Van Zonneveld v Seaton

Supreme Court of NSW|2004-12-17|Before: Campbell J

CITATION : Van Zonneveld v Seaton [2004] NSWSC 1223 HEARING DATE(S) : 12/10/04 - 15/10/04, 9/12/04 JUDGMENT DATE : 17 December 2004 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Defendant to pay plaintiff $51,000

CATCHWORDS : FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - claim for adjustment of interests under Property (Relationships) Act 1984 - plaintiff performs work in renovating defendant's house - valuation of contributions - whether significance in attempt by defendant to have plaintiff enter cohabitation agreement - what significance lies in defendant making a Will, after conclusion of the relationship, leaving a legacy to plaintiff LEGISLATION CITED : Property (Relationships) Act 1984 Evans v Marmont (1997) 42 NSWLR 70 CASES CITED : Ferraro v Ferraro (1993) FLC 92-335 Sullman v Sullman [2002] NSWSC 169; (2002) DFC 95-248 PARTIES : John Cornelius Joseph Van Zonneveld - Plaintiff Birthe Kristine Adsbol Seaton - Defendant FILE NUMBER(S) : SC 1672/02 COUNSEL : M Gilbert - Plaintiff R Schonell - Defendant SOLICITORS : Harris Hyde Page - Plaintiff Delaney Lawyers - Defendant

