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[2005] NSWCA 365
Court of Appeal (NSW)
2005-10-14
Mason P, Tobias JA
Original judgment source is linked above.
JUDGMENT OF: Mason P at 1; Tobias JA at 59; Brownie AJA at 60
DECISION: Appeal dismissed except as to costs order.
CATCHWORDS: PROPERTY - FAMILY LAW - de facto relationship - Property (Relationships) Act 1984 - statutory discretion to adjust property interests pursuant to s20 - where one partner continued to live rent-free in family property after separation - where subsequently asked to leave the property - where partner deferred instituting proceedings - time limit under s18 - discretion to extend time - forensic prejudice from delay - hardship - indemnity costs set aside - failure to accept settlement offer - offer made too late in proceedings. (ND)
LEGISLATION CITED: Property (Relationships) Act 1984
Bull v Selmore [2004] NSWSC 1059 Beavan v Fallshaw (1992) 15 Fam L R 686 Carlon and Carlon (1982) FLC 91-272 CASES CITED: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Fox v Percy (2003) 214 CLR 118 Foster v Evans ((1997) DFC 95-193 Jones v Grech [2001] NSWCA 208, (2001) 27 Fam LR 711
PARTIES: Trevor John SELMORE v Christine Ann BULL
Appellant: M Einfeld QC/ L Snelling COUNSEL: Respondent: P Maiden SC/ T Maltz
Appellant: Milne Berry Berger SOLICITORS: Respondent: Truman Hoyle
LOWER COURT JURISDICTION: Supreme Court - Equity Division
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41148/2004
MASON P TOBIAS JA BROWNIE AJA
Trevor John SELMORE v Christine Ann BULL JUDGMENT
1 MASON P: The parties lived together in a de facto relationship between October 1978 and September 1986, apart from a short separation in 1979. The appellant had been born in 1939, the respondent in 1948. Their child Jennifer was born on 17 December 1978. 2 The appellant purchased a house property at Mt Colah in June 1986. That was the year Jennifer commenced her schooling. It was also the year, in September, when the parties separated. The appellant then commenced living with a woman with whom he had jointly purchased a property at Hornsby in the same month that he had bought Mt Colah. 3 After the separation, the appellant permitted the respondent and their daughter to continue living at Mt Colah rent-free. The appellant also provided weekly maintenance of $40 for the daughter presumably until she turned 18. He also did maintenance, repair work, renovation and landscaping at the house. 4 The respondent was not in paid employment during Jennifer's early years. But after the couple separated she worked in various positions, using her wages to pay living expenses. She was the primary caregiver for Jennifer. 5 After separation, the relationship between the parties continued in a civilised manner. In May 1992 the appellant installed a shed at Mt Colah. He commenced using it for his residence at least two or three nights a week as well as the base for his picture-framing business. In 1994 the couple made a smallish joint investment in a parcel of shares and there was a family holiday in Fraser Island. 6 In February 2002, on completion of her tertiary studies, Jennifer (aged 24) moved to Victoria. In July of that year the appellant moved into the house and in August he asked the respondent to vacate the property. This led to the institution of proceedings in October 2002.
Proceedings at first instance 7 The claims were confined to the Mt Colah property. The respondent initially placed some reliance upon constructive trust principles, but this was abandoned on the first day of the hearing before Master Macready. 8 The principal claim invoked the Property (Relationships) Act 1984. The respondent required leave to prosecute such a claim first instituted in 2002. Section 18 of the Act provides:
Time limit for making applications (1) If a domestic relationship has ceased, an application to a court for an order under this Part can only be made within the period of 2 years after the date on which the relationship ceased, except as otherwise provided by this section. (2) A court may, at any time after the expiration of the period referred to in subsection (1), grant leave to a party to a domestic relationship to apply to the court for an order under this Part (other than an order under section 17(1) made where the court is satisfied as to the matters specified in section 17(1)(b)) where the court is satisfied, having regard to such matters as it considers relevant, that greater hardship would be caused to the applicant if that leave were not granted than would be caused to the respondent if that leave were granted. (3) Where, under subsection (2), a court grants a party to a domestic relationship leave to apply to the court for an order under this Part, the party may apply accordingly. 9 Sensibly, the parties chose to litigate the leave and substantive issues concurrently. There was major overlap in that both issues required close examination of the reasons why the respondent deferred instituting proceedings despite receiving advice as to her legal rights in 1987. It was also common ground that the parties' direct and indirect contributions to the upkeep of the house and the welfare of the family after 1986 were relevant to both leave and the exercise of the statutory discretion to adjust property interests pursuant to s20 of the Act. 10 The respondent was successful (Bull v Selmore [2004] NSWSC 1059). Master Macready made final orders granting her leave to make the application; requiring Mt Colah to be sold with the proceeds divided as to 40% to the respondent and 60% to the appellant; and requiring the appellant to pay costs on a particular basis. 11 The appellant challenges each component of the orders.
