Jasminka Murgic v Anne Murgic
[2011] NSWSC 971
•26 August 2011
Supreme Court
New South Wales
Medium Neutral Citation: Jasminka Murgic v Anne Murgic [2011] NSWSC 971 Hearing dates: 17 May 2011, 18 May 2011, 4 July 2011 Decision date: 26 August 2011 Jurisdiction: Equity Division Before: Sackar J Decision: See paras 109, 110, 111
Catchwords: PROPERTY (RELATIONSHIPS) ACT 1984 s20 - Adjustment of interests in property - Financial and non financial contributions Legislation Cited: Property (Relationships) Act 1984
Conveyancing Act 1919Cases Cited: Howlett v Neilson (2005) 33 Fam LR 402
Baker v Towle (2008) 39 Fam LR 323
Manns v Kennedy (2007) 37 Fam LR
Eathorne & Ors v Araya-Marvin [2011] NSWC 782
Tory v Tory [2007] NSWC 1078Texts Cited: Nil Category: Principal judgment Parties: Jasminka Murgic - plaintiff
Anne Murgic - defendantRepresentation: V Gray - plaintiff
A P Cheshire - defendant
Corporate & Civil Legal - plaintiff
Goldrick Farrell Mullan - David Mullan - defendant
File Number(s): 2008/279846
Judgment
The plaintiff and the defendant in these proceedings are daughter and mother respectively.
The plaintiff seeks orders under section 20 of the Property (Relationships) Act 1984 , for an adjustment of the respective contributions to the acquisition, improvement and retention of the relevant property interests and for an order pursuant to section 66G of the Conveyancing Act 1919 that the relevant property be sold by auction or private treaty and the proceeds divided.
Background Facts
In 1999 when the plaintiff was 21 years of age she resided with her mother then 42 years of age in the defendant's property at Green Valley, near Liverpool.
At or about that time the parties decided that the defendant would sell her property and that they would buy a new home together. It seems that the sale of the Green Valley property after the payment of the RAMS mortgage left the defendant without an ability to make any real contribution to the purchase of the relevant property. The plaintiff asserts she used a substantial proportion of an amount she received of $18,500 by way of victim's compensation payout in or about January 1999.
They together purchased a vacant site at 4 Lodi Place, West Hoxton for $115,000 and a contract was shortly thereafter concluded for the erection of a new dwelling on the site. The contract for the purchase of the land shows that a deposit of $5,750 was paid on the exchange.
The purchase and the construction were both funded by loans from Westpac Banking Corporation.
At that time the plaintiff was in full time employment and the defendant was in receipt of workers compensation following an industrial accident. The plaintiff has since that time remained in employment (currently at the CFMEU), except for a period of approximately four months in 2002 when she took a holiday overseas.
On 24 November 1999 Westpac refinanced the first loan and provided additional funds to cover the construction costs of the dwelling with a new advance of $257,000. Payments to the mortgage account were made from a new Westpac account in the plaintiff's name (account number 57-5625).
The defendant had suffered serious back injury in about August 1998 as a result of which she was deemed totally unfit for work. From about November 1998, having received two but relatively small initial payments, she was on superannuation benefits of $1,867 per month until about July or August 2000.
On about 14 September 2000 the defendant's employment with Franklins where she had sustained her back injury and an injury to her shoulder was terminated. It was terminated due to her prolonged absence from work and her incapacity. The dwelling was at lock up stage and the parties took possession.
Thereafter the defendant received a pension from Centrelink.
Her physical condition gradually improved to the point that in or about January 2003 she commenced her current employment with the Marconi Club, initially part-time for about three months and then thereafter full time. Although she has had continued ongoing problems with her shoulder and back she has nonetheless continued to work.
In about January 2002 Westpac varied the loan to increase the facility to $286,000 to repay existing loans and to permit the defendant to repay some credit cards.
At various points over the years the defendant received lump sum payments as the result of her various work injuries. On or about 17 October 2000 she received a superannuation disability payment of $20,609.25 which she deposited into her Westpac account Number 54-1518. On 26 February 2001 she received a further amount of $20,238.55 from her Colonial Superannuation Fund. She received two other such payments from Colonial in about February 2001. In March 2001 she received $43,213.30 being the lump sum workers compensation payment for her shoulder injury. In or about October 2002 the defendant received a lump sum workers compensation payment for her back injury in the sum of $169,350. She purchased a car for $17,000 on or about 17 October 2002 but on 25 October 2002 she states that she deposited the sum of $80,000 into the Westpac mortgage.
The defendant asserts that a significant portion of the balance of the lump sum payment for her back was used for improvements to the house including a pool, tiling, purchase of new furniture, a fridge, a television and other household items.
On 31 January 2003 the Westpac loan (with a balance of $204,000) was repaid and a new loan was provided by Perpetual Trustees (Members Equity - "ME") to the plaintiff alone in the sum of $217,000. However the debt was guaranteed by the defendant who also signed the mortgage securing the advance. That loan is still in place.
Personal differences arose between the parties during 2007 and/or early 2008.
On or about 27 July 2008 the defendant had the locks changed to the dwelling, effectively expelling the plaintiff from the property. Since that date the plaintiff has had to provide for her own accommodation, whilst the defendant has remained in the property. Since her expulsion from the property the plaintiff continued to make mortgage instalments until 2010. She then ceased making the payments. Her mother has not made any payments since 2010 either.
During the period when they lived harmoniously together the parties combined their various financial resources to maintain a joint household.
The Parties Contentions
The plaintiff initially made a number of claims alleging the existence of a number of trusts and also alleging a breach of contract.
However these claims were superseded by her claim under the Property (Relationships) Act 1984 (the Act) and are no longer pressed. There is no dispute between the parties that that Act applies.
Orders are also sought pursuant to section 66G of the Conveyancing Act 1919 . Following a sale of the property the plaintiff claims that the net proceeds ought to be divided in the proportions: 60% for her, 40% for her mother.
