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[2011] NSWSC 679
Supreme Court of NSW
2011-06-22
Bergin J
Original judgment source is linked above.
Judgment 1HIS HONOUR: This is the hearing of a notice of motion filed 4 April 2011, in which the plaintiff seeks leave to apply for orders for a property settlement under Part 3 of the Property (Relationships) Act 1984 ('the Act'). The proceedings themselves are the proceedings for adjustment of the parties' property interests under section 20 of the Act.
The background to the proceedings 2The parties were in the same class at primary school but they did not know each other at that time. They commenced living together in a defacto relationship in October 1993 when they were both 19 years of age. Their relationship continued at least until October 2005, although the plaintiff suggests that it went on until December 2005. 3Not unnaturally, the parties had little by way of assets at the commencement of their relationship. The plaintiff had a car worth $11,000, savings of $200 and he owed his father a debt of $8,000. The defendant had savings of about $200. 4In mid to late 1997, the defendant entered a competition hosted by a television network. The entry into the competition was made by telephone from the parties' residence at the time. As a result, the defendant, along with some 400 other chosen people, attended an event put on by the television company, where those chosen people would select a key out of a pot and see if the key would open a padlock on a door set up on a stage. The defendant was the 53 rd person to try to open the door. Her key worked and she won the prize, which was a new home at Glenmore Park, New South Wales and a puppy. The house was transferred into the defendant's name and the parties moved in and resided there until the conclusion of the relationship. 5The defendant left their home at the end of the relationship and the plaintiff has continued to occupy it.
The legal principles applicable to an application for extension of time 6The proceedings were commenced by a statement of claim, which was filed on 4 April 2011, many years after the separation of parties in 2005. 7Section 18 of the Act is in the following terms: "Time limit for making applications (1) If a domestic relationship has ceased, an application to a Court for an order under this Part can only be made within the period of two years after the date on which the relationship ceased, except as otherwise provided by this section. (2) A Court may, at any time after the expiration of the period referred to in subsection (1), grant leave to a party to a domestic relationship to apply to the Court for an order under this Part (other than an order under section 27 (1) made where the Court is satisfied as to the matters specified in section 27 (1) (b)) 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." (3) Where, under subsection (2), a Court grants a party to a domestic relationship leave to apply to the Court for an order under this Part, the party may apply accordingly." 8I n Selmore v Bull [2005] NSWCA 365 the President of the Court of Appeal had the following to say in respect of the section: "12. The applicable principles were not in dispute. Section 18 does not lay down a general time-limit, giving a discretion to the Court to extend it. Rather, it makes two different provisions. That found in subsection (2) is expressed in terms of power to grant leave to apply, not as a power to extend the primary time limit. As Bryson J. pointed out in Beavan v Fallshaw (1992) 15 Fam L R 686 at 687: This section appears... to treat an application for leave to apply as a normal event, calling for the Court to consider two stages, a finding relating to hardship and the exercise of discretion, without any special jealousy for the observance of the time limit or particular concern for it... In considering whether a Court should exercise of discretion conferred by statute to make an order in favour of some course, it is usual to consider whether there is a sound and positive ground or a good reason for making the order. Ultimately however it is not... legally necessary to define exactly the ground on which a discretion is exercised favourably to an applicant. 13. It is not mandatory that there be an explanation for delay ( Carlon v Carlon (1982) FLC 91-272). And later at paragraph 20: "The Master correctly recognized that section 18 (2) required him to consider the preponderance of hardship and also whether the residual discretion ought to be exercised in the applicant's favour. His reasons for a favourable exercise of discretion are found at pages 58 to 67 and 80." 9I also note that the question of delay is referred to by Bryson J. in the case of Beavan v Fallshaw to which the President referred in Selmore v Bull in these terms: "The section appears to me to treat an application for leave to apply as a normal event calling for the Court to consider two stages, a finding relating to hardship, and the exercise of discretion." At page 687 he said: " I regard it as relevant to the exercise of that discretion to consider what explanation for delay is offered, but my primary concern ought, in my opinion, to be whether the case put forward is an appropriate case for the plaintiff to apply for an order." 10In s 44 of the Family Law Act 1975 there is a similar section dealing with applications for leave out of time. Usefully, some of the decisions of the Family Court address the question of what will constitute hardship. In In the marriage of Whitford (1979) FLC 90-612, their Honours noted the following matters in respect of hardship: 1.The loss of the right to institute proceedings is not the hardship to which the sub-section refers, but the consequences of the loss of that right; 2.The hardship, if leave were not granted, implies that the applicant would probably succeed if the substantive application were heard on the merits; 3.If there is no probability of success the Court cannot be satisfied that hardship would be caused if leave were not granted; 4.If the probable result of the hearing on the merits is that hardship is not likely to be alleviated then the court cannot be satisfied that the applicant would suffer hardship if leave were not granted; and 5.The right or entitlement to be lost if leave is not granted should not be trifling or likely to be outweighed by the costs of the proceedings. However, it is not necessary to establish the loss must be a substantial one. 11Normally, in this jurisdiction, applications for leave have been dealt with at the final hearing for the substantive claim for relief under the Act. See the comments of Master McLaughlin in Michaelopouos v Pomering [2004] NSWSC 939 at paragraph [44]: "[44] But, in any event, the Court has a discretion under s 18 of the Act to allow proceedings to be instituted after the expiry of that two-year period. It is not usual for an application for an extension of that limitation period to be dealt with separately and before a final hearing of the substantive claim for relief under the Act. The factual matters relevant to the determination of such an application for extension may emerge only at the final hearing. In the instant case, during the course of oral submissions I stated that I did not propose to make a finding at this stage of the proceedings that the Plaintiff's claim under the Act is defeated by the expiry of a limitation period. I expressed the view that I considered this to be a matter which should be properly determined after the totality of the evidence has been presented at a final hearing of the proceedings." 12In the present case, the plaintiff has not followed that course and has instead brought a motion for leave. At the commencement of the hearing of the motion I suggested to the parties that they may wish to adopt that course but for a number of reasons they are not in a position to do so. Accordingly the matter has proceeded by way of the motion in the proceedings. 13This raises the question of the basis upon which the application should be conducted in these circumstances. 14There seems to be some difference of opinion in the Family Court as to how a similar matter should be approached in that Court. In Hedley v Hedley (2009) FLC 93-413 the matter was referred to both by Finn J and Boland J. Finn J said at [32] the following: " The authorities reveal some differences of opinion as to the appropriate manner for the conduct of proceedings for leave under s 44(3) (contrast, for example, observations in Whitford & Whitford (1979) FLC 90-612 at 78,143 with observations in Neocleous & Neocleous (1993) 92-377 at 79,914 and 79,917-918). Nevertheless, it can be accepted that the authorities establish that such proceedings are not intended to be the final hearing of the property (or maintenance) matter." 15Boland J said at paragraph [127]-[130] the following: "[127] The procedure to be followed in an application under s 44(3) and the consideration of what is meant by "hardship" in s 44(4) are the subject of well-known authority. The authorities have consistently recognised, whilst an application under the section is not a matter of practice and procedure, it should be summary in character (see Neocleous & Neocleous (1993) FLC 92-377 and the cases there cited at 79,914). [128] In Whitford & Whitford (1979) FLC 90-612 the full court (Asche and Pawley SJJ and Strauss J) referred to the appropriate way for proceedings to be conducted. Having said they did not consider it necessary or desirable to lay down any definitive procedural rules their Honours noted the following:
Hardship 21The plaintiff only has his personal possessions and a car, whereas the defendant is registered as proprietor of the Glenmore Park home, has a car, some small amounts of superannuation and savings. 22In considering the question of hardship and any claim that will be foregone by the plaintiff if leave is not given to him to bring the proceedings, the treatment of way in which the home was won as a competition prize will have a substantial part to play in the outcome of the proceedings. 23The plaintiff's submissions referred to In the marriage of Zyk (1995) FLC 92-644. There the Full Court of the Family Court reviewed earlier cases and came to the view that the use of the term windfall was misleading and the appropriate term to be considered was contributions. Page 82,515 the Full Court said: "As previously mentioned, we consider that the preferred approach is to analyse these matters as a contribution rather than as a windfall. In the above cases there is no consistency in the use of either term. Chisholm J in this case ultimately treated it as a contribution by the husband, but he referred to both designations. On this appeal counsel for the wife put her submissions in the context of "windfalls" whereas counsel for the husband analysed it as "contributions". In common parlance a windfall is used to describe a chance or unexpected benefit which the people involved neither anticipated nor made any effort towards. The receipt of a substantial lottery prize may in general be referred to in that way. However, we doubt whether, for the purposes of the exercise under s 79, that is the correct analysis. The parties purchase a ticket and expend part of their earnings or capital for the express purpose of winning the prize or a prize. Whilst the chances of winning the major prize are remote, the reality is that somebody does and it is the expectation, or at least hope, of each entrant that he or she may be