Morgan v Bell

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 09921 of 2007

MICHELLE AMANDA MORGAN	Plaintiff
v
GREGORY PETER BELL	Defendant

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JUDGE:	VICKERY J
WHERE HELD:	Melbourne
DATES OF HEARING:	8-10, 15-17, 21-22 March 2011
DATE OF JUDGMENT:	4 July 2011
CASE MAY BE CITED AS:	Morgan v Bell
MEDIUM NEUTRAL CITATION:	[2011] VSC 302

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PROPERTY – De facto relationship – Adjustment of property interests under Part IX Property Law Act 1958 – Basis of assessment of respective contributions – Financial and non-financial contributions – Whether domestic violence made home-maker and parenting contributions more onerous – Whether contributions after period of separation taken into account – “Global” approach to assessment.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms K McMillan SC of Senior Counsel with Ms B Tulloch of Counsel	Jane Curtis & Associates
For the Defendant	Mr P J Davis of Counsel	Wilmoth Field Warne Lawyers

HIS HONOUR:

Introduction

The Plaintiff (“Ms Morgan”) and the Defendant (“Mr Bell”) lived in a de facto relationship spanning some 5 years between 21 April 2002 until they separated on 4 October 2007. There is one child of the relationship, Pia Elly Bell (“Pia”), who was born on 18 July 2006. At the time of the trial, Pia was aged 4 years and 7 months.

Ms Morgan brings this action pursuant to s. 285 Property Law Act 1958, which governed the property interests of the parties during their relationship and any adjustment of those interests thereafter.[1] The section provides:
[1] Section 285 was repealed on 1 December 2008 by s 72 of the Relationships Act 2008 (Vic) (similar provisions to s 285 are now contained in Division 3 of the Relationships Act).

(1) A court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to –
(a)the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the parties; and
(b)the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the domestic partners to the welfare of the other domestic partner or to the welfare of the family constituted by the partners and one or more of the following –

(i) A child of the partners;

(ii) A child accepted by one or both of the partners into their household, whether or not the child is a child of either of the partners; and

(iii) any written agreement entered into by the domestic partners.

In Kenyon v Akeroyd[2] the Court of Appeal cited with approval the observations of Vincent J in Conn v Martusevicius [3] as to how an application made under s. 285(1) should be approached by considering the contributions made by the parties in the context of all the circumstances of the relationship and by affording to the concept of a relevant contribution the breadth of meaning required by the legislation. His Honour observed:

[T]he Court is vested with a wide discretion and must attempt to arrive at a result which is just and equitable in the circumstances. Accordingly, it must have regard to the whole of the relevant context within which an application is made.
Any assessment of the significance and value of the assistance and support provided by de facto partners which did not place them within a framework provided by all of the circumstances of the relationship, would introduce a measure of unreality into the process and a degree of tension would arise between the adoption of a restrictive approach to the factors to be taken into account, and the duty of the Court to attempt to achieve equity between the partners.
Whilst s 285 imposes an obligation upon the court to have regard to a number of particular kinds of contributions which may have been made, the legislature has not attempted to confine narrowly the concept of “contribution” and there is, in my opinion, no good reason for the courts to do so. The fundamental limitations to the scope of the section in this context, are contained in the expression “de facto partner” which makes it clear that any such contribution to be relevant must have been made by a person who fell within that description at the time of its making and possesses a sufficient nexus with the relationship.

Ms Morgan

[2] [2008] VSCA 277 at [7] per Forrest AJA

[3] (1991) 14 Fam Lr 751 at 754

As to the context in which the parties participated in the relationship, the following principal matters are relevant to Ms Morgan:

(a)Ms Morgan was born on the 23^rd of November 1966 and at the time of the trial was aged 44 years;
(b)Since Ms Morgan separated from Mr Bell on 4 October 2007 when Pia was aged 14.5 months) her duties as a single parent prevented her from obtaining employment outside the home. For all practical purposes, Ms Morgan has been engaged full-time in home duties as the mother of Pia;
(c)Ms Morgan and Pia live with Ms Morgan’s mother, Irene Liselotte Johanna Francis (born the 29^th of September 1934) in her home at 54 Prowd Lane, Bonnie Doon. Ms Morgan and Pia have been living with Ms Morgan’s mother from October 2007 until April 2008 and from January 2010 to the day of trial. Ms Morgan’s mother has not charged board or rent;
(d)During 2010 Pia attended kindergarten on 3 days per week in Mansfield. She will continue to attend 4 year old kindergarten in Mansfield during 2011 and it is planned that she will commence prep at St Mary’s Primary School in 2012. Ms Morgan expects that upon Pia commencing primary school she will be in a position to resume part-time paid employment to fit in with her school hours;
(e)The child support paid by Mr Bell has ranged from $66.67 to $909.89 per month. At the time of the trial Mr Bell was paying $896.67 per month to Ms Morgan for child support. Since the separation she has received a total sum of $16,671.82 from Mr Bell. Since separation she has also received the sum of approximately $72,000 by way of Centrelink payments;
(f)Pursuant to Orders made by the Family Court on 18 November 2009, Pia lives with Ms Morgan and spends time with Mr Bell. Further Orders were made in Family Court on 14 January 2011 which did not materially alter the position. Ms Morgan continues to be Pia’s primary caregiver;
(g)Ms Morgan’s living expenses for herself and Pia exceed her income. She has been supported by her mother, Mrs. Francis and has relied upon savings;
(h)At the time of the separation on 4 October 2007, Ms Morgan had the sum of approximately $269,000 invested in a term deposit. These monies were the net proceeds of sale of a property owned by Ms Morgan at 13 Great Oak Court, Moorolbark (the “Moorolbark Property”). When the term deposit matured she received a total of $280,000 from that investment. Ms Morgan also had invested, on behalf of Pia, the sum of approximately $15,000. All of these funds have now been expended by Ms Morgan. To the date of trial, Ms Morgan has spent in the vicinity of $165,000 in on legal fees and valuations in respect of legal proceedings both in this Court and in the Family Court. The balance of the monies which were invested, being approximately $140,000, she has spent since October 2007 to supplement the difference between her income and expenses;
(i)Ms Morgan has received support from her mother both prior to and since the separation. Prior to separation she borrowed the sum of approximately $45,000 from her mother and since separation she has borrowed a further $10,000. Ms Morgan is currently indebted to her mother in the sum of $55,000.
(j)The following table summarises Ms Morgan’s asset and liability position as at the date of trial. This results in a negative balance of $19,346.65, as follows:

ASSET/LIABILITY

OWNERSHIP

VALUE

2007 Toyota Yaris

Plaintiff

$13,000.00

Furniture & Chattels

Plaintiff

$6,000.00

Plaintiff’s bank accounts

Plaintiff

E$500.00

Bank account held in the name of Pia Bell

Plaintiff on trust for Pia Bell

E$5,000.00

Car loan from Toyota Finance as at 3 February 2011

Plaintiff

($8,704.00)

Bank West Visa card as at 1 February 2011

Plaintiff

($347.77)

NAB Visa card as at 3 February 2011

Plaintiff

($1,169.60)

CBA Mastercard as at 3 February 2011

Plaintiff

($1,986.40)

Monies owed to Plaintiff’s mother

Plaintiff

($55,000.00)

Commonwealth Financial Services Superannuation as at 30 June 2010

Plaintiff

$5,498.03

Australian Super as at 30 June 2010

Plaintiff

$14,387.05

Hostplus Super as at 3 February 2011

Plaintiff

$3,476.04

TOTAL NET (NEGATIVE) BALANCE

($19,346.65)

(k)Ms Morgan was previously married to Mr Shane Morgan, a cabinet maker. They married on the 25^th of June 1995. They set up a business together called Shane Morgan Cabinets Pty Ltd in January 1994. Ms Morgan continued to work full-time as a secretary until the year 2000 when she commenced working full-time with the business as the book keeper, administrator and secretary. The business was successful and Ms Morgan played a significant role in its management and administration and gained experience in these roles. During the marriage, Ms Morgan suffered 3 miscarriages including a still birth at 21 weeks. These circumstances were traumatic and emotionally taxing for Ms Morgan. There were no children of this marriage. By 2001 strain developed in the relationship between Ms Morgan and Mr Morgan;
(l)In March 2002 Ms Morgan met Mr Bell at a wine bar in Warrandyte. After a few weeks, Ms Morgan left Mr Morgan and commenced a long term relationship with the defendant, Mr Bell;
(m)On 21 April 2002 Ms Morgan left the former matrimonial home and moved into Mr Bell’s residence on a farm at 35 Retreat Road, Buxton (the “Farm”). Although Mr Bell places this time at about July 2002, I accept the evidence of Ms Morgan on this issue. Ms Morgan moved in with her personal possessions, including her furniture. Mr Bell’s residence consisted of an 8 square cabin built on the Farm property. The cabin had no mains power and no heating. It was powered by a generator, but was generally cold. It had previously been used as a weekend retreat by Mr Bell and his former partner Janice Smythe, until their separation in about 2000, following which the cabin was occupied by Mr Bell as his residence;
(n)When Ms Morgan left her marriage, she ceased to work in the business with her former husband. Subsequently Ms Morgan received a matrimonial property settlement from Mr Morgan. Ms Morgan entered into Consent Orders in the Family Court of Australia with her husband on 13 July 2005. Ms Morgan’s divorce was finalised on 15 July 2005. The principal asset she received in the settlement was the Moorolbark Property;
(o)Ms Morgan and Mr Bell separated for the first time in May 2003 when Ms Morgan moved all of her furniture and personal belongings out of the Farm property and went to Mount Buller for work. They resumed living together again in about November 2003. However, they finally separated in October 2007 when Ms Morgan moved her furniture out of the Farm for the last time.

Mr Bell

The following principal matters are relevant to the context in relation to Mr Bell:

(a)Mr Bell was born on the 8^th of February 1960 and at the time of the trial was aged 51 years. He has never been married, although he lived in a defacto relationship with Janice Lee Smythe ("Janice Smythe") from approximately 1995 until 1999. Mr Bell and Janice Smythe became engaged to be married during their relationship. However, they broke off the engagement and separated in 1999;
(b)Mr Bell is a businessman who has been involved in a number of ventures over the years including property development and constructing tennis courts. Currently Mr Bell is involved in operating wedding reception venues, being “Potter’s Receptions” at 321 Jumping Creek Road, Warrandyte and “Riverlea Estate” at 2-54 Croydon Road, Warrandyte South;
(c)Mr Bell attended school at St Joseph's Secondary College in Abbotsford. St Joseph's was a technical college where he learned sheet metal work, woodwork and carpentry. After leaving secondary college in about 1975, when he was 15 years of age, he worked together with his brother Karl Anthony Bell (“Mr Karl Bell”);
(d)Mr Karl Bell went to Lalor Technical School where he studied woodwork, sheet metal work and other trades;
(e)Mr Bell and his brother Mr Karl Bell have an older brother, Glenn Patrick Bell (“Mr Glenn Bell”). He is a qualified builder. He has been involved in some of the property developments undertaken by Mr Bell and Mr Karl Bell over the years.
(f)In 1991, Mr Karl Bell and Mr Glenn Bell became bankrupt;
(g)Mr Bell has worked continuously together with his brother Mr Karl Bell in the building industry since he left school. They have been involved together in all of their main property developments. These usually involved purchasing properties and using their combined skills to build units or apartments. In about 1995 Mr Karl Bell obtained his builders' licence. This made it possible for the brothers to take on bigger projects. Mr Bell usually worked as a labourer on the development projects, while Mr Karl Bell acted as the manager of the developments;
(h)Mr Bell maintained that he and his brother Mr Karl Bell always agreed that they held a 50% interest in their joint business interests, apart from the circumstances where their sister Linda Karen Hinton (“Ms Hinton”) also had an interest. This matter will be dealt with in detail in these reasons;
(i)At the commencement of Mr Bell’s relationship with Ms Morgan he was a director of the following companies:
i.Helicopter Products Pty Ltd (he ceased to be a director of this company on 10 December 2006); and
ii.Twenty-Seventh Jandina Pty Ltd (he ceased to be a director on this company on 14 January 2007).

