McKenzie v Storer
[2007] ACTSC 88
•26 October 2007
McKenzie v Storer [2007] ACTSC 88
CONTRACT – no intention to create legal relations – no contractual relationship
PROPERTY – tenants in common – proportion 75:25 – mortgage of co-owned property - whether defendant holds interest on trust – common intention as to beneficial interest in property
DOMESTIC RELATIONSHIPS – whether relationship a “domestic relationship” – non-sexual, non-familial relationship - whether relationship included support of a domestic nature – financial and non-financial contributions motivated by friendship and charity – whether residence requirement satisfied where one party frequently away – whether periods of conflict and tension can be included when measuring duration of relationship – adjustment of property interests
WORDS AND PHRASES – “of a domestic nature”, “resident”
Domestic Relationships Act 1994 (ACT) ss 3, 11, 12, 13, 14, 15, 19, 38
Guardianship and Management of Property Act 1991 (ACT) ss 7, 8
Legislation Act 2001 (ACT) ss 139, 142, 169
Allen v Snyder [1977] 2 NSWLR 685 followed
Baumgartner v Baumgartner (1987) 164 CLR 137 discussed
Beuth v Blums [2005] ACTSC 44 cited
Byrne v Opuls (2002) 29 Fam LR 290 followed
Calverly v Green (1984) 155 CLR 242 referred to
Crellin v Robertson (2004) 32 Fam LR 406 followed
Davies v Hawthorn [2004] ACTSC 119 cited
Ferris v Winslade (1998) 22 Fam LR 725 followed
Gissing v Gissing [1971] AC 886 cited
Hafza v Director-General of Social Security (1985) 6 FCR 444 followed
Hayes v Harrison [2002] ACTSC 22 distinguished
Johnston v Hazel [2003] ACTSC 46 referred to
Kempe v Webber (2003) 31 Fam LR 332 followed
Kilby v O’Brien [2006] ACTSC 20 distinguished
Prymas v Whittaker [2006] ACTSC 48 followed
No. SC 937 of 2005
Judge: Stone J
Supreme Court of the ACT
Date: 26 October 2007
IN THE SUPREME COURT OF THE )
) No. SC 937 of 2005
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:ROBYN JOYCELYN MCKENZIE
Plaintiff
AND:HELEN MARGARET STORER
Defendant
ORDER
Judge: Stone J
Date: 26 October 2007
Place: Canberra
THE COURT DIRECTS THAT:
The parties are to bring in agreed short minutes of order giving effect to the reasons of the Court or, if they are unable to agree, short minutes of the orders for which they respectively contend on a date to be arranged with the associate of Stone J.
The plaintiff and the defendant are registered as tenants in common in proportions of 75% and 25% respectively of a property known as 12 Cumbrae Place, Kambah in the Australian Capital Territory. The plaintiff now seeks orders effecting the transfer of the defendant’s 25% interest to her. It is necessary in this proceeding to review the history of the parties’ relationship, their acquisition of the property and the breakdown of the relationship between them.
The central issue in this case is the nature of the arrangement made between the plaintiff and the defendant. It is a regrettably familiar tale of ill-conceived plans, poorly documented and implemented, albeit with good intentions. The possibility that not all would go according to their plans and expectation was not contemplated and consequently, no provision was made for such contingencies. The major aspects of the arrangement were informal and undocumented and only the plaintiff and the defendant were privy to them. Their evidence has been critical to an understanding of the arrangement and for this reason it is useful, at the outset, to say something about my assessment of these two key witnesses.
The Plaintiff
It is not in contention that the plaintiff is a person who has required care and assistance for many years. Her present needs are evidenced by the fact that on 26 September 2005, Mr Stephen Janes was appointed the plaintiff’s guardian pursuant to ss 7 and 8 of the Guardianship and Management of Property Act 1991 (ACT). The powers granted to Mr Janes were limited to legal issues only. This proceeding is brought on the plaintiff’s behalf by Mr Janes. The order appointing Mr Janes states that it is made:
UPON THE TRIBUNAL BEING SATISFIED pursuant to Sections 7 and 8 of the Guardianship and Management of Property Act 1991 that the protected person [the plaintiff] is suffering from an impaired decision-making ability in relation to matters relating to his or her health or welfare and property; and EITHER:
· there is, or is likely to be, a need for a decision in relation to such matters; or
· the person is likely to do something in relation to the matter that involves, or is likely to involve, unreasonable risk to the person’s health, welfare or property;
AND if a guardian and manager are not appointed – the person’s needs will not be met; or the person’s interests will be significantly adversely affected.
There was no suggestion that the plaintiff had ever been subject to a guardianship order before that made on 26 September 2005. There is some tangential evidence that suggests the plaintiff suffered from an impairment of her decision-making ability at the time of the events in question but no direct or expert evidence about the plaintiff’s mental state at that time.
To some extent the plaintiff’s present needs are obvious however no evidence was presented explaining their nature or how they might affect the plaintiff’s evidence. There was no evidence as to the extent or nature of the impairment of the plaintiff’s decision-making ability referred to in the guardianship and management order. Nor was there any evidence as to whether other cognitive functions were affected, such as her recall of past events. This was a notable omission in a matter whose resolution heavily depended on the evidence of the plaintiff and the defendant. Consequently the evidence in this matter has presented more than the usual level of difficulty, even for a case of this nature.
The plaintiff’s counsel, Mr Blank raised the problem at one point in her cross-examination. He advised the Court that the evidence the plaintiff was giving was inconsistent with instructions he had received. He also said that her litigation guardian, Mr Janes, who was present throughout the trial, had expressed concern that she did not understand some of the questions put to her. Mr Blank raised the possibility of an adjournment to obtain some expert evidence, apparently without any specific plan in mind. Given the length of time since this matter commenced (15 December 2005) and, more particularly since the guardianship order was made, the plaintiff’s difficulties could hardly have come as a surprise to her legal advisers. Indeed, counsel for the defendant, Mr Hausfeld stated that he had raised this issue with the plaintiff’s advisers many months before the hearing commenced. In the circumstances I was not prepared to adjourn the hearing unless I could be reasonably satisfied that this would assist in resolving the problem. As it turned out no application for an adjournment was made and Mr Blank was instructed to proceed.
Mrs McKenzie has filed two affidavits in these proceedings. The affidavits were prepared with the assistance of the plaintiff's solicitor and set out various matters surrounding the arrangement between the plaintiff and the defendant. Whereas the account given in her affidavits was a reasonably coherent explanation of the circumstances which led to the defendant having a 25% interest in the Kambah property, her oral evidence was often quite different. On cross-examination at the hearing the plaintiff became agitated easily and contradicted much that was in her affidavit. For instance, at one stage the plaintiff declared that she had no knowledge of how the defendant came by the interest and asserted that she had no arrangement with the defendant that would explain it. I should emphasise that although Mr Hausfeld, was persistent in his questioning, as he was entitled in his client’s interest to be, he did not harass the witness, or rush her or in any way put her under unnecessary pressure. In an attempt to address the problem, in the latter part of the cross-examination the Court took a five minute break after every 35 minutes.
