F v C [2012] QDC 2

DISTRICT COURT OF QUEENSLAND CITATION: F v C [2012] QDC 2 PARTIES: F (Applicant) V C (Respondent) FILE NO/S: 2010 of 2007 DIVISION: PROCEEDING: Claim for adjustment of former de facto partners’ property interests ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 13 January 2012 DELIVERED AT: Brisbane HEARING DATE: 11 January 2012 further written submissions 12 January further oral submissions 13 January 2012 JUDGE: Andrews SC DCJ ORDER: Order as per draft to be initialled CATCHWORDS: Property Law Act 1974 s 286 – Adjustment of interests of former de facto partners in proceeds of sale of house property – where respondent’s assets include superannuation – where no proof of when respondent made contributions to superannuation – whether respondent’s superannuation relevant to adjustment of proceeds of sale of house property Property Law Act 1974 s 286 – Adjustment of interests of former de facto partners in proceeds of sale of house property – where applicant pays rent of $330 per week – where respondent resides in jointly owned house property paying $175 per week mortgage repayment – where applicant’s accommodation costs exceed respondent’s by $155 per week – whether that figure relevant to adjustment of interest in proceeds of sale of house - where market rent for house property $300 per week - whether market rent relevant to adjustment of proceeds of sale of house property COUNSEL: Mr Gardiner for the applicant Respondent for himself -- 1 of 9 -- 2 SOLICITORS: Carswell & Company for the applicant [1] The applicant and respondent were de facto partners.1 They jointly own a house and land at Beenleigh.2 They agree to the making of orders which will result in the listing of that property (“house”) for sale. The only disputes are as to the distribution of the balance proceeds of sale3 and costs of the proceeding. The applicant applies for an order that 70% of the balance be paid to her. The male respondent submits that the balance should be distributed 50% to the applicant and 50% to him. [2] The originating application was filed on 18 July 2007. The de facto relationship between the applicant and respondent ended on 23 July 2005. There is no dispute that Part 19 of the Property Law Act 1974 is the applicable statute law. I must determine the application in accordance with that Part. [3] The respondent filed no material. He did not disclose his financial circumstances in the way prescribed by the rules. One consequence of that is that the court cannot make a property adjustment order in his favour.4 That consequence does not matter in this proceeding as the respondent’s submission that the proceeds be divided equally does not require an adjustment order in his favour. An equal distribution of proceeds is his right at law as the house is jointly owned. The applicant bears the onus of proof that it is just and equitable to adjust the property rights of the parties in the way she seeks. The respondent did not give evidence or read an affidavit. He did not cross-examine the applicant on her affidavits. The applicant gave no evidence to supplement her affidavits. A consequence is that the facts and inferences of fact can be drawn from a few documents whose contents are not contested. The unfortunate consequence is that there is an incomplete picture of the non-financial contributions made by the parties to the conservation or improvement of the house, an incomplete picture of the financial and non-financial contributions made by either party to the financial resources of the other, an incomplete picture of the homemaking or parenting contributions of either party to the welfare of the other or to the welfare of their child, an incomplete picture of the income, property and financial resources of the respondent and an incomplete picture of his health. [4] The applicant and respondent ended their de facto relationship on 23 July 2005 when they separated. The originating application was made within two years after the de facto relationship ended. This court has jurisdiction to adjust the property rights which they have to the house. It has not been argued by the respondent that this court does not have jurisdiction. The respondent did not argue that the application was made more than two years after the day on which the de facto relationship ended. [5] The purposes of Part 19 of the Property Law Act include: (a) Facilitating the resolution of financial matters at the end of a de facto relationship; 1 Within the meaning of that term as contained in s 261 of the Property Law Act 1974 2 To maintain confidentiality I will not set out its address 3 After deduction the outstanding mortgage debt owed to the Bank of Queensland, real estate agent’s commission, auction fees and advertising expenses if any associated with effecting the sale 4 Property Law Act s 289 (2) -- 2 of 9 -- 3 (b) Recognising de facto partners should be allowed to plan their financial future and resolve financial matters at the end of their relationship; (c) Facilitating a just and equitable property distribution at the end of a de facto relationship. [6] A court may make any order it considers just and equitable with respect to adjusting the interests of the applicant and the respondent in their property. In deciding what is just and equitable, a court must consider the matters set out in subdivision 3 of Part 19 of the Property Law Act and must consider to the extent that they are relevant the matters mentioned in subdivision 4 of Part 19. [7] Reference to sub-division 3 of the Property Law Act reveals that the court must consider the financial and non-financial contributions made directly or indirectly by or for the de facto partners