Burgess v King [2005] NSWSC 231 | Case summary

1635/04 - BURGESS v KING JUDGMENT 1 HIS HONOUR: The plaintiff, a male, and the defendant, a female, were in a de facto relationship between some date in 1989 and 17 September 2002. In these proceedings, each party makes a claim against the other. The plaintiff wants an order against the defendant under s 20 of the Property (Relationships) Act 1984. He wants the defendant to pay him $400,000 or half the net value of her house at 10 Diggers Avenue, Gladesville. The defendant, in her cross-claim, seeks an order declaring that she is the sole legal and beneficial owner of the Diggers Avenue property. 2 The uncontroverted evidence shows that the plaintiff was born on 26 October 1951 and so is now aged 53. The defendant is 52. Both had been married. The plaintiff has two children, Rachel now aged 28 and Casey aged 16. The plaintiff separated from his wife Jennifer on 1 May 1989 and immediately moved into the defendant's residence at 10 Diggers Avenue, Gladesville. The defendant separated from her husband in 1988. She had three children of her marriage, Natalie now aged 26, Nicole now aged 23 and Mitchell now aged 19. There were no children of the parties' relationship together. 3 In 1989 the plaintiff had a 50% interest in his former matrimonial home worth about $75,000, savings of $32,300, a motor car and personal effects. The defendant had a 50% interest in her former matrimonial home that half being worth about $120,000 less a $20,000 mortgage, plus she had a motor car, furniture and personal effects. A year after cohabitation with the plaintiff commenced, the defendant purchased her former husband's interest in the matrimonial home for $50,000. She and the plaintiff borrowed this sum on joint account. 4 The plaintiff gave the defendant $32,300 in three instalments. This sum reduced the mortgages. In January 1990 the parties refinanced the mortgages. They jointly borrowed $25,000 and agreed that the plaintiff would repay that loan. He did that. They also agreed that the defendant would repay a $20,000 loan and she did that. 5 The parties later jointly guaranteed a loan to a third party and they were called upon to meet the guarantee, the plaintiff paying $28,000 and the defendant $15,000. The plaintiff says that he contributed $20,681 for materials to renovate 10 Diggers Avenue and that a lot of the labour to renovate that property was voluntarily contributed by the plaintiff's father. 6 Section 14 of the Property (Relationships) Act 1984 provides that a party to a domestic relationship may apply to the court for an order for the adjustment of interests with respect to the property of the parties to the relationship or either of them. The prerequisites for making an order under the Act have been complied with, and there is no doubt that the parties were in a relationship that comes within the definition of a domestic relationship. Accordingly one looks to s 20 which empowers the court to make "such order adjusting the interests of the parties in the property as to it seems just and equitable", the court having regard to the matters in paras (a) and (b) of s 20(1) and other legitimate relevant factors; see Evans v Marmont (1997) 42 NSWLR 70, 75 and 79-80. 7 This matter was heard by me on 28 October 2004, Mr R Maurice of counsel appearing for the plaintiff and Mr J Levy of counsel for the defendant. All the evidence was taken on that day other than the valuers' evidence. I made an order with respect to that evidence which I hoped would solve the problems. In the event it did not. The matter was stood over to 2 December 2004. On that day I was told that the valuers differed but it was not intended to cross-examine either of them and the matter proceeded by written submissions. I think it was overlooked that there was some evidence by the valuers, particularly the plaintiff's valuer, which went to other issues such as the effect of the renovations on the increase in value of the property. I have not applied any technical rules of evidence that might have been applied for lack of cross-examination because this may well have been an oversight. 8 The approach to applications under ss 14 and 20 of the Act has become somewhat plainer over the last 20 years. Early cases tended to focus on precise valuations of assets and compensation for losses suffered as a result of becoming involved in a relationship. Later cases focused more on the general and the positive as to what in all the circumstances, focusing on the factors mentioned in s 20(1)(a) and (b) of the Act, will produce a just and equitable adjustment of property rights. 