Oswin v Kozjak

[2009] NSWSC 433

CITATION:	Oswin v Kozjak [2009] NSWSC 433
HEARING DATE(S):	26, 27, 28 August 2008, 3 February 2009
JUDGMENT DATE :	22 May 2009
JUDGMENT OF:	McLaughlin AsJ
DECISION:	1. I stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect my conclusions herein, and, if desired, for argument as to costs.
CATCHWORDS:	FAMILY LAW- de facto relationship - adjustment of interests of parties in property - respective contributions of parties - the Court should not be diverted from the clear words of the statute, which looks to past contributions actually made by the parties.
LEGISLATION CITED:	Property (Relationships) Act 1984
CATEGORY:	Principal judgment
CASES CITED:	Davey v Lee (1990) 13 Fam LR 688 Bilous v Mudalia [2006] NSWCA 38
PARTIES:	Kerin Jayne Oswin (Plaintiff) Richard Charles Kozjak (Defendant)
FILE NUMBER(S):	SC 3604 of 2007
COUNSEL:	Ms E. Cohen (Plaintiff) Mr D. Dura (Defendant)
SOLICITORS:	Broun Abrahams Burreket (Plaintiff) Gayle Meredith & Associates (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Friday, 22 May 2009

3604 of 2007 KERIN JAYNE OSWIN –v- RICHARD CHARLES KOZJAK

JUDGMENT

1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984.

2 By statement of claim filed on 13 July 2007, Kerin Jayne Oswin seeks orders adjusting the interests in property of herself and the Defendant, Richard Charles Kozjak, pursuant to section 20 of the foregoing statute.

3 A defence to that statement of claim was filed by the Defendant on 14 September 2007. Subsequently, on the third day of the hearing, 28 August 2008, the Defendant filed a cross-claim (although, somewhat curiously, the Defendant to his defence had appended the items of relief which he stated he was seeking in the proceedings). A defence to that cross-claim was filed by the Plaintiff on the final day of the hearing, 3 February 2009.

4 It was not in dispute that the parties lived in a de facto relationship from June 1997 until 25 July 2005. No children were born of that relationship.

5 The Plaintiff was born in 1965, and is presently aged 44. The Defendant was born in 1969 and is presently aged 40.

6 At the time of the commencement of the relationship the Plaintiff was employed as a flight attendant with Ansett, earning a taxable income of about $60,000 a year. At that time she was residing in rented accommodation at Waverley. She had little by way of assets, other than a motor car and a superannuation entitlement. At that time the Defendant was working as a property developer and builder, carrying out those activities in a partnership known as R & R Kozjak, trading as Hapning Homes.

7 At the commencement of the relationship the Defendant’s assets consisted of,

Holden utility motor vehicle
Savings of $24,610
One share in Sentient Pty Limited (“ Sentient”)
One half interest in Hapning Homes, (that interest, according to the defendant, then being worth $29,363).
$355,099 withdrawn by Defendant from Hapning Homes and advanced to Xcel Properties Pty Limited (“Xcel Properties”).
Furniture, household contents, and personal effects.

8 At the commencement of the relationship the Plaintiff was residing in rented accommodation at Waverley. The Defendant moved into residence with the Plaintiff in that apartment, in June 1997. Subsequently the parties resided together in another apartment in the same complex for two years. They then resided in a home unit at Margaret Street, Redfern, which they purchased in their joint names in August 1999. Their final residence was in a home unit at Flood Street, Clovelly, which was their home from August 2001 until the time of the termination of the de facto relationship in July 2005.

9 Throughout the period of their relationship the parties, or the Defendant alone, were involved in a number of real estate transactions and property development projects.

10 In November 1997 Xcel Properties (a company in which the Defendant held 50 percent of the issued shares, the other 50 percent being held by one Kim Clarke) purchased a property situate at Collins Street, Annandale, for a total sum of $1,550,759 (that figure including stamp duty and legal costs). The building on that site was then partly demolished, and a development consisting of eight residential units was then constructed thereon. According to the Defendant, the purchase of that property was funded by borrowings totalling $978,920 and by a loan from the Defendant himself in an amount of $355,099. The eight residential units in that development were all ultimately sold.