that person. It is not the product of any particular skill but it is the product of the chosen expenditure of a small sum of money. Contributions is, we think, the preferable description within s 79 because an acquisition of a prize contributes to the property of the parties. If it or part of it still remains in existence at the time of the trial or is represented by other then existing assets that will constitute part of the property to which s 79 will apply. If it has been disposed of in the meantime in other ways that may or may not have been a contribution to property or the family depending on the circumstances. The use of the term "windfall" creates conceptual difficulties within s 79 and can lead to inconsistent outcomes (see later). The approach of treating it as a contribution is consistent with the treatment of gifts from family as a contribution by or on behalf of that party: see Kessey and Kessey (1994) FLC 92-495. In our view, the critical question in such cases is - by whom is that contribution made? In the ordinary run of marriages a ticket is purchased by one or other of the parties from money which he or she happens to have at that particular time. That fact should not determine the issue. Where both parties are in receipt of income and where their marriage is predicated upon the basis of each contributing their income towards the joint partnership constituted by their marriage, the purchase of the ticket would be regarded as a purchase from joint funds in the same way as any other purchase within that context and would be treated accordingly: see Anastasio . Where one party is working and the other is not the same conclusion would ordinarily apply because that is the mode of partnership selected by the parties. The income of the working member is treated as joint in the same way as the domestic activities of the non- working partner are regarded as being for their joint benefit. In the essential sense this analysis is similar to that provided by the Full Court in Hauff and Hauff (1986) FLC 91-747 in discussing the rationale for treating superannuation benefits of one party, including contributions by the employer, as the product of joint contributions." 24In the facts of this case no ticket was purchased, although the initial phone call, which led to inclusion of the defendant in the selection process, was made on a telephone line for which they both paid. The defendant described the steps she took to win the prize in the following way (affidavit of Natasha Bailey sworn 8 June 2011): "18. I entered a competition via a 1900 number. The competition required me to watch Neighbours on Network 10 and listen to 2WS Radio . 19. At the end of each episode of Neighbours there was a display of contestants' names on the television screen. Upon my name appearing as a contestant I had to call 2WS Radio within 30 minutes to verbally register. 20. After registration I received a Registration Form in the mail, which I had to complete and return, and then I had to be present at Glenmore Park on the day of the competition draw." 25It was submitted by the defendant that the decision of Zyk is of little useful guidance because in that case the purchase of the ticket was from joint funds and was treated as a joint investment and in this matter both parties were working at the time. Further, the defendant submits the plaintiff's attendance during the course of the competition was due to the defendant's exertion, as was the selection of the key and the actions to unlock the padlock and secure the prize. Therefore, it is submitted, that the parties did not equally contribute to the competition and to its prize and to that end Zyk should be distinguished. 26It seems clear from the evidence that the parties' relationship at the time was one where they were both in receipt of income and where their relationship was one of a joint partnership. In that respect it can be said that they jointly contributed to the cost of the telephone call that was placed as part of the entry into the competition. 27The home would not have been won if the defendant had not gone to through the different steps to secure the prize but it did not require the application of any skill on behalf of the defendant to watch the television and listen to and register with the 2WS radio and then unlock the door on the stage. There is conflicting affidavit evidence as to who drove the parties to the competition venue. 28However, due to the nature of the parties' relationship at the time it does seem arguable that the principles in Zyk might apply. Thus, the defendant can be seen to have entered the competition for the parties' joint benefit and in that regard it should be considered as a contribution by both the plaintiff and defendant rather than as a windfall to the defendant. 29I note also that section 4B of the Lotteries and Art Unions Act 1901 provides that a lottery includes a game of chance that is conducted for the purposes of promotion of trade. Under that section a game of chance includes a game partly of skill and partly of chance. Therefore, the home that the defendant won could be regarded as a lottery prize and that lottery was entered into by use of a joint asset. This is a further argument that the principles in Zyk should apply. 