Prymas v Whittaker [2006] ACTSC 48

Supreme Court of the ACT|2006-05-19|Before: Gray J

1. The parties be further heard in light of the findings contained in this judgment.

1. The plaintiff, Vicki Therese Ann Prymas, applies to the court for orders for adjustment of property interests of her and her former partner, Robert Christopher Whittaker, the defendant. The application, which was made on 16 June 2004, is made pursuant to s 15 of the Domestic Relationships Act 1994 (ACT) (the Domestic Relationships Act).

3. While living with her parents in late 1982, the plaintiff had discovered that she was pregnant with the defendant's child and subsequently she rented a house in Watson in November 1982. The defendant stayed overnight at those premises most of the time and moved in to live there in February 1983. In late 1982, the plaintiff was 20 years of age, the defendant 23 years.

4. During 1983, and for the duration of the relationship, the defendant remained in full-time employment. The plaintiff ceased work shortly before the birth of the couple's first child, Steven, in mid-1983. After taking six months maternity leave, the plaintiff attempted to return to work, but resigned one month later, and thereafter became primarily responsible for domestic duties, including the care of their child. By arrangement between the parties, the plaintiff did not recommence full-time employment until 1997, when the couple's second child, Jonathan, who was born on 26 November 1987, began attending secondary school. However, before this time she undertook some part-time employment by way of baby-sitting, day care, foster care, sale of Avon cosmetics, lingerie and sale of indoor plants.

5. In 1984, the plaintiff received $100,000.00 as part of an award of damages for injuries that were sustained in a motor cycle accident that had occurred in 1977 when she was aged 15. The accident had resulted in the amputation of her left leg below the knee. The plaintiff received the balance of the damages, amounting to a further $1,358.48, in February 1987.

6. In 1984, after she had received the majority of the settlement monies, the plaintiff and defendant purchased a home in Florey as joint tenants to which the plaintiff paid some $40,000.00 towards the purchase price and some $40,000.00 was borrowed from the ANZ Bank. The defendant claims to have contributed a further $4,000.00 towards the purchase price or for house fittings. The plaintiff denies this. The responsibility for the repayment of the mortgage was undertaken by the defendant but, in March 1985, the plaintiff claims that she paid a further $30,000.00 off the mortgage. I accept that claim which appears to be supported by the plaintiff's financial records. That payment would have left very little owing under the mortgage, but in October 1985, the parties appear to have refinanced the property by taking a further mortgage to take it back to a more significant sum. In 1995, monies were advanced by the Commonwealth Bank on security of a first mortgage and those monies were, apparently, used to improve the property by adding a carport and garage.

7. Also, in late 1984, the plaintiff purchased a Ford Fairlane as a family car (but particularly because it was suitable to her needs with her disability). She traded in her car and paid $15,000.00 for the new car. It is unclear whether this amount became available because of the mortgage refinance but I assume, in her favour, that it did not.

8. The present mortgage outstanding on the property, the plaintiff says, was used to finance the car that she now has in her possession and which has a present value of $13,000.00.

9. In 1986 the defendant, with three other persons, commenced an engine rebuilding business and, at that time, and in conjunction with his then partners in the business, and on the advice of his accountant, established the Whittaker Family Trust presumably to enable a distribution of the profits from the business. The other partners established like trusts. It appears that one of the original partners was bought out in 1987.

10. In 1994, the business became a proprietary company, Engine ReBuilders Canberra Pty Ltd. It appears, however, that the business was actually operated by the Engine ReBuilders Unit Trust of which the defendant's family trust had a one third interest with the family trusts of the two other interested parties. The business purchased premises in 1996 in Mitchell and the WCW Unit Trust was established to hold that land. That trust also has three unit holders, one of which is the defendant's trust. The property was purchased for $435,000.00 but approximately $550,000.00 was borrowed to support the purchase, establish the internal infrastructure and fit out the premises. The Florey property was used as part security for this purchase by way of second mortgage to the Commonwealth Bank as were the residences of the other partners.

11. In August 1997, the plaintiff resumed full-time work.

12. On 11 December, 1997, the defendant received $10,000.00 by way of an inheritance from his uncle.

13. On 11 February 1998 the defendant received a further $4,359.52 by way of inheritance.

14. In 2001 one of the unit holders left the business. The other unit holders had only a capital interest. The defendant remained as the sole working partner.