1672/02 JOHN CORNELIUS JOSEPH VAN ZONNEVELD v BIRTHE KRISTINE ADSBOL SEATON JUDGMENT HIS HONOUR: Nature of the Case 1 This is an application under the Property (Relationships) Act 1984, brought by a man against his former de facto partner, seeking an adjustment of property interests under section 20 of that Act. Uncontentious Facts 2 There are some facts about the relationship between the plaintiff and the defendant which are not disputed. The plaintiff was born on 25 March 1938. He is a stonemason by trade, and has worked predominantly in that field and as a tiler throughout his working life. He was married twice before entering the relationship to which this case relates. He has children, who are all adult and independent. 3 The defendant was born on 4 February 1945. She was also married twice before entering the present relationship. She has no children. 4 The plaintiff and the defendant met in around February 1998, soon after the death on 5 December 1997 of the plaintiff's second wife. The relationship developed quickly. The plaintiff was out of Australia, visiting his family in Holland over the period from mid-March 1998 to 8 April 1998. He had his sixtieth birthday while in Holland on that trip. He moved himself and his furniture and effects into the defendant's house a few days before departing on that trip. Both the plaintiff and the defendant intended that he would live there on his return. From a few days before he left on that trip, he and the defendant lived in a de facto relationship. 5 The defendant has at all times owned a house at 33 Ryries Parade, Cremorne, free of mortgage. It is a three-storey property, containing twenty rooms of which five are bedrooms. It was originally constructed in the 1940s, and has been extended and upgraded since then. For some years before the plaintiff began living there, the defendant had derived income by permitting students to live in her house, and providing them with meals. The last of those students ceased living at the property at the end of December 1998. 6 The plaintiff was absent from the Cremorne house and was overseas for four different periods during the time he lived at Cremorne. There is the period in March-April 1998 already mentioned. In the period 12 August to 16 September 1998 the plaintiff and defendant holidayed in Europe together. During the period 6 December 2000 to 31 January 2001 the plaintiff and the defendant holidayed in Europe together once more. During the period 6 December 2001 to 13 January 2002 the plaintiff went to Europe alone. 7 The relationship came to an end in September 2001, when the plaintiff moved out of the bedroom he and the defendant had shared. Thus, it lasted three and a half years. The plaintiff continued to live at the Cremorne property until his departure for Holland in December 2001. Upon his return from Holland, he lived initially at the Cremorne property, but on 23 January 2002 moved out of that house, and into a flat which he rented. 8 It is common ground that, during the period of the relationship, extensive renovation work was done to the Cremorne house, and that the plaintiff played a part in performance of that work. There is dispute, however, about the precise extent of the work carried out, about the precise extent of the plaintiff's involvement in it, about whether there was any consensus (and if so what), as to the basis upon which he was doing the work, about the value of the work the plaintiff did and about the extent to which that work has improved the value of the house. The Statutory Test 9 The claim the plaintiff makes is under section 20 Property (Relationships) Act 1984. It 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. (2) A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a party to a domestic relationship in respect of the property." 10 There is no dispute in the present case that the plaintiff and the defendant were parties to a de facto relationship, and hence parties to a "domestic relationship" within the meaning of section 20. 11 There is no dispute that the de facto relationship lasted more than two years, and hence that the prerequisite to the making of an order arising under section 17 Property (Relationships) Act 1984 has been complied with. 12 These proceedings were commenced by the filing of a Statement of Claim on 27 February 2002, which was one month and four days after the plaintiff moved out of the defendant's house. The proceedings thus were begun comfortably within the time required by section 18 Property (Relationships) Act 1984. 13 In Sullman v Sullman [2002] NSWSC 169; (2002) DFC ¶95-248 I set out the approach to construction of section 20 as follows: "246 The language of paragraph (a) requires the contributions of both of the de facto partners to be taken into account. This is because the legislature has quite deliberately used the plural "of the de facto partners" . Further, it is the property of both partners, and the financial resources of both partners, which need to be taken into account. However, to qualify under paragraph (a) it is not any contribution which is made by a partner in the context of the de facto relationship which counts. It must be a contribution with a particular purpose or effect, such that it can properly be described as a contribution "to the acquisition, conservation or improvement of…property" . This is consistent with the purpose of the Act when first enacted in 1984, to remedy deficiencies then perceived to exist in the law of constructive trusts as applied to de facto couples who acquired property during the course of the relationship. To apply paragraph (a) one needs to identify each item of property which has been acquired, conserved or improved, and identify what financial and non-financial contributions have been made, directly or indirectly and by whom, to each such item of property. It may be that the evidence in a particular case only enables this to be done in a fairly rough way, but the exercise must still be attempted. 247 Paragraph (a) requires the Court to have regard to the "contributions" made. I gave some consideration to what counts as a "contribution" for these purposes in Nguyen v Schieff [2002] NSWSC 151, at [105] - [109]: "In Roy v Sturgeon (1986) 11 NSWLR 454 Powell J at 466 took the view that the only contributions which the Court could look at in effective this exercise, were ones made during he period of the relationship. However, that view has since been departed from. Bryson J in Foster v Evans (1997) DFC paragraph 95-193 at 77,681 disagreed with it. In Jones v Grech [2001] NSWCA 208; (2001) DFC paragraph 95-234 Davies AJA at [24] and [26] and Ipp AJA at [77] and [82] and held that contributions made prior to the commencement of the de facto relationship could be taken into account. In Green v Robinson [1995] 36 NSWLR 96 Cole JA said, at 115-116: "Further, in assessing whether it will exercise the s.20 power to adjust regard is to be had to contributions made to the date of the application. The underlying presumption of s.20 is that the de facto relationship has ceased, the parties have joint or several property, and it may be just and equitable to adjust those existing property entitlements having regard to past contributions of the type described so that the financial relationship between the parties may be finalised: see s.19." While neither of the other Judges of Appeal in Green v Robinson