Read v Nicholls [2004] VSC 66

Supreme Court of Victoria|2004-03-16|Before: NETTLE J

The application, however, of the principles is not confined to cases in which applicants have contributed financially to the acquisition or development of the property. As Deane J stated in Mucscinski v Dodds[16]:

"As has been seen however, the relationship between the parties in the present case was not merely a commercial one. It was a mixture of the commercial and the personal. The personal relationship provided the context and explains the content of the planned commercial venture. If the personal relationship had survived for years after the collapse of the commercial venture and the property had been unmistakenly devoted to serve solely as a mutual home, any assessment of what would and would not constitute unconscionable conduct would obviously be greatly influenced by the special considerations applicable to a case where a husband and wife or persons living in a "de facto" situation contribute, financially and in a variety of other ways, over a lengthy period to the establishment of a joint home. In the forefront of those special considerations there commonly lies a need to take account of a practical equation between direct contributions in money or labour and indirect contributions in other forms such as support, home-making and family care. "(Emphasis added)

The point is developed further in the judgment of Debelle J in Parij v Parij[17] :

"These decisions establish in unambiguous terms that, when determining whether it is unconscionable for one party to a de facto relationship to retain the sole beneficial ownership of property acquired in the course of the relationship, regard will be had to the manner in which the parties have conducted their relationship and the contributions each have made. When assessing their respective contributions, regard will be had to non-financial contributions as well as to financial contributions. The latter proposition is clear from the references to the `practical equation between direct contributions in money or labour and indirect contributions in other forms such as support, homemaking and family care' in Muschinski v Dodds (at 622) and in the reference to `contributions either financially or in kind' in Baumgartner (at 150). The principle that regard will be had to non-financial contributions when considering the division of property on the dissolution of a marriage has been affirmed on more than one occasion: see Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605 at 623 per Mason J and the cases there cited. In that passage Mason J noted that a wife's contribution as a homemaker should be recognised in a substantial, and not merely token, way, this being a recognition of the fact that, by her attention to the home and the children, the wife frees her husband to earn income and acquire assets: see also Deane J (at 640) and Dawson J (at 646). These observations were made when considering the effect of s79 of the Family Law Act, 1975 (Cth), which directs the Family Court, when altering interests in property, to have regard to the contribution made in the capacity of homemaker or parent. That principle was reaffirmed by Mason CJ, Deane and McHugh JJ in Singer v Berghouse [No2] [1994] HCA 40; (1994) 181 CLR 201 at 212-213 in these terms:

`As recent cases in this Court have made plain (eg Mallet v Mallet (at 623), it is important that the courts do not disregard or discount the non-financial contributions made to the property and finances of the party to a marriage or marriage-like relationship, such as the contributions made by parties as homemakers and parents, which are not directly productive of a monetary return.'

As I understand them, these remarks have a general application and are not, as the trial judge believed, limited to claims for what used to be called testator's family maintenance. That is evident not only from the manner in which the observations were made but, in particular, by the reference to Mallet . The reference to recent cases stating that non-financial contributions are relevant in marriage-like relationships is plainly a reference to Muschinski v Dodds and Baumgartner. Thus, Singer v Berghouse affirms the authority of those decisions."

In this case there is no evidence that Ethel Read made a direct financial contribution to the acquisition of the Wonthaggi property or the Birkenhead Street property. According to the evidence, the Wonthaggi property was purchased for $10,000, of which the initial $500 deposit was paid by Alice Nicholls, the remaining $1,500 of the deposit was paid by Kyran Nicholls out of his savings, instalments totalling $7,200 were paid by Alice Nicholls over a period of three years and a further $5,500 was paid by Kyran Nicholls out of the deafness compensation claim payment. The Birkenhead Street property was purchased for $60,000 of which $42,000 came out of the workers compensation payment made to Kyran Nicholls in respect of a back injury and the rest appears to have been paid off over time by Kyran Nicholls.

