Ritchie v Styles
[2011] TASSC 39
•4 August 2011
[2011] TASSC 39
COURT: SUPREME COURT OF TASMANIA
CITATION: Ritchie v Styles [2011] TASSC 39
PARTIES: RITCHIE, Shane Leigh
v
STYLES, Tina Maree
FILE NO: 531/2008
DELIVERED ON: 4 August 2011
DELIVERED AT: Launceston
HEARING DATES: 24 & 25 November 2010 and 22, 23 & 24 June 2011
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Family law and child welfare – De facto relationships – Adjustment of property interests – Separation Agreements.
Aust Dig Family Law and Child Welfare [499]
REPRESENTATION:
Counsel:
Applicant: K Stanton and R J Brown
Respondent: S P Bishop
Solicitors:
Applicant: Legal Solutions
Respondent: Bishops
Judgment Number: [2011] TASSC 39
Number of paragraphs: 21
Serial No 39/2011
File No 531/2008
SHANE LEIGH RITCHIE v TINA MAREE STYLES
REASONS FOR JUDGMENT HOLT AsJ
4 August 2011
The parties commenced a relationship within the meaning of the Relationships Act 2003 in 2005. Shortly after the relationship commenced they purchased a house at 2 Wilderness Way, Travellers Rest. The purchase was solely in the name of the applicant. (Presumably this was to obtain the first home owner's grant which he obtained but later had to be repaid.) The respondent contributed $225,444 being the proceeds of the sale of her house at Hadspen. The balance of the purchase price was obtained through a joint mortgage. The mortgage loan included a redraw facility. Each paid most or all of their income into the mortgage account and made withdrawals to cover their expenses.
Between the time of signing the contract to purchase the Travellers Rest property and the contract being settled the parties executed a separation agreement. It included the following:
"… AND WHEREAS the parties have agreed that Shane will purchase a property situated at 2 Wilderness Way, Travellers Rest and to assist with the purchase Tina will contribute $220,000 from the sale of her property at 12 Bowdens Road, Hadspen and the parties have agreed that in the event of their separation Tina will have an entitlement in relation to the property (whether the property be sold or acquired by either party) which is equal to $220,000 together with half of such notional equity as there may be in the property after allowing for the said sum of $220,000 and the amount owing under the mortgage from time to time (in the event of a sale) costs and disbursements associated with the marketing and sale of the property.
AND WHEREAS the significant assets of the parties at the date of this agreement are set forth in the schedule hereto.
NOW IT IS AGREED AS FOLLOWS:
1This agreement is intended to operate in the event of the separation of the parties.
2Except as provided herein, Shane will retain all property and superannuation that he has at the date of this agreement together with any property and superannuation that he may subsequently acquire.
3Except as provided in this agreement, Tina shall retain all property and superannuation held by her at the date of this agreement and all property and superannuation acquired by her after the date of this agreement.
4Except as may be provided in this agreement, the parties shall be equal co-owners of any property held by them jointly.
5In the event of the separation of the parties, the property situated at 2 Wilderness Way, Travellers Rest (together with the chattels which are normally sold with a residential property) shall be sold and the net proceeds (after discharge of the mortgage and payment of all costs and disbursements associated with the marketing and sale of the said property) shall be divided between the parties so that Tina receives $220,000 plus half of the balance of the net proceeds of sale and Shane receives the balance.
…
15Annexed hereto and marked with the letter 'A' is a statement of the assets and financial resources of each of the parties."
The statement of assets referred to in cl 15 included amongst the respondent's assets the item "Equity in the house and land situated at 12 Bowdens Road, Hadspen". It included amongst the applicant's assets "Savings of approximately $26,000" and "Toyota motor vehicle, approximately $14,000".
The couple separated on 17 November 2007. The respondent continued to reside in the house until shortly before it was sold. At the date of separation the mortgage balance was $84,697.38. Monthly instalment payments due under the mortgage were not met and the respondent made substantial redraws. When the sale of the property settled in January 2009 the mortgage balance was $130,107.64. The balance settlement proceeds on the sale, after repayment of the mortgage debt and the payment of the sale expenses, was $254,484.07. There was a dispute as to how the proceeds should be divided and so as an interim measure the respondent was paid $160,000 and the balance, being $94,484.07, was paid into a trust account. The applicant claimed to be entitled to a little less than half of this amount and the respondent claimed to be entitled to all of it and more.
During the course of lengthy closing submissions a number of claims were abandoned. Other claims were resolved with the parties agreeing that the applicant should pay to the respondent $2,375 being an adjustment in respect of the joint assets which each of the parties had taken following separation. By the conclusion of the hearing the only matters left in dispute were:
●The respondent's claim for a further $60,000 to make up the $220,000 entitlement specified in cl 5 of the agreement.
●The respondent's claim for the balance of her initial contribution of $225,444 being $5,444 which, although paid into the mortgage account, was part of the property specified in the agreement to remain her sole property.
●The respondent's claim for $16,750 being half the value of two motor vehicles solely in the applicant's name being a Holden Monaro and a Toyota Hilux, the agreed values of which were $26,500 and $7,000 respectively.
●The applicant's claim for $9,700, which although paid into the mortgage account, was part of the $26,000 specified in the agreement to remain his sole property.
