M v K[2004] QDC 227

DISTRICT COURT OF QUEENSLAND

1. [1]
   There are cross-claims before the court for property adjustment orders under s. 286 (1) of the Property Law Act 1974. The proceeding began in the Supreme Court.  Moynihan SJA ordered it to be deemed commenced by Originating Application and that mediation occur - as it did, without useful result.  The provisions of ss. 342 to 344 of the Act (unlike those applied in other jurisdictions) require a certain amount of secrecy, and in particular concealment of the protagonists’ identities. 

2. [2]
   The plaintiff was born in the middle of 1949. After two marriages, he formed a de facto relationship with the defendant, who was born towards the end of 1946, and is thus about 2½ years older than he is. She had four children who were living independently when the parties’ cohabitation began about 1991. The plaintiff had children too. Throughout the relationship he made payments (initially $80 per week, increasing to $100 per week) for the support of his youngest child, a daughter who joined the parties’ household, aged 15, late in 2002. The defendant, in particular, found this development impossible to tolerate. While the plaintiff conceded there were “teenage” issues, all the defendant particularised was the impact on phone bills (which she had to pay) of the girl’s calls. It is a matter of speculation whether other things led the defendant to “separate – under the same roof” about October 2002, then leave in January the following year. A complaint she made for the first time from the witness box was that the plaintiff had got into her locked bedroom and stolen $800 or $1,000 she had put by as “get away” money.

3. [3]
   Although the allegations in the pleadings ranged far and wide, exposing conflicts as to which party paid for holidays, entertainment, presents and the like, as the proceeding got closer to a hearing, the parties in their affidavit evidence confined the areas of dispute significantly. I would note that counsel presented their cases and cross-examined with commendable economy; it is unfortunate that unavailability of witnesses led to the trial’s going into a second day. Although Mr Galloway was prepared to address on the first day, Mr George (who addressed second) requested an overnight adjournment to enable him to prepare submissions.

4. [4]
   In practical terms the contest came down to the fate of approximately $130 000 presently held by solicitors, and representing the balance of the net proceeds of sale of the home, the bulk of which have already been distributed in equal portions. Some other aspects have been resolved cooperatively, such as allocation of furniture; as to others, there may be issues remaining, for example the defendant’s daughter has a rider mower, and the plaintiff contends some tools are missing (the defendant says these are available to him). Even if I am wrong in thinking the parties ultimately abandoned these “issues”, I would take the view that they would not affect the outcome of this proceeding.

5. [5]
   Not until those submissions came did the plaintiff nominate his suggested outcome. It turned out to be obverse of the defendant’s, whose filed defence asserts that a “just and equitable” distribution of the parties’ asset pool would go 60% in her favour.

6. [6]
   Essentially, the defendant relies heavily on things that have happened since the relationship ended. She says she is older than the defendant, with a shorter working life remaining to her, so that her ability to borrow to purchase a home for herself is doubtful: she has too few years of earning left. She is still alone, boarding in premises she will very soon have to vacate. From the $105,000 that she has received as an advance (reflecting a similar sum the plaintiff got) from the sale of the jointly owned home, she has had to fund these proceedings, likewise, very expensively, acquisition of a motor vehicle. Her ability to get into a new home was reduced by those considerations.

7. [7]
   Comparatively, the plaintiff has fallen on his feet. Once the defendant left, abandoning her legal entitlement to reside in the home, he and his daughter had full use of it until its sale. He has found a new partner, a 45 year old woman who manages a shop; together, they have purchased a block of land on which a house is being constructed, where they will be able to move within months. The new partner may lose her employment; the plaintiff says the shop is scheduled to close.

