Liu v Guo
[2006] NSWSC 1144
•7 November 2006
CITATION: Liu v Guo [2006] NSWSC 1144 HEARING DATE(S): 30/01/06, 31/01/06, 01/02/06, 02/02/06
JUDGMENT DATE :
7 November 2006JURISDICTION: Equity Division JUDGMENT OF: Brereton J DECISION: Plaintiff is entitled to 45%, and defendant to 55%, of pool of property in existence as at separation, which requires transfer by defendant to plaintiff of John Street, and payment by plaintiff to defendant of $224,515. Parties to bring in short minutes to give effect thereto. CATCHWORDS: FAMILY LAW AND CHILD WELFARE – DE FACTO RELATIONSHIPS –adjustment of property interests –approach to property adjustment – evaluation of contributions – date for ascertaining pool of divisible property – where extensive and unclear dealings by both parties with property retained by each since separation – where impracticable and potentially unjust to adjust pool of present property for property use or withdrawn from pool by parties since separation – adoption of pool of property at date of separation valued at date of hearing – post-separation contributions – whether there can be contributions as homemaker to welfare of family after separation – held, there can, family does not need to remain intact – methodology - where evidence does not permit reliable tracing of contributions through assets or identification of discrepant contributions to different assets – whether asset-by-asset approach should be adopted – held, it ought not – significance of expenditure in assessment of contributions – held, assessment of contributions is concerned with who contributed what to relationship (1) by property introduced at outset, (2) by income and accretions of property and domestic contributions during the relationship, and (3) by income and accretions of property and domestic contributions after separation, not with who paid for what. LEGISLATION CITED: Property (Relationships) Act 1984 (NSW), s 20 CASES CITED: Black v Black (1991) 15 Fam LR 109; (1991) DFC 95-113
Cozanitis v Cozanitis (1979) 34 FLR 523n; (1978) 4 Fam LR 709; (1979) FLC 90-643
D v McA (1986) 11 Fam LR 214; (1986) DFC 95-030
Davey v Lee (1990) 13 Fam LR 688; (1990) DFC 95-084
Evans v Marmont (1997) 42 NSWLR 70; (1997) 21 Fam LR 760; (1997) DFC 94-184
Foster v Evans (1997) DFC 95-193
G & G (1984) FLC 91-582
Hauff & Hauff (1986) 10 Fam LR 1076; (1986) FLC 91-747
Jones v Grech (2001) 27 Fam LR 711; (2001) DFC 95-234; [2001] NSWCA 208
Kardos v Sarbutt (2006) 34 Fam LR 550 ; [2006] NSWCA 11
Lenehan v Lenehan (1987) 11 Fam LR 615; (1987) FLC 91-814
McDonald v Stelzer (2000) 27 Fam LR 304; (2001) DFC 95-233; [2000] NSWCA 302
Mallet v Mallet (1984) 156 CLR 605
Nguyen v Scheiff (2002) 29 Fam LR 177
Norbis v Norbis (1986) 161 CLR 513; (1986) 10 Fam LR 819; (1986) FLC 91-712
Omacini & Omacini (2005) 33 Fam LR 134; (2005) FLC 93-218; [2005] FamCA 195
Parker v Parker (1993) 16 Fam LR 863; (1993) DFC 95-139
Robb and Robb (1995) FLC 92-555
Roy v Sturgeon (1986) 11 NSWLR 454; (1986) 11 Fam LR 271; (1986) DFC 95-031
Wallace v Stanford (1995) 37 NSWLR 1; (1995) 19 Fam LR 430
Watt v Watt (1988) DFC 95-060
Wells v Wells (1977) 29 FLR 383; (1977) 4 Fam LR 57; (1977) FLC 90-285
Wilcock v Sain (1986) 11 Fam LR 302; (1986) DFC 95-040
Williams & Williams (1984) 9 Fam LR 798; (1984) FLC 91-541
Woodland & Todd (2005) 33 Fam LR 177; (2005) FLC 93-217; [2005] FamCA 161PARTIES: Tsan Sun Liu (plaintiff)
Tony Zhong Ren Guo (defendant)FILE NUMBER(S): SC 1213/04 COUNSEL: Mr A Givney (P)
Mr G Roberts (D)SOLICITORS: Coleman & Greig (P)
Michael Conley Laywers (D)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
BRERETON J
Tuesday 7 November 2006
1213/04 Tsan Sun Liu v Tony Zhong Ren Guo
JUDGMENT
1 HIS HONOUR: The plaintiff Ms Tsan Sun Liu and the defendant Mr Tony Zhong Ren Guo cohabited in New South Wales as de facto partners from early 1996 until some disputed time between August 1999 and 15 January 2001. There were four children of the relationship, the fourth born after separation. An unusual feature of the case is that the first three children were cared for during the relationship by Mr Guo’s mother, in China; Ms Liu has been the primary carer for the four children since separation. Prior to separation, their financial affairs were not particularly complicated, and they accumulated property, which is now worth about $900,000 net. Since separation, both partners have dealt with the property they retained, acquired additional property, refinanced, and expended assets, in a manner which the evidence quite inadequately reveals, but which has significantly affected their overall positions. Both parties seek relief under Property (Relationships) Act 1984 (NSW), s 20: Ms Liu has applied for an adjustive property order, and Mr Guo has cross-claimed for an adjustive property order in his favour.
2 The jurisdiction invoked in the present proceedings is that created by Property (Relationships) Act, s 20(1), which provides as follows:-
(1) On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:
(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and
(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely:
(i) a child of the parties,
(ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties.
3 The exercise of jurisdiction under s 20 involves three main steps. The first is the identification and valuation of the property of the parties, which determines the “divisible pool of property” – that is, “the property of the parties to the relationship or either of them” referred to in s 20 which may be the subject of an adjustive property order under that section. The second is the identification, evaluation and weighing of the respective contributions of the parties of the types referred to in s 20, and typically though not invariably results in an apportionment between the parties on a percentage basis of the overall contributions (of the types referred to in s 20) of each of them, made to the date of hearing. The third is the determination of what order is required sufficiently to recognise and compensate the applicant’s contributions, and typically results in an order that leaves the applicant with that percentage identified in the second step of the divisible property identified in the first step. This is a simplification of the four step approach first formulated by Powell J in D v McA (1986) 11 Fam LR 214; (1986) DFC ¶95-030 [see also Roy v Sturgeon (1986) 11 NSWLR 454; (1986) 11 Fam LR 271; (1986) DFC ¶95-031; Wilcock v Sain (1986) 11 Fam LR 302; (1986) DFC ¶95-040; Evans v Marmont (1997) 42 NSWLR 70; (1997) 21 Fam LR 760; (1997) DFC ¶94-184; Jones v Grech (2001) 27 Fam LR 711; (2001) DFC ¶95-234; [2001] NSWCA 208; Kardos v Sarbutt (2006) 34 Fam LR 550 ; [2006] NSWCA 11].
4 Accordingly, the issues are:
· What is the divisible pool of property;
· What were the respective contributions of the parties under s 20; and
· What order should be made, as a matter of justice and equity, to reflect and recognise those contributions.
