Soklevska and Soklevski
[2007] FMCAfam 36
•8 February 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SOKLEVSKA & SOKLEVSKI | [2007] FMCAfam 36 |
| FAMILY LAW – Property dispute – lengthy marriage – contributions by wife’s father – dispute over inclusion in pool of assets of wife’s fifty per cent “ownership” of wife’s father’s property – alleged resulting trust – improper purpose not effected – property not included – wife to receive fifty five per cent of pool. |
| Family Law Act 1975, ss.79, 79(2) Property Law Act (Vic) 1958, s.53 |
| Kessey (1994) FLC 92 - 15 Pierce (1999) FLC 92 – 844 Scott v Fratcher, Law of Trusts 4th Edition (1989) Nelson & Nelson (1995) 184 CLR 538 Day v Couch [2000] NSWSC 230 Martin v Martin [1959] 110 CLR 291 |
| Applicant: | CHRISTINE SOKLEVSKA |
| Respondent: | GEORGE SOKLEVSKI |
| File Number: | MLM 3773 of 2006 |
| Judgment of: | Burchardt FM |
| Hearing date: | 21 November 2006 |
| Date of Last Submission: | 21 November 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 8 February 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr Arnold |
| Solicitors for the Applicant: | Maria Barbayannis & Co |
| Counsel for the Respondent: | Mr Serra |
| Solicitors for the Respondent: | L N Christie & Co |
ORDERS
That the Wife shall pay to the Husband the sum of $74,290.00 on or before 16 April 2007, (“the date”).
That contemporaneously with the payment:
(a)the Husband do all such acts and things and sign all documents as may be required to transfer to the Wife at the expense of the Wife all of his right, title and interest in the real property situated at and known as 9 Manuka Court, Mill Park being the while of the land more particularly described in Certificate of Title Volume 09721 Folio 005, (“the real property”).
(b)the Wife indemnify the Husband against all payments and liabilities and all apportionable rates, taxes, and outgoings of or with respect to the real property of whatsoever nature and kind as from 15 February 2007.
That in the event that the whole of the payment has not been made by the date the real property be forthwith sold altogether out of Court (“the sale”) and upon completion of sale, the proceeds of the sale be applied:
(a)first to pay all costs, commissions and expenses of the sale;
(b)secondly to discharge the mortgage and any other encumbrance affecting the real property;
(c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 10 per centum per annum adjusted monthly from the date to the Husband;
(d)fourthly the balance to the Wife.
That pending the payment or completion of the sale:
(a)the Wife have the sole right to occupy the real property and that during such right of occupation the Wife pay all installments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;
(b)the parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)neither party encumber the real property without the consent in writing of the other party.
That the Wife forthwith do all necessary acts and things and sign all necessary documents to transfer to the Husband at the expense of the Husband all her right, title and interest in the property at 96 Childs Road, Epping, being that land described in Certificate of Title Volume 09305 Folio 757.
That on or before the 15 February 2007 the Husband vacate the property 9 Manuka Court Mill Park.
That the Husband forthwith pay all of the outstanding rates, taxes and outgoings in respect of the property at 9 Manuka Court Mill Park until 14 February 2007.
That in the event that the Husband does not comply with paragraph 7 herein, any shortfall in payment of rates, taxes and outgoings be deducted from the payment referred to in paragraph 1 herein.
That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under there or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the real property being deemed to be in the possession of the Wife).
(b)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other.
(c)Insurance policies remain the sole property of the owner named therein.
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
That the applications of the Husband and the Wife respectively filed on 26 June 2006 and on the 16 November 2006 be otherwise dismissed.
Certify for Counsel acting as Counsel.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 3773 of 2006
| CHRISTINE SOKLEVSKA |
Applicant
And
| GEORGE SOKLEVSKI |
Respondent
REASONS FOR JUDGMENT
This matter concerns a dispute as to the division of property between the parties, the Applicant, Christine Soklevska, born on 31 March 1964, and the Respondent, George Soklevski, born on 9 June 1959. There is one child of the marriage under the age of 18, Jason Soklevski, born on 29 August 1990 who lives with his mother and sees his father at such times as he desires.
There is no dispute in this proceeding about Jason, although he is not totally irrelevant to the property dispute.
The parties married on 4 October 1980 and separated in January 2005. It should be noted that whereas the wife put the date of final separation at 17 January 2005, and the husband put the final date of separation as June 2005 when the wife moved out of the former matrimonial home, I am not convinced that anything turns on this aspect of dispute.
In addition to Jason Soklevski, there are two adult children of the marriage, namely Daniel Soklevski, born 3 February 1983, and Belinda Soklevski, born 17 March 1985.
