New South Wales Supreme Court CITATION : Gerwien v Doyle [2008] NSWSC 938 HEARING DATE(S) : 04/08/08, 05,08/08 JUDGMENT DATE : 12 September 2008 JURISDICTION : Equity Division JUDGMENT OF : Macready AsJ at 1 DECISION : Paragraph 38 CATCHWORDS : Family Law. Application for adjustment of property interests under s 20 of the Property (Relationships) Act 1984. Short relationship with no children. Order for adjustment made. PARTIES : Ronald Gerwien v Josephine Mary Doyle FILE NUMBER(S) : SC 5509/06 COUNSEL : Mr S Burchett for plaintiff Mr D Dura for defendant SOLICITORS : Manfred Dougall & Company Galland Elder Lulham for defemdamt - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE MACREADY FRIDAY 12 SEPTEMBER 2008 5509/06 RONALD GERWIEN v JOSEPHINE MARY DOYLE JUDGMENT 1 HIS HONOUR: This is an application under the Property (Relationships) Act 1984 (NSW) in which the parties seek an order under s 20 of the Act for the adjustment of their property interests. The parties although having known each other a little earlier commenced a de facto relationship on 30 November 2003 which continued until the parties separated in March 2006. There were no children of the relationship. Chronology 2 The defendant was born in May 1957 and is now aged 51 years. The plaintiff was born in July 1957 and is now aged 51 years. Since 1987 the defendant had been employed with Department of Defence as a programme modeller. In 1991 he purchased a property at Mackay Place, Gowrie in Canberra for $135,090. 3 In August 2001 the defendant sold a house in Dewhurst Sreet, Goulburn and purchased another property at Kinghorne Street, Goulburn for $112,500. In July 2001 the parties first met and commenced a relationship. They would spend time together at weekends at one or other of their homes. 4 On 1 August 2002 the plaintiff suffered neck injury and was off work until 3 December 2003. In June 2003 the plaintiff commenced working on some alterations to the defendant's home. This consisted of a pergola, a deck and a fence. At this stage the defendant's daughter Aisha had been living with her mother and she moved out in July of that year. At the time of the commencement of the relationship or shortly before the defendant gave her car to her daughter. 5 As mentioned the parties moved to live together in the defendant's home in Goulburn on 30 November 2003. On 3 December 2003 the plaintiff returned to work initially for 3 days a week. 6 In August 2004 the defendant decided to renovate her Goulburn house. At that time she had a mortgage for $96,000 on the property which was in her name. The parties approached the National Bank and a new mortgage was taken out for $126,000 in which the plaintiff was also a party. Out of the additional funds $6,400 was paid off the plaintiff's credit cards and the balance appears to have been used by the defendant for the renovations. 7 At about this time the defendant was approached by a real estate agent in Queensland which led to the plaintiff and the defendant eventually purchasing on 21 August 2004 a property at 9 Cockatiel Circuit, Deception Bay, Queensland. The property was purchased in their joint names and was a combined land purchase and construction purchase with the total purchase price being $333,000. The parties purchased the property using loan funds to meet the entire purchase price such funds being borrowed from the National Australia Bank. The Bank took a mortgage over the plaintiff's Canberra property which was still in his name and the Queensland property. In February 2005 the final settlement occurred for the purchase of the Queensland property. Once the construction of the property was completed the property was let. 8 In December 2004 the plaintiff did further work on the defendant's Goulburn house which included jacking and propping up a floor in the property. 9 In March 2005 the plaintiff suffered a further work injury to his neck and knee and was off work and in receipt of workers compensation thereafter. The plaintiff said that he suffered injuries and appeared from time to time to be in pain. 10 In May 2005 there was an incident when the defendant asked the plaintiff to leave the Goulburn home. The next day the defendant found the plaintiff unconscious with a suicide note. He was resuscitated and hospitalised but suffered some brain damage and came under the care of the Brain Injury Unit. In due course he was discharged to the defendant's care and she assisted the plaintiff with his personal needs and medical appointments. In July 2005 railing were installed in the Goulburn house to allow the plaintiff to move around the house. 11 In October 2005 the building of the Queensland house was completed. In that month the plaintiff's employment with Department of Defence was terminated but he continued to receive workers' compensation of $658 pw. 12 In December 2005 the plaintiff was paid $67,346 by Commonwealth Superannuation Fund. In March 2006 the plaintiff's workers compensation payments were reduced to three-quarters of his original income to $39,000 pa. In that month the parties separated. 13 In Howlett v Nelson [2005] NSWCA 149 the Court identified the following three steps in an application under s 20 as follows: 1. Identification and valuation of the property of the parties; 2. Identification and valuation of the respective contributions of the parties, of the types referred to in s.20; 3. Determination of what if any order is just and equitable having regard to these contributions. 