SJS v MLS[2010] QSC 263

SUPREME COURT OF QUEENSLAND

1. The applicant seeks orders under Part 19 of the Property Law Act 1974 (PLA). Both parties have filed affidavits but the respondent, who lives on Norfolk Island, did not appear at the hearing.

The relationship

2. The parties were in a de facto relationship from October 2001 to January 2008 with two brief periods of separation in 2006 and 2007. They have three children aged 2, 4 and 7. The children are cared for by the applicant.

3. When the relationship commenced the parties lived in a house owned by the respondent on Norfolk Island. At that time, apart from the respondent’s house, the parties had very few assets. While living on Norfolk Island the respondent worked as a full-time gardener and would operate a water truck business before and after work when there was a demand for water. For various periods, the applicant had full-time, part-time and casual work as a chef.

4. At some time in 2004 or 2005 the parties purchased a retail shop business in which they sold nursery items, produce, supplies, fruit and vegetables. The money used to purchase the business was raised by increasing the mortgage over the Norfolk Island property. In order to assist in establishing the business, the applicant worked part-time in the nursery without pay.

5. In June 2006, the applicant moved into her parent’s house in Kippa Ring. She says this was because the parties had separated. The respondent denies this but it is of no moment in determining this matter. The parties also disagree about when they sold the nursery business and its price. I will deal with this later.

6. The respondent claims to have moved into the applicant’s parent’s home for three months, while the applicant says it was for one month only. Once again, it does not matter a great deal, for the respondent moved to Mt Isa in early 2007 and the applicant followed him in April in an attempt to reconcile their relationship.

7. In Mt Isa they purchased a house. They needed 100 per cent finance and were informed by the bank that they would require both the property on Norfolk Island and at Kippa-Ring as security. That was arranged and the parties purchased a property in Mt Isa. The mortgage which existed over the property in Kippa-Ring (which was registered in the applicant’s name) was refinanced and put in the name of both the parties.

The Property Law Act

8. The correct approach to consideration of the relevant provisions of the PLA was set out in the reasons of Keane JA in FO v HOF.^[1] His Honour referred to the requirements of the PLA in these paragraphs:

“[46] Section 286 of the PLA provides:

‘(1)A court may make any order it considers just and equitable about the property of either or both of the de facto partners adjusting the interests of the de facto partners or a child of the de facto partners in the property.

(2) In deciding what is just and equitable, a court must consider the matters mentioned in subsubdivision 3.

(3) It does not matter whether the court has declared the title or rights in the property.

(4) In this section –

adjust, for interests of persons in property, includes give an interest in the property to a person who had no previous interest in the property.’

[47]The reference in s 286(2) to subsubdivision 3 includes s 291 to s 296 of the PLA. By reason of s 296, the matters mentioned in s 297 to s 309 of the PLA must be considered by the court "to the extent they are relevant in deciding what order adjusting interests in property is just and equitable".

[48] Section 291 of the PLA provides relevantly:

‘(1)The court must consider the financial and non-financial contributions made directly or indirectly by or for the de facto partners ... to –

(a)the acquisition, conservation or improvement of any of the property of either or both of the de facto partners; and

(b) the financial resources of either or both of the de facto partners.

...’

[49] Section 292 of the PLA provides relevantly:

‘(1) The court must consider the contributions, including any homemaking or parenting contributions, made by either of the de facto partners ... to the welfare of –

(a)the de facto partners; or

(b) the family constituted by the de facto partners and 1 or more of the following –

(i)a child of the de facto partners;

...’

[50] A court must also consider, to the extent that they are relevant in deciding what order adjusting interests in property is just and equitable:

• ‘the age and state of health of each of the de facto partners’; (Section 297 of the PLA)

• ‘the income, property and financial resources of each of the de facto partners’, and ‘the physical and mental capacity of each of them for appropriate gainful employment’; (Section 298 of the PLA)

• ‘whether either de facto partner has the care of a child of the de facto partners who is under 18 years’; (Section 299 of the PLA)

• ‘the contributions made by either of the de facto partners to the income and earning capacity of the other de facto partner’; (Section 304 of the PLA)

• ‘the length of the de facto relationship’; (Section 305 of the PLA)

• ‘the extent to which the de facto relationship has affected the earning capacity of each of the de facto partners’; (Section 306 of the PLA) and

• ‘any fact or circumstance the court considers the justice of the case requires to be taken into account’. (Section 309 of the PLA)”