In her application filed with the Court on 27 April 2006, the Applicant relevantly sought that there be a property settlement pursuant to s.79 of the Family Law Act 1975 (“the Act”), and that she receive an amount equivalent to sixty five per cent of the matrimonial assets, exclusive of a property at 5 Cassia Court, Mill Park (“the Cassia Court property”).
Although there are a number of matters in dispute as to the facts in this proceeding a number of matters are not controversial. Prior to the marriage, the Respondent and his father, Italas Soklevski, were the registered owners of a property at 96 Charles Road, Epping (“the Charles Road property”). When the parties first married they lived in the Charles Road property for seven and a half years, together with the Respondent's parents. At the time that the parties moved into the Charles Road property the mortgage on that property was $18,000.00. During the seven and half years that the Applicant and the Respondent lived at the Charles Road property the mortgage was entirely paid off. Although there was some dispute on the affidavit material as to who paid the mortgage off, the evidence before me, most particularly that of the Respondent, was to the clear effect that the Applicant and Respondent paid off the mortgage.
The Applicant has deposed that the Charles Road property was brought by the Respondent and his father in 1979 for $32,000.00. In 2002, the Charles Road property was transferred into the names of the Applicant and Respondent as to fifty per cent and the Respondent's parents as to fifty per cent. In December 2004, the Respondent's father died and his share was transferred to his wife.
The Applicant has deposed that the transfer in 2002 was made in order to reflect the contributions that she and the Respondent made to the property by living there, maintaining the property and paying off the mortgage. There is no argument as to the value of the property which is asserted to be $230,000.00. The Charles Road property is unencumbered and the Respondent's mother lives there. The Respondent, himself, proposes to live there when he moves out of the former matrimonial home, where he has continued to reside since the Applicant moved out in 2005.
In 1986, the Applicant's mother died. Thereafter, the Applicant's father, Michael Papaioannou bought a property at 9 Medler Court, Mill Park (“the Medler Court property”). He built a home on that property which he ultimately sold in 1999. The Applicant has deposed in her first affidavit, sworn on 24 April 2006, that following the death of her mother, her father was concerned that if he re-partnered his property might be at risk should the subsequent relationship fail. For that reason, it was asserted, the Applicant's father included her on the title to the property he had purchased at Medler Court. Although the affidavit does not say so, I infer that she was registered as a tenant in common as to fifty per cent of the property.
In 1987, the Applicant and Respondent bought land at 9 Manuka Court, Mill Park (“the Manuka Court property”), upon which the former matrimonial home was ultimately built. The purchase price for the block was $35,500.00 of which the parties paid a deposit of $1,000.00 and the Applicant's father paid $34,500.00. At that time, according to the Applicant's first affidavit, her father had sold a property at Laurie Street, Reservoir, and used those funds to pay for the land at Manuka Court.
It would appear that at roughly this time the father was building his home at Medler Court, and the parties paid him the sum of $10,000.00.
The precise chronology of these events is far from clear, but it should be noted that the substance of these financial dealings is, at least to this extent, uncontroversial between the parties.
The Applicant and the Respondent borrowed $50,000.00 from the Commonwealth Bank of Australia in order to complete the construction of the matrimonial home at Manuka Court, and they have subsequently paid off that mortgage. The Manuka Court property is unencumbered. It is worth $355,000.00 (mid point between the parties positions and accepted by the Applicant – see her 15 November 2006 affidavit – paragraph 6).
The Applicant deposed in her first affidavit that her father contributed the amount of $25,000.00 in respect of building materials and painting contractors and the like while the matrimonial home was being built.
That assertion was also deposed to by the father in his affidavit sworn on 24 April 2006. Mr Papaioannou also deposed that he assisted in the painting, concreting and woodwork in the construction of 9 Manuka Court property. Following separation, it should be noted, the Applicant, Belinda and Jason went to live with her father where they continue to reside up until now.
It would appear, according to evidence in Court by Mr Papaioannou, but not previously put on affidavit, that following the death of his wife in 1988, he re-partnered with one Vasilka Elion in a de facto relationship which commenced in 1998 and concluded, it would appear, after about 14 years, in other words in 2002.
Mr Papaioannou was born on 10 March 1933 and told the Court that he had worked as a labourer.
The Respondent gave evidence that he had been retrenched and received a cheque for $35,000.00 about the time that the Manuka Court property was bought. It was from that sum, as he put it, that the $10,000.00 had been given to Mr Papaioannou at the time when Medler Court was built. He said that he gave Mr Papaioannou $10,000.00 because the latter was short of money.
It should also be noted that Belinda, at the age of 21, earns $450.00 per week, and pays nothing towards the common household expenses. Jason is in receipt of Commonwealth allowance and likewise pays nothing into the common pool of living expenses.
