Sharpless v McKibbin - [2007] NSWSC 1498

CITATION: Sharpless v McKibbin [2007] NSWSC 1498

HEARING DATE(S): 30, 31 January, 1, 19, 20, 21 February & 2 April 2007

JUDGMENT DATE :
14 December 2007

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

DECISION: There was a de facto relationship for part of the period, followed by a close personal relationship. The approach in Mallet v Mallet and Jones v Grech is not applicable where there is no practical union of lives and property of parties. There is no real difference between Kardos v Sarbutt and Bilous v Mudaliar. The doctrine of “unclean hands” does not apply to proceedings for statutory relief, nor does giving false evidence in the proceedings attract it. The plaintiff is entitled to 4% of the pool of property of $1,512,240.

CATCHWORDS: FAMILY LAW – Domestic relationships other than marriage – same-sex relationships – where parties did not cohabit continuously throughout period – whether de facto relationship – whether close personal relationship – Property adjustment – where no practical union of lives and property of parties – whether approach in Mallet v Mallet and Jones v Grech applicable – where very substantial initial contributions by one party – treatment of initial contributions - consideration of “erosion principle” and reconciliation of Kardos v Sarbutt and Bilous v Mudaliar – where plaintiff’s domestic contributions unremarkable and his stewardship of defendant’s assets poor – where plaintiff obtained substantial countervailing benefits from relationship, financial and otherwise – whether plaintiff debarred from relief under Act by analogy with “unclean hands” by reason of having given false evidence.

LEGISLATION CITED: (Cth) Family Law Act 1975
(NSW) Industrial Relations Act 1996, s 106
(NSW) Property (Relationships) Act, ss 3(1), 5(1), 5(2), 20(1),
(NSW) Property (Relationships) Legislation Amendment Act 1999

CASES CITED: Bilous v Mudaliar (2006) 65 NSWLR 615
Black v Black (1991) 15 Fam LR 109; (1991) DFC 95-113
Chanter v Catts [2005] NSWCA 411
Davey v Lee (1990) 13 Fam LR 688; (1990) DFC 95-084
Dewhirst v Edwards [1983] 1 NSWLR 34
Dridi v Fillmore [2001] NSWSC 319, (2001) DFC 95-232
Dwyer v Kaljo (1992) 27 NSWLR 728, (1992) DFC 95-127
Evans v Marmont (1997) 42 NSWLR 70; (1997) 21 Fam LR 760; (1997) DFC 94-184
Farnell & Farnell (1995) 20 Fam LR 513
Figgins & Figgins (2002) 173 FLR 273; (2002) 29 Fam LR 544; (2002) FLC 93-122; [2002] FamCA 688
Foster v Evans (1997) DFC 95-193, 77,681
Gilmore v Allied Express Transport Pty Ltd [2006] NSWIRComm 16
Green v Robinson (1995) 36 NSWLR 96
Howlett v Nielson (2005) 33 Fam LR 402
Jones v Grech (2001) 27 Fam LR 711; (2001) DFC 95-234; [2001] NSWCA 208
Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11
Kennon & Kennon (1997) FLC 92-757
Lodge v National Union Investment Co Ltd [1907] 1 Ch 300
Mallet v Mallet (1984) 156 CLR 605
McDonald v Stelzer (2000) 27 Fam LR 304; (2001) DFC 95-233; [2000] NSWCA 302
Miller v Miller [2006] 2 AC 618; [2006] 3 All ER 1; [2006] 2 WLR 1283; [2006] UKHL 24.
Nguyen v Scheiff (2002) 29 Fam LR 177
Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844
Wallace v Stanford (1995) 37 NSWLR 1; (1995) 19 Fam LR 430
White v White [2001] 1 AC 596
Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th edn,
Law Reform Commission’s report of June 1983: Report on De Facto Relationships, No 36 of 1983

PARTIES: Paul Anthony Sharpless (plaintiff)
Paul Ellis McKibbin (defendant)

FILE NUMBER(S): SC 5396/05

COUNSEL: Mr Reeve (sol) (plaintiff)
Ms Stubbs (defendant)

SOLICITORS: Marsdens Law Group (plaintiff)
Cunningham Legal Pty Limited (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Friday, 14 December 2007

5396/05 Paul Anthony Sharpless v Paul Ellis McKibbin

JUDGMENT (Revised 12 February 2008)

1 HIS HONOUR: The plaintiff Mr Paul Sharpless, now a 48-year-old salesperson, and the defendant Mr Paul McKibbin, now a 48-year-old retired naval officer, met in late 1993 and ceased to live under the one roof in April 2005. When their relationship commenced, Mr McKibbin had assets equivalent to about $540,000 in present terms, and held the rank of Lieutenant Commander in the Royal Australian Navy (he was later promoted Commander); between 1 July 1994 and 30 June 2005 he earned income totalling about $440,000 net. Mr Sharpless was then unemployed, and had no assets of significance; between 1 July 1997 and 30 June 2002, he earned income totalling about $31,000 net, almost exclusively in the form of unemployment benefits. The present net assets of the parties amount to about $1.5 million, virtually all of which are in Mr McKibbin’s name, and of which the most significant are his townhouse property at Newington (worth $560,000, but subject to a mortgage of $312,000), and his superannuation pension (which has been valued at $1,121,981). Mr Sharpless claims that by reason of his contributions during the relationship – chiefly domestic contributions to the welfare of Mr McKibbin – he is entitled to an adjustive property order; in his final submissions, an adjustment that gave him 25% and left Mr McKibbin 75% of their net divisible property was proposed. Mr McKibbin opposes any adjustive order.

2 The jurisdiction invoked in the present proceedings is that created by (NSW) Property (Relationships) Act 1984, s 20(1), which provides as follows:

(1) 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.

3 Once it is established that there was a domestic relationship between the parties, the exercise of jurisdiction under s 20 involves three main steps. The first is the identification and valuation of the property of the parties, which determines the “divisible pool of property” – that is, “the property of the parties to the relationship or either of them” referred to in s 20 which may be the subject of an adjustive property order under that section. The second is the identification, evaluation and weighing of the respective contributions of the parties of the types referred to in s 20, and typically though not invariably results in an apportionment between the parties on a percentage basis of the overall contributions (of the types referred to in s 20) of each of them, made to the date of hearing. The third is the determination of what order is required sufficiently to reflect and recognise the applicant’s contributions, in the context of the contributions as a whole of both partners, and typically results in an order that leaves the applicant with that percentage identified in the second step of the divisible property identified in the first step [Evans v Marmont (1997) 42 NSWLR 70; (1997) 21 Fam LR 760; (1997) DFC ¶94-184; Jones v Grech (2001) 27 Fam LR 711; (2001) DFC ¶95-234; [2001] NSWCA 208; Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11].

4 Accordingly, the principal issues are:

· Was there a domestic relationship between the parties;

· What is the divisible pool of property;

· What were the respective contributions of the parties under s 20; and

Background

5 Mr Sharpless was born on 17 June 1958 and Mr McKibbin on 29 June of the same year. Mr McKibbin joined the Navy in 1977 and was discharged, 24 years later, in 2001.

6 As a member of the Australian Defence Force, Mr McKibbin contributed to the Defence Force Retirement and Death Benefit scheme (DFRDB). As at 1989, his DFRDB interest had a transfer value (if he remained in public employment and entered another eligible superannuation scheme, and which also provides a better indication of the accrued value of his superannuation interest if he were to remain in the Navy, as he did, than the surrender value) of $89,620. In August 1992, when members of the ADF were offered the election of remaining a member of the DFRDB or transferring to the Military Superannuation Benefit Scheme (MSBS), Mr McKibbin elected to transfer to MSBS, and to contribute 10% of his salary (in lieu of the compulsory minimum 5% member contribution).

7 A statement of Mr McKibbin’s assets and liabilities as at 1 April 1992, prepared contemporaneously, showed a net position of $265,677. It included his townhouse in Isaacs, ACT, at a value of $170,000, which appears to have been its cost price; ultimately the Isaacs townhouse was sold in 2002 for $235,000, and the proceeds were applied to reduce the mortgage on the townhouse in Newington, NSW, which he had purchased for $415,000 and is now worth $560,000. The statement also included his superannuation interests, comprising his DFRDB contributions of $22,152, and a “3% superannuation benefit” of $5,284; this reflects what he would have received on immediate retirement in 1992, but not the “transfer value”. It is the addition to his then net assets ($265,000) of the capital increment to Isaacs ($65,000), the subsequent capital increment to Newington ($145,000) and the difference between the surrender value and transfer value of his superannuation ($62,500) that produces the figure of approximately $540,000 mentioned above.

8 The parties met on 2 October 1993. Mr Sharpless was renting a bed-sitter flat in St John’s Road, Glebe, for between $180 and $190 per week; he had been on unemployment benefits for about a year, and was also in receipt of rental assistance of $40 to $50 per week. He now concedes that he had no savings or assets of significance, though he deposed three times to having had savings of $50,000.

9 The parties holidayed together in November 1993; I accept (having regard to their disparate financial circumstances) that Mr McKibbin substantially funded the holiday. Mr McKibbin, who had been resident in Adelaide, was posted to HMAS Brisbane as Executive Officer, and moved from Adelaide to Sydney, where he lived aboard HMAS Brisbane, and temporarily in a suite at “Woolloomooloo Waters”, provided by the RAN, while his ship underwent a refit. In March 1994, the refit having been completed, Mr McKibbin moved from the Woolloomooloo Waters suite back on board HMAS Brisbane. From August 1994, he was deployed overseas on HMAS Brisbane, until the ship returned to Sydney in December 1994. While in Sydney he spent some nights at Mr Sharpless’ Glebe flat, and Mr Sharpless over-nighted from time to time in the Woolloomooloo Waters suite, but each maintained their own separate accommodation. There was a sexual relationship between them, which Mr and Mr McKibbin recorded Mr Sharpless in the wardroom social register as his “spouse”; according to Mr Sharpless their relationship at this time was “pretty intense”.

10 Mr Sharpless was in employment for about 3 months during 1995, ceasing on 28 March 1995; this was the only employment he had held since 1991.