Background
5 Mr Guo arrived in Australia from China in 1989, on a student visa. In about late 1990 he commenced a plastering business, which became known as HK Plasterboard Contractors. Ms Liu arrived in Australia from China in August 1993, she says with $5,000 in personal belongings. She was then married, and had a child, Polly, who remained with her husband in Hong Kong.
6 In May 1994, Ms Liu commenced a handbag business in Sussex Street Sydney, through a company called Sun Wah (Australia) Pty Limited, incorporated by Ms Liu and her then husband, of which both were directors, which imported handbags and sold them through the Sussex Street shop. Ms Liu also purchased a 1986 Audi motor vehicle for $15,000. In or about June 1994, she opened a second handbag shop, and subsequently leased a warehouse in Marrickville to store handbags.
7 The parties met in June 1995. Mr Guo was then a self-employed gyprocker, in his business of H K Plasterboard Contractors. Ms Liu had opened a third handbag shop. According to Ms Liu, they began to live together in late 1995 or early 1996, in premises rented by Mr Guo at 5 Fraser Street Auburn. Mr Guo says that they commenced a personal relationship in January 1996, and that cohabitation commenced in about March of that year. It suffices to conclude that cohabitation commenced in the first quarter of 1996.
8 When cohabitation commenced, Ms Liu had her Audi motor vehicle, her share in the handbag business, and furniture and effects. Mr Guo had the business of H K Plasterboard Contractors, tools, a Ford Econovan, furniture and personal effects. He claims that he also had savings of about $150,000 ($20,000 in Advance Bank, between $80,000 and $90,000 in St George Bank, $20,000 in Westpac, and $20,000 to $25,000 in the Commonwealth Bank), and an interest in the National Mutual Superannuation Scheme; as will become apparent I am not persuaded that he had more than about $26,000, in two Westpac accounts, as at 31 October 1995, and about $18,000 as at 27 March 1996.
9 On 12 October 1996, their first child, Henrietta, was born. Ms Liu returned to work in November, about three weeks after Henrietta’s birth, and Mr Guo’s mother was Henrietta’s primary carer. In March 1997, Mr Guo’s mother took Henrietta to China, where she remained until February 2000, save for a couple of months between 1 May and 25 July 1999 when she returned to Australia in circumstances which were never explained.
10 On 17 January 1997 the purchase of a property at 20 Rickard Street, Auburn, was completed, in the sole name of the Mr Guo, for a price of $188,000, financed by a mortgage loan from Perpetual Trustees Victoria Limited of $150,000. Ms Liu says her savings of $9,500 financed the balance; Mr Guo says the balance came from his savings accumulated prior to cohabitation. As I explain below, it is unnecessary to resolve this dispute, as on the approach I adopt it would make no difference to the outcome.
11 On 7 November 1997, the parties’ second child, Helena, was born. Ms Liu returned to work within two or three weeks of her birth, and Helena was primarily cared for by friends until June 1998, when Mr Guo took her, then aged 9 months, to China to live with his parents. Helena lived in China until she was 3½ years old, in mid-2001.
12 On 8 May 1998, the purchase of a property at 31 John Street, Lidcombe, was completed, in the name of Mr Guo, for a price of $288,000, financed by a mortgage loan from Westpac Bank of $187,000. Mr Guo says that the balance was provided as to $20,000 from his savings, and the remainder by way of the refinancing of the mortgage on the Rickard Street Auburn property. The Rickard Street mortgage was upstamped from $150,000 to $205,000, which suggests that about $55,000 was realised from that source, leaving $45,000 to be raised from elsewhere. Again, on the approach I adopt, it is unnecessary to resolve this.
13 The handbag business closed down sometime during 1998 to 1999. The remaining stock of handbags was moved, ultimately to the garage at the Rickard Street property. Ms Liu alleges that Mr Guo subsequently opened his own handbag business and has sold the handbags; Mr Guo denies that he has sold them and asserts that he has transferred them to his warehouse at Guildford. Either Mr Guo still has them, or he has sold them; in either case they will be treated as part of the property apportioned to Mr Guo in the division of property.
14 During 1998, Mr Guo and his brother-in-law Mr Li Wen Yu converted part of the John Street property into a restaurant, and from about December 1998 the business of a Chinese restaurant called Fujian Chinese Restaurant was conducted from those premises. Mr Guo says that he and his brother-in-law operated the business, and that his brother-in-law contributed $150,000 to its establishment. Ms Liu says she worked in the restaurant, while Mr Guo continued to work as a builder. The restaurant was operated through a company, Multi-Image Pty Ltd, in which Mr Guo and his brother-in-law were equal shareholders.
15 On 27 December 1998, the parties’ third child, Henchel, was born. Ms Liu returned to work within a couple of weeks.
16 In July 1999, Ms Liu took Henchel – and returned Henrietta, who had come to Australia in May of that year - to China to live with Mr Guo’s mother. Ms Liu says she was away from Australia for three months, during which she visited her sister in Hong Kong. On 7 August 1999, she sent Mr Guo a facsimile letter, which suggested that she did not intend to return to Australia. Mr Guo says that he regards the parties as having separated at that time.
17 Ms Liu returned to Australia in late 1999. She says that she was depressed because she missed her children. She found that Mr Guo had a “girlfriend”. The parties were estranged, and Ms Liu attempted suicide by drinking bottle of Dettol, following which she was admitted to hospital.
18 It was Mr Guo who took Ms Liu to hospital. Ms Liu says that upon her discharge, the parties reconciled. In February 2000, Mr Guo went to China and brought Henrietta back to Australia. On 14 August 2000, Mr Guo again travelled to China and collected Helena from his mother and returned to Australia. On 21 August 2000, Ms Liu swore an affidavit in Family Court proceedings between the parties. On 24 November, Mr Guo visited his family in China and collected Henchel whom he brought back to Australia. While he was away, in November 2000, Ms Liu moved into the premises at 31 John Street, Lidcombe, without his knowledge or consent. Ms Liu says that the parties separated on 15 January 2001, when Mr Guo vacated the Rickard St property. On 14 February 2001, Mr Guo executed a selling agency agreement in respect of the Rickard Street property.
19 Ms Liu says that when she returned from China Mr Guo had already commenced living in a de facto relationship with a girlfriend, and that when she moved into John Street in November 2000, Mr Guo moved out, into another property, with a girlfriend. In her affidavit sworn 4 November 2004, she said that they separated in March 2000, more than a year earlier than the date she now asserts. Yet the fourth child, Henchida, who was born on 25 July 2001, and who has been proven by paternity test to be Mr Guo’s child, must have been conceived in October 2000. It is plain that there was some continuing relationship between the parties, and that it is artificial in this context to fix on a precise date of separation. The relationship was in distress, and came to an end between August 1999 and January 2001, though it is not possible, nor necessary, to say precisely when. Although it was a contentious matter, little ultimately turns on the precise date of separation. There were no significant changes in the financial position of the partners between August 1999 and January 2001. As I will explain, contributions made after separation still count as contributions for the purposes of s 20(1)(a) and (b).
