DISTRICT COURT OF QUEENSLAND

INTRODUCTION

1. [1]
   These proceedings concern a dispute between the parties to a former de facto relationship in relation to property acquired during that relationship and, most particularly, a residence (“the residence”) the purchase of which was settled some six weeks prior to the termination of the de facto relationship. The residence has appreciated in value from $206,000 at purchase to $350,000 at trial. The legal interest in that property is held by the parties jointly.

2. [2]
   Each of the parties seek declarations concerning the beneficial ownership of that property or, alternatively, an order pursuant to Part 19 of the Property Law Act 1974 adjusting the rights of the parties. 

3. [3]
   The subject de facto relationship was a brief one, which commenced on an unspecified day in January 2000 and concluded on 30 June 2001, a period of only some 18 months. The de facto relationship ceased upon the plaintiff moving from the residence to a unit. For a further period of approximately one year the parties continued to see each other and have some sexual relations. At some point the plaintiff formed a relationship with another person to whom she now has a child. There was no child of the subject de facto relationship.

4. [4]
   Because of the short duration of the de facto relationship, the court’s jurisdiction to make a property adjustment order depends, relevantly, upon being satisfied that the de facto partner, who applied for the order, has made substantial contributions of the kind mentioned in s 291 or 292 and failure to make the order would result in serious injustice to the de facto partner (s 287(c)). It is relevant to consider the interests of the parties at law with respect to the asset in dispute for the purposes of a determination of whether a failure to make a property adjustment order would result in serious injustice.

5. [5]
   The residence was purchased for $206,000. That was funded, as to $149,167.20, by a financier on security of a mortgage executed by each of the parties and, as to the balance, from a capital contribution from the de facto husband’s funds.

6. [6]
   The applicant de facto wife ultimately contended that she was an equal owner of the property as to both the legal and beneficial interests and that she did not require a property adjustment order to avoid serious injustice. A property adjustment order in her favour would only be required, on her case, to the extent that it was found that she held a lesser beneficial interest.

7. [7]
   The de facto husband contended that the de facto wife held her interest on trust for him but that, if that were not so, a property adjustment order ought be made in his favour, to avoid the serious injustice to him which would otherwise result.

8. [8]
   Counsel for the de facto husband referred me to E v S [2003] QSC 378 where Mullins J said at para 76:

“In the circumstances of a short term de facto relationship as this one, the fact that the applicant made a substantial capital contribution to the purchase of the property in which both parties were registered as equal owners is sufficient to support the conclusion that there would be a serious injustice to the applicant, if a property adjustment order were not made”.

9. [9]
   In a case like this however, where there is an issue as to whether the respective parties hold their legal interests on trust for the other, it would seem necessary to look beyond the registered legal title to have regard also to the beneficial interests in considering whether there would be serious injustice were a property adjustment order not made.

THE BENEFICIAL INTERESTS

10. [10]
    While the plaintiff did not directly contribute monies from her own resources towards the purchase, the law recognises the contribution made by the joint borrowing^[1].  In the absence of a common understanding to the effect that the borrowed money should be the defendant’s alone, the loan monies applied in the purchase were the plaintiff’s as well as the defendant’s.  I am not satisfied that there was a common understanding, in this case, of the relevant kind.

11. [11]
    Where two persons have contributed the purchase price in unequal shares and the property is purchased in their joint names, there is ordinarily^[2], a presumption that the property is held on trust as tenants in common in the proportions in which they contributed to the purchase price^[3].  On this basis, the beneficial interests would be presumed to be held as tenants in common, with the plaintiff’s interest being approximately 36% (ie the proportion to the purchase price represented by half the funds obtained by mortgage finance).  In this regard, no account is taken of the de facto husband’s funding of the incidental costs of purchase^[4] or subsequent mortgage payments^[5].

12. [12]
    The plaintiff asserts that she should also be taken to have contributed some $13,000 of the capital contribution made from the de facto husband’s funds. This would bring her contribution, and presumed beneficial interest to 43%. Her claim is that there was an agreement pursuant to which she was to be taken to have contributed that sum to the purchase in lieu of repayment, or as a means of repayment, of an amount she earlier advanced to the defendant.

13. [13]
    The plaintiff’s evidence was that she had withdrawn a term deposit of some $13,000 (the proceeds of a settlement with her former husband) from which she advanced a total of approximately $9,000 to the defendant in order to assist him to meet certain debts. Her claim is that the defendant agreed to repay her the entire amount which had been withdrawn, notwithstanding that only $9,000 had been advanced to him.

