Vitali v Stachnik

[2001] NSWSC 408

Reported Decision: (2001) 28 Fam LR 142
[2001] NSWSC 408
[2001] ACL Rep 205 NSW 18
(2001) DFC 95-235

New South Wales

Supreme Court

CITATION:	Vitali v Stachnik [2001] NSWSC 408
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 1484/99
HEARING DATE(S):	17/04/01, 18/04/01, 19/04/01, 20/04/01, 24/04/01
JUDGMENT DATE:	25 May 2001
PARTIES :	Johan Hendrik Vitali - Plaintiff Elizabeth Joanna Stachnik - Defendant
JUDGMENT OF:	Barrett J

COUNSEL :	Mr B.J. Knox - Plaintiff Ms L.M. Snelling - Defendant
SOLICITORS:	Elrington Boardman Allport - Plaintiff Claire & Associates - Defendant
CATCHWORDS:	FAMILY LAW - De facto relationships - Adjustment of interests in property - Contributions by one party to business of company solely owned by other - Debt and other contract claims should not be left to be separately litigated - Need for proceedings to produce finality in all aspects of relationship - Order for payment made - Proceedings separately maintainable barred
LEGISLATION CITED:	Property (Relationships) Act 1984
CASES CITED:	Price v Clinton [2000] NSWSC 1041 Wakeford v Ellis (1998) DFC 95-202 Evans v Marmont (1997) 42 NSWLR 70 Dwyer v Kaljo (1987) 11 FamLR 785 Black v Black (1991) DFC 95-113
DECISION:	Orders for payment of money and delivery of property by defendant to plaintiff. Orders restraining parties from suing upon other causes of action arising from relationship. Order that defendant pay plaintiff's costs.

39

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 25 MAY 2001

1484/1999 - VITALI v STACHNIK

JUDGMENT

1 By his Statement of Claim the plaintiff claims relief under s.20 of the Property (Relationships) Act 1984 in consequence of a relationship between him and the defendant which, it is agreed, commenced in May 1995 and concluded in September 1998.

2    Certain matters are common ground. It is agreed that the relationship was a “domestic relationship” as defined by the Act and that the conditions laid down by s.15 in relation to residence within New South Wales are satisfied. Furthermore, it is agreed that by far the major element for the Court’s consideration is the alleged contributions by the plaintiff to the defendant’s business which, throughout the period of the relationship, was conducted by Campaign Nursing Agency Pty Limited. The plaintiff’s case is, in essence, that he brought to that business a particular set of skills of which it was in need and, by dint of hard work and long hours for which inadequate remuneration was received, played a leading role, along with the defendant, in expanding the business, increasing its revenues and enhancing its profitability. For the purposes of the proceedings, each party retained an accountant to express an expert opinion as to the value of the business at the commencement of the relationship in May 1995 and then again at its conclusion in September 1998. There is in evidence a joint statement by those accountants which the parties have agreed to accept. The joint statement ascribes to the business a value of $134,381 at 30 June 1995 and a value of $676,952 at 30 June 1998. It is accepted by the parties that these figures may be taken as a reliable indication of the values at the commencement and conclusion of the relationship.

3    The plaintiff is aged fifty, having been born on 25 December 1950. For most of his working life, including in the early part of the relationship, he had worked in the retail industry, first with Norman Ross and afterwards with Harvey Norman. For part of this time, a company controlled by him and his wife was a contractor to Harvey Norman. It arranged replacement of insured furniture for insurance companies. During his twenty three years with the Norman Ross and Harvey Norman groups, the plaintiff worked his way up to what might be termed upper middle management positions. Some time after the failure of his marriage in about 1989, he took what he termed “time out” and was not in regular employment, although he did some minor consulting and project work for Mr Jerry Harvey, the principal of Harvey Norman. He also spent a year or so working on two projects unrelated to Harvey Norman, both involving the development of technological possibilities. These were speculative and came to nothing. At the commencement of the relationship, the plaintiff was in a sales position with a Harvey Norman franchisee. He said he had taken this position because he wanted to obtain sales experience as a prelude to attempting to acquire a Harvey Norman franchise of his own, knowing that such franchises could produce net annual returns of between $150,000 and $600,000. The plaintiff obtained a certificate in business management from TAFE which he attended in his first year at Norman Ross. He has no accountancy or computer qualifications.

4    After separating from his wife, the plaintiff lived mainly with his mother although he also lived with friends from time to time. There were three children of his marriage and, in consequence of the separation, the plaintiff became liable to pay child support. That liability continues to the present.

5 The defendant is aged forty eight, having been born on 7 December 1952. She is unmarried and has no children. During the last fourteen years or so, she has worked in the personnel placements business. She established her own business in this field in 1989 as a sole trader operating an agency which arranged placement of freelance or casual nursing staff in hospitals, nursing homes and other institutions, as well as in private homes where nursing services are required. The business thus established by the defendant was transferred to Campaign Nursing Agency Pty Limited following the incorporation of that company which she arranged in January 1994. The business operated initially at Waverley and afterwards moved to newly leased premises in The Rocks. Mr Kranz, an accountant, originally held one share in the company in trust for the defendant and was also a director until such time as changes to the Corporations Law allowed single shareholder and single director companies, whereupon the defendant became the sole director and sole shareholder. This occurred in June 1996.

