DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   The plaintiff seeks an adjustment of property interests pursuant to Part 19 of the Property Law Act 1994 (PLA) consequent upon the breakdown of the de facto relationship which, the parties agree, commenced on 13 August 1991 and persisted until 15 August 2001.  The amended statement of claim also contained a prayer for a declaratory relief on the basis of a constructive trust, however that claim was abandoned at trial.

2. [2]
   In such proceedings, the Court may make such order as it considers just and equitable^[1].  In deciding what is just and equitable the Court must consider the matters mentioned in sub-subdivision 3^[2].  Sub-subdivision 3, in turn, requires the Court to consider a range of matters including financial and non-financial contributions made directly or indirectly to property or financial resources^[3].  Sub-subdivision 3 also requires the Court to have regard to the matters mentioned in sub-subdivision 4, to the extent they are relevant in deciding what order adjusting interests in property is just and equitable^[4].  Sub-subdivision 4 sets out a range of specific matters in ss 297-308 and also requires the Court to consider any fact or circumstance the Court considers the justice of the case requires to be taken into account^[5].

3. [3]
   The objectives of the introduction of Part 19 were discussed in E v S [2003] QSC 378 at para 30 which I respectfully adopt^[6].

Property and Financial Resources

4. [4]
   Ultimately, there was little disagreement about the identity and value of the assets and financial resources of the parties which I find to be as follows:

5. [5]
   The total net value of the property (excluding the superannuation financial resources) is $516,899.75. The appropriate document to effect enlargement of the Court’s jurisdiction was filed on 2 March 2004^[7].

6. [6]
   The only significant controversy in relation to the identification and valuation of property related to the plaintiff’s present equity in the property at Kilby Street, a home she shares with her new husband. Her share of the current equity is as set out above. However, it was submitted for the defendant that a notional figure of $36,000 should be used to take account of the fact that there had been a further advance “related to among other things the acquisition of an asset outside the pool (her husband’s care) and as a matter of justice and equity between the parties, the lower mortgage ... should be adopted”.   There is, however, no need to dwell on this subject.  As the submissions for the defendant conceded, “The defendant cannot claim any contribution to the Crestmead property owned by the plaintiff and her husband.”  There was some argument as to whether, in dealing with the matter of contribution, the global assessment should be expressed, in percentage terms, by reference to the value of the property including the Crestmead property or the value excluding it.  That is a futile debate since while, depending upon which approach was taken, there might be a variation in the percentage and in the value to which that is applied, the same dollar amount would result either way.  The defendant conceded that it would be open to the Court to adopt the approach contended for by the plaintiff, that the value of the Crestmead property be left out of account in determining the respective percentage contribution, and that is what I propose to adopt as the more convenient approach in this case.

7. [7]
   The other item which warrants mention is the defendant’s tax liability. That liability relates to part of the income which has been received from the use of the property at Trouts Road as a boarding house for foreign students. At trial, there was a deal of evidence about the extent of undeclared income from that source. At the conclusion of the evidence I asked the parties why I ought not refer the matter of the undisclosed income to the proper authorities. I gave the parties time to consider the position and subsequently the defendant made disclosures to the Australian Tax Office which issued amended assessments for the years 2000-2003 but advised that it did not propose to levy amended assessments for preceding years, given that the assessments were of some age and, it was concluded, that the tax shortfalls in those years was not due to fraud or evasion. Consequently, the parties agreed that the liability which should be taken into account, having regard to the period of the relationship, is that stated above. The attitude taken by the ATO however, does not determine the extent of the income in the earlier years nor does it bind me with respect to the extent of income received in the later period.

The Rival Contentions

8. [8]
   The plaintiff’s ultimate contention was for an adjustment on the basis that the plaintiff should retain her interest in her present home and receive the equivalent of a 50% share of what remains. The defendant’s contention was that the adjustment should be on the basis of the defendant retaining the equivalent of 75%, comprised of 70% on account of contribution and 5% on account of the sub-subdivision 4 factors with the result, it was contended, that in addition to retaining her property and financial resources (superannuation), the defendant should transfer ownership of the Barina motor vehicle to the plaintiff and pay the further sum of $75,094.00^[8].

Sub-Subdivision 3 Factors

9. [9]
   The initial contribution to the property of the relationship was substantially that of the defendant. The plaintiff introduced no assets of significance. The defendant introduced a block of flats at Nelson Street, Wooloowin which had been purchased earlier that year, by a contract which settled on 8 March 1991, for $150,000.00 with the assistance of a loan, secured by mortgage, of $108,750.00. The defendant also received, in June 1992, the sum of $41,540.37 from his then solicitor’s trust account following a property settlement with his previous wife. In addition to that, he claims to have had a further $7,000.00 which was the subject of dispute. I accept his evidence in that regard. He said he spent these sums on renovations to the Trouts Road property and share portfolios for himself and the plaintiff.

10. [10]
    The asset of greatest value acquired during the course of the relationship and that which currently comprises the major part of the value of the combined property ‘pool’ is the property at Trouts Road which was purchased, by the defendant in his sole name, on 23 August 1992 for a price of $120,000.00 of which the defendant provided the $3,500.00 deposit with the balance purchase price of $116,338.27 being borrowed in conjunction with the refinancing of the Nelson Street property. All up, the refinancing was in the sum of $241,000.00 secured over both properties on terms requiring interest only repayments with the principal being repayable after three years. In 1995 that debt was again refinanced. In 1997 the Nelson Street property was sold for $187,500.00. The net proceeds received on settlement on 27 June 1997 were applied to reduce the mortgage account leaving a balance of $56,027.16, which was then paid out by 23 November 2000.

