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RFB v UEB[2005] QSC 178

 

SUPREME COURT OF QUEENSLAND

PARTIES:

FILE NO/S:

Trial

PROCEEDING:

Originating Application

ORIGINATING COURT:

DELIVERED ON:

8 July 2005

DELIVERED AT:

Brisbane

HEARING DATE:

27 and 28 April 2005

JUDGE:

White J

ORDERS:

  1. The monies in the Short, Punch and Greatorix trust account in the sum of $51,599.00, or such other sum as may be there at the time of division, be divided equally between the parties.
  1. The monies standing to the credit of the parties in the UB Unit Trust when recovered from the settlement of the sale of the premises at 80-82 Upton Street, Bundall be divided between the parties
  1. as to the loan account after the payment of the balance amount owed to Rapcivic Pty Ltd 35% to Mr B and 65% to Ms B;
  1. as to the Superannuation Fund in the percentages recorded in the accounts of the Superannuation Fund inclusive of the residual rental received.
  1. The chattels described in Exhibit 7 be divided in the manner agreed between the parties and as set out in the letter of 18 May 2005 from Mr B’s solicitors and attached to these orders.
  1. The parties otherwise retain their respective real and personal property free of all claims from each other.

CATCHWORDS:

FAMILY LAW AND CHILD WELFARE – DE FACTO RELATIONSHIPS – LEGISLATION – property settlement under Part 19 of the Property Law Act 1974 (Qld) – where  de facto relationship for 19 years – initial contribution of both parties – proportion of financial and non-financial contribution throughout relationship – extent of applicant’s involvement in respondent’s business – proportion of parties’ contribution to properties bought, constructed and maintained – just and equitable property distribution

Property Law Act 1974 (Qld), s 255, s 286, s 289, ss 291-293

Family Law Act 1975 (Cth), s 90MC

Practice Direction No 33 of 1999Property Law Act s 289

E v S [2003] QSC 378, cited

JEL and DDF [2000] FAM CA 1353, cited

Mallet v Mallet (1984) 156 CLR 605, cited

McLay (1996) FLC 92-667, cited

Norbis v Norbis (1986) 161 CLR 513, cited

S v B [2004] QSC 080, cited

S v B [2004] QCA 449, cited

COUNSEL:

Mr C Cooper solicitor for the applicant

Mr I Erskine for the respondent

SOLICITORS:

Primrose Cooper Cronin Rudkin for the applicant

Peter J Sheehy for the respondent

[1] The applicant has applied to the court by originating application for declarations and orders pursuant to Part 19 of the Property Law Act 1974 (“the Act”). 

[2] By order of the court the parties have filed pleadings and otherwise proceeded as if the matter was commenced by claim although no formal order to that effect seems to have been made.  The applicant has tended to describe the parties as “plaintiff” and “defendant” while the respondent has retained the description “applicant” and “respondent”.  It will be convenient to refer to them as “Mr B” (applicant/plaintiff) and “Ms B” (respondent/defendant).

[3] The parties have agreed in earlier orders of the court made by consent to the sale of property and equal division of certain of the proceeds of those sales.

[4] The final position taken on behalf of Mr B in submissions is for orders that would give him an equal share in the remaining undistributed assets with Ms B.  She maintains an entitlement to 65 per cent to Mr B’s 35 per cent of those assets. 

[5] Mr B and Ms B lived together in a de facto relationship for some 19 years commencing in 1983 and ending in 2002.  Mr B is 58 years and Ms B is 56 years.  They are both in good health.  They both have the capacity to earn an adequate income.  There are no children of their relationship.  Ms B has one child, A, from a previous relationship born in 1971 who was about 13 years when he commenced living with the parties and lived with them thereafter for about four years, returning again in the final period of the cohabitation.  Some years ago he was diagnosed with bipolar disorder and that condition and his mother’s concerns for his well-being seem to have been a factor in the separation of the parties.  Ms B lives with A and her now de facto partner in rental accommodation.  Mr B, so far as is known, has not entered into another relationship.  He, too, lives in rental accommodation.

[6] The resolution of this matter has been hampered by a lack of supporting documentation.   

[7] It is uncontroversial that the relationship falls within the provisions of Part 19 of the Act so that declarations and orders may be made.  There is no co-habitation or separation agreement to be considered.

[8] Part 19 was inserted into the Act in 1999 by the Property Law Amendment Act (No. 89 of 1999), a main purpose of which was to facilitate the resolution of financial matters at the end of a de facto relationship, s 255.  This may be achieved in a number of ways pursuant to the provisions of the Act without the need to depend on the law relating to contracts, trusts and so on as was the case previously.  Part 19 in many respects is reflective of the provisions in the Family Law Act 1975 (Cth), see Explanatory Notes to the Amending Act and the Attorney-General’s Second Reading Speech, Hansard, 23 November 1999 p. 5146. 

[9] Relevantly for these proceedings, the court may make orders adjusting property interests to ensure a just and equitable property distribution at the end of a de facto relationship, s 286.  To that end the court must consider the financial and non-financial contributions made directly or indirectly by or for the de facto partners to the acquisition, conservation or improvement of any of the property of either or both of the de facto partners, and their financial resources, s 291.  The court must also consider the contributions, including any homemaking or parenting contributions, made by either of the de facto partners to their welfare and any children and the effect of any proposed orders on the earning capacity of the de facto partners, ss 292, 293, as well as the de facto partners’ age, health and other matters set out in subdivision 4.

[10] While the starting point must always be the words of the statute, in construing expressions such as “non-financial contribution” and “homemaking contribution” in the absence of a body of decisions in this jurisdiction the court may obtain assistance from the jurisprudence of the Family Law Court and other legislative regimes with similar provisions when making a property adjustment order, E v S [2003] QSC 378; and S v B [2004] QSC 804, on appeal [2004] QCA 449 are decisions of the Supreme Court drawing on Family Law Court cases.  This is so because the Queensland legislation was based on the Queensland Law Reform Commission draft bill which was modelled on, although not always analogous with, the relevant provisions in the Family Law Act 1975 (Cth) concerning the alteration of property interests. 