Extension of time 12 The applicable principles were not in dispute. Section 18 does not lay down a general time-limit, giving discretion to the court to extend it. Rather, it makes two different provisions. That found in subs(2) is expressed in terms of power to grant leave to apply, not as a power to extend the primary time limit. As Bryson J pointed out in Beavan v Fallshaw (1992) 15 Fam L R 686 at 687: The section appears...to treat an application for leave to apply as a normal event, calling for the court to consider two stages, a finding relating to hardship and the exercise of a discretion, without any special jealousy for the observance of the time limit or particular concern for it.… In considering whether a court should exercise a discretion conferred by statute to make an order in favour of some course, it is usual to consider whether there is a sound and positive ground or a good reason for making the order. Ultimately however it is not … legally necessary to define exactly the ground on which a discretion is exercised favourably to an applicant. 13 It is not mandatory that there be an explanation for delay (Carlon and Carlon (1982) FLC 91-272). 14 The parties joined issue as to whether the appellant had given an assurance in 1986-87 that induced the respondent to refrain from commencing proceedings until the appellant effectively denied that she had any interest in the Mt Colah property in 2002. Significantly, in light of the memory-loss issue referred to below, the appellant pleaded a conversation occurring shortly after the relationship broke down that was relevant to his contention that it was not just or equitable for the court to make any order in the respondent's favour with respect to Mt Colah (Defence, par 45). 15 In March 1987 the parties were in dispute about access to their daughter. This was resolved. The respondent's then solicitor sent her a letter confirming advice that she had "substantial rights to bring proceedings for a property settlement". The letter pointed out the terms of s18 of the Act. 16 Given the terms of s18(2), referred to in the letter, this advice was something less than a warning that the respondent would be time-barred by not going to court within 2 years of separation. 17 The respondent also gave evidence that she relied upon discussions between the parties that took place when the Mt Colah property was purchased. This would have been when the de facto relationship was coming to an end, although it appears that the respondent was then unaware that the appellant had (in the same month that Mt Colah was purchased) contracted to purchase another home at Hornsby as tenant in common with the woman that became his next de facto partner. 18 The appellant accepted that, in about 1986 or 1987, he agreed to allow the respondent and Jennifer to remain in the house until Jennifer finished her studies. But his version of the conversation was to the effect that he wanted the respondent to leave the property after Jennifer finished her studies, a proposition to which she agreed, saying "that seems fair enough" (Blue 111-2). 19 The Master preferred the evidence of the respondent. Her version of events relevant to the grant of leave was set out in an affidavit as follows:
"61. In early 1986 the Hornsby Property was sold and we purchased the Mt. Colah Property, and moved in. The Mt. Colah property was held in Trevor's name alone. Initially, Trevor said to me with words to the following effect:
Trevor: ' The Mt Colah property is for you and Jennifer but I am going to put the property in my name although I may put the property in Jennifer's name.'
A few days later, Trevor changed his mind in this regard and said:
Trevor: ' I can't put the property in Jennifer's name because she is not old enough so I'm going to put it in my name.' …
Trevor: ' There's no need to involve solicitors. We can work this out ourselves. The solicitors will take all the money and we won't be left with anything.'
I then discussed my solicitor's advice regarding a property settlement with Trevor. Trevor said words to me to the effect of:-
Trevor: ' The home is yours and Jennifer's, we don't need to see any more solicitors to sort that out.'
