Lovegrove v Richards
[2003] VSC 465
•19 November 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 8915 of 2001
| MALCOLM JOHN LOVEGROVE | Plaintiff |
| v | |
| PAMELA FRANCES RICHARDS | First Defendant |
| KEMPSONS PTY LTD (ACN 082 532 830) | Second Defendant |
| NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) | Third Defendant |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 & 30 September, 1, 2 & 3 October 2003 | |
DATE OF JUDGMENT: | 19 November 2003 | |
CASE MAY BE CITED AS: | Lovegrove v Richards | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 465 | |
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Property Law – Parties in domestic relationship for 9 years – No children of relationship – Plaintiff and first defendant had “alter ego” company – Separated in October 2000 – Whether partition is appropriate remedy - One party contributed significantly more than the other – Whether sale of property is appropriate – Differing valuations of major asset – Property Law Act 1958 (Vic) ss 221 – 223, 275, 227, 279, 284, 285,and 291.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. A. Edmunds | Findlay Arthur Phillips |
| For the First Defendant | Mr M. S. Osborne | Fitzpatrick Teale |
HER HONOUR:
Introduction
This proceeding was commenced by writ on 24 December 2001, and the defence and counterclaim of the first defendant were filed on 22 February 2002. All issues between the plaintiff and the second and third defendants were resolved before the hearing, and need not be mentioned further. Accordingly, the first defendant is conveniently referred to as “the defendant”.
The plaintiff and the defendant are joint proprietors of a property situated at 130 Sunday Creek Road, Kilmore East (“Sunday Creek”). The principal relief sought by the plaintiff is an order that Sunday Creek be sold by public auction out of court and the proceeds of sale, after payment of selling costs and the amount owing on the mortgage, be paid to the plaintiff and the defendant in equal shares. The principal relief sought by the defendant is an order pursuant to sections 279 and 291 of Part IX of the Property Law Act 1958 (“the Act”) that the interest of the plaintiff in Sunday Creek be adjusted so that he transfer that interest to the defendant subject to the mortgage and to her indemnifying him in respect of all monies due and payable thereunder. She claims in the alternative an order under section 291 adjusting the interests of herself and the plaintiff in the property and financial resources of the parties, or an order that the plaintiff pay to her such sum in proportion to her contribution as the Court deems just and equitable.
The plaintiff also seeks specific orders in respect of a caravan and two Clydesdale horses. The defendant also seeks specific orders in respect of two motor bicycles, the Clydesdales, and certain other items.
The law
The relevant provisions of the Act are sections 221-223 and 275, 277, 279, 284, 285 and 291, which read as follows, so far as relevant:
Part IV Partition
221.Joint tenants and tenants in common compellable to make partition
Joint tenants and tenants in common of any estate of inheritance or freehold . . . shall be compellable to make partition between them of all lands tenements and hereditaments in like manner and form as coparceners are compellable to do and with the like incidents consequent upon such partition.
222. Power to Court to order sale instead of division
In an action for partition where if this Act or any corresponding previous enactment had not been passed a judgment for partition might have been made, then if it appears to the Court that by reason of the nature of the property to which the action relates or of the number of the parties interested or presumptively interested therein or of the absence or disability of some of those parties or of any other circumstance a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them the Court may if it thinks fit on the request of any of the parties interested, and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly and may give all necessary or proper consequential directions.
223. Sale on application of certain proportion of parties interested
In an action for partition where if this Act or any corresponding previous enactment had not been passed a judgment for partition might have been made, then if the party or parties interested individually or collectively to the extent of one moiety or upwards in the property to which the action relates request the Court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested the Court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and give all necessary or consequential directions.
Part IX Property of domestic partners
Division 1
275. Definitions
In this Part¾
.. .
“financial resources” includes¾
(a)a prospective claim or entitlement in respect of a scheme, fund or arrangement under which superannuation, retirement or similar benefits are provided; and
(b)property which, under a discretionary trust, may become used for the purposes of or vested in one or both of the domestic partners; and
(c)property, the alienation or disposition of which is wholly or partly under the control of one or both of the domestic partners and which is lawfully capable of being used for the purposes of one or both of the domestic partners; and
(d)any other valuable benefit;
“property” includes real and personal property and any estate or interest in real or personal property, and money, and any debt, and any cause of action for damages (including damages for personal injury), and any other thing in action and any right with respect to property.
277. Other rights of domestic partners not affected by this Part
Nothing in this Part affects any right of a domestic partner to apply for any remedy or relief under this Act or any other Act or any other law.
Division 2
279. Application for orders under this Division
(1)A domestic partner may apply to a court for an order for the adjustment of interests with respect to the property of one or both of the domestic partners.
.. .
284. Duty of court to end financial relationships
So far as is practicable a court must make orders that will end the financial relationships between the domestic partners and avoid further proceedings between them.
285. Order for adjustment
(1)A court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to—
(a)the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners; and
(b)the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the domestic partners to the welfare of the other domestic partner . . .
291. Powers of a court
(1)A court, in exercising its powers under Division 2, may do any one or more of the following—
(a)order the transfer of property;
(b)order the sale of property and the distribution of the proceeds of sale in any proportions that the court thinks fit;
(c)order that any necessary deed or instrument be executed and that documents of title be produced or other things be done that are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(d)order payment of a lump sum, whether in one amount or by instalments;
(e)order that payment of any sum ordered to be paid be wholly or partly secured in any manner that the court directs;
(f)appoint or remove trustees;
(g)make an order or grant an injunction—
(i)for the protection of or otherwise relating to the property of one or both of the parties to an application; or
(ii)to aid enforcement of any other order made in respect of an application; or both;
(h)impose terms and conditions;
(i)make an order by consent;
(j)make any other order or grant any other injunction to do justice.