agreed or disagreed with this proposition, I find it, with respect, persuasive. It is a logical corollary of the Court of Appeal, in Jones v Grech , rejecting the limitation that Powell J had found and permitting pre-relationship contributions to be taken into account. Further, when s 19 of the Act provides: "In proceedings for an order under this Part a court shall, so far as is practicable, make such orders as will finally determine the financial relationships between the de facto partners and avoid further proceedings between them." there is good reason to take any post-relationship contributions into account." … Construction of Paragraph (b) 249 Because of the word "including" in the first line of paragraph (b), it is possible for a contribution to the welfare of the other de facto partner or to the welfare of the relevant family to be made in some capacity other than as homemaker or parent. Further, there is nothing in the language which requires contributions which count for the purposes of paragraph (b) to be non-monetary. It would be very arbitrary if financial contributions were excluded from paragraph (b). One task which paragraph (b) is unarguably designed to perform, is to permit the contribution made by a woman who stays at home to look after house and family to be taken into account in adjustment of property interests. It would be arbitrary in the extreme if a woman who chose to take paid employment, and to use all or part of her income to employ a housekeeper to do some of the tasks she would have done if she had stayed at home, could not have that contribution similarly recognised. 250 In my view, for one de facto partner to pay for housekeeping expenses is a contribution which falls within paragraph (b), even if the payment of those housekeeping expenses does not enable the acquisition, conservation or improvement of any item of property. Of course in that circumstance the question would arise of why the making of such a contribution made it "just and equitable" to adjust property interests. The point, for present purposes, is that such a contribution can fall to be considered under paragraph (b). 251 Consistently with the view that financial contributions can fall within paragraph (b), Brownie J has held that a payment for a holiday can be a payment towards the welfare of the parties, and so within paragraph (b) ( Myers v Myers 21 October 1986; (1987) DFC ¶95-056). See also Evans v Marmont (1997) 42 NSWLR 70 at 96 per Priestley JA (a passage inconsistent in some respects with the decision of the majority in that case in the way it construes the word "having regard to" in section 20(1), but not cut down by the majority view in so far as it stresses the width of paragraph (b)). "Just and Equitable" 252 In Stephenson v State Bank of New South Wales Ltd (1996) 39 NSWLR 101, at 113, Sheller JA was considering section 66M Conveyancing Act 1919 (which provides, that where land is damaged between the time of contract and conveyance, the purchase price shall be reduced "by such amount as is just and equitable in the circumstances"). His Honour said: "The determination of what is just and equitable in the circumstances is not a matter of unfettered individual opinion, nor does it involve a discretion of an arbitrary kind: see Cominos v Cominos (1972) 127 CLR 588 at 599. As Kitto J observed in R v Commonwealth Industrial Court; Ex parte Amalgamated Engineering Union, Australian Section (1960) 103 CLR 368 at 383, the criteria are of a nature with which Courts are familiar. In Talga Ltd v MBC International Ltd (1976) 133 CLR 622 at 634, Stephen J, Mason J and Jacobs J, dealing with the issue raised for the court by the Banking Act 1974 (Cth) of whether it was just and equitable that a transaction should be treated as valid, said: "… The court will have before it an existing transaction replete with all its surrounding facts and circumstances and in their light will determine what is just and equitable. In doing so it will certainly be exercising a wide discretion that this is a commonplace of the curial process; the court will be bound to act judicially, exercising its discretion by reference only to such considerations affecting the transaction as, on an examination of the legislation, may be seen to be material to the decision which it is called on to make. Irrelevant matters, matters such as the plaintiffs instanced in the course of argument, which have no rational connexion with the policy of the regulations but would be expressive only of the personal predilections of the Court, cannot be allowed by it to play any part in its decision." 253 This approach is, it seems to me, applicable to section 20." Value of the Cremorne House 14 The plaintiff called a valuer, Mr Webster. He valued the property as at 25 March 2003, and put a value of $1.95m on it as at that date. He did so on the basis of six comparable sales, over a period from April 2002 to November 2002. He says that the market has risen by around ten percent between April 2002 and March 2003. 15 He assumed that the extent of the improvements effected by the plaintiff was as described in the report of a quantity surveyor, Mr Martin. On that assumption, he concluded that the works had added value to the property, in an amount between $200,000 and $250,000. His preferred view was that the added value would more likely be towards the top of that range, rather than the bottom. He accepts that that increase in value was a product of not only the labour involved, but also the materials, the design, choice of colour, style, and the quality of the PC items. 16 For the defendant, Mr O'Neill, a valuer, also gave evidence. He valued the house as at January 2002, in its renovated state, at $1.8m. Mr O'Neill's valuation was based on six comparable sales over the period April 2001 to April 2002. His value as at January 2002 is broadly consistent with Mr Webster's value as at March 2003, and Mr Webster's view that there had been a ten percent increase in the market over the period April 2002 to March 2003. 17 Mr O'Neill also valued the property as at March 1998. He assumed that the work which the plaintiff did was the work set out in the report of a quantity surveyor, Mr Baum. He took the view that those works would add $200,000 to the value of the property. He valued the property, in its renovated form, as at March 1998, and then subtracted that $200,000 from the value so arrived at, and concluded that the value of the property in its unrenovated form as at March 1998 was $1.1m. Though he did not expressly state it in his report, it necessarily follows from his methodology that, had the house been in its renovated form as at March 1998, it would have been valued at $1.3m. It also follows that $500,000 of the increase in value of the property between March 1998 and January 2002 was attributable to a rising property market and to work done by people other than the plaintiff, rather than to any work done by the plaintiff. 18 I accept this evidence of both valuers, save only that I do not seek, at this stage of the judgment, to decide the precise extent to which the plaintiff's work increased the value of the house. Changes in the Property of the Parties During the Relationship Assets at Start of Cohabitation 19 At the beginning of cohabitation in March 1998 the plaintiff had assets consisting of:

A van which he used in connection with his work.

