28 In addition, it was asserted on behalf of the Plaintiff that at the termination of the relationship the Defendant held savings, investments and superannuation entitlements, having a total value in excess of $250,000. The Defendant denied holding those assets, or any assets to such a value. It will be necessary, in due course, for me to express findings in regard to whether or not at the termination of the relationship the Defendant held such assets.
29 According to the Plaintiff, throughout the relationship, and especially throughout the period of about ten years whilst the Defendant, in consequence of his injury, was not in employment, the Defendant conducted an illegal gambling enterprise of the nature known as an SP bookmaking business, in which he was aided and assisted by the Plaintiff. It was asserted by the Plaintiff that a considerable quantity of the additional assets which, according to the Plaintiff, were owned by the Defendant at the termination of the relationship had their source in that illegal gambling activity.
30 No reference to such bookmaking business was made by the Plaintiff in her pleadings. It was first referred to (albeit only somewhat tangentially) in her affidavit of 2 May 2002. Neither was it referred to in any affidavit or other document filed on behalf of the Defendant. Evidence concerning this illegal enterprise mainly emerged during the cross-examination of the Defendant. The Plaintiff also gave oral evidence on this topic.
31 During the course of his responses to questions on this topic put to him during cross-examination, the Defendant said that throughout the relationship, or at least from about 1971-1972 (while the parties were still residing in West Street, Five Dock), he was involved with the Plaintiff and her son Craig as SP bookmakers, and that that business required them to work on Saturdays, Wednesdays and public holidays; Friday was settling day. Moreover, that the Plaintiff still continued to run that business after the separation of the parties. According to the Defendant, the Plaintiff and Craig were involved equally with the Defendant in that illegal enterprise. It was the evidence of the Defendant that, whilst he was hospitalised, for a protracted period, as a result of his injury, the Plaintiff carried on the SP business.
32 The Plaintiff said that the enterprise commenced somewhat later, about four years after they moved into the Harrabrook Avenue property; which would put it in the first half of 1976. As will later appear, the date of commencement does not in my conclusion have any bearing upon the relevance of this enterprise to the present proceedings.
33 The Defendant gave considerable and detailed evidence concerning the manner in which that illegal activity was conducted. Originally he was taking bets at the Leichhardt Hotel and at the Orange Grove Hotel. As the business grew, it expanded into other premises where bets were taken, including coffee shops in Fairfield and Leichhardt. Craig was employed as a penciller for the Orange Grove Hotel. Other persons were stationed at various other locations. Bets were laid by a form of code. The Defendant described how, whilst the Plaintiff was working from a suite of rooms in a city hotel, those premises were raided in about 1990. He said that on a good day the business might take between $80,000 and $100,000, but that that was only on rare occasions. On other occasions the business might lose on the day. The Defendant said that it rarely took more than $50,000 on a single day, but that he could not precisely recall.
34 Evidence was given concerning a police raid which took place in about 1990, in a city hotel. According to the Defendant, a number of persons, including the Plaintiff and Craig were charged, and the Defendant was arrested. The Defendant said that the police asserted that the amount which was taken by the business on that day was $116,176.
35 I gather, although the recollection of the Defendant as to the date was not precise, that that police raid took place before the termination of the de facto relationship. The Defendant said that when the relationship came to an end the Plaintiff stopped working in the SP business, as also did Craig.
36 The Defendant also said that the charge laid against him as a result of the police raid was dismissed, whilst the Plaintiff and Craig were each fined. Further, that those fines were paid out of what the Defendant referred to as "our money".
37 The Defendant also asserted that after the police raid the conduct of the SP bookmaking business ceased. That statement is not entirely consistent with the statement made somewhat earlier in the evidence of the Defendant on this topic, that it was at the time of separation that the Plaintiff and Craig stopped working in the SP business.
38 As I understand it, the Plaintiff places significance upon the SP bookmaking business in two ways. Firstly, it is the contention of the Plaintiff that the assets of the Defendant at the termination of the relationship were considerably greater than those which he admits. She asserts that he had at that time cash funds representing the proceeds of the SP business, which he has not disclosed to the Court. Secondly, the Plaintiff asserts that her involvement in the SP business enabled the Defendant to acquire those additional funds.
