//
[2011] QCA 65
General information, not legal advice.
Court of Appeal (Qld)
2011-04-12
Holmes and White JJA and McMurdo J, Separate reasons, for judgment of each member of the Court, each concurring as to the orders, made
Original judgment source is linked above.
Zoe will write a short plain-English brief of this judgment and email it to you: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: GAJ v RAJ [2011] QCA 65
PARTIES: GAJ (appellant) v RAJ (respondent)
FILE NO/S: Appeal No 7019 of 2010 DC No 609 of 2008
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane
DELIVERED ON: 12 April 2011
DELIVERED AT: Brisbane
HEARING DATE: 9 November 2010
JUDGES: Holmes and White JJA and McMurdo J Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDER: **1.**Appeal allowed. / **2.**The orders made in the District Court on 16 June 2010 be set aside and in lieu thereof there be substituted the following orders: / 2.1****The respondent retain for his benefit absolutely all assets in his possession, power or control including: / **(i)**the furniture in his possession; / **(ii)**his motor vehicle; / **(iii)**his boat, if any; / **(iv)**his tools; and / (v) his caravan. / 2.2****The appellant retain for her benefit absolutely all assets in her possession, power or control including: / **(i)**the furniture in her possession; / **(ii)**any money in her bank accounts; / and / **(iii)**her motor vehicle. / 2.3****The appellant pay to the respondent the sum of $82,000 by way of property adjustment pursuant to Pt 19 of the Property Law Act 1974 (Qld). / 2.4****That amount to be paid within 90 days of the delivery of judgment. / 2.5****If the appellant fails to make the payment in full referred to in order 2.3, unless the parties agree otherwise in writing, the property situated at 1/14 Red Gum Court, Pialba described as Lot 1 on SP 204432 in the County of Marsh, Parish of Urangan vest in a trustee to be agreed by the parties, or, failing agreement, as ordered by the court on a statutory trust for sale. / 2.6****The trustee shall distribute from the net proceeds of sale the costs of the trustee, $82,000 to the respondent and the balance to the appellant. / **3.**The parties to provide submissions about costs in writing within 14 days of judgment. / 4.Liberty to apply on the form of order.
CATCHWORDS: FAMILY LAW AND CHILD WELFARE – DE FACTO RELATIONSHIPS – ADJUSTMENT OF PROPERTY INTERESTS – GENERALLY – where the appellant and respondent were in a de facto relationship – where the respondent applied under Pt 19 of the Property Law Act 1974 (Qld) for a property adjustment order – where the appellant challenged the primary judge’s property adjustment orders – whether the primary judge erred in considering initial financial contributions to property – whether the primary judge erred in the apportionment of the property pool – whether the learned primary judge erred in the exercise of discretion in making property adjustment orders / Family Law Act 1975 (Cth), s 79 / Property Law Act 1974 (Qld), Pt 19, s 282(1), s 283, s 286, s 291, s 295, s 296, s 297-s 309 / Burgess v King (2005) 64 NSWLR 293; [2005] NSWCA 396, cited Cabbell v Cabbell [2009] FamCAFC 205, cited Davut v Raif [1994] FLC 92-503, cited Elias and Elias (1977) 29 FLR 393; (1977) FLC 90-267, cited FO v HAF [2007] 2 Qd R 138; [2006] QCA 555, cited Hickey and Hickey and the Attorney General for the Commonwealth of Australia (2003) FLC 93-143; [2003] FamCA 395, cited Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11, cited Lenehan and Lenehan (1987) 11 Fam LR 615; [1987] FamCA 8, cited Mallet v Mallet (1984) 156 CLR 605; (1984) 52 ALR 193; [1984] HCA 21, cited Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17, cited Pierce v Pierce (1998) 24 Fam LR 377, cited Sharpless v McKibbin [2007] NSWSC 1498, cited
COUNSEL: J Brasch, with B Thiele, for the appellant C Carew for the respondent
SOLICITORS: Morton & Morton for the appellant James & Co Lawyers for the respondent
HOLMES JA: I agree with the reasons of White JA and the orders she proposes.
