Smirski v Macandar (No 2)
[2011] NSWSC 373
•03 May 2011
Supreme Court
New South Wales
Medium Neutral Citation: Smirski v Macandar (No 2) [2011] NSWSC 373 Hearing dates: 25 March 2011 Decision date: 03 May 2011 Jurisdiction: Equity Division Before: Hallen AsJ Decision: The Court orders that
(a) Within 28 days of this date, the Plaintiff, by her solicitor shall:
(i) serve, by post, upon the Defendant, a copy of these reasons for Judgment, together with a sealed copy of the orders, as well as a letter drawing attention to the orders that have been made and entered;
(ii) provide a Transfer, in registrable form, to the Defendant, the effect of which, when signed and registered, will be to transfer all of the Defendant's right, title and interest, in the jointly owned property at Croydon Park, to the Plaintiff;
(iii) advise the Defendant, in writing, that, simultaneously with the handing over, to the Plaintiff, of the Transfer, duly executed by the Defendant, she will cause the joint mortgage on title of the Croydon Park property, to be discharged;
(iv) nominate a time and a place for the duly executed Transfer to be delivered, by the Defendant, to the Plaintiff, and when the joint mortgage registered on title to the Croydon Park property will be discharged.
(b) Within 14 days of the date of the letter advising that the Plaintiff is ready, willing and able, to cause the joint mortgage to be discharged, the Defendant shall advise the Plaintiff, by her solicitors, in writing, whether he is ready, willing and able, to sign the Transfer.
(c) Within 14 days of the date of the Defendant's letter, or within such other time as the parties agree in writing, the Defendant shall cause the Transfer, in registrable form, to be delivered to the Plaintiff and simultaneously the Plaintiff will cause the joint mortgage registered on title to the Croydon Park property to be discharged.
(d) Pursuant to s 39 of the Act that upon the Plaintiff filing an affidavit, by her solicitor, proving service of the Judgment and these Orders upon the Defendant, and proving that the Defendant has not complied with order 2 above, and proving that the joint mortgage has been, or will be discharged, the Transfer in registrable form, shall be executed by the Registrar in the name, and on behalf, of the Defendant.
(e) The costs and expenses of and incidental to the preparation of the Transfer shall be borne by the Plaintiff. The costs and expenses of and incidental to its execution shall be borne by the person executing the document.
(f) As between the Plaintiff and the Defendant, and subject to the above orders, each party shall retain all right, title, and interest in and entitlement to, personal and other property in her and his, respective possession or control.
(g) Either party is to have liberty to apply in respect to the implementation of these orders.
(h) These orders shall be entered forthwith.
(i) Otherwise, make no order as to either party's costs to the intent that she, and he, will pay her, and his, own costs of the proceedings.
(j) The exhibits may be returned to the Plaintiff.
Catchwords: Application for property adjustment order under Property (Relationships) Act 1984; ex parte application Legislation Cited: Civil Procedure Act 2005
Family Law Act 1975 (Cth)
Property (Relationships) Act 1984
Uniform Civil Procedure Rules 2005Cases Cited: AGnVET Services v Carter [2009] NSWSC 753
Anton Fabrications (NSW) Pty Ltd, Re; Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186
Bilous v Mudaliar [2006] NSWCA 38
Black v Black (1991) 15 Fam LR 109
Bourdon v Outridge [2006] NSWSC 491
Chanter v Catts [2005] NSWCA 411; (2005) 64 NSWLR 360
Commonwealth Bank of Australia v Gaszewski [2006] NSWSC 772
Davey v Lee (1990) 13 Fam LR 688
Evans v Marmont (1997) 42 NSWLR 70
Fletcher v Furnance [2008] NSWSC 132
Howlett v Neilson [2005] NSWCA 149; (2005) 33 Fam LR 402
Hughes v Egger [2005] NSWSC 18
Jeloudev v Lohman [2010] NSWSC 1229
Jones v Grech [2001] NSWCA 208; (2001) 27 Fam LR 711
Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550
Kosanovic v Lazic [2011] ACTSC 52
Paino v Paino [2008] NSWCA 276; (2008) 40 Fam LR 96
RD v DB [2011] QSC 83
Rose v Richards [2004] NSWSC 315
Ryan v Kalocsay [2010] NSWSC 620
Saric v Steward [2006] NSWCA 260
Savage v Norton [1908] 1 Ch 290
Smirski v Macandar [2010] NSWSC 929
Sullman v Sullman [2002] NSWSC 169
WB v GSH [2008] QSC 346Category: Principal judgment Parties: Kamila Theresa Smirski (Plaintiff)
Zygmunt Macander (Defendant)Representation: Counsel:
Mr N Kirby (Plaintiff)
No appearance (Defendant)
Solicitors:
Otto Stitcher & Associates (Plaintiff)
File Number(s): 2010/44692
Judgment
HIS HONOUR: This is an application brought by Kamila Teresa Smirski ("the Plaintiff") against her former de facto partner, Zygmunt Macander ("the Defendant"), seeking an adjustment of property interests. The evidence reveals that the Plaintiff and the Defendant were parties to a de facto relationship, and, therefore, parties to a "domestic relationship": s 5(1)(a) Property (Relationships) Act 1984 ("the Act"). A de facto relationship is one in which the parties live together as a couple, but are not married or related by family: s 4(1) of the Act.
Since it seems clear on the evidence that the parties' relationship ended before 1 March 2009, the Act applies. The question is what, if any, orders should be made for adjustment of the parties' interests with respect to their property pursuant to s 20 of the Act.
Procedural History
The procedural history in this matter is set out in an earlier Judgment delivered by me, the citation of which is [2010] NSWSC 929. On the application that was then made, I was not prepared to make any orders other than, in effect, one for substituted service of the Statement of Claim and other documents, by including the correct address at which the Defendant should be served. I also permitted the Statement of Claim to be amended.
Since that Judgment, the Plaintiff amended the Statement of Claim by filing an amended Statement of Claim on 3 September 2010.
