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[2011] NSWSC 1059
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Austin v Hornby [2011] NSWSC 1059 (8 September 2011)
Last Updated: 9 September 2011
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Decision:
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Order for the payment of moneys as return of
contributions to failed joint endeavour between parties on Baumgartner
principles. No order under Property (Relationships) Act claim. |
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Catchwords:
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TRUSTS - whether plaintiff's interest in real
property at time of sale held on trust for cross-claimant and second
cross-defendant
- whether proceeds of sale of real property held on constructive
or implied trust - HELD - beneficial interest in real property held
at all times
by plaintiff/first cross-defendant - plaintiff liable to pay portion of proceeds
of sale to defendant/cross-claimant
on failure of joint endeavour - no need to
impose constructive trust - DE FACTO RELATIONSHIPS - application for adjustment
of property
interests pursuant to s 20(1) of the Property (Relationships) Act
1984 (NSW) - HELD - no adjustment warranted in light of conclusion on
constructive trust claim |
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Parties:
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Margaret Elderton Anderson Austin (Plaintiff/First
Cross-Defendant) Gregory Anthony Hornby
(Defendant/Cross-Claimant) Veronica Margaret Austin (Second
Cross-Defendant) |
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Representation
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Counsel P J Livingstone
(Plaintiff/Cross-Defendants) G P McNally SC with Ms T Gordon
(Defendant/Cross-Claimant) |
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- Solicitors:
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Solicitors Rafton Family Lawyers
((Plaintiff/Cross-Defendants) Matthews Dooley & Gibson
(Defendant/Cross-Claimant) |
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Judgment
- HER
HONOUR : These proceedings were commenced by Mrs Margaret Austin by Summons
filed on 17 August 2010, seeking the release to her of the sum
of $200,000
presently held in her solicitor's trust account, which moneys the defendant, Mr
Gregory Hornby (the former de facto partner
of Mrs Austin's daughter, Ms
Veronica Austin), claims are held on a constructive or implied trust for him.
Without intending any
disrespect, I will refer to each of the parties by his or
her given name.
- The
sum of $200,000 represents the balance of the net proceeds of sale of a property
at Kurrajong (after payment out of the mortgagee
and sale expenses and after the
payment of an amount of $360,670 to Veronica at the time of completion). It was
paid into Margaret's
solicitor's trust account to be held pending the resolution
of the disputes in the current proceedings (in order to secure the withdrawal
of
a caveat placed on the Kurrajong property by Gregory and hence permit completion
of the sale in question).
- Gregory
brings two discrete claims by way of Amended Cross-Summons in these proceedings:
(i) as against Margaret, he seeks a declaration that the Kurrajong property
was held, as at 1998, on trust for Veronica and, as at
the date of sale in 2010,
on trust for Veronica and him jointly; alternatively, a declaration that the sum
of $200,000 is held pursuant
to a constructive or implied trust for him;
(ii) as against Veronica (but pressed only if his claim against Margaret
fails or a constructive trust is imposed for less than the
amount claimed by
Gregory on the constructive trust claim), Gregory brings a claim under s 20 of
the Property (Relationships) Act 1984 (NSW) for an adjustment of
interests with respect to the property of his domestic relationship with
Veronica (the amount so claimed
by way of an adjustment of the said property
interests being specified in the Amended Cross-Summons as $180,000, that
representing
roughly half of the proceeds of sale received by Veronica) and
consequential relief to facilitate payment of that sum.
- When
the hearing commenced, Senior Counsel for Gregory (Mr McNally SC) made it clear
that, whether in the alternative or in aggregate,
Gregory's claim is not (as
Margaret and Veronica had perceived it to be) for any sum over and above the
proceeds held in the solicitor's
trust account (i.e. $200,000).
- There
is no dispute that there was at one time a domestic relationship between Gregory
and Veronica within the meaning of the Property (Relationships) Act . The
dispute is as to when that relationship came to an end. Veronica (who consents
to the order sought by her mother in relation
to the payment out of the
$200,000) maintains that the relationship came to an end in December 2005 and
therefore that Gregory's
Property (Relationships) Act claim has not been
made in time. If that contention is correct, then Gregory seeks leave pursuant
to s 18(2) of the Act to bring his claim against Veronica. For his part, Gregory
maintains that the couple lived in a de facto relationship
from about March 1997
to about late 2006 and then again from late 2007 until January 2009 (although he
was vague not only as to the
precise dates on which the relationship first came
to an end but also as to when it recommenced and subsequently terminated).
- Gregory's
claim against Margaret is put on the basis of an implied or constructive trust
arising out of the arrangements pursuant
to which he carried out or contributed
to particular improvements to the Kurrajong property (in the form of a shed and
then a more
substantial house built on the property). His claim against Veronica
under the Property (Relationships) Act is based upon the substantial
benefit that he says Veronica has obtained, out of the sale proceeds of the
Kurrajong property, from
the work that he performed on the property.
Issues
- The
issues to be determined are therefore:
(i) was the Kurrajong
property held on trust by Margaret for Veronica and/or Veronica and Gregory at
the relevant times or, in the
alternative, are the proceeds of sale of the
Kurrajong property held on implied or constructive trust for Gregory?
(ii) is Gregory now able to maintain a Property (Relationships) Act
claim for an adjustment of the property interests of his relationship with
Veronica and, if so, is it just and equitable that any
order for adjustment of
property interests be made, having regard to the contributions of each falling
within s 20(1)(a) and (b) of the Act?
- Logically,
the trust claims fall to be determined first, since any determination of the
Property (Relationships) Act claim (assuming leave is either not
necessary or is given for the bringing of Gregory's claim) must involve an
assessment of the property
of the couple and their respective contributions to
that property during the course of the relationship.
- There
are numerous factual issues in dispute between the parties, including whether
Gregory contributed money towards the improvement
of the Kurrajong property or
to the living expenses of the household (through a settlement reached with his
former wife and/or by
way of income from his earnings as a bricklayer over the
period); what work was done by Gregory in the construction of the improvements
and the value of that work (compared with work done by paid or volunteer
tradesmen or members of the Austin family including Veronica)
and what work was
done after the relationship between Gregory and Veronica had (on any view) come
to an end; what was said to Gregory
as to the basis on which he and Veronica
would live (and build) on the property; and when Gregory first became aware that
Margaret
was the sole registered proprietor of the property. A critical issue
(since it goes to whether leave is necessary for the Property (Relationships)
Act claim) is the date on which the domestic relationship between Gregory
and Veronica came to an end.
Summary
- For
the reasons set out below, I am of the view that:
(i)(a) the
beneficial interest in the Kurrajong property was at all relevant times held by
Margaret;
(b) the sum of $100,000 out of the proceeds of sale of the
Kurrajong property presently retained in Margaret's solicitor's trust account
should be paid to Gregory (with any interest thereon) by way of recoupment by
Gregory of the contributions he made to the failed
joint endeavour between the
parties (with the balance to be paid to Margaret) but no declaration of a
constructive trust over the
proceeds is necessary in the circumstances;
(ii)(a) the domestic relationship between Veronica and Gregory did
resume for part of 2008 and subsisted at least as at December 2008
and therefore
Gregory is now able to maintain a Property (Relationships) Act claim for
an adjustment of the property interests of his relationship with Veronica;
(b) I not been so satisfied then I would not have granted leave now to
make such a claim since I am not satisfied (having regard to
the order to be
made in accordance with my finding in (i) above) that there is a greater
hardship to Gregory if leave is not granted
than the hardship to Veronica if it
is); and
(c) I am not satisfied that it is just and equitable to make
any order for the adjustment of the property interests of the parties
to the
relationship out of the divisible pool of their assets (taking into account the
order to be made in accordance with (i) above
and having regard to the
contributions of each falling within s 20(1)(a) and (b) of the Act).
Background Facts
- Initial
purchase of Kurrajong property
- Margaret,
now a widow in her early 70's, was at all material times the sole registered
proprietor on the title of the Kurrajong property.
The property was bought with
cash when her late husband was still alive but in her name as he was ill.
- In
her first affidavit (sworn 23 September 2010), Margaret says that she initially
purchased the (then vacant) Kurrajong property
(comprising 12 acres) in about
1990. However, as the Real Property Act 1900 (NSW) transfer in her favour
was registered in May 1995, it seems likely (and Margaret conceded as much in
the witness box) that her
memory as to the timing of events at least in this
regard is unreliable. I say this without criticism of Margaret, who presented
as
a truthful witness and gave her evidence directly and without fuss. She conceded
that her recollection of the chronology of various
events could be wrong.
- Similarly,
Margaret's evidence as to the time at which a mortgage was first granted by her
over the property is unreliable. In her
September 2010 affidavit, Margaret says
that the first time a mortgage was obtained against the property was in about
1996 for an
amount of approximately $180,000 and that it was taken out in the
joint names of herself and Veronica, the purpose of so doing being
to build a
dwelling on the Kurrajong property ([18], [19], [21]) and then refinanced and
increased to $380,000 in about 2000. However,
there is no evidence that there
was a mortgage on the property prior to Veronica moving onto the property in
1998 nor was there any
such mortgage prior to the taking out of an NAB flexiplus
mortgage facility in about 2002 (to which Veronica deposes in her affidavit
of
29 October 2010 and which is pleaded in the Defence to Cross-Summons). Further,
Margaret's evidence in this regard is internally
inconsistent with her evidence
that Gregory had told Veronica and her how much they would need the mortgage to
cover (T 86) (since
the relationship with Gregory had not yet commenced in
1996). Margaret conceded in the witness box that it could have been that the
first mortgage was taken out in June 2002 and refinanced in November 2002
(86.41) and that seems to be the case.
- The
purchase price disclosed on the 1995 transfer was $144,000.00. The Kurrajong
property was later sold by Margaret (at Veronica's
suggestion) in April 2010 (by
which time there was a large house and shed on the property) for the sum of
$925,000. At that time,
the NAB flexiplus mortgage over the property secured
borrowings of $338,000 (the bulk of which are said to have been incurred in
relation to the construction of the house on the property). After the mortgage
was discharged (and other expenses paid), the net
proceeds amounted to about
$587,000, of which the sum of $360,670 was paid by way of cheque drawn in favour
of Veronica, in accordance
with the settlement instructions (presumably given by
Margaret as vendor) (see settlement sheet attached to the affidavit sworn 18
October 2010 by Gregory's solicitor, Mr Mark Ford). (As noted earlier, prior to
the settlement, Gregory had lodged a caveat over
the title, which led to the
agreement under which payment of the sum of $200,000 remains held in the
solicitor's trust account.)
- In
Margaret's September affidavit, she deposed that the balance of the funds paid
on completion of the sale (after sale fees, payment
of the mortgage and the sum
paid into the trust account) was paid to her ([6(d)]). However, as noted
above, the settlement sheet on completion disclosed payment of $360,670 by
cheque drawn payable to Veronica
and the funds appear to have been paid into a
bank account in Veronica's name. Margaret was adamant in the witness box that
those
moneys were not paid to her (contrary to her earlier sworn affidavit
evidence, which she said was a mistake) and that Veronica "got
the balance that
was left" (T 84.49). Veronica denies this (a matter to which I later return).
Margaret does, however, maintain that
it was not her intention that all the
sales proceeds go to Veronica "because she had to pay me for the land" (T 85.49)
and hence
she is seeking the release to her of the $200.000.
- The
parties have obtained a joint valuation report (from Mr KD Wood) which assesses
the unimproved value of the land at the relevant
times at $430,000, thus
enabling the value of improvements to be assessed having regard to the ultimate
sale price of $925,000.
- Commencement
of the relationship between Gregory and Veronica
- There
is a factual dispute as to when Gregory and Veronica commenced living together
in a de facto relationship. As noted above, Gregory
says they cohabited from
about March 1997 until about late 2006 and again from late 2007 until January
2009. (As discussed later,
Gregory's recollection of the dates is unreliable. In
cross-examination he put his initial departure at various times in 2006 and
his
later departure at around Christmas 2008 - T 42.41, though later he suggested
that he was living at a property in Kermond "like
a refuge" at that time "when
things got into trouble" for a couple of days - T 63, which might be consistent
with a departure in
early 2009). Veronica accepts that there was a de facto
relationship but says that it commenced in about mid-1998 (when they moved
to
the Kurrajong property) and that the final separation occurred in December 2005.
(Depending on which version of the evidence is
accepted, the relationship was
therefore somewhere between 7 and 10 years in duration.)
- In
1997 Veronica was living in Housing Commission accommodation at Lethbridge Park
(near her mother's house at Lethbridge park). (She
also at that time had a
quarter interest in property at Myrtle Creek for which she says she later
received a payment of $15,000 from
one of her brothers, Reginald). Gregory says
that he moved in with Veronica in March 1997 while she was living at Lethbridge
Park.
Veronica denies this. She says that a "boyfriend and girlfriend type"
relationship began with Gregory in early 1997 and that in approximately
July/August 1997 Gregory began to stay overnight at her home two to three nights
per week, but that Gregory did not reside at the
Lethbridge Park home
(Margaret's second affidavit is consistent with this). Both Margaret and
Veronica say that the couple first
began living together in mid 1998 when they
moved onto the property at Kurrajong.
- There
seems to be no dispute, however, that from some time in 1997 there was a
relationship between Gregory and Veronica that at least
included Gregory
regularly staying overnight at her house and little ultimately turns on whether
there was a domestic relationship
prior to 1998 (the time at which Veronica
concedes such a relationship).
- In
1997/8, Veronica had three children living with her (from a former relationship)
then aged around 12, 10 and 5, respectively, and
Gregory had a young child (from
his former marriage) who lived with his Gregory's ex-wife but who stayed with
Gregory (and Veronica)
from time to time.
- In
February 1998, Gregory and his ex-wife reached a property settlement, as a
result of which Gregory received payment of a sum of
$40,000 (out of which he
paid about $2,000 in legal fees). At that time, he says he had a small amount of
cash, a one tonne ute,
superannuation entitlements of about $16,000 and about 4
trail (or motor) bikes. He had an obligation to make ongoing monthly support
payments (which he said were $100 per month) for his son.
- Gregory
is a bricklayer by trade and he worked as such (off and on) during his
relationship with Veronica. He was employed for a time
prior to 2000 by his
father and for a time during the period around 2000 by the owner of a pub at
North Richmond. Apart from that,
he seems to have worked at various places out
of Sydney (including Mittagong and Forster) as and when work was available.
During
part or all of the relationship with Veronica he did not have a fixed
regular wage - it being dependent on whether and when he obtained
work. It is
not disputed that there were times that he had no work and was dependent on
Veronica to support his living expenses.
Gregory readily conceded in the witness
box that Veronica had been a great support to him over the period. It appears
that for some
of the period he was in receipt of unemployment benefits (such as
in 2007, when he said he had no work - T 64).
- Veronica
was unemployed throughout the whole of the relationship. Her income was derived
solely from unemployment and parenting benefits
from Centrelink (and was in the
order of $580 per week although this varied over a fortnightly period depending
on which particular
benefit she received each week in that period). She says
that she received board from the children once they turned 15 or 16 (though
she
was unable in the witness box to say when that was - at T 94, she said that she
"wouldn't have a clue" when her daughter had
turned 15 or 16, though conceding
that she knew what year she was born). In her affidavit Veronica said that the
"mortgage payments"
were made out of the $250 per week board that she had
received. (In the witness box she said, instead, that it was an interest only
mortgage with no repayments and that the money was just drawn out of account
there "automatically every month" - T 90 - and that
no one made loan repayments
"it just came out of loan money" - T 92.) Gregory, similarly, referred to
mortgage repayments but seems
to have understood that they were debited directly
by the bank.
- What was said
about the Kurrajong property
- Gregory
says that at the commencement of their cohabitation, Veronica told him that she
owned a property at Kurrajong ([11], [21],
[27] of Gregory's first affidavit).
In the witness box he described this conversation as Veronica saying to him "she
had some acreage
at Kurrajong" (T.60.40/46). (When it was suggested to him that
this was unlikely as Veronica was at the time living in Housing Commission
property, Gregory commented that "she also owned land at Myrtle Creek there as
well" (T 61.37), something not denied by Veronica
- indeed Veronica maintains
that the sale of her interest in that land for the sum of $15,000 was one of the
sources of income for
the construction of the shed on the property.)
- Gregory
says that it was Veronica who said that she wanted move the children out of
Sydney and suggested that "we could build on the
Kurrajong property and move up
there" ([16]) (which is what in fact they did) and that at that time he had no
idea that Margaret
had any interest in the Kurrajong property. (As Mr
Livingstone notes the latter assertion is inconsistent with the later assertion
by Gregory's solicitors, when the present dispute arose, that Gregory's belief
at all times was that Veronica and her mother jointly
owned the property.)
- Veronica
denies that it was her idea that they move to Kurrajong and says that the idea
of building a shed and moving to the property
was Gregory's idea ([16] of her
affidavit in reply). However, she also said that "It was me or my brother who
was going to build
on the property" -124.32 - and that "Greg jumped in first",
which suggests that she at least had in mind that she might build on
the
property at some stage (but also suggests that what was involved at that stage
was not contemplated to be the transfer of any
beneficial interest in the
property - it being a question of who in the family might be allowed to build
and live there at the time).
- Veronica
denies that she ever told Gregory that she owned the property. Similarly,
Margaret says that in conversations with Gregory
she said that she owned
the property at Kurrajong and that she also heard Veronica say this to Gregory.
(Both women refer to later conversations, during
the course of the house
construction, in which it is said that Gregory acknowledged or displayed
awareness of the fact that Margaret
owned the property.) Gregory maintains that
he only learnt that Margaret's name was on the title deeds when the couple
started to
build the house and that he was at that time told by Veronica that
Margaret's name was on the deed "to cover for her".
- In
general I accept Margaret's evidence in this regard. That said, having regard to
the conflicting evidence by Veronica and Margaret
as to the moneys received on
settlement of the sale of the property (Veronica asserting that all she received
was $170,000 and that
the balance belongs to her mother but in a bank account in
Veronica's name so that it does not affect her mother's pension), and
the
general tenor of Veronica's evidence (to which I will refer later), it seems to
me by no means inconceivable that if Gregory
had raised the issue of ownership
of the property with her, Veronica could well have explained Margaret's name on
the title deeds
in that way to Gregory. She seems to have regarded (and been
allowed to treat) the property as her own in a practical sense. Similarly,
it
appears that Veronica acted from time to time as if it were her property (at
least by the time of the house construction and the
later giving of instructions
to the real estate agents for the sale of the property). Therefore, it would not
be surprising if she
had earlier conveyed the impression to Gregory that she had
an entitlement to the property.