The plaintiff vigorously maintained that she was entitled to the whole of the interest in the Kambah property and her approach to the defendant's claim was to deny it without explanation. While my impression was that she generally understood the questions put to her she became agitated when she seemed not to be clear about whether her answers would assist her case. Sometimes she seemed to tailor her evidence to what she perceived to be her best interests and at other times she volunteered information that was contrary to her interests and inconsistent with evidence she had already given either by affidavit or orally. In cross-examination she was often aggressive and truculent especially when confronted with a proposition she did not want to admit. I do not suggest that she was deliberately untruthful but that, consciously or unconsciously, she avoided giving direct answers when she appeared to think her answers would not assist. The inconsistencies in her evidence and her intermittent confusion and agitation made it extremely difficult to assess her evidence and, in the circumstances I cannot attach much weight to her account where it is inconsistent with other evidence.
The defendant
The defendant was a much more coherent witness than the plaintiff. Although financially unsophisticated, she is not uneducated and was in stable full-time employment for many years. Her evidence impressed me as attempting to give a fair and unbiased factual account of her arrangement with the plaintiff and of their relationship. Nevertheless I think her disappointment and sense of betrayal arising from the disintegration of the parties’ relationship has, to some extent, coloured her interpretation of the arrangement. Despite this I found her to be generally honest and truthful and, except where I have otherwise indicated, I have accepted her evidence. That being said, there are surprisingly few differences between the parties as to the relevant facts. The differences between them relate mainly to how they felt about events and their evaluation of each other’s conduct.
The facts
The plaintiff and the defendant are both committed Christians. They first met in about 1990/91 through their membership of the same church and initially saw each other only in that context. At that time Mrs McKenzie lived in Torrens in the ACT with her husband. Mrs McKenzie has two surviving children both of whom are mentally handicapped. A third child died as a result of a tragic accident aged about two years.
According to her sister, Mrs Judith Baskin, the plaintiff has always had difficulty in managing her financial affairs and is often very stressed about finances. Apparently the plaintiff’s parents recognised this and left the plaintiff’s share of their estate subject to a trust of which Mrs Baskin is the present trustee. Mrs Baskin’s control of the trust funds had led to strained relations between the sisters. At the hearing, the plaintiff expressed resentment that she did not have direct access to those funds.
When Mr McKenzie died in about 1991, Ms Storer was one of the care team assigned by the church to provide the plaintiff with pastoral support. In December 1991 Mrs McKenzie bought a townhouse in Queanbeyan and Ms Storer (with others) assisted her with the move from Torrens. In particular Ms Storer assisted with cleaning the Torrens house and preparing it for occupation by new owners. According to Ms Storer the house was in a filthy condition and it was a demanding task. She referred to Mrs McKenzie’s animals having had the run of the house and to the need to clean dog excrement from the laundry walls and floors throughout the house.
Ms Storer continued to visit Mrs McKenzie in her new home in Queanbeyan occasionally taking her out shopping, to the dentist, out for dinner or to church. She met Mrs McKenzie’s children and “was sometimes invited to birthday parties and other family gatherings”. In 1993, for most of the year, Ms Storer looked after the home of some friends who were away. The experience was positive and she began to house-sit on a regular basis. At one stage Mrs McKenzie gave her permission to store some boxes of her belongings in her shed at Queanbeyan. This was a convenient arrangement for Ms Storer who was able to have access to her belongings whenever she visited. At this stage there appears to have been a warm and co-operative friendship between the parties.
In 1996 and 1997 Ms Storer occasionally stayed in the spare bedroom in the Queanbeyan house for short periods. In July 1998, when Ms Storer needed somewhere to live for about five months until her next house sit, she arranged to stay with Mrs McKenzie paying board of $30 per week. She had a bedroom and the use of laundry and kitchen facilities. Not long after Ms Storer moved in, Mrs McKenzie expressed a desire to move back to Canberra motivated, at least in part, by a desire to move away from a male friend who had become a nuisance. In September 1998, Mrs McKenzie found the house at 12 Cumbrae Place, Kambah which is the subject of the present proceedings. She was very anxious to buy it. Among its attractions was the fact that it backed onto the home of a close friend, Christine Evans, whom she described as a surrogate daughter.
Initially she was unable to buy the house because she could not raise the necessary finance, and it was sold to other purchasers. Mrs McKenzie was bitterly disappointed and on at least one occasion Ms Storer found her in tears over the matter. According to Ms Storer, she and the plaintiff prayed together, asking God to help her obtain the property. Shortly afterwards, the agents responsible for the Kambah house notified the plaintiff that the sale had fallen through and asked if she was still interested. The plaintiff was still keen to purchase the property but, as both she and Mrs Baskin admitted in cross-examination, she could not afford to do so without first selling the Queanbeyan property. She was not able to secure bridging finance because she had no income other than an invalid pension.
Ms Storer said that she felt sorry for the plaintiff and wanted to help her. She also said that she had a clear message from God to the effect that she should "go in with the widow". The defendant offered to help the plaintiff obtain the Kambah house by joining her in a loan application for the necessary finance. Although she had no significant assets, as a permanent public servant she had a secure income and, provided her personal debts of about $30,000 could be consolidated with a loan to buy the house, was in a position to make regular payments. Mrs McKenzie had unencumbered ownership of the Queanbeyan property and could therefore provide security for a loan.
According to Ms Storer the idea of obtaining a loan jointly with the plaintiff came initially from a finance broker, Mr Rick Reeks, whom she contacted through a mutual friend. The plaintiff and the defendant discussed the matter. Ms Storer’s account was as follows:
We discussed what this would mean for each of us. I explained to her in words to the effect, “I have personal debts of $30,000 that I am paying off. Rick suggested that we apply for an extra $10,000 to pay for the repainting, new carpets and vinyl for the Kambah house.” I explained words to the effect, “We would have to borrow $120,000 to cover the $80,000 cost of buying Kambah. The other $40,000 will be to pay my debts and for improvements to Kambah. We could think of the loan being about 1/3rd for me and 2/3rd for you.” Robyn agreed saying words to the effect, “OK, 2/3rd for me and 1/3rd for you”. …
I said words to the effect, “I’ll pay for the improvements to Kambah but you’ll need to repay to me everything I spend on improving the house once Queanbeyan is sold.” Robyn said words to the effect, “Yes”.
Robyn asked words to the effect, “How will we pay the mortgage off until I sell Queanbeyan?” I replied with words to the effect, “I’ll make the payments for you up until then because the Queanbeyan place should sell quickly once you’ve made a few improvements. You can then pay for the Kambah house out of the proceeds of selling Queanbeyan.”
I said to Robyn words to the effect, “I’ve calculated that this would mean we’d have to share the Kambah house for 4-5 years while my portion of the loan gets repaid. Otherwise, I could not afford to live somewhere else while I pay the mortgage.” Robyn replied with words to the effect, “OK”.