(j)At the commencement of Mr Bell’s relationship with Ms Morgan, Mr Karl Bell was the director of Bell Corp Victoria Pty Ltd ("Bell Corp") (which was originally known as Oriental Management Pty Ltd) and KGB Group Pty Ltd and Twenty-Seventh Caraben Pty Ltd.;
(k)Further, at the commencement of Mr Bell’s relationship with Ms Morgan, both Mr Bell and Mr Karl Bell were the ‘General Beneficiaries’ of the Bell Family Trust that was established in mid 1995 with Bell Corp being the trustee company;
(l)Two other companies in which Mr Bell and Mr Karl Bell had an interest were Marysville Cottages Pty Ltd and Marysville Hotel Pty Ltd, which they operated from 2002 until about 2009;
(m)As at July 2002, Mr Bell owned or controlled the following properties, which he says were owned in conjunction with his brother Mr Karl Bell:
(1)the Farm;
(2)a property at 72 Bay Street Brighton (the "Brighton property");
(3)personal cash under $1000;
(4)motor vehicles in company names;
(5)furniture and personal effects.

(n)In addition, in March 2002 a contract had been entered into to purchase the land and the business known as Potters Restaurant situated at 321-327 Jumping Creek Road, Warrandyte ("Potters Restaurant"). The purchase price was to be paid from monies from the sale of two development sites owned by Mr Bell and his brother Mr Karl Bell in the amount of approximately $1.2M;
(o)Mr Bell’s company Bell Corp had a loan balance with the Bank of Western Australia in respect of the Brighton property in the sum of about $470,000 at the commencement of his relationship with Ms Morgan.

Temporary Separation (June – 17 August 2003)

In about June 2003 Ms Morgan left the Farm and moved to Mount Buller. She obtained employment to manage a ski lodge known as Tatry Lodge. She also worked as a booking clerk, booking lessons for the ski school, and doing the accounts for “The Whitt” Lodge and ski club.

During the ski season of 2003, Ms Morgan left the mountain on 2 occasions to visit Mr Bell. In turn, Mr Bell came to stay with Ms Morgan at Mount Buller on 2 or 3 occasions. The relationship continued with Mr Bell and Ms Morgan regularly communicating by telephone.

On 17 August 2003 Mr Bell picked up Ms Morgan from Mount Buller. Thereafter, Ms Morgan moved back to live at the Farm with Mr Bell until their final separation on 4 October 2007.

Birth of Pia

From late 2003, after Ms Morgan’s return from Mount Buller, the couple agreed to have a family together. Ms Morgan became pregnant in late 2005 but unfortunately on 22 September 2005, after a pregnancy of 8 weeks, she suffered a miscarriage. In mid-November 2005 Ms Morgan became pregnant again.

Pia, the daughter of Mr Bell and Ms Morgan, was born on 18 July 2006.

Following the birth of Pia, Ms Morgan became a full-time mother. She breastfed Pia until late June 2007. She attended to almost all of Pia’s day to day needs.

During this time Ms Morgan also attended to all the usual domestic duties in the cabin home on the Farm including cooking, washing, cleaning and other home making duties. Mr Bell continued to be busy with his business interests and gave only limited assistance to the parenting of Pia when she was a small baby.

In or about mid-2007 when Pia was 5 or 6 months old, Mr Bell and Ms Morgan agreed that she would attend a childcare facility in Marysville for two 2 hour sessions each week to enable her to interact with the other babies and toddlers. Ms Morgan also took her to baby swimming lessons for about half an hour per week.

Legal Principles

As Vincent J further noted in Conn v Martusevicius, the conventional approach to the task of determining what is ‘just and equitable’ involves four steps, as follows: [4]
[4]Conn v Martusevicius(1991) 14 Fam LR 751, 754, applying D v McA (1986) 11 Fam LR 215, 228 (Powell J).

(1) Identify and value the assets of the parties.

(2) Assess the contributions of each party.

(3) Determine whether those contributions have been sufficiently ‘recognised and compensated for’.

(4) Determine the orders to be made to ensure that the applicant’s contributions are sufficiently recognised and compensated for.

However, as observed by Forrest AJA in Kenyon v Akeroyd, [5] more recent decisions have tended to view this as a three-step process, the last two steps being treated as one. [6]
[5] Ibid at [8]
[6] See Kardos v Sarbutt[2006] NSWCA 11; (2006) 34 Fam LR 550, 558 (Brereton J, with Basten JA and Hunt AJA in agreement); Giller v Procopets[2008] VSCA 236, [314] (Neave JA)

I will approach the analysis consistently with the three-step process identified in the current authorities to arrive at a just and equitable outcome having regard to the matters referred to in the legislation.

Beneficial Ownership of the Assets Generally

The assets in question in this proceeding comprise: several commercial properties and businesses (or the insurance proceeds received in respect of same, insofar as they were destroyed in the February 2009 bushfires) which are or were held in discretionary trusts of which Mr Bell is a beneficiary; two real properties of which Mr Bell is the sole registered proprietor, namely 35 Retreat Road, Buxton (“the Farm”) and 13 Buxton-Marysville Road; and Mr Bell’s interest in a self-managed superannuation fund, of which he and his brother Mr Karl Bell are the only members.

It was a consistent theme of the evidence of both Mr Bell and Mr Karl Bell that all of the assets acquired and developed by each of them, or entities associated with each of them, formed part of an overarching relationship between them, akin to a partnership, although not formally so, by which they share a 50/50 beneficial interest in each and every one of these assets.

Mr Bell and his brother Mr Karl Bell have worked together since the 1990’s in various property developments, and more recently in the hospitality ventures which comprise the asset subject matter of this proceeding. Together, they have built up assets on a mutual understanding or expectation that they would share equally in the benefits of those assets.

The evidence given by Mr Bell and his brother on these matters was credible and I accept it.

The equal sharing of the assets between Mr Bell and his brother Mr Karl Bell was reflected in large part in the legal structures which were set up for them by their various lawyers and accountants. They commonly used the vehicle of the discretionary trust. [7] This was used in relation to the following properties and businesses: Potters Cottage Holdings Pty Ltd (as to the Potters Cottage freehold); Potters Cottage Trading Pty Ltd (as to the Potters Cottage business); Marysville Hotel Pty Ltd (as to a ¾ share of the Keppels Hotel freehold); Marysville Cottages Pty Ltd (as to a ¼ share of the Keppels Hotel freehold); FLM Kaikee Pty Ltd (as to the Blackwood Cottages freehold and business); and Riverlea Estate Pty Ltd (as to the Riverlea Estate business). Each of these companies holds the relevant assets as trustee of a discretionary trust.
[7] Per French CJ in Kennon v Spry (2008) 238 CLR 366 at 386, citing Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 234 [8].

Although the deeds of trust utilised by Mr Bell and Mr Karl Bell differed in some of the details from time to time, they had the following essential features in common: a person is, or persons are, identified as the “Appointor” – or, in the case of the Blackwood Cottages Trust, the “Principal” - of the trust. The Appointor has wide powers, most importantly including the power to remove and replace the trustee. In each case, except the Blackwood Cottages Trust, the two brothers are jointly the Appointor. In the case of the Blackwood Cottages Trust, Mr Karl Bell is the Principal but in default of him acting, Mr Bell becomes the Principal; and there is a corporate entity the sole activity of which is to act as trustee of the trust. One or both of Mr Bell and Mr Karl Bell is or are the director(s) and shareholder(s) of the corporate trustee. There is a wide class of beneficiaries, identified by reference to a connection (including a very remote connection) to identified Primary Beneficiaries. Both Mr Bell and Mr Karl Bell are Primary Beneficiaries of each relevant trust, except in the case of the Blackwood Cottages Trust. As to this trust, although Mr Bell is not a Primary Beneficiary, he is a General Beneficiary. The trustee in each case has a complete discretion as to distributions of either income or capital. Any given beneficiary has no more than the equal right to be considered as a potential recipient of distributions from, and an equal right to the due administration of, each relevant trust.[8] The rights that Mr Bell and Mr Karl Bell enjoy under the trusts are for all practical purposes identical.
[8]Gartside v Inland Revenue Commissioners [1968] AC 553 at 617 per Lord Wilberforce

Identification, Ownership and Value of the Assets

The Farm Property

The Farm property is situated between Marysville and Buxton on the west side of the Marysville Buxton Road (the “Farm”). It is situated in a rural area where there are a mixture of grazing farms and hobby farms. It comprises an irregular shaped piece of land comprising some 91.6 hectares (about 226.4 acres). It is a mixture of bushland and cleared land. There is approximately 54 hectares of bushland and 37.1 hectares of cleared land. The cleared land is located at the northern end of the property and features a large hill that provides good views over the property and along the valley. Access is provided by a gravel road off the Buxton-Marysville Road, and there are some internal gravel roads and some formed tracks within the property.

The property is situated in the Shire of Murrindindi. It is zoned partly farming and partly rural living under the Shire of Murrindindi Planning Scheme. A Planning Permit dated 18 January 2008 has been issued in respect of the property permitting subdivision of the Farm into 8 allotments. Lot 1 of the subdivision was sold off with the sale achieving a price of $235,000.

The major structural improvements on the Farm property were destroyed by the “Black Saturday” bushfires of 7 February 2009. The following structures were burnt out: the farmhouse; the stables; the large chook house/aviary; the wash area; one of the barbecue areas; the swimming pool; the slide; and the water tank behind the white cabin. There was also superficial damage to the cabin. A significant amount of the fencing on the property was burnt down and many of the trees including the poplar trees were burnt down. Some of the machinery was burnt, such as the excavator, the bobcat and the lawnmower.

Presently a large shed and a smaller manager’s residence exist on the site.

Ownership of the Farm Property

In or about 1995 Mr Bell developed a relationship with Janice Smythe. They commenced a domestic relationship in about 1996. They were engaged to be married. However, the marriage did not proceed and they were separated in about 1999.

In about 1997 Janice Smythe purchased the Farm property.

Mr Bell submitted that he acquired the farm as part of a “swap” with his former de facto partner Janice Smythe in about 2001, following the cessation of their relationship. The evidence was that a transfer to Mr Bell in these circumstances was exempt from Victorian stamp duty. However, if there was a transfer to both Mr Bell and Mr Karl Bell, it would have attracted stamp duty.

At the time of the transfer from Ms Smythe to Mr Bell, the Farm was encumbered by a mortgage to the Commonwealth Bank of Australia (“CBA”).

The evidence of both Mr Bell and Mr Karl Bell was that they agreed at the time of the transfer that, in effect, the Farm would be brought into their property development portfolio because of its potential for future development. Thereafter they said that they treated it as an asset owned in equal shares by them. Pursuant to the arrangement, Mr Karl Bell said that the agreed funds from Bell Corp Victoria Pty Ltd could be used to discharge the mortgage. This required a payment in the order of between $220,000 to $240,000. Nevertheless, and in spite of the position recognised between the two brothers, Mr Bell remained as the registered proprietor of the Farm property so as not to incur stamp duty that would otherwise have been payable.

Further, Mr Bell and Mr Karl Bell gave evidence that the agreement between them was confirmed in writing. Mr Karl Bell drew up a written record of the agreement between himself and his brother in the form of a letter signed by both brothers. It was dated 8 February 2001. This more than a year prior to the commencement of the relationship between Mr Bell and Ms Morgan. The letter stated:

This document is drawn, signed, witnessed and agreed to on the basis that Janice Smythe of 8 Ferdinand Street, Nunawading is paid out in full by both Gregory Peter Bell and Karl Anthony Bell.
On settlement to Janice Smythe and the Commonwealth Bank, it is agreed that Karl Anthony Bell acquires 50% share of the farm at Lot 5. Retreat Road Marysville and from that day all costs and outgoings are shared equally.

A mutual friend, Mr Christopher Sinclair witnessed the brothers’ signatures to the document and was called as a witness. Mr Sinclair was not challenged in cross-examination as to this event. Nor was it put to either Mr Bell or Mr Karl Bell in cross-examination that the letter was a sham or otherwise than a genuine reflection of an agreement struck between the two brothers.

On the other hand, Ms Morgan contended that the equitable interest in the Farm claimed by Mr Karl Bell could not be made out for a number of reasons. It was said that there were discrepancies in the evidence as to the date when it was agreed that the Farm would become a joint asset of the two brothers. It was noted that no documents were produced by Mr Bell to substantiate any payment to the CBA by Bell Corp Victoria Pty Ltd and the financial statements for the Bell Family Trust make no reference to any such a payment, whether $220,000, $225,000 or $240,000 as the payment was variously described in evidence called by Mr Bell. Further, it was said that no valuation of the Farm was undertaken at the time of the alleged agreement and there is no evidence that any payment of between $220,000 and $240,000 represented a half share of the value of the property. Ms Morgan also points to a number of contemporaneous documents, in which Mr Bell or his advisers have asserted that he is the sole owner of the Farm property.

Ms Morgan also criticized the evidentiary weight to be attached to the letter of 8 February 2001 and the agreement between the two bothers said to be described in it. She pointed to the fact that the arrangement reflected in the letter was said by Mr Karl Bell in the course of his oral evidence to be for the purpose of preventing a “comeback” by Ms Janice Smythe, yet she was not a signatory to the document nor was she a witness in this proceeding. Ms Morgan also submitted that a close analysis of the letter shows that it has several meanings, one of which is that the payment to the CBA could also include the payment out of the mortgage over Mr Bell’s property in Ferdinand Street Nunawading. In her submissions Ms Morgan challenged the veracity of the agreement, and pointed to the fact that there was no documentary financial evidence to substantiate that part of the alleged agreement which provided that the costs and outgoings for the Farm were to have been “shared equally”. Further, no accounts or financial statements between Mr Bell and Mr Karl Bell were produced to substantiate the assertion that Mr Karl Bell contributed to the expenditure on the development of the Farm property.

However, I am satisfied that Mr Karl Bell did devote time and resources to improving the Farm, without any request for recompense. Further, he allowed funds from the Potters business to be used to meet farm expenses such contractors’ invoices and rates. Further, Mr Bell and his brother were jointly insured in respect of the Farm property, and Mr Karl Bell handled the insurance claim when the buildings on the property were destroyed in the February 2009 bushfires.

I am also satisfied that until the time when Mr Bell and Ms Smythe broke off their engagement and separated in 1999, Mr Bell was accustomed to pay his share of monthly loan repayments on the Farm property, which he would pay in cash to Janice Smythe for the loan instalments which had been taken out in her name as the debtor. Payments were made in this way up until the couple separated in 1999. Further, in about 1998 Mr Bell purchased the property at 8 Ferdinand Street Nunawading and was the sole registered proprietor of the Nunawading property. Mr Bell purchased it with the assistance of a loan from CBA. When Mr Bell separated from Ms Smythe in 1999, as part of the settlement of property between them, Mr Bell transferred the Nunawading property to Janice Smythe. As a further part of the settlement of property, Janice Smythe transferred the Farm to Mr Bell.

Since that time, Mr Bell was and remains the sole registered proprietor of the Farm and was registered on title as such on the 29 May 2002.

However, the facts point to Mr Karl Bell gaining a 50% beneficial interest in the farm property. This is consistent with the position taken throughout the present proceeding by both Mr Bell and his brother Mr Karl Bell, that they always considered themselves to have an equal interest in their business ventures and investments.

I accept that a payment of about $220,000 was made to the CBA to pay out the loan against the Farm and that the mortgage on the Farm was discharged. Mr Karl Bell agreed to the loan amount being paid out by Bell Corp in return for him having an equal share in the Farm. It was by this means that Mr Bell became the registered proprietor of the Farm on 29 May 2002.

Mr Bell agreed with his brother Mr Karl Bell that even though they would be equal owners, Mr Karl Bell would not become a registered proprietor of the Farm property. This arrangement was put into effect because Victorian stamp duty would be payable on any transfer to Mr Karl Bell, whereas if the transfer was recorded as part of Mr Bell’s property settlement with Janice Smythe, it would not be payable. To recognise the interest of Mr Karl Bell in the Farm letter dated 8 February 2001 was prepared and signed confirming his 50% interest in the Farm.

Although some suspicion attaches to the letter dated 8 February 2001, given that it was signed and witnessed at Mr Bell’s birthday party held on that day, its status as an authentic document was not effectively challenged. Further, a plausible explanation was given for proceeding without Mr Karl Bell being registered on the title to the Farm property. The letter also reflected the legitimate interest of Mr Karl Bell arising from the payment out of the CBA loan secured by the Farm property from Bell Corp, a company owned and operated jointly by the two brothers. I find that the letter of 8 February 2001 was not a sham transaction. Rather it evidenced a genuine arrangement which had been entered into between the two brothers.

As to the lack of financial records recording the payments made in respect of the Farm, I place little weight on this factor. The Bell brothers conducted business between themselves with little or no regard to financial records. Further, insofar as financial records were kept at all, these were maintained by their accountants primarily for the purpose of presenting a financial picture which would result in minimising exposure to taxation, rather than reflecting the true position of the various entities under their control. I am unable to place any reliance on the accuracy of the financial records kept in relation to any of the Bell entities.

In spite of the absence of credible financial records, I find that both Mr Bell and Mr Karl Bell worked on the Farm and expended their own monies on its development. They discussed development of the Farm property between themselves. From about 2000 they talked about, either building a number of cottages on the farm for weekend retreats, or building time-share apartments. They considered that there was an opportunity to rent the cottages out and take advantage of the rural setting of the Farm. Mr Bell and Mr Karl Bell commenced developing the Farm by building a 300 square metre stable. They employed Mr Steven Helleren to assist in the construction of the stable and other maintenance and building works on the Farm. Mr Bell supervised the maintenance and construction work on the Farm. A variety of other works on the Farm were undertaken by Mr Bell. Further, in about mid-2000 to 2001 Mr Karl Bell, using monies from Bell Corp, spent about $70,000.00 on rebuilding the run down kiosk on the Farm. He converted it into a one bedroom cottage.

Some documents reflected the ownership of the Farm property as residing exclusively with Mr Bell, some did not. For example, the certificate of insurance relating to the Farm provided by Wesfarmers Federation Insurance provided by letter dated 10 February following the bushfires was addressed to both “Mr K Bell & Mr G Bell” and showed them both as the clients. The Certificate of Insurance enclosed with the letter noted that the “Insured” were both “Karl Bell & Greg Bell”.

I accept that the Farm was always treated by the Bell brothers as one of their potential land developments.

On balance, I find that, although Mr Bell remained on title as the sole registered proprietor of the Farm property, he did so pursuant to an express trust declared in favour of his brother Mr Karl Bell as to a 50% share or an implied trust arising from the conduct of the brothers in jointly administering the property.

Value of the Farm

The valuation of the Farm was an issue between the parties. Ms Bell engaged a valuer Mr Darrell Cann, and Mr Bell engaged Mr Gavan Bourke. I directed that the valuers confer together with a view to preparing a joint report as to the matters on which they agreed and those on which they disagreed. Having undertaken this exercise, given that they could not arrive at an agreed position on critical matters, the valuers were called to give evidence concurrently.

Mr Cann is a property valuer who conducts his business from Emerald, Victoria. He has been a valuer on a continuous basis since 2001 and has extensive experience in valuing properties in the Yarra Valley, Dandenong Ranges and in the Shire of Murrindindi areas. Mr Cann said: “we are probably the first valuation company into Marysville after the fires. We were in fact up there before the police were allowing anybody else up there.” He said that he was “quite familiar with Marysville”. I accept these findings.

Mr Cann valued the Farm using direct comparisons with sales of similar properties in the local area. As at 10 November 2010 he assessed the current market value of the property at $820,000. This was an update on an earlier valuation he provided dated 22 September 2009, which valued the Farm at $725,000. He noted in his earlier report that:

The market for rural lifestyle properties has slowed over the last few years with increasing economic uncertainty.
There are few comparable sales of similar properties in this area. However, the market appears to have bounced back after the fires and sales of residential properties in Marysville, Buxton and the Triangle appear to be holding well when compared to pre-bushfire value levels.
The new development plans for Marysville will go to Council next month and this may well see a new push to rebuild parts of the commercial area of the town.

In his revised report of 10 November 2010, Mr Cann noted that since his earlier report, a Planning Permit dated 18 January 2008 had been issued in respect of the property permitting subdivision of the Farm into 8 allotments. Lot 1 of the subdivision has been sold off, and was not included in his current valuation.

The remaining 7 allotments were valued by Mr Cann using a hypothetical subdivision analysis. He noted that no development costs were provided to him. For this reason, Mr Cann applied a ‘rule of thumb’ approach which he said that many developers use. This process requires estimating the Gross Realisation and applying a land value component of about 35% of the Gross Realisation on the basis that, as he put it, developers “often talk about a third for the initial purchase and a third for development cost and a third for profit”, allowing for risk. Mr Cann was of the opinion that the ‘rule of thumb’ could be applied to the subject property, from his knowledge of it.

On the other hand, the market value of the Farm was assessed by Mr Bourke at $640,000 in his report dated 24 February 2011.

Mr Bourke is an experienced valuer and has been in practice since 1966. He is a Senior Consultant to Thomson Maloney & Partners Pty Ltd, trading as CHARTER Keck Cramer, a firm of strategic property consultants.

Mr Bourke included Lot 1 of the subdivision in his valuation.

Mr Bourke took into account two properties as his principal comparative sales evidence: “Elliotts”, 769 Buxton-Marysville Road, Marysville; “Vic Oak”, and 839 Buxton-Marysville Road, Marysville. The properties he said were comparable “insofar as location was obviously the same.” They were grazing farms at the present time, however, as noted by Mr Bourke, “the land is zoned rural living which is the same as the subject land and therefore it could also be subdivided in the same manner”, at least potentially. Both properties had an extensive frontage to the Buxton-Marysville Road and to two rivers. Mr Bourke analysed the sales of these properties back to a net per hectare basis and made a comparison with the subject Farm property.

Mr Cann disagreed with the methodology adopted by Mr Bourke. He said that he knew both of the properties used as comparable sales by Mr Bourke “very well”. His opinion was that “whilst they can be legally subdivided, they can’t economically be subdivided.” This was because there were problems relating to access and connection of services which did not exist with the subject property. The properties were sold together on the same day as part of the realisation of the estate of the deceased former owner. Subdivision was not viable in the short term according to Mr Cann.

Mr Cann maintained that around Marysville, after the bushfires, there were strong sales of rural land, with the exception of large bush blocks. He defined a hobby farm as being from anything between 4 to 100 hectares. He was of the view that prices for hobby farms were not affected by the fires. However, he was not aware of any sales of hobby farms since the fires that were the product of larger holdings being subdivided. However, Mr Cann was able to point to some 16 sales of hobby farm properties under 50 hectares in size which had been sold since February 2009.

Having considered the evidence of both Mr Cann and Mr Bourke, both in their formal reports and in the evidence which they gave under cross-examination, I prefer the evidence of Mr Cann as to the market value of the Farm property. I take into account Mr Cann’s particular specialised knowledge of property values in the Marysville area following the bushfires of ‘Black Saturday’. In my opinion, applying his local expertise, Mr Cann’s valuation more accurately reflects the value of the Farm property as subdivided, compared with the approach taken by Mr Bourke.

The market value of the Farm property for the purposes of this trial is determined to be $820,000.

Contribution of Ms Morgan to the Farm

Ms Morgan made no financial contribution to the Farm property.

However, she advanced a case that she worked on the farm, and that this comprised a non-financial contribution, made directly or indirectly by her to the conservation or improvement of the property, or that it was a contribution made to the welfare of Mr Bell, the other domestic partner in the relationship.

