KASEWIETER v GALLIGAN

[2015] SASC 5

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

KASEWIETER  v  GALLIGAN

[2015] SASC 5

Judgment of Judge Dart a Master of the Supreme Court

27 January 2015

REAL PROPERTY - PARTITION OF LAND - PARTITION OR SALE IN PARTITION ACTION OR SUIT

Joint owner seeks sale of real property - consideration of s 70 of the Law of Property Act 1936 - whether good reason to the contrary - application for summary judgment - consideration of Rule 232 - no reasonable basis for the defendant to oppose order for sale - summary judgment granted.

Law of Property Act 1936 s 69, s 70, s 71; Partition Act 1539 (UK) 31 Hen. 8 C 1; Supreme Court Civil Rules 2006 Rule 232, referred to.
Ceneavenue Pty Ltd and Others v Martin and Others [2008] 106 SASR 1, applied.
Callahan v O'Neil [2002] NSWSC 877; Re Cordingley (1948) 48 SR (NSW) 248; Re Permanent Trustee Nominees (Canberra) Ltd [1989] 1 Qd R 314; Spathis v Nanos [2008] NSWSC 418; Woodson (Sales) Pty Ltd v Woodson (Australia) Pty Ltd (1996) 7 BPR 14,685, considered.

FAMILY LAW AND CHILD WELFARE - DE FACTO AND OTHER RELATIONSHIPS UNDER STATE LEGISLATION - ADJUSTMENT OF PROPERTY INTERESTS - APPLICATIONS

Application for extension of time within which to commence proceedings - consideration of s 9(3) of the Domestic Partners Property Act 1996 - whether serious injustice - application refused.

Domestic Partners Property Act 1996 s 9, 10; Inheritance (Family Provision) Act 1972  , referred to.
Cooper v Lees [2009] SASC 386; Lang & Ors v Australian Executor Trustee Ltd & Ors [2013] SASC 171; Parij v Parij (1997) 72 SASR 153, considered.

KASEWIETER  v  GALLIGAN
[2015] SASC 5

JUDGE DART:

1. The plaintiff and defendant were, for a long time, in a domestic relationship and are the joint registered proprietors of a residential property at Birdwood (“the property”).  In this action the plaintiff seeks an order under the Law of Property Act 1936 (“LPA”) for the sale of the property and proposes that the net proceeds from the sale be split equally with the defendant. The defendant opposes that course of action.

2. The defendant’s opposition to the sale of the property has led the plaintiff to make an application for summary judgment.  There are two limbs to the application.  The first is that the Court enter judgment in favour of the plaintiff in relation to his claim for the sale of the property.  The second is that the defendant’s cross-action under the Domestic Partners Property Act 1996 (“DPPA”) be dismissed on the grounds that it is substantially out of time and that there is no justification for extending the time within which to commence such an action.

3. In my opinion, for the reasons that follow, the plaintiff is entitled to succeed with respect to both aspects of the application. 

   Background

4. The plaintiff is 74 years of age and a German citizen.  He now resides at Hamburg in Germany and has done so since September 2007.  He is currently in receipt of a retirement plan account basic pension in the amount of $2704.00 per month, which is sufficient to cover his rent and other living expenses.  In several years the pension will reduce to $1824.00 per month.

5. There is a dispute in the pleadings in respect of the date of the commencement of the relationship between the plaintiff and defendant, and also the date on which the relationship ended.  The plaintiff pleads that the relationship commenced in 1990, whereas the defendant pleads that the relationship commenced in 1987.  The plaintiff’s position is the relationship ended in September 2007 when he returned to Germany.  He has not been back since.  The defendant’s position is that she was not aware that the relationship ended until receipt of a letter in December 2008.  For present purposes, little turns on which of the dates is correct.  It is sufficient that it is clear that the parties had a long term domestic relationship. 

6. At the time the relationship commenced, the plaintiff owned a freehold residential property at Fairview Park and the defendant owned the property which was then a vacant block of land.  The plaintiff and defendant resided at Fairview Park until about the year 2000.  In that year the Fairview Park property was sold and the proceeds of sale were used to fund the construction of a new dwelling on the property.  The new dwelling cost $150,000 to construct.  The defendant pleads that she later provided the sum of $45,000 to the plaintiff as a contribution to the construction costs.  Once the dwelling was completed, the title to the property was put into joint names. 

7. The relationship broke down in 2007 according to the plaintiff and he returned to Germany after a long time living in Australia. These proceedings were commenced on 9 January 2014. The defendant filed her defence and cross-action on 28 March 2014. The cross-action filed by the defendant seeks relief in equity and also relief pursuant to the DPPA. It is the claim in respect of the DPPA that is relevant to the plaintiff’s application for summary judgment.

