Crellin v Robertson [2004] ACTSC 92

Supreme Court of the ACT|2004-09-22|Before: Crispin J

1. there be judgment for the plaintiff in the sum of $17,750.

1. This is a claim for a property order under s 15 of the Domestic Relationships Act 1994 (ACT) ("the Act").

2. The parties commenced a lesbian relationship on or about 18 April 1986 and commenced cohabitation later that year. The plaintiff was then 23 years of age and was a private in the Australian Army. The defendant was then 30 years of age and was an Air Force officer. The relationship subsisted until early 1999 and throughout that period the parties generally pooled their incomes and shared their assets.

3. They initially lived in rented accommodation in Canberra. The plaintiff resigned from the Army in 1987 because she had been faced with the prospect of being posted to Sydney and wished to remain in Canberra with the defendant. She then obtained employment with the Australian Protective Service.

4. In about September 1987 the defendant purchased a property at 185 Wheeler Crescent, Wanniassa in the ACT and the parties resided at that address from the time of purchase until 1989 when the defendant was posted to the RAAF base Williamtown near Newcastle in NSW. They then lived together in rented accommodation at "Lemon Tree Passage" until the defendant was again posted to the RAAF base Fairbairn whereupon they moved back into the house in Wanniassa.

5. Whilst in Williamtown the plaintiff had resumed nursing studies that she had commenced earlier but abandoned. She completed her studies in 1992 and obtained an advanced certificate in enrolled nursing. After returning to Canberra in 1992 she worked as a direct care worker at Marymead until 1994 when she was able to obtain employment as a nurse.

6. During the course of the relationship the plaintiff made a number of attempts to become pregnant by means of artificial insemination and subsequently joined the IVF (in-vitro fertilisation) program conducted by the Canberra Fertility Centre at John James Hospital. She ultimately succeeded in becoming pregnant and a son, Alexander ("Alex"), was born in May 1998. The plaintiff took maternity leave for a period of about twelve months before leaving full time employment in about December 1998. During the course of that year, the parties purchased a business franchise known as "Nappies R Us" with the intention that the plaintiff would operate the business from home and avoid the need to place Alex into childcare whilst she was working. It was clearly intended that Alex would be raised as the child of both women. The plaintiff cared for him during the bulk of the day whilst the defendant was engaged in her duties as an Air Force officer but the defendant assisted in caring for Alex when she was not on duty.

7. The plaintiff alleges that the relationship between the parties commenced to break down in or about September 1998 when the defendant sought to develop a relationship with Lieutenant Colonel Janice Hyde. That apparently proved unsuccessful and the plaintiff herself commenced a relationship with Lieutenant Colonel Hyde in about December 1998. This sequence of events was not admitted, but it was common ground that since the separation the plaintiff had "re-partnered" with Lieutenant Colonel Hyde and that the defendant had re-partnered with Ms Deborah Loxley.

8. The parties separated on 3 January 1999 though they continued to live under the one roof until 28 February 1999. At that time the plaintiff moved into a house at 17 Inglis Place, Latham in the ACT which she had purchased with the aid of funds provided by the defendant pursuant to an agreement between the parties.

9. The nature of that agreement was the subject of some dispute. Whilst it was common ground that there had been discussions culminating in a division of property accumulated during the relationship, the parties differed as to whether the agreement had been intended to effect a final property settlement between them.

10. The defendant gave evidence that they had decided to split their assets equally. After dividing the large items, the plaintiff drew up a list with estimated values for the remaining furniture and effects and the parties each chose certain items which were offset against items chosen by the other. The defendant said that the plaintiff could not pay her for half the value of the "Nappies R Us" business so she took fewer items in accordance with her list. They obtained market appraisals of the house from three estate agents and averaged the appraisals to produce an agreed value of $142,500. From this sum they deducted the amount of $8,000 still owed on the mortgage and a further sum of $22,000 to allow for the amount that the defendant had paid for an extension on the house. They agreed that the remaining sum of $112,500 should be effectively split between them and this was put into effect by the defendant retaining the house but paying the plaintiff the sum of $56,250.

