New South Wales Supreme Court CITATION : Drennan v Callen [2006] NSWSC 775 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : Friday, 14 July 2006 (written submissions to 18 July 2006) JUDGMENT DATE : 4 August 2006 JURISDICTION : Equity Division JUDGMENT OF : Associate Justice McLaughlin at 1 DECISION : I stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect the orders which I have indicated should appropriately be made in this matter. CATCHWORDS : Family Law. De facto relationship. Duration of relationship. Two periods of cohabitation, each of less than two years. Child born of relationship. Proceedings not commenced within two years after end of first period of cohabitation. Adjustment of interests of parties in property. Respective contributions of parties to acquisition, conservation or improvement of property and as homemaker and parent. LEGISLATION CITED : Property (Relationships) Act 1984 CASES CITED : Jones v Grech [2001] NSWCA 208, (2001) 27 FamLR 711 PARTIES : Sandra Jeanette Drennan (Plaintiff) Peter Andrew Callen (Defendant) FILE NUMBER(S) : SC 4697 of 2004 COUNSEL : Mr. G. Thistleton (Plaintiff) No appearance for Defendant SOLICITORS : Frazi Spink (Plaintiff) - 11 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE McLAUGHLIN Friday, 4 August 2006 4697 of 2004 - SANDRA JEANETTE DRENNAN –v- PETER ANDREW CALLEN JUDGMENT 1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984. 2 By statement of claim filed on 25 August 2004 Sandra Jeanette Drennan claims orders adjusting the interests of the parties in property pursuant to section 20 of the Property (Relationships) Act. A defence was filed on behalf of the Defendant Peter Andrew Callen on 8 March 2005. 3 Subsequently the solicitor for the Defendant filed a notice of ceasing to act on 9 December 2005. 4 The matter came before me on 3 March 2006, upon the return of a notice of motion filed on behalf of the Plaintiff. On that occasion the Defendant appeared in person, and consented to directions which were made in accordance with short minutes of order filed in Court on that date. Those short minutes reserved to the parties liberty to have the matter restored to the Registrar's List on seven days' notice in writing given to the other party. The short minutes required the Defendant to serve all affidavits upon which he relied by 2 April 2006; and also made provision for the appointment of a single expert to value the real estate owned by the parties (and provided that each party should pay 50 per cent of the cost of such valuation). 5 The Defendant did not comply with the direction concerning affidavits, but by letter dated 6 April 2006 addressed to the Solicitors for the Plaintiff said, "I will need some extra time to prepare my affidavit. I would request that you don't take any further proceedings in the Supreme Court until 26th April in order to limit costs. I will commit 100% to this deadline." 6 The letter also referred to property valuations and said, "I will get back to you by Monday with some names [of valuers] and further information." 7 There was no further communication from the Defendant. In consequence, the Plaintiff had the matter listed before the Registrar on 6 June 2006. On that occasion there was no appearance for the Defendant (although the evidence is silent as to whether that the Defendant was, in fact, notified of the listing of the matter on 6 June). However, on that occasion the Registrar made the following directions: (a). Noted that the Plaintiff intends to proceed on an undefended basis on the next appearance. (b). Noted that the Plaintiff is to notify the Defendant. (c). Matter to be relisted on 14 July 2006. (d). Costs 8 By letter dated 7 June 2006 the Solicitors for the Plaintiff communicated to the Defendant the foregoing directions. That letter included the following, Please therefore note that this matter is again returnable in the Supreme Court of New South Wales on 14 July 2006 when we intend to proceed on an undefended basis. 9 The matter came before me by way of referral from the Registrar on 14 July 2006. The Plaintiff was represented by Counsel; there was no appearance for the Defendant. The Plaintiff sought to proceed ex parte upon the hearing of the proceedings. I acceded to that course, and made the following directions: (1). I direct that the Plaintiff lodge a written outline of submissions on or before Tuesday, 18 July 2006. (2). Upon the lodgement of the foregoing written outline of submissions my judgment herein will stand reserved. 10 A written outline of submissions of the nature contemplated in the foregoing directions was lodged on 18 July 2006. 11 I am satisfied that the Defendant received adequate notice of the intention of the Plaintiff to proceed to a hearing on 14 July 2006. 12 The Plaintiff (who was born on 30 April 1962 and is presently aged 44) met the Defendant (whose age is not disclosed in the evidence) in November 1998. 13 At the time when they met the Plaintiff, who is a qualified graphic designer, was working as such on a full-time basis. The Defendant, who is a qualified engineer, was also at that time working as such on a full-time basis. 14 It was admitted on the pleadings that the Plaintiff and the Defendant lived together as man and wife on a bona fide domestic basis for a period of not less than two years: (a) from January 1999 to November 2000; (b) from June 2001 to 2 September 2002. 15 Throughout the first period of cohabitation the parties resided in the Plaintiff's residence at Caringbah. Throughout most of the second period of cohabitation they resided in rented accommodation at Engadine. After the final separation the Plaintiff returned to her residence at Caringbah. 