Taylor v Goddard

Watson v Foxman (1995) 49 NSWLR 315 Proudman v Dickason [2008] NSWSC 681 CASES CITED : Dunstan v Rickwood (No 2) [2007] NSWCA 266; (2007) Fam LR 491 Baker v Towle [2008] NSWCA 73; (2008) 39 Fam LR 323 Parker v McNair (1990) DFC 76

Vicky Anne Taylor PARTIES : v Kevin Goddard

COUNSEL : Plaintiff: B Ralston Defendant: E Cohen

SOLICITORS : Plaintiff: Thomas Adams Solicitors Defendant: Farah Lawyers

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

6059/06 Vicky Anne Taylor v Kevin Goddard JUDGMENT 1 HIS HONOUR: This is an application under s 20 of the Property (Relationships) Act 1984 (NSW). The parties were in a de facto relationship from February 1981 to December 2004. There is one child of the relationship, a daughter born in September 1987. When the parties' relationship began in February 1981 they were both divorced. Each had a child or children from a previous marriage. 2 In February 1981 the plaintiff was 27. She had a daughter, born in May 1977. She and her former husband were the registered proprietors of a property at Berith Street, Auburn in which she lived with her daughter. That property was unencumbered and was then worth about $55,000. As part of a family law settlement with her former husband, the plaintiff acquired his interest in the property. She acquired that interest in about 1983 and paid her former husband $12,000 or possibly $12,500 for it. 3 In February 1981 the defendant was 35. He had three children by his former marriage. He owned a property at Talbot Street, Riverwood, then worth about $60,000. That property was occupied by his former wife and his children. He gave oral evidence that as part of the arrangement with his former wife he declared a trust of the property in favour of his children and agreed to his wife being able to occupy the property, apparently indefinitely. In February 1981 he was living in a mobile home on that property.