15. It was intended that the Florey property be released from the second mortgage to the Commonwealth Bank. For this purpose, in June 2001, $7,000.00 was borrowed from the plaintiff's mother to regularise the parties' financial position.

16. In June 2003 the Florey property was released from being held as security for the business borrowings.

17. In August 2003 the plaintiff and defendant separated.

18. The parties in this matter satisfy the pre-requisites for relief under s 11 and s 12 of the Domestic Relationships Act in respect of residence in the ACT and the length of their relationship. Both parties were resident in the ACT at the time of this application and the parties had been in a domestic relationship, within the meaning of that Act, for in excess of 21 years before their separation. These proceedings were commenced within two years of the parties' separation as required by s 13 of that Act.

19. Section 15 of the Domestic Relationships Act provides for the adjustment of interests in the property of the parties that seems to the court to be just and equitable having regard to the matters set out in that section. Section 15 provides:

(1) On application by a party to a domestic relationship, a court may make an order adjusting the interests in the property of either or both of the parties that seems just and equitable to it having regard to--

(a) the nature and duration of the relationship; and

(b) the financial or non-financial contributions made directly or indirectly by or on behalf of either or both of the parties to the acquisition, conservation or improvement of any of the property or financial resources of either or both of them; and

(c) the contributions (including any in the capacity of homemaker or parent) made by either of the parties to the welfare of the other or any child of the parties; and

(d) the matters referred to in section 19 (2), as far as they are relevant; and

(e) such other matters (if any) as the court considers relevant.

(2) A court may make an order under subsection (1) whether or not it has declared the title or rights of a party in respect of the property.

20. Section 15 (1)(d) of that Act, set out above, refers to consideration being given to the matters in s 19(2) of that Act as far as they are relevant. Section 19(2) deals with matters that the court has to have regard to in making an order for maintenance in favour of an applicant. This is not a case where the plaintiff seeks such an order but the criteria for the making of such an order, which s 15(1)(d) adopts, are set out in s 19(2) of that Act and that subsection requires the court to have regard to:

...

(a) the income, property and financial resources of each party; and

(b) the physical and mental capacity of each party for appropriate gainful employment; and

(c) the financial needs and obligations of each party; and

(d) the responsibilities of either party to support any other person; and

(e) the terms of any order made or proposed to be made under section 15 with respect to the property of either or both of the parties; and

(f) any payments made to the applicant, under an order of a court or otherwise, in respect of the maintenance of a child or children.

...

As far as subparagraph (f) is concerned, I note that the defendant has been paying child support to the Child Support Agency for his second child. Those payments commenced two or three months after separation but will cease later this year.

21. In considering this matter, I adopt the approach taken by Cooper J in Ferris v Winslade (1998) 22 Fam LR 725 at [29], [30] and [33]. At 732 [29], Cooper J said:

The ACT legislature has not sought to equate a de facto marriage to a legal marriage. Nor has it, in relation to adjustment of property rights between parties to a domestic relationship, replicated, exactly, the Family Law Act for the adjustment of property rights. However, the similarities in the nature of the discretion to be exercised in making orders adjusting property rights, in my view mean that recourse can and should be had to decisions of the Family Court of Australia (the Family Court) under s 79 of the Family Law Act as to the appropriate principles which guide the exercise of the discretion under s 15 of the Act. ...

A useful discussion of the approach of the Family Court to orders under s 79 of the Family Law Act is contained in the judgment of a Full Court of the Family Court in In the Marriage of Clauson (1995) 18 Fam LR 693; FLC 92-595. There, the Full Court considered that the making of property adjustment orders was a process involving three steps (at Fam LR 705; FLC 81,907) :-

(a) identification of the property of the parties;

(b) the evaluation of the "contributions" of the parties within s 79(4)(a) to s 79(4)(c) (roughly equivalent to s 15(1)(b) and s 15(1)(c) of the Act); and

(c) the evaluation of the matters referred to in s 75(2), incorporated by s 79(4)(e) (corresponding to s 19(2) and s 15(1)(d) respectively).

I agree with the observations of a Full Court of the Family Court in Harris and Harris (1991) 15 Fam LR 26 at 31; FLC 92-254 at 78,705:-

The task of the court in proceedings under section 79 is not akin to an accounting exercise. To borrow a phrase used by McLelland J in Davey v Lee (1990) 13 Fam LR 688 at in relation to s 20 of the De Facto Relationships Act 1984 (NSW) `the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind'.

