Kelly v Mules No. DCCIV-98-40610

KELLY V MULES
[2003] SADC 140
Judge Muecke
Civil
Introduction

In about August 1985 Mr Peter Kelly (“Mr Kelly”) and Mrs Pamela Mules (“Mrs Mules”) met in a bar at the Federal Hotel, Mount Gambier. Both were residents of the Mount Gambier/Port MacDonnell area in the lower south-east of South Australia. Mr Kelly was about 40 years old at the time and Mrs Mules was about 37 years old.
At the time they met both were in the process of resolving financial and other matters concerning relationships they had had with people who had formerly been their partners. In Mr Kelly’s case it concerned a person named Margaret Kelly and in Mrs Mules’ case it concerned her former husband David Mules. Mrs Mules had, before being married to David Mules, been married to Graham Rosling.
At the time they met Mr Kelly had two children, Dwayne Kelly born on 11 July 1969 and Karina Kelly born on 11 October 1973. Mrs Mules had two children when she was married to Graham Rosling, Donna born on 14 October 1965 and Simon born on 2 November 1969. She had a further son during her marriage to David Mules. That son David was born on 14 October 1971. He married Tamara Mules on 9 September 1995. For some time Mrs Mules’ son Simon lived in a relationship with Mr Kelly’s daughter Karina.
Most of the events in this case occurred in the south-east of South Australia.
At certain times after they met in about August 1985 Mr Kelly and Mrs Mules lived together in various places both in and not far from the city of Mount Gambier. Whatever relationship there was between them commenced no earlier than September 1985 and ceased no later than February 1998.
With the exception of a period of about 2 years Mrs Mules and Mrs Carla Howard (“Mrs Howard”) enjoyed a very close friendship for many years prior to August 1985 until December 1997. They had been close friends since the early 1970s. That ceased in December 1997 after Mrs Mules accused Mr Kelly and Mrs Howard of having an “affair”.
The proceedings
By summons filed 6 May 1998 Mr Kelly instituted proceedings against Mrs Mules. He alleged that Mrs Mules had, on 6 January 1997, acknowledged in writing that she was indebted to him in the sum of $250,000. By a More Explicit Statement of Claim he claimed $270,000 from Mrs Mules together with interest on the sum of $250,000 at the rate of 8% per annum from 7 January 1997. The balance of $20,000 was, he claimed, stolen from him by Mrs Mules. He sought interest on that balance of $20,000 pursuant to the District Court Act. He sought other relief which is not now relevant. Mr Kelly’s claim for $250,000 plus interest at 8% was based upon his allegation that Mrs Mules, on or about 6 January 1997, executed a document known as a loan agreement which agreement provided an acknowledgement by Mrs Mules that she was on that date indebted to Mr Kelly in the sum of $250,000. He further alleged that by the agreement Mrs Mules acknowledged that she would repay the loan on or before 6 January 1998. Other terms of the alleged agreement were pleaded by Mr Kelly.
Mr Kelly further alleged that Mrs Mules was in breach of the agreement because she did not repay to him the principal sum of $250,000 on 6 January 1998, nor has she paid interest on the loan at the rate of 8% per annum or at all. By later amended pleadings Mr Kelly pleaded that the sum of $250,000 was made up of certain advances he made to Mrs Mules at her request, and for other items, between 3 March 1993 and 22 May 1997.
In her finally amended Defence Mrs Mules agreed that on or about 6 January 1997 she executed a document in the nature of a loan agreement. She said that the actual agreement entered into by herself and Mr Kelly on or about that date provided for repayment to Mr Kelly of the sum of $70,000 borrowed by her from him together with interest calculated at 8%. She pleaded that a few weeks prior to 6 January 1997, in the presence of her son David Mules and her daughter-in-law Tamara Mules at her home at the Barn Motel, Nelson Road, near Mount Gambier, Mr Kelly verbally agreed to lend her the sum of $70,000. The terms of that oral agreement were that Mr Kelly would lend her the sum of $70,000; she would repay that sum to him together with interest calculated at 8%; that there would be no specific time for repayment of interest or principal; and that Mr Kelly would have a formal agreement typed up by his daughter Karina. Mrs Mules alleged that on or about 7 January 1998 Mr Kelly produced to her in the presence of Tamara Mules at the Barn Motel a document which she believed comprised two loose pages. They were read by her and they appeared accurately to reflect the terms of the oral agreement. The document was signed by Mr Kelly and herself and was witnessed by Tamara Mules.
Mrs Mules alleged that the first page of the document upon which Mr Kelly relied to evidence an agreement by which she agreed to pay him $250,000 plus interest at 8% was not part of the document produced by him to her on or about 7 January 1997, nor was it part of any document executed by her.
Mrs Mules admitted borrowing the sum of $70,000 from Mr Kelly, together with interest at 8%, but denied borrowing the sum of $250,000.
As to the sum of $70,000 that she admitted borrowing Mrs Mules denied in her finally amended Defence that she was indebted to Mr Kelly for any of that amount. To support that denial she pleaded that she and Mr Kelly were in a de facto relationship as defined by s.3 of the De Facto Relationships Act 1996 (“the De Facto Relationships Act”) from about 24 September 1985 until 19 December 1997. On or about 19 December 1997 at about 8.00 pm at Mac’s Hotel, Mount Gambier she advised Mr Kelly that she had terminated the relationship in circumstances where she found him having dinner with Carla Howard. On or about 8 January 1998, in response to a number of verbal requests by Mr Kelly to her over the telephone and to her personally (the exact number and contents of which she did not recall), she agreed to recommence the relationship. It was a pre-condition of her agreeing to do so that Mr Kelly would release her from all debt owed by her to him, and in particular the loan of $70,000 together with interest calculated at 8%. She alleged that it was a further term of her agreeing to recommence their relationship that Mr Kelly would execute a memorandum in writing formally releasing her from any and all debts owed by her to him and that such release would be lodged at the parties’ bank to be released only under the joint signatures of both of them. She alleged that Mr Kelly drew up and executed the release which she also signed. It was lodged at the parties’ bank and the parties recommenced the relationship. As a result of that agreement she denied being indebted to Mr Kelly for any amount whatsoever. Alternatively, she claimed that Mr Kelly was estopped from claiming that she was indebted to him.
As to Mrs Mules’ allegations that there was an agreement releasing her from all debt owed by her to him, Mr Kelly, in a Reply dated 22 December 1998, alleged that there were a number of discussions between the two of them between 20 December 1997 and 6 January 1998 by which they made an oral agreement. By the terms of such agreement Mr Kelly conditionally forgave the debt owed by Mrs Mules for as long as the parties stayed together and in that event the debt would be forgiven upon Mr Kelly’s death. A document recording this would be prepared and held at Mr Kelly’s bank. The document would not be withdrawn from the bank during the life of Mr Kelly unless with the consent of both Mr Kelly and Mrs Mules. Mr Kelly alleged that he and Mrs Mules did not get together again in accordance with the agreement and therefore the memorandum of release was thereby voidable and of no effect. He further alleged that the memorandum was not under seal and that, as the consideration for the release failed, the release is voidable at the option of Mr Kelly.
At the end of the trial Mrs Mules’ counsel abandoned reliance on the memorandum of release. That effectively was an abandonment of any denial that she was not indebted to Mr Kelly for an amount of $70,000 together with interest calculated at 8%. In the end, then, Mrs Mules admitted such an indebtedness to Mr Kelly.
On 21 October 1998 an amended Defence and Counterclaim was filed on behalf of Mrs Mules. In her counterclaim she alleged that on or about 24 September 1985 she and Mr Kelly commenced residing together in a de facto relationship as defined in section 3 of the De Facto Relationships Act. She said that at the commencement of the relationship she had assets of a combined value of approximately $350,000. She said that at that time Mr Kelly owned and operated an abalone fishing licence and had assets of a combined net value of approximately $1 million or such amount as is disclosed upon full discovery being made by him.
By her finally amended Counterclaim Mrs Mules pleaded that she and Mr Kelly took up residence together in a home owned by her at 35 Reginald Street, Mount Gambier where they lived together as husband and wife on a genuine domestic basis. She pleaded that their relationship was continuous except for a brief period of no more than two weeks in February 1993; from the middle of October 1993 until early December 1993; and between 19 December 1997 and about 8 January 1998. The relationship ceased on or about 15 February 1998. She pleaded that on the occasions they lived apart in 1993 Mr Kelly left the house at Johnston Road Mount Gambier where they were living together and stayed at places unknown to her. In the December 1997 to January 1998 period Mr Kelly resided in a caravan on a property adjacent to the Barn Motel.
In her Counterclaim Mrs Mules pleaded that during the course of the relationship she contributed to the acquisition, conservation and improvement of Mr Kelly’s property, she provided her financial resources to Mr Kelly and she contributed to him by providing and maintaining a home for him. In addition she worked for him both as a deckhand in relation to his abalone fishing business and as a farmhand on his farming properties. She gave particulars of these contributions.
She pleaded that at the cessation of the relationship she owned assets totalling approximately $405,000 comprising the proceeds of sale of the Barn Motel of approximately $330,000 together with a half interest in land she owned with Mr Kelly adjacent to the Barn Motel. She alleged that that land was valued at approximately $75,000. In addition she had an interest in a fishing licence worth approximately $70,000. She pleaded that at that same time Mr Kelly owned assets with a total net value of approximately $5,000,000 or such amount as is disclosed upon full discovery being made by him.
Mrs Mules sought orders for the division of property upon such terms as the court considers just and equitable. In particular, she sought an order for the sale of the land adjacent to the Barn Motel with the net proceeds being divided between she and Mr Kelly in such proportions as decided by this court. She also sought the transfer by Mr Kelly to her of such property owned by him as the court deems fit; a payment by Mr Kelly to her of a lump sum or such sum as this court deems fit; and an order discharging any alleged debt claimed to be owing by her to Mr Kelly. She sought an order resolving all issues relating to property between Mr Kelly and herself by payment by Mr Kelly to her of $2.4 million.
On 23 December 1998 a Defence to Mrs Mules’ Counterclaim was filed on behalf of Mr Kelly. In that pleading Mr Kelly admitted that he and Mrs Mules resided together in a de facto relationship but said that they did not commence that relationship until they had returned from a boat cruise in or about May 1986. Mr Kelly set out what he alleged his assets were at the commencement of the relationship. He alleged that they were all subject to a claim for property settlement by his “first defacto wife” Margaret Kelly. He set out these assets in his finally amended Defence to Counterclaim. They included an abalone licence valued at that time at approximately $200,000; real estate at Port MacDonnell which was sold in 1988; a crayfishing authority which was sold in 1989; and a fishing vessel which was also sold in 1989. He ultimately pleaded that proceedings taken by Margaret Kelly concluded in or about 1989. Assets of the partnership (from which the Court found the abalone licence was excluded) were sold or were the subject of adjustments between he and Margaret Kelly. The net proceeds, after payment of the receiver’s costs, were divided between the parties, who each bore their own legal costs. He received approximately $300,000 for the property settlement less legal costs of some $45,000.
Mr Kelly admitted that whilst he initially spent nights at Mrs Mules’ home at 35 Reginald Street, Mount Gambier from time to time, he alleged that did not move in permanently until May or June 1986. He admitted that he and Mrs Mules lived together in a relationship which terminated in or about the month of February 1993.
Mr Kelly set out in his Defence what he and Mrs Mules had purchased by way of property during the period of the relationship. He said that all of these properties were registered in the names of the parties as tenants in common. He also set out some properties he purchased in his sole name during the period of the relationship up to February 1993 and he set out some properties he purchased in his own name and those Mrs Mules purchased in her own name subsequent to the separation he said occurred in February 1993. Finally, he referred to the property adjacent to the Barn Motel which was purchased in both his and Mrs Mules’ name in about March 1995 which was subsequent to the separation in February 1993. There were, particularly in subsequent pleadings, detailed references to their financial affairs and their contributions to the affairs of each other both before February 1993 and subsequent to it. I do not refer to those details here.