11 From the beginning of August 1999 the Defendant was residing with his parents in Canberra for about a year. During that period it was his practice to come to Sydney and stay with the Plaintiff in the apartment at Albion Street, Waverley on an average of about two occasions each month.

12 In August 1999 the Defendant and the Plaintiff conjointly purchased a residential unit at Margaret Street, Redfern (“the Redfern property”) for a total sum of $278,772 (that figure including stamp duty and legal costs). . According to the Defendant, the price paid for that property, which was purchased from the Defendant’s uncle, was 20 percent less than the market price for the property.

13 The Plaintiff contributed a total amount of $17,000 towards the purchase of that property (payments totalling that amount being made by the Plaintiff to Sentient, which then paid that amount towards the purchase price). It should be noted, however, that in May 2001 the Defendant reimbursed the Plaintiff in the sum of $10,000 in respect to part of that contribution which she had made in August 1999, and that the Plaintiff had earlier, in 1999, received a reimbursement from the Defendant in an amount in excess of $1400. Those reimbursements were not referred to in the Plaintiff’s affidavit evidence, but emerged only during the course of her cross-examination.

14 It is also appropriate here to record that the Plaintiff prepared a schedule of expenses (Exhibit A) shortly before the hearing, setting forth expenses in far greater amounts than those disclosed in her affidavit evidence. The Plaintiff acknowledged under cross-examination that there appeared to be quite a number of errors in her affidavit.

15 According to the Plaintiff, the balance of the purchase price was provided by way of a mortgage loan from Aussie Home Loans secured over the Redfern property. The Plaintiff said that in July 2000 she and the Defendant arranged for the foregoing loan from Aussie Home Loans to be divided into two identical loans, each for $120,000, and each in the sole name of the Plaintiff and the Defendant respectively.

16 The Plaintiff said that from August 1999, until the Redfern property was sold in August 2001, she met the mortgage payments on the loan of $120,000. Those repayments were in an amount of about $205 a week, and were made from the Plaintiff’s MECU savings account. The Defendant said that he made his own mortgage repayments on his own loan of $120,000 throughout the same period.

17 It was the Plaintiff’s evidence that she was closely involved in locating the sites for the various property developments, and that she assisted in the furnishing and decoration of the display unit in the Annandale development. Further, that she contributed one half of the costs of various renovations that were effected upon the Redfern property soon after its purchase in 1999. She said that she paid those contributions in cash directly to the Defendant.

18 The Redfern property was sold for $341,000, in August 2001. The net proceeds of sale, after the discharge of the two loans and the agent’s commission, were in an amount of $92,571. According to the Plaintiff, she did not receive one half, or, indeed, any part, of the net proceeds of sale, since it was agreed between herself and the Defendant that she would lend her share of the sale proceeds to Virtual Developments Pty Limited (“Virtual Developments”), in order to assist in the redevelopment by that company of a property at Flood Street, Clovelly (“the Flood Street property”). Accordingly, the foregoing amount of $92,571 was deposited into an account with the St George Bank conducted by Virtual Developments.

19 Virtual Developments had purchased the Flood Street property in 1999. At that time the Defendant was a joint director and shareholder of that company, the other director and shareholder being one Joe Abreu. (Subsequently the Defendant became the sole director and sole shareholder.) The Flood Street property was purchased with a view to a residential development of four home units being constructed upon that site.

20 The Flood Street property was purchased for $755,000. Virtual Developments obtained a loan facility from the St George Bank, to meet the costs of the purchase and the construction of the four home units. The demolition and redevelopment of the Flood Street property took place over a period of two years.

21 It was the Plaintiff’s evidence that in 2001 she lent to Virtual Developments various sums of money (including an amount representing her half share of the net proceeds of sale of the Redfern property), totalling $81,085, and that those sums were used to assist in the redevelopment of the Flood Street development and also to generate interest for the Plaintiff upon the principal sum which she lent. A draft loan agreement between the parties was prepared, but was never executed, by either the Plaintiff or the Defendant.

