Howland v Ellis

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40103/00 EQ 2621/97 MEAGHER JA STEIN JA IPP AJA

Monday, 10 December 2001 John Robert HOWLAND v Lalla Carmella ELLIS

The appellant, who is a litigant in person and at the time of hearing was a prisoner in custody, appeals the decision of Master McLaughlin dismissing his claim under the De Facto Relationships Act 1984. The Master ruled that the appellant's claim was filed approximately 2 years out of time, as he based the date of the end of the de facto relationship on the time at which the appellant was sentenced to a lengthy period of imprisonment. The appellant argued that the relationship had not in fact ended at this time and that his claim was only a few months out of time, a delay that was explicable. The appellant also sought to challenge a number of adverse credit findings, as well as the Master's finding that he was not entitled to any interest in the property of the relationship.

Held: Per Stein JA ( Meagher JA and Ipp AJA agreeing)

1. More than mere physical separation is required for a de facto relationship to come to an end. Physical separation of the parties must be accompanied by an intention on the part of either partner to permanently end the relationship.

• George v Hibberson (1987) DFC 95-054 applied - McRae v McRae (1967) 68 SR (NSW) 361 considered - Pavey v Pavey (1976) FLC 90-051 considered - Hibberson v George (1989) 12 Fam L R 725 considered

2. The determination of whether on separation the requisite intention to end the relationship existed is a question of fact.
3. Where the parties are separated for reasons of ill health, business purposes and holidays, the de facto relationship is not considered to have come to an end, however, where the parties have a period apart to consider the future of the relationship, the relationship will normally be considered to have come to an end. - Jenkin v Ellis (1990) DFC 95-082 applied
   • Hibberson v George (1989) 12 Fam L R 725 considered
4. The courts have focused on the intention of the parties as opposed to the nature and length of the period of separation in determining whether or not a de facto relationship has come to an end. As with hospitalisation and business trips, a period of imprisonment can be argued to be involuntary and, when not accompanied by the requisite intention, does not necessarily end a de facto relationship.
5. There was evidence at the time of the appellant's imprisonment and his sentencing that both parties intended that the relationship would continue and cohabitation would resume upon the appellant's release.
6. The Master's discretion under s 18(2) of the De Facto Relationships Act miscarried and his refusal of leave should be set aside. In re-exercising the discretion, leave should be granted as the delay was relatively short and sufficiently explained by the appellant. Further, greater hardship would be caused to the appellant if leave was not granted than to the respondent if leave is granted.

7. The appellant, in challenging the credit findings of the Master, did not demonstrate that the Master failed to use or palpably misused his advantage.

8. The appellant's financial contribution towards the property in question was between $15,000 and approximately $40,000, representing between 8 and 20% of the purchase price of the property. The appellant also made significant contributions in the form of labour and expertise towards the improvement and expansion of the house, however this was to a large extent negated by the respondent's significant contributions as homemaker.

9. The appellant is entitled to approximately 15% of the subject property and the payment of the sum of $70,000 by the respondent to the appellant would be a just and equitable adjustment of the respective contributions of the parties under s 20(1) of the De Facto Relationships Act .

Orders:

1. Appeal allowed.
2. Each party to pay his or her own costs of the appeal.
3. Orders 1, 2 and 4 made by the Master on 26 November 1999 be set aside. Orders 3 and 5 are confirmed.
4. Leave granted to the appellant pursuant to s 18(2) and (3) of the Act to apply out of time.

5. Declare that pursuant to s 20 of the Act the respondent pay to the appellant the sum of $70,000, which sum, and any interest hereafter provided for, to be charged upon the lands comprised in the subject property at 12 Jinatong Street, Miranda until payment.
6. The sum of $70,000 shall not bear interest if paid within 3 months of this judgment.
7. In the event of the respondent not paying the said sum of $70,000 within 3 months of this judgment, then liberty to apply be reserved to the appellant for the appointment of trustees for the sale of the subject property for the purpose of paying the appellant the said sum of $70,000. The parties are asked to bring in agreed Short Minutes of Order giving effect to these orders within 7 days or such longer time as the court may permit. They should not feel confined to the wording of the proposed orders mentioned above but may add any words which will assist the mechanics of completing the orders proposed by the court. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40103/00 EQ 2621/97 MEAGHER JA STEIN JA IPP AJA

