Rose v Richards

[2004] NSWSC 315

CITATION:	Rose v Richards [2004] NSWSC 315
HEARING DATE(S):	3, 4, 5 November, 11 December 2003
JUDGMENT DATE:	21 April 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Master McLaughlin
DECISION:	1. Stand matter over to a date to be arranged with my Associate for the bringing in of short minutes reflecting my orders herein.
CATCHWORDS:	Family Law - De facto relationship - Adjustment of interests of parties in property - Respective contributions of parties - Caution should be exercised in applying to a claim by a de facto partner under section 20 of the Property (Relationships) Act 1984 (NSW) the principles which the Family Court of Australia applies to applications under section 79 of the Family Law Act 1975 (Commonwealth) - The Property (Relationships) Act looks to past contributions, whereas the Family Law Act looks also to present and future needs.
LEGISLATION CITED:	Property (Relationships) Act 1984
CASES CITED:	Black v Black (1991) 15 FamLR 109 Davey v Lee (1990) 13 FamLR 688 Evans v Marmont (1997) 42 NSWLR 708 Green v Robertson (1995) 36 NSWLR 96 Jones v Grech [2001] NSWCA 208 Matheson v Wallis [2001] NSWSC 931 Ngyuen v Scheiff (2002) 29 FamLR 177 Roy v Sturgeon (1986) 11 NSWLR 454 Sullman v Sullman [2002] NSWSC 169 Wallace v Stanford (1995) 37 NSWLR 1
PARTIES :	Laurie Rose (Plaintiff) Garry Richards (Defendant)
FILE NUMBER(S):	SC 5948/01
COUNSEL:	C. Simpson (Plaintiff) N. Obrart (Defendant)
SOLICITORS:	Stuart Fowler & Partners, Solicitors (Plaintiff) Jackson Smith Solicitors (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Wednesday, 21 April 2004

5948/01 LAURIE ROSE -v- GARRY RICHARDS

JUDGMENT

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

2 By statement of claim filed on 13 December 2001 the Plaintiff Laurie Rose claims against the Defendant Garry Noel Richards an order adjusting the interests of the parties in property, pursuant to section 20 of the Property (Relationships) Act.

3 Subsequently, on 3 November 2003, the first day of the hearing, the Plaintiff filed an amended statement of claim. The form of that pleading differs from the statement of claim as originally filed only in respect to the relief sought therein. The Defendant has not filed a cross-claim.

4 It was not in dispute that the parties lived in a de facto relationship from (according to the Plaintiff) June 1994 or (according to the Defendant) December 1993. It was not in dispute that the relationship came to an end on 7 May 2001. That is, the relationship obtained for about seven years according to the Plaintiff and for about six months longer according to the Defendant.

5 The Plaintiff, who was born on 9 May 1957, was aged thirty-six at the time when she met the Defendant in mid 1993. He at that time was aged forty-five, having been born on 27 January 1948. The friendship of the parties developed, and from December 1993 they conducted an exclusive relationship. The Plaintiff had previously been married and divorced, a son, Jack Steingold, having been born of that marriage. Jack was aged twelve when he and his mother moved into the Defendant’s rented home unit at Strathfield in July 1994.

6 The Defendant also had been married and divorced. Two children were born of the Defendant’s marriage, being Sam (born on 25 December 1974) and Mae (born on 3 May 1978).

7 No children were born of the relationship between the parties. However, the Plaintiff’s son Jack Steingold lived with the parties during the entirety of the relationship. Throughout that period the Plaintiff received Child Support payments from Jack’s father, Malcolm Steingold, which payments were deposited into a separate bank account maintained for that purpose by the Plaintiff. In addition, the Defendant’s two children, Mae and Sam visited the parties during the relationship, and for various periods Sam lived with them at the Drummoyne property. According to the Plaintiff, he resided with the parties for a total of about eighteen months. No financial contribution was requested in respect to his accommodation, sustenance or household expenses. The Defendant, however, said that Sam resided with the parties for only four months, and that in return for his accommodation he contributed to the rebuilding of a damaged fence and participated in the construction of the kitchen.

