Simpson-Phillips v Stroud [2000] NSWCA 205

New South Wales Court of Appeal

CITATION : Simpson-Phillips v Stroud [2000] NSWCA 205 revised - 8/08/2000 FILE NUMBER(S) : CA 40862/99 HEARING DATE(S) : 31/07/00 JUDGMENT DATE : 4 August 2000

PARTIES : Violet Grace Simpson-Phillips (Appellant) James Godfrey Stroud (Respondent) JUDGMENT OF : Mason P at 1; Stein JA at 2; Fitzgerald JA at 3

LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT 3416/97 FILE NUMBER(S) : LOWER COURT Master McLaughlin JUDICIAL OFFICER :

COUNSEL : Ms R. Winfield (Appellant) Mr Michael R. Errington (Respondent) SOLICITORS : Hovan & Co Solicitors (Appellant) Ellis McLauchlan Solicitors (Respondent) CATCHWORDS : De Facto Relationships Act 1984 - challenge to Master's findings - whether appellant entitled to whole amount of proceeds from the sale of a jointly owned property - ND LEGISLATION CITED : De Facto Relationships Act 1984 DECISION : Appeal dismissed, with costs

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40862/99 EQ 3416/97 MASON P STEIN JA FITZGERALD JA

FRIDAY 4 AUGUST 2000

SIMPSON-PHILLIPS v STROUD

JUDGMENT

1 MASON P: I agree with Fitzgerald JA. 2 STEIN JA: I agree with Fitzgerald JA. 3 FITZGERALD JA: The parties to this proceeding lived for two periods in a defacto relationship within the meaning of the De Facto Relationships Act 1984 (the Act). The first period commenced in January 1986 and the relationship finally terminated on 29 January 1996. In July 1987, a daughter, Chanelle, was born to the parties. Although they maintained their disagreement on the times when they lived in a de facto relationship, in this Court both parties accepted that the total of the periods in which they lived in such a relationship was about 7 years. 4 On 31 July 1997 the respondent filed a Statement of Claim in the Equity Division seeking orders under s 20 of the Act. On 23 October 1997, the appellant filed a cross-claim in which she also sought orders under s 20. Later, she filed an application for an extension of time under s 18 of the Act which was held to be unnecessary. The claim and cross-claim were heard by a Master on 9 April 1999. Judgment was delivered on 29 September 1999. 5 As the judgment required, short minutes were brought in by the parties, and orders were made on 22 October 1999 and entered on 11 February 2000. The Master ordered that the parties' house property at Mt Colah be sold, the mortgagee's debt be discharged, and the net proceeds be divided equally between them. Each party was otherwise "declared to be the sole beneficial owner of real and personal property in his or her possession", and the appellant was ordered to pay the respondent's costs. 6 The appellant applied for leave to appeal and appealed. The respondent asserted that leave to appeal is not necessary and did not oppose leave if it is necessary. The Court proceeded with the appeal. The only variations to the Master's orders sought by the appellant are orders that the house property be transferred to her subject to the existing mortgage and that the respondent pay her costs. She also seeks her costs of her application for leave to appeal and the appeal. 7 The appeal was conducted on the basis that the house property is the parties' only significant joint property and that the only other significant "property" or "financial resource" of either of them is the respondent's superannuation benefit. 8 Except for two brief periods of unemployment, the respondent, who is a computer programmer, was in relatively well-paid employment throughout the periods of the parties' de facto relationship. The appellant engaged in part-time paid employment from time to time. While both made financial contributions, the respondent's financial contribution was much greater than that of the appellant, which was small. 9 Each of the parties also made contributions as homemaker and parent to the welfare of the parties and the family constituted by them and their daughter, and, for part of the time, children of the respondent's previous marriage. 10 The Master found that the appellant was a heavy gambler, and his judgment includes the following findings: "20. Throughout the entirety of each period of the relationship the [respondent] was the principal breadwinner. It was his earnings which maintained the household and the family consisting of himself, the [appellant] and, after her birth on 2 July 1987, their daughter Chanelle. …… 22. The [appellant] made little, if any, financial contribution towards the household or towards the family unit. Indeed, to a very large extent (at least to an amount exceeding $14,000) the [appellant] expended money on gambling, and was largely supported in that activity by monetary advances from the [respondent]. …… 27. The only contributions made by the [appellant] to the relationship were in her roles as homemaker and mother. I do not consider that she devoted a great deal of her time or energy to fulfilling those roles. Indeed, for very substantial parts of each of the two periods of the relationship it was the [respondent] who fulfilled the principal roles as homemaker and as parent to Chanelle, since the [appellant] was very frequently absent from home, indulging her gambling addiction at various clubs and gaming rooms." 