Karpathiou v Clemente
[2008] SASC 316
•19 November 2008
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
KARPATHIOU v CLEMENTE
[2008] SASC 316
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice David)
19 November 2008
FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - RELATIONSHIP
FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - ADJUSTMENT OF PROPERTY INTERESTS - RELEVANT CONSIDERATIONS
Appeal against findings of trial Judge that a de facto relationship existed between appellant and respondent, that it was just and equitable that there be a division of property and against order for division of property – whether appellant and respondent lived together on a genuine domestic basis as husband and wife – whether trial Judge erred in accepting evidence of witnesses for respondent as credible and reliable – whether it was just and equitable that there be a division of property – whether trial Judge erred in failing to have regard to appellant’s substantial financial contribution to relationship.
Held, allowing the appeal: Trial Judge’s acceptance of evidence of witnesses for respondent was inappropriate – respondent failed to establish on the balance of probabilities that he had lived with appellant on a genuine domestic basis as husband and wife – trial Judge’s finding of a de facto relationship cannot be sustained – trial Judge erred in failing to have regard to appellant’s substantial financial contribution to relationship – order for division of property was not just and equitable and was inappropriate.
De Facto Relationships Act 1996 (SA) s 3, s 9, s 10, s 11 and s 12; Domestic Partners Property Act 2007 (SA), referred to.
Fox v Percy (2003) 214 CLR 118; Hogg v Roberts (2003) 87 SASR 248, considered.
KARPATHIOU v CLEMENTE
[2008] SASC 316Full Court: Gray, Sulan and David JJ
GRAY J:
This is an appeal against an order made pursuant to the De Facto Relationships Act 1996 (SA), following a trial in the District Court.
Eleftheria Karpathiou, the defendant and appellant, and Christopher Paul Clemente, the plaintiff and respondent, commenced a relationship in the year 2000. That relationship ended in October 2006. There was a dispute between the parties as to whether their relationship developed into a de facto relationship within the meaning of the De Facto Relationships Act. There was a further dispute, if in fact such a de facto relationship existed, as to what, if any, division of property should take place.
The trial Judge concluded that a de facto relationship did in fact exist between March 2003 and October 2006. The Judge reached the conclusion that it was just and equitable that there be a division of property, and ordered that Ms Karpathiou pay Mr Clemente $17,900. Ms Karpathiou challenged both findings on this appeal.
The Relevant Legislation
The De Facto Relationships Act was amended in 2007, and renamed the Domestic Partners Property Act 2007 (SA), commencing on 1 June 2007. The amending Act provided that its provisions did not apply to a de facto relationship that ended before the commencement of the amending Act. In these circumstances, the De Facto Relationships Act 1996 was the legislation relevant to be considered at trial. The trial Judge directed his attention to the provisions of the Domestic Partners Property Act 2007, whereas he should have had regard to the De Facto Relationships Act 1996. This error, however, had no material effect, as the legislation was relevantly in the same terms.
It is convenient to set out the terms of the De Facto Relationships Act 1996, to be discussed in this appeal.
Section 3 relevantly provides the following definitions:
de facto partner means a person who lives in a de facto relationship and includes—
(a) a person who is about to enter a de facto relationship; and
(b) a person who has lived in a de facto relationship;
de facto relationship means the relationship between a man and a woman, who although not legally married to each other, live together on a genuine domestic basis as husband and wife;
…
property of a person includes—
(a) a prospective entitlement or benefit under a superannuation or retirement benefit scheme;
(b) property held under a discretionary trust that could, under the terms of the
trust, be vested in the person or applied for the person's benefit;
(c) property over which the person has a direct or indirect power of disposition and which may be used or applied for the person's benefit;
(d) any other valuable benefit.
Sections 9, 10, 11 and 12 concern the adjustment of property interests:
9—Property Adjustment Order
(1) After a de facto relationship ends, either of the de facto partners may apply to a court for the division of property.
(2) However, an application for the division of property may only be made if—
(a) the applicant or respondent is resident in the State when the application is made; and
(b) the de facto partners were resident in the State for the whole or a substantial part of the period of the relationship; and
(c) the de facto relationship existed for at least three years or there is a child of
the de facto partners.