8 At the time when she met the Defendant the Plaintiff was operating a catering business, known as A Creative Cuisine, from her rented home unit in O’Sullivan Road, Bellevue Hill. She conducted that business as a sole proprietor, and employed casual staff when required. The Plaintiff had originally become involved in the catering field in consequence of her relationship with one Bill Rosenberg in the late 1980s. Mr Rosenberg operated a restaurant known as Café 87 at Bondi and a catering business known as A Creative Cuisine. The restaurant subsequently closed and Mr Rosenberg and the Plaintiff concentrated on the catering business. After Mr Rosenberg was convicted of a criminal offence and sentenced to gaol in October 1989 the Plaintiff continued to operate the catering business, A Creative Cuisine. It would appear that after Mr Rosenberg was released from gaol in October 1993 he did not return to A Creative Cuisine, but pursued other business interests. He is said now to be living and working in California in the United States of America.

9 From the commencement of the relationship (whether it be in December 1993 or June 1994) the parties resided firstly in the Defendant’s rented home unit at Strathfield, and then, from September 1994, in a house property situate at and known as 1 Gears Avenue, Drummoyne (“the Drummoyne property”).

10 In mid-1994 contracts were exchanged for the purchase of that property by the Plaintiff and the Defendant as tenants in common for $305,000. That purchase (which was settled on about 7 September 1994) was funded by an advance of $70,505 from the Plaintiff and a bridging loan of $248,000 from Westpac Banking Corporation. The advance from the Plaintiff was sourced from her savings and the sale (for $8,334) of shares in GIO. The savings of the Plaintiff had their origin in the property settlement of the Plaintiff with her former husband, by which in early 1988 she received about $100,000, which sum she then invested in a savings account with the Chase Manhatten Bank (later to become a savings account with the Westpac Banking Corporation).

11 According to the Plaintiff, whilst she and her son were residing with the Defendant in his rented home unit at Strathfield from July to September 1994, she paid to the Defendant rent of $120 a week.

12 At the time of the commencement of the relationship the Defendant was employed by an entity called The Active Employee Training Organisation (which was referred to in the evidence as AETO), working from the offices of Innerskill at Leichhardt. According to the Defendant, it was he who was responsible, in the three years period, 1991-1993, for developing AETO, which was a non-profit organisation and was funded by the Department of Education and Training. That entity consisted of a program which provided support for the long term unemployed in assisting them to gain skills in order to make them employable. It was the Defendant’s evidence that the office of AETO was furnished with the Defendant’s own personal equipment and office facilities. The Defendant ceased his employment with AETO in October 1994.

13 The Defendant’s original tertiary qualifications were in agricultural science. He had been employed as a tutor in agricultural botany at the University of Sydney and as a lecturer at the Ryde School of Horticulture and at the Hawkesbury Agricultural College. From 1979 until 1989 the Defendant was a lecturer in Horticulture, specialising in post-harvest horticulture, at the University of Western Sydney.

14 At the time of the commencement of the de facto relationship between the parties (be it in June 1994 or some six months earlier) the assets and liabilities of the Plaintiff were stated by her to be as follows:

Assets

Savings $66,527

Investments $9,660

Motor vehicle $10,000

Furniture $8,000

Paintings $5,000

Goodwill of A Creative Cuisine $20,000

Computer $2,000

Kitchen & Catering Equipment $4,000

The Plaintiff at that time had no liabilities.

15 The assets and liabilities of the Defendant at the commencement of the relationship were stated by him to be as follows:

Assets

Unencumbered property at Richmond $121,000

Savings $15,500

Computer $3,000

Extensive range of business software $5,000

Building tools $5,000

Furniture $3,000

White goods $1,000

Camera/personal items $2,000

Office equipment $2,000

Kitchen and domestic items $4,000

Motor vehicle $1,000

Superannuation Entitlement $3,000

The Defendant states that at that time he had no liabilities.

16 According to the Plaintiff, at the time of the termination of the relationship, on 7 May 2001, the financial circumstances of the parties were as follows,

Assets

Drummoyne property $705,000

1985 Van $2,000

Joint Account $2,000

Paintings $5,000

Furniture $12,000

2 shares in A Creative Cuisine, Sydney Pty Limited

2 shares in ACC Catering Australia Pty Limited

937 shares in NRMA

Liabilities

Westpac home loan $132,000

Westpac loan facility $25,000

MasterCard liability (amount not stated)

In addition, the Plaintiff had a superannuation entitlement of $4,500 and the Defendant had a superannuation entitlement of $7,000.