Ultimately, on the strength of the plaintiff’s assets and the defendant’s earning capacity, the parties were able to obtain a loan sufficient to pay for the Kambah house and to repay the defendant’s debts. On about 19 November 1998, the plaintiff and the defendant entered into a contract to purchase the Kambah property as tenants in common in shares as to 75% to the plaintiff and 25% to the defendant. The deposit was met by a deposit bond purchased by the defendant. The purchase was settled on 11 December 1998.
The bank loan of $120,000 was secured by the Queanbeyan and Kambah properties. It was a condition of the loan that the defendant not only be a party to the loan but also be registered on the title to the Kambah property and a signatory to the mortgage. It is not in contention that the plaintiff and the defendant were jointly and severally liable to the bank to repay the loan. The loan monies were applied as to $79,997.83 to the adjusted purchase price of the Kambah property; as to $37,500 to the defendant’s existing debts and to her personal use and as to the balance for transaction costs and refurbishment of the Kambah house.
I accept the defendant’s explanation (see [17] above), that the plan was for the defendant to make all the mortgage payments until the Queanbeyan property was sold. As Queanbeyan house was expected to sell for over $100,000, it was not envisaged that the plaintiff would have any difficulty in paying off her share of the mortgage debt once the Queanbeyan house was sold. The defendant would repay her share, with interest at bank mortgage rates over a period of years. The defendant's evidence was that she expected the repayment of her portion of the loan to be completed within 4-5 years. I accept that the parties envisaged that, once Queanbeyan was sold, Ms Storer was to be credited with the amount she paid in excess of her commitment to repay 1/3rd of the loan which was applied for her benefit.
Unfortunately, things did not go as the parties planned. Although it appears that relations were amicable at first tensions soon arose. The Queanbeyan house took longer to sell than they expected when they entered into the mortgage and it sold for less than they expected. A quick sale was important for two reasons. First, because of the burden that making all the repayments on the loan placed on the defendant and also because the interest rate on the loan was to increase by almost 1.5% after the first twelve months. Once the Queanbeyan house was sold its proceeds could be used to reduce the capital outstanding on the loan. Mrs Storer regarded it as important that this occur, with consequent reduction in the amount of her repayments, before the interest rate rise took effect. It would seem that both the plaintiff and the defendant expected that the Queanbeyan proceeds would be sufficient to discharge that part of the loan that had been deployed for Mrs McKenzie’s benefit.
Ms Storer, who had a little experience working with a real estate agent, tried for some months to sell the Queanbeyan property privately but without success. In April 1999, when her father became seriously ill, Ms Storer told Mrs McKenzie that she would have to get an estate agent to sell the house. Apparently Mrs McKenzie took no action for some time. There is some suggestion in the evidence that she toyed with the idea of renting the Queanbeyan house and using the rent to make the mortgage payments. In any event, it was sold late in 1999, about a year after the parties had taken out the loan. During that time Ms Storer continued to pay the whole of the mortgage payments. Mrs McKenzie’s dilatoriness caused a good deal of tension between her and Ms Storer. In fact Ms Storer described the atmosphere in the Kambah house as “toxic with hostility”.
Settlement of the Queanbeyan sale took place on 24 December 1999. The property was sold for $88,850. The settlement sheet shows that $1,085.14 was paid to the solicitors who acted on the conveyance and $9,035 was paid to Ms Storer. The latter sum was a repayment of money she had spent in preparing Queanbeyan for sale and refurbishing Kambah. At least in part, Ms Storer was able to provide this amount from the amount she received from the Kambah loan; see [19] above. Ms Storer expected that, after payment of these amounts, Mrs McKenzie would apply the balance to the mortgage. She found, however, that Mrs McKenzie had paid only $53,155.54 and had kept back about $23,013.29 for her personal use. Ms Storer said that she felt cheated and betrayed and told Mrs McKenzie how she felt. Mrs McKenzie said in her affidavit that she never spoke to Ms Storer about what she would do with the proceeds from Queanbeyan. Whether or not that is literally true, I accept that it was part of the arrangement that they would be applied as Ms Storer expected.
After that, relations between the parties went from bad to worse. The problems were exacerbated by Mrs McKenzie not making her full share of the mortgage payments until April 2001. Mrs Storer was uncomfortable living in the Kambah house and took to staying out of the house as much as possible, coming home late at night and being away at weekends. Her mother, Mrs Mavis Storer confirmed that the atmosphere was not a happy one.
The evidence of Mrs Baskin and of Mrs McKenzie’s cousin Max Stewart shows that Mrs McKenzie’s family and friends became increasingly concerned about the arrangement with Ms Storer. Early in 2003 there was a meeting between Ms Storer and some of Mrs McKenzie’s family and friends including Mrs Baskin, Mr Stewart and Mr Stephen Janes. They told Ms Storer that Mrs KcKenzie wanted her to move out of the Kambah house and asked when she could do that. Ms Storer responded that it was not possible for her both to pay the mortgage and rent elsewhere but that if she took early retirement from her public service position in January 2004 she could move out then. Ms Storer described the circumstances of her leaving the Kambah house as follows:
I did arrange early retirement for 9 January 2004. This was to enable me to have sufficient funds to live somewhere else and still meet my obligations to pay the loan. This was necessary because Robyn wanted me out of the house and staying there was intolerable. Robyn had also enlisted the support of her family and friends in getting me out of the house. With the money from my early retirement, I was able to support myself elsewhere and still meet my obligations to repay some of the loan.
I vacated the Kambah house on 14 January 2004 and I have not lived there since. I had been forced out by Robyn’s attitude, by the pressure from several members of her family and by pressure from Pastor Janes, Robyn’s pastor and my former pastor.
I accept that Ms Storer’s moving out of the Kambah house was, for the her reasons she gives, not entirely voluntary although there was no question of her being locked out. I note, however, that in these situations there is generally something to be said on both sides and, while the pressure applied by Mrs McKenzie, her friends and family was the precipitating factor it is not appropriate to attach blame to any party for the inability of the plaintiff and the defendant to live together.
Did the plaintiff and the defendant enter into legal relations?
In my view the evidence shows that the plaintiff and the defendant did not intend to enter into legal relations with each other and did not do so. Ms Storer’s evidence is explicit on the point and, on this issue, the plaintiff’s account, though confused, is generally in accord. I do not believe that they considered their arrangement to be attended with legal consequences. Even if I am wrong and they intended to make a contract, there is not sufficient certainty in the nature of the arrangement for it to be enforceable.
In my view this was an arrangement between friends that arose from Ms Storer’s desire to assist Mrs McKenzie obtain the house she so desperately wanted while at the same time giving herself some security in her living arrangements. There was the additional benefit that Ms Storer’s debts could be repaid at a lower rate of interest than otherwise, although this was not a driving factor.