9 Any person who has been in a relationship within the meaning of the Act which has terminated is entitled to make an application. It does not necessarily follow, however, that each plaintiff is entitled to an order, or that just because an application is made, the court must go through some mathematical computations and decide that one party is slightly better off than the other party. There will be many situations where both parties make gains and losses as a result of the relationship. The court may well consider in such circumstances, particularly bearing in mind the rather vague material that often emanates from parties who naturally enough did not make notes of every cent they spent during the relationship, that, taking a broad brush approach, no adjustment is necessary. Furthermore, it should not be assumed that just because there was a relationship and one party was the proprietor of property which increased in value because of the natural increase in value of properties in the area, and so at the end of the relationship that party's assets are proportionately greater when compared with the other party's to the situation at the start of the relationship, that the person with the asset needs to have his or her rights adjusted downwards. 10 There is not always a uniformity of approach by courts to this class of case. In some situations, the courts look at the global assets of the parties before and after the relationship; in other situations they look at it on an asset by asset basis; see eg Black v Black (1991) 15 Fam LR 109 (CA). It does not seem to me in the present case that it matters much which approach one takes because, as can be seen from the summary of assets at the commencement of these reasons, both parties have acquired property during or after the relationship without any aid from the other at all and both take the position that the only adjustment that the court might consider making is with respect to the property at 10 Diggers Avenue, Gladesville. 11 As I have said in the earlier summary of the parties' property, the defendant brought that property into the relationship: it was her former matrimonial home. It had initially been purchased by the defendant and her former husband for $40,000 in 1977. At the commencement of the relationship between the parties its value was about $240,000. Its value now, according to the defendant's valuer, is $750,000 and the plaintiff's valuer at $860,000. Both valuers take the view that the key factor in the valuation is looking at comparable sales, but they disagree as to what sales are truly comparable. The valuation of the higher valuer is criticised on the basis that he has taken estate agents' sales figures rather than official figures for sales prices, and that he has included in his comparable sales premises more than a kilometre radius from the subject property and in superior locations. The lower valuer is criticised by his opposite number for erring in the sales date and relying on older rather than newer sales. He says that he has managed to consider twice as many comparable sales which allows him to be fairer in his valuation approach. 12 Unfortunately, there are so many subjective factors in both valuations dealing with what is a superior location, how far one must draw the line of distance from the property for a sale to be classed as comparable, that without spending a couple of days in cross-examination of the valuers, there must be a fair amount of speculation in the figures arrived at. Both valuers seem to suggest that No 26 Massey Street, though an inferior property, gives good guidance, a sale at $740,000 and that No 50 Monash Street, if one takes the land value at $580,000 and the value of any house at $150,000 giving one a total of $730,000 is also a useful exercise. No 11 Garnett Street, a recent sale of a superior property at $827,000, makes one think this is near the ceiling for the subject property. No 6 Short Street is again, though a fibro property, comparable at $800,000. The average of these four properties which I consider to be most likely to be comparable on the evidence before me is (rounded up) $780,000. Although it is a rubbery figure, it is the best that I can do on the evidence and accordingly I will take the value of 10 Diggers Avenue at $780,000. It probably matters very little whether I adopt this figure or the highest figure I think I could have legitimately reached on the evidence of $810,000. 13 It would seem to me that the majority of the increase in value is as a result of the increase of value in the properties in the area generally. If one takes the evidence of the plaintiff's valuer Mr Azar, his value in 1989 was $220,000 so that he reckons that there has been a $640,000 increase. Given the amount that the plaintiff says he spent on the property, assuming that the plaintiff's father's labour was worth the same amount, it is hardly likely that an expenditure of $42,000 would have increased the value of the property by half a million dollars. This is a fortiori when one looks at the work that was done from the plaintiff's affidavit which included removing carpets, insulating the roof, replacing the fence, replacing the plumbing and the hot water system and painting repairs and general maintenance. I don't overlook the fact that there was in fact major renovation work done as well, but on this, as the plaintiff acknowledges, he and his father removed the old kitchen. He paid for some appliances and plumbing and the defendant paid for the dishwasher, microwave, stove cook top and plumbing, the kitchen cabinets bench tops and cupboards. There was also a new laundry and bathroom put in mainly by the plaintiff's father. The cost of these renovations, according to the plaintiff, was $20,681 plus labour. There is, however, no reliable material to substantiate that figure. 