A home unit at 7/26 Boundary Street, Brisbane, Queensland, subject to a mortgage to the National Australia Bank of approximately $225,000.

All the issued shares in Metro Masonry International Pty Ltd. That company was the vehicle used for carrying on his building activities. Its only asset of significance was a bank account with the National Australia Bank, in the sum of $57,319.02. It had been, overall, unprofitable for several years. It had made a loss of $11,039 in the 1995/96 financial year, a further loss of $27,537 in the 1996/97 financial year, but a profit of $13,826 in the 1997/98 financial year. By 30 June 1998 it had accumulated losses for taxation purposes of $47,089. That taxation return also shows that it as having a deficiency of funds of $64,115. In those circumstances, the plaintiff's shares in Metro Masonry International Pty Ltd were worth nothing. 20 The assets of the defendant at the start of the relationship consisted of: Estimated Value Property at 33 Ryries Parade, Cremorne, NSW $1,100,000 One-half share of 95/130 Reservoir Road, Blacktown NSW 67,500 Subject to a mortgage, one half share of which equates to approximately $50,000 Properties in Queensland: 26 Beaconsfield Drive, Burleigh Waters (one-half share) 77,500 38 Beaconsfield Drive, Burleigh Waters (one-half share) 90,000 5 Fimmiston Place, Burleigh Waters (one-half share) 85,000 33 Grebe Place, Burleigh Waters (one-half share) 92,500 All subject to mortgages, one half of which equates to approximately $136,000 BMW motor vehicle 5,000 Furniture, furnishings and household effects 300,000 Personalty 200,000 Money in bank account in excess of 100,000

21 The defendant's four Queensland properties were all built in the 1990s, and were tenanted. Assets at End of Cohabitation - Plaintiff 22 At the date the plaintiff left the defendant's house in January 2002 his assets were of the same type as when he entered the relationship. By that time, he estimated the value of the Brisbane home unit at $450,000, and it was subject to a mortgage of $149,232.67. He estimated the value of his furniture, furnishings and personal effects at $30,000, his motor vehicle at $20,000, and his van at $5,000. Metro Masonry International Pty Ltd still had no assets of significance except for its bank account, which had shrunk to a little over $7,000. It had made a profit of $2,253 in the 1998/99 financial year, a loss of $4,138 in the 1999/2000 financial year, a further loss of $1,252 in the 2000/01 financial year, and a profit of $56,677 in the 2001/02 financial year. As at 30 June 2002 it still had a deficiency of funds, of nearly $31,000. The shares in Metro Masonry International Pty Ltd thus continued to be worth nothing. Reduction in the Mortgage of Plaintiff's Brisbane Unit 23 The plaintiff's tax returns show the following financial results concerning his Brisbane unit. Tax year Net profit/(loss) for Net profit/(loss) after adding back depreciation tax purposes 1997/98 (10,895) (2121) 1998/99 (339) 3490 1999/2000 (8,845) (5454) 2000/01 (29,308) (26,263) 2001/02 (15,216) (12,443)

24 I have included a column in that table which sets out the net profit or loss after adding back depreciation because, no matter how proper depreciation charges might be for accounting calculations of profit or loss, they are not an immediate cash expense. The table demonstrates that, throughout the relationship, the Brisbane unit was not only a consistent loss maker for tax purposes, but was also, apart from in the 1998/99 year, a continual drain on the cash resources of the plaintiff. 25 During the relationship, the mortgage debt secured on the Brisbane unit fell by approximately $75,000. The principal cause of this reduction in the debt was that the plaintiff received, in July 2001, an amount of $69,000, which he applied towards that mortgage. He received the $69,000 as the net proceeds (after payment of legal costs) arising from settlement of some litigation which he had brought against Royal North Shore Hospital concerning the circumstances in which his second wife had died. The other $6,000 reduction in the mortgage debt was in substance funded from the bank account of Metro Masonry International Pty Ltd. Likewise, the ongoing cash outgoings connected with the Brisbane home unit were in substance funded from the bank account of Metro Masonry International Pty Ltd. Assets at end of Cohabitation - Defendant 26 At the conclusion of the relationship in September 2001 the defendant still owned the Cremorne house, unencumbered. She had rearranged her investment real estate, so that instead of owning a half share in five different properties she owned two properties outright, namely 5 Fimmiston Place, Burleigh Waters and 33 Grebe Place, Burleigh Waters. Each of those properties was estimated to have a value of approximately $360,000. One of them had a mortgage for $125,000 secured against it. Thus, at the conclusion of the relationship her assets were as follows: Estimated Value Property at 33 Ryries Parade, Cremorne, NSW $1,800,000 Properties in Queensland: 360,000 5 Fimmiston Place, Burleigh Waters 360,000 33 Grebe Place, Burleigh Waters BMW motor vehicle 5,000 Furniture, furnishings and household effects 300,000 Personalty 200,000

