W v S - [2013] SADC 29

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
W v S
[2013] SADC 29
Judgment of His Honour Judge Soulio
13 March 2013
FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS
Plaintiff and defendant in a de facto relationship – application by plaintiff pursuant to s 9 of the Domestic Partners Property Act 1996 (SA) seeking orders pursuant to s 10 of that Act as to division of the property of the parties – discussion of statutory considerations relevant to Court’s discretion to make Orders for division of property in a way that is just and equitable.
De Facto Relationships Act 1996 (SA) ss 10, 11; Domestic Partners Property Act 1996 (SA) ss 9, 10, 11, referred to.
M,DA v P,N [2008] SADC 169; Hayes v Marquis [2008] NSWCA 10; Hogg v Roberts (2003) 87 SASR 248; Evans v Marmont (1997) 42 NSWLR 70; F v R [2012] SADC 84; Love v Chidley (2002) 219 LSJS 287; BKF v DTTN & Anor [2009] SADC 91; Arnold v Dalton (2002) 84 SASR 482; Cressy v Johnson [2009] VSC 52; Pigott v Walker [2002] ACTSC 40; Parker v Parker (1993) 16 Fam LR 863; W v D [2012] SASCFC 142, considered.

W v S
[2013] SADC 29
Introduction

After a relationship of some 17 years the plaintiff and the defendant separated on about 13 July 2004. It is common ground that the commencement date of the relationship was about March 1987, albeit that the parties lived apart during two periods. A child of the marriage, aged five years at the time of separation, essentially remained in the care of the plaintiff. The plaintiff and defendant had brought some limited property to the relationship, and acquired various items of real and personal property during the course of the relationship.
The plaintiff brought an application pursuant to s 9 of the De Facto Relationships Act 1996 (SA), which was, at the time of separation, the relevant Act, seeking a division of property. That Act became the Domestic Partners Property Act 1996 (SA) (‘the Act’) as from 1 June 2007. The relevant transitional provisions provided:
4(1)   This Act does not apply to—
(a)     a domestic partnership (other than a domestic partnership that was a de facto relationship) that ended before the commencement of this section; or
(b)     a de facto relationship that ended before 16 December 1996.
Note—
The Domestic Partners Property Act 1996 came into operation on 16 December 1996 as the De Facto Relationships Act 1996.
(2)     In this section—
de facto relationship means the relationship between a man and a woman, who although not legally married to each other, live together on a genuine domestic basis as husband and wife. (my emphasis)
It is common ground, and I find, that the parties were, at the time of separation, in a domestic partnership which was a de facto relationship. There is no dispute that this Court has jurisdiction to determine the matter.
The plaintiff instructed solicitors to prosecute her claim, and then changed solicitors, before deciding to represent herself, which she did at trial. The defendant was also represented by solicitors, including when this matter was originally set down for trial, but later represented himself in interlocutory proceedings and ultimately elected not to attend the trial.
Brebner DCJ, who had conduct of the matter when it first came on for trial in March 2010, gave leave to the plaintiff to proceed in the absence of the defendant. The first trial proceeded on the basis of the plaintiff’s Amended Statement of Claim, much of which was admitted by the defendant. A Master of this Court gave the plaintiff leave to file a Third Statement of Claim, which she did on 17 March 2011. It is not clear that a draft of the proposed amendments had been filed. The document “pleaded” a range of additions to the previous pleading. The defendant, having elected not to participate in the trial, did not file a further answering pleading.
The relief sought by the plaintiff’s Amend Statement of Claim, pursuant to s 10 of the Act, by way of adjustment of property interests between the parties was:
a.   A declaration of the plaintiff, in consideration of her transfer of her interest in the parties’ Athelstone property to the defendant, is entitled to a payment by the defendant for her financial and non financial contribution to the acquisition, renovation, improvement and increase in value of the house
b.   An enquiry as to the amount to be paid by the defendant to the plaintiff
c.   Further or in the alternative, an order that the house be sold and the net proceeds of sale after payment of commission and associated costs be divided between the parties in proportion to their respective financial and non financial contributions
d.   An order that the defendant pay to the plaintiff such lump sum as is just and equitable in relation to other assets (including the parties’ interest in the (Business) and in the (Company)) otherwise accumulated during the period of the parties co-habitation
e.   An order that the defendant pay occupational rent to the plaintiff equivalent to one half of the net rental value of the Athelstone property since the date of separation
f.   An order that the defendant account to the plaintiff in respect of any and all profits derived from the parties’ interest in (the Business) and the parties’ shareholding in (the Company), since the separation date and in respect of all dividends received by the plaintiff in respect of the parties’ share holding since the date of separation
g.   An order that the defendant do pay to the plaintiff costs of and incidental to these proceedings
h.   Interest
i.    Such further or other relief as this Honourable Court deems appropriate.
