Watson & Ling
[2013] FamCA 57
•12 February 2013
FAMILY COURT OF AUSTRALIA
| WATSON & LING | [2013] FamCA 57 |
| FAMILY LAW – PROPERTY – de facto relationship – where one of the parties to the de facto relationship has died – where the proceedings have continued in the name of the estate – where the estate seeks orders pursuant to s 90SM of the Family Law Act 1975 (Cth) – consideration of Stanford v Stanford (2012) 293 ALR 70 – where it is necessary to determine whether an order would have been made if the deceased had not died – whether it would have been just and equitable in the circumstances to make an order if the deceased had not died – where the “pool” comprised primarily of the respondent’s property – where the deceased made minimal contributions to the respondent’s property – where the deceased had limited property at the time of his death – where it would not be just and equitable to make orders altering the existing legal and equitable interests of the parties – where application dismissed. |
| Evidence Act 1995 (Cth) Family Law Rules 2004 (Cth) |
| Antmann & Antmann (1980) FLC 90-908 |
| APPLICANT: | Ms Watson on behalf of the Estate of Mr Watson |
| RESPONDENT: | Ms Ling |
| FILE NUMBER: | BRC | 9409 | of | 2010 |
| DATE DELIVERED: | 12 February 2013 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 29 January 2013 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Cooper Of Charles Cooper Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Mr Wright of Wrightway Legal |
Orders
The Initiating Application filed on 7 October 2010 be dismissed.
The Response filed on 30 November 2010 be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Watson & Ling has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC9409 of 2010
| Ms Watson on behalf of the Estate of Mr Watson |
Applicant
And
| Ms Ling |
Respondent
REASONS FOR JUDGMENT
Mr Watson died in January 2011. He had commenced proceedings in the Federal Magistrates Court seeking relief pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”) about three months prior to his death. The proceedings are continued in the name of his estate against Ms Ling, his former de facto partner. The personal representative of the estate is Ms Watson. She is Mr Watson’s former wife; their divorce became effective on 20 November 2005.
The existence of a de facto relationship between Mr Watson and Ms Ling is not in dispute, although its duration is. It is not in dispute that Mr Watson’s death occurred “…after the breakdown of the de facto relationship, but before property settlement proceedings are completed…” (s 90SM(8)). Mr Watson and Ms Ling have no children. Mr and Ms Watson have two children aged now 16 years and 11 years.
The existing legal and equitable interests in property, and the respective values of the property in which those interests exist is now agreed. (The issue of what was called by each of the legal practitioners “add backs” will be addressed later.)
The issues to be decided derive from s 90SM(8) of the Act. The provisions of that section (and Part VIIIAB more generally) can, in my view, be seen to be directly analogous to s 79 (and Part VIII more generally). Section 79(2) has its analogue in s 90SM(3); s 79(1)(a) has its analogue in s 90SM(1)(a). Whilst the principles enunciated in Stanford v Stanford (2012) 293 ALR 70 pertain to s 79, and s 79(8) in particular, they should, in my view, be held to be equally applicable to s 90SM(3) and s 90SM(8) in particular.
The Court must decide if it would have made a s 90SM order if Mr Watson had not died and whether it is still appropriate to make an order in light of his death (s 90SM(8)). Each question involves a consideration of whether it is just and equitable to make any order (s 90SM(3)). Those questions are separate from, and not to be conflated with, the separate question of the justice and equity of what orders should be made if it be determined just and equitable to make orders (ss 90SM(3) and (8); Stanford at [35]).
Death and Its Effect on Proceedings
A number of principles relevant to the exercise of the power must be borne in mind. In respect of the analogue to s 90SM it has been held that:
…An order may be made under [s 79(8)] only if the Family Court is of the opinion that it would have made an order with respect to property if the deceased party had not died and that it is still appropriate to make an order with respect to property … [C]learly the discretionary power to make an order under s.79(8)(b) [which has its analogue in s 90SM(8)(b)] should not be exercised lightly. (Per Gibbs J, as his Honour the Chief Justice then was, in Fisher v Fisher (1986) 161 CLR 438 at 448.)