17 The Defendant by his further amended notice of grounds of defence expressly does not admit the foregoing allegations of the Plaintiff concerning the assets and liabilities of the parties at the termination of the relationship, but does not expressly deny those allegations.

18 During the course of the relationship the Defendant sold his property at Richmond and upon settlement in early March 1995 received a sum of $121,000, from which sum he paid $107,704.80 in partial discharge of the bridging loan which the parties had obtained from Westpac in order to purchase the Drummoyne property.

19 Subsequently, in June 1995 the parties re-financed the home loan secured by the mortgage on the Drummoyne property, by instituting two loans. One was in an amount of $40,000 (which was described as an options home loan with a re-draw facility), and the other was in an amount of $148,000, being the principal home loan, secured by mortgage over the Drummoyne property. Each of those loans was from Westpac Banking Corporation.

20 When the Defendant ceased his employment with AETO in October 1994 he commenced working in the Plaintiff’s catering business, and thereafter that business was operated as a partnership by the Plaintiff and the Defendant. Evidence was given by each party concerning the respective duties and responsibilities in and contributions to the catering business by each partner. It should here be recorded that at the outset of the hearing it was stated by Counsel for the Plaintiff that until the latter part of 1998 there was no inequality as to the respective contributions of the parties to the catering business. However, the extent of those duties, responsibilities and contributions of each party after that time were the subject of dispute by the other party.

21 During the period whilst the catering business was conducted as a partnership, income tax returns were lodged and income tax was paid. The net partnership income was then distributed equally between the Plaintiff and the Defendant. I have already referred to the statement by Counsel for the Plaintiff that until the latter part of 1998 (that being the last year in which the catering business was conducted as a partnership) there was no inequality as to contributions of the parties to the catering business.

22 Evidence was also given concerning the present financial and material circumstances of the parties and concerning their present and likely future needs. When objected to, I rejected that evidence.

23 The two significant assets which were the subject of the Plaintiff’s claim were the house property situate at and known as 1 Gears Avenue, Drummoyne, and the business known as A Creative Cuisine.

24 On behalf of the Plaintiff evidence was given by Graham Walter Stevens, valuer, that the value of the Gears Avenue property as at 2 October 2003 was $840,000. On behalf of the Defendant evidence was given by Richard Raymond Links, valuer, that the value of the property as at 17 October 2003 was $740,000.

25 No evidence was given by either valuer as to the value of the subject property as at 7 May 2001, that being the date of the termination of the de facto relationship between the parties.

26 The Defendant has remained in occupation of the Drummoyne property since the termination of the de facto relationship and the departure therefrom of the Plaintiff on 7 May 2001. Some time after the departure of the Plaintiff the Defendant rented out two of the bedrooms in the property to lodgers.

27 On behalf of the Plaintiff evidence was given by Jennifer Anne Exner, chartered accountant, concerning the value of the business A Creative Cuisine and of the company A Creative Cuisine, Sydney Pty Limited (to which I shall make further reference later in this judgment). It was the conclusion of Ms Exner that the value of that company as at 30 June 2002 was nil.

28 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.

29 I have had the benefit of receiving written outlines of submissions and chronologies from Counsel for the respective parties. Those documents will be retained in the Court file.

30 Section 20(1) of the Property (Relationships) Act provides, relevantly,

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 by 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.

31 The phrase “domestic relationship” is by section 5(1) of the Act defined to include a de facto relationship.

32 I have already observed that evidence was given concerning the financial and material circumstances of the parties after the termination of the relationship and concerning the present and likely future needs of the parties, and that when objected to I rejected that evidence.

33 It should be recognised that the purpose of the Property (Relationships) Act is remedial (see New South Wales Law Reform Commission, Report on De Facto Relationships, quoted by Gleeson CJ and McLelland CJ in Eq in Evans v Marmont (1997) 42 NSWLR 708 at 80-81; Jones v Grech [2001] NSWCA 208 per Ipp AJA at 76). The discretion vested in the Court by section 20(1) of the Act is to be exercised “having regard to” the contributions of the nature described in paragraphs (a) and (b) of that subsection.