- Nevertheless,
there is nothing to suggest that when the property was acquired by Margaret
there was any intention on her part to confer
a beneficial interest on Veronica
or that she had later declared any trust over the property in Veronica's favour.
The most likely
explanation of the evidence, it seems to me, is that Gregory
assumed that Veronica had an interest in the property because she behaved
as if
she were entitled to it and because they were moving onto and building on it.
- Towards
the end of 1997, construction began of a shed on the Kurrajong property into
which Gregory and Veronica moved (with her 3
children) in the first half of
2008. There seems to be no dispute that Gregory was involved in the construction
of the shed (which
commenced in 2007). However, Veronica says that the shed was
built by a number of people (including Gregory) and that, in addition
to the
shed, stables were built (at a cost funded by her daughter Felicia, who can then
have been only about 12, but who apparently
provided some funds out of the sale
of a motor bike [35]), and by Veronica's ex partner (who she said had provided
the beams and
structural materials from his workplace at no cost) [36].
- Pausing
there, Veronica seemed to be at pains throughout her evidence to denigrate and
downgrade the role that Gregory had played
in the construction of the shed and
of the house and to criticise the quality of his work. However, there is a
logical inconsistency,
it seems to me, in saying (for example) that Gregory was
only one of a number of people who built the shed and stables and then seemingly
blaming Gregory alone for any shoddy construction work - such as she did in
relation to the stables by reference to an incident when
the horse cut itself on
exposed building materials - T 115.16; T 115.26.)
- Gregory
says that he spent approximately $40,000 of his money on the construction of the
shed ([25]), out of the moneys from his property
settlement with his ex-wife
(though he does not deny that some materials for the stable were provided by
Veronica's ex-partner).
He says that out of those settlement moneys he "refunded
the sum of $12,000 to Veronica and paid a total of approximately $28,000
for the
construction of the shed". (He also says that he gave Veronica a sum of $4,000
to put in a trust account for his son so that
he would be in the same position
as her children.)
- Further,
Gregory says that after moving into the shed he built a new fence along the rest
of the property (and rural wire fences down
both side boundaries with the
assistance of neighbours) and built a stable for Felicia's horse. He says that
he paid approximately
$4,000 for the materials for the fencing and $5,000 for
the stables ([29]). He also says that he paid $13,000 for the cost of
installation
of a large water tank ([35]).
- Veronica
denies that Gregory contributed any moneys at all towards the construction of
the shed. She claims that she had three sources
of income which she used for the
construction of the shed ([31]) - $12,000 held in a bank account in trust for
her children (which
is consistent with Gregory's understanding that the three
children each had the benefit of a trust fund of $4,000); $20,000 of personal
savings; and $15,000 received from her brother Reginald for her share of the
Myrtle Creek property.
- Of
the three sources of income that Veronica says were available to her, there is
doubt in relation to when she received the sum of
$15,000 said to have been
referable to the acquisition of her share in the Myrtle Creek property. The
transfer in respect of her
share was dated 10 May 2000 (well after the shed was
complete). If payment for the transfer was effected at the time of the transfer
then she could not have had those funds available to use in the construction of
the shed in 1997/8.
- In
cross-examination, Veronica gave conflicting evidence as to this issue. After
asserting adamantly that she had enough funds to
complete the shed on her own (T
110.46) and referring to her share of the Lismore property, Veronica accepted
(at first) that the
sale transaction was effected on the one day (T 11.23); she
then said that she had received the sum from her brother Reginald at
an earlier
time (i.e. before the transfer of her interest ion the property); then she said
that when she had referred to the $15,000
she received from Reginald she was
referring to the water tanks or fences not the shed (T 112 .47), saying that
"The shed classified
as septic, everything that is around it, not just
specifically one shed" (T 113.7). Finally, Veronica conceded that she did not
have
the money from sale of that property "when the shed first went up" (T
112.19).
- (I
interpose to note that no evidence was adduced from Reginald as to the time when
money was paid to Veronica for her share in the
Myrtle Creek property).
- As
to the payment out of the children's trust moneys, there is some consistency
between the evidence given by both Gregory and Veronica
on this issue - in that
both say that Veronica was proposing to use the moneys held for her children,
but Gregory says that he refunded
those out of his property settlement moneys.
- At
T 62.4, Gregory said that to "start the shed" there was $4,000 to be put out of
each of Veronica's three children's trust accounts
and $4,000 that was to go
into his son's account was also used for the shed; but he also said that he had
given Veronica $16,000
out of the moneys from his settlement to go into each of
the four trust accounts (though there is no reference to that in his affidavit).
The evidence in this respect was confusing but it would seem that what was
contended by Gregory (as is set out in the conversation
to which he deposes at
[19]) was that Veronica had agreed to use moneys for the construction of the
shed at the outset out of her
children's funds and that he was then to pay her
back for those moneys out of his property settlement - and that this was the
$12,000
of the funds from his property settlement by which he said her had
refunded those amounts ([25]). Needless to say, that is denied
by Veronica.
- Veronica
says that of his property settlement, Gregory paid her $10,000 to repay her a
loan for the purchase of a Holden ute (the
acquisition of which Gregory says
came later than the settlement and was a loan that he says he repaid with moneys
handed over from
his wages) and she also claims that he paid some $24,000 for a
motor bike. Gregory does not deny that he bought a motor bike after
the property
settlement (though he says it was at a much lower cost - around $8,000 or
$9,000, and not the $20,000 that was put to
him in cross-examination) (T 38).
- If,
as Gregory says, the sum of $12,000 (advanced out of Veronica's children's
accounts) was repaid by money he provided out of his
property settlement, then
taking into account the legal fees of around $2,000, that would have left no
more than $26,000 available
for contribution to the shed construction costs (of
which it seems to be conceded that some $8-9,000 was spent on a motor bike at
least). (That would be consistent with a payment of around $9,000 on the fencing
and other materials but leaves unclear from where
the funds for the water tank
were derived - assuming all these amounts were paid at around the time of
construction of the shed.
Alternatively, it would be consistent with payment of
the costs of the water tank but would leave unclear how Gregory could have
funded the fencing and stable materials, at least without another source of
income.)
- No
invoices were produced in relation to the amounts said by each to have been
expended on the shed. Gregory did receive a net sum
of about $38,000 out of his
property settlement of which it is feasible that he could have expended around
$30,000 on construction
of the shed and items such as the water tank (assuming
the motor bike was in the order of $8,000) (and would be consistent with his
assertion that he repaid the amount of $12,000 funded through Veronica's
children's trust funds), though that amount would not have
covered the total
amount that he says was spent by him in connection with the shed, stables and
fencing.
- Apart
from the amount he received from his property settlement, Gregory's ability to
fund payments of the kind that he says he made
towards the shed seems to have
been limited. Mr Livingstone pointed to Gregory's tax returns for the 1998 and
1999 years to show
that his income was limited and would not have permitted
contributions of the kind that Gregory said had been made. (For the year
ended
June 1998, during which year he said he had broken his leg and was unable to
work as much, Gregory's total taxable income was
$15,822; in 1999 it was
$26,211.)
- In
that regard, there was a suggestion that Gregory may not have disclosed all of
his income over the period (he said in answer to
questions as to his taxable
income for those years that there may have been cash jobs). Gregory referred to
"cashies" as payments
received in cash and agreed that they were not recorded in
his work diaries (T 29.35). His evidence in the witness box suggested
that he
might not have regarded those as income he was required to declare. At T
27.19/25, Gregory said that the wages "would all
be on there" but some money was
not on the books and he seemed to suggest that moneys paid in cash might not
have had to be declared.
- However,
to the extent that his filed tax returns should be taken to reflect what his
income was for the period, this does not reveal
a ready source for payment in
respect of the construction of the shed and Gregory conceded (at T 28.29) that
there was not a lot
of money left out of his wages after child support, petrol,
cigarettes and the cost of living.
- Veronica
sets out at [32] of her first affidavit the amounts she asserts were paid from
her own moneys in relation to the construction
of the shed (including for that
purpose amounts that she says were referable to the water tank and fence).
According to Veronica
(and leaving aside the cost of materials for completion of
walls and floors, which she did not attempt to quantify), she expended
a total
of some $45,000 on the shed, fencing and water tank. If those estimates are
reliable (and I treat them as no more than assertions
given the lack of any
documentary evidence and the general tenor of Veronica's evidence) then even if
Gregory had paid the whole
of the net funds from his property settlement to
Veronica (and deducting an amount for the motor bike), there would be a balance
of some $15,000 that Veronica must have funded (out of her children's trust
funds and/or whatever other funds were available to her
- but not out of the
moneys from Myrtle Creek, which she accepted she did not have at that stage).
- For
the reasons that I outline later in this judgment, I consider that the evidence
of both Veronica and Gregory in relation to financial
matters needs to be
treated with scepticism. I consider that the evidence establishes that Gregory
must have contributed at least
$15,000 and potentially up to $30,000 out of his
property settlement moneys to the construction of the shed.
- Relationship
at Kurrajong
- There
is no dispute that after the shed was built the couple lived in the shed on the
Kurrajong property with Veronica's children
from about 1998. There also seems to
be no dispute that the relationship was a volatile one (to use a relatively
neutral, and probably
charitable, term). It was described as an "off and on"
relationship (by Margaret, who deposes to periods during which Gregory lived
at
other locations - for up to approximately 9 months on one occasion) ([12]-[14]);
or a "hot and cold" relationship, as conceded
by Gregory himself (T 65.47).
Felicia (who admittedly was not favourably disposed to Gregory and says she was
forced to like him
and regarded him as the enemy for most of the time of the
relationship with her mother - see T 129.28; T 129 37) said that "it was
always
off and on that he was living at Kurrajong".
- Veronica
more than once described it as an abusive relationship (see T 110.13; T 117.48)
and said that the whole thing was a nightmare
(T 119.14) and there was evidence
from both Margaret and Felicia as to their observations of physical violence
during that time.
Veronica recounted in her affidavit various incidents of
physical and verbal abuse (in the main denied by Gregory, although he did
not
deny that he had used offensive language to Veronica and he accepted that on one
occasion he had injured Veronica's finger and
she had required hospitalisation
for the injury). Gregory's work diaries (to which he knew Veronica had access
from time to time,
though he suggested that this was a breach of his privacy)
certainly contain offensive language (and hence it is not unlikely that
Gregory
used such language in the home) and, on occasion, crude messages (leading to the
submission by Mr Livingstone that they were
intended to harass or intimidate
Veronica - although it is not clear whether she was in fact intimidated by the
contents of the diaries).
Gregory denied that when he wrote notes in his diary
he intended to threaten Veronica (T 66.21) and said that his diary was his "own
thoughts" and for him. He agreed that Veronica had written in them and had
access to them but denied addressing comments in his diary
to her and maintained
that he did not even think about whether she would read it (T 67). In this
regard, many of the notes seem to
be admonitions to himself and it may well be
that the notes written that were abusive of Veronica were not directed at her
(although
I was taken to a particularly crude drawing that is hard to read
otherwise than as directed to her).
- Gregory
accepted in the witness box that he had "probably" used bad language (T 37.15)
"during some fighting, some had times" and
accepted that his diary contained
such language (describing the relationship as 'pretty hectic' throughout the
period - T 64.48).
- On
8 January 2003, while the couple were still living in the shed, Veronica
obtained an apprehended violence order against Gregory
(that order being revoked
on 25 June 2003), which in its terms prohibited entry by Gregory onto the
Kurrajong premises. Gregory says
that when that order was made, he lived for a
time at a friend's place (though he was vague as to whether this was for a week
or
a month) and then moved back in with Veronica with her consent. (According to
Gregory's evidence in the witness box, the order was
amended on Veronica's
application after 6 months. His evidence was vague as to when he actually moved
back to the property). Veronica
seemed to accept that the AVO had been amended
with her consent "because things changed" (saying that the 3 months after that
was
the only period that the couple had "got on").
- Decision to
build on the property
- During
2002, it seems that there was discussion as to the building of a house on the
property. Veronica's evidence in this respect
was difficult to accept. She
maintained in the witness box that the project was Gregory's idea "and solely
his" (T 91.25) (which
seems inconsistent with her mother's evidence) and one
with which she reluctantly went along (T 107) and denied having any interest
in
the project.
- At
T 106.49, she said that "Greg wanted to build the house to keep the cost down,
not me Greg wanted to build the house", and that
she was quite happy living in
the shed (T 107). She said (at T 107) "He is the one who wanted to build the
house. He is the one who
promised everyone the world, and he is the one who did
not deliver". (Somewhat inconsistently, she also said "I was going to go ahead
and build a house regardless if he was in my life or not" (T 91.31).) At T
110.7, Veronica said "I wasn't interested (in the house))
in the beginning and I
probably wasn't really - I didn't have a choice. I was told that I had to help
and that was every day he was
there I had to be there".
- Veronica
was reluctant to accept that there was any intention for the home to be built
for their joint future but did not deny it
outright: asked whether they had
moved to Kurrajong and started living in the shed with a view to a long term
relationship, her answer
was "not really" (T 91.13); asked if she understood
Gregory was building the house for the future they were planning (T 92.6) she
again said "not really" and added "He just lied all the time" (T 92.12); asked
if it was the idea that all of them would live in
the house, she conceded "Oh if
it did get to that yeah" (T 110.16); but then said "it didn't last long - I
wouldn't really say he
stayed in the house too long" (T 110.22) (something
inconsistent with the suggestion that he did not move into the house at all and
only lived in the shed).
- Even
if it be the case that it was Gregory's idea to build the house, it seems highly
unlikely that Gregory would have taken on such
a project if all he thought was
that he would obtain more than the benefit of temporary (and rent-free)
occupation in the property
(which is what Veronica suggested at T 107.11).
Furthermore, if accepted, Veronica's evidence that the construction of the house
was all Gregory's idea and that she only reluctantly fell in with his wishes
would seem to me to support the conclusion that Veronica
understood that Gregory
was to obtain some benefit out of the construction of the house (not simply that
this was something to occupy
his time or to provide temporary accommodation for
him - since the former makes no economic sense and the latter ignores the fact
that Gregory already had temporary accommodation in the shed). I have come to
the conclusion that Veronica's evidence on this issue
was an example of her
insistence on down-playing the relationship and Gregory's role in it.
- Gregory
says, variously, that it was when they were building the shed (T 50.4) and then
that it was when the couple were discussing
the construction of the house in
about 2002 or starting to build the house (T 49.39) that he first learnt that
Margaret's name was
on the title deed. He says that Veronica told him this and
that she said it was "to cover for me", explaining that she would need
to get
her mother to sign the mortgage documents ([33]). Veronica denies this
conversation. (The reason that it might have been to
cover for Veronica was not
explored, although perhaps there would have been an issue as to her CentreLink
benefits if she had owned
an interest in the property.) Gregory also says that
Veronica told him she had looked into transferring half of the property into
his
name but that it would cost about $30,000 for the stamp duty and they agreed
that this was too much ([34]). Veronica denies the
conversation in [33] but,
perhaps tellingly, does not respond directly to the conversation in [34].
- Both
Veronica and Margaret recount conversations in which they say Gregory complained
(during the course of the construction of the
house) that he was doing all the
work and the property was not even his. Gregory denies this, but in any event,
it would be consistent
with Gregory's evidence that he was told at some stage
that the title deeds were in Margaret's name and that he regarded this as
inconsistent with the arrangement in relation to the house. Gregory, however,
maintains that he understood that Veronica had a beneficial
interest in the
house and he asserted that "I thought she [Margaret] had her name on the deeds,
I believed v owned it and the mothers
name was on the deeds" (T 50.13). At least
by the time that preparation for construction commenced, however, he knew that
Margaret's
name was on the deed (T 51.42).
- Finance for
construction of house
- Finance
was obtained from the NAB in late 2002 for the purpose of construction of the
house on the property. (Veronica made the loan
application, falsely stating that
she was employed at the time. When first questioned as to this, Veronica
somewhat disingenuously
suggested that she had not herself misinformed the bank
but, rather, her accountant had. However, she did ultimately concede that
she
had knowingly signed a document containing the dishonest statement that she was
in paid employment with EZI Grow Hydroponics,
Mr Druitt (T 97.34) in order to
obtain a financial advantage for herself (T 98.26).
- The
loan was via a flexiplus loan facility secured by a first registered mortgage
over the property. The facility operated such that
the principal was not
repayable during the term of the facility and interest was charged on a monthly
basis and debited to the loan
account (presumably up to the maximum level of the
facility). Withdrawals from and payments into the loan account were permitted
and operated either to increase or reduce the interest payable on the
outstanding loan account balance. Relevantly, it seems that
the living expenses
for the household were also met from this loan account (into which Veronica's
CentreLink benefits were paid)
as well as the construction costs. (In 2007 and
2008, overseas holiday expenses for Veronica and members of her family were met
out
of the loan account.) Veronica conceded that it was used as a bank account.
- Gregory
says ([25]) that he made mortgage payments during the course of his cohabitation
with Veronica, by giving most of his wages
to Veronica each pay packet ([27])
(though he also accepted in cross-examination that there were not mortgage
repayments as such).
He says that during the course of the relationship, he
worked as a bricklayer and earned approximately $1,500 per week of which he
says
he gave about $1,000 per week to Veronica (which he says she used to pay for
building materials for the house and repay the
line of credit obtained from the
NAB to construct the house). In cross-examination he was somewhat vague as to
what had occurred
in that regard and as to his earnings over the period.
- Having
regard to the work diaries he kept over the period (in which he regularly
records having no work but in which on other occasions
he records amounts paid
for wages and the like - including at least one entry where he notes that he was
paid $1,800) it seems implausible
that he received a regular wage that permitted
him to pay $1,000 per week to Veronica (and the loan account statements do not
record
a regular deposit of such an amount). That said, the bank account do
record cash deposits from time to time of amounts that do not
seem to be
referable to the CentreLink payments, which would support the inference that
Gregory was providing Veronica with cash
out of his wages at least from time to
time (contrary to her denial to that effect). (This seems to me to put into
context his concession
at T 46.17 that all his expenses - bike, petrol, clothes,
food, cigarettes, beer and marijuana - were met for him over a 10 year
period;
and that he did not do the grocery shopping (T 47) and that Veronica would
sometimes buy clothing for him (T 46.44). To the
extent that those payments came
out of funds from the bank account, it seems to me likely that they came out of
pooled funds albeit
that Veronica's income was more regular and may have been
more than his over the period - although no exercise was carried out to
determine that).