4 Apart from the Auburn property, the Riverwood property, and the mobile home, the parties had other significant assets as follows. The plaintiff owned a motor vehicle, furniture and white goods. The defendant had an interest in a ski lodge at Smiggins Holes, shares in Mulgana Pty Ltd, a new Sigma motor vehicle and a water ski boat. Mulgana was a partner in a partnership which owned three bread shops at Roselands, Liverpool and Campbelltown. The partnership opened another shop in Kogarah in 1982. 5 In 1981 the plaintiff was employed as a casual bar assistant at a sporting club. The defendant worked in the bread shops, particularly at Roselands. His income came from the bread shops. In 1981 the defendant moved into the Auburn property with the plaintiff and her daughter. They continued to live there until June 1990. The defendant did not pay rent, although I do not regard this as a matter of great significance. 6 It was claimed for the plaintiff that there was an advantage to the defendant in this arrangement in that it allowed the defendant's former wife and his children to continue to live in the Riverwood property. No family law proceedings were brought for any property settlement between the defendant and his former wife. The plaintiff said that this was attributable to the fact that her house was made available to the defendant. 7 Whilst there was undoubtedly some advantage to the defendant in being able to live in the Auburn property, I do not accept that there was a significant additional advantage to him in avoiding family law proceedings. Nonetheless, I accept that it was a considerable benefit for him to be able to live with the plaintiff in the house at Auburn rather than in the mobile home. 8 Shortly after the defendant moved into the plaintiff's house at Auburn he urged the plaintiff to stop working, and she did so. Until about September 1984 the defendant's income supported both parties, and the plaintiff's daughter. The plaintiff may have received some maintenance payments from her former husband, but the level of support in this regard was minimal. 9 In about 1983 the defendant sold Mulgana's interest in the partnership which owned the bread shops. There was an issue as to how much he received. He said about $200,000; the plaintiff said about $80,000. No records survived to enable this question to be answered. Nor is a precise answer necessary. The sale proceeds were sufficient to finance the later acquisition of a bread shop in Eastwood and were sufficient to support both parties and the plaintiff's daughter until income was received from that new venture. 10 Also in 1983 the plaintiff borrowed $12,500 from her aunt. She used this loan to pay her former husband to acquire his interest in the Auburn property. She paid interest on the loan at 12 percent per annum or $125 per month. Her aunt did not require repayment of the whole of the principal although the plaintiff said she repaid an unspecified part of the principal. The funds to pay interest and to repay such part of the principal as was repaid came from the moneys provided by the defendant. 11 In September 1984, Mulgana opened a bread shop at Eastwood. Mulgana did not purchase an existing business. The opening of the new shop involved locating an appropriate site for lease, purchasing the fittings and the equipment, fitting out the shop, employing staff, and doing everything else required to establish a new business. The plaintiff assisted the defendant in setting up the business. She did so in ways which included providing physical labour in cleaning and installing the equipment. The plaintiff deposed that two bakers were employed in the business and, after about six months, a pastry cook was also employed to assist. She deposed that she was the manager during the day and attended to the daily running of the shop including undertaking the tasks of closing the shop, supervising the staff, providing customer service and bookkeeping. 12 The defendant disputed that the plaintiff was the manager. He said that a separate manager was employed. But it is common ground that the plaintiff worked full-time, at least as a shop assistant, and she also kept the books. She was involved in the placing of orders. She was paid a wage which she contributed, along with moneys from the defendant, to the household expenses. 13 I do not find that the plaintiff was employed as the manager of the bread shop. Nonetheless I accept that she made a significant contribution, both direct and indirect, to the ultimate success of that business. 14 The defendant also worked full-time in the bakery, although at different hours. He did the baking, working from midnight or 2am, until about 10am. During the period up to the birth of the parties' daughter the plaintiff was working full-time in the business. The defendant was also working, although at different hours. The majority of the domestic duties such as cleaning, washing, ironing, cooking and care of the plaintiff's daughter, were attended to by the plaintiff. 15 On 31 July 1986, the defendant sold his interest in his ski lodge. From the proceeds of sale he paid the sum of $55,060 into a bank account of Mulgana's. He deposed that the total consideration received was $90,000, a small part of which he said was paid by way of transfer of a truck. There was no corroboration of the figure of $90,000. The only part of the consideration from the sale of the defendant's interest in the ski lodge, which it has been established was ultimately dealt with for the benefit of both parties, was the sum of $55,060 paid into the Mulgana bank account. 16 On 7 September 1987 a company called Norvek Pty Ltd, then owned by the defendant, purchased a cake shop at Eastwood for $55,000. The equipment was sold to Esanda for about $40,000 and leased back. This would have provided further cash to the defendant in September 1987. The cake shop was not very profitable. It was sold in May 1988 for $60,000, but $41,276 was required to be paid to Esanda to re-acquire title to the assets to be sold. I infer that there was a surplus of about $19,000 available in May 1988. This may have been somewhat less if there were further debts to be discharged. The evidence is unclear about this. 17 The parties had a shared enthusiasm for water-skiing and they looked for properties on the Hawkesbury River with a view to buying land. They found a property at Sackville which had frontage to the river. It is not clear precisely when the contract was entered into for the purchase of the property. I infer that in about August or September 1987 contracts were exchanged for its purchase. The purchase price was $205,000. The property was purchased by the defendant alone. The purchase was partly funded by vendor finance in the sum of $105,000. The balance of the purchase price, and the costs and expenses of the purchase, were provided by the defendant. The source of the funds was the proceeds of sale of the ski lodge, funds left over from the sale of the bread shops in 1983, and proceeds of sale of a Toyota Tarago motor vehicle which the defendant sold on 8 September 1987. 18 At all times during this period the parties kept their finances separate. 19 The vendor finance of $105,000 was for a term of two years and carried 10 percent interest. The loan was repayable on 16 October 1989. The defendant paid the interest on the vendor finance. The vendor pressed for partial early repayment in about December 1988. The defendant paid $25,000 in reduction of the principal. 20 The parties' daughter was born on 20 September 1987. For a time the plaintiff stopped working. The defendant sold the Eastwood bread shop in December 1988, having sold the cake shop in May of that year. He received $164,164.79 from the sale. On 8 December 1988 he deposited those proceeds into two accounts. $58,000 was deposited into a bank account of Mulgana. $106,164.79 was deposited into an account styled "ANZ Executors and Trustee Coy Limited Common Fund". 21 The plaintiff's aunt, from whom she had borrowed $12,500, died in June 1988. The plaintiff and her daughter were beneficiaries of her aunt's estate. At the end of January 1989 the plaintiff received an interim distribution from the estate of $50,000. I accept the defendant's evidence that the plaintiff did not tell him at the time of that receipt. 22 From the sale of the bread shop until April 1989 neither party was working. They lived off their savings which I infer were substantially or wholly the proceeds of the sale of the Eastwood bread shop and any remaining funds from the sale of the cake shop. The earlier sale proceeds had been used to purchase the Sackville property. 23 In April 1989 the defendant took up employment as a truck driver with IPEC. He received take-home pay of $850 to $900 net per week. That money was used to support the family, now consisting of the plaintiff, the defendant, and the two girls. The plaintiff said that the defendant's work with IPEC was irregular and I accept that that was so. Thus in the financial year ended 30 June 1990, (being a year for which the defendant had kept his group certificates), he earned a total after tax of $17,315.50, which is the equivalent of only about 20 weeks', or thereabouts, of full-time work at the rate of pay to which he deposed. It may be that some of the proceeds of sale of the bread shop were used to support the family even after the defendant commenced work in April 1989, but it is not possible to say how much was so used. 24 On 8 September 1989 the plaintiff received a further interim distribution from her aunt's estate of $100,000. On 13 October 1989 the defendant paid the balance of the debt owed to the vendor of the Sackville property. The sum paid was $80,666.67. The plaintiff claims that she funded the payment from the legacy she received. The defendant denies this. He says the payment was funded from the remaining proceeds of sale of the Eastwood bread shop. Both scenarios are possible. No banking records have survived and I was told that subpoenas to the ANZ Bank were unavailing. This is the principal disputed issue of fact in the case. 25 In her first affidavit, sworn 26 September 2007, the plaintiff deposed that she received an inheritance from her aunt's estate in the sum of "around $400,000". She said: " I then contributed the sum of $105,000 towards the purchase of the Sackville North property by paying those moneys to the vendor. This was around October 1989. At that time I would have regular conversations with the defendant during which I would say words to the effect, 'I want to put the Sackville North property into the both our names'. The defendant would reply with words to the effect, Let's not do that. You will have to pay stamp duty to do that and it will be a waste of money. " 26 The plaintiff did not adhere to the evidence she gave in this affidavit as to the moneys she received from the estate. It was clearly established that the plaintiff received not $400,000, but $195,000. (In fact, she was entitled to a little less as she had to make a small refund because there had been an overpayment.) Nor did the plaintiff maintain that she had paid $105,000 to discharge the loan. 27 The plaintiff annexed to her first affidavit correspondence from the defendant's solicitors in October 1987 on the purchase of the Sackville property. It was not disputed that the plaintiff did not obtain these documents on discovery or by notice to produce. It follows that she must have photocopied papers the defendant had retained in relation to that transaction. 28 On 14 August 2008 the plaintiff swore a further affidavit. This was in response to an affidavit of the defendant that was not read before me. In that affidavit the plaintiff deposed that: " I deny the allegation that I contributed no funds towards the purchase of the North Sackville property. Annexed hereto and marked with the letter A is [a] copy of the bank cheque drawn from the ANZ Bank in favour of the vendor of the Sackville property in the sum of $80,666.67. I obtained this cheque from my funds. This was part of the payment that I made towards the purchase of the North Sackville property. "