11. The defendant said that she told the plaintiff that she wanted to formalise the property settlement but that the plaintiff told her:

I want half of everything now. Jan's found a townhouse at Latham that I want to purchase. If I don't get money from you quickly I'll lose the property. I don't want to sign anything now. We can formalise it in three months.

12. The defendant said that despite legal advice, she refinanced the loan secured by the house at Wanniassa and paid the plaintiff the sum of $56,250. At about that time the plaintiff also asked the defendant to pay her half of the value of the spa. The plaintiff explained that she wanted to put heating in the Latham townhouse and if she didn't have that money she would be unable to do so and Alex would be cold. The defendant paid her a further sum of $2,250. The defendant said that in May 1999 she approached the plaintiff with a Family Court "consent order kit" and asked her to formalise the property settlement but that the plaintiff refused to do so.

13. On the other hand, whilst agreeing that she had initiated discussions with the defendant concerning the division of property, the plaintiff claimed that the parties had negotiated a partial property settlement pursuant to which the defendant agreed to pay her the sum of $56,000. In her affidavit of 5 February 2004 she claimed that this sum had been derived by obtaining three market appraisals of the value of the Wanniassa property and agreeing on a value of $160,000. She said that from this amount they deducted the outstanding mortgage balance of approximately $30,000 leaving a balance of $130,000 and then divided this sum in half so that she would receive $65,000 less one half of the value of the "Nappies R Us" business and some furniture and furnishings that she retained. Certain shares were divided equally between them but nothing was decided in relation to the insurance policies which the defendant held with National Mutual, certain savings which she retained and her superannuation entitlements. She agreed that there were subsequent discussions in relation to the spa and that the defendant paid her the sum of $2,250 some time after completion of the purchase of the property at Latham. She denied having told the defendant that they could finalise the property settlement in three months.

14. Having had the opportunity of observing both women respond to cross-examination on their competing versions as to the nature of this transaction, I must say that I prefer the evidence of the defendant. I found her to be an impressive witness who seemed to have a clear recollection of the conversations which she recounted.

15. Whilst I accept that the plaintiff gave her evidence honestly, she seemed to have considerable difficulty in remembering precisely what had occurred and to have been reliant to some extent upon reconstruction. I also formed the impression that her evidence had been coloured by some measure of defensiveness.

16. When asked in cross-examination whether she and the defendant had had a discussion in January or February 1999 concerning their financial affairs, she said that she did not recall such a conversation. However, she acknowledged that she had received the sum of $56,250 and agreed that this had been calculated by placing a figure of $142,500 obtained by averaging three market appraisals, deducting the amounts of $8,000 and $22,000, being the amounts owing on the original loan and the amount contributed to the extension, and halving the remaining figure of $112,500. These concessions were not only consistent with the defendant's version of the relevant events but inconsistent with some aspects of the account which the plaintiff had given in her affidavits. Furthermore, whilst she had said in her affidavit that "I specifically deny that Jennifer approached me saying words to the effect: "I want to finalise our property settlement", she said in cross-examination only that she did not believe that they had had a discussion regarding a property settlement and that she did not recall such a conversation. She did maintain that she had not said "I want half of everything now, Jan's found a townhouse at Latham that I want to purchase". However, she agreed that she had been purchasing a townhouse at Latham at about that time and that "Jan" was her partner. When asked whether she had said words to the effect "If I don't get money from you quickly I'll lose the property", she said she did not recall making those comments but, when pressed about the matter, agreed that she could not deny having done so.

