New South Wales Supreme Court CITATION : Williamson v Birch [2001] NSWSC 36 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3355/99 HEARING DATE(S) : 29/01/2001, 30/01/2001 JUDGMENT DATE : 31 January 2001 PARTIES : Richard Charles Williamson v Melanie Birch JUDGMENT OF : Master Macready at 1 COUNSEL : Mr R. Bell for plaintiff Mr G. Thistleton for defendant SOLICITORS : Malouf Solicitors, Parramatta for plaintiff Lili Bulyk, Solicitor, for defendant CATCHWORDS : Family Law. Application under Property Relationship Act for adjustment of parties to property. Discussion of allowances for improvements to and conservation of property. Green v Robinson (1945) 36 NSWLR 96; CASES CITED : Hicks v Harvey (Master Macready ) 20/02/98; Pierce v Pierce Family Court 10/06/98; DECISION : Para 35 - 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER MACREADY WEDNESDAY 31 JANUARY 2001 3355/99 - RICHARD CHARLES WILLIAMSON v MELANIE BIRCH JUDGMENT 1 MASTER: This is an application under the Property Relationships Act for adjustment of the parties' property interests. The parties lived together in a defacto relationship from September 1994 until 11 December 1997. There was a break in the relationship of some three weeks during January and February 1997. There is no detail in the evidence before me on this break, and indeed the parties conducted the case before me on the basis that there was a continuous relationship from September 1994 until December 1997 and I will accept their treatment of the relationship as continuous. 2 The plaintiff at commencement was divorced, as was the defendant. He was then 45 and she was then 40. The defendant had two children, Samantha born 7 January 1982 and Stacy born 13 December 1984. They were thus 12 and 10 at the commencement of the relationship and were treated as part of the parties household. There was no issue of the relationship. However, it is clear that the parties were endeavouring to have children but this did not come to fruition, the defendant having had two miscarriages. 3 During the period of the relationship the parties lived together in the defendant's residence at 812 Comleroy Road, Kurrajong. The defendant had retained this as a result of her property settlement. 4 At the commencement of the relationship the defendant's assets were as follows: (a) Home at 812 Comleroy Road, Kurrajong $210,000 (b) 1989 Holden Nova 13,000 (c) Furnishings, chattels and jewellery in the home (insurance value ) 40,000 (d) Savings 2,000 (e) Animals 800 $275,800 5 At the time her liabilities were a mortgage to the Commonwealth Bank which amounted to $32,217.36. 6 The plaintiff at the commencement of the relationship had very little property. According to the defendant he brought with him a lounge suite, dining table and chairs, stereo system, television, buffet cupboard, refrigerator, lawn mower and barbecue. He also had at that stage a number of debts on a series of credit cards totalling about $15,000. The plaintiff received shortly after commencing the relationship a sum of $70,000. This was received in November 1994 and it was as the result of his property settlement with his former wife. 7 There were two assets acquired during the relationship. The first was a boat purchased by the defendant for some $25,000 and a smaller boat purchased for $2,250. What has happened to this later boat does not appear in the evidence and accordingly I will ignore it. The main purchase of the larger boat was clearly made by the plaintiff out of his sum of $70,000. It was purchased with the idea of the family using it and this however turned out to be an unsuccessful venture. The family did not want to use it and he sold it a few months later realising only $11,000. No criticism was made by the defendant of the prices which were obtained. Accordingly there was a loss of some $14,000 in respect of this purchase. 8 The second major asset was a Toyota Seca which was purchased on 2 November 1995 for $32,160. This purchase was managed by the defendant trading in her existing car for $12,160, the plaintiff contributing $5,000 in cash and the parties between them taking out finance of $15,000. The plaintiff made monthly payments of $345.31 during the relationship and the defendant made the payments thereafter. She has kept the car. 9 I turn to the property of the parties at the conclusion of the relationship. The defendant's assets at the conclusion were as follows: (a) Home at 812 Comleroy Road, Kurrajong (E) $265,000 (b) 1995 Toyota Seca (E) 20,000 (c) Furnishings, chattels and jewellery in home (insurance value) (E) 40,000 (d) Savings (E) 1,100 (e) Animals (E) 500 (f) REST Superannuation (E) 1,900 $328,500 10 In addition her liabilities at the conclusion of the relationship were as follows: (a) Mortgage to Commonwealth Bank $ 31,473 (b) Toyota Finance 11,200 $ 42,673 11 I mention that after the conclusion of the relationship, and indeed it was in April 1998, that the defendant received $58,000 from her father's estate and she paid out the bank mortgage. She also spent some funds on some furniture and other family expenses. 12 The parties are agreed that the house is now worth $330,000, and as I have mentioned, the mortgage has been paid out. There was some evidence before me of what was the rental value of the property. In September 1994, it was $180 per week, and in December 1997, between $220 and $230 per week. 13 I turn to the financial contributions and firstly note the evidence of the parties incomes during the period. The plaintiff's income from September 1994 to 30 June 1995 is $21,380; to 30 June 1996 is $36,618; to 30 June 1997 is $36,470; and to December 1997 is $18,000. This totals $112,468. 