- The
construction of the house was as 'owner/builder' and it is not disputed that
Margaret completed a TAFE course in June 2003, as
required for the purposes of
such certification. There is a dispute as to whether, as Gregory says, it was
put to him that one or
other of Margaret or Veronica had to do the course and
the suggestion that Veronica did not do so because she was 'probably' required
at home that day.
- Veronica
accepted that Gregory "took control of the work", she says that this was
something that she "just went along with" (T 107)
and that he had liaised with
the Council at first but that this changed after the house was complete (though
quickly adding that
it was "not actually complete because it was never
complete").
- The
building documents tendered by Gregory show that he was recorded on a number of
the documents as the owner or builder, together
with references to Veronica as
owner, suggesting that the couple were not careful to specify accurately the
position in that regard.
(Exhibit 10 is a bundle of documents including a
building inspection request dated 8 September 2003 showing the owner as 'Austin'
but the builder as G Hornby; a second certificate of compliance describing the
clients as Mr and Mrs Hornby; a residential construction
specification in the
name of G and V Hornby of 6 January 2003; an Avcot Engineering Services
Agreement with G and V Hornby; and a
certificate of compliance dated 18
September 2003 describing G Hornby as the builder.) This is consistent with the
project being
treated as a joint project (as are Veronica's own entries in
Gregory's diaries during 2003).
- Construction
of the house began during 2003. Gregory described the works that he says he
co-ordinated during the construction process
(at [39] of his affidavit and in
considerably more detail in his oral evidence). It is common ground that Gregory
did physically
carry out some building works on both the shed and the house
(though Veronica was at pains to stress that she was assisting him throughout
and that others were involved) and there is a dispute as to the extent (and
value) of those works.
- Veronica
grudgingly agreed Gregory took charge of the construction (T 128.9) and
"sometimes" was involved in the construction "when
he would get off his benders
he would go to work and then I would not see him for a week" (T 128). She
asserted that the work was
of "benefit for himself because he was the one who
wanted the house" (T 128.22) and maintained that "No it was actually a headache
to me something that I didn't want to go on lived on promises had no choice but
to go ahead with the house" (T 128.25).
- Veronica
consistently down-played the involvement of Gregory in the construction of the
house, maintained that he had done much less
than he said he had done,
emphasised her own involvement in the construction of the house (and was
critical of the quality of the
work that he had carried out - describing most of
it as 'poorly done' or very poorly done, including by reference to the cheap
tiles
that she said had been used). She did not refer in her affidavit to some
of the work that she conceded Gregory had performed such
as his use of a backhoe
to excavate trenches (which she described as "Got on it all the time to destroy
the property" T 113.49) because
she said that her affidavit "didn't go into the
nitty gritty" and it "wasn't my department" - T 114.12. I can only describe her
attitude
in the witness box in this regard as truculent, grudging and
unco-operative.
- So,
for example, of the tiling that she concedes Gregory carried out ("with
assistance from me") T 114.23, she said that she did not
mention this in her
affidavit because "that's house things not women things its men things" and then
said was a "very poorly job"
(T 114.36). She would not concede that the
bricklaying (in which she said they had all assisted) was an important
contribution ("No
because he done a very poor job. All things were out of line,
depreciated the value of the house because they were cheap tiles" -
T 114.46;
then, when it was pointed out that on her case she had paid for the tiles, she
said the reason that the tiling depreciated
the property was because they were
not laid properly they were all over the place T 115.7 and again that they were
"not the best
of tiles", "when people would throw things on it and smash them no
not the best of tiles" - T 115.11). Veronica gave varying estimates
of the
bricks laid by Gregory (70% or 80%) but says "I was there, every brick" (T
91.42/.48) (her assistance not being disputed by
Gregory). Asked about work on
the fence she said "Not all of it" T 99.5.
- At
T 98.38, Veronica claimed "I done more work than he ever done"; at T 98.45 "He
did a lot less work than he is claiming that he
has done".
- In
response to the suggestion that she considered that every piece of work carried
out by Gregory had been done poorly, Veronica said
"it had to get fixed up a lot
of things had to be fixed up" (T 115.26).
- As
to Gregory's evidence of the work carried out by him, while vague in much of the
rest of his evidence, he became most animated
when describing the tasks that he
had performed or organised others to perform in relation to the works
(presumably because this
was an area of evidence closer to matters of which he
was familiar and felt comfortable discussing). He did not deny that Veronica
(and others) had assisted him and I did not form the impression that he was
overstating the work that he personally had done. I accept
that in general terms
his evidence as to the steps taken by him and others in the construction process
was credible and where there
is a conflict between his evidence and that of
Veronica as to the work that was done and by whom I would accept Gregory's
evidence
as the more reliable.
- Veronica
denies that Gregory contributed any of his own money to the construction of the
house. Certainly, as Mr Livingstone developed
in cross-examination of Gregory,
his financial ability to contribute to the costs of the materials for the
construction works (having
regard to his inconsistent work history and tax
returns) was limited. It is submitted (and I accept) that Gregory's overall
circumstances
were such that he did not have significant funds (whether by way
of capital or income) to invest in the Kurrajong property (having
regard to the
spasmodic nature of his earnings and his ongoing legal obligation to provide
support for his child under the Child Support (Registration and Collection)
Act 1988 (Cth) and the Child Support (Assessment) Act 1989 (Cth)).
- Gregory's
tax returns certainly do not reveal a large income sufficient to meet
construction costs in the vicinity of somewhere in
the order of $330,000 over
the period in which the main construction work was carried out. He was employed
for a time from about
1996 in his father's electrical contracting business and
paid (variously by cash or cheque) depending on the amount of work he had
done
from week to week. He says that out of his pay he gave his mother money for his
child support payments (to pay his ex-wife).
Mr Livingstone placed some weight
on the fact that there was no evidence adduced by Gregory's mother (as to the
alleged payments
to Gregory or as to where Gregory was living in 2007/2009 (the
disputed period)). There was evidence, however, from his father Mr
William
Hornby that supported in general terms his employment of Gregory for some part
of the period in which Gregory was in the
relationship with Veronica (although
he no longer retained records in relation to the wage payments) and, relevantly
in light of
the criticism that Gregory's mother was not called to give evidence,
William was not cross-examined as to where Gregory was living
at the particular
time.
- It
seems fair to say that Gregory's employment over the period from 1998 to 2009
was of a sporadic nature (whether due to injury,
as seems to have been the case
in 1998, or because of a lack of available work). There was a suggestion in the
course of cross-examination
that Gregory had been prepared to take unemployment
benefits while fit and working on the construction of the house. However,
Gregory's
explanation seemed to be that there was not available work in the
whole of the period. I was taken to various diary entries by Gregory
that
suggested that, over the course of his relationship with Veronica, there were
indeed periods in which he had no or little work.
However, given that Gregory
seems to have been prepared to travel out of Sydney in order to obtain work (and
to stay in a van or
other temporary accommodation to do so) I do not conclude
that he was unemployed from time to time because of any general disinclination
to work.
- As
noted earlier, Veronica was unemployed for the whole of the period. There is no
evidence as to any attempt by her to gain employment
in the period. She was in
receipt of welfare benefits (a maximum of $580 per week) that do not seem to
account for all the cash deposits
into her bank account (which suggests that
Gregory did provide her with income from time to time, as he says he did).
- Veronica's
explanation for the various cash deposits (in amounts varying over the period
February 2003 to January 2006 from as low
as $300 to as much as $4,800, leaving
aside a deposit described as "Cash and/or Cheques Deposit of $14,763.85 in
February 2004) was
that those were (on every occasion) payments back into the
account of moneys that she had previously withdrawn to pay workmen (and
then
re-deposited when the need to pay those workmen did not arise). (She said in
relation to one such entry "That was money that
I would have taken out of the
bank to pay for things, didn't use the money and put it back into the bank" (T
101.11) and then "Well
during the period I've taken money out to pay for things.
If people didn't show up or nothing got paid, the money got put back into
the
bank" (T 101.24). That may well have been the case on some occasions but it
seems unlikely to account for the regularity of such
cash deposits into the
account. Her evidence was frankly implausible on this issue and seemed to have
been an attempt to avoid the
conclusion that Gregory had in fact given her
moneys over the period for contribution to household expenses or the like.
- I
was left to conclude that both the parties were less than upfront as to
financial matters - it seems to me quite possible that there
was a
non-disclosure in Gregory's tax returns of at least some of the cash income he
received over the period (if, indeed, his contribution
to the relationship was
as he said it was); by the same token Veronica herself was not averse to
presenting an inaccurate financial
picture if that would be of benefit to her or
her family (insofar as she signed a false statement as to her income when
applying
for the NAB loan and she seems to have been unconcerned at the
suggestion that moneys might be placed in an account in her name in
order, on
her version of events, to present a misleading picture in relation to her
mother's pension).
- It
seems to me likely that Veronica's denial of any contribution whatsoever to
financial expenses by Gregory over the period is consistent
with her desire to
minimise the contribution made by Gregory in other ways and I treat it with
scepticism accordingly. Veronica's
explanation as to the bank cash deposits (as
noted above) lacked credibility in my view. In the absence of evidence that
Gregory
maintained a separate bank account during the period (and given that of
the two of them Veronica seems to have been the one to have
assumed the
responsibility for attending to the household expenses - grocery shopping and
the like - as well as for making the payments
to the tradesmen and at least
supervising, if not attending to, the lodgement of documents with the Council,
having regard to her
entries in Gregory's diary), the suggestion that Gregory
gave Veronica some or most of whatever wages he received (less money for
cigarettes or 'beer money') over the period seems to me to be more credible than
that Veronica was the sole financial support for
the household throughout the
whole of the period of what she said was an abusive relationship (with only one
three-month period in
which they got on). That said, it does not seem likely
that Gregory made either a regular or a particularly large financial
contribution
to the costs of construction of the house (the bulk of which seem
to have been funded through the NAB facility).
- What
is clear is that, other than the provision of her land as security for the NAB
facility, Margaret did not contribute financially
to the construction of either
the shed or the house. Tellingly, she explained this in cross-examination by
saying that this was because
it was to be "their house". However, both Veronica
and Gregory obtained the benefit of rent-free accommodation over the period in
which each resided on the Kurrajong property.
- The
house was completed in 2005 (or at least sufficiently complete that it was ready
for occupation). Gregory says that he and Veronica
and her children then moved
into the house. Veronica says that she moved into the house in April 2005 but
that Gregory remained living
in the shed. (According to Gregory, the shed
remained a source of accommodation for him at least to the extent that he says
he slept
there when there was trouble with Veronica).
- As
to any suggestion that Gregory never lived in the home (if that be the intent of
Veronica's affidavit) it seems inconsistent with
her assertion that "Gregory
never resided in the home after December 2005" ([at 29]) (my emphasis)
and while Margaret gave evidence that she did not see any of Gregory's
possessions in the house after
December 2006, she gives no such evidence as to
the period before then. (It is also inconsistent with Veronica's evidence that
he
did not stay 'long' in the house, to which I have referred earlier.)
- As
to any non-financial contributions to the relationship (such as driving the
children to school or helping with the cooking or the
like (which Veronica again
denies or, in effect, dismisses as minimal), it is submitted by Mr Livingstone
that the quality of Mr
Hornby's non-financial contributions is outweighed by the
evidence of physical and verbal abuse on Gregory's part, as well as
inappropriate
behaviour (such as offensive language and illicit drug use in the
presence of Veronica's children).
- Although
much of the evidence of violence was denied (such as the 'pitchfork' incident
and the 'spark plug' incident - those being
denied on the basis of matters
suggested to show that they could not have occurred - or incidents of violence
in the car), there
were at least two incidents that were conceded by Gregory
(the injury to Veronica's finger, that required hospitalisation and that
Gregory
implicitly concedes was distressing to Veronica's children since he referred to
a lot of screaming and carrying on, and the
throwing of some ham (be it a few
slices or otherwise) at Veronica or over her head).
- There
is also support for the likelihood that Gregory was prone to use offensive
language towards Veronica from the contents of his
diaries in which such
language is rife. That said, Veronica too seems to have accepted that she used
offensive language. Both Gregory
and Veronica insisted that they only used
offensive language in retaliation for its use by the other (which rather begs
the question
as to who first engaged in such behaviour).
- As
to the drug use by Gregory, which he says was the smoking of marijuana and which
he says he tried to do discreetly (although that
is not necessarily consistent
with a photograph tendered by Veronica), there was a suggestion that this was
not something frowned
upon in the household as a general principle (on the basis
that Gregory maintained that Veronica's brothers partook of similar behaviour)
but that assertion was not able to be tested on the evidence before me.
- Suffice
it to say that this seems to have been a not particularly harmonious
relationship and was certainly not one in which the interests
of the children
had been of sufficient concern to lead Gregory and/or Veronica to modify
inappropriate behaviour (such as offensive
language, whether that be retaliatory
or otherwise, or drug use by Gregory) in front of the children.
- There
is no dispute that at least by some time in 2006 the couple had separated.
Gregory, in his first affidavit, says that the parties
separated in late 2006
for 12 months and he claims that he then moved back in with Veronica at the
Kurrajong property in late 2007
(at the suggestion he says of Veronica) ([44]).
Veronica, to the contrary, says that she and Gregory separated on a final basis
in
December 2005 (Veronica's first affidavit [16]) and did not resume a de facto
relationship thereafter.
- It
seems to be accepted that when Gregory left the property (be that late 2005 or
late 2006 or sometime in between) that marked the
end of the relationship at
that point. He says that he attended Felicia's 18 th birthday party in December
2005. Neither Veronica
nor Felicia admit to seeing him there (though do not deny
that he was there), saying it was a 'big party'. Veronica was prepared
to admit
that Gregory had helped to set up for the party, which would be consistent with
Gregory still being treated as part of the
household on that occasion. Felicia
was adamant that after the party, Gregory was no longer living on the property.
- Gregory
refers to his diary as indicating when he was at the property (and, relevantly,
when the relationship came to an end at that
point). I was invited by Mr
Livingstone to review the diaries (not simply as to this issue, I hasten to
add). From the 2006 diary
entries it seems that Gregory was at the property in
early 2006 up until March but that he left at some time around 19/20 March and
that the relationship was (at least so he was informed by Veronica) over at that
point. There is nothing to suggest that the relationship
subsisted through to
late 2006. Gregory's own evidence in the witness box seemed to place the end of
the relationship at an earlier
time although he was unclear as to whether it was
while he was living in Mittagong that they finally separated (i.e. sometime
around
April) or in mid June when he was working in Forster.
- The
2006 diary shows entries for 22 and 23 January 2006 respectively as "at home"
and "mowed lawns", which Gregory said was a reference
to Kurrajong, and
similarly for 16 February 2006 "at home". From my review of the diaries "at
home" or "in shed" are references to
the property at Kurrajong. (Gregory
explained references to at shed as being times when he retreated or was banished
when there was
confrontation within the house and that seems consistent with the
content of some of the entries). When Gregory stayed at his mothers
he referred
to that as "at mum's" and when he stayed elsewhere (Mittagong etc) he noted
that. Significantly, there were entries for
March (10, 12 and 13 March 2006)
referring to commencement of work on the garage, which must relate to the
Kurrajong property (there
being no suggestion that he worked on the construction
of any other garage in that period).
- Therefore,
I find that there was still a domestic relationship (though it may well have
been a troubled one) as at mid March 2006.
However, I find that the relationship
had come to an end by the end of March (and probably around 20 March 2006).
(There was in evidence
a birthday card sent by Veronica to Gregory's son in
October 2006 and signed by her on behalf of Gregory, herself and each of her
children, which is inconsistent with the relationship being over at that stage.
However, the diary entries are inconsistent with
the maintenance of a domestic
relationship after March 2006 and I therefore accept Veronica's evidence that
this was done as no more
than a gesture to Gregory's son.)
- Gregory
says that during 2007 Veronica sent him a number of text messages (there is no
diary for 2007 but his diary of 2006 records
some messages having been received
from Veronica after the time at which Veronica had told him the relationship was
over, and Gregory
seems to have seen this as a hopeful sign). He says that they
had dinner and spent the night together when he was working in Mittagong
on at
least occasion and after that (when Veronica returned from a trip to Europe in
2008) they "hooked up" again. Although his timing
was again vague on this issue
(and it is not helped that there is no 2008 diary from which to test his
recollection), he placed the
timing of the resumption of their relationship by
reference to events that it is not disputed did occur (namely, Veronica's
European
holiday in 2008). He says that he moved back to the Kurrajong property
when Veronica came back from Europe in Europe in 2008. That
is denied by
Veronica (and by Felicia).
- The
resumption of a relationship at that stage would not be inconsistent with the
sentiments expressed in a postcard sent by Veronica
to Gregory from Europe
(tendered as Exhibit 9), which was expressed in affectionate terms: "Can't wait
to hold you again Love and
miss you, you big poof Love Veronica". Certainly,
this does not suggest that any separation was regarded by her at that stage as
final. Veronica said in the witness box that she says "lots of love" to everyone
(T 119) but the message on the postcard seems to
me to go beyond a generic
expression of affection.
- There
is little evidence beyond the parties' respective assertions as to whether in
2008 Gregory was living in the property or not,
although Veronica accepts that
he "would have done a bit of work in 2008" (T 122), the value of which she again
minimised (saying
that he was paid to paint the outside to the house, pulled a
bath out in the children's bathroom, worked on a couple of tiles around
edges
and did a bit of gardening and that she gave him "some money for smokes", as
they were "so important to him" - T 123).
- Gregory's
2008 diary is missing. Unlike Veronica, who was quick to accuse Gregory of
stealing invoices to support her claims as to
the amount of moneys she says were
paid for items for the shed (T 113.19) but who based this allegation of theft on
no more than
supposition:
Probably when he has come up to the property I would say. The shed was always
open, All the documents were in the shed" T 113.25
Well I know he would have stolen them because they disappeared and no one had
seen them so yeah he would have taken them - T 113.30
Gregory does not accuse Veronica of stealing the diary. In his first
affidavit he says that when he packed up his clothes and personal
belongings
"when he left the Kurrajong property" (by which I understand him to mean when he
left at some time after 2005/6) and Veronica
gave him a bag which contained his
work diaries and a few miscellaneous receipts and that was all he had. Clearly
the 2008 diary
would not have been in existence then.
