Kelly v Clarke
[2001] NSWSC 1010
•9 November 2001
Reported Decision:
(2002) DFC 95-237
New South Wales
Supreme Court
CITATION: Kelly v Clarke [2001] NSWSC 1010 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 1237/00 HEARING DATE(S): 3 August, 17 & 18 September 2001 JUDGMENT DATE:
9 November 2001PARTIES :
Kevin Paul Kelly (P)
Ron-El Jean Clarke (D)JUDGMENT OF: Hamilton J
COUNSEL : P M Friedlander (P)
M Bridger (D)SOLICITORS: Bowen & Gerathy (P)
Hardman & Company (D)CATCHWORDS: CONTRACTS [77] - General contractual principles - Statute of Frauds, s 4 - Non compliance with Statute - Doctrine of part performance - Acts constituting past performance - Payment of promised price, entry into receipt of rents of rented premises and assumption of liabilities relating to subject property - FAMILY LAW AND CHILD WELFARE [105] - De facto relationships - Legislation - New South Wales - Property (Relationships) Act 1984 - Adjustment of property interests - Discretion - Principles on which exercised - Time at which value of assets should be assessed LEGISLATION CITED: Conveyancing Act 1919 s 54A
Property (Relationships) Act 1984 s 20CASES CITED: Cooney v Burns (1922) 30 CLR 216
Evans v Marmont (1997) 42 NSWLR 70
Jones v Grech (2001) DFC 95-234
Maddison v Alderson (1883) 8 App Cas 467
Parker v Parker (1993) 16 Fam LR 863
Steadman v Steadman [1976] AC 536DECISION: Plaintiff entitled to specific performance of oral contract for sale of defendant's half share of the property. Defendant's claim under Property (Relationships) Act 1984 fails.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
HAMILTON J
FRIDAY, 9 NOVEMBER 2001
1237/00 KEVIN PAUL KELLY v RON-EL JEAN CLARKE
JUDGMENT
1 HIS HONOUR: These are proceedings between Kevin Paul Kelly and Ron-El Jean Clarke. They were born on 7 August 1969 and 16 August 1973 and are now respectively 32 and 28 years old. They undoubtedly lived in a de facto relationship for about two years ending in January or February 1997. In 1996 they bought a house property at Arncliffe (“the property”) as joint tenants. The purchase was completed on 21 October 1996. The plaintiff claims that after the termination of their de facto relationship he purchased the defendant’s share of the property from her under an oral contract, of which he claims specific performance. She denies the contract and pleads s 54A of the Conveyancing Act 1919 (“the CA”). He replies on part performance. In the alternative, he claims that her interest in the property should be transferred to him by way of property adjustment under s 20 of the Property (Relationships) Act 1984 (“the PRA”). She makes a cross claim under the PRA to the effect that the property should be sold and the proceeds divided equally between them. Neither party’s claim under the PRA was made within two years after the termination of their de facto relationship but, if it becomes necessary to make orders under the PRA, there is no opposition on the part of either of them to extension of time by the Court.
The Evidence
2 The evidence in this case, both oral and documentary, is curiously patchy. Both the plaintiff and the defendant have clear recollections of some things and poor recollections of others, although the events of this case are not as far in the past as those in many. On the documentary front, virtually every document regarding the income and expenditure in relation to the property after its purchase is in evidence. Yet basic documents, such as a search of the title or the contract under which the property was purchased, are not. Three letters from the conveyancing solicitors’ file are in evidence, but no other document from it. Some documents from the file of Miss Pelbart (who at one time advised the plaintiff) are in evidence. The balance of the file is absent (in this case it is clear that efforts were made to obtain the whole file but parts of it are missing). Among the missing parts are Miss Pelbart’s own notes of her initial interview with the plaintiff.
3 The witnesses were the plaintiff, the defendant and Elena Pelbart, a solicitor who when she acted for the plaintiff was employed by the Sydney Regional Aboriginal Corporation Legal Service (“the ALS”). These three were cross examined. There was a short affidavit by the defendant’s mother concerning the period of cohabitation, but she was not cross examined.
4 I did not form the impression that either the plaintiff or the defendant deliberately gave the Court false evidence rather than attempting to convey their present recollections of the facts. In general terms I prefer the plaintiff’s evidence to that of the defendant where they conflict. In doing so I rely on my observation of the witnesses, the fact that the plaintiff was prepared to make concessions against his interest in the course of cross examination and the fact that in respect of important matters where the evidence of the plaintiff and the defendant conflicted there was indication of the correctness of the plaintiff’s version to be found in independent evidence.
5 In fact I find that the parties cohabited from April 1994 until late January or early February 1997, a period of two years and eight months. The plaintiff was initially certain that the period of cohabitation commenced in February 1995 and ended in January 1997 and was thus for less than two years. However, the defendant’s evidence as to the date of commencement received support from diary entries of hers and from the affidavit evidence of her mother. In cross examination the plaintiff conceded that although he had believed at the time of swearing his affidavit that his version was “spot on” he now regarded it as “likely” that her version was correct. In light of the evidence, the plaintiff’s counsel did not seriously contend that the cohabitation was for less than two years.