During the course of the first trial Brebner DCJ, understandably, was required to disqualify himself from further hearing the action, and the matter was re-listed for trial before me.
The Trial
As I have said, as part of the application the plaintiff sought a declaration that the defendant held an interest in a takeaway food business (‘the Business’), and a shareholding in the corporate trustee (‘the Company’) of a family trust (‘WSFT’), which ultimately held the interest in the Business, on trust for the defendant and the plaintiff.
The defendant had, at least, an interest in that property, and the plaintiff sought to bring that property to account in the division of property. She also sought an accounting of the profits from that Business, from the time of separation date to the date of the sale of the Business in early 2011.
The defendant filed a counter claim also seeking an order as to a division of property, but on different terms.
In preparing for trial, the plaintiff had focussed intently on the issue of discovery, and suggested that the defendant had not made full disclosure of financial records. The parties to proceedings under the Act are required to make full disclosure of all relevant circumstances.[1]
[1] Hayes v Marquis [2008] NSWCA 10 at [129], per McColl J.
The plaintiff presented a conflation of evidence and submissions in a florid and discursive manner. She was at times difficult to comprehend and her approach was strongly coloured by her attitude towards the defendant. Although the plaintiff gave evidence about the behaviour of the defendant during their relationship, and attributed the breakdown of the relationship to him, such issues are, generally speaking, irrelevant to the exercise of the discretion pursuant to s 11 of the Act.[2]
[2] Hogg v Roberts (2003) 87 SASR 248 at [15], citing Evans v Marmont (1997) 42 NSWLR 70 at [74].
The plaintiff tendered a number of documents, some of which were barely, if at all, relevant. Given that the plaintiff was unrepresented, I proceeded by receiving all documents she tendered but will refer only to those relevant to deciding the issues.
In addition to a dispute as to whether the plaintiff is entitled to have the Business brought to account in the inquiry into the value of the assets of the relationship, there was a dispute as to the value of the Business and the profitability of the Business.
The plaintiff called an accountant, a Ms Burnett, to give evidence as to the valuation of the Business and as to the value of the other property both real and personal.
In addition, reports as to valuations by Mr Holmes, an accountant retained by the defendant, and Mr Wood, a valuer jointly retained by the parties, were received into evidence.
Legal Principles
An application for a division of the property of a de facto relationship is brought pursuant to s 9 of the Act.
Section 10 of the Act then provides that:
(1)   On an application for the division of property after the end of a domestic partnership, the court may make such orders as it considers necessary to divide between the domestic partners the property of either or both partners in a way that is just and equitable.
(2)     For example, the court may make orders for—
(a)    the transfer of property from one domestic partner to the other; or
(b)the sale of property and the division of the net proceeds between the domestic partners in proportions decided by the court; or
(c)    the payment by one domestic partner of a lump sum to the other.
Section 11 of the Act sets out the factors to be considered and provides:
(1)     In deciding whether to make an order for the division of property under this Part, and if so the terms of the order, the court—
(a)must consider the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to—
(i)the acquisition, conservation or improvement of property of either or both partners; or
(ii)     the financial resources of either or both partners; and
(b)must consider the contributions (including homemaking or parenting contributions) made by either of the domestic partners to the other partner or to children of the partners or either of them; and
(c)must have regard to the terms of any relevant domestic partnership agreement; and
(d)     may have regard to other relevant matters.
The focus is on the just and equitable division of property after primarily considering contributions of the kind identified by s 11(1) of the Act,[3] and not on an order that is fair, having regard to all the circumstances surrounding, and everything that happened during, a relationship.[4]
[3] Hogg v Roberts (2003) 87 SASR 248 at [12].
[4] Ibid at [14].