His Honour went on to say (at 449):
… The fact that strangers [to the marriage] may in some cases possibly benefit from the continuance of the proceedings does not make the connexion [between s 79(8) and the marital relationship] too remote, because the strangers can become entitled only by derivation from the deceased party in whose place the legal personal representative stands.
The reference in the quoted passage to the interest deriving from the deceased party has been emphasised in other authorities:
The court does not take into account the claims or financial circumstances of the beneficiaries of the deceased spouse’s estate.
…
The claim of or against the surviving spouse is to be considered essentially as between husband and wife before the claims of other beneficiaries are taken into account. (Per Brereton J in Grace v Grace [2012] NSWSC 976 at [243] citing Menzies & Evans (1988) FLC 91-969; Berry & Berry (1990) FLC 92-118; Mason v Hannaford; Mason-King (1993) FLC 92-398.)
In Stanford, the High Court held at [29] and [30]:
… [the s 79(8) claim] ... remained a claim arising out of the marital relationship of the parties.
This last point is important, it denies the argument that the claim that was being continued was a claim by the beneficiaries of the wife’s estate and not a “matrimonial cause” as defined in the Act. The point is made good by observing that, because the wife had died and her claim was being continued by her legal personal representatives, s 79(8)(b) required the court determining the claim to consider whether it would have made an order with respect to property if the wife had not died and whether it was still appropriate to make an order with respect to property …
(Italics in original).
It has been held that “…[t]he court is not required to work out the precise order it would have made had the deceased not died” (Grace at [242] citing Allan & Allan (1987) FLC 91-824; Randle & Randle (1987) FLC 91-828; and, North & North (1987) FLC 91-831). However, as both s 90SM(3) and the decision of the High Court in Stanford make clear, it is fundamentally necessary to decide if an order would have been made at all had the deceased not died.
The circumstances of the parties’ relationship (its nature, form and characteristics) is plainly important to the exercise of the s 90SM(3)/s 79(2) discretion. The High Court held in Stanford:
41.Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to "the need to preserve and protect the institution of marriage" identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act. If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
43.By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever order may seem to it to be fair and just.
(Italics in original. Footnotes omitted). (See also at [36], [39] and [40]).
Provided the discretion is exercised judicially, it is at large; it is neither possible nor desirable to specify its “metes and bounds” (Stanford at [36]-[40] and [46]). Recognition is given to the fact that the circumstances of individual marriages (their nature, form and characteristics) can and do differ and those differences – the way in the which the parties have organised and lived their marriage/relationship – may be relevant to the exercise of the s 90SM(3)/s 79(2) discretion. Equally, provided that the questions required by s 90SM(3)/s 79(2) and s 90SM(4)/s 79(4) are seen as separate and applied as such, and not conflated, the enumerated factors within s 90SM(4)/s 79(4) can inform the s 90SM(3)/s 79(2) discretion together with any such other considerations as are properly relevant (see, Stanford at [40]).
As a result of those matters, the Court’s approach to s 79/s 90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear. (See, for example, Davut & Raif (1994) FLC 92-503 at 81,237).
As Stanford makes plain (see, especially at [39]), the breakdown of a marriage (or de facto relationship as defined in the Act) does not bring, as an automatic consequence, an alteration of existing legal and equitable interests. Just as, if an order is to be made, equality is neither to be assumed nor is a starting point (Mallett v Mallett (1984) 156 CLR 605), so too, the making of an order at all is not to be assumed.