The Cassia Court property to which reference has been made already is worth about $290,000.00 and is unencumbered. The Applicant and the Respondent have never lived in that house nor did they make any contributions by way of financial payment to the property. That property was bought with funds from the sale of the Medler Court property. It is not clear whether the sale of the Medler Court property provided enough money for the whole of the purchase price or whether that purchase price was paid with a mortgage paid out over time by
Mr Papaioannou.
The Respondent filed his first affidavit, sworn on 21 June 2006. Relevantly he deposed that he receives sickness benefits of $367.00 per fortnight from which $14.50 is deducted by way of child support. He further deposed that he attempted suicide in 2005. I shall turn to the medical reports, filed on the Respondent's behalf in due course.
He asserted that the moneys provided by the father-in-law for the Manuka Court property were a gift. He also disagreed that the
father-in-law contributed $25,000.00, in other payments towards the Manuka Court property.
He further deposed that the $10,000.00 paid to the father-in-law was not a repayment but was rather moneys given to the father-in-law to assist him in a time of need, and that the same came from the retrenchment package that the Respondent had received from an employer known as Patra.
The Respondent also deposed that he agreed that his father-in-law had assisted with physical labour at the Manuka Court property but that he had done the same for the father-in-law at the Medler Court and Cassia Court properties.
So far as the Charles Road property was concerned, the Respondent agreed that he and the Applicant had paid off the mortgage. He said that he had paid the mortgage and that the Applicant's wage was used for other items including her own personal use.
The picture that the Respondent painted was to the effect that the finances of those living at Charles Road were very much intermingled. Although the Applicant deposed in paragraph 12 of her first affidavit that the $18,000.00 that was borrowed in respect of the purchase of the Charles Road property was paid off by equal contributions between the Applicant and Respondent, in evidence the Respondent was very clear that it was he and not anyone else that had paid off the mortgage.
The Respondent went on to depose to the fact that since 1988 considerable capital improvements had been made to the Charles Road property paid first by the Respondent's parents and after his father's death in 2005 by his mother. These were estimated at approximately $16.000.00.
Another issue raised by the parties is a Ford Festiva car owned by them which has been written off in an accident by the Respondent's brother. The Festiva was said to be worth $6,000.00. It emerged during the trial that the insurers have resisted payment because there is a suspicion that the brother was under the influence of alcohol at the time of the accident.
Supporting affidavits were filed by both the Applicant's father and the Respondent's mother, but for reasons to which I will return they did not, in my view, add much to the evidence given by the primary parties.
During the trial the cross-examination of the wife revealed that she had worked for the vast majority of the marriage. Although it seemed clear that she earned less than the Respondent, she was nevertheless able to work full time for all but about three years of this lengthy marriage.
This was substantially due to the child care offered by the Respondent's parents, and particularly by his mother. I am quite satisfied that for many years the Respondent's mother acted as a full time carer of the children of the marriage and that this was a significant benefit to the parties. If this child care had not been provided the Applicant would not have been able to work so much or she would have to have paid very substantial amounts in child care. It is not possible to put a precise figure on the value of this benefit, but on any view, it must have been substantial.
The parties have superannuation in the sums of (rounded off) $82,000.00 for the Respondent and $42,000.00 for the Applicant.
The pool of assets is set out in the outline of submissions filed for the Respondent, which I have marked as MFI 1.
With the exception of the Respondent's car, valued at $6,000.00 there is no argument as to what the values of the assets that constitute the pool are.
In my opinion, the Respondent's car should be included in the pool. The resultant total of all alleged assets is $761,200.00.
The Respondent has sought that he be paid forty give per cent of that pool; and the Applicant, by amended application, filed on 16 November 2006, seeks that she receive sixty five per cent of the pool, (but excluding the Cassia Court property).
It should be noted that the contents of the former matrimonial home are not now in dispute. It has been agreed that the Respondent will, upon his departure from that property, take with him a video, TV and DVD, but otherwise leave the contents for the Applicant. I do not propose to make any further adjustment in the parties' positions as a result of that division because although the Applicant values the said goods at $2,000.00 and the Respondent values them at $5,000.00, those values are highly likely to be unrealistically high. In any event, the parties in the ultimate consented to a division of those chattels in this fashion.
The only other matter to which I should now turn is the medical evidence about the health of the Respondent. Dr George P Wahr has sworn an affidavit on 13 November 2006. He is a consultant psychiatrist and he has prepared a report in respect of the Respondent.
Relevantly, in addition to symptoms of depression, the Respondent told Dr Wahr, "I cannot use my left hand". Doubtless, as a result of this, he was not able to do any housework, was not able to do any gardening, and when asked about hobbies or interests he replied "None now, I cannot even pick up a glass with my left hand".
If this was so it would appear that the surgery to the Respondent's wrist, which I infer took place following his attempted suicide by slashing his wrists in 2005, was unsuccessful.
