B v H [2008] QDC 28

DISTRICT COURT OF QUEENSLAND CITATION: B v H [2008] QDC 28 PARTIES: B Applicant/Plaintiff v H Respondent/Defendant (225 of 2007) H Applicant v B Respondent (229 of 2007) FILE NO: 225 of 2007 229 of 2007 DIVISION: Civil PROCEEDING: Applications ORIGINATING COURT: District Court DELIVERED ON: 29 February 2008 -- 1 of 9 -- 2 DELIVERED AT: Maroochydore HEARING DATE: 14 December 2007 JUDGE: K S Dodds, DCJ ORDER: 1. B’s application is dismissed. 2. Order in terms of paragraphs 1 and 2 and in terms of the interim directions sought in H’s application filed 5 December 2007. 3. Despite that B’s application has been dismissed and H’s application has resulted in orders there will be no order as to the costs of each application. CATCHWORDS: Property Law Act 1974 Part 19 – defacto relationship – separation agreement – whether recognised agreement – sections 265, 266 Property Law Act 1974 – leave to apply for property adjustment order – whether hardship – section 288(1)(b), (2) Property Law Act 1974 – jurisdiction – section 329 Property Law Act 1974 Cases cited: Neocleous v Neocleous (1993) FLC 92-377; 16 Fam LR 557 Whitford v Whitford (1979) FLC 90-612 78; (1979) 4 Fam LR 754 COUNSEL: A Sinclair for B A Hawkes (sol) for H SOLICITORS: John Hawes and Associates Solicitors for B Adrian Hawkes Lawyers for H -- 2 of 9 -- 3 [1] There are two proceedings before the court, one by each of former de facto partners (Property Law Act 1974, Part 19). Applications have been filed by each in each proceeding returnable before the court on the same date. These reasons deal with those applications. [2] The first proceeding (225 of 2007) filed on 12 October 2007 is a claim by the former male partner (B) claiming: Recovery of possession of land and improvements (Lot 25) and to have possession of the whole; An injunction to prevent his former female partner (H) from re-entering the property other than with written consent; $28,690.00 due and owing pursuant to a deed (the separation agreement) made 20 June 2005; Alternatively an occupation fee in the amount of $28,690.00; Interest and costs. [3] To this claim H filed a defence and counterclaim on 15 November 2007. The counterclaim sought a declaration that B was unable to rely upon the deed and that his claim be dismissed. [4] B responded with a Rule 444 Uniform Civil Procedure Rules (UCPR) letter dated 16 November 2007 pointing out deficiencies in the defence. The letter (from his solicitors) asserted the counterclaim must fail because it relied upon the defence. It sought H re-plead her defence and counterclaim and serve it within 7 days failing which an application would be made to the court to strike it out and for costs. A response to the letter was sought before 5pm on 23 November 2007. [5] B’s solicitors sent a further letter to H’s solicitors dated 18 November 2007 which along with B’s assertions of factual matters contained a demand H pay an occupation fee equivalent to market rental ($295.00 per week) for her continued occupation of the home in which they had resided before separation (the former home), the first payment to be made within 7 days or vacate forthwith. It said an application would be made to the court to enforce one or other alternative. [6] On 23 November 2007 H’s solicitors wrote to B’s solicitors requesting an extension of time to respond to the rule 444 letter because counsel was unable to settle the amended defence and counterclaim in the time allowed. This was refused because it was said seven days had been allowed and rule 444 provided 3 days to respond. [7] On 23 November 2007 H’s solicitors wrote again to B’s solicitors. The letter asserted that both B’s claim and H’s claim (see paragraph 10) arose out of and were incidental to the de facto relationship, the disputes related to property and should both be dealt with, conducted and heard together under Part 19 of the Property Law Act 1974. It suggested both proceedings be merged and dealt with together. It sought agreement to this course. [8] On 27 November 2007 B filed his application in this proceeding. The application sought that: -- 3 of 9 -- 4 Various paragraphs in H’s defence and counterclaim be struck out; Until further order H pay an occupation fee of $295.00 per week from 28 November 2007 in respect of her occupation of the former home; Occupation fees paid be retained in his solicitors trust account until the agreement of the parties or further order; Costs. [9] On 4 December 2007 H filed an amended defence and counterclaim. By her counterclaim she pleaded the separation agreement was unenforceable, made application for leave to apply for a property adjustment order pursuant to section 286 of the Property Law Act 1974 (the Act), asserted that hardship would result to her and the children of the relationship if leave were not granted and sought orders dividing the property of the parties 70% to her and 30% to B. [10] The second proceeding (229 of 2007) filed on 15 October 2007 was an originating application by H for orders: For leave to apply for property adjustment orders pursuant to section 288 of the Act; For property adjustment orders pursuant to section 286 of the Act that the property of the applicant and the respondent be identified, valued and divided, 70% to the applicant and 30% to