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[2011] NSWSC 1131
Supreme Court of NSW
2011-06-16
Sackar J
Original judgment source is linked above.
The Proceedings 1In his summons of 20 November 2009 the plaintiff Mr Peter Boord ("Boord") sought that trustees be appointed in relation to a property known as 35 Commodore Street, Newtown. He sought that the property be vested in the trustees subject to encumbrances and held by the trustees on a statutory trust for sale. 2In a cross summons the defendant as cross claimant, Ms Ivy Wang, ("Wang") sought the stay of the plaintiff's summons. She also sought pursuant to section 20 of the Property (Relationships) Act 1984 ("the Act") that the parties do all things necessary for the purposes of transferring the property at 35 Commodore Street, Newtown into her sole name. Otherwise she sought that the plaintiff's summons be dismissed. 3In a second cross claim, Boord sought an order pursuant to the Act that he be appointed trustee for the sale of the property and that the proceeds of the sale after discharge of the registered mortgage and payments of costs of sale be distributed: (i)As to 37% to Boord; and (ii)As to the remainder to Wang. 4In the alternative he sought an order that the defendant pay the plaintiff the sum equivalent to 37% of the net value of the property and thereafter upon payment so that he would transfer his interest in the property to Wang.
Background Facts 5Wang and her former de facto spouse (a Mr Isaac) had borrowed $172,000 from Westpac Banking Corporation towards the purchase of 35 Commodore Street Newtown on or about 27 June 1994. The property was thereafter acquired by her and Mr Isaac as joint tenants, the purchase price being $215,500.00. That relationship subsequently came to an end. 6On or about 28 May 2000 however Boord and Wang commenced their de facto relationship and lived together in the Newtown house. 7Boord brought mixed assets to the relationship. He owned a car worth approximately $3,000, tools and equipment which he asserts were worth $1,700, some furniture and household effects which he again asserts were worth $4,400, some Telstra shares said to be worth approximately $1,600 and savings of $19,500 and a superannuation entitlement of about $32,722. 8Wang's assets at the time included of course her interest in the Newtown property and furniture and household effects. She estimates that at that time the furniture and effects were valued at approximately $5,500. 9Wang asserts that in the period from May 2000 until September 2003 she paid all land rates, water rates, insurance and mortgage payments. 10The total mortgage payments Wang asserts she paid during this period are $24,849. The total rates Wang paid totalled $5,280. She also asserts she paid insurance in the sum of $2,480. None of this was challenged. 11During the same period she asserts she paid for and organised all maintenance and improvements to the property totalling a sum of $7,131. There was equally no challenge to this. 12From about 1999 to the present time Wang has worked as an accountant earning between $50,572 and $79,502 per annum. 13Boord on the other hand from a period early on in the relationship was virtually a full time student (between 2000 and 2003) studying for his PhD. Subsequently he got work as a sole trader writing bio medical software applications and earning income of a modest amount. 14During the period when Boord was a full time student Wang maintained the property and attended to all or almost all household chores. I have no doubt that Boord assisted from time to time with those chores. I got the firm impression however he was unsurprisingly distracted by his studies and did not assist in any substantial way. During the period 2000 to 2003 Boord concedes that Wang made the greater financial contribution to the household. During the years when Boord undertook his studies he received an Australian Government Post Graduate Award scholarship of approximately $958 per fortnight, but he worked part time in his own software business. 15Although Wang during those years undertook the majority of household chores including cleaning, the laundry, vacuuming, tidying, cooking meals, attending to the shopping and managing household expenses she does concede that Boord provided some assistance by occasionally cooking dinner and cleaning the bathroom. 16In the early part of 2003 Wang and her former partner Isaac reached an agreement as a result of which she bought him out of the Newtown property. Isaac transferred his share in the Newtown property to her for half of the market value ($472,068) after deducting the mortgage debt to Westpac. The mortgage was discharged and Wang refinanced by borrowing $320,000 secured by a fresh mortgage. Wang asserted in her evidence that the market value of the property at the time was around about $578,000. She paid $220,000 to her former partner pursuant to the agreement and the property was transferred solely into her name. 17Between May and August 2003 Wang ordered and paid for the installation of a new kitchen as part of a renovation that she undertook to the Newtown property. She organised the replacement of floor boards, the installation of gas and had the house painted and redecorated at a total cost of $41,000. Boord paid her the sum of $5,800 in or about July 2003 towards the kitchen renovation which Wang reimbursed him for in September 2008. Boord also paid a deposit to install gas in the property of approximately $200. 18It is accepted by Wang that Boord assisted her during the demolition of the old kitchen. He was it seems in no position to make any significant financial contribution to the renovation over and above the contribution of $5,800. Wang however reimbursed that amount at some point between September 2003 and March 2004. 19When the kitchen was being renovated apart from assisting in the demolition of the old one, I am satisfied that Boord from time to time was present when tradesmen undertook their activities and from time to time collected items to be used in the renovations. 20During the first half of 2003 Wang discussed with Boord the prospect of transferring a half interest in the Newtown property to him. 21In late May 2003 Boord made his own enquiries at Westpac concerning the possibility of a joint loan for himself and Wang. On 23 May 2003 an offer of a loan in the sum of $330,000 was made by Westpac to Boord and Wang. 22On or about 25 June 2003 Boord sought the advice of a solicitor on the question of the transfer of the half interest in the Newtown property to him. 23In August 2003 Boord paid an amount of $957.85 into the mortgage account. This amount however was again subsequently repaid by Wang in December 2003. 24On 20 August 2003 Westpac confirmed the opening of a new bank account in the joint names of Boord and Wang. 25In or about September Boord paid Wang $100 per week in rent by agreement. 26On 10 September 2003 Wang transferred the Newtown property to herself and Boord as tenants in common in equal shares. In August it seems Boord had paid Wang two amounts of $1,600 and $957.85 both amounts being repaid by Wang between September 2003 and March 2004. In reality Boord acquired his half interest in the property for no consideration. 27At or about that time Boord and Wang separated. Boord asserts that he moved out to live temporarily in University of Technology accommodation in Chippendale in order to concentrate on his studies during renovations but asserted that he stayed at the Newtown property on most weekends except for the first six weeks of that period when he did not visit the property at all. 28After Boord moved out Wang took in a number of boarders or tenants and received rent from them totalling approximately $10,380 over the next year or so. During this period Wang asserts that she paid Boord approximately $3,300 drawn from their line of credit. 29There is a dispute however as to when the parties recommenced living together. There seems little doubt that after November 2003 whilst the parties were apart they saw each other from time to time and had a casual sexual relationship. 30Wang asserts that she did not see Boord until around November 2003. She asserts that she did not stay with Boord at his residence but he sometimes stayed with her at Newtown. 31Between about September 2003 and December 2005 Wang asserts that she had tenants living in the property from time to time and received approximately $22,200 rent in that period. 32Boord asserts he moved back into the Newtown property in November 2004 to live there full time. 33There is no doubt that even on Wang's version of events a de facto relationship recommenced at some point in either late 2004 or early 2005 until the parties finally separated in July 2008 for the last time. 34Between the period September 2003 and December 2005 Wang asserts that she again paid mortgage, rates, insurance and maintenance on the property. The mortgage payments totalled $51,329, the rates totalled $3,576.90, insurance totalled $1,471.85 and household maintenance totalled approximately $1,000. Again there was no challenge to this. 35Wang accepts that during this period Boord paid a lump sum of $7,400 into their AMP mortgage account. 36Between January 2006 and July 2008 when separation finally occurred Boord and Wang deposited the entirety of their salaries into a loan account with AMP. From there they drew amounts as and when necessary for credit cards and other household and other personal expenses. During that period Wang accepts that she and Boord shared the day to day living expenses equally, including electricity, gas, food and telephone which were all paid from the joint mortgage account. 37During the period January 2006 to July 2008 an amount of $51,508 was paid towards the mortgage. Rates of $4,370.70 were paid as was insurance at $2,007.14. An amount of $2,494 was also expended in that period on household maintenance. 38During the same period Wang's total salary which was paid into the account totalled $162,458 and Boord's salary was also paid into that account totalled $131,726. After separation the parties spent a considerable amount of time and effort attempting a financial reconciliation. They jointly undertook an accounting exercise of the various payments each had made, at least in the period January 2006 to July 2008. Spread sheets were prepared and exchanged along with detailed email correspondence. 39After separation Boord ceased to make payments from his salary into the AMP loan account. The last payment he made was for $900 and that was on 30 July 2008. Since that date Wang has paid all mortgage payments and continues to do so. She has also paid all other household expenses including rates and insurance, for example. 40Between July 2008 and March 2009 an amount of $42,500 was paid to Boord by Wang in instalments following the financial reconciliation exercise referred to above. 41From September 2008 to date Wang has undertaken further renovations to the property totally approximately $38,000. 42In the same period she has made mortgage payments of $38,870.50. She has paid rates to the value of $3,760.65 and insurance of approximately $2,146.64 with an additional $2,000 towards maintenance. As at the date of the trial the outstanding mortgage comprises $62,389 which is owed by way of a variable loan and $226,044 owed by way of a fixed loan. Her other assets are $114,241.75, comprising superannuation of $101,812.75 and cash in bank accounts of $12,429.00. As at the date of her affidavit of September 2010 she had a credit card debt of $1,538.00. 43Apart from his half share in the Newtown property, Boord otherwise identifies his property as comprising a motor vehicle, which he estimates was worth $5,400, furniture and personal effects which he estimates were worth $6,825, his Telstra shares valued at $3,833.25 and superannuation of $79,682.30. His liabilities involve a joint liability in respect of the mortgage to AMP Bank and a joint mortgage to Westpac both in relation to the Newtown property; however, he has paid nothing towards the house since July 2008.
The Legal Principles 44It is common ground in these proceedings that Boord and Wang for a period lived in a de facto relationship. 45It is also accepted that they were therefore parties to a domestic relationship within the meaning of that expression in section 5(1)(a) of the Act. However, there is a dispute as to the length of the relationship. 46It is otherwise accepted that the various jurisdictional prerequisites in Sections 15, 17 and 18 have been met and consequently the court is empowered to make an appropriate order pursuant to section 20 of the Act. 47Section 20 of the Act provides: "20 Application for adjustment (1) On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to: (a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conversation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and (b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely: (i) a child of the parties, (ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties. (2) A court may make an order under subsection (1) in respect of property whether or not it had declared the title or rights of a party to a domestic relationship in respect of the property." 48Both financial and non financial contributions to the acquisition, conservation or improvement of the property are relevant or to their financial resources and secondly contributions to the welfare of the other party or of the family constituted by the parties are relevant contributions. Contributions of the latter kind are of no less relevance, value or weight. The court with reference to the designated statutory factors, exercises a discretion in order to arrive at a just and equitable result in relation to determining the parties respective contributions. 49In Howlett v Neilson , Hodgson J A identified a three stage process that may generally be followed in assessing the respective interests under that section. 50In Baker v Towle , Basten JA with whose reasons and conclusions Beazley JA and Matthews AJA agreed, made the following comments: "[42] These proceedings were brought under s20(1) of the Act, which has three operative effects. The first is to grant a right to a party to a domestic relationship to seek an order adjusting property interests of the parties to the relationship; the second is to empower the court to make such an order "as to it seems just and equitable" and the third is to identify the factors to which the court must have regard in determining the application. Whether those factors are the only factors to which the court can properly have regard was not in dispute in the present case: see Evans v. Marmont (1997) 42 NSWLR 70 at 79-80; 21 Fam LR 760 at 767-9 (Gleeson CJ and McLelland CJ in Eq); compare Manns v. Kennedy (2007) 37 Fam LR 487; [2007] NSWCA 217 at [112]-[125] (Campbell JA, Santow JA and Bryson AJA agreeing). [43] It has been said in a number of cases that the application of s20 involves three steps, which were identified in Howlett v. Neilsen (2005) 33 Fam LR 402; [2005] NSWCA 149 (Howlett) (Hodgson JA, Ipp and McColl JJA agreeing) in the following terms (at [25]): [25]... (1) identification and valuation of the property of the parties; (2) identification and valuation of the respective contributions of the parties, of the types referred to in s 20; (3) determination of what if any order is just and equitable having regard to these contributions." 51Basten JA further pointed out in Baker v Towle at [45] that in many cases a step will need to be taken in order to arrive at a valuation of the proeprty. As he points out, justice and equity will usually require that an assessment be made of the existing interests of the parties in the property in order to determine if an adjustment should be made. 52When one is looking at the valuation of the respective contributions of the parties to the relationship what is required is not "a narrow or purely mathematical process". See Howlett at [29] and Baker at [47]. 53Section 20 of course importantly requires that the adjustment be done on a just and equitable basis having regard to the financial and non financial contributions made directly or indirectly by the parties and, importantly, the contributions made in the capacity of homemaker by either of the parties to the overall relationship or welfare of the other party (Section 20(1)(b)). 54In terms of what is involved in the evaluation process in order to arrive at a just and equitable outcome Campbell JA in Manns v Kennedy at [62]-[67] helpfully collected and reviewed the relevant authorities: "62 McLelland J said in Davey v Lee (1990) 13 Fam LR 688 at 689; (1990) DFC 95-084 at 76, 146, that under section 20 "the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind". That statement was approved in this Court in Ross v. Elderfield [2006] NSWCA 102 at [35] and in Kardos v. Sarbutt [2006] NSWCA 11 at [36]; [2006] NSWCA 11 (2006) 34 Fam LR 550 at 561; (2006) DFC 95-332 at 78,542. 63 The Full Court of the Family Court of Australia (Fogarty, Murray and Baker JJ) in Ferraro v. Ferraro (1993) FLC 92-335 at 79,578 approved the statement in In the Marriage of Harris (1991) 15 Fam LR 26 at 31; [1991] FLC 92,254 at 78,705 concerning section 79 Family Law Act 1975 that the task it calls for "is not akin to an accounting exercise". The same applies to section 20. 64 However, the "holistic value judgment" is the final step in the process of arriving at an order, namely deciding what adjustment of property seems just and equitable having regard to the contributions identified in paragraphs (a) and (b). Carrying out the task that section 20 sets requires, before that final step is carried out, an identification and (so far as possible) valuation of the contributions that are being taken into account and an identification and (so far as possible) valuation of the property concerning which it is open to the court to make an adjustment: Howlett v Neilson [2005] NSWCA 149 at [25]; [2005] NSWCA 149; (2005) 33 Fam LR 402 at 407; Saric v Steward [2006] NSWCA 260 at [61]; (2007) DFC 95,401 at 78,713; Chanter v. Catts [2005] NSWCA 411 at [22]; [2005] NSWCA 411; (2005) 64 NSWLR 360 at 366. 65 Further, even in carrying out that final step, "there is no warrant for ignoring the rigour that mathematics can provide": Ross v. Elderfield (at [49] per Handley JA (with whom McColl JA and Hislop agreed)). As Hodgson JA said in Howlett v Neilson (at [39]; 411): "...while I do not think that these matters can be determined on such mathematical calculations are of some use in guiding and testing conclusions about what is just and equitable, and also in promoting transparency and consistency in decision-making." 66 I note that in Kardos v. Sarbutt (at [29]; 558; 78,539), Brereton J gave an account of the process involved in the exercise of the jurisdiction under section 20 Property (Relationships) Act in which the third step was to decide "what order is required sufficiently to recognise and compensate the applicant's contributions". That formulation of the third step in the process was also adopted by Ipp JA (with whom Giles and McColl JJA agreed) in Bilous v. Mudaliar [2006] NSWCA 38 at [24]; [2006] NSWCA 38; (2006) 65 NSWLR 615 at 620. 67 It was submitted on this appeal that there may be a difference of substance in the way in which the third step is formulated in Kardos and Bilous, and the formulation used in the cases I have referred to in para [64] above, namely "determination of what if any order is just and equitable having regard to these contributions." I do not think there is any difference in substance between the two formulations. McColl JA agreed with both versions of the formulation, in Bilous and Howlett respectively. The emphasis in the judgment of Ipp JA in Bilous on the fundamental importance of the statutory text of section 20 is inconsistent with any rejection or qualification of the need to determine what, if any order is just and equitable having regard to the contributions. Since both Bilous and Kardos, McColl JA (with whom Handley and Santow JJA agreed) has stated the third step using the "just and equitable having regard to these contributions" formulation in Saric v. Steward (at [61])." 55Basten JA further commented in Baker v Towle that in his view the court in Howlett accepted that the diligent application of both parties to the differentiated roles within a domestic relationship may well lead to the conclusion that interests in property should be divided equally. That result, His Honour remarked, may be achieved without valuing respective contributions in monetary terms although the outcome will be the allocation of interests in property which no doubt could be valued if necessary. [50] 56Although not an invariable position, the exercise of the identification and valuation of property is typically undertaken at the date of the trial: Kardos v Sarbutt . There is no reason that a contrary procedure should be followed in this matter.
Discussion 57One issue of significance in this case is the way in which the court ought to treat the capital gain on the Newtown property over the alleged eight (8) years of the relationship between the parties. It is contended on behalf of Boord that a court may award the capital appreciation of the property introduced into a relationship by one of the parties either to each of the parties in a certain proportion of course acknowledging to do so requires identification of a real and substantial contribution to the acquisition, maintenance or improvement of that property during the relationship. The argument being, as I understand it, that the justice and equity of the case may be derived from the fact that the party who owns the property was able to retain that property whilst the market value increased because of "joint efforts". 58Wang submits that once the asset pool is identified and the relevant contributions of the parties are assessed the appropriate order would be for the primary asset of the parties, namely the property in Newtown, to be transferred into her sole name. 59The parties provided the court with an aide memoire as to an agreement they had reached on the values of the property and net equity position at various points in time as follows: "1. The parties have agreed that in mid-2000 the value of Newtown, which was then jointly owned by Ms Wang and Mr Darren Isaacs, was $365,000. The mortgage debt on Newtown was then about $103,993.31 (see W2, p8). Accordingly, the value of joint interests of those persons was then about $261,006.69. And, notionally, Ms Wang's half interest was valued at $130,050.34, which is to be seen as her sole contribution as at the commencement of her relationship with Mr Boord in Mid-2000. 2. The parties have agreed that the value of Newtown in August 2003, when Ms Wang and Mr Boord refinanced and she transferred the property to herself and him as joint tenants, was $580,000. The mortgage debt on the property (which had earlier been refinanced by Ms Wang in April 2003 to settle with Mr Isaacs) was $316,799 (W7, p38). That is the 'equity' in the home was then valued at about $263,201. 3. The parties agree that the value of Newtown at trial is $840,000 and that the mortgage debt is currently about $300,000. that is the interests of the parties in the Newtown property, which is the subject of these proceedings, is valued at about $540,000." 60When the relationship commenced in mid 2000 Wang brought to the relationship a net contribution of $130,005.34. As I see it, apart from some tools and other smaller items earlier identified, Boord brought very little to the relationship from a financial point of view. 61In the period 2000 to 2003 Boord's financial and non financial contributions in my opinion were again modest. He was a full time student for a significant time and was simply incapable of making any real contribution financially or otherwise to the relationship during this period. Wang made by far the greater financial contribution in those years. So far as non financial contributions are concerned my impression is again that Wang made by far the greater contribution. Whilst it is true that Boord performed some household duties from time to time in this period again he was distracted by his studies but in any event I regard Wang as the real homemaker. The property in Newtown has for many years now been her home. She obviously takes great pride in it and has for example continued to renovate it since the relationship with Boord ceased in mid 2008. I am certain she was always the one to suggest, plan and activate improvements to the property. That makes entirely credible her assertion that she at all times made the greater non financial contribution to the household. 62The exercise which the parties engaged in in 2008 by way of financial reconciliation only concentrated of course upon the years January 2006 to July 2008. The exercise did not consider the earlier period and no attempt was made it seems to quantify the non financial contribution Boord or Wang made over that period. The period January 2006 to July 2008 was the period when Boord made a material contribution financially to the relationship. It is plain however that Wang during that period was earning a larger salary and on that basis alone probably made a greater financial contribution to the household. She however paid Boord the sum of $42,500 by instalments which represented the understanding of parties as to their respective contributions to the household expenses in that period. That payment however in my opinion does not stand in the way of Boord making a claim for a further adjustment of such contributions, both financial and non financial, covering the entire period of the relationship. 63Although there is a dispute as to precisely what period they spent apart I do not regard that as material in the end. It does seem to me that apart from a period of perhaps six weeks or so at the end of 2003 between that point and a period later in 2004 I think they continued albeit on a more casual basis to have a relationship in the relevant sense. Until he was in a position to provide financially in a material way, that is from approximately January 2006, Boord's financial contributions prior to that date are both sparse and sporadic, but he did make some. 64Since 2008 Wang has made all of the mortgage payments together with expending additional monies on renovations, which has further enhanced the value of property. 65Whilst I do not consider that payment of $42,500 to Boord by Wang should be the end of any adjustment of contributions I am by no means convinced that Boord at any relevant time over the whole period of the relationship except for the limited period of 2006 to 2008 made any material financial contribution to the relationship and I am certainly convinced that over the whole of the period he made a relatively modest non financial contribution. 66An assessment of the sort required in a case like this as is obvious from the authorities need not and indeed cannot be anything which approaches mathematical precision. Wang of course says that the maximum that Boord should receive is a further adjustment of 5% of the current net equity. I do not consider that would provide a just and equitable solution. Nor however do I consider awarding Boord 37% of the net value which he claims would produce a just and equitable outcome. Nor do I consider in all the circumstances that it is appropriate to order that the property be sold. As I have already observed this is a property which Wang has owned and lived in for many years. Boord was never in a position in 2000 or for that matter 2003 to have raised funds to purchase such a home and it was only due to Wang's diligence, drive and quite frankly her generosity that he was ever placed in a position to be on the title of the property. 67I am of the view that justice and equity does require a payment to Boord. In arriving at the figure I have taken into account the payment made to him of $42,500 and his modest contributions to the non financial aspects of the relationship over its entire length. I have also taken into account the mortgage payments made in the period January 2006 to July 2008 and his contributions both before and during that period to household expenses of various sorts. A relationship of sorts spanned much of the eight years (2000 - 2008). The relationship lasted for a minimum of six years when they lived together and another period when they still had a relationship of sorts. I am of the view that in all the circumstances a just and equitable result would involve Boord being awarded 12.5% of the net value of the Newtown property. That is a figure I have arrived at taking an holistic view of the matter and based upon a finding by me that both financially and more importantly from a non financial point of view Boord simply made nowhere near the contributions made by Wang. 68I propose to make an order that upon the payment of that amount by Wang to Boord, Boord will do all acts and things necessary to transfer his interest in the Newtown property to Wang. It follows that Wang should pay all monies and do such things as are necessary to discharge the mortgage or alternatively be solely responsible for its repayment and thereby release Boord from any further obligations in respect of the mortgage. On my calculations 12.5% of $540,000 would lead to a figure of $67,500. That would mean that Boord will in the end have received a total of $110,000 ($67,500 + $42,500) from Wang. 69I would invite counsel to prepare appropriate short minutes to reflect my judgment. 70I would also invite submissions on the question of the appropriate order for costs. I am content to deal with this issue by written submissions.
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: 14 October 2011
Peter Robert Boord
Ivy Wang
(1997) 42 NSWLR 70
(2007) 37 Fam LR 487
(2005) 33 Fam LR 402
(1990) 13 Fam LR 688
(2006) 34 Fam LR 550
(1991) 15 Fam LR 26
(2005) 64 NSWLR 360
(2006) 65 NSWLR 615