Plaintiff v Defendant

Plaintiff v Defendant - [2007] VSC 218 - VSC 2007 case summary — Zoe

[15]

7 Accordingly, the plaintiff will succeed in her claim to an interest in Victory Street in accordance with the terms of the Cohabitation Agreement, unless the defendant succeeds in adjusting such interest pursuant to the PLA.

8 No basis for avoiding the apparent effect of the Cohabitation Agreement was pleaded or identified on behalf of the defendant other than the provisions of the PLA and in particular s.285 which raises the issue whether such adjustment in favour of the defendant would be just and equitable.

The Facts

9 The plaintiff was born on 9 June 1968 and is now aged 38 years.

10 The defendant was born on 26 November 1971 and is now aged 35 years.

11 The plaintiff and defendant met in 1999 and shortly thereafter the defendant moved into the one bedroom flat previously occupied by the plaintiff at 59A Clyde Street, St. Kilda, and fitted out with her furniture.

12 In 2001, the parties decided to seek alternative accommodation together and after some initial investigation of alternatives, the defendant advised the plaintiff that he was the owner of Victory Street, premises of which he had become sole registered proprietor in 1995.

13 Victory Street had been purchased with funds wholly provided by the defendant's father and was unencumbered. It was subject to an existing lease and rentals from the lease were paid to the defendant's father.

14 The defendant's father agreed to the plaintiff and defendant moving into the property, but requested that they enter into a Cohabitation Agreement prior to doing so.

15 The plaintiff had a draft Cohabitation Agreement prepared by solicitors and provided a copy to the defendant. The defendant sought and obtained independent legal advice in respect of it.

16 Following further discussions and the making of handwritten amendments by the plaintiff for the benefit of the defendant (relating to the florist business), the parties executed the agreement under seal on 15 May 2001.

17 At the time of the agreement the defendant knew that the property had increased in value from $155,000 to $250,000 in the period since his father had purchased it. Both parties anticipated that it would continue to increase in value.

18 The parties' intention was to establish a financial framework for a long term relationship and put in place long term arrangements, designed to achieve financial security, including the substantial renovation of Victory Street. Nevertheless the agreement specifically provided for breakdown of the relationship.

19 Prior to moving into Victory Street, the plaintiff and defendant spent some three weeks undertaking renovation works. The plaintiff worked each weekend and most nights. The defendant worked a similar period save that he went motor cycle riding over one of the weekends. Both of the parties were at that time in full time employment.

20 The plaintiff expended in the order of $3,500 on materials for the purpose of these initial and subsequent renovations. The defendant also expended money on materials (although in an amount which was not the subject of satisfactory evidence).[2] The plaintiff agreed in evidence that this contribution was of an order equivalent to her own expenditure.

21 The works undertaken both before and after the parties moved into Victory Street included the following:

[18]

22 These works were generally undertaken by the plaintiff together with the defendant and overall the plaintiff agrees that she and the defendant contributed to the performance of the works in approximately equal shares, although she did the greater share in some respects such as gardening.

23 The plaintiff concedes that the renovations undertaken were not all those which the parties envisaged as part of their long term plans at the time of the Cohabitation Agreement. Nevertheless, she says they did undertake substantial ongoing improvement to the property over the course of the relationship.

24 Although the defendant disputed some aspects of the detail with respect to the works, I accept the plaintiff's evidence as consistent and credible. It is corroborated by consistent and contemporaneous records whereas the defendant's evidence is not.

25 The plaintiff also performed most of the domestic duties arising out of the parties living together. She was the principal homemaker and did the bulk of the cooking, cleaning and laundry. She purchased major household appliances and household goods to a value in excess of $2,000 for these purposes.

26 The plaintiff was also substantially responsible for the operation of the florist business, which the parties had intended they would run jointly. This business had recurrent fluctuating work, but failed to make any ongoing profit.

27 The relationship broke down in 2004 and the plaintiff left Victory Street on or about 28 September 2004. When she did so, she took with her furniture and other household goods, principally comprising objects she had brought into the relationship. She also left behind a series of household goods brought into the relationship by the defendant or in which she believed he had a greater interest than herself. She says and I accept that she in effect made a 50/50 division of the personal property acquired during the relationship.

28 A redivision of chattels was not pursued by either party upon the hearing of the proceeding.

29 A valuation has been obtained which shows that the current value of Victory Street is $503,000. The plaintiff accepts that from this figure deduction should be made in respect of monies expended by the defendant. In particular, the defendant should be credited with $5,000 worth of improvements made by him since the separation of the parties and with respect to the value of rates paid by him prior to the separation in the sum of $ 1013.46.

30 At the time of their separation, neither party had an interest in real estate other than in Victory Street. Both had cars, some furniture and personal belongings. Both had the capacity to work. Both had an interest in the home based florist business referred to in the agreement, but it appears this was not trading particularly profitably.

The Law

31 The Court is empowered by Part IX of the PLA to make orders in respect of the property of de facto partners, if they have lived in Victoria in a de facto relationship for at least two years, in order to provide for the just and equitable adjustment of the interests in real and personal property of one or both of them.

32 Section 284 of the PLA further imposes a duty on the Court, so far as is practicable, to make orders that will end the financial relationships between the domestic partners and avoid further proceedings between them.