For Ms Storer it was an important part of the arrangement that she be secure in her right to remain at Kambah while paying off the debt she had taken on. She also accepted that Mrs McKenzie should be protected in relation to her debt. I accept that part of the arrangement was that the parties would make wills that would provide for their mutual protection. Ms Storer made provision in her will for the payment of her debt and put pressure on Mrs McKenzie to provide by will for Ms Storer’s right to remain at Kambah until she had repaid the amount for which, as between the parties, she was responsible. Although I accept it was part of their arrangement that the parties would make these provisions in their wills, it does not alter my view that they did not intend that they were legally obliged to do so. Ms Storer herself said that she felt the agreement they made “was a commitment, but it wasn’t a contract”. As committed Christians they appeared to be prepared to rely on moral rather than legal obligations.
The fact that the parties did not intend to enter into legal obligations with each other does not mean that there were no legal consequences of the arrangement they made and which, in part, they put into effect. I find that, while there was no intention to create legal obligations, there was a common intention driving the arrangements they made for the acquisition of the Kambah property which had consequences for their interests in the Kambah property.
The fact of a common intention can be established by the evidence of both parties. On crucial points relevant to this issue Mrs McKenzie’s evidence is consistent with Mrs Storer’s as well as with some documentary evidence including, in one case, a document signed by Mrs McKenzie. This evidence is discussed in the context of examining the parties’ interests in the Kambah property.
The parties’ interests in the Kambah property
There can be no doubt that the defendant has a proprietary interest in the Kambah as tenant in common with the plaintiff. The plaintiff claims, however, that the defendant holds her 25% registered interest in trust for her.
In her affidavit of 14 February 2007, Ms Storer rejected the claim that she held her interest on trust for Mrs McKenzie. She said that Mr Capon, the solicitor who acted for Mrs McKenzie and her on the purchase asked if she and Mrs McKenzie wanted each to hold a 50% interest. Ms Storer noticed that Mrs McKenzie “appeared disapproving of this” so she suggested 75% for Mrs McKenzie and 25% for herself. She added:
Mr Capon never suggested that I should declare any trust over my 25% of the title. Neither Robyn nor I ever discussed the issue of my declaring any trust. I do not recall the issue ever being mentioned of any trust prior to purchase of the Kambah Property. I never intended that I should hold my 25% title on trust for anyone.
None of myself, Mr Capon or Robyn ever suggested that my 25% title was only legal, with no beneficial interest in the property. Such legal distinctions were never raised. I was just to have 25% of the title.
I accept the truth of Ms Storer’s statement. The plaintiff’s claim that Ms Storer held her interest subject to an express trust was prudently abandoned by her counsel at the hearing. In any event it could not have succeeded, there being simply no evidence to support the claim. Similarly I reject the claim that Ms Storer’s interest was subject to a resulting trust in favour of the plaintiff. This claims were not pressed at the hearing and it may be that the plaintiff abandoned it in practice if not formally. In any event it could not succeed on the evidence before the Court. The position is quite different in regard to the plaintiff’s constructive trust claim.
In assuming liability under the mortgage taken out to finance the acquisition of the property Ms Storer would, in the absence of any intention to the contrary, be presumed to take beneficially as well as legally; Calverley v Green (1984) 155 CLR 242. The fact that the registered interest is held by Mrs McKenzie and Ms Storer as to 75% and 25% respectively would, in the absence of any intention to the contrary, be sufficient to show that their beneficial entitlement reflected their legal entitlement. In this case, however, there is ample evidence of an intention to the contrary.
The evidence shows that neither Ms Storer nor Mrs McKenzie ever intended that Ms Storer being on the title to the Kambah property should give her any interest in the property beyond the mere legal title that she acquired on registration as a tenant in common with Mrs McKenzie, and the right to live there while she repaid her part of the loan. This much is shown by Ms Storer’s own evidence and that of Ms Baskin. It is consistent with the evidence of the plaintiff.
As previously indicated (see [16]-[19] above), the Ms Storer was included as a co-owner to facilitate the bank loan to allow Mrs McKenzie to purchase the Kambah property. Although they did not express their intention in technical legal language, the plain intention of the parties was that the house at Kambah was to be Mrs McKenzie’s. Ms Storer was to make no contribution to the purchase price of the house; it was to be funded from that part of the loan attributed to Mrs McKenzie, which would then be repaid from the proceeds of Queanbeyan. Ms Storer’s share of the loan monies was for her personal use and she was to remain on the title only until she had repaid her portion of the loan. After that she would transfer her interest in the property to Mrs McKenzie.
The evidence in favour of this position is compelling. Firstly, the defendant’s intention that on repayment of her debt she would transfer her 25% interest to the plaintiff is evidenced in a handwritten document given to Judith Baskin on 5 February 1999, less than two months after the purchase was completed. The document which is headed “Financial Arrangement agreed prior to the purchase of 12 Cumbrae Place [Kambah]”, states:
The Agreement which Robyn & I have yet to formalize in writing, sees me given right to stay at Kambah as I need to (between house sits etc) and allows a $40,000 mortgage over title of the house to remain (which I am paying off by direct debit from my pay). When Queanbeyan sells Robyn is to pay the $80,000 off the mortgage in a lump sum. Any remaining monies are to abate a personal loan she took out with CBA Queanbeyan ($8,000) and to do with as she chooses.
I will at that time “sign-over” … my 25% “equity” in the house, on the proviso that if anything happens to Robyn it won’t be sold out from under me & I can still repay the loan until I’ve paid it in full. My share of repayment (1/3 to Robyn’s 2/3) is $150 fn & Robyn’s is $300 fn.
The defendant gave this document to Mrs Baskin so that “you know what we are doing”. Mrs Baskin also gave evidence that Ms Storer told her, “I am nominally on the title and will withdraw my claim to the Kambah house when my part of the loan was (sic) paid up”.
There is also a further document that Ms Storer drafted on 20 April 1999. It is signed by both the plaintiff and the defendant. It states that Ms Storer “will make no claim whatsoever upon the title” to the Kambah property. It continues that the contract to purchase the property as “joint owners” was “necessary to provide a legal basis for a Mortgage from ANZ”. It states that Helen Storer will make the mortgage payments until “the Mortgages are abated” from sale of the Queanbeyan property and that the residual monies (after payment of the proceeds from the sale of Queanbeyan will be repaid by Ms Storer “until abated”. It further states that Ms Storer has lodged a will with the solicitors who acted on the purchase of Kambah and that the will authorises payment of “outstanding monies” from her life insurance “before my estate is settled”. The final paragraph of the document states:
Mrs McKenzie has consented to me staying in this property as long as I need a home to live in.
On cross-examination Ms Storer said that the statement that she could stay as long as she needed was made in the context of the agreement with Mrs McKenzie and meant that she could stay until her portion of the loan was repaid. She said that she had drafted this document in 5 or 6 minutes and that she drafted when she was experiencing personal and financial stress and was under pressure from Mrs McKenzie’s family to formalise the arrangement. She stated, “I never turned my mind to creating a legal contract” however she did feel the need to get a written commitment from Mrs McKenzie that she could stay in the house until her debts were paid.