8. After the plaintiff returned to Germany in 2007 the defendant continued to reside in the property and did so until 2013.  She is currently 74 years old and in receipt of the aged pension.  In 2013 the position was reached whereby the defendant decided she could no longer to afford to live in the property.  Since that time the property has been tenanted.  The defendant is receiving the rent. 

   The claim under the LPA

9. The LPA provides power to the Court to order either the partition or sale of land. In respect of a residential dwelling it will rarely, if ever, be practical or possible to order partition. On such an application the issue usually becomes one of whether or not an order for sale should be made or, in the alternative, whether an order should be made directing one party to buy the share of the other.

10. The relevant statutory provisions are found in sections 69, 70 and 71 of the LPA, which provide as follows:

    69—Power to order partition or sale instead of partition

    (1)On any application for partition the court may order a partition of the said land or other property, and may give all necessary or proper consequential directions.

    (2)On any such application if it appears to the court that, by reason of the nature of the property, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the absence, dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions.

    70—Sale on application of certain proportion of parties interested

    On any application for partition, if the party or parties interested individually or collectively, to the extent of one moiety or upwards in the property, request the court to direct a sale of the property and a distribution of the proceeds, instead of a division of the property between or among the parties interested, the court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and shall give all necessary or proper consequential directions.

    71—As to purchase of share of party desiring sale

    On any application for partition, if any party interested in the property requests the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the court may, if it thinks fit, unless the other parties interested in the property, or some of them, undertake to purchase the share of the party requesting a sale, direct a sale of the property, and give all necessary or proper consequential directions, and in case of such undertaking being given the court may order a valuation of the share of the party requesting a sale in such manner as the court thinks fit, and may give all necessary or proper consequential directions.

11. There is no controversy as to the standing of the plaintiff to apply. He is a person interested in one moiety and is accordingly entitled to make an application under s 70 of the LPA for sale of the property. What is proposed by the plaintiff is that the property be sold and that 50 per cent of the net proceeds be paid to the defendant upon settlement and that the other 50 per cent of the net proceeds be paid into the Suitors Fund pending the resolution of the cross-action. He does not oppose the defendant purchasing his interest in the property if she wishes to do so.

12. The plaintiff must satisfy the requirements of rule 232 which provides as follows:

    232—Summary judgment

    (1)The Court may, on application by a party, give summary judgment for that party.

    (2)Summary judgment may only be given if the Court is satisfied that—

    (a)if the applicant is a plaintiff—there is no reasonable basis for defending the applicant's claim; or

    (b)if the applicant is a defendant—there is no reasonable basis for the claim against the applicant.

13. In relation to the operation of Rule 232, Debelle J (with whom Duggan and Anderson JJ agreed) said in Ceneavenue Pty Ltd and Others v Martin and Others[1] that:[2]

    The question whether there is no reasonable basis for the claim or defence must be determined in a summary way.  It is entirely inappropriate for there to be a mini trial on that question.  It must, therefore, be evident or obvious that the party defending the application for summary judgment has no reasonable basis for the claim or the defence.  While adversarial argument will assist in the determination of that question, the question should be capable of ready resolution without prolonged argument. 

    [1] [2008] 106 SASR 1.

    [2]    Ceneavenue Pty Ltd and Others v Martin and Others [2008] 106 SASR 1 at [82].

14. The question to decided here, then, is whether it is evident or obvious that the defendant has no reasonable basis upon which to oppose an order being made pursuant to s 70 of the LPA.

15. The entitlement to partition or sale has always been statutory, because at common law co-owners could not compel the partition of property.  The first statutes were introduced in the United Kingdom in 1539.[3]  It was recognised that partition was not always convenient or available and by the 1860s the alternative remedy of sale was introduced.  Sale has since become the primary remedy under the legislation, with partition relegated to limited circumstances.[4] 

    [3]    Partition Act 1539  31 Hen. 8 C 1.

    [4]    Re Cordingley (1948) 48 SR (NSW) 248 at 250.

16. The provisions of s 70 make it clear that the court shall direct the sale of the property unless it sees good reason to the contrary. Interstate authority in respect of equivalently worded legislation makes clear that an eligible applicant is entitled to an order for sale almost as of right.[5]  The onus is on the defendant to establish good reason to the contrary such as to persuade the Court not to order a sale.[6] The court’s discretion pursuant to s 70 is properly described as limited.[7]  The court cannot refuse an application merely on the grounds of hardship or unfairness.[8]

    [5]    Callahan v O’Neil [2002] NSWSC 877 at [8].

