Joyce v Delany [2004] VSC 338

Supreme Court of Victoria|2004-09-08|Before: Williams J

DOMESTIC RELATIONSHIPS - Adjustment of property interests - Application for leave to commence proceedings out of time - Comparative hardship - Exercise of discretion - Significance of delay - Property Law Act 1958 s 282(2), s 285.

There are two defendants to the application. It was common ground that the first defendant and the plaintiff had been "domestic partners" involved in a "domestic relationship", within the meaning of those expressions in s 275 of the Act, before they ceased living together on 1 January 2000. The second defendant is the registered proprietor of a property at 15 Erica Street Prahran ("the Prahran property") which the plaintiff asserted was to be treated for the purposes of the application as an asset of its controller, the first defendant.[1] The defendants did not dispute this assertion.

S 285 of the Act relevantly provides as follows for the adjustment of the interests of domestic partners in property:

"285. Order for adjustment (1) A court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to -

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

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

(i) a child of the partners;

(ii) a child accepted by one or both of the partners into their household, whether or not the child is a child of either of the partners; and

(c) any written agreement entered into by the domestic partners.

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

S 281 of the Act permits the Court to make an order under s 285 if the domestic partners have lived together in a domestic relationship for a period of at least two years, or, otherwise, in certain specified circumstances. Although its actual length was a matter in dispute, it was common ground that any relevant domestic relationship between the plaintiff and the first defendant had lasted for at least two years and nine months before the plaintiff left the first defendant's apartment on 1 January 2000.

S 282 sets the time limit for the making of an application under s 285:

"282. Time limit for making applications (1) If domestic partners have ended their domestic relationship, an application to a court for an order under this Division must be made within two years after the day on which the relationship ended.

(2) A court may grant leave to a domestic partner to apply for an order at any time after the end of the period referred to in sub-section (1) if the court is satisfied that greater hardship would be caused to the partner applying if that leave were not granted than would be caused to the other partner if that leave were granted."

Under s 282 (1) the plaintiff was required to commence proceedings before 31 December 2001. She did not do so until 17 February 2004, some two years and one and a half months out of time.

A two-stage approach is to be adopted by the Court dealing with an application for leave under s 282(2). It should first weigh up the respective hardship to the parties and then consider whether to grant leave in the exercise of its discretion: Harris v Harris[2]; Moore v Clarke[3].

In Harris v Harris, Gillard J considered the meaning of the word "hardship" in s 282(2) stating:

"In my opinion the word `hardship' is a well understood word and nothing is gained by substituting other English words for it. The sub-section requires the court to consider the relative hardships depending on the outcome of the application.[4]"

His Honour went on to adopt the words of Fogarty and Nygh JJ in In The Marriage of Neocleous [1993] FamCA 44; (1993) 16 Fam LR 557 at 561 where they said:

"Hardship is caused by the inability of a person to pursue a claim which in the circumstances of the case appears on the prima facie evidence to be substantive and not merely trifling."

In support of her application for leave, the plaintiff relied upon her affidavits sworn on 20 April 2004 and 23 June 2004, respectively. The defendants opposed the application and relied upon affidavits sworn by Nathan Kuperholz, their solicitor, on 15 June and 25 June 2004, respectively, as well as the first defendant's affidavit sworn on 15 June 2004.

It was common ground that the parties lived together in the first defendant's apartment in "The Domain" in Albert Road, Melbourne, during the period of at least two years and nine months before they separated on 1 January 2000.

It was also common ground that the first defendant gave the plaintiff a key and car pass relating to the apartment in about March 1996. The parties differed as to the significance of these facts. The plaintiff alleged that they commenced living together "as though [they] were husband and wife" at that time, after having met during the course of the Spring Racing Carnival at Flemington in 1995. The first defendant alleged that their relationship was "close" at that stage and that he had agreed that she could move into his apartment. He also deposed to the plaintiff having lived in his apartment from late September 1996 to the end of 1999 and described the relationship as having lasted for less than three years.