8. [8]
   Accepting that there are two sides to the story, the circumstances concerning the defendant’s “new” car do not reflect much credit on the plaintiff. Each of them had a serious need of a vehicle for work purposes. It seems both vehicles were acquired at times well into the history of the relationship, were registered in the plaintiff’s name. He “repossessed” the defendant’s sedan, which had been perfectly suitable for her purposes, and began to use it for his own, selling the four wheel drive he had used to that point. The defendant was forced to acquire a replacement vehicle. It is no more than commonsense that she would have to spend considerably more to get a replacement in whose reliability she would have as much confidence as she had in the one taken from her. Effectively, at that time, she had no money, so that her only option was to buy on hire purchase. Once funds became available to her, she paid out the hire purchase contract. In my opinion, there was a considerable wasting of her resources in this exercise. It is hard to avoid thinking that the parties could have come to some suitable accommodation. The plaintiff’s justification for what seems a mean decision (that if one of them had to lose a work vehicle, it should be her) is put on the basis that he had no funds, either, and had been left with sole responsibility to pay household debts such as electricity, telephone and insurance which the defendant had always paid. The evidence is insufficient to support any detailed findings. While the defendant did abandon responsibility for those household expenses reflected in bills that came in after she had gone, she did pay seven weekly instalments against the mortgage to the National Australia Bank, thereby assuming, to that extent, an obligation that (as between them) had fallen on the plaintiff.

9. [9]
   By a transaction completed early in 1993, the parties purchased a large vacant block of land (exceeding 5000 square metres) for $90,000. The vendors were prepared to accept delayed payment as to $10,000, which was secured by a promissory note, paid out when the parties obtained a building loan from the bank. The parties were jointly liable to the bank. The property was registered to them as tenants in common in equal shares. This must be taken as a deliberate, considered decision by people with some experience of previous relationships and the financial consequences of their cessation; both of them had children who might have been seen as having some interest in how their parents held property. The parties’ arrangement, which worked well for years, was that the plaintiff would make all payments required under the bank’s mortgage, the defendant would pay everything else. This generalisation requires some qualification, for example, in respect of motor vehicles; it seems, for example, the plaintiff took out a personal loan, maybe more than once, so that a vehicle could be acquired.

10. [10]
    Both parties committed all of their energies and resources to the relationship. His earning capacity exceeded hers, the net weekly earnings being estimated at $600 per week, as opposed to up to $450 per week. Child support payments made by the plaintiff, from “after tax” dollars, resulted in contributions being roughly equal, week to week, the plaintiff slightly ahead. It was not on this basis that the plaintiff asserted that 60% of the asset pool ought, in justice and equity, be allocated to him, but rather, on the basis of an excess of contributions towards the $80,000 which had to be found to acquire the land, and on his Herculean efforts to improve the property by landscaping and related activities outside the house proper, to which it is said the defendant contributed nothing. The plaintiff did not assert he made any contributions inside the house. It may be accepted that the defendant’s efforts in that regard served to keep him going in his projects outside. The defendant claims she contributed there as well. However, it has to be accepted that it was the plaintiff, who did nearly all of the work personally, who devised and carried through the impressive projects documented in photographic exhibits.

11. [11]
    Mr H, a valuer, expressed the opinion, in an ex-post facto valuation exercise, that $35,000 of the $465,000 obtained on sale of the property could be attributed to the improvements made by the plaintiff. Mr Galloway argued that Mr H’s opinion was no more than a guess, and that he should have made inquiry of the purchasers to ascertain the value placed by them on the improvements. Be that as it may, I think it is clear, speaking generally, that the plaintiff’s efforts - which I would characterise as the fruits of a hobby whose practice gave him at once justification for activity, stimulation, challenge, enjoyment and deep satisfaction – enhanced the market value of the property. I do not think it follows that he should be compensated for that at the expense of the defendant in the present proceeding. One reason is that I am satisfied she was making use of her time in contributing to their joint welfare, albeit not in ways which directly enhanced the market value of their assets. Also, I think it would be wrong to allow the plaintiff to “improve the defendant out of her estate” in this way. In L v. H [2004] QDC 152, Southport 138/03, 9 March 2004, one of the former de facto partners was active in arranging refurbishment of the parties’ home unit (with the consequence that its market value may have been increased) more for her own satisfaction than for that of her then partner (whose work saw him rarely at home).  At [41] agreement was expressed with the suggestion that may be found in Sullman v. Sullman [2002] NSWSC 169 (354-359) that there are real problems regarding expenditure on luxuries such as holidays (one might add certain non-financial contributions in certain circumstances) as eroding the equity of a de facto partner in his or her assets, in the absence of clear notice given at the time that something along these lines is intended.  In my opinion there is an analogy open with the plaintiff’s “landscaping contributions” (a description which understates the true nature and extent of the plaintiff’s achievements.)  For what it is worth, I accept the defendant’s evidence and that of Mr L (who used his own bobcat on the site for “practice”) regarding their limited contributions^[1].

