New South Wales Supreme Court CITATION : Brown v Axam [2010] NSWSC 413 HEARING DATE(S) : 9 March 2010 JUDGMENT DATE : 12 March 2010 JURISDICTION : Equity JUDGMENT OF : Slattery J at 1 1. That the defendant within twenty-eight (28) days of the date of lifting of the stay on this Order provided for in Order 5 below give a transfer in registerable form transferring all of his right title and interest in the property known as 1 Brentwood Grove, Werrington Downs NSW being the whole of the land in Folio Identifier 1036/259016 to the plaintiff but only on condition that the plaintiff first discharges the mortgage numbered AD60260 secured against the property referred to by Australia and New Zealand Banking Group Limited. 2. That as between the plaintiff and the defendant, and subject to the above Orders, the plaintiff and defendant shall each respectively retain all interest in and entitlement to: i All personal property no in his/her respective possession or control. ii All shares, debenture, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively. DECISION : iii All interests in life insurance policies and superannuation funds standing in his/her name respectively. 3. That in the event that the defendant fails or neglects to comply with Order 1 herein, that pursuant to Section 39 of the Act, the Registrar of the Court be appointed to execute the said transfer in lieu of the defendant and to do all acts and things necessary to give validity and operation to the said transfer. 4. These orders are stayed for a period of 28 days after the date on which the plaintiff provides proof by affidavit of her compliance with Order 5 below. 5. Direct that within 28 days the plaintiff serve a copy of this judgment both on the address of the defendant's employer and in the manner provided for in Order 4(a)(i) of the Court's previous order for substituted service of 19 January 2010 together with a letter drawing attention to these orders. 6. Grant liberty to apply. 7. These orders may be taken out forthwith. CATCHWORDS : FAMILY LAW AND CHILD WELFARE - de facto relationships - plaintiff seeks adjustment of property interests under s 20 of Property (Relationships) Act 1984 (NSW) for family home - relationship of 23 months - prerequisite for making order under s 17(1) not met - whether the court may make an order under s 17(2) - plaintiff has made substantial contributions of the kind referred to in s 20 - plaintiff had complete responsibility for the financial stability of herself and the defendant - plaintiff would not be adequately compensated for her contributions if a s 20 order were not made - defendant ordered to transfer his interest and title in the family home to the plaintiff on the condition the plaintiff discharges the mortgage on the property LEGISLATION CITED : Property (Relationships) Act 1984 (NSW) ss 17, 20 Uniform Civil Procedure Rules 2005 (NSW) r 10.14 CATEGORY : Principal judgment Calverley v Green (1984) 155 CLR 242 CASES CITED : Evans v Marmont (1997) 42 NSWLR 70 Jones v Grech (2001) 27 FamLR 711 Kardos v Sarbutt (2006) 34 FamLR 550 PARTIES : Plaintiff: Debbie Anne Brown Defendant: Robert Cecil Axam FILE NUMBER(S) : SC 291140/09 COUNSEL : Plaintiff: Mr S W Cairns Defendant: No appearance SOLICITORS : Plaintiff: Reimer Winter Williamson Lawyers Defendant: No appearance IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION SLATERY J FRIDAY 12 MARCH 2010 291140/09 (formerly 5134/09) DEBBIE ANNE BROWN v ROBERT CECIL AXAM JUDGMENT 1 HIS HONOUR: Debbie Anne Brown met Robert Cecil Axam when they were working together at Bambers Transport, a haulage company in Western Sydney. They commenced to live together in November 2006. The relationship did not last and they parted on 14 October 2008. They are now unable to agree on the just and equitable division of their joint property. Ms Brown seeks orders under s 20 Property (Relationships) Act 1984 (NSW) adjusting the interests in the property they each hold. The principal asset at issue between them is the domestic residence in which they both lived in Werrington Downs. It was acquired during the relationship in their joint names but she contributed most of the consideration for its purchase. What should happen to this property is the principal issue for determination in these proceedings. 2 Mr Axam has been served with the statement of claim commencing these proceedings. Service upon him has occurred in conformity with the Court's orders for substituted service. He has chosen not to appear in these proceedings. A preliminary issue for determination is whether final orders should be made on the basis of the notice to Mr Axam that has so far been given. Applicable Principles of Law 3 Ms Brown's claim invokes jurisdiction conferred on this Court by the Property (Relationships) Act 1984 (NSW) s 20. This provision allows the Court to adjust the interests in property of parties to a domestic relationships. Section 20(1) relevantly provides: "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." 