In the ultimate, Dr Wahr found that, indeed, from a psychiatric point of view, the Respondent is suffering from an "agitated oppressive reaction constituting an impairment of thirty five per cent". Dr Wahr expressed the view that the Respondent had no present capacity for employment and would not do so for at least 12 months. He further noted that it was necessary for the Respondent to consult a surgeon for assessment as to his physical capacity to work.
The only other medical report is a report from a Dr Hackan Baglar, prepared on 2 November 2006. Relevantly, Dr Baglar reported that "on examination of his left hand, although there were no atrophic changes in his hand due to denervation, he objectively failed to respond to light touch and pin pricks (pain) testing".
Dr Baglar also recommended an electromyography of the hand. The report, according to Dr Baglar included the following:
“Electricophysiological testing demonstrates a partial left medium neuropathy, the differential involvement of the medium middle fascicles resulting in marked loss of motor axons to the thenar eminence and partial loss of the thumb, second and third finger sensory axons. There was evidence of chronic denervation on EMG testing. Findings are consistent with the preceding injury to the left wrist.”
While it appears that the Respondent is going to see another specialist in July next year, I am comfortably satisfied on the evidence to which I have just referred that to the extent that it is possible to make any assessment, the Respondent is not only unable to work now because of his psychiatric problems, but that his capacity to do physical labouring in the future must be assessed as negligible.
In submissions, both counsel made it clear that no splitting orders were sought in respect of superannuation. They both requested that I treat the superannuation of the parties as simply additional resources within the available pool.
Counsel for the Respondent, Mr Serra, submitted that the biggest issue was the Cassia Court property. It was submitted that contrary to the submissions advanced on behalf of the Applicant, there was no trust in Mr Papaionnou's favour of the fifty per cent registered ownership of the Applicant. He submitted that it was a gift from the father.
It was submitted that there was no express trust because the terms of s.53 of the Property Law Act (VIC) 1958 were not met. That aspect of counsel's submissions was not, it seems to me in issue.
Mr Serra further submitted that there was no resulting trust. He submitted that the principal of advancement applies if one party pays for the entire purchase of land and the other party is a child.
Mr Serra further submitted that this arrangement, which had subsisted at Medler Court and Cassia Court for 20 years’ was a device to defeat future partners in the event of litigation, and submitted that this was a trust, therefore, for an improper purpose. He submitted that the Applicant was the legal and equitable owner of half of the Cassia Court property.
Mr Serra conceded that fifty per cent of the Charles Road property should be part of the pool.
On the question of contributions, Mr Serra submitted that although the Respondent had earned substantially more than the Applicant throughout the marriage, taking earnings and non financial contributions as a whole it would be fair to say that the contributions of the parties were equal. I accept that that is so. It was a twenty five year marriage, and it seems to me that in the main the parties did their best to contribute to the wellbeing of the family.
Mr Serra submitted that the best case for the Respondent was fifty per cent and the worst was sixty per cent in respect of contributions.
Turning to the s.75(2) factors, Mr Serra pointed out that while the evidence was not certain that the Respondent could never work in the future, he has only ever been a labourer, he is now forty seven years old and is presently unwell. By contrast the Applicant is in full time employment.
Mr Serra submitted that there should be no loading in respect of Belinda, who not only contributes nothing to household expenses, but whom, at the age of twenty one, ought to not properly be taken into consideration.
Mr Serra submitted that there should be a loading in respect of future needs at five per cent in his client's favour if the Cassia Court property was included in the pool. In the alternative, if the Cassia Court property was not included, it was submitted that the contributions made by the Respondent loomed larger. It was submitted that if the pool was of the order of $610,200.00 (the figure if Cassia Court were removed), the Respondent should receive fifty five per cent of that total, and that a proper assessment by way of loading for the Respondent's future needs could be up to ten per cent.
Mr Arnold, counsel for the Applicant, submitted that if the Cassia Court property was included in the pool the total sum would be $761,200.00 of which the Cassia Court property represented nearly twenty per cent. In respect of the contributions made by Mr Papaioannou,
Mr Arnold referred me to a case of Kessey (1994) FLC 92-15 (“Kessey”). I accept that that case is authority for the proposition that, and I quote from page 81-150:
“A contribution by a parent of a party to a marriage to the property of the marriage would be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.”
I further accept Mr Arnold's submission that the Respondent was not able in this case to point to any evidence of the sort indicated in Kessey. It follows therefore, that the moneys contributed by
Mr Papaioannou to the development of the Manuka Court property should be taken to have been contributions made by or on behalf of the Applicant.
It is common cause that Mr Papaioannou advanced $34,500.00 but received (albeit it is not clear quite at what time) $10,000 back.
It is clear that Mr Papaioannou helped the parties with the development of the property at Manuka Court, but it is by no means clear what the extent of this assistance was. The impression I have formed is that, not surprisingly, both the Applicant, the Respondent and their families assisted one another at various times in relation to the purchase and development of their various properties. All this happened many years ago in a relatively freewheeling way.
Each party has produced evidence that is capable of being believed as to who contributed what to the development of the Manuka Court property by way of materials and interim payments and the like.
While I accept that Mr Papaioannou undoubtedly advanced some moneys by way of interim payments, and without in any way being critical of him given the fact that all this took place a long time ago, I am not persuaded that it is more probable than otherwise that he advanced funds to the value of $25,000.00 in addition to moneys he advanced for the purchase of the block of land. It is at least as likely as otherwise that the Respondent provided moneys from his redundancy to meet such interim payments.
The Respondent's evidence about his payments in this regard had, like his evidence generally, a considerable air of conviction. I note, in particular, that the Respondent was quite prepared to make concessions. He readily conceded that his mother and father had not paid half the mortgage costs of the Charles Road property for example. His answers were given in a generally responsive and clear way.
While I am not prepared to go so far as to find positively that the Respondent made all the initial cash contributions to the development of the property at Manuka Court, likewise I am not prepared to find on the evidence that it is more probable than otherwise that
Mr Papaioannou contributed anything more than the Respondent in this regard.
Likewise, I find it impossible to further quantify any contributions by both the Applicant and Mr Papaioannou not only to the development of the Manuka Court property, but also to the properties bought by
Mr Papaioannou, first at Medler Court property, and then, the Cassia Court property. There is simply no evidence beyond the impressions of the parties as to how much each party contributed. Those memories are not only long ago, but are also tempered by the natural emotions and reconstructions inherent in the litigation process that has given rise to this trial.
A mortgage of $50,000.00 was taken out on the Cassia Court property, and I see no reason not to accept the Applicant's evidence that his skills as a labourer were put to good use there.
Mr Arnold of counsel for the Applicant laid emphasis on the weight of the contributions made by the Applicant's father to the Manuka Court property. He pointed out that the question of the loading to be allotted to such matters is essentially discretionary and he referred me to
Piercev Pierce (1999) FLC 92 - 844 (“Pierce”) in this regard. He submitted that Mr Papaioannou's initial contribution was substantial.
In respect of the Charles Road property, Mr Arnold submitted that while the paternal grandmother had provided child care, for a considerable number of years, the Applicant had no choice but to go to work not least because she and her husband had left their share of the property in Charles Road, so to speak, in the beneficial hands of the parents of the Respondent.
He pointed out that the Respondent's father had signed a transfer to give each of the Applicant and the Respondent a twenty five per cent interest in the property as recently as 2002.
Turning to the s.75(2) factors, Mr Arnold submitted that Jason is still only 16 years old. The Applicant has had the care and responsibility for looking after Jason since separation. He submitted that the Applicant is essentially a cleaner who is not making more than $300.00 per week.
He submitted that the Respondent will, in the ultimate, live with his mother in her house but his income will be the same, but his expenses will be less.
He submitted that the Applicant will have to take out a mortgage in order to keep the property at Manuka Court. He submitted there should be no adjustment as a result of s.75(2) factors.
He submitted that if the Cassia Court property was excluded, the split should be fifty/fifty, but if it was included it should be seventy per cent. He submitted that the Manuka Court property contributions made by Mr Papaioannou would be worth ten per cent and that the top of the range would be eighty per cent but that such a result would not be just and equitable.
He submitted that if the Cassia Court property was removed from the share of the assets, the split share be sixty five to thirty five per cent, his client should receive $400,535.00, the assets being $413,200.00, and that his client should pay the Respondent $13,220.00.
It is clear from the authorities to which I have been referred that the various levels of contribution made by the parties have to be considered and the totality of the relationship of the parties, given the long duration of the marriage. In Pierce in the Full Court of the Family Court said (page 85 881 at [27]), in respect of initial contributions (quoting from the judgment of Fogarty J in Murray v Murray at page 81 – 54):
“… ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there would be later factors of significance and then the ultimate the exercise is to weigh the original contribution with all other, later, factors, and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.”
The Full Court went on in Pierce at [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 the wife.”
In my respectful view, what the Court has to do in cases such as these is to determine the size of the pool, determine the nature of the contributions made by the parties, consider the s.75(2) factors, and lastly, and very importantly, to consider whether the result to be imposed is just and equitable in all the relevant circumstances. It is a matter of considering all the relevant aspects of the parties' dealing during the currency of their relationship.
The size of the pool
There is little argument between the parties as to the various items, apart from the inclusion or otherwise of the fifty per cent of the Cassia Court property worth $145,000.00.
It is common cause that the Applicant is registered on title as the owner as to fifty per cent of the Cassia Court property. In paragraph 15 and following of her affidavit sworn on 24 April 2006 the Applicant deposed that:
“I say that this property should not be included as part of the property pool as the husband and I have made no contribution to this property. My father registered me on Title as to 50% of the property. I did not make any contribution to the purchase of 5 Cassia Court. I am simply on Title as my father believed that this was appropriate after my mother passed away.
… My mother passed away in 1986 and following her death my father was concerned that if he repartnered, his property may be at risk should the subsequent relationship fail. It is for this reason that my father included me on Title to the property he had purchased at 9 Medler Court, Mill Park. … My father used the sale proceeds of 9 Medler Court to purchase 5 Cassia Court, Mill Park. The property at 5 Cassia Court, Mill Park was registered in the name of my father and myself.
… The property at 5 Cassia Court is worth approximately $290,000 and is not encumbered by a mortgage. The husband and I did not reside in this property during the course of the marriage and have made no contributions during the marriage to the said property. It is for this reason I maintain this property should not be included as part of the property pool.”
The Applicant’s father swore an affidavit on 24 April 2006 in which he effectively confirms the matters set out in the Applicant’s affidavit immediately above. Relevantly, he said:
“Following the death of my wife, I was concerned that should I repartner, and the relationship should fail, my property may be at risk. It is for this reason, that the property at 9 Medler Court, Mill Park was registered in the names of both myself and my daughter.”
He then deposed that the Cassia Court property was put in joint names for the same reason.
From the evidence given on affidavit and before the Court in cross-examination it seems clear beyond any doubt that the reason the Applicant was registered as fifty per cent owner of the Cassia Court property was a fear on the part of the Applicant’s father that if he re-partnered (I note from his evidence that he did so) and the relationship failed the “property may be at risk”. (Affidavit of Mr Papaioannou – 24 April 2006 paragraph 4).
In view of the evidence given by the Applicant and her father, I have no doubt whatever that had any claim been made by some partner of the Applicant’s father against the property it would have been asserted, on oath if necessary, that the Applicant was indeed a fifty per cent owner of the property, thus ensuring that any such prospective hypothetical Applicant would be able to contest only fifty per cent of the property.
That this course of conduct was for an improper purpose seems manifest. It cannot inherently be proper to register a property in one manner, that is to say, with two parties as being the registered owners of fifty per cent of it, when the purpose of so doing is, as it were, to mislead third parties. The third parties to be misled would include any purchasers, and more importantly any claimants against the property for whatever reason.
It is clear that in circumstances such as these the presumption of advancement applies, and it is also clear to me that the Applicant and her father have given evidence designed to rebut that presumption. It was submitted that the fifty per cent interest of the Applicant was held on a resulting trust in favour of her father. The difficulty in the unusual circumstances of this case is that I am not satisfied that it was indeed the intention of the Applicant’s father to retain sole beneficial ownership of the property himself. In a sense he did wish to do so, but only in a contingent sense. He wished, after all, for his daughter to be on title so as to defeat third party claims. It seems clear that the only claims actively contemplated were possible claims by any prospective further wife or de facto partner but the deceit would have operated against creditors, had any been forthcoming.
Thus, the Applicant was given a contingent fifty per cent interest in the Cassia Court property. The contingency in fact never arose, but that was clearly not in the minds of the Applicant and her father when she was caused on not one but two occasions to be entered on title as a fifty per cent owner of property she did not really own.
The law relating to resulting trusts and illegality has been considered in considerable detail by the High Court in Nelson & Nelson (1995) 184 CLR 538 (“Nelson”). The decision is a lengthy one, and as the article by Ben Kremer in the Sydney Law Review (1997) Volume 19 at page 240 makes plain, the various judgments given in that case were by no means entirely to the same effect.
What does emerge clearly, in my respectful view, is that the proposition put by counsel for the Respondent to the effect that an improper purpose necessarily vitiates a trust is put too broadly.
Rather, it is a matter of balancing the competing public policy considerations. On the one hand it is unjust to grant relief to the party who has entered into an illegal transaction. On the other hand, there is unjust enrichment of the other party, (see the decision of Deane and Gummow JJ at page 564 quoting Scott v Fratcher, Law of Trusts 4th Edition (1989) at paragraph 444).
The difficulty here is that the illegality, if such it was, was jointly undertaken by both the Applicant and her father. In the ultimate, and not without doubts, I am of the opinion that the conduct of the Applicant and her father, in effect falsely registering the Applicant as a fifty per cent owner of the Cassia Court property, was conduct designed expressly to defeat the operation of, inter alia, the Family Law Act 1975 and the Property Law Act 1958 (Vic) insofar as the latter deals with de facto relationships.
Whether or not that is fatal to the position contended for by the Applicant in relation to the property, is another matter.
I have received some guidance as to the proper approach in circumstances of this sort from the decision of Bryson J of the NSW Supreme Court in the case of Day v Couch [2000] NSWSC 230 (27 March 2000) (“Day”).