(2)A court may, in relation to an application under Division 2—
(a)make any order or grant any remedy or relief which it is empowered to make or grant under this or any other Act or any other law; and
(b)make any order or grant any remedy or relief under Division 2 in addition to or in conjunction with making any other order or granting any other remedy or relief which it is empowered to make or grant under this Act or any other Act or any other law.
(3)This section does not take away any other power of the court under this or any other Act or any other law.
It is common ground that from August 1991 to October 2000 the parties lived in a “domestic relationship” as defined in section 275 of the Act, and that the prerequisites for the making of an order under Division 2 of Part IX of the Act are satisfied. The question before the Court is what order should be made. I note that there were no children of the domestic relationship, and it does not appear that either party has a child or children of any other relationship.
Mr Edmunds, for the plaintiff, relied on the provisions cited above from Part IV of the Act and the decision of the High Court in Bray v Bray[1] as authority for his submission that, as his client sought a sale of Sunday Creek and the defendant opposed such a sale, his client was as a matter of right entitled to an order for sale, a right which was preserved by section 277. However, sections 222 and 223 and the decision in Bray v Bray only apply “in an action for partition”. A partition is a method whereby joint possession is disunited, and its effect is to make each former co-tenant separate owner of a specific portion of the land, and thus to terminate the co-ownership. Instead of holding an undivided share in the whole, each person will hold a divided share in severalty. [2] There is no claim for a partition in this proceeding, and there has been no suggestion that either party seeks a partition. Accordingly, that submission fails, and this matter falls to be considered solely under the provisions of Part IX of the Act.
[1](1926) 38 CLR 542
[2]Cheshire’s Modern Real Property, twelfth edition, at 217
As to the approach to be followed in considering an application under those provisions, both counsel referred me to the recent decision of Nettle J in Robertson v Austin[3] which, with respect, I would adopt. His Honour in that case [4] , for reasons which he set out, adopted the principles which were enunciated in the following terms by Vincent J in Conn v Martusevicus[5] :
[3][2003] VSC 80
[4]at [36]
[5](1991) V ConvR 54-413 at 64,942
. . . the court is vested with a wide discretion and must attempt to arrive at a result which is just and equitable in the circumstances. Accordingly, it must have regard to the whole of the relevant context within which an application is made.
Any assessment of the significance and value of the assistance and support provided by de facto partners [6] which did not place them within a framework provided by all of the circumstances of the relationship, would introduce a measure of unreality into the process and a degree of tension would arise between the adoption of a restrictive approach to the factors to be taken into account, and the duty of the Court to attempt to achieve equity between the partners.
Whilst s 285 imposes an obligation upon the Court to have regard to a number of particular kinds of contributions which may have been made, the legislature has not attempted to confine narrowly the concept of ‘contribution’ and there is, in my opinion, no good reason for the courts to do so. The fundamental limitations to the scope of the section in this context are contained in the expression ‘de facto partner’ which makes it clear that any such contribution to be relevant must have been made by a person who fell within that description at the time of its making and possesses a sufficient nexus with the relationship.
. . .it is, in my opinion, reasonable within its ambit of operation to adopt a similar approach to that followed by the Courts with respect to the New South Wales legislation according to which a judge:
. . . should proceed first, to identify, and value the assets of the parties;
second, to determine whether any, and if so, what contributions of the type contemplated by [the legislation] have been made by each partner;
third, to determine whether, in the circumstances, the contributions of the applicant have already been sufficiently recognised and compensated for;
and finally, to determine what order is called for in order that the applicant’s contributions be sufficiently recognised and compensated for.” [7]
[6]The decision predates the change from “de facto partner” to “domestic partner” in the Act effected by the Statute Law Amendment (Relationships) Act 2001
[7]D v McA (1986) Fam LR 214 at 228 per Powell J
I have, for convenience of reference, set out these steps separately.
The evidence
Save for the two valuers who gave evidence as their valuations of Sunday Creek, a matter which is considered at [55] and following below, the only witnesses were the plaintiff and the defendant. There were major and minor improbabilities in the evidence of each, and major and minor conflicts between them.
The plaintiff gave evidence of payments which he said that he or the company which he controlled [8] had made. He had no documentary evidence of those payments. He stated that his personal papers were in a filing cabinet at Sunday Creek, that he had not removed them when he removed his other personal property in May 2001, and that they were being retained at Sunday Creek by the defendant to deprive him of evidence of his contribution to the improvements. This was denied by the defendant. He agreed that documents of the company would be with the liquidator, but indicated that he had made no attempt to obtain any such documents for the purposes of this proceeding. In cross-examination he said that it was possible that the defendant had not discovered all documents under her control. However, he agreed that that would make sense only if there was no other way for him to get copies of those documents. He agreed that he had not sought to obtain copies of bank statements. He could not remember the names of the suppliers with whom he had dealt, so as to be able to obtain copy invoices from them, although he claimed to remember the amounts which he had paid. He did not have copies of his personal tax returns for the years 1996 to 2002, although he said that they had all been lodged with the Australian Taxation Office. It is to be assumed that if any documents evidencing the payments in question were in existence, the plaintiff would have taken steps to obtain them. There were a number of inconsistencies in the evidence of the plaintiff, as to which see for example [24], [25] and [36] below. On 15 January 2002 he swore an affidavit in the course of an application to the Court for the sale of Sunday Creek. In that affidavit he deposed that in 2000 he had paid $35,000 of his own funds towards repayment of the mortgage on Sunday Creek. He agreed in cross-examination that that statement was incorrect.