22. I note also that the Full Court of the Family Court in In the Marriage of Hickey [2003] FamCA 395; (2003) 30 Fam LR 355 recognised that it was an inter-related step in the approach to be taken to s 79 of the Family Law Act 1975 (Cth) (the Family Law Act) for the court to resolve what order is just and equitable in the circumstances. That, of course, is a specific requirement of s 79(2) of the Family Law Act just as it is an integral part of s 15(1) of the Domestic Relationships Act.

23. Section 3 of the Domestic Relationships Act defines property for the purposes of that Act as:

... in relation to either or both of the parties to a domestic relationship, means real or personal property in any form to which either is, or both are, entitled

24. Generally, there is no dispute between the parties in these proceedings as to the identity of the property or its value. There is no reason why I should not consider the value of the property as at the date of hearing. The plaintiff filed in this court a financial statement on 18 August 2004 with an updated financial statement filed on 1 September 2005. The defendant filed a financial statement on 13 September 2004 but has not filed an updated statement. Mr Farrar, who appeared for the plaintiff, criticised the defendant for failing to do so. However, there was no order of the court that the defendant do so and I note that the parties were to file "any updates of financial statements and/or valuations" prior to three weeks before the hearing date. Such a direction is equivocal. As far as updating the statement is concerned, the defendant gave evidence (as did the plaintiff) and further the plaintiff and defendant relied upon certain valuations of the real estate and the business so that generally, I may have regard to all this material. Although there is limited material to support the parties' contentions of the financial position at the start of the relationship, there is little financial documentation that assists over the majority of the relationship. I do not propose to attempt to update to precisely the date of hearing the financial information that I have received but I will rely generally on the material before me. Indeed, in the circumstances of this case, and because of the length of time that the parties have been in the relationship, it is not possible in most instances to form other than a broad view of the amounts and matters in contest.

25. The parties agreed on the basis of a valuation of the real estate that it has an agreed market value of $340,000.00. There is a mortgage in favour of the St George Bank on the property of $27,350.00. Since separation, the plaintiff has taken out a loan, which is described as a home improvement loan, of $29,500.00. Before the parties separated, some steps had been taken to commence home renovations. To that end, the defendant carried out some preparatory work that involved removing floor coverings, demolishing walls, and removing doors and tiles as well as leaving unprotected power points. Photographs were tendered showing the state of repair of the house as far as ceilings, floors, cornices, electrical connections and tiles were concerned. The defendant disputes that the plaintiff expended monies after separation, certainly to the extent of the home improvement loan. The plaintiff says that all of the loan was so used and that it was necessary to do so to make the house liveable. I see no reason to not accept the plaintiff in respect of this matter, but as they are contributions made after separation, they should be considered in that context.

26. The plaintiff ostensibly agreed to accept a valuation of the business operated by Engine ReBuilders Unit Trust, which is effectively carried on by the defendant from premises at Mitchell and which, apart from the defendant, employs two other persons. Although the business was established in 1986, it was not until 1996 that it moved to its current premises and, over the past five years, it has reduced from a business which had originally four, then three, working partners employing a dozen or so staff, to the present position where only the defendant and two other staff are employed. Mr Hollands, a certified practising accountant, was engaged to value the business and although it was said that his report was agreed to by the parties, the plaintiff sought to draw from his report, evidence of assets in respect of which it was said that the defendant had not accounted for. Mr Hollands concluded that the Whittaker Family Trust had a net value in the business of $85,284.00. The parties agreed that this should be considered as the property of the parties for the purposes of their property settlement.

27. Although Mr Farrar, for the plaintiff, sought to go behind this valuation and look to the present indebtedness under the borrowings as some justification for suggesting that the interests of the Whittaker Family trust should be greater in proportion to the other two trusts, I do not consider that there is any justification for this approach. As I understand his written submissions, Mr Farrar has resiled from this contention but wishes me to take into account the defendant's demonstrated ability to reduce his loan liability between the time of the valuation and the date of hearing of this matter. I note that fact but otherwise reject the submission that I should, in some way, take a different approach to that taken in the agreed valuation.