Alterations to the Cremorne Property 27 While the plaintiff was in Holland in March/April 1998 the defendant sought a quotation from Extend A Home Constructions Pty Ltd for work which involved a makeover of the façade of the house and demolition and replacement of the garage and the steps running alongside it. A quotation for the work was given by Extend A Home on 14 April 1998. The quotation was for $140,500 for the façade work, and an additional $121,600 for the new garage and steps - a total of $262,100. Part of the work involved the demolition of an existing timber deck and its replacement by a concrete slab. The quotation was prepared on the basis that all tiling was excluded, and also that all painting was excluded. The work on the garage proposed the demolition of the existing garage and the steps which ran alongside the garage, and their replacement. Wall tiling for the garage was included in the quote as a PC item. The tiling of the new steps was excluded from the quotation. 28 The defendant did not accept that quotation, partly because she and the plaintiff regarded it as too expensive. It demonstrates, however, that the notion that there should be renovations of some type to the house, and that the plaintiff should assist at least by doing work within his own trade speciality, was on foot from the earliest times of the relationship. 29 The plaintiff says that in about March 1998 he and the defendant had a conversation to the following effect: DEFENDANT: "John, I'd like to do this house up, completely renovate it and rent it out. Will you do it for me?" PLAINTIFF: "Yes." DEFENDANT: "I think we should have a go at having a relationship. If it works then we can live off the rental income. If not, I will pay you for the work you have done." PLAINTIFF: "That's fine." DEFENDANT: "I will pay for all the materials, we can save a lot of money if you do it. We will both be very comfortable financially when it's finished." PLAINTIFF: "Yes, but I don't want to live here for nothing. I will pay for the food and telephone. I will also pay you $500.00 per month towards other expenses." DEFENDANT: "You don't have to, the house will be a full time job." PLAINTIFF: "No, I want to pay my way." 30 The defendant denies that any such conversation took place, and paints a picture of being reluctant to have most of the work done which eventually came to be done, but of repeatedly giving in to the plaintiff's enthusiasm to carry out the work. A mutual friend, Ms Bailey, gives evidence which tends to support the defendant's view. I prefer the evidence of the defendant on this topic. Even so, it is the defendant who has ended up with the benefit of the work, notwithstanding her initial lack of enthusiasm to have various items of it done. Even during the relationship, she recognised that the renovation work had assisted in making the property one which should be readily letable. Contributions to the Cremorne House Renovation other than by Plaintiff 31 Tradesmen other than the plaintiff worked on the renovations to the Cremorne house. Mr Prizmic is a concrete renderer, who cement rendered the house. Mr Van der Steel Goldberg is a carpenter, who installed seven windows, re-fitted a window in the lower room, installed a solid core outside door on the lower level, and installed a built-in cupboard to the room in the lower level. His affidavit said that in connection with all that work, the plaintiff helped him lift in only two windows, and the plaintiff's contribution would have lasted no longer than five minutes. The defendant confirmed that evidence. I do not take that evidence as being anything other than a rough estimate. The plaintiff's counsel endeavoured to suggest to both the defendant, and the defendant's quantity surveyor, Mr Baum, that this was unlikely given the size of the windows (five of them exceeded 1.2m in length, and two of them exceeded 2m in height). However, the defendant resisted the suggestion, while Mr Baum explained how a mechanical aid is available which makes the fitting of such large windows by one man possible, once they have been lifted into place. In any event, Mr Goldberg was not cross-examined. I accept the evidence of Mr Goldberg. 32 Mr Graziano Smotlak is a retired carpenter. He gives evidence that he attended the house on a large number of occasions, and assisted the plaintiff with carpentry jobs. He says that he assisted the plaintiff with putting in windows, white ant drilling, partitioning, putting up gyprock, creating a bathroom and another room upstairs, putting a floor into the attic, putting air vents in the roof on the verandah, and doing work to the roof over the verandah. He says that on every occasion that he worked on the premises he worked under the direction of the plaintiff, and the plaintiff always worked alongside him. I accept that evidence. 33 As well, other work was done by Greg Norton concerning window fitting, concreting was done by H J Bellamy & Sons Pty Ltd, and plumbing was carried out by a licensed plumber. An electrician did electrical work, and certain items (such as a glass shower screen, and a cupboard in the bathroom) were installed by the organisations which had supplied them. 34 In all, the defendant has paid a little in excess of $187,000 towards the costs of the renovations, for both materials and labour. Of that amount, $44,000 was paid to the plaintiff, as itemised in paras [51] and [52] below. For the purpose of apportioning the valuers' assessed increase in value, that $44,000 should not be regarded as a contribution by the defendant to that increase in value. Rather it should be regarded as a payment to the plaintiff in partial satisfaction of the plaintiff's claim. 35 The defendant's niece Dorthe was in Australia from October 1998 until April 1999. During that time she did a considerable amount of painting of the inside of the house and provided some other minor assistance with the building work. The defendant paid the airfares of the niece and the niece's mother to come to Australia. The value of the work which they did exceeded the amount of $5,000 which the defendant claims as part of the amount which the defendant has spent on the renovations. In those circumstances it would be reasonable to allow that sum of $5,000 to the defendant, as though it was an expense of the renovation, if one were seeking to value the total contribution the defendant made to the renovations. However, the only evidence of the effect of the renovations on the house value is that of the two valuers (paras [15] and [17] above), which quantifies the effect on the house value of the work which the two valuers respectively assumed to have been done by the plaintiff. The plaintiff asserts that he did only a comparatively small amount of painting in the interior of the house (Bill of quantities items B/4E; F; G; C/2R; C/3S; D/2K). Most of that painting appears to be associated with or incidental to other work he did. While I accept that the defendant's niece did the vast majority of the painting of the interior of the house, I should not proceed on the basis that the value of the work which she did is something which was included in the amount by which the valuers stated that the house had increased in value in consequence of the renovations performed by the plaintiff. Thus, for the purpose of apportioning the value fixed by the valuers, this item of $5000 should not be allowed. 36 In the course of carrying out the renovation work the plaintiff discovered a significant white ant infestation in the house. Rather than pay large sums of money to professional pest controllers, the plaintiff purchased some of the appropriate chemicals and dealt with the white ant infestation himself. The $187,000 which the defendant paid includes an amount of $840 which she paid in connection with materials for dealing with the white ant infestation. While she agreed, in cross-examination, that this was a matter of maintenance rather than renovation, in my view it is appropriate to regard the payment as a contribution towards the conservation of the Cremorne home, and so within section 20(1)(a) of the Property (Relationships) Act 1984. Similarly, the effort which the plaintiff put into eradication the white ants should be regarded as a contribution by him which falls within section 20(1)(a). As well, when the valuers have proceeded on the basis that white ant eradication work done by the plaintiff is part of the work done by him which has increased the value of the house, it seems reasonable to allow the cost of the materials used in doing that work for the purpose of apportioning the valuers' figures for increase in value. 37 Another part of the defendant's expenditure was an amount of around $6,000 for Venetian blinds. While expenditure on the Venetian blinds was, no doubt, a real contribution towards renovation of the house, it is not part of the increase in value which the valuers assessed, and so should not be allowed for the purpose of apportioning that increase in value. 38 The result is that the net contribution which should be treated as being made by the defendant towards the increase in value assessed by the valuers is $187,000 minus the $44,000 she has paid to the plaintiff, minus the $5,000 paid for air fares, and minus the $6,000 paid for Venetian blinds. That gives a contribution on her part of $132,000. 39 Many of the materials which were used in connection with the renovations of the Cremorne house were ones which were, in the first instance, purchased by the plaintiff. This was done so that the plaintiff could claim a trade discount for the materials so purchased. The defendant mostly reimbursed him for the materials so purchased. He made the benefit of his trade discount available to the defendant. Making available his trade discount in this way was a benefit which he conferred upon her. Its quantum has not been established with precision. However, invoices tended suggest that a discount of ten percent was allowed on some purchases, but not others. The defendant spent $18,780 on fittings, paint, tools and the like. I estimate $1,000 as the amount she saved through having the discount available. Activities of the Plaintiff Other than Renovation of Cremorne House 40 It is not as though renovation of the Cremorne house was the only task which occupied the plaintiff's time during the relationship. In 1998 he investigated the possibility of exporting various Australian made products to Europe. Over the period from June 1999 to the end of 2000 both the plaintiff and defendant were involved in a network marketing company called "Skybiz 2000", which was involved in the sale of internet sites. At other times they were involved in a marketing company called Jewelway (involved in the sale of jewellery), and Mannatech Vitamins (involved in the sale of vitamins). The plaintiff also investigated the prospect of exporting Indonesian furniture. These business ventures produced no significant profit. 41 As well, the plaintiff did some work in his trade during the relationship. At the start of the relationship he continued working at his trade until the end of April 1998, when he began work on the downstairs bathroom of the Cremorne house. In April/May 2001 he resumed working at his trade, and by about June or July 2001 was working almost fulltime at it. In between April 1998 and April/May 2001 he did not work fulltime, apart from a period of about four months in 1998/99 when he worked for Copenhagen Bathrooms. 42 Further, the defendant was away from the Cremorne property for significant times during the relationship, either overseas (paras [4] and [6] above), or in Queensland (para [50] below). Living Expenses 43 The plaintiff gave affidavit evidence of having paid a total of $12,500 to the defendant, as a contribution towards living expenses, over the period 18 March 1998 to 14 December 2000. In oral evidence in chief he accepted that the last of the cheques he itemised, for $500, was not paid to the defendant, but said that an additional two cheques had been unearthed, so that the amount he had actually paid the defendant was $13,000. Cross-examination established some doubt about some of those payments, but I am satisfied that he paid more than $10,000 to the defendant as a contribution towards living expenses. As well, he paid for most of the food, though not all of it, during the period after the last of the homestay students left in December 1998. The plaintiff estimates that he paid "$100 plus per week" on food and entertainment expenses. Over the period of approximately two years from the beginning of 1999 until he left the defendant's house, and bearing in mind that while they were on holidays they tended to share expenses, this would be an expenditure of the order of at least $10,000 by him. As well, he paid in excess of $7,000 in telephone expenses. Those telephone expenses related in part to his own business activities, however. 44 The defendant paid for all council and water rates, and the cost of all utilities and insurance. It is agreed that the expenses of this nature which she paid during the relationship are as follows: North Sydney Council - rates $2,874.02 AGL - gas $911.08 Sydney Water $2,034 Energy Australia - electricity $2,723.77 Zurich - insurance three years $1,821.58 x 3 = $5,464.74 Telephone $4697.21 Total $18,704.82