In his Defence to Counterclaim filed on 23 December 1998 Mr Kelly pleaded that following a number of discussions between he and Mrs Mules in or about the months of January or February 1993 the relationship between them came to an end. They separated and entered into a settlement of property in respect of their assets and liabilities at that time. The settlement provided for the transfer of interests each had in certain land and an assignment of Mr Kelly’s interest in the chattels at the Johnston Road premises. His interest in the Johnston Road property would be transferred to her, and her interest in certain land at Port MacDonnell and in a factory at Portland, Victoria would be transferred to him. The settlement provided for each of them to retain certain of their monies, property and other interests. The settlement also provided, so Mr Kelly alleged, for Mrs Mules to pay to him the sum of $30,000 by way of adjustment for the contributions made by him to the properties at Reginald Street and Johnston Road. Mr Kelly alleged that following this separation he returned to his home at Port MacDonnell where he took up residence and continued to operate his fishing licence. He said the parties continued to see each other and the relationship between them improved. He “stayed at the Johnston’s Road property from time to time until the month of August 1993 following a disagreement over the demands of (Mrs Mules) to get married and to be released from debts owing to (Mr Kelly)”. He was asked by her to leave the Johnston Road property during September 1993 and thereafter the parties went their separate ways.
Mr Kelly alleged that on 9 December 1993 he and Mrs Mules entered into an oral agreement whereby he would pay board of $500 a week and would provide general assistance and maintenance around the Barn Motel. Mrs Mules would cook and wash for him. They would not enter into a de facto relationship. He alleged that pursuant to the terms of that agreement he, during the month of February 1994, took up residence at Mrs Mules’ house on land on which she operated the Barn Motel.
Mr Kelly set out in some detail in his initial Defence to Counterclaim what happened between he and Mrs Mules from February 1994 when he was in residence at her house. He referred to the physical relationship between them resuming and to the fact that he maintained his separate residence at Port MacDonnell. He maintained a separate bank account; he retained a separate postal address; he had no joint liabilities with Mrs Mules; he did not share day to day living expenses with Mrs Mules; he did not have the emotional commitment for a genuine domestic basis; and he did not hold himself out as being married to Mrs Mules.
He also pleaded that Mrs Mules, during the period that he boarded at her premises, operated the Barn Motel on her own; always referred to herself as Mrs Mules; referred to Mr Kelly to others as “her lover” or “her boarder”; maintained separate bank accounts in her name; and went out with other men as she pleased.
Mr Kelly also pleaded that during the period from February 1994 to December 1997 he left Mrs Mules’ residence at the Barn Motel on several occasions and returned to his home at Port MacDonnell where he stayed. He particularised those occasions. He pleaded that from 1 November 1997 until he, at Mrs Mules’ request, left the motel on 20 December 1997, the parties lived in the house at the Barn Motel but slept separately and Mrs Mules did not provide food nor washing and ironing services for him. He pleaded that he left Mrs Mules’ house at the Barn Motel for the final time on 20 December 1997 and thereafter resided at Port MacDonnell, his farm, and in the caravan situated on the land owned by he and Mrs Mules as tenants in common.
He pleaded that he opposed the orders sought by Mrs Mules for property division.
Mrs Mules’ Counter-claim was amended by leave given on 30 March 1999. Paragraph 5A was added. By that new paragraph Mrs Mules alleged that in early 1993, during the course of her relationship with Mr Kelly, he temporarily moved out of the home where they had been residing at Johnston Road. At that time she and Mr Kelly entered into a series of transactions (which she called “the 1993 transactions”) which had the combined effect of unfairly depriving her of and providing Mr Kelly with a substantial financial benefit. She particularised the 1993 transactions. They were the transactions by which interests had been transferred between the parties that were referred to in Mr Kelly’s Defence to Counterclaim. She also referred to Mr Kelly requiring her to pay to him the sum of $30,000.
Mrs Mules alleged in her new pleading that the 1993 transactions were entered into by her in circumstances where Mr Kelly was in a position to and did exert undue influence over her and he was thereby able to and did take unfair advantage of her. As this new pleading evolved Mrs Mules particularised in greater and greater detail this alleged undue influence. She referred to herself having a Dependant Personality Disorder and of being physically and psychologically less powerful than Mr Kelly who was thus able to take unfair advantage of her. She pleaded that she suffered domestic abuse during the relationship, which abuse was physical, verbal, economic and social. She particularised assaults on her by Mr Kelly, numerous occasions that he smashed and destroyed her property apparently due to uncontrollable rage, and the various times that Mr Kelly required her to engage or participate in degrading and unnatural sexual behaviour against her wishes. Such occurrences were said to have involved the family dog and a dog owned by Mr Kelly. She alleged that Mr Kelly would regularly abuse and belittle her and threaten her with legal proceedings and bankruptcy. He would verbally harangue her continuously until she stopped disagreeing with him. She alleged economic abuse of her by Mr Kelly by which he would deprive her of housekeeping monies, and in other ways. She pleaded that Mr Kelly’s domestic abuse of her included social abuse. In this regard she pleaded that Mr Kelly would not allow her an independent social life or allow her to mix with her own friends or people other than those designated by him. Furthermore, she alleged that during the entire course of their relationship Mr Kelly would not allow her to have people attend at their residence who were not specifically authorised by him.

Mrs Mules pleaded that as a result of all these matters she was unable to negotiate with Mr Kelly on equal terms or effectively to exercise her free will or choice so as to place her at a significant disadvantage in all of the 1993 transactions involving Mr Kelly. She pleaded that Mr Kelly abused his position of power over her and took unfair advantage of her Dependant Personality Disorder in order to induce and oblige her to enter into the 1993 transactions. She alleged that she agreed to the transactions proposed by Mr Kelly in an effort to be free from his controlling influence and the physical and psychological power he exerted over her.
She alleged that on 17 February 1993 she paid Mr Kelly the sum of $30,000. Then, on or about 3 March 1993, Mr Kelly repaid to her the sum of $30,000 in order to induce her to continue the relationship with him. Late in October 1993 Mr Kelly instructed solicitors to issue proceedings against her claiming the sum of $30,000 and falsely basing that claim on an alleged loan by him to her. Mr Kelly agreed to discontinue, and did discontinue, those proceedings after she agreed to continue cohabitation with him.
Mrs Mules alleged that because of all these matters the 1993 transactions were entered into in circumstances where Mr Kelly unfairly took advantage of her and that all these circumstances were relevant within the meaning of the De Facto Relationships Act.
Mr Kelly filed a More Explicit Defence to Counterclaim by leave given on 26 November 1999. Amendments were made to his original pleadings as they related to the 1993 transactions. In his new pleading he alleged that the relationship between he and Mrs Mules came to an end following a number of discussions between them at the Johnston Road property between May 1992 and January 1993. They thereafter separated and an agreement was entered into between them for a settlement at that time of their rights to their assets, and their obligations under their liabilities. The agreement reached, following a number of discussions between them, was alleged to be based upon a letter dated 3 February 1993 written by Mrs Mules’ then solicitors and upon undated hand-written notes of Mr Kelly. It was alleged that the agreement was, and was intended by both parties to be, a comprehensive and final settlement by way of accord and satisfaction of their claims against one another in relation to the period prior to the agreement. The agreement thereby precluded Mrs Mules from making any claim on Mr Kelly in respect of assets acquired or owned before, and conduct occurring before, the settlement was carried into effect. Mr Kelly pleaded in detail what he alleged the settlement provided for. He pleaded further that a payment was made to him by Mrs Mules in the sum of $30,000 pursuant to the settlement by way of adjustment for the contributions made by him to the properties at Reginald Street and Johnston Road.
No Reply to Mr Kelly’s Defence to Mrs Mules’ Counterclaim pursuant to the De Facto Relationships Act was ever filed on behalf of Mrs Mules.
The matter was ultimately listed for trial to commence at Mount Gambier on Monday 1 July 2002. It was listed to be heard over five weeks. It was proposed that the first four weeks of the trial would be in Mount Gambier with the fifth week in Adelaide. The medical witnesses to be called by each party on the undue influence claim would give their evidence in Adelaide in the week commencing 22 July 2002. The trial was assigned to me.
On 9 May 2002 a specially returnable application dated 29 April 2002 issued on behalf of Mr Kelly came on before me. By that application Mr Kelly sought orders as to the course of the trial and other orders. On 9 May 2002 and 19 June 2002 I heard submissions as to whether I should direct that Mrs Mules’ counterclaim pursuant to the De Facto Relationships Act proceed first at the trial. The effect of such a direction would be that evidence as to Mrs Mules’ counterclaim and her defence to Mr Kelly’s claim would be presented first followed by evidence as to Mr Kelly’s claim and his defence to Mrs Mules’ counterclaim. Counsel for Mrs Mules submitted that it would be grossly unfair to her if I were to direct that the trial proceed in that way. Counsel referred to Mrs Mules’ allegations of social and psychological abuse. He submitted that Mr Kelly’s application as to the course the trial should take was part of such abuse. He claimed that the application was motivated to obtain a tactical advantage for Mr Kelly to exploit Mrs Mules’ weaker personality as was alleged in her pleadings. He submitted that the application should not be entertained before Mrs Mules’ advisers had had a proper opportunity, through her medical advisers, to put some information before me as to the unfairness that directing the trial proceed in this way would create. I adjourned further consideration of the application to allow any such material to be put before me. I adjourned the application to 25 June 2002.
On the adjourned day counsel for Mrs Mules handed to me a Notice of Withdrawal which he said had been filed under the Rules of court and by which Mrs Mules withdrew paragraphs 5A(b) and 5A(c) of her counterclaim. He said that was her undue influence plea. He said it was a plea that the so-called 1993 transactions were entered into in circumstances which equity would recognise as undue influence. He said that the counterclaim was therefore now entirely reliant on the cause of action on the De Facto Relationships Act. He submitted that there were some consequential amendments upon the withdrawal of those major pleas in paragraphs 5A(b) and 5A(c). Those included that the word “unfairly” was to be deleted from paragraph 5A(a).
When asked what then was the effect of paragraph 5A of Mrs Mules’ counterclaim her counsel said that the short answer was that on Mrs Mules’ case it may be a circumstance relevant under section 11 of the De Facto Relationships Act. He said that the effect of the withdrawal was that Mrs Mules had abandoned any claim for equitable relief for undue influence. He informed me that doctors who had seen and reported on Mrs Mules for the purpose of the undue influence claim would not now be required to give evidence at the trial. Counsel submitted that Mrs Mules stood or fell on her counterclaim under the De Facto Relationships Act and that the part of paragraph 5A of the counterclaim that remained may be a relevant circumstance under section 11(1)(d) of the De Facto Relationships Act.
I then heard further submissions as to the order of the trial. Mrs Mules’ counsel again submitted that it would be unfair to her if she was directed to present her case first. He relied on the withdrawn particulars. No medical evidence relating to the effect on Mrs Mules was put before me on the application. Her counsel referred again to the application being made for tactical advantage for Mr Kelly.
I heard further submissions on this matter on 27 June 2002. On that day I ruled that Mrs Mules’ counterclaim would be heard first and her evidence would cover the issues on Mr Kelly’s claim. That would be followed by Mr Kelly presenting both his case and his defence to Mrs Mules’ counterclaim. I further directed that the trial commence on Monday 8 July 2002 at Mount Gambier. That direction was prompted by a submission by Mrs Mules’ counsel that should I direct the order of trial as I did the trial should start a week after it was originally scheduled to allow Mrs Mules’ legal team to prepare properly to present her case first. It was also envisaged that that would accommodate the proposed Adelaide week of the trial because it was no longer necessary for the medical evidence on Mrs Mules’ equitable undue influence claim to be called because that claim had been withdrawn.
The trial commenced at Mount Gambier on Monday 8 July 2002. I refer later to the course of the trial and other matters relating to it. Before I do that I refer to some matters relating to the relief sought by Mrs Mules pursuant to her counterclaim.
On 30 September 2002 (the 32^nd day of the trial) Mrs Mules’ counsel said he wished to clarify some aspects of the nature of the relief sought by her. He submitted that there would be no opposition by Mrs Mules for an order that her interest in OB Flat be transferred to Mr Kelly. This was land in both their names adjacent to the Barn Motel. Counsel also indicated that Mrs Mules would not be seeking any order for the transfer of any interest in any real property from Mr Kelly to Mrs Mules. He said that the relief Mrs Mules would be seeking on her counterclaim was a monetary award under the De Facto Relationships Act. That was a monetary award “of a single and undivided lump sum”. He submitted that Mrs Mules would “not be suggesting that the cash amount of compensation that should be awarded to (her would exceed $2,000,000)”. He submitted that that was “a frank ambit claim. The amount in the end is largely a discretionary amount on the authorities”.