28. In calculating the net value of the business, Mr Hollands took into account holiday pay and long service leave accruals that included an amount owing to the defendant of approximately $66,000.00. Both parties identify this as property and recognise the tax payable on a lump sum payout of these entitlements would be approximately $29,000.00. The contingent nature of the identified asset causes me some difficulty. It may be taken during the course of employment or as a lump sum. If the former, there is a possible additional taxation consequence as it will be treated as income.

29. This is an item that the plaintiff asserts arises from Mr Hollands' valuation of the business interest. After 1987, the business had three unit holders. The other two now only retain their capital interests as there are insufficient funds in the business to pay them out. The defendant produced a hand-written document used to calculate monies due to one of the unit holders during negotiations to pay him out. Those figures, of course, relate to the position in 2001 when the negotiations took place and were used, as I understand Mr Hollands' report, primarily to support the capital value of the equipment which he considered would not vary significantly from a current valuation. I presume that that document also gave Mr Hollands background to other aspects of the operation of the business. On that document is an item "Chris Whittaker Overtime $120,000.00". When he gave his evidence, the defendant explained that amount as a negotiating amount that he asserted that the business would have had to have paid him in the event that that business went into receivership. This was to demonstrate to the outgoing unit holder the negative value of the unit holder's interest in the business. I regard the assertion of this amount as part of those negotiations and, in any event, not a proper assessment of a liability of the business to the defendant for unpaid overtime. The defendant, in his evidence, asserted that there was no overtime due to him from the business. In fact, the ultimate settlement achieved in respect of that unit holder was the payment to him of $25,000.00, not the negative amount derived from the use of the overtime figure.

30. Mr Farrar submitted that the defendant, having asserted that he was owed this sum in those negotiations with the unit holder, cannot now resile from that figure for the purposes of the property settlement with the plaintiff. Further, in his written submissions, he submitted that the item referred to in the document should now be treated as property and included in the list of assets.

31. To support his proposition, Mr Farrar referred to what he said was a settled principle in the family law jurisdiction. In particular he referred to In the Marriage of R K and R Jordan (1996) 21 Fam LR 382 at 391 where Chisholm J set out the following proposition from his review of a number of cases in the Family Court:

When a party has made representations of fact to third parties and has gained advantage from so doing, it is open to the court in subsequent proceedings under s 79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.

32. It may be noted that the expression used by Chisholm J left it open to the court to decline to accept the evidence. It was not, as Mr Farrar put in submissions when the evidence was sought to be led from the defendant, a principle of law. Indeed, a reading of Jordan's case shows that Chisholm J rejected the proposition that a representation made in such circumstances could amount to a form of estoppel or was a rule preventing evidence being led to the contrary of a representation. I permitted evidence to be given by the defendant to explain the alleged representation. That evidence could at least establish that, in the course of negotiations to buy out a unit holder, the defendant claimed that if the business went into receivership, he would claim for unpaid overtime. It does not establish that the business, by the receiver, would have acknowledged that claim. I note also that in Jordan's case, and the cases upon which that case proceeds, generally the advantage gained by a specific and direct representation had been tangible in avoiding higher payments of tax or duty than might otherwise be required to be paid to the revenue authorities. That is not the present case. It follows that in light of the defendant's denial that he is entitled to any such sum under the terms of the present business arrangement, I am not prepared to treat a notation, made in the course of settlement negotiations for the withdrawal of a unit holder from the business, as property to be brought to account in these proceedings.

33. There was another matter which Mr Farrar contended arose from Mr Hollands' valuation. Apparently the outgoing unit holder in 2001 had obtained a valuation of property of the undertaking which contained items of property not the subject of Mr Hollands' valuation. The defendant was cross-examined as to items additional to those that formed the subject of Mr Hollands' valuation. In cross-examination it was put that the value of such items amounted to $40,040.00. The valuation upon which Mr Whittaker was cross-examined was not put in evidence before me. The concessions that the items did not appear on the earlier valuation obtained by Mr Whittaker and upon which Mr Hollands relied does not indicate whether any of those items are part of the present assets of the business. I am unable to see how the plaintiff can properly challenge what the plaintiff has agreed as the valuation of the business as at the time Mr Hollands made his valuation without establishing that the items upon which Mr Whittaker was cross-examined are presently part of the assets of the business. In the absence of direct evidence to that effect, I do not propose to go outside the parameters of the valuation tendered in evidence before me. Further, I am supported in this conclusion by the fact that Mr Hollands was not required for cross-examination so that these matters could be put to him as affecting his valuation. The valuation was an agreed valuation and I am not prepared to segment it or to hazard a revaluation in the manner suggested by Mr Farrar.