- If,
indeed, Gregory did return to live on the property during 2008, it is quite
possible that any remaining papers were later thrown
out (deliberately or not)
by Veronica (who seems by 2009 to have been determined to be rid of anything
relating to the relationship,
having regard to her evidence that: "I gave away
everything I had, everything else was destroyed. The whole thing was a nightmare
and I didn't want anything to do with it again ... everything that concerned him
and the so-called relationship we were supposed
to have" - T 119.14.)
- There
are some matters that seem objectively to point to Gregory's whereabouts during
2007/2008 (although to an extent they conflict
with each other).
- First,
there is correspondence with the Council that suggests that the final inspection
reports were obtained with reference to Gregory
on the documentation (supporting
his assertion that when he returned in 2008 he assisted in finalising the
construction works). Exhibit
3 is a Hornsby Council document dated 22 January
2009 (a mandatory inspection report) on which the contact name is noted as
Gregory's
name. It is possible that this may simply be a function of his name
having been on earlier documents but on its face it supports
Gregory's evidence
that he was there and assisting in relation to the final approvals at that time.
(I note that Veronica herself
says that Gregory finally moved his 'stuff' out in
2009 - if, as Gregory's 2006 diary indicates, on his first departure his
belongings
had been removed, then this is support for him having moved back in
at some point prior to early 2009.)
- Second,
Gregory was involved in a car accident during that period and the traffic
incident report of April 2007 notes his address
as the address occupied by his
parents. Gregory says that this address was taken from his licence and that he
had not changed his
licence back to the Kurrajong address at that stage.
However, when the police came to follow up the report of the incident Gregory
was at his parents' address, which would be fortuitous if Gregory was not living
there at the time. Gregory's explanation that he
may have been just visiting
does not seem to me to be credible.
- Third,
there is evidence of a document in relation to long service leave on which
Gregory has noted his parents' address. Gregory
says he did this, in effect,
because of the long-term nature of such leave entitlements. That seems to me to
be plausible.
- Fourth,
tendered at the close of the case (Exhibit 7) was a receipt from a recreational
imports business for a purchase by Gregory
in 2008 which shows his address as at
7 December 2008 as being at Kurrajong. Of the above pieces of evidence it seems
to me that
the last is the most conclusive. There would seem to be no reason at
all for the Kurrajong address to be listed on the receipt had
Gregory not been
living there at the time. If he had been living at his mother's address (and
only staying in the shed while he was
carrying out some chores for Veronica) it
would make sense to put his mother's address on the receipt.
- On
the balance of probabilities I would accept that there was a resumption (albeit
it would seem relatively brief) resumption of the
domestic relationship during
2008 (not 2007) and that Gregory was still living at the property in December
2008 in a domestic relationship
with Veronica (thus within two years of his
application by Cross-Summons in these proceedings which was filed on 22
September 2008).
- Gregory
accepts that by early 2009 the relationship had come to an end (and in around
March/April 2009, Margaret says that she moved
into the house and that Gregory
was not there). As noted, Veronica concedes that Gregory "finally" moved his
belongings out in January
2009 (T 117.29).
- Prior
to the sale of the house in April 2010 there were further works carried out to
the property - in particular, rectification of
some of the electrical work (as
to the initial quality of which Veronica was scathing) and the filling in of a
large hole that had
been excavated on the property (that Gregory said had been
dug for a proposed swimming pool near the house but that Veronica described
as
Gregory having deliberately damaged the property).
- Veronica
said that in order to sell the property she needed to make a number of financial
contributions towards the property in order
to improve it to an appropriate
standard - those are quantified by her (at [81]) as totalling $31,500 in what
she ways was rectification
of faulty work done by Gregory or to fill in the
large hole and (at [82]) in the sum of $112,500 for other improvements to
increase
its sale potential.
- No
invoices or independent corroboration of those asserted amounts were provided.
Veronica seemed to suggest first that invoices had
been stolen by Gregory, then
that Gregory had no business knowing what had been spent, and then that the
invoices had been provided
to the incoming purchaser (even though at the time of
the sale Veronica was on notice of the claimed interest by Gregory since he
had
lodged a caveat and had retained solicitors - who presumably would have advised
her in relation to the retention of documents).
- Veronica
said as to the further moneys that were spent finalising the house that they
came from her brother (Mark) selling his business
and the sale of a boat (T
117.37), though there is no suggestion of this in her affidavit (she explains
the omission of any such
information in her affidavit as being because it was
"no concern of [Gregory's], I was not with him at the time"). It was in that
context that she went on to say that "Anything that happened after January 2006
had nothing to do with him. I was out of an abusive
relationship I didn't want
to go back there anything I have done there I didn't want anything to do with
him" - T 117.48 (though
this is inconsistent with the communications that passed
between them in 2008 and with the fact that Gregory, even on her own case,
was
carrying out work on the property in late 2008).
- Veronica
said that she did not keep the invoices as to moneys spent on the house ("I gave
them to the owner of the house" - T 118.9)
and that she did not keep copies. She
accepted that before settlement of sale she knew that Gregory was making a claim
of some sort
in relation to the house - T 118 - but then suggested that the
invoices may have been provided before the claim was known since the
owner had
moved in before settlement date and she had moved out. (Veronica's explanation
in the witness box was that the purchaser
had occupied the property under
licence before completion, though there was no evidence as to this and it was
not referred to in
her or her mother's affidavits. Indeed, it is inconsistent
with Margaret's evidence at [28] of her second affidavit that she "continued
to
live with Veronica at the Kurrajong property until the property was sold and
settlement took place in April 2010 " (my emphasis).
- Veronica
also said that she did not ask for copies of the invoices from the owner because
she only had one day before she had to send
everything in - T 118 (but later
seemed to suggest that the Notice to Produce served had not related to her
documents, so it is not
clear that her evidence was consistent even on this
point).
- It
is also not clear why the purchaser would need invoices relating to matters such
as landscaping of the yard (even if invoices relating
to particular items
purchased, such as a roller door, might be useful for warranty purposes) and nor
was there any evidence that
the purchaser had been asked if those invoices had
been retained for the purpose of adducing them in evidence.
- I
pause there to note that to the extent that Veronica seems to have given
everything away or destroyed documents, even though there
may be a quite
understandable desire to be rid of the memories of an unsatisfactory
relationship, that would not preclude an inference
arising as a result of the
destruction of evidence of that kind. (And, even though I find the explanation
as to the giving of documents
to the incoming purchaser lacks credibility, an
inference may similarly arise if Veronica put the documents out of her
possession
and made no attempt to retrieve them for the purposes of the
hearing.)
- Where
particular evidence can be identified as having been deliberately or recklessly
lost, or destroyed, or not disclosed, this gives
rise to a presumption at least
that the contents of that evidence would have been entirely against the
defaulting party (in accordance
with the maxim omnia praesumuntur contra
spoliatorem which has been translated as "all things are presumed against
the wrongdoer" per Mozley and Whitley's Law Dictionary as cited in NWR
FM t/a North West Radio v Broadcasting Commission of Ireland & Anor
[2004] IEHC 109).
- In
Allen v Tobias [1958] HCA 13; (1958) 98 CLR 367 at [375], the High Court adopted the
following statement of principle in this regard:
... no statement of the principle could be more apposite than that of Sir
Arthur Channell delivering the opinion of the Privy Council
in The Ophelia
[1916] 2 AC 206:
If any one by a deliberate act destroys a document which, according to what
its contents may have been, would have told strongly either
for him or against
him, the strongest possible presumption arises that if it had been produced it
would have told against him; and
even if the document is destroyed by his own
act, but under circumstances in which the intention to destroy evidence may
fairly be
considered rebutted, still he has to suffer. He is in the position
that he is without the corroboration which might have been expected
in his case.
- There
is some divergent judicial opinion on the nature of the inference to be drawn.
Some cases (such as Allen v Tobias and The Ophelia [1916] 2 AC 206
) suggest that the inference is limited to matters which could likely have been
established by the evidence which has been destroyed
or withheld. Other cases
suggest that presumptions will be raised against the spoliator on all
issues which are not otherwise positively proved, i.e. whether the use of the
word "omnia" means all things which could have
been proved by the spoliated
evidence or means all things in the matter. Even if the more limited definition
is accepted, adverse
inferences as to credit are likely be drawn from deliberate
spoliation of evidence.
- There
is also a debate as to the amount (if any) of "wrongdoing" or fault required to
enliven the maxim, whether the blameworthiness
requires malus animus or
mala fides , ( Delany v Tenison [1758] EngR 152; (1758) 3 Bro PC 659; 1 ER 1559 )
or whether it is sufficient for the presumption to be available that it cannot
be shown that the destruction of evidence was proper
or justifiable ( Gray v
Haig [1855] EngR 469; (1855) 20 Beav 219; 52 ER 587). Nevertheless, the passage of The
Ophelia approved by the High Court suggests that even bona fide
destruction can have negative consequences in that even where "the intention
to destroy evidence may fairly be considered rebutted,
still [the destroyer of
evidence] has to suffer. He is in the position that he is without the
corroboration which might have been
expected in his case."
- Therefore,
to the extent that Veronica has deliberately thrown away or not produced
documents that might have proved her claims as
to the moneys spent on the house
prior to its sale, I consider that there is an inference available that those
would not have supported
her claims.
- I
also note that elsewhere in her evidence Veronica has had a tendency to inflate
amounts that might assist her claims - such as the
suggestion that the mortgage
over the property had been of the order of $400,000, when it was no more than
$338,000 at the time of
sale of the property. (Similarly, albeit in the context
of the earlier contributions, when Veronica said that the only thing Gregory
ever bought was a chainsaw for $500 and the only money he ever gave her was $235
towards wire for fencing (at T 99.27), there is
no way of assessing those
assertions, the figures seemingly being plucked out of the air.)
- There
was no evidence adduced from Veronica's brother Mark to support the quantum of
the funds allegedly provided by him out of the
sale of the business for those
works (even though Veronica says in the witness box that the moneys came from
the sale of her brother's
business) or as to the sale of the boat to which she
referred. This raises the issue as to what, if any Jones v Dunkel [1959] HCA 8; [1959]
ALR 367; (1959) 101 CLR 298 inferences should be drawn in this case (both
Counsel seeking such inferences to be drawn against the other party on different
aspects
of the case).
- Mr
Livingston placed weight on the fact that Gregory had not adduced evidence from
his mother as to the living arrangements in 2008
(though his mother was in Court
during the hearing). Mr McNally on the other hand placed weight on the fact that
neither Reginald
nor Mark was called to give evidence of the moneys provided on
the transfer of an interest in the Myrtle Creek property or the (only
recently
disclosed) provision of funds to complete the rectification works said to be
required before the sale of the property in
2010, respectively.
- It
is trite law that a Jones v Dunkel inference can only be drawn if there
is a matter which calls for explanation and that the rule in such a case would
permit evidence
in relation to that matter to be given greater weight, and an
inference or inferences to be more readily drawn, when the party who
might have
called evidence to the contrary has chosen not to do so.
- In
Commonwealth of Australia v McLean (1996) 41 NSWLR 389, Handley JA and
Beazley JA said; "... The rule typically applies to strengthen or weaken an
inference otherwise available on the
evidence for the benefit of the party not
in default.") A Jones v Dunkel inference, if one does arise, would do no
more than permit the inference that the uncalled evidence (or missing material)
would not
have assisted the defendants' case; it would not permit the inference
that that the uncalled evidence was in fact damaging to their
case.
- As
to the position in relation to Gregory's living arrangements in 2008, the
evidence of the 2007 traffic incident report and the
long service leave
application would support, perhaps, an inference that Gregory was and remained
at his parents' place during the
course of 2007/2008. However, as noted, there
is also evidence that points to the contrary. Therefore, it is by no means clear
that
the whereabouts of Gregory was something that called for explanation from
his mother. In any event, his father was not cross-examined
at all about this
issue (and yet his address as per his affidavit is the same as that of his
wife). Therefore, even if the rule did
apply, I do not accept that in the
circumstances it places sufficient weight on the inference that Mr Livingstone
seeks me to draw
as to Gregory's whereabouts as to lead to a finding that the
relationship had not resumed and was not in existence as at September
2008.
- As
to the fact that Veronica chose not to call either of her brothers to give
evidence as to financial matters asserted by her (when
there was no suggestion
that they were unavailable) I consider that there was a matter relevantly
calling for explanation in relation
to their evidence and that the failure to
call them would permit an inference that they would not have been able to assist
Veronica's
case. In any event, whether or not such an inference should be drawn,
the fact remains that Veronica has done no more than make assertions
as to the
expenditure in question and I am not prepared to accept that evidence without
some form of corroboration, given the bias
in her evidence against Gregory and
her unwillingness to concede matters that even her own witness (her mother) has
accepted as to
the understanding on which the house was built.
- Veronica's
position in the witness box, as already noted, seemed to be one of truculence at
any suggestion that she should account
for what had been done in relation to the
property after January 2006 or the proceeds of sale (or anything else after the
conclusion
of her relationship with Gregory). She was confrontational (T 111.44)
and an uncooperative witness. Her response to the Notice to
Produce served on
her suggests that at best she was careless of her obligations in connection with
this litigation or at worst deliberately
uncooperative. Her response to
questions such as in relation to the loan application (that her accountant had
informed the bank of
her false employment status not her) and in relation to the
receipt of the proceeds of sale (that the bank had received the money,
when it
was paid into an account in her name and was hardly money to which the bank had
a claim) seemed to show an inclination to
take technical points.
- After
the sale of the property, Veronica used part of the proceeds ($170,000) paid to
her to buy a property elsewhere. $70,000 of
this was, she said, to repay the
cost of the further works after Gregory left and $100,000 to reward her for all
the "hard work I
put in" on the property T 124.36). In the witness box Veronica
denied receiving the $360,000 out of the settlement on the basis that
it was the
bank that had received that amount (T 124.43). She said she did not know where
the balance of the proceeds of sale paid
to her had gone but then accepted that
they were in a bank account in her name. She said these funds belonged to her
mother (T 124.47).
She said the account was in her name because "Mum was scared
the pension department was going to find out" (T 124.47). Margaret adamantly
denied that the moneys in the bank account were hers.
- As
to the balance (the $200,000), Margaret was not prepared to concede that this
was intended for Veronica (which perhaps gives the
lie to the suggestion that
the moneys already given to Veronica actually belonged to Margaret, since
receipt of $200,000 alone might
perhaps affect her pension). In her affidavit of
23 September 2010 Margaret said that the retention of the sum of $200,000 was
causing
her financial hardship as it had been her intention that the Kurrajong
premises would be her "nest egg" and she "was hoping to have
access to these
funds on its sale" ([36]). If (as Veronica says) the moneys in the bank account
in fact belonged to Margaret, then
the asserted financial hardship by the
retention of $200,000 would be hard to accept and it would be odd for the moneys
in Veronica's
bank account not to have been utilised. I therefore accept
Margaret's evidence in preference to Veronica's evidence on this issue.
- Margaret
said (at [12] of her second affidavit that she had said to Gregory, at the time
the construction of the shed began, that
"I am allowing Veronica to go up and
live [at Kurrajong]" and that "my name is on the deeds but as long as I make a
profit and as
long as I get my money back then I am happy". What she meant by
that was clarified in cross examination where she said, tellingly
(at T 47),
that:
I said they could do that, build on the land as long as when they sell it I
get my money back with a little bit extra.
- Margaret
agreed (T 82.4/8) that she was content from about 1997 to allow Veronica and
Gregory to build a shed on premises and from
2003 to construct a house on the
property. Again, at (T 83.10) Margaret agreed that she was content for Veronica
and Gregory to retain
whatever they got for the sale of the property above and
beyond what she had paid for it because (at T 83.13) they were doing the
work to
build it.
- Margaret
accepted that there was no contribution of funds by her to the building of the
house "No, because it was going to be their house" (T 83.44) (my
emphasis) and that she did not help with the building work (T 82). Again,
Margaret said "I let them do that [build
on land] because by then I was widowed
and they wanted to build so I said you can build on that land" (T 86.11) and she
presumed
they were going to live in it (T 86.16)
- Margaret
accepted that it was her belief that Gregory was working on property to build it
up for future of the family (T 87.9) "building
the house for the children" (T
87.15) and that she was content for that occur.
- Commencement
of proceedings
- After
the parties initially separated (whether that be in late 2005 or in late 2006),
no steps were taken by Gregory to have any adjustment
of the interests in the
property of the relationship (whatever that might have been). Mr Livingstone
suggests that this is because
Gregory knew he had no entitlement to anything. It
would, however, be equally consistent with Gregory having no understanding as
to
what rights he might in fact have in relation to the property. What Gregory
himself says is that he still loved Veronica and was
hopeful that they would
reconcile.
- In
April 2010, Gregory became aware that the Kurrajong property had been sold. A
caveat was lodged on his behalf. At that time, his
solicitors asserted
(presumably on their understanding of Gregory's instructions) that their client
was at all times of the belief
that the Kurrajong property was owned by both
Margaret and Veronica (inconsistent with what Gregory now says was his belief at
that
earlier time).
Credit
- Before
turning to the issues for determination, I comment briefly on the credit of the
witnesses, having regard to the matters already
noted above.
- First,
as to Margaret, while there were matters on which her evidence was unreliable
(as to the chronology of events in particular)
I consider that this was due no
more than to the frailty of human memory (and perhaps having regard to her age).
I accept that she
was a truthful witness and note that she was prepared to
acknowledge matters (such as the understanding of the arrangements for the
construction of the house) even where that was of assistance to Gregory's case.
I broadly accept her evidence. Insofar as I have
come to a view as to Gregory's
presence at the Kurrajong property in late 2008, I do not see this as
inconsistent with Margaret's
observations in 2009.