20 At this time, the property of the parties comprised 20 Rickard Street, Auburn, subject to a mortgage; 31 John Street, Lidcombe, subject to a mortgage; Mr Guo’s business HK Plasterboard Contractors; a half interest (with Li Wen Yu, through Multi-Image) in the business of Fujian Chinese Restaurant; Mr Guo’s Toyota Prada motor vehicle; Ms Liu’s Audi motor vehicle; Mr Guo’s Ford Econovan; the furniture fittings and effects which each partner retained on separation; and the stock of handbags from Ms Liu’s former business, held in the garage at Rickard Street. Mr Guo alleges that Ms Liu owed him $135,000.
21 On 20 February 2001, pursuant to contract dated 20 December 2000, Ms Liu purchased a property at 336A Park Road Berala, for a price of $183,000, which she says was financed by a mortgage to Perpetual Trustees Victoria as manager for ACE Home Loans for $146,000, and the balance by way of gift from Ms Liu’s parents. Whether there was any such gift is contentious.
22 This was the first of numerous property transactions post-separation in which both partners engaged. Ultimately, for reasons I explain below, I have left the post-separation transactions to fall to the account of the party who engaged in them, for that party’s benefit or detriment, partly because after separation each was making his and her own investment decisions, and partly because there is great difficulty in reaching with any degree of satisfaction a conclusion as to the source of funds for them, including in particular where funds are alleged to have been received from parents, or borrowed from friends, and whether there is any corresponding debt. However, I record these transactions because they form part of the relationship financial history, and to reveal the difficulties that arise in any attempt to adjust the pool of property by making “add-backs” in respect of them.
23 In March 2001, Li Wen Yu had to leave Australia upon expiry of his visa, and Mr Guo agreed to pay his brother-in-law to pay him $107,000 for his interest in the restaurant. That amount has not yet been paid. In about May 2001, Ms Liu assumed the conduct of the restaurant. According to Mr Guo, this was the result of duress and harassment, including a threat by Ms Liu that she would kill the children if not permitted to takeover the restaurant. According to Ms Liu, Mr Guo offered her the restaurant business; she claims that there were outstanding debts [to a grocery supplier ($8,000), for containers/packaging ($3,000), for electricity ($6,000), to the chicken supplier ($2,000) and for 3 weeks wages due to the chef ($1,800)] which she says she repaid within 12 months, allegedly from moneys that she says she borrowed. Mr Guo’s version of this was not challenged and I accept it, but ultimately the circumstances in which she obtained control are of little significance, though what has happened during her management is much more so. Ms Liu has produced no records in relation to the conduct of the restaurant, notwithstanding that she has conducted it since May 2001. She said that it was “not making any money” and “never had made any money”, and asserts it is now valueless. Moreover, since May 2001 she has not paid any rent with respect to the restaurant premises, nor made any contribution to the mortgage instalments or rates, but she has enjoyed both the use of the premises and the profits of the business. As she has had control of the restaurant since shortly after separation, it will be treated as part of the property apportioned to her in the division of property
24 On 8 May 2001, Mr Guo received by telegraphic transfer into his bank account from Sit Wai Ching the sum of $57,502, being US$30,000. On 17 May 2001, Mr Guo completed the purchase of a property at 42/575 Woodville Road, Guildford, for a price of $250,000, which he says was financed by a loan from his cousin Hong Ming Tong of $30,000 (presumably the US$30,000 received from Sit Wai Ching), and the balance by way of mortgage from Permanent Trustee of Australia Limited. At this time, Rickard Street was refinanced, by increasing the amount borrowed from $205,000 to $243,900, which would have raised just under $40,000.
25 On 29 August 2001, pursuant to contract dated 15 June 2001, Ms Liu purchased 10/14 Swete Street Lidcombe, for a price of $150,000, which she says was financed by a mortgage to ING in the sum of $135,000, and the balance by way of gift from her parents.
26 On 12 November 2001, Ms Liu borrowed $234,000 on the security of 336A Park Road, Berala, and discharged the existing mortgage of $146,000 to Perpetual Trustee/ACE. On 13 November, she deposited $75,917.42 to her St George Cash Management Account. On 19 December, she withdrew $70,623 from her St George Cash Management Account and apparently applied that sum towards the purchase of 2A Amy Street, Auburn, which she purchased on 21 December, pursuant to contract dated 29 October 2001, for a price of $237,000, financed by a mortgage to IMB Limited in the sum of $165,900, and, she says, the balance by way of gift from her parents - but in fact Ms Liu appears to have used the $70,623 obtained by refinancing the mortgage to Perpetual Trustee over 336A Park Road, Berala.
27 Ms Liu remained living in John Street until early 2002, when she moved into 20 Rickard Street, although she seems not to have resided there full-time, and sometimes only at weekends. Mr Guo continued to pay the mortgage instalments rates and utilities for both the Rickard Street and Auburn Street properties.
28 On 25 February 2002, pursuant to contract dated 21 January 2002, Ms Liu purchased a property at 7 Michelle Court, Regents Park, for a price of $280,000, financed by a mortgage to Perpetual Trustee Company Ltd in the sum of $252,000, and, she says, as to the balance by way of gift from her parents. The deposit was $14,000, and the balance to complete was $18,524.
29 On 22 October 2002, Ms Liu borrowed $207,000 from Wizard Home Loans on the security of 10/14 Swete Street, Lidcombe. She discharged the mortgage to ING in the amount of $134,219.97, paid $35,000 to Century 21 Auburn – presumably the deposit on the Macquarie Road unit, referred to below - and deposited $19,721.91 to her St George Cash Management Account.
30 On 3 December 2002, pursuant to contract dated 22 October 2002, Ms Liu purchased a property at 25/2 Macquarie Road, Auburn, for a price of $355,000, financed by a mortgage to Permanent Custodian Limited/Wizard of $319,000, and, she says, the balance by way of gift from her parents; there remained $9,464 to be found on completion.
31 Ms Liu says that she met Kasum Ahmet in April 2003. On 4 April, she refinanced the mortgage to Perpetual Trustees Australia on the security of 7 Mitchell Court, Regents Park, to the sum of $315,000, discharged the then mortgage to Perpetual Trustees Australia Ltd in the sum of $257,000, and deposited $51,767.28 to her Westpac Account. In May 2003, she and Kasum Ahmet commenced to live in a de facto relationship.
32 On 18 September 2003, Ms Liu, pursuant to contract dated 7 June 2003, sold her property at 336A Park Road, Berala, for $358,000. She discharged the mortgage to Perpetual Trustees in the sum of $240,744.60, and deposited $98,263.81 to her St George Cash Management Account.
33 On 19 January 2004, Ms Liu deposited $8,055 to the Sun Garden Chinese Restaurant Commonwealth Bank Account. On 20 January 2004, pursuant to contract dated 5 December 2003, she sold 7 Mitchell Court, Regents Park to Kasum Ahmet, for $480,000. She said that she received $101,159.88; but the settlement sheet suggests $318,280 was repaid to the mortgagee, and that a balance of $112,149 plus the deposit of $48,000 held by the agent was due to her on settlement.
34 On 10 February, Ms Liu drew a cheque to Mr Ahmet; it was dishonoured, but two other cheques drawn by her in his favour between 6 and 15 February, each for $30,000, were honoured.