29 The annexed copy of the bank cheque shows that the cheque was signed for the ANZ Bank by the manager and the accountant of the Roselands branch. This was the branch at which Mulgana had its account. As I have said, there are no banking or other records to show the source of funds. 30 In a later affidavit the plaintiff deposed that the repayment of the vendor loan required a bank cheque; that she believed she had deposited the legacy of $100,000 with a credit union, but the credit union did not have a facility to draw bank cheques; that she withdrew the amount necessary to discharge the loan from her credit union account and deposited that amount into an account of either the defendant or Mulgana at the ANZ Roselands branch; and that a bank cheque for repayment of the loan was then drawn on the account into which her funds had been deposited. 31 In that affidavit she also deposed to having had a conversation with the defendant in which she said to him: "'I have received the first cheque from Aunty Nell's estate. ' He said, 'How much did you get?' I said, '$100,000. There will be more to come when they finalise the estate.' He said, 'I have to pay off Jack Everingham the balance of his loan next month. Would you be prepared to let me use those funds for that?' I said, 'That would be all right.'"

The defendant denied that conversation. 32 I do not accept that after almost 20 years the plaintiff does have a recollection of such a conversation, although she may well believe that she does. There are sufficient errors or exaggerations in the plaintiff's affidavit evidence that I cannot accept her statement of having such a recollection as being reliable. Frequently in litigation a party's recollection of events is affected, even if subconsciously, by considerations of where their perceived interests in the dispute might lie. (See generally Watson v Foxman (1995) 49 NSWLR 315.) Moreover, the statement as deposed to by the plaintiff, if made, would not have been true. When the plaintiff received the cheque of $100,000, it was not the first cheque she received from the estate, but the second. Whilst the parties kept details of their financial position to themselves, I see no reason why the plaintiff would have lied about this matter to the defendant. I think that the conversation deposed to in the fifth affidavit sworn by the plaintiff was a reconstruction. 33 The short time between the receipt of the legacy and the payment off of the mortgage might indicate that the legacy was the source of funds to pay off the mortgage, but that consideration is counterbalanced by there being no corroborative evidence of how the $195,000 received by the plaintiff was invested or disbursed. I do not regard the plaintiff's unaided recollection of those matters as being reliable. 34 The defendant deposed that: " I was aware that the plaintiff benefited from the estate, but until the commencement of these proceedings I thought that the amount that the plaintiff received was an amount of $50,000 which I also believed that she had lost in an overseas investment. "