4 In this case one important prerequisite to the exercise of the Court's jurisdiction under the s 20 Property (Relationships) Act is in issue. 5 Section 17 Property (Relationships) Act defines the minimum duration of a relationship that is necessary before jurisdiction exists to make an order under s 20. Section 17 provides: " 17 Prerequisites for making of order—length of relationship etc (1) Except as provided by subsection (2), a court shall not make an order under this Part unless it is satisfied that the parties to the application have lived together in a domestic relationship for a period of not less than 2 years. (2) A court may make an order under this Part where it is satisfied: (a) that there is a child of the parties to the application, or (b) that the applicant: (i) has made substantial contributions of the kind referred to in section 20 (1) (a) or (b) for which the applicant would otherwise not be adequately compensated if the order were not made, or (ii) has the care and control of a child of the respondent, and that the failure to make the order would result in serious injustice to the applicant." 6 There was a domestic relationship between Ms Brown and Mr Axam during the period from November 2006 until 14 October 2008. Ms Brown brought her application within time on 2 October 2009 within the requisite two years after the relationship ceased: s 18. However, the parties have not "lived together in a domestic relationship for a period of not less than 2 years". They have lived together for 23 months, just short of the two year period. There is no evidence of a "child of the parties to the application": s 17. Jurisdiction will therefore only be conferred on the Court if Property (Relationships) Act s 17(2)(b) applies. That is the first issue under the Act. 7 Once a domestic relationship is proven and there is no impediment to the Court's exercise of jurisdiction, the decided cases establish three distinct steps in the decision under the Property (Relationships) Act, s 20. (a) The first step is the identification and the valuation of the property of the parties to determine their "divisible pool of property". The property so identified is "the property of the parties to the relationship or either of them". Section 20 gives authority to the Court to adjust the parties' interests in this property. (b) The second step is to identify, evaluate and weigh the parties' respective contributions of the various types referred to in s 20 Property (Relationships) Act . Typically this results in the Court apportioning as a percentage the overall s 20 contributions that each party made up to the date of hearing. (c) In the third step the Court determines what order is required sufficiently to recognise and compensate an applicant's contributions in the context of the contributions as a whole of both partners. This stage typically results in an order leaving the applicant with the percentage identified in the second stage of the divisible property identified in the first stage. The courts have repeatedly affirmed this three step methodology: Evans v Marmont (1997) 42 NSWLR 70, Jones v Grech (2001) 27 FamLR 711; [2001] NSWCA 208; and Kardos v Sarbutt (2006) 34 FamLR 550; [2006] NSWCA 11. 8 In the absence of a contest as to whether there was any domestic relationship the steps identified in these authorities present for judgment the following three main questions. What is Ms Brown's and Mr Axam's divisible pool of property? What were their respective contributions that may be recognised under s 20? What order as "seems just and equitable" should the Court make to adjust Ms Brown's and Mr Axam's respective interests in their divisible pool of property to reflect and recognise their contributions? Those questions form the structure of this judgment. Those questions become difficult to answer where one of the parties, Mr Axam in this case, has provided no evidence of his assets or his potential s 20 contributions. 9 The Court has a policy of reducing the risk of identity theft through its published judgments. This judgment does not publish the addresses of any of the properties owned by the parties or by any other person. Nor are any bank account details published. If required this information is obtainable from the Court's file. 10 To understand the issues for determination more background is needed. This background is set out in the form of a chronological account of the course of Ms Brown's and Mr Axam's relationship and covers, to the extent the evidence permits, the respective s 20(1)(a) financial and non-financial contributions they each made to their joint property and to their joint financial resources. It also attempts to cover on