No defence has been filed to either the Statement of Claim, or the amended Statement of Claim, although other evidence that has now been read satisfies me that the each of those documents has been properly served upon the Defendant.
The Plaintiff filed her first affidavit, affirmed on 30 June 2010, which contained her evidence in chief. The Defendant has not filed any affidavit evidence in chief, or in reply. I am also satisfied that a copy of the Plaintiff's affidavit in chief was properly served on the Defendant, under cover of a letter dated 28 October 2010, sent, on that date, by post, to the Defendant.
On 4 February 2011, the matter was before the Registrar, who made certain directions and adjourned the matter to her list on 25 March 2011, "for referral to an Associate Judge on that date". The Defendant did not, then, appear before the Registrar.
I am satisfied that the Defendant was informed of the events before the Registrar, and the directions made by her, on 4 February 2011, in a letter dated 7 February 2011 from the Plaintiff's solicitors, which letter was sent, on that date, by post, to the Defendant.
A copy of the Plaintiff's affidavit, affirmed by her on 16 February 2011, was provided to the Defendant, under cover of a letter dated 17 February 2011, on that date, by post. This affidavit had annexed to it, a copy of a valuation of the real property at Croydon Park, owned by the parties as tenants in common in equal shares.
I have been taken to various affidavits of service to which copy correspondence, but, relevantly, not a copy of the amended Statement of Claim, or the affidavit of the Plaintiff affirmed 16 February 2011, was annexed. This is not an error on the part of the Plaintiff's legal representative, but rather is a course that complies with rule 35.8(1) of the Uniform Civil Procedure Rules, 2005 ("UCPR"). That rule provides that an affidavit of service of a document that has been served must clearly identify the document, but must not annex a copy of the document unless the document has not been filed. In the case of each of the documents which were not annexed, the original was filed, and I am satisfied was clearly identified in the affidavit of service.
On 25 March 2011, the matter was again before the Registrar. I am informed, and I accept, that there was no appearance by the Defendant in person or by a solicitor or counsel, and the matter was then referred to me. When the matter was first mentioned, it was called outside the Court, but there was, again, no appearance by, or on behalf of, the Defendant.
The Plaintiff's application before the Registrar and before me was to determine the proceedings on a final basis. I am satisfied that the Defendant was informed, in writing, that the Plaintiff would "seek to have the matter heard and finally determined" on that date. He was also informed that he was "entitled to participate ... to defend the proceedings by filing a defence" and "entitled to legal representation". He was urged to seek legal advice and told that if he continued not to participate in the proceedings that the Plaintiff would "request the court to make orders under the Act that:
"1. [The Defendant] transfer [his] interest in the Croydon Park property to the [Plaintiff];
2. [The Defendant] be released from the associated mortgage."
So far as I can tell from the Court file, and otherwise, the Defendant has taken no steps to defend the proceedings.
A preliminary issue for determination is whether I should proceed to hear the matter in circumstances where the Defendant has not attended Court and is absent when the trial is called on.
Rule 29.7 Uniform Civil Procedure Rules 2005, relevantly, provides:
"29.7 Procedure to be followed if party is absent
(1) This rule applies when a trial is called on.
(2) If any party is absent, the court:
(a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or
(b) may adjourn the trial.
..."
On 25 March 2011, at about 11:50 a.m., the trial of this matter was called on. The Defendant was then absent. No legal representative appeared on his behalf. It was stood down in the list until 2:00 p.m. when it was called three times outside the Court. Again, there was no appearance by, or on behalf, of, the Defendant. No explanation at all for his absence was provided to the Court. Nor was there any suggestion offered that he was unable to attend. In those circumstances, the Defendant has failed to appear.
Overall, I am satisfied that attempts have been made, fruitlessly, to get in contact with the Defendant, to provide him with the documents to be relied upon, and to have him participate in the proceedings. Since it is the Defendant who has failed to appear, the Plaintiff may prove her claim so far as the burden of proof lies upon her, and if she proves the claim, she will be entitled to the relief claimed and such other relief as is consistent therewith: In the matter of Anton Fabrications (NSW) Pty Ltd - Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186, at [11].
No application for an adjournment of the trial having been made by, or on behalf of, the Defendant, and being satisfied that the Defendant was, or should have been, aware of the Court date, and also that the trial would be proceeding, there appeared to be no ground on which it would be appropriate for the court to adjourn the trial. Accordingly, I came to the view that there would be no point in the Court, of its own motion, adjourning the matter, and I proceeded. I read the amended Statement of Claim, and the Plaintiff's evidence that was relied upon. I then reserved my decision.
Facts
I am satisfied that the following facts have been established:
(a) The parties lived under the same roof from in, or about, May 1995 to April 2008, except for three periods, being 6 months in 1998, 8 months in 2001, and 5 months in 2004.
(b) The parties lived in a de facto relationship for a period of about 12 years in total, although it may be said that there were three different periods, totalling about 12 years.
(c) The parties lived in New South Wales.
(d) The Plaintiff was born in June 1960 and is aged almost 51 years.
(e) The Defendant was born in April1958 and is aged 53 years.
(f) There were no children of the relationship, although the Plaintiff had a child by her prior marriage, who, when the relationship commenced in 1995, was aged 6 years.
(g) The substantial contributions to the property of the parties were made in New South Wales, as the parties lived in New South Wales.
(h) At the commencement of the relationship, the Plaintiff had the following assets and liabilities:
(i) Unit at Ashfield, NSW worth approximately $230,000;
(ii) Superannuation of approximately $10,000; and
(iii) A debt of approximately $100,000, secured by Mortgage to Colonial State Bank.
(i) At the commencement of the relationship, the Defendant had the following assets and liabilities:
(i) Motor vehicle worth approximately $8,000; and
(ii) Superannuation of approximately $10,000.
(j) In June 2000, the Plaintiff sold the Ashfield property and the parties purchased a property at Croydon Park ("the Croydon Park property"), which was purchased as tenants in common in equal shares.