35 Pursuant to contract dated 20 February 2004, Ms Liu and Kasum Ahmet purchased 6 Board Street Lidcombe in the name of Kasum Ahmet for $620,000. Ms Liu says she contributed $110,000 to the purchase, being the proceeds of 7 Mitchell Court and 336A Park Road Berala; $548,000 was borrowed.
36 On 25 February, Ms Liu and Mr Ahmet entered into a “Family Agreement” of that date which relevantly provides for the Board Street property to be used by Ms Liu and Mr Ahmed as their family home, but in the event of the breakdown of their relationship to be regarded as being the property of Ms Liu. The Family Agreement suggests that Ms Liu received nothing from the sale of 7 Mitchell Court, but this may mean that her entitlement was contributed directly to the acquisition of Board Street.
37 On 27 February 2004, Kasin Ahmet was born to Ms Liu and Kasum Ahmet.
38 In June 2004, Ms Liu refinanced her loans by borrowing $200,000 from IMB. On 28 June 2004 Ms Liu commenced to have $700 per fortnight paid by periodical debit from her account to Mr Ahmet, she says as rent/contribution to the Board Street mortgage. This was increased to $1,000 per fortnight on 4 October, and it continues until now, even though she no longer occupies Board Street and says that she may separate from Mr Ahmet.
39 On 11 January 2005, Westpac served a Statement of Claim for possession of Board Street; but Mr Ahmet remains in possession – presumably, any arrears have been paid.
40 On 13 December 2005, consent orders were made in the Family Court of Australia at Parramatta, the effect of which was that the children would have contact with Mr Guo each weekend, and half of each school holiday period.
41 As a result of all these transactions, the parties had the following real estate at the time of hearing:
· Mr Guo owned 20 Rickard Street, Auburn (worth $455,000; the Westpac mortgage on Rickard Street has been reduced to $247,874), 31 John Street, Lidcombe (worth $530,000; the Westpac mortgage on John Street has been reduced to $62,184), and 42/575 Woodville Road, Guildford (worth $222,500).
· Ms Liu owned 10/14 Swete Street, Lidcombe (worth $222,500, subject to a mortgage debt to Wizard Home Loans for $202,175), and 2A Amy Street, Regents Park (worth $307,500, subject to a mortgage debt to Perpetual Trustee for $200,200). In addition, she was apparently beneficially entitled to the Board Street property, worth about $620,000, and subject to a mortgage for $548,000 or thereabouts.
The credit of the parties
42 Both parties made extensive attacks on the credit of the other; both attacks were successful. The evidence of both is manifestly unreliable, and there is great difficulty in accepting either party where uncorroborated. I mention only some of the matters that lead to that conclusion.
43 So far as Ms Liu is concerned:
· She has at different times deposed to radically different dates of separation.
· She said that her parents provided cash that was applied to the purchase of 336A Park Road, Berala. First, she said her parents came to Australia in 1999 and provided her with $30,000 to $40,000 in cash, but thereafter did not bring any cash with them. The Park Road property was not purchased until February 2001. Ms Liu maintained that the cash was kept in pockets in her clothing in Rickard Street, notwithstanding that in July 1999 she travelled overseas, and that in August she sent a fax to Mr Guo saying she that would not return (though she later did so). I am not persuaded that she received cash from her parents as she described.
· Shortly before she instituted these proceedings, Ms Liu sold the property at 7 Michelle Court, Regents Park to her present de facto partner, Mr Ahmet, arranged for the purchase of 6 Board Street, Lidcombe in the name of Mr Ahmet, and executed the Family Agreement with Mr Ahmet on 25 February 2004 - less than a month after these proceedings were commenced - providing for that property to be used by Ms Liu and Mr Ahmed as their family home, but to be regarded as being the property of Ms Liu I the event of breakdown of their relationship. Nowhere in Ms Liu’s affidavit material was this agreement, nor any interest in Board Street, mentioned; she did not discover the agreement prior to the hearing; and in the witness box she professed no knowledge of these events and entitlements in relation to Board Street and Mitchell Court.
· Throughout the period from 31 December 2001 to date, Ms Liu has been in receipt of a Centrelink Pension, notwithstanding that in the same period she has acquired motor vehicles worth $119,000, had unexplained deposits in bank accounts, was conducting a restaurant business, and was purchasing, refinancing and selling real estate. Her Income Tax Returns for the year 2001/2002 report a taxable (annual) income of $1,978. However, in April 2002, in an application to Westpac, she stated that her income was $49,000; she told the St George Bank in the same month that her income was $3,000 per week; and she told Citibank on 23 August 2005 that her annual salary was $240,000.
44 So far as Mr Guo is concerned, I do not accept all the attacks made on his credit. It is not adverse to his credit that, though he gave evidence through a Mandarin interpreter, on occasion he corrected the translation of the interpreter into English. Nor is it adverse to his credit that his evidence was given in a considered and careful manner. However:
· Mr Guo’s declared income during the period 1999 to date is manifestly inadequate to fund the very substantial reductions he has made in the John Street and Rickard Street mortgages since separation, and the mortgage instalments on his additional post separation borrowings, let alone the lifestyle indicated by his credit card expenditure. Mr Guo produced four personal tax returns, for the financial years ending 30 June 1999, 2000, 2001 and 2002. His personal tax returns show, for 1999, a net income from HK Plastering Contractors of about $37,000; for 2000, a taxable income of $11,120; for FY2001, a taxable income of $18,423; and for FY2002, a taxable income of $16,750. As well as reducing the mortgage on John Street, which in August 1999 was $120,000, to $64,000, and the mortgage on Rickard Street, over the same period, from $280,000 to $245,000, he has made significant further borrowings, which would incur an interest-only obligation in the order of $4,780 per month or $57,360 per annum. Mr Guo’s declared income could not possibly have funded such a reduction of the mortgages and interest payments and the other outgoings which he continued to pay. He says that he has friends who support him, from whom he claims to have borrowed $83,000, but even that would be insufficient to support the expenditure he has incurred now over several years. Mr Guo did not wish to disclose the names of his “friends”, or the amounts owed to them, notwithstanding claiming a debt in his Affidavit. Mr Guo’s evidence is of an income from which it would be manifestly impossible for him to have reduced the existing Westpac mortgages, incurred and serviced additional borrowings, paid outgoings, and sustained his lifestyle.
· Mr Guo gave manifestly inadequate discovery. He has been involved in many financial transactions, yet produced no documents relevant to most - including the purchase and sale of the Dally Street property, the purchase of the property at Guildford, and the refinancing with ING of the loan on Guildford. He failed to produce the mortgage statements in respect of the Rickard Street and John Street loans, until ultimately only the two latest monthly statements were produced, although he was able to produce other historical bank statements.