9. Justice Keane then said:

“[51]It has frequently been emphasised that the judicial discretion conferred by s 286(1) of the PLA and its analogues in other statutes should not be constrained by pre-determined guidelines. (Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513; In the Marriage of Lenehan [1987] FamCA 8; (1987) 11 Fam LR 615; Kardos v Sarbutt [2006] NSWCA 11 at [51]; (2006) 34 Fam.L.R. 550 at 564.) It is essential, however, that the matters referred to in the provisions set out above be taken into account, and that they are "seen, in the reasons for judgment, to have been taken into account". (Davut and Raif [1994] FLC 92-503 at 81,237.) To this end, the four step approach explained by the Full Court of the Family Court in Hickey v Hickey ([2003] FamCA 395; [2003] FLC 93-143 at 78,386, cf Kardos v Sarbutt [2006] NSWCA 11 at [28] – [29]; (2006) 34 Fam.L.R. 550 at 558) provides a useful discipline to ensure clarity of thought and transparency of judicial reasons.”

10. The four step process identified is:

1. the identification and valuation of the property, resources and liabilities of the parties;

2. the identification and assessment of the contributions of the parties to their pool of assets and the determination of the their contribution‑based entitlements in accordance with sections 291-295 of the PLA;

3. the identification and assessment of the factors in sections 297-309 of the Act to determine the adjustment to the contribution-based entitlement; and

4. consideration of the result of these earlier steps to determine whether that result was just and equitable in accordance with section 286 of the PLA.

The pool of property

11. There are three items of real property to be considered.

Norfolk Island 

12. In 1989 the respondent acquired the Norfolk Island property from his father for the sum of $58,000. Of that sum he borrowed $25,000 on the security of a first mortgage to part-pay his father. The balance was secured by a second mortgage held by his father.

13. In 2003 the parties used the property as security for a loan to assist in the purchase of a business and for refurbishments of the property. That loan is in the names of both parties.

14. The respondent obtained a “market appraisal” from a real estate agent in July 2009 which estimated the property’s value at $120,000 to $130,000. This estimate is not accepted by the applicant but, in the absence of any other material on the point, I will adopt it so far as it is necessary to do so.

15. The respondent has made most of the mortgage payments on the Norfolk Island property. He is currently in arrears but he says that he has an arrangement with the bank manager and wishes to continue to hold the property.

Kippa-Ring

16. In 2000 the applicant’s parents approached her to assist the parties in financing the purchase of a property at Kippa-Ring. Her parents were unable to obtain finance for the purchase at the time as they were both on an aged pension. The property was purchased for $126,000 and a mortgage in the amount of $100,000 was secured by way of a first mortgage. The applicant’s parents paid the stamp duty, transfer fees and conveyancing costs for the purchase. While the applicant is the registered owner of the property she has not made any financial contributions to the purchase of the property as her parents make all mortgage repayments. All other costs relating to the maintenance of the property are paid for by the applicant’s parents. When the parties separated in 2006 the applicant moved to the Kippa-Ring property to live with her parents.

Mt Isa

17. During the first separation the respondent moved to Mt Isa. He sold the businesses which had been established on Norfolk Island.

18. In early 2009 the Mt Isa property was sold and the net sale proceeds of approximately $19,000 were deposited into the trust account of the applicant’s solicitors. The furniture that was in the Mt Isa home was sold by the respondent and he received the proceeds.

Other property

19. Both parties own motor vehicles of approximately the same value. Each party has a superannuation fund of a modest amount and neither party proposes that those funds be adjusted in any way.

20. The respondent has a coin collection which he deposes to having given to his father in part satisfaction of the debt he owes on the property on Norfolk Island. The applicant does not seek any order with respect to that coin collection.

21. The applicant alleges that there is approximately $22,500 outstanding and owing to the parties from the purchaser of the parties’ businesses and the stock of the businesses on Norfolk Island. The respondent denies this. In the absence of any documentation to establish what has occurred with respect to the sale of the businesses, I accept the submission by the applicant that it is appropriate to make a finding that the respondent will receive the benefit of some further funds from the sales, but in an unknown amount.

Liabilities

22. The applicant has a credit card liability of approximately $4,500 which, she says, was incurred purchasing stock for the parties’ business on Norfolk Island.

