made for most of the Respondent’s pay to be banked into the mortgage account and the Applicant organised for the electricity to be placed in her name.
In March 2003, the parties purchased a boat for $15,000.00, borrowing the total amount. Each party contributed equally to the loan repayments.
In late 2004 the boat was sold and a Nissan Patrol was purchased with the proceeds. It appears that the car was registered in the sole name of the Respondent.
In 2004 the Respondent purchased a small caravan for $5,000.00. The stepfather assisted in refurbishment, painting and improvement of the caravan.
In April/May 2004, the Respondent ceased employment of his own choosing.
In 2004 the Respondent discussed with the Applicant about selling everything and going on a working holiday touring around Australia.
In early 2005, the mother and stepfather vacated Property C Court and returned to Adelaide.
In or around April 2005 Property C Court was sold for $245,000.00, with the Applicant receiving net proceeds of $125,000.00.
In or around April 2005 the parties vacated Property O and the property was rented with the rent utilised to pay towards the mortgage.
In or around April 2005 the parties travelled to Adelaide for a five week holiday and whilst in Adelaide, a Supreme caravan was purchased for approximately $52,000.00.
The small caravan was used as a trade in and the balance monies of $47,000.00 were paid by the Applicant from the sale proceeds of Property C.
The caravan for registration purposes was placed in the name of the Respondent’s brother.
In or around April 2005 the Applicant from the sale proceeds paid the sum of $10,000.00 to the Respondent to enable him to reduce the mortgage over Property O and Property U.
In or around April 2005 the Applicant submits that the sum of $13,000.00 was also given to the Respondent, but this is in dispute.
In or around April 2005 the Applicant paid the stepfather the sum of $20,000.00 for the work performed by the stepfather on Property C.
From May 2005 to August 2005 the parties lived in the Supreme caravan at a caravan park. The Applicant remained employed and paid the caravan park fees. The Respondent remained unemployed.
From August 2005 to March 2006 the parties lived in the Supreme caravan which was parked rent free at a friends place.
During this time Property O continued to be rented for $280.00 per week which was paid directly onto the mortgage.
In February 2006 the Respondent sold Property O receiving net sale proceeds of $318,000.00.
In March 2006 the Respondent purchased in his name only from the sale proceeds the property at Property H, for $230,000.00.
From the balance sale proceeds the Respondent carried out substantial improvements to Property H, utilising almost all of the remaining balance of sale proceeds.
In June 2006 Property U was sold by the Respondent for $367,000.00. The net proceeds were minimal once the mortgage and commission were paid.
A boarder lived with the parties at Property H and paid money weekly for rent and food.
In early 2007 the Applicant’s mother and stepfather moved onto Property H and constructed at their expense a one bedroom dwelling known as a “donga”.
The sum of $25,780.00 was borrowed by the mother and stepfather to finance the building. The Supreme caravan was used as collateral for the loan. Currently there is still some $15,000.00 owing under the loan.
The stepfather put another $10,000.00 into the building and setting up the “donga” so as to make it liveable.
In or around May 2007 the Respondent returned to work.
In November 2007 the parties purchased in the Respondent’s name a Toyota Landcruiser for $51,000.00.
The purchase price consisted of the sale proceeds from the Nissan Patrol and some money. The balance was funded by a joint loan. The Respondent spent money from the proceeds of sale on improvements to the car and purchased sheep skin seat covers for $700.00 and a stereo system.
In 2008 the parties purchased a Quintrex boat for $15,000.00.
In March 2009 the parties separated under the one roof in Property H. The Respondent lived in the shed and the Applicant lived in the Supreme caravan which was housed on the property. The mother and stepfather remained living in the “donga”.
In July 2009 the Applicant, her mother and stepfather vacated
Property H.The Respondent continues to occupy the “donga” at Property H and rents out the main shed for $200.00 per week.
In or around March/April 2010 Toyota Landcruiser was sold by the Respondent without the Applicant’s knowledge for $24,000.00 to an acquaintance and the Respondent purchased a Commodore for $19,000.00 from the sale proceeds.
In or around May/June 2010 a motor bike was sold without the Applicant’s knowledge by the Respondent for $3,000.00.
Orders being sought at the date of the hearing
It should be noted that neither party either in their Initiating Application or Response articulated what property orders were being sought.
In final submissions it was indicated that the Applicant was seeking 55% of the property pool.
In final submissions it was indicated that the Respondent was seeking 70% of the property pool, and further that the Respondent wished to retain Property H.
Evidence
The Applicant relied on the following documents:
i)Initiating application filed 11 June 2009;
ii)Her affidavit filed on 6 July 2010;
iii)Her financial statement filed on 6 July 2010;
iv)The affidavit of Mr C, stepfather filed 25 September 2009;
v)The affidavit of Mr C, stepfather filed on 8 July 2010;
vi)The affidavit of Mr G, Certified Practising Valuer filed by leave on 8 July 2010;
vii)Her Outline of Case filed by leave on 8 July 2010.