(k) To enable the Croydon Park property to be purchased, an amount of $250,000 was borrowed. The Plaintiff contributed $120,000 to the purchase price. The Plaintiff says that she and the Defendant agreed that the repayments would be contributed to equally, but, in fact, she has made all of the repayments. The mortgage debt as at 1 December 2010, was $338,411.
(l) Throughout their relationship, each of the parties was in full time employment.
(m) At the date of her affidavit, the Plaintiff's financial position was as follows:
Income
Average weekly income after tax:
$1,185
Son aged 22 resides with Plaintiff in the Croydon Park property and is not earning an income.
He is seeking employment.
No other income earners live in the Plaintiff's household.
Expenditure
Her regular weekly payments are calculated as follows:
Mortgage payment:
$500
Rates, unit levies:
$150
Medical benefits:
$30
Car registration, maintenance, etc:
$40
Total:
$820
Property owned by Plaintiff
Croydon Park property - owned with Defendant:
$480,000 (est)
Volkswagen Bora, 2003 model:
$18,000 (est)
Household contents:
$5,000 (est)
Superannuation
Colonial First State First Choice Employer Super Retirement saving Account:
$92,816
Liabilities
Home mortgage, Commonwealth Bank (jointly with the Defendant):
$330,000 (est)
GE Money personal loan:
$30,000
(n) There is no evidence about the current financial position of the Defendant, other than evidence showing that he is a co-owner, as tenant in common in equal shares, of a property at Wyong (current value unknown), and a co-owner, with the Plaintiff, of the Croydon Park property. He is also a director and shareholder of a company Bogo Contracting Services Pty Limited (value unknown).
(o) The Plaintiff and the Defendant no longer have any joint bank accounts (other than the mortgage account) to which the Defendant does not contribute. During the relationship, the parties kept their finances generally separate (apart from the contribution to general living expenses referred to).
(p) The current market value of the Croydon Park property is $590,000.
(q) The Plaintiff has remained in occupation of the Croydon Park property since the end of the relationship.
Facts asserted by the Plaintiff
The Plaintiff asserts in her affidavit, and I accept, that:
(a) At the time she met the Defendant, she had been married and was divorced. The Defendant, then, had also been married, and was divorced.
(b) With her ex-husband, she had purchased the Ashfield property, in 1988.
(c) When the Plaintiff and her husband later separated, she acquired the whole of the Ashfield property by purchasing her former husband's right, title and interest in it.
(d) In late May 1995, the Defendant moved into the Ashfield property owned and occupied by the Plaintiff.
(e) In February 2007, the Plaintiff purchased the VW car for approximately $33,627 for her own use. She purchased the car using dealer finance.
(f) On 25 February 2008, the Plaintiff drew $23,429 from the home loan account and paid out the car finance agreement.
(g) Following a motor vehicle accident at the end of 2008, by which time the Defendant and the Plaintiff had separated, the car was written off and the Plaintiff received the insurance proceeds of $23,000. She bought another car using the insurance money.
(h) In 2007, prior to separation, the Defendant purchased a boat for $45,000, which amount came from his own funds and financial resources, and with finance from GE Automotive Financial Services.
(i) During the relationship, the Defendant paid child support of $200 per week to his former wife. Until 2005, the Plaintiff received child support of $100 per week from her former husband.
(j) During the periods of separation, the Defendant made no contribution towards the outgoings of the Croydon Park property.
The Plaintiff asserts that her contributions were:
(a) From late May 1995 until the Croydon Park property was purchased, the Plaintiff and the Defendant lived in the Ashfield property (which was owned by her).
(b) The Plaintiff contributed $120,000 towards the purchase price ($350,000) of, and the stamp duty ($20,000) paid for, the Croydon Park property.
(c) The Plaintiff has made all of the repayments due under the mortgage from the date of settlement of the Croydon Park property until the present time.
(d) The Plaintiff paid all Telstra bills, which averaged about $165 per quarter, and all Optus bills, which averaged $120 per quarter.
(e) The Plaintiff paid $10,000 for renovations to the Croydon Park property. She paid $10,000 for a car for the Defendant and contributed about $21,000 towards joint living expenses of the parties during the relationship.
(f) The car purchased for the Defendant was retained by him. When it was sold, in 2004, he retained the proceeds of sale ($17,000).
(g) Throughout the relationship, the Plaintiff attended to almost all of the household duties, including cooking, cleaning, washing, ironing, shopping, arranging payment of household accounts and performed the housework. She estimates that these activities would take her, on average, about 17 hours per week.
(h) The Plaintiff made payments totalling $12,000 towards council and water rates, strata levies, and utility expenses in respect of the Croydon Park property.
(i) During the periods when the Defendant was not living with her, she made all the payments of outgoings.
The Plaintiff has given evidence of what she says were the Defendant's contributions. She acknowledges that:
(a) When he moved into the Ashfield property, the Defendant brought with him, a leather lounge, a TV, and a queen size bed with attached bedside tables.
(b) He contributed $4,500 to have the kitchen in the Ashfield property renovated.
(c) In 2002, the Defendant renovated the backyard of the Croydon property at his own expense ($6,500).
(d) He made payments totalling $22,000, towards council and water rates, strata levies and utility expenses.
(e) In 2005, the Defendant purchased various pieces of furniture and whitegoods for the Croydon Park property, the total costs of which were $18,500. He took the furniture and whitegoods with him when he left the Croydon Park property.
(f) The Defendant, in 2007, purchased an air-conditioner for the Croydon Park property for approximately $2,500. That air-conditioner remains at the property.
(g) The Defendant, at the very most, would spend about 2 hours per week on household activities.
The parties shared some expenses equally. They each paid about $100 per week towards food and other living expenses.