the respondent; That B holds his interest in the former matrimonial home on trust pursuant to the court’s orders and not encumber the property without the written consent of the applicant; For an order for sale of the property sufficient to realise interests following the making of any property adjustment orders including the appointment of trustees for sale; For directions in terms of District Court Practice Direction number 5 of 2004. [11] On 5 December 2007 H filed her application in this proceeding for orders; That proceeding 225 of 2007 be consolidated with proceeding 229 of 2007; For interim directions in terms set out in the application, essentially to ready the matter for trial; Costs on the indemnity basis. -- 4 of 9 -- 5 Background [12] B was born 30 September 1967 in Australia. He is 40 years of age. H was born on 29 December 1970 in England. She is 37 years of age. They commenced a defacto relationship in 1991 or 1992 in England. There are two male children of the relationship, one born 6 September 1996 and the other 21 December 2002. In 1991, prior to meeting H, B bought Lot 25. In 1995 B borrowed money and built a 3 bedroom highset weatherboard home on Lot 25. It was completed probably in the latter part of 1996. B is the sole registered proprietor of Lot 25. He says he was responsible for repayments. H says they both contributed to repayments. In June 2004 they separated. Since then H and the children have lived in the former home. On separation B left Lot 25 and has lived in rental accommodation. [13] According to B from July 2004 until June 2005 he paid to or spent money for H totalling $45,100.00. In about April 2005 H approached him and told him the property settlement between them could be resolved on the basis he paid her $75,000 in full and final settlement of all claims between them. He agreed and requested she arrange through a solicitor for a deed of separation. This she did. He did not have a solicitor. Prior to execution of the deed on 20 June 2005 he had provided to her in excess of $40,000. The deed in clause 3(d) acknowledges her receipt of $40,000 with a further $35,000 to be paid. He paid this to her on 27 September 2005. Subsequent to signing the agreement they agreed that in lieu of him paying child support she would live in the former home without paying rent. Child support was less than market rental. In June 2006 (2 years after separation) he told her he wished to resume occupancy of the former home. She told him she had been looking for another property but could not find one. He agreed to her continuing living in the former home for a further six months. He has paid all mortgage payments and other outgoings for the property since separation. [14] According to H: In November 2004 her motor vehicle was having mechanical problems. B had earlier purchased a new Hilux motor vehicle for himself. After pressing him he purchased a Suzuki motor vehicle for her. In late 2004 she asked B for some money to visit her family in England with her children. Prior to that she had never done so. In 2005 B provided $4000.00 for this purpose. Between separation and until about December 2004, B told H on a number of occasions they would have a property settlement. She had to press him for money for her and the children. She was receiving $300.00 per week in benefits. When he gave her money he would tell her it would be part of the property settlement. In about April 2005 he told her he wanted an agreement to formalise their property settlement. She was in urgent need of money for unpaid bills and expenses. She was depressed. She agreed. On or about 20 June 2005 both signed a deed drafted by Freedom Family Law solicitors retained by H (the separation agreement). From commencement of co-habitation until the birth of the second child, H worked except when pregnant and caring for the children when they were babies and contributed her earnings to the household. The second child -- 5 of 9 -- 6 was sick with various illnesses in the first two years of life and she suffered from post-natal depression. Since separation any work she has been able to obtain has provided little over and above the cost of childcare for the children. The children have remained with her since separation. Until the recent disputing began B showed little interest in having any care or access to them. Now he has them every second weekend. During the relationship she had no access to bank accounts and if she needed money was required to ask B for it. He controlled the joint finances. In 1997 he commenced a family plumbing and roofing business. She answered phone calls when he was not available and would talk to clients. She would assist with the paperwork and attend to filing business documents. A discretionary trust was established by B and his accountant. She was a beneficiary. At tax time the business and trust income would be apportioned by B although she never physically received any of it. Everything was controlled by B and the accountant. She estimates the business income to be in excess of $100,000 per annum. The money borrowed to purchase Lot 2 and build the house had been repaid by the time of separation. She estimates that at that time there were other assets to a value of approximately $100,000. Since separation H and the children