22 It was the Plaintiff’s evidence that she was closely involved in the interior decoration of the entirety of the Flood Street development, and that she was responsible for the complete interior decoration of the home unit in that development, being Unit 3, in which she and the Defendant together resided from August 2001 until the termination of their relationship four years later.

23 By the time of the termination of the de facto relationship between the parties, two of the home units in the Flood Street property had been sold (one in December 2001, for $770,000, and one in March 2002, for $781,000), whilst two units in that development were still owned by Virtual Developments (one of those units being Unit 3, the residence of the Plaintiff and the Defendant).

24 From the termination of the de facto relationship until June 2006, the Plaintiff continued to live in Unit 3 at Flood Street, which had been the conjoint residence of herself and the Defendant. She did not make any payments or contributions to the Defendant for that accommodation during the period of almost a year while she was living there on her own.

25 In December 2003, the parties purchased a property in Keith Street, Clovelly (“the Keith Street property”), for $950,000. Although that property was purchased by the parties as joint tenants, the Plaintiff did not make any direct financial contribution towards the purchase price. The purchase was funded by the deposit of 10 percent being paid by Virtual Developments and by a loan from GE Finance secured over the two unsold units at Flood Street which were owned in the name of Virtual Developments. It was the Plaintiff’s evidence that she was not aware of that fact at the time of the purchase of the Keith Street property. The purpose of the purchase of the Keith Street property was for redevelopment. However, that proposed redevelopment ultimately did not take place. The house standing on that site was rented for $420 a week, the Defendant retaining the entirety of that rent.

26 At the outset of the hearing it was agreed between the parties that the present value of the Keith Street property, inclusive of the DA, is $1,200,000 and that the present value of that property, exclusive of the DA, is $1,080,000.

27 At the time of the commencement of the de facto relationship the Plaintiff was employed by Ansett as a flight attendant. In March 2002, Ansett went into liquidation and the Plaintiff’s employment was terminated. For the ensuing year the Plaintiff worked on a casual basis in a variety of employments. When Ansett went into liquidation the Plaintiff received a payout of $22,073. She also at that time withdrew the sum of $25,825 from her superannuation entitlement in the FAB Super Scheme. Both of those amounts were deposited by her in her MECU savings account. She used those amounts, together with income earned from casual employment, to meet living expenses for the ensuing twelve months. In March 2003, the Plaintiff obtained a position with Impulse Airlines as a flight attendant instructor. Impulse Airlines later became Jetstar, and the Plaintiff has since that time continued to be employed by Jetstar.

28 It was the Plaintiff’s evidence that in her positions with, first, Ansett, and, later, Jetstar, she received staff discounts for air flights and accommodation, both within Australia and internationally, and that the Defendant, as her de facto partner, also had the benefit of those discount rates. The Plaintiff gave evidence concerning various holidays, both in Australia and overseas, in which she and the Defendant participated during the course of the de facto relationship, receiving significant financial discounts for their airfares and accommodation on each of those holidays. She said that she and the Defendant generally contributed equally to the expenses and spending money on those holidays (apart from a holiday to Hayman Island in December 2004, for which the Plaintiff alone paid the entirety of the expenses, accommodation, and meals, totalling $2,574).

29 The Plaintiff gave evidence concerning her contributions as a homemaker, asserting that it was she who essentially performed the major part of all the domestic duties in the various residences which she and the Defendant occupied throughout the period of their relationship. Those duties included cooking, cleaning, washing, ironing, and the like. She acknowledged that the Defendant was primarily responsible for the outdoor maintenance of their residential unit at Flood Street. The Plaintiff gave evidence concerning her involvement in purchasing gifts and shopping for and on behalf of the Defendant, and in hostessing various social occasions and entertainments conducted by herself and the Defendant.

30 A pet cat was acquired by the parties in February 2004, and the feline responsibilities and financial costs thereof were shared equally by the Plaintiff and the Defendant.