Both the plaintiff and the defendant accuse each other of falsely claiming various contributions they each allegedly made to the joint household. The plaintiff asserts that as the person in gainful employment during the whole period that she was in a position and did in fact make contributions not only to mortgage repayment but also to other household expenses connected with the purchase of food and other matters.
The defendant on the other hand asserts that she has made substantial capital contributions both to the mortgage and to improvements including but not limited to, the sale of her car, her superannuation benefits, long service leave and lump sum workers compensation entitlements.
The defendant whilst accepting that the plaintiff has made certain payments towards the mortgage asserts that they were far exceeded by draw downs on the mortgage for her own personal expenses. Through her counsel it has also been contended that the plaintiff simply could not have earned sufficient moneys to have made the contributions she alleges. The defendant's counsel submitted an analysis of the earnings from tax returns for the period 1998 to 2003 which shows her net earnings in that period range from approximately $24,000 to $33,000.
However the defendant accepts that when the mortgage was refinanced into a single loan it was placed solely in the plaintiff's name and that the plaintiff for the time made repayments pursuant to the mortgage. The defendant asserts she likewise contributed.
The defendant however asserts that the plaintiff continued to withdraw significant sums from the loan funds from time to time and that the defendant has remained a guarantor in respect of that loan.
The defendant accepts that she locked the plaintiff out of the property due to what she said was a fear that the plaintiff was aggressive towards her but in any event the plaintiff was in the process of moving out anyway.
There is also a dispute as to whether and if so to what extent the defendant has permitted the plaintiff to remove her chattels from the property.
The defendant ultimately asserts there is no reason for equity to intervene and in particular the property should not be sold nor the proceeds divided.
Legal Principles
The plaintiff's claim is limited to one pursuant to section 20 of the Property Relationship Act 1984 . Section 20 is in following terms:
"Division 2 - Adjustment of interests with respect to property
20. Application for adjustment
(1) On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:
(a) The financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and
(b) The contributions, including any contributions made in the capacity of homemaker or partner, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties an done or more of the following, namely:
(i) a child of the parties;
(ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties.
(2) A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a party to a domestic relationship in respect of the property."
In Howlett v Neilson , Hodgson J A identified a three stage process which may generally be followed in assessing the respective interests under that section.
In Baker v Towle , Basten JA with whose reasons and conclusions Beazley JA and Matthews AJA agreed and made the following comments:
"[42] These proceedings were brought under s20(1) of the Act, which has three operative effects. The first is to grant a right to a party to a domestic relationship to seek an order adjusting property interests of the parties to the relationship; the second is to empower the court to make such an order "as to it seems just and equitable" and the third is to identify the factors to which the court must have regard in determining the application. Whether those factors are the only factors to which the court can properly have regard was not in dispute in the present case: see Evans v. Marmont (1997) 42 NSWLR 70 at 79-80; 21 Fam LR 760 at 767-9 (Gleeson CJ and McLelland CJ in Eq); compare Manns v. Kennedy (2007) 37 Fam LR 487; [2007] NSWCA 217 at [112]-[125] (Campbell JA, Santow JA and Bryson AJA agreeing).
[43] it has been said in a number of cases that the application of s20 involves three steps, which were identified in Howlett v. Neilsen (2005) 33 Fam LR 402; [2005] NSWCA 149 (Howlett) (Hodgson JA, Ipp and McColl JJA agreeing) in the following terms (at [25]):
[25]...
(1) identification and valuation of the property of the parties;
(2) identification and valuation of the respective contributions of the parties, of the types referred to in s 20;
(3) determination of what if any order is just and equitable having regard to these contributions."
As Basten JA pointed out at [45] in many cases a step will need to be taken in order to arrive at a valuation of the property of the parties which is to be the subject of the process. As he points out justice and equity will usually require an assessment be made of the existing interests of the parties in the property owned by each or both in order to determine whether there is an adjustment which should be properly made. This will particularly be so no matter what sort of property is being considered but perhaps more important where real estate is the subject of the consideration.
In this case I am of the view that the date at which the property and other items need to be valued is the date of the trial. I should say that there are cases that suggest the date of separation as it were is the appropriate date. Typically it is however the date of the trial. I am of the view that the trial date is appropriate here because the plaintiff, even though she and her mother parted company in July 2008, continued to make repayments to the mortgage until mid 2010. I was informed that the property is worth somewhere between $450,000 and $540,000. It is currently mortgaged in the order of $219,526.97 as at 4 July 2011.
When one is looking at the valuation of the respective contributions of the parties to the relationship what is not required is "a narrow or purely mathematical process". See Howlett at [29] and Baker at [47].
Section 20 of course importantly requires that the adjustment be done on a just and equitable basis but having regard to the financial and non financial contributions made directly or indirectly by the parties and importantly the contributions made in the capacity of homemaker by either of the parties to the relationship to the welfare of the other party. (Section 20(1)(b)).
In terms of what is involved in the evaluation process in order to arrive at a just and equitable outcome Campbell JA in Manns v Kennedy at [62]-[67] helpfully collected and reviewed the relevant authorities:
"62 McLelland J said in Davey v Lee (1990) 13Fam LR 688 at 689; (1990) DFC 95-084 at 76, 146, that under section 20 "the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind". That statement was approved in this Court in Ross v. Elderfield [2006] NSWCA 102 at [35] and in Kardos v. Sarbutt [2006] NSWCA 11 at [36]; [2006] NSWCA 11 (2006) 34 Fam LR 550 at 561; (2006) DFC 95-332 at 78,542.
63 The Full Court of the Family Court of Australia (Fogarty, Murray and Baker JJ) in Ferraro v. Ferraro (1993) FLC 92-335 at 79,578 approved the statement in In the Marriage of Harris (1991) 15 Fam LR 26 at 31; [1991] FLC 92,254 at 78,705 concerning section 79 Family Law Act 1975 that the task it calls for "is not akin to an accounting exercise". The same applies to section 20.