The emphasis by the High Court in establishing the existing legal and equitable interests of the parties as a precursor to answering the question required by s 79(2)/s 90SM(3) can be seen to derive from the fact that s 79/s 90SM is concerned with rights in property which “…have their source in [the] relationship…” but which “…are created by curial order…”; “… orders made under s 79 [cf s 90SM] … perform a dual function by creating and enforcing rights in one blow, so to speak…” (per Mason and Deane JJ, Fisher at 453). Given that the relationship does not itself create interests in property, due recognition must be given to existing legal and equitable interests because, as Macrossan CJ said (in a different context) in Turner v Dunne [1996] QCA 272 “[i]f it were otherwise, it might have to be concluded that ordinary categories of legal ownership could be not much more than provisional in all domestic relationships.”
Given the circumstances of the current proceedings, and the intersecting relationships of those within them, it is also important to bear in mind not only that the claim is that of Mr Watson, but also that his claim, now being pursued by his estate, is “…not answered by pointing to moral obligations”; “[t]he rights of the parties [are] to be determined according to law, not by reference to other, non-legal considerations …” (Stanford at [52]).
Existing Legal and Equitable Interests – Now and Then
As has been observed, s 90SM(8) requires the answering of two separate questions. It seems to me to flow necessarily from what the High Court holds in Stanford (and my view that the principles there discussed are equally applicable to s 90SM, and s 90SM(8) in particular) that, in order to answer the first question required by the section, it is necessary to first examine the legal and equitable interests of the parties existing immediately prior to death and at the time of trial.
The estate has a current legal or equitable interest in the following property; the value attributed to each is agreed:
Property Value
Hydro Seeding Machine $500
Mr Watson’s business Nil
Funds held by estate’s solicitor ($394.74)
There are no liabilities of the estate save for an amount owing to an accountant which is represented above in the funds held by the estate’s solicitor.
Ms Ling has a current legal or equitable interest in the following property; the value attributed to each is agreed:
Property Value
A Property $420,000
S Property $280,000
A Property $320,000
V Property $230,000
Ms Ling’s business “The PP Business”,
which includes Toyota motor vehicle and
bank accounts $ 31,500
$1,281,500
There are mortgage liabilities over all of the real property outlined above; the three mortgages have (agreed) amounts owing of $636,000, $249,000, and $255,500 (rounded) – a total of $1,140,500 (rounded).
Ms Ling also has a “superannuation interest”, in an amount of $8,332.60.
Legal and Equitable Interests Immediately Pre-death
The property in which Mr Watson had a legal and equitable interest after his discharge from bankruptcy in June 2007 consisted of a superannuation interest, his business (including a truck (its major asset)) and a Hyundai Excel motor vehicle.
By late 2010, in the period after separation and prior to the institution of these proceedings by Mr Watson, he had drawn his superannuation interest ($4856.77); sold his truck (for $3,300); and, sold his Hyundai Excel (for $750). Mr Watson deposes that the proceeds of his superannuation and the sale of the Hyundai Excel were used for, respectively, legal fees and “…rent and other costs of living…” Mr Watson does not himself depose to what became of the $3,300 from the sale of the truck but Ms Watson deposes that this amount was used on his living expenses (although the basis for that information is not stated).
Approximately three months prior to his death, Mr Watson deposed to property, the legal and equitable interests in which accord with those set out above as existing now, save, of course, for the fact that the legal and equitable interests were vested in him rather than his estate. Estimates of value were provided in Mr Watson’s affidavit. There was no independent expert evidence at that time. Different estimates of value were given by Ms Ling in her affidavit in response but no dispute was raised in respect of the then existing interests.
Ms Ling had the property outlined above, save that there is no direct evidence (other than the estimates contained in the Financial Agreement which was not binding on the parties) of the value of those properties at that time, nor the amount of the mortgages attached to them. It appears to be uncontroversial, though, that the properties were all highly geared.
The Place of “Add Backs” in the Existing Legal and Equitable Interests?
The sum of $85,000 was drawn down by Ms Ling on one of the mortgages in her name. She paid those funds to various family members. This is explained as her being part of an “Asian Community Bank” arrangement within the Asian community. Ms Watson, on behalf of the estate, says in her affidavit that, “I seek an Order that the sum of $85,000.00 be added back into the asset pool as a notional asset and attributed to the Respondent.”