6 Throughout the period of cohabitation both the plaintiff and the defendant worked full time. There were no children of the relationship. The defendant worked for an airline. On the plaintiff’s evidence, her income was between $21,000 and $23,000 gross per annum. According to her evidence it was about $17,000 per annum after tax. He worked as a bricklayer earning approximately $25,000 per annum. He does not state whether this was before or after tax and I take it to be gross. He was also earning money as a professional boxer, he says about $10,000 per annum at this time. She does not dispute these figures.
7 She says that she spent about $150 per week on the household food and the rest of her income on her own expenses. He does not substantially dispute this. He says that he paid for restaurant meals and holidays. She claims to have contributed to holidays both in cash and by the provision of cheap airline tickets by virtue of her employment. He concedes one set of cheap airline tickets and she does not dispute in general terms substantial expenditure by him on restaurant meals and holidays. Both contributed to household expenses such as telephone and electricity, although there is a dispute as to the proportions: he claims a preponderance, she about equality. There seems to be no dispute that he paid the car expenses. The facts about cars appear in [8].
8 Initially, the defendant owned a Nissan Pulsar bought either before or at the commencement of cohabitation. She bought it for about $6,000 and it was traded in on the Lexcen vehicle mentioned below for about $3,500. He appears to have paid out part of her borrowings for the purchase of the Nissan car, perhaps the last $1,200. The Lexcen was purchased in August 1995 in joint names for $16,800 plus $500 for the insurance of the vehicle. The $17,300 was made up as follows:
| Loan from Westpac Bank | $10,000 |
| Trade-in price for defendant’s Nissan motor vehicle | 3,500 |
| Dealer finance | 3,800 |
The whole of the borrowings were paid out by February 1996. There is no dispute that they were paid by the plaintiff. It is said they were paid from his earnings as a boxer. Furthermore, he paid the defendant $2,500 towards the value of her Nissan and she took a further $500 on that account from the joint bank account which will be mentioned below, so that she had reimbursement of $3,000. The defendant’s share in the title of the Lexcen has been transferred to the plaintiff and there is no dispute that that vehicle ought be regarded as his.
9 The defendant says that she did virtually all the housework during the time that they lived together. The plaintiff claims to have made some contribution to the housework, particularly the cooking. I accept that the plaintiff made some contribution to the housework, but that the bulk of the housework was done by the defendant. Throughout the period of cohabitation the parties lived in a 3-bedroom flat which the plaintiff’s parents had constructed in their house at Chifley. There is no dispute that this accommodation was provided to them free of charge. There is equally no dispute that it was said to be provided on the basis that the plaintiff would pay $150 per week from his earnings into a joint bank account which could be used in due course for the purchase by them of a home. To what degree moneys were in fact paid in and what happened to them thereafter are among the blanks which I have mentioned in the evidence. There is in evidence only one bank statement relating to the account, dating to June 1995. This indicates that the account was opened at the Matraville branch of the Westpac Banking Corporation (“Westpac”) on 29 May 1995 with a deposit of $353.21, there being two further deposits totalling $250 within a couple of days thereafter. The only debit shown is of $202.62 in favour of the defendant’s “loan acct” [sic]. The only loan which the evidence reveals the defendant had was in respect of her purchase of the Nissan car. The plaintiff conceded that he did not always put $150 per week into the account and that some moneys were taken out of it. Both parties in their affidavit evidence asserted that $8,500 went from this account to the purchase of the property, but as appears in [11] hereafter, I do not accept that that was so.
10 In 1996 the decision was taken to buy a house. For this purpose a loan was obtained from the Aboriginal and Torres Straits Islander Commission (“ATSIC”) for $175,000, the plaintiff being of Aboriginal descent. Contracts were exchanged on 4 September 1996 and the purchase completed on 21 October 1996. Both parties are agreed that the defendant contributed a lump sum of $10,000 to this purchase. This was said by the plaintiff to have come from her father’s estate and by the defendant herself from her mother. Prior to its use it was held in a current account which the defendant maintained at Westpac (initially at Mascot and subsequently in the city). She remembers contributing the sum by either a cheque drawn on that account or a bank cheque purchased with moneys from it and believes it was given to the solicitors. The solicitors’ correspondence reveals that the stamp duty was $4,794 and the solicitors’ costs $1,333.50, a total of $6,127.50, but there are no documents from the solicitors which show how these moneys were provided (save that the costs were paid as to $600 during September and as to the balance on the day of settlement).