30In Waring v Ellis (2005) 13 BPR 24,459 the plaintiff had won $500,000 in Lotto. Young CJ considered a number of authorities on claimants to lottery tickets and decided that the moneys used for the ticket were the plaintiff's on the simple basis that the plaintiff bought the ticket and the proceeds were his. However, in that case the plaintiff then deposited the proceeds into a joint account that he and the defendant opened, thus allowing the money to be used for joint purposes. Young CJ stated: "[14] ... in my view the evidence shows that Michael was the owner of the ticket and the person entitled to the $500,000. [15] This is really just a plain question of fact and the evidence is all the one way. However, counsel did refer me to some authorities. In Van Rassel v Kroon (1953) 87 CLR 298, Dixon CJ set out the general rule at 302, that is: The person in whose name the lottery ticket issues obtains the legal title to what is a chose in action. If he is the applicant he obtains custody of the ticket and is in a position to exercise whatever rights the ticket confers and deal with it as he chooses. ... [16] Two decisions of the Family Court also consider the matter. In Re Zyk (1995) 19 Fam LR 797, the Full Family Court had to deal with a case where 2 years into a marriage the husband won $95,000 in Tatts Lotto. ... This was followed by another Full Family Court decision in Re Brease (1997) 22 Fam LR 518. ... [17] These cases do not take the present matter any further because, as I have held, the moneys used for the ticket were Michael's; he bought the ticket and the proceeds were his. [18] I now must pause and look at the next part of the narrative with considerable care. This is because cases like Voulis v Kozary show that the conduct of a person in whose name a lottery ticket is immediately after the win, may show that in fact other people have beneficial interests in the proceeds." 31As has been discussed, the parties moved into the new home and generally shared the day to day living expenses. Shortly after the competition was won, the plaintiff purchased a second cocker spaniel, as a companion for the prize puppy, for $400. The parties acted as though they were joint beneficiaries of the prize. There is some conflict in relation to how much the plaintiff spent on furnishings and on upgrading the Glenmore Park property. The plaintiff states that he spent around $12,000, while the defendant puts this expenditure at about $5,000. 32After the defendant's departure, the plaintiff was responsible for caring for the dogs. In about 2009, one of the dogs died and in 2010, the plaintiff's parents took over the care of the other dog. However, the defendant states that while the plaintiff had the care of the dogs, she would occasionally return to the Glenmore Park property to check on them and ensure they were fed. 33Even if one concludes from their circumstances, that the acquisition of the property should be seen as a contribution by both of them, albeit with the plaintiff reluctantly accompanying the defendant, whether as driver or passenger in the car to the venue for the purposes of the prize selection, other factors remain to be considered. Importantly, the plaintiff has occupied the property rent free for a period of some 5 years and in the adjustment the value of that may have to be taken into account, noting that the plaintiff himself paid the rates and taxes in the period. 34Both parties sold the cars they owned at the start of the relationship and used the funds to purchase furniture or to buy a new car. The defendant owns a 2009 model Jeep Patriot motor vehicle with a value of approximately $20,000 to $25,000. In or about May 2000, the plaintiff purchased a 2000 model Toyota Hiace for approximately $29,000, which he used for his work as a courier. The Toyota was purchased using the plaintiff's own money and it is registered in the names of both the parties. The parties both used a 1995 model Mazda Astina 323, which was purchased by the plaintiff in 1998 for $20,000. $8,000 of the purchase price was from savings and the plaintiff obtained a loan to pay the balance. There is some dispute as to whether the savings were joint savings or the plaintiff's own. The defendant used the Mazda to go to work during the week and both parties contributed to its running costs. 35The defendant asserts that the parties had an understanding that between 1998 and 2001, the defendant would pay for their living expenses, while Michael saved his income, with the intention that those savings were for both parties. From mid 2001 to 2004, the parties jointly shared their living expenses. Between February 2005 and June 2006, the plaintiff left work to complete a full-time TAFE course in IT Network Management. The plaintiff states that he had saved $20,000 to cover living expenses during this period. The defendant states that those savings were from joint funds. 36After the defendant left, she sent the plaintiff an sms message stating, "I am not going to kick you out while you are at TAFE". When the defendant left the relationship, she had approximately $1,788.09 in a Commonwealth Bank account. She took with her only a suitcase and it seems the Mazda Astina. The remainder of the parties' property stayed at Glenmore Park. The defendant states that an amount of $17,000 cash savings was in the plaintiff's bank account, however the plaintiff denies this and states the figure was $15,800. 37The defendant states that when she left the Glenmore Park property she had concerns about the plaintiff's emotional stability and she believed he might cause harm to himself. The plaintiff admits he suffered from obsessive compulsive disorder, although he states that the extent of the disability is exaggerated by the defendant and her contentions are unsupported by qualified medical opinion. The defendant claims the disorder made their lives together difficult in both an emotional and in a practical sense. 38The defendant suggests she completed 95 percent of the household tasks such as cooking, cleaning and mowing the lawn. The plaintiff denies this and states that he cared for the dogs, mowed, emptied the garbage bins and made improvements to the garden, which included building a pergola. 