Credibility issues and forensic prejudice 23 The appellant submits that the Master failed to recognise the forensic prejudice suffered by the appellant stemming from the long lapse of time between 1986-87 and trial in November 2004. Because of the delay and the appellant's assumption that he would not have to face a claim for an interest in Mt Colah launched after Jennifer finished her education, the appellant said he neglected to retain records that would have assisted him. His capacity to recall events was also tarnished by the delay coupled with the adverse impact of the ageing process. 24 The capacity of delay to create prejudice of this nature, including prejudice that is difficult to prove in detail for the same reason, is well-known to the law (see generally Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541). There are, however, clear indications that the Master made allowance for these matters (see J61). Addressing them was an inevitable concomitant of proceedings of this nature, particularly in light of the terms of the very conversations that (on either version) led to proceedings not being taken in the late 1980s. 25 Senior counsel for the appellant recognised that it is difficult to challenge a conclusion based upon the trial judge's assessment of witnesses who are not presented afresh in the Court of Appeal. The principles have recently been expounded in Fox v Percy (2003) 214 CLR 118. Nevertheless, counsel took the Court to passages in the transcript said to support the conclusion that the trial judge misused his position of advantage. This prompted the respondent to cite passages said to be supportive of the adverse credibility findings. 26 Undoubtedly, cross-examination of the appellant at trial was part of an attempt to discredit his testimony generally. On the other hand, the main focus of attention was directed at a discreet matter that resulted in a finding that was unchallenged in the appeal. It was only very late in the piece that the respondent learnt that the appellant purchased a Hornsby property in June 1986 as tenant in common with the woman who was to become his next partner. The appellant also kept, unknown to the respondent, term deposits and savings of $70,000 at the date of separation (J47). These matters provoked cross-examination designed to explore the source of the funds applied (presumably by the appellant) to contribute to his share in the Hornsby property. It is not I think in dispute that the appellant performed poorly in that particular area of his testimony, although the appellant contends this stemmed from memory difficulties due to the delay. He also contended that some of his financial records touching the transaction had not been retained, in contrast to his retention of other financial records from the same period. 27 At the end of the day, Master Macready found that the appellant retained, unknown to the respondent, the term deposits and savings of $70,000 in the joint names of the parties at the date of separation (J47). As indicated, this finding is not challenged on appeal. Neither are the other findings of primary fact relevant to the substantive orders. For these reasons, it is very difficult to discern the significance of the claims of forensic prejudice. 28 I return to the complaints focusing upon the credibility decision concerning the conversations of 1986-87. The Master had said: 60 In this matter there are clear issues of credit that have to be resolved. When giving her evidence I found the plaintiff to be straightforward. There were some areas of her affidavit evidence where she did not fully disclose the contributions by the defendant but these were not matters of substance and I do not regard them as affecting her credit. On the other hand, when the defendant was cross-examined, he consistently retreated into a lack of memory when questions were asked that might have been against his interest. In addition he was evasive and prevaricated over minor issues, which arose concerning the date on which he left the relationship. This arose because he had conceded in his affidavit evidence and his defence that the parties had separated in September 1986 when he had left Mount Colah. He was taxed with the fact that in June of that year he had purchased land jointly with the lady who later became his next de facto partner. In order to avoid that embarrassment he sought to express doubts about when it was he had left the Mount Colah property. 61 Although I accept that the defendant is elderly I generally preferred the plaintiff's evidence to that of the defendant in cross-examination. In these circumstances I accept the plaintiff's version of what happened at the time of separation. 29 I reject the appellant's submission that this passage indicates that the Master committed the fallacy of overlooking the difficulties of recollection faced by the appellant in consequence of the delay itself. The opening remarks at J61 reveal the Master as being conscious of the very matter in question. The findings at J60 adverse to the appellant's credit are based upon what the Master observed while the appellant was in the witness box. The references to the appellant "consistently retreat[ing]into a lack of memory" and to him being "evasive and prevaricat[ing]over minor issues" relate to what happened to the observation of the Master who was well-placed to make the assessment that he did. Having read the transcript passages to which we were taken, I am quite unpersuaded of error or miscarriage. 30 It is entirely understandable that the appellant would have had difficulty recalling some of the details put to him in cross-examination. It is also true that the delay has interfered with the appellant's capacity to recall and/or document details of his expenditure in maintaining and improving the Mittagong property referred to below. Since, however, there was no suggestion that the respondent contributed money on this account and since the purchase and sale price of Mittagong is known, nothing appears to turn upon these matters. The same applies to the extent (if any) that the appellant has been unable to muster financial records touching his expenditure in maintaining and improving Mt Colah. 31 I would add this. The decision to grant leave was based on much more than preference for the respondent's version of the conversations (see par [20] above). But even the appellant's version was not the knockout blow suggested in submissions in this Court. At its highest, it established a non-binding admission in 1987 that it then seemed fair that the respondent would vacate the premises after Jennifer finished her studies. A lot of water flowed under the bridge in the years that followed.