- As
to Veronica, Mr McNally raises a number of matters that he says go adversely to
her credit:
(i) first, her evidence as to the dishonest statement made to the bank on the
application for bank finance (which is conceded by Veronica);
(ii) second, her evidence in relation to the sources of funding for the shed
- it emerging clearly from the evidence that contrary
to her assertions in [31]
of her affidavit, the receipt of $15,000 from her brother was not available at
the time of construction
of the shed (Mr McNally also refers to Gregory's
evidence as to the sum of $12,000 given to Veronica from his property settlement
to repay monies drawn from her children's accounts, but this is not as clear as
the $15,000 evidence);
(iii) third, as to the source of funds for the improvements after Gregory
left - Veronica claims that some $122,000 was spent but
the bank account balance
only increased from $329,000 to $338,000 in the time and Veronica's evidence as
to the source was proffered
in cross-examination and without support or
explanation from her brother;
(iv) fourth, the lack of invoices and Veronica's failure to respond to the
notice to produce (to which I have referred earlier);
(v) fifth, the implausibility of Veronica's asserted lack of interest in the
home (it being only Gregory's idea but nevertheless she
says she was always
going to build a house) seemingly to down-play Gregory's role and the
relationship itself;
(vi) sixth, the inconsistency between her evidence as to the receipt of
proceeds of sale of property and that of her mother; and,
finally,
(vii) seventh, her evident determination to down-play the relationship in
relation to other matters such as the extent and quality
of Gregory's work on
the property; the explanation for the European postcard; the implausibility of
the explanation for the cash
deposits in and out of her bank account; and the
inconsistency between her evidence and the 2006 work diary that shows Gregory
was
on property in March 2006 working on the garage.
- I
think there is force in each of the areas in which criticism has been made. As
to weight, I regard the inconsistencies in Veronica's
evidence (particularly
where they relate to financial matters in respect of the property itself, as
opposed to the more general criticism
going to the loan application) as of the
most weight, together with Veronica's obvious bias against Gregory (reflected in
the fifth
to seventh of the matters noted above), which lead me to the
conclusion that Veronica's evidence is overstated.
- I
have referred above to Veronica's grudging attitude during cross-examination and
to her apparent lack of co-operation in the litigious
process. I consider that
the animosity she clearly bears towards Gregory (well-deserved as that may be)
has coloured her evidence
significantly and it must be treated with great
caution. Revealingly, Veronica said, in answer to one of the questions put to
her
as to the non-disclosure of material that "I won't reveal because I don't
want Mr Hornby to know my life" (T 125.44). That may be
a perfectly
understandable attitude in day to day matters but it means that, if the Court
does not have a full picture of matters
relevant to her defence to the Amended
Cross-Summons, that is the result of a forensic decision by Veronica.
- As
to Gregory, his evidence was undeniably vague and contradictory on various
points (and his disclosure of his financial position
seems to have been less
than candid - at least to the Tax Office). I accept that the evidence suggests a
pattern of behaviour (of
domestic violence and offensive language) on his part
that is by no means to his credit (and must be taken into account when
considering
his overall contributions to the relationship on the second of the
issues before me). Quite rightly, it was put that domestic violence
and
offensive language of the kind that was used, as well as drug use in the
presence of young children, was deplorable and should
not be condoned.
- However,
he (unlike Veronica) was readily willing to concede her contributions to the
property and the relationship (see for example
where he gave credit to Veronica
for her assistance - T 24.28/40), albeit that his description was perhaps
somewhat on the dismissive
side (when he described Veronica as a 'brickies
labourer' - T 68 - or the like); and I consider that the inconsistencies in his
evidence
turned more on his general vagueness and inability to recall matters
than a deliberate intent to misstate or overstate his position.
In particular,
while I consider that the assertion that the relationship had persisted until
late 2006 in the first instance is unsustainable
by reference not least to his
diaries, I note that in cross-examination Gregory himself seemed to point to the
diaries as a more
reliable source than his memory - and he did not generally
seek to excuse the unpalatable material that those diaries disclosed (although
I
accept that he accused Veronica and her brothers of similar behaviour in
relation to the language and the drugs respectively).
- I
regarded Gregory on the whole as a truthful witness (though I cannot place much
reliance on his ability to remember dates with any
accuracy.)
(i) Claim against Margaret
- The
trust claim against Margaret is put on alternative bases: first that she held
the Kurrajong property on trust for Veronica as
from 1998 and then, as from the
sale in 2010, on trust for Gregory; secondly that there was an implied or
alternatively constructive
trust over the proceeds of sale of the property.
- The
basis on which the implied trust was put seemed to be that Margaret was aware
that Gregory and Veronica were erecting a house
on the property at their own
expense (and had encouraged or acquiesced in that course of conduct) and that
she did not tell Gregory
that the home was hers and that, inter alia, in the
event of a sale she would be entitled to sell and retain the proceeds of the
property.
- Reliance
was placed on the principles expounded in Muschinski v Dodds [1985] HCA
78; (1985) 160 CLR 583 and Baumgartner v Baumgartner [1987] HCA 59;
(1987) 164 CLR 137 for the imposition of a constructive trust where there is a
joint endeavour between the parties in which expenditure is shared for
their
common benefit and that joint endeavour comes to an end, and it is found to be
unconscionable for the contributions to or benefit
of that joint endeavour to be
retained.
- The
difficulty I have with the suggestion that Gregory was permitted to carry out
the construction works on a false premise (namely
that Veronica owned the land
and not her mother), at least once the construction works went beyond the shed,
is that by that stage
he was aware that Margaret's name was on the title
(whether or not that be only to cover for Veronica and whether or not he thought
that both names were on the title). According to his version of the conversation
with Veronica, in which he asked that his name be
put on the title, he knew that
he had no legal interest in the property. It does not seem to me that the case
is one where there
was a mistaken expenditure on the property of another
(Margaret) induced or encouraged by that other.
- In
Jacobs' Law of Trusts in Australia (7 th edn) , the learned
authors state (at [1219]) that orthodox legal theory would suggest that a person
who expends time and money in improving
another's property acquires no
proprietary interest by so acting and therefore that the conclusion that equity
should intervene in
this circumstance is incorrect.
- The
evidence does not in my view warrant a conclusion that there was a "common
intention" constructive trust in favour of Gregory
of the kind considered in
Shepherd v Doolan [2005] NSWSC 42 . (Nor, in my view does it
warrant the conclusion that as at 1998, by permitting Veronica to build a shed
and move onto the property,
Margaret had granted a beneficial interest in the
property to her daughter - rather, the conduct seems to me to be consistent with
a family arrangement between Veronica and her mother to permit the former
temporarily to occupy the land).
- White
J, considering a claim based on a common intention constructive trust in
Shepherd v Doolan , said (at [33]):
Where a constructive trust is imposed, based upon the parties' common
intention as to the ownership of property upon which the claimant
has acted to
his or her detriment, the inquiry is as to the actual intention of the
parties . The law does not impute a presumed intention to the parties based
upon what the Court considers fair and reasonable persons in the
position of the
parties would have intended had they turned their minds to the issue. (
Pettitt v Pettitt [1969] UKHL 5; [1970] AC 777 at 804, 810, 816-817; Gissing v
Gissing [1970] UKHL 3; [1971] AC 886 at 900, 902, 905-909; Allen v Snyder [1977] 2
NSWLR 685 at 690, 698, 701). (my emphasis)
- His
Honour noted that this class of trust has been classified as a constructive
trust even though it is based on the parties' actual
intention rather than
imposed despite their intentions. The intention need not be that there be a
specific share of the property.
It may be sufficient that it be intended that
the claimant should have a beneficial interest or some form of a proprietary
interest.
His Honour noted that the intention may be inferred from direct or
indirect financial contributions to the acquisition of property
"or the payment
of expenses which free up the funds for the purpose", this being a wider enquiry
than whether a contribution was
made to the purchase moneys such as to give rise
to a presumption of a resulting trust.
- For
a "common intention" constructive trust the plaintiff must show that the
plaintiff acted to his or her detriment in a way referable
to the agreement (or
understanding) that he or she have an interest in the property. White J noted
that in Green v Green (1989) 17 NSWLR 343, Gleeson CJ (at [357]), (with
whom Priestley JA agreed), had approved the test taken from the judgment of Sir
Nicholas Browne-Wilkinson
VC in Grant v Edwards [1986] Ch 638; 2 All ER
426 (at [657]) that:
Once it has been shown that there was a common intention that the claimant
should have an interest in the house, any act done by her
to her detriment
relating to the joint lives of the parties is, in my judgment, sufficient
detriment to qualify. The acts do not
have to be inherently referable to the
house. ... The holding out to the claimant that she had a beneficial interest in
the house
is an act of such a nature as to be part of the inducement to her to
do the acts relied on. Accordingly in the absence of evidence
to the contrary,
the right inference is that the claimant acted in reliance on such holding out
and the burden lies on the legal
owner to show that she did not do so ...
- The
quantum of the claimant's beneficial interest is that which the parties agreed
or intended. However, where the parties did not
turn their minds to the
particular form of the title that they intended to have the court can impose a
constructive trust which best
gives effect to the intentions of the parties
(White J noting Green v Green and Parianos v Melluish (Trustee)
[2003] FCA 190; (2003) 30 Fam LR 524 in this regard).
- Margaret's
evidence (which I accept) was that at the time of the construction of the shed
she told Veronica and Gregory that she was
allowing Veronica to go and live
there and, in effect, to build the shed there as long as she made a profit and
got her money back.
Her understanding at the time the house was built, it seems
to me, was different from her position as at that time. I am not satisfied
that
the expenditure in relation to the shed was such as to give rise to a beneficial
interest in the land at that stage. The significance
of the evidence that
Gregory said he was spending his time and money on a home and he was not going
to get anything out of it (as
to which I accept Margaret's evidence) suggests
that no common intention to transfer an interest in the property can be inferred
simply by reference to the contributions he made to the property.
- As
to a Baumgartner type of constructive trust, arising where there is a
premature failure of a joint endeavour between the parties, it is noted in
Jacobs' Law of Trusts in Australia (6 th edn) at [1301] that the enquiry
is not as to the actual presumed intentions of the parties, but as to whether,
according to
the principles of equity, it would be a fraud on the party in
question to deny the trust. Thus, as Mr McNally notes, equity intervenes
to
impose a constructive trust not so as to give effect to an actual specific
intention of the parties but on the basis of a pooling
of resources for the
purposes of the joint relationship which has come to an end (referring to what
was said in Green v Green per Gleeson CJ at [353]).
- In
Green v Green , Gleeson CJ noted that the most common case where equity
intervenes to declare the existence of a proprietary interest in a family
home
(there referring to the case where the interest was of a spouse or de facto
partner) is where the person in whose favour a constructive
trust is found has,
directly or indirectly, made a financial contribution towards the cost of
acquisition, improvement or maintenance
of the property (at p 353).
- In
Little v Saunders [2004] NSWSC 655, Campbell J (as his Honour then was)
said (at [41]):
However, the fundamental matter which guides equity in deciding whether there
is a constructive trust in this area, is whether the
property would come to be
enjoyed by a party in circumstances in which it was not specifically intended or
specifically provided
that the other party should so enjoy it.
- In
Muschinski, Deane J said (at [618]) that a constructive trust may arise
when an assertion of a legal right would be unconscionable:
Those circumstances can be more precisely defined by saying that the
principle operates in a case where the substratum of a joint
relationship or
endeavour is removed without attributable blame and where the benefit of money
or other property contributed by one
party on the basis and for the purposes of
the relationship or endeavour would otherwise be enjoyed by the other party in
circumstances
in which it was not specifically intended or specifically provided
that that other party would so enjoy it. The content of the principle
is that,
in such a case, equity will not permit the other party to assert or retain the
benefit of the relevant property to the extent
that it would be unconscionable
to do so ... (at p 620).
- In
Baumgartner , the majority (Mason CJ, Wilson and Deane JJ) referred to
the result reached by Deane J in Muschinski as an application of the
general equitable principle which restores to a party contributions which he or
she has made to a joint venture
which fails when the contributions have been
made in circumstances in which it was not intended that the other party should
enjoy
them. Their Honours cited what Deane J had said in Muschinski (at
[620]):
... the principle operates in a case where the substratum of a joint
relationship or endeavour is removed without attributable blame and where
the benefit of money or other property contributed by one party on the basis and
for the purposes of the relationship or
endeavour would otherwise be enjoyed by
the other party in circumstances in which it was not specifically intended or
specially provided
that other party should so enjoy it. The content of the
principle is that, in such a case, equity will not permit that other party
to
assert or retain the benefit of the relevant property to the extent that it
would be unconscionable for him so to do : cf Atwood v Maude [1858]
LR 3 Ch App 369 at pp 374-375 and per Jessel MR, Lyon v Tweddell (1881)
17 Ch D 529 at 531). (my emphasis)
- In
Jacob's Law of Trusts in Australia (7 th edn), J D Heydon and M Leeming
express some criticism of the reasoning in Baumgartner , writing that:
... the reasoning in Baumgartner v Baumgartner , while purporting to
be rooted in basic equity, gives no more predicability or consistency in result
than that which follows from
the English decisions espousing the 'new model'
constructive trust. It remains unclear as to when and why the interposition of
equity
to prevent unconscientious reliance on legal rights in the Australian
cases will give rise in equity to a proprietary rather than
a personal right,
and a proprietary right which is a constructive trust 'fashioned' by the court.
(para 1353)
and Gummow J advocated caution in this regard during the special leave
application in relation to Friend v Brooker [2009] HCA 21; (2009) 239 CLR
129.
- It
has been held nevertheless that the pooling of labour by or on behalf of both
parties, in the absence of the pooling of financial
resources, may in itself
found a constructive trust ( Miller v Sutherland (1990) 14 Fam LR 416 at
[424] per Cohen J). Contributions to family welfare by way of domestic
assistance (such as homemaker and parent) have also been
held to amount to the
imposition of a constructive trust in some circumstances ( Baumgartner at
[155] - [156] per Gaudron J; Bryson v Bryant (1992) 29 NSWLR 188;
Stowe v Stowe (1995) 15 WAR 363). The onus is on the party seeking the
intervention of equity and the substantiality of the contribution in question
will be a factor
in determining the issue of unconscionability.
- In
West v Mead , [2003] NSWSC 161; (2003) 13 BPR 24,431 Campbell J (as his
Honour then was) considered what was to be established before such a
constructive trust
could be imposed: first, that there be both a joint
relationship or endeavour, in which expenditure is shared for the common benefit
in the course of and for the purposes of which an asset is acquired (noting that
the scope of the joint venture in which the parties
were engaging may be of
relevance and as Deane J in Muschinski considered, may change from time
to time); second, that the substratum of that joint relationship or endeavour
must have been removed
or the joint endeavour prematurely terminated "without
attributable blame"; and, third, that there must be the requisite element
of
unconscionability (namely, that it would be unconscionable for the benefit of
those monetary and non-monetary contributions to
be retained by the other party
to the joint endeavour).
- I
consider those matters below.
- Was there a
joint endeavour?
- The
first question to be addressed is whether there was a joint relationship or
endeavour between the parties in connection with the
improvement of the
Kurrajong property.
- In
this regard, I note that there was little apparent involvement by Margaret in
the arrangements pursuant to which Gregory came to
reside on the Kurrajong
property in the first place - rather, the position seems to have been that she
acquiesced in Veronica building
a shed on the property and Veronica and Gregory
living in that shed rent free. However, by the time the couple came to consider
the
building of a house on the property, Margaret was necessarily involved -
first, because it was necessary for her to mortgage the
land in order to obtain
the funds for the construction of the house and then because she was required to
be certified as an owner/builder
for the purposes of the building. Therefore, no
matter how limited the discussion as to what interest Gregory (or for that
matter
Veronica) might thereby obtain, Margaret was an integral part of the
joint endeavour in which the couple were there involved. (In
relation to the
shed, it seems to me likely that any joint endeavour was one between Gregory and
Veronica until limited, if any,
involvement by Margaret.)
- Margaret
herself accepted that the arrangement (or her understanding of the arrangement)
was that Veronica and Gregory were to build
the house at their cost (she
contributing no more than the land by way of security for the loan facility) and
to be responsible for
the expenses (such as the rates) while they were living
there rent-free and that the house was to be theirs (subject only to her
being
entitled to recover the purchase price and "a little bit extra").
- Mr
McNally submits that although there is a factual dispute as to when Gregory
became aware that Margaret was the registered proprietor
of the property, there
is no doubt that Margaret and Veronica were aware that Gregory wished to build a
shed and a house on the property
and they were content for him to do so
(reference being made to Margaret's affidavits, in her first, at [12] and
second, at [4(27)]
and to Veronica's first affidavit at [26], [39]). Margaret
said in her evidence that she told Gregory that she did not care who built
on
the property - she simply wanted to get back what she paid for it. It is
submitted by Mr McNally, and this seemed to be accepted
by Margaret in
cross-examination, that this was no doubt with a view to Gregory, Veronica and
her children residing together on the
property.
- It
is submitted by Mr McNally that at the time that Gregory performed the work in
constructing the shed, the stables, and the house
on the property, there was a
joint endeavour between Margaret (as registered proprietor) and by each of
Veronica and Gregory that
the land would be improved by the erection by Gregory
and Veronica of a shed and then a house in which Gregory, Veronica and her
children could then reside and, if they so desired, could then be sold for their
benefit.
- It
seems to me that the circumstances in which Margaret accepted in the witness box
that the house was built (and the joint nature
of the involvement of Gregory and
Veronica in that process - both recording entries in Gregory's diary as to the
house and both being
involved in the physical construction of the house) bear
the hallmarks of a joint relationship or endeavour so as to satisfy the
first
part of the test and that this joint endeavour subsumed whatever earlier
arrangements there were in relation to the shed alone.
- Failure of
joint endeavour without attributable blame
- The
next question is whether the joint endeavour failed or was prematurely
terminated "without attributable blame".
- In
Cetojevic v Cetojevic [2006] NSWSC 432, Campbell J (as his Honour then
was) applied the principles relevant to what he had explained as the principles
relating to the imposition
of a Baumgartner constructive trust in West
v Mead to the joint relationship there between the parties. His Honour noted
(at [43]):
In accordance with the principles set out at paragraph [59] in West v Mead
[2003] NSWSC 161 where there is a joint relationship or endeavour, and an
asset is acquired for the purpose and in the course of, and the joint endeavour
comes to an end without attributable fault on anyone's part (as clearly happened
here), a starting point for ownership of the asset
is that the beneficial
interest ought be shared equally. That application of the maxim equity is
equality places an onus of attributing
any other conclusion on a person who
asserts that the title should be held unequally.
