Wilson v Ryan

[2009] NSWSC 1326

CITATION:	Wilson v Ryan [2009] NSWSC 1326
HEARING DATE(S):	10 and 11 February, 4 and 5 August 2009
JUDGMENT DATE :	2 December 2009
JUDGMENT OF:	McLaughlin AsJ
DECISION:	I stand the matter over to a date to be fixed by arrangement with my Associate, for the bringing in of short minutes of order to reflect the conclusions which I have expressed herein, and also, if desired, for argument as to costs. The exhibits may be returned
CATCHWORDS:	FAMILY LAW - de facto relationship - adjustment of interests of parties in property - respective contributions of parties - the Court should not be diverted from the clear words of the statute, which looks to past contributions actually made by the parties.
LEGISLATION CITED:	Property (Relationships) Act 1984 Real Property Act 1900
CATEGORY:	Principal judgment
CASES CITED:	Davey v Lee (1990) 13 FamLR 688 Bilous v Mudalia [2006] NSWCA 38
PARTIES:	Kathleen Wilson (Plaintiff) James Thomas Ryan (Defendant)
FILE NUMBER(S):	SC 6332 of 2006
COUNSEL:	Ms E. Elbourne (Plaintiff) Mr J. Harris SC (Defendant)
SOLICITORS:	De Losa Burke & Elphick Lawyers (Plaintiff) Mazengarb Barralet Family Lawyers (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Wednesday, 2 December 2009

6332 of 2006 KATHLEEN WILSON –v- JAMES THOMAS RYAN

JUDGMENT

1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984.

2 By statement of claim filed on 15 December 2006, Kathleen Wilson claims against James Thomas Ryan, the Defendant, an order adjusting the interests of the parties in property, pursuant to section 20 of the Property (Relationships) Act.

3 There was no dispute that the parties lived in a domestic relationship from mid-1994 to the end of 1994 and subsequently from 1996 to April 2005. The parties were not in agreement as to precise date upon which the relationship ultimately terminated, the Plaintiff asserting that it was on or about 22 April, whilst the Defendant said it was on or about 9 April.

4 The Plaintiff (who was born in 1956 and is presently aged 53) is a registered nurse by profession.

5 The Defendant (who was born in 1943 and is presently aged 66), although qualified as an accountant, has been employed in administrative positions and more recently, has contracted his services as a consultant (that consultancy work generally including an IT component).

6 No children were born to the relationship between the Plaintiff and the Defendant. However, each of the parties had children by previous relationships (the Plaintiff having two children, and the Defendant having six children). The Plaintiff’s children (who at that time were aged respectively nine and seven) were residing with their mother and the Defendant from the commencement of the relationship. The Plaintiff’s son remained part of the family unit until about 1998, when he went to reside with his father. However, the Plaintiff’s daughter continued to reside with her mother and the Defendant until the termination of the relationship between the parties. For relatively short periods two of the Defendant’s sons resided with the parties during the course of the relationship.

7 During the period of the relationship the parties resided at various locations, in Western Australia, in Queensland, and in New South Wales. However, there was no dispute that they were resident in New South Wales for a substantial period of their relationship, from late 1996 until the termination of the relationship.

8 When the parties commenced to live together in 1994 the Plaintiff had the following assets (to which the following estimated values were attributed):

Pulsar motor car $12,000
Household furniture and furnishings $10,000
Savings in bank $10,000
Property situate at and known as
7 Pickering Close, Kincumber $140,000
Superannuation, Colonial Mutual $3,000

9 At that time the Plaintiff’s residence at Kincumber was subject to a mortgage liability in the sum of about $70,000.

10 Despite her nursing qualifications, the Plaintiff at the commencement of the relationship was employed in a part-time capacity by real estate agents. (Details of the income which she received from that employment were not disclosed in the evidence).

11 In addition, the Plaintiff received rental income from her house property at Kincumber, and she also received child support from her ex-husband. (The amounts of that rental income and of that child support were not disclosed in the evidence).