The Defendant, in late 2003, withdrew $25,000 from the mortgage account, which he used to purchase, with his business partner, a property at Wyong. The purchase price disclosed on the Transfer, which is dated 13 May 2003, is $160,000. It is this property that they currently own as tenants in common in equal shares. The Plaintiff does not assert that, otherwise, she made any direct, or indirect, financial, or other, contribution, to the Wyong property. (I shall treat this as a benefit that the Defendant has received, as it is the Plaintiff who continues to make repayments of the mortgage account.)
Statutory Framework and applicable principles of law
It is necessary to identify the statutory framework and the legal principles that apply in order to enable the matter to be determined.
"Property" is defined in s 3(1) of the Act, unless the context or subject matter otherwise indicates or requires, as follows:
"Property, in relation to parties to a domestic relationship or either of them, includes real and personal property and any estate or interest (whether a present, future or contingent estate or interest) in real or personal property, and money, and any debt, and any cause of action for damages (including damages for personal injury), and any other chose in action, and any right with respect to property."
Section 8(1) of the Act confers jurisdiction upon the Court to make declarations as to existing title, or rights, in respect of property as between domestic partners and to make orders as to consequential relief. The general law confers any title, or right to property, both real and personal and that is not altered by the Act. Indeed, the Act, in s 7, specifically preserves the rights of domestic partners to such legal or equitable remedies as they might have outside its provisions.
Section 14 of the Act, which is headed "Applications for orders under this Part", provides:
"(1) Subject to this Part, a party to a domestic relationship may apply to a court for an order under this Part for the adjustment of interests with respect to the property of the parties to the relationship or either of them or for the granting of maintenance, or both."
Section 15 of the Act provides two pre-requisites for the making of an order, namely, residence within New South Wales for a substantial period of the de facto relationship and substantial contributions of the kind referred to in s 20(1)(a) or (b) having been made in New South Wales by the applicant. There can be no dispute that these pre-requisites are met.
Section 17 of the Act provides a further pre-requisite, namely, one relating to the length of the relationship. Relevantly, the Court cannot make an order unless it is satisfied that the parties to the application have lived together in a de facto relationship for a period of not less than 2 years, or that there is a child of the parties to the application. Again, there can be no dispute that this pre-requisite is met.
The proceedings have been commenced within the time period prescribed by s 18 of the Act.
It follows, from the above, that it is within the jurisdiction of the Court to make an order adjusting interests in the property of the parties if that course is appropriate.
Section 19 of the Act requires the Court, in proceedings for an order, so far as is practicable, to make such orders as will finally determine the financial relationships between the parties to a domestic relationship and avoid further proceedings between them.
Section 20 of the Act provides:
"(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.
(2) A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a party to a domestic relationship in respect of the property."
There is no definition of "contribution" in the Act. It can be seen, however, that s 20(1)(a) is directed to financial and non-financial contributions to the acquisition, conservation, or improvement of the property of the parties, or either of them, or to their financial resources. The contributions of both of the parties must be taken into account ("of the parties to the relationship"). Further, it is the property of both parties and the financial resources of both, which need to be taken into account. However, it is not any contribution that is made by a party in the context of the de facto relationship that counts. It is a contribution with a particular purpose, or effect, such that it can properly be described as a contribution "to the acquisition, conservation or improvement of ... property": Sullman v Sullman [2002] NSWSC 169 at [246].
Section 20(1)(b) is concerned, substantially, with contributions to the welfare of the other party, or of the family constituted by the parties and any child, or children, of them. However, by using the word "including" in the first line of paragraph (b), it is possible for a contribution to the welfare of the other party, or to the welfare of the relevant family, to be made in some capacity other than as homemaker or parent. Also, there is nothing in the language that requires contributions, which count for the purposes of paragraph (b), to be non-monetary: Sullman v Sullman . Contributions as homemaker, or by way of emotional support, are not less relevant, or less deserving, of weight than the material and financial contributions of the breadwinner and in that sense, all forms of contribution are equal: Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550
On an application to adjust interests with respect to property, the Court is empowered to make such order adjusting the interests of the parties in the property "as to it seems just and equitable", having regard to the financial and non-financial contributions described in s 20(1)(a) and in s 20(1)(b). The Court must make a holistic judgment and must not attempt to evaluate the respective contributions of the parties as if it were undertaking a reductionist process analogous to the taking of partnership accounts: Davey v Lee (1990) 13 Fam LR 688. However, before the "holistic value judgment" is made the court is required, so far as possible, to evaluate the contributions that are being taken into account. In doing so "the origin and nature of the different assets ought to be considered: WB v GSH [2008] QSC 346 at [109].
The exercise of the power, ultimately, requires the court to select an amount, or percentage, as being the just and equitable translation into money terms of the wide and general considerations which s 20 requires the court to take into account: Kosanovic v Lazic [2011] ACTSC 52 at [39]).
It is clear that the reference in the Act to "adjustment" of property interests does not convey an invitation to engage in an unbounded exercise in distributive justice: Evans v Marmont (1997) 42 NSWLR 70 per Gleeson CJ and McLelland, CJ in Eq at 79. The court does not commence with any presumption that, upon the conclusion of a de facto relationship, s 20(1) is intended to produce the result that each party will emerge with equality of property value. As Clarke JA made clear in Black v Black (1991) 15 Fam LR 109 at 113, a court is not entitled to work on any preconceived notions or adopt any formula as a starting point.
Their Honours also observed in Evans v Marmont (at 79) that considerations of fault are not mentioned in the Act and there is no reference to means and needs of the kind referred to in the Family Law Act 1975 (Cth).
Section 38(1) empowers the court exercising jurisdiction under the Act to make a wide range of orders, including an order for the transfer of property, an order for sale of property and the distribution of the proceeds of sale in such proportions as the Court thinks fit, an order that any necessary instrument be executed as is necessary to enable an order to be carried out effectively and any other order, whether or not of the same nature as those mentioned in the other paragraphs of s 38(1), which the Court thinks is necessary in order to do justice (s 38(1)(a), (b), (c) and (k)).