6    The parties met in about April 1995 and the relationship which is relevant for the purposes of the Act began about a month later when they began to live together. They lived in rented flats during the relationship. The defendant alone was the tenant of each flat. She paid the rent. She also paid most, if not all, of the living expenses, including meals at restaurants which the parties had virtually every day. The defendant owned the motor vehicle which the parties used during the relationship, having bought it for about $64,000 just before the relationship began. She paid for this out of a bank deposit of some $49,000 and a bank loan of $15,000 (she in fact borrowed $30,000 so that the car purchase would not leave her short of cash). The defendant paid virtually the whole of the running costs and upkeep of the car. The plaintiff’s financial contributions to the parties’ domestic arrangements were, by comparison, negligible. He bought milk and bread occasionally and also paid their joint laundry bills of some $30 per week. The defendant paid the plaintiff’s dentist’s bills and for holidays they took together.

7 The plaintiff came to the relationship with very little by way of financial resources and possessions. He did own some furniture from the house previously occupied by his wife and him. More will be said of this presently. He said that he also brought to the relationship some $13,000 in cash, that is, in currency rather than in the form of a bank deposit. He kept it at home with him “for a rainy day”. At the commencement of the relationship the plaintiff also had considerable debts, being some $55,000 to the Commissioner of Taxation, more than $30,000 (perhaps as much as $39,000) to the Child Support Agency, more than $20,000 for Family Law Act legal services and some $8,000 to his accountants. He described the last two as having now been “written off”, which he appears to think means he no longer has to pay them.

8    In round terms, the respective assets/liabilities positions of the parties at the commencement of the relationship may be summarised as follows:

Plaintiff :
Assets : Cash $ 13,000
Furniture 11,000

$ 24,000
Liabilities : Tax $ 55,000
Child support 30,000
Legal fees 20,000
Accounting Fees 8,000
$ 113,000
Net deficiency: $ 89,000
(If the legal and accounting fees of $28,000 “written off” are disregarded, the net deficiency is $61,000.)

Defendant:

Assets: Furniture etc $ 6,000
Cash (part of car loan) 15,000
Car 64,000
Campaign Nursing business 134,381

$ 219,381

Liabilities: Bank Loan $ 30,000

Net surplus: $ 189,381

9    The plaintiff’s taxation assessments were in evidence. They show a taxable income for each of the following years as follows:

30 June 1994 $ 16,909
30 June 1995 $ 19,011
30 June 1996 $ 36,438
30 June 1997 $ 26,388

10    The parties agree that the plaintiff spent time working with the defendant at Campaign Nursing, initially on a part-time or casual basis on weekends and days off and at night, while holding a full-time position at the Harvey Norman franchise. From May 1997, he worked at Campaign Nursing on a full time basis and was put on the payroll. The plaintiff’s attendances at the Campaign Nursing premises began shortly after the parties began living together because the plaintiff wished to be with the defendant. She says she did not ask him to attend. Equally, however, she did not ask him to stay away. She said she was flattered when he began coming to the business premises to be with her.

11    The plaintiff says he began full time with Campaign Nursing in May 1997 at the express request of the defendant who was overworked and stressed. The defendant denies the specific request but agrees that she took him on to Campaign Nursing’s full time payroll at that time at an annual salary of $30,222. That salary level pertained for the whole of the plaintiff’s employment.

12    Both parties led evidence intended to indicate the appropriate level of the defendant’s salary during his full-time employment. The plaintiff said it was too low, having regard to the position he held and the duties he performed. The defendant disagreed. The plaintiff tendered a report by a remuneration consultant, Mr Hart, who also gave oral evidence. The defendant, on the other hand, referred to the New South Wales Clerical Award for a Grade 5 Clerical officer, contending that the Grade 5 description applied to the work done by the plaintiff. I did not find any of this evidence particularly helpful. Mr Hart’s conclusions were, of course, based entirely on information as to duties and responsibilities furnished to him by way of review of the parties’ affidavits and, while those conclusions were no doubt reached conscientiously and professionally, the assumptions underlying them cannot be accepted as objectively reliable. Nor is the analogy with a Grade 5 clerical officer, in terms of the industrial award, of any particular use. Award rates are minimum rates and say very little about what people are actually paid. In any event, the plaintiff’s salary must be assessed in the light of the whole of the relationship, including the fact that he was kept by the defendant.

13    The defendant says that the salary was kept at $30,222 and the free board and lodging arrangement was continued so that the plaintiff would not be exposed to the possibility of increased liability to the Child Support Agency. The plaintiff denied this.

14    It is common ground that, after full-time employment began in May 1997, the plaintiff worked long hours in the Campaign Nursing business. The plaintiff said he sometimes worked 100 hours a week, including weekends. The defendant does not necessarily concede this number of hours but does agree that the hours he spent there were long enough for her eventually to have to ask him for a formal plan for the reduction of his hours. It was, in part at least, tension over that which eventually led to the split.