12 The Defendant, who had been involved in Family Law proceedings with his former wife at the time when the relationship with the Plaintiff commenced, had little in the way of assets, owning at that time only a leased Ford Fairlane motor car, and personal possessions.

13 The Defendant was not in receipt of any income at the time of commencement of the relationship, on account (according to the Defendant) of his ill-health. He was at that time receiving treatment for pancreatic cancer. According to the Defendant, he has been in remission from that condition since 1996, and has been able to work in full-time employment since at least 1996.

14 During the course of the relationship the parties embarked upon and engaged in what can compendiously be described as property development.

15 They purchased various pieces of land, effected the construction of dwelling houses upon those pieces of land, and then sold those houses. The various purchases of land and the construction of dwelling houses thereon were financed by borrowings made by the parties from various banks, those borrowings being secured by mortgages over the relevant pieces of real estate.

16 It was asserted by the Plaintiff that the Defendant at the commencement of the relationship was indebted to the Australian Tax Office in an amount of about $98,000. However, it was the evidence of Defendant that a demand by the Australian Taxation Office (for $58,000 ¯ not for $98,000) made upon the Defendant, in consequence of a company of which he had been a director for a short time in Perth before the commencement of his relationship with the Plaintiff, was ultimately settled, without the Defendant being required to pay any amount towards that company’s debts.

17 According to the Plaintiff, during the relationship the parties together participated in the following real property transactions:

20 Piper Street, Annandale, purchased in the name of the Plaintiff in October 1996 and sold on 9 October 1997.
134 Old Maitland Road, Bishops Bridge, purchased in the name of the Plaintiff on or about 27 November 1998, and sold on 12 December 2005.
4 Brown Crescent, Kurri Kurri, purchased in the name of the Plaintiff in 2001, and sold in June 2003.
20 Beaufort Circuit, Ashton Grove, East Maitland, purchased in the name of the Plaintiff in 2002, and sold in 2003.
47 Worcestershire Drive, Ashton Grove, East Maitland, purchased in the name of the Defendant and sold in 2003.
12 Carnavon Circuit, Ashtonfield, East Maitland, purchased in the joint names of the parties in December 2004.
14 Carnavon Circuit, Ashtonfield, East Maitland, purchased in the joint names of the Parties in December 2004.
49 Carnavon Circuit, Ashtonfield, East Maitland, purchased in the joint names of the parties in December 2004.
51 Carnavon Circuit, Ashtonfield, East Maitland, purchased in the joint names of the parties in early 2004 and sold in December 2005.

18 From at least the time when they resumed cohabitation in 1996 the Defendant conducted his consultancy business through the vehicle of a company, Equanimity Consultants Pty Limited (“Equanimity Consultants”). The Defendant and the Plaintiff throughout their relationship were the sole directors of that company. Thereafter all of the Defendant’s earnings as a contracting consultant were deposited in that company’s bank accounts. It was the evidence for the Defendant that from the time when he set up that company structure in Townsville in 1996 until the date of his affidavit of 21 August 2007 in the present proceedings, the totality of his contract income, in a total amount of $1,580,145, had been deposited to the company accounts. (It will be appreciated that that figure represented his gross earnings and that it also includes amounts deposited between the termination of the relationship in April 2005 and August 2007).

19 It was the practice of the parties to use the bank accounts of Equanimity Consultants not only for their joint financial arrangements, but also in respect to their individual financial arrangements. They jointly consulted a firm of accountants, Ross Maclean & Associates in Townsville in 1996 in this regard. According to the Defendant, the letter dated 23 December 1996 from that firm of accountants, addressed jointly to the Plaintiff and the Defendant, accurately sets forth the arrangements between the parties concerning their financial affairs and the involvement of Equanimity Consultants in those financial affairs.