Ms Morgan said that during the time that she lived with Mr Bell, she did a lot of unpaid work directed to improving the Farm. She said that in 2002 she assisted with the planting of approximately 300 poplar trees that lined the driveway to the Farm. She said that she drove a bobcat to put in hundreds of metres of tan bark mulch. She estimated that she spent about 300 hours in this endeavour alone, in developing the Farm.

She also said that she undertook much work on the Farm in removing the installations that were there from the days when it was a fun park, such as old hosing under the ground and an old water slide which had to be ripped out. She also said that she spent much time assisting with clearing of the pasture on the property. She said that she picked up dead wood and river rocks, and regularly mowed the lawns using the large ride-on mower.

Ms Morgan also said that throughout the time that she lived on the Farm there were numbers of animals on the property. At various times there were at least 6 horses; 3 deer; 3 to 15 chickens; 2 cats; 3 geese; and 2 dogs. Ms Morgan estimated that she spent in excess of 12 hours a week attending to the animals on the Farm. She said that her work, in relation to the animals, included: feeding the chickens; cleaning the chicken pen; checking water for the animals; picking up feed from the pet supplier in Coldstream for the chickens and horses; attending to the ponies; foundering ponies; calling the farrier and the vet to attend to the animals and checking on the animals and the fencing in the deer enclosure and the paddocks; and cleaning out the stables. Throughout this time she said that Mr Bell was very busy with the various projects that he had underway.

She also said that in 2004 she assisted by collecting about 450 bales of hay to store in stables. She estimates that she spent up to approximately 50 hours collecting baled hay on this occasion.

Part of the Farm property is adjacent to the Stevenson River. Ms Morgan said that she assisted in clearing some 5 acres of scrub and blackberries along the river. She said that she collected river rocks and mowed and estimated spending about 120 hours on this task.

She also described her activities in looking after Mr Bell’s mare ’Sudoka’ after it was purchased in 2005. It required stabling for about 3 months in order to regain condition. Ms Morgan described her role in hand feeding and attending to the animal each day. She estimated that she spent about 200 hours looking after Sudoka.

On the other hand, Mr Bell’s case was that although Ms Morgan did some work on the Farm, this was only to a limited extent,, what she did was largely shared with him.

He said further that the house on the farm was a small cabin which required little in the way of domestic work in the nature of cleaning or homemaking.

He said that most of the debris from the Farm, apart from the odd piping and plastic, was removed from the fun park before Ms Morgan arrived. He said that the fun park had a 60 metre blue plastic slide and when the field was ploughed this plastic was broken up into small pieces. When he drove around the Farm with Ms Morgan, he said that they would often find pieces of the blue plastic on the top of the ground. They would stop and pick up the pieces when they saw them. He said that while he was building on the Farm, Ms Morgan would make lunch for him, but not for the other workers on site.

Mr Bell conceded that at the commencement of their relationship in 2002, Ms Morgan did assist with clearing dead wood and river rocks from the pastures. However, he said that she carried out these tasks only sporadically and for about two to three weeks. After that period of time, he said that during the next few years she may have only occasionally picked up some rocks and cleared some wood.

He also conceded that while Ms Morgan mowed the lawns, she did so only on about five or six occasions, and that it was often Mr Karl Bell and himself who would mow lawns.

Mr Bell agreed that they maintained farm animals on the Farm including 6 horses, 3 deer, 15 chickens, 2 cats, 3 geese and 2 dogs. Unfortunately, the Farm animals perished in the February 2009 bushfires. However he said that it was both Ms Morgan and he who cared for all of the animals on the Farm. He said that either Ms Morgan or he took out kitchen scraps for the poultry on a daily basis, and he said that Mr Karl Bell usually cleaned the chicken pen, although this chore was shared between Ms Morgan or himself, if Mr Karl Bell did not attend to the task.

In relation to other matters concerning management of the Farm, Mr Bell said:

(a) With respect to checking water, it was usually Mr Karl Bell or himself who would check the water tanks or attend to water storage issues;

(b) Both Ms Morgan and Mr Bell picked up the chicken feed from Coldstream;

(c) Watering horses and any other stock took very little time and was carried out infrequently. Mr Bell or Mr Karl Bell checked the water levels and this was rarely an issue that Ms Morgan needed to be concerned about, although she did attend to watering the horse that was stabled for a period of about three months when it had a leg injury which required it to be rested.;

(d) Both Ms Morgan and Mr Bell cleaned out the stables, although Mr Bell concedes that Ms Morgan would have done this more often than he did;

(e) Ms Morgan called the farrier or the vet on the occasions when this was required. This would be on an average of about twice a year. The vet was from the Alexandra Veterinary Clinic. Various farriers were used to assist with shoeing horses. This occurred on about two occasions a year;

(f) All fencing around the Farm was new and it was not necessary for Ms Morgan to check the fencing for breakages.

In cross examination Ms Morgan was challenged on the work she said she did operating a bob-cat in spreading tan bark around the 300 poplar tress planted along the drive-way and in planting the trees. Ms Morgan demonstrated little detailed knowledge as to the operation of this piece of machinery.

Further, Mr Bell called Mr Steven Helleren. Mr Helleren is self-employed and carries on business in the name "Helleren Home Renovations", as a sole trader. He is a qualified carpenter with over 35 years of experience as a carpenter. He undertook a variety of work on the Farm, including construction of a 700sqm stable. He said that, together with his own brother and Mr Bell and Mr Karl Bell, they planted about five hundred poplar trees along the driveway and other trees elsewhere on the Farm. He said that Ms Morgan did not assist in planting the poplar trees or any other trees on the Farm.

I am not satisfied that Ms Morgan undertook the amount of work on the tree planting project which she claimed. At best she had a minor involvement with the tree planning she described.

I am not satisfied that she engaged in any other development work on the Farm, such as clearing and collecting plastic, hose pipes and rocks, to any significant extent.

Further, although Ms Morgan did attend to a number of farm tasks, including lawn mowing and caring for the animals during the periods when she lived at the Farm, these activities, by and large, were not undertaken exclusively by her, but were shared with Mr Bell. The one exception was Ms Morgan’s care for Mr Bell’s mare named Sudoka. I accept that for about 3 months, while the mare was in poor condition, Ms Morgan hand fed and attended to the mare while she remained stabled to bring her into a condition where she could be put into the paddock.

Nevertheless, I accept that Ms Morgan did make a significant contribution to the relationship in looking after the animals on the property. She also occasionally performed other tasks on the Farm as the need arose.

The work she did while she was on the Farm was carried out in support of Mr Bell and his activities in developing and improving the property and in pursuing his other business interests.

Accordingly, these contributions must be taken into account as a non-financial contributions in the assessment as to what is a just and equitable adjustment of the property interests of the parties.

42 Murchison Street, Marysville (“Keppels Hotel”)

Prior to the ‘Black Saturday’ fires of 7 February 2009 the property situated at 42 Murchison Street, Marysville (“Murchison Street”) was used as a commercial hotel known as ‘Keppels Hotel’.

The Keppel’s Hotel building was completely destroyed in the bushfires and nothing remained on that site in Marysville.

Mr Bell and his brother Mr Karl Bell purchased Keppels Hotel in about December 2002. The hotel was in urgent need of extensive maintenance work, including the installation of a fire sprinkler system.

However, the facts point to a different conclusion.

Mr Bell and his brother Mr Karl Bell paid the minimum deposit on the $600,000 purchase and took out a loan from National Australia Bank Limited to cover the balance of the purchase price and the works that needed to be undertaken on the hotel. They employed subcontractors to undertake the extensive building and rectification works at Keppels Hotel. Mr Bell contributed some of his own labour to the work.

Beneficial Ownership of 42 Murchison Street, Marysville (“Keppels Hotel”)

Ms Morgan submitted that there was no evidence of any equitable interest of Mr Karl Bell in the asset comprising Keppels Hotel.

The brothers initially agreed that Mr Karl Bell would be the sole director of Marysville Cottages Pty Ltd and Marysville Hotel Pty Ltd (respectively as trustee for the Marysville Cottages Trust and Marysville Hotel Trust). Mr Karl Bell was the sole director of both companies from 18 June 2003 until 16 September 2005, after which Mr Bell became the sole director. Both companies purchased the property as tenants in common, with Marysville Cottages Pty Ltd taking a one quarter share, and Marysville Hotel Pty Ltd taking a three quarter share. The hotel business was conducted by Marysville Hotel Pty Ltd as trustee of the Marysville Hotel Trust.

The Marysville Cottages Trust and Marysville Hotel Trust are discretionary trusts. The trusts were both settled on 18 June 2003, and had the following relevant features: the Appointers were and remain Mr Bell and his brother Mr Karl Bell, and the Primary Beneficiaries as defined in the schedule under the trusts included Mr Bell and Mr Karl Bell.

Mr Bell and Mr Karl Bell maintained in their evidence that all of the assets owned in the various entities controlled by them were beneficially owned, in effect, equally between them. I accept this evidence in relation to the beneficial ownership of the Murchison Street, Marysville property comprising the Keppels Hotel site.

Valuation of 42 Murchison Street, Marysville (“Keppels Hotel” site)

The valuation of the property situated at 42 Murchison Street, Marysville was in dispute. Mr Cann valued this property at $1,100,000, while Mr Bourke valued it at $810,000.

The Murchison Street property is held in one title, but is divided into 8 Crown Allotments. Upon application to the Victorian Titles Office (or Land Victoria as it is now known), a separate title is able to be issued in respect of each lot. This could be achieved without planning permission from the responsible authority, being the Shire of Murrindindi.

The registered proprietors are Marysville Cottages Pty Ltd and Marysville Hotel Pty Ltd which are listed as tenants in common. The property is a corner allotment, having frontages to Murchison Street, Lyell Street and Darwin Street, Marysville. Murchison Street and Lyell Street are sealed roads and Darwin Street is a gravel road. The property is zoned Business Zone under the Shire of Murrindindi Planning Scheme. The subject property is presently vacant land, having its improvements destroyed in the fires. Mr Cann calculated the total area of the property at 8094 sqm, while Mr Bourke placed it at 8095 sqm.

Mr Cann and Mr Bourke were only able to identify a few sales of comparable commercial properties in Marysville.

Mr Cann used the direct comparison method of valuation. He relied upon four comparable sales in Marysville: 16 Murchison Street; 18 Murchison Street; Cnr Falls and Pack Roads; and 49 Darwin Street. Based on these comparable sales, and making necessary adjustments given that the subject site is approximately 13 times larger than some of the comparable properties and is 40% larger than the Darwin Street property, Mr Cann adopted a rate of $135 per square metre for the subject property. This resulted in the following calculation: 8094 sqm X $135 = $1,092,696, rounded to $1,100,000.

Mr Cann acknowledged that the available comparable sales did not produce evidence which aligned directly with the Murshison Street property because they all involved relatively small allotments with a much higher value per square metre. The closest property in size was 49 Darwin Street with an area of 5803 sqm, with 16 Murchison Street: 670 sqm; Falls Road and Pack Road: 600sqm; and 18 Murchison Street: 523 sqm. Mr Cann said that he relied to a large extent on the sale of 49 Darwin Street in his assessment of comparable sales.

Nevertheless, I am satisfied that Mr Carr properly applied his professional judgment and made appropriate downward adjustments to the rates revealed in the comparable sales evidence, in arriving at his rate per square metre of $135 for the land in question.

Mr Bourke did not include 16 Murchison Street in his list of comparable sales, although he added to the others taken into account by Mr Carr the following properties in Marysville: 6 Pack Road; 4C Murchison Street; 39 Darwin Street; and 34 Murchison Street.