14 Mr Azar, the plaintiff's valuer, reckons that as at October 2003 the property, without the renovations, would have been worth $120,000 less than it is with the renovations. 15 I have already indicated that Mr Azar's valuations are a little high, though when comparing his valuations, the error should be minimised. If one basically accepts the $120,000 then one does not know how much of the building materials were bought by the defendant as opposed to those bought by the plaintiff. 16 Furthermore, when one is looking at this sort of problem in a partition suit or its modern day equivalent, the rule that courts apply is that the improver of property is entitled to bring to account the cost of the renovations or the increase in value, whichever is the lesser; see Forgeard v Shanahan (1994) 35 NSWLR 206. In my view it is appropriate to take this approach with respect to the present improvements. 17 The only material as to the cost of the materials is the plaintiff's own evidence. Unfortunately I found the plaintiff's cross-examination to show that he was a person who tended to remember what had happened through rose-coloured spectacles and give himself more credit for things than was due. I do not doubt that he spent monies on materials and it may well have been in the area of $15,000 to $20,000, but better than that I cannot do. However, how is a court to evaluate the work done by the plaintiff's father? Is that to be counted as a contribution of the plaintiff or is it to be assessed as the voluntary contribution of a well-meaning friend of the family. 18 There is no doubt that when the plaintiff's father did the work, the plaintiff and the defendant were living more or less harmoniously as a family unit. The defendant said she really appreciated his work and bought him a couple of things and it would seem that had Mr Burgess Senior asked for payment, Mrs King would have made some payment to him, but he never did so. 19 In Professor Wade's Commentary in the CCH Australian De Facto Relationships Law [8-190], the learned author says: "It sometimes occurs that a parent, relative or friend of one of the parties makes a contribution either financial or non-financial to the property of the parties. In many cases there will be no direct evidence of whether the contribution was made on behalf of one party or both parties. It would seem reasonable, however, to assume that unless there is clear evidence to the contrary, a contribution made by a relative or friend of one party was a contribution made on behalf of that party." 20 No authority is given for that proposition. The reason for this is that there is, as far as I know, no authority on the point. In Re Wallace (1984) 9 Fam LR 960, the wife's mother provided the deposit for the house, but on the unique facts of that case Treyvaud J held that the mother's contribution was neither a loan nor a gift and that she expected repayment so that the money could not be classed as the wife's contribution. However where, as here, there are no special facts, I would agree that what Professor Wade says is the approach that should be followed. 21 Accordingly, I must take into account as a contribution of the plaintiff to Diggers Avenue the cost of materials and the value of his father's labour in so far as that increased the value of the property. As I have said, the plaintiff was prone to exaggeration and his figure of cost of materials cannot be accepted at face value. The defendant says that she estimates that the renovations carried out by the plaintiff and his father were worth about $19,400, but it is clear that this is really a guess. She estimates that she herself paid $24,120 for various fittings. She says that she also borrowed $5,000 from the Commonwealth Bank to pay for the cost of the kitchen which she paid back herself without aid from the plaintiff. 22 Putting it all together with rather rubbery figures and vague evidence and exaggerations, the probabilities are that, together with the value of his father's labour, the plaintiff should be credited with a contribution of about $40,000. 23 In addition to the cost of improvements to the defendant's house, there is no doubt at all that the plaintiff made a contribution in cash of $57,300. This is made up of $32,300 which he gave to the defendant to pay off her mortgage. There is also another $25,000 which was obtained by the parties on a joint mortgage which, as I have said, the plaintiff wholly repaid. It is also fairly clear as the plaintiff claims that without this support the defendant almost certainly would have had to sell Diggers Avenue, and indeed, she was contemplating having to move to Perth. 24 But one does not only look at one side of the ledger. For instance, the defendant says that whilst she acknowledges that the car port added to the value of the house, the principal reason for building it was that the plaintiff's car had been stolen when it had been parked outside the property and he wished to have a car port to give it shelter and protection. I accept this evidence and accordingly should set off against the contribution the convenience of having protection for the plaintiff's car whilst he was living with the defendant. 