64 However, the "holistic value judgment" is the final step in the process of arriving at an order, namely deciding what adjustment of property seems just and equitable having regard to the contributions identified in paragraphs (a) and (b). Carrying out the task that section 20 sets requires, before that final step is carried out, an identification and (so far as possible) valuation of the contributions that are being taken into account and an identification and (so far as possible) valuation of the property concerning which it is open to the court to make an adjustment: Howlett v Neilson [2005] NSWCA 149 at [25]; [2005] NSWCA 149; (2005) 33 Fam LR 402 at 407; Saric v Steward [2006] NSWCA 260 at [61]; (2007) DFC 95,401 at 78,713; Chanter v. Catts [2005] NSWCA 411 at [22]; [2005] NSWCA 411; (2005) 64 NSWLR 360 at 366.
65 Further, even in carrying out that final step, "there is no warrant for ignoring the rigour that mathematics can provide": Ross v. Elderfield (at [49] per Handley JA (with whom McColl JA and Hislop agreed)). As Hodgson JA said in Howlett v Neilson (at [39]; 411):
"...while I do not think that these matters can be determined on such mathematical calculations are of some use in guiding and testing conclusions about what is just and equitable, and also in promoting transparency and consistency in decision-making."
66 I note that in Kardos v. Sarbutt (at [29]; 558; 78,539), Brereton J gave an account of the process involved in the exercise of the jurisdiction under section 20 Property (Relationships) Act in which the third step was to decide "what order is required sufficiently to recognise and compensate the applicant's contributions". That formulation of the third step in the process was also adopted by Ipp JA (with whom Giles and McColl JJA agreed) in Bilous v. Mudaliar [2006] NSWCA 38 at [24]; [2006] NSWCA 38; (2006) 65 NSWLR 615 at 620.
67 It was submitted on this appeal that there may be a difference of substance in the way in which the third step is formulated in Kardos and Bilous, and the formulation used in the cases I have referred to in para [64] above, namely "determination of what if any order is just and equitable having regard to these contributions." I do not think there is any difference in substance between the two formulations. McColl JA agreed with both versions of the formulation, in Bilous and Howlett respectively. The emphasis in the judgment of Ipp JA in Bilous on the fundamental importance of the statutory text of section 20 is inconsistent with any rejection or qualification of the need to determine what, if any order is just and equitable having regard to the contributions. Since both Bilous and Kardos, McColl JA (with whom Handley and Santow JJA agreed) has stated the third step using the "just and equitable having regard to these contributions" formulation in Saric v. Steward (at [61])."
Basten JA further commented in Baker v Towle , that in his view that the court in Howlett accepted that the diligent application of both parties to the differentiated roles within a domestic relationship may well lead to the conclusion that interests in property should be divided equally. That result, His Honour remarked, may be achieved without valuing respective contributions in monetary terms although the outcome will be the allocation of interests in property which no doubt could be valued if necessary. [50]
Discussion
Counsel for the plaintiff in this case has submitted that the divisible pool of property comprises the property at 4 Lodi Close West Hoxton and the household contents therein. There is no doubt that is correct. No claims are made in respect of motor cars, bank accounts and the like. It is alleged that the plaintiff left various articles at the property which either it is alleged the defendant has destroyed or otherwise disposed of. It is accepted however that the value of that property would not have been substantial in monetary terms but will nonetheless have to be replaced. It is asserted quite appropriately in my view that the court is engaged in an invidious task of trying to sort out the financial and non-financial contributions which occurred many years ago. So much however is true of many cases of this kind. The plaintiff has contended that it is implausible to accept that either party has proved to have made a materially greater total net contribution than the other. Prima facie an equal division would be appropriate. I was also invited however by counsel for the plaintiff that in considering the division of property I should take into account the respective life expectancies of each of the parties which would result in broadly an apportionment of 60% to the plaintiff and 40% to the defendant. I do not consider that a consideration of life expectancies inconsistent with the Act and the case law.
Counsel for the defendant however, whilst accepting that contributions occurred some years ago, invites me to make a more precise evaluation and assessment for the purposes of settling upon the appropriate contributions. He invites me to reject the plaintiff's evidence as lacking in credibility because of internal inconsistencies with independent documentation such as bank statements and the like. He contends that the plaintiff has merely and unfairly attempted a reconstruction coupled with obvious fabrications.
I should say that I found both the plaintiff and the defendant in a number of respects unsatisfactory witnesses.
Each of the three witnesses called in the matter, the plaintiff, her sister Enesa and the defendant, were the subject of adverse comments by respective counsel as to their credit.
It is clear that both plaintiff and defendant happily agreed to buy the particular piece of land and have the house erected and furnished and were for a time prepared to collaborate with each other to achieve that end. They clearly lived relatively harmoniously from 1999 to at least early 2007. The plaintiff indicated that she first sought some legal advice about her position as early as 2004. However she remained in the house until sometime in 2007 thereafter staying only so it seems mainly on weekends until she left completely in the middle of 2008.
What is clear is that both parties obviously made contributions, financial and non financial, to the acquisition and maintenance of the property and indeed for the benefit of each other's welfare.
It has not been an easy task to work out what each has contributed largely due to the fact that both sides have been involved in a significant reconstruction undertaken of course retrospectively where the contemporaneous records do not tell the complete story.
As was pointed out in submissions by the plaintiff's counsel there is no evidence of profligacy. There is no suggestion that bills were unpaid or were otherwise left unattended. There is no suggestion that the house was allowed to deteriorate in any way. When running repairs had to happen they did. The mortgage was until recently always paid and as far as the evidence goes on time and in full.
The Plaintiff
There are a number of aspects of the evidence of the plaintiff which I regarded as unsatisfactory and areas of her evidence which I do not accept.