The Applicant and Mr C were cross-examined.
The jointly appointed valuer Mr G was not called.
The Respondent relied on the following documents:
i)Response filed 21 August 2009;
ii)His affidavit filed on 21 August 2009;
iii)His affidavit filed on 6 July 2010;
iv)His affidavit filed by leave on 8 July 2010;
v)His financial statement filed by leave on 8 July 2010;
vi)His Outline of Case filed by leave on 8 July 2010.
The Respondent was cross-examined.
In considering the matter, I have had regard to each of the affidavits referred to in the course of the proceedings, to the oral evidence given by each of the parties and their witnesses in the proceedings and to the submissions made on behalf of each of the parties.
Findings of fact are made on the balance of probabilities, having regard to the evidence and my observations of the parties and witnesses.
I find the Applicant to be a credible witness. Her answers were direct, well thought out and consistent.
I further find Mr C to be a credible witness.
I therefore give significant weight to the evidence of the Applicant and the stepfather.
I however did not find the Respondent to be a credible witness.
The Respondent was evasive throughout cross examination and demonstrated selective memory when answering questions on numerous occasions.
Further there were substantial inconsistencies in his evidence and in particular in relation to his assertions as to financial contributions to day to day living expenses.
Further it was evident throughout the proceedings that he had total disregard for the Applicant and her rights and held an unshakeable belief that the Applicant did not contribute in any meaningful way to the property pool.
This was not assisted by the poor preparation of the Respondent’s case which resulted in last minute raising of issues, last minute filing of documents and the late disclosure of important information and documentation.
This made the trial very convoluted and posed a significant challenge to the Applicant’s legal representation.
Despite these challenges however it must be said that the Applicant solicitors handled the situation appropriately and professionally.
I therefore give limited weight to the Respondent’s evidence.
The Law
Section 4AA
Section 4AA provides for the meaning of a de facto relationship.
Section 39B
Section 39B confers jurisdiction to the Federal Magistrates Court in respect to de facto financial cases.
Section 39A
Section 39A allows property proceedings in de facto matters to be instituted in the Federal Magistrates Court.
Section 90SL
Section 90SL enables the court where there has been a breakdown in a de facto relationship to make a declaration as to the rights a party in property.
Section 90SM
In determining the division of property in de facto matters the court must apply s.90SM.
The relevant parts of s.90SM which I will be applying reads as follows:
(1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them—altering the interests of the parties to the de facto relationship in the property; or
b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
c) including:
d) an order for a settlement of property in substitution for any interest in the property; and
e) an order requiring:
i) either or both of the parties to the de facto relationship; or
ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
(2)If a party to the de facto relationship dies after the breakdown of the de facto relationship, an order made under subsection (1) in property settlement proceedings may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(3)The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SF
Section 90SF(3) provides that further matters may be considered:
As this case turns on the issues of contributions only, then the only relevant subsection that I intend to reply upon is that contained in
s.90SF (3)(r) which reads as follows:
“any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;”
Declaration of de facto relationship
A declaration was made by the Court prior to the hearing of this matter that the de facto relationship between the parties commenced in late 2002 and ended in March 2009.
Costs in respect to the oral application for the declaration by the Respondent were reserved and will be dealt with later in the judgment.
It is not in dispute that cohabitation commenced in or around March 2002.
Alteration of Property Interests
In determining the property adjustment I apply the four step approach as set out in Hickey & Attorney-General of the Commonwealth (Intervener) (2003) FLC 93-143:
i)Identify and value, as at the date of hearing, the parties’ property, liabilities and financial resources;
ii)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
iii)Identify and assess the other relevant factors; and
iv)Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
Step One – Assets and liabilities
Assets and liabilities for distribution at the date of hearing
The parties agreed on the identity and value of the following assets. There are no liabilities.
Assets
$
Property H
$ 500,000
Supreme Caravan
$ 24,000
Commodore Motor Vehicle
$ 19,000
Quintrex Boat
$ 12,000
Metal Detector
$ 3,000
Motor Bike sale proceeds
$ 3,000
Ride on mower
$ 2,000
Holden Ute
$ 1,750
Slasher
$ 1,000
Model helicopter/airplane
$ 500
Welder
$ 250
Total non superannuation assets:
$ 566,500
Superannuation $ Applicant $ 34,367 Respondent (two policies) $ 20,500 Total: $ 54,867
Total asset pool available for distribution:
$ 621,367
Step Two – Contribution
Contributions
I now turn to the second of the steps in the exercise under s.90SM, namely an assessment of the parties’ contributions within the context of ss.90SM (4) (a) to (c).
Initial Contributions
It is submitted by the Respondent that his initial financial contributions significantly outweighed that of the Applicant, and therefore an adjustment is to be made in the Respondent’s favour.
It is submitted by the Applicant that the initial contributions were almost the same and if there was to be an adjustment it should be for not more than 1% or 2%.
At the commencement of cohabitation the Respondent had an interest in two properties.