25 Moreover, one must look at the contributions of the defendant. She says and I accept, that she cared for the plaintiff's children Casey and Rachel on a regular basis. She carried out the vast majority of the cleaning, cooking, washing and other domestic duties. Later it was she who paid for a cleaner to do some of this work. During the relationship the figures show that the plaintiff earned far less than the defendant so that again one could expect at the end of the relationship that the defendant would probably end up in a superior financial position to the plaintiff and the mere fact that that happened is not necessarily to be attributed to his part in the relationship. 26 Mr Levy for the defendant suggests that I should look at the matter as to how the plaintiff was better off than he would otherwise have been during the relationship. He had separated from his first wife, he was formerly occupying a flat at a rent of $120 per week and in addition he had to buy his own food. After moving in to live with the defendant he was paying $128 per week, food included. Food was in fact included because I accept that the defendant bought the majority of food for the family during the relationship. I consider that this is a valid point. 27 A valid point that goes the other way is that it is fairly clear on the evidence of both parties that had the plaintiff not advanced $32,000 to the defendant in order to secure her purchase of her ex-husband's share in the Diggers Avenue property, she would have had no option but to have the property sold and may well have had to move to Perth as she then intended to do. It was the aid of the plaintiff at the right time that saved the house and enabled the defendant to continue to live in Sydney and in due course has enabled her to reap the increase in capital value of the property. 28 I believe that I have dealt with the major matters. I have also indicated that where there is a conflict (not that it often occurred) I would tend to discount the plaintiff's evidence and prefer that of the defendant. I accept that many of the figures are estimates. 29 I believe that under s 20(1)(a) I have noted the financial and non-financial contributions of the parties. Under s 20(1)(b), the defendant was the principal homemaker. I discount the evidence of the plaintiff. He doubtless did on occasions do some cooking and child minding, but the evidence of Nicole King, the defendant's daughter and the non-controversial evidence that the plaintiff and the defendant's son Mitchell were constantly at war, makes me think that there was not much of a contribution in this respect on behalf of the plaintiff. The balance under this head well favours the defendant. 30 There seems little doubt that the plaintiff made a contribution in 1990 of $57,300 being $32,300 by three instalments which the defendant used to reduce her mortgage and another $25,000 which was a joint mortgage in January 1990. The plaintiff wholly repaid that $25,000 which seems to have included interest. In addition he should be credited with a contribution of $40,000 for improvements. This makes his contribution about $97,000. 31 Against that he has had the benefit of the defendant's care for him (and to some extent his children) and he had been living during the relationship at a cheaper rate than before the relationship. 32 There is also the fact that at the time the plaintiff borrowed $25,000, the defendant borrowed $20,000. However, she retained the property which was mortgaged, the plaintiff did not. 33 Doing the best I can, I would reduce his contribution by one-third for those counter contributions which leads to a figure of $65,000 rounded to the nearest hundred dollars. 34 I have considered the question of interest. The plaintiff should not get interest on his father's contribution, the increase in value is not something that the defendant has yet realized, and the monetary contribution was made without expectation of it ever being repaid. Accordingly, I do not consider that it is a proper case to add interest to the $65,000. Interest will, of course, be payable on the judgment if not paid within 21 days of the date the judgment of the court becomes effective. 35 Accordingly in my view the plaintiff is entitled to an order that the defendant pay him $65,000 and that there be an equitable charge on Diggers Avenue for that amount pending payment. 36 The cross-claim may be dismissed, but as it was merely consequential there should be no order for costs of the cross-claim. 37 I will leave the question of costs of the claim because I do not know whether there has been any payment into court or offer. I think there is a lot to be said for the proposition that as the plaintiff has only received a fraction of what he claimed, and as the matter was moved from the District Court because of the magnitude of the claim, that each party should bear his or her own costs. If anyone wishes to argue costs or deal with the form of the order, they must notify my Associate within 21 days of the date of this judgment; if no application is made, a final order can be taken out on the basis that there be no order as to costs and that the exhibits may be returned.

Burgess v King

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