11. [11]
    Following the purchase of the Trouts Road property, the defendant spent approximately $40,000.00 on renovations.

12. [12]
    I accept the plaintiff’s submission that the purchase of the property, and its operation as a boarding house was part of a joint endeavour of the plaintiff and the defendant to which they plaintiff made a substantial non-financial contribution. Indeed, as the defendant accepted, the idea came, at least in part, from the plaintiff and her family who had some experience in hosting Asian students. The search for the property was described by the defendant as a “dual effort”.

13. [13]
    In addition to the bedroom occupied by the plaintiff and defendant, there were five other bedrooms available for board, although not all of them were always occupied. It seemed to me that the defendant was somewhat reluctant to acknowledge the full extent and duration of the boarding activities, but it is not now possible to calculate the amount of income or profit with any precision. I am satisfied, however, that there were boarders on a fairly continuous basis from 1992, save for one period of about six months, and the number of boarders at any one time was typically of the order of three or more paying board which varied, over time, from about $120 per week to $160 per week each (the board is now $170 per week). There were expenses associated with the boarding business, however it would seem that the defendant has a careful eye when it comes to expenses.

14. [14]
    I am satisfied that the boarding-house business provided a substantial positive financial contribution. I am also satisfied that each of the parties made non-financial contributions to this endeavour. The non-financial contributions of the plaintiff, who, for the most part, was otherwise unemployed, were understandably greater than those of the defendant. While there was, as one might expect in cases such as this, some disagreement as to the respective contributions, I am satisfied that the plaintiff’s non-financial contribution was substantially greater (of the order of double) that of the defendant, which is significant, particularly given the length of the time over which the contribution was made.

15. [15]
    During part of their relationship, the defendant also owned and operated the flats which he brought to the relationship. It is evident however, that this property did not make anything like the contribution that was made by the Trouts Road property. Indeed, the defendant accepted that this investment was a “dud”.  It would appear that the units operated at a loss.  While, as counsel for the defendant pointed out, those losses should be seen in the context of the tax deductions which would have come with the losses and the modest capital gain which was realised in 1997^[9], I am satisfied nevertheless that investment did not make a substantial contribution.  Indeed, the defendant’s evidence was that it made “absolutely nothing” and that “yes, at that particular time I sold it and I made a loss and I was glad to let go of it.  I could go into all the reasons why it was bad but I don’t want to waste the court’s time”.  He accepted that it was a drain on resources.

16. [16]
    As has already been noted, the defendant maintained fulltime employment which he estimated, over the period, to be $38,000 per annum on average. It was substantially the income from his salary and the income from the Trouts Road property which financially supported the couple and allowed them not only to meet day-to-day and other expenses (such as holidays and purchases) but also to eliminate the indebtedness on the Trouts Road property. It should be noted that, for some time, the plaintiff undertook some work although, as she concedes, she did not work for wages during most of the relationship. She described her employment as follows:

“At the commencement of the relationship I was not working.  Throughout 1992 I did a small amount of piecemeal work for wages.  I next worked for wages in 1996 for a short period of time with the Brisbane Strikers and then a few months later I commenced part-time work with the Salvation Army.  In the last year and a half of the relationship, that employment became fulltime.”

17. [17]
    The defendant, for his part, was ultimately retrenched from his employment on 31 December 2000 and received a retrenchment and other leave entitlements payment from his employer, referrable to his employment from the start date of 5 August 1991, of $44,654.49, net of tax, on or about 1 January 2001. He was then employed, on a casual basis, which continued until the end of 2003.

18. [18]
    I am satisfied that the financial contributions to property or financial resources were substantially those of the defendant. I am further satisfied that both parties made substantial non-financial contributions to property or financial resources and to the welfare of each other, although the plaintiff’s non-financial contributions, which extended over the decade of the relationship, were greater than those of the defendant.

19. [19]
    In arriving at an appropriate adjustment, the Act requires consideration of contributions to both property and financial resources, as well as to family welfare, in arriving at appropriate orders adjusting the property interests. That is what I have done. It probably matters little then whether the global contribution is expressed as a percentage of the value of the property, regard having been also given to the contribution to financial resources, or whether it is expressed as a different percentage by reference to the net value of the property and the financial resources. The result is the same.

20. [20]
    In my view, the assessment of contributions is in favour of the defendant. While I accept that the purchase and operation of the property at Trouts Road was a joint endeavour, I do not regard the contribution of the parties, overall, as being 50:50 as was submitted for the plaintiff. I assess the plaintiff’s contribution, expressed as a percentage of the net value of the property and the financial resources (excluding her equity in the property at Kilby Street) at 40%.

The Sub-Subdivision 4 Factors

21. [21]
    In addition to the matters specified in sub-subdivision 3, the Court is required to consider the matters mentioned in sub-subdivision 4 to the extent that they are relevant in deciding what order adjusting interests in property is just and equitable^[10].

22. [22]
    It is not every case involving some relative disparity which will necessarily call for a further adjustment in order to arrive at an order which is just and equitable in the circumstances. Nevertheless, in the present circumstances, I consider that a modest adjustment in favour of the defendant is called for and I adopt an amount equivalent to 2.5%.

Conclusion

23. [23]
    There should be an adjustment in property interests such that, excluding the value of the plaintiff’s equity in Kilby Street, the value of the plaintiff’s interests is the equivalent of 37.5% of the net value of the property and financial resources. That equates to $193,499.91. Given that she retains the proceeds of shares, cash at bank and a motor vehicle with a combined value of $20,088.96, that requires an adjustment of a further $173,410.95. There will be an adjustment to that value. I will invite the parties to make submissions as to the terms of order.