White v Patterson

Supreme Court of NSW|2008-11-24|Before: Barrett J, Mr J

CITATION : White v Patterson [2008] NSWSC 1226

HEARING DATE(S) : 16/07/08, 17/07/08, 18/07/08, 21/07/08 Written submissions: 07/08/08

DECISION : Defendant to make payment to plaintiff

LEGISLATION CITED : Property (Relationships) Act 1984, ss 15(1), 17(1), 18(1), 20

Baumgartner v Baumgartner (1987) 164 CLR 137 Calverley v Green (1984) 155 CLR 242 Howlett v Neilson [2005] NSWCA 149; (2005) 33 Fam LR 402 CASES CITED : Jones v Grech [2001] NSWCA 208; (2001) 27 Fam LR 711 Kardos v Sarbutt [2006] NSWCA 11 Muschinski v Dodds (1985) 160 CLR 583 Paino v Paino [2008] NSWCA 276

Leanne Michelle White - Plaintiff PARTIES : David Joseph Patterson - First Defendant Alice Mia Vors Patterson by her tutor Evelyn Ann Eyland - Second Defendant

Mr J R Hamilton - Plaintiff COUNSEL : First Defendant in person Ms K Richardson - Second Defendant

Rice More & Gibson - Plaintiff SOLICITORS : First Defendant in person Second Defendant by her tutor, Ms E A Eyland