As a practical matter, the parties’ actions are consistent with Ms Storer being a boarder not an owner. Although Ms Storer lived at the Kambah property her use of the house was very restricted. She stated:
At Kambah, I occupied just one small bedroom, with a single bed and small wooden wardrobe, while Robyn had the other rooms. I kept my things stacked up in boxes and bags in that room. Robyn’s things and her pets were around the rest of the house. I also kept some things at my son’s place. At Kambah, I generally did my own cooking and laundry, although after a time I ate out frequently in the evenings to avoid conflict with Robyn. Within a short time after my living at the Kambah property, I adopted the habit of generally not returning home until 8:30pm or 9:00pm, when Robyn was usually in bed. Generally, I also avoided cooking because Robyn tended to complain about cooking smells or the need to wash up afterwards. She seemed to resent my being in her space, so I usually kept to my room.
Apart from Ms Storer’s room the house was furnished by Ms McKenzie who chose the paint colours and floor coverings and generally decorated it. Ms Storer contributed to household expenses such as rates, electricity and telephone. She paid the whole of the house insurance for first three years. She also made other financial contributions from time to time. As well as financial assistance Ms Storer assisted with some tasks such as moving furniture into Kambah and arranging some repairs. In addition her son, Daren Nimmo also helped with some household maintenance such as lawn mowing.
In her affidavit of 14 February 2007, Ms Storer stated that her position that she would make no claim against the title applied only “if things happened as we agreed”. This qualification is so at odds with her stated position close to the time that the arrangement was made that I do not give it any credence. I am satisfied that the intention of the parties is clear. Ms Storer took her interest as tenant in common with Mrs McKenzie only to meet a bank condition for the grant of a loan. The only benefit that the parties intended that Ms Storer have in respect of the property was a licence to live there until her part of the loan was repaid. This right is not a proprietary right and given that Ms Storer has not attempted to live in the property since 2004 it is not necessary for me to consider if the revocation of that licence was susceptible to restraint by way of injunction.
There was a great deal of evidence detailing the numerous ways in which the parties, in particular Mrs McKenzie, had failed to live up to the commitments they had made. It is not necessary for me to consider these in any detail. The joint endeavour had collapsed and the parties had not provided for this eventuality. Since the arrangement between Mrs McKenzie and Ms Storer was consensual but not contractual, it is not necessary to attempt to allocate fault. It is, however, necessary to give effect to the common intention of the parties in regard to the interests that they obtained on the purchase of the Kambah property.
Counsel for Ms Storer submitted that the imposition of a constructive trust against Ms Storer would not be appropriate because she has not acted unconscionably. This submission fails to recognise that it would be unconscionable for Ms Storer to refuse to transfer her interest to Mrs McKenzie when the circumstances in which she acquired included a common intention that she did not have a beneficial interest and would in due course transfer her interest to Mrs McKenzie. This is not an instance of the court ascribing to the parties an intention that does not exist. That is impermissible; Allen v Snyder [1977] 2 NSWLR 685 at 694 per Glass JA. I have found on the basis of oral and written evidence, that the parties had an actual intention that Ms Storer should not hold a beneficial interest in the property and that, once her debt had been repaid she would transfer her registered interest to the plaintiff. To refuse to give effect to this intention would be unconscionable and it is this unconscionability that equity will act to prevent by the imposition of a trust. In Allen v Snyder at 694, Glass JA in referring to such trusts, and to the House of Lords’ judgment in Gissing v Gissing [1971] AC 886, said:
The courts have given effect to them because the legal owner, in denying the beneficial interest, has behaved inequitably. The rest of the judgment [in Gissing v Gissing per Lord Diplock at 905] makes it clear that the inequitable conduct relevant for present purposes consists in disclaimer by the legal owner of the obligations of conscience based upon an express agreement, or common intention of the parties.
It follows that Ms Storer holds her 25 % interest in trust for the plaintiff. While I accept that Ms Storer’s motivation in entering into the arrangement was benevolent and that she may, understandably, feel that her kindness and concern for Mrs McKenzie have not been appreciated, it would, none the less, be unconscionable for her to refuse to transfer her interest to Mrs McKenzie, subject to certain conditions to protect her legitimate interests.
As explained above, on entering into the loan agreement and mortgage with the bank, Ms Storer assumed liability for the loan jointly and severally with Mrs McKenzie. At the time the loan to purchase Kambah was taken out, Ms Storer estimated that it would take her 4-5 years to repay her share of the loan during which time she would live in the Kambah house. The evidence is that the parties moved into the house in Kambah early in 1999 and that Ms Storer moved out on 14 January 2004. According to her, at that stage she expected to have repaid her share of the loan by September 2004 and after that time she did not intend to make any more payments. She said that she stopped paying the loan after 9 November 2004. She said that she resumed payments in January 2006 because she was aware that Mrs McKenzie had not been making payments and was concerned about her credit rating. Any order that Ms Storer transfer her interest to Mrs McKenzie will need to take account of the contributions made by Ms Storer and her obligations to the mortgagee bank.
Claims under the Domestic Relationships Act
The plaintiff and the defendant both make claims under the Domestic Relationships Act 1994 (ACT). As I have found for the plaintiff on the constructive trust issue, and because the relief I am prepared to give on that basis would not materially differ from that I would grant under the Domestic Relationships Act, it is not strictly necessary to consider her claim. The defendant, however, has made a counterclaim based on that Act and therefore I must consider the issue. The defendant’s primary position is that the relationship between Mrs McKenzie and Ms Storer was not a domestic relationship within the meaning of s 3 of the Act. In the alternative, however, the defendant claims that, should find such a relationship to exist, the defendant claims a half interest in the Kambah property.
In order for relief to be granted under the Act, four requirements must be satisfied. The relationship between the plaintiff and the defendant must fall within the statutory definition of a “domestic relationship”. It must also meet the statutory prerequisites for residence within the ACT and for the length of the relationship. Finally, the application for relief must have been made within time. I shall address each of these requirements in turn.
Was the relationship a “domestic relationship”?
Domestic relationship is defined in s 3(1) of the Act which commenced on 11 July 1997. Since that date there have been some changes to the definition all of which are immaterial to this proceeding. In so far as is relevant for present purposes, a domestic relationship is:
a personal relationship between 2 adults in which one provides personal or financial commitment and support of a domestic nature for the material benefit of the other …
Section 3(2) explains the concept of “personal relationship” as follows:
(a)a personal relationship may exist between persons although they are not members of the same household; and
(b)a personal relationship shall not be taken to exist between persons only because one of them provides a service for the other –
(i)for fee or reward; or
(ii)on behalf of another person (including a government or body corporate); or
(iii)on behalf of an organisation the principal objects or purposes of which are charitable or benevolent.
Mr Blank argued that, under the broad terms of the Act, the financial arrangement between the plaintiff and the defendant was sufficient to allow their relationship to be characterised as a domestic relationship. Indeed, he went so far as to say that this is a “classic situation where the domestic relationship is satisfied where there is no intimate relationship”. (I interpolate that both the plaintiff and the defendant are adamant that there had never been an intimate or sexual relationship between them.)