[8]as to which see [13] below
The defendant’s admission that in August 2001 she wrote a signature purporting to be that of the plaintiff on the contract for the sale of the property at Melbourne Street, Kilmore [9] , of which the parties were joint proprietors, significantly affects her credibility. Her explanation appears in the transcript in the following terms:
[9]see [21] and [39] below
In examination in chief:
I spoke to the agent to understand why he was on the title still and they said - - - He being who? --- Mr Lovegrove.
.. .
After you'd had the discussion with the agent, what did you do? --- Well I signed it [i.e. ”I wrote on the contract of sale a signature purporting to be that of the plaintiff”] because I was under the understanding he wasn't in it.
He being? --- Mr Lovegrove.
Why did you have that understanding? --- Because he'd signed the transfer form and the solicitor, to my understanding, had submitted it.
In cross-examination:
Is it your evidence that you say you obtained some documents from a solicitor, in relation to this transfer that you say you presented to him? --- I phoned the Department for the Land Transfer Office, and asked what I needed to obtain, to have this done. They said if I went to a solicitor's office, they would be able to give me the form. So I went to a - called into a solicitor in Kilmore and collected those forms.
Did those solicitors complete any details on the forms, or were they done in your handwriting? --- No. The writing with our addresses, and everything, was done by me. That's what they told me to - - -
[after discussion on other matters and production of the transfer]
See the document has got no description, whatsoever, of the land on it? --- Yes.
The consideration refers to breakdown of marriage relationship? --- That is the wording that they told me to write on, when I phoned the Land Transfer Office.
I would suggest to you, Ms Richards, that the signature on that document was not put on by Mr Lovegrove. That, like the signature on the contract of sale that you signed, you have also signed his signature to this document? --- That is not correct.
There's no party witnessing the signature of this either, was there? --- No, there was just Mr Lovegrove and I perhaps.
In the presence of. I put it to you that there was no agreement that Mr Lovegrove would transfer to you the interest in the land at Kilmore - the 70 Melbourne Road, Kilmore land? --- He agreed to sign the document when I asked him.
Given that you say he signed it, why wasn’t it registered? --- It was my understanding it was.
It's got no description of land so we don't even know what land it's referring to. Are you calling the solicitors that you gave that document to, to say, "We have received that document but for some reason we didn't proceed to register it"? --- No, after the problem with his - they said they didn't have it and then it - I got it back in the post.
Did you receive any letters in relation to this transfer of land? --- No. Just the transfer of land in the post without any covering letter explaining why it was sent back? --- Yes. Yes, that’s what happened.
You're saying the solicitors sent you this document back without any covering letter? --- Well, I spoke to the solicitors - they said they never got it. I remember giving it to them after Mr Lovegrove had signed it, and it was ages after I got it back.
Were there any letters that you sent to the solicitors seeking confirmation that the property be transferred to you? --- No.
No documents whatsoever in relation to this engagement in this dealing? --- No.
The document that you got back, how did it come back? --- In an envelope.
Can you recall what sort of envelope it was? --- It was just a large envelope with them in it.
Can you recall how you delivered it to the solicitors? --- Like this.
In an envelope? Did you post it? --- No, just gave it to them.
. . .
Did that particular envelope you received have a stamp of the solicitor's office on it? --- I can't remember.
And a postage stamp? --- It had a postage stamp on it but I can't remember.
In re-examination:
You were asked some questions about the transfer from Mr Lovegrove to you of his interest in the Melbourne Street property that you say Mr Lovegrove signed at your request in about January 2001. You said it was your belief that that had been registered. When did you become aware that that wasn't the case, that the transfer from Mr Lovegrove to you hadn't been registered? --- When the bank phoned me.
About when was that? --- Just a couple of days prior to the settlement.
Of the sale to the Smiths? --- Yes.
Whether or not Mr Lovegrove had signed the transfer, is a matter as to which it is not necessary for me to make any finding. The defendant was an experienced businesswoman. By that time Melbourne Street was, so far as the evidence extends, the fourth property which she had purchased, and the third which she had sold, and she could not be said to have been entirely ignorant of normal procedure on dealings with land. In any case, her explanation is unconvincing, and even if true, does not in any way justify her action in writing on the contract a signature purporting to be that of the plaintiff. I make no further comment on that behaviour.
Each party was extensively cross-examined. Having heard their evidence, I do not regard either party as a wholly reliable witness. Where there is improbability or conflict, I have found it appropriate for the most part to adopt only that evidence which is supported by convincing documentation.
Findings of fact
The companies
Each of the parties controlled a company which conducted a business. The plaintiff, at the time of the commencement of the domestic relationship, controlled Arista Service and Maintenance Pty Ltd (“Arista”), concerned with dry cleaning and air conditioning equipment, from a period before the commencement of the domestic relationship. In January 1995 the defendant became a director of Arista and a guarantor of its overdraft and was allotted one share. At no stage was she at all involved with the operations of Arista. She received no salary or distributions from Arista. Arista was the trustee of the plaintiff’s family trust, of which the defendant is not a beneficiary. The defendant resigned as a director in November 2000. Arista began to have financial difficulties in the 1990s, went into administration on 9 October 2001 and was deregistered on 5 August 2003.
On 29 June 1993 the defendant caused to be incorporated PR Conference Consultants Pty Ltd (“PR”) which organises conferences and exhibitions and manages a commercial association, Self Storage Association of Australasia Pty Ltd. The plaintiff became a director of PR and was allotted six shares. He resigned as a director in January 2001 but still retains the shares. At no stage was he at all involved with the operations of PR. He received no salary or distributions from PR.
It is clear that each of those companies was wholly controlled by the relevant party, so as to be, in terms of the decision of the Full Court of the Family Court in the case of In the Marriage of Foda [10] the alter ego of that party, with the effect that assets of that company are to be treated as the property of the party controlling it. Both parties proceeded at the hearing on that basis. As Morris J said of an analogous fact situation in Findlay v Besley[11] , “It would be anomalous if an asset in a family trust, controlled by a party, was to be disregarded having regard to the definition of ‘financial resources’ in the Act.”