There is also little direct evidence that Ethel Read made an indirect financial contribution to the acquisition of either of the properties. Such as there is, is confined to Alice Nicholls' testimony that Kyran Nicholls, Ethel Read, George Byrne and Ted Gully each paid one quarter of the "rent" at the George Street and at Coppin Street properties and that Ethel Read paid $45 "rent" during the time that she lived at the Birkenhead property. It may be, as Alice Nicholls would have it, that Ethel Read kept the remainder of her pension after paying her "board" to herself.

But despite Ethel Read's savings of $22,000 at the time of her death, I am inclined to think that she must have contributed to household expenses in each of the properties that she lived with Kyran Nicholls, and thereby contributed indirectly to the pool of funds available for the purchase of property. So long as they lived at Mulberry Street or George Street with George Byrne and Ted Gully it is probable that the four lived as a community and that each contributed as a member of the community; not only to the rent (as Alice Nicholls said was the case), but also to the cost of food and other household items. The amount of money to go round cannot have been large and it is likely to have gone a good deal further if pooled to meet those sorts of costs. The probability is that they made it go further by pooling their resources. Then once Ethel Read and Kyran Nicholls were alone at Birkenhead Street, the patterns of behaviour established by living together for the last 25 years are likely to have continued. It is hard to believe that two pensioners of their age and at their stage would not have combined resources for the benefit of each other.

It may be observed as something that counts against the likelihood of a de facto relationship that there is no evidence of Kyran Nicholls and Ethel Read having had a joint bank account or other form of joint financial arrangement. Perhaps that suggests that there was not the sort of trust and confidence that ordinarily applies between husband and wife or their de facto counterparts. But I do not regard the point as one of great significance - I imagine that there are many married couples who do not share bank accounts or financial arrangements other than perhaps at the most basic level - and given that Kyran Nicholls and Ethel Read were each claiming a single pension at one time or another, they may have chosen to avoid joint financial arrangements in order to avoid detection. The same reasoning applies to the description of Ethel's contribution as "rent".

The fact that they each received a single persons pension is also inconsistent with the existence of a de facto relationship. But I do not regard that point as one of great significance either. Based upon evidence given by Kevin Read, I think it probable that Ethel Read and Kyran Nicholls chose not to report their relationship, in order to avoid a reduction in their pension income.

There is then the matter of Ethel Read's non-monetary contribution as wife and as homemaker. For reasons earlier given, I am satisfied that Ethel Read lived at George Street, Richmond and Coppin Street, Burnley as the de facto wife of Kyran Nicholls and that she continued to do so at Birkenhead Street; albeit that the pace of the relationship must have slowed markedly towards the end. For the reasons which follow, I am also persuaded that throughout the better part of the 40 years for which they so lived together, or at least until she became ill towards the end of their time together, Ethel Read shouldered the bulk of the burden of cooking and cleaning for the household.

Barbara Holden gave direct evidence, which I accept, that she visited George Street on a regular basis while her mother and Kyran Nicholls were living there and that she observed that her mother was responsible for the cooking and the cleaning and for keeping the house.

Graham Read gave direct evidence, which I also accept, that his mother undertook those roles throughout the whole of the six or seven months that he lodged at George Street following the breakdown of his first marriage in 1979. That evidence is supported by the fact that George Byrne and Ted Gully were mature single men, of a generation of men that were not as likely as men these days to be involved in domestic chores, and the fact that George Byrne and Ted Gully followed Kyran Nicholls and Ethel Read from Mulberry Street to George Street and from there to Coppin Street.

Alice Nicholls gave contrary evidence to which I have already referred, that each of Kyran Nicholls, Ethel Read, George Byrne and Ted Gully cooked and cleaned and provided for himself or herself without any sort of community or combination of effort or resources. But as I have said, I reject that evidence as improbable. It is possible that the arrangements were as the defendant asserted. But it is unlikely, especially given the age of the people involved, and the era in which the events are alleged to have occurred, and the sort of community which is suggested by the fact that all four stayed together for more than twenty years through several moves and in several locations. I think it to be more likely than not that George Byrne and Ted Gully moved and stayed with Kyran Nicholls and Ethel Read for more than twenty years because they valued the companionship of Kyran Nicholls and Ethel Read and the care and upkeep which Ethel Read provided.