[11] It is clear that the jurisdiction to make an order that is just and equitable confers a wide discretion on the court, Mallett v Mallett (1984) 156 CLR 605.  In doing so the court must have regard to the various matters set out in subdivisions 3 and 4 of the Act as mentioned above.  General principles have emerged from the numerous reported Family Law Act cases as to what is encompassed in the expression “just and equitable”.  Apart from the High Court decisions of Mallett v Mallett and Norbis v Norbis (1986) 161 CLR 513 there are a number of Full Court of the Family Court decisions which elaborate aspects of the requirement to make orders which are just and equitable.  Mr Cooper referred to JEL and DDF [2000] Fam CA 1353 where Holden and Guest JJ, with whom Kay J agreed, discussed applicable principles at paras 123-152, usefully summarised at para 152, and McLay (1996) FLC 92-667.  It is unnecessary to elaborate those principles save to observe, if it be necessary, that equality is not a necessary concomitant of justice and equity although it may be, and often is.

[12] As the facts here will show this is not a case about seeking to value in monetary terms the relative contributions of a homemaker compared to those of a breadwinner.  Both parties had established careers at the commencement of the relationship and both continued working throughout but Ms B’s endeavours produced by far more material benefits than did Mr B’s which, inter alia, allowed for the employment of domestic assistance.  But much depends on an assessment of Mr B’s contribution both financially and non-financially to the assets built up during the period of the relationship.  There are conflicts in the evidence between Mr B and Ms B principally over those contributions.

[13] The parties have reached some agreement about the disposition of some of the assets but, notwithstanding mediation, have been unable to resolve how the balance of the assets is to be divided.

[14] By orders of Byrne J made 2 May 2003 and Atkinson J made 15 July 2004 the disposition of the proceeds of sale of two properties at 19 and 28 Intrepid Drive, Mermaid Waters of which Ms B was the registered proprietor was agreed.  The net proceeds were distributed equally between the parties in the sum of $350,000 each.  The sum of $51,599.75 was placed in the trust account of Short, Punch & Greatorix to await distribution.  The remaining assets comprise Ms B’s half share in a unit on Chevron Island with an estimated value of approximately $127,000, a loan to the UB Unit Trust of $430,728 and the Superannuation Fund valued at $2,028,699 (depending on the completion of a contract in January 2006 for the sale of commercial property at Bundall owned by Ms B as trustee of the UB Unit Trust the units which are owned by the Superannuation Fund). 

[15] Both Mr Cooper for Mr B and Mr Erskine for Ms B agree in their submissions that this court, unlike the Family Court of Australia, has no power to split superannuation in the context of its powers to make orders varying interests in property.  Section 286 of the Act provides that a court may make any order it considers just and equitable about the property of either or both de facto partners adjusting their interests “in the property”.  A distinction is drawn between “the acquisition, conservation or improvement of ... the property of either or both of the de facto partners” and their “financial resources”, s 291(1).  “Financial resources” include “a prospective entitlement under a ... fund ... under which superannuation ... benefits are provided ...”, s 263(a).  This should be contrasted with s 90MC inserted into the Family Law Act in 2001 extending the meaning of matrimonial cause so that

“[a] superannuation interest is to be treated as property for the purposes of (ca) of the definition of matrimonial cause in section 4.”

The object of the various amendments in the Commonwealth legislation is to allow splittable payments in respect of a superannuation interest to be allocated between the parties to a marriage and has effect notwithstanding anything to the contrary in, inter alia, a trust deed or other instrument.

[16] Since the Unit Trust will be wound up on the sale of the Bundall property and a total distribution to the Superannuation Fund will be made of an estimated $2,028,699 to be distributed in the percentages 52 per cent to Ms B, 35 per cent to Mr B and 13 per cent to A, if appropriate, adjustments can be made.  There is no suggestion that there should be any adjustment to A’s entitlement.

Preliminary point

[17] Section 289(2) of the Act provides that a court may make a property adjustment order in favour of a party only if that party has, in accordance with s 289(1), disclosed the party’s financial circumstances in the way prescribed by the rules of court or a practice direction.  The expressed purpose of Supreme Court Practice Direction No 33 of 1999 is to ensure compliance with s 289.  It provides, relevantly, that

“1.The applicant for a property adjustment order must serve on the other party, within 10 days after filing the application, a signed statement fully disclosing that party’s financial circumstances and, in particular:

(i) details of all income earned in the 3 years immediately preceding the making of the application, including:

(a)the name of each employer;

(b)the period of employment with each employer;

(c)the capacity in which the party was employed by each employer;

(d) the party’s taxable income during each of the last 3 tax years;

(ii)if the party is self employed – details of that party’s nett income in the 3 years immediately preceding the application.  (Financial statements establishing gross income and expenditure incurred in earning gross income must be available for immediate inspection at the other party’s request); ...

3. Nothing in this Practice Direction shall limit a party’s obligation to disclose in full that party’s financial circumstances relevant to the application.”

[18] It is contended that Mr B’s statement of financial circumstances filed 14 March 2003 is seriously deficient in as much as he failed to disclose financial records for himself and related entities.  The List of Documents filed on 19 February 2004 is sparse in its reference to that class of document – two entries only, being a statement of income for 17 April 2003 – 31 December 2003 and a commission invoice for what is described as the period 21 November 2002. 

[19] In the further and better particulars to his amended statement of claim filed on
13 January 2004 Mr B provided the following particulars about his employment:

“The Applicant does not have available to him the dates and specifics in respect of his employment because all documentation has either been destroyed or is in the possession of the Respondent. 
He is aware of the following employment

(a) Ray White Surfers Paradise – Real Estate Sales Person

(b) PRD Surfers Paradise – Real Estate Sales Person

(c) Intergold Real Estate – Barry Sproule Real Estate

(d) D & R Real Estate – Principal

The Applicant will provide further particulars if and when the information becomes available to him.”