Mr Hausfeld submitted that, although the statutory definition appears to be very wide, the key requirement is that of “support of a domestic nature”. In the absence of an intimate relationship, or of “laundry, house cleaning, cooking, buying food, planning a life together, introducing one another as partners”, the support provided by the plaintiff to the defendant could not be said to have a “domestic nature”.
In reply Mr Blank submitted that the phrase “of a domestic nature” is intended to distinguish such support from charitable, state or commercial support, which is specifically excluded by s 3(2)(b). Finally Mr Blank further submitted that the Act is beneficial legislation, and its broad terms should be construed accordingly.
It is clear to me that the relationship between the plaintiff and defendant constituted a personal relationship between two adults. It is also clear that their joint mortgage constitutes at least some degree of mutual financial commitment, which both parties have argued has materially benefited the other. The question thus becomes whether their relationship included “support of a domestic nature”.
In examining the meaning of that phrase, “the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation”; see Legislation Act 2001 (ACT) s 139. Regard may be had to external materials; Legislation Act 2001 (ACT) s142.
The Domestic Relationships Act has received academic praise for its broad scope and as representing a movement towards a more fluid concept of relationships governed by redistributive law. One of the distinguishing features of the Act is its inclusion of non-sexual relationships; see, for example, Goodie and Summerfield, ‘What’s In A Name? Family, Identity and Social Obligation’ (2002) 6 University of Western Sydney Law Review 209. As Connolly J, who - as Attorney-General of the ACT - was responsible for the introduction of the Domestic Relationships Act, observed in Davies v Hawthorn [2004] ACTSC 119 at [3], the category of relationships covered by the Act is broader than that under de facto relationships legislation in other jurisdictions. In Crellin v Robertson (2004) 32 Fam LR 406, Crispin J remarked at [24] that “a person may have one relationship with a domestic partner, another with an elderly parent whom he or she supports in a nursing home and a third with another parent who lives in a granny flat attached to his or her residence. Yet all might fall within the broad ambit of this definition.”
Despite this, a survey of the decided cases reveals that the majority concern sexual relationships; see, for example, Beuth v Blums [2005] ACTSC 44; Prymas v Whittaker [2006] ACTSC 48; Ferris v Winslade (1998) 22 Fam LR 725; Crellin v Robertson (2004) 32 Fam LR 406; Kempe v Webber (2003) 31 Fam LR 332. For discussions of the types of relationships that have been the subject of applications under the Act, see Millbank, ‘Domestic Rifts: Who is using the Domestic Relationships Act 1994 (ACT)?’ (2000) 14(3) Australian Journal of Family Law 163 and Summerfield, ‘Understanding the Law of the Family: A Question of Practice, Not Interpretation’ (2002) 11(1) Griffith Law Review 44.
Neither the explanatory memorandum nor the second reading speech is of any great assistance in determining the meaning of “support of a domestic nature”. The Attorney-General, in outlining who would be eligible to apply for relief under the Domestic Relationships Act, informed the Assembly that:
A domestic relationship includes not only those who live in traditional de facto relationships but also relationships where one party at least provides a personal or financial commitment and support of a domestic nature for the material benefit of the other. Whether there is or has been a sexual relationship between the parties is thus an irrelevant consideration. The common factor for applicants will be their contribution to financial resources of another, and that alone.
During debate in the Assembly, Mr Humphries for the Opposition expressed concern that the legislation might be read to include flatmates, live-in domestic employees, people living in halls of residence, or volunteers working on behalf of community groups and, although he noted the difficulties of giving statutory expression to such concepts, expressed the view that “the essential element that we are looking for to make a relationship a real domestic relationship of the sort that we are talking about here is either deep personal affection or love”, (see ACT, Legislative Assembly, Debates (1994) p 1803). In response, the Attorney-General accept that this was an important element in a domestic relationship and stated, at ACT, Legislative Assembly, Debates (1994) p 1809:
There are concerns about the breadth of the definition. Yes, it is drafted in a broad way because we do not want to focus on just sexual relations. We do want to catch the broader range of domestic relations, but you do look for the motivation. [Emphasis added]
The Domestic Relationships Act grew out of a discussion paper, A Proposal for Domestic Relationship Legislation in the ACT, circulated by the Attorney General’s Department in 1993; Ferris v Winslade (1998) 22 Fam LR 725 at [19]. It was expected that, in interpreting the Act, the courts would have reference to this paper; see ACT, Legislative Assembly, Debates (1994) p 1803. The preface to the discussion paper emphasises the breadth of the relationships it was anticipated would be covered:
People in domestic relationships may include those caring for an ill or aged parent or friend, grandparents providing a home for their grandchildren, or others who have committed themselves to the welfare of someone at their own expense…
… the relationship is to involve a commitment which goes beyond friendship and neighbourliness – flatmates, people living in group houses, employed live-in housekeepers and other domestic employment, and those living in halls of residence for employees or students would not normally be entitled to seek relief.
The Discussion Paper suggested, at [102], that the words “beyond friendship or neighbourliness” could be included in the definition of “domestic relationship” if it were intended to restrict the relationships covered to “family-type” relationships. This suggestion was not implemented.
It is plain that the Act was intended to have a broad application but it must be that the phrase, “support of a domestic nature”, has some operation, and that necessarily must be to exclude relationships that do not have this quality. The term, “domestic” is not defined in the Act or in the Legislation Act 2001 (ACT). The Macquarie Dictionary definition includes “having to do with the home, the household, or household affairs”.
The relationship between the plaintiff and defendant included both financial and non-financial contributions by the defendant beyond the shared mortgage. As well as contributions to the running expenses of the Kambah house, Ms Storer’s financial contributions included money for the plaintiff’s personal expenses, for car tyres and for covering the insurance excess costs to repair the doors of the house after the plaintiff was attacked there in 1999. In late 2005, after the defendant had left the house and ceased making repayments on the mortgage, it is her evidence that she sent the plaintiff a cheque to cover the next rates bill for the property, and a signed form that would have allowed the plaintiff to draw down on amounts paid on the mortgage in excess of minimum repayments.
On the defendant’s evidence, her non-financial contributions included dealing with tradesmen on the plaintiff’s behalf, aiding the plaintiff in an application to have a fine waived, and assisting the plaintiff in her interactions with her children’s carers. The defendant registered herself with her employer as the plaintiff’s carer, took calls at work relating to the plaintiff’s welfare and took time off work to care for the plaintiff during illness or to take the plaintiff to hospital. When the plaintiff was attacked in 1999, it was the defendant who supported her, and the defendant’s son who warned off the attacker when he returned. The defendant also maintains that it was she who kept the Kambah house “clean and tidy”. Although this relationship is of a different order to those previously held to fall within the definition of ‘personal relationship’ in s 3 of the Act, and although admitting that this is a borderline case, on balance I am satisfied that, cumulatively, the defendant’s financial and non-financial contributions to the plaintiff constitute “support of a domestic nature”.