- In
Henderson v Miles (No 2) (2005) 12 BPR 23,579, Young CJ in Eq, as his
Honour then was, said at [18]:
As can be seen from its roots in cases such as Lyon v Tweddell, the
expression "without attributable blame" in the standard formula
does not mean
that the court must try and work out which of the parties in a domestic
relationship was of the greater fault; see
Callaghan v Callaghan [1995] SASC 5064; (1995) 64 SASR
396 at 407, where Perry J said that the question as to whether equity gives
relief does not turn on the nice question as to where the
blame lies [in the
breakdown in the relationship between the parties in that case].
- The
meaning (and potential uncertainty) of this requirement seems to have lead to
the grant of special leave by the High Court in
Gazzola v Gazzola [1990]
HCA 13; (1990) 92 ALR 45 (where Brennan, Deane, Dawson, Toohey and Gaudron JJ
said that their "main consideration" in granting special leave was that the
issues would include "questions about the nature and effect of 'attributable
blame'"). However, as it transpired, their Honours did
not address what was
meant by attributable blame because, the court having found that the facts
precluded a finding of a common intention
to create a trust and did "not give
rise to, or warrant the imposition of, a constructive trust upon any of the
grounds for which
the appellants contend", the question as to attributable blame
did not arise. Their Honours noted that "those questions only arise
in the
present case if the appellants succeed in showing either that there was a common
intention among the parties to create a trust
or that the facts of the case are
such that, subject to any question of the existence or effect of any 'blame' or
'unconscionable
conduct' on the part of one or both of the appellants, a
constructive trust arose or should be imposed". The grant of special leave
was
accordingly revoked.
- In
"Doing Equity between de facto spouses: From Calverley v Green to Baumgartner"
[1988] AdelLawRw 9; (1988) 11 Adelaide Law Review 370, Patrick Parkinson suggested that it
was likely that the notion of blame would quietly disappear as a meaningful
statement in this
kind of case, though expressing his opinion that "Presumably
the relevant fault here is that of the claimant who will be denied a
remedy if
he or she is held responsible for the breakdown of the relationship". Such a
presumption is, however, inconsistent with
the notion that relief in equity does
not turn on the "nice question" of where blame lies in the breakdown of
relationships or joint
endeavours of this kind (per Perry J in Callaghan
approved as noted above in Henderson v Miles ).
- It
seems to me that the apparent inconsistency in this regard is resolved if the
question whether a joint endeavour has come to an
end as a result of
attributable blame (in circumstances where the breakdown is due to some wrongful
conduct of the party seeking
the imposition of a constructive trust) is one
treated as part of the question whether it is unconscionable for the other party
in
those circumstances to retain the benefits of the joint endeavour. Thus, a
lack of focus in the authorities such as Henderson v Miles on who might
be to blame for the breakdown of the relationship or endeavour in question (when
considering the "without attributable
blame" part of the Muschinski
formulation of the test) may be explicable if it is bound up in the question
of unconscionability.
- The
issue is of potential relevance here, where the suggestion is that the
relationship may ultimately have broken down due the abusive
nature of the
relationship (and, in particular, the conduct of Gregory in that regard).
However, in accord with Henderson v Miles , I do not embark upon a
determination of who is responsible for the breakdown of the relationship
between Gregory and Veronica. Rather,
I consider factors of that kind in
considering whether, on the breakdown of their domestic relationship, it is
unconscionable for
Margaret (or, for that matter, Veronica) to retain the
benefits of Gregory's contribution to the joint endeavour without compensation
for his work on the property.
- The
third issue is whether there is the necessary degree of unconscionability to
warrant the imposition of a constructive trust.
- It
is submitted for Margaret and Veronica that the value of the Kurrajong house and
land increased through a combination of physical
improvements and market
improvements to the value of land over time. In that regard, the valuation
evidence suggests that there was
no increase in the unimproved value of the land
over the relevant period (according to the valuer, Mr KD Wood, that remaining
constant
at around $430,000) and hence Mr McNally's submission that the benefit
retained by reference to Gregory's work is some $495,000 (or
around $415,000 if
the value attributed by the valuer to the patio added after Gregory left the
property is also taken into account).
- (I
also note in this regard that Veronica's assertion that in 2002, when she and
her mother borrowed funds to build the home, the
vacant block of land was valued
at $550,000 ([76]) is not supported by the expert evidence of its value at the
relevant time(s).)
- Mr
McNally submits that, assuming that the improvements carried out by Gregory and
Veronica added, say, $375,000 to the value of the
property, and (which is
hotly disputed) that the value of Gregory's contribution overall to those
improvements was 50/50 in comparison to that of
Veronica, then the appropriate
order would be that Gregory receive an interest in that part of the sales
proceeds referable to the
value of the improvements which equated to 50% of
$375,000 (i.e. $187,500). (If a common intention constructive trust were to be
the basis for the relief sought, then the enquiry would be as to what the
parties had intended in that regard. The best evidence
of that intention seems
to be the evidence of Margaret in the witness box - namely that she would allow
the couple to build a house
on the property on the basis that she would get back
the purchase price and a bit extra; and, implicitly, that they would have the
balance of the proceeds of sale.
- Mr
Livingstone, however, contends that Gregory's contribution to the value of the
land (by reference to the improvements on the land)
was offset by what he took
out of the relationship (by way of rent-free accommodation) and notes that he
made no contribution at
all to the improvement in the value of Margaret's land
over time. Further, it is said that in considering the benefit obtained out
of
the sale proceeds by reference to the physical improvements it is necessary to
deduct from the sale price ($925,000) not only
the moneys paid to discharge the
mortgage ($338,000) but the unimproved value of the land ($430,000), leaving
some $150,000 only
that is referable to the physical improvement of the land.
- In
Baumgartner the majority noted (at [148]) that Deane J in Muschinski
had "pointed out that the constructive trust serves as a remedy which equity
imposes regardless of actual or presumed agreement or
intention 'to preclude the
retention or assertion of beneficial ownership of property to the extent that
such retention or assertion
would be contrary to equitable principle'" but had
rejected the notion that it should be imposed in accordance with the
idiosyncratic
notions of what was just and fair.
- In
West v Mead, Campbell J (as his Honour then was) said (at [62]) that:
The Baumgartner type of constructive trust is imposed to prevent an
unconscionable assertion of legal title, in circumstances where the parties had
no explicit intention about how the legal title would be held in the
circumstances which have arisen. ... Part of the justification
for imposing a
Baumgartner constructive trust is that the parties have jointly been
building up assets, on the basis that those assets will be available to the
joint endeavour in future. Part of the reason why it can be unconscionable to
let the legal title lie where it falls, if the relationship
fails, is that each
knew that the other was contributing to a common pool on the basis that the
common pool and assets acquired from
it, would be used for the ongoing common
benefit. It is unconscionable for the party who ends up, at the end of the
relationship, with a disproportionate share of the assets which
were built up
during the relationship, to keep those assets when he or she knew that that was
the basis on which the assets were
being built up . (my emphasis)
- In
Cetojevic v Cetojevic [2007] NSWCA 33, Hodgson JA, with whom Tobias and
McColl JJA agreed, said (at [34]):
I accept that it is insufficient for the establishment of a constructive
trust that it be considered inconvenient or unfair that legal
rights be relied
on. I accept that in the circumstances of this case, it was necessary for the
respondent to show both that circumstances
had arisen which were so outside the
contemplation or intentions of the parties at the time of entry into the joint
endeavour that
it can fairly be said that the joint endeavour had broken down,
and also that in those circumstances it was unconscionable for the
appellants to
rely on their legal rights.
- In
the present case the question is whether it is unconscionable for Margaret to
retain the whole (or give to Veronica some and retain
the balance of) of the net
proceeds of sale of the property, having regard to Gregory's contributions and,
if so, what relief should
be granted to remedy such unconscionability.
- Brereton
J in McKay & anor v McKay [2008] NSWSC 177, noted at [30] that "the
fundamental principle in this area of discourse is the restoration of
contributions upon failure of the
substratum of a joint venture". His Honour
considered that to allow one party to retain the benefit of the other's
contribution in
return for paying out the other, would be "inconsistent with the
basal concept of a return of the contributions on failure of the
joint venture".
- In
Liquor National Wholesale Pty Limited v Redrock Co Pty Limited [2007]
NSWSC 392 at [42], Brereton J (recognising that the principle explained by Deane
J in Muschinski has potential application in commercial joint ventures)
expressed the principle at [42] that "where money or other property is paid
or
applied on the basis of some consensual joint relationship or endeavour which
fails without attributable blame, equity will intervene
where it is
unconscionable to draw a line leaving assets and liabilities to be owned and
borne according to where they may, prima
facie, lie, to the intent that the
parties recover what they have contributed to the failed joint venture " (my
emphasis).
- It
is submitted by Mr McNally that where there was a pooling of both financial and
physical resources, for the purposes of the relationship
which has now come to
an end, Margaret held the Kurrajong property on trust for both Gregory and
Veronica (and that the proceeds
of sale are impressed with such a trust).
- I
also note that the High Court in both Bathurst City Council v PWC Properties
Pty Limited [1998] HCA 59; (1998) 195 CLR 566 at [585] and in Giumelli v
Giumelli [1999] HCA 10; (1999) 196 CLR 101 at [113] has said that before a
constructive trust is imposed the court should first decide whether, having
regard to the issues in the litigation,
there is an appropriate equitable remedy
which falls short of the imposition of a trust. In Bathurst , their
Honours noted that Gibbs CJ in Muschinski had seen the imposition of an
equitable charge to secure the appellant's entitlement to a contribution from
the respondent as an adequate
equitable remedy. Therefore, if it were that a
case to support a common intention constructive trust could be identified, it
would
not necessarily mean that such a trust should be imposed if lesser relief
would be available and similarly in relation to a case
based on the failure of a
joint endeavour. (This is relevant in the present case when no more than an
order that there be a payment
out of part of the proceeds of sale held in the
trust account would seem to be necessary in order to remove the
unconscionability
identified in the retention of the benefit of the
contributions).
Conclusion as to constructive trust claim
- I
consider that the evidence establishes that there was a joint endeavour in
relation to the construction of the house on the property
owned by Margaret, as
part of which Gregory (and Veronica) were to have the benefit of accommodation
in the house and, when it was
sold, to share in the proceeds of sale by reason
of their efforts in the improvement of the property. That joint endeavour came
to
an end (at the latest) when the property was sold. Arguably, it came to an
end at an earlier time when the relationship between Gregory
and Veronica came
to an end and it was no longer possible for Gregory to have the benefit of
accommodation in the property.
- In
those circumstances, I am of the view that it would be unconscionable for
Margaret to retain the benefit of Gregory's contributions
to the improvement of
the property. However, in the circumstances I consider that this requires no
more than that Gregory recover
the financial and non-financial (in the sense of
his unpaid labour and his co-ordination role) contributions Gregory made to the
building works. I am not persuaded that this should extend to a share of any
profits in the sale of the land as improved, in circumstances
where I do not
consider that the joint endeavour contemplated an entitlement for Gregory to
have an interest in the property as such
and nor do I consider it likely that it
contemplated an entitlement for Gregory to remain on the property if the
relationship broke
down (particularly in circumstances where there were issues
as to the abusive nature of the relationship).
- I
therefore consider that the limit of what it would be unconscionable for
Margaret to retain (and for which she should now account)
are any moneys that it
can be shown Gregory paid towards the building works (which in my view were paid
not as a contra for rent
but with a view to Gregory building a house in which he
and Veronica and her children could live) and an amount that represents the
contribution of Gregory in his unpaid role in performing tasks such as
bricklaying and tiling and in co-ordinating tradesmen to perform
the relevant
building tasks so that the house could be built most cost effectively.
- The
difficulty lies in quantifying those contributions. I am not satisfied that
Gregory has established that he paid more than (at
most) $30,000 towards the
construction of the shed. I accept that he made payments from time to time
towards the living expenses
of the household and which may presumably reduced
the interest on the loan facility but I am not in a position to quantify those
amounts. As to his non-financial contribution, apart from quantifying the
bricklaying work at in the order of $35,000 ($1 per brick),
it is difficult to
put a figure on the value of his role as a co-ordinator of the project as a
whole.
- Mr
McNally urged upon me (albeit in the context of the second issue for
determination below) that the difficulty of establishing the
quantum of the
financial contributions was such that I should apply a percentage to the
proceeds of sale referable to the unimproved
value of the land (initially put at
50% of $360,000 but in closing submissions at 50% of $415,000 having regard to
the valuation
report from Mr Wood). Mr Livingstone submitted that any such
exercise should be predicated on a smaller sum ($157,000) and a smaller
percentage (40%).
- However,
when considering the contributions on a Baumgartner trust claim one is
looking at the pooling of financial and physical resources and determining
whether it is unconscionable for one
party to retain the benefit of those. It
can only be unconscionable if they can be quantified in some objective way. It
seems to
me that the appropriate order is to recompense Gregory for his
contributions insofar as they can be measured. On the assumption that
no more
than $30,000 seems likely to have been contributed to the pool of funds from his
property settlement and that his bricklaying
work was worth in the order of
$35,000, what value is to be ascribed to the substantial amount of tiling and
other physical work
(as well as carrying out a project management role)? It
seems to me that it is not likely to be less in total than the amount referable
to the bricklaying work (and I accept it might well be higher but I have had no
guidance in that regard). That would suggest that
Gregory's overall
contributions to the building works were in the order of around $100,000.
- That
may be tested by reference to the evidence of Veronica in the witness box that
her mother had paid her $100,000 'for all [her]
hard work'. Despite Veronica's
denigration of the physical work carried out by Gregory on the property, I am
satisfied that he played
at least as great (and probably physically greater)
role than Veronica in the works for the shed and house.
- Therefore,
I consider that the appropriate order would be for Gregory to be paid the sum of
$100,000 to remove the unconscionability
that would otherwise arise if Margaret
were to retain the proceeds of sale of the property improved (as part of the
failed joint
endeavour between her, Veronica and Gregory) without recognition of
the contributions made by Gregory to the property.
(ii) Claim under the Property (Relationships) Act 1984 (NSW)
- I
turn then to the claim under this Act, which (as I apprehend the submissions) is
pressed in circumstances where Gregory has not
recovered all that was sought by
him on the constructive/implied trust claim.
- The
first question that arises under this heading is whether Gregory's claim under
the Act is out of time (which turns on when the
relationship terminated). (Mr
Livingstone submits that as the case for relief under s20 is non existent his
claim for leave under s 18 of the Property (Relationships) Act 1984 should be
dismissed (referring to Selmore v Bull [2005] NSWCA 365; (2005) 34 Fam LR
488; Beavan v Fallshaw (1992) 15 FamLR 686 at [687]). However, to
determine that submission I need to consider the case for relief.)
- A
'de facto relationship' is defined in s 4 of the Property (Relationships) Act
as follows:
(1) For the purposes of this Act, a de facto relationship is a relationship
between two adult persons:
(a) who live together as a couple, and
(b) who are not married to one another or related by family.
(2) In determining whether two persons are in a de facto relationship, all
the circumstances of the relationship are to be taken into
account, including
such of the following matters as may be relevant in a particular case:
(a) the duration of the relationship,
(b) the nature and extent of common residence,
(c) whether or not a sexual relationship exists,
(d) the degree of financial dependence or interdependence, and any
arrangements for financial support, between the parties,
(e) the ownership, use and acquisition of property,
(f) the degree of mutual commitment to a shared life,
(g) the care and support of children,
(h) the performance of household duties,
(i) the reputation and public aspects of the relationship.
(3) No finding in respect of any of the matters mentioned in subsection (2)
(a)-(i), or in respect of any combination of them, is
to be regarded as
necessary for the existence of a de facto relationship, and a court determining
whether such a relationship exists
is entitled to have regard to such matters,
and to attach such weight to any matter, as may seem appropriate to the court in
the
circumstances of the case.
(4) Except as provided by section 6, a reference in this Act to a party to a
de facto relationship includes a reference to a person who, whether before or
after the
commencement of this subsection, was a party to such a relationship.
- Pausing
there, the fact that Gregory may not have resided at Lethbridge Park more than
2-3 nights a week would not necessarily preclude
a finding that there was a de
facto relationship but, in any event, it is admitted by Veronica that there was
a de facto relationship
from mid 1998 at least until late 2005.
- A
'domestic' relationship is defined in s 5 as follows:
(1) For the purposes of this Act, a domestic relationship is:
(a) a de facto relationship, or
(b) a close personal relationship (other than a marriage or a de facto
relationship) between two adult persons, whether or not related
by family, who
are living together, one or each of whom provides the other with domestic
support and personal care.
(2) For the purposes of subsection (1) (b), a close personal relationship is
taken not to exist between two persons where one of them
provides the other with
domestic support and personal care:
(a) for fee or reward, or
(b) on behalf of another person or an organisation (including a government or
government agency, a body corporate or a charitable
or benevolent organisation).
(3) A reference in this Act to a child of the parties to a domestic
relationship is a reference to any of the following:
(a) a child born as a result of sexual relations between the parties,
(b) a child adopted by both parties,
(c) where the domestic relationship is a de facto relationship between a man
and a woman, a child of the woman:
(i) of whom the man is the father, or
(ii) of whom the man is presumed, by virtue of the Status of Children Act
1996 , to be the father, except where such a presumption is rebutted,
(c1) where the domestic relationship is a de facto relationship between two
women, a child of whom both of those women are presumed
to be parents by virtue
of the Status of Children Act 1996 ,
(d) a child for whose long-term welfare both parties have parental
responsibility (within the meaning of the Children and Young Persons (Care and
Protection) Act 1998 ).
(4) Except as provided by section 6, a reference in this Act to a party to a
domestic relationship includes a reference to a person who, whether before or
after the
commencement of this subsection, was a party to such a relationship.
- The
time limit for making claims under the Act is set out in s 18 of the Act as
follows:
(1) If a domestic relationship has ceased, an application to a court for an
order under this Part can only be made within the period
of 2 years after the
date on which the relationship ceased, except as otherwise provided by this
section.
(2) A court may, at any time after the expiration of the period referred to
in subsection (1), grant leave to a party to a domestic
relationship to apply to
the court for an order under this Part (other than an order under section 27 (1)
made where the court is satisfied as to the matters specified in section 27 (1)
(b)) where the court is satisfied, having regard to such matters as it considers
relevant, that greater hardship would be caused
to the applicant if that leave
were not granted than would be caused to the respondent if that leave were
granted.
(3) Where, under subsection (2), a court grants a party to a domestic
relationship leave to apply to the court for an order under
this Part, the party
may apply accordingly.