16 One child was born to the relationship between the parties, namely Giaan Rachael Drennan Callen, who was born on 19 August 2001 (and who is presently aged 4). 17 At the commencement of the relationship the Plaintiff had the following assets: (a) Interest in property situate at and known as B 12/168 Willarong Road, Caringbah, encumbered by a mortgage to Wizard Mortgage Corporation in an amount of about $92,000 (her equity in that property being about $69,300) (b) 1986 BMW 323 motor vehicle (c) Superannuation entitlements (d) Furniture, computer and household items 18 By his defence the Defendant disputed the Plaintiff's assertion that at the commencement of the relationship she also had savings of about $5,000, and he disputed the estimated value ($13,000) of the Plaintiff's BMW motor vehicle. 19 At the time of the commencement of the relationship the assets of the Defendant consisted of a Mazda motor car and an interest in property situate at and known as 73 Moore Street, Birmingham Gardens, Newcastle, which property was subject to a mortgage, and which property at that time had a value of $135,000. By his defence, however, the Defendant whilst not admitting that he had an interest in that property, admitted to being the registered proprietor of that property. 20 At about the date of the final separation of the parties on 2 September 2002 the Plaintiff had the following assets, which were admitted upon the pleadings, (a) Interest in the Caringbah property, her equity in that property then being about $151,200 (although the Defendant disputed the amount outstanding on the mortgage) (b) Joint interest with the Defendant in property situate at and known as 89/116-132 Maroubra Road, Maroubra ("the Maroubra property"), subject to a mortgage to Suncorp – Metway Limited for about $300,000. (c) 1986 BMW 323 motor vehicle (d) Shares in a company, Know Science Pty Limited (e) Superannuation entitlement, about $9,000 (f) Furniture, a computer and household items. 21 At the date of the final separation the Defendant had the following assets: (a) Joint interest with the Plaintiff in the Maroubra property (b) Shares in Know Science Pty Limited (c) Superannuation entitlement (d) Furniture, a computer and household items 22 At the time of the final separation the Defendant was still the registered proprietor of the property at 73 Moore Street, Birmingham Gardens, Newcastle. 23 During the course of the relationship the parties in mid-2000 purchased the Maroubra property as joint tenants for $320,000 (upon which stamp duty of about $9,900 and legal costs were also payable). That purchase (the purpose of which was as an investment) was financed by a mortgage loan from Suncorp-Metway Limited (the terms of which required the Plaintiff to refinance, and increase by more than $50,000, the mortgage on her Caringbah property). The amount presently outstanding on that loan is $296,635. At the time of the final separation the parties had an equity in that property in an amount of $129,268; that is, to each party could be attributed an equity of $64,634. The evidence does not, however, disclose the value of the Maroubra property at the time of the final separation of the parties, although its present value is $460,000. 24 It is essentially in respect to the Maroubra property that the Plaintiff brings her present proceedings, by which she seeks the adjustment of the interests of the parties in that property. 25 It will be appreciated that section 17 of the Property (Relationships) Act provides, by subsection (1) thereof, that a Court shall not make an order under Part 3 of the Act (section 20 comes within that Part) unless it is satisfied that the parties lived together in a domestic relationship for a period of not less than two years. However, by subsection (2) of that section the Court may make such an order where it is satisfied, inter alia, that there is a child of the parties. In the instant case there is a child of the parties, and thus the Court has the jurisdiction to make an order adjusting the interests of the parties in property. 26 Section 18 of the Act provides that an application for an order under Part 3 can be made only within the period of two years after the date on which the relationship ceased. In the instant case it is quite apparent that there were two separate relationships, the first subsisting from January 1999 until November 2000 and the second subsisting from June 2001 until September 2002. The proceedings were instituted by the filing of the statement of claim on 25 August 2004, that being within the period of two years after the termination of the second relationship, but more than two years after the termination of the first relationship. Accordingly, in respect to the first period of the relationship, the Plaintiff requires the leave of the Court to apply for an order adjusting the interest of the parties in property. Such leave can be granted where the Court is satisfied that greater hardship would be caused to the applicant if that leave were not granted than would be caused to the respondent if that leave were granted. 27 In that latter regard the Plaintiff submits that part of the reason for the delay in the institution by her of the present application in respect to the first period of cohabitation was the very fact of the second period of cohabitation. She submits that she has a substantial case to be tried. Further, she submits that the Defendant is not unusually prejudiced, since, in any event, he has to meet a case about the second period of cohabitation, and the first period is not so long ago, and not so long before the second period, as to cause him any prejudice. Essentially, however, the Plaintiff relies upon the first period of cohabitation, during which (or very shortly whereafter) the child of the relationship was conceived. 