Merkuloff v Yalisheff - [2005] NSWSC 105

No judgment structure available for this case.

CITATION:
Merkuloff v Yalisheff [2005] NSWSC 105

HEARING DATE(S): 21, 22, 23 February 2005

JUDGMENT DATE :

14 April 2005

JURISDICTION:
Equity Division

JUDGMENT OF:
Master Macready at 1

DECISION:
Paragraphs 63 - 65

CATCHWORDS:
Family Law. Application for adjustment of the parties' property interests under s20 of the Property (Relationships) Act 198A. No matter of principle.

PARTIES:
Vladimir Merkuloff v Taisia Yalisheff & Anor

FILE NUMBER(S):
SC 5797 of 2003

COUNSEL:
Mr B. Ralston for plaintiff
Mr M. Kearney for defendant

SOLICITORS:
Barwick Boitano for plaintiff
The Argyle Partnership for defendant

LOWER COURT JURISDICTION:

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Master Macready

Thursday 14 April 2005

5797/03 Vladimir Merkuloff v Taisa Yalisheff and VAT Engineering Services Pty Ltd

JUDGMENT

1 Master: This is the hearing of proceedings for inter alia property adjustment under s 20 of the Property (Relationships) Act 1984. The parties were in a de facto relationship for some 8 years. They now agree that the relationship commenced in January 1994 and finished in August 2002. There were no children of the relationship. The second defendant is a company which the parties incorporated for various reasons related, inter alia, to consulting work that the plaintiff undertook after his retirement. The defendant now owns the company. A Judge of the court has referred the whole of the proceedings to a Master for hearing.

2 The plaintiff was born on 16 July 1939 and the defendant on 12 August 1941. At the commencement of the relationship the plaintiff was in receipt of a Newstart allowance and the first defendant was employed as the Deputy Principal of Prairie Vale Public School. At the commencement of the relationship the plaintiff moved from his unit at Cabramatta to live with the first defendant in her home at Auburn. The parties lived there for about 3 years. They then moved to live in one of the two properties they had built at Sanctuary Point and remained there until the conclusion of the relationship.

3 The second defendant was incorporated in September 1994. In October the plaintiff worked as a consultant through the second defendant for the Water Resources Commission. This continued until August 1995 and the second defendant paid the plaintiff a salary. Such payments continued until October 1997. He did not work thereafter. The first defendant continued working in her position as deputy principal until she retired in December 1996.

The property of the parties at the commencement of the relationship.

4 The plaintiff had the following assets at the commencement of the relationship:-

5 The plaintiff also claimed to have a sum of $30,000 in cash at the time of commencement of the relationship. The first defendant denied this. I do not accept the plaintiff on this aspect of his evidence. It was never mentioned in his affidavits and seems to be an opportunistic attempt to improve his case.

6 The plaintiff had a mortgage secured against Bribie Island in the sum of $30,458.23.

7 The first defendant had the following assets at the commencement of the relationship: -

8 The first defendant had a mortgage secured against her Westmead Villa of $79,442.38. She also had a loan from her son Victor of $15,000.

Property dealings during the course of the relationship

9 It was the plaintiff who first realised his property and superannuation to fund the purchase and development of the parties’ various properties. The first defendant subsequently realised her superannuation after her retirement in 1996.

10 In May 1994 the parties purchased land at Frederick Street, Sanctuary Point in the name of the first defendant for $34,200 financed by way of a $29,000 loan in the name of the first defendant against her Westmead Villa, $5,200 paid by the first defendant from her savings and $1,200 paid by the plaintiff. Subsequently, the parties arranged for the construction of two homes and then the sub-division of the property at a total cost of approximately $189,375.87.

11 In June 19994 the plaintiff sold his Cabramatta unit for approximately $83,000 receiving net sale proceeds of $82,326.92 which was applied as follows:-

12 In October 1994 the plaintiff commenced his consulting work as I have earlier mentioned. Also in that month he purchased vacant land at Kenneth Street Sanctuary Point for $35,000.

13 On 11 October 1994 the plaintiff withdrew his superannuation entitlement in the amount of $128,575.11. He applied it as follows:

14 In September 1995 the first defendant says she borrowed an additional $12,000 secured against the Westmead villa which she applied towards the final payment to the builder of the Frederick Street property. The evidence does not support her claim.