As well, the defendant paid something, not precisely quantified, towards food. 45 In the result, the plaintiff paid slightly more than the defendant of their joint living expenses. It is not possible to quantify that excess precisely. I am satisfied, however, that the plaintiff's excess of such payments, over those of the defendant, total less than $10,000. I fix it at $5,000. Other Contributions 46 During the relationship it was the defendant who was the primary homemaker. While they usually made breakfast together every day, it was the defendant who prepared lunch and dinner. She also did all of the plaintiff's washing, ironing and mending, and did the cleaning inside the house, and the gardening outside. As it was her home, the likelihood is that she would have done the cleaning and gardening regardless of the existence of the relationship. I do not regard the work which the defendant did in a homemaking capacity, and which was extra work done for the plaintiff beyond what she would have done in any event, as of such significance that it outweighs the activities of help and support that the plaintiff provided to her, so as to justify any financial adjustment in her favour. 47 Before he moved in with the defendant, the plaintiff was living in a rented home unit, and paying rent of about $1,200 per month. The defendant's permitting the plaintiff to live in her house saved him this expense, as well as providing him with a comfortable and attractive place to live. The saving should be regarded as having accrued over the period from March 1998 to December 2001, both inclusive, a period of 45 months. The value of that saving is $54,000. 48 From about April 1998 until the end of the relationship, the defendant did not use her own car. The plaintiff and the defendant travelled around together in one of the plaintiff's vehicles. On rare occasions the defendant would use the plaintiff's car for a trip like to the supermarket. When the registration of the defendant's vehicle ran out in 1998 she did not renew it, and the vehicle remained unregistered until November 2001. The plaintiff usually paid for the petrol, and always paid for the registration and repairs connected with his motor vehicles. This arrangement resulted in the defendant saving the cost of registration, insurance, petrol and repairs concerning her own motor vehicle. Those amounts are not quantified. 49 Keeping her car off the road proved to be a false economy for the defendant. Neither she nor the plaintiff had started the engine of the vehicle after its registration expired, with the consequence that when she tried to use the car again, she found that the motor needed to be replaced, and there were several other problems arising from the car not having been used. All in all it cost her $6,000 to make the car roadworthy again. The defendant blames the plaintiff for this, but in my view, it is just as much attributable to her own action in not starting the motor periodically. It has the effect, though, that the plaintiff cannot be regarded as having made any net contribution to the defendant by making his motor vehicles available to her. Work at the Queensland Properties 50 The plaintiff and the defendant travelled to Queensland on four occasions during the relationship. These trips occurred in November 1999, July-August 2000, November 2000, and July 2001. While on those trips, they visited the defendant's rental properties, and performed some maintenance and gardening work there. The plaintiff did some minor tiling, some work towards construction of a pebble path, removed timber surrounding a pool, planted some new trees, removed all paving and replaced it under a clothesline area, and replaced a path and removed the old path. There is no evidence of the value of the work done. While on these Queensland trips, the plaintiff and the defendant would also inspect the plaintiff's rental unit in Brisbane. The plaintiff's counsel accepted that the work done to the Queensland properties could not be made use of as a separate head of claim by the plaintiff. In my view, it provided a small net benefit to the defendant. Just as it was not appropriate to give the defendant any credit for the small net benefit she conferred on the plaintiff through her homemaking activities by comparison with his, so it is not appropriate to confer any benefit on the plaintiff for the small net benefit he conferred on the defendant through his activities at the Queensland properties. Payments By Defendant to Plaintiff 51 The defendant paid nothing to the plaintiff in connection with the work he had performed on the Cremorne house until December 1999. At that time, she paid him $5,000, which he said was for materials which he had used in connection with the renovation. She also paid three additional amounts of $10,000 to him on 7 April 2000, 23 May 2000, and 30 June 2000. He gave her a receipt for each of those payments. While the receipts of April and May 2000 were headed "progress payment", the receipt dated 30 June 2000 has no such heading. The defendant gives evidence that at the time of making that payment they agreed it was to be the final payment, apart from some small amounts for materials for which the plaintiff had not been reimbursed. The plaintiff denies that any such conversation took place. I am not persuaded that there was any such conversation. 52 As well, the defendant provided $9,000 to the plaintiff in amounts of $5,000 and $4,000 respectively. The payment of $5,000 was made on or about 1 December 2000, and the amount of $4,000 was paid on or about 5 March 2001. The plaintiff used $4,000 of the $5,000 payment to reduce his Mastercard debt. Of the $4,000 paid in March 2001, the plaintiff used $1,000 to reduce his Mastercard debt, and paid $2,500 into his current account. Though the defendant asserts that there was a conversation between her and the plaintiff in which the plaintiff promised to repay that $9,000, I am not persuaded that any such conversation took place. The Assault 53 On 6 April 2000 the plaintiff asked the defendant for some money, for the work he had done on the house. This led to an argument between them, in the course of which the defendant hit the plaintiff on the knee with a piece of wood. It was the next day that the defendant made the first payment of $10,000 to the plaintiff. 54 The plaintiff has sued the defendant for damages he has suffered in consequence of that assault. On 12 May 2004 his Honour Judge Garling, in the District Court, delivered judgment awarding the plaintiff $36,257 plus costs. 55 While that assault was an incident which occurred in the course of the relationship, the award of damages provides the measure of the compensation which the law allows for that assault. It does not enter into the matters which I need to consider for the purpose of the present case. Both parties conducted this case on that basis. Plaintiff's Contribution to Renovation of the Cremorne Property 56 The plaintiff had a practice which he adopted in his business, of keeping records of time spent on particular jobs. When he began doing work on the Cremorne property he continued this practice. However, his notes of times spent in performing work disappeared, in circumstances not established by the evidence. He endeavoured to recreate from memory a complete account of the work which he had performed in connection with the renovation of the property, and to itemise, on an hour-by-hour basis, the time spent on each task. When he was in Holland in December 2001 and January 2002 his daughter typed such a document for him. It formed the basis of his statement of claim in these proceedings, and of his affidavit in chief. 57 The plaintiff also put on evidence from a quantity surveyor, Mr Martin, who visited the property on 10 April 2003 and made a detailed inspection, in the presence of both the plaintiff and defendant. He assumed that the work carried out by the plaintiff was as detailed in the plaintiff's list of work done, as supplemented by instructions received during the visit. He made his own estimates of a reasonable time to carry out the work. He then costed the work on two different bases. The first was that labour was charged at $50 per hour. $50 per hour was the standard rate which the plaintiff charged for work in his trade. This first basis on which Mr Martin prepared a costing applied that rate of $50 to every hour of work which he estimated the plaintiff had performed, regardless of whether it was work within the plaintiff's trade, or work of a kind that would ordinarily be carried out by someone of less skill. On that basis, he put the value of the work performed at a little over $206,000 (excluding GST). 58 Mr Martin also prepared a second version of the bill of quantities, which costed labour at the various rates appropriate to the levels of skill involved. That alternative bill of quantities produced a total value of work performed of a little over $180,000. 59 The defendant denied that the plaintiff had performed some of the items of work which he claimed to have performed. The defendant put on evidence from another quantity surveyor, Mr Baum, which went through Mr Martin's report item by item, and costed the items of work which the defendant accepted had been performed, and those which the defendant disputed had been performed. That schedule of quantities showed an amount of a little over $50,000 as the value of the undisputed work, and a little over $19,000 as the value of the disputed work. 60 There are several problems with Mr Baum's methodologies. First, he costed all labour at $30 per hour, on the basis that that was a builder's cost rate for a tradesperson or labourer. He acknowledged that a builder's charge out rate for such a person was greater, but did not attempt to work out the costs on the basis of what a builder's charge out rate would be. As well, there were some items where he did not attempt to allocate an amount. One category of such items concerned the work done by the plaintiff in dealing with the white ant infestation. Mr Martin had allowed $4,400 for that work, but Mr Baum allowed nothing, on the basis that it was outside his area of expertise. Further, the estimates made by Mr Baum are ones based upon an assumption that work is being done as part of a properly organised and co-ordinated building job. That assumption did not apply to the work being carried out at the Cremorne property, which was being done on a piecemeal basis, with the plaintiff doing much work which would ordinarily not be done by a person of his particular skills. 61 The starting point of Mr Martin's report is the plaintiff's evidence about the work he did. There is some inherent implausibility in the plaintiff being able to reproduce, from memory, a detailed schedule of hours actually spent in performing work. 62 The plaintiff also has some difficulties with his credit. In connection with the death of his wife, he sued Royal North Shore Hospital, filing a Statement of Claim in which he alleged he suffered various significant psychiatric and emotional injuries as a consequence of her death, and also significant economic loss. In the present case, he painted a completely different picture of his condition at the time of entering into the relationship with the defendant, just a few months after the death of his wife. In cross-examination in the present case, he denied suffering, at the start of the relationship, from any of the symptoms which he had particularised in his Statement of Claim against Royal North Shore Hospital (though he later modified this evidence, once the purpose of that segment of cross-examination became apparent to him). In November 2000 the plaintiff saw Dr Lyndon, who produced a report for the purpose of the action against Royal North Shore Hospital. Dr Lyndon's report stated: "There has not been a time when he has felt he is getting back to normal. His business has suffered and has finally been wound up because he has been unable to manage. It appears that he has been barely able to cope with the basic day to day functions. John is fairly isolated here in this country now that his wife is gone. He tells me that he is living with another woman at the moment but indicated that this is a matter of convenience rather than a proper inter-personal relationship … About all John can manage to do on a daily basis is to do some basic housework, a few odd jobs and a little bit of gardening."

