New South Wales Supreme Court CITATION : Hancock v Leech [2009] NSWSC 872 HEARING DATE(S) : 3 August 2009 JUDGMENT DATE : 27 August 2009 JUDGMENT OF : McLaughlin AsJ 1. I declare that the Plaintiff and the First Defendant were living in a de facto relationship from October 1994 to 4 December 2006. DECISION : 2. I order that the First Defendant pay to the Plaintiff the sum of $697,710. 3. I order that the First Defendant pay the costs of the Plaintiff of the notice of motion filed by the Plaintiff on 29 November 2007, and of the proceedings. 4. I reserve to the Plaintiff liberty to apply in respect to the implementation of the foregoing orders. CATCHWORDS : FAMILY LAW - de facto relationships - adjustment of interests of parties in property - no participation by First Defendant in proceedings - ex parte hearing LEGISLATION CITED : Property (Relationships) Act 1984 CATEGORY : Principal judgment Patricia Margaret Hancock (Plaintiff) PARTIES : William Leech (First Defendant) Christopher John Anthony Leech (Second Defendant) Mineral Sands Technology Pty Limited (Third Defendant) FILE NUMBER(S) : SC 5262 of 2007 COUNSEL : Ms P. Hancock (in person) No appearance for any Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE McLAUGHLIN Thursday, 27 August 2009 5262 of 2007 PATRICIA MARGARET HANCOCK –v- WILLIAM LEECH and 2 ORS JUDGMENT 1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984. 2 The proceedings were instituted by statement of claim filed by the Plaintiff, Patricia Margaret Hancock, on 31 August 2007. Three defendants were named in that pleading, being William Leech, Christopher John Anthony Leech, and Mineral Sands Technology Pty Limited. 3 Only the Second Defendant has participated in the proceedings. Neither the First Defendant nor the Third Defendant has filed an appearance or a defence, or has in any other fashion participated in the proceedings. 4 The matter came before Mr Justice Windeyer on 12 October 2007, when orders were made by consent of the Plaintiff and the Second Defendant. Subsequently, on 16 November 2007, orders were made by consent of those parties, dismissing the Plaintiff's claim against the Second Defendant. 5 When the matter was before him on 12 October 2007, Mr Justice Windeyer made an order regarding service upon the First Defendant, which, upon compliance therewith by the Plaintiff, had the consequence that service, in accordance with that order, was effected on or about 16 October 2007. 6 Subsequently, the Plaintiff on 29 November 2007 filed a notice of motion (described as Notice of Motion: Default Judgment for Unliquidated Damages), by which she seeks orders, that judgment be entered in favour of the [ sic ] Patricia Margaret Hancock against the first defendant and third defendant for damages to be assessed and for the property pursuant to section 20 of the Property (Relationships) Act 1984 to be adjusted and for costs. 7 That notice of motion came before me on 17 April 2009, for the allocation of a hearing date. On that occasion the Plaintiff appeared in person (the solicitors who had previously been acting for her having filed a notice of ceasing to act on 1 September 2008). There was no appearance by or on behalf of either the First Defendant or the Third Defendant. Although service upon the First Defendant had been effected in accordance with the order in that regard made by Mr Justice Windeyer, nevertheless (since the Plaintiff said that the letter addressed to the First Defendant, in accordance with Mr Justice Windeyer's order of 12 October 2007, had been returned), for an abundance of caution, I made a direction in the following terms. 2. Direct the Plaintiff to notify the Defendant of the aforesaid hearing date by way of a notice to be published in the Sydney Morning Herald on or before 15 May 2009 in the terms annexed hereto. 8 The substance of that notice was as follows, Take notice that, pursuant to order made on Friday, 17 April 2009 in the Supreme Court of New South Wales the notice of motion filed by the Plaintiff on 29 November 2007 for judgment for damages to be assessed and for the adjustment of property pursuant to section 20 of the Property (Relationships) Act 1984 and for costs will be heard before Associate Justice McLaughlin on Monday, 3 August 2009 at 10 am in the Supreme Court of New South Wales, Court 7D, Law Courts Building, Queens Square, Sydney. 9 Pursuant to that direction, the Plaintiff caused a notice in the foregoing terms to be published by the Sydney Morning Herald on 16 May 2009. The tear sheet from the Sydney Morning Herald of that date was exhibit A in the present hearing. 