The argument uses the language of earlier cases in this Court (see, for example, Townsend & Townsend (1995) FLC 92-569 and Cerini & Cerini [1998] FamCA 143).
Where, but for the disposal of money or other property by one party, legal or equitable interests in it would have been part of those existing at trial, it may be possible to assert, in the particular circumstances of a case, that the money or property is nevertheless to be considered as part of the existing legal or equitable interests of the disposing party (sham transactions and circumstances where it can be established that the property is held, for example, on trust by another for the disposing party are examples). The investigation of issues of that type might be seen to be part of the establishment of the existing legal and equitable interests at trial – a task which the majority of the High Court in Stanford (at [37]) said should be the first step in considering, pursuant to s 79(2) (cf s 90SM(3)), whether it is just and equitable to make an order.
In many other cases, for example those which come within the convenient rubrics of “waste” (see Kowaliw & Kowaliw (1981) FLC 91-092) or “premature distribution” (see, for example, Townsend), legal and equitable title to the money or property will have passed. It could not be said that the money or property is part of the “existing legal or equitable interests” of a party or the parties. The notion that such money or property should be treated as a “notional asset” or “notional property” appears to run contrary to the thrust of the decision in Stanford: at issue is the consideration of two separate questions, the first of which is whether existing legal or equitable interests should be altered.
Yet, of course, unilateral actions of the type described might very well be a consideration – indeed, in an appropriate case, an important consideration – in deciding if any order should be made altering the existing interests of a party or parties.
Where the Court has determined that it is just and equitable to make an order pursuant to s 79(2) or s 90SM(3) and there is clear evidence that one party has engaged in conduct and, but for that conduct, the legal and equitable interests of a party or the parties (or the value of those interests) would have be significantly greater, justice and equity may require recognition of the unfairness inherent in those circumstances in the terms of the orders to be made.
How might that be recognised? First, consistent with existing authority, it can be recognised pursuant to s 75(2)(o) (cf s 90SF(3)(r)) (see, for example, Omacini & Omacini (2005) FLC 93-218, Browne & Green (1999) FLC 92-873 and Cerini). Secondly, it might be contended that it might be recognised within the assessment of contributions. This Court has long eschewed the notion of “negative contributions” (see, for example, Antmann & Antmann (1980) FLC 90-908). Nevertheless, it might be argued that the “non-dissipating party” can be seen to have made a disproportionally greater indirect contribution to the existing legal and equitable interests (for example to their preservation) if it is established that, but for the other party’s unilateral dissipation, those existing legal and equitable interests would have been greater or had a greater value.
The assessment of the circumstance under discussion is, ultimately, a matter of discretion (see, for example, Cerini at [46] and Townsend at 81,654). Equally, however, authority dictates that it will be “the exception rather than the rule” (Cerini at [46]) that a direct dollar adjustment equivalent to the amount of the alleged dissipation of the pool is made to the otherwise entitlement of a party. It may be that aspects of the erstwhile treatment of legal fees pre-Stanford (see, for example, Chorn & Hopkins (2004) FLC 93-204) will require further consideration in an appropriate case.
Importantly, of course, as has been emphasised in many authorities including those cited above, not every dissipation by a party can be seen to involve an affront to justice and equity; again the circumstances of the individual relationship must be assessed.
I do not consider that justice and equity requires the withdrawal and use of the money by Ms Ling to be taken into account.
The circumstances of this relationship and, in particular, its financial circumstances and other matters about to be discussed, including the discussion of, and findings about, the asserted contributions made by Mr Watson, point against any moneys being brought to account by Ms Ling in the manner asserted.
In arriving at that conclusion, I am conscious that the solicitor for Ms Ling appeared to concede that at least some funds should be “added back” to the pool of assets and “credited” to her entitlement (although the basis for that submission was not clear). Neither legal practitioner made helpful submissions about the impact that the decision in Stanford might have on this issue (or, it might be said, more generally). For the reasons I have attempted to explain, I do not consider that the concession was properly made.