The decision to grant leave 32 I return to the broader challenge to this decision. 33 It was suggested that the Master took an unduly narrow approach to the issue of hardship to the respondent that would stem from withholding leave. It was ultimately conceded that the Master was entitled to have regard to the hardship from failure to obtain the substantive relief claimed. There was, however, separate complaint that the Master should have balanced the respondent's present state of health and capacity to support herself if left without relief under the Act. There is no merit in this submission. It was not a topic raised in the appellant's submissions at trial (Black 88-90). There is nothing to suggest that the respondent has undisclosed financial assets. Her present employment as a doctor's receptionist is recognised in the judgment below (J30), but it could not be overlooked that she will have her own retirement needs to think about in the not too distant future. Furthermore, the findings in the appellant's favour referable to the hardship he will suffer stemming from his age, medical condition and retirement needs carry an implicit balancing of the situation in those regards vis-a-vis the respondent. 34 The appellant submits that the Master erred in not adverting to the issue of procedural hardship that was raised as one of the grounds for refusing leave (Black 89C). I discern no miscarriage here, because any problems for the appellant stemmed directly from his own inducement to the respondent that she defer bringing a claim in the interests of saving legal costs. Furthermore, it was not shown that any material documents were lost or that the appellant's difficulties in recall of details contributed to his inability to establish the primary facts. 35 The challenges to the grant of leave pursuant to s18(2) must be rejected.
Substantive issue 36 The primary facts referable to the adjustment issues were not in dispute in this Court. 37 After the respondent had fallen pregnant in March 1978, the parties commenced their de facto relationship in October that year when the respondent moved into the appellant's property at Five Dock. 38 The parties inspected a property at Mittagong. It was purchased by the appellant for $55,000 in October 1980 using the proceeds of sale of his two properties and his savings. Before she fell pregnant, the respondent had worked in a secretarial position and she had no substantial savings. Her assets at the start of the relationship were in the vicinity of $8,000-$13,000 including a car. 39 The couple initially lived in a shearing shed at Mittagong. It was renovated at the appellant's expense. They tried their hand at a holiday camp venture. In 1982 they purchased a flock of sheep. Despite extensive work on the property, much but not all of it done by the appellant (cf Blue 7), the venture was terminated due to the impact of drought. In 1983 the couple decided to subdivide and sell, a process that took the next two years. 40 The Master found that both parties contributed in a substantial way to the increase in value of the Mittagong property (J79), a conclusion that was not challenged on appeal. 41 The proceeds of sale were deposited partly into a jointly operated trust account for the benefit of the daughter and partly into a joint account in the names of the parties (in which the respondent was described as Mrs Christine Anne Selmore). Subsequent drawings were made to help fund the purchase of a property at Hornsby and $70,000 of the balance was kept secretly by the appellant. 42 Like all of the purchases, the Hornsby property was acquired in the appellant's name. The Hornsby property was itself sold in January 1986 with the proceeds being used to fund acquisition of the subject property at Mt Colah. The purchase price was $80,000, the property being worth about $90,000 at the date of separation. 43 The parties were unemployed and the family was dependent on social security in the mid 1980s. In May 1986 the appellant commenced a picture-framing business. At some later stage he started part-time teaching at a TAFE College. The respondent was not engaged in paid employment during Jennifer's early years. However, she embarked upon a part-time real estate course in 1985. The respondent commenced employment when the appellant left the relationship and the Mt Colah home in September 1986. With some gaps, she held various part and later full-time positions, using her wages to support herself and Jennifer. As indicated, the appellant provided $40 per week child maintenance as well as permitting the respondent and Jennifer to continue living at the Mt Colah home. 44 At the close of the de facto relationship, in September 1986, the appellant was the owner of Mt Colah, a property acquired in large part from the sale of Mittagong. The respondent's uncertain interest in those sale proceeds could (if necessary) have been enforced through proceedings under the Act. The respondent also had the benefit of the admission implicit in the proceeds having been invested in the two bank accounts (one of them a trustee account) in the parties' joint names. 45 In addition to his interest in Mt Colah, the appellant had a half-share of the property at Hornsby that he purchased in June 1986 (the source of funding being unknown) as well as the $70,000 that he kept, unknown to the respondent, from the various term deposits and savings at the date of separation. The Master correctly recognized that the appellant has had the benefit of this latter sum since 1986 (J78). 46 At the end of the relationship the respondent had $6,000 in assets (J43) and her entitlements over Mt Colah, whatever they were. 47 In 1989-1990 the appellant installed a pool at the property. In May 1992 he built and moved into the shed to which reference has already been made. In 1995 he performed renovation and landscaping work that doubtless contributed to the value of the property at date of trial ($450,000). 