11 In April 1995, Mr McKibbin was posted to Canberra. Mr Sharpless also moved to Canberra, and although he has given different reasons at different times for doing so – including a desire to make a fresh start elsewhere – it is tolerably clear that their relationship was an important factor; they commenced living together in Mr McKibbin’s Isaacs townhouse in about April 1995. However, Mr Sharpless continued to receive unemployment benefits, and held himself out to Centrelink as prepared to work, although he was employed only very sporadically while in Canberra. Meanwhile, Mr McKibbin was promoted Commander with effect 1 January 1997.

12 According to Mr McKibbin, the parties were “drifting apart”, and their sexual relationship ceased in June 1997. Mr Sharpless says that their relationship “became different”, and that Mr McKibbin was “drinking heavily – I avoided him and he avoided me. He was depressed”.

13 A contemporaneous statement of Mr McKibbin’s assets and liabilities as at 1 January 1998 showed a net position of $713,250, with Isaacs still included at $170,000, and his MSBS entitlements then valued at $367,010.

14 In about March 1998, with the relationship in distress, Mr Sharpless returned to Sydney, renting premises in Kirribilli. Despite the deterioration of their relationship, Rushmore Technologies Pty Ltd, a company which Mr McKibbin had acquired on 24 December 1997 and of which he was sole director and shareholder, purchased a Sign-o-Rama franchise during 1998, in order to provide an opportunity for Mr Sharpless to work, while serving as an investment for Mr McKibbin. The evidence does not establish the cost of acquisition, but Mr McKibbin funded it. In August 1998, Mr Sharpless travelled to the United States to receive training for the Sign-O-Rama franchise; the cost was born by Rushmore, and thus Mr McKibbin.

15 Mr McKibbin over-nighted in the Kirribilli premises occasionally when visiting Sydney, but never resided there. However, with effect from 27 December 1998, Mr McKibbin was posted to Headquarters Australian Theatre, at Potts Point in Sydney, and from the time of his return to Sydney, the parties shared rental accommodation in Annandale; Mr McKibbin paid the rent and outgoings. Mr Sharpless maintains that a sexual relationship continued, and Mr McKibbin (although he had deposed that their sexual relationship had ceased) now concedes that there was at least one sexual encounter at Annandale; but they occupied separate bedrooms.

16 On 16 January 2000, Mr McKibbin made a codicil to his will, leaving Rushmore to Mr Sharpless, described in the codicil as his “life partner”. Mr Sharpless says that he changed his own will to leave half his estate to Mr McKibbin, although there is no independent or documentary corroboration of this. On 20 January 2000, Mr McKibbin first sought help with alcohol issues, at Balmoral Naval Hospital. He now accepts that he had had an alcohol problem since about 1980, but says that until 2000 he had managed it himself, without significant impact on his career or otherwise. However, it is plain that from 2000 until about 2004, while he struggled with alcoholism and depression, he functioned at a significantly reduced level.

17 In August 2000, Mr Sharpless sought legal advice and consulted solicitors in relation to relationship breakdown, and on 10 August 2000 his solicitors sent Mr McKibbin a without prejudice letter asserting that the relationship had broken down, referring to rights under the Property (Relationships) Act, and proposing a mediation. In the absence of a response, a follow up letter was sent on 8 September. On 4 December 2000, Mr Sharpless conferred with a solicitor, and on 23 January 2001 with the same solicitor and a barrister, in relation to “family law”; the solicitor continued to act for him at least until 23 April 2001, when an interim account was rendered.

18 Mr McKibbin continued to suffer from alcoholism and depression. His initial attempts to withdraw from alcohol abuse were not enduring. He had at least one, and probably more, seizures; he injured his shoulder, for which he was hospitalised; and he underwent several admissions to detoxify from alcohol. On 25 May 2001 Mr McKibbin gave Mr Sharpless – whom he continued to regard as a trustworthy friend – a General Power of Attorney, pursuant to which Mr Sharpless managed Mr McKibbin’s affairs, as well as those of Rushmore.

19 Mr McKibbin was discharged from the Navy on 4 July 2001, as incapacitated. There ensued lengthy correspondence, mostly generated by Mr Sharpless - over several years, with the Department of Defence and other agencies – to secure Mr McKibbin’s termination, military superannuation, and military compensation (veterans’ affairs) entitlements, and also to propound other claims (some of them quite fantastic), purportedly on behalf of both Mr McKibbin and Mr Sharpless.

20 On 31 July 2001, Mr McKibbin completed the purchase of the Newington townhouse, which he continues to occupy, for $415,000, financed by a mortgage loan of $350,000, and accumulated savings. In August 2001, Mr Sharpless and Mr McKibbin moved into the Newington property, where they occupied separate bedrooms, as they had in Annandale. On 7 March 2002, Mr McKibbin completed the sale of his Isaacs property for $235,000; and from the proceeds he paid $215,834 off the Newington mortgage, reducing it to $155,000.

21 In March 2002, the Sign-o-Rama business was sold for $95,000. Mr Sharpless also arranged the sale of two motor vehicles leased by Rushmore, and the purchase from the proceeds, for cash, of a Mazda 323, in his own name, which he retains.

22 On 16 July 2002, Mr McKibbin was granted a Veterans Affairs Disability Pension, of $281.50 per fortnight. More recently this has been upgraded to the special (TPI) rate.

23 On 4 December 2003, Mr McKibbin notified Mr Sharpless that he had revoked the Power of Attorney. Mr Sharpless ignored this, and continued to exercise the power until, on 15 June 2004, Mr McKibbin instructed his bank not to permit Mr Sharpless to use or access his bank accounts. While Mr Sharpless held and exercised the power of attorney, he expended hundreds of thousands of dollars from Mr McKibbin’s accounts, and the Newington mortgage increased from $155,000 in March 2002 to $337,000 by September 2005.

24 On 14 April 2005, Mr McKibbin – having previously warned Mr Sharpless of his intention to do so – locked Mr Sharpless out of Newington.

25 These proceedings were instituted on 27 July 2005 in the District Court at Campbelltown, and subsequently transferred to this Court. The final hearing commenced before Hamilton J on 29 January 2007; the affidavit evidence had been read, objections ruled upon and some documentary exhibits tendered when, at the morning adjournment on 30 January, His Honour concluded that he ought to discharge himself from the further hearing of the matter. The hearing resumed before me later that day, the parties very sensibly agreeing that the transcript of the proceedings before his Honour would be before me and that they would abide by his Honour’s rulings on the evidence. In the light of some of the issues that emerged, it is as well that I record that my association with the Australian Defence Force was disclosed to the parties, together with the circumstance that I might as a result have a more than ordinary understanding of various policies and procedures of the ADF; neither party objected to my hearing the matter.

The credit of the parties

26 Each of Mr Sharpless and Mr McKibbin was cross-examined at length, not without effect. I do not propose to catalogue every matter that impacted on my assessment of the credit of either of the parties, but it is necessary to refer to some of them, to explain the approach I have adopted to the evidence.

27 There are very serious difficulties in placing reliance on the evidence of Mr Sharpless except where it is uncontroversial or independently corroborated. Mr Sharpless wrongly asserted, repeatedly, that he had made an initial contribution of $50,000. He did so in an elaborate manner. It is not possible to pass this assertion off, as he sought to do, as a mere mistake; how he could have been so mistaken was never satisfactorily explained. He was also compelled to concede that a number of previous representations made by him were erroneous, which were likewise not easily explicable as mere mistakes: they included an assertion that Mr McKibbin had been admitted to St John of God Hospital (he never was), that he had seen Mr McKibbin adopt a particular attitude when engaged in planning for the invasion of Timor and for the Gulf War (but the Gulf War had taken place before the parties met), and that the parties had not had sex for twelve months (an assertion that he had made to solicitors then acting for him, but which was inconsistent with the case he mounted in court and which in cross-examination he said was false).

28 His evidence revealed significant elements of fantasy, bordering on paranoia, in respect of Mr McKibbin’s employment in the ADF – in particular, he maintained that his real employment was in “military intelligence”, which there was absolutely no objective evidence to support, and some in addition to that of Mr McKibbin (including that of another former naval officer, Mr Purdy, called as a witness by Mr Sharpless) to contradict. His assertion that he had been forced by “Military Intelligence” to sell substantial assets was false – he had no such assets. His claim to have been told by “Military Intelligence” not to seek help was grossly overstated and distorted; what he was told was to the effect that he was not eligible for certain assistance. He asserted that it was “Military Intelligence” who prevented legal recourse being taken in respect of an alleged attempt by one Mr Wood to extort funds from Rushmore, and forced the withdrawal of a case against Vodafone; this was mere fantastic supposition, exposed as being without any reasonable basis. Mr Sharpless was given to confabulate, basing wild inferences on the flimsiest foundations.

29 Despite protestations that he was the predominant homemaker at Isaacs and prepared the meals, he conceded that this involved “tea and toast” for breakfast, and that Mr McKibbin did so as well; indeed in cross-examination he acknowledged that Mr McKibbin used to say that cooking was the only thing that relaxed him, and that as Mr McKibbin was more ‘in control’, “I let him cook as it relaxed him”. His evidence that he did the ironing was undermined by the concession that Mr McKibbin had his uniforms laundered elsewhere. He falsely claimed to have been locked out of the Newington property without notice.

30 Mr Sharpless was also prepared to make false statements to Centrelink, over a sustained period, when he was under an obligation to tell the truth, in order to retain Centrelink benefits.

31 Although less seriously affected than that of Mr Sharpless, Mr McKibbin’s credit did not emerge untouched. Though he had been quick, in supplementary oral evidence in chief, to point out that his ComSuper pension could be reviewed (downwards) in the future as a result of his improved health, he did not disclose, until his cross-examination, the recent increase in his Veterans Affairs pension, nor the consequent receipt of a lump sum of $58,000 by way of arrears, nor the resultant reduction of the Newington mortgage from about $360,000 (to which it had climbed with expenditure on legal costs) to $312,000. He had denied that there was a sexual relationship after 1997, but in cross-examination conceded that there was at least one subsequent sexual encounter, justifying his original position on the basis that one occasion does not make a relationship.