20 However, I am prepared to accept the evidence of the Plaintiff that she was not particularly knowledgeable concerning the financial arrangements of that company, and that it was her practice to accept whatever accounts and figures regarding the company which were placed before her by the Defendant, and to sign whatever documents the Defendant requested her to sign concerning such financial matters. For example, on 28 February 2003 the Plaintiff, as well as the Defendant, in their capacity as directors of Equanimity Consultants, signed a document headed “Directors Declaration”. That declaration included the following,

The parties agree that Kaite still owes James a substantial amount of money in loans, due to their previous arrangements, however it is hoped that this new arrangement will allow her to repay some of this outstanding sum. In any event the parties agree that these loans will be paid out of their respective shares in the Bishops Bridge and other properties, should there be a parting of the relationship.

21 Similar Directors Declarations were signed by the parties on 26 April 2003, 22 September 2003 and 24 August 2004.

22 All the living expenses of the parties were paid from the resources of Equanimity Consultants. Loan accounts were established in the financial records of the company, in order to document contributions by each of the Plaintiff and the Defendant to the company.

23 The Defendant prepared a schedule (which is exhibit JTR 3 to his foregoing affidavit) setting forth the manner in which the respective income and expenses of the parties were allocated in the loan accounts of Equanimity Consultants, until June 2005. According to the Defendant, that schedule discloses, in summary, that the Plaintiff by that time owed $742,073 to the company, whilst the company owed $758,151 to the Defendant.

24 Within a few weeks of each other, in late December 1995 and in early January 1996, each of the Plaintiff’s parents died. In consequence of the death of her father, the Plaintiff inherited a one-quarter share of his estate, which included an unencumbered house property at 20 Piper Street, Annandale. In October 1996, the Plaintiff entered into an agreement with her siblings, by which the Plaintiff (through the vehicle of Equanimity Consultants) acquired two further one quarter shares in the Piper Street property (thus becoming the owner of three quarter shares in that property). Equanimity Consultants paid $72,500 for each of those two one quarter shares. The remaining one quarter share was retained by a brother of the Plaintiff, who was paid interest by Equanimity Consultants while the parties resided in that house property until it was sold in October 1997.

25 In consequence of the death of her mother, the Plaintiff deposited in the company account of Equanimity Consultants in May 1996 an amount of almost $25,000, representing part her entitlement from her mother’s estate. Very shortly thereafter two amounts of $25,000 were withdrawn from the company account and one such amount was placed to the credit of each of the parties in their respective superannuation funds.

26 In consequence of the sale of her property at Kincumber in August 1996, the Plaintiff on 20 August 1996 deposited almost $60,400 from the proceeds of the sale of that property in the company account.

27 In May 1997 a further sum of $25,000 was paid by Equanimity Consultants to the superannuation fund of each of the parties.

28 In early 1996 the parties resumed cohabitation, in Townsville, where the Defendant was working at that time. Subsequently, the Defendant’s consultancy practice required him to work in Leeton. The parties had returned to Sydney from Townsville in September 1996, and thereafter resided in the Annandale property (in which the Plaintiff at that time had a one fourth interest, but in which shortly thereafter the Plaintiff, as has already been observed, acquired an additional half interest). It was the practice of the Defendant to work in Leeton during the week and to spend weekends at Annandale.

29 In September 1997 the Plaintiff deposited $33,500 from her entitlement in her father’s estate in the account of Equanimity Consultants.

30 When the Annandale property was sold in the following month, October 1997, the parties moved into rented accommodation at Tumbi Umbi, the Defendant continuing to work at Leeton during the week. Subsequently, the parties resided at Bateau Bay for some months in 1998, before purchasing a rural estate at 134 Old Maitland Road, Bishops Bridge (consisting of about 100 acres), in November 1998. That property, which was purchased in the Plaintiff’s name for $200,000, was subsequently transferred into the joint names of the parties. An amount of $234,000 was borrowed by the parties in respect to that purchase. Upon that property a new house was constructed, which, when completed in September 2001, became the residence of the parties. According to the Defendant, the total price for the land and the construction of the house thereon, was about $744,000.

31 From the end of 1999 the Defendant was engaged in a consultancy in Canberra for about 18 months. Other consultancies in Sydney and in Canberra followed.