12. [12]
    The plaintiff claims credit for “contributions” outstripping the defendant’s in respect of the $80,000 paid for the land. She says she has paid $26,000. She can demonstrate the source of $20,000 ($12,000 obtained from sale of her then vehicle and almost $8,000 in the St George Bank in maturing term deposits). She may have earned or had in bank accounts records of which did not get into evidence the additional $6,000. The plaintiff is able to demonstrate that he had available from identified sources ample funds. The defendant can show she paid a quarter, although she may be right that she paid nearly a third.

13. [13]
    The defendant relied on Bremner (1995) FLC 92-560, the headnote of which is:

14. [14]
    In all of the circumstances here I am not inclined to make distinctions now based on differences between the present parties’ initial contributions back in 1991-1993, even though their relationship lasted only half as long as the Bremners’. It should be acknowledged that the defendant brought in significant furniture, the plaintiff did not.

15. [15]
    I am content to follow the approach of E v. S [2003] QSC 378 at [30]:

“Amongst the objectives of the introduction of Part 19 into the PLA in 1999 was the objective to facilitate a just and equitable property distribution at the end of a de facto relationship in relation to the de facto partners, rather than leave de facto couples to rely on the law of contract, trusts, unconscionable conduct, estoppel or other legal remedies which often gave rise to uncertainty as to the outcome of the dispute.  Part 19 of the PLA is based on the report of the Queensland Law Reform Commission published in June 1993:  De Facto Relationships QLRCR 44.  Part 19 of the PLA follows closely the De Facto Relationships Bill included in that report.  The provisions in that proposed legislation dealing with when the court can alter interests in property on the breakdown of a de facto relationship were modelled closely on the equivalent provisions in the Family Law Act 1975 (Cth), as are the provisions in Part 19 of the PLA.  It is therefore appropriate to have regard to the authorities that have considered the equivalent provisions in the Family Law Act 1975 (Cth) such as Mallet v Mallet (1984) 156 CLR 605.  In that case the High Court endorsed the interpretation of s. 79 of the Family Law Act 1975 (Cth) that it was intended that a spouse’s contribution as homemaker should be recognised in a substantial way and that the policy behind the legislation was that the contribution of a homemaker or parent was to free the other party to the marriage to devote time and energy to the pursuit of financial gain, so that the contribution as homemaker rand parent must be seen as an indirect contribution to the acquisition, conservation or improvement of the property of the parties (at 623, 636, 646).”

16. [16]
    In that case, Mullins J awarded the lion’s share of the asset pool to the applicant. He had put up more than $70,000 in cash (the respondent nothing apparently) when they purchased a property for $275,000 as tenants in common in equal shares. Her Honour’s order allocated the balance of the joint asset pool 60% to the applicant, after repayment to him of his initial capital contribution. The relationship lasted only 15 months, so that s. 287 (a) did not apply. Subsection (c) was found to apply. In other words, failure to make an order in favour of the applicant “would result in serious injustice” to him. The determining factors were the applicant’s substantial capital contribution to purchase of the property and the short duration of the relationship: see [76].

17. [17]
    Neither of the present parties has satisfied the condition in s. 287(c). Of course, neither of them needs to.

