Vekilis v Jarvie

Judgment 1HIS HONOUR: In these proceedings, the plaintiff seeks an order under s 20 of the Property (Relationships) Act 1984 adjusting the rights of property as between her and the defendant. She seeks an order that the defendant pay her a lump sum of $600,000. She alleges that she and the defendant were in a domestic relationship within the meaning of s 5 of the Act. 2The proceedings were commenced in the District Court on 3 November 2009. The relief sought was in excess of the jurisdiction of the District Court. 3The defendant filed a notice of appearance and a defence. The defendant did not plead to the facts asserted in the statement of claim as to the commencement of cohabitation, the assets of the parties at the commencement of the cohabitation, the plaintiff's contributions to the relationship, both direct and indirect, the properties purchased by the defendant during the parties' cohabitation, or the assets of the parties on separation. The only defence pleaded was as follows: " 1. The defendant denies he is indebted to the plaintiff in the amount claimed 2. The defendant denies any alleged relationship or cohabitation with the plaintiff from September 1997 to February 2009 3. The defendant states employee status only 4. The plaintiff pay the defendant [sic] costs of these proceedings as agreed or assessed " 4On 26 October 2010, the proceedings in the District Court were transferred to this Court. There was no appearance by the defendant on the hearing of the application for the transfer of the proceedings. Nor did he appear when the matter was listed before the Registrar in December last year and fixed for hearing. Although the matter was called today, there was no appearance for the defendant. 5I am satisfied that the defendant has duly been given notice of the hearing. Notice was given both to the address which the defendant gave as his address for service and to the address which is his current residential address according to the records of the Roads and Traffic Authority. 6The defendant was made bankrupt on 24 August 2006. On 14 July 2010 the bankruptcy was annulled pursuant to s 153A of the Bankruptcy Act 1966 (Cth). As a result, the defendant's assets that vested in the trustee in bankruptcy became revested in the defendant, subject to the payment of the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee. 7The defendant has given no evidence in the proceedings, including as to his financial position. This is contrary to the defendant's obligation to place before the Court full and complete information as to his circumstances. As a result, the plaintiff has been put to considerable trouble, and no doubt expense, to try to piece together a description of the defendant's assets and of any liabilities. This is particularly relevant to the question of what costs order should ultimately be made. 8The plaintiff's claim for an order under s 20 of the Act was not a debt provable in bankruptcy. The plaintiff's entitlement for relief under s 20 does not arise by reason of an obligation incurred before the date of bankruptcy. Rather, her rights under s 20 arise on the making of an order under that section. Section 20 performs the " dual function [of] creating and enforcing rights in one blow " (see Fisher v Fisher [1986] HCA 61; (1986) 161 CLR 438 at 453 in relation to s 79 of the Family Law Act 1975 (Cth)). Accordingly, the defendant's bankruptcy did not preclude the plaintiff from instituting and prosecuting these proceedings while the bankruptcy was on foot ( Byczko v Sheahan [2005] FMCA 169; Valera Pty Limited v Walker [2010] NSWSC 1492; Valera Pty Limited v Walker (No. 2) [2010] NSWSC 1493). 9The annulment of the defendant's bankruptcy means that the assets registered in the name of the defendant should be taken to be beneficially owned by him in the absence of any evidence to the contrary. 10The plaintiff's evidence and the evidence of the plaintiff's relatives clearly establish that the parties were in a de facto relationship between September 1997 and February 2009. They shared a house. They held themselves out to the world as a couple. The plaintiff carried out domestic services for herself and the defendant, as well as assisting him in the conduct of his businesses. 11I reject the pleaded defence that the only relationship between the parties was that of employer and employee. 12At the commencement of the relationship the plaintiff's assets were slender, with only about $30,000 in savings. The defendant had substantially greater assets at the commencement of the relationship. He was a tenant-in-common with his mother in equal shares of a substantial property in Bells Line of Road, North Richmond and he owned a property in Keppel Road, Ryde and a further property in Bells Line of Road, Kurrajong Heights comprising seven acres of vacant land on which there were a number of caravans rented to tenants. 13At the commencement of the parties' relationship, the plaintiff was employed as an accounts payable officer in a full-time position with James Hardie. She later occupied a similar position with the University of Western Sydney. She later ceased that employment to assist the defendant in the conduct of his businesses. 14The defendant carried on a panel beating business and a business whereby rental cars and trucks were placed in service stations over a wide area for hire. He also had the business of renting the caravans referred to at para [12] above. 15Owing to the defendant's failure to place evidence before the court as to his financial position, there is no evidence as to the income he derived from those activities at the commencement of the parties' cohabitation. 16During the course of the parties' relationship, the plaintiff made substantial contributions to the acquisition, conservation and improvement of the defendant's property and also made substantial contributions in the capacity of homemaker to the welfare of the defendant. 17The indirect contributions the plaintiff made to the acquisition conservation and improvement of the defendant's properties were largely, but not entirely, as a result of her work in the defendant's businesses. 18After the hailstorm of 1999, she assisted the defendant in collecting customers' vehicles for panel beating repairs and driving the vehicles to North Richmond for the repair work to be taken out. She distributed advertisements for the business. She became a consultant to the business and assisted in the detailing of the cars. 19The plaintiff also made substantial contributions to the defendant's vehicle rental business. These are summarised in paragraph 22 of the plaintiff's affidavit of 28 May 2010 and need not be repeated. 20The plaintiff also provided administrative services at the defendant's business premises in Bells Line of Road, North Richmond, including acting as receptionist, booking clerk and accounts payable clerk for the business as well as various other matters detailed in paragraph 23 of her affidavit, which I need not further repeat. 21The plaintiff also made contributions to the household expenses. She contributed the wages she earned while working as an accounts payable officer for James Hardie and later the University of Western Sydney in 1997 and 1998. 