Having regard to the Attorney-General’s comment to the Assembly that you “look for the motivation” when determining whether a relationship qualifies as a domestic relationship, I am satisfied that the defendant was motivated by feelings of friendship, sympathy and charity. I am also satisfied that, initially at least, the plaintiff was grateful to the defendant, and, as she told Christine Evans, felt that the defendant’s act was that “of a true friend”. It is notable that, the defendant’s closing submissions assert that the parties entered into their arrangements “as friends, or almost as family”.
The ACT residence requirement
Section 11 of the Domestic Relationships Act provides:
(1) A court shall not make an order under this part unless it is satisfied –
(a) that either or both of the parties to the domestic relationship were resident in the ACT on the day on which the application for the order was made; and
(b) that –
(i) both parties to the relationship have resided in the ACT for at least ⅓ of the period of their relationship; or
(ii) substantial contributions of the kind referred to in section 15 (1)(b) or (c) have been made in the ACT by the applicant.
(2) If the court is so satisfied, it may make or refuse to make an order under this part because of facts and circumstances even though they, or some of them, took place before the commencement day or outside the ACT.
The “commencement day” is defined in s 3(1) as 11 July 1997. Subsections (b) and (c) of section 15(1) refer to:
(b) the financial or non-financial contributions made directly or indirectly by or on behalf of either or both of the parties to the acquisition, conservation or improvement of any of the property or financial resources of either or both of them; and
(c)the contributions (including any in the capacity of homemaker or parent) made by either of the parties to the welfare of the other or any child of the parties…
The somewhat itinerant lifestyle of the defendant requires a preliminary examination of the meaning of “resident”. In Kempe v Webber (2003) 31 Fam LR 332, Higgins CJ held at [41] that the word “resident” in s 11 has its ordinary or usual meaning, and referred with approval to Wilcox J’s exegesis in Hafza v Director-General of Social Security (1985) 6 FCR 444. In Hafza, at 449, Wilcox J stated:
The test is whether the person has retained a continuity of association with the place…together with an intention to return to that place and an attitude that that place remains “home”…
The above should not be misread as requiring an attitude that the place in question remains “homely”, in the sense of being welcoming or pleasant. Indeed, at 449 Wilcox J contemplates situations where a person is involuntarily resident in a place. Given all of this, I am satisfied that the defendant was resident in the Kambah property from December 1998 until January 2004. It was her express intention that Kambah should function as a base to which she could return between house-sits and her trips away, and the majority of her possessions were stored there.
These proceedings were commenced by an application filed in this Court on 15 December 2005 in which the plaintiff seeks, inter alia, an order under the Domestic Relationships Act. At that time, the plaintiff was residing in the Kambah property, where she has lived since she and the defendant moved there late in 1998. The defendant’s address is listed on the originating application as 4 Snodgrass Crescent, also in Kambah, which is her son’s address and where she continues to reside. The defendant’s bank statements for this time give her address as an ACT post office box. On that basis, I am satisfied that both parties were resident in the ACT on the day in which the application for an order under the Act was made, and that the requirements of s 11(1)(a) have been fulfilled.
The question thus becomes whether s 11(1)(b)(i) or (ii) is satisfied. Section 11(2) permits the court to take account of facts and circumstances which took place before 11 July 1997 and outside of the ACT. Accordingly, I note that eleven years have elapsed since the earliest possible date for any domestic relationship to have arisen, namely the initial periods of intermittent cohabitation in Queanbeyan dating from 1996. Both of the parties were resident in Kambah for just over five years from December 1998 until January 2004. Therefore it is clear to me that both of the parties resided in the ACT for at least one third of the period of any relationship, and therefore that s 11(1)(b)(i) is satisfied. Additionally, I am satisfied that the plaintiff’s assumption of joint liability for the loan from the ANZ Bank constitutes a substantial financial contribution to the acquisition of a financial resource of both parties. Section 3(1) defines “financial resource” to include any “benefit of value to either or both of the parties”. On any analysis, the provision of the loan amount constituted a benefit of value to both the plaintiff and the defendant. As this assumption of liability took place at the Manuka branch of the ANZ Bank, within the ACT, the requirements of s 11(1)(b)(ii) are satisfied.
The duration of the relationship
Section 12 of the DRA provides that:
(1)Subject to subsection (2), a court shall not make an order under this part unless it is satisfied that a domestic relationship has existed between the applicant and the respondent for not less than 2 years.
(2)If the court is not so satisfied, it may make an order under this part if it is satisfied that –
(a) there is a child of the parties to the relationship; or
(b)the applicant –
(i) has made substantial contributions of the kind referred to in section 15(1)(b) or (c) for which the applicant would otherwise not be adequately compensated if the order were not made; or
(ii)has the care and control of a child of the respondent;
and that the failure to make the order would result in serious injustice to the applicant.
As neither the further amended statement of claim nor the further amended defence and counterclaim seeks a declaration under s 38 of the Act, it is not necessary for me to fix the precise point at which the relationship began and at which it ended. At a minimum, it must have commenced when the plaintiff and defendant entered into their joint mortgage in November 1998 and commenced cohabiting in the Kambah property shortly thereafter. Their relationship began to deteriorate at some stage after this, however, I am satisfied that the features that I describe above at [68]-[69] continued to be exhibited for at least the minimum period of two years, notwithstanding some level of interpersonal conflict during that period. Section 12 merely requires that the relationship continue to exist, it does not impose any requirement as to its quality. The Act is designed to resolve disputes arising from the collapse of relationships. It would be contrary to legislative purpose to deny applicants relief on the basis that their relationships were not uniformly harmonious.
Was the application made in time?
Section 13 of the Domestic Relationships Act provides:
(1)An application for an order under this part by a party to a domestic relationship that has ended shall not be made more that 2 years after the day on which the relationship ended.
(2) A court may grant leave to a person to apply for an order under this part after the end of the period referred to in subsection (1) if it is satisfied that greater hardship would be caused to the applicant if leave were refused than if it were granted.
As noted above, the plaintiff filed her originating application, which included a claim under the Domestic Relationships Act, on 15 December 2005. If it is accepted that any domestic relationship between the plaintiff and defendant did not end until the defendant left the Kambah property on 14 January 2004, then the plaintiff is just under a month within the time limit prescribed by s 13(1). In my view the relationship did not end until that date at the earliest and therefore it is not necessary to consider the issue of leave under s 13(2) to apply outside of the period prescribed by s 13(1).
Accordingly, I find that the preconditions for a grant of relief under the Domestic Relationships Act have been met. This brings me to the question of relief under the Act which I shall consider along with the question of relief generally.
Relief under the Domestic Relationships Act
Section 14 of the Domestic Relationships Act provides:
As far as practicable, a court shall make orders under this part that will end the financial relationship between the parties to the domestic relationship and avoid further proceedings between them.