to the acquisition, conservation or improvement of the property and of any other property of either or both of the de facto partners. In this proceeding it is not only the balance proceeds of sale of the house which the applicant applies to adjust. There are other orders sought which may theoretically adjust rights to minor items by effectively requiring the parties to relinquish claims to money and other property held by the other. However, when considering the proper adjustment to the balance proceeds of sale of the house it is relevant to that adjustment that the parties had and have some other property being motor vehicles, furniture and superannuation. [8] At separation, apart from modest furniture and other chattels, the assets and liabilities of the parties or each of them were the house, then subject to a mortgage of about $114,000; the applicant’s superannuation of $39,600; the respondent’s superannuation of $35,000 (as at 2003); applicant’s car $2,000; respondent’s car $4,000; applicant’s debts of about $2,500; respondent’s debts exceeding $10,000 which I infer he brought into the relationship; a credit card debt of about $2,000. [9] What is the effect of superannuation? The applicant submitted that I should consider all other property but particularly superannuation when considering whether and how to adjust the interests in the house. I accept that such matters as the existence of other financial resources are relevant as s 298 Property Law Act so provides. The applicant had superannuation of $39,600 on 30 June 2005 and about $71,000 by 15 November 2011. There was no evidence of the respondent’s current superannuation. There was no submission about its size. I told the parties in submissions that I assumed it increased since June 2003 when he had superannuation of $35,000 and assumed it was about the same as the applicant’s when they separated. Neither party sought to dispute this assumption. The applicant’s counsel was invited to explain why the facts supported his submission that the evidence about superannuation should help justify an adjustment of property interests. There was no explanation given. The applicant put in a subsequent written submission5that If the Court accepts that the relevant financial resources of the parties are as outlined at paragraph 5 of these submissions, and that an apportionment of 70:30 in favour of the Applicant is warranted, then the Applicant submits that an appropriate order would be to increase 5 Further submissions received 12 January 2012 -- 3 of 9 -- 4 the Applicant’s entitlement to the net proceeds of sale in order to reflect this. [10] I reject that submission on the basis that the facts of this case do not support it. Further, the submission assumes that the court decides on the apportionment and then applies it to any assets held at separation. That oversimplifies the proper process of deciding what adjustment is fair and equitable. Before applying an apportionment to any asset held at the time of separation a court must consider the respective contributions of the parties to the acquisition and maintenance of the asset. There is an absence of evidence about when superannuation contributions were made. There was no evidence provided about financial or non-financial contributions made directly or indirectly by or for either the applicant or the respondent towards the acquisition of superannuation. There was no evidence as to when contributions were made to the respondent’s or the applicant’s superannuation assets. The applicant’s superannuation was valued at $39,600 on 30 June 2005. It was not listed among her assets when the relationship commenced. On her modest income I do not infer that it was mostly as a result of contributions made during the relationship. The same can be said for the respondent’s superannuation. I cannot infer that either party did more or less than the other towards the accumulation of one another’s superannuation by the time of separation. It would be reasonable to infer that the respondent had been in intermittent employment in the building industry since separation. It would be reasonable to infer from the scant evidence of his layoffs of employment, debts, assets, and defaults in payment of rates, child support and late payment of his modest mortgage obligations that he earned only modest sums annually. If his earnings were of the order of $50,000 per annum and his or his employer’s contributions to the respondent’s superannuation were 9% of his income per year then the value of his superannuation might have increased by the amount of any contributions: say $4,500 for 8 years since June 2003. On that hypothesis his superannuation would be $71,000 by 30 June 2011. Unfortunately, about the value of his superannuation there was no submission to that effect or to any other effect for either party. There was no submission for the applicant that she had contributed to the respondent’s accumulation of superannuation or that her own superannuation was diminished because of sacrifices made for the respondent or their child during or after the relationship. The evidence relating to superannuation assets is scant. The applicant bears the onus of proof that superannuation assets are relevant to the adjustment of the parties’ interests in the proceeds of the house. She has not satisfied that onus. [11] The court must also consider the financial contributions made directly or indirectly by or for the de facto partners to the financial resources of either or both of them. [12] The parties began their relationship in 2000. In October 2000 the applicant became pregnant with the respondent’s child. They began living together in January 2001. They