17. I accept the defendant's evidence as to the manner in which the property was divided and as to the conversations which led to the agreement for such division. I accept that the plaintiff entered into the transactions on the understanding the agreement involved a final settlement of any rights which each may have had against the other in relation to property and accept her evidence as to the conversation with the plaintiff about formalising the agreement at a later date. I do not accept the plaintiff's evidence that it was intended to be only a partial settlement. Nor do I accept that she entered into the agreement on that understanding.

18. The real question is what significance should be attached to this agreement. The defendant alleged that, in reliance upon the agreement and the representation that it involved a final settlement of their rights against each other in relation to property interests, she had refinanced the loan on the Wanniassa property to pay out the plaintiff's entitlements and incurred other expenses. As a consequence, she claims that the plaintiff is estopped from claiming any further settlement of property from her.

19. I have no doubt that the defendant did act in reliance upon the agreement and the plaintiff's representation. I accept the submission made on the plaintiff's behalf, by Mr Brzostowski, that the jurisdiction to make orders under s 15 of the Act cannot be ousted by the doctrine of estoppel. An agreement which complies with the conditions set out in s 33(1) of the Act will preclude the making of any inconsistent orders but an agreement which fails to comply with one or more of those conditions does not have a similar effect. However, that fact alone does not justify a conclusion that it would be just and equitable to ignore the agreement and it may nonetheless be taken into account by virtue of s 33(2).

20. Section 15(1) of the Act is in the following terms:

On application by a party to a domestic relationship, a court may make an order adjusting the interests in the property of either or both of the parties that seems just and equitable to it having regard to -

(a) the nature and duration of the relationship; and

(b) the financial or non-financial contributions made directly or indirectly by or on behalf of either or both of the parties to the acquisition, conservation or improvement of any of the property or financial resources of either or both of them; and

(c) the contributions (including any in the capacity of homemaker or parent) made by either of the parties to the welfare of the other or any child of the parties; and

(d) the matters referred to in section 19(2), as far as they are relevant; and

(e) such other matters (if any) as the court considers relevant.

21. The matters referred to in s 19(2) are as follows:

(a) the income, property and financial resources of each party; and

(b) the physical and mental capacity of each party for appropriate gainful employment; and

(c) the financial needs and obligations of each party; and

(d) the responsibilities of either party to support any other person; and

(e) the terms of any order made or proposed to be made under section 15 with respect to the property of either or both of the parties; and

(f) any payments made to the applicant, under an order of a court or otherwise, in respect of the maintenance of a child or children.

22. In Ferris v Winslade [1998] ACTSC 18, Cooper J referred to decisions concerning the De Facto Relationships Act 1984 (NSW), such as Evans v Marmont [1997] NSWSC 331; (1997) 21 Fam LR 760, but observed that the criteria which s 15 of the Act permitted to be taken into account in determining what order would be just and equitable had been "deliberately" cast in terms wider than those employed in the comparable New South Wales provision. His Honour said at [29] that:

The ACT legislature has not sought to equate a de facto marriage to a legal marriage. Nor has it, in relation to adjustment of property rights between parties to a domestic relationship, replicated, exactly, the Family Law Act for the adjustment of property rights. However, the similarities in the nature of the discretion to be exercised in making orders adjusting property rights, in my view mean that recourse can and should be had to decisions of the Family Court of Australia (the "Family Court") under s 79 of the Family Law Act as to the appropriate principles which guide the exercise of discretion under s 15 of the Act.

23. His Honour's remarks were cited, with evident approval, by Higgins J (as he then was) in Pigott v Walker [2002] ACTSC 40 at [61] - [64].

24. It should be noted that the De Facto Relationships Act 1984 (NSW) not only provided for a much narrower range of issues to be taken into account but also applied to a more narrow range of relationships than those embraced by the ACT enactment. The term "domestic relationship" is defined by s 3(1) of the Act to mean "a personal relationship between 2 adults in which one provides personal or financial commitment and support of a domestic nature for the material benefit of the other and includes a domestic partnership but does not include a legal marriage". Subsection (2) makes it clear that, for the purpose of this definition, a personal relationship may exist between persons who are not members of the same household. Hence, it may be possible for people to be involved in two or more concurrent domestic relationships. To take an obvious example, a person may have one relationship with a domestic partner, another with an elderly parent whom he or she supports in a nursing home and a third with another parent who lives in a granny flat attached to his or her residence. Yet all might fall within the broad ambit of this definition.