I turn to the problem of how one quantifies Ethel Read's contribution to the acquisition of the Wonthaggi and Birkenhead properties and hence the extent of any interest in those properties to which she may be entitled. The exercise is not without difficulty.

The starting point is in one sense equality[18]. As McHugh JA said in Hibberson v George:

"Equity favours equality. As Mason CJ, Wilson and Deane JJ said (at 149) in Baumgartner where the parties have lived together for years and have pooled their resources `there is much to be said for the view that they should share the beneficial ownership equally as tenants in common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind'. In Baumgartner their Honours thought an adjustment was called for. They declared the interests of the parties in the proportions of 55 per cent and 45 per cent. They also made adjustments to take account of moneys paid by the parties."

After the starting point, however, there are at least two routes leading to the next step in the process of assessment. Mahony JA explained them in Green v Green, as follows:

"In Muschinski, the court decided that each party should receive, from the house, the amount of their respective contributions and that the residue should be held for them in equal shares. In Baumgartner, the approach was, at least in terms, somewhat different. The approach involved three stages. First, their Honours saw the purpose of the joint relationship in that case as being or including `to provide accommodation for themselves and their children': at 149. They saw their `earnings' as having been `pooled for the purposes of that relationship': at 149. And, the relationship having failed, they saw it as inequitable that the house, `financed in part through the pooled funds': at 149; should be held by Mr Baumgartner alone."

In this case there is also the added complexity that Ethel Read made no financial contribution, direct or indirect, apart from her "board" (and such other small sums as she may be inferred to have contributed to the household pool), and therefore that the bulk of her contribution was in the form of what Deane J described in Muschinski as indirect contributions in other forms such as support, home-making and family care. Neither Muschinski nor Baumgartner explains how one is to go about placing a value upon contributions of that kind. Gaudron J referred to the problem and other members of the court referred to contribution financially or "in kind", but that is as far as it went.

In the result, one is left with no more certain guidance than the sorts of considerations identified by Debelle J in Parij, by analogy with the provisions of Part IX of the Property Law Act, and of which the Clarke JA said in Black v Black[19], that:

"In order to evaluate the particular contribution the court is, in my opinion, required carefully to examine the role played by the person who claims to have contributed as a homemaker and parent. Obviously, where a woman has, over a long period, assumed virtually all the responsibility of maintaining the home and bringing up the children, has done so in a responsible and energetic manner, and has devoted most of her time to doing that and thus freed her partner to earn income to be used for the general betterment of the family, her contribution would have to be regarded as substantial and significant. Whether her contribution should be regarded as less than, equal to, or greater than the financial contribution by the wage-earning partner must depend upon the circumstances of the case, which will undoubtedly include the length of the relationship, the nature of the wage-earner's contributions and the care, devotion and services of the homemaker."

Plainly, that is a far cry from the sorts of circumstances which were found in Muschinski and Baumgartner to make it unconscionable for the legal owner of land not to recognise an equity in favour of a claimant who had made direct or indirect financial contributions. It also seems to be a long way from the sort of analysis that was undertaken by Gleeson CJ in Green v Green. But if I may say so with respect, it accords with the underlying principle identified by Deane J in Muschinski and for that reason alone it is likely to be correct. No less importantly, it has the imprimatur of each of the three judges who comprised the court in Parij. It is right that I should follow it.

Consistently with the sort of approach suggested in Parij, I take the view that the relationship between Ethel Read and Kyran Nicholls endured so long and that the support and comfort that she is likely to have given to him for the period of its duration were so significant that Ethel Read's contribution should be regarded as equal to the financial contributions made by Kyran Nicholls out of his income. But I am also of the view, consistent with the sort of approach that was adopted in Baumgartner and Muschinski, that the financial contributions made by Kyran Nicholls from sources other than income should be subtracted from the purchase price of the properties before the calculation of the equal shares and the shares should be computed on the basis of the balance.