were working away from Queensland. In April 2001 the respondent returned to Brisbane to work but the applicant remained to finish her employment until May 2001. It was submitted for the applicant that the respondent was the sole income earner from 2000 to 2002. The submission does injustice to the evidence. I will accept the submission as partly accurate from 2001 for the evidence is to the effect that the applicant was working in 2000 and until May 2001.The parties lived for about a month with the respondent’s parents. Their son was born on 20 July 2001. They rented properties in Beenleigh until June 2003. -- 4 of 9 -- 5 [13] The applicant worked in Brisbane from April 2002 as a casual legal secretary. In June 2003 she began working three days per week as a legal secretary and conveyancing clerk. In August 2004 she increased this employment to four days per week. During this time the respondent was mostly employed full time. The respondent was laid off in February 2005. He was out of work for five weeks before obtaining work for a building and construction company in New South Wales. He was employed in that position for four weeks and was then unemployed for two weeks before finding work for another building company at the Gold Coast. The respondent moved jobs on several occasions. The applicant, save for a couple of weeks between jobs in 2007, has been permanently employed four days per week. She is currently maintaining her employment as a conveyancer and paralegal. The evidence does not disclose whether it is four or more days per week. [14] The applicant’s taxable income has been: FYE 2004 $27,276 FYE 2005 $34,001 FYE 2006 $37,368 FYE 2007 Undisclosed FYE 2008 Undisclosed FYE 2009 $43,976 FYE 2010 $44,529 FYE 2011 $48,407. [15] The respondent’s relevant financial history was not disclosed by him. The respondent submitted from the Bar table that he had been laid off work the day before and that he was suffering from health problems. There was no evidence given by him in an admissible way that permits me to act on that information. In 2007 there was affidavit evidence that he was in reasonable health and I infer on the admissible evidence that he is capable of working until retirement. However, I infer from the evidence in the affidavits of the applicant that the respondent’s employment has been intermittent. For example, the respondent has been in arrears with respect to child support payments and the applicant explained that in March 2007 she received a letter stating that the respondent was once again not working and assessed to pay nil child support. [16] The applicant’s income earning capacity was the subject of an affidavit in 2007. Her earning capacity was restricted in July 2007 due to the fact that she has care of their child. It was her evidence in 2007 that she was working and would continue to work four days a week as it was important to her to be able to assist with class room activities on her day off. There is no evidence as to how long this financial sacrifice continued. At least until 2007 and for some reasonable time thereafter, that parenting contribution is a matter which the court must consider. [17] From the Bar table the respondent gave evidence of parenting contributions he made as coach of a sporting team for the child. As a result of objections taken to the receipt of evidence from the Bar table I will not have regard to that particular evidence. [18] The parties continue to have joint care of their child who is now 10. He spends time with the respondent every Thursday, every second weekend and half of school holidays. Currently, this amounts to about 66 per cent of the time spent with the -- 5 of 9 -- 6 applicant and about 34 per cent of the time spent with the respondent. The respondent submitted that he wishes to have more care of the child and that the applicant denies him that so that she can maintain a higher claim for child support payments. As there is no admissible evidence of these matters I disregard them. The respondent’s opinion about this, even if included in an affidavit, would have been inadmissible and unpersuasive. [19] The property at Beenleigh was purchased in June 2003 for $125,000. $118,000 of the purchase price was borrowed from the Bank of Queensland. The First Home Owners Grant was used to finance the other costs of buying the property. The applicant owned shares which she sold for $6,100. She used that money for a deposit on the house. The house has appreciated in value. The house and land have been valued at a range between $250,000 and $280,000. Without the applicant’s contribution of the deposit and joint obligation to repay the loan the respondent was in a poor position to borrow funds for a house. His funds after spending $1,500 to relocate himself to Brisbane were about $600 after payment of a tax liability. He had an unpaid loan of $9,000 with the National Australia Bank and more than $1,500 owing in parking fines. The respondent made an indirect financial contribution to the acquisition by spending $1,500 relocating the parties to Brisbane. [20] The court must also consider the non-financial contributions made directly or indirectly by or for the de facto partners to the financial resources of either or both of them. [21] The court must consider the contributions, including any home-making or parenting contributions made by either or both of the applicant and the respondent to the welfare of the two of them and their child. [22] The evidence as to the respective contributions to family welfare by each of the applicant and respondent is scant. The respondent was obliged to file material. He failed to comply with his obligation. The applicant in her