14 It is necessary to look at the parties' assets at the date of the commencement of the relationship, at separation and their present assets as part of the first step. The parties' assets at commencement of the relationship 15 At the commencement of the relationship the plaintiff had his property at Mackay Place, Gowrie in ACT which he valued at $350,000. He had a Holden Utility motor vehicle valued at $42,000 and furniture and household items valued at $10,000. At that time he had a liability of $30,000 owing on this motor vehicle. 16 The plaintiff's salary after tax was $709 pw and his expenses were estimated at $430 pw leaving a surplus of approximately of $279 pw. 17 The defendant's assets at the commencement of the relationship were the property at Kinghorne Street, Goulburn worth approximately $150,000, furniture of $15,000, a Mitsubishi Magna worth $1,000 and a motor scooter worth $750. She had liabilities of a mortgage of about $96,000 and credit card debts of $5,000. Her salary was $500 pw net and she had a surplus of income over expenditure of $169 pw. Property of the parties at separation 18 It can be seen that between the commencement and conclusion of the relationship the parties had purchased the Queensland property. In addition the plaintiff had made alterations to his Canberra property which required borrowings. 19 The plaintiff's assets at separation were as follows: 20 Gowrie property estimate at $375,000 Property in Queensland 1/2 share $148,750 2003 Ford Focus car worth $14,000 Furniture $4,000 Total $541,750 Monies on fixed deposit $50,000. 21 The plaintiff's liabilities at separation were as follows: Mortgage over Gowrie property $52,000 Half share of Goulburn mortgage $63,000 Half share of Queensland mortgage $161,750 Total $276,750 22 The defendant's assets at separation were as follows: Property at Goulburn $250,000 Property in Queensland 1/2 share $148,750 Furniture $20,000 Motor scooter 750 Total $ 419,500 23 The defendant's liabilities at separation were as follows: Half share of Goulburn mortgage $ 63,000 Half share of Queensland mortgage $161,750 Total $324,750 24 At the time of the hearing the parties still had their vehicle or motor scooter and their personal possessions. Effectively they had separated their personal possessions between them. The current position in respect of the three properties are as follows: 25 The Goulburn property which is in the name of the defendant is now worth approximately $170,000 and is subject to a mortgage to the National Australia Bank of $122,120. Both parties are liable for the whole of that loan. 26 The Queensland property is in the joint names of the plaintiff and the defendant and is now worth approximately $310,000. There will be selling costs for the sale of that property. The National Australia Bank mortgage at the present time is $330,877 and the loan is approximately $10,000 in arrears. Both parties borrowed the loan. 27 The Canberra property is still in the name of the plaintiff. It is now worth $400,000 and is rented at $267 pw. That property is subject to the balance of the plaintiff's Canberra loan of some $10,936 which was a loan which he originally took out for renovations. The property is also security for the Queensland mortgage and given that the mortgagee for all the properties is the National Australia Bank there may well be security for the loan over the defendant's property in Goulburn. Financial contributions 28 While the parties lived together they had an arrangement whereby the plaintiff would purchase the food and meals when they ate out and the defendant would meet the expenses of the Goulburn property where they lived. 29 When the Queensland property was purchased the defendant made one payment of $1,121 at the commencement of the time for repayment. Thereafter the plaintiff paid all the loan repayments and the rates on the property which total $39,732.57. The defendant tried to suggest that this was by arrangement between them so that the plaintiff could have a tax benefit. However, they both received a benefit and the defendant claimed a tax benefit for the 2005/2006 tax year in this respect. I prefer the evidence of the plaintiff that the plaintiff simply refused to make any further payment because she could not afford to do so. 30 Apart from a payment by the defendant of $6,400 off the plaintiff's credit card debt, perhaps in part due to the recognition that he had met some of the defendant's expenses (not quantified), the parties seem to have kept their loans separate and made their own respective repayments. For example the plaintiff repaid the loans he had taken out on the Canberra property to make improvements to enable the property to be rented. For her part the defendant made the repayments on the loans for the Goulburn property. 31 So far as household duties are concerned there were times when the plaintiff would do these when he was at home although this was limited with his back problems and other injuries. The plaintiff claims he did most of the cooking which was denied by the defendant. It seems clear that during the last year of the relationship the defendant had to mow the front lawn because the plaintiff was unable to so. His homemaker contribution would be quite minimal over this period. 32 There is no doubt that the defendant assisted the plaintiff with personal care when he came home from hospital after his attempted suicide. She was still working at this stage although she took three days' off when he first came home from hospital. 33 In mid 2003 the plaintiff commenced construction of a pergola with a deck and a fence at the defendant's Goulburn property. In December 2003 it was completed to a stage of needing the roof to be erected. During the construction the defendant assisted by lifting the heavier materials when the plaintiff suffered back pain. The plaintiff claimed to have spent $2,644.15 on this project and I am satisfied that he incurred this sum. He also spent $520 on timber to erect a dividing wall in the garage at Goulburn. However, there is as usual no evidence of any improvement to the value of the property. Other major costs for this project were met by the defendant from her new loan. 34 I mentioned in the chronology that the plaintiff jacked and propped up the floors and cleaned under the plaintiff's Goulburn house. He undertook general maintenance in and outside the house. The defendant also assisted with the renovation and painting in a minor way. There is nothing in the evidence to suggest a value for the work undertaken by the plaintiff and the defendant in this respect. 35 The plaintiff suffered from a number of disabilities and at times he had to be cared for by the defendant. It seems to me that apart from the funds of $3,164.15 for the construction of the pergola and wall which were paid for by the plaintiff that contributions they made to each other in respect of work to each other's property and personal support during the short period of the relationship should be considered as being equal. There was the payment of the $6,400 off the plaintiff's credit card and in the absence of verification of amounts said to justify the payment that should be set off against the $3,164.15. Discussion 36 At the commencement of the relationship the plaintiff and the defendant owned their respective properties which have only undergone a moderate increase in value between the time of the commencement of the relationship and the time of the hearing. They purchased as joint tenants an investment property which at present is valued substantially less than what it cost. To separate the financial affairs of the parties it will be necessary for the investment property to be sold before there is a resolution of the matter. In my view, any loss should be shared equally between the parties and they should share equally the repayment costs which have been expanded over the period of the loan. The purchase of the investment property was a joint decision and the losses should be shared between them. In addition there should be a division between them of the payments made by the plaintiff. An appropriate figure to allow after the other adjustments is $15,750 to be paid by the defendant to the plaintiff. 37 The plaintiff has his house in Canberra and apart from some minor tidying there was little that the defendant did to justify any order being made in respect of contributions to that property by the defendant. In respect of the Goulburn property I have discussed the contributions and the work done on the property and have arrived at a figure for adjustments. The plaintiff sought orders that any adjustment after the sale of the Queensland property should be in her favour for some $60,000. In my view it should not be forgotten that the relationship was for a short duration, the parties did not have children and in my estimation for the various financial and non-financial contributions the only relevant adjustments necessary is a figure of $15,750 for the defendant to pay to the plaintiff. 38 The pressing problem is for the investment property to be sold as the loss will have to be realised now. It is appropriate that I order that the property be sold forthwith so that the loss can be quantified and thereafter appropriate orders made for adjustment. At this stage I propose to make the following orders: 1. That the parties forthwith do all such acts and things and sign all documents that are necessary to cause the property situation at Deception Bay, Queensland be sold for the highest price reasonably obtainable. 2. That any losses (being the amount owing to the National Australia Bank at the time of sale in respect of the mortgage over the property in Queensland, less the expenses of sale and the proceeds of sale) shall be borne by the parties equally. If there is any surplus it is to be shared equally. 3. That there be an adjustment of the parties' interest in their property on the basis that the plaintiff is entitled to retain the Canberra and the defendant is entitled to retain the Goulburn property by a payment of $15,750 by the defendant to the plaintiff. 4. That after the sale of the Queensland property each party shall do all things necessary to ensure that any mortgage secured over the Canberra property be the sole responsibility of the plaintiff and that any mortgage secured over the Goulburn property be the sole responsibility of the defendant in default of which each party shall give an appropriate indemnity to the other for the other's liability in respect of the loans secured in respect of each of those properties. 5. Liberty to apply. 39 I will hear the parties on costs and the parties may bring in short minutes to refine the orders which I have indicated above. ********** 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. 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