10 I note that the date of that publication was one day after the date specified in my direction. However, I do not consider that that fact affects the notice itself, especially since the publication was effected on a Saturday (when, presumably, the newspaper had maximum readership), and, in any event, the notice was published more than two and a half months before the date appointed for the hearing of the Plaintiff's notice of motion. 11 When the notice of motion came before me for hearing on Monday, 3 August 2009, the Plaintiff (as on the previous occasion, 17 April 2009) appeared in person. 12 There was no appearance by or on behalf of either the First Defendant or the Third Defendant. In consequence, the hearing of the notice of motion proceeded before me upon an ex parte basis. 13 The statement of claim (which was verified by affidavit of the Plaintiff sworn on 30 August 2007) asserts that the Plaintiff and the First Defendant lived together in a de facto relationship from October 1994 until 4 December 2006, that being a period of more than twelve years. That pleading also set forth details of the assets and liabilities, income and expenditure of each of the Plaintiff and the First Defendant at the commencement of the relationship and at the termination of the relationship, as well as the contributions of the nature referred to in section 20 of the Property (Relationships) Act which the Plaintiff asserted she had made to the First Defendant and to the relationship of the parties. 14 In response to an enquiry from me in that regard, the Plaintiff at the hearing indicated which of the items of relief claimed in the statement of claim she now wished to pursue. 15 The Plaintiff presently seeks relief against only the First Defendant, since (as I have recorded) the claim of the Plaintiff against the Second Defendant has been dismissed, and since, according to what was stated by the Plaintiff during the course of the hearing before me, the Third Defendant (which was a company of which the First Defendant was the sole shareholder and sole director) has ceased to exist. 16 The only relief which the Plaintiff now seeks in the present proceedings is relief against the First Defendant of the nature claimed in paragraph 21 of the statement of claim, to the following effect, (ii) A declaration pursuant to section 56 of the Property (Relationships)Act that the Plaintiff and the First Defendant were living in a de facto relationship from October 1994 to 4 December 2006. (v) A declaration that the proceeds of sale of certain shares disposed of by the First, Second or Third Defendants on behalf of the First Defendant since December 2006 ("the proceeds of sale") are assets of the parties which fall to be determined within this application. (ix) An order that the parties retain all other items of property within their possession, including but not limited to motor vehicles, furnishings, chattels, and personal possessions. (x) Costs 17 It should be noted, however, in regard item (ix), that the Plaintiff asserts that she owned a Nissan Maxima motor car which was retained by the Defendant at the termination of the relationship. 18 Of the foregoing items of relief now claimed by her, the Plaintiff essentially seeks relief regarding the shares referred to in paragraph 21 (v) of that pleading as the "APG shares". Those shares are also referred to in the statement of claim as shares in Austpac Resources NL. 19 In addition, the Plaintiff seeks relief in respect to the Nissan Maxima motor vehicle, which is referred to in paragraph 14A(d) of the statement of claim and to which a value of approximately $12,000 was ascribed. 20 Despite the precise wording of the relief claimed in her present notice of motion, it is apparent that what the Plaintiff is presently seeking is final relief in the proceedings. That is what the Plaintiff herself said she desired when addressing me during the hearing. No purpose – and certainly not the interests of justice – would be served by my making an order in the precise terms in the notice of motion, and then, at a future date, proceeding to a further hearing for the calculation of a monetary amount, if any, to which the Plaintiff might be entitled. 21 I propose, therefore, to treat the present application before as being in the nature of the final hearing of the Plaintiff's claim, especially as the relief sought in the notice of motion includes an order "for the property pursuant to section 20 of the Property (Relationships) Act 1984 to be adjusted". In so doing, I consider that there is no injustice to the First Defendant, who has not participated, and has not manifested any intention to participate, in the present proceedings. 