48 The parties accept that the Master was entitled, as he did, to have regard to the direct and indirect financial contributions made to the property and the welfare of the family after the cessation of the de facto relationship (see Foster v Evans ((1997) DFC 95-193, Jones v Grech [2001] NSWCA 208, (2001) 27 Fam LR 711). Most, but not all, of the expenses relating to the property were paid by the appellant (J73). On the other hand there were the substantial financial and non-financial contributions made by the respondent as the primary caregiver of the couple's daughter (J72). These were required to be taken into account in the respondent's favour in light of s20(1)(b). 49 It was also recognised as relevant in the appellant's favour that the respondent had many years rent-free accommodation at the Mt Colah property. The appellant contended, before the Master and in this Court, that the rental value of the property had to be directly offset against whatever provision called to be made in the respondent's favour. 50 The rental value of the property as a whole between 1986 and the date of trial was computed at $194,300. Contrary to the appellant's submission, the Master did not err in his refusal to deduct this sum from the respondent's putative entitlement. First, the appellant himself had partial occupation of the premises after 1992. Secondly, Mt Colah was in part the home of the parties' daughter, Jennifer, with the consequence that permitting the respondent to live there as Jennifer's primary carer was a partial fulfilment of the appellant's duty to Jennifer, not to mention a situation that enabled him to enjoy ready access to his daughter. Thirdly, the respondent's contributions as homemaker and parent to the welfare of the family during this period were required to be taken into account. These included financial contributions towards Jennifer's needs, given that the $40 pw maintenance hardly covered more than her food and minor items of clothing (Blue 14, J75). Fourthly, the respondent had indirectly contributed to the acquisition of Mt Colah through the contributions she made with respect to Mittagong. In these circumstances, her occupation of Mt Colah rent-free was something less than total bounty on the appellant's part. 51 In the previous paragraph I have addressed the greater part of the appellant's attack on the Master's decision to award the respondent 40% of the sale proceeds of the property. Beyond his complaint about the failure to deduct $194,300 or any finite sum before proceeding to the evaluative exercise of adjusting the parties interest in the property, the appellant's complaints are tantamount to a plea to exercise the discretion afresh without pointing to material error.
Costs 52 When he promulgated final orders, the Master directed that the plaintiff's costs of the proceedings should be paid from the proceeds of sale of Mt Colah. The Master excluded the separately identifiable costs relating to the constructive trust claim that was abandoned on the first day of the hearing. He ordered that the costs were to be paid on a party/party basis up to 8 November 2004 and thereafter on an indemnity basis. 53 No reasons were sought or provided as regards the indemnity costs order which has now been challenged in this Court. Since, however, the parties had exchanged written submissions before the Master addressing the plaintiff's application for costs on an indemnity basis, it is possible to infer the reasoning involved. The hearing at first instance spanned two days commencing on Tuesday 9 November 2004. On the previous Friday, 5 November, the plaintiff's solicitor faxed a Calderbank offer to settle the proceedings for $100,000 plus costs. The letter called for acceptance by no later than 5pm the following Monday. The offer was not accepted and, as indicated, the plaintiff achieved a significantly better result in the litigation. 54 In my view, the discretion as to costs miscarried to the extent that indemnity costs were awarded. It seems to me that the settlement offer was made far too late in the proceedings and was open for acceptance for far too short a period to be capable of branding non-acceptance unreasonable or otherwise of such a nature as to justify the indemnity costs order. I recognise that the trial was imminent and that the parties and lawyers would have been giving attention to settlement at the relevant time. Nevertheless, their primary focus would have been on preparation for trial. It is not known whether the respondent's camp had arranged conferences between noon on Friday and 5pm on the following Monday. I also think it unjust that the indemnity costs should have commenced on and from 9 November given that most if not all of the costs of the first day of the trial would have been committed by the stage that the settlement offer was faxed. I do not regard the justice of the circumstances touching non-acceptance of the offer as altered by the fact that the appellant had been tardy in supplying all relevant financial information in the run-up to the trial. 55 There was a muted submission to the effect that there should have been a separate order in the defendant's/appellant's favour with reference to the separate costs of the application for leave pursuant to s18(2). The grant of leave was likened to the "indulgence" of setting aside a default judgment or obtaining an extension of time by a party in default. The submission has no merit given that the parties chose to fight the case the way they did and in light of the very substantial overlap of evidence as between the issues of leave and of substance. 56 I would therefore uphold the appeal, but only to the extent of setting aside the indemnity costs order. 57 Since the written and oral submissions directed at the costs issue were miniscule compared to the other issues I think it appropriate to go no further than making a small adjustment in the appellant's favour of the cost order that flows from the disposition of the other issues in the appeal. 58 I therefore propose that the appeal be dismissed, except for the variation of order 4(e) by deleting the words "and thereafter on an indemnity basis". The appellant should pay 90% of the respondent's costs in this Court. 59 TOBIAS JA: I agree with Mason P. 60 BROWNIE AJA: I agree with Mason P. **********
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SELMORE
BULL
(1992) 15 Fam L R 686
(1996) 186 CLR 541
(2003) 214 CLR 118
(2001) 27 Fam LR 711