the available evidence their respective s 20(1)(b) contributions to each other's welfare. These matters are the "focal points by reference to which the discretionary judgement as to what seems just and equitable [under s 20] must be made": Evans v Marmont (1997) 42 NSWLR 70 per Gleeson CJ and McLelland CJ in Eq at 79 G – 80A. Upon this background survey and despite the difficulties of proof that arise in this case the Court makes findings as to their relative contributions. This judgment deals with the reasoning required to determine whether there is s 17 Property (Relationships) Act jurisdiction and then each of the three steps necessary to make a s 20 order. The Course of the Relationship 11 Mr Axam commenced working at Bambers Transport in November 2005. Ms Brown was already an employee there. They began seeing each other in March 2006. 12 At the time of their meeting Ms Brown was living with her son Stephen in rental accommodation in Werrington County in Western Sydney. Mr Axam was living in Corrimal on the South Coast of New South Wales. In approximately June 2006 Mr Axam took employment with Lindsay Brothers, another transport operator, with the result that he moved to rented accommodation in Denham Court to be closer to his new work place. Despite the change of residence Mr Axam and Ms Brown continued to see each other sufficiently often that Ms Brown agreed that he should move in with herself and her son at the Werrington County property on a permanent basis. 13 At about the time that he moved in Mr Axam expressed unhappiness about Ms Brown continuing to work in the transport industry. She says and I accept that he said to her words to the effect "I am not happy with the hours you are working. I want you to leave the transport industry". She did so. She left Bambers Transport on 3 November 2006 to a position at Advantage Recruitment and from there in June 2007, to her present position with Multiflex Circuits. 14 Before commencing to live with Mr Axam, Ms Brown had been married to Mr Michael Brown for 19 years until a separation on 8 July 2005. Ms Brown had three children by this marriage. 15 As part of the property settlement between former spouses Ms Brown became entitled to $155,000 as her share of the sale proceeds of the former matrimonial home at Cambridge Park. She received this cheque on 11 December 2006 and deposited it to her ANZ Premium Cash Management Account on 21 December 2006. The documentary evidence showing her receipt of this sum by cheque and her deposit of it in her Cash Management Account is clear and persuasive. 16 When Ms Brown received this settlement money she wanted to purchase her own home and commenced to do this jointly with Mr Axam. They applied together for a joint home loan with the ANZ Bank on 2 January 2007. It emerged in the course of the home loan application that Mr Axam had two personal loans outstanding, one with Credit Union Australia (CUA) for $7,989.40 and another loan. Ms Brown agreed to lend Mr Axam sufficient funds to pay off his loan with CUA, namely $7,989.40. The documentary evidence establishes that this sum was withdrawn from Ms Brown's personal account on 2 February 2007. The bank cheque made out for the same amount to Mr Axam on the same day strongly supports Ms Brown's case that this sum was paid to Mr Axam. The terms of this loan was that Mr Axam was to pay Ms Brown back when he received a tax refund for the financial year ending 30 June 2007. Mr Axam has never repaid that loan. The ANZ Bank approved the home loan on 31 January 2007 and the joint loan account was set up for Mr Axam and Ms Brown. The Werrington Downs property was acquired jointly in both Ms Brown and Mr Axam's names. 17 Despite the joint names on the title the acquisition of property was almost entirely funded by Ms Brown. She paid the $35,100 deposit together with legal fees and other costs associated with the purchase. Ms Brown's statement of her ANZ Premium Cash Management Account shows a withdrawal on 31 January 2007 of $49,395.00, which was sufficient to pay for legal fees and the deposit cheque and for her to acquire a car. 18 Ms Brown also paid the stamp duty on the purchase in the sum of $11,694 on 14 March 2007. Finally, upon settlement she paid a further $67,343.98 to complete the acquisition of the property. Mr Axam and Ms Brown made informal financial arrangements for the household once they moved in together. They agreed each to transfer $400 per week into a second joint ANZ account to cover the costs of the mortgage on the Werrington Downs property and all the household bills except groceries, for which Ms Brown would pay two thirds given that her son Stephen resided with them. Ms Brown paid $10,000 from her personal account into this second joint account to open it on 2 April 2007. This payment is also objectively evidenced in her bank records as having been paid in on 2 April 2007. 