The defendant's interest in the property at Braidwood

34. This is a one-fifth interest in a property bequeathed by the defendant's mother to him and his siblings. It has an agreed value of $60,000.00.

35. The plaintiff is in possession of a 1999 Ford XR6 motor vehicle. It has been valued at $13,000.00. It appears that this motor vehicle was purchased from funds secured by the present mortgage on the real estate.

Furniture and household items and personal property

36. It appears that there is little value in the furniture and household items in the house, they being valued at $950.00. When the defendant left, he took clothing and personal items. The plaintiff claims he also took power tools. There are claims about the plaintiff's porcelain doll collection and the defendant's golfing equipment. There is a suggestion about the existence of an antique fire arm owned by the defendant. I do not propose to bring to account any of this property; its possession and ownership should lie where it is at the present time.

37. The defendant has superannuation entitlements which appear to be some $67,000.00. The plaintiff's entitlements are said to be $14,778.00. There is a question as to whether these entitlements should be treated as identifiable property. The plaintiff points out that s 90MC of the Family Law Act provides:

A superannuation interest is to be treated as property for the purposes of paragraph (ca) of the definition of Matrimonial Cause in s 4.

There is nothing in the Domestic Relationships Act to equate with this approach. It is said that it is within my discretion to adopt an approach in this case to treat superannuation as property and that it would be just and equitable to do so. I do not consider that I should do so. The Family Law Act does not deem superannuation interests to be property, rather it merely defines such interests as falling within the jurisdiction of that Act. I am not prepared to treat superannuation as property for the purposes of the Domestic Relationships Act. The nature of the contingency and the circumstances upon which it becomes due, as well as the question of its valuation, make it particularly difficult to treat it as property in the context of the Domestic Relationships Act dealing as it does with alterations and adjustments to such interests. However, at least insofar as I can regard it as a financial resource of the particular party, I am prepared to take their position on superannuation into account as a relevant matter when making property orders pursuant to the Domestic Relationships Act as part of the exercise of my general discretionary power.

38. I have previously referred to the present mortgage on the Florey home which I take at the date of hearing to be $27,350.00.

39. The other liability is that in June 2001, the defendant borrowed from the plaintiff's mother $7,000.00. That sum was borrowed to assist the defendant in obtaining the discharge of the second mortgage held by the Commonwealth Bank over the real estate. Although the defendant initially disputed this liability, I understand that he now accepts it. He now says that as a consequence of this loan, $2,000.00 was repaid to the WCW Unit Trust account to cover some household items and the balance went to reduce the joint account to an amount under the overdraft limit. Although it has not been repaid, I take it into account as an intended contribution by the defendant to the household expenses of the relationship.

40. I have found difficulties in assessing the evidence of both the plaintiff and the defendant. Not unexpectedly, each was intent on maximising the particular contribution asserted and minimising the others. I do not prefer the evidence of one to the other, rather it is a matter of taking into account the perspective from which the witness is giving that evidence and attempting to form a view as to the extent of the contribution of each of them to what commenced as, and continued as, a relationship in which the sharing of benefits from their joint efforts was utilised in maintaining that relationship and raising their children. The children are now in some form of employment and the youngest will turn 18 later this year.

41. Counsel for both parties took the approach that the adjustment of property interests should be that equated to a long term legal marriage. Although, in some aspects, this may be appropriate as far as the appropriate orders to be made are concerned, I do not consider that the effect of the relationship that I have to consider should be judged otherwise than in terms of the Domestic Relationships Act. In Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 260, Mason and Brennan JJ said:

In a case where a man and woman are cohabiting though unmarried there is no presumption, either of equity or human experience, that they intend their relationship to have the same consequences upon their individual property rights as marriage has upon the property rights of spouses. An assumption that the parties to such an arrangement intend to maintain independent control of money and property and to retain a testamentary power to dispose of assets in which they have an interest is more likely to coincide with reality than an assumption of joint ownership. The provisions of ss 79 and 80 of the Family Law Act 1975 (Cth) now furnish a further ground for not applying the special rules governing the title to property in the case of spouses in order to resolve property disputes between parties who have cohabited but who have not married. On dissolution of a marriage, ss. 79 and 80 confer a discretionary power upon the Family Court of Australia to alter the property interests of the parties to the marriage if it is just and equitable to do so. On the termination of an association between a man and a woman who are not married to each other, no discretionary power may be exercised and the jurisdiction of the courts of equity is simply to declare the proprietary rights of the parties -- a jurisdiction which a court of equity is not at liberty to exceed either in the case of husband and wife or in the case of a man and woman who are not married: see Wirth v Wirth (1956) 98 CLR at 231-232, per Dixon CJ; Hepworth v Hepworth (1963) 110 CLR 309, at 317, per Windeyer J. Therefore, special rules affecting the title to property of husband and wife can have no application in the present case.

See too, Mallet v Mallet (1984) 156 CLR 607 where the court held that, in exercising the discretion under s 79 of the Family Law Act, there was no assumption that property should be divided between the parties in pre-determined proportions.

42. Accordingly, I do not accept that an equation with a "long term marriage" is appropriate if that implies the application of common law and equitable doctrines arising from the marriage status. It is the Domestic Relationships Act that I must apply. I do not accept what may be understood as the contention of Mr Sharwood, counsel for the defendant, to the contrary when he submits that the defendant's greater financial contribution be balanced with the homemaker role undertaken by the plaintiff in order to arrive at a starting point to equate the contributions of the parties on an equal basis.

43. Those observations have relevance to the approach that I take to the Florey home. The purchase was effected, initially by the plaintiff contributing some $40,000.00 from her damages settlement. That settlement included compensation for her future medical needs. Although a mortgage of $40,000.00 had been taken out, for which the parties were jointly responsible, within five months, the plaintiff paid a sum of $30,000.00 of her monies off that mortgage.

44. It was said that the property was "refinanced". Certainly an application was said to have been made to the National Australia Bank, but whether that was effected is not clear. The defendant says a refinance about that time (October 1984) was to ensure that the plaintiff had $30,000.00 still available for expenditure at his request on such on-going medical expenses as the plaintiff might require. I have no details of this. I have nothing to indicate that whatever the purpose of the refinance, it was not the plaintiff's monies that had effectively paid for the Florey property. Thereafter the mortgage appears to have been used as a facility generally for household expenditure and, in at least one instance, home improvement. The defendant undertook the task of maintaining the various mortgages but they were apparently maintained from monies that the defendant provided from his wage or from the Whittaker Family Trust which the plaintiff could be said to be jointly entitled.

45. It appears also that the plaintiff used a portion of her compensation payment to purchase a Ford Fairlane motor vehicle (which included a trade-in of the car she had at the commencement of the relationship). That car was used as the family car. When that car was replaced with the present car that the plaintiff has, it was apparently financed through the house mortgage. One half of its present value can be said to be the defendant's entitlement.

46. The defendant claims to have contributed $4,000.00 from his holiday pay and accumulated savings, at the time of settlement, towards the completion of the purchase of the house. Apart from the defendant's assertions, I have no evidence to support this. It seems unlikely as the defendant apparently had taken a holiday before the house settlement and although he had apparently had several jobs at the time and personal savings, there is no documentary evidence to which the defendant can point to support his assertions. On the other hand, the plaintiff has produced her credit union records which show the run down of the compensation monies that she had received and they appear to account for the deposit and purchase price.

47. In his affidavit, the defendant says that at the time the plaintiff received her compensation monies, he recommended that she put one half of that money aside to provide for her future medical expenses. It is clear that did not happen. The plaintiff's contribution to the real estate in the early stages was over 90% if it is accepted that she contributed a further $30,000.00 within a few months of settlement. Her ability to draw down on that which she could consider a reserve for her future medical expenses was compromised by the ongoing living requirements of the couple and their children. As the defendant put it when he was asked about money set aside for medical expenses:

Well, where did that money go ultimately, the money from the Commonwealth Bank that you say was set aside for her medical?---Well, there's - there's been - there's been a mortgage all the time on - on the premises. It's just leapfrogged from one thing to the next. So it went from there, when it was all but paid out it went on the carport and the garage. There was $20,000 was taken onto the mortgage again. When it go down to $10,000 then the car went on it. There's always been a mortgage and I have to go off my memory and - even like, there's figures and there was - we were backwards and forwards running around, you know, even that National Bank, to this day I still don't think that we ever had - had an account with them. So that's - that's how - - -

There is no fund of money available to meet her future medical expenses, is there? ---Well, not the way that it's been spent. You - as you can see, there's - there's a - there's a - - -

Thank you, that's - - -

HIS HONOUR: No. No, let Mr Whittaker finish his answer, Mr Farrar.