25. In some cases the nature of the relationship could be quite dissimilar to that of a marriage and little guidance might be obtained from decisions of the Family Court of Australia concerning the division of property between separating spouses. The breadth of the discretion provided by s 15 presumably reflects a legislative intention to ensure that the court can make orders that will be just and equitable in any case that may properly come before it. Accordingly, whilst I accept that decisions of the Family Court of Australia may often provide useful guidance, I do not accept that they should be followed in all applications of this kind. In Davey v Lee (1990) 13 Fam LR 688 at 689 McLelland J said that what is required in dealing with an application under s 20 of the De Facto Relationships Act 1984 (NSW) is "a holistic value judgment in the exercise of a discretionary power of a very general kind". This formulation was adopted by a Full Court of the Family Court of Australia in Harris v Harris (1991) FLC 92-254 at 78,705 in relation to applications under s 79 of the Family Law Act 1975 (Cth) and by Cooper J in Ferris v Winslade at [33] in relation to applications under s 15 of the Act.

26. In the present case Mr Brzostowski candidly conceded that, at least until separation, the defendant had made the predominant financial contribution. However, he argued that this had been offset to some extent by the plaintiff's greater homemaking and parental contribution, particularly once she began to prepare for Alex's birth, and by her greater post-separation contribution. Hence, he submitted, the overall value of the relative contributions as at the time of the hearing had been "close to" equal.

27. In arguing that it was appropriate to take into account post-separation contributions to Alex's welfare, Mr Brzostowski acknowledged that a contrary view had been taken by Master McLaughlin in Turnbull v McGregor [2003] NSWSC 899 but submitted that this decision had been based upon a construction of s 20(1)(b) of the Property (Relationships) Act 1984 (NSW) (formerly the De Facto Relationships Act 1984 (NSW)) and that significantly different language had been employed in s 15(1)(c) of the ACT enactment. He also pointed out that a different approach had been taken by Bryson J in Foster v Evans (unreported) NSWSC 31 October 1997 and Campbell J in Nguyen v Scheiff [2002] NSWSC 151 at [104]- [111]. See also Dridi v Fillmore [2001] NSWSC 319; Jones v Grech [2001] NSWCA 208; Griffiths v Brodigan (1995) 20 Fam LR 822; Fuller v Taaffe (1997) 23 Fam LR 702; McDonald v Stelzer [2000] NSWCA 302.

28. It does appear that the preponderance of authority in New South Wales favours the view that post-separation contributions to the welfare of a child may be taken into account in an application under the Property (Relationships) Act 1984 (NSW) but, whatever the position may be in that state, I have no doubt that such contributions could be considered in the exercise of the more broad discretion provided by s 15 of the ACT enactment.

29. Mr Brzostowski also argued that it was appropriate to take into account the value of the Wanniassa property as at the date of the hearing, though he conceded that, in this event, it would also be appropriate to take into account the value of the plaintiff's property at Latham. He submitted that the Family Court of Australia had long acted on the value of property at the time of a hearing and treated any expenditure incurred in mortgage payments as having been offset against the benefit of occupancy.

30. In many cases it may well be appropriate to adopt this approach. However, it would seem difficult to justify doing so in the present case when the evidence establishes that in early 1999 the defendant paid the plaintiff an amount part of which reflected half of the net equity in the house at Wanniassa and that the plaintiff invested some of that money in the purchase of her own home. Such an approach might reveal that a half interest in the Wanniassa property is now worth more than a half interest in the Latham property, but I see no reason to suppose that it would be just and equitable to make an order that would, in effect, enable the plaintiff to make a further gain at the expense of the defendant merely because the property which she bought with her half of the proceeds of her interest in the Wanniassa property may not have appreciated in value as greatly as the property which the defendant retained. Equally, I can see no reason to take into account the present value of the property that the plaintiff purchased after the separation.