The first property acquired in 1999 was Property O which was occupied by the Respondent.
The evidence as to interest of the Respondent in Property O is vague and confusing, which unfortunately was a re occurring theme in the trial when it came to the Respondent’s evidence.
In the affidavit of the Respondent filed on 6 July 2010 in paragraph 3, there is annexed a copy of a historic valuation of the Property O prepared by Integrated Valuation Services.
This valuation was conducted independently by the Respondent and was not annexed, as would have been appropriate, to an affidavit by the valuer.
The historical valuation as at 1 July 2002 was $190,000.00.
This evidence was untested and it should be noted that the Applicant did not offer any alternate proposal as to value.
Accordingly I accept that the Property O property had a value of $190,000.00 as at July 2002.
As to the equity in the property, the Applicant states in her affidavit filed on 6 July 2010 at paragraph 6 that “the Respondent owed $147,000.00”.
The Respondent in his affidavit filed 6 July 2010 in paragraph 4 states that he had “$212,799.00 was secured over the Property O property”, although in the closing submissions reference was made to the sum of $147,000.00.
I suspect the Respondent was confused in his material, especially as mortgages were combined for the properties in July 2002, and I therefore accept that there was a mortgage in the sum of $147,000.00 over Property O therefore leaving the Respondent with equity of $43,000.00 in Property O in 2002.
The second property owned by the Respondent was Property U an investment property leased to Defence Housing Authority which was acquired in February 2002.
There is no dispute as to the purchase price of the property at $205,000.00.
The Respondent at paragraph 9 in his affidavit filed 8 July 2010 acknowledges that “100%” was borrowed to acquire the property.
The Applicant in paragraph 7 of her affidavit filed 6 July 2010 is more specific as to the extent of the debt, stating that it was “$215,000.00” at the date of cohabitation.
As this is not disputed by the Respondent, I accept that the Respondent had a negative equity of $10,000.00 in Property U.
Therefore I find that the extent of equity in real estate by the Respondent at the date of cohabitation was $33,000.00.
As to the Applicant’s initial contribution, as at the date of cohabitation the Applicant owned a property together with her former partner at Property C.
By November 2002 this property had been transferred into the Applicant’s sole name as a result of a property settlement.
The Applicant submits in paragraph 4 in her affidavit filed 6 July 2010 that Property C was worth “$145,000.00” and the mortgage was for “$122,582.00”.
This was not disputed by the Respondent.
I therefore find that the extent of her equity in real property was $22,412.00.
The Applicant owned a car and both parties had personal items at the date of commencement.
I therefore must give consideration as to whether the Respondent is entitled to a percentage adjustment in his favour based on an initial contribution of some $10,000.00 more equity in properties than the equity retained by the Applicant.
I must not only consider the amount of the initial contribution but also the long term effect that this contribution has had on the asset pool.
It cannot be disputed that the initial ownership of the two properties by the Respondent has substantially resulted in the pool that exists today.
Similarly it cannot be disputed that without the sale of the Applicant’s property the parties would not have been able to maintain their lifestyle.
As the relationship was for seven years and taking into account the extent of the pool, I therefore find that an adjustment should be made in favour of the Respondent.
Percentage adjustment
I therefore find that based on initial contributions only, that a 2% adjustment be made in favour of the Respondent, therefore making the percentage adjustment at this point as 52% to the Respondent, and 48% to the Applicant.
Financial and non-financial contributions during cohabitation
Opportunity was given during final submissions for the Respondent to explain how the suggested percentage adjustment of 20% in favour of the Respondent was reached, but no detailed breakup was provided.
The gist was that overall the Respondent contributed far more financially throughout the relationship and therefore through this substantial difference, the percentage division weighs heavily in favour of the Respondent.
Further it is submitted that credit must be given to the Respondent for the increase in value of the real assets.
Likewise it was submitted that the Respondent assisted non financially and whilst some weight can be given to the Applicant’s contribution, it cannot be substantial as none of the duties or work performed were significant.
The Applicant submits that an adjustment of 5-10% should be made in her favour due to her significant financial and non financial contributions and the financial contribution as a result of the increase in the value of the property due to the building of the “donga” by the stepfather. This issue will be dealt with separately in the judgment.
The parties kept their financial arrangements separate. There were no joint bank accounts, and property was retained and purchased in individual names. The only reference I can recall to a financial document being in both names was in reference to a car loan.
It was evident that the Respondent was proactive in ensuring that financial affairs were not intermingled and referred to in his affidavit material and in oral evidence to his previous broken down relationships and his lack of mental or emotional capacity to enter into a long term arrangement.
It was further evident that the Respondent made all decisions regarding the sale and purchase of property, not on the consultative basis but on an informative basis and that the Respondent needs were given priority.