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3540/06 LEANNE MICHELLE WHITE v DAVID JOSEPH PATTERSON JUDGMENT

Preliminary 1 These are proceedings under the Property (Relationships) Act 1984. The plaintiff (Leanne Michelle White) and the defendant (David Joseph Patterson) make claims against each other. Each contends that an order adjusting their interests with respect to property should be made in such a way that the other is ordered to make a payment. 2 As to jurisdictional prerequisites, it is accepted by the parties that they were both resident in New South Wales at relevant times (s 15(1)) and that they lived together in a domestic relationship for a period of not less than two years (s 17(1)). It is also accepted that the claims were brought within the time allowed by s 18(1). The parties 3 The plaintiff was born in 1962, the defendant in 1950. The defendant had an earlier domestic relationship with Naja Vors who died in September 1994. There was a daughter, Mia, of that relationship (born 1994). The plaintiff was married to Tim White from 1983 to 1992. There were two daughters of the marriage, Eleisa (born 1983) and Ashleigh (born 1986). 4 The plaintiff and the defendant met at the University of Sydney where both worked. The plaintiff was employed in an administrative role related to human resources. She had training as a stenographer and had worked for the University since age 18. The defendant had been Professor of Biology and Head of the School of Biological Sciences since moving to Australia in November 1992. The start of the relationship 5 An intimate relationship between the plaintiff and the defendant began in October 1999. At that time, the plaintiff lived with her daughters in rented premises at Leichhardt, while the defendant and his daughter lived in a house at Bundeena of which the defendant was the sole registered proprietor. I shall refer to this property as "No 32". The defendant owned other real estate at the time, being a property adjoining No 32 (which I shall call "No 34") and a flat at Newtown close to the university. 6 The plaintiff and her children went to live at No 32 in December 1999. The plaintiff kept on the lease at Leichhardt for a few months but says that she did so only while she made alternative arrangements for the children's pet cat which could not be taken to Bundeena because it is in the Royal National Park where domestic cats are not allowed. The plaintiff and the defendant established a joint bank account in January 2000 for the purpose of pooling money for domestic purposes. 7 The plaintiff says that the de facto relationship began in December 1999. The defendant says that it began in January 2000. She sees the commencement of living at Bundeena as the starting point. He sees the establishment of the joint bank account as the starting point. In the particular context, there is very little difference between the two and I choose to regard 31 December 1999 as the time at or about which the de facto relationship began. The end of the relationship 8 There is also some dispute about the time at which the relationship ended. Certain significant events and their timing are, however, accepted. On 7 July 2004, the defendant and his daughter Mia departed for the United States of America in connection with the defendant's work. They went with the knowledge and assent of the plaintiff. There was frequent telephone contact between the partners while he was in the United States. There was also email correspondence some of which may indicate stress in the relationship. The defendant and Mia returned to Bundeena on 17 December 2004. The parties' sexual relationship was resumed. Two days later on 19 December 2004, a conversation occurred in which the plaintiff indicated a desire to end the relationship, after which the parties occupied separate beds. In the last days of December 2004, the defendant and Mia went again to the United States where they have lived ever since. 9 The defendant maintains that the de facto relationship ended when he went to the United States in July 2004. The plaintiff's contention is that the end came on 19 December 2004. 10 I accept the plaintiff's contention on this aspect. On the defendant's departure in July 2004, it seems clear enough that both parties continued to contemplate a future together, possibly in the United States rather than Australia; and that it was contemplated that the plaintiff might go to the United States to join the defendant, either for a holiday or for the longer term. That frame of mind seems to have continued, albeit in the context of what I have already described as growing stress within the relationship. 11 The events of 17 to 19 December 2004 indicate that the relationship did continue until the defendant's return to Bundeena but then quite quickly came to an end. 12 My finding on duration is that the relationship began on 31 December 1999 and ended on 19 December 2004, so that it is reasonable to regard it as having subsisted for five years. The children 13 When the parties began living together, the three children - the plaintiff's daughters Eleisa (aged 16) and Ashleigh (aged 12) and the defendant's daughter Mia (aged 5) - became part of the household. A son Daniel was born to the parties in April 2001. His birth occurred while the family was temporarily in the United States during a period that began in August 2000. The plaintiff returned to Sydney with Mia and Daniel in July 2001. The defendant followed in September 2001. 14 Ashleigh and Mia went to the United States with their respective parents in August 2000. Eleisa remained in Sydney at boarding school but visited the family for three weeks in November 2000 on a ticket bought by her father and maternal grandmother. In April 2001, Ashleigh returned to Sydney to live with her grandparents. 