14 The defendant did casual work mainly working at Just Jeans and that employment seemed to decline during part of the period of the relationship. She also received a thousand dollars per month by way of maintenance from her former husband. Accordingly the disposable income that she had during the relevant period was as follows: September 1994 to June 1995 $5,674 plus $9,000 maintenance; to 30 June 1996 $4,311 plus $12,000 maintenance; to 30 June 1997 $7,025 plus $12,000 maintenance; to December 1997 $6,447 plus $6,000 maintenance. This totals $62,457. 15 The plaintiff has presented his case based upon an analysis of his cheque butts and credit cards. Therefore he may well have incurred further liabilities as the total of the expenditure claimed is greater than the income over the relevant period, although he also received the capital sum of $70,000. Precisely how that $70,000 was spent does not appear although it is clear, as I have said, that the boat was purchased from this sum. It is clear that the defendant used all her income for the purpose of the relationship, including meeting the monthly payments on the house mortgage. Although there was evidence of the parties superannuation entitlements there is no evidence to suggest that one particular party contributed in a factual way in increasing the other's entitlement. See Green v Robinson (1945) 36 NSWLR 96. Therefore it is not necessary to take into account these matters. 16 I turn to the direct financial contributions claimed by the plaintiff: (a) Cash payments between November 1994 and June 1995 to the defendant $8,000. This is now conceded by the defendant. (b) Improvements to the driveway $10,000. I accept, as does the defendant, that $3,960 was paid by cheque and I also accept that the balance was paid in cash. (c) Furniture. Furniture was purchased for $2,319.95. Most of this has been retained by the defendant except for a couple of items which he has not separately valued. Since it has been retained I will put this amount to one side. (d) Improvements to kitchen in 1996 $600. I accept that this amount was spent. (e) Addition of lights $1850. I accept this expenditure was made. (f) Changes to the decking surrounding the house $10,000. I am prepared to accept that the plaintiff paid this amount for these items. There were alterations in a number of areas and the work is not complete. This, in some respects, means that the house is not safe and certainly given its incomplete state, would hardly add ;much to the value of the house. Indeed there is no evidence that this, like the other improvements, has had any effect on the increase in value. (g) The defendant concedes the plaintiff paid $5,000 towards the cost of the car and it is also clear that the plaintiff paid $9,700 loan repayments on the car during the period of the relationship. It is also clear that after the end of the relationship the defendant paid out the balance of the car and made payments of some $12,000. Thus each has paid not quite half or slightly more than half of the finance costs of the vehicle. Their original contributions were: on the plaintiff's part $5,000 and on the defendant's part $12,160. This puts their equity in the car at approximately 30 percent and 70 percent respectively. The present value of the car is $11,000, and using the percentages, the plaintiff's interest would be $3,300 and the defendant's $7,700. In order to take account of the disparity in the financial repayments, which is only slight, I will adjust that the plaintiff's interest is $3,000 and the defendant's $8,000. (h) Blinds purchased by the plaintiff, $5,763. (i) There were carpets purchased, $2,100. (j) There was a horse purchased for the defendant by the plaintiff for $2,500. This, however, was a gift at the time and accordingly I will put it to one side. (k) The plaintiff paid for part of the New Zealand trip for the children, $3,100. (l) There was a purchase of a computer for the children for $2,300. (m) The plaintiff claims that he paid some $3,600 for fodder for the horse. Given the defendant's evidence of her also contributing in a small way I propose to allow $3,000 of this amount. (n) There were weekly payments of housekeeping on the part of the plaintiff. This started at $175 per week and finished at $200 per week. The estimated total over the period, $28,800. Having regard to the extent of the defendant's income at the time, I am prepared to accept that the plaintiff made these payments. (o) Rates and electricity. There were a number of items dealt with in paragraph 28 of the plaintiff's affidavit and which he claims he paid. Although he conceded that the items in paragraph 27 were a doubling up, it would appear that these ones in paragraph 28 are additional amounts he paid. They total $21,373 and I propose to allow them. (p) Sundry payments for meals and children's expenses $6,000. Given the reference by the defendant to the plaintiff paying for meals when they went out to dinner and lack of any denial of this amount, I propose to allow it. (q) Portraits $1,500. I accept the plaintiff's evidence on this matter. (r) Pocket money. It seems that the true situation might be although the plaintiff advanced pocket money, there was reimbursement from time to time once the children's father paid. Accordingly I do not allow this. 17 Accordingly the plaintiff's total financial contributions, which I have detailed above, total $104,386, of which $30,313 are improvements to the house. 