affidavits does not suggest that the home-making or parenting contributions by her and by the respondent have been very different. As a result of orders made in another court, the applicant has custody of their child for 66% of the time and the respondent for 34%. I assume proportion of responsibility is a fair reflection of their respective contributions as carers since the time of the orders. Neither party was uncomplimentary about the caring contributions of the other. [23] The applicant worked four days each week as a legal secretary. She used the fifth day of the working week for her son. The applicant lives in rental accommodation which currently costs her $355 net per week. The respondent has continued living in the property at Beenleigh. By my calculation the current mortgage payments are about $175 per week. [24] The respondent accepts that he has had the advantage of paying less than he would otherwise have been obliged to pay as rent. [25] There was no evidence of who paid the mortgage repayments during the period from June 2003 until February 2005. The parties separated in July 2005. The applicant gave evidence that the financial arrangements changed in February 2005 such that the respondent would give her cash each week which was sufficient to pay -- 6 of 9 -- 7 his half of the mortgage and his half share of the food expenses. There is no evidence about which party paid the mortgage repayments before February 2005. Bearing in mind that the applicant had increased her working to three days per week from about the time that the house was purchased and increased it again to four days per week from August 2004 I assume that at least from August 2004 the parties made equal financial contributions to the payment of the mortgage until they separated and that if the applicant had paid less it was because she was working less so as to provide better care to their child. At the time of separation the parties were paying half each of the telephone bill, the electricity bill and the food. Child care fees of about $100 per week were automatically deducted from the bank account of the applicant at that time. The applicant was then receiving child care fees from the Commonwealth. I do not infer that the fortnightly child care fees were being paid by the applicant from her wages. [26] After the relationship ended on 23 July 2005 the applicant paid half the mortgage payments for five weeks and then stopped. The respondent continued to reside at the house. The respondent alone has paid mortgage repayments since the applicant stopped doing so. The amount of the monthly repayments has varied over time. Currently the mortgage obligations are about $25 per day or about $175 per week. The house is a high set residential dwelling of three bedrooms with one bathroom built in about 1980 and from the exterior appears to be in fair condition with no major defects and with external paintwork in fair condition. It has a concrete driveway and basic landscaping. The applicant currently pays rent of $355 per week. It can be seen that the respondent has, by occupying the house, had the benefit of accommodation at a lower cost than the cost of rent paid by the applicant. She pays as weekly rent about twice what he has generally been paying for mortgage repayments. It is also acc [27] There are other direct and indirect financial matters relevant to the maintenance of the house. The applicant has paid insurance on the dwelling continuously. She has not given evidence of the cost of that insurance. No one has paid the rates. The applicant was unaware that the respondent had been failing to pay the rates. This was because rates notices were being sent to the house. Counsel for the applicant stressed the failure of the respondent to pay rates as if this was a matter relevant to the adjustment of property rights in favour of the applicant. I was not explained how it should benefit the applicant. Both applicant and respondent were liable to pay rates. The fact that the respondent occupied the house and received the notices does not shift the applicant’s share of the financial obligation to the respondent. The local Council began proceedings to have the property sold in 2010 when municipal rates exceeded $10,000. Rather than having its interest in the property affected, the Bank of Queensland paid the outstanding rates and added them to the loan. The bank paid a total of $11,609.45 to the Council to prevent the auction of the house for the payment of rates. [28] The respondent accepted during addresses that it was a fair matter to take into account in favour of the applicant that mortgage repayments were less than lent. By permitting the respondent to remain in the dwelling paying less than he would otherwise have paid for rent in an equivalent dwelling, the applicant has contributed to the financial resources of the respondent. [29] The applicant and the respondent are agreed on an order that the mortgage be discharged from the proceeds of sale of the property. Thus, the component of the -- 7 of 9 -- 8 mortgage debt which includes about $11,609 for rates will be paid by each of them equally. Ordinarily, if there were outstanding rates at the time of settlement of the sale of the property the balance purchase price payable would be reduced to take account of that outstanding liability. I assume that for all of the rates which are currently outstanding the position will be that each party will equally share the burden if the ordinary practice was followed. [30] At the current rate at which the applicant pays rent it can be seen that her accommodation costs exceed the respondent’s by about $180 per week or $9,360 per year. The respondent has had