15    There are also conflicting views of the parties as to the value of the plaintiff’s long attendances at the Campaign Nursing office. The plaintiff says, in effect, that he worked very hard and expended a great deal of effort in support of the business. The defendant, on the other hand, says that he spent a lot of time just talking to people and not doing anything particularly useful or valuable.

16    Turning to specific areas in which the plaintiff says that he enhanced the business, it is necessary to refer to activities involving the Royal College of Nursing, Australia, policies in relation to workers compensation, the accounting functions and computerisation.

17    The plaintiff says, and the defendant agrees, that the plaintiff became active in the Royal College of Nursing, Australia. Evidence was given by Mr Paul Stanmore, National Membership and Marketing Manager of the College, of a positive contribution by the plaintiff to the work of that body which was keen to develop interest in its activities on the part of agencies such as Campaign Nursing. The defendant was only marginally interested in this field of endeavour. She saw no real value to be gained from it, having done well enough in business for herself without any such connection. She took the same view of a nursing placements trade association in which the plaintiff also became active on behalf of Campaign Nursing.

18    In the field of workers’ compensation, the plaintiff, according to his own account, effected savings for the business by recognising that there was no need to cover (and therefore no need to incur workers’ compensation insurance premiums for) nurses whose services Campaign Nursing arranged for hospitals and nursing homes. Those nurses, he said, became employees of the institutions with which they were placed. Nurses assigned to patient care in private houses, on the other hand, were, as I understood his proposition, employees of Campaign Nursing at least in the sense relevant to workers’ compensation. It is not clear to me that any such savings were effected or, if effected, were properly made. In December 1998, some three months after the relationship ended, Zurich Insurance, Campaign Nursing’s workers’ compensation insurer, billed additional premiums, being $2,552.00 for the year to June 1997, $7,273.00 for the year to June 1998 and $7,752.00 for the year to June 1999. Assuming the annual premiums were payable in advance, the years to which the apparently deficient payments had been made were years in which the plaintiff was involved in the business. The defendant deposes that her external accountants had to sort all this out after the plaintiff had left.

19    A letter sent to Zurich by the plaintiff on Campaign Nursing’s behalf argues that a particular nurse sent to a home nursing assignment at Bondi was not an employee. This is consistent with the plaintiff’s views. The defendant described these workers’ compensation matters as “a grey area”. She was not prepared to take risks. When Zurich billed for past years’ premiums, she ensured they were paid.

20    In relation to the accounting function, the plaintiff says that the defendant gave him virtually a free hand to upgrade systems and that he initiated computer based systems built around the MYOB product, including the “Powerpay” payroll system, which were superior to those the defendant had previously used. He also arranged the acquisition of new computers and printers. He saw himself as sharing a management role with the defendant. She, however, said that while the plaintiff was given a function in relation to the accounts and was instrumental in the conversion to MYOB and “Powerpay”, he had no accounting qualifications or experience and relied heavily on Monique Piwonka, a staff member with an accounting degree, and on the external accounting firm. Mr Menzies, a principal of that firm, gave evidence that the plaintiff phoned him on an average once a fortnight about treatment of items in the management accounts. Ms Piwonka testified that while she regarded the plaintiff as her superior officer, he did not have the same grasp of accounting matters that she had. She also said that one of the reasons why she left her full time position in February 1998 was that a lot of the work she had done as a result of the streamlining and computerisation of things could be done by someone less qualified than her. Moreover, according to the defendant, the MYOB system the plaintiff was responsible for installing caused problems which she had to have fixed by outside consultants after he had left.

21    The way in which the plaintiff’s position with Campaign Nursing developed from casual attendance simply to be with the defendant to a full time commitment involving substantial overtime, at least on some occasions, means that there was never any formal job description or list of duties, with responsibilities and accountabilities clearly specified. The evidence of the plaintiff and the defendant shows that there is now, and probably was then, a significant difference in their understanding of these matters. The plaintiff painted a picture in which he occupied a position of virtual equality with the defendant in the business, with particular emphasis on financial matters, administration and negotiation. The defendant, on the other hand, maintained that she was always in charge (in the course of oral evidence, she referred constantly to “my business” and “my company”) and that the plaintiff occupied a subordinate position of an essentially clerical kind focussed upon accounting matters. These divergent understandings can be illustrated by reference to two particular areas of activity.

22    Presentations to hospitals and other institutions with a view to obtaining more business from them were a central part of the activities of Campaign Nursing. The plaintiff said that he played a senior management role in relation to presentations. He gave the impression that he was a leader in preparations for these presentations and in delivery of them, with the defendant playing a supporting role. The defendant gave exactly the opposite impression. She was in charge of presentations and their delivery. It was the plaintiff who was cast in the supporting role.