WHITE JA: The appellant appeals orders made in the District Court on 16 June 2010 arising out of the cessation of her de facto relationship with the respondent. He had brought an application pursuant to Pt 19 of the Property Law Act 1974 (Qld) for a property adjustment order. The primary judge ordered, inter alia, that by way of property distribution the appellant was to pay the sum of $141,750 to the respondent within 90 days of the order. Failing payment by that time, the house property of which the appellant was the registered proprietor was to be sold and from the net proceeds of sale, after deduction of the trustee’s costs, that sum was to be paid to the respondent and the balance to the appellant. The appellant’s principal contention is that the primary judge fell into error in insufficiently having regard to her initial financial contribution to the acquisition of relationship property.
Summary
The appellant was born in 1947 and the respondent in 1948. They met in September 1996. They had each previously been married and divorced. There were no dependent children from those relationships. The respondent lived in a caravan park and the appellant in a unit at Port Macquarie. Both were in receipt of pensions. They commenced an intimate relationship a few weeks after meeting and went on a six week caravan holiday together from July 1997. They lived together in rented accommodation in Port Macquarie between February and August 1998.
The respondent contended below that he and the appellant had maintained a de facto relationship between late 1996 and mid-2007. The appellant accepted that there was a de facto relationship but of much shorter duration. According to her the relationship commenced in late 1996 but had ceased by the end of August 1998. For that reason she contended that the court had no jurisdiction to determine the dispute between the parties pursuant to Pt 19 of the Property Law Act 1974 (“the Act”).
The primary judge concluded in favour of the respondent that a de facto relationship had existed between the parties from at least February 1998 when they first cohabited at Port Macquarie until mid-2007.1 His Honour then considered the respondent’s claim for relief pursuant to s 286 of the Act. The appellant does not challenge the primary judge’s finding about the duration of the de facto relationship. She does challenge his approach to the distribution of the relationship property and the orders made to give effect to that distribution.
After the parties left rented accommodation in August 1998 they lived in the respondent’s caravan in Port Macquarie for six months. In 1999 they travelled to Hervey Bay and purchased a property for $96,000 in Corser Street in the appellant’s name. She provided (ultimately) half the purchase price with the balance finance being arranged in her name. They shared that house for approximately five and a half years. Towards the end of December 2004 the appellant entered into a contract to sell the Corser Street property which was settled early the following year for $278,000.2 The parties then resided in their caravan. This arrangement continued until August 2005. In July 2005 the appellant purchased land at Scribbly Gum Court, Hervey Bay for $131,000 on which the respondent built a house. He first constructed a shed in which the appellant lived while the house was being built. During this time the respondent lived in a caravan park. When the house was completed the respondent undertook the landscaping. The appellant paid for the building materials and tradesmen such as plumbers and electricians and a wage to the respondent’s son for about three months whilst he assisted his father as a labourer. Those outlays amounted to $141,000.
Legislation
“(1)A court may make any order it considers just and equitable about the property of either or both of the de facto partners adjusting the interests of the de facto partners … in the property.
(2)In deciding what is just and equitable, a court must consider the matters mentioned in subsubdivision 3.
(3)It does not matter whether the court has declared the title or rights in the property.
(4)In this section –
adjust, for interests of persons in property, includes give an interest in the property to a person who had no previous interest in the property.”
“Contributions to property or financial resources
(1)The court must consider the financial and non-financial contributions made directly or indirectly by or for the de facto partners … to -
(a)the acquisition, conservation or improvement of any of the property of either or both of the de facto partners; and
(b)the financial resources of either or both of the de facto partners.
(2)…
(3)It does not matter whether the property or financial resources mentioned in subsection (1) still belong to either or both of the de facto partners when the court is considering the contributions made.”
Contributions to property and family welfare
“I do not accept her [the appellant] as a witness of credit. Her maintaining of the position that there was no de facto relationship after 1998 in the face of overwhelming evidence and her inability to make reasonable concessions (for example she contested the role of the applicant in planning the Scribbly Gum Court house and how long it took him to build it …) causes me to doubt her when her evidence is in conflict with [the respondent]. This is particularly the case with respect to any financial contributions made by the [respondent], the detail of financial arrangements between them as to the purchase of property (for example, the [appellant] contended she had documentary proof that she contributed $19,999 to the purchase of the caravan … such proof was not produced) and the extent of his contribution in improving the Corser Street property and his work in building the Scribbly Gum Court house.” 6
In fact, there was virtually no contentious evidence about the amounts of money expended by the parties on the acquisition of house properties and other major items. The example given above about the caravan is discussed below.