32 Generally, Mr McKibbin was unprepared to make any concession that might assist Mr Sharpless. He was inclined to adopt a position advantageous to his own case and adhere to it, unless indisputable evidence to the contrary was produced; and he was ever ready to search for explanations, even highly speculative ones, which conformed to his case, rather than to make any concession that might assist Mr Sharpless. One illustration of this is his non-admission that a close personal relationship persisted after 1998, when he asserted the relationship came to an end – despite the codicil, despite the power of attorney, and despite numerous other contemporaneous documents which bespeak the continuance of a close relationship, albeit a sometimes stormy one. Mr McKibbin firmly believes that Mr Sharpless has betrayed his trust, and on the few occasions that he was prepared to concede that Mr Sharpless had done anything for him, added an observation that no less should be expected of a friend holding power of attorney, or questioned whether the motive was not to advance his own financial interest.

33 I did not find the evidence of the minor witnesses – such as Mr McKibbin’s mother, Mr Sharpless’ sister, and Mr Purdy – of much assistance in resolving the conflict. In part this was because each was somewhat partial to the party who called him or her, but it was more because the visibility which each had of the totality of the relationship was very restricted, and not such as to permit a sound conclusion of general application to be drawn from their very limited and occasional observations.

34 Ultimately, the deterioration of the once close relationship between these parties has produced such a level of embitterment and distrust that the evidence of each is affected by an unsurprising lack of objectivity, and consequent polarisation of their perceptions. In my view, Mr Sharpless’ evidence greatly exaggerated many aspects of his case, and in particular his contributions to Mr McKibbin’s welfare; but Mr McKibbin understated his own difficulties during his illness, and the supportive role of Mr Sharpless. The safer approach is not as a matter of course to prefer the less unsatisfactory evidence of Mr McKibbin (although I will on occasion do so), but to proceed on the basis that the truth lies somewhere between the position of each of them.

The relationship and its duration

35 In this case, as is not uncommon in proceedings for financial adjustment under Property (Relationships) Act, there is a preliminary question as to the duration of the domestic relationship that founds jurisdiction under THAT Act.

36 The (NSW) Property (Relationships) Legislation Amendment Act 1999 [enacted 26 May 1999, assented to 8 June 1999, commencement date 25 June 1999], amended the former De Facto Relationships Act 1984 to make the basis of jurisdiction a “domestic relationship”, rather than a “de facto relationship”. For that purpose, domestic relationships include, as well as de facto relationships, certain “close personal relationships”.

37 De facto relationships thus constitute one subset of “domestic relationships”, and are defined as relationships between two adult persons who live together as a couple and who are not married to one another or related by family [Property (Relationships) Act, s 4(1)]. In determining whether two persons are in a de facto relationship, all the circumstances of the relationship are to be taken into account, including such of the following matters as may be relevant in a particular case: the duration of the relationship, the nature and extent of common residence, whether or not a sexual relationship exists, the degree of financial dependence or interdependence and any arrangements for financial support between the parties, the ownership use and acquisition of property, the degree of mutual commitment to a shared life, the care and support of children, the performance of household duties, and reputation and public aspects of the relationship [Property (Relationships) Act, s 4(2)]. However, no finding in respect of any of those matters or any combination of them is to be regarded as necessary for the existence of a de facto relationship, and a court determining whether such a relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate in the circumstance of the case [Property (Relationships) Act, s 4(3)].

38 Under this definition, a same-sex relationship can qualify as a de facto relationship. Although, previously, it was thought essential that there had been, at least at some stage, a sexual relationship between the parties, it is arguable that the effect of s 4(3) is that even that is no longer an essential element, if other relevant elements are present in sufficient degree; nonetheless, it must be a rare case in which there could be a de facto relationship without there having been, at some stage, a sexual relationship. But it is clear, from s 4(1)(a), that there still must be at least some element of cohabitation, as it is an essential element of the definition that the parties “live together as a couple”, although it is apparent, from the combined effect of s 4(2)(b) and (3), that it is not essential to a finding of a de facto relationship that there be unbroken common residence, and it is not incompatible with the existence of a de facto relationship, as defined, that a party spend some nights each week elsewhere than in the “matrimonial home”.

39 The other subset of domestic relationships are “close personal relationships”, other than marriage or a de facto relationship, between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care [Property (Relationships) Act, s 5(1)] - although a close personal relationship is taken not to exist between two persons where one of them provides the other with domestic support and personal care for fee or reward, or on behalf of another person or an organisation, including a government or government agency, a body corporate, or a charitable or benevolent organisation [Property (Relationships) Act, s 5(2)]. It will be apparent that a same-sex relationship, if it is not a de facto relationship, can fall within the definition of a “close personal relationship”.

40 In Dridi v Fillmore [2001] NSWSC 319, (2001) DFC ¶95-232, Macready M (as his Honour then was) considered discretionary property adjustment under s 20 between same-sex partners: the plaintiff claimed an adjustive property order arising from what was alleged to be a domestic relationship that ceased in November 1999, whereas the defendant claimed that the relationship ceased in November 1997, prior to the commencement of the 1999 amendments. The Master found for the defendant and dismissed the plaintiff’s claim, but provided useful guidance as to the essential elements of a “close personal relationship” – namely living together, domestic support and personal care:

It can be seen from the terms of s 5(1) that a domestic relationship can be either a de facto relationship or a close personal relationship.

...

I have earlier referred to aspects of what the Act describes as a “close personal relationship”. It has to be between two adult persons who are “living together”. Given that they may be members of the same family, such as a grandparent and grandchild and the different definition for a “de facto relationship” concepts relating to a “couple” are not relevant. Instead the definition calls for two different links. The first is that the parties are “living together”. The second is that “one or each of whom provides the other with domestic support and personal care”.

So far as the first requirement is concerned we are not concerned with concepts applicable to couples; the requirement would be met if the parties shared accommodation together. For example, a border in an elderly widow’s home would qualify. It may not be necessary for there to be sharing of food or eating arrangements together. In the present case this is not important as it seems that the parties ate together when they were both at home.

The second requirement is cumulative. There must be both domestic support and personal care. In this case there is evidence of domestic support as the defendant provided for the plaintiff free accommodation and meals, which he cooked for the plaintiff when the plaintiff was at home. There are other matters, not present in this case, which could be domestic support, eg shopping for both parties, washing clothes etc.

41 Mr Sharpless contends that the parties were in a “domestic relationship” within the Act from December 1993, when they commenced to cohabit in a de facto relationship; and that although the de facto relationship came to an end in about October 2004, the “domestic relationship” continued – as a “close personal relationship” – until May 2005. Mr McKibbin contends that a de facto relationship commenced with cohabitation in Isaacs in April 1995, and ended with Mr Sharpless’ return to Sydney in March 1998, and does not concede that there was any subsequent close personal relationship.

42 An essential element of a de facto relationship is that the parties “live together as a couple”, and an essential element of a close personal relationship is that the parties be “living together”. Although Mr Sharpless contends that their domestic relationship commenced as early as December 1993, I am unpersuaded that they “lived together” in either relevant sense before they moved to Canberra in April 1995 and commenced to cohabit in Isaacs. Until then, although each stayed on occasion at the other’s place, they maintained separate accommodation. The relationship may have been, as Mr Sharpless put it, “pretty intense”, but they did not “live together”. There was no cohabitation. The absence of that crucial element cannot be overcome by Mr McKibbin having recorded Mr Sharpless as his spouse in the wardroom register of HMAS Brisbane. Accordingly, there was no domestic relationship within the definition before April 1995.

43 From April 1995, the parties lived together, as a couple, in the Isaacs property, and their relationship thereupon became a de facto relationship within the definition, at least until Mr Sharpless returned to Sydney in March 1998. So much was uncontroversial.

44 When that relationship ended is more difficult. On the one hand, it is clear that their relationship changed in nature and quality in 1997, and that they lived apart for most of 1998, although they remained in contact. On the other, they subsequently resumed living under the one roof, though in separate bedrooms, in Annandale in late 1998, and later in Newington. On 16 January 2000, Mr McKibbin made the codicil to his will, leaving Rushmore to Mr Sharpless, whom he described as his “life partner”. In 2000 and 2001, Mr Sharpless instructed lawyers about the breakdown of the relationship. At about the same time, Mr McKibbin spoke to his Alcoholics Anonymous mentor Mr Fry, in terms that suggested that the relationship was over. In May 2001, however, Mr McKibbin gave Mr Sharpless his Power of Attorney, which was not revoked until at least December 2003; this evidences a relationship of trust continuing during 2001 and thereafter. In December 2001, he appears to have told Dr Taylor that he was in a relationship with his “long term partner”. A Naval Medical Board of Survey on 27 February 2001, which recommended his discharge as medically unfit for naval service, referred to a recent “re-alignment” of his relationship with his partner. Mr McKibbin acknowledged that a supportive relationship continued, at least to some extent, after 2001, and Mr Sharpless continued to provide domestic support and personal care for Mr McKibbin until at least late 2004.

45 In this context precision is impossible, but it is also unnecessary, since contributions both before the commencement and after the termination of the domestic relationship may be taken into account for the purposes of s 20 [Foster v Evans (1997) DFC ¶95-193, 77,681; McDonald v Stelzer (2000) 27 Fam LR 304; (2001) DFC ¶95-233; [2000] NSWCA 302, [28]-[32] (Sheller JA), [34]-[36], [39] (Priestley JA); Jones v Grech, [24] (Davies AJA), [79]-[82] (Ipp AJA); Nguyen v Scheiff (2002) 29 Fam LR 177].

46 The nature of the parties’ relationship changed in 1998. They ceased to live “as a couple” when Mr Sharpless returned to Sydney in 1998. Although they subsequently “lived together”, in Annandale and then in Newington, they did so not “as a couple”, but in separate bedrooms, and even if there were occasional sexual encounters after 1998, they were rare. Nonetheless, during that period – particularly from 2001 until 2004 – they lived under the one roof, and Mr Sharpless provided domestic support and personal care for Mr McKibbin. In my view, there was a “close personal relationship”, within the meaning of the Act, until about April 2005.