14. [14]
    The defendant, for his part, acknowledges receipt of the amount of about $9,000, but denies that there was a promise to repay $13,000 or that there was any arrangement pursuant to which the plaintiff was to be taken to have contributed towards the defendant’s capital contribution to the subsequent purchase of the residence. He says the amount advanced to him was made good by other expenditure.

15. [15]
    I reject the plaintiff’s evidence as to these arrangements. The plaintiff’s case, in this regard, was initially pleaded as relating to an amount of $15,000. The reduced amount of $13,000 however, is still some $4,000 in excess of the monies advanced to the defendant. It is unlikely that the defendant would have agreed to repay the larger amount. Other than for the evidence of the plaintiff, who I found to be a less than convincing witness generally, there is no indication that the defendant either agreed to repay the greater amount or agreed to some arrangement pursuant to which the plaintiff would be taken to have contributed part of his capital contribution to the property purchase. I am not satisfied that there was any such agreement or arrangement as alleged by the plaintiff.

16. [16]
    It follows that, if the parties are presumed to hold the beneficial interest as tenants in common in the proportions they contributed to the purchase price, then the plaintiff’s interest is 36%. That presumption can however, be displaced by evidence of intention and each of the parties asserted that it was displaced in the circumstances.

17. [17]
    The defendant’s evidence, which I accept, was to the effect that it was he who searched for property, who, through a real estate agent, found the subject property and instigated its purchase, ^[6]although the purchase was a topic of discussion with the plaintiff.  He did not need the involvement of the plaintiff, who had no funds to contribute and a very modest income, in order to effect the purchase.  Nevertheless, he decided, at the plaintiff’s encouragement, to invite the plaintiff to become a joint owner having regard to their existing relationship and hopes for its continuance.  While the strength of their relationship and even possible future marriage may have been discussed at the time, I would not be prepared to find that the decision was made on the basis of any specific promise to marry or to continue the relationship.

18. [18]
    On behalf of the plaintiff it was submitted that, in the circumstances, the intention was that ownership, both legal and beneficial, be equal, notwithstanding the disparity of contribution. That appears to be consistent with the plaintiff’s evidence that he made his contributions “despite the fact that the plaintiff did not have the means to contribute anything to the purchase cost”^[7] and based his “entire decision” to put the property in joint names on his confidence that the relationship would continue^[8].  I am satisfied, in the circumstances, that the common intention was that the parties be equal owners notwithstanding the disproportionate contribution of the de facto husband.

19. [19]
    The defendant’s claim that the plaintiff’s interest is held on trust for him, focused on what was said to be the conditional nature of the decision for the property to be jointly financed and owned. Reference was made to Jobson v Beckingham^[9] where the plaintiff, while engaged to the defendant, purchased a home in their joint names as tenants in common.  All the purchase monies were provided by the plaintiff.  The parties lived in the home for a short time but never married.  The plaintiff successfully argued that the defendant held her half interest on trust for him, since his intention, at the time of the purchase, was that the defendant should have a beneficial interest conditional upon or in contemplation of marriage.  As counsel for the plaintiff pointed out however, Jobson’s case was one in which the whole of the purchase price had been provided by the plaintiff.  The relevant question was his unilateral subjective intention.  In this case, the purchase was funded partly by joint borrowing.  While it may have been unnecessary for the plaintiff to join in the borrowing in order for the finance to be obtained, I am not satisfied that there was a common intention that the funds obtained on mortgage finance should be regarded as the defendant’s alone.

20. [20]
    The plaintiff gave evidence that, even after the termination of the de facto relationship, the defendant acknowledged her contribution to the purchase and promised, in 2002, to compensate her for that contribution. The promise is said to have been made twice, once when the defendant accompanied the plaintiff and her mother on an inspection of a unit and again when he accompanied them in attending on a mortgage broker. The promise was said to have been to pay the plaintiff $30,000 to assist in the purchase of the unit on account of her contribution to the subject property. It was unclear why the amount of $30,000 would have been settled upon. While the promise said to have been made at the property inspection was pleaded by the plaintiff in her reply and was the subject of her affidavit evidence, the alleged promise made in the meeting with the mortgage broker had not been the subject of pleadings or affidavit material. The plaintiff did not call evidence from her mother or the mortgage broker. The defendant denied making such promises. I do not accept that the alleged promises were made. The rejection of the plaintiff’s evidence in this regard however, is not determinative.

21. [21]
    I have found that the common intention, at the time of the purchase, was for the parties to be equal owners notwithstanding their disproportionate contributions. While that intention was formed in the context of a then existing relationship, the subsequent dissolution of that relationship does not lead to the conclusion that the plaintiff holds her interest on trust for the defendant.