- In
Selmore v Bull , the Court of Appeal said that it was not mandatory for
an applicant for leave under the section to explain the delay in commencing
proceedings under the Act (at [13], citing Carlon v Carlon (1982) FLC
91-272). At [12], the President of the Court of Appeal said that the applicable
principles were not in dispute: "Section 18 does not lay down a general
time-limit, giving a discretion to the Court to extend it. Rather, it makes two
different provisions.
That found in subsection (2) is expressed in terms of
power to grant leave to apply, not as a power to extend the primary time limit",
referring to what had been said by Bryson J in Beavan v Fallshaw at
[687]:
This section appears ... to treat an application for leave to apply as a
normal event, calling for the Court to consider two stages,
a finding relating
to hardship and the exercise of discretion, without any special jealousy for the
observance of the time limit
or particular concern for it ... In considering
whether a Court should exercise of discretion conferred by statute to make an
order
in favour of some course, it is usual to consider whether there is a sound
and positive ground or a good reason for making the order.
Ultimately however it
is not ... legally necessary to define exactly the ground on which a discretion
is exercised favourably to
an applicant. .
- What
is required to be demonstrated is a preponderance of hardship to the applicant
if leave is not granted than will be caused to
the respondent if leave is
granted. If such preponderance is shown it does not automatically follow that
leave is to be provided.
There remains a residual discretion (as noted in
Beavan v Fallshaw ).
- In
Smith v Pearson [2011] NSWSC 600, Macready AsJ summarised the relevant
authorities on applications for leave under s 18 by reference to the above and
said (at [17]):
I also note that the question of delay is referred to by Bryson J in the case
of Beavan v Fallshaw to which the President referred in Selmore v Ball
in these terms:
The section appears to me to treat an application for leave to apply as a
normal event calling for the Court to consider two stages,
a finding relating to
hardship, and the exercise of discretion.
- Mr
McNally accepts that if the relationship terminated when Veronica said it did
(i.e. in December 2005) and did not later resume,
then an order under s 18(2) of
the Act would be necessary and it must be shown that greater hardship would be
caused to Gregory if leave were not granted than
would be caused to Veronica if
leave were granted.
- When did the
domestic relationship come to an end?
- For
the reasons set out earlier I have found that by the end of March 2006, the
domestic relationship between Veronica and Gregory
had come to an end (whether
it had come to an end some 3 months earlier would be of relevance only in
considering the contributions
of the parties to the relationship and, perhaps,
their credit).
- A
de facto relationship will not have been revived simply by reason of the
occasional sexual encounter of the kind that is said to
have occurred in
Mittagong in 2007 and I accept that by March/April 2009 when Margaret came to
live at the property there was no
such domestic relationship. What happened in
between those dates is the issue.
- Ultimately,
I am persuaded that on the balance of probabilities there was a revival of the
de facto relationship between Veronica
and Gregory during the course (although
not for the whole) of 2008 and that Gregory was sufficiently based at the
property as at
the end of 2008 to give it as his address for the purchase of the
motorbike the subject of the invoice in Exhibit 9. On that basis
as at September
2010 (when the initial Cross-Summons was filed it was within time).
- If
that conclusion were to be wrong, and leave was necessary, would I have granted
such leave? In the circumstances I would not have
done so, because it seems to
me that the result of a finding on the constructive trust claim is that Gregory
will be compensated
for his contributions to the property, insofar as they can
be measured by any objective evidence. He is not now claiming an adjustment
to
the couple's property interests on any basis other than the contributions to be
considered under s 20(1)(a). In other words no contribution other than the
property contributions is now pressed in this regard.
- I
have some difficulty in seeing how it would be just and equitable for any
adjustment of the property interests in the divisible
pool of assets would be
warranted in his favour (once he has been adequately compensated for his
financial and physical contributions
to the improvement of the property) having
regard to the circumstances I consider later. Therefore, I would not have
granted leave
to bring the application out of time (in the event that such leave
had been necessary).
- However,
had I found against Gregory on the constructive trust claim then I would have
been satisfied that the hardship to Gregory
of not granting leave was greater
than the hardship to Veronica of granting leave and I would have come to the
conclusion that leave
should be granted.
- I
turn then to the merits of the Property (Relationships) Act claim.
- Section
20 of the Act provides as follows:
20 Application for adjustment
(1) On an application by a party to a domestic relationship for an order
under this Part to adjust interests with respect to the property
of the parties
to the relationship or either of them, a court may make such order adjusting the
interests of the parties in the property
as to it seems just and equitable
having regard to:
(a) the financial and non-financial contributions made directly or indirectly
by or on behalf of the parties to the relationship to
the acquisition,
conservation or improvement of any of the property of the parties or either of
them or to the financial resources
of the parties or either of them, and
(b) the contributions, including any contributions made in the capacity of
homemaker or parent, made by either of the parties to the
relationship to the
welfare of the other party to the relationship or to the welfare of the family
constituted by the parties and
one or more of the following, namely:
(i) a child of the parties,
(ii) a child accepted by the parties or either of them into the household of
the parties, whether or not the child is a child of either
of the parties.
(2) A court may make an order under subsection (1) in respect of property
whether or not it has declared the title or rights of a
party to a domestic
relationship in respect of the property.
- Although
Mr McNally informed me that Gregory does not press the claim based on
contributions made under s 20(1)(b), it was submitted by Mr Livingstone, and I
accept, that matters relevant to Gregory's conduct within the relationship are
of relevance
in assessing the contributions made by each of the parties under s
20(1)(a) of the Act.
- In
Sharpless v McKibbin [2007] NSWSC 1498, Brereton J (at [3]) noted that
once it is established that there was a domestic relationship between the
parties, the exercise of
jurisdiction under s 20 involves three main steps:
The first is the identification and valuation of the property of the parties,
which determines the "divisible pool of property" -
that is, "the property of
the parties to the relationship or either of them" referred to in s 20 which may
be the subject of an adjustive property order under that section. The second is
the identification, evaluation and weighing
of the respective contributions of
the parties of the types referred to in s 20, and typically though not
invariably results in an apportionment between the parties on a percentage basis
of the overall contributions
(of the types referred to in s 20) of each of them,
made to the date of hearing. The third is the determination of what order is
required sufficiently to reflect and
recognise the applicant's contributions, in
the context of the contributions as a whole of both partners, and typically
results in
an order that leaves the applicant with that percentage identified in
the second step of the divisible property identified in the
first step [
Evans v Marmont [1997] NSWSC 331; (1997) 42 NSWLR 70 ; (1997) 21 Fam LR 760; (1997) DFC
94-184; Jones v Grech [2001] NSWCA 208; (2001) 27 Fam LR 711; (2001) DFC 95-234; [2001]
NSWCA 208; Kardos v Sarbutt (2006) 34 Fam LR 550 ; [2006] NSWCA 11].
- As
noted by Hallen AsJ in Davies v Dabela [2011] NSWSC 12 (at [29]), this
approach has been followed in cases such as Howlett v Neilson [2005]
NSWCA 149; (2005) 33 Fam LR 402; Chanter v Catts [2005] NSWCA 411; (2005)
64 NSWLR 360; Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550 ;
Paino v Paino [2008] NSWCA 276; (2008) 40 Fam LR 96.
- In
Evans v Marmont [1997] NSWSC 331; (1997) 42 NSWLR 70, a specially constituted bench of the
Court of Appeal considered the test to be applied on such an application.
Gleeson CJ and McLelland
CJ in Eq cautioned that the reference to "adjustment"
of property interests "does not sound like an invitation to engage in an
unbounded
exercise in distributive justice" (at p 10) and that the discretion
given by s 20 is not unfettered.
- Their
Honours noted that certain aspects of s 20 had been settled by the course of
authority, saying at p 5:
For example, it would not now be suggested that one should approach an
application for adjustment of property interests by beginning
with an assumption
that an equal division of property is appropriate and then asking whether the
circumstances of the case require
some departure from that position: Mallett
v Mallett [1984] HCA 21; (1984) 156 CLR 605.
It would not now be contended that contributions of a de facto partner as
homemaker and parent should be regarded as in some way inferior
to the
corresponding contributions of a spouse: Black v Black (1991) 15 Fam LR
109.
It would not now be suggested that an appropriate way to value the
contributions of a homemaker or parent is by reference to wage
levels applicable
to a domestic servant, or any other commercial provider of corresponding
services or benefits: Black v Black . It is also established that it is
important to give full and proper value to contributions of the kind referred to
in par (b): Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201; Green v Robinson
.
- Their
Honours approved the approach that had been set out in Dwyer v Kaljo
(1987) 11 Fam LR 785 per Hodgson J (as his Honour then was) at 793 of his
Honour's judgment (and approved by Mahoney JA dissenting on appeal in that case
and in the majority in Wallace v Stanford (1995) 37 NSWLR 1; 19 Fam LR
430 ), namely that:
... I also agree with Young J that this [a party's contributions] is not the
only factor which can be taken into account. In my view,
if one considers the
plaintiff's contributions and nothing else, this cannot conceivably lead to any
view on what is just and equitable
in the circumstances. However, it seems to me
that the other factors can have no independent bearing on, what is just and
equitable.
Their relevance is only by reason of such relevance as they may have
to the question: what is just and equitable having regard to
the plaintiff's
contributions?
In my view, some other factors will be relevant in this way in all cases .
One such factor arises from the question whether the contributions of the
plaintiff have been sufficiently compensated. The relevance of this question
is confirmed by the terms of s 17 of the Act. This in turn requires the court to
reach some view of the value of the contributions of the plaintiff, and some
view
of the value of what the plaintiff has received in return. (my emphasis)
In most cases, I think the financial circumstances of the parties will be
relevant. Certainly, it is necessary for the court to ascertain
what the
property of the parties comprises at the time of the hearing, because it is to
this that any adjustments of interest have
to be made. Further, I think that in
most cases the needs and means of the parties will have general relevance, as
subsidiary factors,
to the question of what is just and equitable having regard
to the plaintiff's contributions. However, as indicated earlier, I accept
that
the needs and means of the parties has no relevance except via its relevance to
this question ...
Other circumstances which may be relevant include such matters as the length
of the relationship, any promise or expectations of marriage,
and also I think
opportunities lost by the plaintiff by reason of the plaintiff's contributions.
This is by no means intended to
be exhaustive. I do not think any limit can be
set on what circumstances may be relevant, remembering always that the relevance
must
be to the question, what is just and equitable having regard to the
plaintiff's contributions.
- In
Evans v Marmont , their Honours said (at pp 6/7), having considered the
above passage from Dwyer :
In general, we agree with those observations. It would be unrealistic to
attempt to evaluate contributions of the kinds referred to
in par (a) and par
(b) for the purpose of determining what is just and equitable having regard to
those contributions, in isolation
from the nature and incidents of the
relationship as a whole, relevant aspects of which may well include factors of
the kinds mentioned
by Hodgson J. ... it is important to bear in mind that s
20(1) directs that regard be had to contributions of the designated kinds made
by each of the de facto partners: often it may be found
that contributions of
the kinds referred to in par (b) will involve shared activities or reciprocal
benefits not giving rise to any
disproportionate burden which it would be just
and equitable to satisfy by an adjustment of interests in property.
- At
pp 10,11, their Honours observed that it was not surprising that considerations
of fault were not mentioned, even obliquely, in
the Act, considering the
background of a no-fault system of dissolution of marriage; and that nor was
there mention in the Act of
matters relevant to means and needs, of the kind
referred to in the Family Law Act 1975 (Cth). Their Honours noted that
paragraphs 20(1)(a) and par (b) "prescribe the focal points by reference to
which the discretionary
judgment as to what seems just and equitable must be
made. They are not merely two matters, or groups of matters, which take their
place amongst any other relevant considerations. It is by having regard to those
matters that the court may adjust property interests
in a just and equitable
manner".
- Brereton
J noted in Sharpless at [45] that contributions both before the
commencement and after the termination of the domestic relationship may be taken
into account
for the purposes of s 20 (citing Foster v Evans (1997) DFC
95-193, 77,681; McDonald v Stelzer [2000] NSWCA 302; (2000) 27 Fam LR 304; (2001) DFC
95-233; [2000] NSWCA 302, [28]-[32] (Sheller JA), [34]-[36], [39] (Priestley
JA); Jones v Grech , [24] (Davies AJA), [79]-[82] (Ipp AJA); Nguyen v
Scheiff [2002] NSWSC 151; (2002) 29 Fam LR 177).
- Turning
then to the three steps, I note as follows.
Identification and valuation of the property of the parties to the
relationship or either of them (i.e. the divisible pool of property)
- Brereton
J notes in Sharpless at [48] that the exercise of the identification and
valuation of the property of the parties is undertaken typically, though not
invariably,
as at the date of trial, though sometimes the date of separation is
adopted, saying that:
...The primary reason for this is that the jurisdiction under s 20 is to
adjust interests with respect to "the property of the parties to the
relationship or either of them" and speaks from the date
at which the
jurisdiction is exercised, so that what is in issue is the property of the
parties and each of them at the date of trial.
Establishing the divisible pool
at any other date may lead to failure to have regard to relevant assets
available for division, or
to the bringing into account of property no longer
available [ Kardos v Sarbutt ].
- In
that case, his Honour also had reference to the assets of the couple at the
commencement of their relationship. In the present
case, at around the beginning
of the relationship it is not disputed that Gregory had received the sum of
$38,621.36 from his family
law settlement with his ex-wife, he had a Holden one
tonne utility, four trail bikes and some tools (as set out in his first
affidavit
at [7],[8]). Veronica had assisted him with the purchase of a second
(updated) vehicle by way of what was said to be a loan of $10,000).
- Veronica,
on the other hand, had $20,000 in personal savings and a part interest in the
Myrtle Creek property presumably worth around
$15,000 (based on the sum she
later received for that interest from her brother). She also had $12,000 that
she was holding on trust
for her children (but that cannot be regarded as an
asset of hers if it was, in fact, on trust for them).
- I
do not accept that the evidence establishes that Veronica was a beneficial owner
of the Kurrajong property at that time. Therefore,
it would seem that at the
commencement of the relationship their assets were fairly equal. The duration of
the relationship was somewhere
between 7 to 10 years (the difference not, in my
view, being material when valuing their respective contributions).
- Account
must be taken of the contribution to the relationship of the Kurrajong property
(whether on the basis that due to Veronica's
relationship with her mother she
was able to provide Gregory with the benefit of rent-free accommodation and/or
on the basis that
the building of the property on the land was something able to
be achieved by reason of the property being put up as security for
the finance
obtained from the NAB). Gregory clearly had the benefit of rent-free
accommodation for a considerable period.
- As
to the present assets of the parties to the relationship, as at the date of
trial Gregory has a 1989 Mitsubishi vehicle (currently
unregistered) said to be
worth $1,000, a sum of $200 in a bank account and superannuation entitlements of
$16,000 (Gregory's second
affidavit at [37]). Relevantly, he also will now have
the benefit of an order for payment of the sum of $100,000 to him out of the
proceeds of sale of the Kurrajong property, which are presently held in trust by
Margaret's solicitors. Veronica (whose assets, Mr
McNally notes, have not been
are not separately disclosed) received the sum of $360,670.99 from the sale
proceeds of the Kurrajong
property on or about 27 April 2010 (some of which has
been used in the purchase of other property for the sum of $170,000, which
is
unencumbered, and the balance is held in a bank account in her name - and
according to Margaret belongs to Veronica).
- (It
was submitted by Mr McNally that the sum of $200,000 held in the solicitors'
trust account might also be an asset of Veronica
and/or Gregory to the extent
that they have a beneficial entitlement in the proceeds of sale of Kurrajong. I
have not found that
the couple were beneficially entitled to the property.
However, I have held that Gregory is entitled to half of the moneys presently
held in the solicitor's trust account. On Margaret's evidence, it would seem
that she has not disclaimed her interest in the balance
of that fund in favour
of Veronica so I do not include the remaining $100,000 in assessing the
divisible pool of assets.)
- Therefore,
the divisible pool of property seems to be the net proceeds of sale of the
Kurrajong property received by Veronica ($360,670)
plus the $100,000 to be
received by Gregory as a result of the constructive trust claim (some $436,000
in total), ignoring the personal
assets of Gregory, plus his superannuation
entitlements and any personal (undisclosed) assets of Veronica.
Identification and valuation of the respective contributions of the
parties to the relationship
- As
to Gregory's s 20(1)(a) contributions, Mr McNally relies upon the fact that
Gregory, as a qualified bricklayer, 'effectively' built the shed, stables,
fencing
and house on the property by co-ordinating the works and carrying some
of them out himself (such as much of the bricklaying and the
tiling). Mr McNally
submits that the expenditure of Gregory on the shed, fencing, stables and water
tank was quantified at a total
of $58,000 (my arithmetic adding the sums in
[25], apart from the $4,000 said to be for a trust account, [29] and [35]
produces a
figure of $62,000). In any event, I am not satisfied that Gregory has
proved that he contributed the whole of those moneys. I would
assess his proven
financial contribution to the building of the shed at no more than $30,000 for
the reasons set out earlier.
- I
accept that a portion of Gregory's earnings from bricklaying were pooled with
Veronica's and used to pay for materials in the construction
and/or living
expenses of the household. I do not accept that those can be quantified at over
$1,000 per week. I note that in Sharpless , where the benefit received
from contributions to living expenses could not be quantified with precision,
Brereton J said at [58]:
However, the evidence does not permit the ascertainment with any precision of
the extent to which Mr Sharpless derived benefits in
this way. Ultimately Ms
Stubbs, for Mr McKibbin, submitted that the appropriate course was to make some
deduction for the reasonable
living expenses of the parties, and add back as a
notional asset in the hands of Mr Sharpless the remainder of the amounts
particularised
by Mr McKibbin as having been taken by him. But it is not
possible to quantify an amount to be "added back" on this basis as a notional
asset of which Mr Sharpless has the benefit. Ultimately, I propose to take this
matter into account, not by adjustment to the pool
of property, but in
evaluating the quantum and quality of the contributions made by Mr Sharpless to,
against the benefits derived
by him from, the relationship.
- I
accept that the work that Gregory did on the house was extensive and at least
part of that work can be quantified (namely the bricklaying)
at $35,000.
(Reliance was placed on the evidence of his work on the property at T.20.12 -
23; T 20.36-45; and the cost saving obtained
from his involvement at T 21.6; T
21.14-25.15).