The respondent's claim for a further $60,000 is easily resolved. In her affidavit at par52 she said:
"I continued to reside in the house at Wilderness Way until it was sold. There was an agreement between Shane and I that I would keep the mortgage at the same amount as was owed at the time of separation, being, what we estimated as $88,000.00. This agreement was made between us on or about 25 November 2007 when Shane visited the house."
On the final day of the hearing the respondent conceded that this is a binding agreement. The mortgage balance at separation was $84,697.38. Contrary to the agreement referred to in the affidavit the respondent caused the mortgage debt to increase to $130,107.64. The difference, for which the respondent must account to the applicant, is $45,410.26. The respondent has already been paid $160,000. Accordingly, the balance required to satisfy her entitlement to payment of the sum of $220,000 is $14,589.74.
The respondent's claim for $5,444, being the balance of the funds which she contributed to the acquisition from the proceeds of the sale of her Hadspen property is based on cl 3 of the agreement and the attached statement of assets. The contribution by the respondent of excess funds had the effect of saving interest. The agreement was that the entire proceeds of the sale of the Hadspen property would remain the property of the respondent. She is entitled to have this excess repaid.
The Holden Monaro was purchased by the applicant out of his savings of $26,000 referred to in the agreement. He paid $14,627.60 for the vehicle which was in a damaged condition. He spent many hours over a period of about two years repairing the car. The respondent contributed no labour. Several thousand dollars were withdrawn from the joint mortgage account by him over that period to pay for the purchase of parts. The applicant's estimate of the expenditure was $5,000 and the respondent did not provide evidence to contradict that estimate.
The respondent's argument is that by virtue of the withdrawal of joint funds to purchase parts the car became the subject of a constructive trust in which she had an equitable interest on the basis that the repair of the car was a joint enterprise. The argument continued, that this being so, it was a joint asset and so regardless of the extent of her equity she was entitled to half pursuant to cl 4 of the agreement. Counsel for the respondent did not contend that it was the actual intention of the parties that the Monaro was or would become joint property. Accordingly, the question is whether, regardless of actual or presumed agreement or intention, it would be unconscionable to refuse to recognise the existence of an equitable interest of the respondent. See Baumgartner v Baumgartner (1987) 164 CLR 137 at 146 – 148.
Applying the applicant's estimate of $5,000 for the expenditure from the joint account on parts the weekly figure produced over a two year period is approximately $50. There was no contention by the respondent that this expenditure along with other expenditure by the applicant for his sole benefit exceeded withdrawals made by the respondent for her sole benefit. Counsel for the respondent confined his submission in support of the claimed equity to the fact that the parts had been paid for out of the joint account. I am not persuaded by this fact alone that the repair of the Monaro was part of the joint enterprise of the parties and, accordingly, I am not persuaded that that it would be unconscionable to fail to recognise the existence of the equitable interest claimed.
There will be no adjustment in respect of the Monaro.
The agreement listed as an asset of the applicant a Toyota motor vehicle. The vehicle referred to was a Toyota Hilux Surf. It was replaced with another Toyota Hilux, the subject of the respondent's claim. The circumstances are explained in the applicant's evidence which the respondent did not contradict. He said:
"When we commenced our relationship I had a Toyota Surf which is basically a Hilux but it's a wagon. When we purchased the property at Wilderness Way we decided that it would be more user-friendly to have a pick-up. I then purchased the Hilux which I now have, and sold the Toyota Surf …."
The mortgage shows that the amount withdrawn for the purchase of the substitute Hilux was about $6,000 and the amount returned by the applicant to the account a few weeks later, on the sale of the Surf, was $7,500.
I conclude that the Toyota Hilux was intended by the parties to be in substitution for the applicant's Toyota Surf, which was an asset specified in the agreement to be retained by the applicant. This being so it does not matter that the money to purchase it came out of the joint account.
There will be no adjustment in respect of the Toyota Hilux.
The entitlements of the respondent in accordance with these reasons are $14,589.74 being the balance required to repay her $220,000 contribution to the acquisition of the house as specified in the agreement, $5,444 being part of the funds specified in the agreement as being the sole property of the applicant and which she paid into the joint mortgage account and the agreed adjustment of $2,375 in respect of the joint assets retained by the parties. The amount payable to the respondent is $22,408.74 plus half of the proceeds of the sale of the house as provided in the agreement.
The applicant's claim for $9,700 will succeed on the same basis that the respondent's claim for $5,444 succeeded. It was common ground that the $9,700 paid into the mortgage account came from the applicant's pre-relationship savings of $26,000 specified in the agreement. Under the agreement the money remains the property of the applicant. The amount, however, is to be reduced by the sum of $2,375 being the adjustment figure agreed by the parties to be paid by the applicant to the respondent in respect of the split up of the joint assets.
The amount payable to the applicant is $7,325 plus half the proceeds of the sale of the house as provided in the agreement.
The result is that the sum of $94,484.07 retained in the trust account is to be distributed as follows. The respondent is to be paid $22,408.74 and the applicant is to be paid $7,325. The balance of $64,750.33 is to be equally divided between the parties as provided in the agreement. Accordingly, they are each entitled to a further sum of $32,375.16.
It is ordered that out of the trust account the applicant is to be paid $39,700.16 and the respondent is to be paid the balance being $54,783.91 with any interest earned on the sum of $94,484.07 divided between the parties in shares proportionate to their shares in the principal.
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