GM v RA[2008] QSC 324

SUPREME COURT OF QUEENSLAND

[1] This is an application by the applicant for a property adjustment order pursuant to s 286 of the Property Law Act 1974 (Qld).

[2] The parties to these proceedings commenced living together in a defacto relationship in March 2002. 

[3] The parties separated in early 2003 and maintained separate households for a period of some months. The applicant gave evidence that in December 2006 the respondent expressed the desire to not continue with the relationship.  She sought legal advice regarding her rights upon separation in January 2007.  For a short period after that however the relationship improved. The relationship finally came to an end in May 2007. 

[4] I am not satisfied on the limited evidence adduced, that the relationship was continuing throughout the period of March 2002 to May 2007. In coming to this conclusion, I adhere to the remarks I made in S v B (No. 2)[1] concerning the nature of the defacto relationship.  However in the end, it seems to me not to matter very much in this case whether the relationship was a continuous one for five years and two months or whether it was a combination of a number of shorter periods totalling something less than five years.  The relationship was not a particularly long one.

[5] It seems to me that the relationship falls into two distinct periods.  Until the birth of the child of the relationship on the 27th of February 2006, the parties to the relationship maintained financial independence.  Each earned a separate income for which that party did not account to the other.  Individual expenses were paid individually and each made an approximately equal contribution to joint expenses. 

[6] One exception to this rule was a period from 1 October 2003 for a few months where the applicant joined the respondent who had been posted to Korea as a result of her employment with the Department of Foreign Affairs and Trade (‘DFAT’).  The advice the parties had been given prior to the applicant moving to Korea with the respondent was that the applicant would not be able to work in Korea in his field as a solicitor.  This advice turned out to be incorrect and he was able to obtain reasonably remunerated work after about four months.  In that period of four months however, a disproportionate share of the living expenses were paid by the respondent. 

[7] After the birth of their child the respondent took maternity leave for some time and received Centrelink payments for a period prior to separation.  She did not return to work at the DFAT prior to separation; a decision which I accept was taken jointly for the benefit of the child.  Since separation the respondent has returned to the DFAT on a part-time basis.  I accept that she presently earns from part-time work $35,600 per annum but if she were to resume full-time work her salary would be $62,000 per annum.  I accept that it is unlikely that she will be in a position to return to full-time work until the child starts school in approximately three years. 

[8] Consistently with the position the parties themselves maintained, I am satisfied that prior to February 2006 the nature of the relationship and the justice of the case dictates that each party be entitled to retain the property that each party had accumulated both before and during the relationship.  I am not satisfied that either the fact of the relationship to that period of time or any contribution made by either party to it has resulted in it being just and equitable to alter the interests in property each party lawfully held up to that time. 

[9] Of particular relevance in relation to the parties’ property, this conclusion affects the applicant’s ownership of a house property in Darwin which he had acquired in 1997. 

[10] After the birth of the child the applicant built up a significant portion of the superannuation presently held in a Host Plus superannuation policy.  This was achieved by his salary sacrificing in order to make extensive contributions to the superannuation fund. 

[11] The other significant financial decision taken in this period was the purchase of a house at Bardon for $605,000 in April 2007.  The purchase price was paid by means of a mortgage from Westpac of $480,000 with the balance being contributed from the proceeds of sale of the applicant’s Darwin property.  The property was purchased in joint names and the parties are jointly and severally liable upon the mortgage. 

[12] Notwithstanding the cash component of the purchase price having been provided from the applicant’s assets, the fact that the respondent is jointly liable on the mortgage has the affect that she would have an equitable interest in that property equivalent to 40%.  This represents the proportion that her notional half share of the joint mortgage debt amount bore to the total purchase price.[2]  If the strict legal position was maintained, the respondent would be entitled to 50% of the equity on the property.

[13] The parties agree that the Bardon property is now worth $800,000.  A 40% interest in the net equity in the property would therefore amount to $128,000. A 50% interest would amount to $160,000.

[14] Since April 2007 the applicant has spent a little less than $50,000 in renovations to and maintenance on the Bardon property.  He has also put considerable hours of his own time into those renovations.  About half of the money spent was spent prior to the final termination of the relationship in May 2007.  About half has been spent in the year and a half since.  In that period however the applicant has had the exclusive use of that property. 