35 The plaintiff did not dispute that she lost part of her inheritance in an overseas investment. She said that the amount lost was $45,000. She also said in cross-examination that she hadn't looked for documentation to corroborate that as being the amount of the loss. She said, "I haven't entertained the idea of having to substantiate that because it's a loss." 36 I find this difficult to accept, when the defendant's evidence was to the effect that he believed that the plaintiff had lost all of the inheritance she had received in an overseas investment. It must be obvious that if the amount invested overseas and lost was not $45,000, as the plaintiff deposed, but a much greater sum, then, depending upon the amount of the loss, the plaintiff would not have had the resources to make the payment she deposes she made in October 1989. One would expect the plaintiff to seek to corroborate each aspect of her receipt and dealings with the legacy, but she has not sought to do so. 37 In oral evidence the plaintiff also said that, "I hung on to that bank cheque for a long time knowing that if I had to produce it that that was the bank cheque that paid for my share of that property." If true, this evidence would be highly probative that she had paid off the loan and kept the photocopy of the cheque as evidence that she had done so. The plaintiff also said that the copy of the bank cheque she kept, was "just my little security blanket". She said that she kept the photocopy folded up and tucked in the back of her wallet and transferred it from wallet to wallet. The original paper with which she says she so dealt was not produced to corroborate this evidence. 38 The fact that the plaintiff annexed to her first affidavit photocopies of the correspondence from the defendant's solicitor on his purchase of the Sackville property indicates that the plaintiff had access to papers kept by the defendant in relation to the transaction. As I have said, it is common ground that she did not obtain those documents on discovery or by notice to produce. It is equally possible that the photocopy of the cheque was a document kept by the defendant as evidence of the final payment made to the vendor. 39 Ultimately, I am not persuaded that I should accept the plaintiff's evidence on this matter. If she had indeed kept the photocopy of the bank cheque as her "security blanket" to evidence her payment off of the vendor loan I would expect her to have said so in her first affidavit. She did not refer to the copy of that cheque at all in her first affidavit. When she did refer to it in her third affidavit she merely annexed the copy and said that she obtained the cheque from her funds. She said nothing about the circumstances in which she came to have the photocopy. Nor was that explanation advanced in any later affidavit. 40 The evidentiary onus of showing that the funds to purchase the bank cheque used to discharge the defendant's debt to the vendor were provided by the plaintiff, lies on her. I am not satisfied that she has discharged that onus. 41 Following the sale of the bread shop, the parties investigated whether there were other small businesses they could acquire. The plaintiff said that they looked for a business which she could manage, not a business for them to operate together. I accept that evidence. It is consistent with what happened. 42 On 3 April 1990 Norvek, now called Norvek Bakery Pty Ltd, contracted to purchase a business known as Kingswood Preschool for $115,000. At the same time Mulgana and Ligon 221 Pty Ltd contracted to buy the land at 30 George Street, Kingswood from which the business was conducted. The purchase price of the land was $220,000. The deposits totalling $33,500 were paid by Mulgana. The contracts were settled on 6 June 1990. The ANZ Bank provided a loan of $245,000. 43 At about this time Mulgana also paid $14,500 to purchase a bus to be used in the business. The funding of the difference between the purchase price and the loan from the ANZ Bank is unclear. Whilst it appears that Mulgana paid $48,000 for the deposits and for the bus, it appears that there was an adjustment between the parties. 44 The plaintiff relies on a handwritten note in the defendant's writing. It is attached to a statement of the parties' financial position as at 21 February 1990 provided to the ANZ Bank in connection with the application for finance. The plaintiff says that the note contained calculations as to how much she and the defendant were to pay towards the purchase price. She says that she believes that they contributed those amounts. The amounts recorded were $55,243.28 from the plaintiff and $43,585.66 from the defendant, being a total of $98,828.94. That sum would at least approximate the balance of the purchase price including the deposit and the expenses on the purchase. The defendant is unable to say whether the plaintiff contributed to the purchase costs of the preschool. On the balance of probabilities, I think that the plaintiff did so contribute in the manner indicated on the note. 45 The corporate structure used to buy the preschool, both the land and the business, shows that the parties intended to own the land and the business together. Both parties regard Mulgana as the defendant's company and Ligon 221 as the plaintiff's company, although shares were issued so that they each had equal shareholdings in both companies. A share was also issued to the plaintiff in Norvek Bakery so that she was an equal shareholder in that company. That company in due course changed its name to Kingswood Preschool. 46 The plaintiff was the designated operator of the preschool or childcare centre for the purposes of the Commonwealth Childcare Act 1972. She obtained the licence from the Department of Community Services required under State legislation for the operation of the preschool. She employed the qualified teachers and childcare assistants. She worked full-time at the preschool for at least eight and a half years until the end of 1998. She managed the business and kept the books. Until the business went on to a system of computer accounting in the mid 1990s, she manually wrote up the cashbook. After the accounts were computerised, she operated the MYOB software. She managed the billings to parents and chased up unpaid bills. She purchased the food and arts and crafts supplies for the children. I accept her evidence in these respects. I conclude that she was the driving force behind the business. Her evidence is corroborated by a former employee and by an IT consultant to the business. 47 The defendant had a significantly lower level of involvement in the business. He did general maintenance work, supervised tradesmen when building work was being undertaken and in later years carried out bus runs. 48 The income from the preschool was used to pay the parties' private expenses. This was done through rental payments made by Norvek as the operator of the business and lessee of the premises to Mulgana and Ligon. The parties also had loan accounts with the relevant companies. 49 The defendant's irregular employment with IPEC continued until 1992. He left in 1992 in order, he said, to concentrate full-time on building the business of the preschool which he said up to then was not profitable. However, the defendant did not work full-time in the childcare business. He deposed that: " After I left IPEC in mid 1992 I started to try to expand the after-school aspect of the childcare centre and assist the plaintiff in ensuring that she collected all of the business debts and that the business started to make reasonable profits. During the whole period of the operation of the childcare business I was involved in other small business ventures such as buying and selling cattle and purchasing and selling other things. Some of these transactions made profits and some did not and some made losses, but I traded in this way through Mulgana and did my best to make money for the family. "