No amounts will be “added back to the pool” and “credited” in the manner submitted.
Section 90SM(3) – A Property Order Pre-Death?
The Circumstances of This Particular Relationship
The Positions of Each of the Parties
Ms Watson separated from Mr Watson two days prior to Mr Watson being made bankrupt in May 2004. The jointly owned real property in which he had lived with her and their two children (aged, then, about eight and three years of age), was transferred to Ms Watson, about five months prior to the making of the sequestration order against him. The wife and children lived in the property post-separation until it was sold by Ms Watson in May 2005. The net proceeds were paid to Ms Watson’s mother in whose property Ms Watson and the children resided after the sale.
Mr and Ms Watson effected an informal property settlement as between them. Essentially, Mr Watson retained his business, furniture and tools of trade while Ms Watson became the sole owner of the former matrimonial home and retained furniture and effects and her bank accounts. At the commencement of the relationship with Ms Ling, Mr Watson had no legal or equitable interests in property, save such as was exempt from vesting in his trustee in bankruptcy. That comprised, essentially, his sole-trader business (which was his sole source of income) and its (modest) assets together with (modest) furniture and effects.
Ms Ling owned, and had owned for some time, real property. I accept her evidence that, prior to co-habitation with Mr Watson he had been renting a room from a friend and, immediately prior to co-habitation, was renting a room from another friend. I accept the evidence of Ms Ling that Mr Watson entertained his children at her place prior to he and Ms Ling commencing co-habitation.
Mr Watson was an undischarged bankrupt for about half of the relationship with Ms Ling (from its commencement to June 2007).
Ms Ling acquired three real properties during the course of the relationship. All were highly geared. It is not deposed by the husband, or on his behalf, that those purchases resulted from any research, acumen, or other input from Mr Watson. Mr Watson did not contribute to any deposit monies. He did not contribute directly to any mortgage payment, rates or body corporate fees.
Mr Watson did not assist in the securing of any borrowings which permitted the purchase of the three properties to which reference has just been made. For a considerable part of the relationship he had no capacity to do so by reason of being an undischarged bankrupt. Thereafter he had, in any event, no capacity to do so by reason of his extremely modest assets and modest earnings.
Ms Ling and Mr Watson each ran their own businesses during the course of their relationship. Neither was, apparently, employed by the other. Indeed, Mr Watson’s former wife, Ms Watson, was his business’s book-keeper.
Each of Mr Watson and Ms Ling retained their own income during the course of the relationship; no pooling of income occurred. Rather, each contributed to household outgoings from their own separate incomes. They kept separate bank accounts and never maintained a joint bank account.
Ms Ling received rent from her properties which was not shared with Mr Watson. Ms Ling did not share in any of the moneys obtained by Mr Watson when realising his then-property immediately after separation.
By October 2010, when Mr Watson swore his affidavit, he was unable to work. He had been diagnosed with a brain tumour. No details of the disease, including its prognosis when discovered or as the disease progressed, is given in the evidence save that Ms Watson deposes to him “remaining optimistic”. It seems Mr Watson had his first seizure in January 2010 which was the precursor to the diagnosis. As is known, unfortunately, within 12 months he died.
During the course of the relationship Mr Watson’s taxable income was, in any event, significantly less than that of the taxable income of Ms Ling.
Plainly, Mr Watson’s interests in property were significantly less than those of Ms Ling; indeed negligible. I reject the argument on behalf of the estate that I should see Mr Watson’s business as having had a value of about $100,000, including the value of the truck and trailer used within it, when the relationship commenced. That assertion is based on an amount recorded in a Financial Agreement (Recital K, page 3) prepared by Ms Ling’s solicitors upon her instructions. The Agreement was never signed.
