Claim under s 20 of the Property (Relationships) Act
158Ms Ak-Tankiz also makes a claim under s 20 of the Act, and it will be necessary to consider whether by means of that claim Ms Ak-Tankiz is entitled to any more advantageous relief than she has secured by means of her constructive trust claim.
159For the purposes of determining Ms Ak-Tankiz's claim under the Act it will be necessary to resolve a dispute between the parties as to the level of domestic support and personal care that Ms Ak-Tankiz provided to Mr Ak and his wife before she left the Property.
160Ms Ak-Tankiz claims that she provided domestic assistance to both her mother and her father since she was aged about 15 or 16. She assisted her mother with all household chores such as washing, cleaning, ironing and cooking on a daily basis. When her mother became seriously ill in 1998, Ms Ak-Tankiz says she provided her with personal assistance by bathing her, taking her to the toilet, cleaning under her and washing her clothes and preparing her special dietary needs. She says that her mother could not use her hands because of the effects of her illness, and could not do any of the normal household chores which she could do before she suffered her illness. Mrs Ak's specialist gave Ms Ak-Tankiz advice on how to take care of her mother. She was taught how to massage her, particularly her face where she suffered partial paralysis. Ms Ak-Tankiz was also taught techniques on how to lift and move her mother on and off her bed. Ms Ak-Tankiz says that from about 1998, under the guidance of her mother's doctor, she gave her mother daily medications. She also helped her mother to go to the doctor, although as I understand the evidence, Ms Ak-Tankiz does not drive a car.
161Mr Ak disputed Ms Ak-Tankiz's evidence as to the level of domestic assistance that she provided to her family, and particularly her mother. The thrust of Mr Ak's evidence was that his wife was not as incapacitated as Ms Ak-Tankiz suggested, although he did acknowledge that she suffered serious health problems, which gradually reduced her capacity to look after herself. Mr Ak acknowledged that Ms Ak-Tankiz did some household chores, but suggested that all of the members of the family contributed to those duties, at least when they were living in the home. He said that his wife continued to be able to look after her personal needs up until 2004.
162I generally accept Ms Ak-Tankiz's version of events as to the level of domestic support and care that she provided to her parents. As Ms Ak-Tankiz lived with her mother for almost the entire period up to the mother's death, it would be natural to expect the daughter to provide the care and support required by the mother in her illness. The difference between Ms Ak-Tankiz and Mr Ak is, in any event, essentially one of degree. Mr Ak did not directly deny the truth of Ms Ak-Tankiz's evidence, but rather focused on the claim that to some extent support was also provided by him and his other children.
163As I have noted, Mr Ak still lives in the Merrylands Property, with Arife and Ramazan and their children. Ramazan Ak enjoys secure employment with an income of some $127,000 per annum. Arife receives a carer's pension for looking after Mr Ak. She also owns an unencumbered, and unoccupied, residential property in Adelaide, which she says has a value of about $400,000.
164Ms Ak-Tankiz's position, as has been noted, is that she now lives with her husband in a rented home unit. Mr Tankiz has not been able to find fulltime employment, and continues to assist Ms Ak-Tankiz by driving her to her contractors to deliver finished dresses, which generally occurs about two times a week. Ms Ak-Tankiz says that she and her husband have no substantial savings. Her financial circumstances and her level of production in her business have declined due to her age and her health. Ms Ak-Tankiz says that she was diagnosed with diabetes in 2010.
165Section 20 of the Act is in following terms:
Application for adjustment
(1) 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 partner, 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.
(2) A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a party to a domestic relationship in respect of the property.
166The first question that arises is whether Ms Ak-Tankiz and Mr Ak were parties to a domestic relationship for the purposes of s 20. Section 5 of the Act relevantly provides:
(1) For the purposes of this Act, a domestic relationship is:
...
(b) a close personal relationship (other than a marriage or de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care."
167It is clear that Ms Ak-Tankiz and Mr Ak had a domestic relationship for the purposes of the Act from the time she attained the age of 18 years until she left the Merrylands Property on 16 April 2010. I accept that she provided some amount of domestic support and personal care directly to Mr Ak. However, Mr Ak had an obligation, as her husband, to provide domestic support and personal care to Mrs Ak, particularly during the long period of her illness. The support and personal care that Ms Ak-Tankiz provided to her mother substantially relieved the need for Mr Ak to provide that support and personal care himself, and by that indirect means Ms Ak-Tankiz provided a high level of domestic support to Mr Ak.
