Vesna Kosanovic v Aleksa Lazic
[2011] ACTSC 52
•30 March 2011
VESNA KOSANOVIC V ALEKSA LAZIC
[2011] ACTSC 52 (30 March 2011)
FAMILY LAW – de facto relationship – property interests – adjustment ordered
Family Law Act 1975 (Cth), s 79
Domestic Relationships Act 1994 (ACT), ss 3, 10 – 15, 19(2)
De Facto Relationships Act 1984 (NSW)
Supreme Court Rules 2006 (ACT)
Ferris v Winslade [1998] ACTSC 173; (1998) 22 Fam LR 725
Clauson v Clauson (1995) FLC 92-595
No. SC 835 of 2004
Judge: Master Harper
Supreme Court of the ACT
Date: 30 March 2011
IN THE SUPREME COURT OF THE )
) No. SC 835 of 2004
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:VESNA KOSANOVIC
Plaintiff
AND:ALEKSA LAZIC
Defendant
ORDER
Judge: Master Harper
Date: 30 March 2011
Place: Canberra
THE COURT ORDERS THAT:
the defendant pay to the plaintiff the sum of $170,000.00.
This is a claim for relief under section 15 of the Domestic Relationships Act 1994 (ACT). The parties lived together in a de facto relationship from 1995 or 1996 until 2002. They have a daughter who is almost eleven. The plaintiff, born in 1964 and now forty-six, has two older children from a marriage dissolved before she and the defendant lived together. She says that the defendant lived with her from about June 1996. The defendant says that the domestic relationship commenced in 1995.
At the commencement of the relationship, the plaintiff owned three houses, one at Kambah which she still owns, and others at Gordon and Greenway. She lived in the house at Kambah, and had tenants in the others. There was a mortgage over the Greenway property to secure a bank loan. The other houses were unencumbered. She also had shares worth about $20,000.00. The plaintiff had acquired the properties as a result of property orders made in the Family Court of Australia following the dissolution of her previous marriage.
The plaintiff and her children moved to Sydney to live with her sister during 1997, but maintained a close personal relationship with the defendant, who travelled regularly to Sydney to spend weekends with her.
At the end of 1997 the defendant asked her to move back to Canberra with the children and to live at his house in Lyneham. The defendant works in the building industry and was in the process of building the house. It appears to have been barely habitable, with no kitchen or bathroom, when the plaintiff and her children moved in. By the time of the hearing it was still incomplete and no certificate for fitness for occupancy and use had been issued.
At the start of the relationship the defendant also had a half interest in a house at Bonython, subject to a substantial mortgage. The house was sold during 1997. The defendant says that he received $38,000.00 from this sale, which went into improvements to the Lyneham house and living expenses.
The plaintiff says that she took out a $30,000.00 loan before moving back to Canberra, which was mainly applied towards improvements to the Lyneham house and to a lesser extent to living expenses.
The plaintiff and defendant had a daughter, born in April 2000. For about eighteen months the plaintiff worked as a cleaner at Casino Canberra, earning about $250.00 per week, which she says she applied for general expenses of the couple and children. She says that she sold her shares in May 1998 for $20,000.00, using the amount to buy building materials for the house.
In March 2000, she sold the Greenway property, receiving about $60,000.00 by way of net proceeds. She says that she contributed most of this money towards building materials and furniture for the Lyneham house, and partly to expenses related to her baby daughter, her car, and holiday and general living expenses. She also bought clothes for the defendant from time to time.
She says that during the time she lived with the defendant at Lyneham, he worked only intermittently and never had permanent employment. He had been employed when she first met him but this had ceased. He occasionally did casual work for cash. She also says that he regularly had too much to drink. She says that in 1999 or 2000 he was prosecuted for driving while intoxicated and lost his licence.
The plaintiff says that she contributed to the house at Lyneham, for example making curtains, painting, sanding, putting up wallpaper and landscaping.