31. As I have mentioned, the mere fact that the agreement between the parties in early 1999 is not sufficient to oust the jurisdiction of the Court, does not justify a conclusion that it would be just and equitable to ignore it. The net equity in the Wanniassa property, which had been the parties' home, was effectively divided by agreement in February 1999 along with the net value of other assets and, subject to the other contentions now advanced on the plaintiff's behalf, neither justice nor equity would require that agreement to be revisited or the division of property under that agreement to be disturbed.

32. In essence, Mr Brzostowski argued that the agreement had not been just because it failed to take into account the care and support which the plaintiff had provided and would continue to provide for Alex and the defendant's superannuation contributions and/or entitlements.

33. The defendant clearly made a substantially greater financial contribution, particularly by the provision of the initial 10 per cent deposit for the purchase of the house at Wanniassa and the provision of considerable financial support throughout the relationship. The evidence does not, in my opinion, establish that the plaintiff made a substantially greater contribution to the relationship in non-financial terms, other than through participation in the IVF program and the pregnancy, birth, and subsequent care of Alex. I accept the defendant's evidence that throughout the IVF program she supported the plaintiff physically, emotionally, psychologically and financially and that she assisted in caring for Alex between his birth and the separation that occurred nearly eight months later.

34. The defendant has been paying maintenance for the support of Alex since February 1999 and there is no issue as to the adequacy of the amount so paid. In addition, she has set aside further sums of money to establish a scholarship fund for his secondary and tertiary education. Whilst the plaintiff, no doubt, has made a greater non-financial contribution to the welfare of the child, particularly after separation, the weight that should properly be given to this consideration is dependent upon all of the prevailing circumstances including the fact that she has now re-partnered with Lieutenant Colonel Hyde rather than being left to raise the child as a sole parent. In any event, the fact that the plaintiff would have a greater role in supporting the child was well known to the parties when in February 1999 they entered into the agreement.

35. I accept that the parties appear to have overlooked the contributions that had been made towards the defendant's superannuation throughout the period of the relationship but, subject to that consideration, I can see no reason to interfere with the agreement which both parties plainly then thought appropriate. In my opinion, the agreement was otherwise somewhat generous to the plaintiff and the evidence does not reveal any justification for permitting her to wholly depart from it. Nonetheless, I have concluded, albeit with some hesitation, that it would be just and equitable to make an order that would have the effect of adjusting the agreement in a manner that would have been appropriate had the parties adverted to the issue of superannuation.

36. The real question is how that issue should now be taken into account. Issues relating to superannuation have long concerned the Family Court of Australia and have produced, over the years, a diversity of approaches in that Court. In the case of Harrison v Harrison (1996) 129 FLR 74 a Full Court of the Family Court said:

The various attempts which trial judges, in their ingenuity, have made to take superannuation entitlements into account by reference to precise mathematical calculations, although perhaps desirable from a practical point of view, nevertheless do not enable or entitle them to include such sums as part of the property of the parties, however calculated.

It follows from what we have said that in most cases the proper approach to be taken by trial judges, when dealing with a party's entitlement to superannuation in proceedings for alteration of property interests . . . is to . . . treat the superannuation entitlement as a resource . . .