32 In about 1999 the parties purchased an aeroplane for $82,000, that purchase price being paid by Equanimity Consultants, which became the registered owner of that aircraft. Thereafter both the Plaintiff and the Defendant received flying lessons. Those lessons and all expenses relating to the aeroplane were paid for by Equanimity Consultants and were recorded in the loan accounts of that company. The Plaintiff’s flying costs were shown as being almost $119,000, whilst those of the Defendant were about $96,600.

33 In April 2005 the parties prepared a written agreement in respect to the termination of the relationship. That document was signed by the Defendant on 9 April 2005 and was subsequently signed by the Plaintiff on 16 April 2005 (which is the date it bears). Whether or not that document (which is exhibit JRT 1 to the affidavit of the Defendant dated 21 August 2007) has any legal effect or is binding upon the parties, it is certainly evidence of the attitude of the parties as to how the property owned by them at the time of the termination of the relationship should be divided between them.

34 Essentially the document evidences an intention on the part of the parties that their “[a]ssets are to bee [sic] split on a 50%/50% basis”. The document also contained the following:

To achieve a 50%/50% split of assets, James has agreed to waive his right to $717,000 of loans made to Kaite following an arrangement put in place in 1995, by Ross MacLean and Associates in Townsville, and audited and accepted by Kaite each year since then.

35 The agreement also contemplated that the Plaintiff would remain in residence in the Bishop’s Bridge property until 30 June 2005, and that that property would thereafter be sold, one or other of the parties remaining in residence until its sale, and the parties contributing equally to the costs and outgoings of the Bishops Bridge property and other properties jointly owned by the parties.

36 The Defendant by that document agreed to forgo that amount of money asserted to be owing by the Plaintiff. However, since (according to the Defendant) the Plaintiff had reneged upon the agreement, the Defendant no longer considered himself bound by his part of the agreement to forgo the alleged indebtedness to the company by the Plaintiff.

37 The Plaintiff, in her affidavit of 4 December 2006 (filed in support of the statement of claim at the commencement of the proceedings), asserted that at that time she owned the following assets (having the following estimated respective values):

50 percent interest in 12 Carnavon Circuit $170,000
50 percent interest in 14 Carnavon Circuit $170,000
50 percent interest in 49 Carnavon Circuit $185,000
Nissan Pulsar motor vehicle $8,000
Furniture and Furnishings $5,000
Jewellery (from Plaintiff’s mother’s and aunt’s estates) $10,000
Savings, National Australia Bank $2,000
Westpac Maxi Direct Account $103,000
Trust moneys held by Century 21,
Ransom Real Estate $12,500
Plaintiff’s share in Liberty Eagle
Superannuation Fund minimal
Plaintiff’s share in Trussopt 1 minimal
Plaintiff’s share in Liberty Phoenix Pty
Limited minimal

38 In addition, the Plaintiff has two superannuation entitlements, one presently in an amount of about $55,000 and the other presently in an amount of about $3,000.

39 The Plaintiff owes a debt to Westpac in an amount of about $205,500 (representing 50 percent of a Westpac business development loan made to the Plaintiff and the Defendant).

40 Regarding that indebtedness to Westpac, it should be recorded that in August 2006 (that is, after the termination of the relationship between the parties) the Plaintiff withdrew the sum of $103,000 from the company’s Westpac draw down facility, without the Defendant’s knowledge or consent. That amount (which was the maximum amount available upon the draw down facility) was deposited by the Plaintiff in her own Westpac account. A consequence of that withdrawal was service by Westpac of an appropriate notice under section 57(2)(b) of the Real Property Act 1900, requiring payment to the bank within a specified period of an amount in excess of $411,000. In default of that payment Westpac as mortgagee exercised its power of sale, taking possession of the three Carnarvon Circuit properties which were still retained by the parties.

41 The Plaintiff at the termination of the relationship was employed by Uniting Care as a registered nurse, in which position she currently earns about $56,000 a year.

42 According to his affidavit of 21 August 2007 at the time of the termination of the relationship the Defendant had the following assets and liabilities.