(3)An application for the division of property must be made within one year after the end of the de facto relationship unless the court, after considering the interests of both de facto partners, is satisfied that extension of this period of limitation is necessary to avoid serious injustice to the applicant.
(4)An application for the division of property may be made or continued by or against the legal personal representative of a deceased de facto partner.
(5)However, an application against the legal personal representative of a deceased de facto partner may only relate to property that is undistributed at the date of the application.
10—Power to make orders for division of property
(1)On an application for the division of property, the court may make orders it considers necessary to divide the property of either or both the de facto partners between them in a way that is just and equitable.
(2) For example, the court may make orders for—
(a) the transfer of property from one de facto partner to the other; or
(b) the sale of property and the division of the net proceeds between the de facto partners in proportions decided by the court; or
(c) the payment by one de facto partner of a lump sum to the other.
11—Matters for consideration by the court
(1)In deciding whether to make an order for the division of property under this Part, and if so the terms of the order, the court—
(a) must consider the financial and non-financial contributions made directly or indirectly by or on behalf of the de facto partners to—
(i)the acquisition, conservation or improvement of property of either or both partners; or
(ii) the financial resources of either or both partners; and
(b) must consider the contributions (including homemaking or parenting contributions) made by either of the de facto partners to the other partner or to children of the partners or either of them; and
(c) must have regard to the terms of any relevant cohabitation agreement; and
(d) may have regard to other relevant matters.
(2) If a relevant cohabitation agreement—
(a) is a certificated agreement; and
(b) provides for the exclusion of the court's power to set aside or vary the agreement,
an order for the division of property under this Part must be consistent with the terms of the agreement.
12—Duty of court to resolve all outstanding questions
In proceedings under this Part, the court must (as far as practicable) finally resolve questions about the division of property between the de facto partners and avoid further proceedings between them.
The Appeal
As earlier observed, Ms Karpathiou challenged both the finding that there was a de facto relationship from March 2003 to October 2006, and, in any event, the making of the distribution order.
In respect to the challenge that a de facto relationship existed, the primary complaint related to the Judge’s acceptance of the evidence of three witnesses, and in particular, his findings as to their credibility, reliability and his conclusions as to the effect of their evidence.
This Court’s role when addressing such issues on appeal is well-settled. The High Court, in Fox v Percy,[1] considered the nature of the appellate process, in particular when the appellate court is reviewing findings of fact and findings of credibility and reliability by a trial judge. Gleeson CJ, Gummow and Kirby JJ concluded that a finding of fact by a judge, based on the credibility of a witness, may only be set aside on appeal where incontrovertible facts or uncontested testimony demonstrated that the judge’s conclusions were erroneous, or where it is concluded that the decision of the trial judge was glaringly improbable or contrary to compelling inferences in the case. Their Honours observed:[2]
Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”. In Warren v Coombes, the majority of this Court reiterated the rule that:
“[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.”
As this Court there said, that approach was “not only sound in law, but beneficial in ... operation”.
After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde, Abalos v Australian Postal Commission and Devries v Australian National Railways Commission. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges.
The continuing application of the corrective expressed in the trilogy of cases was not questioned in this appeal. The cases mentioned remain the instruction of this Court to appellate decision-making throughout Australia. However, that instruction did not, and could not, derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute.
[1] Fox v Percy (2003) 214 CLR 118.
[2] Fox v Percy (2003) 214 CLR 118 at [25]-[27] (footnotes omitted).
Turning to the second complaint, Ms Karpathiou accepted that the Judge had exercised a statutory discretion in deciding to divide property and in making an order in favour of Mr Clemente. However, it was submitted that the Judge’s discretion miscarried, in that his approach involved errors of fact and law, and that, as a consequence, an unjust and inequitable order was made.
A De Facto Relationship?
The starting point for determining whether a de facto relationship exists are the terms of the 1996 legislation. Care must be taken when considering judgments from different jurisdictions, as the wording of the generally comparable statutes does differ – in some cases markedly and in other cases subtlety. Picking up from the definition, an important inquiry is whether there was a relationship between a man and a woman in which they lived together on a genuine domestic basis as husband and wife. It is also important to recognise that before an application can be made for a property adjustment order, that genuine domestic relationship, as husband and wife, must have existed for at least three years.