34 In Roy v Sturgeon (1986) 11 NSWLR 454 Powell J (as he then was) said, at 464,

The fact that it is not the policy of the Act to elevate the status of a “de facto partner” to that of a party to a marriage would, in my view, be enough to caution one against too readily embracing the decisions of the Family Court of Australia as to the matters to which that Court might legitimately have regard when dealing with applications under section 79 of the Family Law Act 1975 (Commonwealth). That caution is, however, reinforced by the fact that there are difference between the language of section 20 of the Act on the one hand, and of section 75(2) and section 79(4) of the Family Law Act 1975 (Commonwealth) on the other, which differences are, in my view, significant.

35 Powell JA in Jones v Grech, at 12, quoted the foregoing passage from his judgment in Roy v Sturgeon, and emphasised that the statutory regime under the Property (Relationships) Act is different from that under the Family Law Act 1975 (Commonwealth). (See, also, Black v Black (1991) 15 FamLR 109 at 113 per Clarke JA; Wallace v Stanford (1995) 37 NSWLR 1 at 23 per Sheller JA; Evans v Marmont, supra, per Gleeson CJ and McLelland CJ in Eq.)

36 In Green v Robertson (1995) 36 NSWLR 96 Cole JA, at 115-116, considered that the Court should have regard to contributions made to the date of the application (in distinction to contributions made merely to the date of termination of the relationship). That was a proposition which Campbell J in Ngyuen v Scheiff (2002) 29 FamLR 177 found persuasive (the reasons for so finding His Honour repeated in Sullman v Sullman [2002] NSWSC 169). Nevertheless, there is no authority in either of those decisions for the Court to have regard to the present circumstances (especially the needs) of the parties, let alone to likely future needs of the parties.

37 In exercising the discretion vested in the Court by section 20(1) of the Property (Relationships) Act, it seems to me that, consonantly with the foregoing decisions of the Court of Appeal, the present financial and material circumstances of the Plaintiff and, in particular, her present needs, should not be taken into consideration. The Court should not be diverted from the clear words of the statute in exercising its discretion to “make such order adjusting the interests of the parties in the property as to it seems just and equitable”. The Court must have regard to the contributions of the nature then set forth in paragraphs (a) and (b) of the subsection. As I understand the foregoing decisions of the Court of Appeal, it is not legitimate for the Court to have regard to present or future needs of the parties; it should have regard only to contributions of the nature set forth in the subsection. (See Matheson v Wallis [2001] NSWSC 931, McLaughlin M, 22 October 2001, an appeal from which was dismissed by the Court of Appeal on 11 October 2002, sub nomine, Wallis v Matheson [2002] NSWCA 350.)

38 It is clearly necessary in this regard to exercise the caution counselled by Powell J in Roy v Sturgeon. The principles disclosed in the relevant provisions of the two statutes are that the Property (Relationships) Act looks to past contributions, whereas the Family Law Act looks also to present and future needs.

39 I propose, therefore, in considering the claim of the Plaintiff for adjustment of interests in property under section 20(1) of the Property (Relationships) Act to disregard evidence concerning her present and likely future needs.

40 Similarly, I propose also to disregard evidence concerning various financial transactions (for example, withdrawal of moneys from the business) which occurred after the termination of the relationship. Those transactions can be in no way determinative of the outcome of the present proceedings. It is possible, however, that the company A Creative Cuisine, Sydney Pty Limited, may have a claim in respect to any moneys which were thus withdrawn. I express no concluded view in that regard.

41 In approaching the claim for the adjustment of interests of parties in property pursuant to section 20(1) of the Property (Relationships) Act, the Court should make a holistic judgment, and should 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 and expensive of litigious exercises) (see Davey v Lee (1990) 13 FamLR 688).