Whilst contending for a value of $100,000 on the basis of the Agreement, no mention was made in that argument of the husband’s own pre-death deposition that, at the commencement of the relationship with Ms Ling, he had “[m]y … transport business including my … truck …that would have been worth together about $30,000” and “a … machine ‘pig trailer’ that was worth approximately $5,000.00” (emphasis added). It is accepted that Ms Ling’s estimate in the agreement was made in circumstances where she deposes, and the agreement records, that no expert valuation input had been received. In 2010, the husband offered the business for sale for $30,000. No sale eventuated. As referred to above, Mr Watson sold the truck and car after separation for about $4,000. The trailer remains unsold and is valued at $500. The business is agreed now as having a nil value.
I place no weight upon the asserted value of $100,000 for the business contained in the Agreement. (I also place no weight upon the Agreement’s assertions that, for example, the relationship was 3 years and 11 months in duration and that the parties “… did not contribute to the accumulation, preservation or maintenance of the other’s assets and financial resources.”)
Length of Relationship
Ms Ling deposes that the de facto relationship commenced in “September/October 2005”. She asserts in oral evidence that separations occurred “in August 2008” for a period of a few weeks and for about four months from February 2009. When Mr Watson moved back to her property in “about May or June 2009”, she describes the relationship thereafter as “platonic” although it is agreed that they shared a bed on occasions.
Mr Watson, in an affidavit filed about three months prior to his death, posits “early 2005” as the commencement of the relationship. He goes on to depose that “late in 2009” the relationship had “deteriorated somewhat”. It seems the parties agree that final separation occurred consequent upon a seizure suffered by Mr Watson early in 2010 which, unfortunately, was a prelude to his death from a brain tumour.
It will be seen, then, that Mr Watson postulates a relationship of some five years whereas Ms Ling postulates a relationship lasting slightly more than four years but noting that she asserts periods of separation during that time. I accept her evidence in respect of the periods of separation.
It is, in my view, sufficient to find that the relationship was of very short duration. In terms of the relevant discretions to be exercised, the precise length of the relationship, beyond the observation that it was short, does not loom large in the exercise of my discretion.
What Was or Was Not Paid and Done?
In the affidavit sworn by Mr Watson prior to his death, he contends that during the period of cohabitation with Ms Ling, he paid: Ms Ling $200 each week; the telephone and electricity accounts and 50 per cent of the cost of the groceries; and, that “[o]ther than this, [Ms [Ling]] and I paid for our own day to day expenses.” He also contends that he paid for “…numerous holidays that [Ms [Ling]] and I took particularly to Thailand, Fiji and other destinations … [and for] … local holidays such as to Tangalooma Island Resort.”
In addition to those monetary payments, Mr Watson also alleges that he “…paid for and undertook significant renovations…” to Ms Ling’s properties, including: putting built-in wardrobes in the bedrooms and a new kitchen in the L property; repairing the inside of both houses; building “…various decks and fences at her properties…”; refitting her “…business premises twice including her current premises and the premises she used to occupy next door…”; landscaping work at the property; and, maintenance of the properties. He contends that Ms Ling “…did not pay any costs associated with these renovations nor did she assist…”
The evidence adduced on behalf of the estate, subsequent to Mr Watson’s initial affidavit, is sworn after his death and is principally in the form of first-hand hearsay by Ms Watson. Her affidavit repeats (verbatim) the general claims made by Mr Watson. She says the basis of her information is what Mr Watson told her. While I accept that is true as a general proposition, no particularity is given of particular conversations or statements about particular issues.
Central to the estate’s contentions is that Mr Watson spent $36,000 in buying things for Ms Ling’s properties. That figure is arrived at by totalling a series of receipts in respect of a large multitude of individual items that are each deposed to seriatim at paragraphs 93 through 95 of her affidavit. The receipts comprise some 164 pages of exhibits to her affidavit. (Individual items include, by way of example: “[t]oilet seat, weed control mat and shower organiser for $28.68, Drainage pipes for $41.85, Masking tape and trimming knife $9.20 and Measuring tapes for $10.90.”)