2002 Holden Statesman motor vehicle (leased in the name of Equanimity Consultants), purchased in 2004 for $29,000. (In 2006 that vehicle was traded in on another, later model, Statesman motor vehicle, for a trade-in price of $10,000)
Superannuation with the Bendigo Bank (in the name of Equanimity Superannuation), which by August 2007 had a value of $145,000.
Interest in Equanimity Consultants
Furniture and personal effects

43 Exhibit A in the present proceedings was a Joint Statement of Experts pursuant to Rule 31.26 of the Uniform Civil Procedure Rules 2005, dated 31 July 2008. Those experts had conferred and prepared an agreed balance sheet setting out the assets and liabilities of the parties to the proceedings as at 12 April 2005, 2 August 2006 and 1 May 2008.

44 The assets and liabilities of the parties at 12 April 2005 (which may be treated as their assets and liabilities at termination of the relationship) were set forth as follows:

Equanimity Consultants Pty Limited
Net company assets $181,483
Equanimity Superannuation Pty Limited
Net fund assets $101,646
Plaintiff
Classic Account $1,079
Superannuation $13,123
Funds received from
Equanimity Consultants ($2,400)
Defendant
Capital Finance Liability ($16,986)
Funds received from company ($2,400)
Plaintiff and Defendant
Equity Access Loan – Plan 2 ($98,202)
Home Loan Account/Rocket Deposit ($216,103)
Business Development Loan ($89,000)
Bank Bill Business Loan ($1,210,844)
Progress payment ($88,000)
Bishops Bridge $1,169,193
10 Crothers Street, Aberglassyn $138,892
51 Carnavon Circuit $365,969
49 Carnavon Circuit $366,000
12 Carnavon Circuit $310,050
14 Carnavon Circuit $310,050
Funds contributed to company $80,661
Total $1,073,502

45 It was submitted on behalf of the Defendant that the pool of assets of the parties (that phrase being used compendiously to described the assets of the parties presently available to be subject to an order for the adjustment of the interests of the parties therein) consisted of the following:

Westpac account about $120,000
Controlled money account $260,486
House property, situate at and
known as 49 Carnarvon Circuit,
Ashtonfield, East Maitland $345,000

46 In addition, the Defendant submitted that the Plaintiff’s interest in the estate of her late aunt, Sarah Gaul (being in an amount of $ 21,434, together with some gold bullion and a one seventh interest in remainder in a house property of which the present value is in the range of $400,000-$600,000, and the age of the life tenant whereof is about 91 years), should also be treated as part of the pool of assets of the parties. I do not agree that the Plaintiff’s interest in remainder in that house property should be so treated. Its value cannot be quantified. Any practical benefits therefrom will not be received by the Plaintiff until some uncertain time in the future.

47 It was the case for the Plaintiff that throughout the relationship she made direct financial contributions to the acquisition, conservation or improvement of the property of the parties or of to the financial resources of the parties. Particulars of those contributions were set forth in the statement of claim.

48 Further, it was asserted by her that the Plaintiff made non-financial contributions to the conservation or improvement of the property of the parties, or the financial resources of the parties during the relationship. Particulars of the foregoing contributions were set forth in the statement of claim.

49 The Plaintiff further asserted that she made contributions in the capacity of homemaker or parent to the welfare of the Defendant and of the family constituted by the parties and their respective children. Particulars of those contributions included cooking, cleaning, laundering clothes and linen, managing household finance (sic), meal planning and grocery shopping, payment of household bills, caring for the Defendant and for the Defendant’s children. At various times two of the Defendant’s children (sons aged in their teens and early twenties) resided with the parties for relatively short periods, and the Plaintiff was to a considerable extent cast in the role of parent to those children.

50 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.

51 I have had the benefit of receiving a written outline of submissions from Counsel for the respective parties, together with a chronology from Counsel for the Defendant. Those documents will be retained in the Court file.

52 The jurisdiction invoked by the Plaintiff in the present proceedings is founded upon section 20 of the Property (Relationships) Act, subsection (1) whereof provides:

On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:
(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and
(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely:
(i) a child of the parties,
(ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties.