15 After the plaintiff's return to Sydney in July 2001, Eleisa continued at boarding school. She was in her HSC year. Ashleigh went back to live with her mother at Bundeena and was moved from the school she had been attending at Glebe to a school at Caringbah. After the defendant returned to Sydney in September 2001, he established a pattern of staying overnight at the Newtown flat on about three days of each week so as to be close to his work. He took his washing back to Bundeena at weekends for the plaintiff to do. Eleisa lived at the flat for about a year from some time towards the end of 2001 while she completed her HSC and went on to university. In late 2002, Eleisa established independent living arrangements of her own. 16 Ashleigh completed her HSC at the end of 2003 while continuing to live with the parties at Bundeena. She then went to live at the Newtown flat and remained there until late 2004 when she too established independent living arrangements. 17 Except for short trips with her father alone, Mia lived with the parties throughout their relationship until July 2004 when she went to the United States with the defendant. Daniel lived with the parties from his birth until the parties' separation, although his father was away from time to time, including from July to December 2004. After separation, Daniel remained with the plaintiff and Mia remained with the defendant. The parties have been engaged in apparently protracted proceedings in the Family Court of Australia over custody and access arrangements for Daniel. The plaintiff has been given custody, subject to certain access arrangements for the defendant. The parties' movements during the relationship 18 Because of the nature of his work, the defendant travelled extensively to lecture, attend conferences and conduct fieldwork. The defendant occasionally took either Mia or the family for the whole or part of these trips. 19 From mid-March 2000 to mid-April 2000, the defendant took Mia with him to China on a work visit. During this time, the plaintiff moved her furniture and effects from her rented premises in Leichhardt to the defendant's home in Bundeena. Some of the furniture from the Leichhardt property was also used to furnish the defendant's Newtown apartment. 20 As I have mentioned, the parties lived temporarily in the United States between August 2000 and July 2001. The first month of the trip was spent in Arizona and the remainder at Woods Hole, Massachusetts, where the defendant was working. The defendant currently resides at Falmouth, Massachusetts near Woods Hole. 21 In July 2001, the parties, with Daniel and Mia, travelled from Woods Hole to Ireland for two weeks to visit the defendant's family. They returned to Woods Hole in mid-July 2001 and shortly afterwards the plaintiff moved back to Sydney with the two younger children. The defendant followed in September 2001 and the family resumed living at Bundeena. 22 In the years after the parties' return from the United States, the defendant travelled frequently for his work. He travelled to the United States in January/February 2002, early April 2002, mid-May 2002, April 2003 and June 2003; and to China from mid-June 2002 to mid-July 2003. 23 In July 2002, the defendant attended a conference on Hamilton Island to which the family accompanied him for a holiday. 24 In January 2003, the defendant and Mia visited Mia's relatives in Denmark for three weeks. 25 In mid-2003, the defendant accepted a two-year contract in the United States which involved him dividing his time between Woods Hole and Sydney. His travel between Australia and the United States became frequent. 26 In September 2003, the defendant drove to Broome in Western Australia to conduct fieldwork. In late September, the plaintiff, with Daniel and Mia, met the defendant in Perth and the family group travelled in Western Australia for about a week. The plaintiff and the children then drove from Perth back to Sydney in early October. 27 In July 2004, the defendant took Mia to the United States. She continues to reside with him there. 28 From the separation of the parties in December 2004 to early January 2006, the plaintiff and Daniel continued to reside at the defendant's Bundeena residence. They then moved to Armidale where they now live. Employment - plaintiff

29 As I have said, the parties were both employed by the University of Sydney at the start of the relationship. The plaintiff had been employed at the University since 1980 and, except for two periods of maternity leave, worked full time. This continued until January 2000, after which time she worked part time or on a consultancy basis. 30 Before the commencement of the relationship, from about October 1997, the plaintiff also owned and operated a private workplace consulting business known as L M White Consultancies Pty Ltd, which she sold in late December 1999 around the time she moved to the defendant's Bundeena residence. 31 At the commencement of the relationship, the plaintiff's combined taxable income from her work for the University and from other work through done through her consultancy business was approximately $58,200 per annum. 32 In addition to this income, the plaintiff was also receiving child support payments from her former husband, Tim White, in the amount of approximately $7,200 per annum. 33 The plaintiff's employment by the University came to an end in mid-2000. 34 For about four months of the period of residence in the United States in 2000 - 2001, the plaintiff worked three days a week as a nanny for friends. She received around US$120 per day for this work. 35 In addition, the plaintiff refers in affidavit evidence to consulting work undertaken for the University of Sydney at the start of the 2000/2001 trip abroad. 36 Between March 2002 and December 2005, the plaintiff worked part time (15 hours a week) at the University of Sydney. During this time she also carried out data entry work for the defendant and between July 2004 and December 2004 the plaintiff carried out additional workplace consultancy work, also for the University of Sydney. Employment - defendant