23. The respondent denies that the credit card was incurred for the purchase of stock, but that it was used to purchase furniture for the house acquired in Mt Isa. The respondent alleges that there was an agreement between the parties that the debt on the credit card was to be repaid from the net proceeds of the sale of the Mt Isa property. I do not accept that, given that the furniture was sold and the respondent has, it appears, received the proceeds of that sale.

24. The respondent has a debt of approximately $90,000.00 to the Child Support Agency in relation to child support owing for the children of his first relationship. It is not a debt of this relationship.

The parties’ contributions

25. Both parties worked together in order to establish the retail business on Norfolk Island. The majority of domestic and parenting tasks were undertaken by the applicant. The respondent, though, did work long hours on the Norfolk Island businesses. When those businesses were sold there was probably little profit to be made from them and, even though the Norfolk Island property was used as security for the loan to purchases the businesses, the contribution of the respondent through that property was not of great value.

26. The major contribution by the applicant has been the care and financial support of the three young children of the relationship. The respondent has not paid any assessed child support or made any contributions to the support of the children since separation. He swears that he is unable to do so. That is, I think, likely to continue. The debt of some $90,000.00 in child support for the children of his first relationship means that it is unlikely that he will have the capacity to provide support to the children of this relationship for some time, if at all.

Adjustments on other matters

27. The state of health of the parties is relevant to the extent that the respondent claims to be in poor health due to an alcohol related problem. There is no medical evidence to support that claim.

28. The respondent is able to earn in the order of $400 to $500 a week as a gardener on Norfolk Island. Given the number and age of the children of the parties, the applicant will find it considerably difficult to obtain employment of any substance for some time. She does receive government assistance by way of parenting payments.

What is just and equitable?

29. I have given consideration to decisions of the Full Court of the Family Court in Clauson v Clauson (1995) FLC 92-595 and W v W (1997) FLC 92-723. Those cases deal with appropriate adjustments for “needs factors” and, of course, provide guidance only to the extent that they indicate an appropriate weighting of needs in the facts of those cases. They do, though, clearly recognise that the party which has the sole or primary caring responsibility of a relationship will generally have an adjustment made in his or her favour to recognise that and, further, that disparate earning potential also will lead to an adjustment in favour of the party with the lesser capacity to earn. 

30. The property at Kippa-Ring is not one which can be regarded as being in the relevant pool of property for the purposes of this relationship. It has always been the case that the property was in the applicant’s name only for convenience and that her parents have made all payments for it.

31. In an outline of submissions filed by the respondent on 17 May 2010 he argues that the court has no powers to make orders in respect of personal or real property on Norfolk Island. He goes on to say that “as to such assets in my name or jointly owned with the applicant and [which] are in the State of Queensland, I submit to any orders that the court sees fit”.

32. This court does not have power to make orders in respect of real property on Norfolk Island but it does have the power under the PLA to make orders which act in personam.

33. The asset pool, even taking into account the Norfolk Island property, is quite small. Given the respondent’s current position and indebtedness, I consider it most unlikely that he will make any contribution to the raising of the couple’s three children and that the only contribution that might be made to that task is through an adjustment made under an order in this application.

34. The appropriate distribution of property in the circumstances of this case should be effected by:

1. The sale of the Norfolk Island property with the net proceeds being divided between the parties, 75 per cent to the applicant and 25 per cent to the respondent.

2. Further, in order to protect the applicant from the possibility of the Kippa-Ring property being endangered through default by the respondent, I will make an order that the respondent transfer his interest in the property to the applicant.

3. Further I will order that applicant retain the moneys held in the trust account of Eliadis Lawyers as a result of the sale of the Mt Isa property.

4. The other items of property such as motor vehicles, superannuation accounts and any other property currently held by the parties respectively shall remain in their possession and ownership.

Costs

35. The applicant seeks an order for costs notwithstanding the provisions of s 341 of the PLA.

36. The applicant was required to make an application for this matter to be set down for hearing because the respondent had failed to return the “request for trial date”. On that occasion costs were reserved. The applicant should have her costs of that application on the standard basis. So far as the substantive application is concerned the applicant seeks her costs on the basis that the respondent has taken no active role since serving material in November 2009 and has failed to appear at the trial. The respondent, I accept, has little means and could not come to Brisbane for the hearing from Norfolk Island. He did provide some material and he did provide some written submissions. I do not think this is a case in which the general rule established in s 341 should be ignored.

37. The applicant is to bring in appropriate minutes of order.