That collation was done by Ms Watson (as distinct from Mr Watson pre-death). The husband’s affidavit does not contain any particularity of the amounts spent nor does it postulate any specific amounts or total. Ms Watson does not depose to (nor give in oral evidence) any conversations that tie with particular expenditure. The collation undertaken by her is by reference to (general) pre-death statements by Mr Watson about work undertaken by him or types of expenditure by him tied to time frames that fit with those assertions. It is also asserted in that affidavit that Mr Watson “…paid for various social outings and holidays for he and [Ms [Ling]]…” The foundation for that appears, again, to be what Mr Watson told Ms Watson – in general terms – and tying those statements in time to “…[Mr [Watson’s]] bank statements (both debit and credit accounts)…” to which a particular payment is attributed.
The receipts are evidence of amounts spent on the items specified within them on the date and at the place to which they relate. But, they are not evidence as who was ultimately responsible for those payments. That is important because Ms Ling vehemently denies that Mr Watson was responsible for the expenditure and, while acknowledging that amounts may have been spent by him, says that, invariably, she reimbursed him. She identifies two exceptions to this: two trips to Sydney which, she says, Mr Watson provided to her as gifts. Otherwise, whilst Ms Ling accepts that travel expenses were initially paid by Mr Watson using his credit card, in particular for purchases over the internet, however she states, and I accept, that she repaid Mr Watson for her share of the travel expenses.
It is contended both by Mr Watson and in Ms Watson’s affidavit on behalf of the estate that Mr Watson paid $200 every week to Ms Ling. She categorically denies this. The vehemence with which Ms Ling maintained in oral evidence that Mr Watson spent “very, very, very, very little” in and around her properties, and her equally vehement denial that he made weekly payments of $200, struck me as having an element of hyperbole. Having said that, I am satisfied ultimately that Ms Ling is an honest witness and that her account of the amounts paid by Mr Watson is essentially honest, albeit, slightly exaggerated.
Ms Ling’s statements and my assessment of them occur in conjunction with evidence which, I find, is persuasive of Mr Watson having significant financial difficulties. Ms Ling says, and I accept, that Mr Watson was “always complaining” about his financial difficulties. He was, of course, an undischarged bankrupt for a period of approximately two years of their relationship until the middle of 2007. Ms Watson, too, gives evidence of Mr Watson’s financial difficulties; she says that in 2009 Mr Watson was unable to pay the children’s school fees (which he had, otherwise agreed to pay and had been paying) because, she says, he told her that he was in financial difficulties.
Mr Watson contributed towards his children’s private school fees, and his other living expenses, by reference to what was a very modest taxable income during the course of the relationship. In her affidavit of evidence-in-chief, Ms Watson tabulates amounts in respect of Mr Watson’s business, for the 2006 – 2010 financial years, under the headings “Total Income”, “Net Profit” and “Deposits into accounts disclosed” which, she says are “[b]ased on the bank accounts disclose[d] and the financials disclosed …” I prefer to place reliance upon the Notices of Assessment or taxation returns for the relevant tax years exhibited to Ms Ling’s affidavit of evidence-in-chief. They disclose a taxable income for Mr Watson of $27,800 in 2006; $21,500 in 2007; $33,700 in 2008; and $10,700 in 2009.
I consider it likely that Mr Watson may have, very occasionally, paid for minor items for which he was not reimbursed by Ms Ling. However, I accept the central thrust of the evidence of Ms Ling that any such payments as were ultimately made by him (that is to say paid for but not reimbursed by her) were for very modest amounts and do not total anything like the amount contended to have been spent by him. I also accept Ms Ling’s evidence that the amount of $200 was not paid each and every week, nor was it paid regularly. Again, I think it likely that this amount was paid from time to time, but only very spasmodically.
Save as those spasmodic amounts might otherwise be so attributed, I accept Ms Ling’s evidence that Mr Watson did not pay rent or board in respect of the occupation of that property.