37 At the commencement of the relationship the defendant was earning a salary of approximately $103,000 per annum as Professor of Biology and Head of the School of Biological Sciences. He also received rental income from the No 34 property of around $4,800 per annum, as well as about $2000 per annum in royalty/commission payments from foreign publishers in relation to publications of his academic work. In total, the defendant was in receipt of an annual income of about $111,800 at the start of the relationship. 38 During the sabbatical period August 2000 to July 2001 when the family lived at Woods Hole, Massachusetts, the defendant continued to receive his full time salary from the University of Sydney. The defendant estimates the expenditure on that year abroad at approximately US$90,000; at that time equal to around AU$150,000. Both parties contributed to the time abroad; the defendant through his income and savings (of approximately $50,000) and the plaintiff through her part time work and savings (of approximately $30,000, largely from the sale of her Batemans Bay property). 39 Between late 2001 and May 2004 the defendant continued to work at the University of Sydney and also pursued projects in Massachusetts, travelling frequently. He was able to arrange a release from some of his university responsibilities to allow him to pursue other activities (see paragraph [47] below). The projects in the United States were conducted by the parties' company Maple Ferryman. 40 It is the defendant's evidence that, in the United States, his income depends on research grants. In late 2003, the defendant received sufficient research grants to cover the cost of his salary for 2.5 years. 41 The defendant ended his tenured position with the University of Sydney in May 2004. He went to the United States with Mia in July 2004. The defendant says that his income in Massachusetts was roughly the same as his University of Sydney income. 42 It is the defendant's evidence that after moving to the United States in mid 2004, his "maximum" (i.e. potential) income increased to US$125,000. In 2006, however, he suffered illness and, although he continued to work and receive grants, his earnings dropped. 43 The defendant has records indicating expenditure in excess of US$300,000 on himself and Mia since moving to the United States in mid 2004. This amount includes money spent on trips back to Australia to visit Daniel, the cost of medical treatment for his illness, the cost of nannies for Mia and child support and legal costs of the current proceedings and the Family Court proceedings. Maple Ferryman and the "vision" 44 Early in the relationship, the parties established a company, Maple Ferryman Pty Ltd. It is described by the defendant in an affidavit as "a vehicle to help with this vision", referring to a plan for the defendant to retire in 2005 or 2006 and for the parties to change their lifestyle. 45 The parties had discussed such a "vision" or plan. It involved the defendant, freed from his full time responsibilities as an academic, spending time as a carer for the children and at the same time operating through Maple Ferryman long-distance "eco-tours"; while the plaintiff had more time to undertake a creative writing course and pursue a career as a writer. 46 In 2001 the parties purchased a Mitsubishi Nimbus through Maple Ferryman and the plaintiff sold her Honda Accord to her sister. The Nimbus was used by the defendant for working field trips and by the plaintiff for day-to-day purposes. The Mitsubishi Nimbus was later traded in on the purchase of a Ford Laser which passed to the plaintiff. 47 From 2001 to 2004 Maple Ferryman was used to conduct a consultancy project for Marine Biological Laboratory, the defendant's employer in the United States. In August 2001 Maple Ferryman donated $65,000 accumulated income from this project to the University of Sydney. This was used to fund a staff member to replace the defendant at that time, thus freeing the defendant from his university duties. In June 2003 a second donation was made to the University in the amount of $21,000. 48 Between 2002 and 2004 Maple Ferryman earned an average yearly income in the vicinity of $90,000. 49 The shares in Maple Ferryman are not regarded by either party as an asset relevant to the present proceedings. The venture or proposal for which Maple Ferryman was originally formed is, however, relevant to an understanding of the relationship and, in particular, the defendant's complaint that the plaintiff did not work diligently to give effect to the "vision" or plan I have described. 50 It is by no means clear that the "vision" or plan was wholly shared. The plaintiff said in evidence that she initially expected that she would accompany the defendant on the eco-tours to be undertaken through Maple Ferryman but that she afterwards realised that she would have to stay at home with the children. The defendant, for his part, was disappointed that the plaintiff did not embrace the opportunity to devote herself to writing. She completed a creative writing course but, in his view, did not do well. She did little to pursue a writing career. The reality, it is fair to say, is that he had expectations of her in that direction that she was not equipped to realise or did not want to realise. 51 The position seems to have been that the defendant wished to adopt a new way of life and was enthusiastic about doing so, whereas the plaintiff, no doubt attracted by the general idea, saw that, with small children to be cared for, it was not going to work. She, by force of circumstances, was pre-occupied with domestic responsibilities and unable to live the defendant's dream. Assets and liabilities of the parties 52 It is necessary to consider the extent of the parties' assets and liabilities at three separate points: the start of the relationship, the end of the relationship and the time of the proceedings (accepted, in general terms, as late 2007 to early 2008). 53 A question to be considered at each such point is whether the defendant's daughter Mia had an ownership interest in any of his property. That question will best be examined after the assets and liabilities have been identified. The position at the start of the relationship 54 The plaintiff's assets position at the commencement of the relationship, according to her evidence, was as follows: Accruing value of IAG shares $ 3,000 Bond money, Leichhardt lease 1,365 Batemans Bay property 56,000 Honda Accord 10,000 Savings 3,000 Furniture 5,000 Superannuation 88,000 TOTAL $166,365