31 In 2002, according to the Plaintiff, she and the Defendant purchased a Peugeot motor vehicle, in the name of Sentient. That company entered into a lease agreement with the St George Bank for the acquisition of that motor vehicle for $32,031. It was the Plaintiff’s evidence that throughout the relationship she made all the lease payments of $549 a month from her savings account, and that at the end of the period of the three year lease there was owing a residual amount of $11,000. According to the Plaintiff, she paid a total amount of $31,114 in respect to the Peugeot motor vehicle, that sum including the residual amount owing on the lease, in the sum of $11,000 (which she described as a “balloon payment”). On 11 August 2005, the registration of the Peugeot motor vehicle was transferred into the Plaintiff’s name.

32 At the time of separation the Plaintiff had a legal interest, as joint tenant, in the Keith Street property. She owned IAG shares (having a value of approximately $2,036) and Telstra shares, as well as an amount of $20,000 in the MECU credit union savings account. The Plaintiff also asserted that she was owed an amount of $130,855 by Virtual Developments. She also had an interest in the furniture and contents in the Flood Street home unit. The Plaintiff had a superannuation entitlement of about $49,000. According to the Defendant, the Plaintiff also owned jewellery having an estimated value of $10,000.

33 I have already referred to the fact that the Keith Street property, although purchased in the joint names of the Plaintiff and the Defendant, was funded by Virtual Developments. The amount oustanding to the ultimate provider of the purchase price, GE Finance (whose interest was secured over the two unsold home units at Flood Street held in the name of Virtual Developments) is asserted by the Defendant to have been in an amount of $1,112,817 at the time of separation of the parties. That amount is asserted by the Defendant to constitute a joint liability of himself and the Plaintiff to Virtual Developments.

34 As has already been recorded, after the termination of the relationship the Plaintiff remained in the Flood Street home unit until June 2006. That home unit was sold in March 2007 for $1,231,000. After discharge of the mortgage loan in respect of that property, the net proceeds of sale received by Virtual Developments were $110,396.

35 At the outset of the hearing it was noted that it was agreed between the parties that the current value of Unit 2 (which has remained in the ownership of Virtual Developments) is $1,000,000 and that the value of that home unit at 25 July 2005, was $800,000.

36 The Plaintiff gave evidence of her financial situation at the time of the institution of the present proceedings.

37 It was the evidence of the Defendant that the partnership known as Hapning Homes was a partnership consisting of the Defendant, and his brother Raymond Kozjak, and one Valent Perenc (whose interest was held in trust equally for the Defendant and the Defendant’s brother). According to the Defendant, that partnership was established in 1993, and conducted property developments and building projects in the Canberra district. Mr Perenc is a kinsman of the Defendant, and he held the building licence of the partnership, which was originally used in the business. Mr Perenc did not ever receive any distribution of income from the partnership.

38 Sentient Pty Limited (“Sentient”) was incorporated on 19 June 1996, and the Defendant was a director and shareholder of that company from the time of that incorporation. Sentient conducted the business of property development and construction in the Canberra area.

39 The Defendant disputed the extent of the financial contributions (both direct and indirect) asserted by the Plaintiff to have been made by her in respect to various pieces of real property which were acquired by or on behalf of the parties (or the Defendant alone) during the course of their relationship. For example, the Defendant asserted that the Plaintiff made no contribution towards the purchase price and acquisition costs of the Keith Street property; further, that she paid none of the outgoings (such as council and water rates, maintenance, repairs, cost of utilities) in respect to that property. The Defendant said that the only contribution which the Plaintiff made towards the Keith Street property was one payment of land tax, in an amount of $3,683, which she paid on 30 March 2005.

40 The Defendant agreed that the Plaintiff had advanced moneys totalling $81,085 to Virtual Developments, but that those moneys were in the nature of a loan upon which the Plaintiff was entitled to interest at the rate of 12 percent per annum.

41 The Defendant also agreed that the Plaintiff had made a number of lease payments and the balloon payment of $11,000 in respect of the Peugeot motor vehicle, which had been acquired by Sentient in 2002, and that after the parties separated that vehicle had been transferred into the name of the Plaintiff.