47 It follows that I conclude that the parties were in a domestic relationship from April 1995 until April 2005, albeit interrupted during 1998, being a de facto relationship from April 1995 until March 1998, and a close personal relationship from about December 1998 until April 2005.

The divisible pool of property

48 The exercise of the identification and valuation of the property of the parties is undertaken typically, though not invariably, as at the date of trial, though sometimes the date of separation is adopted. The primary reason for this is that the jurisdiction under s 20 is to adjust interests with respect to “the property of the parties to the relationship or either of them” and speaks from the date at which the jurisdiction is exercised, so that what is in issue is the property of the parties and each of them at the date of trial. Establishing the divisible pool at any other date may lead to failure to have regard to relevant assets available for division, or to the bringing into account of property no longer available [Kardos v Sarbutt].

49 In this case, there was ultimately no significant dispute as to the assets and liabilities of the parties, which were agreed or admitted to be as set out in the following tables. Those that require further comment are marked with an asterisk and addressed below.

Assets

Title

Valuation

Newington Property
D

560000

Artwork, Paintings
D

6000

Furniture*
D

5000

Furniture*
P

5000

Trendwest
JT

26000

Paid legal costs*
D

60000

Paid legal costs*
P

4459

Mazda 323
P

5000

Superannuation pension*
D

1121981

Superannuation – preserved benefit component*
D

30800

Total assets
1824240

Less, liabilities

NAB Mortgage for Newington
D

312000

Total liabilities
312000

Financial Summary

Total assets
1824240

Total liabilities
-312000

Net pool of property
1512240

50 The parties have already divided their furniture between themselves.

51 Paid legal costs are treated as a notional asset of the parties, because their expenditure may reduce the divisible pool, as it has in the present case, disproportionately as between the parties [Farnell & Farnell (1995) 20 Fam LR 513].

52 Superannuation entitlements – even those which have not as at the date of hearing matured into rights capable of immediate conversion into money – are property within the definition in Property (Relationships) Act, s 3(1), and amenable to adjustive property orders under the Act, regardless of whether the other party can be said to have contributed to the superannuation entitlement [Green v Robinson (1995) 36 NSWLR 96, 103 (Kirby P); Chanter v Catts [2005] NSWCA 411, [20]-[23] (Hodgson JA), [82]-[103] (Bryson JA)]. However, it is necessary to take into account the nature of the entitlement in exercising the discretion to make orders that are just and equitable. Mr McKibbin has a preserved benefit component said to be worth $30,800, which he is unable to access now, but will be able to access at age 55. However the major component of his superannuation is an invalidity pension, to which he became entitled upon discharge from the Navy on grounds of invalidity. The pension, which is not commutable to a lump sum, was $62,373 for 2007 (after indexation). On the assumption that it will continue for life, and having regard to the life expectancy of a male of Mr McKibbin’s age (but not his personal physical and mental health issues, which might be thought to reduce his life expectancy), his pension entitlement has been valued at $1,121,981. However, there is evidence that it may be subject to reduction, or even cancellation, due to his improved health, in which case he would not again become eligible for a superannuation pension until age 55. In short, Mr McKibbin’s superannuation pension, while a valuable income stream, cannot be realised into a lump sum and is subject to some contingencies.

53 Mr McKibbin also receives a pension from the department of Veterans Affairs at the special (TPI) rate, about $800 per fortnight, which is also indexed. Eligibility for such a pension, like social security benefits, is not property.

54 Mr Sharpless has a personal loan with the National Australia Bank of some $45,000. The evidence does not explain the origin of this loan, but it appears to be related to post-separation expenditure of Mr Sharpless and to be unrelated to the relationship. There is no suggestion that it was incurred for legal expenses. It should not be brought to account in the divisible pool.

55 Mr McKibbin contended that, during the period that Mr Sharpless held his power of attorney, large expenditures were made from several of his accounts, which have not been explained, and should be taken to have been for the benefit of Mr Sharpless. Some calculations advanced by Mr McKibbin in his affidavit suggested that the total amount might exceed of $410,000, although it was never satisfactorily clarified how a major component of that total ($235,444 said to have been withdrawn from the Flexiplus mortgage account) was calculated. Mr McKibbin’s affidavit provided particulars of each of the expenditures; Mr Sharpless merely denied the allegation in the most general terms and never sought to explain how the funds had been applied, although he maintained that all expenditure was for living expenses or debts associated with the relationship.

56 Mr McKibbin’s evidence, however, did not establish that the expenditures were exclusively for the benefit of Mr Sharpless. The lists he provided only identified who had incurred the expenditure, rather than for whose benefit it was incurred. Most of the expenditures in question involved cash withdrawals and transfers made by Mr Sharpless, and interest and other expenses associated with them. Foremost among them was a withdrawal of $10,000 made by Mr Sharpless in what he called circumstances of emergency (which transpired to be his belief that Mr McKibbin was about to make some expenditure which Mr Sharpless thought imprudent); Mr Sharpless says that he placed this money in his safe deposit box and subsequently expended it on living expenses of the parties. There were also, in April 2003, withdrawals from Mr McKibbin’s account, over a period of three days, of sums of $9,000, $9,000 and $2,000; one of the withdrawals of $9,000 was a transfer to Mr Sharpless’ personal account, the others could not be traced.

57 I am unable to be satisfied that, for the most part, the expenditures in question were not for living expenses of the parties. Undoubtedly, a significant portion was for Mr Sharpless’ living expenses, but the arrangements between the parties, however much Mr McKibbin might now regret them, were that he funded their living expenses. Nonetheless I agree that the expenditure of funds for the benefit of Mr Sharpless during the relationship, and particularly while he was Mr McKibbin’s attorney, should be taken into account as a benefit received by him from the relationship, offsetting his contributions.

58 However, the evidence does not permit the ascertainment with any precision of the extent to which Mr Sharpless derived benefits in this way. Ultimately Ms Stubbs, for Mr McKibbin, submitted that the appropriate course was to make some deduction for the reasonable living expenses of the parties, and add back as a notional asset in the hands of Mr Sharpless the remainder of the amounts particularised by Mr McKibbin as having been taken by him. But it is not possible to quantify an amount to be “added back” on this basis as a notional asset of which Mr Sharpless has the benefit. Ultimately, I propose to take this matter into account, not by adjustment to the pool of property, but in evaluating the quantum and quality of the contributions made by Mr Sharpless to, against the benefits derived by him from, the relationship.

59 Accordingly, the net pool of divisible property amounts to $1,512,240, including Mr McKibbin’s superannuation, and disregarding Mr Sharpless’ personal loan.

Evaluation of the contributions

60 The legislation does not dictate the employment of any particular method in the formulation of an appropriate order for the adjustment under s 20 of property interests, and it is not desirable to attempt to formulate principles or guidelines designed to constrain judicial discretion within a predetermined framework, although in the majority of cases, a global approach is likely to be more convenient than an asset-by-asset approach, provided that those who take the global approach heed the warning that the origin and nature of the different assets ought to be considered [cf Norbis v Norbis (1986) 161 CLR 513; (1986) 10 Fam LR 819; (1986) FLC ¶91-712]. Moreover, an asset-by asset approach almost always carries the risk of undervaluing domestic contributions that are not reflected in any particular asset. Some contributions are readily capable of evaluation in monetary terms. Others – such as those made in the capacity of homemaker and parent – are not. Because some assets depreciate in value, and because parties incur living expenses, the pool of property available for division will usually be less than the sum of the financial contributions, and more so when allowance is made for the value of non-financial contributions. An approach which focusses on the valuing of individual contributions item by item not only fails to pay regard to the overall picture, but risks serious injustice by devaluing those contributions which are not readily capable of evaluation in monetary terms. On the other hand, the “fruits of a totality of efforts of wage earning, homemaking and mutual support”, referred to by Deane J in Mallet, do not usually encompass property which each party had before the relationship, or which either party introduced, not by way of their mutual efforts at wage earning, homemaking and mutual support, but independently through gift or inheritance from third parties.

61 Analysis of the contributions in this case is aided by a comparison of Mr McKibbin’s position as at 1992 (shortly before the parties met), 1998 (at the end of the de facto relationship) and today; as Mr Sharpless never held any assets of significance his position does not require similar examination:

Property	1992	1998	2007
Shares	26091	65460	0
Equity trusts	12686	82281	0
Cash at bank	786	12246	0
Cash on hand	100	0	0
Other investments	74737	28880	0
Real property (Isaacs/Newington)	170000	170000	560000
Car	15000	25000	5000
Trendwest timeshare	0	0	26000
Long service leave	11250	16275	0
Annual leave	3750	4650	0
Superannuation (DFRDB/MSBS)	27436	367010	1152781
AMP Life	1600	3061	0
Silver	2000	2000	0
Stamps and coins	10000	10000	0
Furniture, fittings and effects	4000	10000	16000
Paid legal costs (Defendant)	0	0	60000
Paid legal costs (Plaintiff)	0	0	4459
TOTAL	359436	796863	1824240
Less, liabilities	1992	1998	2007
Cards	198	6850	0
Mortgage	94684	76763	312000
94882	83613	312000
Financial summary	1992	1998	2007
Assets	359436	796863	1824240
Less, liabilities	-94882	-83613	-312000
Net divisible property	264554	713250	1512240

62 As has been explained, Mr McKibbin’s initial contributions amounted to some $265,677 according to his 1992 balance sheet, including his Isaacs townhouse at $170,000, subject to a mortgage of $95,000, leaving an equity of $75,000. However, Isaacs was sold in 2002 for $235,000; there is nothing to suggest that its capital appreciation was attributable to improvements during the relationship, nor that Mr Sharpless contributed in any material way to its conservation, and the capital appreciation of $65,000 should be regarded as attributable to Mr McKibbin’s initial contribution. Newington, which was purchased for $415,000, and ultimately funded by Mr McKibbin’s pre-existing assets (including the proceeds of Isaacs) is now worth $560,000; again, there is no evidence that its capital appreciation was attributable to improvements during the relationship, nor that Mr Sharpless contributed in any material way to its conservation, so the capital appreciation of $145,000 should also be regarded as attributable to Mr McKibbin’s initial contribution. Moreover, his superannuation, though included in his 1992 balance sheet at a value of about $27,500 (being the surrender value), had a transfer value of $90,000. Accordingly, his initial contributions represent about $540,000, which is about 36% of the current pool.