168It is therefore not necessary to decide whether the very substantial financial contributions that Ms Ak-Tankiz made to support Mr Ak and his family are relevant to establishing the domestic relationship. The expression "domestic support" is capable of a wide meaning, and in my view encompasses the making of the various types of payment made by Ms Ak-Tankiz over the years, given the necessity for there to be a close personal relationship as the basis for the making of the payments. It would seem to follow from the fact that s 20 of the Act requires the court to take into account the financial and non-financial contributions made by the parties to the domestic relationship that the meaning of "domestic support" should capture both forms of contribution.
169I respectfully adopt the following statement of principle as to the appropriate way to determine a claim under s 20 of the Act, which is taken from the decision of Sackar J in Murgic v Murgic [2011] NSW SC 971:
[32] In Howlett v Neilson , Hodgson J A identified a three stage process which may generally be followed in assessing the respective interests under that section.
[33] In Baker v Towle , Basten JA with whose reasons and conclusions Beazley JA and Matthews AJA agreed and made the following comments:
[42] These proceedings were brought under s 20(1) of the Act, which has three operative effects. The first is to grant a right to a party to a domestic relationship to seek an order adjusting property interests of the parties to the relationship; the second is to empower the court to make such an order "as to it seems just and equitable" and the third is to identify the factors to which the court must have regard in determining the application. Whether those factors are the only factors to which the court can properly have regard was not in dispute in the present case: see Evans v Marmont (1997) 42 NSWLR 70 at 79-80 ; 21 Fam LR 760 at 767-9 (Gleeson CJ and McLelland CJ in Eq); compare Manns v Kennedy (2007) 37 Fam LR 487 ; [2007] NSWCA 217 at [112]-[125] (Campbell JA, Santow JA and Bryson AJA agreeing).
[43] it has been said in a number of cases that the application of s 20 involves three steps, which were identified in Howlett v Neilsen (2005) 33 Fam LR 402 ; [2005] NSWCA 149 (Howlett) (Hodgson JA, Ipp and McColl JJA agreeing) in the following terms (at [25]):
(1) identification and valuation of the property of the parties;
(2) identification and valuation of the respective contributions of the parties, of the types referred to in s 20;
(3) determination of what if any order is just and equitable having regard to these contributions.
[34] As Basten JA pointed out at [45] in many cases a step will need to be taken in order to arrive at a valuation of the property of the parties which is to be the subject of the process. As he points out justice and equity will usually require an assessment be made of the existing interests of the parties in the property owned by each or both in order to determine whether there is an adjustment which should be properly made. This will particularly be so no matter what sort of property is being considered but perhaps more important where real estate is the subject of the consideration.
[At [35] Sackar J considered the time at which the property owned by the parties should be valued].
[36] When one is looking at the valuation of the respective contributions of the parties to the relationship what is not required is "a narrow or purely mathematical process". See Howlett at [29] and Baker at [47].
[37] Section 20 of course importantly requires that the adjustment be done on a just and equitable basis but having regard to the financial and non financial contributions made directly or indirectly by the parties and importantly the contributions made in the capacity of homemaker by either of the parties to the relationship to the welfare of the other party. (Section 20(1)(b)).
[38] In terms of what is involved in the evaluation process in order to arrive at a just and equitable outcome Campbell JA in Manns v Kennedy at [62]-[67] helpfully collected and reviewed the relevant authorities:
[62] McLelland J said in Davey v Lee (1990) 13Fam LR 688 at 689 ; (1990) DFC 95-084 at 76, 146, that under section 20 "the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind". That statement was approved in this Court in Ross v Elderfield [2006] NSWCA 102 at [35] and in Kardos v Sarbutt [2006] NSWCA 11 at [36]; [2006] NSWCA 11 ; (2006) 34 Fam LR 550 at 561 ; (2006) DFC 95-332 at 78,542.
[63] The Full Court of the Family Court of Australia (Fogarty, Murray and Baker JJ) in Ferraro v Ferraro (1993) FLC 92-335 at 79,578 approved the statement in In the Marriage of Harris (1991) 15 Fam LR 26 at 31 ; [1991] FLC 92,254 at 78,705 concerning section 79 Family Law Act 1975 that the task it calls for "is not akin to an accounting exercise". The same applies to section 20.