She left the defendant at the end of 2002 and moved to Sydney, taking with her some furniture for a two-bedroom unit.
About six months after the separation she borrowed money against the security of the Gordon house, which she sold in November 2005, receiving about $168,000.00 after discharging the mortgage. She used this money to pay off credit cards which she had been using for living expenses for some eighteen months, and also gave some money to her sister.
The plaintiff says that during the time they were living together, she did almost all of the housework, with little assistance from the defendant.
She says that in about April 1999 she paid for a concrete driveway for the Lyneham property at a cost of about $9,000.00. She also says that during the relationship, she bought a considerable amount of furniture and kitchen appliances, using her own funds, sometimes on lay-by. She estimates that she spent about $25,000.00 on items, including a stove, refrigerator, dishwasher and living-room and bedroom furniture.
At the end of 2000, she says that she payed for, or towards, travel by the defendant to Serbia. By early 2002 she had incurred considerable credit card debts. She borrowed $40,000.00 from a bank, secured against the Gordon property. She paid off her credit cards and took the three children to Serbia to see her parents.
In about December 2002 she left the defendant, took the children and moved to Sydney.
In June 2003 she borrowed $170,000.00 to consolidate her debts, also secured against the Gordon property which she sold in November 2005. By this time she had in addition incurred further credit card debt which she paid off. She then moved with the children to live in Serbia. She was finding the cost of living in Australia too high and thought that living would be more affordable in her country of origin. A brother living in Serbia provided her with limited financial and practical support. They found a rented unit in the city of Novi Sad, but she was unable to find work and wishes to return to Australia when she can afford to do so. Her elder daughter is attending university in Sydney supporting herself and providing her mother with some financial assistance from time to time. The plaintiff still owns the Kambah property which is unencumbered and had an estimated value in mid-2009 of about $500,000.00. The rent from the Kambah property represents the plaintiff’s major if not sole source of income. She receives child support for her son from her former husband. She says that she has never had any child support from the defendant, although his evidence is that child support has been collected from him by the tax office. The plaintiff, by the time of the hearing, had further debts on credit cards and from loans by family members.
The plaintiff obtained a value estimate for the Lyneham property in mid-2009 of a range of $630,000.00 to $680,000.00. There is no formal valuation in evidence for either the Lyneham property or the Kambah property.
The defendant says that cohabitation ceased in June 2002 with the parties living separately and apart under the same roof until the plaintiff moved out of the Lyneham house in December 2002.
The defendant says that during 1996, while he was spending many nights with the plaintiff at her house at Kambah, he supplied her with a number of building items for that house, including a hot water service, second-hand stove and second-hand dishwasher. He also says that he carried out a substantial amount of physical work at the house, and throughout the relationship he carried out repairs and services to the plaintiff’s car, or cars, as required.
The defendant was born in 1955 and is fifty-five years of age. He completed an apprenticeship and qualified as a fitter and turner in Serbia. He migrated to Australia in 1981. He was employed in that capacity for a few years but later became a subcontractor. He also bought damaged cars, repaired and sold them.
The defendant agrees that the plaintiff paid for the concrete driveway, but says that in return he gave her a restored car for which he had been offered $9,500.00.
The defendant says that the relationship broke down because of the plaintiff’s daughter’s offensive behaviour towards him.
In November 2004 the defendant fell from a ladder and injured his head, neck and back. This has precluded him from heavier work.
During 2005 he borrowed $200,000.00 from a bank on the security of the Lyneham property, paying out an existing mortgage.
At the hearing, the plaintiff was represented by counsel. The defendant was unrepresented. Unsurprisingly, the defendant’s cross-examination of the plaintiff was generally unsatisfactory. Much of the time he made statements rather than asking her questions.