MR FARRAR: Okay.

THE WITNESS: As you can see by the injection of money through inheritance and through family trust, the money goes just as quick as it - it turns up.

48. During the period that the plaintiff and defendant lived together, the plaintiff had 14 operations on her leg. In fact, although some monies have been paid out of the joint account for the plaintiff's ongoing medical expenses arising from her accident, it seems the great majority of those ongoing expenses have been met by their private health insurance.

49. There have been some contributions from the defendant referrable to the real estate such as the ducted gas heating service and concreting an area around the garage. And, as the defendant alluded to in the above extract, the joint mortgage was the subject of refinancing enabling a carport and garage to be added.

50. The defendant claims that the sum of $56,000.00 net of tax has been paid into the Whittaker Family Trust over the course of the relationship and that sum has gone towards the reduction of the mortgage, the welfare of the children and the joint living conditions. He also claims that one half of his wage has gone into the joint accounts and has been used likewise.

51. In addition to her significant financial contribution to the acquisition of the family home, the plaintiff can rely upon her contribution by way of homemaker whilst the defendant became the sole income earner and financial provider. I note the part-time employment and foster parenting undertaken by the plaintiff but the far more significant contribution is, of course, in raising the couple's two children.

52. The defendant, by all accounts, is a successful amateur golfer, a pastime he participated in over the course of the relationship. That involves him playing on Saturday and Sundays and being away for the whole of some weekends over the course of a year, as well as golf practice during afternoons in the course of a week. These assertions as to his commitment to this activity were not really disputed by the defendant although the number of weekends away was. It is clear that this activity resulted in a lesser commitment to that of the plaintiff in fulfilling homemaking and parental responsibilities. The plaintiff should now have credit for this.

53. Over the course of the relationship, the defendant clearly worked hard at his employment and committed the income earned to the relationship. That is a significant factor particularly in relation to the financial resource represented by the real estate.

54. The defendant contended that as the plaintiff's initial contribution to the purchase of the Florey home was made over 21 years ago, that contribution could be considered to be "eroded" by the later contributions of the defendant in respect of the property. I was referred to the comments of Fogarty J in In the marriage of Money (1994) 17 Fam LR 814 at 816:

In an appropriate case, in my view, an initial substantial contribution by one party may be "eroded" to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party.

55. Lindenmayer J (at 824) disagreed with that view and would have required the later contributions to exceed the initial contribution to be permitted as an offset. I would regard that approach as being too simplistic. I adopt as the better approach that which was the subject of later comment by Fogarty J when he said at 816:

The longer the marriage the more likely it is that there will be later factors of significance, and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution. (My emphasis)

56. In In the marriage of Pierce [1998] FamCA 74; (1998) 24 Fam LR 377 at 385, the Full Court of the Family Court said:

In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.

57. In all the circumstances, I am prepared to think that the plaintiff's initial contribution to the real estate and her subsequent extensive non-financial contributions entitles her to a 70% interest in the equity existing in that particular property.

58. The plaintiff's contribution to the asset that is constituted by the Whittaker Family Trust unit holding in the Engine ReBuilders Unit Trust, may be said to derive from the security offered by the Florey home to the business borrowings securing the advance for the purchase of the business premises and equipment. It seems the broad intent of the parties was for the asset to be shared equally.

59. However, if I adopt that approach I am less inclined to think that the plaintiff has contributed to the accumulation of unpaid leave and holiday pay owed to the defendant except in the most general way and that this contribution is best reflected in the adjustment that I make in respect of the matters I consider under s 19(2) of the Domestic Relationships Act.

60. Whilst the defendant has contributed monies inherited from his mother and uncle towards the family's general living expenses and to the home, I take those into account in his overall contribution to the real estate. The property which the defendant inherited at Braidwood in which he has an interest at an agreed value of $60,000.00, I do not regard as property to which the plaintiff has contributed or is entitled to expect an interest. As far as the defendant is concerned, it is his expectation that his sister, who also has a share in the property, will reside there. I do not propose to bring it into account in this part of the exercise.