63 As has already been observed, following the purchase of Newington the mortgage was reduced, with the proceeds of Isaacs, to $155,000, but by separation had increased to $337,000.

64 There is no explanation in the evidence as to what happened to Mr McKibbin’s other investments between 1998 and the present. It may well be that some were realised to assist in funding the acquisition of the Newington property. But there was no suggestion that he retains any.

65 Mr McKibbin derived income totalling $647,000 gross (say $430,000 approximately net) during the period 1995 to 2005, principally from the Navy and in the last years from his superannuation pension, whereas Mr Sharpless derived income totalling about $31,000 during the period 1998 to 2002, almost exclusively from unemployment benefits. Ultimately, it does not appear that their income generated any assets; it was expended on their living expenses, but that does not mean that it was not a contribution. In addition, Mr McKibbin continued to make contributions to MSBS, and the value of his superannuation interest grew, very substantially, during the relationship, so that it now represents the most significant asset in the pool, comprising about 75% of the divisible pool. It remains to be resolved how the income and superannuation contributions should be attributed between the parties.

66 With the exception of the period of Mr McKibbin’s illness, the domestic contributions were unremarkable. There were, of course, no children to be parented. They occupied relatively low maintenance accommodation, so that there was limited homemaking to be done. Moreover, it was common ground that at Annandale and Newington, they had a paid cleaner, and I prefer the evidence of Mr McKibbin, that there was also a cleaner at Isaacs, to Mr Sharpless’ denial. The gardens were not extensive, and they shared those duties. They shared the cooking: I have previously mentioned that Mr Sharpless’ claim that it was he who prepared meals (which became “tea and toast” for breakfast) was destroyed in cross-examination when he acknowledged not only that Mr McKibbin did so as well, but also that Mr McKibbin enjoyed cooking, and Mr Sharpless “let him cook, as it relaxed him”; similarly, Mr Sharpless’ claim that he did the ironing was undermined by the concession that Mr McKibbin had his uniforms laundered elsewhere. His claim to have contributed by driving Mr McKibbin to work at Russell was diminished by the circumstance that it was in Mr McKibbin’s car, which he would otherwise have driven himself, but if Mr Sharpless drove he could have the use of the car during the day.

67 I do not accept that Mr McKibbin was significantly disabled by excessive use of alcohol at that stage. Alcohol-related problems do not appear to have significantly impacted before about 2000: although he had a couple of bouts of pancreatitis, which might well have been associated with excessive alcohol use, he had no convictions for drink driving, nor even for speeding; he had no accidents; as a seaman officer, he was not permitted to and did not drink at sea in any event; and his naval career before 1999 involved no apparent incidents nor other adverse impacts attributable to alcohol abuse. Suggestions that he had been hospitalised on numerous occasions during the Isaacs period did not sustain scrutiny. I reject the proposition that Mr Sharpless was, during this period, engaged on a daily basis in the care of Mr McKibbin, let alone “24/7” as he at one stage put it.

68 Nor do I accept that during the relationship at Isaacs, Mr Sharpless was the predominant homemaker, nor that he bore any special burden as a result of Mr McKibbin being unwell; I regard their domestic contributions during the de facto relationship at Isaacs as approximately equal, and relatively insignificant in magnitude. Moreover, Mr Sharpless derived substantial benefits from the relationship during this period, which at least offset his contributions. He received rent-free accommodation in Mr McKibbin’s Isaacs townhouse (as he did subsequently at Annandale, where Mr McKibbin paid the rent). Although he continued to receive rent assistance, he contributed only one payment at Isaacs. He enjoyed the use of Mr McKibbin’s car. Mr McKibbin bore virtually all the costs of the relationship: food and household supplies, mortgage payments, utilities and services, motor vehicle expenses, and entertainment. Mr Sharpless could only have made the most minimal contributions to outgoings and living expenses from his very meagre income.

69 It is of course well-established that where there is a division of roles in a marriage-like relationship between the homemaker and parent on one hand and the breadwinner on the other, contributions of a de facto partner as a homemaker and parent are not to be regarded as inferior in any way to the financial contributions made by the other partner [Black v Black (1991) 15 Fam LR 109; (1991) DFC ¶95-113; Evans v Marmont]. The approach endorsed by the High Court to the evaluation of contributions under the (Cth) Family Law Act 1975 in Mallet v Mallet (1984) 156 CLR 605 is applicable to the evaluation of contributions under the Property (Relationships) Act [Jones v Grech, [33]-[35] (Davies AJA)]:

In Mallet v Mallet (1984) 156 CLR 605 at 635-636, Wilson J, after referring to a number of judgments of the Family Court of Australia in which that Court had adopted the notion of “equality is equity” as a convenient starting point to s79(4)(b) of the Family Law Act , 1975 (Cth), went on to say:

In the earliest of these cases, Rolfe [(1977) 5 Fam LR 146 at 148] ..., Evatt CJ referred to s79(4)(b), saying: 'The purpose of s 79(4)(b), in my opinion, is to ensure just and equitable treatment of a wife who has not earned income during the marriage, but who has contributed as a homemaker and parent to the property. A husband and father is free to earn income, purchase property and pay off the mortgage so long as his wife assumes the responsibility for the home and the children. Because of that responsibility she may earn no income or have only small earnings, but provided she makes her contribution to the home and to the family the Act clearly intends that her contribution should be recognized not in a token way but in a substantial way. While the parties reside together, the one earning and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value.’

With all respect, I agree with her Honour’s exposition of the purpose of the paragraph subject to one reservation. The Act requires that the contribution of a wife as a homemaker and parent be seen as an indirect contribution to the acquisition, conservation or improvement of the property of the parties regardless of where the legal ownership resides. The contribution must be assessed, not in any merely token way, but in terms of its true worth to the building up of the assets. However, equality will be the measure, other things being equal, only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal. The quality of the contribution made by a wife as homemaker or parent may vary enormously, from the inadequate to the adequate to the exceptionally good. … Similarly, the contribution of the breadwinner may vary enormously and deserves to be evaluated in comparison with that of the other party. It follows that it cannot be said of every case where the parties reside together that equal value must be attributed to the contribution of each. That will be appropriate only to the extent that the respective contributions of the parties are each made to an equivalent degree. What the Act requires is that in considering an order that is just and equitable the court shall ‘take into account’ any contribution made by a party in the capacity of homemaker or parent. It is a wide discretion which requires the court to assess the value of that contribution in terms of what is just and equitable in all the circumstances of a particular case. There can be no fixed rule of general application.

The general thrust of his Honour’s exposition found support in the observations of other members of the Court: Mason J at p623-p625, Deane J at p639-p641 and Dawson J at p645-p646. One point that their Honours made in relation to matrimonial relationships was that the relationship ordinarily involves “a practical union of both lives and property” and that the acquisition of assets, such as a matrimonial home, can be seen as representing “the fruits of a totality of efforts of wage earning, homemaking and mutual support” (per Deane J at p640-p641). At p625, Mason J pointed out that there may be an equality of contribution if “the efforts of the wife in her role were the equal of the husband in his”. However, the facts of the particular case must always be examined. The passage from the reasons of Wilson J set out above shows how this examination may be made.

The same general considerations apply to a de facto relationship, for that is a relationship of living together as husband and wife on a bona fide domestic basis. Such a relationship also ordinarily involves a practical union of lives and property. The two factors specified in s 20(1), financial and non-financial contributions and contributions made in the capacity of homemaker or parent, reflect the considerations to which their Honours gave weight in Mallet v Mallet .

70 However, that approach has evolved in the context of marriages and quasi-marriages involving a social and economic partnership between domestic partners or, as it was put in Mallet, “a practical union of lives and property”. It is applicable where there is an allocation of roles in the relationship between the homemaker and parent on one hand and the breadwinner on the other, so that one (by assuming the domestic responsibilities) may be said to have freed the other to generate income, so that the income is the product of their joint endeavours in different fields.

71 The inclusion within the Act of “close personal relationships” has the effect of extending the scope of the Act beyond marriage-like relationships. It does not follow that the approach applicable to a marriage-like relationship should also be applied in the context of a “close personal relationship” not amounting to a de facto relationship. “Close personal relationships” within the definition cover a wide range of relationships, and typically do not involve “a practical union of lives and property”. In the case of a close personal relationship from which features of a marriage, such as union of lives and property, are absent, the rationale for the approach authorised by Mallet is much weakened, if not entirely removed.

72 The present is not a case in which it can be said that there was a practical union of the lives of the parties, nor an allocation between them of responsibilities so that one generated income while the other freed him to do so by maintaining the home. Mr McKibbin continued to earn the income which he would have earnt in any event as a Naval officer, unaffected by the relationship; Mr Sharpless remained free to seek work as he pleased, and did not, on account of the relationship, forego opportunities which might otherwise have come his way. That Mr Sharpless continued to receive unemployment benefits and held himself out as available for employment is one of the indicia of this. Indeed, Mr Sharpless ultimately accepted that neither the relationship, nor any need to support Mr McKibbin, occasioned him any reduction of the income that he might otherwise have earnt during the period they resided in Canberra. Similarly, in this case the accumulation of Mr McKibbin’s superannuation was not facilitated nor contributed to by Mr Sharpless; Mr McKibbin would have accumulated it regardless of the relationship. By 2001, all Mr McKibbin’s property had been accumulated, as a result of his own efforts in his 24-year naval career and his husbanding of his resources. Mr Sharpless made no contribution of significance to this. The fruit was not that of the joint efforts of the parties.

73 However, the position was different from the time of the grant of the power of attorney in 2001, until about 2004. For substantial periods during these years, Mr McKibbin’s functional level was significantly affected by his alcoholism and depression, and he underwent several admissions for detoxification. During this period, Mr Sharpless managed Mr McKibbin’s finances and affairs, and provided domestic support and personal care for him. Mr Sharpless did the greater share of the homemaking during this period. He drove Mr McKibbin (albeit in a car purchased with Mr McKibbin’s funds) to medical appointments and to Alcoholics Anonymous meetings (though far from invariably – Mr McKibbin more often than not went on his own); he finalised Mr McKibbin’s taxation affairs for several years and brought them up to date; he attended to most of the shopping, and the payment of household bills and creditors (albeit from Mr McKibbin’s accounts); he provided personal care for Mr McKibbin when necessary, including responding to the occasional disasters – such as organising an ambulance when Mr McKibbin fitted and injured his shoulder in May 2001, and more prosaically putting Mr McKibbin to bed and cleaning up after him when he was unable to do so himself. He provided support to Mr McKibbin during detoxification. In effect, Mr McKibbin relinquished responsibility for dealing with the Department of Defence, ComSuper, the Australian Taxation Office, Rushmore, and the Department of Veterans Affairs to Mr Sharpless, who “filled up his day” with doing things that Mr McKibbin could not or would not then do. Mr Sharpless took a number of steps to facilitate Mr McKibbin obtaining his termination entitlements, his military superannuation pension and his Veterans Affairs pension. In October 2003, he attended and appeared before the Veterans Affairs Review Board on behalf of Mr McKibbin. While Mr McKibbin contends, not without cause, that at least some of what Mr Sharpless did in his dealings with the authorities was less than helpful, and some might have been motivated at least in part by self-interest, this was nonetheless a contribution to Mr McKibbin’s welfare, facilitating his recovery, by relieving him of responsibilities to which he would otherwise have had to attend.

74 During the same period, Mr Sharpless also continued to manage Sign-o-Rama, until its sale in March 2002. While Sign-o-Rama did not prove profitable, its eventual sale (for $95,000) would have been less satisfactory had Mr Sharpless not continued to manage it until then. Accordingly, Mr Sharpless’ work at Sign-o-Rama was a contribution to the conservation of Mr McKibbin’s property.

75 There was debate as to the apparent controversy in the Court of Appeal as to the treatment of initial contributions, and the so-called “erosion principle”, in Bilous v Mudaliar (2006) 65 NSWLR 615 and in Kardos v Sarbutt: Mr Reeve, for Mr Sharpless, submitted that I should follow Bilous, and Ms Stubbs, for Mr McKibbin, submitted that I should follows Kardos. If I thought that there was any real difference between those cases, I would be bound to follow Bilous, being the later decision of the Court of Appeal. However, properly understood, I do not think that there is any substantial underlying difference.

76 In Kardos, reference was made to the judgment of the Full Court of the Family Court (Ellis, Baker and O’Ryan JJ) in Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC ¶92-844:

[28] In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: see also Campo and Campo (Full Court, Sydney, 19 May 1995, unreported) at pp 21–2 of the joint judgment of Ellis, Lindenmayer and Finn JJ and Zahra and Zahra (Full Court, Sydney, 3 October 1996, unreported) per Ellis J at p 10.

77 With reference to that passage, with the concurrence of Basten JA and Hunt AJA, I wrote (emphasis added):

66 In Howlett v Neilson , Hodgson JA referred to that passage and, observing that there was no clear statement concerning the “erosion principle” in cases under the Property (Relationships) Act , suggested that it was by no means clear that it would apply to the same extent as under the Family Law Act where matters other than contributions can be taken into account and where the relationship involves a public commitment to mutual support for life [ Howlett , [34]]. However, as the Full Family Court pointed out in the passage just cited, it is really a matter of weighing initial contributions with all other relevant contributions . In a short marriage, the other contributions may be relatively insignificant. In a long marriage, ongoing income contributions and contributions as a homemaker and parent, if they have not resulted in the acquisition of assets sufficient to recognise them, may warrant the “erosion” of initial contributions so that all contributions can be satisfied to some extent, though not in full, out of the available property. There is no reason why this approach would apply to any less extent under the Property (Relationships) Act than under the Family Law Act ; it does not involve taking into account matters other than contributions, but is part of the methodology for weighing and balancing the different contributions .

67 Significant factors affecting the application of the “erosion principle” are the length of the relationship and, in particular, the extent to which there have been other or off-setting contributions which also have to be satisfied from the available pool. It is to accommodate those contributions that the initial contributions are “eroded”.

78 The references in Kardos to the “erosion principle”, in inverted commas, were intended to reflect that it was not a principle of law, but a shorthand description of the approach to evaluation of contributions which recognises that initial contributions do not carry forward at full weight, but diminish in significance by reason of the other subsequent contributions made by both parties during the relationship, and that as the Full Family Court said in Pierce, it is not really a question of erosion, but of what weight is to be attached in all the circumstances to the initial contributions, in the context of all the contributions. This does not involve casting any particular onus on a party to prove that an initial contribution should be “eroded” – save to the extent that any party contending that it has made a contribution bears the onus of proving that contribution [cf Mallet v Mallet, 609-10 (Gibbs CJ), 625 (Mason J), 636 (Wilson J)].

79 The point of Kardos v Sarbutt was that it was not a rule of general application that increases in value of initial assets should be apportioned 50/50 between the partners, but that the apportionment of increments in value depended on the circumstances; the trial judge had applied a 50/50 apportionment, as had the Court of Appeal in Howlett v Nielson (2005) 33 Fam LR 402. In referring in Kardos to the “approach in Howlett”, I was referring to the 50/50 apportionment of the increment in value during the relationship of an asset introduced by one party at the outset. In Bilous, Ipp JA expresses agreement with Kardos insofar as it stands for that proposition:

59 In Kardos v Sarbutt Brereton J said at [59] that in Howlett v Nielson Hodgson JA was not “purporting to state a rule of general application”. If all his Honour meant was that Hodgson JA was not intending to suggest that a 50 per cent apportionment of the increase in value of the assets was of general application then I agree entirely. In fact, Hodgson JA made it plain that this was simply the order that was appropriate in the particular circumstances.

80 However, Ipp JA also wrote:

48 The initial contributions made by parties to a de facto relationship may often take the form of a family home or other assets in the form of immovable property. During the course of the relationship, property may be acquired and registered in the name of one of the parties, alone. The duration of the relationship and the significance of the respective contributions of the parties may lead to a court adjusting the parties’ interests in such a way that the party who provides such property (or the party who is the registered owner) receives substantially less than the full value of that property when the relationship is terminated.
49 The adjusting order may require the party making the initial contribution (or the party who is the registered owner) to pay the other party a sum of money that represents a proportion of the increase in the capital value of the property concerned or, indeed, its overall value. Hodgson JA emphasised the latter possibility in Howlett v Nielson when he said at [35]:

“[I]t is plainly not the case that the contributions of the parties should be considered as making it just and equitable that there be an order only concerning increases in the value of assets over and above initial contributions.”

…
54 Hodgson JA commented on the erosion principle (at [34]):

“I have found no clear statement concerning the ‘erosion principle’ in cases under the Property (Relationships) Act . In my opinion, it is by no means clear that it would apply to the same extent as under the Family Law Act , where matters other than contributions can be taken into account, and where the relationship itself involves a public commitment to mutual support for life … “

55 In my opinion, the erosion principle should not be applied in cases under the Property (Relationships) Act as it tends to distract the mind from the express wording of s 20 which provides that:

“… a court may make such order adjusting the interests of the parties in the property [of the parties to the relationship] as to it seems just and equitable having regard to …”

Under s 20, the sole consideration of the court in adjusting the interests of the parties in their property is the justice and equity of the case, having regard to the contributions that fall into the category of those described in ss 20(1)(a) and (b). Under the erosion principle, on the other hand, the inquiry commences with a determination whether an initial contribution by one party has been made and this is followed by a consideration as to whether that contribution was eroded by later contributions of the other party. On this basis there appears to be an onus on the other party to prove that the initial contribution should be eroded. This approach is contrary to s 20.

56 I would add that the erosion principle, if adopted, would tend - in the same way - to affect the onus in regard to other property assets acquired by a party at a later time in the relationship. Consistently with that principle, it might be said that, once a property is registered in the name of one party, that party should be entitled to the full value of that property at the date the relationship is terminated unless it can be shown that his or her right to that property was eroded by the contributions of the other party. That would plainly be inconsistent with the express words of s 20.

…

62 By “the approach adopted in Howlett v Neilson ” Brereton J appears to have meant the apportionment of the increase in value of the assets initially contributed. His Honour appears to have stated a rule to the effect that, for the purposes of determining what order should be made under s 20(1) of the Property (Relationships) Act , any increase in value in assets initially contributed should be regarded, in all circumstances, as entirely a contribution by the party who contributed those assets. If that is what his Honour intended, I do not agree.

63 Determinations as to what orders should be made under s 20 are to be made solely on the grounds of the justice and equity of the case. The justice and equity of the case may derive from the fact that the party who owns the family home or other property was able to retain that property, while the market value increased, because “of joint efforts of wage earning, homemaking and parenting, and mutual support”. In some instances the non-financial contributions of one party may result in property of the kind in question not having to be sold. In other instances, the non-financial contributions of one partner may allow the other to advance his or her career and earn a high income that enables the property in question to be maintained and retained. Thus, an increment in capital value may well result, indirectly, from “joint efforts of wage earning, homemaking and parenting, and mutual support”.

81 With respect, I entirely agree with what Ipp JA says in para [63], cited above. That (and what his Honour said in [48] and [49]) accords entirely with what I understand by the so-called “erosion principle”, and reflects the passage from the judgment in Pierce cited in Kardos and above. I did not intend to suggest, in Kardos, that any increase in value in assets initially contributed should be regarded, in all circumstances, as entirely a contribution by the party who contributed those assets, nor that there was an onus on the other party to prove that the initial contribution should be eroded; but that (following Pierce) it is necessary to weigh the initial contributions of a party with all other relevant contributions of both parties, and that in doing so, regard must be had to the use made by the parties of the initial contributions, and that it was inappropriate to routinely regard increments in value of assets so introduced as the product of equal contributions by both partners.