53 In approaching a claim for adjustment of the interests of parties in property pursuant to section 20(1) of the Property (Relationships) Act the Court must make a holistic judgment and must not attempt to evaluate the respective contributions of the parties as if it were undertaking a reductionist process analogous to the taking of partnership accounts (notoriously one of the most time consuming of litigious exercises). (See Davey v Lee (1990) 13 FamLR 688; see also Bilous v Mudalia [2006] NSWCA 38, at [43], where Ipp JA said that some situations do not lend themselves to either a pure global approach or a pure asset by asset approach in determining what orders should be made.)

54 In considering the claim of the Plaintiff and the Court should not be diverted from the clear words of the statute, where, by section 20 (1), the Court is required to have regard to the respective contributions of the parties of the nature referred to in that subsection.

55 At their time of the commencement of the relationship between the parties the assets of the Plaintiff were considerably greater than those of the Defendant. Nevertheless, throughout the period of the relationship the earnings of the Defendant were considerably greater than those of the Plaintiff. Further, it was what might be described as the Defendant’s financial expertise which was primarily responsible for the successful property development activities which were conducted by the parties. I do not, however, overlook the significant contributions of a non-financial nature made by the Plaintiff to the acquisition, conservation and improvement of those properties. Neither do I overlook the direct financial contributions made by the Plaintiff to Equanimity Consultants, which financial contributions, through the vehicle of that company, enabled the parties to conduct their property development enterprises.

56 Although their extent was disputed by the Defendant, I am satisfied that the non-financial contributions of the Plaintiff, and especially her contributions as homemaker and parent (to her own children and, for various periods, to two of the children of the Defendant) were considerably greater than the contributions as homemaker and parent made by the Defendant.

57 Neither should it be overlooked that in April 2005, at the time when they were proposing to terminate their relationship, the parties reached agreement concerning the division of their assets, and reduced that agreement to writing. Essentially, they agreed that there should be an equal division of those assets.

58 It was submitted on behalf of the Defendant that any adjustment of the interests of the parties in property owned by them at the termination of the relationship should not result in the Plaintiff receiving more than 30 percent of the totality of the property owned by the parties, and that the Defendant should receive the remainder of that property. The Plaintiff, however, sought an equal division of the totality of the property owned by them at the termination of the relationship.

59 It is quite apparent that, had it not been for the original direct financial contributions made by the Plaintiff in the early part of the relationship, from, first, the sale of her Kincumber property, and, later, from the estates of each of her parents (including, until it was sold, the interest of the Plaintiff in the Annandale property, which interest allowed the parties to reside in that property from September 1996 until October 1997). Similarly, I am satisfied that the non-financial contributions of the Plaintiff, especially in respect to the locating and acquiring of the various properties, the construction of houses thereon, and the supervision of all aspects of that construction, were far greater than the Defendant would have the Court accept (although possibly not as great as the Plaintiff herself asserted). It should not be overlooked that throughout most of the period while those properties were being acquired and houses were being constructed thereon, the Defendant was engaged in his consultancy business in Leeton, Canberra, and Sydney, those places of work being located at considerable distances from the various properties which were being acquired by the parties.

60 Further, I am fully satisfied that the contributions of the Plaintiff as a homemaker and parent were considerably greater than those of the Defendant. In this regard it should not be overlooked that during considerable periods during the relationship the Defendant’s consultancy work required him to be away from the family home of himself, the Plaintiff and whichever of their respective children were residing with them at the relevant time.

61 In my conclusion, the Plaintiff is entitled to 50 percent of the totality of the assets owned by the parties at the termination of the relationship, and the Defendant to the remaining 50 percent.

62 My preliminary view regarding costs is that the Defendant should pay the costs of the Plaintiff. However, I have not heard any submissions regarding costs, and if either party so desires, an opportunity will be given to that party to make submissions for some other order as to costs.

63 Accordingly, I stand the matter over to a date to be fixed by arrangement with my Associate, for the bringing in of short minutes of order to reflect the conclusions which I have expressed herein, and also, if desired, for argument as to costs. The exhibits may be returned

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