Ollie and Norwood
[2015] FCCA 71
•23 January 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| OLLIE & NORWOOD | [2015] FCCA 71 |
| Catchwords: FAMILY LAW – Practice and procedure (?) – de facto property application under s.90SM of the Family Law Act 1975 (Cth) – s.90SB(a) applied to application – Respondent issued proceedings under Property Law Act 1958 (Vic) in the Victorian Civil and Administrative Tribunal – consideration of meaning of ‘substantial contribution’ under ss.90SM(4)(a), (b) and (c) – consideration of meaning of ‘serious injustice’ in s.90SB(c)(ii) – substantial contribution found under s.90SM(4)(a) – Court not satisfied that failure to make the order would result in serious injustice to the Applicant – application dismissed. |
| Legislation: Domestic Relationships Act 1994 (ACT), s.15(1) Family Law Act 1975 (Cth), ss.90SB, 90SM(4) Property Law Act 1974 (Qld), ss.276, 286 |
| Davies v Johnston (Revised) (Real Property) [2014] VCAT 512 Gibbons v Vowles (2003) 22 FRNZ 946 Henry v Williams [2004] 2 NZLR 132 Lee & Hutton [2013] FamCA 745 LF v RA (2005) 34 Fam LR 536 LS v ZJ [2005] NZFLR 932 Mallet & Mallet (1984) 156 CLR 605 McMaster & Wilkie-Snow [2011] ACTSC 183 Miller & Trent (2011) 250 FLR 387 Rolfe & Rolfe (1979) FLC 90-269 V & K [2005] FCWA 80 Van Jole v Cole (2000) 26 Fam LR 228 Wall & Mitchell [2012] FamCA 114 Wentworth v Wentworth (1995) 37 NSWLR 703 X and Y [2010] NZHC 287 |
Applicant: | MS OLLIE |
| Respondent: | MR NORWOOD |
| File Number: | MLC 8579 of 2014 |
| Judgment of: | Judge Whelan |
| Hearing date: | 18 December 2014 |
| Date of Last Submission: | 18 December 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 23 January 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms H Renwick |
| Solicitors for the Applicant: | Brygel Lawyers |
| Counsel for the Respondent: | Mr D Dudderidge |
| Solicitors for the Respondent: | Nevile & Co Lawyers |
ORDERS
The Application filed on 24 September 2014 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Ollie & Norwood is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8579 of 2014
| MS OLLIE |
Applicant
And
| MR NORWOOD |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by MS OLLIE (“the Applicant”) under Part VIIIAB, Division 2 of the Family Law Act 1975 (Cth) (“the Act”) in which she seeks the following final orders:
1. The applicant retain the proceeds of sale of the property situate at Property K.
2. That the respondent do all things necessary, including signing any documents necessary to enable the applicant to transfer use of mobile telephone number (omitted) to an account in her sole name.
3. That the respondent pay the applicant’s costs of and incidental to this application.[1]
[1] Initiating Application filed by Ms Ollie on 24 September 2014, at p.2.
It is not disputed that the Applicant and the Respondent Mr NORWOOD (“the Respondent”) commenced cohabitation in (omitted) 2013 at Property K (“the property”) and that the Respondent vacated the property in May 2014. There is no child of the relationship. Consequently, neither ss.90SB(a) nor (b) of the Act apply. In order to invoke the jurisdiction of the Court under the provisions of the Act, the Applicant therefore needs to satisfy the Court that s.90SB(c) of the Act applies, that is:
(i)the party to the de facto relationship who applies for the order or declaration made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c); and
(ii)a failure to make the order or declaration would result in serious injustice to the applicant …
The Respondent concedes that the Applicant made substantial contributions of the kind set out in s.90SM(4)(a) of the Act. In order to invoke the jurisdiction, the Court therefore needs to be satisfied that a failure to make the order sought would result in serious injustice to the Applicant.
Background
The Applicant and Respondent met in (omitted) 2012. At the time, the Applicant was the registered owner of the property and resided there with her children A born (omitted) 2002 and B born (omitted) 2005. The property was subject to a registered mortgage of $792,000.00. At the time, the Applicant’s former husband Mr C was still named as a party to the loan.
In (omitted) 2013, the Respondent moved into the property. He has two children, X and Y both aged nine, who resided with him for six days each fortnight.
At the time of cohabitation, it was agreed that the Respondent would obtain finance to pay:
·The remainder of the pre-existing mortgage;
·Any debts with respect to the property; and
·The personal debts of the parties.
The Respondent obtained a mortgage in the amount of $940,000.00 for this purpose with the Applicant named as guarantor for the loan. In July 2013, the property was transferred from the Applicant as sole proprietor to the Applicant and Respondent as tenants in common in equal shares.