have occupied the upstairs of the former matrimonial home. B had not paid regular maintenance. H has not paid rent. B has occupied the downstairs part of the home where he has stored his tools, building materials and other chattels. He has also occupied the locked shed on the property. Until recently he stored his boat and trailer on the property. [15] In view of the wide ranging submissions made at the hearing of the applications it is I think appropriate to deal with the following issues. Separation Agreement [16] The deed was executed by both B and H in the presence of a solicitor engaged by H. It is a separation agreement in terms of section 264 of the Act. However in my opinion despite its terms it is not a recognised agreement as described in section 266 of the Act. That is because it cannot be concluded from the agreement itself or from the evidential material before the court that the agreement contained a statement of all significant property, financial resources and liabilities of each of the defacto partners when the agreement was signed.1 The agreement makes no attempt to disclose these matters, the evidential material suggests that B retained control and knowledge of property and financial resources and it is not possible to reach any view about the total value of B’s property, financial resources and liabilites. This conclusion is despite that in Clause 5(h) of the agreement, both parties purport to acknowledge that it constitutes a recognised separation agreement. Moreover to the extent the agreement purports to set up the agreement as a bar to any further or other claim under the Act it is invalid.2 In that event section 277 of the Act applies. A court may make an order it could have made if 1 Property Law Act 1974 section 266(1)(c). 2 Property Law Act 1974 section 271. -- 6 of 9 -- 7 there were no separation agreement, but in making the order may consider the agreement provisions on financial matters in addition to the other matters the Act requires the court to consider. Leave necessary to apply for property adjustment orders [17] The defacto relationship ended in June 2004. The two year limitation period expired in June 2006, the time, when, coincidently B told H he wished to occupy the former home. H can now only proceed pursuant to Part 19 pf the Act if the court gives leave which may only be given if the court is satisfied hardship would result to the applicant or a child if leave were not given.3 In J v S (2002) QDC 222 Robertson DCJ was required to construe section 288(2) of the Act. His Honour drew upon Family Court of Australia decisions about a similar provision in the Family Law Act 1975 (Cth) section 44(4). In Neocleous Neocleous v Neocleous (1993) FLC 92-377; 16 Fam LR 557 Lindemeyer J said “--- the generally accepted meaning--- (of hardship) is “a substantial detriment”: see Whitford v Whitford at (FLC) 78; 144--- “hardship” is a relative term and--- there is no absolute measure of it. What amounts to “a substantial detriment” depends upon the circumstances of each particular case. While the existence of a reasonable claim to relief under section 79 is obviously a necessary ingredient of hardship, it has been held that the mere loss of the right to litigate that claim is not itself hardship”. [18] It is I think, appropriate to mention some matters. There is an absence to this point of any disclosure of property and financial resources by B, there is evidence suggesting that he established a plumbing and roofing business in 1997 which from that time seems to have placed its financial affairs into a trust structure, that at tax time until separation there was a notional distribution of trust money to H although she was never given any of it. There is evidence H was never privy to any of the family financial detail, money provided to her post separation was accompanied by advice that it was to be part of their property settlement, the demand for a written agreement originated with B although B says to the contrary. Despite that the agreement provided that H and the children could remain in the house for only 12 months post agreement and would pay market rental, H remained living in the house without paying rent and B did not pay any maintenance payments. B says he asked H to leave prior to his solicitors’ letters requiring she vacate. H denies that. On 17 April 2007 solicitors for B sent a letter and notice to tenant to H requiring she vacate the house. Solicitors for H replied advising that the separation agreement did not prevent her from filing an application pursuant to Part 19 of the Property Law Act 1974 (although the limitation period had expired). Unless the notice to vacate was withdrawn by 8 May 2007 a caveat would be lodged over Lot 25. They advised that unless B entered into genuine negotiations instructions had been provided to file a Part 19 application. On 23 July 2007 H’s solicitors wrote to B’s new solicitors enclosing a copy of a caveat lodged over the property. The letter reiterated instructions to file a Part 19 application. It again asked that B enter into meaningful negotiations to avoid the expense of legal proceedings. In response B’s solicitors advised that if H had not vacated the property by 2 August 2007, counsel would be briefed to make an application to the