Later, on 31 October 2002 (the 49^th day of the trial and during cross-examination of Mr Kelly) Mr Kelly’s counsel indicated that Mrs Mules’ counsel still had not “nailed his colours to the mast ... on the prayer for relief in the counterclaim”. Mrs Mules’ counsel repeated that Mrs Mules was seeking a money award and no order for the conveyance of any interest in real estate or any other sort of property. He submitted that she was not going to be suggesting a particular figure for such an award. After submissions he said that he was happy to inform Mr Kelly and me what the sum should be. He said that he would do that by way of an amendment to be sought to the prayers for relief on the Mrs Mules’ counterclaim.
On Thursday 20 February 2003 (the 58^th day of the trial and after all evidence had completed) I heard counsel as to the order of addresses which were to commence on the next Monday morning. Mr Kelly’s counsel referred to the fact that there was still no formulated claim by Mrs Mules on her counterclaim. I was informed by Mrs Mules’ counsel that a letter had been drafted on behalf of Mrs Mules as to this matter but had not been sent. I was informed that Mrs Mules would not be opposing an order that her interests in the property known as OB Flat be transferred to Mr Kelly. Mrs Mules would consent to a transfer to Mr Kelly of her interest in that property on terms that he pay all costs, fees and charges in relation to the sale. In addition, Mrs Mules sought the payment by Mr Kelly to her of $750,000 or such other sum as this court deems just and equitable. She also sought an order by way of discharging any alleged debts claimed to be owing by Mrs Mules to Mr Kelly other than the debts acknowledged to be owing by her to him of $70,000 plus interest at the rate stipulated in the agreement. He said that was an interest rate of 8%.
I was informed by Mrs Mules’ counsel that he would have delivered to Mr Kelly’s counsel and to the court a copy of the letter which had, by oversight, not gone to Mr Kelly’s solicitors.
On Friday 21 February 2003 I received a letter from Mrs Mules’ solicitor advising that she intended to amend the relief she sought in her counterclaim by claiming orders for property division upon such terms as the court considers just and equitable and in particular as follows:
(a)Payment by the Plaintiff to the Defendant of $750,000.00 or such other sum as this Honourable Court deems just and equitable.
(b)That upon the payment referred to in (a) hereof the Defendant do transfer to the Plaintiff her interest in the property comprised in Certificate of Title Register Book Volume 5264 Folio 643 for no consideration on terms that the Plaintiff pay all costs fees and charges in relation to same. (the OB Flat land).
(c)Discharge of any alleged debt claimed to be owing by the Defendant to the Plaintiff other than the debt owing by the Defendant to the Plaintiff of $70,000.00 as acknowledged by the Defendant in her Defence to the Plaintiff’s Statement of Claim together with interest calculated at 8% per annum from the 6^th January 1997 until and including the 31^st March 2003 of $34,892.00.
(d)Such further or other order by way of relief as this Honourable Court may deem just and expedient.
(e)Interest.
(f)Costs.
Mrs Mules’ counsel sought and obtained leave to amend her counterclaim in this way after his address concluded on the penultimate day of trial.
It is convenient here to refer to an application that was made on behalf of Mrs Mules to amend the relief sought in her counterclaim in a way quite different than the relief to which I have just referred.
On 30 September 2002 (the 32^nd day of the trial and less than two days before Mrs Mules’ case was closed) Mrs Mules’ counsel orally gave notice in court that Mrs Mules proposed, prior to the close of her case, to amend her counterclaim to seek exemplary and aggravated damages. Counsel orally identified five particulars. First, fraud on Mr Kelly’s part in propounding the loan agreement; secondly, malice on Mr Kelly’s part; thirdly, the propounding by Mr Kelly of a fraudulent document in an attempt to make an illegitimate profit for himself at the expense of Mrs Mules; fourthly, extra compensation over and above that to which Mrs Mules would be entitled pursuant to the De Facto Relationships Act to compensate for the injury to her feelings and dignity by the conduct of Mr Kelly in the litigation in that he had used the forum of the court to attempt to degrade and humiliate her and her family; and finally, to reflect the contumelious and cynical disregard by Mr Kelly of Mrs Mules’ legitimate legal rights.
I heard submissions on the application to amend on 2 and 3 October 2002 after Mrs Mules’ case had closed. By that time the proposed amendment had been reduced to writing. The amendment sought to add new paragraph 8 as follows:
AND the plaintiff by counterclaim further claims aggravated and exemplary damages on grounds that:
(a)     The defendant by counterclaim has attempted to defraud the plaintiff by counterclaim by concocting and propounding page one of Exhibit p62 in these proceedings so as to falsely and maliciously claim that the plaintiff acknowledged a debt of $250,000 instead of $70,000 and so as to unjustly make a profit for himself at the plaintiff by counterclaim’s expense.
(b)    The defendant by counterclaim has conducted the litigation in a way designed to degrade and humiliate the plaintiff by counterclaim and her children Simon, Donna and David such that the plaintiff by counterclaim is entitled to extra compensation for the injury to her feelings and dignity.
(c)    The defendant by counterclaim has, from the outset of these proceedings, acted and instructed his legal advisers to conduct the case in cynical and contumelious disregard of the plaintiff by counterclaim’s legitimate legal rights.
During submissions Mrs Mules’ counsel varied (c) so that it read: “The defendant by counterclaim has, from the outset of these proceedings, conducted his case in cynical and contumelious disregard of the plaintiff by counterclaim’s legitimate legal rights”. Following submissions I refused Mrs Mules leave to amend her counterclaim in the way sought. I did not consider that I had power under the De Facto Relationships Act to award compensatory damages, let alone aggravated or exemplary damages. I indicated that I would consider any submissions made at the conclusion of the trial on behalf of Mrs Mules as to whether the matters sought to be raised in the proposed pleading could or would be relevant to any orders I might be satisfied should be made pursuant to section 11 of the De Facto Relationships Act.
The trial commenced at Mount Gambier on Monday 7 July 2002. Mrs Mules’ case on both her counterclaim and Mr Kelly’s claim was opened on that day. Just after lunch Mrs Mules started her evidence. Her evidence finished during the morning of Friday 26 July 2002. That was the end of the third week of the trial. It was the 15^th day of a trial which had been estimated would run for 20 days. I heard further witnesses called by counsel for Mrs Mules in Mount Gambier in the week following which commenced on 29 July 2002. On Thursday 1 August 2002 the trial was adjourned to resume in Adelaide on 15 August 2002. There were 19 sitting days in Mount Gambier. The remainder of the trial was heard in Adelaide. Mrs Mules’ case was closed on Wednesday 2 October 2002 after a further 15 sitting days. In that time Mrs Mules was cross-examined further on a number of topics. Mrs Mules’ case was presented over 34 sitting days.
Mr Kelly commenced his evidence just before lunch on Thursday 3 October 2002. He was in the witness box for 15 days. His evidence concluded on Thursday 31 October 2002. The balance of Mr Kelly’s case was heard over 9 sitting days. Mrs Howard was in the witness box for 7 of those days.
I heard addresses over 3 days.
The trial of this action comprised 61 sitting days over the period from 8 July 2002 to 26 February 2003. There were fifteen witnesses called on behalf of Mrs Mules and four witnesses called on behalf of Mr Kelly. Over 300 exhibits were tendered.
The issues in outline
On Mr Kelly’s claim the issue is whether the parties, on or about 6 January 1997, executed what I shall refer to as a loan agreement whereby Mrs Mules acknowledged that she was indebted to Mr Kelly in the sum of $250,000 which sum she acknowledged to be repayable on or before 6 January 1998 or at Mr Kelly’s direction, and by which Mrs Mules acknowledged that interest on that sum would be paid annually at the rate of 8% per annum.
Alternatively, did the parties, on or about 6 January 1997, sign an agreement by which Mrs Mules acknowledged a loan to her by Mr Kelly in the sum of $70,000 which sum was repayable by Mrs Mules to Mr Kelly together with interest thereon at the rate of 8% per annum. In her amended Prayer for Relief Mrs Mules has acknowledged an indebtedness to Mr Kelly of $70,000 together with interest calculated at 8% per annum from 6 January 1997 until and including 31 March 2003 of $34,892. In her Defence to Mr Kelly’s claim Mrs Mules pleaded that there was no specific time for repayment of interest or principal.
Mrs Mules’ case is that the “second” page of Exhibit P62 was the page that she and Mr Kelly signed in the presence of Tamara Mules on or about 6 January 1997. The “first” page of that exhibit was fraudulently prepared by Mr Kelly some time after the end of 1997. Her case is that the “first” page of the agreement she signed on or about 6 January 1997 contained reference to a sum of $70,000 plus interest at 8% and not to a sum of $250,000.
On Mrs Mules’ counterclaim the following issues arise:
(1)Whether Mrs Mules and Mr Kelly were in a de facto relationship as defined in section 3 of the De Facto Relationships Act at any time between September 1985 and February 1998 inclusive.
(2)If they were, what was the period or periods of such a de facto relationship. Whether there was any de facto relationship as defined by the Act will depend upon whether a de facto relationship existed for at least three years and upon whether the De Facto Relationships Act was in force at the time of any such relationship. The Act came into operation on 16 December 1996 and an application for division of property may only be made if the de facto relationship existed for at least three years.
(3)If a de facto relationship existed between Mrs Mules and Mr Kelly pursuant to the De Facto Relationships Act then should an order for the division of property be made under Part 3 of the Act and, if so, what should the terms of any order dividing the property of either or both of the de facto partners between them be, such that it is just and equitable.
Mrs Mules’ case is that I should find that a de facto relationship as defined by the Act existed between she and Mr Kelly from about 24 September 1985 to about 15 February 1998. Her case is that although they were living apart for two brief periods in 1993 and one further period near the end of 1997 those separations did not “break the bond between them” and do not preclude a finding that a de facto relationship between them existed for the whole of the period referred to. It was submitted on behalf of Mrs Mules that I should find that a de facto relationship as defined by the Act existed between she and Mr Kelly for the whole of this period.

Mrs Mules’ case is that I should make an order for the division of property between she and Mr Kelly and that the orders I should make are those that were substituted by amendment to her counterclaim at the end of the trial.
Mr Kelly’s case ultimately contained an admission that a de facto relationship as defined in section 3 of the De Facto Relationships Act existed between he and Mrs Mules from about May 1986 until about the end of August 1992, or alternatively until about the end of January 1993. His case is that I should find that the parties did not live together on a genuine domestic basis as husband and wife after early 1993.
Alternatively, Mr Kelly’s case is that if the parties did live together on a genuine domestic basis as husband and wife at any time after early 1993 it was from February 1994 to November 1996. Any de facto relationship that may have existed from February 1994 ceased as at November 1996. On the basis of such a finding a de facto relationship under the Act did not exist for at least three years and did not exist after the Act came into operation on 16 December 1996. Accordingly, in either of those circumstances, Mrs Mules had not established any entitlement for a division of property under the De Facto Relationships Act.
I have just set out the positions on the counterclaim argued for by the parties. Other possible findings are open. For example, I could find that a de facto relationship as defined by the Act existed between February 1994 and December 1997 or February 1998. Such a relationship would have existed for at least three years and would have existed after the Act came into operation on 16 December 1996. Such a finding would then require me to consider whether I should make an order for the division of property and, if I decided I should, what the terms of the order should be.
There are other possible scenarios as to the existence of a de facto relationship(s) over a different period(s) to those to which I have just referred.
There is a potential for issues arising from the claim and the counterclaim to overlap. By this I mean that whatever Mrs Mules’ indebtedness to Mr Kelly may be (whether it be $250,000 plus interest at 8% or $70,000 plus interest at 8%) such indebtedness, and how it arose, may be relevant either to the existence of a de facto relationship or to any division of property between the de facto partners. For example, the liability of Mrs Mules for a debt to Mr Kelly is, or could be, “property” of each of them separately which may need to be considered in the event I am satisfied that there did exist a de facto relationship to which the Act applies and I am satisfied that I should make orders dividing property of either or both of them.