Because all of the comparable sales were for areas less than the subject property, Mr Bourke, although he said in his report that his “primary method of assessment is by direct comparison” and arrived at a rate of $100 per square meter by this means, he also had regard to a “secondary approach” which involved assessing the sale of the eight separate allotments each containing an area of 1,012 sqm, which he said was “more comparable to the areas outlined in the comparable sales evidence.” Using this methodology, Mr Bourke assessed the four lots fronting Murchison Street at $300,000 each (applying $296 per sqm). This gave rise to a sum of $1,200,000. He assessed the four lots fronting Darwin Street at $100,000 each (applying $99 per sqm). This in turn gave rise to a sum of $400,000. From the total of $1,600,000 Mr Bourke then deducted $791,273 for the costs of achieving the subdivision by the creation of 8 separate titles, and realising the individual sales by marketing. Mr Bourke also included in his hypothetical subdivision project the following costs: GST remittance ($64,582); Margin for profit and risk realisation calculated at 35% ($379,434); Costs associated with survey, obtaining titles and minor earthworks ($20,000); Purchasing costs, including stamp duty, ‘due diligence’ and legal fees ($63,928); Rates and taxes ($15,180); Interest payable during development and sale, estimated to be 2 years ($95,276); and ‘Margin Scheme Credit ($80,873).

By this means, Mr Bourke calculated the gross realisable value of the 9 lots at $1,600,000, from which he deducted $791,273 for the costs of achieving the hypothetical subdivision and realising the sales of the 8 lots. This resulted in $808,727 ($1,600,000 - $791,273), rounded to $810,000. This value equated to $100 per sqm for a total area of 8094 sqm, which Mr Bourke considered to be ‘fair and reasonable’.

Mr Cann expressed the view, which I accept, that under the Marysville redevelopment plan, the site has been selected for major tourist development. He said in his report:

It is unlikely that the allotments could be sold off and developed separately, although I do not believe this is prohibited under the planning scheme the Council would not support piece meal development of this land…
The Shire of Murrindindi carried out an extensive reassessment of the property, the Marysville township after the fires went through and a new planning [scheme] was amended and these properties have been set aside for major tourism development.
So this one, the one immediately next to it and there’s about three others in the township are all set aside, reserved for major tourism, which essentially means that if you were to sell them off one at a time you’re unlikely to get a permit to do anything unless you could prove it was a major tourism thing…as part of one development.
So you can’t do a major tourism development on 1000 square metres, but you can on eight. So legally you could sell them, but when that person went to try and get a permit to do something he would fall foul of the planning scheme….Unless the development overall was part of a major tourist development.

Mr Cann also agreed that it would be hard to envisage a major tourist development being split up, and “…then getting eight people to try and do all the same thing.” Mr Cann said that the hypothetical subdivision method of valuation “didn’t seem appropriate because it ….. couldn’t be effectively subdivided so I steered away from th[at]”. He also said that an “in globo land subdivision or a hypothetical analysis is … not an option because it can’t be subdivided [or] effectively I’m told because of the planning scheme restrictions so you’re only left with one other method and that’s direct comparison.”

I am not satisfied that Mr Bourke’s hypothetical subdivision and the individual sales of the 8 separate allotments comprising the Murchison Street property is likely to be permitted by the Shire of Murrindindi. Nor am I satisfied that any hypothetical purchaser at the present time would be likely to approach the purchase of the property on this basis. Accordingly, Mr Bourke’s valuation, to the extent that it was influenced by the prospect of a hypothetical subdivision, as it clearly was, is unlikely to reflect the current market value of the land.

Further, having considered the evidence of both Mr Cann and Mr Bourke, both in their formal reports and in the evidence which they gave under cross examination, again I prefer the evidence of Mr Cann, as to the market value of the Murchison Street property. In particular, I had the advantage of Mr Cann’s specialised knowledge of property values in Marysville following the bushfires of ‘Black Saturday’.

The market value of the Murchison Street property for the purposes of this trial is determined to be $1,100,000.

Contribution of Ms Morgan to 42 Murchison Street, Marysville (“Keppels Hotel”)

Ms Morgan made no financial contribution to the 42 Murchison Street, Marysville property.

For a period of time following September 2003, Ms Morgan worked in Keppels Hotel for the tenant of the property. She commenced working there for 15 to 20 hours per week and was paid approximately $18.00 an hour. Ms Morgan used this money for her personal living expenses as she did with other income she earned during the relationship.

While Ms Morgan did work for Keppel's Hotel after returning from the ski fields, it is uncertain as to the exact period that she was so employed. The income that she received from her employment was kept for her own benefit. She did not make a contribution to the joint living expenses and she disposed of her income as she wished.

Potters Cottage Restaurant

On 27 March 2002 Mr Bell and his bother Mr Karl Bell purchased Potters Cottage Restaurant situated at 321 Jumping Creek Road, Warrandyte (“Potters Cottage Restaurant”). It was purchased at auction for $1,215,000. The sale was settled on 1 October 2002 when possession was granted to the Bell brothers.

Potters Cottage Restaurant had been a popular restaurant for many years. The restaurant had 80 seats. It was situated on land of about 6½-acres. On the property there was also a pottery school, a gallery and a gift shop. The pottery school and gift shop were rented out to third parties. The gallery was conducted by two persons as an independent business, however, the profits of that business were distributed to the owners of Potters. The restaurant was very well known in the area and the chef had a substantial following. The chef was assisted by two apprentice chefs, a head waitress, a team of casual wait staff and a cleaner.

Beneficial Ownership of Potters Cottage Restaurant

Ms Morgan also submitted that there is no evidence to support the position that Mr Karl Bell has an equitable interest in this asset.

However, the business of Potters Cottage Restaurant was purchased by Potters Cottage Trading Pty Ltd for $210,000, and the real estate was purchased by KGB Group Pty Ltd for $1,005,000. Prior to settlement, KGB Group Pty Ltd nominated Potters Cottage Holdings Pty Ltd as the purchaser. Following the purchase, Mr Karl Bell became the sole director and sole shareholder of Potters Cottage Trading Pty Ltd which held the business as trustee for the Potters Cottage Trading Trust. Mr Bell became the sole director and sole shareholder of Potters Cottage Holdings Pty Ltd which in turn held the land as trustee for the Potters Cottage Holdings Trust.

Both Mr Bell and Mr Karl Bell are the appointers and the “primary beneficiaries” nominated under both the Potters Cottage Trading Trust and the Potters Cottage Holdings Trust.

Ms Morgan submitted that an analysis of the financial statements for both the Holdings Trust and the Trading Trust do not reflect equal ownership between Mr Bell and Mr Karl Bell, nor do they reflect an initial borrowing for the purchase price from Bell Corp Victoria Pty Ltd.

Further, she pointed to the fact that on 16 September 2005 Mr Bell became the sole director and shareholder of Potters Cottage Trading Pty Ltd.

However, for the reasons which follow, I am satisfied that this was undertaken for commercial reasons and had nothing to do with any alteration in the beneficial ownership of the Potters Cottage Restaurant business.

As to the beneficial ownership of the two Potters trustee companies, Ms Morgan relied on the fact that Mr Bell is now the sole director of the two Potters trustee companies, being Potters Cottage Holdings Pty Ltd which is the owner of the Potters Cottage freehold, and Potters Cottage Trading Pty Ltd, which is the owner and operator of the Potters Cottage business. As such, Mr Bell, it was submitted, has formal control of both of the Potters discretionary trusts, and in effect owns the enterprise to the exclusion of his brother, Mr Karl Bell.

Ms Morgan also placed reliance upon the fact that the trust deeds for the two Potters Trusts were not executed until September 2003 which suggested that the freehold and business assets never became assets of those trusts.

Ms Morgan also pointed to the existence of substantial loan account balances in favour of Mr Bell in the accounting records maintained on behalf of Mr Bell and Mr Karl Bell at or shortly after the purchase of Potters. It was submitted that these records indicate that Mr Bell was the sole source of the funds used for the purchase.

However, as earlier observed I am not satisfied that the accounting records maintained by the Bell brothers for their various entities accurately reflected the true financial position between them. Nor am I satisfied that any weight can be placed on the fact that the trust deeds for the two Potters Trusts were not executed until September 2003, when considered against the evidence which clearly establishes that the trusts in question, from the time of their establishment, owned and operated the Potter’s enterprise.

I am satisfied that the prior history of the acquisition of the Potters Cottage freehold and the Potters Cottage business gives rise to an enforceable equitable claim on the part of Mr Karl Bell as to one half of those assets. These matters include the fact that the enterprise was first identified by Mr Karl Bell as a suitable investment opportunity for the two brothers and was purchased in the expectation that it would comprise one of the assets to be developed under the umbrella of their joint enterprise; the use of money to fund the Potters purchase which I accept was sourced from the brothers’ previous joint business activities; Mr Karl Bell’s contributions to the establishment, improvement and operation of the reception business and the property; and the transfer of Mr Karl Bell’s share in Potters Cottage Trading Pty Ltd to Mr Bell for no consideration in 2005.

When these facts are combined with the stated declaration made by the two brothers in their evidence, which I accept, that all of their assets are owned equally between them, including the Potter’s freehold and business, the conclusion that Mr Bell and Mr Karl Bell share a 50/50 beneficial interest in the Potter’s enterprise is strengthened.

I accept that the Potters Cottage Restaurant business and land were agreed to be beneficially owned as to 50% each by Mr Bell and his brother Mr Karl Bell. The agreement between the two brothers had binding effect between them.

Contribution of Ms Morgan to Potters Cottage Restaurant

Ms Morgan said that she worked in the Potters Cottage Restaurant business as a ‘front of house’ manager during its opening hours. She said that she carried out this work until in about June 2003.

However, I do not accept this to be the case. In the course of attending at the Potters Cottage Restaurant, Ms Morgan did on occasion work behind the bar, enter the kitchen area, and attend upon customers. However I am satisfied that she did not work full time in the ‘front of house’ position. Nor did Ms Morgan wait on tables or act as a bar tender. Ms Kerry Benson was employed to run the front of house for Potters Cottage Restaurant. Following Ms Benson, Ms Tony Sinclair was employed as the front of house person.

Ms Morgan was employed by Potters Cottage Restaurant between September 2002 and March 2003 in a different capacity. She was employed as an administrative assistant during this six month period. In this capacity Ms Morgan performed a variety of tasks, including: collecting mail; setting up accounts for suppliers of stock; ordering supplies; dealing with creditors; making wedding bookings; and undertaking general clerical duties. In the course of carrying out this work Ms Morgan did not oversee or manage any staff. Nor did she carry out banking or payroll duties.

Ms Morgan’s Earnings from Potters

Ms Morgan was paid for her work at the Potters Cottage Restaurant from September 2002. She was paid $20.00 an hour for a 40 hour week, amounting to $800.00 gross per week. Given that turnover for the business was low, I do not accept that she worked significantly longer hours than the 40 hours per week that she was paid for. Potters Cottage Restaurant was only open on Friday and Saturday evenings for meals and the Sunday trade was small.

In or around September or October 2002, in order to alleviate the extensive travelling time from the Farm to Warrandyte, Mr Bell and Ms Morgan rented a house across the road from Potters Restaurant. Ms Morgan lived in the rented house with Mr Bell and his brother Mr Karl Bell.

Ms Morgan’s relationship with Mr Karl Bell began to deteriorate from the time Mr Bell and Ms Morgan commenced living together with Mr Karl Bell in Warrandyte. Conflicts between Ms Morgan and Mr Karl Bell soon developed.

Ms Morgan left working at Potters Restaurant in March 2003. Following that time, I am satisfied that Ms Morgan did not work at Potters again.

The Plaintiff did not contribute any of her earnings from Potters Cottage Restaurant directly towards the support of Mr Bell. In large part she kept her earnings for her personal expenses, and was never requested by Mr Bell to make any contribution to household payments or any other joint outgoings.

Indeed, this was the position with all other earnings derived by Ms Morgan during her relationship with Mr Bell.

Further, Mr Bell provided Ms Morgan with a secondary credit card on his own account. Ms Morgan was permitted to use the credit card as she chose during the period of the relationship with Mr Bell.

Value of the Potters Cottage Site

From the time of its purchase in 2002 through to 2005 the Potters Restaurant business struggled financially.