The purchase of the boats, when the Applicant was not a lover of fishing, the plan to travel around Australia, the sale of the Applicant’s [C] property to finance the purchase of the Supreme van and their lifestyle, the self imposed long period of unemployment of the Respondent, the purchase of fun items for the Respondent’s enjoyment such as the model airplane and helicopter, the metal detector, the purchase and doing up of motor vehicles and the sale of the Respondent’s properties to purchase the rural property at Property H, despite the concerns raised by the Applicant as to its isolation, are just a few examples of the decisions imposed by the Respondent on the Applicant.
The Applicant dutifully abided by and supported the decisions of the Respondent and whilst it is clear from the evidence that the Respondent treated everything that he had as his own and only his own, with no acknowledgement of the Applicant having any claim or right, the Applicant freely and unquestionably committed herself non financially and financially to ensuring that the Respondent’s dreams were met, and did so on the belief that they were in a committed relationship where each would share in the spoils of their labour.
I will deal with the non financial and financial contributions separately.
Non-financial contributions during cohabitation
Each party submits that their non financial contributions are greater than the other.
I accept in this relationship that the Applicant played a very traditional role in that the Applicant carried out the majority of the household duties including shopping, cooking and cleaning, not only for herself and the Respondent, but at times also for the boarders.
Further the Applicant was primarily responsible for the running of the household and payment of household bills.
From the evidence, the Applicant was also proactive in organising the holidays, and looked after all household duties when staying in the caravan.
The Applicant also attended to gardening.
I accept that the Respondent was involved in more physical pursuits, and was involved in improvements and maintenance of the properties.
I have considered all the evidence closely and I find that there in nothing in the evidence that justifies an adjustment in either parties favour in respect to non financial contributions.
Financial contributions during cohabitation
There are several issues that need to be addressed as to financial contributions.
Financial contributions by the Applicant to the real properties in the name of the respondent
The Respondent submits that the Applicant did not make any financial contribution to the real properties in the name of the Respondent.
Whilst there was no evidence to support direct financial contributions of significance to the real properties, the evidence substantiates that the Applicant financially supported the day to day living expenses of the relationship from the date of cohabitation including the payment of electricity and the buying of groceries.
Whilst from time to time the boarders paid the Applicant monies, these funds were used to pay bills and to provide food and household items.
It was determined in cross examination of the Respondent, that over lengthy periods of time, the Respondent contributed next to no money to day to day living expenses except for the payment of insurance and health cover.
This arrangement enabled the Respondent to restructure his financial affairs so as to enable him to refinance the mortgages on Property O and Property U, and to ensure the quicker reduction of the mortgage through the majority of his wages being utilised for mortgage repayments.
This then had a flow on effect when both of these properties were sold and sufficient monies existed for the purchase and improvement of Property H.
I do not therefore accept the submission by the Respondent that there has not been any financial contribution by the Applicant to Property O, Property U, or Property H, nor do I accept the submission that he alone should benefit from the increase in value of the properties.
I therefore make no adjustment in favour of the Respondent.
Property C Court sale proceeds
The Respondent submits that there was no direct financial contribution of significance made by the Applicant from the sale proceeds of Property C and that the money was squandered and therefore there should be an adjustment in the Respondent’s favour as his direct financial contributions were greater.
It is acknowledged by the Respondent that at the date of cohabitation the Applicant had an interest in Property C.
The Applicant lived in Property C until moving in with the Respondent in March 2002.
Later in 2002 the Applicant’s mother and stepfather moved into Property C.
The stepfather undertook repairs and maintenance and improvement to Property C, although the Respondent was unsure whether rent was being paid. It is the Applicant’s submission that work was carried out in lieu of rent.
I accept that the decision to sell the Property C was as a result of conversations that took place between the parties sometime in 2004, whereby the parties discussed selling up, buying a van and going on a working holiday.
Property C sold in 2005 and $125,000.00 was received by way of sale proceeds.
It is agreed that from the sale proceeds the sum of around $47,000.00 was utilised to purchase the Supreme caravan, and the sum of $10,000.00 was paid towards the Respondents mortgage over Property O and Property U.
The Respondent submits that $5,000.00 was returned to the Applicant for the purposes of a holiday.
This was not supported by the evidence, and I do not accept the Respondent’s submission.
It is agreed that the Applicant paid to the mother and the stepfather the sum of $20,000.00 for the work performed on Property C although the Respondent questions whether the stepfather was entitled to receive payment when he appeared to live in the property rent free.
It is disputed that the Respondent received a further $13,000.00 cash from the sale proceeds.
The Applicant submits that the Respondent requested the money in cash.
The Respondent submits that the Applicant retained the money for her own use.
The bank statements support that the sum of $13,000.00 was withdrawn from the Applicant’s bank account at the same time that bank cheques were obtained for the payment towards the mortgage and van
It is agreed that on the day of the withdrawal of monies there was a significant wait of a number of hours before the monies were available.
The Applicant submits the delay was due to the bank raising the cash required for the $13,000.00.
The Respondent submits that the delay was due to the bank cheques being drawn up for the caravan and the mortgage debt.
There was no evidence that the sum of $13,000.00 was placed in either parties’ bank account after the withdrawal.