42 The business A Creative Cuisine was at the time of the commencement of the relationship being conducted by the Plaintiff alone. Shortly thereafter the Defendant entered into participation in that business, and it was then conducted by the Plaintiff and the Defendant in partnership. Subsequently, on 29 June 1998 the parties incorporated a company ACC Catering Australia Pty Limited, of which the Plaintiff and the Defendant were the sole directors and the sole shareholders. The business was then conducted by the parties through the vehicle of that company, still trading under the name A Creative Cuisine. At that time the mortgage loan over the Drummoyne property was increased by $36,000. Each of the parties was receiving a salary of about $500 (gross) a week.

43 Subsequently the parties then brought Dion Jamie Clark into the business. In December 2000 a further company, A Creative Cuisine, Sydney Pty Limited, was incorporated, each of the parties and Mr Clark being a director of that company and having one share therein. That company took over the catering business which had previously been conducted by ACC Catering Australia Pty Limited. At that time the new company also acquired a business, Pira’s Pantry at Ryde, for $20,000.

44 A Creative Cuisine, Sydney Pty Limited thereupon obtained a loan facility of $100,000 from Westpac, secured over the Drummoyne property and guaranteed by each of the shareholders in that company.

45 On 14 January 2001 A Creative Cuisine, Sydney Pty Limited completed the purchase of another catering business, Pira’s Pantry. In consequence, the business conducted under the name A Creative Cuisine was significantly enlarged.

46 Despite the evidence of Miss Exner that the company A Creative Cuisine, Sydney Pty Limited had no value as of 30 June 2002 the Plaintiff said under cross-examination that at the time of the hearing she considered that the value of the business would probably be the equivalent of what was paid for Pira’s Pantry, being $20,000. Since Pira’s Pantry had been purchased during the course of the relationship, it seems to me that that value of $20,000 should be ascribed to the shareholding of the parties in A Creative Cuisine, Sydney Pty Limited at the time of the termination of the relationship.

47 I have already observed that a great deal of evidence was presented by each party concerning details of the contributions (especially the contributions regarding the conduct of the catering business and the improvements to the Drummoyne property) asserted by each party and largely denied by the other party.

48 To the extent that it is necessary for me to do so, I state that I preferred the evidence of the Plaintiff to that of the Defendant. There were a number of errors and inaccuracies in his evidence which the Defendant conceded under cross-examination. His responses in his oral evidence were prolix and discursive, and often non-responsive to the questions asked. I regarded the Plaintiff as a more reliable witness than the Defendant. I did not, however, regard the Defendant as deliberately attempting to mislead the Court concerning the extent of his contributions during the course of the relationship.

49 In my conclusion, the de facto relationship between the parties commenced in July 1994, when the Plaintiff and her son moved into residence with the Defendant in his rented home unit at Strathfield.

50 It is not necessary for me to make findings on each and every one of the individual assertions and denials of factual matters made by the parties, especially concerning individual catering events (as to who did what, and when, and provided what food at those functions). It is sufficient that I should express my general conclusion that I consider that after the latter part of 1998 (and it will be recalled that it was conceded on behalf of the Plaintiff that until then there was no inequality as to the respective contributions of the parties to the catering business) the Plaintiff performed the greater part of the work in the business, and further, that her contributions thereto and her contributions as a homemaker and parent were greater than those of the Defendant.

51 It will be appreciated that it was the income generated by the business from which the various loans (including the advances made for the purchase of the Drummoyne property) were repaid.

52 I consider that for the last two and a half years of the de facto relationship the business was largely conducted by the Plaintiff, and that the contributions thereto of the Defendant, both in time and in effort, were significantly less than those of the Plaintiff. In proportion, I consider that during that period the Plaintiff performed at least three quarters of the activities of the business, whilst the Defendant performed no more than one quarter.

53 As to the contributions towards the acquisition, conservation and improvement of the Drummoyne property, it will be recognised that the Plaintiff made a capital contribution of $70,505, being about 23 percent of the purchase price of $305,000, whilst the Defendant some seven months later made a capital contribution of $107,704, being about 35 percent of the purchase price. It was submitted on behalf of the Plaintiff, however, that the fact that the capital contribution of the Defendant was made almost seven months after that of the Plaintiff should properly have the effect of reducing the extent of the Defendant’s contribution in real terms.