19 Mr Axam completely failed to meet the expectations that were created by these financial arrangements. Ms Brown's evidence is, and I accept, that Mr Axam failed to meet all his commitments in regard to payments into the second joint account for the mortgage. 20 Mr Axam fell into further financial difficulties. Ms Brown had to rescue him from these in January 2008. Mr Axam's credit cards reached their credit limit over Christmas 2007. To pay out those credit cards and to reduce the interest outgoings in the household budget they both borrowed a further $25,000 against their home loan to pay out Mr Axam's credit cards. Of the $25,000 drawn down, $18,194.12 was paid on account of Mr Axam's credit cards, $2,200 to MasterCard, $9,494.12 to Citibank, and $6,500 to a CGL Source Card. The balance of these funds seemed to have been used for joint household purposes. 21 Mr Axam borrowed other monies from Ms Brown which have not been repaid for specific items that Mr Axam needed. These are all substantiated by bank account details or receipts or both. (a) Mr Axam borrowed $1,300 from a joint account which he did not repay; (b) Ms Brown paid $2,120 for Mr Axam's dental work and dentures; (c) Ms Brown advanced amounts for purchases from Bunnings Warehouse in August and September 2007 in the sum of $470.08; (d) Ms Brown made miscellaneous loans to Mr Axam for various purposes which he has failed to repay in June and July 2007. These loans were to pay for his daughter's 21 st birthday, to pay for tyres on his car and to buy a jacket. They totalled $1,716; (e) Ms Brown also claims that Mr Axam claims that she needs to pay him $25,000 for his contribution to the purchase of the property. She admits that he did make contributions to the payment of the mortgage on the property but only in the amount of $15,936. Solicitors acting on behalf of Mr Axam in an earlier part of these proceedings claimed this entitlement of $25,000. I accept Ms Brown's figure of $15,936 as the correct amount of Mr Axam's contributions to the property. I do so principally because I can infer from the sound substantiation that Ms Brown has provided for most of the monies she claims, that she has kept good records of her financial dealings with Mr Axam and with the financial institutions with which they were both dealing. The calculation of this amount of $15,936 is to be derived from the kinds of documents she has already adduced in evidence. The inferences which arise from these facts can be more confidently drawn because of Mr Axam's failure to contest them. 22 Ms Brown says that there has been some text message communication between herself and Mr Axam since their separation. These messages have in part concerned arguments about the money that he wanted. He is said to have made threats to her. I do not need to decide the details of these questions now. It is conceivable they could become the subject of other proceedings. I have not heard Mr Axam's side about these particular communications. Nevertheless I accept that there were some communications after separation. These communications assist the inference that Mr Axam has chosen deliberately not to participate in these proceedings. 23 It is now necessary to consider the issues of service upon Mr Axam, the operation of s 17(2)(b) Property (Relationships) Act and the three steps necessary for the exercise of jurisdiction under s 20 Property (Relationships) Act. Service on Mr Axam 24 I am satisfied that Mr Axam has adequate notice of the existence of these proceedings and that the fact they were listed on 9 March 2010. I am not satisfied that he is adequately notified of the possibility that final orders were to be made against him on 9 March 2010, even though the inference that the making of final orders was likely is reasonably clear on the materials sent to him. After these proceedings were commenced on 2 October 2009 service of originating process and the affidavits on Mr Axam proved impracticable. Upon Ms Brown's application the Court made orders for substituted service under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 10.14 on 19 January 2010. Instead of personal service on Mr Axam the Court ordered the statement of claim and Ms Brown's affidavit to be served at his current employer's address for his attention, and at Farry & Co Solicitors, his former solicitors, and at an address at Albion Park Rail associated with him. The solicitors said they no longer acted for him and did not know where he was. He was not found at the Albion Park Rail address. Service at his current employer in the manner specified was a reasonable way of bringing these proceedings to his attention. There was sufficient evidence before the Court both in support of the application for substituted service and in the reports upon the execution of