Deans v Jones [2003] NTSC 117

[3] The learned Master decided that the respondent plaintiff would be fairly compensated if a property adjustment in the sum of $45,000 inclusive of interest was made in her favour. The defendant has appealed against that decision on a number of grounds. It is necessary only to deal with three of those grounds, namely grounds 5, 6 and 7 which are in the following terms:

5. In awarding unspecified interest on an unspecified amount for unspecified period (sic) without statutory authority

6. In failing to make any findings as to the extent of the asset pools at the beginning and at the end of the relationship in order to determine from what assets the respondent's award was to be made.

7. In failing to make findings as to the actual contribution in money or percentage terms such that the Learned Master's findings would have been capable of review."

[4] Before dealing with the grounds of appeal it is necessary to briefly refer to some of the findings and fact. The learned Master found that the parties commenced a de facto relationship near the end of 1992. At first they lived together at Pandanus Farm, near Katherine, a property owned by the appellant. The respondent was in employment at the time and she remained in employment for the most part until the de facto relationship ended. The learned Master found that the relationship ended in December 1998. It is not clear what employment the respondent was in at the beginning of the relationship. There is a finding that she commenced working fulltime for Terrace Emporium in November 1994 until February 1995. Terrace Emporium was a business in which the appellant had an interest and which had interests in shops in Katherine and Darwin. Up until April 1995 the respondent did the cooking, cleaning and washing and contributed to the household expenses by purchasing most of the food from her own resources. The appellant paid the outgoings including electricity and assisted with the cleaning from time to time, but the respondent carried out most of the domestic duties.

[5] During this period the parties lived together at Pandanus Farm, a property outside Katherine. The learned Master found that the plaintiff contributed by providing furniture and appliances. However, the evidence was insufficient to identify and provide specific values for those items.

[6] In April 1995 the appellant purchased the Palms Diner near Darwin through his company Deans Investments Pty Ltd and the respondent moved to Darwin as manager. The respondent was to be paid $25,000 per annum and was provided with accommodation and running expenses for her vehicle. The Palms Diner business turned out to be unsuccessful and lost money. There is no finding as to the amount of the losses, but the learned Master refers to the evidence of a Mr Bell who estimated losses at around $240,000. There is a finding that the business was "subsequently sold at a loss", but there is no finding as to when this occurred, nor is the amount of the loss quantified.

[7] There is a finding also that the respondent in 1996 sold a property which she owned in Rockhampton for $87,000. From these monies she repaid $32,000 which she had borrowed from the appellant in 1993 or 1994. There is an allegation (which the learned Master notes) that she loaned the appellant $10,000 to purchase a tractor and spent approximately $37,000 in living expenses and improvements to the Pandanus Farm. The learned Master observed that the evidence as to these matters was vague and he was unable to make any specific findings, although he did accept that the respondent contributed financially from time to time. There is also a finding that the respondent did loan the appellant $10,000 which had not been repaid. The learned Master also found that the plaintiff's financial situation had deteriorated during the period of the relationship from net assets of some $95,000 to net assets worth about $15,000.

[8] As to the appellant's net assets, the findings are more elusive. There was evidence from an accountant, Mr Bell, that the appellant's net worth as at 30 June 1992 was some $899,120. There is no specific finding as to whether or not that evidence was accepted. There is also reference in the judgment to evidence from Mr Cowling and Mr Bell as to the appellant's net worth as at 30 June 2001 and as at 30 June 1998. The learned Master appears to have accepted that the appellant's net worth declined during the period of the relationship without making any specific finding as to the extent of the decline, although the learned Master notes that the appellant "paid the sum of $230,000 to his former wife in settlement of her property claims, which partially explains the decline in his net worth".

[9] After making a number of findings of this kind (I have not referred to them all), the learned Master's judgment concludes as follows:

"[32] I conclude that the plaintiff is entitled to an order for an adjustment in the interests of the parties in the partnership property by reason of her contributions, both financial and non-financial, particularly in relation to Pandanus Farm, and the contributions to the welfare of the defendant in her capacity as home-maker and companion. It was suggested that there were no contributions to the improvement of Pandanus farm after the plaintiff became manager of Palms Diner, but by means of her efforts in that business, the defendant earned an income and was freed to develop Pandanus Farm. He was also freed to develop his other business interests, although these were, for the most part, already established, and did not appear to require much of his time or money.

[33] It is not possible to measure the effect of the plaintiff's contributions with any precision, but she would remain without adequate compensation for her contributions if no award was made. Considerations of justice and equity suggest that the defendant's losses, particularly those relating to the Palms Diner, should also be taken into account. With all these matters in mind, I consider that the plaintiff would be fairly compensated if a property adjustment in the sum of $45,000, inclusive of interest, was made in her favour."

[10] It is well established that an appeal from an order adjusting the property interests of the parties is an appeal from a discretionary judgment: see Black v Black (1991) 15 Fam LR 109 at 114. Consequently before this Court can interfere error must be shown: see House v The King [1936] HCA 40; (1936) 55 CLR 499.

[11] Section 18 of the Act provides:

(1) The order which a court may make under this Division with respect to the property of de facto partners or either of them is such order adjusting the interests of the partners in the property as the court considers just and equitable having regard to -

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

(b) the contributions (including any made in the capacity of homemaker or parent) made by either of the partners to the welfare of the other partner, or to the welfare of the family constituted by the partners and one or more of the following:

(ii) a child accepted by the partners or either of them into the household of the partners, whether or not the child is a child of either of the partners; or

(iii) any person dependent on the partners who has been accepted by the partners or either of them into the household of the partners.