55 The plaintiff's evidence is that she had one liability only, a credit card debt of about $600. On that basis, net assets were $165,765. 56 The defendant challenges two aspects. He says that the Honda car was worth $2,000, not $10,000; and he says that the Batemans Bay property was worth $49,000, not $56,000. 57 As for the car, I have no way of resolving the difference and, on the basis that I am not required to come to any mathematically perfect result, I intend to take it into account at $6,000. 58 As for the Batemans Bay property, the evidence is that it changed hands in 2000 ostensibly for a price of $49,000 but under a transaction which in reality involved an additional $7,000. I therefore accept the $56,000 figure. 59 The net assets figure for the plaintiff is accordingly reduced by $4,000 (on account of the car) to $161,765. 60 The defendant's assets at the commencement of the relationship (disregarding any right or claim of Mia) are said by him to have been: House No 32 $ 250,000 House No 34 340,000 Newtown property 325,000 Savings 45,000 TESS superannuation 18,000 Standard Life pension 3,000 Audi car 10,000 Furniture 4,000 Superannuation 272,000 TOTAL $ 1,267,000

61 He lists two liabilities - a mortgage debt of $70,000 on No 34 and a mortgage debt of $245,000 on the Newtown property, to produce a net assets figure of $952,000. 62 The plaintiff disputes some of the items. On her view of matters, the No 34 property should be given a value of $250,000 only - the same as the adjoining No 32. In the absence of a valuation, there is some attraction in this, as submitted by counsel for the plaintiff. The defendant says, however, that the value of No 34 at commencement should be taken to lie on the point occupied by that date on a straight-line graph comparing the purchase price in 1994 with the sale price upon disposal in 2002. It is by this method that he arrives at $340,000. I am not persuaded that any sound basis for adopting that approach has been shown. No 34 should be taken into account at $250,000. 63 The other significant discrepancy concerns superannuation said by the plaintiff to be $260,000 rather than $272,000. However, the defendant has satisfactorily explained the $12,000 difference and I accept the figure of $272,000. 64 Otherwise, the discrepancies between the competing positions are small and may be ignored. 65 In the result, the $952,000 net assets figure should be reduced by $90,000 on account of the No 34 property. The adjusted figure for the defendant is therefore $862,000. The position at the end of the relationship 66 The plaintiff maintains that the value of the asset pool at the time of separation was $1,758,600. This was confirmed by the defendant in his closing submissions when he said "the asset pool at that stage is agreed by both of us to be valued at about $1.7 million". The precise figure of $1,758,600 comes from written submissions of the plaintiff's counsel. It will be appropriate to work on that figure. 67 These net assets are attributed as to $203,600 to the plaintiff and as to $1,555,000 to the defendant. 68 The assets are: Plaintiff Bombala property $ 70,000 IAG shares 3,000 Furniture 3,000 Savings 2,200 Superannuation 126,600 Less credit card bill (1,000)

Defendant Uni Super 600,000 House No 32 550,000 Newtown property (equity) 335,000 Colonial account 31,000 Audi car 4,000 Standard Life pension 3,000 Nissan Pathfinder 9,000 Furniture 4,000 Savings 19,000

69 Some significant changes from the position at commencement are sale by the defendant of the No 34 house property and the sale by the plaintiff of her Batemans Bay property - plus acquisition by the plaintiff of the Bombala property which, it is acknowledged, was bought for her by the defendant. The position at the time of the proceedings 70 The plaintiff contends that the relatively up-to-date position (late 2007 to early 2008) is that there is a net assets pool of $2.1 million. The defendant's corresponding figure is $1.82 million. The difference comes largely from the fact that the defendant has recognised (but the plaintiff has not) a reduction of $201,000 outlaid on account of legal expenses for these and related Family Court proceedings. The plaintiff, however, has paid only $680. That too would represent a depletion. 71 The appropriate course, in my view, is to approach matters on the basis that the assets pool is to be struck before any recognition of, or allowance for, such legal expenses. 72 Another matter to be mentioned is a discrepancy in the defendant's evidence about his superannuation. One figure given is $667,000 but then in an affidavit of 12 May 2008 the defendant says that the amount at December 2007 was $715,000. On the basis of the disclosure obligations that parties to these proceedings have, the superannuation should be taken into account at the higher figure. 73 When this is done and the legal expenses are added back, the current net assets will be taken into account at the figure for which the plaintiff contends, that is, $2,099,390. 74 This is allocated $208,390 to the plaintiff and $1,891,000 to the defendant. 75 The assets are: Plaintiff Bombala property $ 85,000 IAG shares 3,500 Furniture 2,870 Savings 1,140 Superannuation 112,300 Ford Laser 2,900 Add back legal expenses 680

Defendant Uni Super 715,000 House No 32 775,000 Improvements to House No 32 79,000 Equity in USA property 65,000 USA superannuation 40,000 Standard Life pension 3,000 Nissan Pathfinder 3,000 Furniture USA 10,000 Add back legal expenses 201,000

76 I should note, by way of explanation, that the valuation of the No 32 house property for the purposes of the proceedings took into account extensions to a value of $200,000 whereas the actual cost of the extensions was $279,000. The additional $79,000 is on account of this.