15 The plaintiff sold his unit at Bribie Island on 20 Nov 1995 for $98,000. A sum of $20,000 was paid to the first defendant.

16 In December 1996 the first defendant retired from her position at Prairie Vale Public School. The first defendant received $390,851.42 in superannuation and approximately $51,000 in long service leave entitlements. Some of her superannuation was applied to discharge the mortgage on her villa at Westmead.

17 During 1997 the plaintiff transferred his shareholding in the second defendant to the first defendant and her daughter Margaret. The reason was probably connected with the plaintiff’s desire to continue to receive the pension. The daughter’s share was transferred to the first defendant in 2003.

18 In February 1997 the parties commenced building a home on the Kenneth Street property at a total cost of $85,000 the majority of which cost the first defendant paid for from her superannuation and long service leave entitlements which were contributed by her to the second defendant by way of loan.

19 In April 1997 the second defendant purchased vacant land at Mount Annan for $56,650. The first defendant loaned $50,000 to the second defendant to enable it to purchase the Mount Annan land. A residence was built on the land, which was used as a home by the first defendant’s daughter and her family. The daughter contributed the sale proceed of their home amounting to $170,031 towards the construction costs. The home was transferred to the first defendant’s daughter and son in law in September 1998. They sold the house in 2002. On settlement, the company and the plaintiff, at the plaintiff’s insistence, was paid the sum of $244,000 from the sale proceeds which in general represented the balance of the construction costs, the cost of some cars provided to the daughter and son in law, interest on outstanding funds and some share of the profit on the eventual sale of the property.

20 On 26 August 1997 the plaintiff paid from an account, which he had with his deceased parents, two sums of money towards the parties’ joint endeavours. He paid $9,450 to the first defendant and $6,384 to the second defendant.

21 In October 1998 the plaintiff purchased a Campervan paying $45,000 which was sourced as to $1,000 from the joint account and as to $44,000 by way of loan from the second defendant.

22 During 1999 the titles of the Frederick Street properties were transferred such that 91A was transferred into the name of the second defendant and 91B into the plaintiff’s name. In September of that year the Kenneth Street property was completed and thereafter rented through a real estate agent for between $140 and $165 per week until sale in August 2002, the rent being withdrawn by the first defendant from time to time to apply to joint expenses.

23 In December 1999 the First Defendant sold her Westmead villa and received the sum of $187,874.38 distributing the same as follows:-

24 In March 2001 the plaintiff consigned the Campervan to John Terry Motors and shortly thereafter received a cheque in his favour in the amount of $33,000 which he deposited to the account in the name of the plaintiff and his deceased parents at the Commonwealth Bank.

25 In 2002 the title to the property at 91A Frederick Street was transferred from the name of the second defendant to that of the first defendant. In August of that year the second defendant sold the Kenneth Street property for approximately $175,000 and the net proceeds of sale are now held in trust pending resolution of these proceedings. The parties finally separated on 10 August with the plaintiff leaving 91B Frederick Street, Sanctuary Point. The first defendant remains living in that unit which is still in the name of the plaintiff.

26 On the third day of the hearing there was a settlement of the claims between the plaintiff and the second defendant. No claims are now made by the plaintiff or by the second defendant against the plaintiff. The plaintiff and the first defendant both contributed money to the second defendant during the course of the relationship. There has been no dissection of the relevant loan accounts and the parties are happy for the amount of those loan accounts to be treated as one item of property to be considered when the Court makes its orders. The parties suggest that there be a release or indemnity of the plaintiff in respect of any loan account which he might have with the company and that in the rearrangement of their affairs the first defendant retain any interest by way of loan account with the second defendant.

The property of the parties at the end of the relationship

27 At the time of separation, assets held by the plaintiff were as follows:

28 At the time of separation the assets held by the first defendant were as follows:

29 At the time of the hearing the parties agree that the value of the following properties were:

Financial contributions

30 In this matter both parties contributed substantial financial amounts resulting from sale of various units, realisation of their superannuation and their income. As I have already mentioned, it was the plaintiff who first realised his assets and, plainly, when taking into account the value of contributions, the time value of money and inflation on the properties purchased and constructed has to be taken into account. The plaintiff no longer presses any claim that he suffered a disadvantage by realising his superannuation funds earlier than he possibly could have.

