Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137

Black v Black (1991) 15 Fam LR 109

Hibberson v George (1989) 12 Fam LR 725

Kais v Turvey (1994) 11 WAR 357

Mallett v Mallett [1984] HCA 21; (1984) 156 CLR 605

Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583

Stowe & Anor v Stove, unreported; FCt SCt of WA; Library No 950246; 22 May 1995

Thompson v Winter; unreported; SCt of WA; Library No 950710; 20 December 1995

Whitehead v Pilgrim [1999] WASC 25

1 WALLWORK J: The plaintiff was working as a bar assistant at the Raffles Hotel and earning an average of about $274 per week net when in about March 1992 she decided to give up her employment and enter into a relationship with the defendant and commence a family. She has deposed that had she not decided to enter into the relationship, she would have continued to work and earn approximately the same net weekly income.

2 After the couple commenced to live together in 1992, the defendant gave the plaintiff money for housekeeping and personal purposes. The plaintiff used that money to make the ordinary domestic payments, including such things as HBF membership and St John Ambulance membership. During the relationship the defendant worked for a company as an engineering consultant whilst the plaintiff maintained the house, cared for the family and assisted with the maintenance of their home and two investment properties which were owned by the defendant.

3 On 27 May 1996 the relationship ended and the parties separated. The plaintiff now claims that she is entitled to be compensated for her contribution to the parties' "joint endeavour" which resulted in a considerable increase in the defendant's assets. The defendant denied that the plaintiff was so entitled, but on 13 October 2000 the plaintiff obtained a judgment against the defendant and an order that the defendant pay to her compensation to be assessed.

4 The defendant did not attend at the hearing of this matter, but submissions were prepared on his behalf by solicitors and he wrote to the Court.

5 The plaintiff contends that her contribution to the relationship was significant and that it allowed the defendant to increase his net assets; that it was her expectation to share in the defendant's assets as his defacto partner.

6 The plaintiff has deposed that in May 1992 when the couple began living together, they lived in a duplex at 5 McKenzie Road, Applecross, which was owned by the defendant. He also owned a farm at Pinjarra Road, Pinjarra. The defendant gave the plaintiff $300 per week from which she paid all the household expenses and any personal expenses she had. During the time of the relationship the couple's two children were born on 5 February 1993 and 8 July 1995 respectively.

7 The plaintiff has deposed that the couple had originally intended to live on the property at Pinjarra with their children. However, they went there mainly on the weekends. That property consisted of 26 acres, a weatherboard house, a swimming pool and a large workshed.

8 The plaintiff says that she visited the property twice a week which was an all day affair. She worked on the premises and organised tradesmen. She says she was kept "intensively busy" with these activities for a period of two years from 1992 to 1994. After that time she mainly did checking on the property about once or twice a week and organised tradesmen to do maintenance work. In late 1995 the defendant and the plaintiff had a long discussion and it was agreed that the property should be sold.

9 While they were living at McKenzie Road, the plaintiff carried out the usual housekeeping chores and generally looked after the family's finances and the children. The defendant was away for long periods at work. When he was in Perth he worked for long hours.

10 After they sold the farm at Pinjarra the couple agreed to purchase a property at Lentona Road. That was later sold and resulted in a loss of capital of $2,000.

11 After the couple separated on 27 May 1996 the defendant voluntarily paid $240 per week for child support until 25 August 1997. The plaintiff says that she has not received any money for child support since that time. However, that is a separate matter to her claim that she is entitled to compensation due to the increase in value of the defendant's assets whilst they were living together.

12 The defendant has valued the increase in value of the McKenzie Road property at $110,000 less $17,500 spent by him on the premises, leaving a net increase in value of $92,500. As stated above, he has estimated a loss on the Lentona Road property of $2,000 bringing the net gain so far to $90,500. He has estimated the net increase in value of the Pinjarra Road property at $154,000. As at May 1996 when the couple separated the defendant owed $211,622 to the National Bank on a mortgage which had been used to service the payments on his properties.

13 It is the intention of the plaintiff to remain on the sole parent allowance until the children are at least of school age. At that time she will try to re-enter the workforce, probably part-time whilst the children are young, and then full-time as they grow older.