22 No defence having been filed by the First Defendant within the time specified by Part 14 rule 3(1) of the Uniform Civil Procedure Rules 2005, the First Defendant is in default, pursuant to Part 16, rule 2 (1) (a) of those Rules. 23 Part 16 rule 3(1) provides that, If a defendant is in default, the plaintiff: (a) may apply for judgment to be given under this Part, according to the nature of his or her claim for relief, against the defendant in default, … 24 Subrule (1A) of rule 3 makes provision for an application under that rule to be dealt with in the absence of the parties, and provides that such application need not be served upon the defendant. The subject notice of motion appears to contemplate that the foregoing provisions of subrule (1A) apply thereto. 25 It will be appreciated that, consequent upon Part 14 rule 26 (1), the First Defendant having failed to file a defence, all the allegations of fact made by the Plaintiff in the statement of claim are taken to be admitted by the First Defendant. Those admissions then bring into operation the provisions of Part 17 rule 7, subrule (1) whereof provides, If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions. 26 Not only was the notice of motion accompanied by an affidavit of the Plaintiff sworn 28 November 2007, as well as an affidavit of service (apparently in conformity with the requirements of Part 16 rule 3(2)), but there was also before the Court at the hearing of the present application the affidavit of the Plaintiff sworn on 30 August 2007, verifying the statement of claim, and the further affidavit of the Plaintiff sworn 12 October 2007, which was relied upon at the hearing before Mr Justice Windeyer on that date. 27 The First Defendant came into the relationship with relatively little by way of assets. He owned shares worth about $36,000; two motor vehicles, having a total value of about $50,000; furniture worth about $10,000: as well as a debt of about $150,000, owing to him by the Second Defendant. 28 The assets of the Plaintiff at the commencement of the relationship were considerably greater, consisting of a villa residence worth about $315,000 (subject to a mortgage liability of about $148,000), three town houses (worth about $630,000), furniture worth about $15,000, and a motor vehicle (worth about $15,000). 29 During the course of the relationship the Plaintiff received, by way of gifts from her mother, about $49,000; inheritance from her mother's estate worth a total amount of about $670,000; family law property settlement from her previous marriage, about $73,650. 30 In addition, the Plaintiff received income from her town house properties, and from dividends on shares. During the course of the relationship the Plaintiff purchased and sold various pieces of real estate, receiving net proceeds of sale totalling about $1,185,000. 31 The only income received by the First Defendant during the course of the relationship appears to have come from his trading in shares, although it would appear that an interest by the parties in that activity (in which the Plaintiff also participated) developed only after the death of the Plaintiff's mother in July 2002. The First Defendant's only significant asset at the termination of the relationship was the foregoing APG shares, which are the essential subject of the Plaintiff's present claim for relief. 32 It is a legitimate inference which the Court is entitled to draw from the evidence that for about the first eight years of the relationship it was the direct and indirect financial contributions of the Plaintiff which largely supported the relationship. Further, it should not be overlooked that throughout the entire period of the relationship the parties resided in premises which were owned by the Plaintiff alone. 33 The evidence of the Plaintiff, as well as the admissions of the First Defendant in respect to all the allegations of fact made in the statement of claim, satisfy me that the 1,571,869 APG shares purchased in the name of the First Defendant in May 2006 (which thereafter significantly increased in value and were dealt with by the First Defendant, who retained the ultimate benefit of the proceeds of sale thereof) were purchased with the money of the Plaintiff. 34 It should be emphasised, however, that the purchase of those shares in May 2006 with money provided by the Plaintiff is only one instance of a direct financial contribution made by the Plaintiff to the First Defendant during the course of the relationship. 