The issue of the $13,000.00 was the subject of extensive cross-examination and re-examination.
It is not necessary for me to make a finding as to who had the benefit of the $13,000.00 as I am satisfied that the monies, whether utilised by the Applicant or utilised by the Respondent were used appropriately within the relationship.
It is more than likely that the funds were used during the holiday period in Adelaide and to support the parties upon their return to Darwin.
As to remaining balance of the sale proceeds the Applicant submits that these monies were used for everyday living expenses. I accept this was the case, as the evidence was clear that the Respondent made little or no contribution during his period of unemployment from 2004 to 2007.
I am therefore satisfied that the balance of sale proceeds were not squandered and were used appropriately by the Applicant to benefit both parties within the relationship, and further that the Respondent was aware and had some input into how the sale proceeds would be used.
I therefore do not accept the Respondent’s submissions that the Applicant did not make any direct financial contributions to the property pool through the sale proceeds of Property C.
I therefore make no adjustment in favour of the Respondent.
Respondent’s unemployment
The Applicant submits that a greater financial contribution was made by the Applicant as the Applicant continued to work throughout the relationship and financially maintain the relationship whilst the Respondent had a long period of unemployment, and therefore an adjustment should be made in the Applicant’s favour for this contribution.
The Respondent submits that whilst there may have been a period of unemployment, he continued to contribute financially through his savings.
The Respondent was unemployed from late 2004 to around May 2007, a period in excess of two and a half years.
Apart from holiday periods the Applicant remained in employment during the whole of this time, sometimes holding down more than one job.
Hours of cross examinations did not support that the Respondent made any significant financial contributions during this time to day to day living expenses.
Further the Respondent gave evidence that from the sale proceeds Property O and Property U, most of the monies were used for the purchase and improvement of Property H.
I therefore do not accept the Respondent’s submissions that he continued to financially contribute to day to day living expenses.
I do accept that due to the Respondent’s significant period of self imposed unemployment that the Applicant made a greater financial contribution and therefore an adjustment should be made in her favour.
Further, when the Respondent recommenced employment in 2007, his savings increased from some $2,000.00 in his account to $7,424.00 within a period of a few months, further evidencing that the Applicant continued to meet the day to day living expenses whilst the Respondent kept all of his income for his own use.
I therefore find that the Applicant made a greater financial contribution than the Respondent.
Percentage adjustment
I therefore find that based on the direct financial contributions made by the Applicant during the Respondent’s prolonged period of unemployment that a 2% adjustment should be made in favour of the Applicant, therefore making the percentage adjustment at this point as 50% to the Respondent, and 50% to the Applicant.
Contributions made by the stepfather
I will deal with the contributions made by the stepfather under two categories, firstly the repair maintenance and improvements undertaken by the stepfather and secondly the building of the “donga” on Property H by the stepfather and mother.
Repairs, maintenance and improvements undertaken by the stepfather
It is agreed that the stepfather assisted with repairs, maintenance and improvements of the small caravan, Property C and Property H.
I find that this contribution of the stepfather does not weight in favour of either party, as the stepfather and mother benefited from the arrangements, through being provided rent free accommodation at Property C and Property H, and being compensated financially with the sum of $20,000.00 from the sale proceeds.
I therefore make no adjustment in favour of either party in respect to this contribution by the stepfather.
Improvements to Property H
The Respondent submits that the building of the “donga” on
Property H by the mother and the stepfather is to be treated as a gift to both parties and therefore both parties should benefit from the increase in value in Property H attributable to the “donga”.
In the alternative the Respondent submits that upon separation it must be inferred that ownership and right of occupation revert to the owner of the freehold.
It is further submitted that neither party can assert that they made greater than a 50% contribution in respect to that improvement.
The Applicant asserts that if the Applicant was not living at Property H, then the “donga” would not have been built and therefore the contribution by the mother and stepfather should be seen as a contribution by the Applicant, and therefore a percentage adjustment is to be made in favour of the Applicant.
Discussions took place between the parties and the mother and step father in late 2006 and/or early 2007 for the mother and stepfather to move to Property H on the basis that they live in a caravan on the property or build a residence to live in.
The reasons for the suggested move was twofold, firstly so that the mother and stepfather could be closer to the Applicant and secondly that the mother and stepfather could caretake the property when the parties went travelling.
It was decided by the mother and stepfather that it would be cheaper to erect a dwelling rather than live in a caravan and in 2007 approximately $25,000.00 was borrowed by the mother and the stepfather from Northern Territory Finance for the building of the “donga”.
Evidence was given that the mother and the stepfather put another $10,000.00 of their own money towards the building and setting up of the “donga”.
The mother and stepfather did not pay rent but did yard maintenance for Property H and the stepfather provided physical labour in respect to other improvements to Property H including assisting in the building of a kitchen, painting the bathroom, replacing gyprock in the bedroom and erecting a verandah to the shed.
Further the mother placed the electricity for Property H in her name and assisted towards the bill.