11 The parties' house property was purchased in late 1987 for $148,000. The respondent paid $10,000 toward the purchase price from money which he had saved prior to the commencement of the parties' de facto relationship. The balance of $138,000 was borrowed, secured by mortgages. The respondent made a further capital contribution of $91,000 from a redundancy payment which he received in 1994. Part of that payment, approximately $62,500, was referable to the respondent's employment during periods in which the parties were not in a de facto relationship. The remainder, approximately $28,500, was referable to the respondent's employment during periods in which the parties were in a de facto relationship. All, or almost all, other mortgage payments, both principal and interest, were made from the respondent's income. Most of these payments were made from income earned by the respondent while the parties were in a de facto relationship but some were not. 12 At the time when the parties' de facto relationship terminated and at the time of the hearing, the debt secured by the mortgage of the house property had been reduced to about $38,000; i.e. about $110,000 had been paid toward the purchase price. Most of that amount, approximately $72,500, had been paid by the respondent from money he had saved prior to the commencement of the parties' de facto relationship and from money which he had received as a redundancy payment in respect of employment during periods when the parties were not in such a relationship. The amounts of interest paid from income earned by the respondent while the parties were and while they were not in a de facto relationship were not revealed by the evidence. 13 On a broad estimate, about half of the total amount paid in relation to the house property was paid from money which was referrable to the respondent's employment while the parties were in a de facto relationship. Even if the parties' "contributions" for the purpose of s 20 of the Act should be taken to be equal, the appellant was only entitled to ¼ of the net proceeds of sale of the house property if that property is considered in isolation. The value of the house property was about $215,000 when the parties' de facto relationship terminated and about $265,000 at the time of the hearing. 14 The respondent's superannuation benefit totalled almost $264,000 when the parties separated. Approximately $182,000 was attributable to the respondent's employment while the parties were not in a de facto relationship and about $82,500 was attributable to the respondent's employment while the parties were in a de facto relationship. The Master made no reference to these amounts in his judgment. 15 The Master's unfavourable views of the appellant and her "contributions" within the meaning of s 20 of the Act led him to the following conclusion: "28. The [respondent], as I have already recorded, seeks that the house property should be sold and the net proceeds of sale divided equally between the parties. Counsel for the [respondent] emphasised that that relief was what the [respondent] regarded as being fair in all the circumstances. Were it not for that attitude adopted by the [respondent], I would have been disposed to make an order giving to the [respondent] considerably more than one half of the net proceeds of sale." 16 There is force in the appellant's criticism of the Master's findings with respect to her "contributions". The evidence to which our attention was drawn suggests that the appellant's financial and other "contributions" might both have been underestimated. Further, while the only order sought by the appellant is one "adjusting the interests of the parties" in the house property, the portion of the respondent's superannuation benefit which is referable to his earnings while the parties were in a de facto relationship cannot be ignored in determining what is "just and equitable". 17 However, it is insufficient for the appellant to point to defects in the Master's judgment. The appellant must persuade the Court that, since the respondent is to retain his entire superannuation benefit, it is "just and equitable" that the appellant should receive more than half of the net proceeds of sale of the house property having regard to the parties' respective "contributions" during the periods of their de facto relationship, 18 Even if the Master understated the appellant's "contributions", his conclusion that they were not equivalent to the respondent's contributions was clearly open and ought not be disturbed. 19 Further, while the order giving each party half of the net value of the house property takes no account of the portion of the respondent's superannuation benefit which is attributable to his employment while the parties were in a de facto relationship, such an order also disregards, in favour of the appellant, the respondent's payments towards the purchase of the house property and under the mortgage from money earned in respect of periods while the parties were not in a de facto relationship. 20 If it be assumed in favour of the appellant that her "contributions" were equal to those of the respondent at the time when their de facto relationship terminated, she would not be entitled to more than (approximately):