11 The parties’ initial versions in affidavits as to how the balance of funds was provided were closely similar, but have been proved to be inaccurate. They both proceeded on the basis that the purchase price was $185,000 and that the additional expenses were about $3,500. On this basis, the total of the moneys needed for the purchase was $185,000 plus about $5,000 for the stamp duty plus $3,500, equals $193,500, so that the balance needed over and above the borrowing of $175,000 was about $18,500. They were and continue agreed that the defendant provided $10,000 in a lump sum, but both swore that the balance of $8,500 was drawn from the joint account. However, at the trial, when part of the solicitors’ file was produced, it became apparent that there was a basic error in their assumptions, namely, that the purchase price was $185,000. The evidence establishes that the purchase price was $180,000. The additional expenses were only about $6,000 (inclusive of the stamp duty), so that a total of only $186,000 was needed, $175,000 undoubtedly being supplied by ATSIC and a further $10,000 by the defendant. A second mistaken assumption appears to have been that the deposit paid was $18,500, the conventional 10 per cent, so that a further $8,500 was necessary at the time of exchange of contracts, but, again, the solicitors’ correspondence reveals that the deposit was $10,000 only. It may well have been the perceived need to find a source for an additional $8,500 either for the deposit or on settlement that misled both parties into believing that it was taken from the joint account at that time. My conclusion on the probabilities is that the defendant’s $10,000 was used as the amount of the unconventional deposit. It remains a mystery as to how and when the $4,794 required for the stamp duty was paid but, in my view, it is not established on the evidence that $8,500 or any sum was taken from the joint bank account for the purposes of this purchase.
12 It would seem that, by the time of the completion of the purchase, difficulties were arising in the parties’ relationship. It was decided not to move into the property but to let it. Relations obviously deteriorated over December 1996 and January 1997 and the defendant departed from the flat in his parents’ house in which she had lived with the plaintiff, as I have said, in late January or early February 1997.
13 The greatest actual controversy in this matter is as to what passed between the plaintiff and the defendant after their separation concerning the future of the property and the undoubted payment by the plaintiff to the defendant of $10,000. That there was such a payment there is no doubt. It was made by a cheque of the Maritime Workers of Australia Credit Union Limited drawn on 8 May 1997 in favour of the defendant, being the proceeds of a loan raised from that credit union by the plaintiff. The plaintiff’s account of how this came about is as follows. He deposed in his affidavit that “shortly after” the separation he had a telephone conversation with the defendant in the following terms:
| “Me | ‘Now that it’s over between us what are we going to do about the house’ |
Defendant | ‘Well I just want my $10,000.00 that I put in and you can do what you want with it’ |
Me | ‘Maybe we can keep it as an investment’ |
Defendant | ‘No. I want my money, I don’t want any ties with you at all’ |
Me | ‘Well I don’t have $10,000 just to give you like that’ |
Defendant | ‘Well just get it, get a loan or something. The bank will lend you the money’ |
Me | ‘Alright then I’ll see if I can get a loan from the credit Union for $10,000 then I’ll have to go and see the legal service about changing the house over into my name’ |
Defendant | ‘Okay, just hurry up and give me my money back because I’m not signing anything until I get my money’ |
Me | ‘If they will lend me the $10,000 I’ll give you your money, but if they don’t you’ll just have to wait until I get it. I can’t give you what I haven’t got’ |
Defendant | ‘Well call me after you talk to the Credit Union, I need the money, I’m broke’” |
Thereafter she pressed him for the payment on a number of occasions saying, “I need the money. I am broke.” About 7 May 1997 he again telephoned and had the following conversation with her:
| “Me | ‘I have got a loan from the Credit Union to give you back the $10,000 that you put in. I will then go and see a solicitor and get the papers that we need to put the house into my name’ |
Defendant | ‘Fine, okay then just give me my money. I don’t want anything to do with you or the house, you can have it. I just want a clean break. I want to cut all ties’ |
Me | ‘I’ll pay you the $10,000 we agreed on and then you will sign over the house’ |
Defendant | ‘Yes, just give me my money and I will sign over the house to you’ |
Me | ‘I will drop the cheque into your work tomorrow’ |
Defendant | ‘Okay’” |
He says that on the next day he personally delivered the cheque to her at her place of employment and the following conversation took place:
| “Me | ‘Here is the $10,000.00. Now I will go and see the solicitor and have the papers drawn up to change the house over into my name.’ |
Defendant | ‘Okay then give me a call when you have had it done.’ |
Me | ‘Okay then I will be in touch.’” |
14 The defendant’s account of the three conversations in her affidavit is as follows. As to the first conversation:
- “Plaintiff: ‘If you don’t want to come back to me, what are we going to do about the house?’
- Me: ‘I want at least my $10,000 back straight away, I haven’t got any money, you can make the decision about what happens about the house.’
- Plaintiff: ‘Maybe we can keep it as an investment.’
- Me: ‘You can make a decision about whether to sell the house or not. I am sick of talking about it. You make the decision, what I want now is $10,000.’
- Plaintiff: ‘Where am I going to get $10,000 from?’
- Me: ‘You can borrow it.’”
As to the second conversation:
- “Plaintiff: ‘I have got the cheque for $10,000 for you. I will drop it into you next week at work but I am going to a solicitor to make you sign the house over to me.’
- Me: ‘Fine, drop in the cheque and do whatever you feel is right, obviously you will need to see what your solicitor’s input is.’