That evidence is completely at odds with his evidence in this case, which suggests that at that time he was working very long hours, almost every day, on the house renovations, and that his relationship with the defendant was a real one, to which they were both committed. 63 I accept the defendant's submission that the plaintiff has exaggerated the amount of work he has claimed to have performed in connection with the renovations. Even so, there is detailed photographic evidence showing that extensive renovations have been carried out. The plaintiff was the instigator of that renovation, and performed a very significant part of the work. Further, all the evidence is that (apart from a complaint about a leak in the garage) the plaintiff's work was of a high standard. 64 The defendant submits that there is a fundamental flaw in the plaintiff's use of quantity surveying evidence in this case. The defendant points out that in Evans v Marmont (1997) 42 NSWLR 70 Gleeson CJ and McClelland CJ in Eq held, at 74, that it was not an appropriate way to value the contributions of a homemaker or parent by reference to wage levels applicable to a domestic servant, or any other commercial provider of corresponding services or benefits. Analogously, he submits, it is not appropriate to value the work which the plaintiff did in renovating the home by reference to commercial rates of pay for the performance of such work. 65 In my view, the present situation is distinguishable from that discussed by Gleeson CJ and McClelland CJ in Eq in Evans v Marmont. Here, the work which has been done in renovating the house has produced an increase in value of the house. That work has consisted in part of the plaintiff's labour, in part of the labour of other people which the defendant paid for, and in part of materials provided by the defendant. As well, the defendant did some work herself, both in design and choice of materials, and (though to nothing like the same extent as the plaintiff) in performing physical labour. To work out the value of the plaintiff's contribution to the increase in value of the house, it is, in my view, useful to compare the monetary value on the market of the work which the plaintiff performed, with the monetary value which the defendant paid for materials and the work of others, even though I recognise that considerable estimation and approximation is required. 66 I have held (para [34] ff above) that the defendant has paid of the order of $132,000 towards the costs of renovations which were valued by the valuers. 67 Taking into account the difficulties which there are with the reports of both Mr Martin and Mr Baum, including the problem that Mr Martin's work starts by presupposing the correctness of instructions given to him by the defendant, and the defendant has engaged in some exaggeration, I assess the value of the work done by the plaintiff in connection with the renovations at $150,000, including the $1,000 of value of trade discount. He has already received $44,000 towards that amount. There remains an amount of $106,000 in relation to which he ought receive compensation. 68 The total value which has been established of contributions towards the renovations is $132,000 plus $106,000, namely $238,000. Working from their different bases of assumption, the two real estate valuers have said the work done has contributed somewhere between $200,000 and $250,000 to the value of the house. The appropriate way to resolve this difference in the evidence is by treating the increase in value of the house arising from the renovations taken into consideration by the valuers as being $225,000. The benefit of that increase in value should be split between the plaintiff and the defendant proportionately to their contributions not already recouped. This would allow the plaintiff 106/238 x $225,000 = $100,210, say $100,000 for his contribution to the renovations. 69 In Ferraro v Ferraro (1993) FLC ¶92-335 at 79,578 the Full Court of the Family Court of Australia (Fogarty, Murray and Baker JJ) said: "The task of the court in proceedings under s79 is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC ¶95-084; (1990) 13 Fam LR 688 at 689 in relation to s20 of the De Facto Relationships Act 1984 (NSW) 'the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind'.