an advantage which is significant. I am unable to find on the evidence that it is an advantage as great as $9,360 per year for there is no evidence as to the relative merits of the properties occupied by the parties nor for how long the applicant has occupied her current residence. There is no evidence of the rent paid throughout the 5 ½ years by the applicant. Another exercise gives some idea of the amount of financial assistance the applicant gave to the respondent since separation. [31] The respondent has enjoyed some advantage for 5 ½ years and it has been as a result of his occupation of a property jointly owned with the applicant. The current market rent for the property would be $300 per week. The respondent currently has been paying a mortgage at about $175 per week. The applicant has also been paying an undisclosed sum for insurance on the property. I will assume she has been paying about $10 per week at current rates. Neither party has paid rates or maintenance costs. The applicant has continued for 65 months after separation to contribute to the respondent’s financial state by letting him live in the home which could have been rented out for more than the mortgage repayments. If the respondent was now paying $150 to the applicant as half the weekly market rent and was now contributing $5 each week to the insurance and $87.50 weekly to the mortgagee and if the applicant was now paying $87.50 weekly to the mortgagee as a half share of the current weekly mortgage debt then the situation would be that the respondent would be out of pocket by $242.50 each week. Instead, he pays $175 to the mortgagee. His advantage currently is $67.50 each week. That is an amount of about $3,406 per year or about $18,733 since the separation on current figures. [32] The application is not to adjust the property rights to the house. It is an application to adjust the property rights to the balance after satisfying the mortgage, the agent’s commission, auction fees, advertising expenses, if any and legal costs of the sale. Accordingly, when considering the proper percentage by which to adjust the balance to justly and equitably take account of a contribution made to the financial resources of one party or the other it is important to consider what that balance is likely to be. [33] The applicant currently receives $402.36 in Family Assistance from Centrelink each fortnight. She has a motor vehicle worth $13,000 and a debt of $12,000 in respect of it. She has $3,5031 in her savings accounts. The respondent is required to pay child support of $24.19 per week. He is currently in arrears in the sum of $9,810.48 which the applicant is pursuing through the Child Support Agency. I assume that it will be recovered. That assumption is consistent with the final written submission of the applicant. That submission does not refer to the arrears as one of the issues affecting apportionment. -- 8 of 9 -- 9 [34] The respondent’s payment of mortgage obligations has been haphazard. As a result there have been some default fees incurred. There is no evidence about the capacity or incapacity of the respondent to have met the mortgage repayments when they fell due. I infer that the had the capacity to do so. I regard the fault for the default fees as primarily the respondent’s. It is a matter which will have a small bearing on the adjustment. The only evidence relating to the respondent which does not appear in the applicant’s material and which is relevant is the fact that the respondent has another child aged four who is in the care of the respondent for 55 per cent of the time and that he proposes to clean up the property for sale with the consent of the applicant. [35] Matters which I find important in considering whether and how to adjust the rights of the parties to the balance of the proceeds of sale of the house are: The applicant’s sole contribution of the deposit; The unlikelihood that the respondent would have been able to obtain a loan on his own behalf; The applicant and the respondent accepted joint liability for the mortgage; It is unlikely that the applicant, then working three days per week, would have obtained a loan in her own name for the purchase of the house and that it is likely that the loan was obtained because there were the applicant and respondent as joint borrowers; The respondent has had the benefit of occupying the property for 6 ½ years paying less than he would have paid in rent; Proceeds of sale for division are likely to be between about $120,000 and $153,000; The applicant is likely to obtain the arrears of maintenance owed by the respondent from the proceeds he receives; The applicant has been the primary caregiver to their child and even reduced her work by a day each week for some years for this reason. [36] If only to repay the applicant for half her contribution to the deposit, for the advantage the respondent enjoyed by his occupation of the house at less than market rent and for half the insurance the respondent would permit the applicant to retain about $22,000 of the proceeds. That in itself is about 14.3% to 18.3% of the likely proceeds. The fact of a child of the relationship and the applicant’s greater proportion of care for him significantly adds to the necessary adjustment. A 30% adjustment is warranted. [37] I propose that the order in the originating application at 2.4 should provide for a balance to the applicant of 65% and to the respondent of 35%. [38] The applicant wishes to be further heard as to costs. I propose to permit the applicant to prepare a draft order in terms of the amended originating application. Paragraph 1.2 was amended and incorporating any order as to costs. -- 9 of 9 --