So, in the case of the Wonthaggi property, I consider that the $5,500 of purchase price which came from the workers compensation payment should be excised and treated as contributed to by Kyran Nicholls alone, as too should the $500 initial deposit and instalments totalling $7,200 paid by Alice Nicholls. Those adjustments having been made, it is then appropriate to treat Ethel Read as having contributed as to 50% to the balance of deposit of $1,500 which was paid by Kyran Nicholls out of savings. I reach that conclusion on the basis that by her house keeping and other efforts Ethel Read so freed and supported Kyran Nicholls as to enable him to earn and save those moneys.

In the result, out of a total purchase price paid of $14,700[20], Ethel Read should be taken to have contributed one half of the $1,500 balance of deposit, or 5.1% of the total.

Similarly, in the case of the Birkenhead property, I consider that the $42,500 of purchase price which came from the second workers compensation payment should be excised and treated as having been contributed by Kyran Nicholls alone, and that it is appropriate to treat Ethel Read as having contributed as to 50%to the balance. I reach that conclusion on the basis that so long as Kyran Nicholls continued to work (which was until about 1991) Ethel Read's housekeeping and other efforts so much freed and supported him as to enable him to earn and save the moneys which he applied to the repayment of the Westpac loan, and to work on renovating the property, and on the basis that after his retirement he and she are more likely than not to have pooled funds and may be assumed to have met expenses out of the pool.

In the result, out of a total purchase price of $60,000, Ethel Read should be taken to have contributed one half of $17,500 balance of purchase price, or 14.6%of the total.

For the reasons given I consider that the plaintiff's claim under Part IV of the Administration and Probate Act 1958 should be dismissed but that upon the remainder of the plaintiff's claim it is appropriate to declare that the defendant holds the Wonthaggi property upon constructive trust as to 5.1% for the plaintiff and that she holds the Birkenhead Street property upon constructive trust as to 14.6% for the plaintiff.

[12] Skene v Dale [1990] VicRp 53; [1990] VR 605 at 613,per Kaye J; see also Kalejs v Minister for Justice & Customs (2001) 111 FCR 442; [2001] FCA 1769 at [20]

[13] cf Agtrack v Hatfield [2003] VSCA 6

[14] Although it has been held that it is permissible to refer to s.285 as a form of guidance in determining what is equitable: see Parij v Parij [1997] SASC 6771; (1987) 72 SASR 153 at 166 -7, per Debelle J

[15] (1989) 17 NSWLR 343 at p.353.F; See also Hibberson v George (1989) 12 Fam LR 725 at p.743 per McHugh JA

[18] cf Black v Black (1991) 15 Fam LR 10

[20] $500 + $1500 + $7,200 +$5,500 = $14,700

"...it is now well settled that there are circumstances in which a court of equity will intervene to declare the existence of a proprietary interest in a family home on the part of spouse or de facto partner, and the unifying principle underlying the cases where such intervention is regarded as appropriate is that in the circumstances of the case, and in accordance with equitable doctrines, it would be unconscionable on the part of the person against whom the claim is set up to refuse to recognise the existence of the equitable interest: Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 at 147 per Mason CJ, Wilson and Deane JJ. The most common case of intervention of that kind to be found in the law reports is the case where the person in whose favour a constructive trust is found has, directly or indirectly, made a financial contribution towards the cost of acquiring, improving, or maintaining the property in question. Lord Diplock's discussion of the principles relevant to such a case in Gissing v Gissing [1970] UKHL 3; [1971] AC 886 at 905-10 appears now to be generally accepted by the courts in England as correctly stating the law. It is of interest to note the general proposition with which his Lordship introduced his discussion of the particular problem that arises where both spouses have contributed, directly or indirectly, to the cost of a matrimonial home..."

(1989) 12 Fam LR 725

(1991) 15 Fam LR 109

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