The requirement to make an order that is “just and equitable” does not give rise to a general and unfettered discretion, both because the Court is dividing property, not settling all outstanding financial issues as between the partners, and because s 11(1) of the Act indicates that the contributions referred to in that provision are important considerations in deciding what is just and equitable. Therefore the primary focus must be on the property, contributions to that property, contributions to financial resources, and contributions by one party to another, and to any children.[5]
[5] Ibid at [11].
It is not the role of the Court to use the division of property to remedy any justified grievances that one party may have against the other, nor to compensate one party for disappointed or unfulfilled expectations. Where fault for the breakdown of the relationship may lie is also irrelevant.[6]
[6] Ibid at [13].
However, the Court must (as far as practicable) finally resolve questions about the division of property between the de facto partners and avoid further proceedings between them.[7]
[7] Section 12 Domestic Partners Property Act 1996 (SA).
Further, s 14 of the Act provides that:
(1)If a court is satisfied that a transaction has been entered into to defeat, or has the effect of defeating, an order, or an anticipated order, for the division of property, the court may set aside the transaction and give consequential orders and directions.
(2)A court may grant an injunction to restrain a person from entering into a transaction that might defeat an order, or an anticipated order, for the division of property.
(3)In exercising its powers under this section, the court must have regard to all interests in the property to which the proceedings relate.
It is apparent in the present case that there must be an order for the division of property between the parties pursuant to s 10 of the Act. Given the circumstances of this case, and in particular the fact that the Athelstone house, and the Business, have been sold, the order must be one pursuant to s 10(2)(c) of the Act which provides for the payment of a lump sum by one domestic partner to the other. In the circumstances of this case, that means that there must be a payment of a lump sum by the defendant to the plaintiff.
The approach to be taken to the discretionary power to make orders for the division of property in a way that is just and equitable, was canvassed in some detail by Smith DCJ in F v R,[8] where he said of ss 10 and 11 of the Act that:
The language of sections 10 and 11 and, in particular sub section 2 of section 10, makes it clear that it is not intended that the Court embark upon an “accountancy exercise of a fragmentary nature”. On that topic I refer to and adopt what I said in Love v Chidley:[9]
The exercise of the discretionary power in s 10 to make an order “in a way that is just and equitable” is an “holistic value judgment of a very general kind” as opposed to an accountancy exercise of a fragmentary nature. That is, after taking into account the considerations particularised in s 11(1)(a), (b) and (d), the Court must, if the evidence justifies it, select a round figure or make an order for the division of property which is a monetary reflection of what justice and equity demands as the entitlement of the application of the de facto partner: (see Davey v Lee (1990) 13 Fam LR 688 per McLelland J at 689; Ferris v Winslade (1998) 22 Fam LR 725; at 733; In the Marriage of Collins (1990) 14 Fam LR 563 at 562-572.
Although mathematical precision is not required, the evidence, ordinarily, should identify and value the assets and ascertain the circumstances of their acquisition (see Norbis v Norbis (1986) 161 CLR 513 per Mason and Deane JJ at 523; see also M v P [2008] SADC 169 per Beazley DCJ at [40] to [47].)
[8] F v R [2012] SADC 84 at [15].
[9] Love v Chidley (2002) 219 LSJS 287.
Matters that are likely to be relevant include the length of the relationship and the immediate needs of the parties. However, the Court is not dividing property with a view to providing, for example, for the continuing maintenance of the parties, or after taking into account their future financial prospects.[10]
[10] See generally Hogg v Roberts (2003) 87 SASR 248, per Doyle CJ, and BKF v DTTN & Anor [2009] SADC 91.
Given the absence of any provisions relating to payment and maintenance, no direct orders for maintenance can be made in the context of dividing property.[11] However, as Smith DCJ observed in F v R,[12] that is not to say that such matters as a failure to pay child support cannot be relevant to the evaluation of the respective contributions of the parties. For example, if one party wrongfully avoids paying child support to the party with care of the children, then that may result in homemaking and parenting obligations being more burdensome for the other party, thereby increasing that party’s parenting or homemaking contribution. Such a failure could be characterised as a relevant matter within the meaning of s 11(d) of the Act. Further, contributions as homemaker and parent are not to be treated as inferior to material or financial contributions.[13]
[11] Hogg v Roberts (2003) 87 SASR 248 at [13] & [44] per Doyle CJ, citing Arnold v Dalton (2002) 84 SASR 482 per Bleby J at [50].