court. In response H’s solicitors requested confirmation any court application by B would be a Part 19 Property Law Act 1974 application. Again on 23 July 2007 H’s solicitors sought that confirmation. It appears no such confirmation was provided. On 10 October 2007 3 Property Law Act 1974 section 288. -- 7 of 9 -- 8 B’s solicitors wrote to H’s solicitors advising they were completing material to be filed in court and asked for advice whether they held instructions to accept service. On the same day H’s solicitors advised they had those instructions. The letter pointed out that H would be required to commence proceedings in the next few days to protect her caveat and sought service of the process or alternatively advice about in which court and what application was to be made by return facsimile. The letter pointed out that duplication of court applications would be a waste of money. By letter 11 October 2007 B’s solicitors advised the application would be for recovery of possession of the land, injunction, monies dues and owing to B, or alternatively an occupation fee, interest, damage and costs. Then On 12 October 2007 and 15 October 2007 B and H filed their respective proceedings referred to earlier [19] H has the care of the two children. It appears she has no extended family in Australia having come to Australia in pursuance of the relationship. She has no particular job skills. Her income is $300.00 per week in benefits. She has little in the way of assets. Any assets acquired in the relationship are in B’s name. During the relationship according to her she made significant financial and non-financial contributions towards the financial wellbeing of the family. Jurisdiction [20] The District Court’s jurisdiction to hear and decide a Part 19 application for property distribution after a de facto relationship has broken down is section 329 of the Act. Apart from jurisdiction to make a declaration under Division 5 the court has jurisdiction in all other matters under Part 19 of the Act subject only to subsection 4 of section 329. Subsection 4 prevents the court making an order or declaration concerning an interest in property exceeding the court’s monetary limit i.e. $250,000, unless both parties otherwise agree by a memorandum signed by them or their lawyers.4 [21] H deposed in an affidavit filed on 15 October 2007 that at separation she estimated the value of the property at Lot 25 was $450,000. She also deposed to the value of other assets totalling in all about $100,000. In her application she has sought 70% of the value of the assets which on the evidence so far would seem not supportable. No memorandum has been signed by the parties or their lawyers pursuant to section 72 of the District Court Act 1967. [22] Subject to leave being granted, H may proceed in the District Court however the court may not make an order or declaration about her interest in property exceeding the court’s monetary limit. On any trial of a Part 19 claim what has occurred since separation would be examined, full disclosure of the property, financial resources and liabilities of the parties will have occurred, the history of the relationship and the contributions of both parties as required by the Act would be examined. All these matters will have a bearing on the outcome. [23] H’s originating application was a necessary step to seek leave. If leave were granted it is appropriate the two proceedings be consolidated and heard together. Substantially the same questions are involved in both proceedings. In that event H will need to address the jurisdictional question in accordance with paragraph 6 of District Court Practice Direction No. 5 of 2004. 4 Property Law Act 1974 section 329(4)(a); District Court Act 1967 section 72. -- 8 of 9 -- 9 Decision [24] In light of the skirmishing between the parties and these reasons the remaining question is what orders should be made in the two applications. B’s application [25] By the time of hearing of the application H’s amended defence and counterclaim had been filed. B had refused an extension of the 7 day period limited in the rule 444 letter. Whether or not leave was ultimately granted to H it seems to me there would be little if any utility in ordering H pay an occupation fee pending resolution by the court (or resolution by the parties themselves). If interim directions were made and complied with, all matters between the parties may be resolved quite quickly either by agreement or by the court. H’s application [26] Orders should be made in terms of paragraphs one and two of H’s application filed 5 December 2007 and the directions set out in the application should be made. There is sufficient evidentiary material pointing to hardship.5 Whether ultimately leave is granted can only be determined after disclosure of the property financial resources and liabilities of both parties. To this point there has been no disclosure by B. Orders [27] B’s application is dismissed. [28] Order in terms of paragraphs 1 and 2 and in terms of the interim directions sought in H’s application filed 5 December 2007. [29] Despite that B’s application has been dismissed and H’s application has resulted in orders there will be no order as to the costs of each application. 5 Property Law Act 1974 section 288. -- 9 of 9 --