23    Similarly conflicting accounts were given of the decision to set up a branch office of Campaign Nursing in Parramatta. The plaintiff said that he was the moving force in this, that the defendant was reluctant because she did not think it would work and did not want to pay for it. However, he eventually persuaded her, to her advantage, that “the future is in the west”. The defendant, on the other hand, said that she decided herself to expand into western Sydney and that the plaintiff merely attended to some administrative details such as the finalisation of the lease of premises.

24    Towards the end of the relationship, it appears that the defendant became increasingly nervous about aspects of the plaintiff’s activities in the business. She was very concerned about the workers’ compensation situation where she thought the plaintiff was either doing the wrong thing or taking unacceptable risks. Many of the differences of opinion - both emerging from the evidence and contributing to the breakdown of the relationship - may be traced to different personalities and philosophies.

25    The plaintiff’s sister gave evidence. She described the plaintiff as follows:

“He is a very entrepreneurial person, and he does live in the world of ideas, so there was absolutely nothing unusual for him to work incredible hours doing things that not a lot of us could keep track of.”

26    The plaintiff was keen to bring fresh ideas to the Campaign Nursing business. He had commercial experience from Norman Ross and Harvey Norman. Manual bookkeeping would have presented to him a challenge to modernise. He regarded himself as an innovator. He had a measure of business sophistication which would countenance calculated risk taking. He came from an industry where there is close attention to margins and cash management. The defendant, on the other hand, showed herself to be very cautious and conservative. She referred, on one occasion, to keeping money for workers’ compensation premiums in a separate bank account so that it would be earmarked. She also showed conservatism in her borrowing to buy the car acquired just before the relationship began. The evidence about the loan and the way it was structured was not entirely consistent, but it is clear that the defendant borrowed more than she needed to, in purely objective terms, as she did not want to run the risk of being short of cash.

27    Many of the differences in the accounts of various matters given by the plaintiff and the defendant can be traced to these personal characteristics. Things the plaintiff might regard as normal probably seemed to the defendant to be financially risky and unwarranted. And things she might regard as normal probably seemed to him to be financially so conservative as to be unwise.

28    Much was made in evidence and in argument of the way in which the plaintiff was held out by the defendant in a business context. It was common ground that, with her consent, he used a business card identifying him with Campaign Nursing and carrying the title “Director”, although both agreed that the defendant did require that word to be in smaller letters than the plaintiff wanted. He was never a director of the company. It is also common ground that, when expansion of the Campaign Nursing business to New Zealand was under consideration, in early 1997, the defendant was referred to a firm of accountants in Auckland by her accountants in Sydney. Having introduced herself to the relevant person at the New Zealand firm on the telephone, she sent him in January 1997 a letter which is in evidence. The letter was sent “to introduce ourselves more formally”. It continued as follows:

“Campaign is in its most exciting times at present, as we are now organised and we feel our profits are running 100% to goals and Targets. So this means we are in our most creative times.
McDonald Ross (Our Accountants) have been tremendous, and have given me the guidance needed in this business. My organisational skills and sales are my forte. But for me what is essential for any location to progress is having Accountants who will give me accounting guidance.
Fortunately since my partner John Vitali has joined Campaign, revamping the administration and accounting our profits have tripled in the last twelve months.
So we are on the right track.
Importantly, you can send us a copy of your fees.”

29    The plaintiff points to the third last paragraph as evidence of the defendant’s having acknowledged the worth of his contribution to the business. The defendant, on the other hand, says that, in January 1997 (some seven months or so after the start of the plaintiff’s full time employment), she still had high hopes of seeing the plaintiff make a significant contribution, but those hopes were never realised.

30    Several witnesses spoke of the defendant having acknowledged the plaintiff as her partner in both the personal or domestic sense and the business sense. There was similar evidence about statements that the plaintiff was to have a 50% or 49% interest in the Campaign Nursing business. In most cases, however, it appears more likely that the statements were initiated by the plaintiff, in the sense that he represented himself to occupy such a position or to have been promised such an interest and the defendant either agreed with him or did nothing to contradict him. An exception was a statement apparently made spontaneously by the defendant which Monique Piwonka testifies occurred when the success of the business was being celebrated. There was evidence that he was “the talker” and she was more quiet in conversation. She says that when conversations of this kind occurred, she thought it best to say little or nothing, first, because she did not want to upset the plaintiff and, second, because she did not really want the subject to be canvassed in the circles where he brought it up. This was particularly so in the presence of Campaign Nursing staff and in certain social contexts. There was also evidence that the defendant had nominated the plaintiff as beneficiary under her superannuation policies and that she made a will in his favour. These moves say nothing about the plaintiff’s position in relation to the business but are, of course, indicative of the nature of the parties’ personal relationship and the defendant’s feelings towards the plaintiff at the time.

31    I come now to the matter of the plaintiff’s furniture. Following the breakdown of his marriage, the plaintiff came to own a quantity of household furniture from the matrimonial home which was initially stored at the home of one of his friends, Mr Kincaid, who gave evidence. There was evidence of a transaction in which Campaign Nursing bought this furniture for $11,421 so that most of it could be used at the company’s office and one or two items (including a large Mitsubishi 68 cm television set) could be used at the flat occupied by the plaintiff and the defendant.