- Plaintiff: ‘I think we should go to a solicitor together and they could witness you signing your name off the house.’
- Me: ‘No, you go to a solicitor and see what they have to say about the legalities of the whole thing.’”
As to the third conversation:
- “Plaintiff: ‘Here’s the cheque.’
- Me: ‘Thank you.’
- We then talked in general terms about what he was up to and what I was up to and then:
- Plaintiff: ‘So what’s happening with the house.’
- Me: ‘The last think you told me was that you were going to a solicitor to check the whole thing out, so why are you even asking me about it.’
- Plaintiff: ‘If you don’t fucking do it I will take you to court and they will make you sign over the house.’
- Me: ‘Fine. See you there. Just don’t come to my work harassing me.’”
15 Whilst the defendant denies any promise to transfer her interest in the property in exchange for the payment of $10,000, a number of things are significant about her version of the conversations. First, she concedes that there were three conversations corresponding to those deposed to by the plaintiff. Secondly, she admits that she pressed for the immediate payment of $10,000. Thirdly, that $10,000 she characterised as “my $10,000”. Fourthly, she concedes that the plaintiff in the first conversation suggested them keeping the property as an investment. Fifthly, she concedes that they discussed him going to a solicitor about the matter.
16 The evidence clearly shows that he did in fact go to a solicitor. That solicitor was Miss Pelbart. It is clear on the evidence that Miss Pelbart took extensive notes of the instructions that she was given, but those notes are now missing. That is clear from the documents which Miss Pelbart shortly thereafter prepared, which contain detailed material about the parties’ financial dealings and their acquisition of the property. Miss Pelbart had present when she saw the plaintiff a handwritten note. What is available now is a bad photocopy of that note with some of the writing cut off in the copying and much of it virtually illegible. The handwriting in the note is not Miss Pelbart’s and is not the plaintiff’s. The plaintiff was referred to Miss Pelbart by someone else at the ALS and it is possible that it is that person’s handwriting. It does, however, contain some notes in Miss Pelbart’s hand, corroborating that she had it before her when she saw the plaintiff. In view of the shortcomings of the document I do not place great reliance on it, although it is plain from it that the plaintiff had told someone that he had paid the defendant $13,000 and that there was “no formal agreement drawn up”. Without her notes Miss Pelbart’s recollection of what was said to her by the plaintiff was to the following effect:
- “I have split up with my defacto, Ron-el Clark. We own a house together. We have agreed to split up everything. I have paid Ron-el everything she put into the property and she has agreed to give me her share of the house. I want to make it legal. Would you prepare the paper work which is necessary for the property to be put into my name.”
Miss Pelbart prepared some documents which were subsequently sent to the plaintiff and the defendant. Before sending the documents to the defendant Miss Pelbart spoke to her on the telephone and deposes that she said the following:
- “I am the solicitor acting on behalf of Kevin Kelly, I need your address so that I can forward you a copy of the Terms of Agreements which I have drafted based on the agreement that you and Kevin reached before you moved out. Once you get the papers please get your solicitor to let me know if there are any changes you require me to make. I have been trying to get in touch with you for a while. Kevin Kelly told me that you have been waiting for the Orders so you could sign them. I apologise for the delay.”
I accept Miss Pelbart’s evidence that the plaintiff spoke to her and that she spoke to the defendant substantially in the terms set out above.
17 The documents that Miss Pelbart prepared included a draft application to the Local Court at Sydney for an order under the PRA for the adjustment of property interests by the transfer of the defendant’s share in the property to the plaintiff. It recorded the payment of $13,000 by the plaintiff to the defendant, being the $10,000 borrowed plus the $3,000 paid in respect of the Nissan car as set out in [8] above. It did not specifically state that there had been an agreement by the defendant to transfer her interest in the property to the plaintiff. It is suggested on the defendant’s part that this shows that the plaintiff did not claim to Miss Pelbart that there was such an agreement. However, Miss Pelbart was in her evidence most emphatic that the plaintiff had said that to her. Again, it was said to be significant that the document she prepared was an application under the PRA, not a contract for the sale of land or Real Property Act transfer. However, it seems to me likely that Miss Pelbart proceeded in this fashion because aware that a contract or transfer would not in the long run be efficacious unless the defendant’s potential entitlements under the PRA were determined and that that was what she was proceeding to achieve.
18 After the payment of the $10,000 the plaintiff did commence to pay all the expenses of the property. He took and used the rents for this purpose but added funds of his own when necessary. Until May 2000 he used ATSIC’s payment booklets to make the payments. After that he caused the letting agents to deposit the net rental directly into a bank account of ATSIC. He has not made all the payments. About the same time, ie, May 2000, he ceased to top up the money available from the rent to ensure that the whole of the instalments under the mortgage were paid, so that the mortgage account is now about $4,500 in arrears. The defendant suggests that he ceased doing this by reason of a lack of belief in his own case that a promise of a transfer had been made to him. I am inclined to accept his explanation that at about that time he realised that by reason of this litigation it had become uncertain whether or not he would in fact obtain a transfer of the property so that he feared that he was in effect throwing good money after bad by keeping the mortgage entirely up to date. I find that the cessation of top up payments should not be taken as any admission by him that he did not believe in his case. Nor is it evidence of unwillingness to perform the agreement on his part at the time the proceedings were commenced, as the statement of claim was filed on 1 February 2000.