In their various forms the pleadings disclose significant antagonism between the parties. Mr Kelly claims that Mrs Mules owes him $250,000 plus interest. He also claims that she stole $20,000 in cash from his motor vehicle when it was at his house at Port MacDonnell and from his briefcase which he had left at the Barn Motel from time to time. Mrs Mules defends Mr Kelly’s claim based on an alleged agreement by alleging that he has fraudulently replaced the first page of an agreement by which she acknowledged a debt of $70,000 with a page asserting that she acknowledged a debt of $250,000. By amendments to her counterclaim in March 1999 Mrs Mules made serious allegations of physical, sexual, emotional, and social abuse which Mr Kelly directed at her over a significant period of time. These allegations were withdrawn on the eve of trial more than 3 years after they were made.
During the protracted trial it was put to each party in turn that each had been guilty of infidelity. It was put strongly and repeatedly to each party that each had given false evidence and had falsified evidence. Such assertions were put to some of the principal witnesses called by each party to support their respective cases.
In his final address counsel for Mrs Mules submitted that I should find not only that Mr Kelly falsified an agreement so that he could destroy Mrs Mules financially and emotionally, but that he had conducted the trial in such a way as to impose as much stress as possible on Mrs Mules and her family. It was submitted that I should find he and Mrs Howard had collaborated through numerous telephone calls for both to give consistent, but knowingly false, evidence at the trial. It was submitted that Mr Kelly had instituted and conducted this litigation to ruin Mrs Mules and to degrade and humiliate her and her children.
In his final address counsel for Mr Kelly submitted that I should find that much of Mrs Mules’ evidence was knowingly false and that she had collaborated with a number of her witnesses for them to give false evidence to support her own version. She had done that when she realised that her evidence had not gone so well and that therefore she might need support from some witnesses who had not been mentioned in the Opening of Mrs Mules’ counsel. It was submitted that I should find that Mrs Mules had produced an audio tape during the trial which she falsely represented as containing a contemporaneously prepared note of a conversation she said she had just overheard. It was submitted that I should find that Mrs Mules was a “control freak” and a “pathological liar”. One alternative submission made was that I should find that any de facto relationship which may have existed between Mr Kelly and Mrs Mules as at October 1996 ceased in November 1996 when Mrs Mules contracted a venereal disease as a result of sexual contact with one of her former husbands. It was submitted that I should find that sexual relations between Mr Kelly and Mrs Mules ceased from November 1996 because of her failure at any time thereafter to obtain a medical certificate to the effect that she was not still suffering from such a disease. It was submitted, in effect, that I should find that Mrs Mules was a liar, a thief and a cheat. It was alleged that she was, and had been in the past, a gold digger who was out to get what she could from Mr Kelly. She had dragged her family into this case when she perceived that it was not going as well as it might for her. It was also submitted that Mrs Mules was a manipulator, that she never loved Mr Kelly and that she contrived an incident at Mac’s Hotel on the night of 20 December 1997 because she wanted to end her relationship with him.
I have referred to these matters to indicate the depth of feeling between the two parties to this litigation. Whilst it is never necessary for any judge to make findings on all submissions that are put to him, I consider that in this case it is necessary for me to consider the evidence and make findings on many of the issues that were put to me in the addresses of counsel. I will not need to make findings on all of the matters they mentioned but the issues in the case are such that what I do have to decide will be significantly influenced by my conclusions as to the credibility and reliability of the two parties to this litigation, and of Mrs Howard. Regrettable though it may be I do not consider that I can decide the issues in this case without reflecting adversely on the credit of one or other of the parties, and some of their witnesses.
Some legal considerations
Section 3 of the De Facto Relationships Act 1996 defines a de facto relationship to mean 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.
The existence of a de facto relationship within the meaning of the Act is a question of fact.
In Roy v Sturgeon (1986) 11 Fam LR 271, Powell J said (at pp274-5):
... the various aspects of their relationship which lead one to hold that a man and a woman are living together as husband and wife on a bona fide domestic basis vary from case to case. As I said in D v McA (1986) 11 Fam LR 214 it seems to me that each case will 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:
(a)     the duration of the relationship;
(b)     the nature and extent of the common residence;
(c)     whether or not a sexual relationship existed;
(d)the degree of financial interdependence, and any arrangements for support, between or by the parties;
(e)     the ownership, use and acquisition of property;
(f)     the procreation of children;
(g)     the care and support of children;
(h)     the performance of household duties;
(i)     the degree of mutual commitment and mutual support;
(j)     reputation and “public” aspects of the relationship.
That such an approach is hardly novel is, I believe, amply demonstrated by the extract from the New South Wales Law Reform Commission’s Report (the Report) which I set out below. Having set out the Commission’s recommendation that “the basic statutory definition of a de facto relationship” should be “the relationship between a man and woman who, although not legally married to each other, live together on a bona fide domestic basis”, and having referred to some of the decisions of the Federal Court of Australia (Lambe v Director-General of Social Services, (1981) 38 ALR 405) and of the Administrative Appeals Tribunal (Re Tang (1981) 3 ALN No 49; 2 SSR 15; Re RC (1981) 3 ALD 334; 4 SSR 36) the report continued as follows (ibid p 310):-
“17.10       The application of the basic definition to the myriad facets of private personal relationships between men and women will inevitably be a matter of degree and proportion. The attributes and circumstances of such relationships differ greatly, ranging from what is little more than a casual liaison, to a continuing affectionate companionship, to a long-term merging of lives and resources. Moreover, the nature and quality of a particular relationship may change and develop over time, making it sometimes very difficult to pinpoint a time when the relationship should assume a legal significance. While criteria such as those outlined in the preceding paragraph [those adopted by the Administrative Appeals Tribunal in Re RC, supra, including the comments of the Full Court of the Family Court of Australia in In the Marriage of Pavey, (1976) 1 Fam LR 11, 358; 25 FLR 450 at 455, which comments were cited with approval by the Tribunal] will be useful as a guide in assessing the nature of a relationship, decisions in borderline cases will necessarily require a close and detailed examination of all aspects of the parties’ domestic arrangements.
17.11        A review of the Tribunal’s decisions in social security cases reveals a large number of matters considered by the Tribunal in deciding whether or not a particular relationship amounted to a de facto relationship: the nature and extent of common residence; the duration of the relationship; whether or not a sexual relationship existed; the degree of financial interdependence and arrangements for support; the ownership, use and acquisition of property; procreation of children; care and support of children; performance of household duties; sue (sic) (use) of common surname; nature of social activities; degree of mutual commitment and moral support; plans for a common future; reputation and ‘public’ aspects of the relationship; and explanations and interpretations offered by the parties. It is not practicable to attempt an exhaustive list or a precise weighing of all factors; but it is apparent that the Tribunal places particular emphasis on the nature, extent and duration of common residence, and on the presence of a sexual relationship.
17.12        One commentator within the Department of Social Security, has observed: ‘Basically, the Department’s conception of de facto marriage has been the commonsense one that would be accepted also by its clients: de facto spouses are people who live together in the same household, and sleep together, and this arrangement is of some stability. Only it has bound itself normally to infer the existence of the sexual relationship from other features of the association.”
The importance of any given factor referred to by Powell J will depend on all the circumstances of a particular case.
It was suggested in Brown v Manuel (1996) DFC 95-170 that the absence of affection is not necessarily incompatible with the existence of a de facto relationship.
Frequent separations during an unstable and turbulent relationship does not preclude a finding of the existence of a de facto relationship. In Thomson v. Badger (1989) 13 Fam LR 259, Young J in the Supreme Court of New South Wales found that a de facto relationship existed over seven years because the bond between the parties had remained intact despite frequent separations which accounted for nearly half of the total period. Where a relationship is punctuated by separations the court may hold that there was more than one de facto relationship. Each relationship may then be separately subjected to the statutory requirements. In Lipman v Lipman (1995) 13 Fam LR 1, Powell J found that there were two separate de facto relationships. The first had endured for nine years but ended before the commencement date of the Act and so was ineligible for consideration under the statute. It was only the second relationship, which endured for three and a half years, that was amenable to the Act. An argument that the court could take into account contributions made by the applicant in that case during the first relationship when adjusting property on the breakdown of the second was rejected.
The separation date may be particularly significant because of statutory limitation periods and the commencement date of the De Facto Relationships Act.
Section 9 of the De Facto Relationships Act provides that after a de facto relationship ends, either of the de facto partners may apply to a court for the division of property. Such an application may only be made if the de facto relationship existed for at least three years.
Section 10 of the Act provides that 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.
Section 11(1) of the Act provides:
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.
Section 12 of the Act provides that in proceedings for a division of property, 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.
There have not been many decisions in South Australia dividing property on applications made pursuant to the De Facto Relationships Act. I refer to two judgments of this court where some principles relating to, and guidance is given to, the proper approach in considering the application of sections 10 and 11 of the De Facto Relationships Act.
In Love v Chidley (2002) 219 LSJS 287 (published on 12 April 2002), His Honour Judge Smith wrote (at pp 320-325)
Summary of principles which guide the exercise of discretion under ss10 and 11.
1.The exercise of the discretionary power in s10 to make an order “in a way that is just and equitable” is an “holistic value judgment of a very general kind” as opposed to an accountancy exercise of a fragmentary nature. That is, after taking into account the considerations particularised in s11(1)(a), (b) and (d), the Court must, if the evidence justifies it, select a round figure or make an order for the division of property which is a monetary reflection of what justice and equity demands as the entitlement of the applicant de facto partner; (see Davey v Lee (1990) 13 Fam LR 688 per McLelland J at 689; Ferris v Winslade (1998) 22 Fam LR 725 at 733; Germinario v Pinkerton (2000) 209 LSJS 419; In the Marriage of Collins (1990) 14 Fam LR 563 at 562-572).
2.The starting place in applications for division of property is not a presumption that there should be an equal division of property; (see Black v Black (1991) 15 Fam LR 109 per Clarke JA at 113; Mallett v Mallett (1984) 156 CLR 605; Evans v Marmont (1997) 21 Fam LR 760 at 763).
3.It is inappropriate and an underestimation of the value of the contributions of a homemaker or parent to rely upon the cost in the marketplace of, for instance, housekeepers and carers as some indication of the value of such contributions; (see Black v Black (supra) per Clarke JA at 117; Evans v Marmont (supra) at 763).
4.Contributions of a de facto partner as homemaker or partner are not to be regarded as inferior to the contribution of a wife as homemaker and parent; (see Black v Black (supra) at 114).
5.The contributions of the male to the welfare of the female in the sense of providing a home and financial security are not to be regarded as contributions which are inherently greater than the females contributions as homemaker and parent or vice versa; (see Dwyer v Kaljo (1987) 11 Fam LR 785 at 733).
6.Blame or fault for the breakdown of the de facto relationship is irrelevant to the exercise of the discretion under s11. As Gleeson CJ and McLelland CJ in Equity at page 768 said in Evans v Marmont (supra):
“Considerations of fault are not mentioned, even obliquely, anywhere in the Act. This is hardly surprising. Against the background of a no‑fault system of dissolution of marriage, it is hardly likely that a Parliament in Australia in 1984 would have intended questions of fault to govern property issues arising between de facto partners”.
However, fault should not be irretrievably pushed aside as a relevant consideration because such a stance might mean that deceptive conduct by one partner which caused the other to be in serious need at the end of the relationship would be disregarded. Such should not be the case; (see Evans v Marmont (supra) per Mason P at 776). In this case it is arguable that the plaintiff’s current parlous financial position should not be taken into account because it was brought about by her fault.
7.The time for assessing the financial circumstances of the parties is the time of hearing because that is the time when adjustments of interests, orders for division of property or lump sum orders are made. Accordingly, the time to value the assets is ideally at the date of hearing; (see Evans v Marmont (supra) at 764; Parker v Parker (1993) 16 Fam LR 863 at 875).