The parties agreed that the trial Judge had correctly identified the general approach to be taken so as to determine whether a relationship was a de facto relationship. In this respect, the Judge drew on interstate authority dealing with relatively comparable legislation. The Judge observed:
In D v McA, Supreme Court of New South Wales (Equity Division), 27 June 1986 (unreported) Powell J was concerned with whether the relationship between the parties before him, was a “de facto relationship”, defined by the De Facto Relationships Act 1984 (New South Wales) to be “the relationship between de facto partners, being the relationship of living or having lived together as husband and wife on a bona fide domestic basis although not married to each other”. He observed that “definitions in substantially the same terms (have) become a part of common statutory usage – as for example, in the Social Security Act (Cwlth) … Family Relationships Act 1975 (SA), s11 as to ‘putative spouse’” and therefore considered “it is both permissible and legitimate to seek, and to take, whatever guidance is provided by decisions relating to similar statutory provisions”. Referring to a number of decisions in the Federal Court, and other Tribunals, upon the Social Securities legislation concerning de facto relationships, Powell J wrote:
It is, however, to be observed that, just as human personalities and needs vary markedly, so also will be aspects of their relationship which lead one to hold that a man and a woman are, or are not, “living together as husband and wife on a bona fide domestic basis” be likely to vary from case to case. This being so, it seems to me that each case would involve the court making a value judgment having regard to a variety of factors relating to the particular relationship, those factors including, but not being limited to, the following:-
1. the duration of the relationship;
2. the nature and extent of common residence;
3. whether or not a sexual relationship existed;
4the degree of financial inter-dependence, and any arrangements for support, between or by the parties;
5. the ownership, use and acquisition of property;
6. the procreation of children;
7. the care and support of children;
8. the performance of household duties;
9. the degree of mutual commitment and mutual support;
10. reputation and “public” aspects of the relationship.
In Simonis v Perpetual Trustee Co Ltd (1990) 21 NSWLR 677, Kearney J, in determining whether the claimant before him “was living with the deceased person as her husband on a bona fide domestic basis”, adopted (although stating them not to be the complete test) the factors listed by Powell J. That approach was referred to with approval in the New South Wales Court of Appeal (Light v Anderson & Ors (1992) DFC 95-120).
In my view the approach in those cases, is an appropriate aid in considering whether or not the plaintiff has proved the existence of a de facto relationship (as defined) between him and the defendant for the requisite period, but not (to paraphrase Powell J) to attempt to dissect the definition of the phrase into “discrete elements” and then to test the facts of the case by reference to a set of a priori rules to establish whether a particular “element” is or is not present; with respect I consider the view of Kearney J in Simonis’s case, concerning the phrase with which he was dealing, equally applies to s4(2) of the Act, namely it “constitutes a single composite expression of a comprehensive notion or concept, and therefore has to be approached by considering the expression as a whole and not in several parts.”
The factors identified by Powell J in D v McA include factors that would allow an assessment of whether there was a genuine domestic arrangement as husband and wife. However, it is to be understood that the factors identified by Powell J were not intended to be exhaustive. The Judge’s approach in the present case suggests that little attention was paid to this aspect of the definition.
Mr Clemente gave evidence in support of his claim, and led evidence from three witnesses, who were said to provide independent supporting testimony to the de facto relationship having existed for at least three years. It was Mr Clemente’s case that the relationship commenced in August 2002 and continued until October 2006. Ms Karpathiou gave evidence, supported by her stepfather. The substance of her case was that a relationship of boyfriend and girlfriend existed from early 2000 to late 2006, but that a de facto relationship did not extend over a three-year period.
The Judge noted the diametrically opposed evidence of Mr Clemente and Ms Karpathiou, and at times during his reasons, indicated his rejection of aspects of the evidence of each. However, he found sufficient support for the existence of a de facto relationship for more than a three year period from the three witnesses called by Mr Clemente. The Judge concluded:
The parties’ relationship was unusual, fractured and confronting, but on the balance of probabilities (bearing in mind the Briginshaw v Briginshaw (1938) 60 CLR 336) I find that the parties were in a de facto relationship between March 2003 and October 2006.