However whilst the defendant's counsel made significant and effective attacks on her credit in cross examination, it is nonetheless clear to me that she did make significant financial and non financial contributions. Whilst it was put to her repeatedly that she could not possibly have made contributions to the mortgage as alleged because her wages from time to time less any expenses would not have permitted her to do so, she did give evidence which I accept, that from time to time she held several jobs simultaneously. Over and above her ordinary day to day employment from time to time she worked at a nightclub and/or a delicatessen. Although it is not entirely clear during precisely which period or periods she did this it does seem apparent to me and I accept that she earned monies upon which she did not pay tax. Some of those monies went towards household expenses and the like and some unsurprisingly she spent on herself.
In anticipation of the proceedings and it seems from around about 2004 she commenced preparing schedules in order to, as she described it, "paper trace" various amounts expended.
The schedules originally filed with the plaintiff's evidence were prepared by the plaintiff over a number of years. In the year 1999 (CB146) there appears what becomes a pattern in later schedules. There is a date column, an amount column, an identification of the party to whom the payment was made and then the expenditure is categorised. The source of the payment is identified and then what is described as the "evidence" which is produced to support the item. Again for the year 1999 as an example one can see a payment to T J Johnson a solicitor acting for the defendant on the sale of her property in Green Valley. One also sees amounts attributed to Woolworths, Harvey Norman and the like. The categorisation column for 1999 identifies most items if not all as attributable to household groceries, maintenance or shopping. In a number of the schedules which have been created there are interpolations as it were which indicate passing thoughts of the plaintiff in relation to a number of the items. It is plain to me that this and other schedules were created by the plaintiff without any guidance or input from a lawyer.
The schedule for the year 2000 (CB335-336) covers the period from April to December of that year. All of the items are again attributable to household expenses and apart from six the source of the "evidence" is either a statement of CUA (an acronym for the Endeavour Credit Union) relating to the plaintiff's then employment and an account in her name, or alternatively a Westpac statement again in the plaintiff's name. Again, all of the items except a small number are said to be attributable to household expenses of various sorts. There are approximately six entries which refer to "mum's credit card".
The schedule for 2001 dating as it does from 22 January to 21 December of that year (CB372-278) has only broadly two categories of items either household expenses of various sorts or amounts which the plaintiff attributes to the defendant for example "mum credit card bill" or "mum's lotto" or "mum's clothes". There is one item attributed to both for 12 November of that year, noted as "vitamins for both of us".
The plaintiff prepared a similar schedule for the year 2002 dating from 18 January to 29 December of that year (CB508-510). At CB510 there is an interpolation in which it is asserted by the plaintiff that she sent her mother $12,000 (not the $11,000 otherwise referred to in evidence) when she was overseas for 3 or 4 months in the second half of 2002. Again apart from many of the items identified as household expenses of one sort or another all other items are identified as referable to the defendant's expenditure, for example "mum's credit card", "mum's lotto" or "mum's medication".
The schedule for 2003 (CB556 to 559) follows a similar pattern. On this occasion however there are references not only to household expenses but numerous references now to "mortgage". This covered the period when the plaintiff made contributions to the Members Equity mortgage. There are two references however, still to "mum's credit card".
Again the schedule for the year 2004 (CB586-591) covering as it does the period 15 January to 30 December identifies "household bills" or mortgage although one item is identified as "mum's and my car".
The schedule for 2005 (CB637-638) is somewhat out of order. It does appear to cover the period from 12 January to 29 December of that year. It has similar descriptions whether they be "household bills" or "mortgage" and some items are slightly more specific for example "income protection/mortgage".
The schedule covering 2006 (CB681-686) is in a similar format with many items identified again as either "household bills" or "mortgage".
The schedule for 2007 (CB732/737) is prepared in a similar format again and almost every item is attributable to either "household items" or "mortgage".
The schedule for 2008 (CB796/799) has only descriptions of either "household bills" or "mortgage".
There were no schedules originally presented in relation to the years 2009 and 2010. The plaintiff had of course moved out in mid 2008 but made contributions to the mortgage for the years to 2010.
At the commencement of the trial the plaintiff's counsel tendered some further schedules which became "Exhibit P2".
When cross examined about the original schedules, the plaintiff indicated that she had prepared them over about six years. The new schedules (Ex P2) had been prepared by her in November 2010.
In respect of the two schedules purporting to cover 1999 there was a $2,000 difference between the new schedule and the previous schedule she had prepared for that year (CB 146). However in cross examination she had to accept that even the $32,000 in the new schedule was an error and that she had totalled various amounts erroneously. The accurate total that she had to concede was correct was approximately $16,500. If I may say so that was readily apparent by simply totalling the amounts in the column. How she got the $32,000 is simply exposed as an obvious arithmetical error.
She was next taken to the schedule she had previously prepared for the year 2000 and was asked to agree that the total came to approximately $40,000. She accepted that that was the total. She had to agree that the new schedule for the year 2000 totalled $28,000 and tried to insist that the most recent schedule was still "substantially correct".
A number of matters were exposed however in cross examination which in my mind make the schedules no more than a very substantial reconstruction in an environment of hostility and loathing. They are in my opinion quite unreliable. In any event substantial revisions to the schedules occurred from late in 2010 and she was cross examined about differences between the original schedules which she described as merely "drafts" and those tendered when she first entered the witness box.
She accepted that unless she had a receipt for a specific item she could not tell the court whether or not it was a payment towards household expenses. She accepted however that her mother did pay for household expenses from time to time. For a very large number of items included in her schedules there were no receipts and there was a significant amount of speculation in my opinion on her part as to who had spent what between she and her mother and for what purpose. She was forced to concede that she included items in her schedules in respect of which she had absolutely no knowledge and possibly nothing to do with it at the time.