50 Whilst it was not disputed that the defendant was involved in other small business ventures, it was not shown that his involvement in those business ventures made any significant contribution to the welfare of the parties or their family. From at least the early 1990s the family was supported from the income derived from the preschool. 51 In October 1993, the plaintiff and the defendant purchased an adjoining property at 59 Great Western Highway Kingswood for $120,000. The purchase moneys were borrowed. The Riverwood house was used as security for the loan. 52 In 1995 the parties set up a superannuation fund and contributions were made to it equally from the preschool business. In 1997 the parties purchased 61 Great Western Highway Kingswood to expand the preschool. The purchase price of that land was $142,000. The purchase price was substantially paid for using the superannuation funds. 53 The loan taken out in 1990 was refinanced in October 1995. The parties also borrowed substantial moneys from the plaintiff's elder daughter, which she had inherited from her great aunt's estate. That money was used in the business. In due course it was repaid with interest. 54 The plaintiff said, and I accept, that prior to 1998 the defendant did little in connection with the day-to-day activities of the preschool. From 1998 he did the morning and afternoon bus runs. He checked the books and paid bills approximately once per month. 55 The preschool business and the lands were sold in late 2001. The sale was completed in April 2002. After all debts were paid the parties received $708,469.82. The profit made on the sale of the land and business was substantially, although not wholly, due to the work done by the plaintiff. 56 From October 1987 up to 1991 the parties used the Sackville property as a weekender. In 1990 they vacated the plaintiff's house in Auburn. Since then the plaintiff has let the Auburn property and she has received and kept the rents. For about a year from 1990, the parties rented a house at Kingswood near the preschool. The rent for that was paid out of the business. In about July 1991 the parties moved to the Sackville property and they lived there until the plaintiff gradually moved out following separation at the end of 2004. The defendant continues to live at the Sackville property with Katrina. 57 I have earlier referred to the benefit derived by the defendant from being able to live in the plaintiff's Auburn property. That benefit was substantially matched by the benefit received by the plaintiff in living in the Sackville property. 58 Notwithstanding that the plaintiff was working full-time in the preschool business, she continued to bear the larger share of domestic duties. A cleaner was employed four hours per week. The plaintiff did the housework that was not done by the cleaner. She did the cooking and other domestic duties. The defendant did substantial work about the Sackville property. It is a farm with river frontage. He substantially expanded and improved the house. He built a large shed. He did work such as gardening of the paddocks and yards, and maintenance of river banks. He carried out plumbing and electrical work. He concreted the driveways and a boat ramp. He maintained fencing, built and maintained irrigation, installed electricity - he has qualifications as an electrician - to the boat ramp and water pumps, and did other maintenance. He also carried out mechanical repairs to motor vehicles and cared for the livestock on the property. 59 The work the defendant did on the Sackville property would have contributed to the value of that property which, (at least at present), is legally and beneficially owned by him. The work would also have contributed to the welfare of the family living at the property. Nonetheless, I do not regard the contributions he made to the Sackville property and to the welfare of the family as matching the contributions the plaintiff made through her work at the preschool and the contributions she made to the welfare of the family. That is to say, whilst both parties made contributions falling within s 20(1)(a) and (b), there was, in my view, a disproportion in their contributions which it is just and equitable to satisfy by an order adjusting their interests in property. 60 Apart from their joint investment in the preschool, the parties have largely kept their finances separate. That position continued with respect to their dealing with the proceeds of sale of the preschool. The net proceeds of $708,469.82 were divided equally. 61 On the advice of their accountant, the parties made investments in a hotel and resort related development in Queensland through entities called Kondari Investments and Pialba Hotel. They are, in effect, silent partners or shareholders in the development of a hotel and resort complex. The parties jointly borrowed separate identical sums to make these further investments. Those loans are secured over the Auburn property and the Riverwood property. Although they are joint borrowers of each loan, the parties are agreed that as between themselves the plaintiff is responsible for the loan secured over the Auburn property, and the defendant is responsible for the loan secured over the Riverwood property. 62 The parties have received substantial returns from their investments in Kondari and Pialba. They have received equal returns, but have invested and dealt with the returns separately. 63 The parties took out a further joint loan of $250,000 secured over the Sackville property. There are no details as to when the loan was drawn down. I infer it was in the early 2000s before separation. $200,000 of the $250,000 loan was advanced to Kondari which paid interest at 20 percent on the loan. The balance was used for joint living expenses. 64 So far as appears, until about April of 2006, the parties used the income derived from the difference between the interest being paid by Kondari and the interest they were paying, for their joint benefit. In about April 2006 Kondari repaid the $200,000 loan and the loan over the Sackville property was correspondingly reduced. As at 30 April 2009 the balance of the loan secured over the Sackville property was about $57,000. The defendant has paid the interest on that debt although it is a joint debt obtained for the parties' joint benefit. That is a contribution made by him for the plaintiff's benefit, but it is not a contribution of particular significance for the making of an order under s 20. 65 There are numerous other claimed contributions and benefits which each party claims she or he made, or the other party received, and claimed detriments suffered by the conduct of the other. These include the withdrawal of various sums of money. They include damage done to a Cessna aircraft which the defendant purchased out of funds returned from the Kondari investment. That aircraft was damaged in an accident when the plaintiff was flying the plane. No reference was made to these matters in final submissions and neither individually, nor collectively, do they materially affect the order to be made under s 20. 66 Section 20(1) provides: " (1) On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to: (a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and (b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely: (i) a child of the parties, (ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties. " 67 It seems to me that the most significant matters in considering an order under the section are the financial support provided by the defendant to the plaintiff in the first nine years of their relationship; the contribution made by the plaintiff to the defendant's Eastwood bread shop, which, in a way which is not measurable, contributed to his having funds to purchase the Sackville property; the significantly greater contribution made by the plaintiff to the ultimately successful operation of the preschool, which has resulted in profits in which the parties have shared equally; and the relatively greater contribution by the plaintiff in her capacity as homemaker to the welfare of them both and their family. 68 I think the significance of the defendant's earlier financial contributions diminishes with time having regard to the subsequent contributions made by them both. 69 This is not a case in which an adjusting order under s 20 should be made by notionally pooling the assets of the parties, either at the date of hearing or the date of termination of their relationship, and then determining what percentage of the notional pool each party should have, and making an adjustive order to achieve the appropriate percentages. 70 The reasons that is not an appropriate approach in this case are as follows. First, subject to two exceptions, the parties treated their assets as separate. The two exceptions are the preschool business to which I have already referred and the Sackville property. I have earlier set out the plaintiff's evidence in which she complained that the defendant had bought the Sackville property in his name alone and asked him to transfer it into both names. She says that the reason the defendant gave for not acceding to that request was that it would incur stamp duty and would be a waste of money. I accept that evidence. The defendant in cross-examination agreed that the fact that the Sackville property was in his name was a subject of discussions between him and the plaintiff and that the plaintiff did not think it was fair that it was solely in his name. He was asked: " Q. And you were not prepared to transfer it, were you?