Mia's position 77 I turn now to the question whether the defendant's daughter Mia should be regarded as having some proprietary interest or claim of right impacting upon the value of the defendant's property. 78 I have referred to the fact that the defendant had an earlier relationship with Ms Vors and that Mia was born to them in 1994. Ms Vors' died in September 1994 when Mia was a small baby. 79 Ms Vors was a Danish national. She was a scientist working in the same field as the defendant. They had known one another professionally before Ms Vors came to Australia in January 1992. The defendant arrived in Australia in November 1992. They commenced cohabitation in Sydney at some point after that. It may therefore be accepted that, at the time of Ms Vors' death in September 1994 their domestic relationship had subsisted for something less than two years. 80 The defendant and Ms Vors purchased the No 32 house property in July 1993 for $210,000. A mortgage loan of $160,000 was provided by the Commonwealth Bank. The evidence does not allow me to determine the source of the balance of $50,000. The defendant and Ms Vors took title as joint tenants. In June 1994, the mortgage loan was increased by $30,000 and the outstanding balance became $185,852. The additional funds were spent on improvements to the house. 81 Ms Vors left no will, but did leave an informal document which exhibited an intention that members of her Danish family and the defendant should benefit in the event of her death - broadly on the basis that the Danish family would receive personal effects in Denmark plus jewellery and clothing and that money and "Australian goods" should pass to the defendant - also "chandeliers and other Danish goods to stay with Paddy [the defendant] unless he wants to send them back to my parents". This last part seems, clearly enough, to refer to (or include) household items which one may infer were in the jointly owned house property. 82 After Ms Vors' death, the defendant became the sole registered proprietor of No 32 by survivorship. The Commonwealth Bank debt was paid and the mortgage discharged by the end of January 1995 (the discharge of mortgage is dated 18 January 1995). That was about four months after Ms Vors' death. The possibility that moneys used to pay off the debt were moneys to which Mia was entitled in consequence of Ms Vors' death is one to which I must now turn. 83 Ms Richardson of counsel made application early in the trial for an order adding Mia as a party to these proceedings. Ms Richardson was instructed by a tutor. The order was made and submissions were made on Mia's behalf in support of the proposition that the defendant's ostensible assets are diminished by an interest on the part of Mia. There is no cross-claim by Mia. 84 Following Ms Vors' death the defendant received a lump sum under a Danish life insurance policy on Ms Vors' life in which the defendant was named as beneficiary. The relevant sum was 525,000 Danish kroner, accepted before me as the equivalent of $113,457.09 in Australian currency. This was remitted to the defendant's Commonwealth Bank account in January 1995. The defendant says that he had no savings of his own of any size and that the maximum he could have provided from his own funds to obtain discharge of the Commonwealth Bank mortgage was this sum (say, $113,000 in round figures). 85 The defendant's evidence is that benefits became receivable from a Danish superannuation fund in late 1994 in consequence of Ms Vors' death. The evidence shows that this fund remitted a "one-off" payment of 66,218.66 Danish kroner (about $16,000) and that the defendant had no interest in those moneys which belonged to Mia. There is evidence that Mia was also entitled to annual pension payments of 10,566 Danish kroner (say, $2,500) from the superannuation fund. However, there is no evidence of actual receipt of any such payments. 86 It was argued on behalf of Mia that she must be regarded as having an interest in No 32 because money that came to her consequent upon the death of her mother contributed to payment of the mortgage debt. The argument proceeded on the basis that if, as he says, the defendant had no savings beyond the $113,000 he received from Denmark, Mia's money was the only source from which the balance needed to discharge the mortgage could have been obtained. I take at face value, at this point, the proposition that, under both the law of New South Wales and the law of Denmark as to intestate succession, Mia alone became entitled to the whole of her mother's estate. 87 Even if it be accepted that money belonging to Mia contributed to the payment of the mortgage debt in early 1995, it does not follow that Mia thereby gained some interest in the house. The reason was explained by Mason J and Brennan J in Calverley v Green (1984) 155 CLR 242 at 257 as follows: "It is understandable but erroneous to regard the payment of mortgage instalments as payment of the purchase price of a home. The purchase price is what is paid in order to acquire the property; the mortgage instalments are paid to the lender from whom the money to pay some or all of the purchase price is borrowed." 88 The correct approach, in my view, is to regard the defendant and Ms Vors as having together borrowed the total of $160,000 advanced by the Commonwealth Bank to finance the purchase of the property, so that they together expended $210,000 on the purchase. Whether the balance of $50,000 came from one of them alone or from each as to part, I cannot say. But, in my opinion that does not matter. 89 The defendant and Ms Vors chose to take title as joint tenants to the property purchased with the total sum of $210,000. Each of them, by taking title in that way, manifested an intention that, if one died, the other should have and enjoy the whole. Ms Vors' invalid will showed an intention on her part to benefit the defendant in case of her death. 90 In these circumstances, I do not consider that there is room to find any constructive trust binding upon the defendant in respect of the property following Ms Vors' death. There is reference in the judgment of Deane J (with whom Mason J agreed) in Muschinski v Dodds (1985) 160 CLR 583 to the general equitable principle which restores to a party contributions that he or she has made to a joint endeavour which fails when contributions have been made in circumstances in which it was not intended that the other party should enjoy them. Deane J said (at 620): "... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do: cf. Atwood v. Maude (1868) LR 3 Ch App 369, at pp 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 ChD 529, at p 531." 91 The constructive trust is imposed by equity, as Deane J pointed out, "to preclude the retention or assertion of beneficial owners of property to the extent that such retention or assertion would be contrary to equitable principle". 92 These principles may well be applicable to the breakdown of a de facto relationship. They were so applied in Baumgartner v Baumgartner (1987) 164 CLR 137. In that case disputes as to ownership of property arose when the parties to the de facto relationship separated. 93 That is not the case here. The defendant and Ms Vors did not separate in circumstances making it necessary to determine competing property claims. Their relationship came to an end in the very way for which the form of ownership chosen by them catered, being the death of one of them. The situation that actually arose (under which the defendant became the sole owner) was not a situation in which, to use the words of Deane J in Muschinski v Dodds (above), "it was not specifically intended or specially provided that" the defendant should enjoy full beneficial ownership of the property. On the contrary, by choosing the particular form of ownership, the parties manifested a specific intention and made special provision regarding ownership of the property in the event of the death of one of them. And the passing of the property to the defendant by survivorship was precisely in accordance with that specific intention and special provision. 