[10](1997) 21 Fam LR 653
[11][2003] VSC 247 at [70]
The financial arrangements of the parties
The essential submission of counsel for the plaintiff was that the parties conducted their relationship on a general basis of equality, both as to financial and non-financial contributions, and accordingly that at the end of their relationship a result based on equality would be just and equitable, in terms of section 285 of the Act. The principal oral evidence on which that submission relies derives from the answers to two questions put in examination in chief and reads as follows in the transcript: :
Did you, throughout that relationship, treat the nature of the relationship anything other than equal? --- No, I always treated as equal.
Did you regard Ms Richards as ever treating the nature of the relationship anything other than as equal? --- I always considered her to treat as equal also.
No objection was made to those questions, but it is clear that the words were effectively put in the mouth of the plaintiff by his counsel. In his witness statement the plaintiff says that overall the parties would have contributed approximately equally to their joint living expenses.
There are two passages from the defendant’s evidence in cross-examination which are relevant to that issue. The first passage reads:
When you started living together with Mr Lovegrove, is it fair to say that however the rental and the bills were adjusted between the two of you that you started off on the basis of trying to share those costs equally? --- Yes. It started off that way.
The second passage, in the context of the payment for the improvements at Wallan and Sunday Creek, reads:
I put it to you, that the reason that there wasn't a finite agreement in relation to a dollar for dollar adjustment for everything that was spent, was because there was an understanding between both of you, that you and your companies, respectively, would contribute, effectively, equally, towards this joint venture? --- That was never discussed.
The submission thus calls for an examination, in terms of section 285(1) of the Act, of the evidence as to the financial and non-financial contributions to the property or financial resources of the parties made by each party (including their respective companies) over the time during which they lived in that relationship.
At the outset of the domestic relationship, the plaintiff had $37,000 on term deposit, a boat, tools, furniture, personal effects and superannuation said to be worth about $25,000. The defendant had an equity of $8,000 in a unit at Vermont [12] , a car, a caravan, furniture and some superannuation. While the total value of the plaintiff’s assets appears to slightly exceed the total value of the defendant’s assets, such values as are given, save for the term deposit and the unit, are estimates, and in any case the difference would not appear to be such as to be significant.
[12]see [21] below
Financial contributions
The evidence as to the financial contributions of each party can be conveniently considered for the most part in the context of the periods during which the parties resided at particular addresses. However, it should be noted that the evidence as to payment for social outings and holidays throughout the whole period of the domestic relationship is conflicting, inconclusive and not supported by documents. I am not in a position to take into account expenditure on those items, and I have not done so.
For some months before the commencement of the relationship the defendant resided in a unit which she owned at 4/6 Short Street Vermont (“Vermont”). The plaintiff’s address at that time is not in evidence and presumably is not relevant to this matter. The relevant periods during the domestic relationship are:
q The Josephine Avenue period, from August 1991 to February 1995, at 5 Josephine Avenue Mount Waverley (“Josephine Avenue”);
q The Wallan period, from February 1995 to August 1999, at 1935 Old Sydney Road Wallan (“Wallan”);
q The Lancefield period, from August 1999 to June 2000;
q The Sunday Creek period, from June 2000 to October 2000, at Sunday Creek.
The period after separation from October 2000 to about February 2002, also has relevance. For a short period after the end of the relationship, the defendant resided at a property at 70 Melbourne Street Kilmore (“Melbourne Street”), [13] which had been purchased as an investment, while the plaintiff remained at Sunday Creek. However, since November 2000 the defendant has been the sole occupier of Sunday Creek, apart from occasional visits by the plaintiff either to work on his bobcat, or when the defendant has been away.
[13]see [38] below
Vermont
The defendant had purchased Vermont some months before the commencement of the relationship, borrowing $70,000 on first mortgage from a lender which subsequently merged with the ANZ Bank. When she and the plaintiff began to reside at Josephine Avenue, Vermont was leased.
The Josephine Avenue period
Josephine Avenue was leased by the plaintiff at a rent of $760 per month which was paid by him. The defendant or PR paid half that amount throughout the Josephine Avenue period, save that from January to August 1994, a period when PR was conducting its business from Josephine Avenue, the defendant or PR paid the whole of the rent. The plaintiff denies that PR paid the whole of the rent in that period, but the defendant’s evidence is to an extent supported by documentation and I accept it. In August 1994 PR moved to an office in Balwyn.
The defendant had previously opened an account with the Members Australia credit union, which came to be referred to as the “bills account”. The bills account continued to be in the sole name and under the control of the defendant. The plaintiff did not have a cheque book. Throughout this period, each party paid $400 per month into the bills account. The rent received by the defendant under the lease of Vermont, being some $470 per month after deduction of agent’s fees and the like, was also paid into the bills account. The plaintiff initially said that he did not receive any share of the rental money, but he later conceded that joint expenses of the parties were paid from the bills account and that the rent for Vermont was paid into that account.
The bills account was used for items of joint expenditure but not for the payment of rental or for food and groceries. The defendant paid personally for food and groceries. The plaintiff initially said in evidence that that the bills account was used for groceries but he later agreed that the defendant paid for the groceries throughout the relationship. The defendant also paid for the outgoings on Vermont, including payments under the mortgage ranging from $400 to $1000 per month. However, from about February 1995 the mortgage payments were made from the suspense account described in [28] below, to which both parties contributed equally.