By the time of the hearing, the balance of the defendant’s mortgage loan over the Lyneham property was about $193,000.00. He was paying it off at $1,610.00 per month. He produced tax returns showing a net annual income of $12,000.00 to $15,000.00. Counsel for the plaintiff cross-examined him, putting that he had failed to include in the return some cash income, which he denied.
I thought that both the plaintiff and the defendant were generally honest and truthful in their evidence, although I suspect that perhaps the defendant had failed to include all of his cash income in his tax returns. I am not satisfied that he did so deliberately or with any intention to defraud the revenue.
Not unusually for a case of this kind, the defendant was very emotional in his evidence about the breakup of the relationship. Fairly typically, he would be much happier to see his money going to his daughter rather than his former partner.
There is not a great deal of disagreement between the parties as to factual history, although there are differences of emphasis.
This is, regrettably, a case where the parties are probably both worse off now than they were when they entered the relationship, and indeed probably worse off than at the time of separation.
The power I am asked to exercise is conferred by section 15 of the Domestic Relationships Act. That section provides as follows:
15 Property orders
(1) On application by a party to a domestic relationship, a court may make an order adjusting the interests in the property of either or both of the parties that seems just and equitable to it having regard to –
(a) the nature and duration of the relationship; and
(b) the financial or non-financial contributions made directly or indirectly by or on behalf of either or both of the parties to the acquisition, conservation or improvement of any of the property or financial resources of either or both of them; and
(c) the contributions (including any in the capacity of homemaker or parent) made by either of the parties to the welfare of the other or any child of the parties; and
(d) the matters referred to in section 19(2), as far as they are relevant; and
(e) such other matters (if any) as the court considers relevant.
(2) A court may make an order under subsection (1) whether or not it has declared the title or rights of a party in respect of the property.
The matters referred to in section 19(2) are as follows:
(a) The income, property and financial resources of each party; and
(b) The physical and mental capacity of each party for appropriate gainful employment; and
(c) The financial needs and obligations of each party; and
(d) The responsibilities of either party to support any other person; and
(e) The terms of any order made or proposed to be made under section 15 with respect to the property of either or both of the parties; and
(f) Any payments made to the applicant, under an order of a court or otherwise, in respect of the maintenance of a child or children.
Domestic relationship is defined in section 3 as follows:
Domestic relationship means a personal relationship between 2 adults in which one provides personal or financial commitment and support of a domestic nature for the material benefit of the other and includes a domestic partnership but does not include a legal marriage.
Section 10 specifically provides that proceedings under the Act may be instituted in this court. Section 11 establishes a precondition for relief that either or both of the parties to the domestic relationship were resident in the ACT on the date the application was filed, and that both parties resided in the ACT for at least one-third of their relationship. Section 12 establishes a further precondition that the domestic relationship must have existed for not less than two years. Section 13 imposes a limitation period of two years from the date the relationship ended. Section 14 requires the court to make orders which will, as far as practicable, end the financial relationship between the parties and avoid further proceedings between them.
I am satisfied that all of the preconditions have been met, and that the court has jurisdiction to make an order under section 15 if satisfied that it is appropriate to do so.
Cooper J in Ferris v Winslade [1998] ACTSC 173; (1998) 22 Fam LR 725 explained how the court is to go about its task in determining a section 15 application. His Honour set out the history of the Act, noting that it was intended to apply more widely than to de facto relationships between a man and a woman. His Honour noted that the Act was in substantially different terms to the NSW De Facto Relationships Act 1984, and other equivalent Australian legislation. His Honour held that recourse could and should be had to decisions of the Family Court of Australia under section 79 of the Family Law Act 1975 (Cth), and found helpful the judgment of the Full Court of the Family Court in Clauson v Clauson (1995) FLC 92-595, where the court described the process leading to a property adjustment order as involving three steps:
(a) Identification of the property of the parties;
(b) The evaluation of the contributions of the parties; and
(c) The evaluation of the matters referred to in the equivalent sections of the Family Law Act to sections 15 and 19 of the Domestic Relationships Act.