18 There is absolutely no evidence that these had any effect on the increased in value of the house. In Hicks v Harvey, a decision of mine on 20 February 1998, I refer to the problems that this causes in these terms: "The real question is whether there has been any improvement to any of the property of the parties. In this case one has to determine whether improvement means any increase in valuation terms. An alternative view of looking at it, might be that improvement to the property, might include something which does not add to the value of the property, but in fact adds to the amenity of the house. For instance, a nicer bathroom or perhaps a bedroom which has nice cupboards in it simply adds to the amenity of the house. I was referred to these problems in a matter of McKee v Truelove (unreported 7 July 1995). In that case the parties had substantially overcapitalised a property by spending $225,000 on the property which gave in improvement to the property of only $52,000. In the circumstances of that case I decided that such contribution had to be substantially discounted as they did not increase the value of the property. If one looks at section 20, the primary focus, of course, is the adjustment of interest in property. IF one is to adjust the interest in property one needs to, in order to carry out that process, know what is the value of the property. In an ordinary sense one would think that the Court's main concern would be to allow a consideration of what was the increase in the value of the property as a result of the improvements. However, notwithstanding this, I do think there is some room for the view that you can improve property just by improving its amenity, although this should not be carried beyond sensible lengths. In particular it might be quite often a matter of what the parties jointly decided to do which might affect how much consideration a court would give to such improvement. In the present case the defendant was at pains to say that she didn't ask for the work to be done, but by the same token she certainly did not object and stood by and let the plaintiff employ his labour and funds in this enterprise." 19 Similar comments can be made in respect of the present case. 20 One of the problems for the defendant is that some of the work that has been done is incomplete and unsafe and she will be left with this and it can hardly be called an improvement. In addition some of the improvements, such as carpets, are more a maintenance item. I do think that some of the improvements, having been jointly agreed to, fall within the area of improvement to amenity and I will allow a total of $20,313 for the defendant in respect of these amounts. 21 The plaintiff's direct financial contributions are thus $94,386. The defendant's direct financial contributions are her income, $62,457. Some of that went on mortgage repayments. The defendant will have the benefit of that and the only reduction of capital during the period of the relationship was the sum of $744. Thus one has, in terms of direct financial contributions, the plaintiff contributed $31,929 more than the defendant. 22 I turn to the non financial contributions. Parenting Contributions 23 It should be borne in mind that these contributions were over a period of three years and three months and it should also be borne in mind that the children at the commencement of the relationship were 12 and 10. It is a busy time with children when they are at that age. It is clear that the plaintiff assisted with the parenting. He seems to have stepped into the existing routine which applied in an endeavour to help. For instance, he would take the children to school on two days a week when he left for work at the same time. Quite often he left earlier and sometimes he would be away for up to twelve hours. He helped out with the advancing of pocket money and he also joined in the children's sporting activities. He joined them in those activities in the evenings and after work and on weekends. However, the fact of the matter was that he was working long hours and the plaintiff was working somewhat less. On one occasion when the defendant was overseas for ten weeks, the plaintiff ran the household and looked after the children. Clearly, of course, she did more but I think it is a case where he was actively involved and had joined in the existing routine. Household Contributions 24 The arrangement for the household tasks followed a fairly familiar pattern. The defendant during the week prepared the meals, cleaned up afterwards and put away the dishes. The plaintiff himself would cook on the weekends and this was clearly conceded by the defendant. The defendant tended to do the shopping and she also did the washing and ironing for the whole family. She cleaned inside the house and mostly the plaintiff did the hard work outside the house, doing lawns and general maintenance items. Accordingly it seems she did more than him but it must be remembered they were both working and sharing tasks. 25 There are a number of other adjustments that have to be made. Firstly the loss on the boat of $14,000. Given that the plaintiff bought the boat and it was for a family purpose, it seems that the loss ought to be shared. The amount of the loss is not included in the above figure and the plaintiff should be credited with $7,000. The other matter for adjustment is the car and the defendant is to keep it. The plaintiff should be credited with the sum of $3,000. 