She was cross examined in relation to MFI1 (the schedule attached to defendant counsel's opening submissions which was itself a reconstruction from banking records tracing the movement of funds between various accounts). She really had no answer to many of the questions posed in relation to that schedule. Indeed she had to accept that her mother had obviously made payments towards the mortgage. She also conceded that she had made withdrawals from time to time. Her recollections as to movement of monies from one account to another was as one would expect after such a passage of time: non specific and indeed vague. On numerous occasions she had to admit that she had made what she described as an "admin error" which I took to mean an error in the compilation of her schedules. She also had to concede that she did not in her schedules account for redraws she made from time to time. In cross-examination she made a number of telling concessions as follows:
"Q. In your affidavit you made no reference to any of the redraws that you made, why is that?
A. I took the onus of the redraws and Members Equity. I am sorry why would I?
Q. I just wanted to stipulate the redraws in order to give a full picture of your contribution to the household would be fair. Wouldn't it be accurate to say: This is how much I paid and this is how much I took out?
A. Yes it would."
She could not recall the withdrawal of certain monies for the payment on a car. But it seems to me that is precisely what she did do.
She asserted that during her trip overseas in 2002 she arranged for approximately $11,000 to be given to her mother by a friend or friends. The only basis upon which she can assert that evidence is from her own memory. There is no contemporaneous document or documents corroborating that amount. I should say that whilst I accept that she did arrange for some monies to be loaned to her mother during her absence overseas I am by no means convinced that it was anything of the order of $11,000.
She was simply unconvincing when she tried to explain why she had not taken into account the monies that she had redrawn. She also conceded to my observation that she had ignored any expenditure that was purely personal to her and had not undertaken any exercise to identify and/or quantify such amounts.
She accepted that from 2007 she was not living at home on a regular basis. She was living there on and off. She would go back on weekends; however she asserted that she did clean the pool, change clothes and pack up some things to take with her, but she accepted that she was not living at the property on a regular basis from this point. She would sometimes stay with friends and sometimes her boyfriend. She also accepted that she made contributions from time to time to the households she stayed in both in terms of groceries and rent. She accepted the arrangement, which she is happy to accept should properly be described as "part time", continued until the middle of 2008 when she left the property entirely. She denied that when she went back to the house briefly to retrieve her belongings that she in fact took all that she intended or indeed wanted to take. She asserted she was limited by her mother as to the type of access she could have. She also denied that she took only those things that she thought were valuable. Importantly however she was taken to the schedule to the statement of claim that lists a number of items and attributes values to them. She was quite unable to indicate how the values had been arrived at and accepted that she probably just valued them "off the top of my head". She agreed however that the items had been jointly owned in any event.
I should observe that the plaintiff has made no attempt whatsoever (and indeed one could hardly be critical of her in this regard given the lack of specific identification and indeed access to the items) to put any more than a very subjective guestimate of what items were left in the house are and what they might be worth.
The Plaintiff's Sister Enesa
Having regard to the answers that she gave during her evidence and the manner in which she gave those answers I am satisfied that I can place really no reliance at all upon anything of relevance the witness had to say.
For example, although she asserted in her affidavit that the amount the plaintiff had loaned her mother during the plaintiff's absence overseas was in the order of $11,000 she conceded even in examination in chief that she was likely not to be correct on the amount that all she did was witness "the" money being given to her mother. In cross examination she conceded that her sister (the plaintiff) told her what the amounts were. She also conceded without too much resistance that certain statements she had made about her mother not providing groceries, clothing or any school equipment for her other sister Emina or the plaintiff as simply untrue. She simply could not explain why she had put that in her affidavit. Tellingly, she conceded that although she was involved in the preparation of her affidavit the person involved with her was the plaintiff. She also accepted one particular wording of her affidavit had been written for her by the plaintiff. In fact she was asked the following question:
"Q. Did you prepare this affidavit or was it prepared for you?
A. I was involved in the preparation.
Q. With whom?
A. With Jasminka Murgic"
She was specifically asked about some evidence she gave about the plaintiff's intention in relation to making contributions to the maintenance of the home. She gave the following evidence:
Q. Did Jasminka draft part of your affidavit?
A. Yes
Q. So in fact was the position that Jasminka effectively drafted this affidavit and gave it to you to sign?
A. I was there with her when she was writing it.
Q. Right, and she was suggesting to you what you might say and you were adding bits in; Is that right?
A. Yes"
Doing the very best I can I found it impossible to determine precisely what the witness was giving by way of independent recollection as opposed to simply adopting or regurgitating what she had been told by the plaintiff. I simply cannot accept her as a reliable source of any relevant evidence. In my mind I do not therefore believe she can corroborate the plaintiff in any relevant respect.
The Defendant
As I have already observed the defendant like the plaintiff made concessions sparingly and grudgingly.
Some of her evidence I simply could not accept. For example she denied knowing very much about the detail of the original borrowings for the acquisition of the relevant property. I cannot accept that she signed the contract committing herself as it were to the repayment of the loans without having had a discussion with the plaintiff about the details. This is especially so when she conceded that she could not have borrowed monies on her own and she needed to collaborate with her daughter for that purpose. I regard it as inconceivable that the two did not have a discussion about the acquisition of the property as a joint enterprise.
Likewise I do not accept that she lacked any real knowledge of the joint wills she and her daughter executed in 2002. To the extent that she asserted that she signed the will, having been taken to the solicitors office by the plaintiff, and without any prior discussion or contact with the solicitor I simply do not accept. Likewise I do not accept that she did not discuss with the plaintiff the form that the will would take. They are virtual mirror images of each other and I do not accept they happened by mere coincidence. Her will like that of the plaintiff expressly excluded her daughter Emina on the basis that "she has taken no interest in my welfare". Again I cannot accept that the defendant did not give that considerable thought before executing the will in that form. The following questions and answers are insightful:
"Q. You knew when you were signing the will that you were in those terms, effectively you were excluding your other two daughters, weren't you?