22Subsequently, she was paid an allowance by the defendant of $200 per week. All of this money was used for joint expenses. She supplemented that allowance by taking domestic cleaning jobs and contributed her payments to joint household expenses. 23The plaintiff made contributions to the conservation and improvement of the properties that were owned by the defendant at the commencement of the relationship and to properties which he acquired during the relationship. Contributions she made involved cleaning and painting of premises, tidying of yards, cutting of grass and such matters of general maintenance. 24The plaintiff also contributed to the defendant's welfare as homemaker. She cooked, cleaned, shopped, and was also largely responsible for the feeding and care of the parties' two dogs. 25There is little evidence as to what contributions the defendant made which would fall within s 20 of the Act. He provided accommodation for the plaintiff. After the parties separated, he paid the plaintiff's Visa card debt in the sum of $13,650. 26In 2004, the defendant gave the plaintiff a Mercedes Benz motor vehicle. She enjoyed the use of that vehicle, but he retook possession of that vehicle in March 2009 and she has not had the benefit of it since. Otherwise, it can be inferred that the defendant worked in his various businesses. 27The plaintiff does not say that she contributed to all of the household expenses, and I can infer that the defendant also made a contribution to such expenses, although it is impossible to quantify its extent. However, it is clear that, at least partly as a result of the plaintiff's contributions, the defendant enjoyed an income which enabled him to acquire additional properties during the course of the parties' relationship. He acquired a further property which was vacant land in Bells Line of Road, Richmond adjacent to the existing property. He also acquired two other properties in Richmond. 28At the conclusion of the parties' relationship, the plaintiff had only $5,000 by way of assets. The defendant had retained the three properties of which he was an owner, or part owner, at the commencement of the relationship and had also acquired three other properties referred to above. It is not known what other assets he might have. 29As the defendant's bankruptcy was annulled under s 153A of the Bankruptcy Act , that is to say, on the basis that the trustee was satisfied that the defendant's debts had been paid in full, and as the defendant remained registered as the proprietor of the various properties, which appear to be largely unencumbered, I do not infer from the fact of his bankruptcy that he was without substantial assets. 30The plaintiff obtained appraisals of the various properties of which the defendant is the registered proprietor, either alone, or as tenant-in-common with his mother. Those appraisals suggest that the properties have a combined market value in the order of approximately $2.9 million as at July 2010. The only evidence as to encumbrances on the properties suggests that they are encumbered for substantially less than $471,000. 31The provision the plaintiff seeks by way of a lump sum of $600,000 is less, and I think materially less, than 25 per cent of the defendant's assets. Having regard to the plaintiff's contributions under s 20, I am satisfied that an order for payment of that sum would be a just and equitable adjustment of the parties' interests in property, having regard to the parties' contributions falling within s 20(1). 32Section 19 of the Act requires the court, so far as practicable, to make orders that will finally determine the financial relationships between the parties and avoid further proceedings between them. It appears from the plaintiff's affidavit that she may have a claim for damages in tort against the defendant for his conversion of the Mercedes Benz motor vehicle which she says was a gift to her. However, the plaintiff's counsel accepts that it is appropriate to make an order that would have the effect of releasing the defendant from such a claim. 33I have taken into account the fact that she does not have that asset in reaching the view that it is appropriate to make the order under s 20 claimed in the statement of claim. 34It also appears from the plaintiff's affidavit that the defendant treated her as an employee of the business from 2005, but did not remit to any superannuation fund any employer superannuation contributions. I am not minded to make any order in relation to that matter. Questions of public interest obtrude, which make it inappropriate to make any order about that. 35In the statement of claim and the amended statement of claim the plaintiff seeks an order that the payment to be ordered under s 20 be secured by way of a charge over the real property of the defendant. In her affidavit of 30 November 2010, she sought an order that she be given security for the award by an order requiring the defendant to transfer his interest in four properties to her to secure payment of the award and costs, with her being at liberty to sell the property and to deduct the award and costs from the net proceeds of sale and to hold the balance on trust for the defendant. 36I am not persuaded it is appropriate to appoint the plaintiff as a trustee for sale. If the defendant fails to pay the amount awarded under s 20, then the plaintiff can apply to the court to enforce the charge by obtaining an order for the appointment of a receiver and the judicial sale of the properties necessary to satisfy the order under s 20. The costs of any such application would, at least prima facie , be to the defendant's account unless the plaintiff had acted unreasonably in making any such application. 37The remaining question is one of costs. The defendant has signally failed to fulfil his duty as a litigant under s 56 of the Civil Procedure Act 2005. His failure to give evidence as to his financial position has substantially increased the plaintiff's costs by compelling her to issue numerous subpoenas and to give instructions for the appraisal of the various properties registered in the defendant's name. 38I am also satisfied that the defendant has deliberately delayed the plaintiff in her pursuit of the claim, and has not fulfilled his duty to assist in the expeditious resolution of the claim. 39It is appropriate that the costs of these proceedings be paid by the defendant on the indemnity basis. However, it is not appropriate that the defendant be required to pay the costs of the application for the transfer of the District Court proceedings to this Court. Those costs were occasioned because the plaintiff, or her legal advisors, failed to appreciate the jurisdictional limit of the District Court in matters of this kind. 40That having been said, a number of affidavits filed in connection with the application for transfer were also relevant to the substantive proceedings and were read in these proceedings. It is appropriate that the costs order I will make apply also to the preparation of those affidavits. 41For these reasons, subject to any submissions counsel may have as to the appropriate form of order, I propose to make the following declaration and orders: