Plaintiff v Defendants

Plaintiff v Defendants - [2006] VSC 219 - VSC 2006 case summary — Zoe

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7 As to the Laverton property, Mrs Davis has relied upon a current valuation provided by her valuer Mr Lawrence of $4,706,000. While Mr Tayles provided valuations from another valuer they have not been relied upon by his counsel. I am not surprised. That valuer was less than persuasive. In any event, in cross-examination of that valuer, counsel for the Mrs Davis demonstrated that applying his approach to determining the value of the Laverton property in 2000 and comparing that with his valuation of the Laverton property in 2005, the increase in site value was $1.8M. The valuation of Mr Lawrence appeared to me to be realistic and should be relied upon. It demonstrated an increase of $2.706M from the commencement of the relationship.

8 The use of company structures by Mr Tayles introduces complications into the case. The parties have taken different and inconsistent positions in these proceedings. Mrs Davis has tended to treat the assets owned by the companies controlled by Mr Tayles as his assets but has argued that payments made and liabilities incurred related to Biztek. Mr Tayles has tended to treat the payments and liabilities of his companies as if they were his own but resisted any attempt made on behalf of Mrs Davis to access the assets of his companies.

9 It is reasonable to proceed on the basis that Mr Tayles' assets include the net value of the companies and that he has ultimately felt the effect of liabilities incurred by Biztek and payments made by it of various domestic and other expenses either through their effect on the net worth of the companies or because they have been charged to him - notably by Biztek. The precise details, however, are not available because Mr Tayles has not kept up to date and satisfactory financial statements. He has also tended to treat the financial affairs of the companies as if they were his own.

10 As a result, in determining what is just and equitable, it is appropriate to proceed on the basis that Mr Tayles has received the full benefit of any increase in the value of the assets owned by the companies. In addition, it is appropriate to proceed on the basis that any payments made by Biztek from which Mrs Davis has benefited, are in effect his payments. This, in any event, appears to be the only practical way forward in resolving the questions raised in the case and to carry out the duty imposed by the Act to avoid so far as practical the risk of further litigation.[2]

11 It should be noted that, during the hearing, the Commonwealth Bank discharged its mortgage over the Glen Iris property. As a result the Glen Iris property can be dealt with free of any encumbrances and the personal covenants contained in the mortgage agreement that imposed liabilities on Mr Tayles and Mrs Davis personally for the debts of Biztek have been released. Those covenants and the mortgage are discussed below.

Claims and counterclaims

12 In determining what order should be made adjusting the interests of the domestic partners in their property, counsel for Mrs Davis submitted that there were two approaches that could be taken, both leading to the same result.

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13 Counsel for the defendants submitted that no adjustment should be made in Mrs Davis' favour and that Mrs Davis' interest in the Glen Iris property should be limited to her contribution - 25%. Counsel argued that the relationship was at the most of four years duration. During that time, Mr Tayles and Mrs Davis did not live with each other continuously and Mr Tayles maintained a separate residence at Bringenbrong. Counsel submitted that the adjustment he proposed reflected the respective contributions of both parties. Counsel submitted that there should be an order for the sale of the Glen Iris property and a division of the proceeds according to the parties' interests.

14 Mr Tayles originally raised specific counterclaims in respect of moneys spent by him or his companies on school fees, legal fees and a computer for Sarah Davis. These sums were claimed as moneys lent. Those claims are no longer pursued as money lent claims but the payments are relied upon as financial contributions made by Mr Tayles which benefited Mrs Davis. The amount claimed for school fees is $27,000 or $33,000. Counsel for Mrs Davis submitted that these payments should all be treated as payments made in the course of a domestic relationship.

15 Counsel for Mr Tayles also submitted that a counterclaim by Lighthouse Peak should be allowed in respect of the expenses associated with the lodging by Mrs Davis of a caveat alleging an equitable interest in Bringenbrong. This counterclaim was introduced during the hearing by amendment to Mr Tayles' pleadings. Counsel submitted that the caveat was one that could not be sustained and that the caveat was lodged for the purpose of forcing Mr Tayles to negotiate rather than to advance a claim to an interest in the property.

16 The position of the Mrs Davis on this issue is unclear. Counsel submitted that it should not be taken into account in determining a just and equitable distribution or adjustment between the parties and should be treated as a commercial matter. Counsel subsequently submitted that it should be collapsed into and be seen as part of the Part IX application. Counsel also submitted that no accounts had been presented in evidence and floated the possibility that some gain in price may have flowed from the delay caused by the caveat.

17 In relation to the injunctions that are sought, counsel for Mrs Davis submitted that they are required because of the threats of legal proceedings made by Mr Tayles in his evidence. Counsel referred again to s 284 of the Act and its requirement that the courts so far as practicable avoid the risk of further litigation.

Principles to be applied in Part IX application

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20 In considering what contributions have been made, the Court must have regard to, and only to, the financial and non-financial contributions made by each partner of the types referred to in the legislation. In respect of non-financial contributions such as the homemaker or parent, it is no longer accepted that that contribution is to be valued by reference to wage levels applicable to a person supplying such services commercially. It is also established that the contribution of the homemaker is to be recognised in a substantial way not a token way.[4] It cannot now be contended that the contributions of a de-facto partner as homemaker and parent should be regarded as in some way inferior to the corresponding contributions of a spouse and full and proper value must be given to that kind of contribution.[5]

21 In considering what is just and equitable, the Court will consider the contributions in context. The context may include the financial circumstances of the parties, the length of the relationship, the extent to which the financial affairs of the parties have been integrated and opportunities lost by a party by reason of their contributions. Contextual matters will also include the consumption enjoyed by a domestic partner as a result of the financial and non-financial contributions of the other. It is also relevant to have regard to the benefits enjoyed by domestic partner as a result of a contribution. At the same time the concept[6] of contributions should not be confined narrowly. It is a flexible concept.[7] At all times it must be borne in mind that the Act is "not about compensation".[8]

The credibility of the key witnesses

22 Before addressing the issues and the facts, it is desirable that I indicate the view that I have formed about the credibility of the two principal witnesses, Mrs Davis and Mr Tayles.

23 Mr Tayles is a man of great drive, enthusiasm and passion. Unfortunately for him those qualities have adversely affected his evidence.

24 I regret to say that I formed an unfavourable view of his credibility as a witness. Throughout his evidence he appeared to want to fight the case at any cost. He constantly chose to be unco-operative and difficult in responding to cross-examination. He was evasive, quibbled with questions and gave non-responsive answers. He fought the cross-examiner and argued his case.

25 He plainly is extremely angry with Mrs Davis. He appears to hold her responsible for the fact that he had to sell the farm at Bringenbrong. He claims that this followed from her contacting the Commonwealth Bank in the middle of June 2003 to seek information about her position and the state of the accounts. He described this on several occasions as like throwing a "hand grenade". I am satisfied that his view is incorrect. The need to sell the farm arose because of cash flow problems identified 12 month earlier. The Bank was very concerned about Mr Tayles financial situation before Mrs Davis contacted the Bank. Part of the explanation for his anger and hostility may lie in the acute sense of loss he has felt with the termination of the relationship. On more than one occasion he became extremely emotional in dealing with questions about Mrs Davis' two children. He plainly not only fell in love with Mrs Davis but fell in love with her children. The photographic evidence points to a very warm relationship between them all for much of the period of the relationship. He is plainly still grieving for that loss.

26 His obsession to win the case and deprive Mrs Davis of any adjustment in her favour resulted in him going to absurd lengths to deny the existence of a de-facto relationship and any relationship of a domestic nature for the relevant time of two years. The question of the nature and duration of the relationship is discussed further below. I find it difficult to understand how anybody could say (as he initially attempted) that he and Mrs Davis did not commence a de-facto relationship in late 1999 when he moved into her home, set up his office in her home and commenced a sexual relationship with her. In addition, he assisted her in late 1999 by holding himself out to be the step-father of her children for the purpose of seeking entry for them into Wesley College. As discussed below, his changes of position during the trial on the duration of the relationship were tortuous. Unarguably, it seems to me, Mr Tayles and Mrs Davis formed what is normally called a de-facto relationship in late 1999 and yet he refused to concede that this was so. In the end he was driven to explain his position on the basis that he has sexual relationships with women and he marries women but he never has de-facto relationships. By applying his definition of reality, he was not in a de-facto relationship with Mrs Davis because "I don't do de-facto relationships".

27 I am satisfied that his hostility towards Mrs Davis and his desire to win the case has been so extreme that he has also attempted to mislead the court in a number of areas. I refer, for example, to his protestations of ignorance about the nature of mortgages and the obligations of the mortgagor. At the same time he claimed to know that what had been provided by Mrs Davis was not a guarantee. He also acknowledged that he had executed at least eight mortgages in the course of conducting his various enterprises. He was also aware of some finer points of discretionary trusts and the like. Another example is the evidence given in cross-examination initially to the effect that there was an agreement that the Bank would call on all his other assets ahead of the house, something he said was confirmed by two Bank officers, John Sercia and Neil Cowie and which he described as a "very stringent requirement". I am satisfied that there was no such requirement. At its highest, Mr Cowie indicated that the Bank was likely to call up securities other than the house in Glen Iris because it was likely that there would be an attempt by Mrs Davis to assert her rights over that property which could make the sale more costly and difficult. Mr Tayles also said that the arrangement with the Bank was that Mrs Davis was not liable for Biztek's debts. Again this appeared to be relying upon the proposition that the Bank was unlikely to sell the Glen Iris house first up but would realise other securities - a different matter. Later, he stated that she was a limited guarantor to the extent of $300,000 until her house was sold. He said that was his understanding of it and was the Bank's also. I am satisfied that he fully understood the extent of her liability, having himself negotiated a limit of $700,000 on her liability. I am also satisfied that he attempted to persuade a witness, Dr Horkin, to give evidence relevant to the duration of the relationship which evidence would have been false. I make that finding having due regard to the gravity of the allegations involved.

28 Mrs Davis in her evidence provided a complete contrast. She attempted to co-operate, she attempted to answer the questions, she rarely if ever argued her case and she understated her position. She revealed no hostility towards Mr Tayles and on occasion praised him. Her care at times resulted, however, in answers that were non-specific or complex.

29 Counsel for Mr Tayles challenged her credibility on several bases. One was that she had made inconsistent statements on different issues at different times depending on the circumstances.

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Challenged on the assertion that she was separating from Ian at that time, an assertion contrary to her case and evidence, she said the statement as to separation wasn't truthful. She said that the truthful part was that she could not continue to pay the fees. She said that she was in fact considering separation, but they did not and Sarah in fact went to Korowa and Sam to Wesley. She said she was angry because she was so tired from working so much on the farm and was very sick with pneumonia. But they remained together and had a holiday in January 2003.

The accuracy of her assertion that she could not pay the fees was also challenged on the basis that at that stage she had money on deposit with ING. Assuming that to be the balance of proceeds of the sale of the Burwood property totalling approximately $100,000, it is understandable that Mrs Davis did not see herself as able to afford the school fees for her two children. She had been planning to send them to secondary school using the equity in the Burwood property. That equity, however, was of the order of $350,000. Further, whatever money she then had with ING was the only asset she could gain access to at that time for herself and her family. Even that was subject to possible appropriation by the Commonwealth Bank because of her personal responsibility for Biztek's debt to the Bank to the extent of $700,000. It is understandable that she would have the view that she could not continue to pay the fees.