31 There were four main areas of contributions by the plaintiff. These were his salary, cash and savings, the sale proceeds of his two units and his superannuation.

32 So far as his income is concerned, the plaintiff submitted that it was appropriate to take into account repayments of his mortgage during its currency. The first defendant also had to make such payments. Given the approach which I propose to adopt it is probably useful at this stage to determine the income in terms of direct cash contributions as a result of the parties’ independent earnings. The evidence disclosed that the plaintiff's income from the Water Resources Commission was a gross amount of $87,634 from which taxation was paid of $17,200.07. His net contribution was therefore an amount of $70,433.93.

33 The plaintiff sold his Cabramatta unit and received net sale proceeds of $82,326.92 out of which he discharged the mortgage on Bribie Island. The amount he contributed was thus a sum of $56,405.67. That contribution was made in June 1994.

34 In October 1994 he received superannuation of $128,575 which was contributed to the parties’ joint endeavours.

35 The plaintiff sold his Bribie Island unit for $98,000 on 20 November 1995. The net proceeds of $93,016.88 were contributed to the parties’ joint endeavours.

36 At the commencement of the relationship the plaintiff also brought into the relationship his savings of $3,645.03.

37 This puts the total of the plaintiff’s financial contributions at $352,076.51

38 The first defendant’s relevant net income over the period of relationship was as follows:

Year	Taxable income	Tax paid	Refund	Net
1994	24,203	6,927	126	17,402
1995	47,785	13,150	969	35,604
1996	48,878	13,620	1,018	36,276
1997	24,000	6,500	Nil	17,500
1998	15,622	2,044	209	13,787
1999	9,683	857	1,292	10,118
2000	9,792	874	1,292	10,210
2001	5,607	Nil	5,607
2002	2,051	Nil	174	1,877
Total	$148,381

39 It is to be noted that the taxable income for 1997 does not include a component of payments made on her cessation of unemployment.

40 The first defendant received her superannuation in December 1996 and after the discharge of her mortgage on the Westmead Villa she contributed a total of $257,336.79.

41 The first defendant sold her Westmead Villa and received a sum of $187,874.38. The first defendant's financial contributions therefore total $593,592.17

Non-financial contributions

42 The majority of the homemaker contributions were by the first defendant. She described them in the following terms in her affidavit and the defendant did not take issue with her description of these contributions.

43 These contributions have to be considered in the light of the fact that the parties had no children to care for during the relationship. Both parties seemed to share the cooking.

44 The first defendant also gave evidence of some assistance given by her to the plaintiff’s parents. She also assisted in the care of the plaintiff’s stepfather when he was ill in 1997. The defendant for his part did some gardening and maintenance work to the plaintiff’s property at Auburn.

Consideration of the claims

45 In Norbis v Norbis (1985-1986 ) 161 CLR 513 at 523 the High Court said the following:-

"Although it is natural to assess financial contributions under s79 (4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as homemaker and parent either by reference to the whole of the parties' property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an ‘asset-by-asset’ basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient. It follows that the Full Court is quite entitled to prescribe that approach as a guideline in order to promote uniformity of approach within the Court. In saying this we are not to be understood as denying the legitimacy of the trial judge's ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as he is required to by s.79(4)(a) of the Act . In this respect we agree with the comment of Nygh J in G and G that, although mathematical precision is certainly not required, there is ordinarily a need to know the circumstances in which assets were acquired and the general extent of each party's contribution to them."

46 The parties have contributed a substantial part of their pre-relationship assets and resources to their joint endeavours. The property at Auburn and that at Heritage estate played little part in the matter in terms of contribution and the first defendant owned them both before and after the relationship. In these circumstances they can be put to one side.

47 It was the plaintiff's counsel’s very thoughtful and well argued submission that I should consider the matter on asset by asset approach. In submissions counsel developed the contributions that each party had made to the particular assets acquired during the course of the relationship. The difficulty with this approach is that it involves many competing offsetting arrangements. In particular the second defendant was a company which was used for different purposes during the period of the relationship with a whole host of different contributions. In these circumstances it seems to me preferable to adopt a global approach in respect of the property of the parties with the exclusion of the first defendant's property at Auburn and at Heritage estate.