The divisible pool of property
45 The exercise of the identification and valuation of the property of the parties is undertaken typically, though not invariably, as at the date of trial [see Parker v Parker (1993) 16 Fam LR 863; (1993) DFC ¶95-139; Wells v Wells (1977) 29 FLR 383; (1977) 4 Fam LR 57; (1977) FLC ¶90-285], though sometimes as at the date of separation [Cozanitis v Cozanitis (1979) 34 FLR 523n; (1978) 4 Fam LR 709; (1979) FLC ¶90-643]. The starting point is that ordinarily property is valued as at the date of trial [Williams & Williams (1984) 9 Fam LR 798; (1984) FLC ¶91-541; Hauff & Hauff (1986) 10 Fam LR 1076; (1986) FLC ¶91-747]. The primary reason for this is that the jurisdiction under s 20 is to adjust interests with respect to “the property of the parties to the relationship or either of them” and speaks from the date at which the jurisdiction is exercised, so that what is in issue is the property of the parties and each of them at the date of trial. Establishing the divisible pool at any other date may lead to failure to have regard to relevant assets available for division, or to the bringing into account of property no longer available [Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11]. Thus in Woodland & Todd (2005) 33 Fam LR 177; (2005) FLC ¶93-217; [2005] FamCA 161, in which the property of the parties – which had been worth $873,000 when the husband and wife divided it between them in 1997 under an informal agreement which did not deprive the court of jurisdiction - had increased in value to $2.5 million when the matter came to trial years later, the Full Court of the Family Court held that the primary judge had erred in treating the case as concerning an asset pool as at the date of the informal agreement in 1997, and was required to address an asset pool that existed at the time of the hearing, not at the time of the prior agreement.
46 However, although usually the preferable approach is to value property as at the date of trial, giving where appropriate separate and special consideration to contributions to value made between separation and trial, nonetheless the ultimate task of evaluating the respective contributions of the parties may sometimes be facilitated by adopting the date of separation for identifying and valuing the property, particularly when there have not been ongoing contributions by one party which have benefited the other since separation. Thus the Full Court of the Family Court has said (in respect of proceedings under Family Law Act, s 79, which for present purposes are akin to proceedings under Property (Relationships) Act, s 20) that although ordinarily the parties’ property is to be valued at the date of trial, in a particular case there may be reasons to justify another date, which might be the date of separation [Omacini & Omacini (2005) 33 Fam LR 134; (2005) FLC ¶93-218; [2005] FamCA 195].
47 In this case, while a reasonable picture can be formed of the financial position of the parties at about the date of separation, what has happened since is clouded in mystery and confusion. Both parties have separately engaged in extensive financial and property transactions since separation. The evidence of both parties in respect of those transactions is unreliable. I cannot accept that either has fully disclosed the position. Mr Guo contends that there should be substantial “add-backs” to the pool of property to reflect benefits received post-separation by Ms Liu; she points to matters which might be added-back against Mr Guo but submits on balance that there should be no add-backs. He says that Ms Liu could only have funded her property acquisitions and lifestyle from the income of the restaurant business; she says he could only have funded his acquisitions and lifestyle by selling the handbags. In respect of some of the transactions, which have allegedly been funded by “parents” or “friends”, further difficulties arise as to whether the associated debt should be included, where the evidence of the debt is dubious. The extent of the add-backs required fully to adjust the present pool of property to account for assets used or withdrawn and benefits received by each since separation is such that the adjustments potentially overwhelm the pool. In this case, it would risk great injustice to begin from the present property of the parties without making adjustments for transactions which have resulted in one party withdrawing assets from the pool for the benefit of that party alone; but there is also considerable risk that to do so would operate unfairly against one party or the other, in the light of the potential extent of the adjustments required, the likelihood that the court has not been told the entirety of the financial position of either party, and the difficulty in ascertaining precisely what adjustments are appropriate.
48 It is now six years since the parties separated. Since separation, the parties have conducted their financial affairs separately, and those dealings should be to their separate accounts. Although there are significant cross-contributions in the post-separation period in respect of the provision and use of accommodation and the payment of mortgage reductions on the one hand, and the care and support of the children on the other, for which allowance must be made in the overall evaluation of the contributions, I have concluded that in this case the least risk of injustice is involved in using the property which the parties had at separation as the starting point, but at the value which is now has: in other words, the position in which the parties would now have been, had they retained the assets which they had at separation. To the extent that their separate dealings have enhanced or diminished those assets, that will be to the account of the party who had the relevant asset.
49 The competing positions of the parties, and my conclusions, as to the pool of property at the date of separation, are set out in the following. My reasons for the conclusions on the disputed items follow.
20 Rickard Street, Auburn 31 John Street, Lidcombe HK Plasterboard Fujian Chinese Restaurant Toyota Motor Vehicle Audi Motor Vehicle Ford Econovan Furniture fittings & effects Furniture fittings & effects Debt from Plaintiff to Deft Handbag stock at Guilford TOTAL
Auburn mortgage Lidcombe mortgage Debt from Plaintiff to Deft Monies owing to Li Wen Yu TOTAL NET DIVISIBLE PROPERTY
50 Mr Guo also had an unspecified interest in a superannuation fund with AXA.
51 The real estate has appreciated since separation, and the values shown are as at date of hearing; the alternative of using value as at date of separation and interest since is not open here, due to lack of acceptable evidence of value at any earlier date than the hearing. The amounts of the mortgages as at separation (late 1999) are as deposed to by Mr Guo, there being no other evidence, and Ms Liu adopts those amounts for various of her submissions.
52 Neither party submitted that any value should be attributed to HK Plasterboards.
53 Mr Guo contends that the restaurant was worth $220,000 at separation, and that he owes his brother-in-law Li Wen Yu $107,000 for his share. Ms Liu contends that it was worth not more than $50,000 at separation, but is now valueless, and she disputes that there was a debt to Li Wen Yu. I accept that when Li Wen Yu had to return to China in about March 2001, because his Application for Residency in Australia was declined, Mr Guo and he agreed that he would be repaid his share of the restaurant, and Mr Guo listed the real estate and restaurant for sale with King Kong Real Estate at Lidcombe, at $688,000; the agent’s opinion as to current reasonable selling price (including the restaurant) was $600,000 to $650,000. In cross-examination, Mr Guo said that a valuation of the restaurant was obtained at about the time it was listed for sale, valuing the restaurant at about $220,000. Such a valuation is broadly consistent with the agreement said to have been reached with Mr Li that his share in the business was $107,000. While the evidence of value is less than satisfactory, it is all that is available. It is broadly internally consistent. I conclude that the restaurant was worth $214,000, being twice the amount agreed to buy out the 50% owner, and that there is a debt of $107,000 to Li Wen Yu. If the restaurant is now worthless, that is because of the manner in which Ms Liu has conducted it post-separation. She has had the benefit of the income it has generated to date. She should be treated as having received the restaurant at its then value of $214,000.
54 As to the motor vehicles, for the Toyota and the Ford Econovan (which were retained by Mr Guo) I have adopted the values admitted by him as their values as at date of hearing; the Audi is uncontroversial. In the absence of any evidence I have adopted the values of furniture and fittings admitted by the party who retained it, which in the case of both parties was $2,000. I disregard the alleged debt between the parties, as ultimately it has no effect on their net joint estate.