The first defendant was at all times a licensed real estate agent and the managing director of Kay & Burton in Melbourne. He had formerly been married. According to the file of Marshalls and Dent, solicitors, which was in evidence, the plaintiff had informed the solicitors that the first defendant had been born on 7 November 1950. If so, he was 45 years old in March 1996. The plaintiff asserted that he was a wealthy businessman and the owner of a number of properties. He did not deny the allegations but no details of his income or assets were in evidence.

At the commencement of their relationship, the plaintiff was the proprietor of a property in Westbury Grove, East St Kilda which she let whilst living at the first defendant's apartment. It would appear that she was 27 years old in March 1996, as her date of birth was recorded as 23 July 1968 in the Marshalls and Dent file. She was employed as a sales manager by Jestset Corporate Travel, earning approximately $55,000 per annum between 1996 and May 1998. She ceased work for Jetset after difficulties arose when the first defendant suggested that they travel overseas in about February 1998. She maintained that she had sought six weeks' leave, that her employer had refused her request and that, accordingly, she had decided to resign. She received a redundancy package of $17,000 from Jetset in April 1998. She resumed working in May 1999 as a sales manager for Esanda Fleet Partners. No details of her salary or conditions were provided by the plaintiff in relation to the Esanda job.

The plaintiff described her role as that of a home-maker and companion to the first defendant. She stated that she had purchased food and met various expenses of their joint household between 1996 and May 1998. She also alleged that she had undertaken all domestic responsibilities in the household, acted as hostess to the first defendant's friends, clients and family, organised social functions and even participated as a "dummy bidder" in auctions with which he was involved. She claimed that she had contributed towards the first defendant's health and wellbeing, by organising his exercise and change of diet, as well as by assisting him in his business interests. She asserted that she had also helped with the care of the first defendant's daughter, Chloe. In addition, she claimed to have visited his mother and elderly aunts and to have come to their aid when he was unavailable because of work commitments.

In his affidavit material the first defendant disputed the plaintiff's allegations as to the extent of her contributions.

The plaintiff responded to some of the first defendant's counter-allegations. Counsel for the defendants sought to rely upon her failure to address other allegations made by the first defendant as a concession as to the truth of his assertions. Suffice it to say that there is significant dispute between the parties as to many of the relevant facts.

It was however common ground that, in mid 1997, the plaintiff became pregnant and that she subsequently underwent an abortion, after discussing the pregnancy with the first defendant who told her that he did not want another child at that time. She alleged that he had told her that the termination would only strengthen their relationship and that, if they did marry in the future, they could discuss the question of children. The first defendant alleged, on the other hand, that he had told the plaintiff that marriage was "totally out of the question" and that he did not want another child.

By about September 1999, the relationship was on the wane. The plaintiff and the first defendant discussed the plaintiff's future accommodation and she discovered the Prahran property.

The plaintiff alleged that the first defendant offered to buy the Prahran property for her. The first defendant gave a different account. He asserted that they had agreed that he would arrange for the property to be purchased and would allow the plaintiff to remain in possession as a tenant for three years, with a three year option and a right to a 50% share of net profit on its sale. The first defendant claimed that it had been agreed that no rental would be paid by the plaintiff, despite her status as tenant under the documentation relating to the arrangement between them.

It was common ground that the Prahran property was ultimately purchased in the name of the second defendant. The plaintiff and the second defendant executed a document entitled "Profit Sharing Agreement in respect of 15 Erica Street, Prahran" and a written undated Residential Tenancy Agreement in relation to it. However the plaintiff alleged that the transaction was a sham, structured for the purpose of the arrangement and for the financial benefit of the first defendant. Her interpretation was contested by the defendants. They maintained that the transaction was genuine.

The plaintiff contributed no part of the purchase monies and never paid rent in relation to the Prahran property. The first defendant alleged that the plaintiff had informed him, in mid November 1999, that she had obtained legal advice to the effect that the benefits to her of six years' rent free accommodation and the profit sharing arrangement were "broadly in line with what [she was] legally entitled to". The plaintiff contested the allegation and deposed that she was never satisfied with the arrangement as documented.