Section 15 of the Domestic Relationships Act provides:
(1) On application by a party to a domestic relationship, a court may make an order adjusting the interests in the property of either or both of the parties that seems just and equitable to it having regard to –
(a) the nature and duration of the relationship; and
(b) the financial or non-financial contributions made directly or indirectly by or on behalf of either or both of the parties to the acquisition, conservation or improvement of any of the property or financial resources of either or both of them; and
(c) the contributions (including any in the capacity of homemaker or parent) made by either of the parties to the welfare of the other or any child of the parties; and
(d) the matters referred to in section 19(2), as far as they are relevant; and
(e) such other matters (if any) as the court considers relevant.
(2)A court may make an order under subsection (1) whether or not it has declared the title or rights of a party in respect of the property.
The relevant matters referred to in s 19(2) are:
(a) the income, property and financial resources of each party; and
(b)the physical and mental capacity of each party for appropriate gainful employment; and
(c)the financial needs and obligations of each party; and
(d)the responsibilities of either party to support any other person; and
(e)the terms of any order made or proposed to be made under section 15 with respect to the property of either or both of the parties; and
(f)any payments made to the applicant, under an order of a court or otherwise, in respect of the maintenance of a child or children.
Section 25 of the Act gives the Court broad general powers to make orders that it considers necessary to do justice in all the circumstances including, in subsection (i) to impose terms and conditions.
In Prymas v Whittaker [2006] ACTSC 48, Gray J adopted at [21] the approach of Cooper J in Ferris v Winslade (1998) 22 Fam LR 725, namely identifying the property of the parties, then identifying their contributions, and finally evaluating the matters in s 19(2). This approach is endorsed by Miles CJ in Byrne v Opuls (2002) 29 Fam LR 290 at [27]. The similarities with the Family Law Act 1975 (Cth) mean that the jurisprudence of the Family Court can generally be helpful in this process; Ferris v Winslade (1998) 22 Fam LR 725 at [29]. However, as Crispin J remarked in Crellin v Robertson (2004) 32 Fam LR 406 at [25], decisions of the Family Court dividing property between separating spouses are of little guidance where the relationship in question is, as here, quite dissimilar to a traditional marriage. Indeed, the circumstances of this case are sufficiently novel in terms of relief under the Domestic Relationships Act that even ostensibly similar cases decided under the DRA, such as Kilby v O’Brien [2006] ACTSC 20, are of little, if any, assistance.
Given the broad powers of the Court under the Act both parties have made wide ranging submissions directed to their view as to what justice requires. The plaintiff, argues that she has provided “substantially more financial contributions” and that as “the relationship was a relatively short one, the weighting of the financial contributions should be greater than non-financial contributions.” She asserts that, save for sums paid since January 2006, and leaving aside “everyday expenses such as utilities, food and insurance”, the defendant “has made no contributions by way of rent, mortgage or otherwise…in excess of the amount required to repay the sum of $37,500 which was advanced to her personally at settlement of the Kambah property”. The plaintiff also submits that the defendant has had the benefit of accommodation in the Kambah home rent-free, which is estimated at $21,320.00 in value. The plaintiff finally submits that the parties should be regarded as having contributed equally to domestic duties, and that the defendant continued to earn an income (including superannuation payments) during the relationship.
In closing submissions made for the defendant a comparison is drawn between the financial positions of the parties. The defendant argues that she has retired, and has no housing, and is therefore in no superior financial position to the plaintiff. The submissions set out the plaintiff’s financial position, including her regular pension. They refer to omissions from the plaintiff’s financial statement and contrast this with the defendant’s position, noting that the defendant took early retirement partly to facilitate the plaintiff’s wish that she leave the Kambah house. The defendant also notes that neither party is responsible for the care of children. The defendant asserts that the relationship is not particularly short, and also claims that the defendant’s pre-existing debts might be considered debts of the relationship. The defendant finally asserts that she contributes financially to her children, whereas there is no evidence that the plaintiff does the same.
Conclusion
Before discussing specific aspects of the relief in this proceeding, I should make the point that, in my view, I would be entitled to make any order I would be prepared to make under the Domestic Relationships Act even if I had not found the parties to be in a domestic relationship. That is my conclusion as to the nature of the arrangement between the parties and would be a sufficient basis for such orders and, in such case, I would regard them as equally appropriate.
In this regard I note s 14 of the Act which I have quoted at [78] above. I also note the similar sentiments expressed in Baumgartner v Baumgartner (1987) 164 CLR 137 at 150 by Mason CJ, Wilson and Deane JJ:
The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual enquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest.
As I have discussed, the Domestic Relationships Act gives the Court broad powers to make property adjustments between the parties, with or without terms and conditions. Given all of the circumstances I have described above, the only order for a property adjustment I am prepared to make is an order that Ms Storer transfer her registered interest in the Kambah house to Mrs McKenzie. I would not, however, be prepared to make that order unconditionally. Any order must provide for Ms Storer to be relieved of her obligations under the mortgage and, if necessary, for the refund to her of any amount paid under the mortgage in excess of an amount required to repay that part of the loan monies that were applied to her personal use which, despite the rounding up to $40,000, Mr Blank, for the plaintiff, accepted was actually $37,500.
I would not be prepared to make any order designed to compensate the plaintiff for the fact that the defendant did not pay rent during the period she lived in the Kambah house. The fact that Ms Storer was not obliged to pay rent was part of the arrangement between the parties and there is no injustice in refusing to disturb this arrangement. Similarly I would not be disposed to make any orders compensating either party for amounts spent in relation to household expenses including repairs during the period of cohabitation. In broad terms, orders in this matter should be framed so as to draw a line under the arrangement and free the parties once and for all from a relationship that has become onerous to both of them.
In final submissions, Mr Blank suggested an approach to relief which, given the findings I have made, seems to be reasonable. He suggested that an appropriate time at which to draw the line might be 9 November 2004, the date at which Ms Storer had repaid, with interest, the amount of the loan that was directed to her personal debts but not the additional $3,700 that she received. He said:
… your Honour, in doing an adjustment could find that it’s appropriate to draw the line at 9 November 2004 and in fact say, taking into account the fact that the defendant has received use of the property for five years, taking into account the defendant has received reduced interest payments on her loans for an extended period, [taking] into account that additional sum that she [still owes] but I relieve her of that obligation vis a vis the mortgage and, conditional upon the plaintiff refinancing so that the defendant is discharged from the mortgage obligation and therefore any loan obligation, I transfer the proceeds back at that point with no further adjustment between parties – sorry with an adjustment that the plaintiff pay back to the defendant the amount she’s paid since 9 November.
It is apparent that the reference to transferring “the proceeds” was intended to be a reference to Ms Storer’s 25% interest in the Kambah property.
I shall allow the parties time to consider my reasons and then will hear them on the question of orders that are consistent with these reasons.
| I certify that the preceding ninety one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of her Honour Justice Stone Associate: Date: 26 October 2007 |
Counsel for the plaintiff: G Blank
Solicitor for the plaintiff: Capon & Hubert
Counsel for the defendant: S Hausfeld
Solicitor for the defendant: Bradley Allen
Date of hearing: 30 November, 1 December 2006, 26, 27, 28 February and 9 March 2007
Date of judgment: 26 October 2007
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