In that case Bryson J had to consider an application in which the Plaintiff’s in which his Honour recorded at paragraph [84] his reasons for decision that:
“The Plaintiff’s case shows that he transferred the properties to the deceased with the purpose of making them unavailable to creditors if the Plaintiff faced large claims or damages arising from his trucking business. As events turned out the claims were relatively small and he paid them, he did not become a bankrupt, and no creditor was defrauded. What he did was not unlawful in a sense that it was forbidden by law, but it was done with a purpose of being a position to defraud creditors at a later time, and I regard that as an unlawful purpose.”
In paragraphs [81] to [83] of Bryson’s J decision his Honour referred to Martin v Martin [1959] 110 CLR 291 (“Martin”) and Nelson. At paragraph [83] his Honour referred to the judgment of McHugh J in Nelson in these terms:
“McHugh J, who was in the majority in Nelson v Nelson referred to four exceptions to withholding remedies where there is the legality. The exceptions were stated at 604 to 605 and included “where the illegal purpose has not been carried into effect (Paine v McDonald [1908] 6 CLR 208 at 211 – 212: Perpetual Executors and Trustees Association of Australia Ltd v Wright [1917] 23 CLR 185 at 193 – 194: Martin [1959] 110 CLR 297 at 305).”
Having referred to those authorities and set out the relevant facts in paragraph [84] above his Honour went on to say at [85]:
“Doing acts preparatory to committing a fraud in circumstances which have not yet happened is obviously undesirable behaviour, but it is difficult to identify any legal rule which it contravenes. The fact that the Plaintiff and the deceased both participated in the suspect conduct directs attention to whether there was conspiracy to defraud, but in the absence of an existing identifiable creditor or class of creditors and of any loss by creditors there is no actionable conspiracy.”
At paragraphs [86] – [88] his Honour referred in the alternative to the conclusions of Justice McHugh in Nelson, and arrived at the conclusion that because the illegality of the Plaintiff’s purpose had not given rise to any breach of any legislative provision and nothing which was punishable under the relevant legislation, it was inappropriate to limit the remedy sought by way of equitable relief that the Plaintiff claimed.
The facts and legislation considered by Bryson J in Day are not of course those with which we are concerned here, but in my respectful view his Honour’s approach is consistent with the High Court’s decision in Nelson and is one that I should apply.
On the facts shown here, the illegal purpose that the Applicant and Mr Papiaonnou undoubtedly had in mind to put in place was never achieved. No new spouse or de facto partner of Mr Papiaonnou was in any way ultimately defrauded nor were any other creditors of
Mr Papiaonnou defeated by the false registration of the Applicant’s purported fifty per cent interest in the Cassia Court property.
In the circumstances therefore I will not include the Cassia Court property in the pool.
I note in passing that even if I was to be wrong in this regard, that would not be the end of the matter.
It is quite clear that the Applicant and the Respondent have put nothing whatsoever into the Cassia Court property, and that would be a matter that could be addressed under an analysis of the contributions made by the parties and, if necessary, addressed in the final stage I have earlier identified, namely determining whether the outcome was just and equitable.
The contributions of the parties
This was a long marriage during which both parties worked whenever they were able and in respect of which it seems clear, all things otherwise being even, the contribution of the parties must be said to be roughly even.
There was a disagreement between the parties as to the nature of contributions made both by the parents of the Applicant and the parents of the Respondent and indeed by the Applicant and the Respondent also in the development of and payment for both the Manuka Court and Charles Road properties.
It emerged ultimately as common cause that the Applicant’s father had paid $34,500.00 towards the purchase of the land upon which the Manuka Court property was built. It was also clear that at a later date $10,000.00 was paid to the Applicant’s father, and in my view it is clear on the evidence that that was in part a repayment of that sum albeit that it was not formally perhaps expressed to be so.
Thus there is an agreed nett payment of $24,500.00 as it were in the Applicant’s favour. I accept the authority of Pierce, which requires that I presume that this was an advance by Mr Papiaonnou for the Applicant only, there being no evidence that it was intended to be a gift jointly to the parties.
What was an issue in respect of the Manuka Court property was the value of the amounts of work and materials supplied by
Mr Papiaonnou, which he quantified as being worth $25,000.00. I have formed the view on the evidence that the position in relation to the building of the Manuka Court property was flexible and informal. I have little doubt that Mr Papiaonnou did spend a certain amount of time and indeed expend monies to the benefit of the Applicant and the Respondent while they were building the Manuka Court property. I note however that the Applicant was only able to say in evidence that $25,000.00 was the figure that her father had given her. She was not herself able to corroborate the figure of $25,000.00 or any part of it. I also note that the Respondent readily conceded that Mr Papiaonnou had provided $34,500.00, but he strongly denied labour and materials to the value of $25,000.00 having been provided by Mr Papiaonnou.It is common cause that no receipts were kept by Mr Papiaonnou for any of the materials he said that he bought. He said he did not expect a divorce and that is not in the circumstances an unreasonable answer.