The defendant or PR made a number of interest free loans to the plaintiff or to Arista in this period and the Wallan period. In this regard, it is not necessary to consider the two periods separately. I am satisfied on the documentary evidence of the records of the defendant that the loans totalled $49,216.46, as claimed by the defendant. The evidence of the plaintiff as to most of the amounts claimed was that it was possible that the loans were made, but he had no records and did not remember them. The taxation returns of PR show for the years 1995/96 to 1999/2000 that loans amounting to some $43,000 were made by PR to Arista and repaid. An amount of approximately $6,000 thus remains outstanding.
The Wallan period
Wallan was purchased by the parties jointly for $147,500. It is conceded that the plaintiff contributed a total of some $35,000, the parties paid the stamp duty and other costs jointly and $118,000 was lent to both parties by the National Australia Bank (“the NAB”) and secured by a first mortgage over the property. Repayments of that loan were $850 per month for 25 years, and the parties transferred their business and personal accounts to the NAB. The defendant’s loan from the ANZ Bank which was secured by a mortgage over Vermont was consolidated with some personal loans of hers into a new loan of $70,000 from the NAB, also secured by a mortgage over Vermont.
The parties opened a joint account with the NAB which was called the “suspense account”, on which they were both signatories. Each party paid $1,000 per month into the suspense account during this period. This account was used to make the payments due under the Vermont and Wallan mortgages, but the defendant paid personally for the other outgoings on Vermont. There were withdrawals from that account of some thousands of dollars, in round figure amounts, over this period. It was put to the defendant that they were for the mutual benefit of the parties. However, the defendant denied any knowledge of the reasons for those withdrawals, while agreeing that she might have made them. I am not in a position to make any finding as to the recipient of those withdrawals or the use to which they were put.
In either 1995 (on his evidence) or August 1998 (on the evidence of the defendant), the plaintiff ceased to contribute to the bills account, and from then on the defendant paid for all living expenses and for such items as health insurance, rates, insurances and equipment for Wallan. These payments were made out of the bills account, to which she was now the sole contributor. She also continued to pay personally for the groceries. The plaintiff’s evidence was that he did not believe the bills account was operating during the Wallan period. It seems appropriate to accept the evidence of the defendant on this point.
Capital improvements were made to Wallan. The plaintiff concedes that the defendant paid for carpets, curtains, linoleum and a ceiling fan, and she produced documentary evidence of expenditure on these items totalling $5,245. The plaintiff claimed that he or Arista had spent $16,400 on materials, and $4,000 on driveway grading and construction of dams, but he had no documents to support that claim, and I am not in a position to accept it. I note also that there are a number of inconsistencies on these matters between his defence and counterclaim and his witness statement.
In 1996 the plaintiff was seriously ill and required surgery on several occasions. He received $100,000 under an insurance policy as a result. The defendant says that he told her that he had used it to pay creditors of Arista. The plaintiff says $40-50,000 went on tax and legal expenses, $25-30,000 was paid to the defendant in repayment of loans, and the balance was spent on improvements to Wallan, two Clydesdales for $4000, a fire truck for $5500 and cash for the restart of Arista’s business. The defendant did not deny the purchase of the Clydesdales (see [51] below) and I am inclined to accept the evidence of the plaintiff as to the expenditure of the $100,000.
Wallan was sold in May 1999 for $188,000 and the defendant says that the net proceeds of $64,321.16 were applied towards the purchase of Sunday Creek. The plaintiff says that the amount was $70,000 and that it was applied to the construction of the house at Sunday Creek, but the difference is not significant in the context.
Vermont was sold in April 1999, and the net proceeds of $24,388.96 applied towards the purchase of Sunday Creek.
The Lancefield period
Sunday Creek was purchased as vacant grazing land, and while a house was being built on the land the parties lived in rented accommodation at Lancefield from about August 1999 to June 2000. The rent of $954 per month was paid by the defendant from the bills account, to which she was now the only contributor. In this period the defendant ceased making payments to the suspense account. The plaintiff’s payments of $1000 per month to the suspense account were used to pay the interest on the Sunday Creek mortgage. The defendant continued to pay out of the bills account for all living expenses as in [28] above and produces documentary evidence of payments made from August 1998 to November 2000 amounting to $4,536.00. She also continued to pay personally for groceries.
The Sunday Creek period
Sunday Creek was purchased for $160,000. The parties each paid half of the deposit of $16,000. $280,000 was borrowed from the NAB to meet the balance of purchase money and the acquisition and construction of a kit home on the land. The parties moved into the house in June 2000 and after that date they each paid $650 per month to the NAB until June 2001; thereafter they each paid $770 per month until February 2002.
There was expenditure on improvements to Sunday Creek over and above the amounts provided by the NAB. The plaintiff, having seen supporting documentation, concedes that the defendant paid a total of $38,355.52 on various items, and was prepared to concede that she had also paid $12,550 to a plasterer. He claimed that he had spent a total of some $50,000 on items set out in Schedule A of his witness statement, as well as claiming amounts for non-financial contributions, which are considered elsewhere. However, he produced no documents to support the claim for $50,000, and his oral evidence as to some of the items was inconsistent with the details set out in that schedule, as, for example where he said in evidence that the bank had paid for the septic tank, whereas in Schedule A he said that he had paid for the septic tank at a cost of $3,000.
The defendant was prepared to concede that the plaintiff had paid for a number of items on which he claimed to have spent a total of some $26,000. Asked in evidence what she thought of the amount claimed in respect of each item, she said that it seemed “a little high”, but gave no basis for that view, and I accept the plaintiff’s figure.
