New South Wales Court of Appeal CITATION : Wallis v. Matheson [2002] NSWCA 350 FILE NUMBER(S) : CA 40920/01 HEARING DATE(S) : 11 October 2002 JUDGMENT DATE : 11 October 2002 PARTIES : Leigh Wallis - appellant Jacqueline Sarah Matheson - respondent JUDGMENT OF : Meagher JA at 23; Handley JA at 24; Hodgson JA at 1 LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT ED 2648/99 FILE NUMBER(S) : LOWER COURT Master McLaughlin JUDICIAL OFFICER : COUNSEL : Mr. G. Gould for appellant Mr. P. Brereton SC with Mr. M.W. Tregilgas for respondent SOLICITORS : Attwaters, Newcastle for appellant Boyd Wooi Olsen, Newcastle for respondent CATCHWORDS : FAMILY LAW - DE FACTO RELATIONSHIPS - Orders as to property rights - Relevance of gross and net values - Claims in respect of increases in value of assets during period of de facto relationship. LEGISLATION CITED : Property (Relationships) Act 1984 DECISION : Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40920/01 ED 2648/99 MEAGHER JA HANDLEY JA HODGSON JA Friday 11 October 2002 WALLIS V. MATHESON Judgment 1 HODGSON JA: On 22 October 2001, Master McLaughlin made orders in proceedings brought by the respondent Jacqueline Sarah Matheson against the appellant Leigh Wallis under the Property (Relationships) Act 1984, the principal orders being to the effect that the respondent transfer to the appellant, subject to encumbrances, the property 90 Wolfe Street Newcastle, that the appellant pay the respondent $198,525.00, that the respondent deliver up to the appellant certain chattels, and that each party bear its own costs of the proceedings. The appellant appeals to this Court from that decision. 2 I will begin with an outline of circumstances. 3 The appellant was born in 1951, has been married twice, and has also been in one other de facto relationship. The respondent was born in 1961 and has never married. The parties began going out socially in 1983, and a sexual relationship commenced shortly thereafter, although the parties continued to live separately for various periods until 1992. 4 At the time of the commencement of the relationship, the respondent was employed as an industrial chemist, and the appellant was a journalist. 5 In April 1992, they entered into residence together in a property 315 Lambton Road, New Lambton, which had been acquired by the respondent earlier that year. They decided to start a family, and subsequently had two children, one born in 1993 and the other born in 1996. Master McLaughlin found, and this is not challenged, that a de facto relationship existed between the parties from April 1992 to November 1998. 6 The principal assets of the parties comprised a number of properties. 7 There were properties purchased in the name of the respondent. Firstly, a property 18 Alfred Street, Newcastle East, purchased in September 1985 for $51,000, subject to a mortgage of about $45,000. Secondly, a property 3/62 Selwyn Street, Merewether, purchased in January 1989 for about $39,850, subject to a mortgage for the entire amount. Thirdly, a property 315 Lambton Road, New Lambton, purchased in March 1992 for $105,000 subject to a mortgage for the entire amount. And fourthly, a property 90 Wolfe Street, Newcastle, purchased in September 1998 for $220,000, subject to a mortgage for the entire amount. 8 At the time of the commencement of the acquaintance of the parties, the appellant was the owner of a house property in Porter Street, Adelaide, which was sold in about 1987 for $116,000. At the commencement of the de facto relationship in April 1992, the following properties were owned in the name of the defendant: 8 Parish Street, Cooks Hill, purchased in October 1980 for $32,000, of which $15,000 was borrowed from a building society; 10 Parnell Street, Newcastle East, purchased in December 1983 for $35,000, of which $30,000 was borrowed from a building society; 96 Booral Street, Cooks Hill, purchased in August 1987 for $51,000, of which $46,000 was borrowed from a bank; portion 71 Belburra via Gloucester, a rural property purchased in October 1987 for $70,000, the whole purchase price being borrowed from a bank; 72 Booral Street, Cooks Hill, purchased in February 1989 for $96,000, the whole purchase price being borrowed from a bank; and 136 Grandview Road, New Lambton Heights, purchased in March 1992 for $176,000, the entirety of the purchase price being borrowed from a bank. 9 The practice of the parties was to effect renovations and improvements to the properties that they acquired, and to rent properties other than those occupied by themselves. 10 There was no specific finding by the master as to the equity in the various properties at the time of the commencement of the de facto relationship, or at the time of the termination of the relationship. And it seems to be common ground on the appeal that the Master did not have material before him that would have enabled him to make those findings. However the Master did find that, at the time of the hearing, the total net value of the various items of real property was $924,500. 11 The Master held that the physical contributions to renovations and improvements of the property made by the appellant were greater than those made by the respondent. He held that the respondent made contributions to the joint living expenses of the parties, particularly before the birth of the first child. He noted also that, at the time the respondent ceased employment, she received a redundancy payment of $90,000, which was applied towards the living expenses and/or assets of the parties. However, he held that the main contributions to the relationship and the assets of the parties made by the respondent from mid 1993 were as a homemaker and parent. 12 He concluded that it was appropriate to equate the contributions of the respondent as a homemaker and parent during the de facto relationship with the contributions of the appellant to the acquisition and improvement of the properties. He considered that the contributions of the appellant during the period 1983 to April 1992 were somewhat greater than those of the respondent. He considered that the contributions of the appellant to the maintenance of the children after the termination of the de facto relationship were not contributions to be taken into account under s.20(1)(b) of the Property (Relationships) Act. 13 In the result, the Master considered it appropriate to make an order as to the division of the property of the two parties which would have the effect of giving the respondent 45 per cent of the total value of all the properties and the appellant 55 per cent of the total value of those properties. It seems to be common ground that the orders actually made by the Master gave effect to those proportions. 