22. [22]
    That the defendant has subsequently met expenses, not least by meeting the mortgage payments (which reduced the loan, by the time of trial, to approximately $135,000) does not alter that conclusion, although that may be relevant on an equitable accounting between the parties^[10].  The plaintiff on the other hand pointed to the defendant’s continuing occupation of the premises which, it was claimed, was to the exclusion of the plaintiff, thereby raising a liability to pay an occupation rent, to be taken into account on any accounting.  It was suggested that the plaintiff was effectively excluded from the property as a consequence of domestic violence.  There was conflicting evidence about the incidence of physical and verbal abuse and the party responsible for that.  While I accept that there were some confrontations, including physical confrontations, between the parties, I am satisfied that the decision of the plaintiff to move out, and remain out, of the residence was as a consequence of the general breakdown of the relationship.  I do not accept that it was a case of effective exclusion by reason of domestic violence.

SERIOUS INJUSTICE

23. [23]
    Given my conclusions with respect to the legal and beneficial interests of the parties, there is no occasion for making a property adjustment order in favour of the plaintiff. On the other hand, I am satisfied that a property adjustment order in favour of the defendant is called for. He made substantial contributions which are not fully or adequately reflected in his legal or beneficial interest in the residence. Even with the benefit of an equitable accounting in relation to expenditure, there would be a serious injustice were an order not to be made in his favour. He is a de facto partner who, in the course of the proceedings, was given leave to amend his pleadings to seek a property adjustment order^[11].  I am satisfied that he is entitled to such an order.

PROPERTY ADJUSTMENT ORDER

24. [24]
    The parties had each been in relationships prior to the commencement of the subject relationship. Each received monies from settlements associated with those relationships. In the case of the plaintiff, she received the $17,438.94 which, after paying some debts incurred during her previous relationship, resulted in the approximately $13,000 referred to previously. In the case of the defendant, he received an amount of some $86,446.72. The parties had various chattels otherwise, which it is unnecessary to detail.

25. [25]
    At the start of the relationship the plaintiff had an infant daughter and the defendant had three children, the oldest of which, a daughter, was aged eleven years. During the course of the relationship the plaintiff’s daughter and, for part of the time, the defendant’s eldest daughter, resided with the parties.

26. [26]
    For about one month at the commencement of the relationship the parties resided in the home which the plaintiff had occupied with her former de facto husband. The mortgage payments at that time were being met by the plaintiff’s former de facto husband. Thereafter, until acquisition of the subject residence, the parties lived in rental accommodation. The rental payments were met by the defendant. There were contributions by each of the parties to expenses otherwise, but I am satisfied that it was the defendant who made a substantially greater financial contribution for expenses throughout the relationship. As noted earlier, the plaintiff advanced the

defendant an amount of approximately $9,000 to meet certain of his debts.  Upon the conclusion of the relationship the defendant paid the plaintiff’s rental bond of $880.  I do not accept that there was an agreement that the $9,000 was taken to be repaid by the defendant’s contributions, but his contributions are of relevance to an assessment under the Property Law Act.

27. [27]
    Non financial contributions to family welfare were made by each of the parties. I am satisfied that the plaintiff’s contribution in this regard was not substantially greater than that of the defendant.

28. [28]
    The contribution of the parties to the residence was disproportionate.

29. [29]
    As noted earlier, I accept the defendant’s evidence that he was the instigator of the property purchase. From his own funds he contributed $62,846.29, including payment for the building and pest inspection report and legal fees and outlays on the conveyance. Before the parties moved into the residence, the defendant paid a further $1,144 for the costs of sanding and polishing the timber floor boards. Subsequently he funded a kitchen renovation (approximately $4,500) and the installation of a dishwasher (approximately $900). Further, I accept that the defendant has utilised his skills and labour in carrying out renovation work on the residence.

30. [30]
    Other than for two mortgage payments totalling $364.86 paid by the plaintiff prior to her departure from the residence and an amount of between $507.74 (as admitted by the defendant) and $1,647 (as asserted by the plaintiff) paid by her towards renovation expenses, it is the defendant who has met the mortgage payments, rates and other expenses in relation to the property^[12].

31. [31]
    I accept that the plaintiff gave some assistance in the renovation works and about the residence generally by, for example, assisting in the stripping and repainting of walls, but her contribution was, I consider, limited.

32. [32]
    The plaintiff relies on the contribution she made by joining with the defendant in securing the borrowings to purchase the property, thereby exposing herself to liability to the financier.

33. [33]
    That the plaintiff joined in the borrowing, thereby exposing herself to liability, was a product of a decision to purchase the property in joint names which, I am satisfied, was encouraged by her. While there was an attempt to suggest that an interest in the property could have been conferred upon her without making her a party to the mortgage, it appears that such an arrangement was never considered. The defendant had difficulty distinguishing between the conveyance of the property and the mortgage obligation. It is likely that a financier would, in any event, require the participation of both registered proprietors where property is jointly owned.