[15] Other factors which are of relevance to my determination in this mater include the ages of the parties.  The applicant is in his mid 50s and the respondent in her mid 30s. 

[16] The applicant is a solicitor who in recent months has been working in Indonesia on a package with a value of USD275,000.  He has recently signed a contract to work for Theiss in Indonesia where he will be paid a base salary of USD175,000 together with some other benefits.

[17] The pool of assets over which the parties are in dispute is not large.  It amounts to a total of $441,832 made up as follows:

[18] It was submitted that I should treat the mortgage debt as if it were $400,000 and exclude the Westpac loan. The mortgage debt was $400,000 until the additional $80,000 was withdrawn on the eve of the trial. The loan has a redraw facility and was treated by the applicant as a private account. The money withdrawn is in another of the applicant’s private accounts, it is thus accounted for. Two vehicles that the respondent seeks to include in the property pool have been sold. As with the personal loan of $13,000 from Westpac it is not alleged that the proceeds have been dealt with improperly. The proceeds should be treated as being absorbed into the applicant’s overall financial position. In the absence of any challenge to the proprietary of it, the Westpac personal loan should be included in the liabilities.

[19] In addition to the assets listed, there was, at the 30th of June 2008, $304,499.89 in the applicant’s Host Plus superannuation policy.  This included the roll-over of an amount from the applicant’s public service superannuation accumulated prior to the relationship. Since the largest component of the superannuation funds were invested in Australian and international shares, the balance in the superannuation fund is likely to be lower now than it was in June 2008. 

[20] The respondent has superannuation of about $70,000. 

[21] Of the various matters to which I am required to have reference in Division 4 Part 19 of the Property Law Act, those that seem to me to make a material difference to the position here include the requirement of the respondent to continue to provide domestic services directly consequential upon the relationship for the foreseeable future.  This is because for the foreseeable future she will have the overwhelming responsibility for the care of the child.  Not only does this require her to make a direct contribution probably for decades after the relationship is finished but it also has a significant personal financial impact upon her capacity to support herself. 

[22] On the other side of the ledger, at about 54, the applicant’s working life is much more limited than that of the respondent and his capacity to re-accumulate assets, judged by reference to time is correspondingly limited. 

[23] Although the applicant’s income is significantly higher than that of the respondent at the present time that seems to me to be a direct function of their respective ages.  The relationship has no bearing on that position beyond the impact caused by the birth of their child.

[24] It seems to me that none of the matters referred to in Part 19 to which I have not made direct reference are likely to affect the parties respective entitlements either way; although I do note that the applicant is paying child support for the child in the sum of $1,180 per month and thus the direct costs of the child do not cause a disproportionate burden on the respondent.

[25] Both parties have adopted the position that I should order that each party retain the assets to which, but for Part 19, that party is legally entitled except in relation to the Bardon property.  Both parties are content for that property to be transferred to the applicant on payment of an amount to the respondent.  The respondent seeks a payment of $230,000.  The applicant’s submission is that the payment should be limited to $40,000. This is less than the interest the respondent would have in the property even if the parties had not availed themselves of Part 19.

[26] The respondent’s position is that she is entitled to 60% of the total of the parties combined assets on the basis of her ongoing responsibilities and the disproportionate financial resources available to the parties by way of superannuation.  That submission was based upon a calculated property pool of $476,000. Taking the value of the pool as I find it, the payment to the respondent on that basis would be $212,000.

[27] Having regard to the matters to which I have referred I am satisfied that a distribution of the joint property in the ratio of 60% to the respondent and 40% to the applicant is appropriate particularly given the limited pool and the extent of the child care obligations the respondent will continue to shoulder. In this case, the joint property is the Bardon house.

[28] In saying that however, I am conscious that property adjustment orders are not intended as compensation, but rather reflect contribution.  60% of the joint property in this case amounts approximately to $192,000.  In addition, the applicant has approximately $55,000.00 worth of total assets solely in her own name.  In my view justice between the parties in this case is best achieved by directing that each party retain the assets in that party’s sole name, transferring the Bardon property from joint names to the name of the applicant and ordering the applicant to pay to the respondent the sum of $192,000.

[29] I will hear argument as to the form of the order.

[30] In accordance with the principles underlying Part 19 of the Property Law Act I do not propose to make any order in relation to costs.