[20] Mr B’s evidence was that when he was excluded from the home which he had shared with Ms B in February 2003 he was thereby precluded from access to his papers although he conceded that he kept some in his professional offices and some were with his accountant.  Ms B has exhibited two or three of Mr B’s financial documents to her affidavits which she had not previously disclosed as being in her possession which lends some credence to his claim that he did not have access to his records.  He has not, if his evidence be accepted, so far as the evidence reveals, sought access to his records through his solicitors for the purpose of complying with his obligations pursuant to the Practice Direction.  Neither has he sought those records which are available from other sources such as his accountant.  It must, however, be noted that the parties over a lengthy period have attempted to resolve their financial differences and this may explain, to some extent, his inaction.

[21] In his most recent affidavit of 18 April 2005 in which he consolidates and brings up to date his previous affidavits Mr B makes reference to his current financial position but exhibits no documents.

[22] Mr B said in cross-examination that he had not disclosed any tax returns for himself or any company through which he operated his business for the duration of the relationship because he had no access to them but eventually said that he had lodged no tax returns because they or he did not earn sufficient income to need to do so.  Other evidence from him suggested, at least for some years, that that statement was incorrect.  He had lodged no tax returns since separation but said they were in draft form with his accountants and were not produced.  Mr B’s explanation for failing to disclose financial documents was obtained only by extensive questioning.  There were documents available to be disclosed but he chose not to do so.  Mr B’s allegation that many documents were lost to him was non-specific and vague – like much of his evidence about his own business interests – but it is not, in this case, a sound basis for declining to make an order pursuant to s 289.  These are, however, matters which will necessarily impact upon the evaluation of his contribution to the accumulation of assets before and during the relationship. 

History of the relationship

[23] Prior to the commencement of the relationship Ms B had an established interior design business in Sydney.  She and her then partner decided in about 1977 to expand their business operation to the Gold Coast.  As I understood the evidence, Ms B thereafter had a business presence and clients at the Gold Coast but continued to work and reside in Sydney until the early 1980s.  Mr B had come to Australia from New Zealand at some unspecified time and was a registered real estate agent at the commencement of the relationship.  He was employed on a commission basis and subsequently operated his own businesses which included the purchase and sale of rent rolls and some hotel brokerage work, the latter revealed by a witness who had worked for Mr B, not from him. 

[24] The parties commenced cohabitation in 1983.  They never held any joint bank account during their relationship or owned property jointly.  It was Ms B’s understanding that they would operate their own businesses separately.  Mr B did not disagree with this understanding even though, as time passed, he became involved in Ms B’s business.  That Ms B was a successful interior designer with marketing skills is not in dispute and is evidenced by her work on a great many multi-apartment high rise developments at the Gold Coast, Brisbane and other places in Queensland.  Initially, Mr B introduced Ms B to new clients through his work as a real estate agent but I conclude that she was not as dependant upon him for introductions as his affidavit evidence would suggest.  Her business generated significant profits enabling the parties to live very well, drive prestigious cars and take many overseas trips often related to her business.  They built a luxurious house together at 19 Intrepid Drive, Mermaid Waters and lived in it for most of their relationship.  A showroom and offices were built in the late 1990’s in Upton Road, Bundall to advance the interior design business and to engage in wholesale and retail furniture sales. 

[25] Through much of the relationship Mr B operated as a real estate sales person.  Little, if anything, is known of the success or otherwise of his businesses.  Gradually, Mr B contends, he devoted more of his time to Ms B’s business – he is not an interior designer – in practical ways.  In about 1999, although the year is controversial, he took over a management role in the business for several years while Ms B attended to family matters and suffered from ill health although still worked in the business.

[26] The parties separated in about May 2002 but continued to reside together until November 2002.  A returned to live with his mother in September 2002 but relations between him and Mr B deteriorated to such an extent that Ms B left the home with A on the first of November 2002 and moved into rental accommodation after some exchange of correspondence via the parties’ solicitors.  Mr B continued to reside in the home until 12 February 2003.  During that period he continued to use a Mercedes Benz 4WD leased by L Pty Ltd, Ms B’s business company, and a Porsche motor car then registered in Mr B’s name but originally registered to the company.  He did not contribute to the repayment of any indebtedness, including outgoings during this period save for an amount of about $180 per week. 

[27] Ms B through her solicitors sought Mr B’s cooperation to reduce the substantial level of debt of the business by the sale of various properties and the Mercedes Benz 4WD.  Mr B through his solicitors indicated opposition to the sale of the home and a desire to have it transferred to him.  On 12 February 2003 police were involved in seizing from the home certain unlicensed weapons owned by Mr B as a collector.  He was arrested, the locks changed on the house at the direction of Ms B and the Porsche and Mercedes Benz 4WD removed from his possession.  His clothes and other possessions were put into storage which he retrieved in due course. 

[28] Mr B has returned to real estate work.  Ms B has closed her business for the time being but contemplates engaging in interior design consultancies in the future.  It is not suggested that any of the additional factors found in subdivision 4 of the Act need be agitated.  Most of the real property has been sold or is under contract and, as mentioned, orders have been made by the court by consent of the parties concerning the distribution of some of the proceeds of sale of the properties.

Initial Contribution

[29] The parties are in dispute about what each brought by way of assets into the relationship.  There is little documentation to support the disputed assertions.  Although the relationship has been of considerable duration, Mr B’s contribution from his assets is important because he claims to have used the proceeds of their sale, estimated at nearly half a million dollars, to build the home at Mermaid Waters.  Ms B contends that his contribution was no more than $150,000 to $200,000 of the approximately $400,000 it cost to build the house.

[30] There are discrepancies in the value Mr B puts on his property in his amended statement of claim and in his most recent affidavit.  He deposes that in the first two to five years of cohabitation he sold a number of properties which he owned at the commencement of the cohabitation.  A house property and vacant land at 3 and 5 Brigantine Drive, Birkenhead, Auckland, New Zealand, respectively, were pleaded to have a combined value of AU$240,000 in the amended statement of claim filed on 16 June 2003.  In his most recent affidavit of 18 April 2005 Mr B deposed in para 12(a) that his net equity in the two properties was A$140,000 but in para 26(a) he deposed that he received approximately $245,000 net of sale costs from the sale of those two properties.  In cross-examination he said that he was fairly sure he had an equity in the land of A$70,000 and in the house of A$140,000 making a total of A$210,000 – a different figure again.

[31] Mr B said he was assisted in this most recent recollection by recent property searches which he had conducted of the New Zealand Land Register.  He said:

“... also it’s only in the last three weeks that I did the – the special searches in New Zealand to find out exactly the sale prices and that’s happened between the two affidavits.”  t/s 37

Mr B was handed a copy of some documents which he said had brought back memories of the correct sale figures when he undertook the searches.  Those documents are copies of the North Auckland Land Register in respect of Lots 14 and 15 Brigantine Drive, Birkenhead (Exhibit 1).  The searches do not contain any monetary amounts – they merely record, as might be expected, dealings with the land.  Lot 14 was transferred to one EEB on 31 July 1973.  It was transferred to RFB (Mr B) on 28 May 1975.  Various mortgages are stamped as discharged during his ownership but it is not possible to decipher the dates.  Lot 14 was transferred to CL and SSL on 23 December 1988.  Lot 15 was transferred to RFB (Mr B) on 18 March 1981.  Again, mortgages were discharged during that ownership and the land was transferred to RAC and JEC on 30 March 1987.  Clearly these documents did not assist Mr B’s recollection about the net proceeds of sale and nothing else was suggested.

[32] Without the benefit of any supporting documents Mr B deposed that he obtained A$110,000 from the sale of another property in New Zealand at 9 Walter Street, Hauraki Corner at some unspecified date between approximately 1985 and 1988. 

[33] Mr B lists as assets brought into the relationship a half share in three “off-the-plan” apartments at the Gold Coast and a block of land at Tallebudgera for the purchase of which he had made a deposit of $40,000.  Mr B forfeited his share of the deposit of the three apartments because he could not afford to settle, again, at some unspecified time.  As to the block of land, he deposed that

“[w]ithin the first two to five years of cohabitation commencing I sold all of the properties that I owned ... referred to above.”

Those properties included the Tallebudgera land.  He deposed that he received $40,000 net of sale costs for that land.  However at t/s 41 the following exchange took place. 

“Mr ERSKINE:  Now 11G, the deposit block of land at Lennon Court, Tallebudgera, what happened with those moneys? --  Ah, I – that – that was – that was – was a mortgage on the property.

Yes? --  And when I sold it, it was a bit of a fire sale, I didn’t get much out of that.

When was it sold?  I mean, do you recall.  Three years after you – commencement of co-habitation;  five years after;  within the first 10 years?  When approximately did you sell that land? --  In the first five years.

Within the first five years.  Well, you sold it in 1983, do you accept that? --  I’d accept that.

You in fact sold it before you and U… came into a union?  Do you accept that or not? --  I accept that.

And so it shouldn’t even be there should it?  You sold it for a $36,000 loss, do you accept that? --  Yes.

So, it’s not correct to say that you brought to the union – brought to the union $40,000 interest in that property, do you accept that?”

This, Mr B apparently accepted, was the case.  Mr B’s evidence about these matters and other evidence discussed in the following paragraph has led me to have serious reservations about the reliability of his evidence relating to financial matters.

[34] Other property which Mr B deposed he had at the commencement of the relationship was the contents and furnishings in the home in Auckland which he valued at $2,500 – he does not say if that furniture was sold for that amount, passed in the house sale to the new owners or brought to the Gold Coast and used.  In his most recent affidavit Mr B deposed to having $10,000 worth of furniture and other chattels in his home at the Gold Coast.  He deposed owning a BMW motor car with an estimated equity of $23,000 and cash net of debts of $8,000.  In his amended statement of claim he valued the Gold Coast furniture at $2,500 and his equity in the car at $12,000.  The car was purchased by means of a hire-purchase agreement bearing the date 14 January 1985 (after cohabitation commenced).  The amount payable under the agreement was $8,987.95.  The cash price of the car was $7,284.84.  He offers no valuation evidence to justify the estimated value he placed on the car.  Mr B did not deal with those figures, quite at odds with his sworn evidence, even though the hire-purchase agreement had been exhibited to Ms B’s affidavit of 19 March 2003, well in advance of his most recent affidavit which purported to contain the contents of all his other affidavits and to bring it up to date.

[35] At the commencement of the relationship with Ms B, Mr B owned a half-interest in a house at 12 Rumrunner Street, Mermaid Waters subject to a mortgage.  The parties made it their home for some years after cohabitation commenced.  Mr B deposed that he obtained $90,000 cleared funds from its sale, again offering no supporting evidence. 

[36] Before the commencement of the relationship Ms B had an interest in a company which was developing some 24 apartments in Sydney and obtained dividends from it.  She had her own interior design company in partnership in Sydney from which she obtained some $25,000 worth of stock and a Mercedes Benz sports car.  She also had a Mini Moke motor vehicle.  Both cars were sold many years later to Mr LE who gave evidence at the trial.  Ms B deposed to building society and bank savings of approximately $30,000, an inheritance from her father’s estate of $20,000, furniture and artefacts of approximately $20,000 and jewellery estimated at $30,000 in value.  Mr B values Ms B’s furniture brought into the relationship at $10,000, her cars at approximately what she sold them for to Mr LE, a friend of Mr B, years later for $25,000 and $600, and her savings at $10,000.  There was no basis advanced for these diminished valuations other than Mr B’s opinion.  I found Ms B a generally reliable witness – her evidence about current financial matters was supported by the several accountants who gave evidence and her business records were available. 

[37] Another matter which raised concern about Mr B’s reliability was the vagueness of his evidence about his own business dealings throughout the relationship.  He had disclosed few documents about his business, said little about it in evidence, and did not reveal much, if anything, about his earnings to Ms B during the relationship whereas her business operations were well known to him.  Although he deposed to the contrary, he did not resist in oral evidence, nor was Ms B challenged, that for the most part she paid for most of their living expenses including travel, meals out and entertainment.  She accepted that he was not successful in his businesses and, as he told her, was “cheated” out of money owed to him from time to time.