A. Yes, at the time, because at the time Jazz and I,we were happy and we planned a future together.
Q. When you planned the future together, when was that?
A. At the time when we were buying the house."
She denied she ever knew that her daughters Enesa and Emina were both mentioned in the will. I do not accept her denial. She was asked:
"Q. You know don't you that it provides for what is to happen to your property on your death?
A. Yes
Q. And you knew that when you signed this document in 2002 didn't you?
A. That is true I never had any - I never had any doubts about leaving whatever I owned to Jas - that is true"
She conceded that she was quite happy to leave everything to the plaintiff when the wills were executed but it is equally clear that as time passed distrust and resentment set in. It is of no relevance whatsoever as to what might or might not have been the cause of the ultimate falling out between the two. However it was indeed the most intense relationship for a period. The following questions and answers underscore that impression.
"Q. I suggest to you that not only are you or were you prepared to give her everything you could but that you said so to her didn't you?
A. If anything happened to me, yeah, it would have been hers.
Q. Yes. You told her that didn't you?
A. I could of but I am not sure
Q. I suggest to you that you did and it is the obvious thing for you to have said to her, isn't it?
A. Yes, I would have given her my blood if I can."
She accepted that from time to time she suffered with incapacity and that had been caused by work injury. She did assert however that she did do cooking from time to time and cleaning and she always bought groceries. She accepted that the ME loan had been structured in the way that it was because she had no income at that time. She was however still on the title and was a guarantor in respect of the loan.
I should observe however that it was never put to her in cross examination that she did not make lump sum contributions as alleged from either her workers compensation payments or superannuation payments.
What is Just and Equitable?
Before I embark upon a more detailed analysis of the alleged contributions made by the parties I should observe that the defendant submits that from the period December 1999 until at least 31 January 2003 when the Westpac loan was replaced with a loan provided by ME she made the lion's share of financial contributions to the mortgage. It is contended by plaintiff's counsel and as I understand it is not really in issue that since the loan was provided by ME, although the debt was guaranteed by the defendant the plaintiff has made substantial contributions to the mortgage repayments up to and including 2010 when she ceased making any contributions at all to the mortgage. The real issue is the extent of the plaintiff's redrawings during the early years and beyond to 2010 and what they were in fact used for.
It also seems reasonably clear that from the time (mid 2008) when the plaintiff effectively moved out of the property she concedes that the only contribution she made to the household was in fact the payments towards the mortgage. This is apparent from Ex P2. Apart from an amount of $1,405.89 said to be for telephone bills, all other amounts for 2008 to 2010 solely relate to the mortgage.
There is no doubt that as mother and daughter and during the period when goodwill dominated I am certain that each made very likely similar non financial contributions to the household at least until the beginning of 2007. These were made week in and week out and some weeks greater than others, but no one was keeping precise calculations at this time.
The plaintiff has of course had to pay her own rent and keep her own house as it were since 2008. There is little doubt however that the defendant has solely maintained the house since at least mid 2008 and has done so up to the present.
The plaintiff had had an overseas trip of some three to four months in 2002 and by January 2007 she was at home irregularly during the week and was there mainly on weekends. In my opinion the plaintiff contributed in a meaningful way to the household in a non financial way up to and including the end of 2006. From January 2007 she contributed I believe less and from mid 2008 she effectively did not contribute at all. It is impossible to recreate on a day by day or week by week basis what each did for the other but I am quite content to accept that, although their views are somewhat now retrospectively jaundiced, when there was a harmonious relationship each helped the other in varying ways whether in making a meal for example or perhaps in the plaintiff taking her mother to the doctor when required or perhaps shopping. Their respective non financial contributions were clearly not equal after 2007 and could not be in the circumstances of this case and some apportionment needs in due course to be made.
As I have already commented, trying to be precise in circumstances such as these is difficult. There is no doubt that both the parties were originally paying monies into the Westpac Account to meet mortgage payments and both parties were withdrawing funds to cover household outgoings and meet their own individual needs or desires.
Dealing with the plaintiff there are a number of flaws in the calculations in her schedule. This is apparent when one compares the original schedules she prepared for the case (referred to in para 50 and following above) and then those tendered on the outset of the trial (ExP2). In Ex P2 for example there is an amount of $481,686.64 said to be for "Jazz Household Contribution". The problem is that there is a schedule on the same page of the exhibit, which purports to be a break up of the various items said to comprise those total contributions. These however only appear to total $436,013.74. There are a number of other issues. For example when one attempts to double check additions there are a number of other arithmetical errors. When the 1999 year is examined the contributions are said to be $32,203.92. When the figures which are said to comprise that amount are added the amount of $15,401.96 appears to be the correct amount. For 2000 instead of the amount of $28,087.46 the amount of $16,107.46 is the correct amount. For 2001 the amount claimed is $82,315.61, whereas the correct amount would appear to be $75,594.82. For 2002 the amount claimed is $26,107.53 whereas again the correct amount would appear to be $25,283.03. For 2003 the amount claimed is $43,370.04 whereas the correct amount would appear to be $36,004.79. For the year 2004 the amount claimed is $55,983.69, whereas the correct amount would appear to be $44,274.55. For 2004 the amount claimed is $55,983.69 whereas the correct amount would appear to be $44,274.55. For 2005 the amount claimed is $45,474.51 whereas the correct amount would however appear to be $65,035.55. There are no arithmetical differences for the years 2006 to 2010. However when the correct additions are used the total of $453,827.52 is arrived at.
These schedules (Ex P2) like those initially attached to the plaintiff's affidavit make no allowance for amounts which the plaintiff concedes she did redraw from time to time. It is submitted on behalf of the defendant that actual net contribution to the ME mortgage is $237,182 less redraws of $124,521, totalling $112,661. It is submitted that the contributions to the Westpac mortgage shows a net deficit of $32,220. It is also submitted that she withdrew $64,854 from the Westpac mortgage which included $32,414 for a car and for her visa card.