    [6]    Woodson (Sales) Pty Ltd v Woodson (Australia ) Pty Ltd (1996) 7 BPR 14,685 at 14701.

    [7]    Re Permanent Trustee Nominees (Canberra) Ltd [1989] 1 Qd R 314 at 317.

    [8]    Spathis v Nanos [2008] NSWSC 418 at [20].

17. The plaintiff pleaded out his case in a fairly straightforward and simple statement of claim.  The Defence sets out a number of factual matters with respect to the relationship.  In paragraph 8 of the Defence the defendant simply says that an order for partition or sale of the property is opposed.  The factual matters pleaded in the Defence do not amount to an arguable defence against the making of the order for sale. 

18. Submissions put on behalf of the defendant, at their highest, appear to be that the defendant would lose an opportunity to retain the property as a result of any court order that might be made.  The legislation in relation to partition and sale is clearly intended to allow a joint proprietor to quit an interest in a property. 

19. In my opinion, nothing put to the Court by the defendant satisfies the onus of establishing “good reason to the contrary” as to why an order should not be made.  No reasonable basis for defending the plaintiff’s claim has been made out.  As mentioned above, unfairness or hardship are not, on the authorities, appropriate grounds on which to refrain from making an order. 

20. The plaintiff’s position is that he is prepared to share the net proceeds of sale equally with the defendant.  She will receive her share of the proceeds at the date of settlement.  The balance will be paid into Court.  Regardless of whether they comprise a defence, there is no hardship to the defendant in proceeding this way, nor any unfairness.  If the defendant can ultimately establish an entitlement to a greater than 50 per cent share of the proceeds of sale of the property, she will receive those proceeds by way of an order for payment out of the Suitors Fund.

21. I propose to make an order for the sale of the property and I will hear further from the parties in respect of the terms of the order that should be made.

    Defendant’s claim under the DPPA

22. The application made by the defendant by her cross-action commenced on 28 March 2014 is for a property adjustment order under s 9 of the DPPA. That section provides:

    9—Property adjustment order

    (1)After a domestic partnership ends, either of the domestic 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 applicant and respondent were resident in the State for the whole or a substantial part of the period of the relationship; and

    (c)the domestic partnership existed for at least 3 years or there is a child of the domestic partners.

    (3)An application for the division of property must be made within one year after the end of the domestic relationship unless the court, after considering the interests of both domestic 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 domestic partner.

    (5)However, an application against the legal personal representative of a deceased domestic partner may only relate to property that is undistributed at the date of the application.

23. The object of the DPPA is to facilitate the resolution of property disputes arising on the termination of domestic relationships. It permits the Court to make orders for the division of property in a way that is just and equitable.[9] 

    [9] DPPA, s 10.

24. The immediate issue under consideration arises under s 9(3). That provision requires an application for the division of property be made within one year after the end of the domestic relationship subject to the court’s discretion to extend, to avoid serious injustice to the applicant.

25. The essence of the plaintiff’s application that there is no basis for the granting of an extension and the Court should deal with the application for an extension now and dismiss it.  The plaintiff must therefore satisfy the test set out in Rule 232(2)(b).  To establish that, the plaintiff must establish that there is no reasonable basis for the grant of an extension of time to bring the statutory claim. 

26. In Cooper v Lees[10] Doyle CJ noted that the ability of a court to extend time in DPPA matters was limited and stated:[11]

    But Parliament has made it clear that the time limit is not easily displaced, and has limited the grounds for doing so.

    [10] [2009] SASC 386.

    [11]   Cooper v Lees [2009] SASC 386 at [38].

27. The application for division of property under the DPPA should be made within one year of the end of the domestic relationship. There has been an extremely lengthy delay in this matter. At best for the defendant, she says that the relationship did not end until December 2008. Accordingly, the claim should have been commenced by December 2009, but it was not commenced until March 2014.

28. The limitation provision in s 9(3) is unusually expressed. The sub-section requires the Court to first consider the interests of both domestic partners. The Court may only extend the time if it is satisfied that the extension is necessary to avoid serious injustice to the applicant. The need to first consider the interests of both domestic partners before determining whether there is a serious injustice that should be avoided indicates there must be some connection between the two steps. Presumably that is that, when one looks at the respective positions of the domestic partners, the applicant will be significantly disadvantaged if not permitted to prosecute the claim.