61. After the separation in August 2003 both parties have made contributions to the property and financial resources of each of them. The plaintiff has been the sole carer for the children which has generally involved the younger child who was 15 at the time of separation. As well as support for the younger child, which will terminate when he turns 18, but in respect of which the defendant is paying child support and contributing to the mortgage, sums have been paid by the defendant in cash subsequent to the separation although the amount is in dispute. The defendant also has paid $11,622.00 to retire the overdraft debt relating to the joint account maintained by the parties. After separation, school fees totalling $4,819.00 have been paid by the defendant. On the other hand, the plaintiff has taken out a home improvement loan in relation to the real estate and improvements have been made to that property. The plaintiff maintains that that loan was required just to make the property liveable. The defendant takes issue with whether the whole of the loan was in fact spent on the property but that is an issue that I have difficulty in resolving. Having regard to the state that the defendant had put the property in as a consequence of commencing renovations that were unfinished when the parties separated, the costs incurred by the plaintiff for home improvements would seem to account for a significant part of that loan. In all the circumstances, any adjustment that is to be made slightly favours the plaintiff in respect of these post separation contributions.

62. The plaintiff is now 44 years of age and is now in full-time employment with an income of approximately $36,400.00 per annum before tax. She is on temporary contract but there is no real indication that her employment will not be ongoing or that she cannot realistically look to being employed in the future.

63. The plaintiff lost her left leg in the 1977 accident. She requires ongoing medical treatment as an amputee. The stump of her leg is prone to infection which requires operative treatment. She is required to take antibiotics due to a recurrent staph infection. Strictly, she requires a replacement prothesis every two years but has not been able to afford a replacement that frequently. There is a yearly requirement for a new prosthetic foot. There also is an ongoing requirement for private health insurance which she has not had since the defendant closed their joint account. She says that with insurance, she will be covered for these ongoing expenses. I take into account an element of risk that she might not.

64. The defendant is 46 years of age and is self-employed in his own business. As at September 2004 his income was $55,328.00 per annum. There is no reason to think that the difference between his income and that of the plaintiff's will not be maintained. Similarly, there is a disparity in the superannuation entitlements as well as the defendant having significant holiday and long service leave entitlements. A further resource that the defendant has is his interest in the Braidwood property, although there may be difficulties in its realisation.

65. The plaintiff alleges that the defendant receives cash payments which are not disclosed as part of his income. I discount that allegation. Even if it were a fact, it is totally unable to be quantified. I directed the defendant as to his rights in regard to meeting that allegation when cross-examined and I have no independent evidence to support it. Accordingly, I do not propose to act upon the allegation.

66. Having regard to all the circumstances, I propose to further adjust the plaintiff's interest in the real estate by 10% to balance the parties' resources for the future and taking into account the contributions made after separation as well as the superannuation position between the parties. In so doing, I am mindful of the fact that I am not readjusting contributions in respect of property other than the real estate, but I consider that doing it this way best gives effect to the overall value judgment that I make of the matters to which I have regard and which fulfils the requirement that the adjustment be just and equitable having regard to the various matters identified in s 15 and s 19 of the Domestic Relationships Act.

This apportionment results overall in the plaintiff being apportioned 59% of the identified property and the defendant 41%. I note the following liabilities but make no finding as to the responsibility of the parties to discharge them.

68. In regard to the orders that may be made consequential upon these findings, I note that it is agreed by both parties that the plaintiff keep the Florey property and that the plaintiff is prepared to take over the mortgage on that property. Both parties consider that the plaintiff should keep the motor vehicle. Neither party seeks any specific order concerning the business asset. It is appropriate that I hear the parties as to the form of orders that I should make in light of this judgment and having regard to the stated attitude of the parties. I will hear the parties on the question of costs.

I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

De Facto Relationships Act 1984(NSW)

Relationships Act 1994

De Facto Relationships Act 1984(NSW)

(1998) 22 Fam LR 725

(2003) 30 Fam LR 355

(1996) 21 Fam LR 382

(1994) 17 Fam LR 814

(1998) 24 Fam LR 377

(1995) 18 Fam LR 693

(1990) 13 Fam LR 688

At a glance

Court

Decision date

Before

Source

Judgment (89 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (11)