94 I do not accept that Mia has an interest of any kind in the No 32 house property, even if moneys belonging to her went towards paying off the mortgage. The defendant alone is the full legal and beneficial owner of No 32. 95 Is it, in any event, established that money belonging to Mia went towards paying off the mortgage of No 32 - or, as is suggested on behalf of Mia, towards the purchase of No 34 in February 1996 for $220,000 or the purchase of the Newtown property for $325,000 in November 1998? 96 The defendant gave evidence of having had a Colonial Cash Management Account in the mid-1990's. No records of that account are in evidence but the defendant did tender records of a subsequent account that he said was a successor account to the original account, following some form of restructure within Colonial. The second account was, it appears, initiated on 30 June 1998 with an opening balance of $22,519.00.40 The second account is in the name of the defendant and Mia. She, of course, was at all relevant times a minor lacking legal capacity. It must be accepted that the defendant alone operated the accounts and made decisions in relation to them. And in his affidavit of 3 December 2007, the defendant gave evidence that the money in the second account at the time the relationship with the plaintiff began was his. 97 It is hypothesised on behalf of the plaintiff that the opening balance of $22,519.40 in the second account represented the sum of about $16,000 received for Mia from the Danish superannuation fund following Ms Vors' death, together with accrued interest. This may or may not be so. The real point is that one simply cannot tell. 98 The defendant said in his affidavit that moneys that came from the Danish superannuation fund were put into a cash management account. The only receipt from this source established by the evidence is the receipt of 66,218.66 Danish kroner to which reference has already been made. There is evidence of a quite separate remittance to an account at Colonial Cash Management Trust, Melbourne, in October 1996 by Bo Johansen, with Mia named as "receiver". This was for 60,400.82 Danish kroner. The defendant says that this represented the price for an interest in property in Denmark acquired by Bo Johansen from Ms Vors. Using the exchange rate employed earlier, it may be taken to have been the equivalent of about $14,000. 99 The defendant gave conflicting evidence on the subject of sources of funds. In paragraph 11 of his affidavit of 18 August 2007, he says that the house property No 34 was purchased for $220,000, of which $75,000 was borrowed and "the balance was funded from savings". A similar statement is made in paragraph 12 about the purchase of the Newtown property. In paragraph 56 of that affidavit, he refers to savings he had at the start of the relationship, being $45,000 including $23,870 in the Colonial Cash Management Account. He did not say in the affidavit, but it was later shown, that the account was in his name and that of Mia. The defendant nevertheless relied on the money in the account as a contribution brought by him to the relationship with the plaintiff. It is clear that the defendant used the money in the account as his own, including for the payment of legal fees. Indeed, the defendant said in cross-examination, in relation to the $23,870, "I could have spent the whole $23,870 if I so wished". 100 The defendant sought to portray withdrawals from the Colonial Cash Management account as being for Mia's benefit, in some broad sense, even though it is clear that there was no benefit to her. For example, it was put to him in cross-examination that the $40,000 for the purchase of the Bombala property - a property bought by the defendant for the plaintiff and owned by the plaintiff - had been drawn from that account (which he accepted) and that that could not possibly have been for Mia's benefit. His response was: "A. Yes, it was. If you remember what I was saying on the first day, it was my understanding that we were building a new life for our entire family. Mia is a part of that. Bombala was essentially to provide Leanne with the reassurance on the financial front because it was something that concerned her. So it was absolutely an investment in that structure which I thought was going to emerge in 2005. So it was for Mia's interests." 101 The evidence does not support a finding that all the money in the Colonial Cash Management account from time to time was Mia's money. The evidence is also insufficient to ground a finding that money belonging to Mia was outlaid as part of the purchase moneys expended by the defendant to acquire No 34 and the Newtown property. It is, however, sufficiently shown that two sums due to Mia or to the estate of Ms Vors (effectively, for the benefit of Mia) were received into the Colonial Cash Management account. The first was the sum of 66,218.66 Danish kronor (about $16,000) received from the Danish pension fund in late 1994, the second the sum of 60,400.82 Danish kronor (about $14,000) received from Bo Johansen in October 1996 (the latter was after the purchase of No 34 in February 1996). 102 It should be accepted, for the purpose of ascertaining the financial resources of the defendant, both at the commencement of the relationship with the plaintiff and at subsequent points, that some money ostensibly owned by him was held for the account of Mia. But it is not possible to say that this money was applied in any particular way. 103 The first relevant sum is the $16,000 from the Danish pension fund. On the basis that this was received in late 1994, and on the assumption that interest on it accrued annually at a rate of 8%, it represented, at December 1999, some $23,400; and at December 2001, some $34,400. With interest continuing to accrue at that rate, it represented at December 2007 about $43,300. 104 The other relevant sum is the $14,000 received from Bo Johansen in late 1996. According to the same basis of calculation, it represented about $17,600 at December 1999; about $25,600 at December 2004; and about $32,300 at the time of the proceedings (say, December 2007). 105 The assets of the defendant, as otherwise calculated, should be reduced by $41,000 as at the start of the relationship, by $60,000 as at the end of the relationship and by $74,600 as at the time of the proceedings. 106 I must emphasise that I do not state these conclusions by way of any kind of determination of rights and liabilities as between the defendant and Mia. The sole purpose of considering Mia's position is to obtain an accurate picture of the defendant's financial situation. The assessment is made solely for the proceedings between the plaintiff and the defendant and in order to arrive at a reliable basis for approaching the question of adjustment of the interests of the plaintiff and the defendant with respect to property. Net assets after adjustment on account of Mia 107 Having regard to these conclusions, the following adjusted net asset figures should be adopted: Plaintiff Defendant Total At commencement of relationship $ 161,765 $ 821,000 $ 994,765 At end of relationship 203,600 1,495,000 1,698,600 At time of proceedings 208,390 1,816,400 2,024,790

