Lumley v Freeth

[2009] NSWSC 928

CITATION:	LUMLEY v FREETH [2009] NSWSC 928
HEARING DATE(S):	28-29/05/2009
JUDGMENT DATE :	10 September 2009
JURISDICTION:	EQUITY
JUDGMENT OF:	Bryson AJ
DECISION:	Order that by way of adjustment of interests in property pursuant to Property (Relationships) Act 1984 s 20: (1) The plaintiff Mrs Lumley is to be paid $350000. (2) The sum of $350,000 is to be raised and paid first by selling the co-owned assets Tintuppa, 234 IAG shares and 1000 Telstra shares and paying her the proceeds up to $350,000. Second if $350,000 is not raised from selling Tintuppa and the shares, by the defendant Mr Freeth paying her sufficient money to make up $350,000. (3) Reserve further consideration of the sale of Tintuppa and of orders requiring sales of other assets if Order 1 is not complied with. (4) The defendant Mr Freeth is to indemnify Mrs Lumley and save her harmless from all or any liability which she has or may have from financing arrangements, borrowings, debts, mortgages or guarantees for the benefit wholly or in part of himself, of Geoff R Freeth Pty Ltd or of the veterinary practice known as Canobolas Family Pet Hospital or in any other way connected with him; and is to give adequate security for this indemnity. (5) Reserve further consideration of orders to give effect to and carry out Order 4. (6) Except as provided for by these orders each party is to retain all property presently in that party’s possession. This extends to the plaintiff’s Credit Union accounts and to her 766 IAG shares.
CATCHWORDS:	PROPERTY (RELATIONSHIPS) ACT - de facto relationship - dfr 1993 to 2006 - four children - decision on adjustment after review of facts and events - HELD - award of $350,000 to F, sale of home and release of guarantees.
LEGISLATION CITED:	Property (Relationships) Act 1984 Conveyancing Act 1919, s 66G
PARTIES:	Jane Elizabeth Lumley - Plaintiff Geoffrey Robert Freeth - Defendant
FILE NUMBER(S):	SC 1718/08
COUNSEL:	A Givney - Plaintiff J Levy - Defendant
SOLICITORS:	Campbell Paton & Taylor, Orange - Plaintiff McIntosh McPhillamy & Co, Bathurst - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON AJ

Thursday 10 September 2009

1718/2008 LUMLEY v FREETH

HIS HONOUR:

The parties.

1 The plaintiff Mrs Lumley claims adjustment of interests with respect to property of herself and Mr Freeth under s 20 of the Property (Relationships) Act 1984. The parties were born in February and March 1969, less than two weeks apart. The parties lived together in a de facto relationship as defined for some years until they separated on 11 March 2006. They have four children:

Lewis born in November 1993;
Oliver born in October 1995;
William born in January 1999; and
Arthur born in September 2001.

The relationship.

2 Mrs Lumley contended that the relationship commenced in 1987. The parties shared households from 1987 until 1991 while both were university students; and other students also lived in the households. When the academic year 1991 came they separated; the defendant moved to live in the veterinary school at Camden, and the plaintiff moved to Tasmania, where she worked for about a year as a teacher; he visited her during this year. They continued to live in separate households throughout 1991 and 1992 and in 1993, by which time Mr Freeth was working as a veterinary surgeon in a practice in Cowra. Mrs Lumley visited him there early in 1993 and then left for overseas, for a holiday of some months at the least. Before Mrs Lumley went overseas the parties agreed that when she returned she would move back to Cowra.

3 While Mrs Lumley was in Britain she found that she was pregnant; she ended her overseas journey and returned to Australia. About the middle of 1993 the parties began to live together in rented accommodation in Cowra; and soon afterwards bought a house in Fitzroy Street, Cowra. Their first child was born in November 1993.

4 There is a body of evidence about the nature of their relationship and the extent to which their lives were shared while they lived in student households. Whether or not their relationship then was a de facto relationship as defined, the relationship clearly ended in 1991; the events in 1991, 1992 and earlier in 1993 cannot be interpreted as an interruption in a continuing relationship.

5 Their relationship and separation have had some conflictual aspects. In 2004 Mrs Lumley left their home and lived with the children in a women’s shelter for about three months, after which there was a reconciliation of some kind and the whole family returned to the home. This was not a termination of the relationship; it was an adverse event in the continuing relationship. Late in 2006, after the separation, Mr Freeth engaged in some strange behaviour, sending Mrs Lumley communications under an assumed name, apparently inviting communication. When Mrs Lumley applied for child support, child support became conflictual; Mr Freeth was assessed to pay no child support apparently on the basis that he had no income, a very undignified outcome for him and not justified as he had a continuing successful veterinary practice. Early in 2007 there was some proceeding in which police sought an apprehended violence order. An apprehended violence order was made against Mr Freeth, with his consent, for a 12 month period. In my understanding there is no continuing order.

Lack of precision.