34. [34]
    It is unlikely that the plaintiff’s participation significantly affected the defendant’s ability to obtain mortgage finance to purchase the residence. The plaintiff had a very limited income. Her taxable income in the relevant financial year was $5,744 and was no higher in the preceding year. She received social security payments, which were affected by her living with the defendant (rather than being a sole parent) and some child maintenance payments. She had no capital sum to offer. The defendant, on the other hand, although having a modest taxable income^[13], was the operator of his own business, had been making regular rental payments from his own resources and was able to offer a very substantial capital contribution, thereby increasing the purchaser’s equity in the property and reducing the mortgagee’s risk of having inadequate security. 

35. [35]
    While it is true that, in participating in the mortgage finance, the plaintiff exposed herself to liability in the case of default, her obligations have not been called upon and the existence of that contingent liability did not impact upon her ability to invest otherwise. In 2002 she purchased a unit with the benefit of mortgage finance. Her mother is a joint owner of the unit and is also liable under the mortgage finance, although it is the plaintiff who meets the mortgage payments and other expenses. It appears to be treated, in substance, as the plaintiff’s unit. The defendant’s continuing payment of the mortgage instalments on the subject residence meant that the plaintiff proceeded to purchase the unit without having to also make payments with respect to the subject residence. Further, the loan application form (exhibit 4) reveals no mention of the property purchased jointly with the defendant or any interest or liability, contingent or otherwise, in that regard.

36. [36]
    I accept the submission by counsel for the defendant that the assessment of a contribution of this kind under Part 19 under the Property Law Act does not necessarily result in the same conclusion as would flow from an application of the principles in Calverly v Green.  I do not consider that it would be appropriate to value the financial contribution of the plaintiff in this case by reference to an equal share of the amount raised by mortgage finance^[14].

37. [37]
    In assessing the plaintiff’s contribution it is relevant to have regard to her limited mortgage payments, contribution to renovation costs^[15] and limited renovation work.  It is also relevant, to an overall assessment of financial contribution, to have regard

to the previously mentioned sum of approximately $9,000 advanced by her to the defendant.  While I have rejected the suggestion of an agreement for that to be regarded as a direct capital contribution to the purchase of the residence, it is a contribution without which the defendant might not have had the ability to make the same level of capital contribution to the purchase of the residence.

38. [38]
    It is not suggested that the defendant made any particular contribution towards the plaintiff’s subsequent purchase of a unit jointly with her mother^[16].  The parties retention of their respective property otherwise is not in dispute. 

39. [39]
    In determining what would be just and equitable overall, having regard to the contributions of the parties, matters of particular importance are the brevity of the relationship, the disproportionate financial contributions of the defendant to the joint expenses generally, and the purchase of the residence in particular, As well as the $9,000 advanced by the plaintiff to the defendant. Overall, I consider it would be appropriate, having regard to the respective contributions, if a property adjustment order were made in an amount which was equivalent to an apportionment of the net value of the residence as to 10% to the plaintiff and 90% to the defendant with the parties to retain their respective property otherwise. That apportionment should be done on the basis of the net value of the residence at trial.

40. [40]
    Before an order is made in those terms however, it is necessary to consider whether there are considerations requiring some further adjustment under sub subdivision 4.

41. [41]
    The plaintiff is forty-eight years of age and is a self employed fencing contractor. He is in reasonable health, although it is likely that, as he becomes older, he may experience some greater difficulties with physical activities associated with his

employment.  His declared income is relatively modest, although that is affected by the level of his business expenses.  He lives in the residence with two of his children and provides child support in respect of his son, who resides with his former wife. He has not entered into a new relationship.  He enjoys an appropriate standard of living.  The short relationship did not have an effect on his earning capacity.

42. [42]
    The plaintiff, who has most recently been employed as an optical dispenser, is thirty-seven years of age and has a longer remaining working life. That employment has recently been interrupted by the birth of her second child. She is now living with the father of that child while renting out the unit which she jointly owns with her mother. The difference between the rental income and the mortgage payments is only in the order of $5 per week. The plaintiff claims that she is only living with the father of her most recent child while she remains on maternity leave so that she can obtain rental payments to cover the mortgage payments. She continues to receive child support from the father of her first child. She does not claim child support from the father of her second child at this stage, given the support he is otherwise providing her during her period of maternity leave. She appears to enjoy an appropriate standard of living. The subject relationship, which was short, did not adversely affect her earning capacity.

43. [43]
    Overall, I do not consider that it is appropriate to make any further adjustment.

44. [44]
    I will invite the parties to consider the appropriate terms of order, given these reasons.