33 Section 285(1) of the PLA provides:

[32]

44 The defendant further submits that if the value ascertained by reference to consideration of the plaintiff's contributions pursuant to subsections (a) and (b) is of an entirely different order from that indicated by the agreement, then the agreement should be given little (if any) weight.

45 Ultimately, Mr Davis submitted on behalf of the defendant that the plaintiff's contributions, both direct and indirect to the property and the home, should be valued at no more than $25,000, representing 5% of the total value of Victory Street.

46 He further submitted that the Court should recognise that to give effect to the agreement would be inequitable to the defendant, while conceding that to give no effect at all to the agreement might be regarded as inequitable to the plaintiff.

47 I accept that the assessment of what is just and equitable is to be undertaken having regard to the circumstances as they are now known. In this sense, it is an assessment in hindsight, whereas the agreement between the parties was a prospective one, reflecting their agreement as to a fair and appropriate division of future equity within a framework of expected performance of reciprocal obligations.

48 I further accept that the Cohabitation Agreement was entered into in the context of long term plans for residence at and renovation of Victory Street. I accept that these plans did not come fully to fruition as the parties hoped, although there was both a substantial commitment and implementation of renovation works and of course a domestic relationship of not insignificant duration. Further, as Mr Staindl emphasised, the agreement expressly contemplated and provided for the breakdown of the relationship.

49 There are in my view five fundamental difficulties with the approach submitted on behalf of the defendant.

Firstly, the value of the contributions pursuant to subsections (a) and (b) is not easily ascertainable. Thus, a bare assessment of costs of materials incurred by the plaintiff and of the hours worked in effecting improvements, does not give rise to an easy calculation of the consequent increase in value in the property. In the present case, the evidence suggests that the work undertaken by the plaintiff with respect to the house formed part of a joint effort with the defendant, in respect of which they ultimately contributed approximately 50% each towards costs of materials and value of labour, although the plaintiff undertook somewhat more hours of work in some respects. Further, the evidence supports the view that the works did materially improve the presentation of the house and hence its value, although no precise figure can be ascribed to such increase.[13]

Secondly, the value of the plaintiff's contribution over five years as a homemaker is even more difficult to assess. But I do not accept that its value is to be regarded as simply that of a domestic servant, nor that it is to be regarded as "negligible". The evidence does not permit any precise estimate in this regard, but the contribution included the purchase of household equipment to a value in excess of $2,000 and the undertaking of almost all cooking, cleaning and laundry.

Thirdly, the value of the plaintiff's contributions falls to be assessed within the context contemplated by the parties at the time of entering into the Cohabitation Agreement. Such contextual matters included:

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(a) Such agreement was entered into by mature adults having the benefit of independent legal advice;

(b) It recognised reciprocal rights in respect of the Victory Street property on the one hand and the home florist business on the other. Both had the capacity to grow in value.

(c) It preserved the agreed existing value of Victory Street for the benefit of the defendant's father.

(d) It contemplated the parties would make their home at Victory Street.

(e) It contemplated that Victory Street would be improved as a result of the joint endeavours of the parties, as in fact occurred. On the evidence the plaintiff contributed at least equally with the defendant in this regard.

(f) It contemplated that an increase in value during the period of cohabitation by reason of improvements or otherwise would be split equally between the parties.

(g) This split was co-extensive with agreements to hold equally the value of the florist business, and the value of chattels acquired by the parties during the same period.

(h) The 50/50 division was agreed to in the context of the establishment and ongoing maintenance of a home at Victory Street, which home was established and maintained as part of a five year relationship. The evidence shows the plaintiff made the greater contribution as homemaker by way of domestic duties.

(i) The plaintiff also contributed a significantly greater amount of time than the defendant to the jointly owned florist business operated from home.

(j) The plaintiff's contribution towards the renovation of Victory Street and towards the maintenance of a joint home was not negligible.

(k) The plaintiff's contributions were inherently difficult of valuation, particularly insofar as her contributions in the capacity of homemaker is concerned.

(l) The combined effect of her contributions towards home renovation, as homemaker, and as the operator of the florist business was such as to materially reduce the plaintiff's opportunity for alternative forms of property related activity than those associated with Victory Street.

(m) Although the long term relationship contemplated by the parties at the time of the Cohabitation Agreement was not achieved, it was substantially commenced and substantial contributions were made by the plaintiff towards the parties' property during it. Further, the agreement itself provided an agreed mechanism for the adjustment of the parties' interests if the relationship broke down.

(n) There is no sufficient reason to reject the terms of the written agreement as a just and equitable arrangement between the parties.

(o) To the contrary the agreement is itself evidence of the special value to the defendant of the plaintiff's contributions to their joint financial position in accordance with the agreement.

(p) The agreement was the subject of continuing performance by the plaintiff over an extended period of time.

(q) The agreement is also strong evidence that the arrangement effected by the agreement was and is just and equitable having regard to the parties' relationship as a whole. It should be given weight on this broader basis, because it is relevant independently pursuant to s. 285(1)(c) and not simply as evidence bearing on the assessment of the contributions referred to under s.285(1)(a) and (b).

At a glance

Court

Decision date

Before

Source

Judgment (45 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (3)