When the parties travelled to Hervey Bay in 1999 they looked at a number of houses. The respondent had been a builder and advised the appellant about purchasing a house. The appellant had $75,000 from the proceeds of the sale of her home in Victoria. The Corser Street house was purchased for $96,000. The legal costs and stamp duty were agreed to be approximately $4,000. His Honour accepted the respondent’s evidence that the appellant contributed $40,000 towards the purchase price, he contributed $10,000, and the appellant borrowed $50,000 from a financier. The house was purchased in the appellant’s name but there was an agreement that the respondent would make the mortgage repayments so that each would have a 50 per cent share in the house.
After about eight months the respondent was experiencing difficulty making the repayments as he was not employed and only in receipt of a social security pension. As found by his Honour, they agreed that the appellant would pay the respondent $20,000 to cover his initial contribution and subsequent repayments. The appellant was able to finance that arrangement by selling her car for $14,000 and using money she had saved while the respondent was making the house repayments. On 3 July 2000 the respondent signed a statutory declaration to the effect that he had no financial interest in any property owned by the appellant and “all monies lent by me have now been repaid in full”.7 It may be mentioned that the respondent is functionally illiterate and during the relationship was dependent upon the appellant reading communications to him and explaining what he was signing. Thereafter the respondent paid $30 per week to the appellant, the amount she was allowed to earn and retain her Centrelink pension, as his contribution to his accommodation at Corser Street.
There is some confusion in the reasons about the purchase of a caravan. The primary judge noted that the respondent was paid $20,000 by the appellant pursuant to their agreement to refund his contribution within the first 12 months of residence at Corser Street. “That amount”, his Honour wrote, “plus an additional $6,500 was used to purchase another caravan in which [the respondent] and the [appellant] would travel”.8 His Honour referred to paras 26-28 of the respondent’s affidavit. In para [20] of his reasons the primary judge then stated:
“In April 2004 the parties purchased a caravan for $26,000. The [respondent] asserts he used the $20,000 paid to him by the [appellant] as well as an additional $6,500 … The [appellant] asserts she paid $20,000 and the [respondent] $6,500 …”9
The appellant had deposed:10
“In 2004 [the respondent] was grumbling about the state of his caravan. [The respondent] said it was worn out due to the big trips we had taken. [The respondent] was keen to buy a new one. I agreed to pay $20,000.00 towards a new caravan with [the respondent] to pay the balance. I still have copies of the bank cheques showing that I paid $19,999.00 towards the caravan which was purchased from Car Mart Caravans in April of 2004. [The respondent] paid the balance which I believe was approximately $6,500.00.”
As mentioned, his Honour was critical of the appellant for not producing this documentary evidence referred to in the passage quoted above at [11]. But there was no need for her to have done so because at the trial the respondent agreed in cross-examination that the new caravan was bought in 2004 or 2005 towards the end of their time at Corser Street. The respondent did seem to be suggesting still that the $20,000 provided by the appellant was the $20,000 paid by her to discharge his contribution to the purchase of the house. But that had occurred, they both agreed, in 2000. While the primary judge preferred the evidence of the respondent when they were in disagreement, the analysis of this body of evidence needed a further step to link the $20,000 paid to the respondent in 2000 to the $19,999 paid in 2004. Without it, the preference for the respondent’s account could not be supported. It was not controversial, after the respondent’s cross-examination, that the respondent purchased a custom built caravan for $26,500 in about 2004.