those orders to conclude that this material has come to the attention of Mr Axam. 25 The affidavit of Megan Jane Woodley of 9 February 2010 and the affidavit of Gregory John Bigene of 2 February 2010 show that service was effected in accordance with the Court's order of 19 January 2010. Rule 10.14(4) UCPR indicates that such steps are then taken to constitute personal service on Mr Axam. 26 Evidence that Mr Axam has notice of this hearing though is less adequate. The covering letter dated 25 January 2010 from Messers Reimer Winter and Williamson, the lawyers acting for Ms Brown, accompanying the statement of claim, Ms Brown's affidavit and the substituted service orders said "we note that this matter is before the Supreme Court of New South Wales on 9 March 2010 at 9am" (Exhibit A). This statement was apt to indicate that a further step was likely to be taken in the proceedings by Ms Brown on 9 March 2010. It was not clear enough to indicate that a hearing for final relief would take place. For that reason I direct in the orders below that a copy of this judgment and the orders that are made but temporarily stayed should be served at Mr Axam's employers premises and a further 28 days allowed to go by. If Ms Brown's attorneys receive any notice that Mr Axam has ceased to work with that employer then the matter should be relisted for supplementary directions. Prerequisites for Making the Order 27 This is clearly a case where the applicant has made substantial contributions of the kind referred to in s 20. These are set out in the survey above. This survey shows that but for an amount of approximately $15,000 Ms Brown has provided the whole of the contributions for the Werrington Downs property. Something has been provided by Mr Axam but it is minimal. 28 Ms Brown would not otherwise be adequately compensated for these contributions unless an order under s 20 was made. There is no ready legal basis on which it can be inferred that once the Werrington Downs property was put in joint names that there was any joint default arrangement in which the parties could have placed its value in Ms Brown's hands upon Mr Axam's non performance of his side of their arrangements. That is what the justice of the case requires. 29 In these circumstances, where two persons contribute to the purchase of the property which is conveyed to them in their joint names, the equitable presumption is that they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contributions unless the contributions are equal: Calverley v Green (1984) 155 CLR 242. Here Mr Axam would be able to argue in equity for the retention of some interest in the property. The important field of operation of Property (Relationships) Act in this case is that it would authorise the complete transfer of the whole of Mr Axam's share in the property to Ms Brown, which may well not be the result at general law. She has made "substantial contributions" of the kind referred to in s 20, within s 17. These contributions significantly exceed the $15,000 approximately that he has contributed to the property and would otherwise be the foundation for his claimed interest in it. The general law would probably not adequately compensate her for all her contributions to the joint financial resources of the couple through a declaration of interest in the property. She may have to look to him as an unsecured creditor in respect of the loans that she made to him. The making of an order under the Property (Relationships) Act serves to give her immediate satisfaction in respect of her effective full contribution to the acquisition of the Werrington Downs property and avoid future litigation between the parties. 30 The justice of making an order in this case is also compelling because the relationship is only one month short of the requisite 24 months that would mean that s 17(1) would otherwise be satisfied. Joint Property of the Parties 31 As I have indicated above it is not possible to establish what is the joint property of the parties beyond the Werrington Downs property. For that reason it is appropriate for the orders to be limited in the manner suggested by the plaintiff. 32 The lack of evidence about the property is cured by the orders proposed by Ms Brown. Other personal property and shares held by the parties are to be retained by each of them. The principal asset in contention between them is the Werrington Downs property. I have little evidence as to its actual present value, only evidence about relative contributions. The parties seem to have led separate lives in some respects. It was the joint bank accounts and the contributions to the Werrington Downs property that were within the scope of their joint contemplation and is therefore the realistic subject of this assessment. Relative Contributions under s 20 33 Ms Brown's money contributions completely neutralised those of Mr Axam. Even if it is accepted that he contributed $25,000 to the mortgage payments she has paid far more than that sum in other loans and outgoings to him. 34 There is no evidence of disproportionate non-financial or homemaker contributions under s 20(1)(a) and (b) between the parties so it is reasonable to say they were roughly equal in this short relationship. 