The plaintiff lived at the Prahran property after leaving the first defendant's apartment on 1 January 2000. She alleged that she continued to meet the first defendant for dinner after she left the apartment and that, in March 2000, he took her on a week long trip to Dubai during which they had sexual relations. He took her with her family and friends to the "Flower Drum" restaurant to celebrate her birthday on 23 July 2000.

At some point of time in 2000 the plaintiff asked the first defendant to provide her with written confirmation of her entitlement to sublet the Prahran property. By a letter dated 13 September 2000, allegedly written on behalf of the second defendant, the first defendant provided the requested confirmation. The plaintiff asserted that she considered that such a letter would give her some rights over the Prahran property. The first defendant, on the other hand, contended that the letter was provided in the context of the actual relationship of landlord and tenant existing between the plaintiff and the second defendant.

The plaintiff claimed that she raised the issue of her ownership of the Prahran property with the first defendant in the course of a telephone call at around Christmas time in 2002. The first defendant asserted that no such discussion ever occurred and that the plaintiff had rung him on about 24 December 2002 to wish him well over the festive season.

The plaintiff did not exercise any option for the renewal of the lease for a further term commencing on 17 December 2002.

In March 2003 the first defendant advised the plaintiff that he wished to sell the Prahran property and suggested that it be valued for the purposes of sale. He alleged that he did so in light of the fact that he had not heard from her since 24 December 2002 and because she had not exercised the option for a further three year term under the lease.

The plaintiff alleged that she had expressed surprise at the first defendant's suggestion that the Prahran property be valued for auction. She maintained that she then began to worry about her legal position and sought advice from Marshalls & Dent. She instructed the firm to write to the first defendant. The solicitors' letter, dated 7 April 2003, advised of the plaintiff's anxiety "to effect an amicable settlement without recourse to lengthy and costly litigation" and sought a "round table" conference in order to settle the matter. The solicitors foreshadowed legal proceedings in the event of no response.

The solicitors' file revealed that, on 3 June 2003, Marshalls & Dent wrote to the plaintiff, confirming the importance of commencing proceedings forthwith and informing her that, otherwise, she might not obtain the leave of the Court to institute proceedings in relation to her claim.

In the meantime, the solicitors had registered a caveat, dated 4 April 2003, in relation to the Prahran property, claiming that the second defendant held its interest as trustee for the plaintiff "pursuant to a constructive an/or implied trust".

Eventually, on 17 February 2004, a County Court proceeding was issued seeking relief under Part IX of the Act, as well as equitable relief recognising the plaintiff's entitlement as beneficial owner of the property. The County Court proceeding was discontinued by the plaintiff on or about 25 February 2004, after correspondence between the solicitors for the parties in relation, inter alia, to the unsuitability of the limited jurisdiction of the County Court in the context of a dispute as to ownership of the Prahran property which was arguably worth more than $200,000.

Counsel for the defendants submitted that the plaintiff had not established any sufficient hardship because she had not established a prima facie case in relation to her claim under s 285.

He mounted a strong attack on her credibility, arguing that her affidavits were inconsistent in places and that she ought not be believed in relation to a number of her allegations. However, without the benefit of oral evidence, I was not persuaded by his submissions to reject the plaintiff's allegations outright as false. In my view, the plaintiff's material was not obviously contradictory, despite arguable inconsistencies.

Counsel for the defendants also submitted that the plaintiff was required to establish that she had made substantial contributions of the type referred to in s 285(1)(a) or (b) because of the operation of s 280(b)(ii) or s 281(2)(b)(i) of the Act. I did not find his arguments in this regard persuasive. He subsequently conceded that the provisions of s 280(b)(ii) related to the situation in which the partners to the relationship had not lived together in Victoria for at least one third of the period of their relationship. S 281(2)(b) deals with the particular situation in which the relationship has not lasted for the two years required by s 281(1).

The significance and value of the plaintiff's alleged financial and non-financial contributions must be assessed for the purposes of s 285 in the context of the circumstances of their relationship; see: Conn v Martusevicus[5]; Robertson v Austin[6]; Lovegrove v Richards[7]. The length of the relationship is a relevant factor; see: Hughes v Curwen- Walker[8].