Contributions - principles 108 Section 20 of the Property (Relationships) Act 1984 is in these terms: "(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." 109 Case law (particularly as derived from Evans v Marmont (1997) 42 NSWLR 70) makes it clear that, in applying this provision, the court must undertake a three step process: first, identify the property of the parties; second, identify and value their respective contributions of the type referred to in paragraph (a) and paragraph (b); and, third, determine what order is just and equitable having regard to those contributions. The first aspect is dealt with above. I now proceed to consider the second matter. 110 In Kardos v Sarbutt [2006] NSWCA 11, the Court of Appeal referred to three particular points to be remembered at the second of the steps in the three-step process (that is, identification and valuation of the parties' contributions): first, that where there is a division of roles in the relationship between homemakers and breadwinner, the intangible contributions of the first kind are in no way inferior to the material and financial contributions of the second kind; second (and as noted by Hodgson JA in Howlett v Neilson [2005] NSWCA 149; (2005) 33 Fam LR 402), contributions brought to the relationship at inception are relevant; so too are contributions made after separation and before trial. Third (at [36]): "… the court is not required to undertake a reductionist process analogous to the taking of partnership accounts by examining every alleged 'contribution' of the kinds described in the section with a view to putting a monetary value on each in order to reach an accounting balance one way or the other, then to be eliminated by the requisite financial adjustment; rather, the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind [ Davey v Lee (1990) 13 Fam LR 688; (1990) DFC ¶95-084 (McLelland J)]." 111 The second of these matters requires some elaboration. It is now, I think, sufficiently established that the court may have regard to contributions made before the relationship began, but only in a subsidiary or contextual way. In that respect, I note what was said in Jones v Grech [2001] NSWCA 208; (2001) 27 Fam LR 711 by Davies AJA at [24] and by Ipp AJA at [77] to [82]. Contributions - assessment 112 The position with respect to contributions is, to my mind, reasonably straightforward. Each party made contributions of both the paragraph (a) kind and the paragraph (b) kind. 113 The defendant was in highly remunerative employment throughout the relationship. He also worked as a consultant. The plaintiff worked in full time employment and as a consultant until mid-2000, just before the family went to the United States. While in the United States, she derived income as a nanny for friends until just before Daniel's birth in April 2001. After the return to Sydney, she re-commenced employment (in March 2002) on a part-time basis. 114 The defendant's earning capacity was greater than that of the plaintiff. In purely financial terms, the income contributions he made to the property and financial resources of the parties were greater than those made by the plaintiff. But she made income contributions commensurate with her earning capacity and the domestic responsibilities that she undertook. 115 The only contributions to the property and financial resources of the parties were these contributions by way of income from personal exertion. There was no investment income to speak of and nothing in the nature of gifts or bequests received by either party. In addition, it seems that there were no savings of any consequence accumulated on either side, except for superannuation. 116 When it comes to paragraph (b) contributions, the situation can be seen to be one in which the defendant provided benefits to the family unit by way of domestic accommodation at No 32, holidays both in Australia and overseas and, in general terms, the care and attention that one would usually associate with a highly qualified and busy husband and father engaged in challenging and demanding employment. 117 The plaintiff, for her part, provided benefits to the family unit by undertaking virtually all domestic and child-care duties and providing a nurturing home environment for the defendant and the four children. The relative remoteness of the home at Bundeena from the University of Sydney and the fact that, at least in the earlier part of the relationship, the defendant stayed overnight at Newtown for about three nights a week meant that the plaintiff had domestic responsibilities greater than those of many other women living with a domestic partner and children. 118 The defendant is critical of the plaintiff because, in his view, she did not honour a commitment to the "vision" to which I have earlier referred. His disappointment is understandable. But I do not think that this has any bearing on the evaluation of contributions that I am required by the legislation to make. The fact that the plaintiff may not have had the capacity to undertake a writing career and that the "vision" did not come to fruition is neutral in the evaluation of contributions. The simple reality is that the plaintiff was, by circumstances, required to divide her time between paid employment (except when Daniel was very young) and domestic duties. Indeed, the defendant seemed to be critical of her that she did not return to work sooner than she did after Daniel's birth - he observed more than once that Ms Vors had gone back to work more promptly after Mia's birth. 119 The defendant would no doubt have been more contented had the "vision" been accomplished. But any failure in that respect that it might be possible to lay at the feet of the plaintiff should not be regarded, in terms of the legislation, as some form of negative contribution to the welfare of the defendant or of the family unit. Rather, the court must take the parties' circumstances and activities as it finds them and assess contributions according to what actually happened, not what might have happened if some other lifestyle had been adopted. 120 Following the approach stated in the above extract from the judgment of Hodgson JA in Howlett v Neilson, I am of the opinion that, as to contributions in the overall sense (both paragraph (a) and paragraph (b)), the relevant holistic value judgment indicates that the plaintiff and the defendant made equal contributions. 121 Events after the end of the relationship do not seem to me to require any different view. The plaintiff continued to live in the No 32 house property for about a year. That was an advantage for her, but also an advantage to the defendant as it freed him from responsibilities for the house and for Daniel so that he could pursue his work in the United States. What order should be made? 122 In approaching the question of what is just and equitable by way of adjustment to reflect these contributions, I begin by noting that, over the period of the relationship, the adjusted net assets of the parties increased in value from $982,765 (plaintiff: $161,765; defendant: $821,000) at commencement to $1,698,600 (plaintiff: $203,600; defendant: $1,495,000) at conclusion - an increase of $715,835. 123 Part of the increment is attributable to no more than increasing property values. The increase of $300,000 in the value of the No 32 house property and the increase of $10,000 in the value of the Newtown property - both brought to the relationship by the defendant - should not be regarded as brought about by any contribution of the parties. On that basis, the increase over the period of the relationship attributable to the parties's contributions should be reduced by that $310,000 so that the figure to be taken into account is $405,835 - in round figures, $400,000. 124 Each party should be regarded as having contributed to one-half of that increase, that is, $200,000 each. 125 The plaintiff left the relationship with net $203,600 and the defendant with net $1,495,000, representing a net increase over the commencement position of about $42,000 in the case of the plaintiff and $684,000 in the case of the defendant. The actual increments enjoyed by them were thus such that the plaintiff came actually to enjoy much less than the value of $200,000 to which I have referred. The defendant, on the other hand, came actually to enjoy much more than an enhancement of $200,000. 126 There must therefore be an adjustment by way of payment by the defendant to the plaintiff. Having regard to the approaches that recently commended themselves to Hodgson JA and McColl JA in their joint judgment in Paino v Paino [2008] NSWCA 276 at [98] and following, I should make two calculations in order to obtain an indication of an appropriate monetary expression of the adjustment in favour of the plaintiff. Each recognises that the plaintiff should have $200,000 as a basic award. From that point, one approach is to add a notional interest factor from the end of the relationship to the time of the proceedings and the other is to attribute to the plaintiff that proportion of the asset pool at the time of the proceedings that $200,000 bears to the value of the asset pool at the time the relationship ended. 127 On the first approach applying court rates of interest for the period 1 January 2005 to 30 June 2008, an award of approximately $274,000 is indicated. 128 Adopting the alternative, it is seen that $200,000 is about 11.8% of the adjusted asset pool at the end of the relationship ($1,698,600) and that 11.8% of the adjusted asset pool at the time of the proceedings ($2,024,790) is approximately $239,000. 129 On the whole, therefore, and having regard to these two indicators, I consider it just and equitable that there be an order which has the effect of re-allocating value of $250,000 from the defendant to the plaintiff. 130 The plaintiff, by her amended statement of claim, seeks an order the effect of which would be to cause the No 32 house property to be sold and the net proceeds of sale divided between the parties. I see no reason to make any such order. The plaintiff does not have any special claim to that property and there is no reason why the defendant should not satisfy the order of the court in whatever way he chooses. There should be simply an order for the payment of money. 131 As for the defendant's cross-claim, the findings as to respective contributions and the extent of the defendant's assets at both termination of the relationship and the time of the proceedings mean that there will be no order in his favour. Conclusion 132 There will be an order that the interests of the parties in the property of the parties be adjusted by means of a payment of $250,000 by the defendant to the plaintiff. It will also be ordered that the sum of $250,000 be paid within sixty days after the making of the order and that, from and after the expiration of the period of sixty days, it carry interest at court rates. 133 It will be necessary to receive submissions on costs and it is preferable that the making of the substantive orders be deferred until those submissions have been made. Bearing in mind that the defendant is self-represented and lives overseas, I shall make directions for the filing of written submissions on costs. **********

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(2005) 33 Fam LR 402

(2001) 27 Fam LR 711

(1990) 13 Fam LR 688

At a glance

Court

Decision date

Before

Source

Judgment (24 paragraphs)

Parties

Cases Cited (11)

Cited By (1)