- As
to Veronica's contributions, she says that she spent some $45,000 on the shed
([32]). I am not satisfied that she has established
that this is the case. (Mr
McNally submits that if this is the case then $12,000 of that amount was
refunded to her by Gregory referring
to Gregory's affidavit at [25]. However,
that has already been taken into account in the assessment of Gregory's
contribution above.)
- As
to Veronica's claim to have paid for rectification and improvement works from
2006 onwards (valued at $122,500 ([82]), I accept
that there is no corroboration
as to these amounts and I am sceptical of the claims that have been made by
Veronica. Similarly, I
am sceptical of the assertion that Veronica paid for all
other work in the construction of the house. The construction costs seem
largely
to have been funded from the mortgage facility.
- I
accept that Veronica made contributions to the household living expenses and to
the interest on the loan facility out of her CentreLink
benefits.
- As
to the s 20(1)(b) contributions, Gregory did not press his claim that he had
made contributions to the welfare of Veronica's children. Veronica's
contributions
in supporting Gregory and the children must be taken into account.
- When
valuing the contributions between the parties, there have been two approaches
identified (as noted in Davies v Dabela ): the global approach and the
asset-by-asset approach. In Sharpless , Brereton J said at [60]:
The legislation does not dictate the employment of any particular method in
the formulation of an appropriate order for the adjustment
under s 20 of
property interests, and it is not desirable to attempt to formulate principles
or guidelines designed to constrain judicial discretion
within a predetermined
framework, although in the majority of cases, a global approach is likely to be
more convenient than an asset-by-asset
approach, provided that those who take
the global approach heed the warning that the origin and nature of the different
assets ought
to be considered [cf Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 ; (1986) 10
Fam LR 819; (1986) FLC 91-712]. Moreover, an asset-by asset approach almost
always carries the risk of undervaluing domestic contributions that are not
reflected
in any particular asset. Some contributions are readily capable of
evaluation in monetary terms. Others - such as those made in the
capacity of
homemaker and parent - are not. Because some assets depreciate in value, and
because parties incur living expenses, the
pool of property available for
division will usually be less than the sum of the financial contributions, and
more so when allowance
is made for the value of non-financial contributions. An
approach which focusses on the valuing of individual contributions item
by item
not only fails to pay regard to the overall picture, but risks serious injustice
by devaluing those contributions which are
not readily capable of evaluation in
monetary terms. On the other hand, the "fruits of a totality of efforts of wage
earning, homemaking
and mutual support", referred to by Deane J in Mallet, do
not usually encompass property which each party had before the relationship,
or
which either party introduced, not by way of their mutual efforts at wage
earning, homemaking and mutual support, but independently
through gift or
inheritance from third parties.
- Ipp
JA in Bilous v Mudaliar (2006) 65 NSWLR 615 at [43] said:
If a global approach is adopted, regard must still be had to the origin and
nature of the different assets. If an asset-by-asset approach
is adopted, care
must be taken to avoid the risk of undervaluing domestic and non-financial
contributions and regard must be had
to the overall result: Kardos v Sarbutt at
[51] and [54]. Some situations do not lend themselves either to a pure global
approach
or to a pure asset-by-asset approach. In some cases the judge may
decide to have regard to the particular contributions made to individual
assets,
weigh up the overall respective contributions to the parties and make differing
apportionments in relation to the interests
of the parties in different assets.
- What
seems clear is that there is not a rule that, for the purpose of determining the
order to be made under s 20(1) any increase in value in assets initially
contributed should be regarded in all instances as a contribution by the party
who contributed
the assets, though that may be a significant pointer to the
extent to which each party should participate in the capital appreciation
of the
asset, particularly where the period of co-habitation is "not sufficiently long
enough to justify any substantial erosion
of the fact that the party brought a
substantial asset to the relationship" (see Davies v Dabela ; Bilous v
Mudaliar ; Kardos v Sarbutt ; Sharpless ).
- In
Bilous at [63] Ipp JA, in a passage with which Brereton J has expressed
his agreement, said:
Determinations as to what orders should be made under s 20 are to be made
solely on the grounds of the justice and equity of the case. The justice and
equity of the case may derive from the
fact that the party who owns the family
home or other property was able to retain that property, while the market value
increased,
because "of joint efforts of wage earning, homemaking and parenting,
and mutual support". In some instances the non-financial contributions
of one
party may result in property of the kind in question not having to be sold. In
other instances, the non-financial contributions
of one partner may allow the
other to advance his or her career and earn a high income that enables the
property in question to be
maintained and retained. Thus, an increment in
capital value may well result, indirectly, from "joint efforts of wage earning,
homemaking
and parenting, and mutual support".
- In
Sharpless , Brereton J said at [81]:
...I did not intend to suggest, in Kardos, that any increase in value in
assets initially contributed should be regarded, in all circumstances,
as
entirely a contribution by the party who contributed those assets, nor that
there was an onus on the other party to prove that
the initial contribution
should be eroded; but that (following Pierce) it is necessary to weigh the
initial contributions of a party
with all other relevant contributions of both
parties, and that in doing so, regard must be had to the use made by the parties
of
the initial contributions, and that it was inappropriate to routinely regard
increments in value of assets so introduced as the product
of equal
contributions by both partners.
- Referring
to English authority, Brereton J noted at [85] that, while there are significant
differences between the adjustive property
jurisdiction in the United Kingdom,
that under the Family Law Act and that under the Property
(Relationships) Act , "there is universal recognition in the
contribution-based systems of the prima facie claim of a party who introduces an
asset to
retain it, but also that the significance of such a contribution is
diminished over time by the other relevant contributions. Ultimately,
it is a
question of weighing the initial contribution with all other relevant
contributions to achieve a just and equitable result,
the nature and the source
of the property and the manner in which it has been used during the relationship
being material considerations.
This will typically involve one party being
regarded as having contributed to the improvement or conservation of an asset
introduced
initially by the other, but in a lesser proportion than the first
party's overall contributions to the relationship: as Macready
AsJ has
suggested, speaking extra-judicially at the 2006 Supreme Court Conference,
usually it is neither appropriate that any increment
in value of an asset
introduced exclusively by one party be equally shared between the parties, nor
that it be wholly attributed
to the party who introduced it; the answer will
usually lie somewhere between".
- I
accept that account must be taken of the contribution by Veronica of the benefit
obtained, through her mother's benevolence, of
rent free accommodation and the
fact that Margaret had made her land available for the borrowings (although the
latter is hard to
quantify unless it could be said that it led to, say, a more
favourable interest rate or the like, as to which there is no evidence).
- The
danger of double counting when one party occupies the property of another during
the relationship was noted in Bilous at [122] in the context of
considering whether notional rent should be taken into account:
The respondent's provision of the family home was a contribution to her by
the partnership, and appropriate weight should be accorded
to it. It could be
wrong in principle however to accord it weight and then require a notional
rental in respect of the appellant's
accommodation in the home to be deducted
from the value of his contributions. That would be impermissible double
counting.
- If
the unimproved value of the land was in effect taken out of the equation (it
having not increased over the period) such that notionally
the benefit obtained
by Veronica did not include any benefit referable to the increase in value of
property notionally contributed
by her to the relationship, then there should be
little danger of notional double counting in relation to the rental benefit.
(The
rental benefit is quantified by the valuer at somewhere in the order of $70
per week for the shed and $450 per week for the house).
The fact that Veronica
too occupied the property rent-free seems to me not to be relevant since that is
not a contribution from Gregory
to the relationship (but it might mean that the
notional rent should be halved).
- In
terms of non-financial contributions, as noted above, Veronica made a large
contribution to the running of the household and Gregory
conceded that she had
"definitely" supported him over the period. Her contribution must also be seen
in the light of difficulties
in the relationship (as I discuss below).
Determination of what if any order is just and equitable having regard to
those contributions
- In
Manns v Kennedy [2007] NSWCA 217; (2007) 37 Fam LR 489, Santow and
Campbell JJA and Bryson AJA noted the statement of McLelland J (as his Honour
then was) said in Davey v Lee (1990) 13 Fam LR 688 at [689]; DFC 95-084
at 76,146, that under s 20 "the court is required to make a holistic value
judgment in the exercise of a discretionary power of a very general kind"
(approved
in Ross v Elderfield [2006] NSWCA 192 at [35] and in Kardos
v Sarbutt [2006] NSWCA 11 at [36]; [2006] NSWCA 11; (2006) 34 Fam LR 550 at [561]) but
emphasised that while the task called for by s 20 "is not akin to an accounting
exercise", at [65] that:
...even in carrying out that final step, "there is no warrant for ignoring
the rigour that mathematics can provide": Ross v Elderfield
(at [49] per Handley
JA (with whom McColl JA and Hislop J agreed)). As Hodgson JA said in Howlett v
Neilson (at [39]; 411):
... while I do not think that these matters can be determined on such
mathematical calculations, I think mathematical calculations
are of some use in
guiding and testing conclusions about what is just and equitable, and also in
promoting transparency and consistency
in decision-making.
- Slattery
J, in Ryan v Kalocsay [2010] NSWSC 620 referring to the above, said at
[19]:
The court is not required in proceedings under Property Relationship Act s 20
to undertake a reductionist process, examining every
alleged contribution with a
view to putting a money value on each in order to reach an accounting balance,
which balance is then
to be eliminated by the requisite financial adjustment in
the s 20 order.
- In
Davies , Hallen AsJ noted at [46] that the role of the court is not to
use the division of property to remedy any justified grievances that
one party
may have against the other, or to compensate a party for disappointed or
unfulfilled expectations and that the fault for
the breakdown of the
relationship, wherever it may lie, is irrelevant.
- What
order would here be required as a matter of justice and equity in order
sufficiently to recognise and compensate Gregory's financial
and physical
contributions to the construction of the shed and the house? In my view, the
answer to that is that there is no adjustment
warranted in light of the fact
that (by reference to the determination in (i) above) he will have received what
represents the amount
of his financial contribution (in money or money's kind)
to the building of the shed and home on the property (to the extent that
that
can be quantified on the evidence before me) and which it would otherwise have
been inequitable for Margaret not to reimburse
in the circumstances.
- Having
regard to the benefit that Gregory has obtained from the rent-free accommodation
over the years (and the matters I refer to
below) I do not consider that any
adjustment to the property interests of the parties to this relationship (having
regard to the
order made above for recoupment by Gregory of the contributions he
made to the building works) is warranted.
- Had
I not found for Gregory on the constructive trust claim, I would have considered
that an adjustment in the order of $100,000 out
of the divisible pool of assets
(that would then have been $360,670) in recognition of his s 20(1)(a)
contributions would have been
a starting point but that there would then have
been a need to consider the reduction of that amount by reference to his
behaviour
during the relationship (noting what was said in Jackson v Jackson
[1999] NSWSC 229). I would in those circumstances have been inclined to
accept the proposition by Mr Livingstone that Gregory should receive a lesser
sum - in the order of $60,000, being roughly 40% of $157,000. The difference in
outcome is due to the different exercise being carried
out as between the
respective claims. (An order of that kind would have been made as against
Veronica, not out of the monies referable
to the balance of the proceeds of sale
belonging to Margaret.)
- In
Jackson , Macready M (as his Honour then was) considered a situation in
which reference had been made to particular assaults and bad language
(as well
as an allegation of sexual abuse of which no evidence had been given before his
Honour). His Honour went on to say (from
[49]):
I turn to the question of what effect the assaults may have in the adjustment
process. The defendant relied on two cases under the
Family Law Act, Doherty v
Doherty (1996) FLC 92-652 and Marando v Marando (1997) FLC 92-754. In the first
of these cases the Full Court said at p82,683:-
On p26 the trial Judge made reference to the appellant's drinking habits and
to domestic violence and aggression, which he exhibited
towards the respondent
and the children, particularly to S. Although the trial Judge did no more than
record these events, it is
clear from his findings that the wife's contribution
as homemaker and parent may have been increased as a result thereof.
Although the domestic violence complained of related to a relatively small
period of time at the end of the marriage, nevertheless,
his Honour would, in my
opinion, have been entitled to have found that because of the appellant's
conduct, the respondent's contribution
diminished as a consequence, leading to
the overall weighting based upon contribution in favour of the wife being
increased, albeit
only slightly, having regard to the facts of this case."
Of interest is the reference to such conduct either increasing one party's
contribution or diminishing the other party's contribution.
In Marando v Marando at 84,168-9 Gee J had the following to say about the
issue of domestic violence.
In my opinion however, the wife over the very long period of cohabitation
made a much greater contribution than the husband to the
welfare of the family,
particularly as homemaker and parent. I am satisfied on the evidence that in her
homemaker and parenting role
the wife in that role and by way of general
contribution to the family's welfare carried out responsibilities well beyond
the norm.
She had the responsibility of the home and the children almost
entirely without the husband's assistance for a very long period of
time.
Amongst other things, she thereby enabled him to work and earn income over and
above his full time work as well as his full
time work. In this family she was
the uniting force and the one who provided the support, love and affection
necessary to maintain
this particular family unit over a long time.
This was made especially hard by the husband's abuse and denigration of her
and the children in the ways described by them in their
evidence, which I
largely accept on this issue, as well as by his attitude to 'women's work' and
by his drinking which necessitated
the wife working especially hard and harder
than would be usual in normal situations as homemaker, parent and as the prime
navigator
of the welfare of this family through the many seas of problems and
difficulties which confronted them over the years.
- Referring
to Cole J in Green v Robinson (1995) 36 NSWLR 96 at [119], his Honour
went on to say:
Clearly his Honour includes the qualitative aspects as well as the
quantitative. Accordingly in the adjustment process it is possible to take
account of these actions of the plaintiff in assessing his homemaker
contributions. ... (my emphasis)
The language used by the plaintiff was not said to cause an apprehension of
physical contact and thus would not amount to an assault.
The defendant's
evidence did not indicate how such statements increased the difficulty of the
work she did in her capacity as a parent
and homemaker. No doubt it caused her
distress and hurt. In contrast in the case of assaults the time spent recovering
would have
an obvious impact on her capacity.
The homemaker contributions put forward by the plaintiff are the execution of
minor maintenance and repairs to the unit, managing
finances and assistance with
household chores. The defendant gave more detail in relation to household
matters and it would seem
that her input was far greater in this area. To the
extent that he puts forward a claim for homemaker contributions the quality of
that contribution should be judged bearing in
mind his language. This should not
be seen as a matter of penalising the plaintiff for his denigration of the
defendant but more
an assessment of the quality of the plaintiff's contribution.
(my emphasis)
In respect of the four assaults it seems to me that to the extent that the
performance of the defendant's homemaker contributions
was affected by the
assaults, that fact ought to be taken into account in her favour in assessing
them. The time, a period of some
weeks, is of minor significance in the overall
time frame of the relationship.
The apprehension, contact and the injuries arising from the assault and
battery is another matter. These are serious matters and are
no less
reprehensible because they occur within a domestic arrangement. They should be
separately treated to show the Court's disapproval
of such matters. This course
is adopted from time to time in the Family Court. See In the Marriage of Kennon
22 Fam LR 289 at 296 where Coleman J, who was there concerned with exemplary
damages said:-
This is a case where the message must be spelled out to persons such as the
respondent that they cannot assault and beat wives or
de facto wives and escape
civil liability simply on the basis that it was 'a domestic'. I know of no
principle which renders an assault
and battery in a domestic context less
reprehensible than that in any other context.
- I
have referred to the evidence of regular offensive language (on both Gregory's
and Veronica's part) and to the incidents of physical
abuse (observed by members
of Veronica's family and, at least on one instance, leading to the need for
hospital treatment). On an
assessment of the contributions of both parties to
the relationship, I accept that this conduct would warrant greater weight being
given to the contributions of Veronica than Gregory. (I note, in this regard,
that the task of this Court in adjusting the property
interests is neither to
penalise nor to condone deplorable conduct such as domestic violence.)
- It
is submitted by Mr McNally that assuming that Veronica received $360,000 from
the sale of Kurrajong, then a large proportion of
that sum was generated by the
work that Gregory did on improving the Kurrajong property and that it is "just
and equitable" that
Gregory should receive a sum for the work that he did and
money that he spent over 8 years in improving the property (and that any
rental
benefit is offset by Gregory's contribution to mortgage repayments). For the
reasons given earlier, I consider that the order
on the constructive trust claim
adequately takes into account that contribution (and would be more favourable
than an order I would
have made under the Property (Relationships) Act in
any event).
- Balancing
the above factors, I take into account that Veronica's contribution to the
relationship at the outset (in terms of bringing
to the relationship the ability
to occupy the property rent free) was greater than Gregory's (though their
respective assets at the
commencement of the relationship were otherwise equal).
I accept that her day-to-day financial contributions seem to have outweighed
Gregory's (although he did contribute from time to time) and she had the bulk of
the responsibility for running the household (made
harder by Gregory's
behaviour). Nevertheless, I consider that Gregory's contribution to the building
of the shed and house was a
significant contribution.
- Having
regard to the orders to be made on (i) above, I consider that there is no
adjustment to the parties' property interests now
warranted. Had the decision in
(i) been otherwise, I would have adjusted the parties' property interests by an
order in Gregory's
favour of $60,000.
(iii) Costs
- At
the outset of the hearing, in written submissions it was contended by Mr
Livingstone that costs should follow the event save that
in the event that
Gregory obtained modest relief against Veronica he would not be entitled to
costs if the proceedings ought to have
been commenced in the Local Court
(relying upon Harris v Schembri (1995) DFC 95-166; Vollmer v Hauber
Davidson [2006] NSWCA 79) and that his claim for interest should be refused
given that the delay in commencing the proceedings was as a result of his own
error
as to the law. It was further submitted that Gregory should pay the costs
of the application for leave regardless of the outcome
of the proceedings.
However, at the close of the hearing both Counsel sought to defer submissions on
costs until after the judgment.
- I
will therefore hear submissions as to costs at a convenient time to Counsel.
Orders
- I
therefore make the following orders:
(1) I order that the second cross-defendant do all such things and sign such
documents as may be necessary to cause Rafton Family
Lawyers to pay to the
cross-claimant within 7 days the sum of $100,000 (plus any interest accrued
thereon from the date of payment
of that amount into the said trust account).
(2) I direct that the solicitor for the second cross-defendant, on payment of
the amount referred to in order 1 above to the cross-claimant,
be permitted to
release to the second cross-defendant the balance of the funds held in the trust
account of Rafton Family Lawyers
out of the proceeds of sale of the second
cross-defendant's Kurrajong property.
**********
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