32    I am satisfied that the plaintiff was the moving force in the removal of his furniture from storage at the friend’s house to the Campaign Nursing office for use there as office furniture. However, I am also satisfied that the defendant acquiesced in that and was content for the furniture to be used as office furniture. There was no suggestion that it was not suitable for that purpose or that it was not in fact used at the office. The furniture continues to be reflected as an asset in the company’s balance sheet. The exception was the large television set which, as I have said, was taken separately to their residence, even though included in the list for the company and still represented as a company asset.

33    There is a question about the fact that new furniture prices were ascribed to the furniture in the list, even though most of the furniture was some twelve years old. But there was no evidence about the true value of the items in a second hand market or of the cost of obtaining equivalent items new. I therefore do not see how I can draw any conclusions about the relationship of the price of $11,421 to the value of the furniture and, as I see it, I have no alternative but to take the transaction at face value.

34    There is an issue about the drawing of the cheque for $11,421 for the furniture. It is common ground that the writing on the cheque, apart from the signature, is that of Monique Piwonka and that the signature is that of the defendant. It was also common ground that the defendant left a few signed but otherwise blank cheque forms with staff members, although she said that she only did this for specific purposes. The plaintiff says that Ms Piwonka filled in the details on a cheque form which was not pre-signed and that the defendant afterwards signed it. The defendant has no recollection of having signed any such cheque and raises the possibility that one of the pre-signed forms was used. Ms Piwonka, who stated in evidence that she was very aware of the personal relationship between the plaintiff and the defendant and sometimes experienced discomfort at being drawn into it, recalls writing the date, the payee and the amount and believes that the signature line on the cheque was then blank. Because of the discomfort to which I referred, she would not have used a pre-signed cheque form for a payment by the defendant to the plaintiff. I am satisfied therefore that, while Ms Piwonka wrote the details of payee and amount onto the cheque form at the request of the plaintiff, the form was at that time unsigned and was signed at some later time by the defendant.

35    The cheque was banked by the plaintiff after the relationship ended. By that time the defendant had asked her bank to monitor the account for unusual payments. She received a phone call from a bank officer to say that a cheque for $11,421 had been presented for payment by a collecting bank. The officer could not tell her the name of the payee but did tell her the cheque number. She initially said that when she went to the cheque butt she found the name of the payee to be “PCH Office Furniture” and, because she had had no dealings with any organisation of that name, stopped payment on the cheque. When cross-examined and shown the cheque butt, the defendant agreed that the name of the payee on the butt was “J. Vitali” and that she must have known this when she stopped payment. She also said in cross-examination that the name “PCH Office Furniture” appeared in ledger entries relevant to the cheque. The ledger pages were shown to her and she identified an entry in capital letters “PCH OFFICE FURNITURE”. It is clear to me that this is simply a bookkeeping abbreviation of “purchase office furniture” and that the defendant’s belief that any firm named “PCH Office Furniture” was involved was a result of either honestly jumping to a wrong conclusion or deliberately attempting to cause suspicion to attach to the furniture transaction in which the cheque for $11,421 in the plaintiff’s favour played a central part.

36    My conclusions with respect to the furniture are that the defendant willingly but probably not enthusiastically agreed to the purchase by the company for $11,421; that the defendant signed the cheque knowing that it was payable to the plaintiff and was the price of the furniture; that the defendant stopped payment of the cheque not because she thought it involved some suspicious payment to “PCH Office Furniture” but because she knew it was the cheque she had signed in favour of the plaintiff for the furniture; and that the defendant thus intended to deprive the plaintiff of the sum of $11,421 which Campaign Nursing had previously paid to him by means of the cheque, having told herself (as she told the Court) that the furniture was in reality still his and should be collected by him.

37    The next matter to be examined is a financial aspect of the opening of the Parramatta office of Campaign Nursing. As I have already said, the plaintiff claims a great deal of the credit for the idea that Campaign Nursing should extend its operations into the western areas of Sydney. The defendant, on the other hand, says that she had done a great deal of work on the possibility of opening in Parramatta before the plaintiff became involved and that he really only helped out at the end with arranging the lease.

38    It is common ground that a separate bank account of Campaign Nursing was opened for the Parramatta office and, since it was also common ground that the defendant was the sole director and secretary of the company and that the plaintiff never had signing authority on any company bank account, it must be inferred that the defendant attended to (or, at least, signed) the paper work for the establishment of this bank account.

39    The plaintiff deposited $6,010 into this newly established account. The bank statement is in evidence. It shows that such a cash deposit was the first transaction on the account. The defendant does not deny that the deposit was made but says that the company had quite adequate funds at the time it established the Parramatta office. It seems clear, therefore, that the deposit by the plaintiff was in truth in response to a challenge by the defendant to “put his money where his mouth was” in relation to expansion to Parramatta. This is consistent with the plaintiff’s contention that the defendant was reluctant to expand and that he played a leading role in the Parramatta expansion. It is also consistent with the evidence given by Mr Appino.