A. I don't know that. I just know at the time I couldn't see it was worthwhile. "

71 A further reason for not notionally pooling the assets of the parties and applying a particular percentage to the pool is that, although the Riverwood property was and is more valuable than the Auburn property, it was not a property that was ever brought into the relationship. That is subject to this qualification; that it was applied for the benefit of both parties by its being used as security for a borrowing for the purchase of land to expand the preschool, but the property was not used by either party. It remains occupied by the defendant's former wife under his arrangements with her. The defendant is the legal owner of the property. But I accept his evidence as to the arrangements he has made with his former wife such that he does not have the full benefit of ownership of the property. 72 Another reason for not pooling all of the parties' assets is that the parties made their separate investments and their individual expenditures from the proceeds of their investment with Kondari and Pialba. There is no reason that either should benefit from, or suffer from, the decisions made by the other as to how those investments should be applied or spent. 73 In my view, the adjustive order under s 20 should be made with respect to the Sackville property which was the family home from 1991 until 2004. It is currently valued at $780,000 and is subject to a mortgage to secure a joint debt of $57,000. Thus the equity in the property is about $723,000. The profits from the sale of the preschool, after allowing for the parties' initial capital contributions, were significantly less than $720,000. Moreover, the defendant made some contribution to the realisation of those profits although not to the same extent as the plaintiff. 74 However, there are other factors to be taken into account, in particular, the plaintiff's greater contribution as homemaker. Against this there is to be considered the defendant's financial support in the early years of the relationship. 75 At the last and critical point of decision-making in cases under s 20, attempts to give reasons for the precise orders to be made breaks down. (See e.g. I said in Proudman v Dickason [2008] NSWSC 681 at [49] and [50]: " [49] In cases such as the present, under this Act it is at this crucial point of decision-making that the attempt to provide reasons for a conclusion breaks down. This is inevitable because a decision has to be made on uncertain data, by applying uncertain and indeterminate criteria, and by weighing factors which are incommensurable.

[50] As Bryson JA said in Chanter v Catts (at 385 [94]):

'… The Master left the basis of the assessment of $95,000 unexplained; I am at a loss to see any other or better process for reaching a conclusion on that matter, and an attempt to reduce to arithmetic the assessment of the contribution made by the appellant staying at home and contributing to the family welfare to the respondent's superannuation resources by some detailed process or calculation could not improve on the simple one-step process of evaluation which the Master used. There are many stages in the course of disposing of civil proceedings where resort to judicial wisdom and experience for evaluating in money terms something which has no essential relation with money and commercial dealings is the only means available; such assessments must often be required in coming to decision under s 20.'"

76 I think the just and equitable adjustment to reflect the parties' respective contributions under s 20(1)(a) and (b) is to treat the plaintiff as if she were beneficially entitled to half the Sackville property. I see no occasion to make other adjustments by reference to other property of the parties, including the cattle on that property, or the chattels of either of them. 77 The defendant and the parties' daughter presently live on that property. If, within 90 days, the defendant could raise funds to pay the plaintiff $360,000, representing the approximate 50 percent of the equity of the property, and if he were to assume liability for the current mortgage debt on that property, then I would not make an order requiring sale. However, if the defendant cannot pay that sum to the plaintiff then the property should be sold and the net proceeds divided equally; not in the proportions sought by the plaintiff in her statement of claim. 78 In coming to that view, I have taken into account the interest payments made on the joint debt secured over the Sackville property by the defendant. If the sum of $360,000 is paid by the defendant to the plaintiff without the property having to be sold then the defendant is also to indemnify the plaintiff in respect of the payments of principal and interest on that debt. That is because the debt would have been taken into account in determining the monetary sum to be paid. 79 On the other hand, if the defendant either cannot or chooses not to make that payment, and the property is to be sold and the net proceeds distributed, then any interest payments made by the defendant on the joint debt after the date of these orders in excess of 50 percent should be adjusted on the distribution of the net proceeds. 80 Other orders are to be made in accordance with s 19 to bring the financial relationships between the parties to an end and I have asked counsel for the parties to bring in short minutes of orders of those matters which are not in dispute. I will hear counsel as to the precise form of the orders to be made to give effect to these reasons and I will hear counsel on the question of costs.