39Over the term of the relationship, the plaintiff appears to have earned about 20 to 30 percent more than the defendant, except for a brief period in 1999, when their respective earning capacities were reversed. 40The parties took a number of holidays together in Queensland between 1997 and 2003. There is some disagreement about a holiday taken in 1997 that was either to the Gold Coast or to Lindeman Island. The defendant states that she paid $5,000 for them to stay at the Legends Hotel on the Gold Coast. The plaintiff states he contributed about $4,000 towards for a joint holiday to Lindeman Island and he states that the defendant paid for general expenses over the holiday. Around that time, the parties also took a driving trip to the Gold Coast. They used the Mazda Astina 323 for the trip, which was purchased by the plaintiff for about $20,000. The parties took other driving holidays in 2000 and 2003. It appears the costs of these holidays were shared fairly equally. 41Despite the contentions from both sides as to who paid for what, taking a global view, it is possible to see that the parties pooled their resources during the course of their relationship and treated the Glenmore Park property and the dogs as jointly owned property. 42The cars owned by the parties have been purchased one way or another from joint funds and these vehicles have a similar value. Therefore, they should not be included in the calculation. The parties' expenditure on holidays should also be discounted as they were for the parties' combined enjoyment. 43The defendant currently lives in a rented 3 bedroom property in Prospect with her 17 month old daughter. She has been living in rented accommodation since moving out of the Glenmore Park property. She has minimal savings. 44Since the plaintiff has had sole occupation of the Glenmore Park property, he has paid: (a) Council rates from 2006 to 2011 between $1,300 and $1,400 (b) Home and contents insurance of about $800 per annum (c) Water and sewerage rates of about $1,200 per annum (d) Gas rates of approximately $1,000 per annum (e) Care for the cocker spaniels of about $800 per annum and after June 2010, $400 per annum (g) Home phone of about $500 per annum 45The water rates and sewerage appear to be very high and these should be discounted. The cost for gas and the price of the home phone are not expenses that relate to the upkeep of jointly owned property. That leaves the other rates, the insurance and the care for the dogs at a value of approximately $14,850. As discussed, prior to the defendant's departure, the parties had joint savings of $20,000, which appear to have been used to support the plaintiff's studies. So, subtracting the plaintiff's contributions of $14,850 (discussed above) from $20,000, that leaves $5,150 of joint funds which the plaintiff received the sole benefit. 46There is argument as to the value of the furniture and effects at the Glenmore Park property. The plaintiff states the value is about $20,000 the defendant claims the value ranges between $40,000 to $50,000. An average between the two valuations is approximately $35,000. The average (disputed) value of the plaintiff's contributions to the purchase of some of those contents and upgrading the home is about $8,500. Subtracting the $5,150 discussed above, the plaintiff approximately contributed an additional $3,350 to the pool of jointly owned property. 47Therefore, subject to the plaintiff reimbursing the defendant for the benefit of living at Glenmore Park for the past five years, the parties' respective contributions were roughly equal. However, it should be noted that the authorities warn against the danger of double counting when considering whether a party that occupies another's property during the course of their relationship should pay notional rent. Generally the Courts take a holistic view of such contributions (for exceptions to this rule see De Gallo v Fredrikson (2000) 27 Fam LR 162 per Heydon JA at 173-174 and Zwernemann v Conaty (Bergin J, NSW Supreme Court, 13 April 1999, unreported ). 48Ipp JA in Bilous v Mudaliar [2006] NSWCA 38 discussed the general principle at [122]: "The respondent's provision of the family home was a contribution to her by the partnership, and appropriate weight should be accorded to it. It could be wrong in principle however to accord it weight and then require a notional rental in respect of the appellant's accommodation in the home to be deducted from the value of his contributions. That would be impermissible double counting." And at [167] his Honour stated: " More important, however, is that the registration of a particular property in the name of a party to a de facto relationship, and even the existence of an intention that that property be the sole asset of that party, does not preclude the court from making an adjusting order under s 20 of the Act based on contributions to that property by the other party to the relationship. The sole ground on which an adjusting order is to be made is what is just and equitable. The fact that property is registered in one party's name and intended to be the sole property of that party does not necessarily mean that it is just and equitable to ignore contributions made by the other party to the property or generally." 49However, once a relationship has concluded different considerations apply and each case must turn on its own facts. In this situation, although the defendant alone is shown as the owner on the title deed, the parties treated the property as a joint asset. The defendant told the plaintiff that she would not ask him to leave Glenmore Park while he was studying at TAFE and the defendant has paid the rates and bills for the property. 