Later in 2013, the mortgage was extended to $1,040,000.00 to pay for some renovation work on the property and to pay out some personal debts (the Applicant says of both of them, the Respondent says of the Applicant). The Respondent says that he made all of the mortgage payments and paid the home insurance with respect to the property until late August 2014. The Applicant claimed that she paid for utilities, rates, holidays, vehicle maintenance, petrol and living expenses.
During cohabitation, the Applicant also purchased a motor vehicle for $87,000.00. The purchase was financed by a payment of $30,500.00, which the Applicant says she borrowed from her parents, and a loan from (omitted) Finance which was arranged by the Respondent. The Respondent says that, from the time of purchase until late October 2014, he made all of the repayments under that loan and paid for the insurance on the vehicle.
From (omitted) 2014, the Applicant resided in the property until
October 2014 when it was sold for $1,545,000.00. The Applicant received all of the sale proceeds after discharge of the mortgage, sale costs and other debts associated with the property with the exception of an amount of $46,430.00 which is held in trust by the Applicant’s solicitors. It is this amount which is the subject of these proceedings.
In September 2014, the Respondent instituted proceedings in the Victorian Civil and Administrative Tribunal (“VCAT”) seeking orders under Part IV of the Property Law Act 1958 (Vic) (“the Property Law Act”). On 11 November 2014, by consent, those proceedings were stayed pending a determination by this Court on the issue of jurisdiction.
The legislative framework
The effect of s.90SB of the Act is to restrict the jurisdiction of the Court to make orders under ss.90E, 90SG or 90SM of the Act unless the Court is satisfied that certain conditions have been met. Of relevance in these proceedings are the conditions that the Applicant has made substantial contributions of a kind mentioned in ss.90SM(4)(a), (b) or (c) of the Act and that a failure to make the orders sought would result in serious injustice to the Applicant.
[3] [2005] FCWA 80 at para.19.
In Miller & Trent (2011) 250 FLR 387 (“Miller”), Coates FM (as he then was) considered the meaning of “substantial contributions”[2] and, in doing so, referred to the judgment of Holden CJ of the Family Court of Western Australia in V & K [2005] FCWA 80 (“V & K”). In that case,
his Honour referred to the CCH commentary which observed that
“it will be a matter of degree, in a relationship which lasts a short time when a “normal” spousal contribution becomes “substantial””.[3]His Honour also referred to the decision of the High Court in Mallet & Mallet (1984) 156 CLR 605, which adopted the language of the Full Court of the Family Court in Rolfe & Rolfe (1979) FLC 90-269 that “contributions to home and family should be recognised not in a token, but in a substantial way”.[4]
[4] Ibid at para.20.
[2] Family Law Act 1975 (Cth), s.90SB(c)(i).
His Honour went on to observe:
Notwithstanding I am of the view that a contribution to domestic duties in circumstances such as exist in this case where there were no dependant children and over a short period of time ought not be seen to be substantial. In my view, substantial means something more than usual or ordinary. In my view, s 205X(b)(ii) is aimed at more exceptional circumstances where serious injustice may be caused by the application of sub-section (i).[5]
[5] Ibid at para.21.
Coates FM referred to the dictionary definition of ‘substantial’ as well as the decision of Wentworth v Wentworth (1995) 37 NSWLR 703 before concluding that the requirement was to be satisfied that the contributions were “more than usual or ordinary or were contributions having real worth, value or importance”.[6]
[6] (2011) 250 FLR 387, p.395 at para.62.
As Watts J noted in Lee & Hutton [2013] FamCA 745, the views of Holden CJ in V & K have been followed in a number of cases in this Court and the Family Court. His Honour also referred to other definitions of the word ‘substantial’ including “of ample or considerable amount, quality or dimensions”, “considerable or large” or “not illusory”.[7]
[7] [2013] FamCA 745, p.28 at para.181.
In Wall & Mitchell [2012] FamCA 114, Johnston J, in expressing agreement with both Coates FM and Holden CJ, went on to say:
If usual or ordinary contributions were sufficient to amount to “substantial contributions” within the meaning of s 90SB(c) there would be little purpose in the two years requirement in s 90SB(a) of the Act.[8]
[8] [2012] FamCA 114, p.38 at para.303.
I am satisfied on the evidence that the Applicant made substantial contributions of a kind mentioned in s.90SM(4)(a) of the Act. I am not satisfied that she made substantial contributions of a kind mentioned in ss.90SM(4)(b) or (c) of the Act.
I now turn to the meaning of “serious injustice” for the purpose of s.90SB(c)(ii) of the Act.
In Miller, Coates FM dealt with the issue of “serious injustice” in the following passage:
The Act recognises that an injustice may occur and so sets a higher test being a serious injustice. The word serious in this context, taken from the Concise Oxford Dictionary, must mean not slight. The Macquarie Encyclopedic Dictionary uses the words weighty or important. These meanings show a difference by marked degree from a mere injustice.[9]
[9] (2011) 250 FLR 387, p.395 at para.63.