19 The sums that he paid additional to the rent are as follows:
| SYDNEY WATER | ||
| 1 October, 1996 - 31 December, 1996 | 105.55 | |
| 1 January, 1997 - 31 March, 1997 | 116.95 | |
| 1 April, 1997 - 30 June, 1997 | 110.10 | |
| 1 July, 1997 - 30 September, 1997 | 103.20 | |
| 1 October, 1997 - 31 December, 1997 | 102.90 | |
| 1 January, 1998 - 31 March, 1998 | 107.70 | |
| 1 April, 1998 - 30 June, 1998 | 97.30 | |
| 1 October, 1998 - 31 December, 1998 | 83.60 | |
| 1 January, 1999 - 31 March, 1999 | 98.60 | |
| 1 April, 1999 - 30 June, 1999 | 87.05 | |
| 1 July, 1999 - 30 September, 1999 | 88.30 | |
| 1 October, 1999 - 31 December, 1999 | 98.40 | |
| 1 January, 2000- 31 March, 2000 | 100.20 | |
| 1 April, 2000- 30 June, 2000 | 129.90 | |
| 1 July, 2000- 30 September, 2000 | 127.20 | 1,653.95 |
NRMA HOUSE INSURANCE | ||
| 15 October, 1996 - 14 October, 1997 | 271.35 | |
| 15 October, 1997- 14 October, 1998 | 276.60 | |
| 15 October, 1998- 14 October, 1999 | 294.60 | |
| 15 October, 1999- 14 October, 2000 | 304.76 | |
| 15 October, 2000- 14 October, 2001 | 303.82 | 1,451,13 |
ATSIC LOAN REPAYMENTS | ||
| Difference paid by Kevin Kelly as per attached schedule | 13,527.95 | |
| 16,633.03 |
20 It is agreed that the present value of the property is $300,000. The property was purchased for $180,000 by a contract in September 1996 completed in October 1996. The contract clearly having been at arms’ length, I should infer from that that $180,000 was the value of the property at that time. There is no evidence of an increase in value by February 1997, or by May 1997 when the $10,000 was repaid. In the absence of other evidence I infer that the value of the property continued to be about $180,000 or did not exceed $180,000 by any significant amount as at those times.
The Law
21 The principles relating to the doctrine of part performance as a reply to a plea of the Statute of Frauds are well known: see Maddison v Alderson (1883) 8 App Cas 467 at 475 – 476, 478 - 481; Cooney v Burns (1922) 30 CLR 216 at 222; Steadman v Steadman [1976] AC 536 at 540 - 541.
22 So far as the exercise of the discretion under the PRA is concerned, the criteria are stipulated by s 20(1) as follows:
“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:
(b) the contributions, including any contributions made in the capacity of homemaker or parent, 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 and one or more of the following, namely:(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
- (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.”
The Court of Appeal has ruled in Evans v Marmont (1997) 42 NSWLR 70 that the contributions stipulated in subparagraphs (a) and (b) are the only criteria to which regard may be had in exercising the discretion, although they must be viewed in the context of the whole relationship and all the circumstances. There has been considerable judicial controversy as to whether the contributions to which regard can be had must have been made during the period of cohabitation, or whether contributions before or after that period can be taken into account. The preponderant view appears to be that at least in some circumstances it is possible to take into account contributions both before and after the period of cohabitation: see Jones v Grech (2001) DFC 95-234 per Davies and Ipp AJJA, Powell JA dissenting. In the last mentioned case the nature of the inquiry under s 20 was stated as follows by Davies AJA at [29]:
- “29 In general, an inquiry under s 20 requires examination, first, of the identity and value of the respective assets of the parties, secondly, of the contributions of the type contemplated by paras (a) and (b) made by each partner, and, lastly, whether, in all the circumstances of the case, the contributions have already been sufficiently recognised and compensated for and, if not, whether it is just and equitable to make an order so that the contributions of one or other of the parties are sufficiently recognised and compensated for. See Powell J in Lipman v Lipman (1989) 13 Fam LR 1 at 18.”
The Parties’ Property
23 Some of the relevant findings are able to be made only in general or vague terms, because of the state of the evidence. So far as the evidence goes, the defendant at the beginning of the de facto relationship had only personal possessions and perhaps a current account with Westpac, although there is no evidence as to its balance. It is not clear whether she had the $10,000 which has been discussed above, although it seems likely that it was after the commencement of the relationship that she received that. At the end of the relationship she retained her bank account and a joint bank account with the plaintiff. There is no evidence as to what sum was in that joint bank account, save that the evidence suggests that there was at least $500 there which she took as a final instalment of the refund of the value of the Nissan car. She may have already owned the second hand Nissan Pulsar, or it may have been purchased after the commencement of the de facto relationship. It was purchased for $6,000 and disposed of for $3,000. At least some of the purchase price was borrowed. At the end of the relationship she was the registered proprietor as joint tenant of the property, in which at that time she had an equity of approximately $2,500. It is alleged that shortly afterwards she disposed of her share in the property by contract for $10,000. A half share in the equity in that property is now worth some $65,000 to $70,000. There is no evidence of her having any other assets other than personal possessions.