6 A feature of this case was the lack of written confirmation of evidence or assertions in evidence about the sources of funds, the amounts obtained from various sources and the manner of application of funds. Mr Freeth is a poor source of written material. Aspects of his case included vigorous assertion and general lack of precision. He has not made a tax return since 2005 nor has his private company. I infer that he does not regard it as in his interests to have his income clearly known and understood; that would have implications which he might see as adverse in the assessment of child support obligations. I do not have confidence in his uncorroborated assertions about financial matters. Discovery and inspection of documents were not handled in an appropriate way, in advance of the hearing and in detail, in a case where there were disputes about details of transactions, sometimes from many years ago. Documents were produced on Notice to Produce during the hearing, and inspected as the case proceeded, no doubt with less than full opportunity to absorb what they said. This qualifies confidence in the outcome.

Assets in 1993. Oberon.

7 At the commencement of the relationship in 1993 only Mr Freeth owned any significant property. Mrs Lumley’s evidence is that she had $10,000 of savings. This of course is an inexact statement, not a precise figure. It was challenged in cross-examination, but I accept what she says. Cross-examination did not suggest any serious reason to doubt her estimate. Each party had personal effects such as clothing and other small property of no significant value, and Mr Freeth owned the Oberon property. Mr Freeth inherited a rural property near Oberon from his late grandmother, who died on 16 June 1991 and gave him this property specifically by her Will. He still owns this property and he attributes the value of $280,000 to it now. The Will gives its area at 66.31 hectares, which is about 164 acres. It has few improvements; fencing and huts, and a dwelling described as a small two-bedroom shack, not a family home. It is not suitable for intensive farming and he has always or usually had some sheep on it. The main activity has been sheep grazing and wool production and there were also some trading activities. The Oberon property is about one and a half hour’s drive from Orange; not really a convenient location. The property requires maintenance work, some supervision of the sheep and shearing, and has never earned significant income. The wool cheque from Oberon would range from $1,500 to $3,500 a year. In December 2008 there were 109 sheep at Oberon and Mr Freeth estimated their value at $20 each, in total $2,180.00.

8 The main contribution of the Oberon property to Mr Freeth’s affairs has been that it has qualified him as a primary producer, or assisted in his qualification, and this has brought advantage in his taxation affairs. The Oberon property has been used several times as part of the security for bank advances, including for the purchase of the house in Fitzroy Street, Cowra, and later of Tintuppa. Mr Freeth appears to have a strong sense of attachment to the Oberon property. In evidence he referred to an event in which a Child Support Agency worker suggested that Mr Freeth should sell the Oberon property. His response showed that he rejected the idea of selling it and found the suggestion distasteful.

9 Mrs Lumley had some involvement in the Oberon property. Of course Mrs Lumley made no contribution to its acquisition. There were family visits to the property from time to time, although there was no suitable accommodation there and living arrangements were no more than makeshift. When the family went to Oberon Mr Freeth did most of the work and Mrs Lumley was occupied caring for the children. The work there was supervision, management and movement of sheep, shearing, supervision and repairs of fencing, and work on weeds. Mrs Lumley took little part in the physical work. Mrs Lumley attended to paper work associated with Oberon such as seeing that insurance, statutory charges, council rates and other costs were paid, that there was comprehensive and public risk liability insurance and that the premiums were paid; she liaised with tradesmen who repaired the fences and did other maintenance and she attended to payment. There were purchases of equipment, fence material and panels; Mrs Lumley had some involvement in these, and in livestock trading activities. Mr Freeth, in evidence, denied that Mrs Lumley participated in these activities or assisted; in oral evidence he said: “I’m sure there was some contribution but it was very minimal” (T68). I accept her evidence and not his denial. However her work there is unlikely to have been very intense.

10 Overall in my finding Mrs Lumley has made some contribution to Mr Freeth’s retaining the advantage of owning the Oberon property and the sheep grazing and other activities there. Mr Freeth’s activities there have not been very profitable; but they have had favourable taxation implications. It is undisputed that the value of Oberon at present is $280,000.

The veterinary practice.

11 Mr Freeth carries on professional practice as a veterinary surgeon and owns an interest in a veterinary practice in Orange. Geoff R Freeth Pty Limited, in which he is the only shareholder, is a partner and co-owner of the veterinary practice with Emuil Pty Ltd, which Mrs Lisa Brisbane controls, and Mrs Brisbane is the other principal of the veterinary practice. Mrs Lumley and Mr Freeth were and still are the only directors of Geoff R Freeth Pty Ltd.

12 Events which led up to the acquisition of this practice extended over some years, and involved financial dealings details of which have not been shown by evidence. Only an outline can be shown. Mr Freeth was employed by a veterinary practice in Cowra from 1992 onwards. Geoff R Freeth Pty Limited was formed in May 1995 and at about that time Mr Freeth, through the company, acquired an interest in the veterinary practice in Cowra. In 1997 there were several changes in the partnership arrangements, perhaps involving disputes, and a partnership emerged in which the principals were Mr Freeth, Mrs Lisa Brisbane and Mr Paul Cusack. This partnership purchased a second practice in Orange, which came to be named Canobolas Family Pet Hospital. Mr Freeth has worked in the practice in Orange since December 1998. For a time Mr Freeth worked in both practices, commuting from the parties’ home in Cowra to Orange on several days each week.