[64] However, the "holistic value judgment" is the final step in the process of arriving at an order, namely deciding what adjustment of property seems just and equitable having regard to the contributions identified in paragraphs (a) and (b). Carrying out the task that section 20 sets requires, before that final step is carried out, an identification and (so far as possible) valuation of the contributions that are being taken into account and an identification and (so far as possible) valuation of the property concerning which it is open to the court to make an adjustment: Howlett v Neilson [2005] NSWCA 149 at [25]; [2005] NSWCA 149 ; (2005) 33 Fam LR 402 at 407; Saric v Steward [2006] NSWCA 260 at [61]; (2007) DFC 95,401 at 78,713; Chanter v Catts [2005] NSWCA 411 at [22]; [2005] NSWCA 411 ; (2005) 64 NSWLR 360 at 366.
[65] Further, even in carrying out that final step, "there is no warrant for ignoring the rigour that mathematics can provide": Ross v Elderfield (at [49] per Handley JA (with whom McColl JA and Hislop agreed)). As Hodgson JA said in Howlett v Neilson (at [39]; 411):
... while I do not think that these matters can be determined on such mathematical calculations are of some use in guiding and testing conclusions about what is just and equitable, and also in promoting transparency and consistency in decision-making.
[66] I note that in Kardos v Sarbutt (at [29]; 558; 78,539), Brereton J gave an account of the process involved in the exercise of the jurisdiction under section 20 Property (Relationships) Act in which the third step was to decide "what order is required sufficiently to recognise and compensate the applicant's contributions". That formulation of the third step in the process was also adopted by Ipp JA (with whom Giles and McColl JJA agreed) in Bilous v Mudaliar [2006] NSWCA 38 at [24]; [2006] NSWCA 38 ; (2006) 65 NSWLR 615 at 620.
[67] It was submitted on this appeal that there may be a difference of substance in the way in which the third step is formulated in Kardos and Bilous, and the formulation used in the cases I have referred to in para [64] above, namely "determination of what if any order is just and equitable having regard to these contributions." I do not think there is any difference in substance between the two formulations. McColl JA agreed with both versions of the formulation, in Bilous and Howlett respectively. The emphasis in the judgment of Ipp JA in Bilous on the fundamental importance of the statutory text of section 20 is inconsistent with any rejection or qualification of the need to determine what, if any order is just and equitable having regard to the contributions. Since both Bilous and Kardos, McColl JA (with whom Handley and Santow JJA agreed) has stated the third step using the "just and equitable having regard to these contributions" formulation in Saric v Steward (at [61]).
[39] Basten JA further commented in Baker v Towle , that in his view that the court in Howlett accepted that the diligent application of both parties to the differentiated roles within a domestic relationship may well lead to the conclusion that interests in property should be divided equally. That result, His Honour remarked, may be achieved without valuing respective contributions in monetary terms although the outcome will be the allocation of interests in property which no doubt could be valued if necessary. [50]
170The decisions of the Court of Appeal in Ducker v Smith [2011] NSWCA 2012 and Ireland v Pratley [2013] NSWCA 445 are consistent with the statement of principles set out by Sackar J.
171The only property the subject of Ms Ak-Tankiz's application is the Merrylands Property.
172The parties accept that the value of the Property as at 25 March 2014 was $835,000. That is likely to remain the value of the Property at present.
173The Property is subject to a mortgage that secures a debt of $106,123.11 as at 31 January 2014. The equity in the property is therefore approximately $730,000.
174I have determined that Mr Ak holds the Property on a constructive trust with the effect that at the time of his death Ms Ak-Tankiz will be entitled to half of the beneficial ownership of the Property, subject to a charge that reduces her entitlement by $25,000.
175Mr Ak is 77 years of age. The time when Ms Ak-Tankiz will be entitled to enjoy the her interest in the Property cannot be predicted, but Mr Ak's age gives some indication that the time will not be a substantial number of years after the present.
176The evidence does not permit a determination of the proportions by which Ms Ak-Tankiz's financial contribution to the acquisition of the Property bears to Mr Ak's financial contribution. That is in part because the evidence does not establish in any precise way the total amounts contributed by Ms Ak-Tankiz, or the total amount of the expenditure by both parties that has been required in order to purchase or rent the various properties that the family has occupied. The uncertainty also arises because many of the forms of expenditure, particularly on Mr Ak's part, have not been quantified, and would in any event be difficult to quantify.
177Nonetheless, the evidence permits a finding confidently to be made that Ms Ak-Tankiz's contributions have, in total, substantially exceeded half of all of the necessary contributions, and may well have exceeded, say, 75%, although any attempt to assess the upper boundary of the proportionate contribution by Ms Ak-Tankiz is a speculative exercise.