8.If one de facto partner effectively sacrifices his or her earning capacity during the relationship so that at the end of the relationship, by reason of circumstances such as age and the state of the labour market, he or she is precluded from gainful employment, then that is to be regarded as a “contribution” within the meaning of s11(1)(b) and or is a “relevant matter” within the meaning of s11(1)(d); (see Ferris v Winslade (supra) at 747; In the Marriage of Best (1993) 16 Fam LR 937 at 962; In the Marriage of Clauson (1995) 18 Fam LR 693; In the Marriage of Kennon (1997) 22 Fam LR 1 at 36)).
This consideration of lost earning capacity finds expression as “... opportunities lost by ... by reason of ... contributions ...” in the judgment of Hodgson J at first instance in Dwyer v Kaljo (supra) at 793 which was approved by Gleeson CJ and McLelland CJ in Equity at page 764 of Evans (supra).
9.Under s11 of the SA Act, the Court must consider contributions and may have regard to matters it considers relevant, notwithstanding that the contributions were made, or the otherwise relevant matters arose prior to the commencement of the de facto relationship; (see In the Marriage of Olliver (supra) – by a parity of reasoning with the Family Courts construction of ss75(2) and 79(4) of the Family Court Act; see also Roy v Sturgeon (1986) 11 Fam LR 271 at 276-278).
10.In deciding whether an order is necessary under s10, the Court
·       must consider the two types of contributions specified in (a) and (b) of s11(1)
·       must have regard to the terms of any relevant cohabitations agreement, s11(1)(c); and
·       may have regard to “other relevant matters”, (s11(1)(d).
The focus of s11(1)(a) is clearly upon matters which are material namely “property” and “financial resources” (NB expansive definition of “property” (s3)). However, indirect contributions are to be considered. So, for example one de facto partner is to be regarded as contributing if he or she provides the other with support while that other is engaged in acquiring, conserving or improving property or financial resources of either or both partners.
On the other hand, the focus of s11(1)(b) is upon the less obviously material contributions such as homemaking and parenting and would include the provision of companionship, comfort, support and security by one de facto partners to another and to children of either or both.
Finally, s11(1)(d) permits the Court scope to have regard to matters not captured by (a) and (b) but which in the circumstances of the case, are relevant to the exercise of the discretion to make an order which is “just and equitable”.
The debate in New South Wales to which I have alluded demonstrates that it will not be easy to categorise certain relevant circumstances as arising under (a), (b) or (d) of s11. For instance, circumstances such as:
·       needs and means of the parties;
·       length of the relationship;
·       promises or expectations of marriage;
·       detrimental reliance encouraged by one partner;
·       disappointed expectation previously encouraged by one partner; and
·       opportunities lost by the applicant by reason of the applicant’s contributions;
in the appropriate case will be relevant. It is unnecessary to allocate every relevant circumstance to one or other of the two groups of considerations (ie s11(1)(a) and (b)), or consign it to the “catch all” (ie s11(1)(d)). The boundaries are necessarily blurred. For example, in this case the plaintiff contributed her companionship on a full time basis and so lost the opportunity to return to gainful employment. The loss of that opportunity was a consequence of the contribution. It seems to me that it is not imperative to label it as either a consideration under s11(1)(b) or a relevant matter under s11(1)(d). It is one or the other.
I turn now to the approach to be taken.
The early New South Wales cases suggested a four stage approach to construction, namely:
·       identify and value the assets of the parties;
·       determine whether any, and if so what, contributions of the two types had been made by each partner;
·       determine whether in the circumstances the contributions of the applicant had already been sufficiently recognised and compensated for;
·       make the appropriate adjustment.
(see D v McA (1986) 11 Fam LR 214 at 228, Dwyer v Kaljo (supra) (first instance) and Parker v Parker (1993) 16 Fam LR 863 at 870). In Evans at 764, Gleeson CJ and McLelland CJ in Equity endorsed these four questions as appropriate though not a binding formulation. Of course the four questions would not be exhaustive of the proper inquiries under the SA Act because the Court in SA is additionally entitled to “have regard to other relevant matters”; (s11(1)(d)).
In construing s15 of the ACT Act, Cooper J in Ferris borrowed from the Family Court approach to making orders under s79 of the Family Law Act. His Honour referred to In the Marriage of Clauson (supra) at 705 and said at 732, 733 as follows:
“There, the Full Court considered that the making of property adjustment orders was a process involving three steps (at Fam LR 705; FLC 81,907):
(a)identification of the property of the parties;
(b)the evaluation of the “contributions” of the parties within s 79(4)(a) to (c) (roughly equivalent to s 15(1)(b) and s 15(1) (c) of the Act); and
(c)the evaluation of the matters referred to in s 75(2), incorporated by s 79(4)(e) (corresponding to s 19(2) and s 15(1)(d) respectively).
The requirement in s15(1)(a) of the Act for the court to consider the nature and duration of the relationship is relevant to both the second and third stages of the process referred to above and involves an assessment of the expectations of the parties as to what each would contribute, the worth of it to the relationship and how it would be reflected in the property interests of each. So far as the evaluation under s 15(1)(d) looks to the present and future financial resources and the present and future obligations of each of the parties, the nature and duration of the relationship is relevant, for example, to whether one party, who has provided the homemaker contributions over many years, has or has not lost the work skills necessary to immediately or in the future obtain gainful employment.
Finally, s15(1)(f), the catch-all provision, requires the court to consider any other matter which is relevant to do justice in the circumstances of any particular case before the court where regard only to the matters in para (a), (b), (c) and (d) may not result in a just and equitable outcome for one of the parties.”
It seems to me that Cooper J has inappropriately consigned the “other matters, if any, as the court considers relevant” to some subsidiary role in the categories of relevance.
So with all that in mind, I suggest the following in the context of this case:
(1)    identify and the value of the assets of the parties as at trial;
(2)    evaluate the “contributions” of the parties to the:
·        acquisition of property
·        conservation of property
·        improvement of property or
·        financial resources
of either or both of them (s11(1)(a)).
(3)    evaluate the “contributions” of the parties including
·        homemaking contributions
·        parenting contributions
made by one to the other partner or to children of either or both of them; (s11(1)(b)); and
(4)    have regard to other relevant matters (s11(1)(d)).
Evaluating the respective “contributions” is a balancing exercise best described by Mahoney JA in Dwyer v Kaljo (supra) at 732, 733 in the following terms:
“It is, of course, possible to determine what has been done by one party for the welfare of the other and to assess the extent to which the welfare of the other has been forwarded by it. But, in my opinion, the assessment of “the contributions” made by one party is not one sided; it cannot have been the intention of the legislature that what one party has done for the other is to be considered – and rewarded – in isolation. Regard must be had to what that party has received in return. Special cases apart, what is contemplated by the provision is, therefore, that it is the balance of the contributions of the one over those of the other which is to be taken into account in determining what justice and equity require the court do. At least, in deciding what “to it seems just and equitable”, the contributions of each side are to be had regard to.
I do not mean by this that what is involved is merely the weighing of the quantum of the benefits: it may be that quality also is to be weighed. But, in the end, it is, I think, the balance between the contributions of each which is or, at least, the contributions of each which are to be taken into account. But such a balance is not to be determined by the number of lawns moved or dishes washed. The process is to an extent normative. And that leads to the examination of the assumptions underlying the section and the process it requires to be undertaken.”
11.As to the issue of contractual concepts such as “reliance interest” and “expectation interest” I respectfully adopt that said by Mason P at 778 in Evans (supra) as follows:-
“I share the reservations voiced by some other members of the court concerning the helpfulness of the contractual analogies of reliance interest and expectation interest: cf Green v Robinson (1995) 36 NSWLR 96 at 101 (Kirby P), 110 (Powell JA), 115 (Cole JA); 18 Fam LR 594. But this is not to say that factors such as detrimental reliance or disappointed expectation previously encouraged by the other partner are necessarily irrelevant. I doubt if Handley JA intended to indicate any more by his glancing reference in Dwyer (at 744) to Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; 104 ALR 1.”
12.In considering the plaintiff’s entitlement under the provisions of the SA Act it would be erroneous to draw upon what she might have received in a claim against the estate of the defendant pursuant to the Inheritance (Family Provision) Act 1972 in the event of his death as was suggested by the plaintiff’s counsel. Nor would it be permissible to evaluate the plaintiff’s apparent detriments as if she was seeking damages for negligently inflicted personal injuries. The exercise is one of statutory construction. The method for the valuation of contributions might have some similarities but that is where any comparison ends.

In Simmons v Williams [2002] SADC 168 (published on 13 December 2002) His Honour Judge Robertson wrote (at pp 4 – 7):
Steps to be taken in considering a claim.
Generally, in most applications, the appropriate manner of considering a claim under the Act is to deal with it in the following steps:
·First, identify and value the property of the parties at the date of trial;
·Secondly, determine whether any and if so what contributions were made of the kind set out in sub-section (1)(a) and (b) of Section 11; and
·Thirdly, consider what other relevant matters, if any, need to be taken into account as provided by sub-section (1)(d) of Section 11.
After considering these matters, as I stated earlier, if the Court is of the opinion that an order should be made under Section 10 adjusting the property interests of the parties, then the Court must determine its final order in a way which is just and equitable.
I have mentioned that the first step in the exercise is to identify and value the assets of each of the de facto partners at the date of trial. This is the ideal time because it is the time when adjustments to the interests of property of the parties takes place (Evans v Marmont (1997) 42 NSWLR 70 at 75; Parker v Parker (1993) 16 Fam LR 863 at 874; Love v Chidley (2002) SADC 36 at para 138 (page 33)). However, whilst that may be the general rule there may be circumstances where the time of separation or some other time may be appropriate depending upon the circumstances. (Parker v Parker (supra) at 874; Theodoropoulos v Theodesco (1995) 38 NSWLR 424 at 432).
The Approach to be adopted.
Whilst I have identified the steps to be taken in a claim under the Act, there still remains the wider question of how a Court is to evaluate the matters raised in Section 11 and the manner by which a Court reaches its final determination under Section 10.
The weight of authority suggests that the most common form of approach in reaching a final determination is what has been described as the “holistic value judgment” approach.
In Davey v Lee (1989) 13 Fam LR 688 McLelland J, when considering Section 20 of the New South Wales legislation, described the approach in the following manner (at 689):
“By that section the court is empowered to make such order adjusting the interests of the de facto partners in property of both or either of them as seems just and equitable having regard to “contributions” of the kinds described in para (a) and (b) of sec. 20(1). In approaching the exercise of that power it is necessary to bear in mind that a domestic relationship differs in fundamental respects from a commercial partnership .
Typically a de facto relationship involves the mutual conferring and receiving of benefits (be they emotional, social, sexual or intellectual) of a kind which are incapable of evaluation in monetary terms, as well as other benefits which are, or may be in varying degrees, capable of such evaluation. Often, one or other, or both, of the parties may value non‑material contributions to the welfare of the family more highly than material contributions. These however are not matters which lend themselves to detailed examination and analysis by a court.
Furthermore in the context of such a relationship, it would usually be highly artificial to attempt to evaluate ‘contributions ... to the welfare of the family’ of the kinds referred to in sec.20(1)(b), including those ‘made ... in the capacity of homemaker or parent’ simply by reference to what it might cost in the market place to hire the provider of a particular service, such as a housekeeper or childcarer, to perform similar activities to those of the contributing partner. In the context of a domestic union, ‘homemaking’ and ‘parenting’ are typically shared activities, and although it may often be found that one partner devotes more time than the other to particular tasks within these general descriptions, it would rarely be feasible or realistic to attempt to evaluate such relative contributions in monetary terms, or in isolation from the nature and incidents of the relationship as a whole.
It is thus apparent that the court is not required under sec. 20 to undertake a reductionist process analogous to the taking of partnership accounts (notoriously one of the most time-consuming and expensive of litigious exercises) by examining every alleged “contribution” of the kinds described in the section with a view to putting a monetary value on it in order to reach an accounting balance one way or the other, which is to be then eliminated by the requisite financial adjustment. Rather the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind.
Such an approach was followed by Cooper J in Ferris v Winslade (1997) 22 Fam LR 725 at 733 when considering a claim under the Australian Capital Territory legislation. The approach referred to in Davey has also been approved in this Court in Germinario v Pinkerton ((2000) 209 LSJS 419 at 433) and Love v Chidley (supra at para 138 (38)).