13 Mr Freeth’s evidence is that the veterinary practices of Mr Payton and Mr Duggan in Cowra merged, and Mrs Lumley and he borrowed money from ANZ Bank to buy into the practice. In approximately 1998 that practice bought a third practice, and Mr Freeth bought in using $86,000 which his parents lent him. His parents borrowed this money from St George Bank, and Mr Freeth made payments to St George Bank for several years; then in June 2000 Mr Freeth’s father told him not to make further repayments. By that time the amount due had reached $75,644.53, to which Mr Freeth has not been required to contribute further. In effect his parents gave him this amount.

14 In a Dissolution of Partnership in 1999 Mr Freeth and Mrs Lisa Brisbane retained the Orange Practice and Mr Freeth received some payment from Mr Cusack the amount of which he does not recall. The family moved from Fitzroy Street, Cowra to rented premises in Orange until October 2001.

15 The partnership in the Orange practice is an asset owned in effect by Mr Freeth and is the mainstay of his earning capacity and economic position. Each party obtained a valuer’s report on the value of the share in the Canobolas Family Pet Hospital practice at the present time. Shortly before the hearing it was agreed that the value of that share at the present time is $165,000. The books of account of the partnership show a loan account to Geoff R Freeth Pty Limited of $4,929; this should be included among Mr Freeth’s resources, as on correct principles it would have been taken into account as a deduction when reaching the valuation of $165,000. Mr Freeth’s counsel contended that I should not regard this as an asset. However there is no substantial reason for disregarding it.

16 The veterinary practice has a liability to the National Australia Bank for borrowings to finance lease equipment and an overdraft. The agreed value of Mr Freeth’s interest in the practice is an asset valued after taking this liability into account. The company’s financing by National Australia Bank is supported by a guarantee and indemnity given in July 2003 by Mrs Lumley, among others. The liability is also supported by guarantees by Mr Freeth and Mrs Lisa Brisbane, and by security over Tintuppa and the Oberon property, as well as over property of Mrs Lisa Brisbane and her husband.

17 Mr Freeth drew $2,990.24 per fortnight from the partnership, paid into the account of the company, until March 2007. His drawings were at this rate since 2004, if not earlier. In March 2007 he ceased making these drawings, and his usual method of making payments since then has been to charge them to a credit card of the partnership. He had not seen a record of his withdrawals on the partnership credit card for 18 months before the hearing. When Mr Freeth last inquired, in 2008, he was still in credit meaning that the amounts he had charged on the practice credit card were less than the drawings due to him. He had not ascertained the position at the time of trial. He did not give evidence of the state of account between the partnership and himself with respect to drawings but he is probably entitled to a considerable credit. Mr Freeth uses an account at Orange Credit Union as his personal bank account. Mr Freeth’s account with the Orange Credit Union contained $8,585.30 on 3 February 2009 (exhibit G).

18 Late in March 2009 the practice had $123,357.88 deposited in a credit union. Mr Freeth said to the effect that there was probably a similar amount on overdraft (T92). In his affidavit [81] he gave the amount overdrawn on 9 December 2008 at $44,306.11. It is remarkable that he did not put a clear explanation of this matter into evidence, and I infer that in his understanding it would not have been to his advantage to do so. I am left to infer and act on the basis that the agreed value of the practice has regard to this deposit and to the overdraft.

19 Mrs Lumley assisted in day-to-day operations of the veterinary practice. Her participation included taking calls during and after office hours, making appointments and attending to office and administration work on a relief basis. At the time of separation Mrs Lumley, a director of the company, had authority to operate on the bank account of the company. For some years until separation, Mrs Lumley received Director’s fees. I accept her evidence to the effect that she took part in the company’s work and affairs. The company made payments to Mrs Lumley for this work, which she declared as income for taxation purposes. However, the records of these payments are not complete (exhibit K).

The house in Cowra.

20 From June 1993 until July 2000, Mrs Lumley and Mr Freeth co-owned the house property at 155 Fitzroy Street, Cowra, which was their home. The purchase price was $88,500. Mrs Lumley contributed $10,000 of her savings, and also $8,000 which was a gift from her parents. Mr Freeth challenged Mrs Lumley’s evidence about these contributions, but I accept her evidence; no substantial reason for doubting it was offered. Mrs Lumley and Mr Freeth borrowed $80,000 from ANZ Bank on mortgage. It is Mr Freeth’s evidence that he contributed $10,000 towards the purchase of Fitzroy Street, Cowra being money given to him by his mother, while Mrs Lumley’s evidence was that the amount was $4,000.00. So $102,000 was available; or possibly $108,000.

21 Mrs Lumley had some remaining funds after the purchase which she used to buy furniture and contents. There were considerable repairs and renovations and improvements, most of which were carried out by tradesmen. However, Mrs Lumley and also Mr Freeth participated in this work to some degree. Mrs Lumley had, as usually throughout the relationship, responsibility for attending to payments and managing accounts. The amount due on the mortgage to ANZ Bank was reduced by payment of instalments over seven years. The parties sold the house in July 2000 for $118,000. The net proceeds after mortgage debt, agent’s commission and other expenses were approximately $54,000. They then went to live in rented premises in Orange, where by that time Mr Freeth worked.