24 So far as the plaintiff is concerned, on the evidence, at the commencement of the de facto relationship he had only personal effects. At the termination of the de facto relationship, as well as personal effects, he had an interest in the joint bank account. He had a half share in the property. He owned a second hand Lexcen motor car purchased in 1995 for $16,800 and for which he paid out of his boxing earnings. The value of that motor car has no doubt diminished over time, but there is no evidence as to what its value was at the end of the relationship or, indeed, is now, if it be still in his ownership. It is to be noted that the defendant acknowledges that the motor car is beneficially the plaintiff’s and makes no claim to it or by reference to the plaintiff’s beneficial ownership of that vehicle.
The Specific Performance Claim
25 The first thing to do is to determine whether the plaintiff is entitled to specific performance of an oral contract to purchase the property. This must be done both to determine the plaintiff’s claim for specific performance and also to establish the position as to the parties’ rights to property as at the present time. The first defence to the plaintiff’s claim is that there was no contract. In my view this turns on whether the plaintiff’s version or the defendant’s version is accepted of the conversations that led to the plaintiff’s undoubted payment of $10,000 to the defendant. I accept the plaintiff’s version of these conversations. In doing so I rely on my preference for the plaintiff as a witness as expressed in [4] above, on the fact that the defendant admits substantial parts of those conversations whilst denying her commitment to transfer her share of the property, on the corroboration afforded by Miss Pelbart’s clear recollection that the plaintiff told her when he saw her in July that an agreement was in place and that she spoke in those terms to the defendant without demur on the defendant’s part, and on the probabilities of the situation itself. As to the corroboration provided by Miss Pelbart, it is contended for the defendant that it should be concluded from the terms of the particulars that she put into the draft application to the Local Court and, indeed, from the very fact that the course Miss Pelbart followed was the preparation of such an application that the plaintiff did not tell her that there had been an agreement to transfer the property. However, Miss Pelbart’s recollection was clear and I accept her word. The way she proceeded, as I have already suggested, is explicable by the fact that firm and permanent entitlement to the property could only be achieved for the plaintiff by the resolution of the parties’ rights under the PRA. What I mean by referring to the probabilities of the situation is that it does not seem to me likely that the plaintiff would have gone out and borrowed $10,000 and paid it to the defendant as a refund of “her” $10,000”, thereby reducing her contribution to the property to nil, except in return for the transfer of her share of the property If she declined continuing joint ownership, which he says (and she admits) he offered, the likelihood is that he would want in return for the $10,000 full ownership of the property, he taking all future risks associated with it and bearing all expenses, including indemnifying her against any further liability under the mortgage. I find that there was a contract as alleged by the plaintiff.
26 In view of the plea of s 54A of the CA it is therefore necessary to consider whether the plaintiff has established his reply of part performance. The particulars given are that he paid the whole of the purchase price; he alone has since then “done all things necessary and paid all outgoings in respect of the property”; and that he acted to his detriment in borrowing money to pay the defendant. There is no doubt that that the money was borrowed at interest. The plaintiff thereafter collected the rent from the letting agent and has had all dealings with the letting agent since that time. The rent which he collected he then paid towards the mortgage with, until May 2000, further moneys of his own to ensure that the mortgage obligations were met. He has paid all outgoings in respect of the property. It is contended that these acts are not sufficient acts of part performance and that in particular the payment of the purchase price cannot be characterised as an act of part performance at all. However, Steadman v Steadman supra is authority for the proposition that it is incorrect to say that the payment of moneys can in no circumstances be characterised as an act of part performance. Whilst the plaintiff has not physically taken possession of the property there is no dispute that he has taken sole possession of the rents and been the person who solely dealt with the letting agents as well as paying all outgoings on the property. It is suggested that those acts cannot be taken as acts of part performance because he ceased last May to contribute make up payments allowing the mortgage to fall into some arrears. However, there is no doubt that he acknowledges his obligation to make those payments. I accept his explanation that the cessation of the additional payments was not an admission that he did not believe in his account that there was a firm contract but a reluctance to pay away further moneys while that account and his rights under it were under active challenge in the courts. This may not be entirely logical but I regard it as a not unnatural reaction on the part of a layman. Viewing the totality of the acts set out above I am of the view that they constitute part performance of the relevant contract. The plaintiff has in his pleadings offered to perform the contract, insofar as it has not been performed by him. In those circumstances, the plaintiff was entitled at the commencement of these proceedings and is entitled to performance of the contract on the defendant’s part.