48 It is necessary to see what is the present asset pool of the parties which will need to be the subject of orders for adjustment. The present asset pool was helpfully set out in the final submissions of the first defendant and I will incorporate it subject to some adjustments.

No.	Item	Title	$
1.	12 Carnegie Street, Auburn	First Def Beneficially held by the First Defendant as to 5/9 on trust for her children.	512,500
2.	Lot 60 Heritage Estate	First Def	10,000
3.	91A Frederick Street, Sanctuary Point	First Def	237,500
4.	91B Frederick Street, Sanctuary Point	Plaintiff	02 240,000
5.	Holden Berlina motor vehicle	First Def	100 10,000
6.	Furniture and personal effects	Pl/First Def	550 10,000
7.	Fishing gear	Plaintiff	0 5,000
8.	VAT cash resources	First Def	17,062 47
9.	VAT trust funds	Pl/First Def	181,518
10.	Taxation payable	First Def	(1,894)
11.	Cash (now in IMB account)	First Def	9 90,000
12.	Savings – Teacher’s CU	First Def	236,841
13.	Boat	Plaintiff	8,000
14.	Gold coin collection	Plaintiff	0
15.	Toyota Corolla motor vehicle	Plaintiff	20,000
16. F	Furniture	Plaintiff	12,000
17.	Proceeds of Campervan sale	Plaintiff	33,000
18.	Savings (at separation)	Plaintiff	39,639
19.	Debt to Victor Yalisheff	First Def	(20,000)
20. T	Total	1,641,166
21.	Total (excl items 1 and 2)	1,118,666

49 Normally the Court adjusts the interests of the parties in the property having regard to its value of the date of hearing. See Parker v Parker (1993) DFC 95-139 and Kelly v Clarke (2001) NSWSC 1010. There are no matters which would cause any departure from that practice in this case.

50 The first matter for comment concerns the first defendant's savings. It was submitted that the amount which should be included was the present savings of $107,795. The plaintiff submitted that the correct approach should reflect the savings at separation because since then the way the first defendant has applied her savings is a matter for her and does not touch upon the question of adjustment. It was submitted that her savings at separation represented part of what the parties had achieved by their endeavours during the course of the relationship. Any expenditure by them after separation would not be for their joint purposes.

51 Exhibit E shows the first defendant’s savings at separation in the amount $236,840.89. It is appropriate to take these savings into account in this amount.

52 In relation to the plaintiff’s interest in the second defendant it was submitted that I should take this into account having regard to the balance sheet as a 30 June 2004. During the last two years there have been taxation liabilities taken up by the company which no doubt arose from the transactions before separation. The company has not traded since separation. In these circumstances and bearing in mind the arrangement for the first defendant to receive the second defendant in the adjustment process, it seems more appropriate that the present cash position of the company taking up those liabilities should be adopted. This amount was $17,061.77.

53 There was a question about item 17 which was the sale price of the campervan of $33,000. This requires a resolution of what happened to the proceeds. I am satisfied that they were received by the plaintiff in 2001 and placed in his account with his deceased parents. He has used them for his purposes and has not, despite repeated requests to do so, given any explanation of the use of those funds. In these circumstances I am satisfied that he has used them for his own purposes and the amount should be included.

54 The plaintiff’s savings have been included as at the date of separation. He gave no explanation as to what happened since separation and according to his evidence the pension was sufficient to have maintained him since separation.

55 I earlier identified that the plaintiff’s financial contributions amounted to $352,076 and those of the defendant $593,592 a total of $945,668. Applying these proportions to the present asset pool of $1,118,666 the plaintiff’s proportion is $416,487 and the defendant’s proportion is $702,179.

Assessment of a just and equitable order

56 I have earlier mentioned the plaintiff’s non-financial contribution to the Auburn property. That contribution was to its repair and maintenance for three years when the parties resided there and also to a lesser extent after they moved. This should be taken into account but I note that there is no evidence of any improvement to the value of the property as a result of these matters.

57 The defendant also submitted that I should take into account the following contributions on the part of the first defendant which were identified in submissions in these terms:

“1 The First Defendant provided cost-free accommodation to the parties for the first three years of the relationship;

2 such contribution is not off-set by the asserted minimal contributions on the part of the Plaintiff to the maintenance of the Auburn property, particularly in circumstances where the First Defendant made similar contributions;

3 the considerable profit made by VAT (and hence the parties) on the Mt Annan development which was only possible as a consequence of the First Defendant’s funds;

4 the greater contributions by the First Defendant as homemaker, particularly in circumstances where the Plaintiff was in ill-health throughout the relationship, which contributions are not to be taken lightly: see for example Mallett v Mallett (1984) 156 CLR 605 and Black v Black (1991) DFC 95-113.