(b) Next it is alleged that a letter she wrote to the father of the children in November 2000 was inconsistent with her evidence. In that letter she had stated that Mr Tayles had agreed to lend to her the amount of her husband's share of the fees to enable the children to continue at Wesley until he came to accept his responsibilities. Counsel submitted that Mrs Davis now says the money was paid as a gift.

The precise basis upon which this money was paid was unclear. Mrs Davis gave evidence that in 2000, Mr Tayles paid Sarah's fees saying he wanted to do so because he had no children of his own and education was the greatest gift a child could be given. Thereafter they split them for a time until she paid them. After they separated in late 2003, she in fact drew on the funds in ING to pay the then debt to Wesley of $34,000. Mr Tayles' outline of evidence stated that his payments of half the school fees were a loan that became payable to him once Mrs Davis was reimbursed by her former husband. If that be the case there is no inconsistency - the statement is supported by

Mr. Tayles. At the same time a loan in those terms is not yet repayable. Mrs Davis, however, denies there was any loan arrangement with Mr Tayles. The letter puts forward a proposal which Mrs Davis and Mr Tayles could well have agreed would not come into operation unless Mr Davis agreed. I am not satisfied on Mr Tayles evidence that any loan discussion went beyond that. The moneys were paid by Biztek. Mr Tayles claims that the books charged the debt to him. The situation is confused, but I accept Mrs Davis' account and that the payments by Mr Tayles were a gift. They must, therefore, be considered as a contribution made to him.

(c) It was also put that Mrs Davis had given differing accounts of the caveat on the farm property. Counsel referred to the following:

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In my view the statements are not inconsistent. To ensure the proceeds from the sale of the farm were used to reduce the debt on the Glen Iris property, it would be necessary to enter into negotiations relying upon the claim in the caveat to a constructive trust. Whether that claim, which has not been pursued, had substance or not was dependent upon establishing, inter alia, that Mrs Davis had by her labour or by money contributed to the value of the farm. There was no inconsistency.

(d) The next matter raised was that Mrs Davis had made no mention in her evidence that she had been concerned at different times about whether Mr Tayles was having affairs with other women. Counsel referred to the evidence of Dr Horkin, Mrs Potocky and Mrs McMananmy. Counsel criticised her because she did not give evidence of her concerns.

If anything, her failure to mention her concerns reflects favourably on her. She did not have direct evidence and so could not substantiate her concerns. I can understand her having concerns, however, because Mr Tayles clearly saw himself (and still does) as a latter-day Casanova and at the start of his relationship with Mrs Davis had, as he put it, some "fires" to put out. He conceded that he put them out at her insistence.

(e) Mrs Davis is also criticised for inconsistency between a note on the back of a photograph of 2001 and the case put to Mr Tayles by counsel that the picture was taken in April 2003. There is no evidence whether the error was that of counsel or whoever gave the instruction to counsel. Assuming there was a wrong instruction by Mrs Davis, there is no evidence that it was deliberate.

(f) Counsel suggested the evidence of Mrs Davis about a visit to a nursery in September 1999 was that of a person intimately involved with decisions concerning the farm and that this was highly improbable at that time. I am satisfied, however, that Mr Tayles would have approached their new relationship with great enthusiasm and encouragement. I can well understand that, at that early stage of the relationship, he would have encouraged her to be involved.

(g) Counsel also sought to rely upon evidence given by Dr Horkin about the Mrs Davis' concerns in mid 2003, suggesting that they showed her true motivation. The points raised were that:

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30 Counsel raised one matter of particular significance, however, - the fact conceded by Mrs Davis, that she did not tell Centrelink of her de-facto relationship until February 2001. Counsel put that she misstated her arrangements with Centrelink to secure her pension. Thus she had been guilty of serious dishonesty when it served her financial interests. For this reason, and because of the other false statement mentioned, it is necessary, to consider her evidence with care. In the end, however, I have concluded that, as a witness, she was conscientious and that the evidence she gave was honest and credible.

The nature and the period of the relationship - submissions

31 The first major issue to consider is the nature and period of the relationship.

32 For most of the proceedings Mr Tayles has maintained that if a domestic or de-facto relationship existed, it did not exist for a period in excess of two years. At the commencement of the hearing, his position was that a relationship commenced when they moved into premises in Glen Iris in January 2001 and terminated in about the middle of 2002. On the fifth sitting day, the period was extended to the end of 2002. On the sixth day of sitting , after a period of cross-examination, Mr Tayles indicated through his counsel that he now conceded that there had been a domestic relationship within the meaning of the Act in the period from January 2000 to June 2002 and a de-facto relationship from January 2001 to June 2002. He also conceded that Part IX of the Property Law Act had application to him and Mrs Davis. He continued, however, to vigorously contest, the issues of the nature of the relationship and its history and the duration of the "domestic relationship".

33 In final submissions as to the duration of the relationship, counsel for Mr Tayles argued that a relationship did not begin in September 1999 but in the later months of 1999 and did not become a domestic relationship until early 2000.[9] Counsel further submitted that it came to an end by June 2002, the occasion when Mrs Davis declined to go to the farm with Mr Tayles for the Queen's birthday weekend. He also put forward several longer alternatives:

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34 It was put for Mr Tayles that there was no event in September 2003 which marked the end of the relationship and the fact that Mrs Davis left the bed they had shared was not an event which marked the end. Counsel conceded, however, that up until September 2003, a sexual relationship continued. Mrs Davis in fact said the last occasion was August 2003 and that they still had "beautiful" times up until August 2003. I note that in evidence Mr Tayles said that she left the bedroom several times after June 2002, and that a series of reconciliations were attempted.

Relationship of the parties - analysis

35 I am satisfied that from late September 1999 to September 2003, Mrs Davis and Mr Tayles lived in what would normally be described as a de-facto relationship. Initially, for some 16 months they lived together at her home in Burwood when he was in Melbourne. By the end of 1999 Mr Tayles had had installed two Telstra business lines for his purposes and had his home office in the family room which formed his Melbourne office and was keeping business records on the premises. Mrs Davis fulfilled the traditional role of home maker in addition to attempting to conduct a business from home as a consultant. Mr Tayles assisted her in setting up a company and helped her by bringing up to date her financial records and six years of tax returns. They lived as a couple and presented to their friends, family and the public as a couple. They slept together whenever Mr Tayles was in Melbourne until at least mid 2003. When Mrs Davis joined him at the farm, they lived there as a couple with her again fulfilling the home maker role. In addition, however, she worked hard on the property performing tasks in relation to the cattle, fencing, vineyard and nursery. She received no payment at the time for this work and there is no evidence of any contemporaneous discussion about payment for that work.

36 In August 2000, Mrs Davis and Mr Tayles agreed to marry. They discussed purchasing a home together instead of extending the house at Burwood. The engagement was announced in October 2000 at a party at the home of Ian Tayles' sister Helen. The occasion was the celebration of Susan Davis' 40th birthday, Ian Tayles' 50th birthday (he having turned 50 the previous year) and his sister Helen's 50th birthday.

37 Initially, they were very happy and a close bond was formed between Mr Tayles and Mrs Davis and her children. The children started to call him "Dad" in about September 2000. He spent a considerable amount of time with her and the children; in Melbourne,[10] at the farm and on holidays. This changed in 2002 for a number of reasons and the relationship came under stress.

38 In 2002 the farm was in difficulty because it became affected by drought conditions which began that year and which worsened in 2003. Mr Tayles thought it necessary to give more personal attention to the farm and long separations resulted. At the same time, by the end of 2002, Mrs Davis was exhausted, in particular, by the travelling to and from Bringenbrong (a five hour journey) and the domestic and farming work at Bringenbrong. In addition her health was not good. She had been experiencing back pain (for which she wore a brace) and at times her lungs were causing her difficulty. Thus, from near the end of 2002 through 2003 she made few visits to the farm - there would appear to have been two visits, one in early January and the other in the Easter period. Another problem was financial issues about which she had legitimate concerns. They are discussed in more detail below.

39 The relationship continued into 2003, however, although it was experiencing difficulties. Mr Tayles tried to maintain it. In September 2002, for example, Mr Tayles spent at least $8,000 purchasing equipment for a home theatre. Mrs Davis and Mr Tayles spent Christmas day together, at her parents' home, and New Year's Eve together. They had a holiday early in January 2003 as a family as well as spending time at the farm. The children went back to school at Korowa and Wesley. In April or May 2003 Mr Tayles purchased a replacement speaker for the home theatre. Mr Tayles writing to the Bank in July 2003 described the relationship as ebbing and flowing with his absences.[11] Eventually they separated in September 2003. They both continued to live at Glen Iris, until there was an assault in December 2003.

40 In my view a de facto relationship, and therefore a domestic relationship, existed for close to four years between Mr Tayles and Mrs Davis. I turn to the next issue, the contributions made by Mrs Davis and Mr Tayles.

Submissions as to contributions

Domestic contributions - Melbourne

41 Counsel for Mrs Davis submitted that as home maker, Mrs Davis fulfilled her role in its entirety and in doing so left the first defendant in a position to get on with his business affairs. Counsel accepted that as Mr Tayles spent less time in Melbourne, particularly as the drought worsened at Bringenbrong in 2002 - 2003, Mr Tayles had less benefit from her homemaker role. Counsel argued, however, that Mrs Davis continued to look after their Melbourne home but bore the burden on her own. While the purchase of the Glen Iris property in early 2001 conferred benefits it being a bigger house with garden and swimming pool and tennis court, it meant a bigger job for her as home maker.

42 Counsel also submitted that in assessing the contribution of Mrs Davis it should be borne in mind that for the first 16 months of the relationship, Mr Tayles had the use of the Burwood property as his home and all outgoings were paid by Mrs Davis.

43 Counsel argued that Mrs Davis' contributions needed to be recognised by an appropriate adjustment of Mr Tayles' interests in the Glen Iris property.

44 Counsel for Mr Tayles, on the other hand, submitted that there was nothing to suggest that Mrs Davis was the sole contributor or that she had to take care of all of Mr Tayles' domestic needs. Counsel argued that the evidence of Sarah Davis, Mrs Davis' daughter, was that the parties contributed equally at the outset in dealing with washing, ironing, cleaning and cooking but thereafter Mrs Davis did more. It was put that this was consistent with the deterioration over time and the increasing time spent apart. It was put that Mr Tayles spent much of his time away from Melbourne and was but one of the four members of the household. It was argued that it was not contended that the presence of Mr Tayles significantly increased the tasks required.

45 It was also put that Mr Tayles had made significant contributions physically and financially. These included work done to improve the Burwood property, through Biztek Pty Ltd, but in respect of which he did not charge for his labour. Counsel submitted that the improvements were a selling point and resulted in a higher price than expected. Counsel also submitted that Mr Tayles had paid school fees, legal fees, buying a computer for Sarah Davis, rates, utilities, food, groceries, holidays and contributed as a father figure. It was put that Mrs Davis had received substantial benefits from these contributions and from financial contributions made by Mr Tayles including the improvement to the Burwood property, the receipt of $100,000 from the sale of that property, assistance in enrolling children at Wesley, the benefits of a larger house and facilities, payment of interest amounting to $60,000 per annum on the Biztek loan used to purchase the Glen Iris property, use of a Ford LTD, sole use of the Glen Iris property since 2003 and no need to borrow funds.