[38] Mr B deposed he paid $30,000 received on the sale of D & R’s (his business company) business in about 2002 into L Pty Ltd’s bank account for its business purposes.  That sum, or three payments of approximately $9,000 each which Mr B said in evidence was the manner of the deposits, have not been able to be traced by L’s accountants.  Another matter suggestive of Mr B’s unreliability in financial matters was his explanation as to how he disbursed the $230,000 payment received from the proceeds of sale of 19 Intrepid Drive.  He said $32,500 was paid in settlement of legal fees and, after giving some money to a friend, paying some bills, going on an overseas trip, and paying $20,000 into D & R’s account “it just goes out the door …  I just spent it on shoes” t/s 87.

[39] The tone of his principal affidavit is one of entitlement and overstatement as I was satisfied the evidence revealed, of his financial contributions and a significant minimisation of Ms B’s.  Much of that detail is no longer relevant as the parties have reached substantial agreement about their “domestic” property by equal division.

Residence at Rumrunner Street, Mermaid Waters

[40] When the parties commenced cohabitation Ms B moved into the residence at Rumrunner Street, Mermaid Waters of which Mr B was a half owner.  He had been living in that house with two other people who then left.  Mr B deposed that he paid for all expenses associated with the occupation of the house.  Ms B deposed that she outlaid approximately $20,000 to recarpet the house, install new curtains and new furniture for which she was not reimbursed out of the proceeds of sale.  Mr B merely contests the amount on impression rather than evidence.  Ms B also paid rent, she maintained, to assist with Mr B’s mortgage repayments, which he denies, and paid for a housekeeper, all food and household supplies.  She agreed he looked after house maintenance such as the pool.  During this period the parties and A travelled overseas, generally to near destinations in Asia, for which Ms B paid.  Mr B did not contest these contributions put to him in cross-examination.  He chose not to make reference to them in his revised affidavit notwithstanding that by then he had Ms B’s several affidavits.

[41] After about two years the parties moved out of Rumrunner Street, which was sold, and rented a house at Helm Court, Mermaid Beach.  Both contributed to the rent and Ms B paid for housekeeping services, food and supplies, furnished the home and paid for overseas holidays and trips.

19 Intrepid Drive, Mermaid Waters

[42] Ms B purchased in her name from her own monies a block of land at 19 Intrepid Drive, Mermaid Waters for $84,000 in approximately 1984.  Mr B made no mention of the source of the funds in his affidavit but gives prominence to his negotiation of the contract.  He deposed that it was in Ms B’s name only because if he were known, as a real estate agent, to be interested in the land, the price, he said, would have increased.  Ms B said that she did not know at the time of purchase that this was the reason why it was in her name.  Ms B does not, in any event, dispute that the land was bought to establish their joint home.  All subsequent real property purchases were in Ms B’s name.  Mr B contends that this was for estate planning reasons but Ms B said that that was not discussed, they did not consult any adviser and the money came from her business.  I accept Ms B’s evidence. 

[43] The house was built over about 18 months with Ms B as the “owner/builder”.  As mentioned, Mr B maintains that he put all of the proceeds of sale of his New Zealand properties and Rumrunner Street into the construction of the house amounting to nearly $500,000.  However in light of the evidence about the proceeds of sale of those properties discussed above and also the dates when those funds must have been received (in 1987 and December 1988 for two of the New Zealand properties) this amount must be seriously doubted. 

[44] Ms B denies that Mr B contributed more than $150,000-$200,000 to the cost of the construction of the house.  Her recollection is that the total cost of the house was in the vicinity of $400,000 and that she provided what was needed above Mr B’s contribution from her earnings as a successful interior design consultant.  Subsequent bank borrowings for which they were both responsible were used to complete the house.  It is not disputed that Mr B contributed time by coordinating the trades in the construction of the house but there is no suggestion that Ms B was not also involved.  I accept that Ms B’s recollection of the quantum of Mr B’s financial contribution is more likely to be correct than his.

[45] Ms B contended that apart from his estimated contribution to the construction costs she never knew what Mr B obtained from the sale of his properties or what he did with his money as he kept his business interests separate and did not spend his own money or very little of it on their domestic expenses.  She said if they dined out she paid.  She added Mr B to her existing Medical Benefits Fund cover at the commencement of their cohabitation for which she paid and did not cancel it until May 2002.  Ms B was not cross-examined that these were untrue or incorrect recollections.

[46] Ms B suggested in cross-examination that Mr B most likely used the balance of the proceeds of sale of the New Zealand properties to purchase rent rolls.  He said that he had purchased only two in 20 years but she challenged this from her recollection of discussions with him.  His answers in cross-examination about his business gave the impression that he was being evasive.  He had produced no documents although some, he conceded, could have been obtained from his accountant.  An example can be seen from some of his evidence about a real estate business which he purchased about 12 months into the relationship, D & R.  He said that he was initially in partnership with an accountant, SZ, which lasted for about five years.  He said Mr SZ was bought out by the payment of partnership funds to about $65,000.  Mr B then operated the company for about 12 years on his own.  In para 82 of his affidavit he deposed that he sold the business in about 2002 and received $30,000 but retained the company.  Amongst other things, D & R operated as a collection agency for rentals.  In cross-examination Mr B, having given rather broad evidence about his business interests, was shown an agreement dated May 2001 for the sale of the D & R business to Central Surfers Real Estate for the gross amount of $129,515.  When asked what had happened to those moneys he answered, “Banks got paid, super got paid, the place got closed down,” t/s 51.  Mr B further explained that he was not paid the contract sum but only about 50 per cent of it – there was “a technicality in the contract which stopped me from retrieving it” t/s 52. 

[47] There were some borrowings against the 19 Intrepid Drive property from the ANZ Bank for the interior design business.  The parties agreed to meet those repayments equally.  I accept Ms B’s evidence that she met the majority of those payments because Mr B did not or could not do so.  In about 1999 the mortgage was about $30,000.  Ms B used the property as security for loans for her business or security for letters of credit and so on.  She imported large quantities of furniture from outside Australia.

[48] At the time of separation the mortgage stood at $402,000.  At about that time Ms B needed to fund the fit-out of the Renaissance Tower One project – well over 100 units – which was expected to be recovered in due course.  The amount thereafter secured against the property was $625,000.  It was hoped that the successful completion of the first tower for Mr Raptis, the principal of the development company, Rapcivic Pty Ltd, would lead to a contract to decorate and furnish the more than 400 units in the other two towers yet to be built.  This did not occur.  Those borrowings were with the consent of Mr B.