22 It is necessary to decide how the net proceeds of $54,000 should be attributed to each party. The borrowings were $80,000 and they should be treated as having contributed half of that each. Mrs Lumley contributed a further $18,000, and I infer that her contribution went in part towards the purchase price but also in part towards stamp duty and costs of the purchase, furniture and contents. Precision is not possible but I attribute $30,000 of the proceeds to Mrs Lumley and $24,000 to Mr Freeth. Contributions to mortgage payments, renovations and improvements cannot be quantified but I do not treat them as upsetting this apportionment.

23 Although it is not clearly shown what the $54,000.00 was used for, it is likely that it went towards payment of debts incurred through purchasing interests in veterinary practices. In this way Mrs Lumley made a significant financial contribution, at an early stage, to the cost of acquiring the present veterinary practice. It can be seen that $30,000 attributable to her went into paying debt arising from its acquisition. It can also be seen that $86,000 which Mr Freeth’s parents lent to him and $24,000 attributable to him from Fitzroy Street Roseville went into it. He paid down part of the $86,000 and his parents gave him the rest: all of it should be treated as contributed by him. Mrs Lumley contributed $30,000 of the $110,000 which can be seen as going into acquiring the practice: there could well have been other contributions by Mr Freeth but I am not told of them. She also contributed to its operations. Mrs Lumley also contributed in financing the borrowing from the ANZ Bank to buy into the Cowra practice, and by giving a guarantee for the practice overdraft.

“Tintuppa”

24 The parties are co-owners of Tintuppa. Tintuppa is a rural property at Spring Hill about 17 kilometres from Orange, with a family home which was occupied by them and their children from the time of its purchase about September 2001, fourteen months after selling the house in Cowra, until their separation in March 2006, with an interruption in 2004. Mrs Lumley was active in the search for a house property before Tintuppa was purchased, and took part in negotiation about the purchase price. Tintuppa is central to the claim for adjustment of property interests and it is necessary to trace the financing for its acquisition and what has happened relating to moneys secured by mortgage of Tintuppa. For some purposes a distinction is made between the house and its surrounds and other land which is used for rural purposes. There are about 50 acres of rural land, cattle yards and shedding. The agreed value of Tintuppa is $650,000.

25 The title to Tintuppa was at first joint tenancy but after the separation Mr Freeth severed the joint tenancy on 11 December 2006 and the parties are now tenants in common in equal shares. Mr Freeth has continued to occupy the house and the rural property at all times since separation. The eldest son Lewis now lives with Mr Freeth at Tintuppa. Ms Yvette Lieschke-Mercer has also lived at Tintuppa on and off over the three years to the time of the hearing, and when there she contributes to her living expenses. At time of trial there were 15 horses there but no other livestock. Since the separation in March 2006 Mrs Lumley has lived in rented accommodation, and has provided the principal home for the three younger children.

26 The purchase price of Tintuppa was $350,000. About the time of purchase the parties obtained two loans from National Australia Bank which totalled $350,000; they were Flexi Plus Account $140,000; and Home Loan Mortgage $210,000. However the money borrowed from the bank was not all used for purchase of Tintuppa.

27 Mr Freeth’s explanation for there being two loans was to this effect (t103). The house and surrounding five acres were treated as the home, not part of the farm, and were valued. The rest of the property was considered to be for primary production. Interest on that part of the property would be an expense deductible for taxation purposes. The loans were split accordingly.

28 Mrs Lumley’s evidence is that her parents gave her $35,000 which was used as a deposit and that the balance of the purchase price was paid with money by the National Australia Bank. Mr Freeth’s evidence confirms that Mrs Lumley’s parents gave $35,000 for the deposit and the balance to complete the purchase was borrowed from National Australia Bank. As Tintuppa had to be paid for, I infer that $315,000 of the bank advance went into the price and about $10,000 into Stamp Duty. Mrs Lumley’s evidence is that the borrowing of $350,000 was “to pay for the residue of the purchase price, stamp duty, legal costs and cattle”. She says “When [we] applied for the finance we borrowed extra funds to buy cattle for livestock trading purposes.” Stamp duty costs and expenses must have used part of the remaining bank finance. Treating the part of the price borrowed from the bank as contributed equally, Mrs Lumley contributed $162,500 of the borrowing and $35,000 deposit, totalling $197,500 or 55 percent, and Mr Freeth contributed $162,500 or 45 percent of the cost of acquisition of Tintuppa.

Livestock and Livestock trading.

29 There is no particularity in evidence about the process or the profits of livestock trading. The livestock trading consisted of trading in cattle, goats and sheep and trading of wool. It is Mr Freeth’s evidence that he has not bought or sold stock since 2003. I am left to conclude that, because the activity was pursued, it was probably successful, but it was never very profitable. Trading in livestock at Tintuppa was never on more than a very small scale. Mrs Lumley and Mr Freeth maintained an account at the Orange Credit Union which they called “The Farm Account”. Farming income including the wool cheque was paid into this account, but it proved insufficient to pay farm expenses and shortfalls were paid from the Flexi Plus account. The most recent information about Mr Freeth’s rural enterprises is in exhibit J, his financial statements prepared by accountants for him, for the year ended 30 June 2004. Much of this document is difficult to follow; it does not relate to his whole position, but appears to relate only to farming enterprises. Among other things it shows farm income at $10,090.00 for the year to 30 June 2004, derived from the profit on cattle trading, proceeds of wool and a loss on sheep trading; and there was a small amount of other income. However, the “Farm Statement of Financial Performance” concludes with a net loss of $31,885.00.