Monday, 10 December 2001 John Robert HOWLAND v Lalla Carmella ELLIS

1 MEAGHER JA: I agree with Stein JA. 2 STEIN JA: Introduction 3 This is an appeal from a decision of Master McLaughlin dismissing a claim under the De Facto Relationships Act 1984, now called the Property (Relationships) Act (the Act). The appellant is a litigant in person and, at the time of the hearing, was in custody serving a sentence of imprisonment. The respondent was represented by Mr G Walsh, solicitor, although his client was not present in court at the hearing of the appeal. 4 At the conclusion of the hearing of the appeal on 5 July 2001, the court asked the appellant and the respondent's legal representative whether the parties would consider mediation. Subsequently they agreed and a mediation was arranged for October 2001. It was, however, unsuccessful. Thus, the court proceeds to determine the appeal.

Facts 5 The parties cohabited in a de facto relationship from January 1989 until the appellant was arrested on 29 October 1991. He was refused bail and on 25 June and 3 September 1993 was sentenced upon the criminal charges for which he is currently serving a lengthy term of imprisonment. The parties have one child, a son, Kahl, who was born on 6 March 1991. 6 The respondent is a widow, her husband having died in 1986. There was one child of her marriage, a son, born on 29 February 1984 and who was accepted as a child of the parties and resided with them for the duration of the relationship before the appellant's arrest and imprisonment. 7 The dispute before the court relates to the appellant's claim with respect to a house property situated at 12 Jinatong Street Miranda. This was acquired in October 1989 during the course of the relationship. The respondent alone is the registered proprietor. The property was the residence of the parties and remains so for the respondent. 8 The appellant's Statement of Claim seeks a declaration pursuant to s 14 of the Act that he is a joint tenant or a tenant in common as to a one half share of the property, and an order for the appointment of a statutory trustee for the sale of the property. The amended Statement of Claim filed in 1999 alternatively seeks a declaration that the respondent holds on trust for the appellant, 50% of the property. The alternative claim resulted from an interruption of the hearing before the Master to allow the appellant to resort to Santow J, the Duty Judge, where leave was sought and granted to the appellant on 17 June 1999 to institute proceedings pursuant to the Felons (Civil Proceedings) Act 1981. The later Statement of Claim filed on 17 June 1999 was thereby the only valid pleading before the Master, as the previous Statement of Claim had been filed in the absence of leave entitling the appellant to institute the proceedings. However, the proceedings were, treated as having been, in effect, instituted in June 1997, at the time of the filing of the initial Statement of Claim.