[49] On 21 November 2003 Ms B signed a contract for the sale of 19 Intrepid Drive for $1.6m.  Some furniture was included in the sale including some items which Mr B wanted to retain although it is unlikely that Ms B knew that at the time.  However, she had given undertakings to the court on 2 May 2003 not to sell or dispose or furniture or chattels in the house as a condition of Mr B removing a caveat over the property.  Settlement date was 23 December 2003.  Each of the parties pursuant to orders of Byrne J received $50,000 and the balance of $823,209.09 was paid into the trust account of Short Punch and Greatorix Solicitors.  Subsequently each party received $230,000 and outstanding accounts relating to the business were paid by order of Atkinson J of 15 July 2004.

Chevron Island Unit

[50] Ten or so years ago Ms B purchased an investment unit on Chevron Island with Mr GM, a solicitor at the Gold Coast held in equal shares.  Mr B deposed that “we” contributed $15,000 for the deposit.  Ms B deposed that she provided her share of the deposit from her savings and it was not intended to be a jointly owned property with Mr B.  The unit is rented and Ms B nets approximately $2,000 per year from rentals which is deposited into her personal account.  Mr B made something of introducing Ms B to Mr M and locating the property.  All real estate transactions involving Ms B were through D & R, Mr B’s business, for which Mr B’s business received a commission.  There is no agreed valuation for the unit – Mr B’s estimate is $260,000.  Ms B’s is $250,000.  Since it was purchased during the cohabitation it needs to be considered as part of the pool of assets.

28 Intrepid Drive, Mermaid Waters

[51] This house property was purchased in approximately 1994 for $211,000 in Ms B’s name.  The deposit of $112,000 was provided from profits of the interior design business.  The balance $99,000 was obtained from a loan from a bank in Ms B’s name.  Mr B was the agent on the sale and collected rents from the tenants on commission.  He does not deny, as Ms B alleges, that after separation he continued to collect the rents and did not account for some three and a half months of receipts in the amount of approximately $1,500.

[52] The property was used as security for a further loan of $60,000 which was given to A to assist him in a business venture which ultimately failed and the money was never recovered from him.  The property was sold in early 2003 and after discharging the mortgage, making provision for other costs including capital gains the remaining proceeds were split equally, each party receiving $70,000.

Commercial Showroom 80-82 Upton Street, Bundall

[53] Some six to eight years ago land was purchased at Bundall to build a showroom and offices for the business.  It was purchased by Ms B as trustee for the UB Unit Trust.  It was financed by profits from the business.  The construction of the building was financed by the business and bank borrowings in Ms B’s name.  Mr B involved himself in the plans and building of the showroom.  He deposed that he was onsite on a daily basis and the demands were such that his own business suffered and he eventually stopped working in real estate. 

[54] The parties agreed that the monthly loan repayments to the financier bank in respect of the property be met from moneys received from the sale of 19 Intrepid Drive from 15 July 2004. 

[55] Ms B entered into a contract for the sale of the property for $3,500,000 (GST – exclusive) on 23 March 2005.  The contract is conditional with completion date being the later of 14 January 2006 or seven days after the withdrawal of caveats.  A non-refundable deposit of $300,000 was paid by the purchaser on signing the contract.  The property is leased to Australian Futures Trading Pty Ltd from 15 April 2005 for an annual rental of $200,400 (GST – exclusive).  The allocation of the deposit moneys is set out in Attachment 1 of Mr J’s Financial Update Report dated 21 April 2005.  The dispersal included a $50,000 fee to Ms B as trustee, $87,872 to Rapcivic Pty Ltd concerning a fit-out loan and $100,000 to S Pty Ltd, a company associated with Ms B’s present partner, in repayment of a loan.  The payment of this sum has been criticised by Mr B in a general way.  Ms B said it was a loan to assist with pressing debts.  There is no basis for disallowing it.

[56] Since separation Ms B has managed, maintained and marketed the property without any assistance from Mr B except his proposal of a much less advantageous sale.  The eventual contract required considerable negotiation to achieve the price which has improved the Superannuation Fund. 

Contribution to the interior design business

[57] Ms B’s interior design business was operated through a company.  On the advice of her accountants she ceased trading through her NSW company and purchased a shelf company in Queensland named L Pty Ltd through which she then operated her business and subsequently the furniture business.

[58] The parties are in disagreement about the extent of Mr B’s contribution to that business.  Mr B asserted in his recent affidavit at para 24

“During all of the years of our relationship, I was working full time in the interior design and furniture business with the defendant, I did not receive any remuneration.  Instead all ongoing expenses such as mortgage payments, utilities, rates, car registration, insurance etc were paid through the business.  The mortgage payments were principally entered into for the purpose of financing the ongoing operation of the business as deposed to below.  I never drew a wage but the defendant always drew wages for herself, plus dividends and these funds were used as part deposit for the purchase of the properties.”

The evidence did not fully support that claim.  True, Mr B did not draw a salary but he had the benefit of a lifestyle of some luxury by virtue of the business.  He drove a Mercedes Benz 4WD motor vehicle and a Porsche motor vehicle originally owned by L Pty Ltd.  It was transferred to him in the 2003 accounts of L at a book value of $18,507.  He did not disagree that he made this transfer without reference to Ms B.  He retained the Porsche after separation and eventually sold it and has acquired another vehicle for himself.

[59] Ms B and Mr B were directors of L Pty Ltd.  Ms B deposed that Mr B’s appointment was to satisfy the requirements of the then Corporations Law for two directors.  He has since been removed which, he contends, and that seems to be so, was done unlawfully.  Ms B held and continues to hold 99 shares in the company and Mr B 1 share.  L owns the business names, U Interior Design, U’s Collections and U’s Imports.  At the time of this hearing Ms B had ceased trading although anticipated returning to interior design consultancy eventually.  UB Pty Ltd of which Ms B is the sole director and shareholder was incorporated in December 2002 and has no assets. 