McLelland J in Davey identified three important points. The first is that there are some contributions which are capable, in varying degrees, of evaluation in monetary terms and others which are incapable of such evaluation. The second is that in the end, it is not possible, nor is it in accordance with principle, to undertake some form of accounting exercise. The third is that in making a final determination a Court is required to make a holistic value judgment after having evaluated all the relevant contributions and other relevant matters.
It seems to me that the “holistic value judgment” approach is similar to that described as the “global” approach when the Family Court is determining entitlement to property of the parties to a marriage under Section 79 of the Family Law Act 1975 (Cwth.). That approach involves assessing the contributions of the parties, similar in nature to those described in Section 11(1)(a) and (b) and other matters and then viewing the matter globally when making an order which is just and equitable. In so doing the Court does not differentiate between particular property. This is to be contrasted with the “asset by asset” approach where the Court makes orders with respect to discrete assets of the parties.
In Norbis v Norbis (1986) 161 CLR 513 the High Court indicated that whilst the Full Court of the Family Court preferred the “global” approach it could not determine that a Court must follow that approach in determining property issues. The High Court held that the discretion to be applied was a wide one and where a Judge adopted the “asset by asset” approach, in appropriate circumstances, that would not cause the discretion to miscarry. In other words, the “asset by asset” approach may be preferable in some circumstances.
In my opinion, there is no legitimate reason to suggest that the “holistic value judgment” approach is the only manner in which a final determination can be made by a Court under the Act. Where it is appropriate an “asset by asset” approach may be adopted.
There is one final matter to which I wish to refer. Whatever approach is adopted, it is recognised that there may be some contributions which are capable of being evaluated with some degree of precision in monetary terms and some which are not so capable of being evaluated. There are some contributions, which by their very nature make it undesirable to attempt to evaluate in money terms. With respect to those assets which are capable of being evaluated with some degree of precision in money terms, it is important to recognise that a Court is not required to undertake a mathematical exercise. The approach is best described by Mason and Dean JJ in Norbis when they said (at 524):
“… that although mathematical precision is certainly not required, there is ordinarily a need to know the circumstances in which assets were acquired and the general extent of each party’s contribution to them”.
In Arnold v Dalton (2002) 84 SASR 482 the Full Court of the Supreme Court of South Australia considered section 11(1)(b) of the De Facto Relationships Act which requires the court to consider the contributions (including homemaking and parenting contributions) made by either of the de facto partners to the other partner or to children of the partners or either of them. Bleby J (with whom the other two members of the court agreed) wrote (at pp 490-493):
There is also a question as to what is encompassed by “homemaking and parenting” contributions. The trial Judge seems to have made some allowance for the fact that Ms Arnold had provided throughout for the children’s “emotional wellbeing” and that Mr Dalton had an emotional debt to his daughters which could somehow be taken into account.
There are obvious difficulties in equating such a concept to a monetary figure. There will also be insuperable difficulties in determining the relative level of emotional support and wellbeing contributed by one partner or the other, particularly in times of great domestic emotional stress. I do not consider that there is any warrant under the Act for that aspect of the approach taken by the trial Judge.
Section 79(4) of the Family Law Act 1975 (Cth), as it stood until 1987, specified what a court should take into account when an order for division of property is necessary between parties to a marriage. It provided:
“(4) In considering what order should be made under this section the court shall take into account –
(a)the financial contribution made directly or indirectly by or on behalf of a party … to the acquisition, conservation or improvement of the property, or otherwise in relation to the property;
(b)the contribution made directly or indirectly to the acquisition, conservation or improvement of the property by either party, including any contribution made in the capacity of homemaker or parent;
(c)the effect of any proposed order upon the earning capacity of either party.”
Sub-paragraph (b) is of particular relevance in the present context. Speaking of that paragraph in Mallet v Mallet (1984) 156 CLR 605 at 623, Mason J said:
“The Family Court has stated – and in my view correctly stated – that the purpose of s 79(4)(b) is to give recognition to the position of the housewife who, by her attention to the home and the children, frees her husband to earn income and acquire assets: In the Marriage of Rolfe (1977) 25 ALR at p 219; In the Marriage of Wardman and Hudson (1978) 33 FLR 196; In the Marriage of Crawford (1979) 35 FLR 489 at pp 495-496; In the Marriage of Aroney (1979) 5 Fam LR 535 at pp 539-540; In the Marriage of Albany (1980) 6 Fam LR 461 at p 471; In the Marriage of Dupont (No. 3) (1981) 7 Fam LR 747; In the Marriage of Mahon [1982] FLC 77 and In the Marriage of Racine and Hemmett (1982) 8 Fam LR 716 at p 717. And it has been held, again correctly in my view, that the Act intends that the wife’s contribution as homemaker should be recognized in a substantial and not merely in a token way.”
See also Parij v Parij (1997) 72 SASR 153 at 163-164.
Section 79(4)(b) of the Family Law Act as considered in those cases is not in identical terms to s 11(1)(b) of the De facto Relationships Act. The latter provision does not require consideration of the contribution that homemaking or parenting contributions may have made to the acquisition of the property in question. However, the provision of contributions of that nature will almost inevitably affect the ability of one partner to make a financial contribution towards the acquisition of the property. The more general requirement of s 11(1)(b) now has its counterpart in the present s 74(1)(c) of the Family Law Act.
The question is what is encompassed by homemaking and parenting contributions and how they are to be valued. As Mason J noted in Mallet v Mallet (1984) 156 CLR 605 at 623 in relation to the relevant provision of the Family Law Act, the judges of the Family Court have held that the contribution of the wife as homemaker is to be equated to the contribution of the husband as income earner. In a judgment with which Asche SJ and Gun J agreed, Evatt CJ said In the Marriage of Rolfe (1977) 25 ALR 217 at 219:
“The purpose of s 79(4)(b), in my opinion, is to ensure just and equitable treatment of a wife who has not earned income during the marriage, but who has contributed as a home-maker and parent to the property. A husband and father is free to earn income, purchase property and pay off the mortgage so long as his wife assumes the responsibility for the home and the children. Because of that responsibility she may earn no income or have only small earnings, but provided she makes her contribution to the home and to the family the Act clearly intends that her contribution should be recognized not in a token way but in a substantial way. While the parties reside together, the one earning and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value.”
In considering the phrase “in the capacity of homemaker or parent” in s 79(4)(b) of the Commonwealth Act, the Full Court of the Family Court (Watson SJ, Wood SJ and Fogarty J) said In the Marriage of Wardman and Hudson (1978) 33 FLR 196 at 204:
“It appears to us that the latter portion of that phrase is clearly directed to the ordinary circumstance where a wife remains in the home looking after the home and the children thus freeing the husband from those obligations and enabling him to earn in a more direct fashion and thus involve himself more directly in the acquisition, conservation or improvement of the property in question. In any event the considerations contained in s 79(4) are not exhaustive and clearly, in our view, in considering what order is just and equitable under s 79, it would be wholly inappropriate not to give full and significant regard to the ordinary situation in the community, namely a situation where the wife directs herself, particularly during the period when the children are young, away from outside employment towards the conduct of the home and the rearing of the children, and that in ordinary circumstances that is a contribution which in every way ought to be equally equated to the efforts of the husband who is thus freed to pursue his direct outside employment.”
See also In the Marriage of Crawford (1979) 35 FLR 489 at 495-496.
These cases are, of course, speaking of a situation where the relationship is subsisting and the partners have chosen a particular means of providing for the family unit. The period we are considering in this case is the period between the cessation of the relationship and the trial. Nevertheless, the contributions being spoken of in s 11(1)(b) of the Act are of the same type as those being spoken of in those cases. It is the contribution being made by one partner by staying at home and performing the usual domestic and child raising functions for the benefit of the whole family unit. The paragraph requires some assessment both of the financial contributions made or to be made by each partner and of the relative contributions of each partner to those domestic and child-raising activities, the demands for which will change particularly as children grow up. The principle applicable to s 79(4)(b) of the Family Law Act is that in the situation where one partner is engaged in paid employment and the other remains at home, the contributions are valued as equal. I consider that to be an appropriate starting point for the application of s 11(1)(b).
I consider that the approach referred to in these authorities, and the principles that are set out in the authorities to which they refer, should and will guide me in my consideration of the issues in this case.
The way the counterclaim proceeded
As I have already indicated I directed that Mrs Mules present her counterclaim under the De Facto Relationships Act and her defence to Mr Kelly’s claim first.
On 30 August 2002 (the 31^st day of the trial and after the trial had moved to Adelaide) I was told that Mrs Mules’ case would close after the conclusion of Mr David Mules’ evidence and after hearing one further witness and the tendering of certain actuarial material. I referred Mrs Mules’ counsel to her counterclaim wherein it was pleaded what the assets of the parties were at the cessation of the relationship. That was said to be 19 December 1997 in her Defence to Mr Kelly’s claim and 15 February 1998 in her counterclaim.
By paragraph 6 of her counterclaim she had pleaded that she owned assets totalling approximately $405,000 which comprised the proceeds of sale of her motel of approximately $330,000 together with a half interest of the land at OB Flat valued at approximately $75,000. In addition she had an interest in a fishing licence worth approximately $70,000. She had further pleaded that at the cessation of the relationship Mr Kelly owned assets with a total net value of approximately $5,000,000 or such amount as is disclosed upon full discovery being made by him.
I asked Mrs Mules’ counsel if I could have, at the end of her case, a schedule of the property of both parties, with current values, that Mrs Mules would be asking me to divide pursuant to sections 10 and 11 of the De Facto Relationships Act should I be satisfied that a de facto relationship had existed. I indicated that it was not clear to me at that time what property then existed that was owned by either or both parties that Mrs Mules said was properly the subject of orders for division. I asked for a schedule of such property and their values (transcript pp 3384 – 3386).
On 30 September 2002 Mrs Mules’ case had not closed. I again asked her counsel if I could have a schedule setting out the property currently owned by either or both parties which was said by her to be properly the subject of any orders for division that I might make, assuming there was a finding that a de facto relationship existed for some period of time coming within the Act (transcript pp 3482 – 3489).
I raised this matter again on 31 October 2002 when Mr Kelly’s evidence had nearly concluded (transcript pp 5218 – 5221). This exchange occurred:
HIS HONOUR:           My primary job is, if I am satisfied that the preconditions are met, is to, if I decide to, make an order for the division of property; I have to first consider what the property is.
MR HOILE:                Yes.
HIS HONOUR:           Then I must consider the financial and non-financial contributions made directly or indirectly by each partner to the acquisition, conservation or improvement of such property. That is the primary, first-up task.
MR HOILE:                That is what your Honour must consider under the Act, yes.
HIS HONOUR:           That, to my mind at least, requires me to set out what is the property of either or both parties, what contributions they have made directly or indirectly to its acquisition, and divide it according to the justice of the case. Right?
MR HOILE:                Yes.
HIS HONOUR:           That, to my mind, means I have got to look at what it is, what its value is and then look at what each has done in respect of each property and then, according to what I think is just as between the parties, taking into account all sorts of things, I divide it or make an order.
MR HOILE:                Yes.
HIS HONOUR:           All right. You say you just leave that to me? You’re not arguing it for any particular division.
MR HOILE:                We are not arguing for an order that a conveyance be ordered from Mr Kelly to us of any of his real property.
HIS HONOUR:           No, I know.
MR HOILE:                Nor are we asking for an order that he convey to us his abalone licence, we’re not seeking that.
HIS HONOUR:           No; you want me to order a lump sum in favour of Mrs Mules.
MR HOILE:                Yes.
HIS HONOUR:           But you are not going to submit to me or inform Mr Anderson what that sum should be?
MR HOILE:                We are happy to do that. The only reservation that we feel is that it is the usual question; it is the old chestnut in an analogy in a damages trial where it is generally regarded as improper for counsel to suggest either to the jury or to the judge an actual figure that should be awarded.