At the time of the purchase, Potters Cottage Restaurant was in need of some work. The décor required attention and the business was not particularly successful. Within a short period of time after the purchase, there was a significant drop in takings. The Bell brothers ran the restaurant at a loss and were required to put monies in from other sources to keep the business running.

In about 2003 Ms Linda Hinton, who was the sister of Mr Bell and Mr Karl Bell, loaned them $60,000 to help her brothers renovate the Potters Restaurant land and business. This money has not yet been repaid to her.

In about mid-2005 the Bell brothers determined to cease the operation of the restaurant business and convert the property into a reception centre. They applied their building and development experience to this project.

The Potters Cottage Restaurant site was not in the bush fire zone and was unaffected by the bushfires of 7 February 2009.

The agreed value of the property comprising the Potters Cottage Restaurant as at the date of the trial is $3,800,000.

Blackwood Cottages

In about August 2007, Mr Bell and his brother Mr Karl Bell purchased a property known as the “Blackwood Cottages”. It was their plan to build multiple cottages or some other special accommodation development on the site.

The Blackwood Cottages is a property situated at 38 Falls Road, Marysville. It is situated on a 3½ acre site. Prior to the “Black Saturday” bushfires of 9 February 2009, Blackwood Cottages was operated as a bed and breakfast motel business. It consisted of a main residence and 9 cottages.

The main residence and all 9 cottages were completely destroyed in the 7 February 2009 bushfires. The barbecue area was also burnt out.

Beneficial Ownership of Blackwood Cottages

Ms Morgan submitted that there is no evidence to support the position that Mr Karl Bell has an equitable interest in this asset.

However, on 11 September 2007, the registered proprietor of the land comprising Blackwood Cottages becamse FLM Kaikee Pty Ltd. It acquired the asset as trustee for the Blackwood Cottages Trust. This was shortly prior to Mr Bell ending his relationship with Ms Morgan in October 2007.

Mr Karl Bell is the director of the trustee, FLM Kaikee Pty Ltd. The sole shareholder is Marysville Hotel Pty Ltd, which holds 2 ordinary shares in the company. As from 16 September 2009, Mr Bell has been, and remains, the sole director and sole shareholder of Marysville Hotel Pty Ltd.

The Blackwood Cottages Trust is a discretionary trust. The ‘Primary Beneficiary’ as defined in the schedule under the trust is Mr Karl Bell. However, the trust deed includes both the Primary Beneficiary and relatives of the Primary Beneficiary (including his brother Mr Bell) in the class of ‘General Beneficiaries’. The trustee in empowered under the trust deed, in its absolute discretion, to pay sums of money held by the trust to its beneficiaries.

Accordingly, through his directorship and shareholding of Marysville Hotel Pty Ltd, Mr Bell is in a position to exercise control over the trustee of the Blackwood Cottages Trust, FLM Kaikee Pty Ltd.

I accept that Blackwood Cottages was a joint enterprise with the both Mr Bell and Mr Karl Bell owning 50% of the beneficial interest in the property .

Value of Blackwood Cottages

The Blackwood Cottages have an agreed land value, as at the date of trial, of $280,000.

The buildings on the property were destroyed by the bushfires which occurred on Saturday 7 February 2009. FLM Kaikee Pty Ltd. received the proceeds of an insurance policy for the damage in the sum of $1,125,000. Wesfarmers Federation Insurance Limited was the insurer. Although the discharge acknowledging the insurance payout was signed only by Mr Karl Bell, the relevant certificate of insurance showed the “Insured” as both Mr Bell and Mr Karl Bell and the letter which enclosed the certificate of insurance, dated 10 February 2009, was addressed to both brothers as the “clients”.

Contribution of Ms Morgan to Blackwood Cottages

The Blackwood Cottage property was purchased by the Bell brothers just three months prior to the end of the relationship between Ms Morgan and Mr Bell.

Ms Morgan made no contribution by way of money towards Blackwood Cottages. However, Ms Morgan provided an office fit out from her former property at Mooroolbark for use in Blackwood Cottages. Ms Morgan claims that the office fit out was worth $18,000, which was never paid to her.

Further, from the time of its purchase by the Bell brothers in about August 2007 to October 2007, Ms Morgan said that she managed the property and bed and breakfast business jointly with Mr Bell. She said that she did a large amount of the physical work such as washing of sheets and stripping beds. This she said was undertaken by her at a time when she was also caring for a young baby, which made work more demanding for her.

Mr Bell said that for the first two weeks or so after acquiring the property, he worked with Ms Morgan in managing Blackwood Cottages. However, he said that this soon ceased, and Ms Christine Wilson was appointed as the manager. Thereafter, he said that Ms Morgan contributed little by way of working in the enterprise, before her relationship with Mr Bell ended on October 2007.

Mr Bell called Ms Christine Wilson to give evidence.

I accept that soon after the Bell brothers took possession of Blackwood Cottages, Ms Morgan telephoned Ms Wilson and said that she could not manage to undertake setting up accounts and the computer system, answering telephones, and meeting the customers while she had her young daughter Pia. She asked whether Ms Wilson could come up and help “with the business side of Blackwood Cottages”.

Ms Wilson confirmed that after that time she was appointed the full-time manager of Blackwood Cottages, a position which she occupied until the bushfires in February 2009. Her role was to meet the people and stay on the property and look after the cottages.

Following Ms Wilson’s appointment as manager, Ms Morgan continued to work at Blackwood Cottages, but only on a part-time basis doing the bookwork and attending to some duties in the office. Her hours were not regular. I accept the evidence of Ms Wilson.

However, I am satisfied that Ms Morgan did not get paid for the work she did at Blackwood Cottages, limited though it was. Her work indirectly contributed to Mr Bell’s financial resources in a modest way, by reducing to some extent the need the to employ staff to carry out her duties.

13 Buxton- Marysville Road, Marysville

On 13 November 2006 the Bell brothers purchased a 3-acre property situated at 13 Buxton-Marysville Road.

The property was purchased in Mr Bell’s name in January 2007 for $295,000. At the time of the purchase, the property included a dwelling, a cabinet makers home and a large shed, which had been used as a joinery.

In 2009, the property was subdivided into two allotments: Lot 2 (known as 13 Buxton-Marysville Road); and Lot 1 (known as 7 Buxton-Marysville Road).

Value of Lot 2 (13 Buxton- Marysville Road, Marysville)

Subsequently, the front block containing the dwelling (Lot 2) was sold for $265,000.

The net proceeds of sale in respect of Lot 2, after payment out of the mortgage over the property following its sale, were $30,000. This sum is held in trust by Pandeli Lawyers, pending finalisation of this proceeding.

Value of Lot 1(7 Buxton- Marysville Road, Marysville)

The remaining block (Lot 1) which includes the large shed, is leased to the Alexandra Hospital as consulting rooms and to the local doctor, and is rented for $200 per week. The shed survived the February 2009 bushfires and was used for bush fire relief.

The remaining allotment (Lot 1) is valued at $170,000.

Beneficial Ownership of Lot 1, 13 Buxton- Marysville Road, Marysville

Ms Morgan submitted that the evidence does not support an equitable interest in the property in favour of Mr Karl Bell.

However, the deposit monies in the sum of $29,500 for the purchase of 13 Buxton- Marysville Road, Marysville were provided by Potters Cottage Trading Pty Ltd. The balance of the purchase price was provided by a subsidiary of the CBA. Although the property was registered solely in the name of Mr Bell, and the loan was taken out solely in his name, Potters Cottage Trading Pty Ltd made all of the loan repayments.

The property was purchased as part of the business of Mr Bell and Mr Karl Bell as property developers. They both saw it as a good opportunity for subdivision, and considered that it may have been possible to develop the land as a five lot subdivision.

Further, Mr Bell and Mr Karl Bell both proceeded to develop the property together. They engaged a surveyor to draw up a 5-lot subdivision and approached the Murrindindi Council with the plan. However, the Council considered the 5-lot subdivision to be an over development. They then continued preparing a 2-lot subdivision with 2 allotments, one of 1¼ acre and the other of 2 acres, which they considered would gain the approval of the Council. This was ultimately successful in gaining approval.

Together the Bell brothers renovated the house on the property and redeveloped the shed to provide the other dwelling on the subdivided portion of the land.

I am satisfied that the property at 13 Buxton-Marysville Road, Marysville was a joint enterprise with the both Mr Bell and Mr Karl Bell each owning 50% of the beneficial interest in the property.

Contribution of Ms Morgan to 13 Buxton- Marysville Road, Marysville

Ms Morgan made no financial or non-financial contribution to the purchase or upkeep of the property at 13 Buxton-Marysville Road, Marysville.

Riverlea Estate, Warrandyte

On 13 October 2009, a company under the control of the Bell brothers, Bell Group Superannuation Pty Ltd, settled the purchase of a property and wedding reception business known as “Riverlea Estate” situated at 2-54 Croydon Road, Warrandyte South.

The purchase price for the property was $1,585,000.

Both Mr Bell and Mr Karl Bell are the directors and shareholders of Bell Group Superannuation Pty Ltd.

As at 31 May 2010, Bell Group Superannuation Pty Ltd had a credit balance of $163,585.85 in its bank account.

A wedding reception business was also purchased by the Bell brothers in conjunction with their purchase of the Riverlea Estate property. The settlement of the Riverlea Estate wedding reception business was also effected on 13 October 2009.

The purchase price for the business was $615,000.

The purchasing entity for the Riverlea Estate wedding reception business was Riverlea Estate Pty Ltd. Both Mr Bell and Mr Karl Bell are the directors and shareholders of the company.

As at 18 June 2010, Riverlea Estate Pty Ltd had a credit balance of $32,839.46 in its bank account.

Beneficial Ownership of the Riverlea Estate Property and Business

I am satisfied that the property and business comprising Riverlea Estate was a joint enterprise with both Mr Bell and Mr Karl Bell each owning a 50% beneficial interest.

Contribution of Ms Morgan to Riverlea Estate Property and Business

Ms Morgan made no financial contribution or non-financial to the purchase or upkeep of the Riverlea Estate property and business.

Insurance Monies

Mr Bell received significant insurance payments arising from property destroyed in the February 2009 bushfires.

Insurance monies paid out in respect of the farm property situated at 35 Retreat Road, Marysville and received by Mr Bell and Mr Karl Bell, amounted to $591,586.

They also received a total of $3,094,142 by way on insurance proceeds in respect of the Keppels Hotel. These monies were applied as follows: purchase of the Riverlea Estate property $1,585,000; purchase of the Riverlea Estate business $615,000; with the balance, $894,142, being used to retire debt.

Mr Bell and Mr Karl Bell also received $1,125,000 as an insurance pay out in respect of the Blackwood Cottages.

Cash on Hand at the Date of Trial (March 2011)

As at the date of trial, the following cash was held personally by Mr Bell, or was money over which he had control: $1300 (Mr Bell); $7,000 (Blackwood Cottages); $13,890 (Potters Cottage); and $11,000 (other cash).

Superannuation at the Date of Trial (March 2011)

Mr Bell and Mr Karl Bell are the members of the Bell Superannuation Fund.

At the date of trial, the fund had a total of $326,244 in its bank account.

Total Assets at the Date of Trial (March 2011)

Accordingly, the total assets owned by both Mr Bell and Mr Karl Bell and their respective entities as at the date of trial (being March 2011) amounted to $11,370,162.

Liabilities at the Date of Trial (March 2011)

The total liabilities of Mr Bell and Mr Karl Bell and their respective entities as at the date of trial comprised of the following amounts: loan in respect of Potters Restaurant ($905,000); loan in respect of Keppel’s Hotel ($810,000, which was repaid from insurance monies received); loan in respect of Blackwood Cottages ($1,100,000, which was repaid from insurance monies received); and stamp duty in respect of the purchase of the Riverlea Estate land ($87,175, which was paid from insurance monies received).

Accordingly, at the date of trial, the total joint liabilities of Mr Bell and Mr Karl Bell are $2,902,175.