His Honour later referred to the difference between a “serious injustice” and an order made on the basis of justice and equity:
While an assessment of the possible division of property without testing the evidence is to some extent a hypothetical exercise, any division of course must be made on a justice and equity basis. But because the order altering the property must be just and equitable, as well as the percentage division, it follows that this aspect of justice and equity is not the same as a person suffering a serious injustice, because a claim was not allowed to proceed.[10]
[10] Ibid, p.399 at para.94.
The Respondent referred the Court to two judgments concerning similar legislation to the Act provisions where the concept of “serious injustice” was considered. The first of these is a judgment of Potter J of the New Zealand High Court in X and Y [2010] NZHC 287. The judgment was in an appeal against a decision of the Family Court concerning s.14A of the Property (Relationships) Act 1976 (NZ)
(the “PRA”). Section 14A of the PRA provides:(1)This section applies if a de facto relationship is a relationship of short duration (as defined in section 2E).
(Section 2E defined a relation for a period of less than three years as a relationship of short duration).
(2)If this section applies, an order cannot be made under this Act for the division of relationship property unless –
(a) the Court is satisfied –
(i) that there is a child of the de facto relationship; or
(ii) that the applicant has made a substantial contribution to the de facto relationship; and
(b)the Court is satisfied that failure to make the order would result in serious injustice.
The Judge at first instance had referred to the meaning of “serious injustice” in various judgments where the term was considered. Heath J in Henry v Williams [2004] 2 NZLR 132, for example, said:
… the term “serious injustice” suggests injustice of a type that the Court cannot tolerate. While not creating a standard as high as the “repugnant to the interests of justice” test used in s 13 of the 1976 Act … the term requires a degree of injustice sufficient to require the Court to intervene.[11]
[11] [2010] NZHC 287, at para.81.
Her Honour noted that both Judge Inglis QC in Gibbons v Vowles (2003) 22 FRNZ 946 (“Gibbons”) and Judge Ullrich in LS v ZJ
[2005] NZFLR 932 had considered that:
… the injustice must be sufficiently serious to justify departure from the general rule that where the de facto relationship is of short duration no order can be made, the primary rule being that de facto relationships of short duration do not come under the PRA at all.[12]
[12] [2010] NZHC 287, at para.83.
Justice Potter, on the appeal, found that:
… there is an implicit requirement for the applicant who seeks orders from the Court under s 14A to place before the Court evidence which will both satisfy the Court that one or other of the threshold requirements has been met and that the situation is such that serious injustice would result from failure to make an order.[13]
[13] Ibid, at para.95.
His Honour quoted from the judgment of Judge Inglis QC in Gibbons where he said:
I consider that this door [to s.14A(3)] cannot be opened in the absence of detailed and specific evidence indicating in precisely what respects not opening the door could result in an injustice which is sufficiently serious to justify departure from the general rule that where the de facto relationship is of short duration no order … can be made.[14]
[14] Ibid, at para.96.
Justice Potter further quoted from Gibbons where his Honour said:
The exercise of determining whether “serious injustice” does or does not arise necessarily involves comparison between the consequence for the parties as the result of the determination, though other factors which may assist in a finding whether or not there is “serious injustice” are not excluded.[15]
[15] Ibid, at para.151.
The Respondent also referred to the decision of Besanko J in the Supreme Court of the ACT in McMaster & Wilkie-Snow [2011] ACTSC 183, a judgment concerning s.15(1) of the Domestic Relationships Act 1994 (ACT) (the “DRA”). That matter concerned an application to set aside a domestic relationship agreement on the grounds that, in the circumstances, the enforcement of the agreement would result in serious injustice. In that judgment, her Honour said the following about the term “serious injustice”:
The meaning of serious injustice was considered by Riley J in
Van Jole v Cole [2000] NTSC 18; 26 Fam LR 228. His Honour said that the words “serious injustice” in s 46 of the De Facto Relationships Act 1991 (NT) were to be accorded their ordinary meaning which was a considerable wrong or unfairness. I accept those observations, although one could also describe the requirement in terms of significant or substantial unfairness ...[16]
[16] [2011] ACTSC 183, p.14 at para.44.
In Van Jole v Cole (2000) 26 Fam LR 228 (“Van Jole”), Riley J of the Northern Territory Supreme Court was also dealing with the issue of whether a separation agreement made under the DRA should be set aside. His Honour stated:
It is clear that the Court will not interfere with a separation agreement simply because it believes a different form of agreement was more appropriate. Further it will not interfere where there is simple injustice. Rather, it must be satisfied that a failure to intervene would result in “serious injustice” between the parties.