[Short minutes handed up following adjournment.] 81 Save in one respect, the parties are agreed on the orders that are made to give effect to my reasons. The dispute concerns capital gains tax. The defendant seeks an order that, if the Sackville property is sold, the proceeds of sale before division between the parties should be applied in payment of any capital gains tax payable by the defendant on the sale of the property. 82 Although the property was used as the family residence from about 1991, the defendant is concerned that capital gains tax would be payable, both in respect of the period before it was so occupied and also by reason of its having been used by him as a commercial enterprise. 83 In reaching my conclusion that an appropriate adjustive order under s 20 would treat the plaintiff as if she were beneficially entitled to half of the Sackville property, I took into account the figures which the parties placed before me during the hearing as to the value of the property and, of course, my assessment of the respective parties' contributions. No issue was raised during the hearing as to whether capital gains tax would be payable on the sale of the property or if so, in what amount. Nor did the evidence or the submissions address the question as to who should bear the burden of capital gains tax, if such tax were payable on the sale of the property. 84 I concluded that a monetary payment of $360,000, representing half of the net equity in the property, was an appropriate adjustment order under s 20. In providing the alternative of the property being sold, I took into account that the defendant might not be able to raise the sum of $360,000 to satisfy the plaintiff's claim. I considered that it would be appropriate that the net proceeds of sale be divided equally, recognizing that this would reflect any change in value of the property between now and the time of such sale. 85 If capital gains tax is payable, it will be payable because the defendant used the property for his commercial purposes. He may have derived income from the use of the property as a farm, although the evidence did not show that any substantial income was so derived, let alone that any income so derived was applied for the benefit of both parties. 86 In my view, if capital gains tax is payable, the burden of that tax should not be cast on the plaintiff as well as the defendant. If the liability was substantial, so that the plaintiff received a significantly lower sum than the $360,000 which I will order, that would not then, in my view, be a just and equitable adjustment to reflect the parties' contributions under s 20. I therefore decline to make the proposed order 4(c) in the short minutes handed up by counsel for the defendant. 87 The other substantial issue concerns costs. The plaintiff's substantial claim was for 70 percent of the net proceeds of sale of the Sackville property, plus 50 percent of the net proceeds of sale of unspecified motorbikes, four-wheelers, tractors, livestock, boats, tools and a waverunner. She also claimed payment equal to a quarter share of the value of the Cessna aircraft. There was no agreement on the value of the latter items of property, nor was there evidence of that value. 88 The claim to 70 percent of the net proceeds of sale of the Sackville property was the equivalent of a claim of about $504,000. Thus, it can be said that the plaintiff was claiming an amount in excess of $504,000. How much in excess, I am unable to say. 89 The defendant's substantial claim, by way of cross-claim, was an order for provision in his favour of $100,000. He sought other orders to separate the parties' interests. They were not the subject of dispute. 90 Costs are in the discretion of the court but, pursuant to r 42.1, the court is to order that the costs follow the event, unless it appears that some other order should be made as to the whole or any part of the costs. 91 It was submitted for the defendant that in an application under the Act, the starting point was that each party should pay his and her own costs, although that position could be modified depending upon the reasonableness of the parties in making settlement offers and whether any settlement offer was bettered by the final order. That is not the law (Dunstan v Rickwood (No 2) [2007] NSWCA 266; (2007) Fam LR 491; and Baker v Towle [2008] NSWCA 73; (2008) 39 Fam LR 323). 92 In applications under the Act there is often difficulty in identifying what is the "event" for the purposes of r 42.1. A vital consideration in the exercise of the discretion under s 98 of the Civil Procedure Act 2005 (NSW) is the reasonableness of the positions each party has taken towards settlement or towards limiting the issues in dispute (see Parker v McNair (1990) DFC 76 at 155 quoted inter alia in Baker v Towle at [16]). It is not only settlement offers that better the final outcome that can be used for that purpose. 93 In the present case, no reasonable settlement offer was made by either party. The plaintiff served an offer of compromise in September last year offering to compromise her claim for $525,000 plus the defendant being required to do all things to discharge the joint loan secured over the property at Sackville. Given that her claim was, in effect, for an order to the value of $504,000 plus half the value of the other assets referred to earlier, this offer involved no real element of compromise. It was not close to the final outcome, whereby the plaintiff has received an order for payment of $360,000. 94 It was common ground that the only offer of compromise made by the defendant was for a sum of $50,000. Whilst that may have had some element of compromise, it was not a reasonable offer. 95 In Baker v Towle, Beazley JA with whom Matthews AJA agreed, said: " [9] ... I should state that I do not consider that there is a 'usual rule' that an award of costs in applications made under the Property (Relationships) Act should reflect the proportion of interests in property that were adjusted in comparison with the claim. The discretion conferred by r 42.1 is not to be fettered in that way.

... [12] There have been a number of cases in which the principles governing the award of costs in cases under the Property (Relationships) Act have been considered. This Court's decision in Kardos , in so far as it stated that in cases under the Act ' the starting position should be that each party should bear its own costs' , has been rejected: see Dunstan v Rickwood (No 2) [2007] NSWCA 266; Hayes v Maquis [2008] NSWCA 10 at [14] and [145]. As those two cases establish, it is inappropriate to so confine the discretion conferred by s 98 of the Civil Procedure Act and r 42.1. However, those cases did not deal with the question of what ' the event' was for the purposes of r 42.1. Indeed, it appears that they proceeded upon the basis that ' the event' was the proceedings and that the different order made in each case was made pursuant to the exercise of the court's discretion. ...

[20] A review of the cases does not reveal any authoritative resolution of the meaning of ' the event' within r 42.1. The discussion of the Court in Vollmer on the leave application indicates that ' the event' could be defined or identified in a variety of different ways. The approach of Basten JA, to which I have referred at [10], adopts a similar approach.

... [22] However, on the approach adopted by the Court on the leave application in Vollmer, ' the event' may be identified in a variety of ways in the one case. It would be odd and, indeed, unfortunate, if the identification of ' the event' in one way resulted in an order for costs, on the basis of ' costs follow the event' whereas a different, but equally appropriate identification of ' the event' meant a different application of the rules. The oddness in there being different possible applications of the rule (in this respect I am not referring to the exercise of the discretion under the rule) depending on the identification of ' the event' raises in my mind the question whether this is the correct approach. In most cases, the costs order will almost invariably depend upon the exercise of the discretion.

[23] The real question is what is the appropriate order for costs. An obvious starting point is the pleadings. However, the identification of the issues in the pleadings is likely to be only one of several considerations relevant to the costs order that ought to be made. The considerations may include whether any offers of settlement have been made and if so what those offers were. The discretionary considerations may also include the manner in which the proceedings are conducted. These are but 2 examples. There may be a whole range of relevant circumstances depending upon the particular case.