50It is generally accepted in relation to co-owners of a property, that each has an undivided interest in the whole: Wright v Gibbons (1949) 78 CLR 313 at 330. A co-owner in occupation is generally not liable to pay an occupation fee to other co-owners unless he or she claims an allowance for improvements or that person has excluded the other from the property. Except for the case of exclusion or ouster, the law treats a co-owner not in occupation simply as one who chooses not to exercise his or her legal right to occupy the property: McKay v McKay [2008] NSWSC 177 per Brereton J at [46] and Forgeard v Shanahan (1994) 35 NSWLR 206 , 221G. A co-owner can bring proceedings for possession on the basis of an exclusion being a legal wrong: Luke v Luke (1936) 36 SR (NSW) 310 at 314. 51Brereton J in McKay v McKay explained how the principle of exclusion operates and its application to relationship breakdowns in the following way: "[47] There is no little controversy as to what amounts to ouster, particularly in the context of a failed domestic relationship. On the one hand, authority establishes that a co-owner who obtains an apprehended personal violence order, or an order for exclusive occupation of the property under matrimonial laws, does not thereby exclude the other unlawfully and is not therefore liable for an occupation fee [ Biviano v Natoli (1998) 43 NSWLR 695 ]. On the other hand, there is authority that a domestic partner who, upon the breakdown of the relationship, vacates in circumstances that it is no longer reasonable to expect him or her to remain in occupation with the other, may be regarded as having been excluded and may be entitled to an occupation fee [ Dennis v McDonald [1982] Fam 63 at 71]. The first instance judgment of Purchas J, as his Lordship then was, in Dennis v McDonald was upheld in the Court of Appeal, although the present point was not an issue on the appeal. Though doubted by Young J in Chieco v Evans (1990) 5 BPR 11,297, it was endorsed by Beazley JA, with whom Stein JA agreed, in Biviano v Natoli (at 702). The controversy was referred to, but not resolved, by Bell J in Rupchev v Callow [2007] NSWSC 1097. [48] The jurisdiction of matrimonial courts - including this Court in exercise of its jurisdiction under the (NSW) Property (Relationships) Act 1984 - to grant injunctions and make orders for the exclusive occupation of property is not fault based. The touchstone for such an order is that it is no longer reasonable or practicable to expect the parties to continue to live together in the same property [see, for example, In the Marriage of V and CL Fedele (1986) 10 Fam LR 1069 at 1073 and the cases there cited]. Once that finding is made, the decision is made according to the balance of the convenience including, for example, where one party has the custody of children, whether it is preferable that that party or the other continue to occupy the former matrimonial home. The explanation offered by Powell JA in Biviano v Natoli - that the result in Dennis v McDonald is to be explained on the basis of one party effectively being responsible for the other not being able to live there - does not, with respect, sustain examination in that context. [49] It would be unfortunate if a party by vacating voluntarily, even in the face of a threatened application for exclusive occupation, could be regarded as having been excluded so as to claim an occupation fee, whereas one who was ejected by such an order after having opposed it, on considerations of balance of convenience but without fault, was not entitled to an occupation fee; yet that appears to be the effect of the current state of the authorities. [50] In matrimonial proceedings, this situation is typically addressed by taking into account, in evaluating the respective contributions of the parties for the purposes of discretionary property adjustment, the fact that since separation one has had the benefit of exclusive occupation of the former matrimonial home - either as a contribution by the other, or as a benefit already received by the party who remains in possession. [51] When, in cases such as Luke v Luke , it was said that an occupation fee was available only where there was a legal wrong, there was no jurisdiction to exclude a co-owner for personal reasons, despite the co-owner's legal rights; that jurisdiction, whether in the domestic violence provisions of the (NSW) Crimes Act 1900 or under matrimonial legislation, has been created since. When Long Innes J referred, in Luke v Luke , to the exclusion being a legal wrong, there was no difference between a positive (actionable) legal wrong, and the denial of a legal right. However, while a party who obtains an order for exclusive occupation or an APVO does no legal wrong by excluding the other, that other's legal rights as a co-owner to occupy are, nonetheless, denied. If a party is excluded by such an order, it can no longer be said to be a case of the party out of possession being one who merely chooses not to exercise his or her right of occupancy as a co-tenant; rather, he or she is prohibited from doing so. I, therefore, agree with Purchas J in Dennis v McDonald and Beazley JA in Biviano v Natoli , that the basic principle that a tenant in common is not liable to pay an occupation rent by virtue merely of his being in sole occupation of the property does not apply in the case where a matrimonial or similar relationship has broken down and one party is, for practical purposes, excluded from the family home. Upon breakdown of a domestic relationship, if it becomes no longer reasonable or practicably sensible to expect the partners to co-occupy the one property, the one who remains in possession may be taken to do so to the exclusion of the other, and to be liable to pay an occupation fee. At present, however, Biviano