35 The financial contributions evidence shows that Ms Brown paid $18,194.12 plus other monies amounting to $5,606.08, being $23,800.20 to him. She was not repaid and Mr Axam has not contributed any equivalent sum to her. There is no evidence of his paying any more to their joint resources than what she concedes of $15,930. 36 Ms Brown has effectively taken complete responsibility for their financial stability. The Adjusting Order 37 The appropriate adjusting order to be made in this case is the one sought by the plaintiff transferring the Werrington Downs property to her but requiring her to take over all mortgage obligations over it and not transferring any other property. This reflects the reality that she has more than fully paid for the Werrington Downs property herself, when the performance of all their domestic financial arrangements is considered. Conclusions and Orders 38 In the result I have found that there was a de-facto relationship between Ms Brown and Mr Axam between November 2006 and 14 October 2008. Although the relationship falls short of the requisite 2 year threshold for the making of orders under Part 3 of the Act, Ms Brown has made substantial contributions of the kind referred to in s 20 Property (Relationships) Act. She would not be adequately compensated for these contributions if a s 20 order were not made. A failure to make an order would result in a serious injustice to her. 39 I have found that the only property of the parties about which there is any certainty is the Werrington Downs property. Before the intervention of the Court Ms Brown is entitled to at least 50% of that property. She is entitled in equity on a resulting trust because of her advances of a substantial proportion of the purchase price and because of the strong inference that arises from placing the title in joint names. She has made s 20 financial contributions, that substantially outweigh Mr Axam's financial contributions to the property. There is no evidence that he has made any other substantial financial or non-financial contribution to their joint resources. The parties did not make any agreement as to what would happen to the property if one of them failed to perform his or her side of their financial arrangements. That is where the Act can provide a solution. In the circumstances the adjusting order that she seeks is the appropriate one. Accordingly I make orders as follows. These orders include the orders foreshadowed above in relation to further service of these orders on the defendant and a temporary stay on their operation. 40 The Court orders: 1. That the defendant within twenty-eight (28) days of the date of lifting of the stay on this Order provided for in Order 5 below give a transfer in registerable form transferring all of his right title and interest in the property known as 1 Brentwood Grove, Werrington Downs NSW being the whole of the land in Folio Identifier 1036/259016 to the plaintiff but only on condition that the plaintiff first discharges the mortgage numbered AD60260 secured against the property referred to by Australia and New Zealand Banking Group Limited. 2. That as between the plaintiff and the defendant, and subject to the above Orders, the plaintiff and defendant shall each respectively retain all interest in and entitlement to: i All personal property no in his/her respective possession or control. ii All shares, debenture, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively. iii All interests in life insurance policies and superannuation funds standing in his/her name respectively. 3. That in the event that the defendant fails or neglects to comply with Order 1 herein, that pursuant to s 39 of the Act, the Registrar of the Court be appointed to execute the said transfer in lieu of the defendant and to do all acts and things necessary to give validity and operation to the said transfer. 4. These orders are stayed for a period of 28 days after the date on which the plaintiff provides proof by affidavit of her compliance with Order 5 below. 5. Direct that within 28 days the plaintiff serve a copy of this judgment both on the address of the defendant's employer and in the manner provided for in Order 4(a)(i) of the Court's previous order for substituted service of 19 January 2010 together with a letter drawing attention to these orders. 6. Grant liberty to apply. 7. These orders may be taken out forthwith. ********** 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.