Melbourne Street
Melbourne Street was purchased in July 200l for $144,500 as an investment. It was purchased in the joint names of both parties, but the plaintiff made no contribution to the purchase price or to the expenses of the purchase. The defendant intended that PR would occupy Melbourne Street as an office, and it did so from October 2000 to August 2001. The purchase was financed by borrowings from the NAB totalling $130,100, secured by a mortgage debenture over the assets of PR, a guarantee given by both parties and a mortgage over Melbourne Street. The defendant paid for all of the improvements to the property, in amounts totalling $36,092.71.
Melbourne Street was sold in August 2001 to people named Smith for $165,000. The plaintiff says that the sale was effected without his knowledge or consultation. The defendant admitted (see [10] above) that she wrote a signature purporting to be that of the plaintiff on the contract for the sale. However, the plaintiff says in his witness statement that he subsequently adopted the sale and signed the transfer to the Smiths, on condition that the sale proceeds would be used to reduce the overdraft of Arista. After the proceeds of sale were applied in reduction of the loans taken out by PR which were secured on that property, the remaining $34,904.11 was applied in reduction of the overdraft of Arista. Issues relating to the sale of Melbourne Street are considered at [10] and [11] above.
After separation
It is not in issue that payments made after separation are relevant to the questions before me. From October 2000 to about February 2002, the defendant paid for all outgoings relating to Sunday Creek except for the interest on the mortgage, which the parties continued to share equally. Since October 2000 the defendant has continued to live at Sunday Creek and since the sale of Melbourne Street the business of PR has been conducted from Sunday Creek. Since February 2002 the defendant has made all payments on the Sunday Creek mortgage at $1540 per month, and paid all outgoings, in the course of which the principal due under the mortgage has been reduced by some $8,000. She has continued to improve the house and the property, and has documented expenses amounting to $21,842.29 in that regard.
Payments by defendant as guarantor
As a guarantor of the liabilities of Arista, the defendant has been required to pay a total of $41,252.26, made up of payments in respect of the purchase of an Isuzu truck for which she has no use and which she is unable to sell; a further $22,000 towards the overdraft of Arista in addition to the $34,904.11 referred to in [39] above; and a debt of $2,500 owed by Arista to a company known as Melsteel.
Groceries
The defendant produces unchallenged documentary evidence of $13,682.67 spent by her on groceries from July 1995 to November 2000.
Indirect financial contributions
The amounts which the defendant claims to have contributed by way of indirect financial assistance to Arista – charging a nominal rent for shared office premises, sharing a Christmas party, sending a staff member to Hepburn Springs – are challenged, are not sufficiently supported by the documentation relied upon, and are in any case not significant in the overall context.
Non-financial contributions
The plaintiff states that he did most of the outside work on any property the parties were living in, including the garden, the fences and mowing the lawns, and that domestic duties including cooking and laundry were shared, although the defendant would do more of the cooking than he. It is not possible on the evidence for me to form any view as to the extent to which the parties ate at home or dined out, and I do not do so. He says that he received a little assistance from the defendant with the outside work. In Schedule A to his witness statement he lists the contribution of labour which he says that he made to the improvements on Sunday Creek, either by his own personal labour or that of employees of Arista. He is a fitter and turner and a plumber.
The defendant says that she performed all household and domestic tasks, at all places where the parties lived, including cooking, cleaning, washing, ironing, shopping and housekeeping, maintained live stock and other animals, and maintained gardens including mowing and maintaining two acres of lawn at Sunday Creek. She agreed that they employed a cleaner at Wallan, but there is a dispute as to who paid for the cleaner. It is not in issue that she did the grocery shopping throughout the period of the domestic relationship, or that during the plaintiff’s illness she visited him in hospital or that since separation the defendant and her father have carried out painting at the house at Sunday Creek. However, I note that Mr Ongarello, the valuer called by her to give evidence as to the value of that property, describes the painting as “amateurish in its finishing”.
Each party was concerned in evidence to minimise the non-financial contribution of the other party to the relationship. Inevitably there is no documentary support for any of the contributions claimed. For most of the period of the relationship each party was operating a full-time business. This is not one of those cases where one party provided domestic assistance to the relationship and the other provided financial support. Doing the best I can with the material available to me, I am not in a position to find that the non-financial contribution of either party to the property or financial resources of the parties, or to the welfare of the other party, was significantly greater than the corresponding non-financial contribution of the other party.
Specific items
Cattle
The defendant states that during the Wallan period the parties were given five head of cattle, and the effect of natural increase was that 14 cows resulted from that gift. She personally purchased two other beasts called Frank and Alfred for $100. She sold Frank, Alfred and five of the others for a total of $4759.04 which she used to pay personal bills. She claims that the plaintiff took the ten remaining head and seeks an accounting.
The plaintiff claims that the five cows were given to him personally, and that he used the proceeds of sale of the ten cattle, amounting to $5770.40, to pay out the parties’ joint liability as guarantors of vehicle leases entered into by Arista. The amounts received by the respective parties for the sale of cattle are not in dispute, and effectively cancel each other out.
The plaintiff seeks an accounting for agistment fees, at approximately $3 per head per week, for at least 36 head of cattle presently on Sunday Creek. The defendant states that she has received no money for agistment since February 2002, and that the cattle in question belong to a friend and have been put on the property to save her the expense of having to have the hay cut. I have no documentary evidence either way, and there is nothing which I can take into account in respect of those cattle.
Hay
The defendant’s evidence is that she arranged for the hay on Sunday Creek to be cut in November 2001 as a result of receiving a fire hazard notice from the council. The contractor charged $2,689 to cut some 1600 bales of hay. She was only able to sell 150 bales at $375 because it was not good hay, and the rest was fed to the horses or left on the property. These transactions do not appear to be relevant to the questions before me.
Clydesdales
The plaintiff claims in his witness statement that the two thoroughbred Clydesdale horses on Sunday Creek, being one mare and one gelding, were purchased by him for $1250 and $2500 respectively. The defendant did not deny that this was the case. In oral evidence he said that the defendant had had very little to do with the horses up to the time when the parties separated. They were still on Sunday Creek and he wished to retain them. The defendant denied that she had had little to do with the Clydesdales, and said that she would wish to retain the gelding
Motor cycles
It is agreed that a PW80 motor cycle was purchased for $1830, of which Arista paid $1000 and the defendant paid the balance of $830. The plaintiff said that he took it from Sunday Creek and sold it for $1000. He agreed that the parties “entered into a lease agreement dated 30 July 1996 for the acquisition of a Big Bear motor cycle” and payments were made out of the bills account save that the defendant made the last payment of $1744. There does not appear to be any evidence as to the total cost. There is documentary evidence that the Big Bear was insured for $12,000 although the plaintiff estimated that it was worth about $6000. He said that he took it from Sunday Creek and sold it in late 2001 for $2,500. He had no documentary evidence of either sale, and did not consult the defendant about them.
Caravan
The plaintiff seeks a transfer of the defendant’s half share in a caravan at Waranga Basin on which he claims to have spent more than $3,000 for improvements. The defendant says that he spent only $1500. The evidence of the defendant is that she bought the caravan with a bank loan on which she made the repayments, and sold it for $11,000 in May 2002 to pay legal costs.
Miscellaneous items
The defendant claims in respect of clothing, a tractor, a catamaran and a video camera bought by her for the plaintiff. Details of the purchases are in issue, and the amounts involved are insignificant in the overall context of the relationship.
Valuations of Sunday Creek
The principal claim of each party relates to the disposition of Sunday Creek. Each party obtained a market valuation of Sunday Creek as at August 2003. Evidence was given by Mr Campbell of Countrywide Valuers, instructed by the plaintiff, who gave evidence as to the valuation prepared by Mr Peake of that firm, and by Mr Ongarello of Raine & Horne, instructed by the defendant.
The classic method of determining market value is that described by Isaacs J in Spencer v The Commonwealth (1907) 5 CLR 418 at 441 in the following terms:
To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration.
The matters to be taken into account by a court in determining the value of any land are set out in section 5A of the Valuation of Land Act 1960, and do not need to be set out here. As Dixon CJ said in Turner v Minister of Public Instruction (1956) 95 CLR 245 at 268, “valuation cannot be made to depend entirely on a logical process or formula”.
Similarly, Wells J said in Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 171 at 180:
. . . there is no hard and fast rule by the application of which a valuer may, whatever the circumstances, draw the line that clearly separates the sales that are comparable from those that are not. It is in my view, all a matter of degree: . . .Just where the line is to be drawn is, it seems to me, the very sort of question that is fit for the expert valuer to determine; the assessment of the risks of adjustment is peculiarly within his sphere of skill.
And Hope JA said in Leichardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409 at 434:
The need to make adjustments to values deduced from sales in order to arrive at the true valuation of the land to be valued does not preclude the court which has the task of valuing the land from relying upon the sales as comparable in the relevant sense, nor from the making by the court or by valuers of adjustments which may be nothing more than the best guess that can be made.
Both valuers had difficulty in finding sales which were sufficiently comparable to be of assistance, and they agreed that there was no precisely comparable sale available. Mr Peake valued the property at $470,000 and Mr Ongarello at $395,000. It is common ground that the amount owing under the mortgage is $208,000. The value is affected by the fact that the house on the property is not complete and a certificate of occupancy has not yet been obtained. Both valuers said, Mr Campbell in examination in chief and Mr Ongarello in cross-examination, that the best way to test the market value would be to sell the property. Neither counsel submitted that either valuation should be preferred to the other, or suggested any basis on which I could form such a preference.
In these circumstances, it seems to me that I must proceed to make “the best guess that can be made”, to adopt the words of Hope JA, and find the value of the property to be at a point midway between the two valuations, which produces a figure of $432,500. If the $208,000 owing under the mortgage is deducted, that leaves $224,500, and the net half interest of each party is accordingly to be valued at $112,250.
The Financial Contributions of the Parties
I have said [14] that I am not in a position to find that the non-financial contribution of either party to the property or financial resources of the parties, or to the welfare of the other party, was significantly greater than the corresponding non-financial contribution of the other party. Accordingly, it remains for me to assess, in terms of section 285(1)(a) of the Act, the financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners.
[14]see [46] above
The evidence is not such as to enable me to make findings in any detail; but my view is that a broad picture emerges with sufficient precision to enable me to make orders pursuant to section 285. For the reasons appearing in [15] above, I have considered Arista to be the alter ego of the plaintiff and PR to be the alter ego of the defendant. As set out in [19] above, the evidence does not enable me to establish any significant difference between the value of the assets of the parties at the commencement of the domestic relationship, and I have proceeded on the basis that their assets at that time were effectively of equal value and may therefore be ignored.
The Josephine Avenue period - [23] to[26] above
The parties contributed equally to the rent, save that for 8 months the defendant paid the whole of the rent, i.e. contributed an additional $380 monthly for that period, totalling $3040. The defendant contributed the rent of Vermont to the bills account, being $470 per month for 42 months, thus totalling $19,740 in this period. Expenditure from the bills account was on jointly owed items, and thus it can be said that she contributed an additional $9,870, being half of the total rent, to an account to which otherwise the parties contributed equally. She also paid the outgoings on Vermont, and paid for the groceries in this period, but the evidence does not disclose the amounts of either item. In addition, $6,000 is owing by the plaintiff to the defendant for loans not repaid.
The Wallan period – [27] to [33] above
The plaintiff contributed $35,000 more than the defendant to the purchase of Wallan. [15] The parties contributed $1,000 per month equally to the suspense account, from which payments were made in respect of the Wallan and Vermont mortgages. From August 1998 the defendant paid for all living expenses, rates, veterinary expenses, other joint bills and groceries. Mr Osborne, for the defendant, submitted, and I accept, that a conservative allowance in favour of the defendant would credit her, in respect of the Wallan, Lancefield and Sunday Creek periods with approximately $40,000 under that head.The defendant paid $5245 towards improvements on Wallan, and I have been unable to accept the plaintiff’s evidence as to his contribution.
[15]see [27] above
On the sale of Wallan, the net proceeds went towards the purchase of Sunday Creek. Mr Osborne submitted that in view of his contribution to the purchase of Wallan, the plaintiff should be credited with more of this amount than the defendant, and, accepting the figure of $70,000 for the net proceeds, I consider it just and equitable that $45,000 be credited to the plaintiff and $25,000 to the defendant.
On the sale of Vermont, the net proceeds of $24,000 went towards the purchase of Sunday Creek. Although Vermont was wholly owned by the defendant, Mr Osborne submitted that in view of his contribution to the mortgage payments, the plaintiff should be credited with a proportion of this amount, and I consider that a just and equitable proportion would be one-third; making $8,000 for the plaintiff and $16,000 for the defendant.
The Lancefield period – [34] above
In this period, the payment of rent by the defendant and the Sunday Creek mortgage by the plaintiff effectively cancel each other out. Living expenses are dealt with at [64] above.
The Sunday Creek period - [35] to [37] above
The deposit and mortgage payments were made jointly. I find that the defendant contributed $51,000 to improvements and the plaintiff $26,000, giving a balance of $25,000 in favour of the defendant. Living expenses are dealt with at [64] above.
Melbourne Street - [38] to [39] above
All payments in respect of this property were made by the defendant, although the purchase was made in the joint names of the parties. The net proceeds of sale, being $35,000, went to reduce the overdraft of Arista. Mr Osborne submitted that equity would presume that the parties owned Melbourne Street in proportion to their contributions towards its acquisition, and thus the plaintiff held his share in Melbourne Street, to which he had made no contribution, on a resulting trust for the defendant. As the presumption of advancement did not apply to a de facto relationship [16] , it did not operate to rebut the presumption of a resulting trust. Mr Edmunds made no submission on the point and I accept the submission of Mr Osborne. Accordingly, I find that the sum of $35,000 was a contribution by the defendant to the resources of Arista and thus of the plaintiff.
[16]Calverley v Green (1984) 155 CLR 242
After separation – [40] above
From October 2000 the defendant has continued to live at Sunday Creek and to conduct her business from that address. I accept the submission of Mr Osborne that her payment of outgoings, save insofar as those payments have reduced the principal owing under the mortgage, effectively constitutes an occupation rent and requires no adjustment. I accept that she should be credited with the $8,000 by which the principal has been reduced in that period.
Payments as guarantor – [41] above
The defendant paid $41,000 as guarantor of the debts of Arista, as well as the $35,000 referred to in [69] above. I note that, as Mr Osborne submitted, the payments made by the defendant as guarantor of the liabilities of Arista, have the effect that, although the business of that company has failed, the debts have been paid, and the plaintiff is relieved of those obligations.
Miscellaneous items
Clydesdales
It does not appear to be in issue that the Clydesdales belong to the plaintiff, and it would seem just and equitable that they be delivered to him.
Motor cycles
Given the amount of her agreed contribution to the purchase of the PW80 motor cycle, it would seem just and equitable that the defendant receive $400 of the $1000 which the plaintiff says that he received for that machine, rather than denying her that credit on the ground that there is no documentary evidence of the sale. However, there is insufficient evidence to enable me to form any view as to an appropriate adjustment in relation to the Big Bear machine.
Caravan
Although the evidence is inconclusive, it is accepted that the plaintiff contributed to the caravan and it would seem just and equitable that he receive an allowance of $1500 in respect of that contribution.
Conclusion
Mr Edmunds submitted, in accordance with the principal claim of the plaintiff, that Sunday Creek should be put on the market, as the only method of determining its value, and the net proceeds of sale divided equally between the parties. I note the evidence that the parties began with the intention of sharing costs equally [17] . However, it is apparent from [63] to [71] above that as time went on that intention was not carried out; no doubt because the plaintiff’s business became less successful over time, and it appears that the defendant’s business succeeded. The nature of the evidence does not justify any precise mathematical determination of the contributions of either party to the property or financial resources of the parties. Nevertheless such of the evidence before me as I have felt able to rely upon, leads me inevitably to the conclusion that the contribution of the defendant has been several times as great as the contribution of the plaintiff, and considerably greater than what I have found to be the value of the plaintiff’s net interest in Sunday Creek. [18] Accordingly I cannot find that an equal distribution between the parties of the proceeds of a sale of Sunday Creek would be either just or equitable.
[17]see [16]-[17] above
[18]see [60] above
I accept also that a sale would be inconvenient for the defendant, who is living and conducting her business at Sunday Creek. Further, there are still works to be carried out to enable the issue of a certificate of occupancy, and in the event of a court-ordered sale, there would be questions as to the responsibility for those works.
In all the circumstances, I find it to be just and equitable to make pursuant to section 285 of the Act the principal order sought by the defendant; namely, that the interest of the plaintiff in Sunday Creek be adjusted so that he transfer the whole of his right title and interest in that property to the defendant subject to the mortgage and subject to the defendant indemnifying the plaintiff in respect of all moneys due and payable under the mortgage or otherwise in respect of the property.
For the reasons appearing in [51] and [72] above, there will also be an order that the defendant deliver to the plaintiff the two Clydesdale horses.
I invite submissions from counsel as to the form of the orders to be made and as to costs.
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