40    A third item of cash movement must also be noted. The plaintiff, at the request of the defendant’s sister-in-law, arranged the purchase of certain computer equipment the sister-in-law needed for her business. The plaintiff obtained this at a discounted price through his Harvey Norman contacts. The equipment was shipped to the sister-in-law after the plaintiff had paid for it from his own pocket. The sister-in-law later sent the relevant sum (being $5,995) to the defendant, presumably with the intention that she would pass it on to the plaintiff or, at all events, with the intention that the payment to the defendant discharged the sister-in-law’s obligation to the plaintiff. The defendant has retained these funds.

41    The final item of a similar financial nature involves a claim made by the plaintiff upon Campaign Nursing after separation for reimbursement of expenses to the extent of some $5,544. These were not reimbursed. The expenses consist of a very large number of small items, the bulk being taxi fares. Many of these are fares from Sydney to Balmain and vice versa and thus represent travel between home and work which the plaintiff really should bear out of his own pocket.

42    Returning to the matter of the value of the business, I have already referred to the fact that the parties have agreed that the values at 30 June 1995 and 30 June 1998 were respectively $134,381 and $676,952 - an increment of $542,571. Other indicators of enhancement of the business are numbers of placements, revenue and profits. As to placement numbers, the defendant candidly confirms that average weekly placements in May 1997 and September 1998 were respectively 386 and 608. Total revenue and net profit of the business for the years ended 30 June 1996 to 1999 were:

Revenue Net profit
1996 $ 564,766 $ 149,507
1997 920,275 116,713
1998 2,126,776 249,764
1999 2,243,613 140,759

I do not suggest that any of these statistics is determinative of anything. I mention them only to show that the business was, at relevant times, a growing business.

43    Before turning from this recitation of the facts to the legal principles I must apply to them, I should refer to one particular legal issue on which I invited submissions from counsel, namely, the extent to which it is open to the Court in proceedings such as these to find that specific sums are due or owing by one party to the other (or, in this case, Campaign Nursing which is effectively an alter ego of the defendant) and whether the Court may make orders with respect to such sums. I refer in particular to the sums related to the furniture transaction, the bank deposit in connection with the establishment of the Parramatta office and the reimbursement payment by the defendant’s sister-in-law.

44 Ms Snelling, counsel for the defendant, submitted that these are contractual matters which fall to be determined in other forums in properly constituted proceedings. On that basis, she said, they are not matters which can be taken into account in these proceedings for the purposes of the Property (Relationships) Act. Mr Knox, counsel for the plaintiff, on the other hand, pointed to the clear requirement of s.19 that the orders of the Court in proceedings under the Act should “finally determine the financial relationships between the parties to a domestic relationship and avoid further proceedings between them”.

45    In the light of that requirement, it seems to me that the Court cannot simply put to one side debt claims between the parties on the footing that those claims will be taken care of, one way or another, in other proceedings. The proceedings under the Act are the occasion for all financial matters, including debt claims, to be disposed of once and for all. In the present context, this includes debt claims involving Campaign Nursing which is an alter ego of the defendant.

46 In this connection, I should refer to the decision of Master McLaughlin in Price v Clinton [2000] NSWSC 1041 where one party had made a loan to the other and the former’s claim under the Act proceeded on the basis that the Court should award only the higher of the debt with interest and an appropriate monetary sum under s.20. The lender party acknowledged that she could not receive a duplication in the statutory claim of any entitlement under the general law to repayment of the loan with interest. The learned Master then proceeded to determine what was, in effect, an action for the recovery of a debt and, because that produced a sum greater than the sum which he concluded would otherwise be awarded under s.20, ordered judgment for the plaintiff for the debt with interest according to the Supreme Court Rules.

47 I do not accept that this approach accords with the Act. To my mind, money which one party has lent to the other or which is otherwise owing between the parties should, as it were, be left to lie where it has fallen, with the resultant benefits and detriments being taken into account as elements in the overall assessment of respective contributions the Act requires. Thus, the fact that Party A has had and continues to have the benefit of money belonging to Party B should be viewed in the same way as the fact that Party B has lived and continues to live in a house owned by Party A or that Party B has rendered domestic assistance to Party A. Where a contribution of this kind taken into account in the overall s.20 assessment is of such a nature as to leave open the possibility of the assertion of some legal right of recovery - whether it be in relation to money or property - the appropriate course in proceedings under the Act seems to me to be for the Court to make orders effectively precluding that possibility so that its determination under the Act may be, as it is intended by s.19 to be, a final settlement of all financial and property matters involving the parties which avoids the possibility of further proceedings between them.

48 A conceptually similar question (and one by no means irrelevant to the present case) was considered by Master McLaughlin in Wakeford v Ellis (1998) DFC 95-202. It concerned a situation where one party worked in a business owned by the other and received wages which were afterwards said to be inadequate having regard to the extent and value of the services provided. Master McLaughlin took the view that any such inadequacy (which, in any event, he did not regard as established) should not reflect in an order made under the Property (Relationships) Act but “should be pursued by the plaintiff in the appropriate tribunal having jurisdiction over a claim against a former employer for unpaid wages”. He added that, in expressing that view, he was fully mindful of the admonition contained in s.19.