42 It was the evidence of the Defendant that during the period while the parties were residing in the rented accommodation at Albion Street, Waverley, he paid the major part of the rent, his contributions being more than five times those of the Plaintiff (even though for about a year the Defendant was residing in Canberra with his parents and was occupying the Albion Street apartment only about twice each month).

43 The Defendant said that Plaintiff paid none of the expenses or outgoings on the Flood Street property, apart from two payments (totalling $185) for gas, and two payments totalling $1,390 for insurance.

44 The Defendant was a licensed builder, and was self employed as a property developer and builder throughout the period of the relationship. Initially he was in partnership with his brother, trading as Hapning Homes, and subsequently with Xcel Properties by himself, and later with Sentient and with Virtual Developments. The Defendant was paid partnership income and/or salary by those companies and also took drawings from those companies from time to time.

45 According to the Defendant, he used his income and drawings from the companies to pay all of the expenses of the Plaintiff and himself, except those to which I have already referred. The Defendant disputed the extent of the financial contributions which the Plaintiff said she made to the relationship, in particular, in respect to the holidays and to the household outgoings.

46 The Defendant in his evidence set forth details of the various property developments in which he participated during the course of the relationship, and of his financial transactions regarding those developments. The Defendant disputed the extent of the Plaintiff’s asserted involvement in those property developments.

47 According to the Defendant, at the time of the termination of the relationship his assets consisted of the following:

Keith Street property $950,000
Shares in Virtual Developments $127,972
Jointly owned furniture and contents
In Unit 3, Flood Street (retained by Defendant) $5,000
Shares in IAG $2,445
Money owed to Defendant by Virtual Developments $34,347
Moneys owed to Defendant by Sentient $312,825
St George Bank account, negligible balance
Shares in Sentient (asserted by Defendant to have no value)

48 The Defendant said that at the time of the termination of the relationship his liabilities consisted of an indebtedness in respect to a loan from his parents in an amount of $122,582; and a joint liability of himself and the Plaintiff to Virtual Developments in an amount of $1,112,817.

49 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff, and the cross-claim of the Defendant.

50 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. Those documents will be retained in the Court file.

51 The jurisdiction invoked by each of the parties in the present proceedings is grounded upon section 20 of the Property (Relationships) Act, subsection (1) whereof, provides,

On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:


(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and

(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely:


(i) a child of the parties,

(ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties.

52 In approaching a claim for the adjustment of the interests of the parties in property pursuant to section 20 (1) of the Property (Relationships) Act, the Court must make a holistic judgment and must not attempt to evaluate the respective contributions of the parties as if it were undertaking a reductionist process analogous to the taking of partnership accounts (notoriously one of the most time consuming of litigious exercises). (See Davey v Lee (1990) 13 Fam LR 688; see also Bilous v Mudalia [2006] NSWCA 38 at 43, where Ipp JA said that some situations do not lend themselves to either a pure global approach or a pure asset by asset approach in determining what orders should be made.)

53 In considering the claim of the Plaintiff and the cross claim of the Defendant, the Court should not be diverted from the clear words of the statute, where, by section 20 (1), the Court is required to have regard to the respective contributions of the parties of the nature described in that subsection.

54 By her statement of claim the Plaintiff seeks, substantively, an order that the Defendant transfer to her his interest in the Keith Street property, and pay to her the net rental income of that property from 25 July 2005 to the date hereof.

55 The Defendant, on the other hand, by his cross-claim seeks, substantively, an order that the Plaintiff transfer to him her interest in the Keith Street property; that Defendant indemnify the Plaintiff in relation to the joint indebtedness of himself and the Plaintiff to Virtual Developments; that Virtual Developments pay to the Plaintiff the amount standing to her credit “the sum standing to her credit in her loan account” with that company; and that the Plaintiff pay to the Defendant a certain specified sum of money, being $54,115.