54 Although the capital contribution of the Defendant was greater than that of the Plaintiff, the repayments of the various loans (being the original bridging loan and the subsequent loans into which that bridging loan was later transformed) after the end of 1998 were funded from the earnings of the business which, as I have already concluded, resulted from the efforts of the Plaintiff rather than those of the Defendant. It seems to me, in those circumstances, that it is proper to consider that the contributions of the Plaintiff to the acquisition of the Drummoyne property exceeded those of the Defendant. I do not overlook the fact that the Defendant significantly contributed to the conservation and improvement of the Drummoyne property, especially its gardens. In all the circumstances, it seems to me that the respective contributions of the nature identified in section 20(1) of the Act in respect to the Drummoyne property to the time of the termination of the relationship should reflect an entitlement in the Plaintiff to 60 percent of that property and in the Defendant to 40 percent thereof.

55 By her amended statement of claim the Plaintiff concerning the Drummoyne property seeks orders for the sale of that property and an order that, after payment of costs, expenses and the like, and the discharge of any mortgages, the balance then remaining be paid as follows:

(i) 65% to the Plaintiff
(ii) Such amount is as necessary to discharge any loan from the Plaintiff’s mother for payment of the mortgage
(iii) The balance to the Defendant.

56 It should here be recorded that the foregoing claim of the Plaintiff for payment to her from the proceeds of sale of the Drummoyne property of an amount necessary to discharge any loan made to her by the Plaintiff’s mother to meet mortgage payments was expressly abandoned by the Plaintiff at the hearing (during closing addresses).

57 I have already observed that, whilst the Defendant did not file a cross-claim, by his further amended notice of grounds of defence (filed on 8 September 2003) he submitted that the Court should grant relief different from that sought by the Plaintiff. The appropriate adjustment of the property of the parties submitted by the Defendant was:

(a) that the Defendant pay the Plaintiff 35% of the value of the Drummoyne residence, based upon the valuation either agreed between the parties or as determined by the Court.

(b) the Plaintiff retain half of the furniture and other household items located at the residence immediately prior to separation;

(d) the Defendant transfer his share in A Creative Cuisine, Sydney Pty Limited to the Plaintiff.

(e) that the Defendant be paid a sum of money in lieu of dividends and other benefits of which he was deprived between 21 May 2001 and the date of this decision as a result of being removed as director and employee of A Creative Cuisine, Sydney Pty Limited

(f) the Defendant be paid the $25,000, plus the interest which has accrued on that sum, which the Plaintiff took for her own purposes from the joint accounts at the time she left the Drummoyne residence.

58 It will be appreciated from the foregoing that in respect to the Drummoyne property the Plaintiff is seeking that the property be sold and that she receive 65 percent of the net proceeds of sale, and that the Defendant receive the remaining 35 percent. On the other hand, the Defendant appears to wish to remain in the Drummoyne property and to acquire ownership thereof, upon payment to the Plaintiff of 35 percent of the value of the property.

59 That is, each of the parties asserts that she or he is respectively entitled to at least 65 percent of the value of the Drummoyne property.

60 In my conclusion, the contributions of the parties to the Drummoyne property should be recognised by the Plaintiff having an interest therein of 60 percent, whilst the Defendant should have an interest therein of 40 percent. If the parties cannot agree upon a valuation of the property, then orders will need to be made for the sale of the property. The Plaintiff upon such sale will be entitled to 60 percent of the net proceeds and the Defendant to 40 percent of the net proceeds.

61 In respect to the business conducted by A Creative Cuisine, Sydney Pty Limited, the Plaintiff seeks orders for the sale of that business and for the winding up of A Creative Cuisine, Sydney Pty Limited and ACC Catering Australia Pty Limited. Although not expressly sought in the relief claimed by the Plaintiff, it would follow that upon the winding up each of the shareholders would be entitled to a distribution in accordance with his or her shareholding. That is, each of the Plaintiff and the Defendant would be entitled to one third of the net assets upon the winding up. Such an outcome, however, would not accurately reflect my foregoing findings concerning the respective contributions of the parties to that business. It seems to me that the far greater contribution of the Plaintiff to the business during the last two and a half years of the relationship should be reflected by the totality of the interests of the parties in the companies being held as to 60 percent for the Plaintiff and 40 percent for the Defendant.