The Inquiry into the PRA Claims
27 The defendant claims to have made the following contributions within the meaning of s 20(1):
(1) Monetary Contributions to Purchase: $10,000 (being the lump sum of $10,000 which she provided) and $4,250 (being half the $8,500 said to have been contributed to the purchase from the joint account).
(2) Savings Scheme: Pursuant to the arrangement whereby the defendant was to pay for the household food and the plaintiff was to put aside $150 per week into the joint account towards the purchase of a house, the defendant claims during cohabitation to have paid $100 to $150 per week out of her income for household food. The balance of her income she used on personal expenditure.
(3) Homemaker: The defendant claims to have done virtually all the housework during cohabitation.
(4) Holidays and Lifestyle: The defendant claims to have contributed some moneys towards holidays taken together and to have provided cheap airline tickets for holidays by reason of her airline employment. She offers no quantification of amounts contributed or the value of the concessions represented by the tickets or of the plaintiff’s expenditure on holidays, which there is no dispute that he made.
(6) Effort Expended: She refers to efforts she made in assisting to effect the purchase.(5) Household Effects: She claims to have contributed an unquantified amount to household effects used in the flat occupied by the couple during cohabitation, but to have taken only a limited amount of those effects after cohabitation ceased. However, she does not quantify the value of the expenditure, what was taken, or what was left.
28 The contributions claimed to have been made by the plaintiff are as follows:
(1) Monetary Contributions to Purchase: The plaintiff claims to have contributed $4,250 cash to the purchase, being his share of the $8,500 said to have been taken from the joint account. He claims to be entitled to the benefit of the $10,000 originally contributed by the defendant, which he refunded to her.
(2) Savings Scheme: The plaintiff claims to have carried out his part of the bargain by depositing in general terms $150 per week into the joint account, although he concedes that he did not always make deposits weekly and those he made were not always in the full amount. An integral part of the savings scheme was the provision by his father of free accommodation in the flat, obviating the necessity for rent to be paid for accommodation. This was in fact provided throughout the whole of the period of cohabitation.
(3) Homemaker: He claims to have done some of the housework, particularly some cooking.
(4) Holidays and Lifestyle: He claims substantially to have paid for holidays taken during cohabitation. He remembers one sum of $4,000 expended from his boxing earnings. He concedes that the defendant provided concessional air tickets on one occasion. He says that they dined out frequently at restaurants and this was always paid for by him, which does not seem to be disputed.
(5) Household Effects: Not a great deal is said about this, but it seems to be common ground that some of the household effects were bought by the plaintiff.
(7) Monetary Contributions to Purchase after Separation: He claims to have paid water rates in the sum of $1,654 and insurance in the sum of $1,451. The payments out of his own funds towards principal and interest which he has made in respect of the mortgage total more than $13,000 in addition to the rent. The principal owing under the mortgage has been reduced by about $8,000.(6) Effort Expended: It seems to be common ground that he also participated in the effort of effecting the purchase.
29 I make the following findings concerning the claims of contribution:
(1) Monetary Contributions to Purchase: I find that the $10,000 lump sum was undoubtedly paid by the defendant towards the purchase of the property, but that it cannot realistically be counted as a contribution by her towards the purchase of the property because it was, on her story as well as his story, refunded to her in full within a few months after it was paid and about three months after cohabitation ceased. I have already found that, despite the belief and evidence of both parties to the contrary, neither the $8,500 nor any sum was contributed to the purchase from the joint bank account. There cannot therefore be taken to have been a contribution of $4,250 by the defendant from this source, nor, indeed, by the plaintiff.
(2) Savings Scheme: There is no dispute that the defendant contributed $100 to $150 per week from her wages to buy the household food throughout cohabitation. Equally, the plaintiff’s part of this scheme was carried out throughout cohabitation by the provision of accommodation by his father. In my view this was a contribution indirectly made by the plaintiff, since it was only by reason of the plaintiff’s participation in the relationship that the accommodation was made available to the couple by his father. The property when purchased fetched from the start a rental of more than $200 per week. The flat provided to the parties was a commodious one. Although the material is thin, I am of the view that the rental value of the flat the couple occupied was at least $200 per week. The contributions to the joint account and their disbursement remain a mystery. They did not commence at the beginning of cohabitation (since the little evidence there is about the account shows that it was opened in May 1995, and not in 1994, when I have found that cohabitation commenced). It does not seem that those moneys went into the Lexcen motor car, since this was said to have been paid for out of his boxing earnings. The proceeds of the joint account did not go to acquiring any further assets for the couple or for the plaintiff alone, since on the evidence there are no such assets. The evidence suggests that during cohabitation the parties lived as a normal young couple engaging in social activities, dining out and holidaying together. The best conclusion I can come to on the evidence is that, despite the intention to create a joint fund from savings from the plaintiff’s earnings, such moneys as were paid into the joint account (in an amount I cannot determine) were in effect spent on lifestyle activities engaged in together by the couple.
(3) Homemaker: I accept that the defendant did the bulk of the housework during cohabitation, although I accept that the plaintiff did do some, particularly some cooking.