Both the appellant and respondent were in receipt of social security pensions which were paid to them at the single person’s rate. They maintained that they were not in a relationship when challenged by investigators, but his Honour has not, it seems, been influenced by this circumstance in his assessment of credit - rather the converse - the respondent frankly conceded in evidence that “they” were cheating the system which inclined the primary judge in his favour. The appellant made no such concession. Although a ground of appeal is that the primary judge ought to have found that the respondent’s truthfulness was thus questionable11 that was not vigorously pursued at the appeal hearing.12
While the parties lived at Corser Street – a period of some five years and five months – the respondent carried out improvements to the property. Although there was some quibbling by the appellant as to the nature and extent of those renovations and improvements she agreed that the respondent remodelled part of the interior to create an open plan living area, painted internally and “turned the grass into a garden”.13 The appellant paid for the internal materials and the respondent paid for the landscaping. There was no challenge to the appellant’s contention that she did all of the housework, cooking, washing and mending and, as her arthritis got worse each would help the other “as best [they] could”.14 The house was sold and in February 2005 and settled for $278,000.
“… it is incorrect to assert that the entire increase in capital value was only due to market forces and thus solely the [appellant’s] because she had contributed the bulk of the purchase price.”16
It was not asserted by the valuer that market forces were the sole cause of the increase nor by the appellant. Mr Noel Maddern, a registered valuer, conducted a kerbside inspection of the Corser Street property. He noted that one of the valuers in his office had inspected the property in July 1999 when it was under contract for $96,000 (presumably to the appellant). The improvements were noted. Mr Maddern commented “[i]t is assumed that there were similar improvements when it sold on 31 December 2004 for $278,000.”17 He attached a schedule of sales from 1996 for single unit dwellings on sites less than 2,000 square metres in the towns which make up the Hervey Bay area. He wrote:
“The schedule clearly shows a significant increase in the median prices achieved for dwellings in all the suburbs in Hervey Bay between 1999 and 2004. In Point Vernon [where Corser Street was located] the median price increased from $95,000 in 1999 to [$255,500] in 2004.”18
He searched comparable sales within a 500 metre radius of the subject property with sale dates a few months either side of the contract date. Three nearby properties showed an increase of 195 per cent, 142 per cent and 196 per cent respectively. The increase in value for the Corser Street property was 190 per cent. Mr Maddern concluded:
“Based on the available evidence there is no doubt that the significant increase in the value of the subject property between its date of purchase and its date of sale was due to the prevailing market conditions. Based on the sales and resales above, it is my opinion that the increase in value was generally consistent with the increase in values for this area between the relevant dates (1999 and 2004).”19
While the parties lived at Corser Street they purchased furniture including televisions and lawn mowers and other household items. New furniture was purchased for the second property. They are not in agreement about who had purchased the majority of those items. The issue was not squarely resolved by his Honour. It does not greatly matter as there is no point taken on appeal.
After Corser Street was sold in February 2005 the parties resided together in the caravan until August 2005. A block of land was purchased in Scribbly Gum Court in Hervey Bay for $131,000 with the proceeds from the sale of the Corser Street property. They agreed that the respondent would build a house on the land to their mutual design. It was the respondent’s understanding that the house was to be built for them both to live in. The appellant contended that it was a friend building a house for a friend and that the respondent did so because he wanted to prove that he could build a house and for that reason wanted no remuneration. In this way the appellant justified paying the respondent nothing for his contribution in building the house. The appellant and the respondent were at odds about how long it took. His Honour preferred the respondent’s evidence of about 18 months. The appellant had contended it took only five to six months. Initially the respondent built a shed on the property. When it was finished the appellant moved into the shed in August 2005 and the respondent moved to a different caravan park closer to the property. The appellant paid for all materials and labour accepted to amount to $141,000. The respondent’s son assisted for approximately ten weeks labouring on the slab, frame, internal sheeting and bricklaying. For this he was paid by the appellant, that sum being included in the $141,000. She provided lunch each day and dinner in the evening for the respondent. The respondent worked seven days a week, 12 hours a day and carried out all the building work except for specialist tradesmen such as the electrician and the plumber. When he had completed the house he landscaped the grounds which took several months. The total monetary cost of this property for which there was evidence was $272,000 for the land, materials and labour.
The respondent offered no evidence which would place a monetary value on his contribution as builder to the value of the house. There was evidence that the parties had considered a land and house package of $270,000 in respect of that land but had rejected it. Mr Maddern prepared a kerbside valuation of the property at Scribbly Gum Court in December 2009. The median price for a house in the area in 2005 was $295,000 which increased to $344,450 in 2007. He concluded that the increase was due primarily to market factors. That evidence was of no particular assistance in valuing the respondent’s contribution. All that can be said is that the property achieved a little over the median price when it sold for $350,000. His Honour made no reference to Mr Maddern’s evidence insofar as it related to the second property.
“Proceeds of sale of Scribbly Gum Court property $350,000
Furniture of the parties $5,000
[Respondent’s] motor vehicle $8,000
[Respondent’s] boat $27,000
[Respondent’s] tools $5,000
[Respondent’s] caravan / [Appellant’s] motor vehicle (at time of separation) $2,500 / $18,000
TOTAL $415,000”.[20]
“With respect to the contribution of the parties, I am satisfied each contributed equally over the duration of the relationships [sic]. In relation to the value of the two properties held during the relationship, I am satisfied that the respondent contributed labour in the improvement and maintenance of the first property and it is incorrect to assert that the entire increase in capital value was only due to market forces and thus solely the [appellant’s] because she had contributed the bulk of the purchase price. Whilst I accept the [respondent’s] evidence as to his contribution to the purchase of that property, it is also clear that the [appellant] contributed a substantially higher proportion from her savings. The proceeds of the sale of the first property [were] wholly expended in the building of the second property. I find that the parties contributed equally to that: the [respondent] by building the house and garden and the [appellant] by providing the [monies] and in other ways such as the provision of meals and a wage to the [respondent’s] son.
Whilst the initial contributions of the parties perhaps even out over a relationship that existed for 10 years, here the [appellant] clearly contributed most of the [monies] for the purchase of the first property. Whilst I am satisfied the [respondent] provided $10,000 for that purchase, he was also paid that back (through the purchase of a caravan) at some later stage. At the commencement of the relationship the [appellant] had approximately $75,000 in savings … I am of the view that the [appellant] contributed substantially more in the purchase of that property and that it is appropriate to adjust the distribution to recognize that.”20
“I am of the view that the property distribution should be adjusted to 55 per cent/45 per cent in favour of the [appellant] to recognize her greater initial contribution. There should thus be an order that the [appellant] pay to the [respondent] 45 per cent of the pool. In my view that is a just and equitable distribution.
Forty-five per cent of that pool is $186,750. The [respondent] should retain the benefit of all assets in his possession: half of the furniture (valued at $2,500), his motor vehicle ($8,000), his boat ($27,000), his tools ($5,000) and his caravan ($2,500). The distribution should be reduced accordingly.”21
His Honour ordered:
“The [respondent] retain for his benefit absolutely all assets in his possession, power or control including:
(1)the furniture in his possession;
(2)his motor vehicle;
(3)his boat;
(4)his tools;
(5)his caravan
The [appellant] retain for her benefit absolutely all assets in her possession, power or control including:
(1)the furniture in her possession;
(2)money in the bank;
(3)her motor vehicle.
The [appellant] is to pay the [respondent] the sum of $141,750 by way of property distribution.
That amount is to be paid within 90 days. Failing payment by that time the property at […] vest in a trustee to be agreed between the parties or, failing agreement, as ordered by the court.
The trustee shall,
1.do all things and employ all such persons and agents to effect a sale of the property;
2.the net proceeds of sale after deduction of the costs of the trustee will be the sum of $141,750 to the [respondent] and the balance to the [appellant].”22
Discussion
Although there were a number of grounds to the appellant’s appeal the focus was primarily on Ground One that the primary judge failed to give proper consideration to the unchallenged and uncontested evidence of Mr Maddern that the increase in capital value of the Corser Street property was primarily due to market conditions; that the primary judge placed inadequate weight upon the substantial initial financial contribution of the appellant; conversely, his Honour placed excessive weight upon the non-financial contributions of the respondent; and failed to provide adequate reasons for determining a division of 55/45 in favour of the appellant. The underlying criticism is the perception that the primary judge erroneously started from a presumption of equality and adjusted the contributions thereafter.
In FO v HAF23 Keane JA (as his Honour then was) discussed the approach to the exercise of the judicial discretion conferred by s 286(1) of the Act:
“It has frequently been emphasised that the judicial discretion conferred by s 286(1) of the PLA and its analogues in other statutes should not be constrained by pre-determined guidelines.24 It is essential, however, that the matters referred to in the provisions set out above be taken into account, and that they are ‘seen, in the reasons for judgment, to have been taken into account’.25 To this end, the four step approach explained by the Full Court of the Family Court in Hickey v Hickey26 provides a useful discipline to ensure clarity of thought and transparency of judicial reasons.