The evaluation steps involve an assessment of the expectations of the parties as to what each would contribute, the worth of it to the relationship and how it would be reflected in the property interests of each.
Cooper J described the critical issue as the real impact in money terms of the factors listed in section 19 on each of the parties. The procedure was not akin to an accounting exercise, but required the court to make a holistic value judgment in the exercise of a discretionary power of a very general kind. The exercise of the power under section 15 ultimately required the court to select a round figure or percentage as being the just and equitable translation into money terms of the wide and general considerations which section 15 required the court to take into account.
Counsel for the plaintiff submits that I should take account of her minimal or negligible earning capacity. I accept that she has been unable to exercise her earning capacity in Serbia. She has the capacity to earn a modest income, for example as a cleaner, should she return to Australia.
Counsel submits that I should find that the defendant has understated his income very considerably for tax purposes. As I have said, I think it likely that there has been some understatement but I am not satisfied that it has been substantial.
Counsel further submits that I should take into account the fact that the plaintiff has had sole care of the daughter of the parties since December 2002 and that she will have for a further seven years at least. Counsel has advised the plaintiff that an application for maintenance in the Family Court would be futile. The plaintiff’s evidence is that she has not received any child support. The defendant’s evidence is that he has had child support deducted from his income and paid to the tax office. The documentary evidence does not assist me in resolving this inconsistency. I am satisfied that any child support paid by the defendant has been negligible, and certainly of insufficient amount to have any effect on my task in the present application.
It seems to me that the defendant has some income-earning capacity, but that he is not exercising it, partly by choice. I accept that he has been depressed because of the present application and that this has probably played a part in his not working. I also accept that his physical working capacity has been reduced by his back injury.
The plaintiff’s house is said to have been worth about $500,000.00 in mid-2009. The defendant’s house is said to have been worth about $650,000.00 at about the same time. Neither party would appear to have other assets of any realisable commercial value. The plaintiff’s evidence was that she had debts of about $15,000.00, and the defendant owed $193,000.00 on his mortgage at the time of the hearing.
I can take judicial notice of some rise in the Canberra residential real estate market since mid-2009, which will have had the effect of increasing the value of both the Kambah house and the Lyneham house by about the same proportion.
The defendant will no doubt have paid a little more principal off his mortgage loan, while the plaintiff’s indebtedness will probably have increased somewhat since the hearing.
I think it likely that each of the parties has net realisable assets with a value of the order of $500,000.00, which means that there is a notional pool of about $1,000,000.00 to be divided.
Taking into account all of the factors, including the length and the history of the relationship between the parties, the needs of the child of the relationship, the contributions made by each in money and in other ways, and the other factors required to be taken into account, and also taking into account the future needs of the parties to have a place to live, it seems to me appropriate to divide the notional joint pool two-thirds to the plaintiff and one-third to the defendant. On my very broad figures, that would be achieved by an order that the defendant pay to the plaintiff $170,000.00. This would increase the value of her assets to $670,000.00 and reduce the value of his to $330,000.00.
I have considered whether I should make orders which would result in the plaintiff acquiring a percentage interest as tenant in common with the defendant in the Lyneham property. Such an order seems to me inconsistent with the obligation of the court to end the financial relationship between the parties. Instead I propose simply to order that the defendant pay to the plaintiff the sum of $170,000.00.
In case it becomes necessary for the order to be enforced, it seems to me that to give the plaintiff access to the remedies available under the Supreme Court Rules 2006 (ACT), I should direct that she have judgment against the defendant for that amount.
I shall hear the parties about costs if an order is sought.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.
Associate:
Date: 30 March 2011
Counsel for the plaintiff: Mr D P Shillington
Solicitors for the plaintiff: J S O’Connor, Harris & Co
Defendant: In person
Date of hearing: 9 July 2009
Date of judgment: 30 March 2011
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