26 To the extent that one can look at the direct money contributions, there are the following: financial difference in overall cash contributions $31,929; loss on boat $7,000; share of the car $3,000; total $41,929. 27 Reference was made to Pierce v Pierce, the Family Court of Australia on 10 June 1998 and the importance of giving weight to initial contributions. I do not however find that this reference is helpful and it seems that in matters where there is a short relationship, then it is better to deal with the matter by reference to the terms of section 20 of the Act. 28 Another area which was raised in submissions was the provision of accommodation for the plaintiff in the defendant's home during the period of the relationship. I have made mention of the rental value of the house. It is however not appropriate to charge the plaintiff the sum of the rental amount. Section 20 of the Act was in the following terms: "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. 29 Clearly the provision of accommodation for one party would not fall within section 20(1)(a), but arguably it may possibly be a contribution to one party's welfare and as such falls within (b). However, it seems to me that it is not appropriate in a case of this nature to make such an allowance. First, it was the defendant's home in which she had been living. It was not an investment property which the parties chose to occupy. If there had been no relationship then the defendant most likely would probably continue to occupy for some time depending upon whether she could afford it. Secondly, the plaintiff's moving into the property did not impose any burden. All of the people living in the house could live there comfortably. Thirdly, the plaintiff and the defendant, by their household contributions, kept up the mortgage and meet the outgoings of the house. It seemed therefore, having regard to these factors, it would be inappropriate to make some allowance by way of some notional rent for the plaintiff's occupation during the period of the relationship. 30 There has, however, been an increase in the value of the defendant's property since the commencement of the relationship. At the commencement in September 1994, the property was worth $210,000. At the conclusion in December 1997, it was worth $265,000. Its present value is $330,000. This is a substantial increase in value but it is the defendant's asset to which there has been little contribution to its acquisition by the plaintiff. As I pointed out, the mortgage was only reduced by $744 during the whole of the period. Section 20(1)(a) provides that payments for the conservation of one of the assets of the parties can be taken into account. 31 In paragraph 7.42 of the New South Wales Law Reform Commission Report, which led to the passing of the Act, the following was said: "...Specifically, the law fails to give sufficient recognition to two kinds of contribution to a de facto relationship: indirect financial and non-financial contributions by one partner to the acquisition, conservation or improvement of assets such as contributions to the family's household expenses which assist the other partner to acquire assets in his or her own name, and financial and non-financial contributions by one partner to the welfare of the other partner or to the children of the relationship, including contributions made in the capacity of homemaker and parent. This failure leads to injustice because it has the effect of permitting a de facto partner to be enriched at the expense of the contributions, whether financial or non-financial, made by the other partner. In a sense, the partner making the contributions can be said to have 'earned' an entitlement to a beneficial interest in property of the other partner. The injustice is equally stark whether the contribution to the well-being of the family which frees the other partner to earn income and accumulate assets. We think that injustice of this kind should be remedied." 32 In the circumstances of the present case, the use by the parties of the plaintiff's higher income during the period of co-habitation has ensured the retention of the property by the defendant with its consequent increase in value during the period. The defendant has continued to own the property after separation and this was no doubt assisted by the fact that she received money from the father's estate which allowed her to pay off the mortgage. Although it is hard to quantify and is to a lesser degree a direct contribution to an asset, the use of the plaintiff's finances had the effect of preserving the defendant's asset allowing an increase in value to accrue to the defendant. It is the avoidance of this somewhat unfair effect to which the Law Reform Commission was referring in the passage I have quoted. 33 Thus one has (a) the higher financial contributions by the plaintiff of some $41,929; (b) The increase in value in part assisted by the plaintiff's contributions; (c) The homemaking and parenting contributions of the defendant. 34 These have to be recognised in a substantial way. 35 Taking all of these factors into account it seems to me that the proper adjustment is that the defendant should pay the plaintiff the sum of $15,000. 36 Having regard to the amount recovered and part 52A Rule 34, there should be no order for costs, subject to submissions. The parties can bring in short minutes which should include the time for payment and an order for transfer of the car to the defendant. 37 Accordingly I will stand the matter over for short minutes to Wednesday 7 February 2001. oOo Last Modified: 02/08/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.