14 The appellant appeals to this Court on the following grounds: 1. The Master erred in finding (as he did at paragraph 84 of his Judgment) that the defendant at the time of the commencement of the relationship was the owner of seven pieces of real property which had purchase prices totalling $428,000.00 when the correct addition of the prices (as found by the Court at paragraph 49 of the judgment) is $460,000.00. 2. The Master erred in considering the gross value of by the parties at the commencement of the de facto relationship in 1992 rather than the equity held by the parties in those properties. 3. The Master erred in finding (as he did at paragraph 83 of the Judgment) that the Court should make orders reflecting contributions by the plaintiff of 45% and the defendant of 55% where he finds: (a) that at the start of the de facto relationship in 1992 the plaintiff had real property which had been purchased for $195,850.00 (see paragraph 47 of the Judgment); (b) that at the start of the de facto relationship in 1992 the defendant had real property which had been purchased for $428,000.00 (correct figure $460,000.00) (see paragraph 84 of the judgment); (c) that the plaintiff had the benefit of the defendant enhancing the value of her properties prior to cohabitation (see paragraph 84 of the judgment); (d) that during the de facto relationship (1992 to 1998) the financial and non-financial contributions of the parties are equal (see paragraph 63 of the judgment). 4. That the finding that the plaintiff's contributions were 45% is outside the range available in the reasonable exercise of discretion. 5. That the Master has erred in not giving adequate reasons for his finding that the plaintiff's contributions should be assessed at 45% (see paragraph 83 of the Judgment). 15 The appellant seeks an order that sets aside the order of Master McLaughlin for the payment of $198,525. It has been put to us that that would have the effect of a division of the assets of approximately 70 per cent to the appellant and 30 per cent to the respondent, as opposed to the division of 55 per cent to the appellant and 45 per cent to the respondent adopted by the Master. The respondent has put on a notice of contention, but it will not be necessary to refer to matters raised by that notice of contention. 16 The first ground of appeal pointed to an error made by the Master in specifying the total purchase price of the properties owned by the appellant at the commencement of the de facto relationship as being $428,000, when the correct figure was $460,000. It was submitted that this was an error which could be considered to have made a difference to the result, and accordingly was a basis for overturning the Master's decision. 17 The second ground pointed to an alleged error in taking the gross value of properties held by the parties at the commencement of the relationship in 1992 as a starting point, rather than the equity held by the parties in those properties. The gross values in question were for $460,000 so far as the appellant was concerned, wrongly stated by the Master to be $428,000, and about $196,000 so far as the respondent was concerned. The net figures were $27,000 so far as the appellant was concerned, and only $6,000 so far as the respondent was concerned, translating to 18 per cent for the respondent and 82 per cent for the appellant. 18 It was submitted in reliance on that ground and ground three that the Master, in coming to the ultimate figure of 55 per cent to 45 per cent, did not give proper weight to the correct proportions at the time of the commencement of the relationship. It was submitted that, even if there was some ground for ending up with the division of 55 per cent to 45 per cent, the Master did not give any reasons for that shift. That submission also related to ground five of the grounds of appeal. 19 In my opinion, it is clear that the Master did place considerable weight on his finding that the contributions of the parties during the time of the de facto relationship should be treated as substantially equal. In my opinion, that finding would plainly justify an equal division between the parties as to so much of the parties' assets as was the result of the payment of mortgages and improvements effected to the properties during the time of the de facto relationship. 20 The evidence before the Master did not make it clear as to how much of the increase in the net value of the properties from about $33,000 to about $924,000 occurred during the de facto relationship, how much of that increase was due to market forces acting on the value of the properties, and how much was due to improvements to the properties and payment of mortgages. The relationship of gross values of the relative contributions of the parties may have been some indication of proportions which would be affected by market increases, and to that extent would have some relevance independently of the net values of the properties. Another factor which might come into the calculation of what was fair between the parties would be the extent to which individual properties were treated as joint enterprises of the parties, or alternatively as being principally the property of one or other of them. 21 It appears that details relating to these issues that I have identified were not explored in evidence or submissions before the Master. In those circumstances, it seems to me that the Master was in a position where he had to do his best on inadequate material to come to a decision which was fair between the parties. In my opinion, having regard to the absence of the detailed material to which I have referred, it cannot be said either that the Master has erred in the conclusion which he reached or that the reasons he gave were inadequate. In my opinion, on the materials that he had, the result reached by the Master was reasonable and the reasons given were adequate. I would add that the total gross value of the appellant's properties was only one factor among many in the assessment, and the master's minor error in stating this total was in my view immaterial. 22 For those reasons, in my opinion, the appeal should be dismissed with costs. 23 MEAGHER JA: I agree. 24 HANDLEY JA: I also agree. 25 MEAGHER JA: The order of the Court therefore is the appeal is dismissed with costs. ********** 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.