On the hearing of the appeal, Ms Karpathiou attacked this conclusion, and in particular, closely analysed the evidence of the three witnesses, and said that having regard to material inconsistencies, the Judge’s conclusions could not be supported. Counsel for Mr Clemente acknowledged that the Judge’s acceptance of and reliance on the evidence of these three witnesses was critical to his conclusion that a de facto relationship existed for more than three years.
The Judge’s critical findings concerning the three witnesses were as follows:
Each of the witnesses, Messrs Franze, Giorginis and Thanos, described in various terms their observations of the relationship between the plaintiff and the defendant. Collectively their acquaintance with the parties, whom each witness described to be his friends, extended over the period from in about January 2003 to in the month of October 2006 during which the plaintiff says, but the defendant denies, he lived with the plaintiff in the Plympton house, then the Kilkenny house and then the house at Cowandilla. Each of the three men was called by the plaintiff, but I see no reason to reject or have reservations about the veracity of those three witnesses; none of them in their evidence exhibited any responses which suggested partisanship with the plaintiff’s cause. Indeed, in the case of Mr Thanos, it appears that he had come to know the defendant in a circle of friends separate from that which included the plaintiff, and through the defendant he counted the defendant’s parents as his friends – he said he was a friend of her family, visiting them at the Cowandilla house. Mr Franze’s impression of the parties when he visited the Plympton house and saw them there was that they were living together. The number of his visits to the house is not very clear, it could possibly have been only one, although Mr Franze thought there was more than one occasion. However, his visits to the Kilkenny house in the period from approximately March 2003 to October 2005 were about twice weekly. I have summarised the substance of his evidence about what he saw of the defendant’s activities in the house engaged in apparently domestic duties on occasions and the presence of male and female clothing in a drying area. The defendant had, effectively, full-time employment as a carer (at least in 2003 and 2004 working, she said, sometimes double shifts between St Basils and agency engagements) as to which, on occasions, Mr Franze went with the plaintiff, to her place of employment to bring her back to the Kilkenny house. Mr Franze judged that the parties were a couple living together at the Kilkenny house and subsequently, as he observed, at the Cowandilla house.
Mr Thanos visited the Kilkenny house about once each month, with his girlfriend, to spend an hour or so on each occasion with the parties over a period of about twelve months beginning in 2003. He considered that the plaintiff and the defendant were living together.
Mr Giorginis also concluded from his observations of the parties at the Kilkenny house and the Cowandilla house that they were living together.
In the circumstances of this case the evidence of those three witnesses respectively is important where the parties are so diametrically opposed on the fundamental issue of co-habitation.
The defendant said she saw Mr Franze at the Kilkenny house and that it would have been in the evenings. Her evidence was to the effect that as her workplace was nearby she would call into the Kilkenny house “or I would pop past and go home”, adding that the plaintiff “always had his friends there. He had all his friends coming and going … I didn’t really associate with his friends and they would be in the room and I would stay for a bit and go”. Mr Thanos, the defendant said, was another person she saw at the Kilkenny house who came with his girlfriend Gabriella, who was a friend of the defendant. The defendant said Mr Thanos was invited to the house by the plaintiff, “because I think they were doing something with cars or something” and Mr Thanos brought Gabriella to visit the defendant.
In my view the defendant’s evidence concerning the occasions and the purpose of the visits by Mr Franze and Mr Thanos was a directed endeavour to undercut the conclusions which each of them respectively drew from their own observations of the parties’ living arrangements. I accept the evidence of Messrs Franze and Thanos in preference to that of the defendant.