In an application for adjustment under the Act, in order to determine whether and if so, what, property order is justified in a particular case, the Court is required to:
(a) identify and value 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";
(b) determine whether any, and if so what, contributions of the type contemplated by s 20(1)(a) and s 20(1)(b) of the Act have been made and by which party - that is, the evaluation and balancing of the respective contributions of the parties of the types referred to;
(c) determine what order is just and equitable - that is, what order is required to sufficiently recognise and compensate the applicant's contributions?
This approach has been followed in many cases, including, Howlett v Neilson [2005] NSWCA 149; (2005) 33 Fam LR 402; Chanter v Catts [2005] NSWCA 411; (2005) 64 NSWLR 360; Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550; Paino v Paino [2008] NSWCA 276; (2008) 40 Fam LR 96.
While the Court has "a broad discretion" in determining the approach to adopt in considering what order to make under s 20, two approaches are usually referred to, global and asset-by-asset: Saric v Steward [2006] NSWCA 260 at [63] per McColl JA (Handley and Santow JJA agreeing); Kardos v Sarbutt at [51]; Bilous v Mudaliar [2006] NSWCA 38 at [42]; (2006) 65 NSWLR 615 per Ipp JA (Giles and McColl JJA agreeing). Care must be taken when either is adopted to conduct that might be described as a cross-checking process as described by Ipp JA in Bilous v Mudaliar at [43]:
"43 If a global approach is adopted, regard must still be had to the origin and nature of the different assets. If an asset-by-asset approach is adopted, care must be taken to avoid the risk of undervaluing domestic and non-financial contributions and regard must be had to the overall result: Kardos v Sarbutt at [51] and [54]. Some situations do not lend themselves either to a pure global approach or to a pure asset-by-asset approach. In some cases the judge may decide to have regard to the particular contributions made to individual assets, weigh up the overall respective contributions to the parties and make differing apportionments in relation to the interests of the parties in different assets."
Contributions by either party, after the termination of the relationship, are also relevant for the purposes of s 20.
As to the date of the valuation of the property, in Kardos v Sarbutt at [30], the Court of Appeal said:
"As to the first step, 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 [see Parker v Parker (1993) 16 Fam LR 863 at 1993) DFC 95-139; Wells v Wells (1977) 29 FLR 383; (1977) 4 Fam LR 57 at 1977) FLC 90-285], though sometimes as at the date of separation [ Cozanitis v Cozanitis (1979) 34 FLR 523n; (1978) 4 Fam LR 709 at 1979) FLC 90-643]. The starting point is that ordinarily property is valued as at the date of trial [ Williams & Williams (1984) 9 Fam LR 798 at 1984) FLC 91-541; Hauff & Hauff (1986) 10 Fam LR 1076 at 1986) FLC 91-747]. 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. Thus in Woodland & Todd (2005) 33 Fam LR 177 at 2005) FLC 93-217; [2005] FamCA 161, in which the property of the parties - which had been worth $873,000 when the husband and wife divided it between them in 1997 under an informal agreement which did not deprive the court of jurisdiction - had increased in value to $2.5 million when the matter came to trial years later, the Full Court of the Family Court held that the primary judge had erred in treating the case as concerning an asset pool as at the date of the informal agreement in 1997, and was required to address an asset pool that existed at the time of the hearing, not at the time of the prior agreement."
The Court of Appeal, however, also recognised, as legitimate, an approach that has regard to the value of the property at the date of separation at [31]:
"Although usually the preferable approach is to value property as at the date of trial, giving where appropriate separate and special consideration to contributions to value made between separation and trial, nonetheless the ultimate task of evaluating the respective contributions of the parties may sometimes be facilitated by adopting the date of separation for identifying and valuing the property, particularly when there have not been ongoing contributions by one party which have benefited the other since separation. Thus the Full Court of the Family Court has said (in respect of proceedings under the Family Law Act , s 79, which for present purposes are akin to proceedings under the Property (Relationships) Act , s 20) that although ordinarily the parties' property is to be valued at the date of trial, in a particular case there may be reasons to justify another date, which might be the date of separation [ Omacini & Omacini (2005) 33 Fam LR 134 at 2005) FLC 93-218; [2005] FamCA 195]."
In this case, I am of the view that the property should be valued at the date of trial.
What the Court should not do, in cases under the Act, has been considered by Master McLaughlin (as his Honour then was) in Rose v Richards [2004] NSWSC 315, in which he said:
"37 In exercising the discretion vested in the Court by section 20(1) of the Property (Relationships) Act , it seems to me that, consonantly with the foregoing decisions of the Court of Appeal, the present financial and material circumstances of the Plaintiff and, in particular, her present needs, should not be taken into consideration. The Court should not be diverted from the clear words of the statute in exercising its discretion to "make such order adjusting the interests of the parties in the property as to it seems just and equitable". The Court must have regard to the contributions of the nature then set forth in paragraphs (a) and (b) of the subsection. As I understand the foregoing decisions of the Court of Appeal, it is not legitimate for the Court to have regard to present or future needs of the parties; it should have regard only to contributions of the nature set forth in the subsection. (See, Matheson v Wallis [2001] NSWSC 931, McLaughlin M, 22 October 2001, an appeal from which was dismissed by the Court of Appeal on 11 October 2002, sub nomine, Wallis v Matheson [2002] NSWCA 350.)
38 It is clearly necessary in this regard to exercise the caution counselled by Powell J in Roy v Sturgeon . The principles disclosed in the relevant provisions of the two statutes are that the Property (Relationships) Act looks to past contributions, whereas the Family Law Act looks also to present and future needs.
39 I propose, therefore, in considering the claim of the Plaintiff for adjustment of interests in property under section 20(1) of the Property (Relationships) Act to disregard evidence concerning her present and likely future needs.
40 Similarly, I propose also to disregard evidence concerning various financial transactions (for example, withdrawal of moneys from the business), which occurred after the termination of the relationship. Those transactions can be in no way determinative of the outcome of the present proceedings.