would seem to restrict that to a case in which the exclusion was not authorised by a court order - whether under matrimonial legislation or an APVO. [52] In this case, the plaintiffs left the property, in a sense voluntarily, in February 2002. However, I think it was not reasonable or sensible to expect them to continue to live there with the defendant. That involves no attribution of fault, simply that it was no longer sensible to expect all three to live there when there had been unpleasant, even violent, incidents between them. That would, on my view, entitle them to an occupation fee. But in this case, there is, in any event, more. The plaintiffs returned to the property once, but on their second attempt to return, found that the gates had been locked. The mere placing of a lock on a gate may not be enough to amount to exclusion [ Jacobs v Seward (1872) LR 5 HL 464 at 473]. However, in that case Lord Hatherley LC pointed out first, that there was no evidence as to whether the gate was kept locked or not - simply that there was a lock on it; secondly, that the defendant had allowed the plaintiff's son to enter when a request had been made; and, thirdly, that there was no evidence as to what was the object and intent of putting on the lock. In the present case, the evidence is that the gate was in fact locked. Moreover, the plaintiffs requested they be provided with keys and there was no response to their requests. In the course of this oral evidence, Mr McKay - when asked what he would have done had the plaintiffs attended and asked to be let in - said, "I would have made sure I had a witness and if they'd asked to come in, I'd have let them in, but I wouldn't have let them come in the place when I wasn't present because I was fearful of goods being taken and I would not have wanted them to come in unless I had somebody with me because of their actions and the way they had been behaving towards me". That intent is quite inconsistent with the rights of the plaintiffs as co-owners to occupy the property and to come to and from it as they please. [53] Thus, while it is true that in a sense they departed voluntarily from the property, that was in circumstances where it was desirable if not inevitable that one or other of the parties do so. After they departed, they were excluded physically by the lock on the gate, and that lock was accompanied by an intention inconsistent with their legal rights as co-owners. In those circumstances, I am satisfied that they were excluded in the relevant sense, and are entitled to an occupation fee against Mr McKay." 52I admitted paragraphs 51 to 56 of the defendant's affidavit, dated 8 June 2011, which are relevant to this issue of exclusion as they relate to the defendant's state of mind at the end of the relationship. As discussed, the defendant believed that the plaintiff was suffering from obsessive compulsive disorder and she found his behaviour difficult to live with. The defendant alleges that the plaintiff would shower for periods of up to four hours at a time, when he finished he would call out for her to lay out the bathmat and hand him his towel and occasionally she would then wait while he took a further rinse. The defendant alleges that the plaintiff would use tissues to avoid touching handles and she would serve him drinks because he would not touch a bottle. The defendant also alleges that the plaintiff would ask her to frequently wash her hands, would not allow her to sit on his sofa and she would have to cook dinner late in the evening due to the plaintiff's allegedly extended showers. The defendant has stated that she felt the plaintiff's behaviour was demanding of her and her time and that it was quite draining. The plaintiff did not accept that this was an accurate description. 53White v O'Neil [2010] NSWSC 1193 is another situation in which such an adjustment was made. T he plaintiff sought to establish that she was the beneficial owner of a property of which the defendant was the registered proprietor. The plaintiff claimed that she contributed the whole purchase price and that the defendant held the legal estate in trust for her. Alternatively she sought to have a constructive trust imposed to that effect. As a further alternative the plaintiff made a claim under s 20(1) of the Property (Relationships) Act 1984 to have the parties' interests in the property adjusted. The defendant cross-claimed for an order under s 20(1). Bryson AJ made the following findings: "76 The defendant's contributions to the plaintiff's asset position are entirely outweighed by the advantages he has derived from occupation, again without any payment in the nature of rent, of the property at Gilbert Avenue, Gorokan since September 2004. He occupied this initially with the plaintiff's permission, although commencement of these proceedings brought that permission to an end. Permitted or not, it has been a substantial advantage to him to have the use of the premises for over six years without paying anything in the nature of rent. He has allowed rates to build up to arrears of $3,248.88 and strata levies to $3,751.48. There is no prospect that he will ever have that much money. These advantages altogether outweigh any adjustment of interests which might otherwise be made in his favour. When I have regard to the considerations in s 20, the defendant has already received greater advantages than should justly be allowed to him and I am not prepared to make any order in his favour. 