The claim out of time 9 Section 18(1) of the Act states that: Except as provided by subsections (2) and (3), where de facto partners have ceased to live together as husband and wife on a bona fide domestic basis, an application to a court for an order under this Part shall be made before the expiration of the period of 2 years after the day on which they ceased, or last ceased, as the case may require, to so live together. 10 In order to determine whether the appellant's claim was filed within time, it was necessary for the court to examine when the de facto relationship between the parties came to an end. 11 The Master considered that the de facto relationship came to an end at the time the appellant was sentenced to prison (June 1993). The appellant, however, contended that the relationship continued for a time after he went to prison. He relied upon the continued visits by the respondent and communications between them, which, as late as June 1994 expressed sentiments of love and affection on the part of the respondent. The appellant asserted that the relationship was maintained until the respondent clearly exhibited an intention to end the relationship. 12 The appellant had previously spent almost six months in gaol in 1989, shortly after the parties began cohabiting, during which time the respondent maintained regular visits and corresponded and spoke to the appellant regularly. The respondent does not dispute that the de facto relationship between the parties remained in existence throughout that period and this was accepted by the Master. 13 However, the Master found that the nature of the appellant's prison sentences precluded the parties from living together after June 1993. He distinguished this sentence from those brief or temporary interruptions to living arrangements which can occur, such as overseas travel or a period of time spent in hospital. He found that, as a result, there was 'considerable doubt as to whether, in such circumstances, the continuation of the de facto relationship can be regarded as dependent solely upon the subjective intention of one, or even both, of the parties'. 14 The Master noted that it was only in June and September of 1993 that the appellant was sentenced upon the criminal charges for which he had been held in custody since October 1991. He observed that it may have been the intention of each of the parties during the period in which the appellant was on remand in custody that, in the event he were to be released from custody pending trial, the relationship would continue. Despite correspondence from solicitors, who previously acted for the appellant, which indicated that the appellant regarded the relationship as having come to an end no later than 7 March 1995, the Master was not satisfied that: … the de facto relationship between the parties [could] be regarded as subsisting once the plaintiff was sentenced to a term of imprisonment. I have reached the conclusion that at the very latest the de facto relationship had come to an end when the plaintiff was sentenced by the District Court on 25 June 1993 (that being the earlier of the two sentences imposed upon the plaintiff by the District Court in that year). 15 As a result of the finding as to the date at which the relationship ended, it was found that the proceedings were instituted almost two years out of time. This finding clearly influenced the consideration of the substance of the appellant's claim when considering whether to grant leave under s 18(2) of the Act, which states that: A court may, at any time after the expiration of the period referred to in subsection (1), grant leave to a de facto partner to apply to the court for an order under this Part (…)where the court is satisfied, having regard to such matters as it considers relevant, that greater hardship would be caused to the applicant if that leave were not granted than would be caused to the respondent if that leave were granted. 16 The Master considered that, in approaching the question of whether leave should be granted, 'the Court should look at the substance of the claim of the plaintiff [appellant]'. 17 The operation of s 18(2) requires an exercise of discretion, as the prejudice to the parties and the substance of the claim must be weighed when determining whether to extend time to bring the claim. It follows that a claim for leave may be approached differently under s 18(2) than a claim that was filed within the limitation period. 18 It is therefore necessary to examine the findings of the Master as to the time at which the de facto relationship ended, as this conclusion has implications for the manner in which the substantive claim was approached.