55 Ms Liu gave evidence that handbags left over from the conduct of her businesses were stored in the garage at Rickard Street. Mr Guo says that he helped Ms Liu put those handbags there. They were still in the garage, Ms Liu says, when she came back from overseas in about November 1999. Although it is not entirely clear, Mr Guo says either that he has relocated them to his warehouse in Guilford, or that they are still in Rickard Street; in either case they are and have for some time been under his control. The Plaintiff gave evidence as to the value she ascribed to the handbags, being $10 each for the 3,000 open ones and $30 for the 5,000 unopened ones, a total of $180,000. Mr Guo submits that they should be returned to the Plaintiff, and the value she ascribes allocated to her in the property she receives from the division. Whether or not the handbags are to be returned to her, she has experience in the industry which equips her to express an opinion as to their value, and hers is the only such evidence. Since they have been in Mr Guo’s custody, he could have advanced an alternative valuation had he wished to do so. As I have foreshadowed, I have some reservation about his assertion that he has not disposed of them, and they will be treated as having been retained by him upon separation.
Evaluation of the contributions
56 A number of principles have been established relating to the evaluation and balancing of the respective contributions of the parties of the types referred to in s 20.
57 First, where there is a division of roles in the relationship between the homemaker and parent on one hand and the breadwinner on the other, contributions of a de facto partner as a homemaker and parent are not to be regarded as inferior in any way to the financial contributions made by the other partner [Black v Black (1991) 15 Fam LR 109; (1991) DFC ¶95-113; Evans v Marmont]. The approach endorsed by the High Court to the evaluation of contributions under the Family Law Act 1975 (Cth) in Mallet v Mallet (1984) 156 CLR 605 is applicable to the evaluation of contributions under the Property (Relationships) Act [Jones v Grech, [33]-[35] (Davies AJA)]:-
- In Mallet v Mallet (1984) 156 CLR 605 at 635-636, Wilson J, after referring to a number of judgments of the Family Court of Australia in which that Court had adopted the notion of “equality is equity” as a convenient starting point to s79(4)(b) of the Family Law Act , 1975 (Cth), went on to say:-
- "In the earliest of these cases, Rolfe [(1977) 5 Fam LR 146 at 148] ..., Evatt CJ referred to s79(4)(b), saying: '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 homemaker 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.’
- With all respect, I agree with her Honour’s exposition of the purpose of the paragraph subject to one reservation. The Act requires that the contribution of a wife as a homemaker and parent be seen as an indirect contribution to the acquisition, conservation or improvement of the property of the parties regardless of where the legal ownership resides. The contribution must be assessed, not in any merely token way, but in terms of its true worth to the building up of the assets. However, equality will be the measure, other things being equal, only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal. The quality of the contribution made by a wife as homemaker or parent may vary enormously, from the inadequate to the adequate to the exceptionally good. … Similarly, the contribution of the breadwinner may vary enormously and deserves to be evaluated in comparison with that of the other party. It follows that it cannot be said of every case where the parties reside together that equal value must be attributed to the contribution of each. That will be appropriate only to the extent that the respective contributions of the parties are each made to an equivalent degree. What the Act requires is that in considering an order that is just and equitable the court shall ‘take into account’ any contribution made by a party in the capacity of homemaker or parent. It is a wide discretion which requires the court to assess the value of that contribution in terms of what is just and equitable in all the circumstances of a particular case. There can be no fixed rule of general application.”
- The general thrust of his Honour’s exposition found support in the observations of other members of the Court: Mason J at p623-p625, Deane J at p639-p641 and Dawson J at p645-p646. One point that their Honours made in relation to matrimonial relationships was that the relationship ordinarily involves “a practical union of both lives and property” and that the acquisition of assets, such as a matrimonial home, can be seen as representing “the fruits of a totality of efforts of wage earning, homemaking and mutual support” (per Deane J at p640-p641). At p625, Mason J pointed out that there may be an equality of contribution if “the efforts of the wife in her role were the equal of the husband in his”. However, the facts of the particular case must always be examined. The passage from the reasons of Wilson J set out above shows how this examination may be made.
- The same general considerations apply to a de facto relationship, for that is a relationship of living together as husband and wife on a bona fide domestic basis. Such a relationship also ordinarily involves a practical union of lives and property. The two factors specified in s 20(1), financial and non-financial contributions and contributions made in the capacity of homemaker or parent, reflect the considerations to which their Honours gave weight in Mallet v Mallet .
58 It is to be observed that, insofar as it was said in Mallet that the Family Law Act requires that the contribution of a wife as homemaker and parent be seen as an indirect contribution to the acquisition, conservation, or improvement of the property of the parties, that is no longer necessary since the 1983 amendments to the Family Law Act; nor has it ever been necessary for the purposes of Property (Relationships) Act, s 20(1)(b), which does not require that the contributions there referred to be contributions to the acquisition, conservation, or improvement of property, as the 1983 amendments to the Family Law Act, which require domestic contributions to be taken into account whether or not they are traceable into property, have been reflected in the Property (Relationships) Act from its inception.
59 Secondly, despite earlier controversy [see Powell J in Roy v Sturgeon (1986) 11 NSWLR 454, 464; (1986) DFC ¶95-031 at 75,366], it is now established that contributions made before cohabitation commences are relevant contributions for the purposes of s 20 [McDonald v Stelzer (2000) 27 Fam LR 304; (2001) DFC ¶95-233; [2000] NSWCA 302, [28]-[32] (Sheller JA), [34]-[36], [39] (Priestley JA); Jones v Grech, [24] (Davies AJA), [81]-[82] (Ipp AJA); Nguyen v Scheiff (2002) 29 Fam LR 177], as are contributions made after separation and before trial (in particular contributions made by one of the parties to the welfare of a child by caring for and supporting that child post-separation) [Foster v Evans (1997) DFC ¶95-193, 77,681; see also Jones v Grech, [79] (Ipp AJA)]. Mr Roberts submitted that contributions under Section 20(1)(b) - being “contributions made in the capacity of homemaker or parent to the welfare of the family constituted by the parties and the children of the parties could not extend beyond the time that the parties were living together; but Foster v Evans holds to the contrary; the reference to “family” in s 20(1)(b) does not require that it remain at the time of the relevant contribution an intact family as distinct from a separated one. This means that, contrary to the submissions advanced on behalf of Mr Guo, post-separation contributions to the welfare of the children are relevant considerations.
60 Thirdly, in proceedings under s 20, the court is not required to undertake a reductionist process analogous to the taking of partnership accounts by examining every alleged “contribution” of the kinds described in the section with a view to putting a monetary value on each in order to reach an accounting balance one way or the other, then to be 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 [Davey v Lee (1990) 13 Fam LR 688; (1990) DFC ¶95-084 (McLelland J)].
61 Fourthly, where one party supports, economically or emotionally, children of the other party, which the other would otherwise have had to support on his or her own, that is a significant contribution by the first partner; whereas, support of those children by the second partner, whose obligation it was to support them in any event, is not a relevant contribution [Watt v Watt (1988) DFC ¶95-060; cf Robb and Robb (1995) FLC ¶92-555]. Similar considerations have significance in this case, in respect of the role of Mr Guo’s mother in caring for the children; the full-time care provided by her is a significant contribution on behalf of Mr Guo, which relieved Mr Guo and Ms Liu of the responsibility of childcare and freed them for their other, income-generating pursuits.