Analysis of the evidence of Mr Franze discloses matters of some disquiet. He gave evidence before Mr Clemente and gave an account of visiting a property at Kilkenny that he rented to Mr Clemente. He claimed to attend twice weekly over a two and a half year period – on one occasion to collect rent and the other as a social visit, as Mr Clemente was his friend. He then spoke of his observations on those visits which were said to support the existence of a de facto relationship. When Mr Clemente gave evidence, he provided a very different account. He said that he made an initial payment of rent as a lump sum for a five-month period, and thereafter he made a number of lump sum payments from time to time. This stood in stark contrast to the suggestion of Mr Franze attending weekly to collect the rent. The Judge did not resolve this dispute directly, and appears to have simply accepted that Mr Franze attended each week to collect rent. This inconsistency was directly and materially relevant to Mr Franze’s credit. The Judge’s failure to recognise and give weight to this inconsistency seriously undermines his acceptance of Mr Franze’s evidence.
The observations that Mr Franze made on occasions when he visited were extremely general. He spoke of calling mainly at about 8:00pm, and on one occasion during the two and a half year period being aware of vacuuming taking place, and on one other occasion seeing Ms Karpathiou approaching the bathroom with gloves and a spray bottle. The other observation said to be relevant was that he observed a man’s and a woman’s clothing on a drying rack. He spoke in a conclusive manner of there being a de facto relationship being in existence, but the observations made in support of that conclusion were desultory. Once it is recognised that Mr Franze was not attending weekly to collect rent, the credibility and reliability of his evidence is seriously undermined in respect of this two and a half year period.
The evidence of Mr Giorginos was extremely limited. Again, he gave evidence before Mr Clemente. He spoke of visiting the property at Kilkenny five or six times over the two and a half year period. On those occasions Mr Clemente was normally home alone. He only observed Ms Karpathiou at the premises on two or three occasions in the lounge room. In cross-examination he agreed that he had never seen them out together. Mr Giorginos was under the impression that Mr Clemente and Ms Karpathiou had bought a property together at Cowandilla. This was based on incorrect information given to him by Mr Clemente. Mr Giorginos assisted Mr Clemente and Ms Karpathiou to move to Cowandilla, but was unable to substantiate in any material way the existence of a de facto relationship. Counsel for Mr Clemente acknowledged that Mr Giorginos’ evidence was of little assistance. The Judge’s treatment of Mr Giorginos’ evidence was perfunctory and failed to identify the weaknesses in the evidence.
Mr Thanos claimed to have visited the Kilkenny property about once a month, and when analysed, over no more than a 12 month period. He acknowledged in evidence that he assumed that Mr Clemente and Ms Karpathiou were living together. He thought that because they had a dog together, that was an indication of a de facto relationship. He said that they were going to get married, but he didn’t provide any cogent evidence that they were in a de facto relationship.
Of the three witnesses, only Mr Franze’s evidence could, in my view, substantiate the existence of a de facto relationship. However, as earlier observed, his credibility and reliability was seriously undermined in a manner not addressed by the trial Judge. The Judge’s reliance on Mr Franze’s evidence in these circumstances was not justified. The evidence of Mr Giorginos and Mr Thanos was effectively without any real weight.
As earlier observed, the judge made positive findings that the relationship between Mr Clemente and Ms Karpathiou was “unusual, fractured and confronting”. This finding was not challenged by Mr Clemente on appeal. It is difficult to determine what findings of fact were made by the trial Judge to allow the above conclusion. However, earlier in his reasons, the trial Judge did appear to accept that there was a relationship between the parties which was punctuated with verbal violence leading to one of the parties departing from the other’s company. In this context the trial Judge noted that episodes of violent disagreement had occurred from 2002, and that although it is not entirely clear, that would appear to lead to a serious deterioration in the relationship by 2004, if not earlier. On Ms Karpathiou’s evidence the relationship had started to seriously deteriorate by 2003, due to Mr Clemente’s involvement with a bikie club.
It would appear that the Judge reached the conclusion that there was a de facto relationship continuing for more than three years, notwithstanding that the relationship was “unusual, fractured, and confronting”, primarily as a result of the acceptance of the evidence of the three witnesses. Once the acceptance of that evidence is demonstrated to be inappropriate, it follows that the Judge’s acceptance of a de facto relationship cannot be sustained.