[60] Mr B deposed that he worked in the interior design business from about 1986, initially assisting with moving and assembling furniture and then other physical work such as unloading trucks, ordering furniture and unpacking containers.  Eventually, he deposed, he worked full time in the business in a major administrative role from about 1999 to the date of separation.

[61] Ms B agrees that Mr B assisted her in her interior design business during their relationship doing those things set out in his affidavit.  He also managed her rental properties through his real estate agency for which he received a commission which he does not mention.  Mr B’s contribution to the business was supported by the evidence of Mr DB who had been employed in Ms B’s business for many years over two periods.  Mr DB’s role was to attend to the costing and ordering of stock for the various projects.  He was absent for a number of years following other interests. His later period of employment commenced in early 2000 to assist with the Phoenician, Moroccan and part of the Marrakech projects.  Ms B’s son at that time managed the retail showroom and subsequently took over the wholesale division of the business.  Mr DB agreed that in the period 1990-1999, to the extent he was employed there, Mr B worked in his own real estate business as well as helping with the physical work of moving and assembling furniture in Ms B’s business.  From the end of 1999 going into 2000, after Ms B’s illness, he said Mr B worked full time in the interior design business.  Mr DB noted that he assisted the bookkeeper, Mr RS, who attended three days per week;  was involved in the importation of containers of furniture;  assisted and oversaw the installation of fit-out and furniture in a number but not all of the large apartment block contracts.  During this later period Ms B worked from her warehouse and Mr B from the showroom in Bundall Road.   

[62] Ms B resumed the administration of her business in 2002.  She deposed that her businesses were profitable until late 1999/2000 when Mr B took over their administration.  The financial returns for L for the year ended 30 June 1999 show a net profit before tax of $223,000 and the previous year a profit of $430,000.  From the affidavits and report of Mr JS, then director of taxation services at KPMG, retained by Ms B after she returned to managing her business, and correspondence from the business’s then accountant to Mr B in June and August 2001, it is clear that the business went into rapid decline during the period of Mr B’s administration.  Whether this was due to his incompetence, that of the employed internal bookkeeper or for other unrevealed reasons cannot be resolved.  One problem was likely to have been a design employee who took clients from the business.  Litigation has commenced but Ms B is unlikely to pursue it as a matter of economic good sense.  Mr B was unable to be of much assistance to the court over matters of detail during his management period.  Whilst there should be no deduction for this “negative” contribution by Mr B neither can he be regarded as having enhanced the business as a manager.  He clearly was of assistance in a real sense in the profitability of the business when he did the things outlined by Mr DB of a more physically practical kind.  Further, Mr B accompanied Ms B on many of her business trips to trade fairs and to buy furniture and accessories overseas.

[63] L Pty Ltd has a nil value and there is no suggestion that there is anything to sell apart from the real estate from which it has been conducted.  It has a debt of approximately $97,000 to Rapcivic Pty Ltd.  L Pty Ltd has accumulated substantial tax losses - $175,000 approximately - as calculated by Mr JS.  If Ms B recommences her business utilising this company she will be able to utilise these losses against future profitability. 

Superannuation

[64] A superannuation fund known as the UB Superannuation Fund was commenced in 1996.  Those entitled are Ms B, Mr B and A.  From 1996 employer contributions were made on behalf of Mr B and Ms B equally.  During that year, according to Mr JS, Ms B rolled over some entitlements from other superannuation funds in an amount of $51,500.  Although there was no evidence about the origin of those funds, Mr JS surmised, without challenge, that that they likely post-dated the commencement of the relationship.  The members’ entitlements thereafter were calculated at 52 per cent to Ms B, 35 per cent to Mr B and 13 per cent to A.  That imbalance between Mr B and Ms B has been maintained thereafter.  This treatment of the extra funds on the basis of opening balances was said by Mr JS to be fair and reasonable.  If the unit trust is wound up on the completion of the sale of the showroom in January 2006 the proceeds of sale will be allocated in those proportions to the beneficiaries.  Indicatively Ms B’s entitlements will be $1,054,923, Mr B’s $710,045 and A’s $263,731.

[65] The arrangement with the purchaser for the Bundall property is for a lessee to pay rent until settlement.  That rent will be used to pay liabilities such as the mortgage and will be taxable at 15 per cent in the superannuation fund.  Any balance will augment the beneficiaries’ superannuation entitlements in the current percentages.

Other Property

[66] Considerable energy was expended at the hearing over Ms B’s jewellery.  Mr B estimated its value at $300,000.  Ms B’s October 2003 retail valuation by Brew & Sterling is $157,610.  The value for a sale over a three to six month period is estimated to be 30 per cent of that figure - $47,283.  Many pieces of jewellery were bought in the course of the relationship by Ms B.  She estimates that she bought $30,000 worth of jewellery into the relationship.  It is impossible to divide the jewellery and the parties have been content to bring it into account at the valuation tendered.

[67] Mr B estimates the value of his personal jewellery at $8,500.

[68] There are certain chattels in storage in respect of which the parties have reached agreement.

[69] There is an amount of $430,728.30 in the loan account of the parties owed by the Unit Trust.  An amount of approximately $97,000 is owed by L Pty Ltd to Rapcivic Pty Ltd, the balance of the fit-out loan.  Failure to make that payment would tarnish Ms B’s commercial reputation and I do not discern Mr Cooper to submit seriously that the debt ought not be repaid even though it is not owed by Ms B personally.

[70] Mr B leases a motor vehicle with an equity of $8,000.

Welfare and Health

[71] It is conceded by Ms B that although the relationship between Mr B and A was often difficult he contributed in a relevant way to his welfare when he lived with them as a child. 

[72] Both parties are in good health and able to support themselves financially.  A is an adult and, to the extent necessary, will be his mother’s sole responsibility.  The parties have provided a statement of their current expenditure.  There has been and will be sufficient money available to meet their needs and the parties have not made submissions to suggest otherwise.