77 My conclusions are that the plaintiff should succeed in her claim to own the Villa at Gilbert Avenue, Gorokan, she has no need of an adjustment under s 20, and the defendant's cross-claim should fail." 54Ryan v Dries [2002] NSWCA 3 was an appeal from a decision of Master McLaughlin (as he then was) in which his Honour dismissed a claim brought by Joanne Dries under the Defacto Relationships Act 1984 and under the Contracts Review Act 1980 seeking relief in relation to a property the appellant and respondent jointly purchased. Master McLaughlin found that their relationship did not constitute a de facto relationship for the purposes of the De Facto Relationships Act but he did find that Ms Dries was entitled to a one-half interest in the property on the basis of a constructive trust. After the relationship ceased, Ms Dries did not have access to the premises. The appeal was allowed and Giles JA stated: "17 A is seeking equity, but why must he do equity by submitting to payment for his occupation? In the absence of exclusion, whereby the first limb of the rule comes into play, A's occupation of the property has been with B's concurrence. Doing equity by nonetheless paying an occupation fee to B requires justification. That B is being required to pay for something he did not undertake to pay for by becoming co-owner has been regarded as a justification. That B is being required to bear his proper share of the burden he jointly undertook has not. In my opinion, on the established rule the respondent is not entitled to a counter-allowance for the value of the appellant's occupation of the property prior to November 1997. " 55It will be a matter of some argument at the trial as to whether there has been an exclusion of the defendant from the property sufficient to provide for some claim for an occupation fee. However, the vacation of the property by the defendant was voluntary and there was initial consent to the plaintiff remaining in the property. In addition the plaintiff has paid all the outgoings on the property during his occupation. In these circumstances there is at least the prospect that no occupation fee allowance will be made. 56The affidavit of Farshad Amirbeaggi (sworn 22 June 2011), solicitor for the defendant, provides some rough guidance on the approximate market and rental value of the Glenmore Park property. Mr Amirbeaggi has annexed copies of advertisements of comparable properties for sale in the area. The photographs of the Glenmore Park property, provided in the plaintiff's affidavit, match up to the type of homes annexed in Mr Amirbeaggi's affidavit, although the Glenmore Park property seems to show more signs of wear and tear and the garden seems to simply consist of dry grass. However, it is possible, on the basis of these advertisements, to put the value of the property at approximately $350,000 to $380,000. 57The Glenmore Park property is subject to a mortgage of approximately $60,000 that was taken out by the defendant to pay for day-to-day living expenses the defendant incurred after separating from the plaintiff. This would need to be discounted from any adjustment in favour of the defendant. 58The likelihood of weekly rent is about average of $400 to $450 per week. Over five years and 10 months (from alleged date of separation in October 2005 to date), this equates to approximately $128,775 (303 weeks x $425). Alternatively, deducting the time post-separation that the defendant's acquiesced to the plaintiff residing in the property rent-free until he completed his studies in June 2006, then the figure would need to be reduced to about $114,325 (269 weeks x $425). The figure for rent should be divided equally between the parties as they can be seen to have an equal interest in the property. 59Therefore, if the parties respective contributions are seen to be equal, the adjustment could be approximately as follows: Average Glenmore Park sale price $365,000 - $20,000 (for usual costs and disbursements related to the sale) / 2 = $172,500 Defendant: $172,500 - $60,000 (mortgage) = $112,500 Plaintiff: $172,500 60Otherwise, if the plaintiff were to claim for the contributions for upgrading the home and the defendant were to successfully plead that she had been excluded from the property, the possible adjustment could approximately be: Average Glenmore Park sale price $365,000 - $20,000 (for sale costs) / 2 = $172,500 Defendant: $172,500 - $60,000 (mortgage) - $3,350 (for plaintiff's contributions to upgrading the home) + $64,387.50 ($128,775 / 2 for rent) = $173,537.50 Plaintiff: $180,000 - $64,387.50 + $3,350 (for property upgrade) = $118,962.50 61There is no evidence as to the likely costs of future proceedings although it would seem that the majority of the costs have already been expended in preparing the case to this interlocutory stage. Bearing in mind the disputed evidence, which will have to be decided at trial, about the exclusion of the defendant caused by of the plaintiff's alleged obsessive conduct, the plaintiff has a reasonable claim, on his evidence, that there should not be any finding of exclusion. This would mean that the plaintiff's claim would be substantiated. Even if the plaintiff lost he would still have a claim. In my view, it is likely the plaintiff would experience hardship, being the loss of his claim, if leave were not granted. That hardship would be greater than the hardship the defendant would experience if leave were granted. 62I give leave to apply for orders for a property settlement pursuant to part 3 of the Property (Relationships) Act 1984. 63Costs of the motion are to be the parties' costs in the cause, subject to an application for a different costs order made within seven days of today's date.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 August 2011
Michael Senno
Natasha Bailey
[2007] VSC 364
(1992) 15 Fam L R 686
(2000) 27 Fam LR 162
(1994) 35 NSWLR 206
(2005) 11 VR 568
(1949) 78 CLR 313
(1953) 87 CLR 298
(1995) 19 Fam LR 797
(1997) 22 Fam LR 518
(1998) 43 NSWLR 695
(1986) 10 Fam LR 1069