29. As Doyle CJ noted in Cooper v Lees, the question of an extension of time will often be dealt with at the trial, but that is not a particularly convenient way to deal with an application for an extension.[12]  A lot of time, effort and expense will be involved in getting this matter ready for trial, which will be wasted if at trial the applicant fails to obtain the extension of time.  It is much better for the litigants for the question to be determined ahead of trial if that can be done appropriately.

    [12]   Cooper v Lees [2009] SASC 386 at [37].

30. A recent example of considering an application for an extension of time before trial is provided by Lang & Ors v Australian Executor Trustee Ltd & Ors,[13] in which the Court dealt with an application for an extension of time within which to make a claim under the Inheritance (Family Provision) Act 1972.  The matter proceeded on affidavits ahead of the trial.  There was some cross-examination on the affidavits. The application for an extension of time was refused. 

    [13] [2013] SASC 171.

31. Here the Court is being asked to determine the matter summarily. The parties filed affidavits. No party applied to cross-examine on any of the affidavits. The Court must proceed on the evidence before it, having regard to the pleadings filed. The affidavit material discloses no reason for the delay by the defendant in commencing a claim under the DPPA. It appears to have been brought solely as a defensive reaction to the application for the sale of the property.

32. The time period provided for in the DPPA is 12 months, which is a short period of time within which to commence an action when compared to many other limitation periods. Under the DPPA a court is required to divide the property of the relationship. The short period provided for is no doubt because the ease with which the property of the relationship can be identified will diminish over time.

33. It is now over seven years since the plaintiff returned to Germany. No doubt the asset position of both of the litigants has changed significantly during that period. It is clear that s 9(3) provides the Court with a discretion to extend time if the relevant criterion is satisfied. However, even in situations where the criterion is satisfied, that only enlivens the Court’s discretion. It is not mandatory to grant an extension simply because the relevant criterion was satisfied. When considering the exercise of the discretion to extend time, the issue of delay and the reasons for the delay become relevant.

1. In the cross-action the defendant has pleaded an alternate cause of action in equity.  The claim is that the property is held on a constructive trust.  The question of whether or not there is an alternate cause of action was found by Doyle CJ in Cooper v Lees to be a relevant consideration on the question of extension of time.[14]

   [14]   Cooper v Lees [2009] SASC 386 at [33].

2. The Full Court made clear in Parij v Parij[15] that, in considering a case in equity between former parties to a domestic relationship, financial and non‑financial contributions could be considered in deciding whether to impose a constructive trust to achieve a fair distribution of property between partners to the relationship.[16]  It is clear that the Court was there referring to all assets of the relationship including such matters as superannuation.  The issue of the amount of superannuation held by the plaintiff at the end of the relationship will need to be considered when determining the scope of any constructive trust.

   [15] (1997) 72 SASR 153.

   [16]   Parij v Parij (1997) 72 SASR 153 at 162.

3. The principal judgment in Parij was that of Debelle J, who stated:[17]

   When determining whether it is unconscionable for one party to a de facto relationship to retain the sole beneficial ownership of property acquired in the course of the relationship, regard will be had to the manner in which the parties have conducted their relationship and the contributions each have made.  When assessing their respective contributions, regard will be had to non-financial contributions as well as financial contributions.  The latter proposition is clear from the references to the “practical equation between direct contributions in money or labour and indirect contributions in other forms such as support, homemaking and family care” in Muschinski v Dodds.

   [17]   Parij v Parij (1997) 72 SASR 153 at 163.

4. The position appears to be, then, that the claim in equity being pursued by the defendant requires a consideration of issues similar but not identical to those which would be considered in a claim under the DPPA and that such a claim is likely to produce a similar but perhaps not identical outcome to a claim under the DPPA. In the circumstances, where such an equitable claim is advanced, I do not accept the defendant will suffer serious injustice if left solely to the claim in equity.

5. After considering the position of the parties, the lengthy delay in commencing proceedings under the DPPA, the failure to provide any proper explanation for the delay and the fact that the defendant is not left without a remedy, I am of the opinion that the defendant has not established a reasonable basis for an extension of time. It follows that the cross-action, to the extent that it seeks to prosecute a claim pursuant to the DPPA, should be dismissed.

   Observations about commerciality of these proceedings

6. Each of the parties in these proceedings are now aged in their 70’s and living on pensions of various types.  Considerable costs will be incurred pursuing this matter to trial.  It is not apparent at the moment that an improved financial outcome can be achieved by either of the parties pursuing this matter to a trial.  The costs that will be incurred will more than likely outweigh any commercial advantage to be obtained in proceeding to trial.  I would urge the parties to consider some form of alternative dispute resolution such as mediation as being the most cost-effective way to resolve the position they now find themselves in.