HIS HONOUR:           We are not talking about damages here, we are talking about a division of property and I hope at the end of this trial you can identify for me what property it is and what the value of that property is and tell me what contributions your client has made to its acquisition and conservation and improvement and what other things that I have to take into account in dividing that property. I don’t mean one gets one piece of property and the other gets another, because you are not asking that, and I am quite happy for you not to ask that.
MR HOILE:                Perhaps I will volunteer this: a good example, probably, is what has been referred to in the evidence as the farm at Nelson because it still exists and still exists as property of Mr Kelly and we will certainly be making a submission that we have contributed not to its acquisition but to its improvement and maintenance and we will be referring to some evidence that has been given on that topic. If that’s the type of assistance and particulars then, yes, we will undertake to do that, certainly before the resumption.

When asked about various large sums of money provided to her from the trust account she repeated that she didn’t know what she had spent those sums on, she wouldn’t have a clue. It was put to her that between 2 September 1998 and 13 January 2001 what had come in and gone out of the trust account was $159,000 - odd. She replied “That’s correct, I knew I went through that much”. She said:
ANo, I’ve gone through it, I went through it.
QThat’s pretty extravagant living, isn’t it.
AI don’t care what it was, I just wanted to do what I wanted to do.
QDo you agree it’s extravagant living.
AI don’t think it’s very extravagant.
She said she had just spent it. There was no reason why. It was put to her:
QCan I suggest that it suited you for the purposes of this case to be penniless.
ANo, it didn’t.
QThat is why you have spent the money.
ANo. It could have been the frame of mind I’m in, I don’t know.
QWell, that’s what I’m suggesting, the frame of mind you’re in is to be able to convince the court that you are penniless.
AWell, to be - to convince the court, I don’t even - I don’t even think I should have had to answer for that 150,000, that’s my honest opinion, because that 150,000 was mine and the whole story of the whole thing is that I borrowed 70,000 at 8% and I was in debt to Mr Kelly for that. Not a problem. The house is there, can take it. Not a problem. I don’t think I have to answer to anyone for that money. And I didn’t think I did till they got all the bank accounts and that, just whatever. I’ve let them have it whatever they want, your Honour.
QYes, except the trust account.
AI don’t know.
QWell, you contested in court the right for Mr Kelly to have access to the trust account statement, didn’t you.
AIt was Mr Bersee’s trust account, it wasn’t mine, your Honour.
QNo, but you contested in proceedings that those advising Mr Kelly should have access to the trust account.
AI think that’s what did happen.
At about that time of this cross-examination Mrs Mules had told the cross-examiner that she had some documents in the boot of her car. She later produced them. Amongst them were some documents addressed to Mrs Mules by a land agent regarding the renting of a property at Tantanoola. It transpired that Mrs Mules had paid a deposit of $10,000 for the purchase of a property at Tantanoola that was put in the name of her son Simon Mules. No arrangements had been made between she and her son for the repayment of that money. Mrs Mules agreed that she was corresponding with the land agent in respect of the rental of that property. It was said by her and by Simon Mules that Simon Mules had borrowed money from the bank for the purpose of completing that purchase. Simon Mules said that he lived in the house on the property for about a year before he went to Western Australia. He was unemployed for some of that time. He said that once the property was tenanted the rent was nearly sufficient to pay the mortgage. Although Mrs Mules paid some monies from time to time for rates, both Mrs Mules and Simon Mules denied that Mrs Mules had otherwise contributed to the purchase of that property. It was not adequately explained how Simon Mules met the mortgage repayments at the times that he was unemployed. I was left wondering what the true position was in relation to this property. I find that Mrs Mules did not tell her solicitors about the documents in the boot of her car. I find that she knew that they were relevant to her case. I find that she did not “discover” them because she did not want them, or what they contained, to come to light.
Some passages of Mrs Mules’ evidence to which I have just referred record Mrs Mules’ evidence to the effect that she did not consider that she had to answer to anyone for her money. She gave evidence to a like effect for earlier periods of time between 1989 and 1992. For example, during cross-examination about a period between 1990 and 1992 she was directed to an allegation in her pleadings that she and Mr Kelly shared their financial resources. She was questioned about very large sums of money. At one stage she said:
AMy wages and my interest, definitely, I did what I wanted to in the house and whatever. My money in the bank, well, that’s beside the point, I did what I did with that.
QHow is it beside the point.
AWell, that was - that’s my money, I did what I wanted to do with that. You know, like, if I bought the house for the kids I bought the house for the kids. I didn’t have to ask Peter, it wasn’t his money, it was my money.
The evidence established that over a period in 1990 to 1991 very large sums of money were withdrawn by Mrs Mules from her various accounts. She could not explain what she did with that money. She said that she wouldn’t have the foggiest - no idea. She said: “I did what I wanted with my money”. She said: “my interests and my wages was put in - was in my control, and I spent them how I’d see fit.” She also said:
AWell, your Honour, my money was - I just did what I wanted to do. It didn’t matter if it was for the kids or Peter or who it was for. If I wanted to do it, I’d do it.
QSo your approach -
AI haven’t had any of Peter’s funds.
QWell, he might say to me, ‘My money was my money and I did what I wanted to do with it.’
AWell, he did.
QYou say to me your money was your money and you did what you wanted to do with it.
ANo, my wages - my wages was mine and my interest was mine. I didn’t get any housekeeping money from Peter. I got paid wages, and I did distribute it back into the house.
QBut when you ceased wages and got $500 -
AYes.
Q- what you have called housekeeping and Mr Anderson has called board - whatever it’s called -
AYes.
QI understand that at least part of that money was expended by you to pay the bank back for the purchase of the Barn.
AYour Honour, if it was used in some periods - but I did pay the bank back out of it - well, yes, I did. But other times, no.
QWell, you told the bank manager, or whoever it was, that that’s how you were going to be able to afford the repayments, because you were getting $500 a week from Peter.
AWell, I knew that I was getting that $500 a week, and if I didn’t have any business in the motel well at least I knew I’d be able to pay that back out of that.
I am satisfied and find that throughout the time that Mrs Mules and Mr Kelly were together Mrs Mules’ attitude was that her money was her money to do with as she wished. She was not answerable to Mr Kelly for the way in which she spent her money. Nor was it any of Mr Kelly’s business how she spent her money. I find that she considered that Mr Kelly had the same attitude as her and used his money as he wished to use it. I am further satisfied and find that Mrs Mules has over the whole period she lived with Mr Kelly and since spent vast sums of money for which she is now unable or unwilling to account. I am satisfied and find that such sums were spent to her own or to her childrens’ benefit and not to the benefit of Mr Kelly. That later finding is related particularly to the period of time after 1990. I am satisfied and find that a significant sum of money from the proceeds of the sale of the Barn Motel has been secreted by Mrs Mules so that it could not be brought into account in this case. I reject her evidence that she has “spent” over $150,000 in a relatively short period of time after the sale of the Barn. I am unable to find exactly how much money is involved. However, I find that it is at least $75,000.
I have already referred to some aspects of Mrs Mules’ evidence concerning Mr Arthur Facey. During her cross-examination Mrs Mules at first said that she didn’t know how much land Mr Facey owned. She was asked:
QWhy haven’t you been interested in finding out, as a partner of his -
ABecause I’m in this situation with Mr Kelly, that’s why. I know what Mr Kelly is like. I know what I’m going to go through. I have not involved myself fully with Mr Facey as far as commitment goes. I’m not saying I’m not going to, but I cannot commit myself and there is no commitment between us with that, your Honour. There is no commitment whatsoever until I finish this crap, whatever it may be.
QWell, when you finish this.
AYes.
QAnd assuming you and Mr Facey are still in the situation you are now.
AYes.
QIs it your intention to marry him.
AI don’t know that. I haven’t made any plans to marry Mr Facey, or he hasn’t with me, that’s for sure.
QYou mean he hasn’t asked you.
AI’m not saying he hasn’t asked me.
QWell, has he asked you.
AYes, but we cannot - we cannot do a thing until this is out the road.
QDo you regard yourself as engaged to him.
AI definitely do not. I definitely do not.
QSo how many times has he actually asked you, ‘Would you marry me?’
AHe hasn’t asked me, ‘Would you marry me?’
QWell, why were you able to say a moment ago, in relation to marriage, what you did.
AI just -
QWhat was it if he didn’t say - sorry, answer that question first. What were you trying to convey to us.
AArthur hasn’t asked me to marry him but when this is finished who knows what will happen. I told you that yesterday.
HIS HONOUR
QMr Anderson was asking why did you tell us a moment ago that he had asked you to marry him.
AWell, he hasn’t just come straight out and said, ‘Pam, will you marry me?’ No, he hasn’t said that.
XXN
QWell, what has he said.
AI don’t know what he said but there has been marriage mentioned once but we are not committing ourself, we are not doing anything until this business is over.
QWhy did you say to his Honour a minute ago-
AYour Honour -
QJust can I ask my question, please. Why did you say to his Honour a minute ago that he had asked you to marry him.
AI don’t know if he has or he hasn’t, your Honour.
Well before Mr Kelly met Mrs Mules he owned an abalone licence. Earlier in these reasons I referred to what Mrs Mules’ counsel said in Opening her case on the first day of trial. He referred to the fact that a valuer would be called to give his opinion that the value of Mr Kelly’s abalone licence is in the order of six and a half, or seven million dollars. He said that with that level of value in the asset it was not going to matter very much at the end of the day to analyse any particular bank account. He said that “detailed evidence about the actual value of this asset or that asset is not going to be the focus of our case.” I have also referred earlier to the fact that Mrs Mules pleaded that at the time of the commencement of their relationship Mr Kelly owned and operated an abalone fishing licence and had assets of a combined nett value of approximately $1,000,000 or such amount as is disclosed upon full discovery being made by him, and to the fact that I was told in addresses that the matters pleaded in paragraphs 5 and 6 of the Defence to Counterclaim were admitted as facts. Paragraph five included a plea that as at May 1986 Mr Kelly had an abalone licence valued at that time at approximately $200,000. It was submitted by Mrs Mules’ counsel that the effect of the admission was that as at May 1986 Mr Kelly’s assets were the abalone licence plus $250,000 - “not much more than my client’s proved assets in our submission”. Finally, it was agreed between the parties that as at February 1994 Mr Kelly’s assets included an abalone licence AO2 worth approximately $2,000,000.
A marine valuer and consultant, Mr Richard Oakley, wrote that his belief was Mr Kelly’s licence had a value of $5.5m to $5.8m as at 15 April 2002 (Exhibit D163). Mr Oakley stated in his valuation:
Due to the relatively high beach price for abalone in this country and the limited number of licences in South Australia, supply and demand is a determining factor in the price that a licence is worth.
My research indicates that there have been very few licence transfers in South Australia in recent years and thus it is difficult to clearly state their true value.
As a valuer of marine licences across all fisheries in Australia, the only guide I can suggest to determine the value of a South Australian abalone licence is to use prices obtained for abalone licences in Victoria and Tasmania. Industry sources indicate these prices have been in the range of $6m to $6.4m in recent times.
It is therefore my belief the Kelly licence to have a value of $5.5m to $5.8m on the 18,500 kg of green and black lip abalone that the holder is authorized to annually harvest.
Mr Oakley did not give evidence before me. It seems from his valuation that he valued Mr Kelly’s licence on the basis of prices obtained for abalone licences in Victoria and Tasmania. It does not appear that he valued the licence by other means, such as for example, capitalising the annual gross or nett income that Mr Kelly had received for selling the abalone he caught.
I have no doubt that Mr Kelly’s abalone licence is an extremely valuable one. It earns him an enormous amount of money annually. On the evidence before me it seems that the value of the licence has increased from $200,000 in May 1986, through $2m in February 1994, and then up to $5.8m in April 2002. That presumably is due to the fact (although I have no evidence of this) that the overseas market for abalone is such that the price paid for it has increased substantially over these years. There is no doubt that Mrs Mules made no contribution to the acquisition of the licence. It was acquired by Mr Kelly using his resources alone. It was already the subject of a property dispute between Mr Kelly and Margaret Kelly before Mr Kelly met Mrs Mules. I am satisfied that Mr Kelly himself made no direct financial contribution to the conservation or improvement of his abalone licence other than retaining it and not selling it. In some sense the appreciation in its value is a windfall for Mr Kelly to which he has contributed nothing other than retaining the licence and working it. That is no doubt extremely hard and hazardous work.