82 A similar approach prevails in the United Kingdom. In White v White [2001] 1 AC 596, Lord Nicholls of Birkenhead referred to the significance of sole contributions in the following passage (at 610):

Inherited money and property

I must also mention briefly another problem which has arisen in the present case. It concerns property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust. For convenience I will refer to such property as inherited property. Typically, in countries where a detailed statutory code is in place, the legislation distinguishes between two classes of property: inherited property, and property owned before the marriage, on the one hand, and 'matrimonial property' on the other hand. A distinction along these lines exists, for example, in the Family Law (Scotland) Act 1985 and the (New Zealand) Matrimonial Property Act 1976.

This distinction is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.

83 In Miller v Miller [2006] 2 AC 618, Lord Nicholls, having referred to White v White, said (at 634, [24]-[25]):

In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other's non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage.

With longer marriages the position is not so straightforward. Non-matrimonial property represents a contribution made to the marriage by one of the parties. Sometimes, as the years pass, the weight fairly to be attributed to this contribution will diminish, sometimes it will not. After many years of marriage the continuing weight to be attributed to modest savings introduced by one party at the outset of the marriage may well be different from the weight attributable to a valuable heirloom intended to be retained in specie. Some of the matters to be taken into account in this regard were mentioned in the above citation from the White case. To this non-exhaustive list should be added, as a relevant matter, the way the parties organised their financial affairs.

84 Baroness Hale referred (at 663 [147]-[148]) to debates about the significance of conduct and “special contributions” as evidence of unease - at the fairness of dividing equally great wealth which has either been brought into the marriage, or generated by the business efforts and acumen, of one party – so strong that it could be unwise for the law to ignore them completely. Her Ladyship continued (at 664-5):

152 My lords, while I do not think that these arguments can be ignored, I think that they are irrelevant in the great majority of cases. In the very small number of cases where they might make a difference, of which Miller may be one, the answer is the same as that given in White v White [2001] 1 AC 596 in connection with pre-marital property, inheritance and gifts. The source of the assets may be taken into account but its importance will diminish over time. Put the other way round, the court is expressly required to take into account the duration of the marriage: section 25(2)(d). If the assets are not 'family assets', or not generated by the joint efforts of the parties, then the duration of the marriage may justify a departure from the yardstick of equality of division. As we are talking here of a departure from that yardstick, I would prefer to put this in terms of a reduction to reflect the period of time over which the domestic contribution has or will continue (see Bailey-Harris, "Comment on GW v RW (Financial Provision: Departure from Equality)" [2003] Fam Law 386, at p 388) rather than in terms of accrual over time (see Eekelaar, "Asset Distribution on Divorce - Time and Property" [2003] Fam Law 828). This avoids the complexities of devising a formula for such accruals.

85 Thus, while there are significant differences between the adjustive property jurisdiction in the United Kingdom, that under the (Cth) Family Law Act and that under the Property (Relationships) Act, there is universal recognition in the contribution-based systems of the prima facie claim of a party who introduces an asset to retain it, but also that the significance of such a contribution is diminished over time by the other relevant contributions. Ultimately, it is a question of weighing the initial contribution with all other relevant contributions to achieve a just and equitable result, the nature and the source of the property and the manner in which it has been used during the relationship being material considerations. This will typically involve one party being regarded as having contributed to the improvement or conservation of an asset introduced initially by the other, but in a lesser proportion than the first party’s overall contributions to the relationship: as Macready AsJ has suggested, speaking extra-judicially at the 2006 Supreme Court Conference, usually it is neither appropriate that any increment in value of an asset introduced exclusively by one party be equally shared between the parties, nor that it be wholly attributed to the party who introduced it; the answer will usually lie somewhere between.

86 In the present case, I consider that the initial contributions are entitled to very substantial weight. The main reasons for this are, first, that the offsetting contributions made during the relationship are relatively slight – Mr Sharpless generated little income, and save for the period of Mr McKibbin’s illness between 2001 and 2004, the domestic contributions of both parties were modest, given the absence of children and their occupation of relatively low-maintenance accommodation; secondly, that the current pool of assets comprises in substance assets that reflect those that Mr McKibbin introduced, and his accumulated superannuation, to the accumulation of which Mr Sharpless did not contribute; thirdly, that the capital accretions were not attributable to any contribution by Mr Sharpless, nor was Mr McKibbin’s retention of Isaacs or Newington facilitated by any contribution of Mr Sharpless; and fourthly, the pool of assets represents the financial result of Mr McKibbin’s career of some 24 years, of which the relationship in any form spanned only about ten, and the de facto relationship only about three.

87 Taking an overview, I do not consider, except in one respect to which I shall come, that the acquisition, conservation or improvement of any of Mr McKibbin’s property is attributable to contributions by Mr Sharpless. Mr McKibbin would have had the property and superannuation that he has today – quite probably more – had the relationship never taken place. Similarly, I do not accept that, except in the same respect, Mr Sharpless is any worse off by reason of being in the relationship than would otherwise have been the case: he has not applied significant assets or income, nor foregone opportunities otherwise available to him, on account of the relationship.

88 The exception is Mr Sharpless’ efforts during the period 2001 to 2004, which, while they did not result in the accumulation of assets or the generation of income, nonetheless enabled Mr McKibbin to “disentangle himself from day to day life affairs” while he was ill, and facilitated his recovery, and also the day-to-day operation of Sign-o-Rama, and thus the conservation of assets. Mr Sharpless committed four years of his life to this.

89 However, as Wilson J explained in Mallet, in the passage cited above, the quality of a domestic contribution may vary, and in this case the significance of Mr Sharpless’ contributions is affected by a number of matters.

90 First, the weight of his contributions during 2001 to 2004 is diminished by his poor stewardship of Mr McKibbin’s affairs. Had Mr Sharpless been a prudent manager of Mr McKibbin’s affairs, his contributions in that behalf would have called for greater recognition. But he was not a good steward. The circumstance that, despite the substantial superannuation pension that Mr McKibbin received, the mortgage increased by $180,000 between 2002 and 2005, without apparent reason beyond living expenses, is sufficient indication of this.

91 Secondly, the countervailing benefits to Mr Sharpless were very considerable. He continued to receive free accommodation in Mr McKibbin’s Newington townhouse, including all the services and outgoings that go with it. He continued to enjoy the use of Mr McKibbin’s car. Mr McKibbin continued to fund virtually all Mr Sharpless’ living expenses. Mr Sharpless had unfettered access to Mr McKibbin’s funds, and used them to pay for almost everything, and on a generous scale – he even treated himself to a holiday to the United States of America at Mr McKibbin’s expense. While I have declined to add back any part of this expenditure as a notional asset, I take into account that for the period in question – indeed for a decade from 1995 – Mr Sharpless was permitted to live off Mr McKibbin’s resources, and did so well. Moreover, for at least part of the period in question, he was in receipt of a carer’s allowance for his care of Mr McKibbin.

92 Finally, the relationship during this period had pathological features. In my assessment, the emotions of the parties were often inconsistent, and at many times there were high degrees of emotional hostility, which emanated at least as much from Mr Sharpless as from Mr McKibbin. The domestic stress that this generated did not assist, but detracted from, Mr McKibbin’s recovery.

93 In proceedings under s 20, the court is not required to undertake a reductionist process analogous to the taking of partnership accounts by examining every alleged “contribution” of the kinds described in the section with a view to putting a monetary value on each in order to reach an accounting balance one way or the other, then to be eliminated by the requisite financial adjustment; rather, the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind [Davey v Lee (1990) 13 Fam LR 688; (1990) DFC ¶95-084 (McLelland J)]. Over the period between 2001 and 2004 while Mr McKibbin was unwell, Mr Sharpless made a contribution to Mr McKibbin’s welfare and the conservation of his property. However, it was made in the context of a “close personal relationship” as distinct from a de facto relationship, in which there was no union of lives and property; it resulted in no enhancement of Mr McKibbin’s property, and indeed his net position significantly declined during Mr Sharpless’ stewardship; moreover, Mr Sharpless received substantial countervailing benefits from the relationship during the same period. I have seriously considered whether, in light of those matters, this is not a case for the application of the observation of Gleeson CJ and McLelland CJ in Eq in Evans v Marmont (at 76), that “often it may be found that contributions of the kinds referred to in [s 20(1)(b)] will involve shared activities or reciprocal benefits not giving rise to any disproportionate burden which it would be just and equitable to satisfy by an adjustment of interests in property”. However, I have concluded that Mr Sharpless’ commitment of four years to the management of Mr McKibbin’s affairs and his personal care, despite the offsetting consideration to which I have referred, still calls for some modest recognition under s 20.

94 In my judgment, once the matters to which I have referred are taken into account, the contributions should be evaluated in proportions 96:4 in favour of Mr McKibbin. In a case of this type, mathematical justification of such a result is even more impossible than in an ordinary case under the Act. But the appropriateness of the assessment may be gauged from the range produced by a number of “sole contribution” cases, under the (CTH) Family Law Act 1975 and under the Property (Relationships) Act. In Figgins & Figgins (2002) 173 FLR 273; (2002) 29 Fam LR 544; (2002) FLC 93-122; [2002] FamCA 688 (Nicholson CJ, Ellis and Buckley JJ), with a pool of some $21,000,000 of which $14,000,000 was inherited by the husband early in a relatively short marriage, and the remainder accumulated by the joint efforts of the parties, but for which the inheritance was the seed money, the wife was found to be entitled to about 8% on the contributions; this equates to about 24% of the $7 million increment in value during the relationship. (She received an additional 3% by reference to the s 75(2) factors, which are not relevant for the purposes of the Property (Relationships) Act). In Kennon & Kennon (1997) FLC ¶92-757, of a pool of about $8,700,000 - all of which was held by the husband (who earned $1,000,000 per annum) before the marriage, the wife (in a marriage of about five years with no children) was held entitled to about 4.6% on the contributions (and an additional 3.4% for the s 75(2) factors). And in Dwyer v Kaljo (1992) 27 NSWLR 728, (1992) DFC ¶95-127, Mr Kaljo had assets of at least $11 million to which Ms Dwyer had not contributed; she had enjoyed many benefits during the relationship, but had made contributions as a homemaker during their six year relationship; the Court of Appeal increased the trial judge’s award of $50,000 to $400,000 (3.6%). I have taken into account that the pool in the present case is significantly smaller than in those cases, and thus the domestic contributions attract greater weight; I regard Mr Sharpless’ net contributions, once regard is had to the benefits, financial and otherwise, conferred on him by or taken by him from Mr McKibbin, as significantly less, in absolute terms, than those of Ms Dwyer and Mrs Kennon, let alone those of Mrs Figgins.