When did the de facto relationship end? 19 The Master found that the relationship ended when the appellant was sentenced to a substantial prison term on 25 June 1993. However, there was evidence which established that after that date the respondent had continued to regularly visit the appellant in gaol and that correspondence between the parties indicated that the respondent's sentiments of love and affection continued. The Master based his decision upon the nature of the separation of the parties, finding that as it precluded the parties from living together for a substantial period of time, it was of a different nature than temporary separations such as travel or hospitalisation, which may often occur. 20 However, more than a mere physical separation is required for a de facto relationship to come to an end. The physical separation of the parties must be accompanied by an intention on the part of either partner to permanently end the relationship. 21 The decision at first instance of Cohen J in George v Hibberson (1987) DFC 95-054 indicates that to be separated in a legal sense, there needs to exist the requisite intention to separate. In that case the defendant had left the household she shared with the plaintiff in order to take 'time to work things out and to think about her relationship away from the plaintiff'(at 75,605). She denied having any intention of leaving the plaintiff permanently and gave evidence to the effect that they discussed reconciliation. Cohen J held that although courts must be careful not to equate marriage with a de facto relationship, it is of benefit when considering the question of how a relationship can cease, to look at the law relating to separation in marriage. He noted that the Matrimonial Causes Act 1959 referred to the parties as 'living separately and apart', and that this required both a physical separation and a 'destruction of the consortium vitae or matrimonial relationships' (at 75,608). His Honour cited Sugerman JA in McRae v McRae (1967) 68 SR 361 at 376, where it was said that : … physical separation of the spouses for a greater or less period often occurs in circumstances in which it could not be suggested that it is indicative of a severance of the marriage relationship. It is, no doubt, for this reason that in establishing a ground for dissolution dependent upon a breakdown of the marriage the legislation imposed a requirement that the parties should have lived 'separately', as well as that they should have lived 'apart', for the requisite period. In the circumstances of physical separation as I have mentioned the spouses may be taken to recognise mutually the continued subsistence of the marital relationship and to intend definitely to resume the closer association of a common life as soon as the occasion or exigency which has led to its temporary interruption has passed. 22 Cohen J cited the Full Court in Pavey v Pavey (1976) FLC 90-051, where it was said that: …'separation' means more than physical separation - it involves the destruction of the marital relationship… Separation can only occur in the sense used by the Act where one or both of the spouses form the intention to sever or not to resume the marital relationship and act on that intention, or alternatively act as if the marital relationship has been severed. 23 His Honour concluded that emphasis was laid upon the fact that 'mere physical absence… will not amount to separation and living apart unless there is an intention to separate or a party acts as if the marital relationship has ceased'. (at 75,608). He also noted that it was not to be assumed that principles applicable to marriages are immediately applicable to de facto relationships. He added: The use of the words 'living or having lived together as husband and wife on a bona fide domestic basis' suggest a degree of permanence which will not cease merely because one party separates for the purpose of going on holidays or going on business. Nor would it cease if, after an argument, one party moved out or stayed elsewhere for a short while or went home to his or her family, if there was an intention to return and if there was a reasonable indication of that intention'. (at 75,609) 24 The determination of whether on separation one party intended that there should be an end of the relationship or whether the parties acted in such a way as to indicate the existence of such an intention, is a question of fact. 25 Whilst the judgment of Cohen J was overturned on appeal in Hibberson v George (1989) 12 Fam L R 725, the Court of Appeal did not remark adversely on his Honour's views in relation to the separation. Indeed, Mahoney JA stated (at 740) that: The essence of the present relationship lies, not in law, but in a de facto situation. I do not mean by this that cohabitation is essential to its continuance: holidays and the like show this. But where one party determines not to 'live together' with the other and in that sense keeps apart, the relationship ceases, even though it be merely … to enable the one party or the other to decide whether it should continue. [emphasis added] 26 Although Mahoney JA was in dissent, the appeal was allowed on an unrelated issue and no comment was made on the subject of separation by either Hope JA or McHugh JA. 27 The general exceptions to a physical separation are those such as holidays, separation for business purposes and for reasons of ill health, see McLaughlin v Saillard & Ors (1990) DFC 95-082. Where the parties have a period apart to consider the future of the relationship, it appears that this may bring the relationship to an end, as the courts appear to have taken the restrictive approach indicated by Mahoney JA in such situations. Young J stated in Jenkin v Ellis (1990) DFC 95-086 at 76,154 that 'normally, a de facto relationship will come to an end if the fact of cohabitation ceases'. 28 In the present case, however, the parties were not taking a period apart to consider the future of the relationship. In addition to physical separation, a determination by one or both of the parties to end the relationship is necessary, and therefore de facto relationships survive separations such as holidays, business trips and hospitalisation. Here the parties were previously physically separated for a period of six months when the appellant was imprisoned in 1989, however there was no indication that the parties intended to end the relationship and the Master did not view it as operating to do so. Although a period of six months is significantly longer than many holidays or business trips, the approach of the authorities discussed focuses not on the length of the separation but on its nature and the intent of the parties. It can be argued that, as in hospitalisation and business trips, a period of imprisonment is involuntary and not accompanied by the necessary intention to end the relationship. 29 At the time of the appellant's imprisonment, and indeed his sentencing in June 1993, there was evidence that both parties intended that the relationship would continue and cohabitation would resume upon the appellant's release. There was clear evidence that the relationship had ended in March 1995, however prior to that time there is no such indication. If the relationship is accepted as having continued until March 1995, the appellant's original Statement of Claim was filed only 3 months out of time, a very different scenario to the Master's conclusion that it was filed 2 years out of time. It may be that the relationship came to an end earlier then March 1995, perhaps in the last six months of 1994. Even if this be the case, the delay is much less than 2 years. 30 In my opinion, the Master's discretion under s 18(2) of the Act miscarried and his refusal of leave should be set aside. In re-exercising the discretion, leave should be granted because the delay is relatively short and was sufficiently explained by the appellant. There were obvious difficulties in communication with his solicitors from gaol, which slowed the commencement of proceedings. Furthermore, it is clear that greater hardship would be caused to the appellant if leave was not granted than to the respondent if leave was granted.