62 By paragraph 18.3(d) of his further amended defence the Defendant submits that it is appropriate that he should transfer his share in A Creative Cuisine, Sydney Pty Limited to the Plaintiff. During the course of the hearing it was noted that the Defendant will transfer the shareholding, business name, logo and all parts of the business owned by him, as part of the relief which the Defendant seeks should be granted in the proceedings. The relief sought in subparagraph (e) of paragraph 18.3 relates to an entitlement which the Defendant asserts in respect to dividends and other benefits of which he claims to have been deprived between the termination of the relationship and the conclusion of the present proceedings “as a result of being removed as director and employee of A Creative Cuisine, Sydney Pty Limited”. As I have already observed, I do not consider that events which occurred after the termination of the relationship in respect to the financial relations between the parties can properly be taken into consideration in determining the nature of the relief to which the parties are respectively entitled.

63 The relief submitted by the Defendant in subparagraph (f) of paragraph 18.3 of his further amended grounds of defence relates, as does the relief submitted in paragraph (e), to financial transactions involving A Creative Cuisine, Sydney Pty Limited. Whilst the Plaintiff does not dispute that on 20 June 2001 (that is, some six weeks after the termination of the relationship) she withdrew the sum of $20,000 from a bank account conducted, as I understand it, on behalf of the company, she points to the fact that the Defendant himself retained an amount of $5,000, withdrew a further amount of $5,000 from the joint account of the parties, and subsequently sold the jointly owned Mitsubishi motor vehicle for $12,500. All the foregoing transactions relate to one or other of the two companies. It will be appreciated that neither of those companies, nor Dion Jamie Clark, is a party to the present proceedings. The foregoing transactions must of necessity, therefore, be brought into account upon the liquidation of the companies and in the ultimate disposition of any assets therein among the shareholders, in the light of my conclusions as to the respective entitlements of the Plaintiff and the Defendant between themselves as such shareholders.

64 It was also submitted on behalf of the Defendant that if the business does in fact have a value, then it should be sold on the open market, and the proceeds divided equally between the parties. That is, each of the parties appears to be in agreement that the business should be sold. Since the business is owned by A Creative Cuisine, Sydney Pty Limited, it would only be upon the winding up of that company that there would be a distribution of the proceeds of sale of the business. I have already expressed my conclusion that as between the Plaintiff and the Defendant (each of whom is an equal shareholder in that company) the Plaintiff should be entitled to 60 percent of the assets to which those parties are conjointly entitled, whilst the Defendant should be entitled to 40 percent.

65 Although the Defendant by subparagraph (b) of paragraph 18.3 of his further amended grounds of defence submitted that the relief should include an order that the Plaintiff retain half of the furniture and other household items located at the residence immediately prior to separation, nevertheless no submissions were presented to the Court by either party concerning such relief. The Plaintiff by prayer 20.9 of her amended statement of claim seeks orders in accordance with a formula therein expressed concerning the division between the parties of “the remaining items of furniture, whitegoods and electrical goods located at the Drummoyne property”. The general effect of that formula is that each party should receive one half (in value) of such items. If the parties cannot agree to a division of the items, then it will be necessary for the Court, pursuant to the general liberty to apply which I propose should be reserved herein, to effect such a division.

66 Having expressed my foregoing conclusions, I shall stand the matter over to a date to be arranged with my Associate for the bringing in of short minutes of order, to reflect those conclusions. Those short minutes should include a general liberty to apply.

67 I have not heard any submissions as to costs. The Plaintiff, who sought a 65 percent interest in the net proceeds of sale of the Drummoyne property, will be entitled in my conclusion to a 60 percent interest therein. The Defendant, who sought a 65 percent interest in the Drummoyne property, will be entitled to a 40 percent interest therein.

68 Although neither party has succeeded in obtaining the relief which that party sought, nevertheless the Plaintiff has been more successful than the Defendant. It seems to me, in those circumstances, that the interests of justice would be appropriately served if I were to make an order that the Defendant pay two thirds of the costs of the Plaintiff. But, if either party wishes to submit that some other costs order should be made, an opportunity to do so will be available at the time of the bringing in of the short minutes.

**********

Last Modified: 05/26/2004