Plaintiff's contributions - Bringenbrong

46 Counsel for Mrs Davis also submitted that as the home maker both in Melbourne and at the farm and having regard to the work done at the farm, Mrs Davis' contributions should be recognised. Counsel argued that an adjustment should be made equal to a reasonable portion of the increase in capital value that occurred in the farming property from the commencement of the relationship to the time of its sale - in the sum of approximately $1M to $1.2M. Counsel put that, viewed as simply a domestic contribution, she would be entitled to at least half the increase but here there was a greater contribution than that. Counsel had to concede that, on an annual basis, she could not say that her contribution was equal to or greater than that of Mr Tayles at Bringenbrong. When there, however, she contributed significantly. Counsel also referred to the increases in the credit limits of Biztek secured in January 2002 of $20,000 and July 2002 of $100,000 by Mr Tayles without the knowledge or agreement of Mrs Davis and for which she was liable. The latter was apparently obtained by Mr Tayles for the purpose of preparing Bringenbrong for sale.

47 Counsel for Mr Tayles acknowledged that Mrs Davis did some work in respect of the farm at Bringenbrong but argued that it was, on the evidence, very little. Mr Tayles compiled a time sheet in March 2004 which recorded a total of 323 hours of work for which she was subsequently paid $4840 (a rate of $15 per hour). Counsel for Mr Tayles submitted that there was no evidence to suggest that Bringenbrong was seen as a joint venture between Mrs Davis and Mr Tayles.

Mrs Davis' contribution to Glen Iris, Laverton and Echuca

48 In relation to the Glen Iris, Laverton and Echuca properties, Mrs Davis seeks a 28% share of the present value of those assets less the amount representing the balance of her contribution of $700,000, namely $400,000, she having contributed $300,000 of the $700,000 personal guarantee she had agreed to put in. The total value of the Burwood, Laverton and Echuca properties as at 2000 was calculated as follows:

1. Laverton $1,860,000 (equity)

2. Burwood $300,000

3. Echuca $340,000

Total $2,500,000

The figure of 28% is arrived at on the basis that in purchasing the Glen Iris property, Mrs Davis contributed by committing herself to an effective personal guarantee of $700,000. That amount represented 28% of the value of the properties mentioned above in the year 2000.

49 As to the increases in value by 2005, Mrs Davis submits that the relevant properties had the following values:

Laverton $4,706,000 (equity)

Glen Iris $1,600,0000

Echuca $340,000

Total $6,646,000

50 Applying the percentage of 28% to the value of the properties in 2005, a figure of $1,860,880 is arrived at. From that figure is deducted the $400,000 mentioned above and the sum of $800,000 representing her half share of the value of the Glen Iris property leaving, it is argued, an adjustment in favour of Mrs Davis of $660,880.

51 I note that counsel for Mr Tayles interpreted Mrs Davis as seeking 28% of the increase in value over the period of the relationship. In my view the claim in this area should be confined to any increase in value over that period. At the same time, the plaintiff's contribution was more than the $700,000 guarantee. She contributed $300,000 and, having done so, remained personally liable to the Commonwealth Bank for $700,000. Her contribution can be said to have increased in payments and liabilities to $1M.

52 Counsel for Mrs Davis submitted that prior to the purchase of Glen Iris in late 2000, Mrs Davis and Mr Tayles had kept their assets separate. To purchase the property, however, they combined their assets to enable a borrowing to take place to purchase the Glen Iris property. In particular, the Burwood, Echuca and Laverton properties became one for the purpose of the borrowing. That borrowing covered an amount greater than that needed to purchase Glen Iris. The exercise also involved a mortgage of the Glen Iris property to secure the borrowing by Biztek under which Mrs Davis and Mr Tayles were personally liable as third parties. This, it was said, effectively created a personal guarantee to which they were subject. Mr Tayles disputed the accuracy of describing the obligation as a guarantee. Nothing turns on that dispute although it should be contrasted with his claimed ignorance of other legal distinctions. Mrs Davis also gave a registered first mortgage over the Burwood property to secure the debt. Counsel submitted that, prior to this transaction, Mrs Davis was in a position of financial security in that she owned the Burwood property which was at that time subject only to a mortgage of some $10,000 and was worth at least $300,000. As a result of this transaction, however, she lost that position and incurred a personal liability of up to $700,000 in respect of Biztek debts secured by the mortgages over the Burwood and Glen Iris properties. If the Bank called up its securities, she would be left with nothing - unless the Bank called on Mr Tayles to meet fully the loan facilities and he did so. If this occurred, he, by contrast, would nonetheless still have had some substantial assets remaining. Counsel submitted that the result of this exercise was that the parties had in fact directly pooled four assets - Laverton, Burwood, Echuca and Glen Iris. Counsel put that it became a joint venture.

53 Counsel also drew attention to the fact that the original agreement with the Bank, and Mrs Davis' expectation was, that by February 2003, she and Mr Tayles would hold a clear title to the Glen Iris property.[12] This was because it was a term of the loan made to facilitate the purchase of the property in Glen Iris that the Burwood, Laverton and Echuca properties would be sold and the loan paid out. Counsel also submitted that it should, however, be found that Mr Tayles never intended to sell his own properties and was relying upon addressing the Bank's requirements without doing so. In particular, the loan facility involved a temporary extension of an overdraft which had to be paid out within 12 months. This obligation was met by selling the Burwood property. As to the Bill facility, Mr Tayles was intending, as he usually did, according to his evidence, to try to roll over that Bill rather than sell any property. He stated proudly that he had acquired his wealth by not selling his assets. Counsel submitted that by providing her property and submitting to the risk of losing everything, Mrs Davis had made a significant contribution to the purchase of Glen Iris and the continuation of loan facilities to Biztek and the retention of three properties rather than their sale which would have been necessary to purchase the Glen Iris property. Counsel submitted that Mr Tayles did not tell Mrs Davis of his intentions not to sell his properties at any time.

54 Counsel for Mrs Davis also submitted that Mrs Davis did not fully understand the ramifications of what was occurring. Counsel submitted that she was fairly uninformed and inexperienced, her previous dealings having only involved mortgages. Counsel for Mr Tayles criticised Mrs Davis' suggestion that she had little idea of financial transactions when comparison is made of a note of a meeting in July 2002 with the Commonwealth Bank made by Mrs Davis. Counsel referred to the detail of the options discussed including the payment of "interest only for the next couple of years". I do not see any inconsistency. The note does not record technical details. In any event, I am satisfied that Mrs Davis did not have an understanding in late 2000 and early 2001 sufficient to understand the intricacies of the financial arrangements entered into. It was not until mid 2003 that she started to gain some understanding. Counsel submitted that by June 2003, Mrs Davis was becoming concerned about the security of herself and her children and retained lawyers. Her solicitors who wrote to the Bank on 18 June 2003 seeking information about her liabilities. She also received help from Dr Horkin in 2003.

55 Further, counsel for Mrs Davis submitted that Mrs Davis trusted Mr Tayles and that was demonstrated by the fact that she handed over to him all her assets. Counsel submitted that in January 2002 she still thought the arrangement was some form of mortgage and was encouraged in that view by the document he supplied to her at the time when she was asked to sign an authority to release the sale proceeds of the Burwood property to the Bank. She agreed to do so under pressure from Mr Tayles who said that, if the release was not given, Glen Iris would have to be sold. There were other options - the sale of Laverton or Echuca. He typed up a document and signed it and this gave her comfort. The document is discussed below. There was no express representation from Mr Tayles to Mrs Davis that the mortgage would be reduced but, in my view, the impression was given that in some fashion the money had been linked to the Glen Iris property to protect her position. This had not in fact occurred. Instead $120,000 was used to meet the commitment of Biztek to the Bank to pay out the overdraft extension and the balance used to reduce its debt. Her liability for $700,000 remained and was fully secured by her interest in the property.

56 Counsel for Mrs Davis also submitted that the use of the proceeds of sale of the Burwood property contributed to the assets and resources of Mr Tayles. Counsel referred to the evidence of Mr Tayles that the Burwood property was not needed as security for the purchase of the Glen Iris property and its sale was not required. Counsel submitted, however, that Biztek was obliged to reduce the temporary extension of the overdraft and this was done by selling the Burwood property. This could have been done by selling the Laverton property or the Echuca property. The Echuca property, however, had not increased in value and no steps had been taken to try to sell it and it was generally regarded as a difficult property to sell. On the other hand the Laverton property had a plan of sub-division prepared for 9 allotments but was not yet on the market. Counsel submitted that the sale of the Burwood property was the means by which Mr Tayles, through his companies, was able to retain both the Laverton and the Echuca properties. It was put that this sequence of events gave rise to Mrs Davis having an interest in the Laverton property because she had thereby contributed to its retention.

57 In assessing the contributions of the parties, counsel for Mr Tayles made a number of submissions.

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Preliminary issue - the parties' interest in the Glen Iris property

58 A preliminary issue to be determined before considering the contribution issues raised by the parties is the nature and extent of the interests of Mrs Davis and Mr Tayles in the Glen Iris property. I turn to that issue.

Mrs Davis' submission

59 Counsel for Mrs Davis submitted that on proper analysis of the whole transaction relating to the Glen Iris property, Mr Tayles had intended Mrs Davis to benefit to the extent of one half of a clear title of that property. Counsel also submitted that Mr Tayles intended her to benefit from the payments made by Biztek. It was put that Mr Tayles had stated in evidence that he knew there was no way she could buy such a property or make any significant contribution. Counsel conceded that under Part IX of the Act this represented his contribution.

Submissions of Mr Tayles

60 While it was common ground that the certificate of title for the property at Glen Iris records Mrs Davis and the first defendant as joint proprietors, counsel for Mr Tayles submitted that the parties hold the beneficial ownership of the property according to their contributions. Mrs Davis' contribution to the acquisition of the Glen Iris property was allowing the Burwood property to be used as security and paying $300,000 in January 2002 to the Bank from the proceeds of its sale. This amounted to 25% or, on current values, $400,000. Counsel argued, however, that this contribution is recognised by a 25% interest in the equity of the Glen Iris property. Counsel submitted that there was no other evidence pointing to any other form of contribution in respect of that property.

61 In support of Mr Tayles' argument reliance is placed upon the evidence of Mr Tayles and also upon the principles relating to resulting trusts. Reference was made in particular to the High Court decision of Calverley v Green[13] and the discussions in that judgment of the principles to be applied in determining whether a resulting trust applies. Counsel quoted the judgment of Mason and Brennan JJ[14] where their Honours stated:

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62 Counsel for Mr Tayles submitted that a contrary common intention to hold the property jointly was not shown. Counsel argued that it was significant that at no stage has Mrs Davis in evidence or submission said that there were any discussions that the parties would own the beneficial interest in the Glen Iris property equally. Counsel for Mr Tayles also referred to the pleadings in the case and argued that Mrs Davis referred in turn to contracts and agreements which contemplated unequal contributions to the purchase of the property. Further reliance was also placed upon Mrs Davis' outline of evidence where she stated that prior to the purchase of the Glen Iris property, Mrs Davis and Mr Tayles entered into a financing agreement relating to its purchase under which Mrs Davis was to sell Harrison Avenue and contribute the net proceeds to the Glen Iris purchase. Reference was also made to another statement in the outline of evidence to the effect that when the property in Burwood was sold and its sale completed on 16 February 2002, the sum of $300,000 from the net proceeds of sale was applied pursuant to the collateral agreement by Mrs Davis to the purchase of the Glen Iris property and Mrs Davis' equity therein.

63 In my view, Mrs Davis' pleadings and evidence do not detract from the primary position of Mrs Davis that it was intended that the property be held jointly both legally and beneficially. I note that in her outline of evidence she stated that she and Mr Tayles agreed to jointly purchase a home. In her evidence in chief, she did not go into any detail about statements of intention but rather spoke of them looking at properties as a couple and purchasing the property as a couple. This is hardly surprising: they being in love, engaged to be married , confident about their future together and looking for a family home for the future. The issue was not explored directly in her cross-examination.

64 Counsel for Mr Tayles submitted that his evidence about the arrangements was contained in paragraph 15 of his outline and confirms that the agreement was that Mrs Davis would sell her property at Harrison Avenue, Burwood and contribute part of the proceeds, around $300,000, to the purchase of the new house. The outline of evidence, however, does not address the intention of the parties. In cross-examination, Mr Tayles denied any common intention that they held the property jointly but he gave no evidence of any relevant discussions at the time of the purchase.

The nature of the interests of the parties in the Glen Iris property

65 There is, however, strong contemporaneous evidence supporting the conclusion that the intention of both parties was that they would hold the property as joint proprietors both in law and in equity.

66 Reference should be made first to a document which was typed by Mr Tayles and signed by Mrs Davis on 25 November 2000. It was in the following terms:

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69 The document was drawn up by Mr Tayles after Mrs Davis had been told by Mr Tayles that she had to sign an authority to release the sale proceeds. The authority had been sent to them by Mr David Miles of the Commonwealth Bank. She said that the release really worried her. She had understood that the money was to be used to reduce the loan at the Commonwealth Bank. She said that Mr Tayles told her that $180,000 was going to the Bank and $120,000 was going to Biztek. She did not understand why the Bank would ask Mr Tayles to do what he was doing. She said she was very alarmed by this and asked why the proceeds should go to Biztek saying that they should go to the Commonwealth Bank because that was what they had agreed - to pay off the loan. She stated that they had a bit of an argument about it and as a result of that he brought her the above document to reassure her, as he put it, that $300,000 was going to the Commonwealth bank (not Biztek) and $20,000 was going to repay Biztek for the refurbishment of Harrison Avenue. She agreed that the sale proceeds exceeded $400,000 but said that at no time did Mr Tayles ask for more than $300,000. She said that the high price was achieved because it was sold later and because of the work that she and Mr Tayles had done. She said that Mr Tayles had been "fabulous" and done a tremendous amount of work.

70 In cross-examination she again repeated that she was concerned about Mr Tayles stating that $120,000 was to go to Biztek. Asked about the reference to the application of the money to her "equity in the property" she said she didn't know what was meant by that. She said the letter did make her feel a bit better but she was not happy signing the document. She said that Mr Tayles told her that if she didn't sign the document they would have to sell Glen Iris. She said she was very upset with the authority to release. She said it was a very stressful period. She said that the mortgage over the Glen Iris property was to be paid off. The money was intended to be used to pay off that mortgage. She didn't see the payment as an investment but a repayment off the mortgage.

71 I accept her evidence about this transaction. At worst from Mrs Davis' point of view, the document shows Mr Tayles attempting to deceive. I am satisfied that at the time these events occurred Mrs Davis did not fully understand and was still somewhat unsophisticated in the technicalities and niceties of the transactions. As a result she was somewhat confused as to the above third document itself and the reference to the application of $300,000 "to your equity in the property at 31 Howard Street". What Mr Tayles set out to do was to appear to link the payment to her and the property rather than to the Biztek debt owed to the Bank. He did not set out to describe her equity in the property. The document was consistent with the parties having the common intention that she would have an equal beneficial interest in the property. What had been planned and intended from the outset was that she would receive such a half interest and her direct contribution to the purchase of her half interest, or equity, would be the provision of $300,000 approximately from the sale of the Harrison Avenue property. Thus the document is consistent with what was originally planned - namely that she directly contribute $300,000 and that they own the property jointly.

72 In my view the above documents and events point strongly to a common intention that Mrs Davis and Mr Tayles would own the Glen Iris property jointly. That conclusion is strengthened by the reality that Mr Tayles was well aware of the relevant concepts and distinctions and had ample opportunity to ensure that any document prepared made it clear that Mrs Davis was to have a 25% interest in that property. I note that at about the time of these transactions he showed his familiarity and ease with the concept of equities of different sizes in correspondence from February 2001 to September 2001 with his mother and siblings. It related to discussions prior to Christmas 2000 and during 2001 concerning the funding of the purchase of a unit in Melbourne for his mother. He acknowledges that in February 2001 he wrote a detailed letter stating that five people were to be on the title and that a transfer was prepared identifying four persons as tenants in common in equal shares. Throughout his cross-examination he was evasive on these matters. He was driven to claim that he had no idea of the ramifications of being a joint proprietor of real estate, notwithstanding an extensive past experience in dealing in real estate and having held property jointly with his two previous wives. I also note that in September 2001 he was circulating a draft agreement recording his mother holding 51.43% interest in the property and each of the other three holding a 16.19% interest. Ultimately, he said it finished up at one half and three one-sixths. A title search of the property revealed that as at 4 May 2001, Mrs May Tayles had a one quarter undivided share as tenant in common and Mr Ian Tayles, Helen Mary McManame and David William Tayles held the remaining three one quarter shares. Thus counsel made the further point that it was not a novel proposition for Mr Tayles to have the title recording a situation that did not match the agreement he claimed to exist between the parties.

73 It should be remembered that Mr Tayles himself said that he saw the action of Mrs Davis in making her property available as a loving gesture on her part. It was the act of someone placing her entire trust in the other for her financial future and financial security. In those circumstances, it is hardly surprising that Mr Tayles would respond and intend that they would be equal beneficial owners of the property.

74 Finally, on the evidence it would be surprising if Mr Tayles had not intended that Mrs Davis should receive an equal beneficial interest in the property. They were very much in love. They had announced their engagement to be married approximately one month prior to the purchase. Mr Tayles had formed a very strong bond with Mrs Davis and her two children. In September 2000, as noted above, they began calling him "Dad". They had provided him with the family that, as he himself said, he had craved from his late 20s but thought he could not have. I am satisfied that at the time of the purchase of the property Mr Tayles and Mrs Davis had committed themselves to the marriage. What occurred was a pooling of resources in the context of a commitment between them for the future.

75 Once all the parameters are taken into account, it also seems to me that the provision of a joint interest was just and equitable. That issue is discussed further below.

Analysis of contributions - approach

76 The submissions and evidence reveal a complex situation involving contributions of different kinds and categories which inter-relate in different ways. It is necessary to explore the issues in more depth before any decision can be reached.

77 The situation does not lend itself to a classic global approach.[17] It is not the situation of a couple acquiring assets in the course of the relationship. Rather they brought to the relationship assets significantly different in value and nature and during the relationship, the only asset acquired was the Glen Iris property to which each contributed financially and in different ways.

78 It seems to me that for Mrs Davis to be able to benefit from any increase in the value of assets held during the relationship, Mrs Davis needs to be able to demonstrate, among other things, a connection between her contributions and the preservation, or increase in the value, of assets concerned or the sharing of exposure to risk from the pooling of assets. An assessment also has to be made of what might be described as the domestic contributions of both.

79 I propose to consider the specific contributions alleged by Mrs Davis in three broad categories.

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82 As a result, her financial contribution to the relationship represented significantly more than 25% of the purchase price of Glen Iris. She had placed herself in the position where she could end up being personally liable for a further $700,000 and effectively losing $1M - only marginally less than the liability to the Bank of Biztek and Mr Tayles - $1.175M. Plainly it was the credit obtained by Mr Tayles that put her in the position that she could in fact lose that much money. But the fact remains that the terms on which she made her contribution had the consequence that she could lose everything that she brought into the relationship. The Burwood property was her only asset. In taking this action, she tied her financial future and that of her children to that of Mr Tayles and his business interests. While she plainly benefited from Mr Tayles' borrowing capacity in the form of a half interest in the property worth approximately $600,000, she agreed to place herself in the position where she ran the risk of losing everything if Mr Tayles financial affairs took a turn for the worse. Under the terms of the loan agreement, and as agreed between them, that situation would continue until late December 2002 when Mr Tayles was supposed to sell the Laverton and Echuca properties to pay out the loan facility - something that did not happen.

83 Counsel for Mr Tayles submitted that, if the Glen Iris property is held by Mrs Davis and Mr Tayles legally and beneficially as joint owners, then it would follow that Mrs Davis had received a benefit from Mr Tayles equal to the difference at the time of purchase between her then contribution, the Burwood property, and the value of the half interest in the property and that this benefit increased as time went on as the value of the property increased and Mr Tayles continued to pay the interest payments under the mortgage.

84 Accepting that analysis, it does not, however, take into account all of the above mentioned aspects of her contribution. Further, while Mr Tayles through Biztek paid the interest payable on the borrowings, at no time during the relationship did Mr Tayles make a personal capital contribution to match that of Mrs Davis as noted above. After Mrs Davis paid $300,000 to the Bank, both she and Mr Tayles stood to lose very similar amounts if the Bank chose to enforce the mortgage against them both. As to the interest payments, they are more appropriately considered with other contributions of a domestic nature such as that made by Mrs Davis in providing Mr Tayles with a home in Melbourne for the first 16 or more months of their relationship.

85 There are, however, other contributions to consider and take into account.

86 Since the expiration of the approved term of the Bill facility for the purchase of the Glen Iris property in late 2002, the debt has remained unpaid because Mr Tayles chose not to comply with his agreement with the Bank and Mrs Davis and did not sell the Laverton and Echuca properties. Since then, the liabilities under that loan agreement have remained as they were, with Mr Tayles personally liable for a little over $1.175M and Mrs Davis personally liable for $700,000 and at risk as to the loss of her $300,000 contribution in the event that the Bank exercised its rights as mortgagee. Moreover, as discussed below, during this latter period, the securities provided by Mrs Davis over the Glen Iris property along with the securities Mr Tayles provided over his and his companies properties, were relied upon and used by Mr Tayles in his negotiations and dealings with the Bank. This occurred without any agreement of Mrs Davis. Those events and circumstances in themselves constituted a contribution by Mrs Davis and support, inter alia, an entitlement in Mrs Davis to share appropriately in any increase in value of the Glen Iris property over that period on the basis of justice and equity.

87 Having regard to the above matters, it seems to me that the just and equitable outcome for her contributions in relation to the Glen Iris property is that Mrs Davis should have a 1/2 interest in the property and be entitled to benefit from the increase in its value. I, therefore, reject the argument advanced for Mr Tayles on this issue and conclude that the present division of ownership in law and equity should not be disturbed when regard is had to the above contributions.