49 Again, I do not think that it is consistent with s.19 to contemplate that financial claims clearly referable to the relationship and to contributions relevant to the operation of s.20 should, as it were, be cut out from the comprehensive assessment of all such contributions called for by s.20 and left to be litigated in an isolated way and in separate proceedings by reference to facts which form one part of the overall factual context in which the s.20 assessment falls to be made. To the extent that a contribution takes the form of labour provided by one party in return for payment by the other, there is, in reality, either no net contribution to combined financial resources (because each element counterbalances the other) or a net contribution, in the case of any inequality of value, by the party providing the component of greater value, whether it be the services or the remuneration. Another way of looking at this is to say that there are two contributions: the labour contributed by one party and the remuneration provided by the other. I do not suggest that some detailed mathematical process can or should be undertaken. Rather, the matter should be approached in the same way as, say, homemaker or parent contributions where there is no associated payment regime, the difference being that appropriate countervailing allowance must be made for the fact that the service is not unremunerated.

50 Section 38(1)(h) confers a broad power for the Court, in exercising its powers under s.20 (among other provisions), to “make an order … for the protection of or otherwise relating to the property or financial resources of the parties to an application or either of them”. A cause of action in the nature of a chose in action is, clearly enough, “property” or “financial resources” for these purposes. Section 38(1)(h) can therefore be used to bar separate proceedings based on part of the totality of the facts relevant to s.20 relief.

51 I now turn to s.20 of the Property (Relationships) Act and to the identification of the matters to which the Court is to have regard in determining what is just and equitable by way of the adjustment of the interests of the parties in their property. Those matters are specified in paras (a) and (b) of s.20(1):

“(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the de facto partners to the acquisition, conservation or improvement of any of the property of the partners or either of them or to the financial resources of the partners or either of them; and
(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the de facto partners to the welfare of the other de facto partner or to the welfare of the family constituted by the partners and one or more of the foillowing, namely:
(i) a child of the partners;
(ii) a child accepted by the partners or either of them into the household of the partners, whether or not the child is a child of either of the partners.”

In the present case, part of para (b) may be disregarded as the defendant has no children and those of the plaintiff never formed part of the household or domestic unit of the parties to the relationship.

52 Authoritative guidance on the approaches to be taken under s.20 is provided by the decision of the Court of Appeal in Evans v Marmont (1997) 42 NSWLR 70. It is there made clear that the factors mentioned in paras (a) and (b) of s.20(1) are “the focal points by reference to which the discretionary judgment as to what seems just and equitable must be made” (per Gleeson CJ and McLelland CJ in Eq, Meagher JA concurring). The discretionary judgment must, of necessity, be made in the whole of the context of the parties’ relationship. To disregard that context would be to run a significant risk of misconstruing the signifance of the contributions. The context may well involve factors of the kind referred to by Hodgson J (as he then was) at first instance in Dwyer v Kaljo (1987) 11 Fam LR 785, including whether the contributions were compensated and, if so, whether the compensation was adequate (this being the matter to which I have already referred in connection with Wakeford v Ellis) and the parties’ respective financial circumstances and their needs and means. It is to be emphasised, however, that these and other matters beyond those specifically mentioned in paras (a) and (b) of s.20(1) can play only a limited role in the judicial evaluation. The redressing of injustice and the assuring of equity are to be achieved by reference to (or “having regard to”) the specifically mentioned matters only, although the surrounding contextual matters will play a subsidiary role of a stage-setting kind.

53 I proceed now to apply the legal principles to the circumstances of this case, noting at the outset that it would be inappropriate to start with any idea that the justice and equity with which s.20 is concerned involves any presumption of equality: Black v Black (1991) DFC 95-113.

54    The defendant brought to the relationship a profitable and growing business, a leased home, home contents and a car. In the course of the relationship she kept the defendant, in the sense of providing virtually all his material needs for board and lodging, sustenance, transport, holidays and entertainment. Her business was, as I have said, profitable and growing. She was still building it up and realising the potential of further profitability embedded in its goodwill. That potential continued to be realised over a period which included the period of the parties’ relationship. Even if the plaintiff had never come upon the scene, it is virtually certain that the value and profitability of the business would have continued to grow.

55    The plaintiff brought to the relationship assets of little worth, compared with those of the defendant. He had some $13,000 in cash and the furniture which, towards the end of the relationship, became the subject of the transaction involving the sum of $11,421.

56    The relationship was short. It existed for only three years and three months. It cannot be viewed in the same light as relationships in which parties commit substantial parts of their lives to one another. The period of full time service with Campaign Nursing was only sixteen months.

57    During the currency of the relationship, both parties expended effort in servicing the needs of the business. I am satisfied that the defendant, although not as commercially sophisticated as the plaintiff, has particular experience in her field and made very substantial contributions to the success and continued growth of the business by way of her general superintendence as chief executive and through her undoubted skills in those aspects of the business (which, by definition, must be considerable) involving interaction with clients and contracted nurses, as well as staff - not to mention, of course, her experience in the relevant field of business and a track record of successful operation. The plaintiff’s efforts and contributions in relation to the business, particularly after May 1997, were also beneficial. But they were largely confined to accounting and administration.