Nonetheless, it is a discretionary judgment which must be exercised by reference to the particular statutory test laid down in section 20 Property (Relationships) Act 1984 , imprecise as the exercise of valuing those contributions must be. In my view the following adjustments should be allowed in favour of, and against, the plaintiff:

Value not already received of contribution to renovation $100,000 Rent -$54,000 Living expenses $5,000 $51,000

Plaintiff's Un-recouped Expenses Connected with Renovation 70 The plaintiff gave evidence that he had paid an amount of nearly $16,000 for material purchased by him for the property and other accounts which he paid on the defendant's behalf, and for which she has not reimbursed him. Cross-examination on this list of expenses showed that it could not be higher than $13,090, as some items on the list did not relate at all to the renovation work. However, the defendant denies that she owes the plaintiff any sum of money at all for these items. While the plaintiff has vouchers supporting his having purchased building materials, which support many of the items claimed, the defendant says that she has reimbursed the plaintiff in cash for items which relate to her property. This has some plausibility, given the practice which the plaintiff and defendant adopted of the plaintiff purchasing building materials for the defendant, so that the defendant could obtain the benefit of his trade discount, and that the only contribution to the building work the plaintiff intended to make was of his skill and labour. Given also that I generally regard the defendant as a more reliable witness than the plaintiff, I am not persuaded that this aspect of the plaintiff's claim is made out. The Defendant's Attempts to Enter a Cohabitation Agreement 71 The plaintiff submits that assistance can be gained with his case from the terms of a cohabitation agreement which the defendant sought to have him agree to. The defendant was aware that it was possible for a de facto partner to make a claim concerning the property of the other de facto partner once the relationship had been on foot for two years, and was also aware that a cohabitation agreement, entered with proper legal advice on both sides, could prevent such a claim being made. Towards the end of 1999 her solicitors drew a draft of a cohabitation agreement. It was not signed, but there were discussions between the plaintiff and the defendant about the defendant making provision for the plaintiff to receive a capital sum, and the plaintiff thereafter paying rent. The defendant's account of the negotiations at the time (which I accept) is: "Well, at the end of 2 years I believe he could have a claim on my house and I did not want him to have that so I suggested that we put a figure in to the cohabitation agreement, a figure that he could put in because he said "I'm doing work to your house", and I said, "Well, why don't you put a figure in to prove that I am not going to throw you out but then we will - you will also - we will also have to put rent in".

No figure was proposed by the defendant, or agreed to by the plaintiff, for either the capital sum, or the rent. 72 In 2001 the defendant made another attempt to have a cohabitation agreement entered. Her solicitors produced a draft agreement, which she discussed with the plaintiff. Its structure was that each of them should retain title to their separate assets, subject to a clause which said: "In the event that Birthe and John shall separate and thereafter remain living separately and apart for a period of One (1) month then Birthe and John agree that:- (a) Birthe shall be entitled to the exclusion of John to the assets and financial resources contained in the Annexure marked "A" and John shall be entitled to the exclusion of Birthe to the assets and financial resources contained in Annexure "B"; (b) Birthe shall pay to John the sum of One Hundred & Fifty Thousand Dollars ($150,000.00) in relation to his interest in Birthe's Cremorne home. John acknowledges the sum of Thirty thousand dollars ($30,000.00) of this amount has already been paid to him. The remaining One hundred and twenty thousand dollars ($120,000.00) shall be reduced by any further payments made in the interim period by Birthe to John. Any balance outstanding after separation shall be paid over the period of Two (2) years with compound interest of Eight percent (8%) accruing on any outstanding balance until fully paid. (c) The interim payments referred to in (b) above are being paid regardless of whether separation actually occurs in accordance with the wishes of the parties." 73 Though the defendant agreed that such a provision was one which she regarded as fair, the question of why she regarded it as fair was not gone into with her. In May 2001, after negotiations between the plaintiff and the defendant for execution of the cohabitation agreement had broken down, the defendant faxed her solicitors about that breakdown, saying: "I don't believe I owe John anything. I wanted a cohabitation agreement signed to create peace and harmony. The $120,000 was simply picked to pay off John's apartment in Brisbane, we were going to live there, I wanted him to be debt free." 74 The defendant's proposal to pay a further $120,000 to the plaintiff is one which, if it stood on its own, might have been a significant admission. However, when, at the same time, she is explaining to her solicitors where that figure of $120,000 came from, it seems to me that the force that such an admission might otherwise have is taken away. 75 As well, I accept the submission of counsel for the defendant that a significant motivation for a person in a de facto relationship to enter a cohabitation agreement is to avoid litigation like the present. An offer to make a payment to the other party is, to some extent, in the nature of an insurance premium against the risk of litigation. 76 In these circumstances, I do not regard the defendant's attempts to enter a cohabitation agreement as of assistance. The Defendant's Two Wills 77 The plaintiff submitted that the defendant's actions in making two Wills, under which the plaintiff received a benefit, provided some assistance in my making an order in favour of the plaintiff. On 8 June 2000 the defendant made a Will. It appointed the plaintiff as one of three executors (along with the defendant's brother and cousin). It gave to the plaintiff the properties at 26 Beaconsfield Drive, Burleigh Waters and 5 Fimmiston Place, Burleigh Waters, subject to any mortgage on them. There was a specific legacy to her brother of her half interest in 33 Grebe Place, Burleigh Waters, and of an additional $50,000. Her jewellery was given to her cousin, to be divided at his discretion between members of her immediate family. Her silverware, paintings, antiques and rugs were directed to be valued, and shared by lot equally between four people, one of whom was the plaintiff. Soon after, the plaintiff made a will leaving everything he owned to the defendant. 78 The plaintiff accepts that this first Will does not, of itself, lead to any conclusions, because at the time it was made the relationship was still on foot, and both parties were enthusiastic about it, and expecting it to last. 79 The defendant made another Will on 11 December 2001. This was a date after the end of the relationship, and at a time when the plaintiff had left for Europe. It no longer appointed the plaintiff as an executor. The only benefit it gave him was a pecuniary legacy of $150,000. 80 That legacy was revoked by a codicil which the defendant made in the early months of 2002, after the plaintiff had taken out proceedings for an apprehended violence order against her. 81 The plaintiff submits that the second Will, made when the relationship was over, is a significant admission. I agree that it is a significant admission that the defendant owed the plaintiff something, but I do not accept it as an admission that she owed him, then and there, $150,000. Even if the defendant did not change her Will before she died, there was no reason to believe she would die for many years, so the present value of the legacy would be much smaller than $150,000. Further, on the day that the plaintiff moved out of the house he asked the defendant whether she would pay him the $150,000 referred to in the Will at that time, and she refused. In these circumstances I do not regard the making of the second Will as of assistance in fixing a quantum. 82 In these circumstances, I order that the interests in property of the plaintiff and the defendant be adjusted by the defendant paying to the plaintiff the sum of $51,000. 83 Any argument about costs can occur by making an appointment, no later than 14 February 2005, with my Associate to fix a time for any such argument. **********

Last Modified: 12/21/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Banking Act 1974(Cth)

De Facto Relationships Act 1984(NSW)

(1990) 13 Fam LR 688

At a glance

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Judgment (17 paragraphs)

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Cited By (7)