It is difficult to assess the value of any financial contributions by the plaintiff made to benefit of the first defendant during the period in which she was working in paid employment. Indeed, the nature, extent and relative value of any contributions by the plaintiff were in dispute. The first defendant expressly reserved the right to provide more detailed evidence to meet her claims in the event that she were to succeed in obtaining the leave sought in this application. Although she did not reply to some of the assertions and counter-allegations made by and on behalf of the first defendant and despite some arguable inconsistencies in her materials, I was not persuaded as a result that I ought to totally accept the version of events contended for by the defendants. Only at trial will the allegations of the parties be able to be fully tested and compared.

In my view, it is, in any event, open on the evidence to conclude that the plaintiff in this case has established a prima facie case that her non-financial contributions to the first defendant benefited him personally and professionally. The parties had some association between about November 1995 and perhaps even as late as July 2000, when the first defendant celebrated the plaintiff's birthday with her and members of her family. During some part of that period they lived, travelled and socialised together and she allegedly acted as a hostess when he entertained his family, friends and business associates.

Counsel for the defendants argued that the plaintiff had obtained considerable financial benefits as a result of the relationship, offsetting any contributions she might have made. He said that her claim should be characterised as trifling, rather than substantive. He referred to the rental received in relation to the property let whilst she was enjoying rent free accommodation at the first defendant's apartment. He also referred to her present ownership of a Southbank apartment, generating rental income. He mentioned gifts made to her by the first defendant and the holidays they took overseas. He submitted that, although she had claimed that her career had been impeded by her contributions towards the welfare of the first defendant, she had failed to adduce evidence of her income and prospects in relation to her employment with Esanda. Such matters were peculiarly within her own knowledge and highly pertinent to her application. He argued that she had voluntarily executed the written agreement relating to the Prahran property, under the amended terms of which she had not paid any rental for her accommodation after leaving the first defendant's apartment. He contended that, in any event, she could pursue elsewhere a claim for recognition of an equitable interest in the Prahran property.

However, the evidence in the application does not satisfy me that the alleged benefits to the plaintiff in the form of gifts, the opportunity to travel, the provision of accommodation, the receipt of rental or her possible equitable interest in the Prahran property offset the alleged benefits to the first defendant resulting from her alleged contributions.

At this point, even if the plaintiff's allegations were accepted as true, I would be unable to estimate the quantum of any amount that might be awarded to her by way of an interest in the Prahran property or otherwise. In my view there is insufficient evidence as to the respective assets of the parties and the relative value of any contributions made upon which to base any necessary calculation. I bear in mind in this regard the first defendant's foreshadowed provision of more detailed material in response to the application.

Taking into account the alleged contributions of the plaintiff and the first defendant and the alleged circumstances of their relationship, I am of the view that the plaintiff has established a substantive prima facie claim for relief under s 285 of the Act. If denied the opportunity to pursue the claim, she would suffer hardship.

As to the alleged hardship to the first defendant, I note that the plaintiff has not contested a number of his assertions that he met household expenses to which some of the documents he alleged were unavailable to him might relate. Further, the first defendant has not specified what documentary evidence he would have had in his possession had proceedings been commenced at any time within the two year period ending on or about 1 January 2002.

The first defendant claimed to have been disadvantaged by the death of the aunts whom the plaintiff claimed to have visited. One aunt had died in June 2004. However, the other aunt who died in June 2001 would have been unavailable had the plaintiff brought her application within time and between the date of the aunt's death and 1 January 2002. It was also put by the first defendant that, because his mother was 92 years old, it would be difficult to obtain her evidence as to the alleged attention paid to her by the plaintiff. However, if the plaintiff were to give evidence, she could be cross-examined with regard to her assertions. Further, it was not asserted that no other evidence could be adduced as to the extent of the plaintiff's relationship with the first defendant's mother and elderly aunts.

On balance, in my view, the plaintiff would sustain greater hardship if denied the opportunity to bring a claim under Part IX of the Act than would result to the first defendant if leave were granted.