Ms Karpathiou gave evidence of violent assault upon her by Mr Clemente. The Judge recounted her evidence but did not make an express finding as to whether the evidence was accepted. Implicitly his finding about the relationship being “fractured and confronting” would suggest that he did accept this evidence. It is unsatisfactory for the Judge to have failed to make clear findings in respect of a number of disputes. This has left an air of uncertainty about aspects of his reasons.
It is relevant to record that the evidence established that Mr Clemente and Ms Karpathiou would spend perhaps two or three days together, and that Mr Clemente would then simply disappear and attend to his own pursuits. He might attend at the premises during the day time and then be absent for the entire night. There is no evidence that establishes a genuine domestic relationship of husband and wife over a period of at least three years.
In these circumstances, I have reached the conclusion that Mr Clemente had not established on the balance of probabilities that he had lived with Ms Karpathiou on a “genuine domestic basis as husband and wife”.
Division of Property
Section 11 of the De Facto Relationships Act specifies the matters to be considered by the Court when deciding whether to make an order for division of property. However, section 11(1)(d) provides that the Court “may have regard to other relevant matters”. Other relevant matters, it may be inferred, are matters that the Court considers relevant to a determination of what is just and equitable. Plainly, other relevant matters may encompass a wide range of considerations.
Section 11 does not identify the remedying of grievances or the addressing of disappointments or expectations. However, it is possible to envisage circumstances in which these matters may have some relevance to what may be considered just and equitable in all of the circumstances.
In Hogg v Roberts,[3] Doyle CJ made a number of observations about section 11, and the approach to be taken under that section. The Chief Justice spoke of the focus of the section and observed that its purpose appeared to be narrower than, for example, the similar tasks to be undertaken under the Family Law Act 1975 (Cth). However, Doyle CJ cautioned about the danger of trying to draw “a line … in the abstract” and then continued:
[3] Hogg v Roberts (2003) 87 SASR 248 at [11]-[19].
I go no further than to say that the focus is on the just and equitable division of property and not on an order that is fair having regard to all the circumstances surrounding, and everything that happened during, a relationship.
Doyle CJ then drew on decisions in other States, and in particular observed:
In Parker v Parker (1993) 16 Fam LR 863 Young J suggested a four-stage approach which will often be helpful. The four stages he suggested (at 870) are:
“(i) to identify and value the assets of the parties;
(ii) to determine whether any, and if so what, contributions of type A or type B had been made by each partner;
(iii) to determine whether in the circumstances the contributions of the applicant had already been sufficiently recognised and compensated for;
(iv) to make the appropriate adjustment.”
Once again, he was concerned with different legislation, but the process he suggested is likely to prove helpful under the Act. However, I emphasise that this is simply one approach. In some cases a broader approach will work better. There is no need to take what might be called a narrow approach involving a careful tracking of income and expenditure, contributions made and benefits received. The legislation requires a reasonably broad and practical approach.
Between stages (iii) and (iv) it will be necessary to consider whether there are "other relevant matters" to be considered. It will also be necessary to bear in mind that the object is to divide property in a "way that is just and equitable". As I have said, I do not treat that expression as opening up all aspects of the relationship, but it appears to me that the matters identified in s 11(1) of the Act do not alone dictate the order to be made under s 10(1). They are matters to be considered, they are important, but they will not necessarily be decisive.
What I have just said does not provide any solutions. Difficult questions will arise along the way. I have done no more than identify what seems to be the appropriate process of reasoning.
In the event, the Judge concluded that there was a de facto relationship and then considered that it was just and equitable that there be a division of property:
Having considered the financial and non-financial contributions by the parties to the acquisition, conservation or improvement of the property owned by one or other of the parties, or their financial resources, and having regard to other relevant matters referred to in these reasons, I consider it is just and equitable that there be a division of property.
The Judge then addressed the division in the following terms:
At the date the de facto relationship ceased and, I infer, at the date of trial, the property referred to earlier had, or I assess it to have had, about the following values.