41 In approaching the claim for the adjustment of interests of parties in property pursuant to section 20(1) of the Property (Relationships) Act , the Court should make a holistic judgment, and should not attempt to evaluate the respective contributions of the parties as if it were undertaking a reductionist process analogous to the taking of partnership accounts (notoriously one of the most time consuming and expensive of litigious exercises) (see Davey v Lee (1990) 13 Fam LR 688)."
His Honour added in Fletcher v Furnance [2008] NSWSC 132:
"52 In considering the claim of the Plaintiff (and also the cross-claim of the Defendant) the Court should not be diverted from the clear words of the statute, where by section 20 (1) the Court is required to have regard to the respective contributions of the parties of the nature described in that subsection. The Court is not required to proceed upon the basis that the Defendant might have made greater contributions than he in fact made, if he had done other than he in fact did.
53 Each of the parties submitted that I should approach the matter upon the basis of what was described as the asset pool of the parties. (Indeed, the Defendant even went so far as to adopt what was referred to as a "three pool approach".) I would here interpolate that I do not find the phrase "asset pool", or even such a concept, as being particularly helpful in a claim under the Property (Relationships) Act . As I have already observed, the Court should not be diverted from the clear wording of the statute, which looks to past contributions that have been actually made by the parties.
54 The Plaintiff based her claim in part upon what was referred to as "a premature distribution" from the asset pool, and sought what was referred to as a "notional restoration" of certain assets to the asset pool. I consider such concepts, howsoever they may be appropriate to claims under the Family Law Act 1975 , to be quite inappropriate to a claim under the Property (Relationships) Act , a statute of New South Wales. The State Act looks only to past contributions, whereas the Commonwealth Act looks also to present and future needs.
55 To the extent that the claim of the Plaintiff is grounded in some way upon the failure of the Defendant to contribute more than he actually did contribute to the relationship, I reject that claim. The Court is required to look to the contributions of the nature set forth in section 20 (1) which were actually made by each of the parties. The Court cannot proceed upon some conjectural basis. Such concepts as a "premature distribution" from the asset pool or a "notional restoration" to that asset pool seem to me to be incompatible with the task imposed upon the Court, to exercise its discretion to "make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to" the contributions of the nature set forth in section 20 (1) of the Act. Moneys which were invested by one of the parties (as, for example, in the instant case, in superannuation funds by the Defendant) do not constitute such contributions. I do not see how those funds can be characterised in the fashion in which they have been in the written submissions of the parties (especially those of the Plaintiff, for the purpose of performing a detailed, and somewhat convoluted, arithmetical exercise, in order to establish a monetary entitlement to the Plaintiff)."
Furthermore, as was noted by Slattery J in Ryan v Kalocsay [2010] NSWSC 620, at [19]:
"The court is not required in proceedings under Property Relationship Act s 20 to undertake a reductionist process, examining every alleged contribution with a view to putting a money value on each in order to reach an accounting balance, which balance is then to be eliminated by the requisite financial adjustment in the s 20 order. Rather the court is required to make a holistic value judgment in the exercise of a discretion of a very general kind. Mathematical calculations, however, are of some use in guiding and testing conclusions about what is just and equitable, and also in promoting transparency and consistency in decision making: Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11 at [36] and [49] and Howlett v Neilson (2005) 33 Fam LR 402; [2005] NSWCA 149."
Finally, it should be mentioned that in determining what is just and equitable, the Court is not restricted to considering only property to which an identifiable contribution can be identified. The position was stated as follows in Chanter v Catts (2005) 64 NSWLR 360; [2005] NSWCA 411, per Bryson JA dissenting, but in the majority on this issue:
"88. It is quite usual for the Court of Appeal to take a global view in which contributions made directly or indirectly to acquisition, conservation or improvement of some identifiable property or financial resource is regarded when deciding to make an adjusting order which is to be satisfied out of some different property or financial resource; this global view rather than detailed adjustment item by item is often favoured by practicality, and by the court's duty under s 19 to determine finally financial relationships and to avoid further proceedings. The global view taken by the majority in Gazzard v Winders is the usual course. In my opinion the global view is justified by s 20, the terms of which contain nothing, in my opinion, to indicate that the burden of adjustment may fall only on property or on a resource to which contribution was made.
89 Nothing in the terms of s 20 or of the Act generally means that it is necessary, if an item of property or a financial resource is to be the subject of an order adjusting interests, that a contribution either of the kind described in s 20(1)(a) or of the kind described in s 20(1)(b) should be traced to that particular item of property or resource. Section 20(1) speaks in terms of contribution to acquisition, conservation or improvement of property in par (a), but the contributions referred to in par (b) are not by the terms of s 20(1) related to identifiable items of property and in their nature they could not usually be traced into or otherwise related to identifiable items of property. The words of s 20(1) which precede par (a) and par (b) contain no expression which requires an order adjusting interests in property to reflect or give effect to contributions to the particular piece of property interests in which are adjusted; what is required is that the court have regard to the contributions; there may be a connection, but there is no necessary connection, and there may not necessarily be a discernible connection among a contribution, a piece of property and an adjusting order."
Determination
The determination of the matters that are referred to above become difficult where one of the parties, the Defendant, in this case, has provided no evidence of his assets, or of the contributions referred to in s 20 made by him. Despite such difficulties I shall make such findings as I am able of their contributions.
It seems clear, from the evidence relied upon by the Plaintiff, that the joint property of the parties, namely the Croydon Park property, was acquired using, in part, the proceeds of sale of the Ashfield property of which the Plaintiff was the sole registered proprietor. As stated, her contribution was $120,000.
To the extent that moneys were borrowed to pay the balance of the purchase price and associated expenses, for the Croydon Park property, whilst they were joint mortgagors, the Plaintiff has made all of the mortgage repayments on the property. The Defendant, on the evidence, has made no repayments. The mortgage, for reasons set out above, has not decreased substantially. In fact, it has increased.