The Full Court of the Family Court explained in Hickey and Hickey, in relation to the Family Law Act analogue of pt 19 of the PLA, that the first step in making a property adjustment order is the identification and valuation of the property, resources and liabilities of the parties. The second step is the identification and assessment of the contributions of the parties to their pool of assets and the determination of their contribution-based entitlements in accordance with s 291 to s 295 of the PLA. The third step is the identification and assessment of the factors in s 297 to s 309 of the PLA to determine the adjustment to the contribution-based entitlement. The fourth step in the process is consideration of the result of these earlier steps to determine whether that result is just and equitable in accordance with s 286 of the PLA. While this approach should be understood as a guide to the exercise of the statutory discretion, it also serves to focus attention upon the importance attached by the legislature to the identification of the contributions of the parties to the parties’ assets as the basis from which the process of adjustment is to proceed. That process is distorted if one party’s financial contribution to the assets of the parties is treated to a large extent as dead money having little or no bearing upon the increase in value of the parties’ assets.”27
In Mallet v Mallet28 the High Court, in deciding what division of property would be just and equitable, made clear that it is not correct to start with an assumption that property should be divided between the parties in any pre-determined proportions or that equality is a convenient starting point after a long relationship.29 The development of a proper recognition for the non-financial contribution of either of the de facto partners mandated in s 292 had its genesis in a common situation considered in the Family Court of Australia where a wife freed her husband to earn income and acquire assets by her attention to the home and the children in a long marriage. The Family Law Act 1975 required in s 79 that any indirect contribution to the “acquisition, conservation or improvement” of the property including the contribution as a homemaker be taken into account. In Mallet it was explained that each case must be examined for its own facts and to identify with some precision what contribution it was of a non-financial kind which made equality of contribution appropriate.
While the primary judge accepted the respondent’s evidence that he improved and maintained the fabric of the Corser Street house, the respondent produced little or no evidence to value, in financial terms, an interest in the property. The materials used on the internal renovations and painting were paid for by the appellant. There was no attempt at a figure, even of the broadest kind, to suggest a tradesman’s charges or the cost of materials used in the garden paid for by the respondent. The non-financial contribution by the appellant of cooking, cleaning, mending and washing was not mentioned by his Honour. The $30 per week “board” was a very modest contribution indeed. His Honour concluded that the appellant had contributed “most of the moneys [sic] for the purchase of the first property”30 but, in fact, the respondent contributed nothing because the $20,000 representing what he had contributed to the initial purchase was repaid to him within 12 months of purchase. The appellant had purchased the house entirely from her own resources. His Honour erred in concluding otherwise.31
It might be supposed that the increase in value of the Corser Street property would have been at the lower end of the range rather than the upper had it been presented to market in a neglected state with unformed gardens and a shabby interior. After weighing the initial financial contribution of the appellant and her non-financial contributions to the parties’ joint living against the respondent’s $30 per week contribution and work on the house and garden, it would be an error to give the respondent more than a modest interest in that property. It is not clear what proportion the primary judge considered appropriate, but he did say that “each contributed equally over the duration of the relationships.”
1.Appeal allowed.
2.The orders made in the District Court on 16 June 2010 be set aside and in lieu thereof there be substituted the following orders:
2.1The respondent retain for his benefit absolutely all assets in his possession, power or control including:
(i)the furniture in his possession;
(ii)his motor vehicle;
(iii)his boat, if any;
(iv)his tools; and
(v)his caravan.
2.2The appellant retain for her benefit absolutely all assets in her possession, power or control including:
(i)the furniture in her possession;
(ii)any money in her bank accounts; and
(iii)her motor vehicle.
2.3The appellant pay to the respondent the sum of $82,000 by way of property adjustment pursuant to Pt 19 of the Property Law Act 1974 (Qld).
2.4That amount to be paid within 90 days of the delivery of judgment.