(2) A court may make an order in respect of property whether or not it has declared the title or rights of a de facto partner in respect of the property."

[12] In Fiket v Linco [1998] NTSC 37; (1998) 145 FLR 456, Thomas J held in making an adjustment, the Court was confined to considering what is just and equitable having regard only to the two factors referred to in s 18(1). Her Honour, in reaching that conclusion followed Meagher JA in Evans v Marmont [1997] NSWSC 331; (1997) 42 NSWLR 70 at 97-98. Her Honour's decision was binding on the Master, but it may be questionable whether it is correct, having regard to the fact that the five Judges of the New South Wales Court of Appeal were split into three distinct camps, comprising (1) Gleeson CJ and McLelland CJ in Eq., (2) Meagher JA, and (3) Priestley JA and Mason P. Priestley JA and Mason P were of the opinion that factors outside of the equivalent provision in NSW to s 18(1)(a) and (b) (s 20(1)) could be taken into account. Gleeson CJ and McLelland CJ in Eq held that although the Court was confined to the factors referred to in s 20(1), there were other factors relevant to a consideration of those factors including: the financial circumstances of the parties; the property of the parties at the time of the hearing; the needs and means of the parties (which will have general relevance, as subsidiary factors, to the question of what is just and equitable having regard to the parties' contributions); the length of the relationship; any promises or expectations of marriage and any lost opportunities as a result of the parties' contributions (see at pp 75-76). Although Meagher JA expressed himself as agreeing with Gleeson CJ and McLelland CJ in Eq., he appears to have confined himself to a narrower formulation than appears from the joint judgment of the former. It is not necessary in this appeal to resolve this apparent difference.

[13] It is clear that the Master arrived at the amount of the award by making a global assessment of what he considered to be just and equitable without adopting an asset by asset approach. I accept the submission of Ms Gearin of counsel for the respondent that it was open to the Master to adopt either approach: see Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513; Black v Black, supra at 118-119. Thus it was not essential that the Master adopt a two staged approach to the assessment consistent with the pattern suggested in Pastrikos v Pastrikos (1980) FLC 90-897 at 75, 653: see also Whitely v Whitely (1996) FLC 92-684.

[14] However, the duty of the Master is to provide adequate reasons for the exercise of his discretion, and if he does adopt a global approach, it is still essential that he indicate the process of his reasoning so that the parties (and the appeal court) can see that all matters which were required to be taken into account were properly taken into account, and how the ultimate order was arrived at: see for example Mobasa Pty Ltd v Nikic (1987) 89 FLR 411; Sun Alliance Insurance Ltd v Massoud [1989] VicRp 2; (1989) VR 8, esp at 18; T v Medical Board (SA) (1992) 58 SASR 382 at 392-394; 408-410 and Alice Springs Town Council v Mpweteyerre Aboriginal Corporation (1997) 115 NTR 25 at 33-34.

[15] The difficulty with this case is that it is simply not possible to see, by reading the learned Master's reasons, whether he took into account all of the relevant factors, how they were taken into account, and how the ultimate conclusion was arrived at. The award of the sum of $45,000 including interest is an obvious example of the problem in this case. What authority was there for awarding interest? Possibly the learned Master relied upon s 84 of the Supreme Court Act. If so, one can assume that he applied a rate of interest to a sum he had in mind and calculated the interest for a period commencing from the date the cause of action arose until the date of judgment. Assuming this to be so, and assuming the cause of action arose at the time the relationship between the parties came to an end in December 1998, the calculation necessary is according to the formula:

z is the period commencing from the date the cause of action arose and ending at the date of judgment expressed in years - in this case a period of 4 years and 8 months or 4.67 years.

[16] However without knowing what value has been attributed to x and y, it is impossible to know how much interest has been awarded and how it was calculated.

[17] There are similar problems with the findings covering the factors to be considered under s 18(1). As I have already mentioned, there are no formal findings about a number of essential matters which were needed to be made if the reasoning process were to have been exposed, such as, the net worth of the assets of the parties at the beginning and the end of the relationship and at the time of trial; the extent to which there were loses; the extent to which those should have been borne as between the parties (and I note in this regard that there is no presumption that losses should be borne equally any more than gains should be distributed equally - cf Black v Black, supra, at 112-113); and how whatever sum was awarded was arrived at. The difficulty with the case is that it is impossible for the appellant to know why it was just and equitable that he be ordered to make a payment to the respondent under s 18 at all, and if so, how much it is and how it was arrived at. Although reference is made to the respondent's contributions particularly in relation to the farm and as home-maker and companion, there does not appear to be any corresponding findings about the appellant's contributions other than the appellant's losses which under s 18(1) and (2) the Court must also take into account, such as the fact that the appellant provided the home in which the respondent lived.

[18] In the circumstances of this case, I consider that there is no alternative but to allow the appeal and set aside the orders made by the Master to date. It was suggested by Mr Waters QC that I should order a retrial of the outstanding issues. I am not able to substitute my findings for that of the Master as there are insufficient findings of fact for me to do so. It was urged upon me by the appellant that I should order a retrial before a Judge or another Master. There are problems with adopting this course.

[19] Subject to any further submissions by counsel I think the best course is to remit the matter to the Master for rehearing on all issues subject to the following directions:

(2) whether or not there was serious impropriety or gross negligence by the respondent in the running of the Palms Diner,

I have excepted those issues because they were two very contentious issues resolved by the Master, and neither side has sought to challenge his findings or criticise his reasons in respect thereof. However before making these orders I will hear any submissions the parties may wish to make.