18. [18]
    While the “serious hardship” test is not generally applicable, in my view, a party seeking a property adjustment order must affirmatively satisfy the court that it is “just and equitable” that the order contemplated be made, changing what the parties’ interests otherwise are. I reiterate what was said in L v. H at [46]:

“The purpose of subdivision 2 of division 4 of Part 19 of the Property Law Act 1974, as set out in s 282 is “to ensure a just and equitable property distribution at the end of a de facto relationship”.  S 286 authorises the court to “make any order it considers just and equitable about the property of either or both of the de facto spouses adjusting the interests”.  The expression “just and equitable” which is found also in the headings to subdivisions 3 and 4 and in s 296 seems tautologous, but is increasingly encountered in legislation.  An early instance was in relation to contribution among tortfeasors for purposes of apportioning liability (see Daniel v Rickett, Cockerell & Co Ltd [1938] 2KB 32); the “just and equitable” ground for winding up of companies is long established (see re Kurilpa Protestant Hall Pty Ltd [1946] State Reports Queensland 171, 183); more recently, the Body Corporate & Community Management Act 1997 calls for this court or a specialist adjudicator to determine what is “just and equitable” by way of relative lot entitlements of owners of lots in community titles schemes: see s 48 and Sandhurst Trustees Ltd v Condah Bay Investments Pty Ltd [2003] QDC 438, where the view was expressed at para 14, to which I adhere in the present context, that there is no single “just and equitable” solution.  Both components of the expression “just and equitable” signify “fair”.  I think that “just” has a connotation that the outcome is defensible in accordance with legal principles of the kind people would expect to be applied in a court.” 

19. [19]
    It appears to me that the court, having identified a particular order (among the relevant range of possibilities) which it considers just and equitable, then has a discretion under s. 286 (1) as to whether or not to make that order. I indicated to the parties at the end of the hearing that my strong inclination was against making any order, but that I wished to take time to reflect on that. That original view is unchanged.

20. [20]
    Apart from the “contributions” aspects in ss. 291 and 292, there are no relevant “Subdivision 3” matters for consideration, nor are there any “Subdivision 4” matters other than “other facts and circumstances … the justice of the case requires to be taken into account” under s. 309. The court notes, of course, that the defendant’s age is greater (s. 297), that superannuation entitlements presently are about equal (s. 298) and the parties’ commitments as revealed by them (s. 300). The court notes the defendant’s desire to own a home of her own (s. 303) and that the plaintiff is well on the way to achieving that goal again for himself, with the co-operation of his new partner. (Unfortunately home ownership is now denied to many; in particular, it is financially unrealistic to expect in every case to provide new homes each for a couple who formerly shared one.) Section 307 requires the court to consider the financial circumstances of the new cohabitation. Mr Galloway has not persuaded me that those require the plaintiff to be regarded as comfortably off, while the defendant is in straitened circumstances, at least if that leads to the conclusion that she ought to be subsidised in some way. The difference between their relative positions seems to me roughly the same as it was at the beginning of the relationship.

21. [21]
    While conceding that the plaintiff is able to establish superior initial contributions and that his contributions during the course of the relationship are easily shown to have resulted in enhancement of the joint asset pool, so that his case for a property adjustment order may appear stronger, I am not persuaded that any discretion ought to be exercised in favour of the plaintiff. He bears responsibility for both parties incurring substantial costs in relation to this proceeding, something which would have been avoided, had he accepted the consequences of the way in which he and the defendant elected to register their ownership, at a time before Part 19 was inserted in the Act. Further, whether or not he ought to bear blame for it, the repossession by him of the vehicle the defendant was using was extremely costly to her. Circumstances until now have worked against the defendant’s being able to put such resources as she had into purchase of a residence for herself.

22. [22]
    I have read Pierce (1998) 24 FamLR 377, in which the catchwords refer rather generously to a “10-year cohabitation”; there, the husband appealed against an order at first instance (which left him with 55%), seeking 70% of the property; he must have been pleased to be awarded 75% on appeal.  The notion of erosion of initial contributions was accepted.  Pierce is clearly special, one of the features being that the appellant had full care of two children, and received no contributions in that regard from their mother. 

23. [23]
    (There is no particular occasion here to get into the debate which has emerged as to how closely the legislation assimilates de facto partners’ relations to those of conventionally married people. Mullins J’s views are set out above; it was suggested that they represent a contrast with those expressed by Powell J in Roy v. Sturgeon (1986) 11 NSWLR 454, 464, regarding the somewhat different New South Wales legislation, noted inter alia in Turnbull v. McGregor [2003] NSWSC 899 at [49]). 

24. [24]
    Both claim and counter claim (more correctly, both applications) must be dismissed. It appears to follow from s.341 that no order about costs may be made.