[12] F v R [2012] SADC 84 at [23], citing Arnold v Dalton (200) 84 SASR 482 per Bleby J at [49].
[13] Hogg v Roberts (2003) 87 SASR 248 at [15].
One possible approach to the task facing the Court was set out in Hogg v Roberts where Doyle CJ said:[14]
[14] Ibid at [16].
In Parker v Parker (1993) 16 Fam LR 863 Young J suggested a four-stage approach which will often be helpful. The four stages he suggested (at 870) are:
(i)    to identify and value the assets of the parties;
(ii)     to determine whether any, and if so what contributions of type A or type B     had been made by each partner;
(iii)    to determine whether in the circumstances the contributions of the         applicant had already been sufficiently recognised and compensated for;
(iv)to make the appropriate adjustment.
Once again, he was concerned with different legislation, but the process he suggested is likely to prove helpful under the Act. However, I emphasise that this is simply one approach. In some cases a broader approach will work better. There is no need to take what might be called a narrow approach involving a careful tracking of income and expenditure, contributions made and benefits received. The legislation requires a reasonably broad and practical approach.
Between stages (iii) and (iv) it will be necessary to consider whether there are “other relevant matters” to be considered. It will also be necessary to bear in mind that the object is to divide property in a “way that is just and equitable”. As I have said, I do not treat that expression as opening up all aspects of the relationship, but it appears to me that the matters identified in s 11(1) of the Act do not alone dictate the order to be made under s 10(1). They are matters to be considered, they are important, but they will not necessarily be decisive.
The divisible property in the possession of the parties at the time of separation must be identified.[15] However, in determining the adjustments which must be made, the value of the assets at the time of hearing should be considered.[16]
[15] Cressy v Johnson [2009] VSC 52 at [201]; and Pigott v Walker [2002] ACTSC 40 at [88].
[16] Parker v Parker (1993) 16 Fam LR 863.
The Relationship
A number of matters alleged by the plaintiff, in her Amended Statement of Claim, were admitted by the defendant. I set out such matters, in narrative form, as part of my findings.
The plaintiff was born in 1967 and the defendant in 1964. They commenced cohabitation in a de facto relationship in March 1987, (‘the commencement date’) when the plaintiff was 20 years old and the defendant 22 years old. They lived apart for a period between September 1988 and January 1990, and for a short period in 1996, and then lived together until the relationship came to an end on about 13 July 2004 (‘the separation date’).
There is a child of the relationship, born on 18 October 1998, who, following the separation, lived with the plaintiff, but had limited access visits with the defendant. There were apparently bitterly contested proceedings in the Family Court, during which the plaintiff made serious criminal allegations against the defendant.
The plaintiff worked from the commencement date until 1996 in a pharmacy, and then for some months in an aromatherapy business in Port Lincoln. From early 1997 until August 1998, shortly before the birth of her daughter, the plaintiff worked in the Business. She gave evidence that she performed work in the Business following the birth, and I accept that she performed some work in a largely unpaid capacity and thereby contributed to the Business.
The defendant worked in Port Lincoln from the commencement date until 1996, principally in the retail food and liquor industries, including the takeaway food industry, with the exception of a period during 1988 and 1989 when he worked as a builder’s labourer in Victoria and Western Australia. From late 1996 onwards he worked at the Business until the sale of the Business in 2011.

At the commencement of the relationship each of the parties had modest savings, and owned a motor vehicle. The defendant also owned items of furniture. On 11 May 1988 the parties jointly purchased a residential property at Port Lincoln for $64,500. A deposit of $10,000 was paid. There is a dispute as to the source of that deposit. It is common ground that $2,000 came from the defendant’s father. Of the remaining $8,000, the plaintiff said $3,000 was provided by the defendant and $5,000 via the First Home Owner’s Grant. I accept her evidence in that regard.