58 Statements the defendant made about wishing to see the plaintiff become (or already being, in concept) an equal or 49% partner in the business cannot be regarded as indicative of anything with respect to the extent or value of the contribution on the plaintiff’s part relevant to the operation of s.20. While, in purely commercial situations, an objective view of the worth of someone’s contribution may be gathered from statements about partnership potential, that is by no means so in domestic and emotional relationships. To my mind, the defendant’s statements as to partnership in the business belong in the same category as her nomination of the plaintiff as her superannuation beneficiary and the making of a will in his favour. These demonstrate personal regard for and personal affection towards a romantic or domestic partner, not some acknowledgment or measure of contribution to the matters with which s.20 is concerned.

59    I can see no firm basis at all on which I can or should infer that the agreed increase in the value of the Campaign Nursing business over the life of the parties’ relationship was attributable to any contribution of the plaintiff. As I have said, the business was well established and in growth mode before the relationship began, with the defendant successfully steering it into further phases of development. Her considerable groundwork was already beginning to pay off and the significant increases in placement numbers, revenue and profit in years after 1995 were the natural outcome of that groundwork. Improved accounting and administrative practices to which the plaintiff contributed by way of support services, while beneficial to the business, cannot really be said to have played any cause and effect role in those increases.

60    I do accept, however, that the plaintiff worked for almost two years part-time without payment and that he worked unpaid overtime after the full-time employment began. I also accept that he played a positive role in assisting the defendant to expand into Parramatta and that that contribution on his part warrants recognition. In addition, he made financial contributions to the business to the extent of $8,621 in respect of the office furniture (exclusive of the large television set to which $2,800 was ascribed) and $6,010 by way of the cash contribution upon establishment at Parramatta. At the personal rather than business level he also made the contribution in the form of the funds sent to the defendant by her sister-in-law but not accounted for by the defendant to the plaintiff ($5,995).

61    It is just and equitable that the plaintiff’s contributions to the property of the defendant be recognised by a cash payment by her to him. Having regard to the facts I have just mentioned, the components in the calculation of that sum should be:

(a) the value, as indicated by the full time remuneration rate, of the part time services rendered by the plaintiff before May 1997 on the footing that those services were the equivalent of two working days per week instead of five and that the relevant period was two years;
(b) the value, as indicated by the full time remuneration rate, of the services rendered during the full time employment period over and above normal working hours, on the footing that the time spent each week was the equivalent of seven working days rather than five and the relevant period was sixteen months;
(c) the equivalent of four months salary at the full time remuneration rate as recognition for the special effort in relation to the opening of the Parramatta office;
(d) recognition of the financial contributions in respect of office furniture (being $8,621 after exclusion of the large television set), funds paid into the Parramatta office bank account ($6,010) and funds received by the defendant from her sister-in-law ($5,995); and
(e) recognition of the fact that the plaintiff has been out of pocket to the extent of the above items since the relationship ended.

62    The defendant should also cause the large television set to be restored to the plaintiff.

63 The payment and delivery by the defendant to the plaintiff should put an end to such contractual and other claims, if any, as may be maintainable between the plaintiff on the one hand and the defendant and Campaign Nursing Agency Pty Limited on the other so that the finality required by s.19 of the Property (Relationships) Act is achieved.

64    The orders of the Court are as follows:

1. Order that the defendant pay the sum of $91,000 to the plaintiff not later than 30 June 2001.
2. Order that the defendant purchase from Campaign Nursing Agency Pty Limited (and cause that company to sell to her) at a price the defendant determines the Mitsubishi 68 cm television set and remote previously sold by the plaintiff to Campaign Nursing Agency Pty Limited and that the defendant deliver up those items to the plaintiff not later than 30 June 2001.
3. Order that the plaintiff be restrained from suing upon or otherwise asserting each and every cause of action, if any, which the plaintiff has against the defendant or Campaign Nursing Agency Pty Limited by reason of any act, neglect or default in the course of or in connection with the domestic relationship between the plaintiff and the defendant or the employment relationship between the plaintiff and Campaign Nursing Agency Pty Limited.
4. Order that the defendant be restrained from suing upon or otherwise asserting each and every cause of action, if any, which the defendant has against the plaintiff by reason of any act, neglect or default in the course of or in connection with the domestic relationship between the plaintiff and the defendant.
5. Order that the defendant cause Campaign Nursing Agency Pty Limited to desist from suing upon or otherwise asserting each and every cause of action, if any, which Campaign Nursing Agency Pty Limited has against the plaintiff by reason of any act, neglect or default in the course of the employment relationship between the plaintiff and Campaign Nursing Agency Pty Limited.
6. Order that the defendant pay the plaintiff’s costs of these proceedings.

7. Order that the exhibits be returned at the expiration of twenty-eight (28) days from today unless within that period a Notice of Appeal has been lodged.
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Last Modified: 05/28/2001