The Cowandilla house $240,000 (Ex P6)
Amount outstanding to mortgagee ING Bank 181,264 (Ex P2 Tab 10)
Equity 58,800
The insurance claim including the value of the wreck 14,000
The Harley Davidson
$24,000 less $15,000 originally contributed by the plaintiff from his own resources 9,000
Total $ 81,800
Since about February 2007 the plaintiff and her parents have lived interstate and the Cowandilla house has been let for $260 per week; that is $520 per fortnight, which is $80 per fortnight less than the defendant’s mortgage repayments. In addition to that deficiency the defendant would be liable for rates and taxes levied against the property.
In my opinion it is appropriate in this case to use a broad approach and make an order that the defendant pay the plaintiff one half of the nett value of the parties’ property, that is, $40,900 less the value of the property the plaintiff obtained or retained, namely $23,000 which produces a sum of $17,900.
The Judge’s approach was fundamentally flawed. An analysis of the evidence established that Ms Karpathiou had contributed more than $100,000, primarily from her earnings, over the period from March 2003 to October 2006. Documentary records confirmed her account and evidence.
Mr Clemente’s position was unclear. He spoke of dealing in cash and of having found a substantial sum in a jar following his great Uncle’s death, from which he benefited to the extent of about $15,000 in 2002, of receiving a further $18,000-$20,000 on the death of his grandfather in January 2003, and of receiving a further $20,000 on the death of his brother, also in January 2003. It is unclear as to how this money was expended, although it does appear that there was a purchase of a number of vehicles, including the purchase of a Harley Davidson motorcycle in 2002. The other substantial sum of money received by Mr Clemente, and the only sum documented, was the amount of about $34,000 for a compensation claim. Banking records show that almost all of this sum was not spent in the relationship with Ms Karpathiou. At all relevant times, Mr Clemente was in receipt of a disability pension, but for a substantial period he was paying fines to the Courts Administration Authority in an amount that substantially eroded his pension. Because of the lack of any records, counsel for Mr Clemente was left to submit that he had access to sufficient monies to assist in the domestic expenses of the relationship. However, in the course of submissions, counsel for Mr Clemente acknowledged that an analysis of the figures demonstrated that at best, an amount of $60,000 was provided by Mr Clemente from March 2003 to October 2006. In my view, the probabilities are that the sum contributed was substantially less than $60,000.
The Judge appears to have paid no regard to this analysis that demonstrated that, in substance, Ms Karpathiou was the principal provider of monies in the relationship. In my view the trial Judge was in error not to have regard to these objective facts.
The Judge in making his calculation acted inconsistently. He failed to bring to account the fact that the equity in the Cowandilla house was in substance a gift provided by Ms Karpathiou’s parents to her. This gift was acknowledged in a formal document to the banker providing the loan funds that enabled Ms Karpathiou to purchase the property from her parents. Although there was some debate about the extent of the gift, it does not appear to be disputed that there was a gift of at least $35,000 and probably something in excess of $60,000. On the other hand, when dealing with the value of the Harley Davidson motorcycle, the Judge allowed Mr Clemente a credit of $15,000 contributed from his own resources. The same can be said about the equity in the house, as a result of a gift to Ms Karpathiou from her parents. Counsel for Mr Clemente acknowledged the inconsistent approach adopted by the Judge.
There is nothing just and equitable about the order of the Judge. Assuming there to have been a de facto relationship, the Judge’s order fails to recognise the substantial equity held by Ms Karpathiou in the Cowandilla property, prior to the relationship commencing in March 2003. In substance, the order of the Judge allows Mr Clemente to share equally in a gift made some six months prior to the relationship with Ms Karpathiou commencing. The unfairness of such an approach is self-evident. Further, there is nothing just and equitable about the trial Judge rewarding Mr Clemente notwithstanding the lesser contribution that he made to the expenses incurred in the relationship. Despite the Judge’s finding that there was a de facto relationship in existence, it was not appropriate that there be any order as to the division of property. The appropriate order was that Mr Clemente’s application be dismissed.
Conclusion
I would allow the appeal. I would set aside the order of the trial Judge. I would, in lieu, order that Mr Clemente’s application be dismissed.
SULAN J: I agree with the reasons of Gray J. I would allow the appeal. I agree with the orders proposed by Gray J.
DAVID J: I agree with the reasons of Gray J and would allow the appeal. I also agree with the orders he proposes.
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4
1