56 At the commencement of the subject relationship the Plaintiff had little by way of assets, apart from a motor vehicle and a superannuation entitlement. The real property assets which were acquired by the parties during the course of the relationship were essentially acquired as a result of borrowings made by the Defendant (or companies in which he had an interest), and property development work then performed by the Defendant, which required the exercise of the Defendant’s expertise and experience in that field. Although the Plaintiff asserted that she had a significant input of a non-financial nature into the acquisition of property sites, and into the decorational work performed in a number of the residential units (especially that at Flood Street, which was for a significant period the residential home of the parties), the extent of that input was disputed by the Defendant.

57 It will be appreciated, first, that the Plaintiff throughout the relationship was in receipt of a relatively small income from her employment by Ansett and later by Jetstar (and an even smaller income during the year when she was not employed by either of those airlines). Further, that the nature of her employment, at least by Ansett, required absences from Sydney for substantial periods.

58 Where the evidence of the Plaintiff and that of the Defendant were in conflict, especially regarding the extent of the financial and non-financial contributions of the Plaintiff towards the relationship (including, for example, household expenditure), I prefer the evidence of the Defendant to that of the Plaintiff. I regarded the Plaintiff as not a particularly reliable historian. Her response to many of the questions asked to her in cross-examination was that she could not remember. The Defendant, on the other hand, provided very full documentary material in support of his oral evidence regarding the extent of his financial contributions during the course of the relationship, especially regarding household outgoings, and regarding the various property development projects.

59 Whilst I accept that the Plaintiff made contributions as a homemaker, I do not accept that those contributions were as great as she asserted. Further, whilst she made contributions of a financial nature towards the outgoings of the household throughout the relationship, again, I am not satisfied that they were as great as she asserted.

60 The Plaintiff made a significant financial contribution towards the acquisition of the Flood Street property, by advancing the sum of $81,085 to the Defendant. That sum included the amount of $46,285, representing the Plaintiff’s one half share in the net proceeds of sale of the Redfern property.

61 The foregoing sum of $81,085 was treated by the parties as an advance by way of loan to Virtual Developments at an interest rate of 12 percent per annum. Further, the Plaintiff also received the Peugeot motor vehicle during the course of the relationship, although I recognise that it was the Plaintiff herself who made the significant payments (indeed, almost the totality thereof) towards the leasing of that vehicle and towards the final residual payment thereof.

62 At the termination of the relationship the Plaintiff had, essentially, a motor vehicle, savings of $20,000, a superannuation entitlement, her interest in the Keith Street property, and the indebtedness owing to her by Virtual Developments (together with accrued interest thereon), in a total amount of $130,855. The Plaintiff is entitled to receive repayment of that amount, together with interest at the agreed rate of 12 percent per annum. At the time of the hearing that indebtedness was calculated to total $182,222.

63 The assets of the Defendant (either in his own name or held by him through the vehicles of Virtual Developments and Sentient) at the termination of the relationship essentially consisted of the two unsold residential units in the Flood Street development (one of which units was subsequently sold in March 2007 for $1,231,000), and his interest in the Keith Street property.

64 I consider that the contributions of the Plaintiff of the nature set forth in section 20 (1) of the Act entitle her to retain beneficially her one half interest in the Keith Street property (which has a present agreed value of either $1,200,000 (inclusive of DA) or $1,080,000 (exclusive of DA)) and to receive from the Defendant one half of the net rental income from that property from 25 July 2005 to the date of the orders herein.

65 I turn now to the cross-claim of the Defendant. Essentially the Defendant seeks that the Plaintiff should transfer to him her interest in the Keith Street property, he, in return, indemnifying her in respect to the asserted joint liability of the parties to Virtual Developments.

66 It should be recognised that the Plaintiff and the Defendant were in de facto relationship. They were not conducting a commercial partnership of the kind recognised by the Partnership Act of 1890. The fact that the Plaintiff had an input and made a contribution (either directly by way of cash advances, or indirectly by way of assistance in choosing furniture, décor and decorations) into some of the commercial activities of the Defendant does not have the consequence of imposing upon the Plaintiff a burden of the liabilities resulting from those commercial enterprises of the Defendant. As I have already observed, in claims under the Property (Relationships) Act the Court should not be diverted from the express words contained in section 20 (1) of the statute, and should ground its decision, in the exercise of its discretion, upon the respective contributions of the parties of the nature described in that subsection.