In addition, Mr Bell has personally incurred a total of $635,000 in respect of legal fees, both in respect of these proceedings, and proceedings in the Family Court of Australia. As at the date of trial, $505,000 of those fees have been paid by Mr Bell, leaving a total outstanding of $130,000.

Mr Bell’s Net Assets at the Date of Trial (March 2011)

Mr Bell’s net assets at the date of trial are therefore assessed at $4,103,993, calculated as follows:

·net combined assets of Mr Bell and Mr Karl Bell $8,467,987 ($11,370,162 - $2,902,175 = $8,467,987)
·net assets of Mr Bell $4,233,993 ($8,467,987 divided by 2 = $4,233,993);
·less Mr Bell’s outstanding legal fees of $130,000 = $4,103,993.

Net Increase in Assets of Mr Bell during the Relationship

I accept that Mr Bell had some $1 million by way of net assets at the commencement of the relationship. This grew by approximately a further $3 million by the time of the trial, when his net assets totalled something in excess of $4 million ($4,103,993).

I also accept that, at the conclusion of the relationship with Ms Morgan, Mr Bell held net assets were in the order of about $1.8 million.

Relevance of Post Separation Contributions

Contributions to the relationship as homemaker and parent, to the benefit of the family unit, are to be assessed up to the date of trial. Accordingly, the Court must have regard to the post separation contributions made for the welfare of the family by both parties.

It is common ground that Mr Bell enjoys an ongoing and loving relationship with the child of the relationship, Pia. She has spent a significant amount of time with Mr Bell since the parties separated. It is common ground in these proceedings, that from the date of separation until April of 2010, Mr Bell paid child support of approximately $88 per week to Ms Morgan and from April 2010 to date he has paid $207 per week.

I accept that Mr Bell has played an active and ongoing role in Pia’s life and has paid child support. However, I do not accept that the role of parenting the child has been shared equally since the parties separated. Ms Morgan has clearly continued the principal parenting role as she did when the couple were together.

Nevertheless, I accept that the financial contribution made by Mr Bell to the welfare of Pia since the date the parties separated, through his payment of child support to date, have not been insignificant and are to be taken into consideration in the overall assessment of the contributions of the parties.

Contributions of the Parties

Approach to Assessment of Contributions

As observed by the Court of Appeal in Kenyon v Akeroyd [9], it has been accepted since Norbis v Norbis[10] that there are two possible approaches to assessing contributions.
[9]Ibid at [10]
[10][1986] HCA 17; (1986) 161 CLR 513

(1) The first is the so-called ‘asset by asset’ approach, whereby the respective contributions to individual assets are assessed separately and where, as a result, the proportionate contributions may differ from one asset to the other.

(2) The second is the so-called ‘global’ approach, whereby the identified assets are treated as a ‘pool’ and a global assessment of respective contributions is applied to the whole of the pool, often on the basis of percentages. As further observed by Neave JA in Giller v Procopets[11], citing in turn the statements of Mason and Deane JJ in Norbis v Norbis[12], which of these approaches is regarded as the more convenient to adopt in the particular case is a matter for the Court, having regard to the circumstances of the case.

[11][2008] VSCA 236, [283] (Neave JA)

[12] (1986) 161 CLR 513 at 523 - 524

Ms Morgan’s principal contribution to the relationship was non-financial. This was in part provided by her contribution as a homemaker. However, the most significant contribution made by Ms Morgan was as a mother and parent to the child of the relationship, Pia.

As to the assessment of this contribution, the observations of the Court of Appeal in Giller v Procopets are relevant. Neave JA, with whom Maxwell P agreed, observed:

In our view, the entire endeavour to attribute a dollar figure to Ms Kenyon’s parent/homemaker contribution is misconceived. Not only is such a contribution, by its nature, insusceptible of valuation in money terms, but the very attempt to compute such a value ignores the critical fact that many – perhaps most – domestic relationships operate as a shared undertaking where the maintenance of the family unit depends in equal measure on each contribution. Typically, one partner bears a disproportionate share of the burdens of homemaker and (where there are children) parent; the other partner is thus left free to earn a disproportionate share – if not the entirety – of the household income.
……….
As discussed earlier, s 285(1)(b) required the Court to assess the homemaker or parent contributions made by either of the de facto partners to the welfare of the other de facto partner or to the welfare of the family. This provision must be given a beneficial construction. Contributions to the welfare of the family must be recognised ‘not in a token way but in a substantial way’. The contributions of a de facto partner as homemaker and parent should not be regarded as inferior to the corresponding contributions of a spouse, nor should contributions as homemaker or parent be valued by reference to the commercial value of those services. Family Court decisions dealing with the assessment of homemaker and parent contributions under s 79 are also of assistance in assessing the value of such contributions, although they cannot be applied uncritically given that s 79 requires reference to factors (in s 75(2) of the Family Law Act) which have no equivalent in the Act.
I respectfully adopt what the New South Wales Court of Appeal said in Kardos v Sarbutt about the approach which should be taken in evaluating the respective contributions of the parties:
... [T]he court is not required to take a reductionist process analogous to the taking of partnership accounts by examining every alleged ‘contribution’ of the kinds described in the section with a view to putting a monetary value on each in order to reach an accounting balance one way or the other, then to be eliminated by the requisite financial adjustment; rather, the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind: Davey v Lee (1990) 13 Fam LR 688 (McLelland J).
Some contributions are readily capable of evaluation in monetary terms. Others - such as those made in the capacity of homemaker and parent - are not.
As the origins and nature of particular assets must also be taken into account the circumstances of particular cases may warrant a different approach , but it will often be an appropriate starting point to treat the contributions of the partners, though different, as reciprocal – and equal.
In our view, the present is just such a case. Ms Kenyon and Mr Akeroyd made reciprocal contributions to the family unit, he (principally) as the breadwinner, she (principally) as the homemaker. Each worked long and hard in aid of the shared undertaking. It would be neither just nor equitable to view one’s contribution as more valuable than the other’s. The difficulty faced by a court in weighing up and comparing the different kinds of contributions was described by the Full Court of the Family Court in Ferraro and Ferraro.
The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a “level playing field”. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution, can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and cannot be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role.
Having regard to their equal contributions, we have adopted a global approach and concluded that the former partners are equally entitled to the assets. We proceed on that basis.

I adopt a global approach to the assessment of the contributions of the parties in this case.

Valuing the Contribution of Ms Morgan as Homemaker and Parent

Prior to the birth of their daughter Pia, while she lived at the Farm with Mr Bell, I am satisfied that Ms Morgan was primarily responsible for the domestic work. As verified by Ms Morgan’s mother, Mrs Irene Francis, she would attend to most of the cooking, cleaning, washing, and shopping.

In assessing Ms Morgan’s contribution as a parent mother to the child Pia, I take into account that this took place between the time leading up to the birth of Pia on 18 July 2006, during the period of Ms Morgan’s pregnancy, and the time when the relationship came to an end, namely 4 October 2007. During this time, Ms Morgan devoted her time to the birth of her child and subsequent child rearing for approximately 18 months. It was reasonable for her to not take on employment during this period.

I further take into account that from late 2003 after Ms Morgan’s return from Mount Buller, the couple agreed to have a family together, and attempted to achieve this. Ms Morgan became pregnant in late 2005 but unfortunately on 22 September 2005 she miscarried during her pregnancy at 8 weeks.

In mid-November 2005 Ms Morgan became pregnant again. She continued to work at Keppel’s Hotel but in January 2006 she decided to stop working. Ms Morgan was particularly concerned about doing anything that might affect the success of this pregnancy. It was for this reason that she finished working at the hotel at such an early stage.

However, during her pregnancy, Ms Morgan continued to participate in domestic tasks at the farm and assisted to look after the animals. She also undertook some administrative work for Bell such as paying mortgage payments.

The daughter of the relationship, Pia, was born on 18 July 2006. Ms Morgan had an elective caesarean birth at 38 weeks. She endured the usual consequences of a pregnancy and caesarean birth. Ms Morgan became a full-time mother and breastfed Pia until late June 2007.

On Sunday the 24 June 2007 Ms Morgan suffered from another miscarriage.

Despite this, she continued to attend to almost all of her daughter’s day to day needs including getting up in the middle of the night to feed her, changing nappies, washing clothes and providing her with a regular daily routine.

During this time Ms Morgan also attended to the usual domestic duties including cooking, washing, cleaning and other home making duties.

I am satisfied that Mr Bell during this period remained busy with his business interests and gave only very limited assistance to the parenting of Pia when she was a small baby and in attending to domestic duties.

When Pia was 5 or 6 months old, Mr Bell and Ms Morgan agreed that she would attend at a childcare facility in Marysville for two 2 hour sessions each week. This activity was thought to be good for the child’s socialisation. Ms Morgan also took Pia to swimming lessons for about half an hour per week.

A further positive contribution was made by Ms Morgan to the relationship. At the commencement of their relationship, Mr Bell advised Ms Morgan that he did not have a driver’s licence. He frequently required Ms Morgan to drive him during this period of driving licence disqualification. Mr Bell had his driving licence restored in September 2006. I accept that for the period from April/May 2002 until September 2006 Ms Morgan spent a significant amount of time driving Mr Bell to places that he wanted to go. His friend Lance Muller also assisted Mr Bell in this regard.

Relevance of Domestic Violence

In Giller v Procopets[13] the Court of Appeal examined the relevance of domestic violence during the course of the cohabitation to an assessment of the victim’s contributions.
[13] [2008] VSCA 236 at [288-300]

The Court of Appeal concluded on the facts of Giller that: [14]

…..the violence and threats to kill to which Mr Procopets subjected Ms Giller would have made it significantly more difficult for her to discharge her role as homemaker and parent. Like White J in Hughes v Egger, I regard this as self-evident. Plainly, the effects of domestic violence are not limited to physical injury. The assaults on Ms Giller made her fearful, apprehensive that she would be assaulted again, and anxious to avoid provoking Mr Procopets. In my opinion, his Honour erred by failing to take account of this matter in assessing Ms Giller’s homemaker and parent contributions.

[14]Supra at [300] per Neave JA

The trial Judge in Giller found that Mr Procopets had assaulted Ms Giller on four occasions while they were living together, and on one occasion after they had ceased to do so. There were two other alleged assaults which his Honour did not consider for the purposes of Ms Giller’s claims. The Court of Appeal considered that the violence and threats to kill, to which Mr Procopets subjected Ms Giller, would have made it significantly more difficult for her to discharge her role as homemaker and parent. In the opinion of the Court of Appeal, the Trial Judge erred by failing to take account of this matter in assessing Ms Giller’s homemaker and parent contributions.

In the Marriage of Kennon the Full Court of the Family Court reviewed the case law and concluded that: [15]

... where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s 79. We prefer this approach to the concept of ‘negative contributions’ which is sometimes referred to in this discussion.

[15][1997] FamCA 27; (1997) 139 FLR 118 at 140

The Full Court in Kennon recognised, however, that taking account of violence or other conduct which had made the contributions of the party more arduous carried the risk that spouses would routinely make allegations of misconduct in property adjustment proceedings. In this regard Fogarty and Lindenmayer JJ said: [16]

However, it is important to consider the ‘floodgates’ argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters — a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the court at an early stage when a case appears to raise those issues.
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).

[16]Supra at 140-141

Two examples of the application of the principle in Kennon are Hughes v Egger[17] and BLM v RWS.[18]
[17][2005] NSWSC 18
[18] [2006] QSC 139

In Hughes the assaults on the female partner included slapping her across the face, punching, choking and hitting her, pushing her down the stairs and ripping out an earring from her earlobe. White J said:

I think it is self-evident that the contributions made by the defendant as a homemaker were more arduous by reason of the fact that the person for whom she was working about the house descended, on occasion, to such conduct. It is a factor which increases the weight to be given to her role as a homemaker. [19]

[19]Ibid at [151]

In BLM v RWS, Mackenzie J said:

While the full extent of actual physical violence was in my view difficult to gauge, the evidence was sufficient to convince me that there was physical violence, and also verbal abuse, of a level that made the applicant’s contribution to the homemaking and parenting role more onerous. For that reason some allowance in her favour will be made in the final assessment.^[20]

[20]Ibid at [85]

Applying these principles, the Court in this case is required to consider whether the alleged acts of violence on the part of Mr Bell did occur, and whether, if they did, they had the effect of making Ms Morgan’s contributions more arduous in the sense that the conduct had a discernible impact upon the contributions she made.[21]

Nature and Extent of Physical Violence

[21] See: Kennon v Kennon [1997] FamCA 27; (1997) 139 FLR 118; and Conn vMartusevicius (1991) 14 Fam LR 751

In the present case, I make the following findings of fact in relation to the conduct alleged against Mr Bell which occurred in the course of the relationship.