(4) Holidays and Lifestyle: I find that the plaintiff did pay $4,000 in a lump sum and did pay the vast bulk of the moneys expended on holidays and on eating out at restaurants. I refer to my remarks in subparagraph (2) above as to expenditure on lifestyle activities.
(5) Household Effects: On the evidence I can make no determination as to the amounts expended or value of the benefits derived by the respective parties after cohabitation from expenditure on household items. It is likely that the plaintiff wound up with more of these than the defendant, but I can place no figure on their value.
(7) Monetary Contributions to Purchase after Separation: I find that the plaintiff has contributed sums in respect of the property after cohabitation as alleged by him; and that the defendant has contributed nothing, as is admitted.(6) Effort Expended: I find that both parties participated and expended effort in the acquisition of the property.
Conclusion
30 Taking items (2) to (6) in [29] together, it seems to me that, on the basis of those items, the various contributions by the parties respectively essentially came to balance each other and there has been no imbalance of contributions which, so far as those items are concerned, create any requirement of justice or equity that there be an adjustment of the proprietary interests of the parties. So far as the direct financial contributions in items (1) and (7) are concerned, there are different ways of looking at them. If only contributions during the period of cohabitation can be taken into account, then the situation is that, although the defendant paid the $10,000, that cannot in my view be regarded as a contribution by her, because it was refunded to her. If neither party made any contribution during the cohabitation, then there is no reason why the present proprietary interests ought be adjusted. Those interests are that each still holds a legal half share in the property, but the defendant’s half share is held, as I have found, subject to an obligation to perform the contract for the sale of her interest in the property by transfer of that interest to the plaintiff. The foregoing represents the defendant’s best case; even if no other contribution by the plaintiff could be taken into account, the correct result would be that no adjustment is required. However, on my view of what can be taken into account, the plaintiff’s case becomes even stronger. In my view the plaintiff’s payment of $10,000 to the defendant should be counted as a contribution by him made at the time of the defendant’s original contribution (which in effect became his when he refunded it to her), or because it can be taken account as a contribution by him, albeit made after the end of cohabitation. On that basis he has made a financial contribution of $10,000 and she has made none. If one can take into account, and it is my view that it is the correct legal position that one can, his later payments of outgoings and principal and interest under the mortgage, then his position becomes stronger again.
31 It is argued for the defendant that the balance is changed because the property should be valued at the present time; that it is now worth $300,000, so that one half of the present equity therein is $65,000; and that the result I propose would deprive the defendant of the benefit of the increase which the value of the property has undergone while she has held the legal title. Whilst it is said that it is generally appropriate to value the property for the purposes of s 20 applications at the time of the hearing, it has also been said that it is appropriate to take into account their value at an earlier time, such as the termination of the relationship, in appropriate circumstances. In Parker v Parker (1993) 16 Fam LR 863 Young J (as his Honour then was) said at 874:
- “Mr Brereton submits that the relevant date is the date of separation though he concedes that no greater award can be made to the plaintiff than the amount of the defendant’s assets as at the date of trial. This matter was considered by Master Macready in Taggart v Gaston (unreported, 7 December 1991). In that case the learned Master reviewed most of the applicable authorities and came to the conclusion that as a matter of principle this court under the De Facto Relationships Act should follow the approach taken by the Family Court in Re Wardman and Hudson (1978) 33 FLR 196, 200. The Full Family Court there said that unless there are other factors the appropriate time to value the assets is at the date of the hearing. The date of separation may be chosen if the facts warrant it, such as (a) where a party had won the lottery between separation and hearing: Mackie v Mackie [1981] FLC 91-069, where the parties had agreed to adjust their rights as at the date of separation: Faraone v Shabalah (1988) 12 Fam LR 577; [1988] FLC 91-956, or where there had been a deliberate wasting of assets after separation: Jones v Jones (unreported, Master Macready, 7 August 1992).”
In my view this is a case where it is appropriate to assess the value of the assets at an earlier date, being the date of separation. On the findings I have made, it was only shortly after the termination of cohabitation that the agreement that I have found to exist was made and was carried out by the plaintiff by his payment of $10,000, which was the whole of the moneys promised to be paid to the defendant under the agreement. She was obliged upon payment to transfer her share of the property. It is only by her failure to carry out that obligation that the title to the property has remained in her name until the present time, during which period its value has in fact increased. Had it decreased, this argument would not have been heard. The increase in value should not affect the result.
32 In my view the correct exercise of the Court’s discretion under the PRA is that there should be no adjustment of the proprietary rights as between the parties under s 20(1) of the PRA and the defendant’s cross claim should fail. It is under those circumstances unnecessary to consider the plaintiff’s alternative claim under the PRA. However, if it had to be determined, it would be my view that the proper way in which it should be determined would be by the making of an order under that section for the defendant to transfer to the plaintiff her estate or interest in the property.
33 Short minutes should be brought in to encompass the decisions I have announced in [26] and [32]. Costs can be dealt with at that time.
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