On 21 February 1997 the property was sold for $85,000. After discharge of a mortgage registered on the property the parties received net proceeds of some $58,000 which was deposited into a National Australia Bank account in joint names. Of that sum, $2,000 was repaid to the defendant’s father, and $15,000 was paid to purchase an interest in the Business, in the name of the defendant. Later, an additional $5,000 was paid to increase the share in the Business to, what I infer, was a 50 per cent share. The balance was paid into a Macquarie Bank Cash Management Trust in the name of the plaintiff. Subsequently, the Cash Management Trust money was used to purchase certain shares in the plaintiff’s name, and purchase items of furniture for joint use.
On 31 January 2002 the parties purchased a house at Athelstone for the sum of $176,000, plus expenses. The parties contributed the sum of $38,296.41 from their joint savings and borrowed the sum of $140,162.80 from St George Bank upon security of a Memorandum of Mortgage.
The parties maintained both separate and joint bank accounts. The parties jointly acquired at various times throughout the relationship; certain motor vehicles, furniture and effects, some limited shares, and contributed to superannuation accounts held separately by the parties.
During the course of the relationship payments were made for various expenses – the plaintiff alleging that she made such payments, and the defendant asserting, by his pleadings, that the expenses were paid from joint accounts. Such expenses were identified by the plaintiff, and most were recurrent expenses, rather than contributing to the accumulation of assets, with the exception of the purchase of certain household effects.
The plaintiff performed the bulk of the duties involved in maintaining the household and in caring for her daughter. She also worked to some extent in the Business following her daughter’s birth.
Assets of the Relationship
At the time of separation the major assets of the relationship were the house at Athelstone, formerly shared by the parties; a share in the Business, held initially by the defendant in a partnership with his brother, and shortly prior to the separation, through a corporate entity; various motor vehicles, and separate superannuation accounts held by each of the parties. Following separation the defendant remained in occupation of the house until it was sold in early 2006, and continued to work in the Business until that was sold in early 2011.
It is common ground that at the separation date the plaintiff retained certain furniture and effects, her superannuation entitlements, her personal items and effects, and a Holden Commodore motor vehicle.
It is also common ground that the defendant retained certain furniture and effects, although there is a dispute as to the extent of the furniture and effects; his superannuation entitlements; his personal items and effects; motor vehicles being a 1976 Chevrolet Camaro Coupe, a 1984 Chevrolet Monte Carlo Coupe, and a Ford Falcon; a car trailer, and a shareholding in the Company.
Although the defendant had asserted that he sold the 1984 Chevrolet Monte Carlo for $5,000 prior to the separation, the plaintiff gave evidence that she saw that car at the defendant’s address at Athelstone in February 2006. The car was later advertised for sale by a person the plaintiff said was an associate of the defendant. I accept her evidence on that topic, and find that the Chevrolet was part of the property of the relationship at the date of separation.
Valuing the Assets
The House
As I have said, on 31 January 2002 the parties purchased the house at Athelstone for $176,000, plus certain expenses, of which $38,296.41 was paid by the parties from joint savings, and $140,162.80 was borrowed from St George Bank. The parties made some improvements to the house during the course of the relationship. The property was sold in March 2006. The sale price was $265,000. The settlement statement discloses that after repayment of the outstanding bank loan, and payment of the agent’s commission, expenses of sale and adjustments, the resulting net asset was $106,813.53.
The defendant lived in the house, and enjoyed the benefits of so doing, until the sale of the house. The plaintiff was required to rent alternative accommodation where she and her daughter lived.
Occupation Fee
As I have said, the plaintiff sought an order that the defendant “pay occupational rent equivalent to one half of the net rental value since the date of separation.”
As Smith DCJ observed in F v R:[17]
That such a fee is payable, is recognised by a number of authorities (see McKay v McKay [2008] NSWSC 177; Callow v Rupchev [2009] NSWCA 148; H v E [2009] SADC 76; and F v D [2010] SADC 92 per Beazley, J). What justifies this adjustment is the fact that the party who occupies the home rent free, after the breakup, thereby obtains a financial advantage compared with the other. All other things being equal, the disadvantaged party should be credited with one half of the rent on the basis that he or she is effectively the joint owner.
Whether, as a matter of justice and equity any such adjustment is to be made at all, and if so, the extent of it, would depend on whether the party occupying the family home rent free has been otherwise contributing, for instance by paying:
·the mortgage on the house; and
·the outgoings on the house such as rates, taxes, insurance and costs of upkeep.
[17] F v R [2012] SADC 84 at [105].