…
An injustice is the opposite of justice and includes the concepts of a wrong or unfairness. The word serious in this context suggests weighty, grave or considerable.[17]
[17] (2000) 26 Fam LR 228, pp.230-231 at paras.15-16.
In LF v RA (2005) 34 Fam LR 536, White J of the Queensland Supreme Court was dealing with an application for a property adjustment order pursuant to s.286 of the Property Law Act 1974 (Qld) (the “PLA”). The parties had entered into a cohabitation agreement. Section 276 of the PLA provided that, on application for a property adjustment order, the Court may vary the provisions of such an agreement if it was satisfied that enforcement would result in serious injustice for a party to the agreement. His Honour adopted the approach in Van Jole and commented:
It is not, of course, a serious imbalance of itself which will give rise to a conclusion of serious injustice. The detail of the relationship and the parties’ financial and other contributions to the acquisition of the assets in the course of the relationship will be determinative of that question.[18]
[18] (2005) 34 Fam LR 536, p.547 at para.56.
Conclusions
In this case, the Respondent has brought proceedings under the Property Law Act. Section 228 of the Property Law Act provides that, in any proceeding under this division (Part IV, Division 2), VCAT may make any order it thinks fit to ensure a just and fair sale or division of land or goods. The Respondent referred the Court to a recent decision of VCAT in proceedings under that section, Davies v Johnston (Revised) (Real Property) [2014] VCAT 512 (“Davies”). In that case, the applicant and the respondent were registered tenants in common of a property, with the applicant holding two of three undivided shares and the respondent one of three undivided shares. The parties agreed that the property should be sold but disagreed as to how the net proceeds of the sale should be distributed. The parties had lived together in the property as a de facto couple between August 2007 and December 2008.
While the respondent in Davies contended that VCAT should take into account the fact that she provided comfort and love to the applicant during the period of cohabitation, VCAT did not consider that the discretion of VCAT extended that far. Senior Member Riegler expressed the view that the use of the phrase “just and fair” was not “a licence to the court to resort to some form of instinctive justice” but that the basis of the division must be “determined in a manner which best accords with the legitimate rights and interests of each of the parties”.[19] In addition to submissions concerning whether their legal interests should be adjusted, both parties submitted that VCAT should consider their claims for compensation arising out of their contributions to the property. VCAT considered that it could make such orders on the basis of both equity and the terms of the statute. It then went on to consider the contribution claims made by each of the parties.
[19] [2014] VCAT 512, p.7 at para.28.
Would a failure to make the order result in serious injustice to the Applicant?
In her orders, the Applicant has sought that she retain all of the proceeds of sale of the property. It is not disputed that she has already received all of those proceeds with the exception of a sum of some $46,430.00. It is this amount which would be the subject of any proceedings in this Court or in VCAT.
The Applicant, in written submissions,[20] stated that she would suffer serious injustice if she was not able to proceed in this jurisdiction because “VCAT may not take into consideration the substantial initial contributions made by the Applicant, the history of the relationship and the contributions of the Applicant to the welfare of the family”.[21] Further, it was submitted that the Applicant also asserts financial contributions to the payment of the Respondent’s pre-relationship debts and that she made non-financial contributions to the welfare of the family.
[20] Submissions on behalf of the Applicant filed 18 December 2014.
[21] Ibid, at para.31.
I accept that VCAT would not take into consideration contributions the Applicant made to the welfare of the family. In a relationship of such short duration, however, I cannot see that such contributions would carry much weight in proceedings under the Act unless they were exceptional in their nature. This would not appear to be the case on the material before me.
Both the Applicant and the Respondent assert that they made contributions to the pre-relationship debts of the other. Indeed, part of the re-financing and extension of the mortgage was for the purpose of paying out both parties’ debts. I am not satisfied that the Applicant or the Respondent would be barred from raising such matters in the context of the proceedings before VCAT. I cannot pre-judge what VCAT might consider relevant to its deliberations; I am, however, satisfied that it is bound to act in accordance with the statute and the general principles of equity.
If there is some disadvantage to the Applicant in proceeding in VCAT, I am not satisfied that she has established that such disadvantage would amount to serious injustice. Section 90SB of the Act excludes from the jurisdiction of the Court de facto relationships of short duration unless certain criteria are met. As a general rule, de facto relationships of the length of the relationship in this matter are not ones in which this Court can make orders. In order for the Court to consider making such orders, it must be satisfied, in this case, that the injustice to the Applicant was substantial, considerable and of such a degree as to require the Court to set aside the general rule. I am not satisfied that, in this case, the Applicant has established injustice of such a degree as to require the Court to act in order to avert significant unfairness to the Applicant.
For these reasons, the Application is dismissed.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge Whelan
Date: 23 January 2015
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