The mother and stepfather moved out of the “donga” in July 2009 and removed from the “donga” the toilet, kitchen sink, wash trough, stove and gas hot water system.
As at the date of the hearing the mother and stepfather were still paying off the loan to Northern Territory Finance and the sum of approximately $15,000.00 was outstanding.
The Respondent replaced some of the items removed from the “donga” by the mother and the stepfather and now lives in the “donga” and rents out the shed for $200.00 per week.
Mr G, the jointly appointed valuer attributes the value of $80,000 to the one bedroom dwelling (the “donga”) and assesses Property H as having a total value of $500,000.00.
The mother and the stepfather have chosen not to be parties to the proceedings and are not pursuing any equitable rights to the “donga”.
The Applicant gave evidence that from her share of the property proceedings, the Applicant will pay out the remainder of the loan to Northern Territory Finance, leaving the mother and stepfather debt free.
I must now consider how the contribution of the mother and stepfather of the “donga” to the improvements to Property H is to be treated and what impact this has, if any, on the alteration of property interests between the Respondent and the Applicant.
Firstly I do not agree with the submissions made by the Respondent that the building of the “donga” was a gift and further that it was a gift to both parties.
The “donga” was built for one purpose only and that was to house the mother and the stepfather. As such it does not hold any qualities as a gift and therefore I give no weight to that submission.
As to the alternate submission by the Respondent that after separation then ownership of the “donga” and right of occupation revert to the owner of the freehold I refer to the passage of Moss J in Wright v Wright & Adams (1997) FLC 92-761 at paragraph 22 which reads:
“Depending on the facts in such cases, it is sometimes held, where the claimant has expended money or otherwise incurred a detriment, with the knowledge and consent of the legal owner, in respect of relevant property, that if the arrangement under which that was done is thwarted by outside circumstances, with the result that the legal owner would, without the intervention of equity, reap an undeserved and unintended windfall, equity will intervene to give some relief, depending on the particular facts: see Morris (1982) 1 NSWLR 61; Malsbury (1979) 1 NSWLR 226; and the unreported decisions of Young J in Plumb v Breen 13 December 1990; Knox v Knox 16 December 1994; and Leichardt-Lillyfield Sailors’ Soldiers’ and Airmen’s Club Ltd v Kelly 23 August 1995”
It was clear from the evidence that at no material time was it the intention of any of the parties that the building of the “donga” would create a beneficial interest by the mother or stepfather in the land.
Further there were no discussions had as to what would happen should the Respondent and Applicant separate.
The mother and the stepfather chose not to be parties to proceedings and therefore I am not required to consider nor can I consider what equitable rights they may have to the property.
However I cannot then come to the conclusion that all ownership in the “donga” reverts to the owner of the freehold, especially where in this matter the land is in the name of the Respondent only.
I must therefore consider the improvement to Property H by the building of the “donga” as a contribution and as such whether weight is to be given to one party over the other.
The Respondent submits that neither party can assert that they made greater than a 50% contribution in respect to that improvement, with the competing submission by the Applicant that as the “donga” was constructed by her parents, then it should be seen as a contribution by the Applicant and therefore a greater percentage adjustment should be made in her favour.
A similar submission was made to Moss J in Wright v Wright & Adams (1997) FLC 92 – 761 and was promptly rejected.
The fact scenario in that case was that the Applicant’s mother, Mrs A, at her own expense of around $15,000.00 built in a granny flat in the matrimonial home and lived in the flat for some fourteen years, contributing to electricity, rates and insurance, but did not pay rent.
At the date of hearing the matrimonial home was valued at $180,00.00 and that $32,000.00 of that value was attributed to the existence of the construction paid for by Mrs A.
Moss J made findings as set out in paragraph 42 that there should be no payment to Mrs A, based on an equitable claim as
“I cannot see there is anything “unfair” or “unjust” in the legal owners now selling the premises and benefiting from the increase in price brought about by the additions, let alone that it would be unconscionable for them to do so. The second Respondent has derived a benefit from the arrangement which has endured for many years and which, however it is measured, has been out of all proportion to the comparatively modest investment by her in the premises. Had the cause of the cessation of the arrangement been brought about, not by the present circumstances, but, for example, by the second Respondent being required at this time to enter a nursing home due to failing health, it could not, in my opinion, be possibly suggested that she would in such circumstances have been entitled to claim an interest in the property, or a charge over it to secure to her a sum of money. The circumstances which have brought about the cessation of the arrangement are such that no attributable blame can be laid at the door of either of the legal owners, so that the situation and its consequences can be no different from the example given.”
Moss J then considered the alternate submission by the Applicant as set out on paragraph 43:
“In the alternative it was submitted by the Applicant [wife] that the amount of the additional market value of the [omitted] premises represented by the downstairs addition, should be viewed as contribution, direct or indirect, from the Applicant with the result, so it was submitted, that all or the majority of that contribution should be returned to the Applicant in the orders made in these proceedings.”