35 Regarding the purchase of those shares I would further observe (although this aspect of the matter was not expressly pleaded in the statement of claim) that, even if the Plaintiff had not been able to enliven the power of the Court to adjust interests in property under the Property (Relationships) Act, it might have been open to her to establish that the First Defendant held those shares, and, ultimately, the proceeds of sale thereof, upon a resulting trust in favour of the Plaintiff. 36 However, in the light of the conclusion which I have reached - that the plaintiff is entitled to relief pursuant to section 20 of the Property (Relationships) Act and that that relief should reflect the Plaintiff's direct and indirect financial contributions to the First Defendant and to the relationship, especially contributions used by the First Defendant for the purchase of the APG shares ¯ it is not necessary for me to pursue a consideration of whether the First Defendant holds those proceeds of sale upon such a resulting trust. 37 A problem concerning the quantification of the monetary amount which the Plaintiff is entitled to receive from the First Defendant is that the evidence concerning the disposition of those shares by the First Defendant was far from complete. The Plaintiff made statements from the Bar table during the course of the hearing and in her submissions which, even if those statements had been made by way of oral testimony given by her in the witness box or by way of affidavit, would, in any event, have been hearsay. 38 The Court must decide this matter upon the evidence, and where, as here, the evidence is skimpy or incomplete, the Court must do the best it can with that evidence. 39 It was the Plaintiff's evidence (in her affidavit of 12 October 2007, paragraph 27) that in May 2006, after discussion with the First Defendant, she borrowed $200,000 from the Commonwealth Bank by way of Veridian loan (secured by mortgage over the Plaintiff's property at Taren Point). With that borrowing, 1,571,869 shares in APG were purchased for $74,000 in the sole name of the First Defendant. It was the plaintiff's evidence that it was for taxation reasons that the purchase was made in the First Defendant's sole name. 40 It was the Plaintiff's further evidence in that affidavit (paragraph 31) that at the time of separation the First Defendant held APG shares which were then worth about $320,500, as well as further APG shares worth approximately $35,000. (I assume that what are described as "further APG shares" were purchased by the First Defendant with moneys other than the borrowing of $200,000 which the Plaintiff had made in May 2006.) 41 The Plaintiff in the same affidavit (paragraph 33) said that after the separation she sold 340,500 of the shares which she held in APG for the sum of $24,075. 42 In the same affidavit the Plaintiff said (at paragraph 42) that in March 2007 she was informed by her solicitors and verily believed that the First Defendant sold 3,878,340 Austpac shares on 23 March 2007 for the sum of $523,025.90. The Plaintiff also said (at paragraph 47) that she had learnt, from the affidavit filed in the proceedings by the Second Defendant and by investigations made with the former solicitors for the First Defendant and ABN Amro, that all the proceeds of sale of those shares had been disbursed to the First Defendant. It was the Plaintiff's understanding (stated in paragraph 47) that the moneys so disbursed to the First Defendant amounted to a sum in excess of $700,000. 43 I find it somewhat difficult to reconcile the various numbers of shares said to have been sold by the First Defendant. According to the Plaintiff's evidence, he sold 3,878,340 shares on 23 March 2007, for $523,025.90. There is also the statement (based upon a letter from the solicitors then acting for the First Defendant) that the First Defendant had transferred 500,000 shares to the Second Defendant and 4,579,340 shares to the Third Defendant. 44 It emerges from the foregoing evidence of the Plaintiff that the purchase of the shares in May 2006 was possible only in consequence of the direct financial contribution of the Plaintiff, and that, although those shares were purchased in the name of the First Defendant, they were regarded by the parties as being purchased for the parties to the relationship, that is, for the Plaintiff and the First Defendant together. 45 However, the source of the funds with which additional shares were apparently purchased in the name of the First Defendant (bringing to 5,079,340 the number of shares transferred by First Defendant to the Second Defendant and to the Third Defendant) did not emerge with clarity from the evidence. 