14 The statement of claim on which judgment was obtained alleges that the plaintiff and the defendant lived in a defacto relationship from about March 1992 until 27 May 1996; that at all material times the parties applied their capacities and skills towards their relationship. The plaintiff claims that she worked as a defacto wife, mother and homemaker and that the defendant worked as a defacto husband and financial provider; that they worked in a joint endeavour, one purpose of which was to provide them with permanent financial security.

15 It is alleged by the plaintiff that at about the time of the commencement of their cohabitation and thereafter on a number of occasions, the defendant said to her that one purpose of his work was to provide for her permanent financial security. They had agreed that their relationship would be permanent and that they would have children together.

16 The plaintiff alleges that she agreed with the defendant not to work in paid employment or to pursue a career and to devote herself full time to her role as a homemaker and mother, and to assist the defendant as far as she could with his employment. The plaintiff claims that her contribution to the joint endeavour was generally to organise the home and whatever she could of the defendant's affairs whilst he worked in the oil industry; that she assisted him to preserve and increase the value of the properties which he had purchased.

17 In May 1996 when the relationship came to an end the defendant retained the two properties on which a capital gain had been made. The plaintiff pleads that his failure to account to her was unconscionable and that she should be compensated for the value of her contributions.

18 In Stowe v Stowe, unreported; SCt of WA; Library No 960354; 4 July 1996 Owen J discussed the rights arising from a defacto relationship. At p 5 of the reasons his Honour said:

"The principle is concerned to restore contributions made for the purpose of the now defunct joint endeavour: see Baumgartner [1987] HCA 59; (1987) 164 CLR 137 at 148. In Stowe v Stowe & Anor, unreported; FCt SCt of WA; Library No 950246; 22 May 1995 the Full Court said that 'equity intervenes to deny the unconscionable retention of a benefit.'"

"The equity which underpins the plaintiff's cause of action is what she alleges as unconscionable conduct of the defendant in retaining wealth acquired pursuant to the joint endeavour and refusing to account to her for wealth to which she has contributed. It is the unconscionable conduct that leads to the duty to account. The failure to abide by that duty constitutes the wrong in respect of which equity intervenes and for which equity provides a remedy. It is the restoration of the value of the contributions made that is the primary relief claimed by the plaintiff: ... It is a particular form of equitable intervention moulded to fit the circumstances of the case. It falls short of a claim for an interest of an ownership kind in the assets to which it relates."

20 Owen J said that to found a claim based on joint endeavour, there must be an actual intention that the parties agreed to participate in the joint endeavour; that the purpose and the scope of the endeavour is a question of act fashioned by the circumstances of the particular case. His Honour said that the fact that the contributions were of a non-financial kind will not prevent the application of the equitable principle: Baumgartner (supra) at 148; Stowe (supra) at 13.

21 In Parij v Parij [1997] SASC 6771; (1997) 72 SASR 153 a decision of the Full Court of SA, Debelle J, with whom Cox and Millhouse JJ agreed, when discussing the factors to be taken into account after the breakdown of a defacto relationship, said at 166 - 167:

"In my view, the following guidelines are relevant in this case. First, even in cases involving a relatively long marriage, there is no presumption that equality is equity: see Mallet (at 613, 625, 635 - 636 and 646 - 647). In other words, it is necessary to examine the facts and circumstances of each case. That examination may lead to a determination that there should be equality, but equality is not the starting point. Secondly, substantial, not token, regard should be had to the contribution of the partner who is the homemaker and caregiver: see Mallet (at 609, 623, 636, 646) approving Evatt CJ in In the marriage of Rolfe (1977) 34 FLR 518 at 519. Thirdly, as a general rule, the domestic activities of one partner may properly be regarded as contributing towards the acquisition of property by the other partner through his or her business activities: see In the Marriage of Ferraro [1992] FamCA 64; (1992) 111 FLR 124 at 157, 169 - 170. The rationale lies in the fact that the performance of domestic duties by one partner frees the other from domestic responsibilities to work directly for financial reward.