Moss J rejects this proposal in paragraph 43 and states:
“With respect, in the circumstances of this case, I cannot accept that submission. I am satisfied that it was the entirely humane concern for the welfare of Mrs A which caused the Respondent [husband] (obviously with the consent of the Applicant) to make the offer that he did, and that to date, the parties have received no practical benefit at all from having the addition paid for by Mrs A and occupied by her during all of that time. The arrangement has been to the advantage of Mrs A, and, indeed, very much to her advantage, in my opinion, and has also resulted in a benefit to the Applicant herself, in the sense that her mother was provided with accommodation over a long period of time and at modest cost. Now that the arrangement must come to an end, through no fault of the parties, why should not the first Respondent’s generosity towards Mrs A in that regard be reflected in orders providing for the parties to share in the additional value in whatever proportions seem just and equitable having regard to the terms of s.79 of the Act? Thus, in my opinion, the additional value should be treated as having been acquired by equal contributions of the parties.”
Whilst there is some similarity in the facts, there are also some major differences which distinguish this matter.
It cannot be argued that the mother and the stepfather benefited from the building of the “donga”. It provided them with a cheap alternative to housing and there was no requirement to pay rent.
The period of time that the mother and stepfather were in occupation however was only two years and when they vacated the premises, they took with them a debt which they continued to service at $500.00 a month, without having any benefit to the property.
The mother and stepfather are still significantly in debt with the sum of $15,000.00 still owing on the property.
It is evident from the history in this relationship that the Applicant has a strong family bond, and has continually assisted the mother and stepfather in the past, and nothing in the evidence indicates that this level of assistance would not continue into the future.
Taking all this into account I cannot find that the Respondent and the Applicant have not had the practical benefit of the improvements to the property.
If the “donga” had not been built property pool would be reduced by some $80,000.00, which is significant in a pool of just over $620,000.00.
Nor can I say that this arrangement has been overly beneficial in the long term to the mother and the stepfather.
Whilst they lived rent free, it is evident that they wholly committed themselves financially, physically and emotionally into making Property H a home for themselves and the parties, and that when the relationship broke down, they were worse off in every respect than they were when they first moved in.
This is recognised by the Applicant who is prepared from her share of the property division to pay off the debt to Northern Territory Finance and I have no doubt, will continue to assist her mother and stepfather when and wherever possible.
The Respondent was not as generous in his view as to the situation. At no time was it suggested by the Respondent that the mother and stepfather be compensated for there contributions or that the debt be paid out and when questioned in cross examination about the “donga”, went to great lengths to downplay its significance even though the jointly appointed valuer provided uncontested evidence as to the increased value placed on Property H as a result of the improvement.
Further the Respondent was critical of the actions of the stepfather in removing items from the “donga” some of which have been replaced by the Respondent at the cost of around $1,500.00.
Whilst I do not condone the behaviour of the stepfather in removing such items, there was no evidence that this impacted on the value of the donga as an improvement to Property H.
I therefore find that a percentage adjustment should be made in the Applicant’s favour in the sum of 5%.
Percentage adjustment
I therefore find that based on the contributions attributable to the Applicant as a result of the improvements made by the mother and stepfather to Property H that a 5% adjustment should be made in favour of the Applicant, therefore making the percentage adjustment at this point as 45% to the Respondent, and 55% to the Applicant.
Step Three – Other relevant factors
Section 90SM (4) (d) to (g)
I now turn to the third step in the process of apportioning the assets available for distribution between the parties.
Section 90SM (4)(d) – the effect of any proposed order upon the earning capacity of either party to the marriage
The orders that I propose making in this matter will not affect the earning capacity of either party to these proceedings.
Section 90SM (4) (e) – the matters referred to in sub-section 90SF (3) so far as they are relevant;
Neither party made submissions in respect of additional factors that I need to take into account pursuant to s.90SF.
The only aspect of s.90SF that I will take into account is s.90SF (3) (r) in respect to other facts or circumstances which the justice of the case requires to be taken into account.
Section 90SF (3) (r) – any fact or circumstance which in the opinion of the court the justice of the case requires to be taken into account
The parties have raised additional issues that I must take into account.
Removal of items from the donga by the stepfather
Evidence was given that the stepfather removed several items from the donga when it was vacated in July 2009 therefore rendering the “donga” unliveable.
The removal of items were not denied by the stepfather and the reason given was that he had paid for the items and that he could utilise them at a later stage.
There was no evidence put forward by the jointly appointed valuer
Mr G that the removal of these items impacted on the valuation.
Further I must take into account that the Respondent has had the benefit of and continues to have the benefit of rent received from Property H since the Applicant and the stepfather and mother vacated Property H in July 2009.
At first the Respondent received $100.00 a week when he lived in the shed with the tenants and then when he moved into the “donga”, the rent was increased to $200.00 a week.
This rental has more than compensated the Respondent in the costs of repairs to the “donga” to make it liveable and accordingly I do not intend to make any adjustment to percentages based on the removal of items from the “donga”.