37. Such an approach does not require the court to ignore the availability of that resource when considering what distribution would be just and equitable and the fact that the amounts contributed by that party during the course of the relationship were not otherwise available to the parties may be sufficient to support an argument that the other party made some, albeit indirect, contribution to the amount so accumulated. However, as Higgins J said in Pigott v Walker it would not usually be just or equitable to distribute from one party to another an asset or funds to which the other party did not, even indirectly, contribute and which were acquired after the relationship had ceased. Despite Mr Brzostowski's eloquent submissions to the contrary, I see no reason to depart from this principle by taking into account contributions made by the defendant to her superannuation fund or accretion to her entitlements before the relationship commenced or after the separation. I accept there may be cases in which the availability of such an additional resource would itself be relevant by, for example, providing a financial capacity for one party to contribute to the financial needs of the other (see 19(2) Domestic Relationships Act 1994 (ACT)). However, in my opinion, this is not such a case. Mr Millar, who appeared for the defendant, also argued that it would be inappropriate to, in effect, give the plaintiff the benefit of a greater share of the joint assets of the parties based upon further superannuation entitlements which the defendant had accrued following separation when, throughout the same period, Lieutenant Colonel Hyde had also been accruing further superannuation entitlements. Those entitlements will presumably be of indirect benefit to the plaintiff either because of the enhanced financial position that she and Lieutenant Colonel Hyde will enjoy during their retirement together or, should that relationship be terminated, because of the opportunity to have Lieutenant Colonel Hyde's additional entitlements taken into account as a resource in any subsequent application against her.

38. By the time of the separation the defendant had accumulated a "member benefit" under the Military Superannuation and Benefits Scheme consisting of contributions made since May 1984 and interest of approximately $71,000. Of course, some of that amount had been contributed prior to the commencement of the relationship and that part of the contributions would have generated interest in each of the subsequent years. On the other hand, the defendant's income increased progressively throughout the period of co-habitation and her contributions would presumably have increased commensurably. Whilst the evidence does not permit a precise calculation to be made of the value of contributions made during the course of the relationship, it seems reasonable to assume that they would have been in the order of $60,000 - $65,000. The "employee benefit" would have been much greater. However, this would not have been available to the defendant until her retirement and at the time of separation she was only 42 years old. The plaintiff deposed to having had entitlements of only about $9,000 in the Hesta Superannuation Fund.

39. As previously mentioned, I think that the plaintiff's overall contributions to the property and financial resources of the parties up to the time of separation were substantially outweighed by those of the defendant. I do not accept that she should be taken to have made an equal contribution to the accumulation of the defendant's superannuation. Furthermore, as successive decisions of the Family Court of Australia amply demonstrate, there is no wholly satisfactory means of comparing a sum of money that is accessible only by the premature termination of a career to the sum of money that is readily available. In these circumstances I do not think it would be just and equitable to simply increase the amount which the plaintiff received in February 1999 by half of the disparity in the parties' superannuation contributions or entitlements.

40. Having taken into account all of the factors mentioned in s 15(1) of the Act to the extent relevant, I am not satisfied that justice would be served by permitting the plaintiff to effectively ignore the agreement made between the parties in 1999 and obtain an overall readjustment of assets based upon present entitlements and values. However, I have finally concluded that, in view of the disparity in superannuation entitlements, it would have been just and equitable for the agreement to have provided for the net value of the other assets of the parties to have been divided on a 60:40 basis in favour of the plaintiff rather than the 50:50 basis in fact adopted. It had been agreed that the net assets amounted to $112,500 and I see no reason to doubt the accuracy of that assessment. Sixty percent of that figure is, of course, $67,500, which is $11,250 more than the plaintiff in fact received.

41. It would not be just and equitable to now require the payment of that sum without making due allowance for the fact that the plaintiff has not had the benefit of it during the five and a half years that have elapsed since that time. Hence, I allow a further sum of $6,500 for interest on this amount.

42. Accordingly, there will be judgment for the plaintiff in the sum of $17,750.

I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Solicitor for the plaintiff: Mazengarb Barralet Solicitors

Relationships Act 1994

(Relationships) Act 1984

Facto Relationships Act 1984

(1997) 21 Fam LR 760

(1990) 13 Fam LR 688

(1995) 20 Fam LR 822

(1997) 23 Fam LR 702

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