Contributions by Mrs Lumley. Parenting responsibilities.

30 The parties’ domestic life and the needs of and care for their children have a very prominent part in the grounds for making an adjustment under s 20 of the Act.

31 Throughout the relationship Mrs Lumley undertook paid employment, either on a casual basis or on a part time basis, whenever she could. There were a number of different employments, by the Central West Community College and by the Western Institute of TAFE. There was a short period when she worked full time in 1997 at the Bathurst Campus of the Central West Community College. The time available for her employment had to be fitted in with her responsibility as a parent and homemaker, which she regarded as primary. She had absences from work following the births of her children, and she breastfed the children, but she returned to work as soon as practicable.

32 Mrs Lumley contributed income, from her paid employment and also from family allowance, towards mortgage payments, household accounts and family living expenses. Mrs Lumley’s availability to work part time or on a casual basis was limited by her parenting responsibilities, and her working hours had to be arranged and always were arranged around her need to attend to the care of her children. As Mr Freeth said, in the context of Mrs Lumley’s part-time work, “… I think we took as much work as we could get” (T71). He also said “we were trying to tie down debts and as much debt as possible” (T74). In my finding Mrs Lumley made the most of her earning capacity in the circumstances, but her earning capacity was adversely affected by the need to take care of the children and to arrange work times accordingly. Working part time or on a casual basis did not produce as favourable career outcomes and long term earnings as if she had consistently pursued full time employment.

33 In my finding Mrs Lumley made very considerable contributions in her capacity as homemaker and parent to the welfare of the family constituted by Mrs Lumley and Mr Freeth and their children. Mrs Lumley was primarily responsible for day to day care of the children during the relationship. Mrs Lumley attended to the children’s daily care and development including feeding and breast feeding, hygiene, health care and medical treatment, teaching life skills, starting with elementary manners, colours, vocabulary, numbers. When the boys began to attend school Mrs Lumley attended to readying them in the mornings, making their lunch, attending to their journey, either taking them to the bus or taking them to school. She also arranged sports, music lessons, music practice and attended to the journeys, special tuition, parent/teacher interviews, supervision and homework.

34 The eldest child Lewis required extensive paediatric care, and three surgical operations within his first 12 months. Mrs Lumley took the primary part in managing his hospitalisation at the Children’s Hospital in Sydney and caring for him there. Other significant medical attendances have been Lewis’ operation at the Cowra Hospital at the age of three for tonsils and ear grommets, a similar operation for Oliver at the age of two years and also hospitalisation for bronchiolitis. Arthur has required special care for asthma and has suffered health emergencies at the age of 10 months with hospitalisation for pneumonia in Orange, then at Westmead. Mrs Lumley took the primary part in these attendances. Arthur’s illness was life threatening. He has had a number of hospital admissions. The children have had other conditions which required special attention or treatment; physiotherapy and speech therapy. Mrs Lumley gave attention to commitment to sporting activities, musical training in several instruments, teaching, reading and activities connected with schooling, with high involvement in school fetes, carnivals and similar band concerts, sports events and activities. The children made some progress with musical instruments.

35 Mrs Lumley had primary responsibility and a heavy burden of home duties including cooking, washing and ironing, cleaning, shopping, arranging family social activities and making arrangements for holidays and travel. Mrs Lumley washed the family’s clothes, and did most of the ironing, although sometimes Mr Freeth did his own ironing. On four or five occasions when Mrs Lumley was unwell, a housekeeper was brought in.

36 Mrs Lumley’s attendances at Tintuppa included ordinary every day domestic work of cleaning, making curtains, maintaining the gardens; and also caring for horses and livestock and attending to business relating to the house, such as Council rates, insurance premiums, repairs, maintenance and dealing with tradesmen and payment of household accounts. There were horses, chickens and other pets and Mrs Lumley was mainly responsible for the smaller animals. She also had some responsibilities for larger stock, horses and sometimes cattle which had to be checked and watered. There were some improvements during their occupation including repairing fencing.

37 Mrs Lumley also attended to payment of domestic accounts and managed household finance. She attended to payment of most household accounts. She compiled financial documents for accountants when necessary for taxation returns. She ensured that mortgage payments and credit card payments were met on time. Mr Freeth regarded Mrs Lumley as a person who is careful with money, but he also asserted “she can live beyond her means, yes” (T56).

38 Mrs Lumley’s numerous and burdensome attendances as home maker and parent were a large contribution to Mr Freeth’s welfare, including his economic welfare. They enhanced his opportunity to pursue and benefit from professional activities while having large family responsibilities himself. Although there are no means of calculating the amounts of these advantages, Mrs Lumley’s contributions had a very large favourable impact on Mr Freeth’s financial position and ability to build up assets.

39 Mr Freeth worked as a veterinarian and this made very considerable demands on his time, from about 8am to about 6 to 6.30pm on work days, and sometimes at later times and on weekends. Mr Freeth had a much heavier work commitment in terms of time than Mrs Lumley did and it is her evidence that she has taken up most of the parenting responsibilities regarding the children. Mr Freeth gave evidence of various significant attendances to parenting responsibilities which he has undertaken, but in my finding Mrs Lumley’s contribution in time, effort and quality was considerably higher than his.

40 Mr Freeth gave evidence of his sharing in parental responsibilities. He also participated in their general sporting activities and transport. He somewhat overstated his contribution, including his contribution to attending to the boys’ needs in the mornings, making breakfasts, school lunches and school transport. In my finding Mrs Lumley bore a much heavier burden. Mr Freeth also claimed in evidence that he was primarily responsible for cooking. In my finding he did cook evening meals from time to time but this was not a routine but an occasional event.

41 Mr Freeth is very supportive of the boys’ sport, and plays with them at home, where he and his father built a cricket pitch and nets.

42 From the time of separation the four children remained with and were cared for by Mrs Lumley. It is her evidence that Mr Freeth had sporadic contact with them, and did not have regular contact with the children until March 2007. An order made by the Family Court at Parramatta on 18 July 2007 gave the parties equal shared parenting responsibility for all four children. The three younger children were to live with Mrs Lumley except for a schedule of times, each alternate weekend, and Fridays and Tuesdays and one day in the alternate weeks; school holidays to be shared. When they are with Mr Freeth the children live at Tintuppa. Parental arrangements for Lewis were not dealt with by the order and since January 2007 Lewis has lived, at most times, at Tintuppa with Mr Freeth, with an arrangement for visiting Mrs Lumley.

43 Mrs Lumley’s credit union statements show that when the relationship ended she had approximately $17,000.00 in two credit union accounts (see exhibit A, T 17, 18). It was asserted on behalf of Mr Freeth that she then had $27,000.00 but I find that the amount she had was approximately $17,000.00. In February 2006 Mrs Lumley withdrew $6,150.00 from her Teachers’ Credit Union account, which she deposited in accounts owned by various of the children; she had made similar deposits from time to time earlier from the proceeds of Centrelink payments.

Children’s maintenance after separation.

44 After separation Mrs Lumley supported the children. Mrs Lumley has made a significant contribution to the welfare of the children since separation by contributing to their housing and maintenance appropriately and reliably, within her limited means. To do this she used savings and earnings. Before the separation it was usual for Mrs Lumley to transfer moneys from one account to the other as necessary and to keep an eye on the Mortgage Loan account; she continued to do this after the separation. In August 2006 Mrs Lumley began to withdraw money from the smaller of the accounts secured under Tintuppa, referred to as the Flexi Plus Mortgage account. Mrs Lumley withdrew sums of $500.00 from the Flexi Plus Mortgage account, commencing on 8 August 2006 and continuing weekly until the end of January 2007 (T18, 19). From time to time she transferred money from the account of Geoff R Freeth Pty Ltd to the Flexi Plus mortgage account, in sums of $5,000.00, when the mortgage account was nearing or at its limit. Otherwise she did not make any withdrawals from the Flexi Plus mortgage account. Endeavours to establish that she had done so did not succeed. They depended on assertions by Mr Freeth which, by the conclusion of cross-examination, it was clear that he was not convinced of himself. He agreed that it was likely that the majority of the transactions (other than the withdrawals she acknowledged) were made by him (T88). In my finding the only withdrawals made by Mrs Lumley were those she spoke of in her own evidence.

45 In December 2006 Mrs Lumley agreed not to take more money out of the account secured on Tintuppa and applied for child support assessment. Child support was first assessed at nil but on review it was assessed in June 2007 on the basis that his income was $80,000 per year. The first financial support relating to the children was paid in May 2007 and has been paid irregularly since then. In December 2008 child support payments as assessed were $900 per month.

46 Mr Freeth denied Mrs Lumley’s evidence that he did not provide financial support for the children in the period after separation. In his evidence he said “I provided financial support for the children in the form of $500 weekly withdrawals by Jane from a joint account and the ability of Jane to use account No. 1”. Mr Freeth changed his banking practices and, in his expression, froze the accounts when he learnt that Mrs Lumley was withdrawing $500.00 per week. Mrs Lumley withdrew the money referred to on her own initiative, and she withdrew it from an account in which she was one of the bank’s two customers and the money was secured on a house she owned. What Mr Freeth said about this was not a frank or open passage in his evidence, and confirms Mrs Lumley’s evidence that he did not provide financial support for the children; she took it from a co-owned bank account. He also asserted in evidence that Mrs Lumley continued to draw money from the account secured by mortgage, after December 2006 and until March 2007. However, cross-examination and acknowledgements made by him showed that this assertion was not reliable.

Securities charged on property.

47 Tintuppa, of which Mrs Lumley is a co-owner, has been made available as security supporting Mr Freeth’s interest in his veterinary practice. Mr Freeth’s Counsel commented on the use of the Oberon property as security to support loans for housing. Making the property available as security has been a contribution towards the acquisition and retention of assets, but they were in part or in whole Mr Freeth’s assets; whereas the use of Tintuppa as security to support an asset solely of Mr Freeth is a striking and substantial contribution to his property.

Other assets.