I have no evidence as to the value of the notional rent which might be attributable to the occupation of the house. I infer that the defendant did make payments of the mortgage relating to the house, and paid expenses including rates and taxes and the like.
In W v D,[18] Kourakis CJ said that the principles governing the quantification of an occupation fee are not settled, and referred to the “confusing state of the authorities”.[19] He concluded that where there has been a breakdown of a domestic relationship without an ouster, the occupation fee should be valued by reference to the value of the occupation to the resident co-owner without discounting it for the burden of the occupancy being a joint one. Accordingly there should be no discount of the market rent in calculating the occupation fee. The occupation fee should bear the same proportion to the market rent as the absent co-owner’s proportionate interest in the land.[20]
[18] W v D [2012] SASCFC 142 per Kourakis CJ, Anderson and David JJ, concurring, delivered 21 December 2012.
[19] Ibid at [77].
[20] Ibid at [78-79].
I consider that rather than endeavouring to make a precise calculation of an occupation fee, I should make some allowance for the benefit derived by the defendant from occupation of the jointly owned property in the division of property.
The Business
From the time of the acquisition of a half share in the Business the share was held by the defendant in partnership, first with his father and later with his brother. On 1 July 2004, some two weeks prior to separation, the defendant transferred his interest in the Business to the trustee of WSFT. The defendant was the director and shareholder of the Company.[21] The plaintiff says she did not know of such transfer in advance. The defendant asserted, by his pleadings, that the plaintiff was aware of the transfer.
[21] A company incorporated on 18 June 2004.
I am satisfied that by June 2004 the relationship was on the verge of breaking down. I accept the plaintiff’s evidence that she was not aware of the defendant’s plans to contribute his share of the Business into WSFT. I infer that he effected that transfer in order to endeavour to protect what he presumably regarded as his asset, from a claim by the plaintiff.
The real issue however is not the plaintiff’s state of knowledge, but rather whether she had an interest in the defendant’s half share of the Business, regardless of whether such share was held in his name, or in WSFT.
At the time of the establishment of WSFT, the defendant held one half of the Business in his own name. There was a loan of $35,000 owed by the Business or by the defendant and his brother, the owner of the other half of the Business. The defendant’s brother wished to dispose of his share. The price agreed was $55,000. An agreement was drawn up on 1 July 2004 between the defendant, his sister, and WSFT which records that WSFT intended purchasing the Business from the partnership. The agreement records that WSFT had intended to borrow money to pay out the defendant’s brother. The amount to be borrowed was $65,000. The defendant was to contribute his half share of the Business into WSFT.
WSFT was unable to borrow the money without security. The defendant’s sister offered her real property at Glenside as security for the loan, in exchange for a one half share of the Business, and was to receive one half of the profits of the Business, after allowing a wage of $400 per week to the defendant who was working in and operating the Business.
I find that the defendant owned a half share in the Business at all times until the sale of the Business.
Had the Business not been sold shortly prior to trial I may have set aside the transaction whereby the defendant’s share was transferred into WSFT.[22] As it is, I will simply allow an amount in respect of the Business in the calculation of the lump sum to be paid by the defendant to the plaintiff.
[22] On 13 August 2010 Brebner DCJ had made an ex parte order restraining the directors of the Company from disposing of the assets of the Business. On 6 April 2011 that order was dissolved to enable the sale of the Business to proceed.
It is open to conclude that the Business was principally the defendant’s business. As Mason J said in Mallet v Mallet:[23]
No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of longstanding. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where that other party’s role does not extend beyond that of homemaker and parent.
[23] Mallet v Mallet (1984) CLR 605 at 625, per Mason J considering s 79 of the Family Law Act (Cth), cited by Beazley DCJ in M, DA v P,N [2008] SADC 169.
However, here, while the defendant was, it would appear, the dominant force in the operation of the Business, the Business could hardly be regarded as an “extensive business enterprise”.
I find that by virtue of the nature and length of the relationship between the parties, the way in which monies from the sale of assets were used in order to fund the purchases of new assets, and the work both paid and unpaid performed by the plaintiff in the Business, that the share in the Business held by the defendant, and later by WSFT, was part of the property of the relationship.
What then is the value of the Business? The plaintiff’s accountant, Ms Burnett, produced a report in which she valued the Business, as at 30 June 2004, at $172,391 comprising the “capitalised net profit average valuation” of $154,846, stock on hand as at 30 June 2004 of $4,500, and the written down value of plant and equipment at $17,045.
She also incidentally purported to value the Athelstone house, the two Chevrolet motor vehicles, and the contents of the house and “other assets retained”. Ms Burnett, it appears, is a qualified accountant. However, her report contained emotive language, made reference to the defendant’s behaviour towards the plaintiff, including descriptions of violent assaults and veiled references to sexual assaults, and the physical and emotional state of the plaintiff. Ms Burnett may have meant well, but she cannot be regarded as an independent witness. She is the plaintiff’s accountant. She conceded that she was not qualified to value the house property or cars. She arrived at her valuations by looking at websites. She arrived at her valuations of the house contents based on her “experience of other cases like this”. She conceded her opinion as to value was not an expert opinion, but said that it was a “reasonable estimation”.
I received a detailed report from Mr Peter Holmes of Ferrier Hodgson. He was originally engaged by the defendant’s solicitors to provide a report verifying the authenticity of the financial records of the Business. Mr Holmes is a qualified accountant with considerable experience in financial statement analysis, valuations, and assessment of loss.
The purpose of Mr Holmes’ report was to provide support for the assumptions made by Mr Dale Wood, a valuer engaged jointly by the parties to value the Business in mid 2008. Mr Holmes concluded that the Sales Cashbook of the Business properly reflected the sales of the Business; that the gross profit rate was consistent with that shown in the financial records of the Business; and that the gross profit rate achieved by the Business accords with rates generally achieved across similar businesses.
Mr Wood concluded that the Business, being a leasehold business, should be valued by capitalising a realistic average net profit based on the trading figures of recent years. Taking into account the fact that the Business had been operating for many years, and the fact that the defendant and his family had owned the Business for many years, he assessed the Business as being in the medium risk range, justifying a capitalisation using a return of 35 to 45 per cent. On that basis, he valued the Business at $120,000 to $135,000 including stock, plant and equipment, and goodwill.
The Business was in fact sold, and I accept that the sale was at arm’s length, in May 2011. The settlement statement of 17 May 2011 relating to the sale of the Business records the sale price as $123,000 plus stock of $1,793.70, a total of $124,793.70. That accords with the valuation by Mr Wood. Whilst the profitability of the Business varied to a degree over the intervening years, I am prepared to regard the sale price as indicative of the value of the Business.
Whilst the plaintiff sought to rely on evidence as to the value of various items of plant and equipment, cash on hand in WSFT, and the state of loans and loan accounts, I do not consider it necessary to resolve the matter on the basis of a detailed analysis of the changes in the fortunes of the Business.
From the sale price must be deducted the agent’s commission of $10,065, and legal fees relating to negotiating the assignment of lease, arranging settlement and related attendances, totalling $4,741. That leaves an amount of $109,987.70.
The settlement statement shows that the balance due to WSFT at settlement was in fact only $26,569.58 but that resulted from the repayment of the loan secured by the defendant’s sister, the payment of monies owed to the Australian Taxation Office and various business debts including accountant’s fees, suppliers invoices, wages, and unrelated legal fees.
Although, as I have said, WSFT initially borrowed a sum of $65,000 from the Commonwealth Bank, in order to fund the purchase of the defendant’s brother’s share of the Business, I find that liability was that of the defendant’s sister provided in exchange for a half share of the Business.
Accordingly, as I have said, I find that the defendant held a one half share of the Business at all times, initially in a partnership, and then through WSFT, but did so on trust for himself and the plaintiff. The net asset which is to be regarded as property of the relationship is $55,000, being, in round figures, one half of the net sale price of the Business.
Business Profits Post Separation
Having identified the Business as a property of the relationship, there remains the issue of the potential need to account for the profits of the Business until the sale of the Business.
Following the separation, the defendant maintained that he took a wage of $20,400 per annum, and a share of the profits distributed through WSFT. The defendant’s sister also received a distribution of profits.