The first incident occurred in or about July 2003, while Ms Morgan was living at Mount Buller. Mr Bell travelled to the mountain to spend a pre-arranged weekend with Ms Morgan. It appears that Mr Bell arrived at about 3.30 to 4.00pm, while Ms Morgan was out skiing. Mr Bell visited the Kooroora Hotel where he consumed some alcohol. He arrived at Ms Morgan’s room at the Tatry lodge at about 7.00 to 7.30 pm. He was intoxicated and aggressive. An altercation occurred over messages Mr Bell discovered retained on Ms Morgan’s mobile phone. After listening to the messages Mr Bell smashed the phone. He then grabbed Ms Morgan and lifted her up. Her skis were standing up against a wall and Mr Bell pushed her against them. The jacket that she was wearing got caught on the skis. Ms Morgan then toppled over. Mr Bell then upended the couch in the living area. He then threatened Ms Morgan in an aggressive fashion. He then walked into the bathroom.

Ms Morgan was terrified by Mr Bell’s behaviour on this occasion. She ran out the emergency exit door. As she walked up stairs cut into the snow , Mr Bell followed her, trying to grab her feet. Ms Morgan managed to run next door into the Bullerbar and met up with the proprietor. He dragged Ms Morgan into the male toilets. Mr Bell pursued Ms Morgan into the Bullerbar in an agitated state. He was calmed down by one of the barmen. The police were called, but no charges were laid. Mr Bell then removed his belongings from Ms Morgan’s room and left the mountain.

Following this incident, Mr Bell and Ms Morgan did not speak directly for some 4 days, however, Mr Bell left abusive messages on her phone. Following this period, Mr Bell’s mood changed. He tried hard to persuade Ms Morgan not to remain at Mount Buller and implored her leave the mountain and be with him. On 17 August 2003, not long after the incident, Mr Bell picked up Ms Morgan from Mount Buller and they resumed co-habitation until they finally separated on 4 October 2007.

During 2006 and 2007 there were difficulties in the relationship. Mr Bell took to drinking at either the Buxton Hotel or the Marysville Hotel on most evenings, following which he was often intoxicated. Arguments between the couple developed, and their relationship started to deteriorate.

In or about November 2006 there was an incident in which Mr Bell upended a couch that was occupied by Ms Morgan while she was breastfeeding Pia. Mr Bell arrived home at about 10.30 or 11pm and was intoxicated. An argument developed between the two over his drinking habits. In the course of this altercation Mr Bell came over to the couch that Ms Morgan was sitting on while Pia was attached to her breast. He lifted up one end and upended the couch. Fortunately Ms Morgan and the baby got out of the way of the couch and were not hurt. It was however an upsetting and stressful event.

Ms Morgan also points to an incident which occurred on 5 June 2007. Mr Bell, Ms Morgan and Pia were going out to dinner with Ms Morgan’s sister and her family in Blackburn. They called into Potter’s Restaurant on the way to pick up a bottle of wine. An argument broke out between the couple at Potter’s while Mr Bell was holding Pia in his arms. As they were arguing Mr Bell turned out the lights to leave the restaurant. Ms Morgan tripped and fell in the dark. She broke the metacarpal bone in her left hand. She was treated by a plastic surgeon and had her hand immobilised in plaster for 6 weeks. This made looking after her baby more difficult during this period.

Another incident occurred in or about March 2007. On that occasion Mr Bell again arrived home in a drunken condition. An argument ensued between Mr Bell and Ms Morgan. In the course of this altercation, which occurred to the kitchen, Mr Bell in a stabbing gesture lunged at Ms Morgan’s hand with a fork. He did not connect with Ms Morgan, and she was not physically harmed, however he did leave 3 fork marks in the laminex of the kitchen bench top.

A further incident of violence, was directed towards Ms Morgan’s mother, Mrs Irene Francis. The evidence does not reveal precisely when this occurred. Nevertheless, it took place in the presence of Ms Morgan. Although Mr Bell took the position that Mrs Francis’ version of the event was false, I accept her description of the incident. Mrs Francis was pushed violently by Mr Bell up against a wall. He pushed his leg between Mrs Francis’ legs, held her in this position and punched the wall repeatedly next to her ears. I am satisfied that Ms Morgan, who witnessed the incident, was distressed by this event.

A further incident was described in the evidence of both Mr Bell and Ms Morgan which appears to have occurred in September 2007 in the course of an argument involving a threat made by Ms Morgan to report Mr Bell to the Australian Taxation Office. Mutual exchanges of physical violence were alleged. I find it impossible to arrive at any concluded view as to this incident based on the evidence.

Other instances of violence were described by Ms Morgan in her evidence. She described bruising down her left leg from being kicked by Mr Bell and said that this was only one of the many instances where this occurred. Mr Bell denied kicking Ms Morgan and causing her bruising. I do not make any finding on these matters because, in the face of Mr Bell’s denial of the events, and the paucity of detail provided by Ms Morgan, the evidence is not sufficient to arrive at a concluded view on the issue.

For present purposes, I discount the incident at Potters Restaurant on 5 June 2007 when Ms Morgan broke her hand. On the evidence, this was an accident which occurred in the course of an argument between the couple. It was not a consequence of any violence directed to her by Mr Bell. Although during the six weeks or so of recovery it made Ms Morgan’s contributions more arduous in the sense that her role in looking after Pia was made more difficult, this was not brought about by any conduct of Mr Bell’s for which he was relevantly responsible. Nor has it been shown that this particular incident had any discernible and on-going detrimental impact upon Ms Morgan, and the manner in which she continued to make her contributions to the relationship, following her recovery.

As to the incident at Mount Buller in or about July 2003, unpleasant and highly upsetting as it was, I take this to be an isolated event at this stage of the relationship. Mr Bell was provoked into a jealous fit of rage by the surrounding circumstances which led to the incident. Although his behaviour is not condoned, when placed in its context, I am satisfied that it was not such as to have had any discernible and detrimental impact upon the contribution which Ms Morgan subsequently made. I am reinforced in this conclusion by the fact that on 17 August 2003, not long after the incident, Ms Morgan resumed co-habitation with Mr Bell on the farm at Buxton, where she remained until the final separation some 4 years later on 4 October 2007.

However, during the 2006–2007 period of the relationship, two incidents which I have described were in a different category. Both occurred within a relatively narrow time frame, within about 4 months of each other. The upending of the couch while Ms Morgan was breastfeeding Pia occurred in or about November 2006, and the ‘fork stabbing’ incident occurred in or about March 2007. Further, although the evidence does not permit the dating of the incidents, these events took place against the backdrop of the further aggressive conduct directed towards Ms Morgan’s mother, Mrs Francis, which took place in the presence of Ms Morgan as I have described.

These incidents manifested a propensity for loss of control and aggression while Mr Bell was intoxicated. Inebriation was a condition which Mr Bell commonly experienced between 2006 and 2007 when the couple were experiencing difficulties in their relationship. For Ms Morgan, life with Mr Bell during this period was unpredictable, and on occasions, frightening.

I am satisfied that during the last year of the relationship between November 2006 to October 2007, while Ms Morgan was making a substantial contribution to the relationship in her role as the principal caregiver and mother to Pia, undertaking this responsibility was made more arduous for her by Mr Bell’s domestic aggression during this period. This manifested itself in scenes of violent and drunken behaviour during this time.

As observed by the Court of Appeal in Giller[22] the effects of domestic violence are not limited to physical injury. It is self-evident that the assaults on Ms Morgan made her apprehensive that she would be assaulted again in the future and made her anxious to avoid provoking Mr Bell into such behaviour. I am satisfied that the conduct had a discernible and detrimental impact upon the contribution she made as a mother to Pia and homemaker, and would have made it more difficult for her to discharge her role as such in the last year of the relationship.
[22]Ibid at [299]

The conduct of Mr Bell described is relevant in determining the value of Ms Morgan’s contributions.

Just and Equitable Outcome

It is now necessary to consider the order required to achieve a just and equitable adjustment of the parties’ property.

Ms Morgan as the plaintiff sought the following orders against Mr Bell as the defendant:

(1) That within 60 days the defendant pay or cause to be paid to the plaintiff the sum of $1,500,000.

(2) Pending the payment, the plaintiff be entitled to lodge a caveat on all or any of the following parcels of real estate such as may be required at her discretion to secure her entitlements pursuant to paragraph 1 of these orders:

(a) The Farm at 35 Retreat Road, Buxton;

(b) Lot 1,13 Buxton-Marysville Road, Buxton;

(c) Potter’s Receptions at 321 Jumping Creek Road, Warrandyte;

(d) Keppel’s Hotel at 42 Murchison Street, Marysville;

(e) Blackwood Cottages at 38 Falls Road, Marysville; and

(f) Riverlea Estate at 2-54 Croydon Road, Warrandyte.

(3) That upon the payment being made in full the plaintiff remove at her expense all caveats lodged by her on the above properties.

(4) That the payment shall be a full and final settlement of any entitlement that the plaintiff may have against the defendant arising out of their domestic relationship, save for any entitlement to child support.

The defendant, Mr Bell has made an open offer of $400,000, which he says was to recognise “in a substantial way” the role of Ms Morgan in providing care to the parties’ child Pia and “provide a just and equitable recognition of the role of homemaker and parent during the time frame relevant to these proceedings”.

In evaluating the respective contributions of the parties, McClelland J of the Supreme Court of New South Wales in Davey v Lee said:

... the court is not required ... to undertake a reductionist process analogous to the taking of partnership accounts ... by examining every alleged ‘contribution’ of the kinds described in the section with a view to putting a monetary value on it in order to reach an accounting balance one way or the other, which is to be then eliminated by the requisite financial adjustment. Rather the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind. [23]

[23](1990) 13 Fam LR 688, 689

This statement was endorsed by the New South Wales Court of Appeal in Kardos v Sarbutt and by the Victorian Court of Appeal in Tayles v Davis.

In the exercise of the discretionary power vested in the Court, I order that Mr Bell pay Ms Morgan the sum of $675,000 by way of adjustment of the parties’ property.

I will hear the parties on the terms of the order which should be made and as to the costs of the proceeding.

ASSET/LIABILITY	OWNERSHIP	VALUE
2007 Toyota Yaris	Plaintiff	$13,000.00
Furniture & Chattels	Plaintiff	$6,000.00
Plaintiff’s bank accounts	Plaintiff	E$500.00
Bank account held in the name of Pia Bell	Plaintiff on trust for Pia Bell	E$5,000.00
Car loan from Toyota Finance as at 3 February 2011	Plaintiff	($8,704.00)
Bank West Visa card as at 1 February 2011	Plaintiff	($347.77)
NAB Visa card as at 3 February 2011	Plaintiff	($1,169.60)
CBA Mastercard as at 3 February 2011	Plaintiff	($1,986.40)
Monies owed to Plaintiff’s mother	Plaintiff	($55,000.00)
Commonwealth Financial Services Superannuation as at 30 June 2010	Plaintiff	$5,498.03
Australian Super as at 30 June 2010	Plaintiff	$14,387.05
Hostplus Super as at 3 February 2011	Plaintiff	$3,476.04
TOTAL NET (NEGATIVE) BALANCE		($19,346.65)

[2011] VSC 302

4 July 2011