Whilst the plaintiff did withdraw funds from both the Westpac and the ME mortgage accounts I am satisfied that she contributed especially in the years 1999 to mid 2008 substantial monies towards the household in various ways. It was not put to her for example that the amounts she withdrew were entirely used for her own purposes and not in part for the household, whether it be for groceries, other bills or for example furniture. Fixing upon a figure is difficult. One starts with the gross figure of $453,827.52 which was it seems expended by the plaintiff over the period 1999 to 2010. The defendant submits that there were redraws for cars, credit cards to a total of approximately $71,000 ($32,414 for a car and Visa card, a redraw of $11,231 on refinancing and $28,000 for a car in 2003). I consider that these amounts are likely to have been for her own purposes and I so find. If one deducts that from $453,827.52 one gets an amount of $382,827. I am not prepared to find that the plaintiff however contributed the entirety of that amount for the mortgage and the household and would in my view have spent some of those monies for herself, for clothing, make-up, overseas travel, petrol and entertainment as examples, and I am quite certain from time to time she had a busy social life. She has done no such exercise herself but doing the best I can I consider it would be not unfair to reduce that amount by say 30% to arrive at a figure of approximately $267,000 as her net contribution to the mortgage and household expenses of the kind identified in the various schedules during the period 1999 to 2010. The figure of 30% is obviously on one view a somewhat crude assessment. I have chosen that figure based to a large extent on the rather flawed approach the plaintiff adopted in relation to the composition of her schedules, her entirely arbitrary assignment of almost all the payments which were allegedly expended by her on the household and her abject failure to even attempt to acknowledge and reconcile her redrawings. For reasons I have otherwise expressed I have found the plaintiff quite unreliable in a number of respects in her attempted reconstruction of her alleged contributions. To a large extent the figure is one based on impression and in an attempt by me to adopt an holistic approach.
The defendant's counsel submitted that contemporaneous bank statements showed payments made by the defendant towards the Westpac mortgage of $225,406. It was accepted by him that there were two debits during that period totalling $22,704 yielding a net contribution of $202,702. In addition it was asserted that the defendant had paid $119,256 for various works on the property in respect of which there does not appear to me at least to have been any real challenge. That yielded a total net contribution of approximately $322,000. The summary from which these figures are extracted shows unsurprisingly that the largest contributions by the defendant to the mortgage for example were predominately made up to and including October 2002. The reasons why the defendant was able at least in that period to make such contributions was simply because she contributed her superannuation payments totalling some $41,000 and two lump sum workers compensation payments totalling $213,000. I accept that she did and so find. For some of the time the defendant was unemployed but when she worked I am satisfied she also made contributions as and when she could. For example I accept that she used her Centrelink payments from time to time to buy groceries. I should say that the amount of $322,000 however makes no allowance for personal expenditure of which there must have been some. There is no evidence that the defendant had any real social life to speak of apart from interaction with her family. She did not it seems travel for example and there is simply no evidence of the extent of any of her personal expenditure. She must have bought clothes, make-up and the like and she certainly from time to time had credit card debt. I am prepared to find that she lived a relatively modest existence. I am of the view that the amount of $322,000 should be reduced by say 5% to account for her personal expenditure over that period as opposed to her contribution to the mortgage and the household. That leads to a figure of approximately $306,000.
At the conclusion of his submissions defendant's counsel submitted that the correct split on his calculation was 3.5% to the plaintiff and the remaining 96.5% to the defendant. I cannot accept that as a just and equitable division. Equally I reject the plaintiff's submission of 60% for her and 40% for her mother.
There is a further issue of some relevance between the parties as to precisely what each intended in terms of the length of the relationship in respect of the property. The plaintiff's counsel asserts that this was to be a life long venture whereas on the other hand it is submitted by the defendant that this was not a venture to provide a joint home for the parties for life but rather a home for the defendant for life and for the plaintiff until such time as she moved out to marry and have her own family. In my view neither position of itself requires any particular adjustment by reason of that fact. It is in my mind immaterial what the parties intended, whether the relationship lasted short, medium or indeed long term. The Act in my opinion merely requires me to make the relevant adjustment of the interests of the parties of course taking into account the length of the relationship being the relevant period during which contributions of a financial or non financial direct or indirect were made.
Plaintiff's counsel attempted to cast significant doubts over the defendant's assertion of the payment of $225,406 towards the mortgage and the further alleged payment of $119,256 for building works and asked rhetorically where the monies had come from. The answer is quite plain. The schedule prepared by defendants counsel, MFI 1, discloses the precise amounts and evidence has been given as to their source and this has not been seriously challenged. As I have already observed a large proportion of those monies came from either superannuation monies or lump sum workers compensation payments. It is further asserted that it would be wrong to allocate all of those monies paid into the bank account by either party for that matter as paid exclusively to the Westpac mortgage debts. If I may say so that is reasonably obvious because both parties participated in redrawings either for their own personal use or in my opinion in all probability to a large extent for the payment of household expenses.
As the authorities make plain, the court in making an assessment of what is just and equitable is not it seems to me required to undertake a reductionist process. It will be impossible in almost all cases and this one is no exception to put a money value on each contribution as a common expense as opposed to an individual expenditure and so as to arrive at some sort of precise accounting. A detailed approach of individual items clearly runs a risk of losing sight of the overall picture but it may well also lead to an injustice.
It is clear that the plaintiff has since at least mid 2008 paid her own rent in respect of which she makes no claim. In addition the plaintiff asserts that certain personal items of hers had been left at the property and she can no longer get access to them. She contends that she had made contributions to household goods and furniture from time to time. In her schedules for example she alleges that between 1999 and 2006 she contributed $26,691.61 towards such items. That figure is already included in the schedules prepared by the plaintiff and has been taken into account by her in her original addition of $453,000. Rather than try to arrive at some figure for such items as have been left behind or perhaps discarded by the defendant I have included that amount to arrive at the total contributions I consider the plaintiff has made. In the statement of claim the plaintiff had asserted that she was the owner of certain goods and chattels identified in a schedule to which she attributed a value of $61,150. This figure is clearly at odds with the amount identified in the schedule which is part of ExP2. The simpler and indeed my preferred approach is to as I have said add them as I have into the overall amount as identified above.