By letter dated 5 February 2008 the defendant wrote to the Child Support Agency, as part of the ongoing vigorous dispute between the parties, stating that his total income from the Business was, for the financial years 2004/2005 - $47,790; 2005/2006 - $34,257; and 2006/2007 - $35,666. The 2004/2005 year, he said, was apparently distinguished by a period when a neighbouring shopping centre was renovated, resulting in considerably greater traffic to the shopping centre in which the Business was housed.
For the five years prior to separation the defendant’s income from the Business, comprising a salary, and a half share of profits, ranged between approximately $20,000 and $35,000, broadly consistent with the later years.
In November 2011 a senior case officer of the Child Support Agency determined the defendant’s income from the Business for the year ending 30 June 2009 at approximately $28,000, including a distribution of $8,000 from WSFT, and an approximately similar amount for the year ending 30 June 2010.
It may be that the defendant derived some income from the Business which was not declared. The plaintiff had filed an affidavit describing cash sales from the Business which were not put through the cash register, thereby, she said, understating the earnings of the Business. I am unable to make a finding about that on the evidence, and unable to make any assumption of what such amounts might have been in any event.
I find that the defendant derived from the Business an average of some $10,000 per year by way of distribution of profits, from the separation date until the date of sale of the Business, over and above his wage.
Such profits were derived from an asset which, I have found, was property of the relationship. Accordingly, such income, bearing in mind however that it was taxed in the hands of the defendant, should be taken into account in adjusting the division of property.
The Cars
A report was prepared by Mr John Cece, a motor vehicle valuer. The report was not prepared in compliance with the District Court Rules. Nevertheless, I received the report and have regard to it in assigning a value to the American Chevrolet vehicles. Mr Cece valued each of the vehicles at $15,000. I am prepared to accept Mr Cece’s valuations.
Other Assets
I propose to disregard the Holden and Falcon cars retained by the plaintiff and defendant respectively. They were of approximately similar value. I will also disregard the furniture and effects including personal effects, about which I have insufficient evidence to value. I also propose to disregard the superannuation accounts. The defendant’s account held a balance of some $7,000. The plaintiff’s was a little greater.
Accordingly, the assets of the relationship to be considered are:
The house  $106,813,53
The half share of the Business    $55,000
The American cars  $30,000
Total  $191,813.53
Division of Property
Having regard to the length of the relationship, the early employment of the plaintiff, her financial contribution including her work in the Business in earlier years, and her contribution to care of the child of the relationship, the starting point, in my view, is one of an equal entitlement to the assets.

However, the plaintiff effectively ceased working to care for the child of the relationship, except for the limited and largely unpaid work in the Business. She has since been essentially unemployed. The defendant continued to draw a wage, albeit a modest wage, from the Business until the time of sale. I have no information regarding his present employment.
As Layton J said in H v G:[24]
If one de facto partner effectively sacrifices his or her earning capacity during the relationship so that at the end of the relationship, by reason of circumstances such as age and the state of the labour market, he or she is precluded from gainful employment, then that is to be regarded as a “contribution” within the meaning of s11(1)(b) and or is a “relevant matter” within the meaning of s11(1)(d); (see Ferris v Winslade (supra) at 747; In the Marriage of Best (1993) 16 Fam LR 937 at 962; In the Marriage of Clauson (1995) 18 Fam LR 693; In the Marriage of Kennon (1997) 22 Fam LR 1 at 36).
This consideration of lost earning capacity finds expression as “... opportunities lost ... by reason of ... contributions ...” in the judgment of Hodgson J at first instance in Dwyer v Kaljo (supra) at 793 which was approved by Gleeson CJ and McLelland CJ in Equity at page 764 of Evans (supra).
[24] H v G [2005] SASC 344 at [127], citing with approval Smith DCJ in Love v Chidley (2002) 219 LSJS 287.
That must be taken into account here. There must be a further adjustment to take into account an allowance for an occupation fee in respect of the house between 13 July 2004 and the sale in early 2006; and the share of profits derived from the Business by the defendant between 13 July 2004 and the sale of the Business in early 2011. I consider that a just and equitable division of the property results in the plaintiff being entitled to 70 per cent of the calculated value of the identified assets, namely a sum of $134,269.47.
I propose to order that the defendant pay a lump sum in that amount to the plaintiff. I dismiss the defendant’s counter claim. I will hear the plaintiff, and any intervening party, as to any consequential orders, including as to costs, having regard to monies already distributed, or paid into court.