In this regard, the oral evidence of the Plaintiff given at the hearing was that only interest on the principal was being repaid.
However, the Defendant, by making himself jointly and severally liable for the mortgage debt, should be seen as having made an indirect financial contribution to the acquisition of the Croydon Park property. However, since he has not made any repayments, and as his liability will be discharged completely if the Plaintiff obtains the orders that she seeks, that indirect financial contribution should not be regarded as significant.
The Plaintiff admits the Defendant's contribution to the conservation, or improvement, of the Croydon Park property to only a limited extent, and during the period that he lived in that property. But, he has not been there for almost three years, during which period the Plaintiff has, alone, borne the burden of expenses, maintenance and repair, thereon. Of course, she has had the sole occupation of that property during this period also.
I have come to the view that it is not necessary for me to determine the parties' beneficial interests in the Croydon Park property before deciding what adjustment order, if any, should be made: Jones v Grech [2001] NSWCA 208; (2001) 27 Fam LR 711 at 722-723; Evans v Marmont at 84; Hughes v Egger [2005] NSWSC 18 at [100]- [101]; Bourdon v Outridge [2006] NSWSC 491 at [19].
In Bourdon v Outridge , White J said at [19]:
"[19] In applications under the Property (Relationships) Act it is not always necessary for a court to determine the beneficial ownership of the property of the parties before making an adjustment order under s 20. An inquiry into beneficial ownership may be subsumed in the wider inquiry under s 20(1). On the other hand, the Court may determine the parties' beneficial interests in property in such proceedings before deciding whether it is necessary to make any adjustment order, and before deciding what adjustment order, if any, should be made."
If I had, it would appear that the Plaintiff has paid, almost entirely, if not entirely, all of the purchase price and the associated costs.
In the events that have happened, and taking into account the Plaintiff has paid, and is prepared to continue to pay, the whole of the debt on the Croydon Park property, the Defendant will have made no direct financial contribution to the acquisition of that property. I am of the view that an adjustment should be made in respect of the Croydon Park property in favour of the Plaintiff as she seeks and that the Defendant's interest therein should be transferred to her.
In regard to the further borrowings, which borrowings have resulted in the amount secured by the mortgage remaining almost the same as the amount borrowed, it seems to me that each of the Plaintiff and the Defendant caused the mortgage debt to be increased by a similar amount.
I must, however, consider, the contributions that both parties otherwise made. It seems clear, even on the Plaintiff's evidence, that the Defendant made a small contribution ($4,500) to the Ashfield property. However, he lived there, apparently, rent or occupation fee, free until the Croydon Park property was purchased, about 5 years later. During this period, the Plaintiff made all mortgage repayments on that property. Of course, she remained the sole registered proprietor of it.
In stating the above, I note what was recently said in RD v DB [2011] QSC 83:
"[34] Account also will need to be taken of the fact that the defendant's significant contribution towards its acquisition and maintenance permitted the plaintiff to reside in that home "rent free" between April 1999 and August 2005 when the parties moved to the United Kingdom. The expression "rent free" is something of a misnomer. Parties in a committed relationship who live in a home that is owned by one of them generally do not tend to treat their relationship as one of landlord and tenant. However, there can be a rough financial reckoning of the benefit of the contribution of one party's property to accommodate the couple. Account must be taken of the benefit that one party enjoys because the other provides a roof over their head...."
I do not consider that any adjustment in favour of the Defendant should be made on the basis of his very negligible contribution to the Ashfield property.
The Defendant made a small contribution to the maintenance or repair of the Croydon Park property ($6,500) in 2002. However, the Plaintiff appears to have contributed an additional amount of $10,000 towards the renovation costs from the proceeds of the Ashfield property. I have taken the slightly greater financial contribution of the Plaintiff into account.
The Defendant appears to have contributed about $10,000 more than did the Plaintiff to the rates, taxes and utilities on the Croydon Park property. However, she appears to have made a greater financial contribution than he did to their joint living expenses. It seems to me, in those circumstances, that their contributions, overall, on these aspects of their financial interrelationship, were equal.
I am satisfied that the Plaintiff made a much more significant contribution as homemaker than did the Defendant and that this contribution should be taken into account in her favour. It should be regarded as a significant, non-financial, contribution by her.
The discretion conferred upon a court under s 20 is to adjust the property interests of the parties in a way that is just and equitable. This is clearly a case where the Plaintiff has made much more substantial contributions of the kind referred to in s 20 of the Act. Doing the best I can, and considering what is just and equitable, I am of the view that the Plaintiff should receive the whole of the Defendant's right, title and interest in the Croydon Park, upon the basis that when that occurs, he will no longer be liable to repay any share of the mortgage debt secured on the property. In other words, the Plaintiff should cause the mortgage secured on the Croydon Park property to be discharged completely, and a new mortgage, in her name alone, to be obtained. She will then be the sole registered proprietor of the Croydon Park property. The disproportionate financial contribution that she made to the acquisition of the Croydon Park property and otherwise is not matched by the Defendant's financial, or other, contributions to that property or to the relationship.
I have taken into account the Plaintiff's continuing occupation of the Croydon Park property since separation to the exclusion of the Defendant, but I do not think any adjustment in favour of the Defendant is necessary.
The making of such an order under the Act provides the Plaintiff immediate satisfaction in respect of her effective full contribution, to date, to the acquisition of the Croydon Park property and should avoid future litigation between the parties.
In coming to this conclusion, I confirm that I am not adjusting, in favour of the Plaintiff, any part of the Defendant's interest in the Wyong property (which the Defendant has enjoyed), even though the Defendant used some of the moneys that are now secured on the Croydon Park property to enable him to purchase an interest in the Wyong property. In my view, this is just and equitable also, and enables any contributions of the type referred to in s 20 made by the Defendant, not otherwise adjusted, to be considered and given weight.
Otherwise, the parties should be declared beneficially entitled to all property, including all interests in any superannuation funds held by each of them respectively at the present time. In this regard, I am aware that there is no suggestion that either party contributed to the superannuation entitlement of the other. In any event, each has no immediate entitlement to superannuation because of her, and his, age.
The lack of participation in the proceedings by the Defendant makes it advisable, in my view, that there should be reserved to the parties liberty to apply in respect to the implementation of my orders herein.
I have considered whether I should direct the Registrar to sign the transfer immediately in view of the Defendant's lack of involvement in the proceedings and because I believe that he is unlikely to co-operate in complying with the orders.
Section 39 of the Act provides:
"(1) Where:
(a) an order under this Part has directed a person to execute a deed or instrument, and
(b) the person has refused or neglected to comply with the direction or, for any other reason, a court thinks it necessary to exercise the powers conferred on it under this subsection,
the court may appoint an officer of the court or other person to execute the deed or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the deed or instrument.
(2) The execution of the deed or instrument by the person so appointed has the same force and validity as if it had been executed by the person directed by the order to execute it.
(3) A court may make such order as it thinks just as to the payment of the costs and expenses of and incidental to the preparation of the deed or instrument and its execution."
It would seem that non-compliance with the order is a precondition to such an order. It is established, in respect of a similar section of the Civil Procedure Act 2005, that such an order should not be made merely because of an anticipated refusal to execute the document.
However, such an order may be made if the circumstances demonstrate the probable futility of any proper request ( Savage v Norton [1908] 1 Ch 290, 297; Commonwealth Bank of Australia v Dariusz Adam Gaszewski & Anor [2006] NSWSC 772). Gaszewski was referred to and followed by McDougall J in AGnVET Services v Carter [2009] NSWSC 753.
Brereton J referred to the authorities in Jeloudev v William Lohman [2010] NSWSC 1229. He said:
"12 It is clear that the power under s 94 is conditioned on non-compliance with a judgment or order directing the party bound to execute the relevant instrument. However, in Savage v Norton [1908] 1 Ch 290, Parker J, while holding that, before making an order under a corresponding provision, the court ought as a rule be satisfied that the person originally ordered to execute an instrument had neglected or refused to do so, nonetheless allowed that there may be cases in which the court might make an anticipatory order, because it appeared that the person ordered to do so had in fact by his conduct already demonstrated that he refused to do the act ordered, in which case the court may make an order at once because of the probable futility of any proper request [see also Folley v Marafioti (No 2) (1972) 9 SASR 9].
13 As I indicated in Commonwealth Bank of Australia v Gaszewski [2006] NSWSC 772, an order appointing the registrar may be made prospectively, although there cannot yet be said to be non-compliance by the defendant with the order to execute, if the circumstances demonstrate the probable futility of any proper request, and the order is framed in such a manner as requires the relevant non-compliance to be established before the power is exercised. This view has been followed, by Hamilton J in Ciavarella v Polimeni [2008] NSWSC 541."
In my view, the circumstances demonstrate the probable futility of any proper request to sign the documents. However, I shall allow the Defendant an opportunity to comply with these orders, but shall avoid the Plaintiff from having to incur the costs of further representation at any hearing if he does not by making what I hope is an appropriate order for the Registrar to sign if certain steps are taken and there is evidence that the Defendant has not complied.
The costs and expenses of, and incidental to, the preparation of the Transfer should be borne by the Plaintiff. The costs and expenses of and incidental to its execution should be borne by the person executing the document.
Orders
In the circumstances, I order that:
(a) Within 28 days of this date, the Plaintiff, by her solicitor shall:
(i) serve, by post, upon the Defendant, a copy of these reasons for Judgment, together with a sealed copy of the orders, as well as a letter drawing attention to the orders that have been made and entered;
(ii) provide a Transfer, in registrable form, to the Defendant, the effect of which, when signed and registered, will be to transfer all of the Defendant's right, title and interest, in the jointly owned property at Croydon Park, to the Plaintiff;
(iii) advise the Defendant, in writing, that, simultaneously with the handing over, to the Plaintiff, of the Transfer, duly executed by the Defendant, she will cause the joint mortgage on title of the Croydon Park property, to be discharged;
(iv) nominate a time and a place for the duly executed Transfer to be delivered, by the Defendant, to the Plaintiff, and stating that simultaneously, the joint mortgage registered on title to the Croydon Park property will be discharged.
(b) Within 14 days of the date of the letter advising that the Plaintiff is ready, willing and able, to cause the joint mortgage to be discharged, the Defendant shall advise the Plaintiff, by her solicitors, in writing, whether he is ready, willing and able, to sign the Transfer.
(c) Within 14 days of the date of the Defendant's letter, or within such other time as the parties agree in writing, the Defendant shall cause the Transfer, in registrable form, to be delivered to the Plaintiff and simultaneously the Plaintiff will cause the joint mortgage registered on title to the Croydon Park property to be discharged.
(d) Order, pursuant to s 39 of the Act, in the event the Defendant does not comply with any of the orders set out above, that upon the Plaintiff filing an affidavit, by her solicitor, establishing service of the Judgment and these Orders upon the Defendant, and that the Defendant has not complied with order (b) above, and proving that the joint mortgage has been, or will be discharged, the Transfer in registrable form, shall be executed by the Registrar in the name, and on behalf, of the Defendant.
(e) The costs and expenses of, and incidental to, the preparation of the Transfer shall be borne by the Plaintiff. The costs and expenses of and incidental to its execution shall be borne by the person executing the document.
(f) As between the Plaintiff and the Defendant, and subject to the above orders, each shall retain all right, title, and interest in and entitlement to, personal and other property in her and his, respective possession or control.
(g) Either party is to have liberty to apply in respect to the implementation of these orders.
(h) These orders shall be entered forthwith.
(i) Otherwise, make no order as to either party's costs to the intent that she, and he, will pay her, and his, own costs of the proceedings.
(j) The exhibits may be returned to the Plaintiff.
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Decision last updated: 03 May 2011
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