[24] I would therefore prefer to treat the identification of the issues that arise on the pleadings as part of the consideration of matters relevant to the Court's discretion. In my opinion, that gives proper effect to r 42.1 and is consistent with the authorities and, in particular, the statement of McLelland J in Parker v McNair to which the Court referred in Vollmer (see [8] of the judgment on the leave application). ."

96 Basten JA said: " [83] An application under s 20 for adjustments to interests in assets should involve a specific claim and a defence which should indicate the degree (if any) to which the defendant is willing to concede the adjustment sought. The pleadings will then identify the scope of the dispute. The next question is whether any degree of success on the part of the plaintiff should be sufficient to justify an order for payment of her costs in full, or whether the costs order should in some sense be proportionate to the degree of success. In such a case, the ' event' may be identified with greater or less precision by reference to the extent of the adjustment ordered.

[84] This kind of case differs from cases where a proportion of costs only has been awarded, based on an assessment of the specific issues on which each party has been successful: See, for example, Cretazzo v Lombardi (1975) 13 SASR 4 at 12 (Bray CJ) and at 16 (Jacobs J); Trade Practices Commission v Nicolas Enterprises Pty Ltd (1979) 42 FLR 213 ; (Fisher J); Hughes v Western Australian Cricket Association Inc (1986) 8 ATPR 40-748 at 48,136 (Toohey J); Commissioner of Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64 at 69; (Wilcox J), being cases discussed and applied in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at [26]-[28] (Gummow, French and Hill JJ); see also James v Surf Road Nominees Pty Ltd (No 2) (Beazley, Tobias and McColl JJA) and generally G E Dal Pont, Law of Costs , LexisNexis Butterworths, Sydney, 1993 at [8.6]-[8.9]. On the other hand, this is not a case where the plaintiff seeks to establish liability in, say, breach of contract or negligence, and obtains a judgment for somewhat less than the total amount claimed. Unless there are severable elements on which the plaintiff failed, in a case of that kind apportionment will rarely be appropriate. However, in a case involving adjustment of interests in assets, it may be thought that justice is best done by an apportionment of costs depending upon the plaintiff's degree of success. The trial judge was not in error in adopting that approach in the present case, and the approach may properly be applied in relation to the appeal. "

97 Although Basten JA's approach that a party's proportionate degree of success might identify the event, and that costs should be apportioned according to that proportionate degree of success, did not enjoy the concurrence of the majority, nonetheless, the plaintiff's degree of success is a relevant consideration in the exercise of the discretion under s 98. 98 Another relevant consideration in this case is the plaintiff's failure on the issue of whether she provided the funds for the repayment of the vendor loan in October 1989. That issue occupied a considerable amount of time and was a distinct issue. 99 The effect of the orders that I will make is that the defendant will substantially have failed on his cross-claim and the plaintiff will have obtained an order to the value of less than 70 percent of her own claim. She has also failed on a distinct issue concerning the source of funds for repayment of the vendor's loan. 100 Subject to one further matter to be mentioned, those considerations indicate that, in the exercise of the discretion under s 98, an appropriate order is one which gives the plaintiff some, but not all, of her costs. 101 Separate questions arise from the adjournment of these proceedings last year. The proceedings were listed before Hamilton J for hearing on 24 November 2008. The matter was listed for three days. The hearing was vacated on 25 November. His Honour reserved the costs flowing from the adjournment. It is clear from the transcript that the reason for the adjournment was that very substantial parts of an affidavit sworn by the defendant on 11 June 2008 were rejected. As a result of that, a further affidavit was prepared and provided to the plaintiff, either on the evening of the first day of the hearing or the following morning. As a result of the service of that affidavit, the plaintiff sought and was granted an adjournment. 102 Hamilton J observed that the lack of preparation was worse on the defendant's side than the plaintiff's. His Honour described the defendant's affidavit as a disgrace. His Honour said that he doubted whether costs would be thrown away by the vacation because the case had to be put in order and the objections to the plaintiff's affidavits had to be taken. The parties agreed that his Honour's rulings on those objections would apply to the resumed hearing. His Honour recorded that the defendant's affidavit, which was partly read on the first day of the hearing, was withdrawn. 103 It appears to me that the defendant ought to pay the plaintiff's costs thrown away by reason of the service of his affidavit of 11 June 2008 and any costs thrown away by reason of the adjournment of the hearing before Hamilton J on 24 and 25 November 2008. Subject to that, the plaintiff should have a proportion of her costs. 104 Having regard to her degree of success when measured against the claims and counter-claims in the proceedings, and having regard also to the particular issues on which the plaintiff failed, I think the appropriate order is that the defendant pay two-thirds of the plaintiff's costs. That, of course, is subject to the orders to be made in respect of the costs thrown away. 105 I will make orders in accordance with the short minutes of order handed up by counsel for the parties to give effect to my earlier reasons, with the following changes: 106 On the first page I will delete: "A. Pursuant to s 20 Real Property Act". So it will be "1". In paragraph 4, I delete subparagraph (c) and renumber (d) and (e), (c) and (d) respectively. On page 3, I change the letter (b) to number 14 and I add the following orders:

15. The claims for relief in the amended statement of claim and amended cross-claim be otherwise dismissed.

16. The defendants pay the plaintiff's costs thrown away by the service of the defendant's affidavit of 11 June 2008 and the adjournment on 25 November 2008 of the hearing before Hamilton J.

17. Subject to order 16 the defendant pay two-thirds of the plaintiff's costs.

18. The exhibits may be returned after 28 days. 107 With those amendments, I make the short minutes of order which I initial and date today and place with the papers.

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