39 By its very nature the SP business kept little in the way of records of its earnings, let alone its profits. (This was especially so since, according to the Plaintiff, the enterprise made use of dissolving paper.) There is little doubt that, whatever funds may have been generated by that business, the Plaintiff was a participant in the business and in the acquisition of those funds. It is well nigh impossible, especially some twelve years after the termination of the de facto relationship, to arrive at any conclusions concerning cash funds held by the Defendant which he may have acquired as a result of the business. The most that can be said is that the Defendant admitted to a cash amount of $20,000 which was secreted under a drawer of the wardrobe of the bedroom in the Harrabrook Avenue property. Those funds were probably the result of the SP business (although it is also possible that they may have had their source in the Defendant's compensation payment). The Plaintiff herself was aware of those funds. She also gave evidence concerning other amounts of cash which she said it was the practice of the Defendant to secrete in two other locations on the property. Upon the available evidence it is not possible for the Court to be satisfied that the Defendant at the termination of the relationship held funds in cash greater than that amount of $20,000.
40 But there is a further, and in my view far more important, aspect to this matter of the SP bookmaking business and any funds acquired by either of the parties from that business. It was accepted by both parties that at the time when the SP bookmaking business was conducted that activity was illegal. The Plaintiff is, in essence, asking the Court to lend its aid to a claim by her to part of the proceeds of crime.
41 The well known litigation of Everet v Williams (the Highwayman's Case) ((1725), set forth in (1893) LQR 197, cited in Burrows v Rhodes [1899] 1 QB 816 at 826 (a case arising out of the Jameson Raid); see R.E. Megarry, Miscellany-at-Law (London, 1955)) reveals the unwisdom of such an approach. That was a case in the Court of Exchequer by which Everet sought against Williams an account of partnership profits. That plaintiff alleged that the partnership between himself and that defendant dealt in commodities such as plate, rings, watches and other valuables, that the plaintiff and the defendant had dealt successfully in these commodities in the course of the partnership, but that the defendant had failed to come to a fair account with the plaintiff concerning the partnership profits. In the course of the trial it was revealed that the business in which the partners were engaged was actually highway robbery, and that the plaintiff was aggrieved that the defendant had not handed over a fair share of the spoils. The case was thrown out of Court, both parties were hanged, the plaintiff's solicitors were attached for contempt and the plaintiff's Counsel was made to pay the costs of the proceedings (see Burrows v Rhodes [1899] 1 QB 816 at 826; see, also, Zelino Pty Limited v Budai [2001] NSWSC 501 (Palmer J, 24 July 2001, unreported).
42 People who deliberately set out to breach the law cannot expect to be aided by a Court. The rule permitting a Court to refuse its assistance to enforce a contract where to do so would be contrary to public policy is an ancient one. It was given expression by Lord Mansfield in Hollman v Johnson (1775) 1 Cowp 341 at 343; 98 ER 1120 at 1121 in these terms,
The principle of public policy is this… no Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.
43 The foregoing dictum of Lord Mansfield was considered by McHugh J in Nelson v Nelson (1995) 184 CLR 538 at 604-605. See Yango Pastoral Company Pty Limited v First Chicago Australia Limited (1978) 139 CLR 410; see, also, Wetherell v Jones (1832) 3 B&Ad 221 at 225-226; 110 ER 82 at 84; St. John Shipping Corporation v Joseph Rank Limited [1957] 1 QB 267; Fitzgerald v F.J. Leonhardt Pty Limited (1997) 189 CLR 215.) The principle is most succinctly stated by Lord Atkin in Beresford v Royal Insurance Company Limited [1938] AC 586, where His Lordship, after citing with approval the judgment of Fry LJ in Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 156, continued, at 598-599,
[T]he principle is that a man is not to be allowed to have recourse to a Court of Justice to claim a benefit from his crime whether under a contract or a gift. No doubt the rule pays regard to the fact that to hold otherwise would in some cases offer an inducement to crime or remove a restraint to crime, and that its effect is to act as a deterrent to crime. But apart from these considerations the absolute rule is that the courts will not recognise a benefit accruing to a criminal from his crime.