The sale of the Landcruiser and the motor bike
In cross examination the Respondent agreed that the Landcruiser was sold to a friend for $24,000.00 after separation and from the sale proceeds the Commodore was purchased for $19,000.00. This transaction occurred without consultation of the Applicant and the Applicant was not informed that the Landcruiser was sold until during the trial.
There was some cross examination as to the vehicle being sold at an undervalue, but in the absence of any strong evidence in support I am not prepared to accept this submission.
Similarly the motor bike was sold, again without the knowledge of the Applicant.
What these incidents illustrate is the continued view of the Respondent that the Applicant’s rights were limited and therefore consultation was not considered or required and further it demonstrated the poor preparation of the Respondent’s case, as this was only one instance where information was provided late to the Applicants legal representatives.
I do not intend to make any percentage adjustments based on the sale of the vehicle or the motor bike and it is noted that the value of the Commodore and sale proceeds of the bike are included in the list of assets.
Monies received from tenants at Property O and Property H
The issue as to the monies paid by tenants, what the monies were used for and the extent of assistance provided by the Applicant in respect to the tenants was extensively addressed in examination and cross examination of both parties.
I accept that any monies received by the Applicant from tenants were utilised appropriately and further that the Applicant assisted in household duties regarding the tenants.
After taking into account all of the evidence, I find that this has no impact on the percentage division, and therefore an adjustment in not made in favour of either party.
Attitude of the Respondent towards the relationship with the Applicant
The law is now clear. The division of property as a result of the breakdown of a relationship is treated in a similar way whether the parties are married or in a de facto relationship.
This approach will be taken no matter what the attitude of a party is in proceedings.
It is clear in this case that for whatever reason, the Respondent was dismissive of the importance of his relationship with the Applicant referring several times during the evidence as the relationship being one of convenience and explaining reasons as why he would not make an emotional commitment to the relationship.
Further the Respondent went to great lengths to explain that he spent little time with the Applicant, that they did little socialising and that he enjoyed spending time with the boys (his friends) and fishing.
It appears because of this belief the Respondent was also dismissive as to the contributions made by the Applicant on any level and this is demonstrated by the lack of acknowledgment and understanding as to the entitlements in law of the Applicant.
Further the Respondent maintained that he knew little about the income received by the Applicant and the property that she owned.
One would hope that appropriate legal advices were provided to the Respondent as to the law in respect to alteration of property interest and the factors taken into account, and further that the Respondent took notice of this advice, but from the way the Respondent’s case was presented and the attitude of the Respondent, I suspect that neither occurred adequately.
Nonetheless I have applied the law in altering the property interests and the view of the Respondent to the seriousness of the de facto relationship is not a factor I have taken into account.
Percentage adjustment
I therefore find that based on the contributions, both non financial and financial, direct and indirect, that overall percentage adjustment is 55% to the Applicant and 45% to the Respondent.
Step Four – Effect of the orders and what is just and equitable
I find that the Orders as to property appearing at the commencement of these Reasons which equates to a 55% adjustment in favour of the Applicant and a 45% adjustment in favour of the Respondent is just and equitable.
Whilst only a relatively short relationship of seven years, the contributions by both parties were significant and whilst some small adjustments were made due to initial contributions and financial contributions, the overall larger adjustment in favour of the Applicant is attributable to the increase to the asset pool by the building of the “donga”.
The effect of the overall adjustment is that both parties can move on with their life, and even though the Applicant is receiving a larger part of the pool, the Respondent will more than likely be able to retain Property H, and will continue to have the advantage of not only a residency but one that is income producing due to the rental of the shed.
The Applicant however may not have the same opportunity to acquire property, as the Applicant will pay out the debt for the “donga” and then must break into a market where house values have increased significantly in the last few years.
Reserved costs
Despite a compliance mention conducted by me a few days before the trial to ensure the matter was ready to proceed, the Respondent’s legal representatives failed to notify the Applicant’s legal representatives of their intentions on the first day of trial to make an oral application as to a declaration as to when the de facto relationship commenced, and certainly this was not reflected in the affidavit material filed to date by the Respondent.
As a result of the application the trial was delayed by a day and further albeit smaller delays were incurred due to the late provision of documents by the Respondent that should have been supplied prior to the trial.
Although the outcome of the application resulted in a declaration that the de facto relationship commenced later in 2002, and not in March 2002 as submitted to by the Applicant, this had little impact on the final alteration to property interests.
Accordingly I award costs to the Applicant in the fixed sum of $1,500.00 in respect to the reserve costs for the oral application for the declaration as to commencement date of the de facto relationship.
Conclusion
This was not an easy matter to determine.
What should have taken one to two days took several days to hear.
In reaching the orders, I have given close consideration as to the needs of each party and the effect of the orders on each of the parties.
I am therefore satisfied that the orders reflect a just and equitable outcome.
I certify that the preceding two hundred and seventy-five (275) paragraphs are a true copy of the reasons for judgment of Turner FM
Date: 11 August 2010
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