48 There are a number of other assets of relatively small value. I do not propose to adjust ownership interests in them, but I should be aware of those ownership interests in other assets when I come to decision. There is a maze of assertions and contradictions about assets of relatively small value. In view of the values involved it is not useful to pursue every one of these to a conclusion.

49 The parties are the co-owners of 234 shares in IAG and 1,000 shares in Telstra. Mrs Lumley separately owned 766 IAG shares at separation. Mrs Lumley’s evidence is that the IAG shares were purchased from “our joint income” and that the 1,000 Telstra shares were paid for from her income from paid employment, were purchased in December 2000 as co-owners and cost $6,219.15. It is Mrs Lumley’s evidence that dividends from jointly owned shares have gone to the benefit of Mr Freeth since separation.

50 In December 2008 there were fifteen horses on Tintuppa. Their values ranged widely. Eleven belonged to Mr Freeth and the estimates of value that he gives in evidence total $3,700. There were sheep at Oberon which Mr Freeth valued at $2,180. There were plant and equipment associated with rural enterprises, which Mr Freeth valued at $2,000.

51 There is also a quantity of furniture and household contents including a home computer and a laptop computer, the greater part of which was left at Tintuppa on separation. It is Mrs Lumley’s evidence that most of the furniture was acquired during the relationship from joint income. There are also garden and electrical tools, such as a whipper snipper, drills, a shearing table and equipment. I do not regard it as appropriate to make any order adjusting ownership of these items. They can stay where they are and in the present ownership.

52 There are also motor vehicles; the most recent spoken of in Mrs Lumley’s evidence was purchased in 2002 under a lease arrangement, later paid out. I do not regard any adjustment relating to this vehicle as appropriate.

53 Each party has a superannuation fund. However these are not large, and they will not be accessible for many years.

54 There were several references in evidence as to a ride-on lawn mower; evidence dealt with several mowers but at least the most recent is an asset of the practice and not of either of the parties.

Borrowings mortgages and guarantees.

55 It is necessary to trace, as far as evidence allows, dealings in moneys raised by mortgage and the obligations of the parties at present in relation to borrowings.

56 The Mortgage Loan Account was at first an advance of $210,000. Counsel treated the amount owing at the time of the hearing as exactly or approximately $190,000, the figure given by Mr Freeth as the balance at 9 September 2008. I infer that the only dealings on this account were payments of agreed instalments, perhaps supplemented by some or all of the savings accumulated in Mrs Lumley’s Teachers’ Credit Union account. Mr Freeth said in oral evidence that monthly payments are made directly from the practice to the mortgage account, and he thought the amount was $2,430.00. At separation the Flexi Plus Mortgage account was in debit $126,118.89. The last statement in evidence in exhibit B shows that the debit balance on 27 February 2009 was $139,898.55. There were not, or in good order there would not have been drawings on the Mortgage account, to which regular payments are required to keep possession of Tintuppa.

57 Most transactions with National Australia Bank were conducted on the Flexi Plus Mortgage account, at first an advance of $140,000. Each had authority to draw on the Flexi Plus account. Mrs Lumley also had accounts of her own in credit unions. Mrs Lumley managed the Flexi Plus account after separation by observing when it was necessary to make payments from Geoff R Freeth Pty Ltd’s account to prevent the Flexi Plus account from going beyond its overdraft limit, and making phone transfers. Mr Freeth relied on her for information about the state of the Flexi Plus account (exhibit D).

58 During the relationship Mr Freeth’s drawings from the partnership were paid into the company’s business account at the rate of $2,990.24 per fortnight. Payments to the Mortgage account were mainly made by transferring money from the business account of Geoff R Freeth Pty Ltd to the Mortgage account. From time to time savings accumulated in Mrs Lumley’s Teachers’ Credit Union account and were transferred to the mortgage account. After separation until early in 2007, when Mr Freeth says he froze the account, deposits to the Flexi Plus mortgage account came from money earned by Mr Freeth. From separation until the time of trial, only Mr Freeth made payments on the Flexi Plus mortgage account and debt secured on the home; his counsel asserted that these payments amounted to almost $80,000.00; I have not been shown the basis for this assertion. It is unremarkable that Mr Freeth made payments on the debt secured on Tintuppa and Mrs Lumley did not: he had occupation and she did not. Since separation little more can have been done than to cope with the interest.

59 Since separation Mr Freeth has paid the outgoings on Tintuppa, and has paid any maintenance costs. Work on the house at Tintuppa since separation has consisted of minor improvements and decoration, such as painting two rooms.

60 Since separation Mr Freeth has paid all outgoings on the Oberon property.

The significant assets.

61 Their ownership and values are these:

Assets owned by Mr Freeth
Oberon. $ 280,000
Veterinary Practice 165,000
Loan account 4,929
Horses $3,700 Sheep $2,180 5,880
Orange Credit Union Account 8,585
Rural plant and equipment 2,000 466,394
Assets owned by Mrs Lumley
Credit Union accounts at separation 17,000
766 IAG shares 2,727 19,727

Co-owned assets
Tintuppa $ 650,000
Less Flexi Plus Account 139,898
Less Mortgage Account 190,000 320,000
234 IAG shares 833
1,000 Telstra Shares 3,240 324,073 $810,194

Mr Freeth probably has a credit due from the practice for his drawings.