67 The accounts of Virtual Developments disclose a joint indebtedness of the parties to that company in the sum $1,241,542. That indebtedness is described as a loan to the parties. It is apparent that the Plaintiff never received the benefit of that sum or any part thereof from Virtual Developments. I observe that there was some suggestion on the part of the Plaintiff that although her signature appeared on photocopies of certain documents relied upon by the Defendant, her signature was not on the originals of those documents. Whether or not the Plaintiff did, in fact, sign the originals, she did not ever receive from Virtual Developments the foregoing sum or any part thereof.

68 Further, it should not be overlooked that, while the Plaintiff and the Defendant are asserted to have a joint liability to Virtual Developments, the Defendant is the sole shareholder and sole director of that company. The effect of the liability of the Plaintiff to Virtual Developments, asserted by the Defendant in his cross-claim, would be to reduce by half the liability of the Defendant, through Virtual Developments, in respect to the Flood Street property, while in no way benefiting the Plaintiff through the sale of the various units in Flood Street or the beneficial interest which the Defendant currently has in the remaining unsold unit in Flood Street (which has a current agreed value of $1,000,000 and which at 25 July 2005 had an agreed value of $800,000). The Defendant cannot have it both ways. Either the Plaintiff has a joint liability to Virtual Developments, and also has a joint interest in the assets of that company and in the proceeds of sale of the units in Flood Street which have already been sold (and the benefit of which sales have been received by the Defendant); or, if the Plaintiff is not entitled to any interest in the Flood Street property, then she can have no liability to Virtual Developments in respect to the Flood Street project.

69 Whilst I recognise that a commercial loss resulting in the parties, or one of them, having assets of a reduced or non-existent value at the conclusion of the relationship may (indeed, probably will) have the practical consequence that the contributions of the other party to the relationship, will not be able to be adequately recognised, I not understand that the effect of the subsection is to require that one of the parties contribute to the liability of the other party.

70 I consider that the contributions of the Defendant of the nature set forth in section 20 (1) of the Act entitle him to retain beneficially his one half interest in the Keith Street property and one half of the net rental income from that property from 25 July 2005 to the date of the orders herein.

71 It should be recognised that by section 19 of the Act, in proceedings of the nature of the subject proceedings, the Court is enjoined, so far as is practicable, to make such orders as will finally determine the financial relationships between the parties, and avoid further proceedings between them. It would be inappropriate, therefore, to leave the Plaintiff to her rights in debt against Virtual Developments in respect to the present liability of that company to her in an amount (representing the principal of her loan to that company and agreed interest accrued thereon) now totalling in excess of $182,000. The orders should provide for the payment of that amount to the Plaintiff.

72 I propose to stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to give effect to my foregoing conclusions.

73 Neither party has succeeded in obtaining the entirety of the Keith Street property. In my conclusion, each party is entitled to retain beneficially her or his joint interest in that property. It may be that some agreement will be reached between the parties, whereby one party will buy out the interest of the other party, at one or other of the agreed valuations. Otherwise, it will be necessary for the Court to appoint trustees for sale of that property, pursuant to section 66G of the Conveyancing Act 1919.

74 Similarly, it may be that the parties will reach agreement concerning the amount of net rental for that property from the date of the termination of the de facto relationship on 25 July 2005 until the date of the orders herein. If the parties do not reach such agreement, then it will be necessary for the Court to give directions for the taking of an account in respect to such rental.

75 Neither party has been successful to the extent asserted by that party in, respectively, the statement of claim or the cross-claim. Each party has established an entitlement to less than what was claimed by that party, but to considerably more than the opposing party acknowledged. My preliminary view concerning costs is that there should be no order as to costs, to the intent that each party should bear her or his own costs of the proceedings.

76 However, since I have not heard any submissions concerning costs, I will give to the parties an opportunity, should they so desire, to argue costs on the date when the short minutes are brought in.

77 Accordingly, I make the following orders,

1. I stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect my conclusions herein, and, if desired, for argument as to costs.

**********