The credibility findings of the Master 31 The Master made a number of findings about the credit of the witnesses before him. 32 With respect to the appellant, the Master stated that: I have reached the conclusion that the truth means nothing to the plaintiff; that he was prepared to say in his evidence whatever he thought would best suit his case; and that at times he was deliberately lying. 33 The Master also found that there were a 'number of unsatisfactory aspects' in the respondent's evidence. He found that she was clearly 'bitter and vindictive in her attitude towards the plaintiff' and noted that she had described both the appellant and his father as 'vultures'. He also found confusing and unsatisfactory her explanation of a statutory declaration in which she noted that she would repay the sum of $24,000 to the appellant's father, which was borrowed by the appellant for renovations on the Miranda home. 34 With respect to the appellant's father, Mr Roy Howland, the Master approached his evidence with 'a considerable degree of caution'. He noted that this was especially true in light of the fact that Mr Howland: … [was] seventy-one years of age, stated that he suffered a cerebral infarct (which he described as a "stroke") about eighteen years ago, and that in consequence he had what he described as "very, very erratic memory recall". 35 Overall, where the only evidence was that of unsupported oral assertions made by one party and denied by the other, the Master preferred the evidence of the respondent to that of the appellant. 36 The appellant made a number of submissions as to the existence of error on the part of the Master in his findings on the credibility of witnesses. He asserted that the Master's cautious treatment of Mr Roy Howland's evidence was not based on medical expertise and was therefore in error. He also contended that Mr Peter Waters, and indeed himself, should have been accepted as expert witnesses due to their experience in the building industry. With respect to the Master's assessment of the appellant's credibility, the appellant contended that a hearing problem meant that his demeanour would appear rude to the Master and also that the Master was generally biased against him. No basis for any such bias was given. The respondent submitted that all the findings of the Master were open to him on the evidence, and that there was no appellable error demonstrated. 37 While the appellant seeks to challenge the credibility finding against him and his witnesses, it cannot be shown that the Master failed to use or palpably misused his advantage. As such, the court must determine the appeal on the basis of the Master's preference for the evidence of the respondent, albeit one which was considerably qualified. The distribution of property under the Act 38 The property at Miranda in which the appellant is claiming an interest was acquired in October 1989. It was purchased for $190,000, of which the respondent provided $133,000, the proceeds from the sale of her former matrimonial home. A mortgage for $37,000 was obtained from St George Bank, the respondents parents (who did not give evidence or provide affidavits) provided something in the region of $10,000, and in what was allegedly the repayment of a loan made by the respondent to the appellant in 1988, the sum of $10,000 was provided by way of a cheque from the appellant's father. 39 The property was valued in 1999 for the purpose of the proceedings. The valuation obtained by the appellant placed the market value of the property at that time at $480,000, while the valuation obtained by the respondent placed it at $430,000. 40 The appellant asserted that he had made very substantial contributions, both financial and non-financial, to the acquisition, conservation and improvement of the Miranda property. There was no documentary evidence produced which established such contributions, however it was conceded by the respondent in cross-examination that the appellant had made direct financial contributions totalling at least $5,000 towards the improvements to the property. It was also agreed by the respondent that the appellant had shared in responsibility for the mortgage payments ($345 per month) when he was residing with her and, that during the period that the respondent was on maternity leave, the appellant met the entirety of the mortgage repayments. The Master also noted however, that the respondent was entirely responsible for all living costs whilst the appellant was incarcerated in 1989 for six months and from the point of his arrest in 1991 onwards. The respondent also admitted that the total direct financial contribution of the appellant was in the amount of $15,000. 41 Annexed to the affidavit of Mr Roy Howland, the appellant's father, was a Statutory Declaration of the respondent (sworn 8 March 1995) which stated that: The [Miranda property] is the family home of I, Lalla Ellis, and my sons, Tyson and Kahl. It will remain so until I, Lalla, decide to sell the property.