44 The foregoing passage was cited with approval by Mason J (as he then was) in Yango Pastoral Company Pty Limited v First Chicago Australia Limited, at 428.
45 I consider it to be highly offensive to public policy if I were to make an order the effect of which would be to award to the Plaintiff some share of the spoils of a criminal enterprise conducted by herself and the Defendant. I propose, therefore, totally to disregard the SP bookmaking activities, and the contribution and participation in those activities by each of the parties, firstly, when approaching the assets of the parties during the course of and at the conclusion of the de facto relationship, and, secondly, in considering the respective contributions of a direct and indirect nature, both financial and non-financial, of the parties to the acquisition of the assets of the relationship.
46 I do, however, propose to treat the cash amount of $20,000 secreted by the Defendant under the drawer of the wardrobe as being an asset of the Defendant held by him at the termination of the relationship, which may be regarded as property of the Defendant for the purposes of the present proceedings. It is possible that that sum may have had its source in the lump sum payment which the Defendant received as a result of his injury. The evidence does not enable me to be satisfied that that sum of necessity had its source in the illegal SP bookmaking activities.
47 Since the evidence of the Plaintiff was often in direct conflict with that of the Defendant, it is appropriate that I should express my views concerning the reliance to be placed upon the evidence of the each of the parties.
48 Neither party emerged as a witness whose credit remained untarnished. Neither party could be regarded as an essentially reliable witness, although my impression was that the unreliability of the testimony of the Plaintiff was in a large part due to her poor recollection, rather than as a result of a deliberate intention to mislead.
49 The Plaintiff presented as a more frank witness than the Defendant. Interestingly, the Plaintiff appeared to be in no way vindictive towards the Defendant. She acknowledged that he was extremely generous during the period of the relationship and that he was a very good father to her children. The Defendant, on the other hand, was at times vague in his evidence, and at other times deliberately evasive in responses. I regarded him as an unsatisfactory witness, whose unsupported evidence, when in conflict with that of the Plaintiff, on any matter of significance should not be accepted. Nevertheless, the false information given by the Plaintiff to the Department of Social Security when in 1995 after the termination of the relationship she applied for unemployment benefits, without disclosing that she was receiving $500 a week from the Defendant, reflected very poorly upon the credit of the Plaintiff. By the same token, various loan applications which were signed by both parties and which contain false statements of fact reflect equally badly upon each of the parties. Where the evidence of the Plaintiff and the Defendant was in dispute, and the version of neither was supported by any independent evidence (such as documentary material or the evidence of a corroborative witness), I would not be prepared to prefer the evidence of one party to that of the other.
50 It was put to the Defendant, but denied by him, that at the time of separation he was holding cash reserves of $200,000 at the Harrabrook Avenue property. He did, however, agree that he had about $20,000 in his bedroom secreted underneath a drawer of the wardrobe, saying that that cash was kept for his personal usage.
51 It is appropriate here to record that for a period of about five years after the termination of the de facto relationship between them, the Plaintiff and the Defendant appear to have maintained a harmonious personal relationship, and indeed to have maintained, to an extent, a financial relationship.
52 By her summons the Plaintiff sought not only the appointment of statutory trustees for sale of the Harrabrook Avenue property, but also an order that, after payment of commission and other expenses in respect of the sale, and legal expenses and the costs of those proceedings from the net proceeds of sale, "the portions of the balance payable to the parties be determined by the Trustees" (prayer 5) and an order "[t]hat the Trustees be at liberty to seek the advice of the Court as to the distribution" (prayer 6). By the cross-claim the Defendant seeks, substantively, orders that the Plaintiff transfer to him all her right, title and interest in the Harrabrook Avenue property, together with payment by the Plaintiff to the Defendant of $40,000 "by way of property adjustment".
53 At the outset of the hearing it was noted that it was agreed between the parties that the present value of the Harrabrook Avenue is $600,000.
54 I have had the benefit of receiving written submissions and chronologies from Counsel for the respective parties. Those documents will be retained in the Court file.
55 Section 20(1) of the Property (Relationships) Act 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: