Plaintiff v Defendant

Effect of prior agreements; In the Marriage of Candlish and Pratt (1980) 6 Fam LR 75.

Failure by defendant to take part in proceedings or disclose current financial position; In the Marriage of Chang and Su [2002] Fam CA 156; Kannis v Kannis [2002] Fam CA.

1 In this proceeding, commenced by writ and statement of claim on 1 August 2003, the plaintiff seeks an order pursuant to section 285 of the Property Law Act 1958 ("the Act") for adjustment of the interests of the parties in the real and personal property acquired and/or improved during the relationship between the plaintiff and the defendant, and the taking of all necessary accounts in respect of the financial ventures entered into by the plaintiff and the defendant during the relationship.

2 The defendant did not enter an appearance and has taken no part in the proceeding.

3 On 25 May 2004 Coldrey J made orders for adjustment of property and taking of accounts in accordance with the statement of claim.

4 Pursuant to that order, the plaintiff now seeks orders in the following terms:

1. That the defendant forthwith pay to the plaintiff $2,500,000.00.
   1. That pursuant to section 291(1)(c) of the Act and for the purposes of section 51 of the Trustee Act 1958, the plaintiff [be] appointed as a trustee for the sale of the real property at 2/58 Clarendon Street, East Melbourne, being the land described in Certificates of Title Volume 9006 Folios 172, 205 and 189 ("the real property") and the real property be forthwith sold wholly out of Court and upon the settlement of the sale the proceeds be dispersed as follows:

(a) firstly, to pay all sale costs, estate agents' commissions and any conveyancing expenses of the sale;

(b) secondly, to pay such sum as will enable the plaintiff to obtain a discharge of the mortgage numbered W605090A to National Australia Bank Limited;

(c) thirdly, to pay such sum as is necessary to satisfy:

(i) the plaintiff's entitlement pursuant to paragraph 1 of these orders; and

(ii) the plaintiff's taxed costs and any reserved costs of this action;

(d) fourthly, the balance (if any) to be held by State Trustees for and on behalf of the defendant.

1. For the purposes of paragraph 2 of these orders and pursuant to section 292 of the Act, the Prothonotary is appointed to sign the transfer of land for the trust for sale in the name of the defendant and to do everything necessary to give validity and operation to that transfer.
   1. That the certificates of title referred to in paragraph 2 of these orders be cancelled by the Registrar of Titles pursuant to the provisions of section 103 of the Transfer of Land Act 1958 and in lieu thereof, the Registrar of Titles issue in the name of the plaintiff new certificates of title to the real property.
   2. That upon the issue of such new certificates of title, a memorandum of these orders vesting the real property in the plaintiff be entered by the Registrar upon the original and duplicate of the original of the certificates of title then issued.
   3. That the said duplicates of the original certificates of title, subject to any claim by the National Australia Bank in respect of the mortgage referred to in paragraph 2 of these orders, be issued to the plaintiff.
   4. That the defendant pay the plaintiff's costs including all reserved costs.
   5. That save for the purposes of satisfying any obligation under these orders, each party otherwise retain to the exclusion of the other, all other assets in their respective possession or control.

(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 homemaker 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 -

(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.

6 Extensive powers are conferred on the Court by section 291 of the Act, to enable the implementation of orders made under section 285.

7 As to the approach to be followed in considering an application under those provisions, I note the recent decision of Nettle J in Robertson v Austin [1] which, with respect, I would adopt. His Honour in that case, [2] for reasons which he set out, adopted the principles which were enunciated in the following terms by Vincent J in Conn v Martusevicius [3] :

. . . the court is vested with a wide discretion and must attempt to arrive at a result which is just and equitable in the circumstances. Accordingly, it must have regard to the whole of the relevant context within which an application is made.

Any assessment of the significance and value of the assistance and support provided by de facto partners [4] which did not place them within a framework provided by all of the circumstances of the relationship, would introduce a measure of unreality into the process and a degree of tension would arise between the adoption of a restrictive approach to the factors to be taken into account, and the duty of the Court to attempt to achieve equity between the partners.

Whilst s 285 imposes an obligation upon the Court to have regard to a number of particular kinds of contributions which may have been made, the legislature has not attempted to confine narrowly the concept of 'contribution' and there is, in my opinion, no good reason for the courts to do so. The fundamental limitations to the scope of the section in this context are contained in the expression 'de facto partner' which makes it clear that any such contribution to be relevant must have been made by a person who fell within that description at the time of its making and possesses a sufficient nexus with the relationship.

. . . it is, in my opinion, reasonable within its ambit of operation to adopt a similar approach to that followed by the Courts with respect to the New South Wales legislation according to which a judge:

. . . should proceed, first, to identify, and value the assets of the parties;

second, to determine whether any, and if so, what contributions of the type contemplated . . . [by the legislation] . . . have been made by each partner;

third, to determine whether, in the circumstances, the contributions of the applicant have already been sufficiently recognised and compensated for;

and finally, to determine what order is called for in order that the applicant's contributions be sufficiently recognised and compensated for." [5]

I have, for convenience of reference, set out these steps separately.

8 Mr North, for the plaintiff, submitted that the failure of the defendant to take part in the proceeding created difficulties for the plaintiff in ascertaining his current financial position. He referred me to several authorities, including the decision of the Full Court of the Family Court in In the Marriage of Chang and Su, [6] where their Honours found that in similar circumstances the trial judge was entitled to take a "more robust view" in making orders under the equivalent of section 285, and "should not be unduly cautious about making findings in favour of the innocent party". [7] Similarly, another Full Court in Kannis v Kannis [8] said: [9]

Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might otherwise be seen to be disadvantaged by the lack of complete candour.

While those authorities arose in another jurisdiction and under different legislation, they appear to me to be appropriate for application in the circumstances of this case, and consistent with the power conferred on the Court by section 285 to make such order adjusting the interests of the domestic partners as appears to it to be just and equitable.

9 Making what I can of the unchallenged affidavit material before me, I am satisfied:

(a) that in 1991, at the commencement of the domestic relationship between the parties, the plaintiff had property and financial resources totalling $14,000, and the defendant had property and financial resources totalling $68,000;

(b) that the plaintiff directly and indirectly made substantial contributions, financial and non-financial, to the acquisition, conservation and improvement of the property and financial resources of the defendant;

(c) that the plaintiff made substantial contributions in the capacity of homemaker to the welfare of the defendant and to the welfare of the family constituted by the partners and the children of the defendant;

(d) that the plaintiff and her advisers have done what they can to identify and value the assets of the parties, and to determine the relevant contributions made by each party to those assets;

(e) that at the conclusion of the domestic relationship in August 2001 the plaintiff had property and financial resources totalling $2 million, and the defendant had property and financial resources estimated by the plaintiff as totalling $11,300,000 so that the effect of the proposed orders would be to award to the plaintiff approximately one-third of the total asset pool at that time;

(f) that the property described in the proposed orders as "the real property" is the only property of the defendant which is known to the plaintiff to be within the jurisdiction of the Court;

(g) that in the circumstances the contributions of the plaintiff have not been sufficiently recognised or compensated for;

(h) that the agreement between the parties made on 2 August 2001 was agreed to be null and void by the agreement between the parties made on 17 October 2002 ("the second agreement");

(i) that when the plaintiff signed the second agreement she was operating under much emotional stress and would likely not have been in a rational, clear thinking state of mind or capable of making significant decisions.

10 I would adopt the finding of the Full Court of the Family Court in In the Marriage of Candlish and Pratt [10] to the effect that an agreement between the parties of the kind envisaged by section 285(1)(c) "cannot oust the jurisdiction of the Court or fetter the proper exercise of its discretion in proceedings under s.79" and that "the existence of the agreement is a relevant factor" but that the duty of the Court is to consider the relevant factors and determine what order is just and equitable between the parties and that "to regard the deed as the bench mark, or starting point of the exercise" could unduly restrict the exercise of that discretion.

11 Mr North indicated that it was the intention of the plaintiff that the proposed orders should have the effect contemplated by section 284 of the Act of ending the financial relationships between the parties and avoiding further proceedings between them.

12 I was informed by Mr North that it has not been possible to ascertain the whereabouts of the duplicate certificates of title to the real property, and that the proposed orders have been drafted with that in mind. He referred to the decisions of Lush J in Rizos v Rizos [11] and of Gillard J in Marshall v Williams, [12] and the concern expressed by each judge at, to adopt the words of Lush J [13] "the risks, which are serious risks and to be carefully avoided by a court, if possible, of having duplicate documents adrift in the community". He indicated that the proposed orders 4 to 6 followed the procedure adopted by Gillard J in Marshall v Williams with a view to minimising those risks.

13 Having regard to all of the matters to which I have referred, it seems to me that the orders sought by the plaintiff are just and equitable to adjust the interests of the parties in the property which they have accumulated and there will be orders in the terms set out in [4] above.

1. [1] [2003] VSC 80
2. [2] at [36]
3. [3] (1991) V ConvR 54-413 at 64,942-64,943
4. [4] The decision predates the change from "de facto partner" to "domestic partner" in the Act effected by the Statute Law Amendment (Relationships) Act 2001
5. [5] D v McA (1986) Fam LR 214 at 228 per Powell J
6. [6] [2002] FamCA 156 at [72]
7. [7] There adopting the decision of another Full Court in In the Marriage of Weir (1993) 16 Fam LR 154 at 158
8. [8] [2002] FamCA 1150
9. [9] reported on this point only in the headnote
10. [10] (1980) 6 Fam L R 75 at 82-3
11. [11] [1970] VicRp 19; [1970] VR 150
12. [12] [1974] VicRp 70; [1974] VR 592
13. [13] at 152