58 The provision of cost free accommodation to the plaintiff as a result of him residing in the first defendant’s premises is certainly something that the parties never contemplated to be the subject of adjustment. Plainly they made a decision to live together and it was convenient for them to live in the first defendant’s house while the plaintiff went about the task of selling his accommodation, realising his superannuation and engaging in their future joint ventures of property development. In these circumstances it would seem strange that it would be appropriate to somehow charge after the event a rental which neither party contemplated or desired at the relevant time during the relationship. I do not think any allowance should be made for this matter.

59 The reference to minimal contributions on the part of the plaintiff to the maintenance of the Auburn property is not appropriate. Such matters are detailed in paragraph 48 of the plaintiff’s affidavit of 16 February 2005 and include a number of improvements to the property. There was work outside in the garden and inside. The plaintiff painted the whole of the inside of the house. There does not seem to be any evidence as to whether the first defendant made similar contributions other than mowing the lawns. The profit made by the second defendant on the Mt Annan development ultimately reflects itself in the assets of the parties at the date of separation and as at the present time. In these circumstance the profit has been taken into account and the differential contributions will also be taken into account.

60 Earlier I have referred to the non-financial contributions by the first defendant. Clearly, these were substantially more than those of the plaintiff. They have to be balanced with all the non-financial contributions. There does not seem to be any particular evidence of maintenance done by the first defendant on the Bribie Island property.

61 It is, of course, difficult to balance the various non-financial contributions. So far as the homemaker contribution is concerned we know that the relationship was for a period of eight years but the parties did not have children. The plaintiff’s contributions to the Auburn property and other ones he has detailed are also reasonably substantial. There is no estimate of the hours taken in respect of the various contributions nor, as I have mentioned, is there any evidence of increase in value although some improvement to the property would be evident given the nature of the work done by the plaintiff.

62 Any assessment of the non-financial contributions therefore has to be in a most general way. In substance I think the first defendant’s contributions were greater than the plaintiff’s in respect of non-financial contributions particularly bearing in mind the length of the relationship. In these circumstances it seems to me that an appropriate division of the asset pool to reflect the non-financial as well as the financial contributions (and the times at which they were contributed) would be to apportion the pool as to $400,000 to the plaintiff and $718,666 to the first defendant.

63 At the present, leaving aside Auburn and Heritage estate, on the basis that the first defendant retains the funds from the trust account with the second defendant, the plaintiff has assets in the pool amounting to $362,639. The first defendant has control of assets amounting to $756,027. In these circumstances an adjustment of $37,361 is required in favour of the plaintiff.

64 However, there are other matters which the parties may wish to address. I have in mind that although he is the owner of 91A Frederick Street, Sanctuary Point, the first defendant resides in 91B Frederick Street, Sanctuary Point. The parties may wish to exchange the ownership of these properties.

65 Accordingly, I direct the parties to bring in short minutes and argue any question of costs.

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Citations

Merkuloff v Yalisheff [2005] NSWSC 105

Cases Citing This Decision

0

Cases Cited

4

Statutory Material Cited

0

Parker v Parker [1908] HCA 92

Kelly v Clarke [2001] NSWSC 1177

Norbis v Norbis [1986] HCA 17

CITATION:	Merkuloff v Yalisheff [2005] NSWSC 105
HEARING DATE(S):	21, 22, 23 February 2005
JUDGMENT DATE :	14 April 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Master Macready at 1
DECISION:	Paragraphs 63 - 65

CATCHWORDS:	Family Law. Application for adjustment of the parties' property interests under s20 of the Property (Relationships) Act 198A. No matter of principle.
PARTIES:	Vladimir Merkuloff v Taisia Yalisheff & Anor
FILE NUMBER(S):	SC 5797 of 2003
COUNSEL:	Mr B. Ralston for plaintiff Mr M. Kearney for defendant
SOLICITORS:	Barwick Boitano for plaintiff The Argyle Partnership for defendant