On my analysis above it is clear that the respective financial contributions of the parties were not equal. The court should of course where possible strive to give effect to the notion of practical equality. In arriving at what I regard to be the appropriate adjustment I have formed the very clear impression that the defendant made a greater financial contribution towards the acquisition and conservation or improvement of the property than the plaintiff. She also in my view made a greater non financial contribution because the plaintiff was simply not around on a full-time basis in 2007 and for half only of 2008 and has only made a contribution of a non financial kind therefore for approximately seven years of the twelve years she and her mother have owned the property (1999 to 2006). I will return to the years 2007 to date in a moment. If I take the total financial contributions as I have found them to be namely $306,000 plus $267,000 one gets a total of $573,000. This figure is the total contributions from 1999 to date. If each of the amounts ($306,000 and $267,000) are viewed as a percentage of the total net contributions ($573,000) the parties respective contributions would be approximately 46% by the plaintiff and approximately 54% by the defendant. I am of the view however that given the difference in the non financial contributions for approximately the last three years there should be some further adjustment in favour of the defendant in order to arrive at a just and equitable result. Although she was not living at the property full time in 2007 she continued to make a financial contribution to the household during that calendar year. Up to 2007 I do consider the non financial contributions of the parties to be approximately equal. For the last approximately three years the plaintiff has made no and/or no material contribution at all to the non financial aspects of the household. It is of course impossible to put any tangible value on such factors but they are to be considered real.
Non financial interests can be relevant in two respects. First they may be taken into account as part of the exercise under S 20(1)(a). But secondly they also emerge as part of the consideration under S 20(1)(b). The difficulties in converting a view as to the actual non financial contributions in respect of each factor to a monetary value is clearly a difficult task.
As I have already said in and from 2007 the plaintiff began staying on a casual or part-time basis at the property. She either lived with her friends or her boyfriend at the time. She asserts she still made a contribution to the household both financially and non financially as I understood her evidence. However she ceased living at home from mid 2008 and although the defendant changed the locks the relationship had well and truly come to an end independently in my view of that event. The only reason that the plaintiff said she continued to require access was to retrieve her belongings.
Notwithstanding her move out of the home she, as I have already observed, continued to make financial contributions to the mortgage and whatever non financial contribution she made in the years 2007 to 2008, she made none whatsoever from mid 2008 to the date of the trial, a period of approximately three years. The defendant had of course to keep the household running during that period. Some allowance in my mind must be made for this. I propose although for at least 2007 and the first half of 2008 she may or may not have made substantial non financial contributions, to take into account only the three year period from 2008. I consider it likely that even before mid 2008 she ceased making a material contribution of a non financial kind but I consider I should give her the benefit of the doubt and I do not propose to apply any discount for the years 2007 to mid 2008.
If one looks at the period of three years (2008 - 2011) as a fraction of the 12 years (1999 to 2011) that is 25% of the time. As I have said placing a monetary value on the non financial contributions is difficult but I consider justice and equity requires that the amount I have found to be her net financial contribution should be reduced further by a figure of 25%. When one applies that discount to the $267,000 I have otherwise arrived at one gets (($267,000 x 25%) - $66,750. = $200,250).
That results in my finding that the defendant has made total net contributions of $306,000 and the plaintiff of $202,250, making a total of $506,250. Their respective contributions on a percentage basis of the total contributions therefore leads to approximately 40% contribution by the plaintiff and approximately 60% contribution by the defendant.
A Division of Property
The plaintiff seeks a division of property and I consider I should grant an order to that effect. I consider justice and equity demands it: the parties in my view should be able to go their own way.
S 66G(1) of the Act provides:
"66G Statutory trusts for sale or partition of property held in co-ownership
(1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the court and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition."
The relevant principles were recently reiterated by Nicholas J in Eathorne & Ors v Araya-Marvin . I gratefully adopt what His Honour there said:
"[18] The relevant principles were recently stated in Tory v. Tory [2007] NSWSC 1078 by White J as follows:
"42 Whilst an order under s66G of the Conveyancing Act is discretionary and the Courts have declined to define the matters which are bar to a successful application (Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068), such an order is almost as of right unless on settled principles it would be inequitable to allow the application (Callahan v O'Neill [2002] NSWSC 877 at [8]). An application will be refused, if to make the order would be inconsistent with a proprietary right, or a contractual or fiduciary obligation (Re McNamara and the Conveyancing Act; Ngatoa v Ford (1990) 19 NSWLR 72 at 77; Williams v Legg (1993) 29 NSWLR 687 at 693; Hogen v Baseden (1997) 8 BPR 15, 723 at 15,726-15,727)..."
[19] The party opposing sale has the onus of dissuading the Court from ordering a trust for sale (Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14, 685 at 14,701 per Santow J)."
I therefore am of the view that the property should be sold and the net proceeds divided 40% to the plaintiff, 60% to the defendant.
The plaintiff sought orders for the apportionment of trustees for sale and I will so order. For that purpose I would also make an order vesting the property in the trustees for that purpose. Whilst I would envisage a sale and the division of the net proceeds in accordance with my reasons above, if the parties wish to have orders providing for either party to purchase the property I would be disposed to make an order to that effect. I would therefore invite the parties to approach my Associate to have the matter relisted for the purpose of bringing in short minutes to reflect my reasons.
I grant liberty to the parties to make submissions on the question of costs which I am content can be made in writing and in which case I will deal with that issue on the papers.
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Decision last updated: 29 August 2011
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