62 Fifthly, the legislation does not dictate the employment of any particular method in the formulation of an appropriate order for the adjustment under s 20 of property interests, and it is not desirable to attempt to formulate principles or guidelines designed to constrain judicial discretion within a predetermined framework [cf Norbis v Norbis (1986) 161 CLR 513; (1986) 10 Fam LR 819; (1986) FLC ¶91-712 (Wilson and Dawson JJ). Although, in the majority of cases, the global approach is likely to be more convenient than an asset-by-asset approach, the application of the asset-by-asset approach does not of itself amount to an error of law (Mason and Deane JJ). In Norbis, Mason and Deane JJ cited with approval observations of Nygh J in G & G (1984) FLC ¶91-582, to the effect that (at 79,697) it cannot be required of the Family Court that it assesses contributions with mathematical precision with respect to each item, and (at 79,697) that while the Family Court was divided between those who favoured the so-called global approach and those who seek to achieve some degree of precision, both approaches were legitimate provided that those who take the global approach heed the warning that the origin and nature of the different assets ought to be considered, and that those who favour the more precise approach do not mistake the trees for the forest and add up their individual items without standing back at the end to review the overall result. Some contributions are readily capable of evaluation in monetary terms. Others - such as those made in the capacity of homemaker and parent - are not. Because some assets depreciate in value, and because parties incur living expenses, the pool of property available for division will usually be less than the sum of the financial contributions, and more so when allowance is made for the value of the non-financial contributions. This means that the type of accounting approach which McLelland J discouraged in Davey v Lee runs the risk that, by focussing on the valuing of individual contributions item by item, not only will the overall picture be lost, but serious injustice can be done, particularly by devaluing those contributions which are not readily capable of evaluation in monetary terms. On the other hand, the “fruits of a totality of efforts of wage earning, homemaking and mutual support” referred to by Deane J in Mallet do not usually encompass property which each party had before the relationship, or which either party introduced, not by way of their mutual efforts at wage earning, homemaking and mutual support, but independently through gift or inheritance from third parties. In Lenehan v Lenehan (1987) 11 Fam LR 615; (1987) FLC ¶91-814, the Full Court of the Family Court (Fogarty, Maxwell and Gun JJ) said:-
The judgments of the High Court in Norbis v. Norbis (1986) FLC ¶91-712 demonstrate the very wide discretion which a trial Judge has in the approach that he may adopt under sec. 79. In particular the judgments in that case discuss the ``global'' and the ``asset by asset'' approaches, and demonstrate that this is largely a matter for the trial Judge to determine in the exercise of his discretion. However Norbis' case is not a carte blanche to adopt either view irrespective of the circumstances of the individual case. There are cases where one approach or the other is clearly appropriate and a failure by the trial Judge to adopt that approach may demonstrate error. We think this is one such case. His Honour's initial approach of treating the parties' contributions to the home as separate from their contributions to the other (largely business) assets was, we think, a proper approach in the circumstances.
63 As Lenehan shows, the principal indicator for an “asset-by-asset” analysis is discrepant identifiable contributions of the parties to different assets: in that case, the proportionate contribution of the parties to the acquisition conservation and improvement of the matrimonial home on the one hand, and to the business assets on the other, were quite different. Such an approach will often be contra-indicated where there has been a pooling of income. Moreover, an asset-by asset approach almost always carries the risk of undervaluing domestic contributions that are not reflected in any particular asset. In the present case, with the unsatisfactory state of the evidence not permitting contributions to be traced through the various assets, or discrepant contributions to different assets to be identified, a global holistic assessment is the only practical approach.
64 Much of the submissions on behalf of Mr Guo in respect of contributions focus erroneously on what he paid for during the relationship. Contributions are assessed according to what the parties contribute to the relationship, not what they pay out. Who during the relationship provided the funds for a deposit or renovations is beside the point if those funds were generated from the joint efforts of the parties during the relationship. The circumstance that one partner pays for all expenditure does not mean that that party alone contributed to the assets acquired, because he or she may well have been enabled to make those payments by income earned by, or domestic support provided by, the other. Similarly, loans between the partners are usually not a contribution of significance, because they have no ultimate effect on the joint position of the parties to the relationship. Broadly speaking, the contributions of the parties can be viewed in the following categories:
· Property introduced at the outset;
· Income and accretions to the pool of property generated, and domestic contributions made, during the relationship;
· Income and accretions generated, and domestic contributions made, after separation.
65 The initial contributions of Ms Liu were her handbag business (which probably produced an income until 1999, when it was closed), an Audi motor vehicle (ultimately worth $5,000), and some items of personalty. The initial contributions of Mr Guo were a motor vehicle; his plasterboard business HK Plasterboards (which also produced an income, but has no capital value); moneys standing to his credit with Westpac in the sum of $8,841; and moneys standing to the credit of HK Plasterboard Contractors in the sum of $10,437.
66 I do not accept Mr Guo’s claim to have introduced more than $18,000 by way of accumulated savings. He maintained that at the commencement of cohabitation he had a substantial savings with banks totalling $150,000 or more. Bank statements produced by him confirm that he had about $26,000 in two Westpac accounts as at 31 October 1995, and about $18,000 as at 27 March 1996. There is no documentary evidence to support his claim to have had funds in other accounts, and when the Rickard Street property was purchased in 1997 for $188,000, $150,000 was borrowed on mortgage loan. If Mr Guo had had anything like the savings he claimed to have had, this would have been unnecessary. His explanations [see esp T161-163, 178-179] were entirely implausible. In cross-examination, he could not remember whether he had an account with the St George Bank, in which he had claimed in his affidavit to have had a credit balance of between $80,000 and $90,000 at the commencement of cohabitation.
67 During the relationship, each partner generated an income from his or her business. Mr Guo worked in his plasterboard business; and Ms Liu did so in her handbag businesses, at least until they closed in about 1999. There is no acceptable evidence of what income either produced. All I can conclude is that both worked in their businesses and generated income for the family. The handbag business produced the stock worth $180,000, which remains among the divisible assets; however, the evidence does not permit a conclusion that its assets were of that order in 1996: while it then had some stock, I am unable to find how much. The plasterboard business has no residual value.
68 Mrs Guo was pregnant for 36 months of a relatively short cohabitation; she returned to work very promptly after the birth of each child. Mr Guo’s mother, and others, cared for the children in Australia before they went to live with Mr Guo’s mother in China. Ms Liu says that she was mainly responsible for household matters, including cooking. Mr Guo said that he assisted with household duties. I accept that as between them, Ms Liu did more of the domestic work, whereas Mr Guo used his trade skills to make direct non financial contributions to the acquisition, conservation and improvement of the property of the parties, by undertaking renovations and building works to the premises occupied by Ms Liu’s business in Haymarket and other places; to the property at 20 Rickard Street, Auburn; and to the property in John Street, with the assistance of his brother in law, to convert it into the restaurant. Both partners also worked in the restaurant business, Mr Guo more so than Ms Liu.