What order should be made?

95 In determining what order is required sufficiently to recognise and compensate the applicant’s contributions – the court is concerned with what is just and equitable having regard to, and only to, the respective contributions of the parties of the type referred to in s 20, and there is no warrant for regard to other factors such as the respective means and needs of the parties (which are made relevant to equivalent applications under the Family Law Act by s 79(4)(e) of that Act, an equivalent of which is conspicuously absent from the Property (Relationships) Act, and the omission of which was deliberate, as appears from the Law Reform Commission’s report of June 1983: Report on De Facto Relationships, No 36 of 1983, to which the draft Bill was an appendix, and from which the policy underlying the legislation appears [Wallace v Stanford (1995) 37 NSWLR 1; (1995) 19 Fam LR 430; Evans v Marmont, 81].

96 Ms Stubbs submitted that Mr Sharpless’ false evidence disentitled him from relief that depended on the criteria that it be “just and equitable”, as does relief under s 20. She submitted that a plaintiff who gives wilfully untrue evidence is debarred from claiming relief, by analogy with the “clean hands” doctrine. I reject this submission. Insofar as it is supported by the decision of Schmidt J in Gilmore v Allied Express Transport Pty Ltd [2006] NSWIRComm 16, in which her Honour refused to make a monetary order in favour of an otherwise successful applicant under (NSW) Industrial Relations Act 1996, s 106, on the ground that she had given false evidence – while nonetheless granting relief varying the subject contract – I respectfully disagree. The equitable maxim that he (or she) who comes to equity must do so with clean hands is concerned with the transaction the subject of the claim, not with the evidence given in court: “the impropriety must have an immediate and necessary relation to the equity sued for” [Dewhirst v Edwards [1983] 1 NSWLR 34, 51]. Moreover, the defence does not apply to a statutory jurisdiction such as that created by s 20 [Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th edn, [3-135], suggesting that although there is no distinct authority for the proposition that unclean hands is no defence to a purely statutory remedy, it is implicit from Lodge v National Union Investment Co Ltd [1907] 1 Ch 300].

97 Of the divisible pool of $1,512,240, 4% is about $60,000. Mr Sharpless will retain the Mazda motor vehicle, worth $5,000. He will retain the furniture, fittings and effects in his possession, also worth $5,000. He will retain the benefit of his own paid legal costs, of $4,459. If he were also to retain the Trendwest investment, worth $26,000, that would leave a requisite cash adjustment of about $20,000.

Conclusion

98 The parties were in a domestic relationship from April 1995 until April 2005, being a de facto relationship from April 1995 until March 1998, and a close personal relationship from December 1998 until April 2005.

99 The net pool of divisible property amounts to $1,512,240, including Mr McKibbin’s superannuation, and disregarding Mr Sharpless’ personal loan.

100 Mr McKibbin’s initial contributions represent about $540,000, which is about 40% of the current pool. His was also the overwhelming income contribution. With the exception of the period of Mr McKibbin’s illness, the domestic contributions were unremarkable; during the de facto relationship at Isaacs they were approximately equal and relatively insignificant in magnitude. Moreover, Mr Sharpless derived substantial benefits from the relationship, being financially almost completely supported by Mr McKibbin for most of a decade.

101 The approach which has evolved in the context of marriages and quasi-marriages involving a social and economic partnership where there is a division of roles in the relationship between the homemaker and parent on one hand and the breadwinner on the other, is not applicable in the context of a “close personal relationship” which is not a de facto relationship. Where the relationship does not involve “a practical union of lives and property”, the rationale for the approach authorised by Mallet is reduced, if not absent.

102 By 2001, all Mr McKibbin’s property had been accumulated, as a result of his own efforts in his 24-year naval career and his husbanding of his resources. Any modest contribution that Mr Sharpless made to this was offset if not outweighed by the benefits he received from Mr McKibbin. However, between 2001 and 2004 while Mr McKibbin was unwell, Mr Sharpless made contributions to Mr McKibbin’s welfare and the conservation of his property, which – although affected in quality and quantity by the circumstances that Mr Sharpless’ stewardship of Mr McKibbin’s affairs not only failed to enhance but significantly reduced his property; that Mr Sharpless derived substantial rewards from the relationship during the same period and before, through expenditure which benefited him; and that these contributions were made in the context of a “close personal relationship” as distinct from a de facto relationship, and one which was not always beneficial to Mr McKibbin’s recovery – nonetheless calls for some modest recognition under s 20. Once the matters to which I have referred are taken into account, the contributions should be evaluated in proportions 96:4 in favour of Mr McKibbin.

103 That supports an entitlement of $60,000. If Mr Sharpless retains the Mazda motor vehicle ($5,000), the furniture, fittings and effects in his possession ($5,000), the benefit of his own paid legal costs ($4,459), and the Trendwest investment ($26,000), a cash adjustment of $20,000 is required.

104 Subject to any submissions which may be made as to their form, my order is:

Property (Relationships) Act

1.1 the defendant transfer to the plaintiff all his right title and interest in and to the Mazda 323 motor vehicle in the name of the plaintiff;

1.2 the defendant transfer to the plaintiff all his right title and interest in and to the Trendwest time share in the joint names of the parties;

1.3 the defendant within 60 days pay to the plaintiff the sum of $20,000;

**********

CITATION:	Sharpless v McKibbin [2007] NSWSC 1498
HEARING DATE(S):	30, 31 January, 1, 19, 20, 21 February & 2 April 2007
JUDGMENT DATE :	14 December 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
DECISION:	There was a de facto relationship for part of the period, followed by a close personal relationship. The approach in Mallet v Mallet and Jones v Grech is not applicable where there is no practical union of lives and property of parties. There is no real difference between Kardos v Sarbutt and Bilous v Mudaliar. The doctrine of “unclean hands” does not apply to proceedings for statutory relief, nor does giving false evidence in the proceedings attract it. The plaintiff is entitled to 4% of the pool of property of $1,512,240.
CATCHWORDS:	FAMILY LAW – Domestic relationships other than marriage – same-sex relationships – where parties did not cohabit continuously throughout period – whether de facto relationship – whether close personal relationship – Property adjustment – where no practical union of lives and property of parties – whether approach in Mallet v Mallet and Jones v Grech applicable – where very substantial initial contributions by one party – treatment of initial contributions - consideration of “erosion principle” and reconciliation of Kardos v Sarbutt and Bilous v Mudaliar – where plaintiff’s domestic contributions unremarkable and his stewardship of defendant’s assets poor – where plaintiff obtained substantial countervailing benefits from relationship, financial and otherwise – whether plaintiff debarred from relief under Act by analogy with “unclean hands” by reason of having given false evidence.
LEGISLATION CITED:	(Cth) Family Law Act 1975 (NSW) Industrial Relations Act 1996, s 106 (NSW) Property (Relationships) Act, ss 3(1), 5(1), 5(2), 20(1), (NSW) Property (Relationships) Legislation Amendment Act 1999
CASES CITED:	Bilous v Mudaliar (2006) 65 NSWLR 615 Black v Black (1991) 15 Fam LR 109; (1991) DFC 95-113 Chanter v Catts [2005] NSWCA 411 Davey v Lee (1990) 13 Fam LR 688; (1990) DFC 95-084 Dewhirst v Edwards [1983] 1 NSWLR 34 Dridi v Fillmore [2001] NSWSC 319, (2001) DFC 95-232 Dwyer v Kaljo (1992) 27 NSWLR 728, (1992) DFC 95-127 Evans v Marmont (1997) 42 NSWLR 70; (1997) 21 Fam LR 760; (1997) DFC 94-184 Farnell & Farnell (1995) 20 Fam LR 513 Figgins & Figgins (2002) 173 FLR 273; (2002) 29 Fam LR 544; (2002) FLC 93-122; [2002] FamCA 688 Foster v Evans (1997) DFC 95-193, 77,681 Gilmore v Allied Express Transport Pty Ltd [2006] NSWIRComm 16 Green v Robinson (1995) 36 NSWLR 96 Howlett v Nielson (2005) 33 Fam LR 402 Jones v Grech (2001) 27 Fam LR 711; (2001) DFC 95-234; [2001] NSWCA 208 Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11 Kennon & Kennon (1997) FLC 92-757 Lodge v National Union Investment Co Ltd [1907] 1 Ch 300 Mallet v Mallet (1984) 156 CLR 605 McDonald v Stelzer (2000) 27 Fam LR 304; (2001) DFC 95-233; [2000] NSWCA 302 Miller v Miller [2006] 2 AC 618; [2006] 3 All ER 1; [2006] 2 WLR 1283; [2006] UKHL 24. Nguyen v Scheiff (2002) 29 Fam LR 177 Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844 Wallace v Stanford (1995) 37 NSWLR 1; (1995) 19 Fam LR 430 White v White [2001] 1 AC 596 Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th edn, Law Reform Commission’s report of June 1983: Report on De Facto Relationships, No 36 of 1983
PARTIES:	Paul Anthony Sharpless (plaintiff) Paul Ellis McKibbin (defendant)
FILE NUMBER(S):	SC 5396/05
COUNSEL:	Mr Reeve (sol) (plaintiff) Ms Stubbs (defendant)
SOLICITORS:	Marsdens Law Group (plaintiff) Cunningham Legal Pty Limited (defendant)

Assets	Title	Valuation
Newington Property	D	560000
Artwork, Paintings	D	6000
Furniture*	D	5000
Furniture*	P	5000
Trendwest	JT	26000
Paid legal costs*	D	60000
Paid legal costs*	P	4459
Mazda 323	P	5000
Superannuation pension*	D	1121981
Superannuation – preserved benefit component*	D	30800
Total assets	1824240
Less, liabilities
NAB Mortgage for Newington	D	312000
Total liabilities	312000
Financial Summary
Total assets	1824240
Total liabilities	-312000
Net pool of property	1512240