62 There are other assets, which have not been reliably valued. I will not make an order adjusting interests in them. They can stay where they are.

Decision.

63 There should be an adjustment of the interests of the parties in property. Counsel for each party supported an adjustment in submissions which contended for allocation of different proportions of what counsel spoke of as the pool of assets. Mrs Lumley's counsel contended that she should receive 43 percent of the pool. Mr Freeth’s counsel argued that Mrs Lumley should receive 20 percent. I cannot readily think of the assets as a pool: they have not been converted into cash, although adjustment will require that some be converted. At the end of the process it must be, in my judgment, that Mr Freeth will own the shares in Geoff R Freeth Pty Ltd and still have his interest in the veterinary practice. Then too, it must be that Mrs Lumley and her economic interests are disentangled from all liability for debts and guarantees which involve or assist Mr Freeth: the conflictual element means that the break must be final and complete. Unless Mr Freeth can arrange for National Australia Bank to release Mrs Lumley from guarantee and mortgage liabilities, enough cash must be raised to pay them all out. The risk that some debt burden related to him might fall on her in the future is a risk which cannot be taken.

64 One thing this means in all practicality is that Tintuppa must be sold and the debts secured on Tintuppa must be paid off. This would have happened under section 66G of the Conveyancing Act 1919 if there were no power of adjustment, so it relies but little on the Property (Relationships) Act. There should be a surplus, which I estimate at $320,000, while seeing that this depends on what happens in the sale and the state of debts to National Australia Bank. The co-owned 324 IAG shares and 1,000 Telstra shares should also be sold.

65 If sale of Tintuppa does not produce enough to pay an appropriate sum to Mrs Lumley, Mr Freeth will have to sell the Oberon property, or he may be able to raise enough money in a bank refinancing to avoid doing so. My order will give him some little time to consider how he will comply.

66 The financial contributions made by Mrs Lumley to property of the parties were at their greatest for Tintuppa, but not exclusively. After Tintuppa was acquired in September 2001 her financial contributions insofar as traceable were her joining in incurring liability for the borrowings, her contributions towards payments to the bank, the contribution of her earnings to the general household finances and the general underpinning which her domestic activities have provided for the environment in which Mr Freeth was able to do his professional work and provide most of the money for mortgage payments.

67 Mrs Lumley has also made significant contributions to the value of Mr Freeth's interest in the veterinary practice. Her contribution to the proceeds of sale of Fitzroy Street, Cowra had a significant although indirect part in his acquisition of his present practice. Her work in the practice, although not a prominent contribution, should not be overlooked. She has supported acquisition and continuance of the practice by joining in financing arrangements.

68 Mrs Lumley has also made some contribution to the conservation and improvement of the Oberon property, although her contributions were minor.

69 Mrs Lumley's contributions in the capacity of homemaker and parent should be accorded a high value when considering a just and equitable adjustment. The main factor in the parties’ overall financial position has been Mr Freeth's economic strength: his professional practice and earnings, his initial ownership of Oberon and his backing for financing arrangements with security property and with prospective future professional earnings. He also made significant contributions to the welfare of the children as a parent, although Mrs Lumley’s contributions of this kind have greatly outweighed his.

70 Mathematics are of little use in the decision required by s 20(1) because precise information about financial contributions is not available: not even sufficiently clear information for an approximation. Then too, mathematics do not relate to evaluations of contributions referred to in s 20(1)(b).

71 Insofar as these considerations can be evaluated it appears to me that Mr Freeth has made the greater contribution overall to the parties’ asset position, but that Mrs Lumley's contribution is almost as great as his and she should receive a substantial part, approaching one half, of the net value of assets.

72 In my judgment the appropriate order is one under which Mrs Lumley will be clear of all financial obligations and will receive $350,000 out of the significant assets. She should also retain her Credit Union accounts and her 766 IAG shares. When the financial arrangements are complete Mrs Lumley should resign as a Director.

73 I have not yet dealt with costs.

74 ORDER:

Order that by way of adjustment of interests in property pursuant to Property (Relationships) Act 1984 s 20:

(1) The plaintiff Mrs Lumley is to be paid $350,000.

(2) The sum of $350,000 is to be raised and paid first by selling the co-owned assets Tintuppa, 234 IAG shares and 1,000 Telstra shares and paying her the proceeds up to $350,000.

Second if $350,000 is not raised from selling Tintuppa and the shares, by the defendant Mr Freeth paying her sufficient money to make up $350,000.


(3) Reserve further consideration of the sale of Tintuppa and of orders requiring sales of other assets if Order 1 is not complied with.

(4) The defendant Mr Freeth is to indemnify Mrs Lumley and save her harmless from all or any liability which she has or may have from financing arrangements, borrowings, debts, mortgages or guarantees for the benefit wholly or in part of himself, of Geoff R Freeth Pty Ltd or of the veterinary practice known as Canobolas Family Pet Hospital or in any other way connected with him; and is to give adequate security for this indemnity.

(5) Reserve further consideration of orders to give effect to and carry out Order 4.

(6) Except as provided for by these orders each party is to retain all property presently in that party’s possession. This extends to the plaintiff’s Credit Union accounts and to her 766 IAG shares.

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