46 It is apparent from the Plaintiff's evidence, however, that at least the 1,571,869 shares purchased in May 2006 were purchased for the relationship with money provided by the Plaintiff. 47 Upon the basis that 3,878,340 shares were sold for $523,025.90 on 23 March 2007, it would appear that at that time a single share had a value of about 13.5 cents. That would give to the 1,571,869 shares purchased with the Plaintiff's money in May 2006 a value of a little over $212,000. 48 Nevertheless, as I have already observed, the direct financial contribution of $200,000 made by the Plaintiff towards the acquisition of shares in the name of the First Defendant in May 2006 is only one instance of contributions by the Defendant of the nature referred to in section 20(1) of the Act. The Plaintiff is entitled to an order which will reflect all those contributions, even though she has stated at the hearing that the relief which she is presently seeking should be limited to the proceeds of sale of the total shareholding of the First Defendant in APG, such proceeds being, in the Plaintiff's understanding, the only asset which the First Defendant presently owns. In regard to First Defendant's financial circumstances, I observe that the letter of 20 December 2006 from his former solicitors (being annexure PH3 to the affidavit of the Plaintiff sworn 30 August 2007) states that the First Defendant's only source of income at that time was a pension of $220 a week, and that he was paying rent of about $250 a week. 49 It seems to me, therefore, that the direct and indirect financial contributions made by the Plaintiff to the relationship (including, but not limited to, the foregoing sum of $200,000) should be reflected by an order that the First Defendant pay to Plaintiff a monetary sum, of which there should be a component reflecting the proceeds of sale of the totality of the APG shares held by the First Defendant. 50 Although the evidence was far from complete concerning the additional 500,000 shares, transferred to the Second Defendant on 8 December 2006, and the 4,579,340 shares transferred to the Third Defendant on or about 8 December 2006 (see the foregoing letter dated 20 December 2006 from the former solicitors acting for the First Defendant), it seems to me that the totality of the shareholding of the First Defendant in APG was acquired in consequence of the direct and indirect financial contributions of the Plaintiff made to the First Defendant and to the relationship. 51 Upon the basis that the totality of the shareholding of the First Defendant in APG was 5,079,340 (that figure including the 3,878,340 shares sold by the First Defendant on 23 March 2007) and upon the basis that the those shares had a value of about 13.5 cents each, the direct and indirect financial contributions of the Plaintiff to the Defendant during the relationship should be reflected (so far as concerns what appears to be now the only asset of the Defendant, being the shares in APG, or the proceeds of sale thereof) by a component in the sum of $685,710. 52 The Plaintiff's entitlement should also include a component reflecting the ownership by the Plaintiff of the Nissan Maxima motor vehicle, which was retained by the First Defendant, and to which a value of about $12,000 was ascribed. 53 In consequence, therefore, the First Defendant should be ordered to pay to the Plaintiff a total sum of $697,710. 54 The Plaintiff is entitled to an order that the First Defendant pay her costs, not only of the notice of motion filed on 29 November 2007, but also of the proceedings. 55 The total lack of participation in the proceedings by the First Defendant and the problems which have been encountered regarding service upon him make it advisable, in my view, that their should be reserved to the Plaintiff liberty to apply in respect to the implementation of my orders herein, especially the order that the First Defendant pay to her the foregoing monetary sum. 56 I make the following orders: 1. I declare that the Plaintiff and the First Defendant were living in a de facto relationship from October 1994 to 4 December 2006. 2. I order that the First Defendant pay to the Plaintiff the sum of $697,710. 3. I order that the First Defendant pay the costs of the Plaintiff of the notice of motion filed by the Plaintiff on 29 November 2007, and of the proceedings. 4. I reserve to the Plaintiff liberty to apply in respect to the implementation of the foregoing orders. ********** 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.