If that decision is made and when that event takes place, I, Lalla Ellis, will pay you, Roy Howland, the total sum of $24,000 only. This will be exact repayment of money borrowed by your son, John, for renovations on the home at the above address. No other encumbrance can be claimed on the property.

42 The respondent claimed that the Statutory Declaration was written under pressure from the appellant who she said had told her that if she so declared, he and his father would not harass her. As noted above, the Master found her explanation 'confusing and unsatisfactory', however he did not make a specific finding as to its truthfulness.

43 It also appears that it was conceded by the respondent that the appellant had made 'very substantial contributions by way of his own physical efforts and activities towards the conservation and improvement of the house property'. It is relevant that the appellant's professed trade is that of carpentry and joinery. The Master held, however, that this work was not greater than the indirect contributions made by the respondent to the household. 44 The Master also found that without any supporting documentary material, he was not persuaded that the various items of expenditure asserted by the appellant to have been made by him to subcontractors and labourers or the asserted value of the improvements performed either by the appellant, or at his expense, were worth the various amounts he claimed them to be. The Master noted that in so deciding, he had not overlooked the evidence of Mr Peter John Waters, a friend of the plaintiff and builder by occupation, who had estimated that some $200,000 worth of work had been done to the property, albeit in a 'higgledy-piggledy' fashion. 45 Overall, the Master found that in light of the fact that the respondent had been responsible for all the expenses related to the property and the household since the appellant's imprisonment in October 1991, when determining whether or not to grant leave to make an application out of time, he was not satisfied that greater hardship would be caused to the appellant than to the respondent if the application were not granted. However, as discussed above, in my opinion that ruling was in error and I would allow the application to extend time. Therefore, the appellant's claim in respect of his contributions toward the property must be determined on the merits. This may be achieved by accepting the Master's credit findings and by examining the aspects of the claim which are undisputed or able to be established by evidence other than unsubstantiated oral assertions on the part of the appellant. 46 On the evidence accepted by the Master and his findings, the appellant's financial contribution towards the property was between $15,000 and approximately $40,000. This represents between 8 and 20% of the original purchase price of the property. It is also undisputed that the appellant made significant contributions in the form of labour and expertise towards the improvement and expansion of the house. However, the respondent, in addition to her financial contributions, played a significant role as homemaker, which to a large extent negates the appellant's non-financial contributions to the property. 47 It is impossible to be more exact as to the contribution of the appellant. However, I am mindful that a retrial would be contrary to the interests of the parties given the history of the litigation. Doing the best I can with the evidence and the relevant findings of the Master, I would conclude that the appellant is entitled to approximately 15% of the subject property and the payment by the respondent to the appellant of $70,000 would be a just and equitable adjustment of the respective contributions of the parties under s 20(1) of the Act. 48 The following orders are therefore proposed: (1) Appeal allowed.

(2) Each party to pay his and her own costs of the appeal.

(3) Orders 1, 2 and 4 made by the Master on 26 November 1999 be set aside. Orders 3 and 5 are confirmed.

(4) Leave granted to the appellant pursuant to s 18(2) and (3) of the Act to apply out of time.

(5) Declare that pursuant to s 20 of the Act the respondent pay to the appellant the sum of $70,000, which sum, and any interest hereafter provided for, to be charged upon the lands comprised in the subject property at 12 Jinatong Street, Miranda until payment.

(6) The sum of $70,000 shall not bear interest if paid within 3 months of this judgment.

(7) In the event of the respondent not paying the said sum of $70,000 within 3 months of this judgment, then liberty to apply be reserved to the appellant for the appointment of trustees for the sale of the subject property for the purpose of paying the appellant the said sum of $70,000. 49 The parties are asked to bring in agreed Short Minutes of Order giving effect to these orders within 7 days or such longer time as the court may permit. They should not feel confined to the wording of the proposed orders mentioned above but may add any words which will assist the mechanics of completing the orders proposed by the court.

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