Contributions made by Mrs Davis towards the retention of assets other than Glen Iris to the benefit of Mr Tayles and other financial benefits

88 The issues raised in this area also need to be considered in the context of the loan agreement between Mrs Davis and Mr Tayles and the Bank which financed the purchase of the Glen Iris property. Reference has already been made to some of its terms. A more complete description of them is required.

89 It was a term of the loan agreement that:

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Financial Contributions - Events in the first 12 month period.

91 The critical obligation of Mrs Davis and Mr Tayles under the loan agreement during this period was the reduction of the temporary overdraft extension given to Biztek. They had agreed that the Burwood, Laverton and Echuca properties would be sold to pay out the Biztek debts over the two year period of the loan facility. To reduce the temporary overdraft, one of the properties needed to be sold. The agreement with the Bank did not require that the Burwood property be sold for that purpose. But it provided that in the event that it was sold in the first 12 months, its proceeds would first go to reduce the overdraft extension. If Burwood had not been sold, in the first 12 months, the choice would have been between the Laverton and Echuca properties for reduction of the temporary extension. It is clear that, as between those two properties, Laverton was an easier property to sell and it is, therefore, more likely that it would have been the one sold. By selling Burwood, however, the need to sell Laverton (or Echuca) before December 2001 was avoided. In addition, selling the Burwood property had the benefit for Mr Tayles that it placed him in the position that he and Biztek had complied with the terms of the agreement with the Bank and the Bank's requirements. This would have continued his apparently good record with the Bank.

92 Mr Tayles maintained that it was never necessary to sell Burwood but that Mrs Davis had agreed. I am satisfied, however, that one of the three properties had to be sold and that he in fact pressured Mrs Davis to sell her property so that he did not have to sell his. If it had not been necessary then why was it sold particularly when Mrs Davis was very reluctant to do so? Selling one of his properties would have been inconsistent with Mr Tayles' strategy of not selling his assets. If the Burwood property had not been sold what would he have sold? The conclusion that should be drawn is that in late 2001 and early 2002, by selling the Burwood property, the need to sell Laverton or Echuca, but more probably Laverton, was avoided.

93 In my view, it follows that Mrs Davis' contribution of the $300,000 of the Burwood property proceeds enabled Mr Tayles to avoid selling, and so retain the Laverton property in December 2001 and enjoy the benefit of its subsequent capital appreciation. It would, therefore, be just and equitable that her contribution be recognised by receiving an appropriate adjustment related to the increase in value of the Laverton.

94 The next issue that arises is the extent to which her contributions in the form of the Burwood property, and its sale proceeds, and her undertaking of the mortgages and accepting of liability for the debts of Biztek up to $700,000 played any further part in assisting Mr Tayles to finance his operations and to conserve his properties including the Laverton property. I turn to the subsequent periods. The first is the second 12 month period of the loan agreement. The other is the period from the end of 2002, or early 2003, when Mrs Davis and Mr Tayles had agreed that the loan facility should have been paid out, up to the sale of the farm. In the first period, Mr Tayles used the contributions of Mrs Davis to obtain additional temporary credit under the loan facility for his purposes and without her agreement. The second period followed Mr Tayles decision not to comply with their agreement with the Bank and pay out the loan agreement and so he retained the benefit and use of Mrs Davis' financial contributions but left her at risk under the loan facility and did so without her agreement.

Financial Contributions - the remaining 12 month period of the loan agreement.

95 During this period two transactions occurred in late December 2001 and in August 2002 in which the Bank, at Mr Tayles' request, made available to Biztek temporary credit of $20,000 and $100,000 pursuant to the facility provided to purchase the Glen Iris property. Mrs Davis was unaware of these transactions at the time. In so doing, Mr Tayles was using assets provided by her to advance his own interests without her agreement and for purposes she had not authorised.

96 It appears that the first transaction was made possible by the sale of the Burwood property. I refer to the letter from Mr Myles of the Commonwealth Bank to Biztek dated 21 December 2001.[21] It advised Biztek that its overdraft had been temporarily increased by a further $20,000 to $340,000 until 16 February 2002 when the sale proceeds of Harrison Avenue were due at which time the overdraft would revert to the standard limit of $200,000. The letter stated:

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97 Thus, not only was the Burwood property sale required to meet the Bank's loan requirements, it was also necessary to secure a temporary increase of $20,000 in the overdraft - which her mortgage also secured. It is reasonable to infer, in the absence of evidence to the contrary, that these funds were spent on the operation of or improvement to the farm - it appearing to be the major activity of Biztek.

98 In addition, in August 2002, Mr Tayles succeeded in obtaining an increase to the Bill discount facility of $100,000 - to $1.075M. He did so on the basis that he proposed to sell the farm and sought the additional funding to effect improvements to it. His later lengthy letters to the Bank in July 2003 indicate that what he was planning to do in August 2002 with the money was to improve infrastructure such as all weather roads, a holding dam, sprinkler irrigation, fencing trees and piped stock water. The letters go on to refer to the difficulty he had in constructing all weather roads using local rock and in creating a dam. There was little direct evidence given about what was done but it is reasonable to infer that the money was spent on improvements to the property which would have affected its market value.

99 Mrs Davis indirectly contributed to this by reason of the fact that she remained as a person providing security for the Bill facility in the form of the mortgage over the Glen Iris property and the personal "guarantee" provided by the terms of that mortgage of $700,000. The additional borrowings were to benefit Mr Tayles not Mrs Davis. The increase in the Bill and overdraft increased the risk inherent in providing that security.

100 It also needs to be remembered that the extension of the Biztec Bill occurred approximately four months before the agreed end of the Bill facility. It was to be paid out in December 2002 by the sale of the Laverton and Echuca properties. The Bank in increasing the Bill facility, however, extended the time for payment to 28 February 2003. This also occurred without Mrs Davis' agreement.

101 Again, it would be just and equitable that Mr Tayles' use of her contributions be taken into account in determining an appropriate adjustment to the property of Mr Tayles . It would be just and equitable that Mr Tayles account to Mrs Davis for an appropriate share in any increase in the value, in particular, of Bringenbrong resulting from the funding provided pursuant to the loan facility.

Financial Contributions - the period from the original Bill facility termination date, 1/12/02, to the sale of the farm

102 During the earlier periods, the relevant financial obligations of Mrs Davis and Mr Tayles were the subject of the agreement between them and with the Bank. As noted above, those agreements required that the Bill facility be paid out at the end of 2002. This could only be done by selling the Laverton property. Contrary to their agreement and without the further agreement of Mrs Davis, Mr Tayles chose not to sell the property with the result that Mrs Davis' half interest remained exposed and her personal liability for the Biztek debt to the Bank of $700,000 continued. In addition, her interest and liability continued to provide support to Mr Tayles in his dealings with the Bank. This was still the situation when the farm was sold and it remains so.

103 An analysis of what occurred in his dealings with the Bank in this last period reveals that it was important for the Bank, and therefore for Mr Tayles, that he had a good history and "a good spread of assets". This enabled him to continue to deal with the Bank in difficult circumstances and negotiate with the Bank to secure favourable outcomes. Those outcomes included delaying the sale of assets, avoiding the sale of other assets, except Bringenbrong, and persuading the Bank to let him keep some of its proceeds of sale to pay creditors.

104 The relevant evidence admitted included internal Bank documents as well as correspondence between Mr Tayles and the Bank. From that material it is clear that Mr Tayles and his companies had been experiencing a serious cash flow problem from at least July 2002. This prompted meetings with the Bank. It is clear that Mr Tayles was spending substantial sums and he was having difficulty servicing debts. In July 2002 consideration was given to the sale of Mr Tayles' assets. It was decided to sell Bringenbrong in part because the cost of maintaining it, a cost presumably borne by Biztek, was a major contributor to the cash flow problems. I note that the sale of the farm would have provided funds to pay out the Lighthouse Peak Bill but only part of the Biztek debt.

105 As noted above, one result of the meetings between Mr Tayles and Bank officers in July and August 2002 was that the term of the Biztek Bill facility was extended to 28 February 2003 when it was to be repaid in full. It will be recalled that the loan agreement involving Mrs Davis, Mr Tayles and Biztek provided for repayment of the loan to be achieved by the sale of Laverton and Echuca. The papers also reveal that a significant factor in the Bank's thinking was that Mr Tayles had had "a trouble free record" and there was "a good spread of property assets" and the security was "fully interlocking" - including the securities over the Glen Iris property. This made it less difficult for the Bank to extend the terms. At the same time, the Bank was proceeding on the basis that Mr Tayles was selling the farm property on the market in the spring of 2003 after completion of the improvements for which the additional $100,000 had previously been sought. The Bank was also anticipating that some of the proceeds of sale would be used to reduce the Biztek debt with the balance of the debt being met from the sale of livestock and equipment. Thus the Bank was expecting the Biztek debt to be cleared.

106 The position of the parties, however, worsened over the next 12 months. By letter dated 16 January 2003, Mr Miles of the Bank reminded Mr Tayles that the Bill facility would expire on 28 February 2003. He asked him about his intentions regarding clearance of the facility. He also informed Mr Tayles that if he wanted an extension to the term or the facility he should forward financial statements for the year ending 30 June 2002 by no later than 7 February 2003. The letter requested similar statements for the annual review of facilities to other companies.

107 Mr Tayles did not repay the Biztek Bill in February 2003 (or the Lighthouse Peak Bill) or sell the farm and did not respond to the requirements spelt out by the Bank for a further extension of time. Instead he managed to secure a further extension to 26 May 2003 to give him time to comply with those requirements - in particular to produce financial statements. By letter dated 26 May 2003 from Mr Ford, a relationship executive, the Bank again requested the financial statements previously requested and recorded that the facilities to his companies had expired and the documents requested were still outstanding. The letter stated that it was important that they meet urgently to discuss Mr Tayles plans for either retiring the debt in full or seeking an extension of the loan term. I note that internal records reveal that on 27 May 2003 internal approval had been given at the Bank for a 60 day extension of the loan facilities. This does not appear to have been formally approved and communicated to Mr Tayles. The bank continued in its dealing with Mr Tayles to proceed on the basis that the Bill facility had been extended to 26 May 2003 and not beyond.

108 By 10 July 2003 the financial statements still had not been produced and the situation had worsened for other reasons. By letter dated 10 July 2003, Mr Neil Cowie, the Manager of Group Risk Management, wrote to Mr Tayles raising some serious matters which gravely threatened his financial position. He stated that due to concerns about "the credit quality" of his account, management of it had been transferred to the Bank's Group Risk Management. The letter alleged breach of the contractual obligations with the Bank in respect of the Biztek Bill facility which had been "extended to 26 May 2003" but had not been cleared. Also noted was the failure to provide financial information that had been sought. Finally, concern was raised about the de-registration of the two Taycorp companies and Lighthouse Peak Pty Ltd and a striking-off action in progress in relation to Biztek. Each of those matters was stated to be a breach of his contractual obligations with the Bank. The Bank sought his proposals for action and, as a minimum, required taxation returns, dates for re-registration of the companies, copies of relevant trust deeds, details of the new Trustees and a progress report on the sale of the farm property at Bringenbrong to demonstrate his ability to clear arrears and meet ongoing contractual obligations. He was told to anticipate an increase in the interest rate applying to the facilities.

109 Mr Tayles' financial position was now precarious and, as a result, so too was that of Mrs Davis. He was seriously in default in his arrangements with the Bank and had continued to fail to meet the Bank's requirements. The extension of time for the Biztek Bill facility had expired and the Bill was repayable. The Bank could have insisted that he sell the Laverton and Echuca properties under the terms of the loan agreement. Mrs Davis continued to be liable for the Biztek debt to the extent of $700,000. The Bank could also have exercised its rights as mortgagee, but it seems that the Bank was more likely to sell the commercial than the residential property - in part, because of Mrs Davis claiming an interest in that property.

110 Mr Tayles responded defiantly in a lengthy letter of 22 July 2003 and asked that the Bank advance the companies what was required to get them "through this difficult period."

111 The issues received serious consideration at the Bank. A strategy paper dated 18 August 2003 and approved by Mr Cowie and Mr Butcher, the Executive Manager, contained as one of its recommendations the obtaining of reports on the sale of all security properties. It recommended that the Bill facility be extended to 30 November 2003 to allow financial information to be received. Apparently Mr Tayles had said he was auctioning the farm on 4 November 2003. Reference is made in the document to the Bank's "strong security position" and the comment made that the connection should be maintained subject to Mr Tayles demonstrating that he will provide necessary financial information and complete re-registration of the companies.

112 On 22 August 2003, Mr Cowie met with Mrs Davis who was wanting to discuss her position in relation to the security she was providing for the facilities extended to Biztek Pty Ltd. Her solicitors had approached the Bank by letter of 18 June 2003. The notes record that she mentioned the sale of the Burwood property as part of the original agreement to repay the facilities and that she believed that the other part of the agreement was that Mr Tayles would sell the Echuca and Laverton properties by December 2002. The notes record that the Bank had allowed the Bill to continue under Bill rates even though it could have been allowed to continue but only at a higher rate. The notes also record that Mr Cowie advised Mrs Davis that the Bank was working with Mr Tayles to resolve the issue of the expired Bill.

113 On 5 September 2003 a meeting occurred between Mr Cowie and Mr Tayles at which Mr Tayles stated he had received an offer on the Laverton property that would clear the Biztek Bill and that he had changed his mind on selling the farm. Mr Tayles asked the Bank if it would allow the overdraft limit of $200,000 to continue while releasing the security property at Glen Iris (that was said to be causing a dispute between him and Mrs Davis). The notes record Mr Cowie's view that the Bank would consider the proposal because the remaining security of the Sydney property and the farm property had sufficient value to meet the Bank's lending margins against a reduced debt of $2.25M. The companies still had to be re-registered, however, and the Bank had to be satisfied as to the income streams.

114 Ultimately, however, the farm was sold in late 2003 with settlement due on 12 February 2004. On 8 January 2004 it was agreed between Mr Tayles and the Bank's officers that the proceeds would be disbursed in the following manner:

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Mr Tayles agreed to provide the Bank with a copy of the latest leases of the North Sydney property so that the Bank could obtain an updated valuation. It was also agreed that the Bank would require a Statement of Financial Performance of Biztek as soon as possible but was prepared to allow him time to resolve his dispute with Mrs Davis before the financial statement requirement was to be satisfied.

115 At this point, it may be said that the presence of the Glen Iris asset as a security was not critical so far as the continued funding of Mr Tayles and his enterprises by the Bank was concerned. How important it was previously is unclear. But the fact remains that it was at all times part of the good spread of interlocking assets relied upon by the bank. It may also be said that the treatment of Mr Tayles, in all the circumstances, was extremely generous and patient. It is fair to draw the conclusion that the presence in the portfolio of a first class appreciating residential property, the Glen Iris property, then worth more than $1.2M, significantly added to the comfort of the Bank, even though not critical, and so helped it to agree to allow Mr Tayles, to delay the sale of assets, to receive some of the proceeds of the sale of the farm and to delay producing a statement of financial performance of Biztek while the dispute with Susan Davis was on hand and so avoid embarrassing Mr Tayles.

116 After the sale, an internal review prepared on 15 April 2004 recorded that settlement had taken place and the Lighthouse Peak Bill of $525,000 had been repaid. It also recorded that the Bank had released the security over the property at Bringenbrong. As to the balance of the proceeds, the document notes that Mr Tayles had undertaken to reduce the Taycorp Bill by $100,000, as previously agreed. It also notes that the Biztek Bill was to be reduced by $100,000 and overdraft by $30,000 on or before 22 April 2004. Thus, Mr Tayles had managed to persuade the Bank to reduce the previously agreed repayment figure for the Biztek debt of $230,000 to $130,000 and the Biztek overdraft was to be reduced by $30,000 not $230,000. The document then turned to the issue of the securities held and the debt to be covered by that security. The debt was identified as totalling $2,787,494 and the value of the securities provided, including Howard Street Glen Iris, $3,307,000. Howard Street Glen Iris was included at a value of $700,000 on the basis that consents were only held to $700,000. The document noted that, when Mr Tayles had reduced the other debts with the amount of $230,000 released to him, the total debt to the Bank would be $2,557,490 leaving a satisfactory relationship between the debt and security provided.

117 The history shows that the Bank regarded all assets and securities, including the Glen Iris property and the mortgages given over it, as part of the assets and securities available to protect it and considered that it was entitled to consider action in respect of all of them in protecting its interests. The history also shows that the Bank was remarkably patient with and generous to Mr Tayles. It is reasonably clear that this was in large measure due to the previous history of dealings which was good and the good spread of interlocking property assets. The dealings in 2001 and 2002 over the Burwood property and the then compliance with the terms of the loan facility contributed to the picture of a good record as well as reducing the debt. The purchase of the Glen Iris property also added to the quality of the spread of interlocking property assets - introducing a high-quality appreciating residential property. It cannot be said, however, that in and between 2002 and early 2004 the presence of any one asset was critical or that, but for the provision of a particular asset, Laverton or any other property would have had to be sold. But Mr Tayles because of his history and interlocking asset spread, including the Glen Iris property, was able to obtain time and able to chose which asset he sold. He chose the farm not Laverton. If he had not been able to do so, he and Mrs Davis were in the position that the Bank was entitled to sell up Laverton and Echuca and exercise its rights as mortgagee over the Glen Iris property to pay out the Biztek Bill pursuant to the original agreement. Mr Tayles was also able to persuade the Bank to let him have over $400,000 of the proceeds of sale of the farm with which to pay his creditors.

118 Mrs Davis may be said to have played a part, albeit modest, in maintaining that good past history and improving the spread of property. While modest compared to that played by Mr Tayles it was nonetheless of benefit to Mr Tayles and was real and he used her assets to his benefit. From the perspective of Mrs Davis' situation, her contribution was very significant. For, through this latter period, she remained heavily committed and in a situation where she could have lost everything.

119 The risk to her was considerable but the extent of the risk is difficult to determine because much depended on how much money Mr Tayles was spending during the drought in 2002 and 2003 to try to save his farm business. But he was plainly in financial difficulty and creditors were forced to sue. Despite the Bank's numerous earlier requests and the commencement of these proceedings in 2004 no financial statements were available during the hearing of evidence in this matter setting out the financial position in 2002 to 2004. Some purported statements for some companies were produced between the conclusion of evidence and the commencement of submissions over a period of four days but they were incomplete. Thus, during the years 2002 and 2003 Mrs Davis' financial position was seriously at risk and neither then nor now is it possible to determine precisely how serious that was.

120 A different difficulty in assessing the risk arises because we have the benefit of hindsight and, as events transpired, the risks Mrs Davis was facing did not eventuate. On the other hand the immediate risk to her should not be exaggerated. Mr Tayles' other assets were more likely to be sold - as transpired. But throughout the relationship and afterwards, her financial future was locked into his business future. She remained at risk of having to produce a further $700,000 and so lose everything. Mr Tayles cannot avoid responsibility for this situation. Mrs Davis' risks had continued and worsened because Mr Tayles had not adhered to the original agreement. If he had, Laverton would have been sold and the Biztek debt paid out. Instead, he put his own interests ahead of her interests and, without her agreement, continued to use her assets and her personal covenant to the Bank secured over the Glen Iris property while he tried to keep his business enterprises afloat.

121 If Mr Tayles had honoured the original agreement with the Bank and Mrs Davis, as from early 2003, he and Mrs Davis would have each had an unencumbered 50% share in the Glen Iris property and Mrs Davis would have been free of her liability for the debts of Biztek and the risk of losing everything. Instead, Mr Tayles for his own business reasons, managed to keep the loan arrangement alive and it was, therefore, he who kept Mrs Davis involved in his business affairs.

122 It should be concluded that throughout this latter period, Mrs Davis also contributed materially to Mr Tayles' financial position and interests and it would be just and equitable that this contribution be recognised by an appropriate adjustment in her favour out of his assets. Having used her assets, he should in that way be appropriately held to account for any consequent benefit. Again, assessing the value of that contribution requires consideration of any increase in value of other relevant assets - in this context, the other assets are those in the interlocking spread, other than Glen Iris, any one of which might have been sold but was not.

Financial contributions - some arguable calculations

The initial period to the sale of Burwood

123 It should be accepted that Mrs Davis' provision of her assets and acceptance of liability for $700,000 of Biztek's debts was a factor in enabling Mr Tayles to avoid having to sell the Laverton and Echuca properties. In particular, at the end of 2001, her sale of the Burwood property and contribution of $300,000 of the proceeds of sale, to meet the loan requirement of removal of the temporary overdraft extension, enabled Mr Tayles to avoid selling Laverton and Echuca, but, in particular, Laverton. It would be just and equitable, therefore, that she benefit appropriately from any increase in the value of those assets - effectively Laverton.

124 It could be argued that Mrs Davis, having directly contributed 25% of the purchase price of the Glen Iris property from the sale proceeds of the Burwood property, should as a matter of justice and equity receive, in respect of that contribution, a similar percentage of the increase in value in the Laverton property - 25%. This approach enables a calculation to be made which can assist in making a final judgment of what adjustment should be made to reflect that contribution.

125 Accepting that the Laverton property increased in value by an amount of $2.706M over a six year period, I should be concerned for present purposes only with the period in and between late 2001 (when the need to sell a property arose) and the end of 2005. Thus, the figure of 25% should be not applied to the full increase in value but to an appropriate proportion. Assuming an average annual increase in price over those years of $.457M, the increase in value over four years might be calculated at $1.828M. Twenty five percent of that figure would be $457,000.

126 Against that, it might be argued that while the sale of the Burwood property allowed Mr Tayles to retain the Laverton property in late 2001, other factors came into play subsequently which allowed him to continue to retain that property - notably the Bank's preparedness in late 2002 to extend the period of the Bill facility and not enforce the terms of the loan agreement. An argument could be mounted that the sale of the Burwood property operated as a causal factor in a practical sense in the retention of the Laverton property for only the first year. Using the above figures that would translate in a calculation of the value of the contribution to an amount of $114,250. Taking that approach, however, consideration would have to be given to Mrs Davis' contribution in sharing the risks of the Biztek debts with Mr Tayles in the four subsequent years. That is discussed below.

127 During this period, the risks Mrs Davis was facing were those to which she had agreed. Nonetheless, in determining what is just and equitable, her sharing of the risks in this initial period is also a relevant matter in assessing her contribution to the benefit received as a result of the increase in value to the Laverton property.

The second period - the end of 2001 to the end of 2002

128 During this period, the Biztek loan facility was used by Mr Tayles to raise $120,000 to be spent on the Bringenbrong property, mostly to improve the property for sale. Securities Mrs Davis provided were in the bundle of securities relied upon by the Bank in permitting the additional borrowings and so there was a contribution on her part. As noted above, the additional borrowing was procured by Mr Tayles without her agreement. This increased Biztek's total indebtedness and so increased the risks attaching to Mrs Davis' personal liability for $700,000 of the total Biztek debt and her half interest in the Glen Iris property provided as the security.

129 It would be just and equitable that her financial assistance and the sharing of the burden of additional risk designed to assist Mr Tayles be recognised in an adjustment of his assets in her favour.

130 In assessing a just and equitable adjustment, regard should also be had to the likely benefit that flowed to Mr Tayles from the additional borrowings. The aim of the borrowings was to enhance the value of Bringenbrong. There was an increase in market value from the commencement of the relationship to 2005 of approximately $200,000 notwithstanding the drought.

The third period - end 2002 to sale of farm

131 From the end of 2002, Mrs Davis continued to be liable under the loan facility contrary to the original loan agreement and without her agreement. Her half interest in the Glen Iris property continued to secure her personal liability for $700,000 of the Biztek debt. Throughout that time she remained at risk of being called upon to meet $700,000 of the Biztek debts and losing everything. Mr Tayles, however, remained liable for all the debts of Biztek and all his other business interests and bore the burden of the interest payments including interest payments referable to the purchase price of the Glen Iris property. The latter, however, will, as noted above, be considered with other domestic contributions

132 Among other things, having shared in the risks involved in remaining locked in to Mr Tayles' financial affairs, it is just and equitable that she share appropriately in any benefits that may have followed. In that regard I note that in this period, Mr Tayles benefited from the increase in value of the Laverton property and Bringenbrong, while her exposure to risk continued. Her contribution should be recognised. The other property to consider is the Miller Street property which increased in value by at least $400,000 over six years. As to the Glen Iris property, it increased in value during this period but that issue has been considered above.

133 In attempting to value the contribution made by accepting liabilities, an approach that could be taken would be to compare the liability that Mrs Davis undertook, $700,000 of debt, with the liability undertaken by Mr Tayles. Treating his liabilities as having been increased by $1.2M[22] as a result of the loan agreement for the purchase of the Glen Iris property, his total liability for the debt increased to between $3.4 to $3.5 million - this time a 20% ratio.

134 Twenty percent of an increase in Miller Street value of $200,000 over three years is $40,000. Taking the same approach to the Laverton property, three years of average increase in value in the Laverton property would amount to $1.371M. 20% of that figure is $274,000. Combined with the Miller Street property, a figure of $314,000 is arrived at for the three year period of shared risk and increase in value.

135 That, of course, is a purely arithmetic approach and assumes an average progression of value for a three year period. The assessment of risks also assumes that the degree of risks was equal. On the other hand, the percentage to be employed might arguably be approximately 60%[23].

136 No doubt there are other ways in which the value of Mrs Davis' contribution might be examined. In that context, reference should again be made to the analysis suggested by counsel for Mrs Davis which produced a figure of $660,000. I refer also to my comment on that approach.

137 No attempt has been made in the above figures to include a figure for those benefits flowing to Mr Tayles from improvement in the value of the Bringenbrong property flowing from the work funded by the additional borrowings in 2002 or the retention of Bringenbrong in this period while Mrs Davis shared the risks.

138 I turn to the issue of contributions of a domestic nature.

Contributions of the parties of a domestic nature

Contributions direct and indirect at Bringenbrong

139 In this context, it is relevant to consider first the work done by Mrs Davis as Mr Tayles de facto partner on the farm itself both in working with the animals but also in working on the vineyard and maintaining the infrastructure on the property.

140 Mrs Davis was not able to give precise days and hours. This was to be expected. But I am satisfied that whenever she was on the farm she was significantly involved in work related to the farm. She had a farming background - in particular, working with and feeding cattle. She enjoyed the work. I accept her evidence that she was involved in the weighing and vaccinating of cattle, the marking of calves, the tagging of calves and their mothers, the castrating of bull calves, and the hand feeding at different times of the cattle. She said there were some 300 breeders on the property. She did fencing work. She worked in the vineyard particularly around vintage time (February, March April). This depended on the weather and whether the grapes were ready for picking. She also helped with the pruning. There were times when they cleaned up the vineyard because the person who mowed the vineyard shattered vine guards. She worked for a few days solidly with the manager of the vineyard cleaning up that area. There was also the maintenance of water systems in the vineyard and trough management - cleaning out troughs and the supply of the water. There were constant problems with the electric wire fencing because of the terrain and the kangaroos and wombats. She was also involved in work to plant trees on the farm and to develop a nursery for the growing of trees.

141 Counsel for Mr Tayles suggested that the hours she worked were somewhat limited. He referred to the evidence of Mr. Wilson who said he observed Mrs Davis working a total of five days and that of Mrs Betochi, the vineyard manager, who suggested that it was something of the order of six days in the vineyard. They, however, had only a partial picture and were attempting to recall matters of which they would not have taken particular notice. On the other hand, Mr Tayles himself in March 2004 prepared a document with the assistance of those two witnesses recording the hours worked by Mrs Davis. It was done on the basis that she worked the same hours that her children worked. It purported to cover the period from early 2000 to 30 June 2003 and attributed to Mrs Davis a total of 323 hours work. The object of the exercise was to forward money to her in payment of that work of $4,845 on the basis of $15 per hour. Mr Tayles asserted that the estimate was generous. I do not accept that proposition. That is not the way he has conducted himself in this matter. What he was attempting to do was to reimburse Mrs Davis in respect of work done at Bringenbrong. Three hundred and twenty three hours work represents about eight 40 hour weeks. Much of the work listed appeared to be work involving cattle and other work of a non-capital improvement nature. It was therefore, work which was being done by Biztek in running the farm. It does not purport to include work which would have involved improvement to the property such as fencing and repair of other infrastructure. Thus, the list underestimates the hours of work done on the property by Mrs Davis. When Mrs Davis was at the farm she played her role as the partner of a person who was operating a farm and attempted to pull her weight while at the property. Her other work on the infrastructure would have assisted in maintaining the quality of the property and its value. Her work with animals and the vineyard, while not benefiting Mr Tayles through the company that owned the farm, plainly benefited Mr Tayles' financial resources in other ways, notably in the operation of the farming business which was the business of Biztek.

142 As to whether there has been adequate reimbursement, I note that Mr Wilson gave evidence that he was paid $14 per hour when he was working without his own equipment. He was working generally around the farm with stock and the like. In those circumstances it is difficult for Mrs Davis to suggest that in respect of a total of 323 hours of work she had not been reimbursed. Accepting, however, that she worked more than 323 hours and that she also acted as homemaker, she has not been adequately reimbursed for such contributions and they are best considered when weighing up other domestic contributions, including those of Mr Tayles.

143 I have referred above to the financial contribution to the Bringenbrong property and its operations by Mrs Davis by providing the security which supported the loan facility of Biztek which was used by Mr Tayles to the extent of at least $100,000 for the purpose of improving the farm property for sale and $20,000 for the operation of the farm. But I take that contribution into account in looking at financial contributions to assets and businesses.

Contributions to the welfare of the parties of a domestic nature generally

144 Between approximately September 1999 and January 2001, it was Mrs Davis who provided the home in which she and Mr Tayles lived in Melbourne. Mr Tayles used half the family room as his office. In it he placed a desk, shelving and a filing cabinet.

145 Mrs Davis conceded that, overall, Mr Tayles made the greater contribution to the utilities and other charges and costs related to the properties occupied.

[69]

147 It is common ground, so far as the Glen Iris property is concerned, that Mr Tayles, through Biztek, has been paying the interest payable on the loans to purchase the property which totals approximately $60,000 per annum. This need not have been incurred, however, after 1 December 2002 if he had complied with the agreement with the Bank and Mrs Davis. In addition, paying that interest has enabled him to benefit from the substantial capital appreciation in the Laverton property. Nonetheless, it has been a cost he has borne and, in doing so, has enabled Mrs Davis and her children to remain in the Glen Iris property. Mrs Davis, of course, contributed capital from the sale of the Burwood property but that has already been addressed in the foregoing analysis.

148 Turning to the homemaker area, I am satisfied that, apart from attempts by Mr Tayles earlier on in the relationship, he and Mrs Davis settled quickly into a fairly traditional relationship in which Mrs Davis was the homemaker doing most of the domestic things such as cooking and cleaning and washing and ironing. At Burwood, Mr Tayles spent a lot of time working from his home office. Mrs Davis took the children to school, came home and cooked him breakfast, lunch and dinner. A similar pattern continued at Glen Iris. In the latter part of 2002 and in 2003, Mr Tayles was frequently away from Melbourne at the farm and accordingly the domestic benefits he obtained directly from Mrs Davis playing the role of homemaker decreased. But she continued to maintain his Melbourne home. I am satisfied, also that when at the farm she continued to perform that homemaker role. His absences at the farm meant that she carried the immediate responsibility and burden of looking after the house at Glen Iris.

149 In addition to performing the traditional homemaker role, I am satisfied that Mrs Davis generally paid for the food purchased for the family to eat - both in Melbourne, at the farm and on family holidays. Food for the four normally cost $200 to $250 per week. As to insurance, Mrs Davis paid contents insurance and Biztek paid the building insurance at Glen Iris. Mrs Davis bought items like bedding, sheets, towels and clothing including that of Mr Tayles - except for Mr Tayles farm clothing bought by Biztek. She also bought gardening materials like fertilizer and plants for the Glen Iris property.

150 Mr Tayles has made contributions to the school fees - $27,900 or $33,000 depending on whether $6,000 was deducted from Biztek's invoice.

151 I note that Mr Tayles claimed that he paid for cleaners at Glen Iris and the farm, a gardener at Glen Iris and farm gear for the children. The only evidence of any detail that he was able to produce to support these contentions was a copy of two invoices from Heather Crane both dated 6 May 2002 in respect of cleaning work done in March, April and May totalling some 15 hours. I accept that evidence. There is no documentary evidence of any sort produced to support the gardener claim. I am not prepared to act on his evidence on these matters where it is not supported by other credible evidence.

152 Mrs Davis and her children and Mr Tayles enjoyed a number of holidays together. Their first holiday was in January 2000 at Wilsons Promotory. This was a holiday that Mrs Davis had organised and paid for. In June 2000 Mr Tayles took her to Sydney for a short period, paying the cost. In April and July 2000 they had family holidays at Falls Creek. Mrs Davis paid the cost of the lodge on the first trip and he paid the cost of the second and bought the necessary tickets. In 2001 they had a holiday at the home of a friend of Mr Tayles in Lakes Entrance. Mrs Davis paid for the food. In September 2001, Mr Tayles hired a four wheel drive camper van for a trip to Central Australia. Mrs Davis paid for the food and cooked for the whole group at times. In January 2002 they went with another family to Tasmania. They shared the costs of the motels with the other family. In July of 2002 they holidayed in Thredbo with Mr Tayles bearing the cost. Finally in January 2003 they had a family holiday in Tasmania. Mr Tayles paid the expenses and Mrs Davis paid for all food. Mr Tayles generally claimed to be the first to put his hand into his pocket to buy food and wine and practically everything needed by Mrs Davis and the children when he was with them. While there is no supporting evidence produced to support this assertion, and it is no doubt an exaggeration, I think it likely that he would have made a point of buying things, particularly early in the relationship, for Mrs Davis and the children including meals and wine.

153 Mr Tayles also played an active role as a father for the children until the demands of the drought took him away from Melbourne. He obviously greatly enjoyed the experience, as did the children. Importantly, of course, he provided Mrs Davis and the children, and himself, with a substantial home with pool and tennis court through his capacity to borrow. This was something they would not have otherwise experienced. He also gave them the experience of country living and farming life at Bringenbrong. He also at different times spent money on entertainment such as video tapes and DVD's and in late 2002 acquired a home theatre facility for Glen Iris at a cost of more than $9,000. This reflected the difference in their roles as parents in that it was Mrs Davis who performed the day to day duties while Mr Tayles provided special things. That is not to say that the children and Mrs Davis did not derive pleasure and benefit from his spending - as he did too of course.

154 Finally, I note and accept that Mrs Davis has had the benefit of the use of a Ford LTD and of Howard Street, Glen Iris since 2003 together with her children. In the absence of evidence to the contrary, I assume that Mr Tayles through Biztek has covered the cost of registration and third party insurance of the motor car which Mrs Davis has been using.

155 Care must be taken to ensure that an adequate value is put on the homemaker role performed by Mrs Davis. As to financial contributions, both Mrs Davis and Mr Tayles have contributed financially to domestic charges and other items but Mr Tayles has plainly contributed more in the terms of financial and material contributions. This contribution has included something like $300,000 ($180,000 since 2003) in interest payments on the borrowings that gave him and the Davis family the opportunity to live in a substantial home with pool and tennis court. This opportunity has continued after the termination of the relationship. His wealth also enabled him to provide Mrs Davis and the children with the experience of country and farm living. I refer also to the items set out below from the counterclaim which are to be considered in the present context.

156 In the end, I have come to the conclusion that Mrs Davis cannot prove that her farming, homemaker and other domestic contributions amounted to more than those of Mr Tayles. At the same time, he cannot prove that his were greater. In those circumstances, the contributions of Mrs Davis and Mr Tayles of a domestic nature will not affect the outcome of the proceedings.

Conclusion on the Part IX claim

157 For the reasons advanced above, I am satisfied that Mrs Davis has a joint interest in the Glen Iris property in law and in equity. I am also satisfied, for the reasons stated above, that that situation is a just and equitable one having regard to their respective contributions as discussed above.

158 Also, for the above reasons, I am satisfied that it would be just and equitable for Mrs Davis to have her financial contributions recognised by sharing in the increase in value experienced by the assets held by Mr Tayles and his companies. Her contributions enabled him directly and indirectly to retain assets which increased in value. During the relationship, she shared the liabilities and the risks of the loan facility and the securities she gave were interlocked with the securities provided by Mr Tayles. This was for Mr Tayles' benefit. Due recognition must be given to these aspects.

159 The above arithmetic exercises are of some assistance but the judgments to be made are not arithmetic. Ultimately, it is necessary to stand back from such detail and form a judgement of what would be a just and equitable adjustment having regard to the relative contributions of Mrs Davis in this case in light of all the circumstances over the entire period of the relationship.

160 In considering how important her contributions were, I suggest that it is important to bear in mind that Mr Tayles obviously saw them as important. It would have been a relatively simple matter at the end of 2001 to sell Laverton, but he pressured Mrs Davis to sell her property. It would have been a relatively simple matter at the end of 2002 to proceed as he had agreed with Mrs Davis, and sold the Laverton and Echuca properties and paid out the loan facility. He must have known that by not doing so he continued to place Mrs Davis' financial position at risk. Yet he chose to do so. It is true that the relationship at that stage was experiencing difficulties but, both then and in the following year, Mr Tayles and Mrs Davis attempted to hold onto the relationship and tried to maintain it. Plainly to have first class appreciating residential property in the assets providing the interlocking security and to have Mrs Davis' interests available as security to an extent of $700,000 was of real value to Mr Tayles in his dealings with the bank. In my view, it was a major reason for him refusing to proceed with the original agreement in late 2002 and sell the Laverton property.

161 Taking the properties other than the Glen Iris property, the capital appreciation in the remaining properties was Laverton, $2.746M, Miller Street $400,000, and Bringenbrong $200,000 making a total of $3.3M to $3.4M. For half of that period, from the end of 2002 when the Laverton property should have been sold, an increase of the order of $1.7M occurred in the above properties, assuming the increase in value was spread evenly over the six year period. To value Mrs Davis' contribution as being of the order of $400,000 would be just and equitable in light of those figures. It would represent approximately 12% of the total increase in value and approximately 25% of the increase in value over the last three years. It is, I suggest, a just and equitable figure having regard to the opportunity Mrs Davis gave Mr Tayles to retain the Laverton property and the use and benefit derived by Mr Tayles from being able to retain his asset portfolio during the relationship and to have Mrs Davis continue to share the liability and risks of the loan facility through the money and securities she gave in support of that loan facility.

162 Mrs Davis has a half interest in the Glen Iris property. The ultimate question is what adjustment of Mr Tayles' property would be just and equitable having regard to her contributions. It seems to me that a just and equitable adjustment of the assets of Mr Tayles would require that he transfer half of his half interest in the Glen Iris property to Mrs Davis. I should add that I have come to the conclusion that to require an adjustment greater than that to any material degree would enter into the field of compensation of Mrs Davis for the actions of Mr Tayles. I am also satisfied that no other adjustment of his assets should be required.

Other claims by Mr Tayles or his companies

163 The first defendant in his counter-claim raised a number of items which he alleged were loans to the plaintiff:

[76]

167 The amount claimed is $32,131.19 together with interest under the statute. It includes estimated legal fees of $3,000 and estimated travel expenses of $900, the latter relating to travel by Mr Tayles to the interstate court before which there were some hearings.

168 Counsel for Mrs Davis did not seek to challenge the items or argue that there was reasonable cause for the caveat. Rather, counsel submitted that the matter should simply be treated as part and parcel of the domestic relationship and that it should be collapsed into and seen as part of the Part IX application. Precisely what is meant by this is unclear but for present purposes it is sufficient to refer again to the matters noted above - namely that the items claimed were not challenged for accuracy and no attempt was made to justify the lodging of the caveat. Assuming that contributions to property and financial resources can include negative contributions,[24] it might be argued that the expenditures claimed involved a diminution of the financial resources of Mr Tayles because it diminished his resources or the financial resources of Lighthouse Peak Pty Ltd or Biztek. Nonetheless, it seems to me to be straining the language and intent of the legislation to treat this claim as something that can be taken into account in determining the just and equitable adjustment of interest in property of Mrs Davis and Mr Tayles. It is better treated as a separate claim.

169 Mr Tayles produced a list of expenses which he had prepared it comprised:

(a) a calculation of interest payments totalling $11,259.12,

(b) bank fees totalling $2,901.16,

(c) title search fees totalling $114 and process servers fee $50.

These sums total $28,231.19.

170 No other evidence was called to prove these items. They were the subject simply of Mr Tayles' oral evidence to which no objection was taken. The same course was followed as to other items of estimated legal fees of $3,000 and travel expenses of $900. While objection was taken to the document being received into evidence, no argument was advanced that Mr Tayles evidence on these matters should be rejected. I propose to act upon it. It seems likely that the items of cost raised were incurred. The total counterclaim of $32,131.19 should be allowed.

Application for Injunctions

171 Mr Tayles has threatened that he will take unspecified action against Mrs Davis, for example, if she is successful in obtaining an adjustment in her favour which reflects any increase in appreciation of assets owned by him through his companies. It seems to me that his threats should be taken seriously. He appears to be a man of considerable means. He is also extremely aggrieved by what has occurred, particularly the loss of the relationship with the children. It is likely that he will be very unhappy with the conclusion I have reached and will look for ways to recover money from Mrs Davis. His threats may, of course, be bluster but they have not been withdrawn.

172 The injunctions seek to restrain him and Lighthouse Peak. They can go no further because the other companies are not parties to the proceedings. Counsel for Mrs Davis submitted that there is no prejudice to Mr Tayles in the form of the injunction proposed. In addition he has been given adequate opportunity to identify any claims he might have and plead them. I have referred to the counter-claims made both on his behalf and for one of the companies in which he was a shareholder and director - the second defendant. Counsel submitted that the companies are not prejudiced by the proposed orders.

173 It seems to me that the orders are justified and are in fact required if the obligation imposed on the court by s 284 of the Act is to be satisfied. That section provides as follows:

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[1] Different information was conveyed by counsel as to the agreed values. For example $3.4 million in 1999 and $3.8 million in 2005, a rise of $400,000. But it was also said that the current agreed valuation of the North Sydney properties was $3.96 million. I will proceed with the lesser figure of $400,000 as the increase.

[2] Section 284.

[3] In particular, Conn v Martusevicius (1991) V Con v R para 54-413; Robertson v Austin [2003] VSC 80 Findlay v Besley [2003] VSC 247; Evans v Marmont [1997] NSWSC 331; (1997) 42 NSWLR 70.

[4] Con v Martusevicus 14 FAM LR 751, 758; Finlay v Besley, above, [47].

[5] Finlay v Besley, ibid.

[6] In considering the issues regard should be had to the state of affairs presently existing. Robertson v Austin, above, [52], [53].

[7] Robertson v Austin, above [40]; Findlay v Besley above, [56].

[8] ibid, [60].

[9] Mr Tayles and his counsel were faced with the difficulty, among other things, that Mr Tayles stated in a letter to the bank in 2003 that the relationship began in late 1999.

[10] By his calculations, 59% in 2000, 63% in 2001, 36% in 2002 and 18% between January and September 2003. I am satisfied that these figures are conservative. In addition they do not include time spent together at the farm or on holidays.

[11] Letter dated 17 July 2003.

[12] Exhibit P16.

[13] [1984] HCA 81; (1985) 155 CLR 242.

[14] At 258.

[15] At 260.

[16] Exhibit B27, Court Book 2-375.

[17] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513; Black v Black, unreported, NSW C of A, 14 November 1991.

[18] As at 23 November 2000, the debit balance of the Biztek cheque account as shown in its statement was $111,253.16. As at 6 December 2000 the debit balance was $240,965.98.

[19] $20,000 in reimbursement for work done at the Burwood property and used to reduce Biztek's debt to the bank.

[20] This was the bank's position referred to in Mr Cowie's evidence and accepted by the parties.

[21] In response to a telephone conversation and letter from Mr Tayles for Biztek dated 21 December 2001.

[22] The loan facility included the original overdraft debt as well as the Bill.

[23] $700,000; $1,200,000.

[24] Finlay v Beasley, above, [56]

At a glance

Court

Decision date

Before

Source

Judgment (79 paragraphs)

Parties

Legislation Cited (16)

Cases Cited (3)