28 Further, in respect to the first period of cohabitation, the Plaintiff submits that the contributions made by her to the relationship throughout each of the periods of cohabitation should be taken into account. In this regard she relies upon the decision of the Court of Appeal in Jones v Grech [2001] NSWCA 208, (2001) 27 FamLR 711, and, in particular, upon the observations by Ipp AJA [at 77-82], with which Davies AJA agreed. 29 The Plaintiff submits that the failure to make an order granting leave to the Plaintiff to make the present application in respect to the first period of cohabitation would result in a serious injustice to her. She submits that an examination of her case reveals a situation where it is appropriate that she should receive a 10 percent adjustment in the proceeds of sale of the jointly owned property. By such an adjustment she would receive a sum exceeding by $22,000 her one-half interest in that property. If there was not such an adjustment in her favour she would be deprived of that sum. By the same token, the value of the interest of the Defendant in the property has increased by reason of contributions made by the Plaintiff. 30 Although the Defendant by his defence disputed the extent of the contributions of the Plaintiff to the acquisition, conservation and improvement of the jointly owned property, and the extent of the contributions of the Plaintiff as homemaker and parent, nevertheless, as I have already recorded, the Defendant has not placed before the Court any evidence by affidavit which challenges the affidavit evidence of the Plaintiff herself, or which contains substantiation of contributions asserted in his defence to have been made by the Defendant. 31 In these circumstances, I consider that it is appropriate to accept the unchallenged evidence of the Plaintiff concerning the contributions made by her and by the Defendant. 32 I have already observed that, since there is a child of the relationship, the proviso contained in subsection (2)(a) has effect, and thus the Court is not precluded from granting the relief sought by the Plaintiff, despite the parties not having lived together in a domestic relationship for a period of not less than two years (the first relationship having obtained for about twenty-two months, and the second relationship for about fifteen months). I am satisfied that after the birth of their child the Plaintiff had the primary responsibility as homemaker and parent. Since the final separation the Plaintiff has had the custody of the child, with appropriate orders made by the Family Court of Australia for contact and access by the Defendant. 33 Further, in the absence of opposition, supported by affidavit, from the Defendant, I am satisfied that this is an appropriate case for the Court to make an order in respect to the first period of the relationship, despite the fact that the present proceedings were not instituted within two years of the date upon which that relationship ceased. 34 In all the circumstances, I am satisfied that the Plaintiff is entitled to receive 60 per cent of the net proceeds of sale of the Maroubra property and for the Defendant to receive the remaining 40 per cent. 35 I have received a form of minute of the orders sought by the Plaintiff. Those draft orders extend beyond what is necessary to give effect to the entitlement of the Plaintiff. For example, it seems to me that the declarations sought in paragraph 3 of the minute of orders are, in the light of the admissions made in the pleadings, totally unnecessary (and would probably be unnecessary in any event). The relief sought in paragraph 10 of the draft minute is premature, unless and until the Defendant refuses or neglects to execute any document necessary to carry the orders into effect. In any event, it is quite inappropriate that an order for damages consequent upon some prospective default should be made at this stage of the proceedings, let alone an order in respect to solicitor and client costs relating to the enforcement of the order and the proving of such damages. 36 I propose to make an order of the nature sought in paragraph 1 of the minute of orders, granting leave to the Plaintiff to institute the proceedings in respect to the period from January 1999 until November 2000. I propose also to make an order of the nature set forth in paragraph 4, for the sale of the Maroubra property. 37 Regarding paragraph 5, I consider that the costs of the single valuer (the order for whose appointment and for the costs of whose valuation was consented to by the Defendant on 3 March 2006) should be paid out of the proceeds of sale of the Maroubra property. Further, it is appropriate that the reimbursement of the Plaintiff for costs incurred by her in preparing the Maroubra property for sale should also be payable out of the proceeds of that sale. 38 However, I am not disposed to make an order the effect whereof is to give to the Plaintiff 60 percent of the net proceeds of sale, then to require the Plaintiff's costs to be paid from the balance then remaining, and then for the Defendant to be paid only 40 percent of "the net proceeds then left". 39 Orders along the lines sought in paragraph 6, 7, 8 and 9 are appropriate to be made, and also an order for costs in the terms of paragraph 11. 40 It is also appropriate that there be reserved to the parties liberty to apply in respect to the implementation of the foregoing orders. 41 I will stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect the orders which I have indicated should appropriately be made in this matter. ********** 07/08/2006 - Inserted name of Judicial Officer - Paragraph(s) cover page DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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