2.5If the appellant fails to make the payment in full referred to in order 2.3, unless the parties agree otherwise in writing, the property situated at 1/14 Red Gum Court, Pialba described as Lot 1 on SP 204432 in the County of Marsh, Parish of Urangan vest in a trustee to be agreed by the parties, or, failing agreement, as ordered by the court on a statutory trust for sale.
2.6The trustee shall distribute from the net proceeds of sale the costs of the trustee, $82,000 to the respondent and the balance to the appellant.
3.The parties to provide submissions about costs in writing within 14 days of judgment.
4.Liberty to apply on the form of order.
Reasons at [57], AR 227. ↩
The trial judge refers to $268,000 at para [21], but the valuer refers to $278,000 at AR 147. ↩
s 282(1). ↩
s 283. ↩
s 296. ↩
Reasons at [59], AR 228. ↩
AR 169. ↩
Reasons at [17], AR 219. ↩
AR 219. ↩
AR 109. ↩
Elias v Elias (1977) FLC 90-267. ↩
Appeal transcript 1-2 ll 38-46. ↩
Trial transcript 2-13, AR 67. ↩
AR 109. ↩
AR 148. ↩
GAJ
RAJ [2011] QCA 65
(2005) 64 NSWLR 293
(1977) 29 FLR 393
(2006) 34 Fam LR 550
(1987) 11 Fam LR 615
(1984) 156 CLR 605
(1984) 52 ALR 193
(1986) 161 CLR 513
(1998) 24 Fam LR 377
After the house and garden were completed in about August 2007 the appellant indicated that she no longer wished to maintain a personal or any relationship with the respondent. The appellant sold the house for $350,000 without reference to the respondent and from those proceeds purchased her present residence which, at the trial, she valued at approximately $278,000. She neither paid any money to the respondent for building the house nor did she account to him for any of the proceeds of sale. The respondent was living in a caravan at the time of the trial. The intended effect of the primary judge’s order was to apportion the property pool 55/45 per cent in favour of the appellant.
The primary judge concluded that the respondent had contributed labour to the improvement and maintenance of the Corser Street property. Evidence was led by the appellant from a valuer, who was not required for cross-examination, that the increase in the capital value of the property from $96,000 to $278,000 was “due to the prevailing market conditions”.15 Of that evidence his Honour commented:
In about August 2007, because the caravan was no longer being used, the respondent sold it and bought a boat in Brisbane for $27,000. When he returned to Hervey Bay the appellant told him that she no longer wished their relationship to continue. Shortly afterwards she placed the house at Scribbly Gum Court on the market and sold it for $350,000. The appellant used those proceeds to purchase the residence in which she was living at the time of the trial which she estimated to be valued at $278,000. At the time of the hearing she had a car valued at $7,700 and savings of $9,000. His Honour regarded those two items as covered by the amount received by her from the sale of the Scribbly Gum Court property. He included the applicant’s boat valued at $27,000 in the pool of assets although the respondent’s evidence was that he had sold it by then for about $8,000.
The pool of property to which his Honour had regard comprised:
The proceeds of sale of the Corser Street property were the source of funds to purchase the land and build the second house. His Honour concluded that the parties contributed equally to the second property because the respondent built the house and shed and developed the garden while the appellant provided the funds to purchase materials and necessary labour and provided meals.
There is little analysis by his Honour as to how he reached his conclusion of equal contribution to the acquisition of the second property. It is incumbent on an applicant for an adjustment order to provide some relevant evidence which can value the contribution. Plainly the respondent made one by building the house. There was no evidence about the kind of house built. The sale price of $350,000 put it above the median price in the area and suggests it must have had features which justified that price. But whether that was because the respondent built a superior or larger house or a particularly charming garden or none of these things remains unknown. How the house actually compared to the $270,000 land and house package’s increase in value (if any) is also unknown.
Although the primary judge erred in not recognising that the appellant had contributed an “extra” $19,999 to the purchase of the new caravan, the appellant does not now contend that that amount should be credited to the appellant in the division of the assets.