178The step of determining what, if any, order is just and equitable, having regard to the respective contributions, which involves a holistic value judgment, should have regard to the fact that it follows from Ms Ak-Tankiz's constructive trust case that she made her contributions, even though disproportionate, on the basis of an understanding that she would ultimately be entitled to half of the beneficial interest in the Property. That understanding is not decisive, and it does not exclude the statutory power given to the court by s 20 of the Act to adjust the interest of the parties in the Property, but it is a significant factor that should be taken into account and given weight in the exercise of the court's discretion.
179All things being equal, it would usually be considered to be just and equitable for the parties to receive interests in the property in accordance with their agreement, unless there was good reason for the court to conclude that the circumstances in which the agreement was made undermine the conclusion that the outcome that reflects the agreement is just and equitable, or alternatively some development that was not anticipated by the parties justifies a different outcome.
180In the present case the parties at all times proceeded on the expectation that the relationship within the family would continue to be on good terms, and even if Ms Ak-Tankiz re-married, she would continue to enjoy some benefit from her parents' ownership of the Merrylands Property (in the same manner as Arife and Ramazan are presently enjoying), and that she would continue to benefit from being able to conduct her sewing business from a room in the Property on a rent-free basis, as she had done in that property, or the earlier properties, for some 30 years. As has been noted, Ms Ak-Tankiz operated her business from the family home throughout the course of her first marriage.
181The relationship between Ms Ak-Tankiz and her father broke down because she insisted upon him honouring the Promises that he and his wife made over the years. The evidence supports a conclusion that, in addition, Mr Ak was not on particularly good terms with Ms Ak-Tankiz's new husband, Mr Tankiz.
182Ms Ak-Tankiz did not put a case that the court should ignore her expectation that she would receive a half interest in the Property in return for her contributions, on the ground that she was in some way overborne by her father. It is true that she gave evidence that she made various payments because Mr Ak required her to do so, particularly immediately after she left school, and in relation to such matters as the conveyancing costs of the acquisition of the Property, and the legal costs for her parents' wills in 2004. She did not claim, however, that the terms of the Promises should be ignored, and that the court should make an order that she receive a substantially higher proportion of the Property than she would receive from the fulfilment of her parents' Promises.
183Although I have concluded that the circumstances do not make it just and equitable for Ms Ak-Tankiz to be ordered to be given a greater share of the ownership of the Property than the half share that she expected to receive, it will be just and equitable to adjust the timing of her receipt of that interest. The effect of the breakdown in the family relationship is that Ms Ak-Tankiz is now entirely deprived of any enjoyment flowing from the ownership of the Property by Mr Ak, and she is obliged to find the money to pay the rent for the home unit in which she now lives with her husband.
184The appropriate order to be made under s 20 of the Act is that Ms Ak-Tankiz receive now half of the beneficial ownership of the Merrylands Property, less the amount of $25,000, which should be the subject of a charge on Ms Ak-Tankiz's interest in the property. The effect of Ms Ak-Tankiz's application under the Act has therefore been to accelerate her entitlement to the one half interest in the Merrylands Property that Mr Ak promised she would receive under his will.
185As I have noted above, the parties agreed that the Merrylands Property has a value of $835,000. The Property is subject to a mortgage of about $105,000 (rounded down). On the orders that I propose to make Ms Ak-Tankiz will be entitled to $417,500, less her contribution to the mortgage of $25,000, which gives $392,500. Mr Ak will be entitled to $417,500, less the balance of the mortgage of $80,000, which gives $337,500. Of cause, in each case, the amount will be reduced by the cost of selling the Property, if that is necessary, as is likely. It is just and equitable to leave Mr Ak responsible for the $80,000, as he permitted Ramazan to borrow money for his own purposes on the security of the Property. It may be that Mr Ak is entitled to recover that sum from Ramazan, but whether or not he chooses to do so is a matter for Mr Ak. In relation to the position of Arife and Ramazan, I have noted above that the former owns an unencumbered house in Adelaide, and the latter earns a relatively substantial salary. I should also record that the orders will have the effect that Ms Ak-Tankiz will enjoy a share in the ownership of the Property that is proportionately substantially less than her contributions to the costs of acquiring and improving the Property, but this result is in accordance with the outcome that she expected and acted upon over the whole of the relevant period.