Just and Equitable Issues

[73] The relationship has been a long one and its “partnership” nature is recognised by Ms B.  As the evidence revealed, apart from Mr B’s contribution, which I assess at about $200,000, to the construction of the home, he made no other significant financial contribution to the accumulation of assets.  If he realised more than that from the sale of his properties, those funds were not directed towards relationship property.  And, either he kept the money earned from his businesses for himself, or he did not earn anything much worth sharing apart from modest contributions towards joint living expenses and some mortgage repayments.  It is difficult to accept that for all the years before he undertook a management role in Ms B’s business from 1999 or about then, on his account, his earnings in real estate were so paltry as to dispense with the need to file tax returns.  He said in evidence that before he met Ms B he was earning a lot of money but once he started helping her, his earnings went down.  While this is accepted after 1999 and likely while 19 Intrepid Drive and the showroom were being constructed there were many years in respect of which he provided no evidence to support these assertions.  His evidence, I have concluded, was generally unreliable except when supported by other accepted evidence such as that of Ms B and Mr DB.

[74] Mr B did, however, make significant non-financial contributions to the acquisition, conservation and improvement of the home at 19 Intrepid Drive, the showroom at Bundall and to the business itself.  This was principally in his participation with Ms B in the identification of the land, the design, planning and construction of the home and the showroom.  The contribution to the home and to the parties’ joint domestic life including to Ms B’s son has been appropriately recognised by the equal division of the available proceeds of sale of the home and 28 Intrepid Drive.

[75] The diversion of some of those proceeds to service the business indebtedness whether the real estate or the operations of the business has a two-fold benefit for the parties.  It has enabled the business to survive and the real property to be sold at an advantageous price and thus to swell the coffers of the Superannuation Fund.  Furthermore, it has been the business which has funded the lifestyle enjoyed by the parties.

[76] How, then, to assess Mr B’s non-financial contribution to the business is difficult.  It cannot be doubted that it was the flair and skill of Ms B which allowed the business to flourish.  Family Law Act cases such as JEL and DDF and McLay recognise that particular skills and talents may augment the contribution of a party – in those cases particular metallurgical and business acumen.

[77] In the years 1999 to early 2002 Mr B relieved Ms B of the burden of management of the business when she needed that respite.  She did not then realise how poorly the business was progressing under his stewardship.  During that period Mr B admitted that he kept some moneys due to the business from the sale of furniture to pay some of his credit card debts.  These he seemed to have seen as “family” debts but gave no details.

[78] A perusal of the correspondence between the parties’ solicitors since separation exhibited to the several affidavits, although no doubt not complete, reveals that Ms B drove the management of the indebtedness with little or no initiative or input from Mr B.  It was her industry which secured the sale of Intrepid Drive and, more recently, the showroom at Bundall, noting Mr B’s complaint of being excluded.  The negotiated contract for the showroom should not be seen simply as a windfall.

[79] How are these contributions to be reflected?  I have concluded that the balance of the value of the assets, save for the proceeds in the Short, Punch & Greatorix account should be awarded in the vicinity of 35 per cent to Mr B and 65 per cent to Ms B.  There can be no precise or correct figure and an asset by asset division is not appropriate on the relatively limited material.  The earlier equal division should remain undisturbed, as recognised by the parties, but has been kept in mind when arriving at the proposed 35/65 division.  The balance of the proceeds of sale of the Intrepid Drive properties should be divided equally to reflect the “domestic” nature of at least 19 Intrepid Drive.

[80] The result may be achieved in a number of ways.  Mr Cooper has proposed an approach that ignores cash in the possession of the parties since it may be accepted that it derived from the proceeds of sale of the earlier properties; and without bringing into account any personal earnings since separation, but to bring into account the personal jewellery, Mr B’s car, the Chevron Island unit and the superannuation entitlements.  This seems an acceptable approach.

Mr B

Motor vehicle $8,000.00

Jewellery $8,500.00

Superannuation entitlement (indicative) $710,045.00

 $726,545.00

Ms B

Chevron Island unit half share $127,500.00

Jewellery $47,283.00

Superannuation entitlement (indicative) $1,054,923.00

 $1,229,706.00

Joint Interest

Funds in Short, Punch & Greatorix’s

account $51,599.00

Loan account ($430,728 less $97,000

to Rapcivic Pty Ltd or the correct figure) $333,728.00

[81] When the Short, Punch & Greatorix figure is divided equally and the loan account 35/65 the amounts by percentage which each party receives is: to Mr B 37.14 per cent and to Ms B 62.86 per cent.  The rent will be allocated in the existing entitlements percentages in the Superannuation Fund which will modulate the final percentages slightly in Ms B’s favour obviating the need to vary the existing Superannuation Fund entitlements. The following orders are to give effect to the above:

1. The monies in the Short, Punch and Greatorix trust account in the sum of $51,599.00, or such other sum as may be there at the time of division, be divided equally between the parties.

2. The monies standing to the credit of the parties in the UB Unit Trust when recovered from the settlement of the sale of the premises at 80-82 Upton Street, Bundall be divided between the parties

(a) as to the loan account after the payment of the balance amount owed to Rapcivic Pty Ltd 35% to Mr B and 65% to Ms B;

(b) as to the Superannuation Fund in the percentages recorded in the accounts of the Superannuation Fund inclusive of the residual rental received.

3. The chattels described in Exhibit 7 be divided in the manner agreed between the parties and as set out in the letter of 18 May 2005 from Mr B’s solicitors and attached to these orders.

4. The parties otherwise retain their respective real and personal property free of all claims from each other.

Close

Editorial Notes

  • Published Case Name:

    RFB v UEB

  • Shortened Case Name:

    RFB v UEB

  • MNC:

    [2005] QSC 178

  • Court:

    QSC

  • Judge(s):

    White J

  • Date:

    08 Jul 2005

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
E v S [2003] QSC 378
2 citations
E v S [2000] FAM CA 1353
2 citations
Mallet v Mallet (1984) 156 CLR 605
2 citations
McLay (1996) FLC 92
2 citations
Norbis v Norbis (1986) 161 C.L.R., 513
2 citations
S v B[2005] 1 Qd R 537; [2004] QCA 449
2 citations
S v B [2004] QSC 804
2 citations

Cases Citing

Case NameFull CitationFrequency
KR v IJ [2007] QDC 332 citations
1

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