I note also that the Respondent has deposed that he assisted
Mr Papiaonnou with his property from time to time.While I have said I accept that Mr Papiaonnou almost certainly did provide some measure of labour and material to the Applicant and Respondent when they were building the Cassia Court property, I note that the Respondent’s evidence that a mortgage of $50,000.00 was taken out to enable the property to be built was not challenged. The property was bought and I presume built in or about 1987, and a figure of $50,000.00 does not seem utterly unrealistic, as a matter of impression, as to what it might have cost to build the property. Neither party produced any expert evidence on this issue, and I can therefore do no more than do the best I can with the evidence that is available. Given the absence of any compelling proof, I am unable to put any particular figure on the value of the contributions made by way of labouring material provided by Mr Papiaonnou to the Cassia Court property.
While I accept of course, as counsel for the Applicant put it, that the authority of Kessey requires the contribution made by the father to be taken into consideration, nonetheless, in the context of the very lengthy period of the marriage, and the countervailing and significant assistance provided by way of child care by the Respondent’s parents, I do not think that this is a matter that requires an adjustment of more than five per cent in the favour of the Applicant. Accordingly, I assess the contributions of the parties to the development of the pool as being fifty five per cent to the Applicant and forty five per cent to the Respondent.
Section 75(2) factors
Neither counsel had much to say about the s.75(2) considerations. It is plain that Jason continues to live with his mother and that she has primary care for him. Given his age however, and even allowing for the fact that he may remain dependent for some years to come should he pursue further study, this is not likely to be a massive financial imposition on the mother for a very extensive time. I note that the adult daughter of the relationship Belinda lives with her mother and is not required to contribute even one dollar each week to the expenses of the household.
Counsel for the Respondent laid stress upon the fact that the Applicant, who is on benefits at the present time, faces real difficulties in future employment. It is uncontested that the Respondent has only ever worked as a labourer. That work is now shrouded at the very least in mystery in the sense that the Respondent appears to have some sort of injury to his left hand which has not yet been fully diagnosed and which, taken in conjunction with his agitated depressive reaction (see report of Dr Wahr dated 24 October 2006), makes his future employment prospects very uncertain at the least. Conversely, however the Applicant’s capacity to work, subject to the care of Jason, is unimpaired.
Neither party drew my attention to any other considerations that arose under s.75(2), although counsel for the Applicant pointed out that the Respondent proposes to live with his mother and thus will reduce his expenses. It was noted that the Applicant will have to take on responsibility for the mortgage in respect of the Manuka Court property.
In my view, in all the circumstances there ought not be any further adjustment in respect of the s.75(2) considerations, which seem to me to be evenly balanced between the parties.
Superannuation
Both parties agreed that their respective superannuation should be included in the relevant pool of assets, but neither side sought any splitting orders. The practical result of this position therefore that is the property available for division is realistically:
“Manuka Court property $355,000.00
fifty per cent of 96 Charles Road $115,000.00
Husband’s superannuation $82,000.00
Wife’s superannuation $42,000.00
Wife’s car $4,000.00
Wife’s term deposit at separation $12,200.00
Husband’s car (subject to insurance claim) $6,000.00
TOTAL: $616,200.00”
Just and equitable
The parties did not address me in any great detail as to what orders the Court should make to give effect to the splitting of the pool. Self evidently, they could not be expected to make submissions in detail prior to knowing the Court’s view as to what the size of the pool was and what the division of it should be. It is however implicit that the Applicant wants to keep the Manuka Court property and the Respondent the Charles Road property.
I have inferred that each party desires to retain their own superannuation, and this seems to me not inappropriate.
In all the circumstances it is my view just and equitable that the Applicant should receive fifty five per cent of the pool. I think that the division of the pool should as counsel for the Applicant submitted, reflect the fact that the $6,000.00 figure in respect of the Respondent’s car should be allotted to him alone, and self evidently the Applicant should keep her own car. The Applicant has of course had the benefit of the $12,200.00 in her term deposit at separation.
Fifty five per cent of $616,200.00 is $338,910.00 and forty five per cent is $277,290. The Respondent should receive the share of the Charles Road property ($115,000.00), his superannuation of $82,000.00 and the $6,000.00 attributable to his car, a total of $203,000.00. The Applicant must pay the Respondent $74,290.00 to ensure the fifty five/forty five division I have decided is fair and equitable.
I will hear the parties as to any necessary ancillary orders to give effect to this division.
I certify that the preceding one hundred and nineteen (119) paragraphs are a true copy of the reasons for judgment of Burchardt FM.
Associate: Brooke Evans
Date: 8 February 2007
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