When determining the respective contributions of the provider and the homemaker, it is not appropriate in every case to make a detailed analysis of the quality of performance by each partner of their respective roles in the relationship. So in In the Marriage of Shewring (1987) 92 FLR 385 at 387 - 388 the court said:

'The assessment of the quality of the contribution should be based on the principle that each party should make such contribution as can be reasonably expected having regard to the nature of the parties' capacity, the ability of each of the parties and expectations of the spouses.'

Thus, where the parties have acted in what might be the normal range of roles no detailed assessment is either called for or is appropriate: see Ferraro (at 161). Like observations were made in Black (at 117 - 118) which concerned the division of property upon the separation of parties who had been living in a de facto relationship.

'In order to evaluate the particular contribution the court is, in my opinion, required carefully to examine the role played by the person who claims to have contributed as a homemaker and parent. Obviously, where a woman has, over a long period, assumed virtually all the responsibility of maintaining the home and bringing up the children, has done so in a responsible and energetic manner, and has devoted most of her time to doing that and thus freed her partner to earn income to be used for the general betterment of the family, her contribution would have to be regarded as substantial and significant. Whether her contribution should be regarded as less than, equal to, or greater than the financial contribution by the wage-earning partner must depend upon the circumstances of the case, which will undoubtedly include the length of the relationship, the nature of the wage-earner's contributions and the care, devotion and services of the homemaker.'"

23 In his affidavit the defendant has stated that at all times the properties remained in his sole name. He sets out the details of his financial arrangements with the National Australia Bank when he purchased the McKenzie Road property and also the fact that he expended $17,500 on that property. He contends that he never agreed that the plaintiff was to share in the ownership of any of his property investments and that she did not make any financial contributions to those investments.

24 The defendant deposes that the mortgage accounts for the Applecross home and the Pinjarra farm property were combined by the National Bank of Australia into a single mortgage account. I will not set out all the defendant's contentions in these reasons, but in essence, he says that the only activities carried out by the plaintiff in connection with the relationship were domestic duties. He deposes that he purchased a unit in Lentona Road, Alfred Cove which was later sold at a loss of $2,000 in August 1997.

25 The defendant also deposes that in January 1997 he was admitted to the psychiatric unit at Fremantle Hospital for three weeks and that thereafter he was re-admitted, on and off, over a period of 21 months. During that period he was ill and his brother managed his financial affairs. He regained control of his own financial affairs in about November 1998, but he was unfit to return to work until 1999.

26 The defendant deposes that he avoided bankruptcy but lost most of his assets. He retained the McKenzie Road property which was rented out. He has now regained employment and says he is attempting to re-establish his life and provide reasonable support for his wife and child. He says he did not receive a large severance payment in his employment as contended by the plaintiff, but that he received some withheld expenses in backpay wages after he was laid off in Singapore. Generally he denies any claim on his assets by the plaintiff.

27 The plaintiff has deposed that during the course of the relationship she believes the net worth of the defendant's estate increased by approximately $200,000. I accept the evidence of the plaintiff and am satisfied that she has established her claim pursuant to the joint endeavour in accord with the principles which were discussed by Owen J in Stowe v Stowe (supra).

28 On the figures I have, at the commencement of the relationship the defendant had total assets of $205,000 (McKenzie Road) plus $145,000 (Pinjarra Road) being $350,000 less the mortgage at say $212,000, totalling $138,000.

29 Just prior to the end of the relationship, and as at 14 April 1996, the assets were $315,000 (McKenzie Road) plus $299,000 Pinjarra Road, less the mortgage at $212,000, less the expenditure on McKenzie Road at $17,500. I take into account the loss on Lentona Road at $2,000 in July 1997, making a total for the assets at $382,500.

30 The increase in value of the assets was therefore $244,500.

31 From that sum the defendant would be entitled to compound interest at say 8 per cent per annum on his original capital of $138,000 for the four relevant years amounting to $49,747, say $50,000. If the sum is deducted from the net increase in the assets of $244,500 the sum of $194,500 remains.

32 In all the circumstances and having regard to all the contents of the parties' affidavits and submissions, and taking a broad brush approach, I assess the plaintiff's compensation at half of the sum of $194,500 being $97,250. I also allow interest on that sum from 27 May 1996 to the present time at the appropriate rates pursuant to s 32 of the Supreme Court Act.

33 If there are any problems arising from the calculation of the interest I give liberty to apply on that question.