I accept the evidence of Ms Ling that utilities were shared equally between she and Mr Watson as were ordinary household expenses. In that respect, Ms Ling specifically deposes, and I accept, that the grocery bill was shared equally until “late 2009 and 2010” after which time she “paid the majority”. That time frame would appear to accord roughly with the time when Ms Watson accepts that Mr Watson was in financial difficulties and could not pay school fees.
Ms Ling concedes that Mr Watson did …“help [her] with manual work from time to time…” including assisting her brother and neighbours to install a kitchen and erecting a fence, respectively. Ms Ling specifically denies, and I accept, that, contrary to what Mr Watson asserts, he did not install any built-in wardrobes or repaint properties. She denies, and I accept, that Mr Watson constructed any decking and denies any significant contribution to the refit of her business premises. In respect of the latter, a Mr M was employed. Mr M and a neighbour (Mr K) are deponents. The evidence contained in their affidavits does not assist me greatly, but I accept that they are supportive of the general thrust of Ms Ling’s case which I have accepted, namely that such contributions that Mr Watson made in the manner he alleges, are very minor and significantly less than that which he asserts.
Conclusion as to s 90SM(3)
The estate which bears “the burden of proof” (see Stanford at [60]) must establish, relevantly, that it would have been just and equitable for the Court to have made an order “with respect to property” (s 90SM(8)(a), emphasis added) if Mr Watson had not died.
In my opinion, the Court would not have made an order with respect to property if Mr Watson had not died. Put another way, I do not consider that it would have been just and equitable to alter the existing legal and equitable interests of the property at that time.
The matters that inform that decision as discussed in these Reasons can be summarised as follows:
§The claim falls to be considered within the context of a short relationship;
§I do not consider that this is a case where the parties’ relationship was based on “… express and implicit assumptions that underpinned the existing property arrangements …”. By way of contrast, this was very much a relationship within which the parties lived essentially independent financial lives;
§In the latter respect the parties maintained their own bank accounts and never had a joint bank account, including for the payment of day-to-day expenses, utilities and the like;
§The parties each ran their own businesses independent of the other; neither employed the other. No business income or expenses were shared;
§Prior to death, Mr Watson had sold property (all personalty) in which he had interests, netting about $9,000, in which Ms Ling did not share;
§The interests in property existing immediately prior to death were overwhelmingly those of Ms Ling; they were acquired by Ms Ling without financial input from Mr Watson; they were secured by Ms Ling without assistance from Mr Watson which, in any event, he could not have provided either because of his bankruptcy or, later, his lack of assets and modest income;
§The interests in property were maintained by the payment of mortgages, rates and outgoings to which Mr Watson did not contribute save for sharing the utilities for the property owned by Ms Ling in which he resided;
§Ms Ling’s property provided a place for Mr Watson to live in circumstances where he had separated from his wife and where his former matrimonial home had been transferred to his former wife and later sold;
§Mr Watson made payments that might be attributed to rent or board only spasmodically. He had the use of a place to live without paying rent or board weekly or regularly;
§Mr Watson made only minor contributions to repairs, maintenance and other work in and about Ms Ling’s properties.
As earlier pointed out, the question required by s 90SM(8) is whether an order for property would have been made had Mr Watson not died. In the period immediately prior to his death, Mr Watson may have had a sustainable claim for maintenance (s 90SE; s 90SF(1)(b)(ii)) (noting that, at that time, any need that could be established would be subject to the impact of what was then plainly a very serious, and likely terminal, illness). But, that is a question different to whether a property order would have been made.
The aggregation of all of the circumstances to which I have just referred leads me to the conclusion that it would not have been just and equitable to have made an order for settlement of property pursuant to s 90SM of the Act at the time of Mr Watson’s death. Specifically, I am not satisfied of the opinion required by s 90SM(8)(b)(i).
In light of that decision, it is not necessary for me to answer the second of the questions that needs to be answered pursuant to s 90SM(8), namely whether it is “still appropriate” to make an order.
I order accordingly.
I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 12 February 2013.
Associate
Date: 12 February 2013
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