Plainly, this is not a case where the parties should participate in the capital appreciation of an asset of the relationship in accordance with their initial financial contribution as discussed in Burgess v King.34 The respondent’s contribution must be recognised. As the New South Wales Court of Appeal held in Kardos v Sarbutt35 the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind. Mathematical calculations are of use in guiding and testing conclusions about what is just and equitable and in promoting transparency and consistency in decision-making. The paucity of the evidence and the limited findings by the primary judge do not permit of any mathematical exactitude in assessing the respondent’s contribution. But it is not a division which favours the appellant only by five per cent. The errors made below which have been discussed mean that the discretion should be exercised anew. A 70/30 division of the pool in favour of the appellant would, in my view, appropriately reflect the appellant’s initial financial contribution of the whole of the purchase price of both properties, her non-financial contributions, the respondent’s work on the Corser Street property and his contribution in building and developing the second property and in providing his caravan in the early stage of their relationship as accommodation.
The appellant challenges the form of order made by the learned primary judge. His Honour adopted the draft order proposed by the respondent’s counsel below save as to the ultimate figures. Clearly his Honour intended that the order would result in an apportionment of 55 per cent of the pool of assets to the appellant and 45 per cent to the respondent. It was accepted that $350,000 represented the gross contract price of the second property. No evidence was led as to the costs of the sale which, presumably, would have been deducted from that figure. On the other hand, as was argued below for the respondent, the appellant had the use of the net sum (whatever that was) from the date of settlement in about early 2008 until judgment in June 2010. Practical justice may be effected by keeping the $350,000 in the pool of assets without deduction and making no adjustment for the appellant’s use of the money.
The appellant also challenges the order about the sale of the appellant’s present property. The evidence demonstrated that the appellant would have to sell her house to satisfy any likely order in favour of the respondent. The appellant’s counsel contended that by not ordering the costs of that sale (including any trustee’s costs) to be borne pro rata the appellant would receive less than 55 per cent of those proceeds. This is to misconceive the respondent’s entitlement. He was entitled to a division of the relationship property represented by the $350,000 received from the sale of the second house shortly after separation. This is not an appropriate case for tracing those funds into the appellant’s present residence save for the purpose of satisfying the order as necessary. How the appellant disposed of the proceeds of the sale of the second property is not relevant in this case just as the amount for which the respondent sold the boat prior to trial was not relevant.
Thirty per cent of a pool of $415,000 is $124,500. The value of the assets which his Honour ordered the respondent may retain (about which there is no dispute) is $42,500 leaving a sum of $82,000. It may be that the appellant is able to borrow against her interest in her house which would obviate the need for any sale. If that is not the case then the property will have to be sold. The appointment of a statutory trustee as occurred below is an additional financial burden on the appellant which may be avoided by private sale. The appellant should have the opportunity to do so.
The parties’ representatives sought leave to make submissions about the costs of the appeal after the delivery of judgment.
The orders which I propose are:
Reasons [67], AR 230-231. ↩
AR 147. ↩
AR 147. ↩
AR 148. ↩
AR 230-231. ↩
AR 232. ↩
AR 232. ↩
[2006] QCA 555. ↩
Norbis v Norbis (1986) 161 CLR 513; In the Marriage of Lenehan (1987) 11 Fam LR 615; Kardos v Sarbutt [2006] NSWCA 11 at [51]; (2006) 34 Fam LR 550 at 564. ↩
Davut and Raif [1994] FLC 92-503 at 81,237. ↩
[2003] FLC 93-143 at 78,386, cf Kardos v Sarbutt [2006] NSWCA 11 at [28]-[29]; (2006) 34 Fam LR 550 at 558. ↩
At [51]-[52]. ↩
(1984) 156 CLR 605. ↩
Per Gibbs CJ at 610, Mason J at 625, Wilson J at 636, Deane J at 639-640, Dawson J at 646-647. ↩
Reasons at [68], AR 231. ↩
Cabbell v Cabbell [2009] FamCAFC 205 at [54]-[55]. ↩
See discussion of the “erosion principle” of an initial financial contribution in Pierce v Pierce (1998) 24 Fam LR 377; Kardos v Sarbutt [2006] NSWCA 11; and Sharpless v McKibbin [2007] NSWSC 1498. ↩
At Reasons [67], AR 230. ↩
[2005] NSWCA 396 at [25]. ↩
[2006] NSWCA 11. ↩