I am satisfied and find that Mrs Mules made no financial contribution to the acquisition, conservation or improvement of Mr Kelly’s abalone licence. It is true that she worked for a time carting abalone. However, she did that for wages and that contributed nothing to the value of the licence. Mr Kelly could easily have employed others to cart his abalone, as he did to help him catch it. Because of these matters there is a sense in which Mr Kelly’s abalone licence has only marginal relevance to the issues that arise under s11 of the De Facto Relationships Act.
Furthermore, I consider that in the circumstances of this case Mrs Mules’ financial and non-financial contributions to the financial resources of Mr Kelly, in as much as they are reflected by the income he derives from his abalone licence, were not significant. Whilst it was the case that Mr Kelly resided at the Barn Motel from time to time subsequent to February 1994, he did so on the terms and on the understandings to which I have referred earlier in these reasons. Mr Kelly had other premises in which he could and did live when he was not at the Barn Motel. In those circumstances, I do not consider that it can properly be said that by allowing Mr Kelly to stay at her house at the Barn Motel, and by providing meals and washing for him there, Mrs Mules made much of a contribution, in the relevant sense, to Mr Kelly being able to use his abalone licence to fish and earn the money that he did from fishing abalone. I find that Mr Kelly and Mrs Mules had negotiated a special arrangement between themselves whereby Mr Kelly would reside at the Barn Motel from February 1994. The parties had, by their agreement, resolved to keep their personal and financial affairs separate.
Conclusions
I conclude that by loan agreement dated 6 January 1997 (Exhibit P62) Mrs Mules acknowledged an indebtedness to Mr Kelly in the sum of $250,000. By the same agreement she agreed to pay that sum on 6 January 1998 (subject to Mr Kelly’s discretion to extend). She further agreed to pay interest on the sum of $250,000 annually at the rate of 8% per annum. Such interest would be payable annually. Mrs Mules has made no payments pursuant to the agreement. Accordingly, she is liable to Mr Kelly to pay the principal sum plus interest.
Mr Kelly claims moneys he alleges Mrs Mules took from his car at Port MacDonnell and from his brief case. I am satisfied that Mrs Howard’s evidence that Mrs Mules took large sums of money from Mr Kelly’s car at Port MacDonnell was truthfully and accurately given. I have found that Mrs Mules took other monies from Mr Kelly without his knowledge and consent. Although I find that she probably took these monies I am not prepared to make a finding on the higher burden of proof such as would lead me to enter judgment for Mr Kelly against Mrs Mules as to any such sum of money. That includes the $5,000 that Mrs Mules admitted taking from Mr Kelly’s drawer and other monies I find she took without his knowledge. Mr Kelly will not have judgment for this part of his claim.
Mr Kelly admitted that he and Mrs Mules lived together on a genuine domestic basis as husband and wife from no earlier that May 1986 to no later than the end of January 1993. I conclude that whatever relationship existed between Mr Kelly and Mrs Mules up to the end of January 1993 ceased on 17 February 1993. Their relationship had been steadily deteriorating and disintegrating over a long period prior to that date. They had not had sexual relations since August 1992 and I find that for much of the last six months of the 1992 calendar year Mr Kelly lived at his house at Port MacDonnell and not at Johnston Road. I conclude that in February 1993 Mr Kelly and Mrs Mules determined to, and did, end their financial and personal relationship. Transfers of their interests in properties were signed and registered. Mrs Mules paid Mr Kelly $30,000 as part of their agreement to end their relationship. The correspondence between them and the understanding that I have found existed between them reflected that they would settle and conclude not only their financial relationship but their personal relationship also.
What they did in February 1993 was reflected in what I have found happened in the months that followed February 1993. I have rejected Mrs Mules’ evidence that co-habitation resumed between March 1993 and October 1993. I have found that co‑habitation did not resume at Johnston Road or at the Barn after February 1993 until February 1994. I have found that there was no engagement at the Edelweiss Restaurant. I find that Mr Kelly purchased the farm at Nelson on his own. I have found that Mrs Mules purchased the Barn Motel without Mr Kelly’s knowledge. I have rejected Mrs Mules’ evidence that she received $500 per week from Mr Kelly between February 1993 and February 1994. I have found that Mrs Mules went to work at a petrol station and at the Blue Lake motel in order to provide for her own day to day living and, from September 1993, to meet her obligations to the bank after she had purchased the Barn Motel.
I conclude that Mr Kelly and Mrs Mules did not live together on a genuine domestic basis as husband and wife after February 1993. Accordingly, Mrs Mules is not entitled to any order pursuant to the De Facto Relationships Act.
The matters I consider are particularly important in reaching this conclusion (in addition to the matters to which I have just referred) are:
·My findings as to the basis upon which Mr Kelly and Mrs Mules lived together at the Barn Motel after February 1994. In particular:
·My finding that Mr Kelly paid board which was largely used by Mrs Mules to meet her mortgage commitments on the Barn Motel.
·My finding that there was agreed to be, and there was, no financial dependence one upon the other after February 1994.
·My finding that after February 1994 Mr Kelly and Mrs Mules maintained their business and financial affairs separate from one another. Whilst the purchase of OB Flat was made in both their names it was purchased with both accepting that Mrs Mules would pay an equal share. Although she never did, I find that it was always contemplated by both that she would.
·My finding that it was agreed between Mr Kelly and Mrs Mules that marriage was not to be an expectation of Mrs Mules. I am satisfied and find that Mrs Mules always knew that, and in particular she knew that from February 1994 onwards.
·My finding that Mr Kelly did not move all his clothes and belongings from his house at Port MacDonnell to the Barn Motel in or after February 1994.
·The Barn Motel was Mrs Mules’ business, although she and Mr Kelly lived in a house on those business premises. I find that Mrs Mules was not a “homemaker” in the sense that she maintained a home for she and Mr Kelly. I find that Mr Kelly was a “boarder” in the sense to which I have referred in my findings earlier in these reasons. Mr Kelly maintained his own residence at Port MacDonnell and I find that he often used those premises when he was told to “piss off down to the bay” and at other times.
·My finding that Mrs Mules and Mr Kelly did not support each other in the sense that they provided some means or opportunity to enable each other to acquire, conserve or improve property or to build financial resources.
·Whilst Mr Kelly and Mrs Mules provide companionship for each other from February 1994 I find they did not provide comfort, support or security for each other. I find also that neither provided much support or security to the children of the other.
·My finding that Mrs Mules never loved Mr Kelly.
·My finding that Mrs Mules did not, subsequent to February 1994, sacrifice her earning capacity nor was she precluded in any way from gainful employment by the arrangement she had with Mr Kelly for him to live at the Barn Motel. Prior to February 1994 she had acquired the business of the Barn Motel without Mr Kelly’s knowledge and at a time when they were not living together with each other. I am satisfied and find that that was something she did because she wished to. She intended to and she thought that she could build up that business. She succeeded to the extent that she ran it as a motel until she decided to sell it. She made a not insignificant capital gain on its sale.
·My finding that even before February 1994, and certainly after it, Mrs Mules considered that her money was her money to do with as she wished. I find that she did use it as she wished and without consulting Mr Kelly. I find that Mr Kelly had a similar attitude.
·I find that neither Mr Kelly nor Mrs Mules provided for or contributed to the emotional wellbeing of the other, or of the children of the other.
·My finding that although a sexual relationship resumed after February 1994 it ceased in about mid-November 1996.
·My findings as to the loan agreement Mr Kelly and Mrs Mules signed in January 1997. That is evidence of the manner in which they considered they were financially independent of each other.
·The fact that Mr Kelly and Mrs Mules never used (for themselves) a common surname. I find that Mrs Mules made it clear to anyone who asked, during the time that they were together, that her name was Mules not Kelly.

If I am wrong as to the conclusion that Mr Kelly and Mrs Mules did not live together on a genuine domestic basis as husband and wife after February 1993, I would have concluded that Mr Kelly and Mrs Mules did not live together on a genuine domestic basis as husband and wife subsequent to November 1996. Accordingly, Mrs Mules is not entitled to any order pursuant to the De Facto Relationships Act.
In addition to the matters upon which I have relied for my earlier conclusion the following matters are important in reaching this conclusion:
·My findings as to the aftermath of Auntie Joan’s birthday and in particular my finding that Mr Kelly and Mrs Mules have not had sexual relations with each other since that time.
·My finding that Mrs Mules determined at about November 1996 that she would leave Mr Kelly within a year and that she would do what she could to extract money from him to her and/or her childrens’ benefit.
If I am wrong as to that conclusion, I would have found that Mr Kelly and Mrs Mules did not live together on a genuine domestic basis as husband and wife after December 1997. In that event, I would have decided, on the findings I have made, not to make an order for the division of property under Part 3 of the De Facto Relationships Act. Whether an order for the division of property is made is a discretionary matter for me to decide (section 11). In exercising that discretion I am entitled to take into account all the matters set out in sub-section (1) of Section 11. The particular matters that I would have taken into account when exercising my discretion not to make an order for the division of property are those matters to which I have already referred. In addition, the following matters are relevant and important:
·My finding that Mrs Mules’ relationship with Mr Facey has not been and is not as she ultimately gave evidence. Whatever it may be, I am satisfied that Mrs Mules has, since about March 1998, been in no worse position than she was when she and Mr Kelly lived together at the Barn Motel. She has been with Mr Facey now for over five years. Not only am I not able to make any reliable findings as to Mrs Mules’ property as at the date of trial, I am also not able to make any findings as to whether she has any financial relationship with Mr Facey.
·My findings that Mrs Mules probably took large sums of money from Mr Kelly’s car and drawer.
·My findings that Mrs Mules has encouraged witnesses to give false evidence at this trial.
·My findings that Mrs Mules herself has given false evidence and has “manufactured” evidence, being the audio tape Exhibit P82.
If I had been convinced to make a division of property pursuant to the De Facto Relationships Act I would have made an order that Mr Kelly make no more than a nominal lump sum payment to Mrs Mules. Such nominal sum would not have exceeded $150,000.
Apart from the matters to which I have already referred, the following matters are relevant and important:
·My finding that Mrs Mules made little or no financial contribution to the acquisition, conservation or improvement of any of Mr Kelly’s property since February 1994. I recognise in this finding that I have referred at some length earlier in this judgment to the way Mrs Mules’ counter-claim was presented during the trial. Her case was not presented in such a way as to enable me to identify what financial contributions were made by her to Mr Kelly’s property. I am satisfied, however, that it would have been difficult to adduce such evidence because there was little evidence available to that effect.
·My finding that Mrs Mules made little by way of non-financial contributions directly or indirectly to the acquisition, conservation or improvement of property of Mr Kelly or of his financial resources.
·As to Mrs Mules’ homemaking contributions to Mr Kelly I am satisfied that she made some small contribution of this type although, since February 1994, it was in a place she solely owned and in which I have found she allowed Mr Kelly to live on the payment by him of a significant sum by way of board. Her homemaking therefore was in respect of a property she owned, in respect of which she could claim some tax deductions, and from which she has received the sole benefit upon its sale late in 1998.
·My findings as to Mr Kelly’s abalone licence.
·I am satisfied that there is little reliable evidence upon which I can make findings as to what Mrs Mules’ property was as at the date of trial or at any other time other than in late 1985 or in the middle of 1986. I am satisfied and find that Mrs Mules sold the Barn Motel because she intended to, and did, secrete as much of the proceeds of it as she could so that they could not be brought into account in this case. I do not believe her evidence that she “spent” over $150,000 in just over two years after the sale of the Barn.
Further to the order that Mr Kelly pay Mrs Mules a sum which would not have exceeded $150,000 I would also have ordered that Mrs Mules sign a transfer of her interest in OB Flat to Mr Kelly. I would have further ordered that Mr Kelly pay all duty, costs and other disbursements to effect such a transfer. (I have not overlooked the fact that my conclusion as to the loan agreement and an order I expect would be made as a result of that conclusion would mean that Mrs Mules would have paid her “share” of OB Flat.)
I shall hear the parties as to the form of orders to be made, including orders as to interest and costs.

[2003] SADC 140

17 September 2003