69 Often, where domestic partners co-operate to support each other and generate wealth through their different efforts in different fields, a conclusion that they have contributed equally to the fruits of their joint endeavour is warranted and appropriate. Although more detailed and reliable evidence might have led to a different result here, on the unsatisfactory state of the evidence, but for the matters to which I shall shortly come, there is no reason for thinking that either partner’s contributions during the relationship exceeded those of the other.
70 The first and very significant exception is that, whereas it is often said that the domestic contributions of one partner indirectly contribute to the earning of income by the other, by “freeing” the income-earning partner to work, here, to the extent that Ms Liu earned income, she was also freed to do so by the contributions of Mr Guo’s mother in caring for the children. Notwithstanding that Ms Liu bore four children, the uncontradicted evidence is that within two or three weeks of the birth of the first three children, she had resumed her employment and that Mr Guo’s mother, or other carers organised by Mr Guo, were engaged to look after the children. The children spent most of their lives during the period of cohabitation with Mr Guo’s mother in China.
71 In effect, the accumulation of assets during this relationship was the result of the joint efforts not just of Mr Guo and Ms Liu, but of Mr Guo’s mother also. Both partners were enabled to work and earn income by reason of Mrs Guo’s care for their children. That care extended not just to babysitting, but to full-time care in her own home in China, which had the additional consequence that the care and raising of the children was not a financial cost. Such a contribution by the parent of one of the partners is properly to be seen as an indirect non-financial contribution “on behalf of” that partner to the acquisition of property or resources, within s 20(1)(a). In my judgment it counts heavily in favour of Mr Guo.
72 The second exception, though I give it much less weight, is that the circumstance that the handbag businesses were closed, whereas HK Plasterboards was maintained, suggests that the latter was more significant in the generation of income; and the non-financial contributions of Mr Guo to renovations also tilt the balance slightly in his favour.
73 Although Mr Guo says that between 1996 and 1999 his mother gave the parties $50,000, I am not persuaded. She may well have provided a much smaller sum, but not such as to bear significantly on the balance of contributions.
74 Nonetheless the matters to which I have referred – most particularly the role of Mr Guo’s mother, results in the contributions made by him and on his behalf during the relationship significantly outweighing those of Ms Liu; I would assess them at 62.5:37.5 in favour of Mr Guo.
75 It is then necessary to consider the position since separation. As I am using the property which the parties had at separation as the starting point, it is only necessary to consider those contributions by which one party has effectively benefited the other, rather than simply enhanced his or her own position.
76 Essentially:-
· Ms Liu has had substantially the whole responsibility since separation for the care of four children. This is a significant parenting contribution, and I accept that she has received little assistance or, until about 2003, even relief, from Mr Guo, though he has been significantly more involved since about then. Mr Guo has paid practically no Child Support for the children. The rate of child support payable in respect of four children at the maximum child support rate is about $45,000 per annum, which for six years amounts to $270,000. But even payment of Child Support does not wholly compensate a residential parent for the costs and disadvantages incurred.
· However, Ms Liu has been permitted to enjoy use and occupation, first of Rickard Street, and then of John Street – including the restaurant business - free of any rent or other outgoings. That is of limited significance, because Mr Guo could have enjoyed the use and benefit of the other property, had he wished to do so, but he has paid all outgoings in respect of Rickard Street and John Street - the rates, electricity and other expenses associated with the properties, including the mortgage instalments - without any assistance from Ms Liu. Until November 2001, his payments in respect of John Street amounted to approximately $78,374.
· In addition, Mr Guo has made significant reductions in the mortgages, relevantly in respect of the John Street property that Ms Liu effectively retained, without any assistance from Ms Liu. He reduced it by $60,000, which will directly benefit Ms Liu, since she will retain John Street subject to the reduced mortgage.
· Ms Liu has had the benefit of the income from the restaurant. However, this is effectively accounted for by treating her as having received the restaurant at valuation upon separation. In those circumstances I do not see a requirement to make further allowance for any indirect contribution by Mr Guo to the acquisition of real estate post-separation by Ms Liu.
77 In my assessment, Ms Liu’s financially unsupported care for four children for six years since separation calls for an adjustment in her favour, though its magnitude is reduced by the offsetting contributions of Mr Liu in providing free accommodation and particularly in reducing the John Street mortgage. The balance of post-separation contributions between the parties favours Ms Liu.
78 In my assessment, in the context of this case, there was no sufficient significance or discrepancy in the parties’ initial contributions to require reflection in the ultimate division. The contributions during the relationship favour Mr Guo, mainly because of his mother’s role in the care of the children, but slightly because I think his income and non-financial contributions were a little more significant than Ms Liu’s income and domestic contributions, in proportions 62.5:37.5. The balance of post-separation contributions between the parties favours Ms Liu, and while not extinguishing the difference, reduces it to 55:45 overall in favour of Mr Guo.
What order should be made?
79 As to the third step - the determination of what order is required in order sufficiently to recognise and compensate the applicant’s contributions - the court is concerned with what is just and equitable having regard to, and only to, the respective contributions of the parties of the type referred to in s 20, and there is no warrant for regard to other factors such as the respective means and needs of the parties (which are made relevant to equivalent applications under the Family Law Act by s 79(4)(e) of that Act, an equivalent of which is conspicuously absent from the Property (Relationships) Act, and the omission of which was deliberate, as appears from the Law Reform Commission’s report of June 1983: Report on De Facto Relationships, No 36 of 1983, to which the draft Bill was an appendix, and from which the policy underlying the legislation appears [Wallace v Stanford (1995) 37 NSWLR 1; (1995) 19 Fam LR 430; Evans v Marmont, 81].
80 Mr Guo should therefore receive 55% ($496,815), and Ms Liu 45% ($406,485), of the divisible pool. Each should otherwise retain his and her own post-separation assets and liabilities.
81 Ms Liu has retained or will retain the benefit of the restaurant ($214,000), John Street ($530,000), the Audi ($5,000), and her furniture and effects ($2,000). The only associated mortgage is the Lidcombe mortgage of $120,000 [I have taken into account its reduction post-separation in reducing the adjustment for post-separation contributions which would otherwise have been made in favour of Ms Liu]. Accordingly, she has received, or will receive, net property to the value of $631,000, which exceeds here entitlement of $406,485 by $224,515.
82 Mr Guo has retained Auburn ($455,000), the Toyota ($20,000), the Econovan ($2,300), furniture and effects ($2,000) and the handbag stock ($180,000). The associated liabilities are the Auburn mortgage ($280,000) and the debt to Li Wen Yu ($107,000). Accordingly he has received, or will receive, net property to the value of $272,300, which falls short of his entitlement by $224,515.
83 Accordingly, the adjustment required to produce a just and equitable division of property having regard to the respective contributions of the parties referred to in s 20 is a payment of $224,515, by Ms Liu to Mr Guo.
84 Having treated Ms Liu as having retained the restaurant business and the John Street property from which it is conducted, it is appropriate that she be afforded the opportunity to buy out Mr Guo’s interest for that sum; if she is unable or does not wish to do so, then he should have the option of buying her out, failing which John Street should be sold.
85 I direct the parties to bring in Short Minutes to give effect to this judgment, at which time any application in relation to costs may be made.
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