The defendants urged the Court to refuse the relief sought in the exercise of its discretion, even if the "balance of hardship" favoured the plaintiff. They argued that:

(a) the plaintiff had not adequately explained her delay in commencing proceedings;

(b) she could rely upon proceedings seeking equitable relief in relation to the Prahran property; and

(c) she had benefited from the relationship by receiving rental income, free accommodation and gifts from the first defendant and had benefited as a result of subsequent relationships.

(a) Delay

In McGibbon v Marriott[9] Warren J (as her Honour then was) considered the applicable principles in relation to the exercise of the Court's discretion to grant leave under s 282(2). Her Honour noted that there was no express reference in the sub-section to the provision of a satisfactory explanation for the delay in instituting proceedings. Referring to a period of some three years which had elapsed since the date by which proceedings should have been commenced in the case before her, her Honour expressed the view that it was necessary that she be satisfied that there was a reasonable explanation for the delay. She noted the somewhat different view of Gillard J in Harris v Harris[10], suggesting that perhaps the shorter period of delay in that case (one year) might have explained why his Honour had rejected any requirement for an adequate explanation of delay.

Counsel for the defendants relied in this regard and more generally in support of his argument upon the decision of Bryson J in the Supreme Court of New South Wales in Beavan v Fallshaw[11] relating to the equivalent legislation in that state[12]. In Beavan v Fallshaw Bryson J declined to exercise the necessary discretion to extend time to a plaintiff, in circumstances in which he considered that her delay tended to confirm that it had been her view that there was no need for a property adjustment between the parties.

The plaintiff in this case explained her delay on the basis that she had trusted the first defendant to provide for her accommodation in accordance with an alleged agreement between them. After becoming concerned about her situation, she had negotiated with him and had wished to resolve matters without litigation.

The defendants responded that the explanation was unconvincing, in light of the history of the negotiations following the parties' separation on about 1 January 2000. They submitted that the plaintiff's solicitors had emphasised to her the importance of minimising any delay and argued that the plaintiff had failed to heed that advice.

If the plaintiff's version of events were to be accepted, her failure to commence proceedings before March 2003 would, in my view, be explicable on the basis of her belief that she was the beneficial owner of the Prahran property. Further, once she became aware that the first defendant contested her version of the agreement, it would not have been unreasonable for her to have postponed litigation in the hope of negotiating an acceptable outcome with him.

The plaintiff's delay, in all the circumstances, does not convince me that she should be refused the leave she has sought.

It is not clear from the evidence adduced in this application that the plaintiff would succeed in obtaining judicial recognition of any equitable interest in the Prahran property.

Accordingly, I am not persuaded by the argument as to the availability of equitable relief that I should refuse to exercise my discretion in relation to the grant of leave in the plaintiff's favour.

In Beavan v Fallshaw[13] Bryson J took it into account that the plaintiff had left the relationship with assets estimated by the defendant as being worth some $23,000. She had not provided evidence as to their value, although his Honour took the view that that matter was one peculiarly within her own knowledge[14]. He refused to exercise his discretion in the plaintiff's favour in all the circumstances which included delay that he viewed as indicative of the plaintiff's assessment of the weakness of her own claim.

Although the first defendant in this case made apparently undisputed allegations that he had made a number of gifts to the plaintiff, the facts in Beavan v Fallshaw are different and the parties' respective contributions must in every case be considered in the context of the circumstances of their particular relationship. I have taken into account the receipt of rental and the free accommodation enjoyed by the plaintiff whilst living at "The Domain". However, as I have previously said, the limited extent of the evidence in the application for leave restricts my ability to assess the relative value of the plaintiff's contributions in all the circumstances.

The defendants' allegations in relation to the receipt of benefits by the plaintiff as a result of subsequent relationships were non-specific and the plaintiff denied receiving valuable gifts from any third parties. Further it was also not established by the material that the plaintiff was benefiting from her residence in London.

The evidence as to the alleged benefits to the plaintiff during and after the relationship does not convince me that she should be refused leave under s 282(2) of the Act.

Having been persuaded that the hardship to the plaintiff resulting from the refusal of leave would outweigh any hardship to the first defendant consequent upon the grant of leave, I am satisfied that I ought to exercise my discretion in her favour in all the circumstances.