Archive for the ‘de facto relationships’ Category

Internecine shenanigans

April 30, 2018

When judgments are published on the internet, they are published with a section, supposedly for indexing purposes, called “catchwords.”  The cognoscenti have been having a bit of a chuckle over the catchwords to Gladys Hargraves v Susan Eveston [2018] NSWSC 505, a judgment by Justice Hamill:

CIVIL LAW – unpleasant litigation – contract dispute – loans from mother to daughter – internecine family dispute – where loans formalised by deeds – whether terms of deeds varied by subsequent conversation between parties – dispute as to whether conversation occurred – where neither party presents as a witness of credit – financial shenanigans – palpable personal animosity – dark looks across the public gallery – tsk-tsking – objectively established chronology – not satisfied conversation occurred.

The case was about a loan for $1.7 million from Gladys to Susan.  There was a written agreement documenting this loan. Susan did not dispute that she had to repay it, but claimed that as a result of a conversation with her mother in September 2016 she did not have to repay it until another family dispute (in which she and her husband claimed to be owed a similar amount by a family company) was resolved.   This was the conversation  which Justice Hamill was not satisfied occurred – basically because the first mention of it by Susan was very late in the piece.

There was some colourful detail because Susan was forced to admit in cross examination that she had stolen some money from a family company (she said that she had worked in family companies for some years but was not paid at a level commensurate with her responsibilies).  Maybe this was the stuff which elicited the “tsk-tsking.”  Otherwise  it wasn’t really a very complicated or legally  interesting case, apart perhaps for the considerable wealth of the family involved.

Meanwhile, a more humble family has been slugging out before Justice Robb the question of who owned 14 Prout Street Cabramatta. His judgment is Lay v Pech [2018] NSWSC 460.

Maybe there was less eye-rolling and tsk-tsking because, as his Honour observed, the parties were all of Cambodian background.  This was relevant on at least one parties’ case because of the obligation of a son to look after his mother according to traditional Cambodian values.

Ms Lay sued her son, Poly Pech, for orders that she was the beneficial owner of a house which was legally in Pech’s name.  The legal owner of the property at the time of its purchase in 2010 was  Mr Tai, her then-de facto, who joined Ms Lay as plaintiff.

Ms Lay and Mr Tai said that Mr Tai had bought the property in 2010 because Ms Lay lacked an income which would enable her to obtain a mortgage.  Later, in 2015, it was transferred to Mr Pech.  Ms Lay and Mr Tai said that this was part of a de facto property settlement between them, but that the intent of the transfer was that Ms Lay become the beneficial owner and not Mr Pech.

Mr Pech said that the property had always been his, and that it had first been purchased in Mr Tai’s name because Mr Pech had a bad credit rating, that Pech had provided the initial deposit, and that payments made by his mother or Mr Tai were explicable as rent paid to him.  The transfer to Mr Pech in 2015 was not part of a de facto settlement between his mother and Mr Tai, but rather because he was by then in a position to obtain a mortgage.

Mr Pech faced at least two difficulties.  The first was that he said he was earning about $50,000 a year at the time the property was purchased, whereas for a number of years his PAYG summaries and tax returns only referred to an income of $20,000.  This, Justice Robb said, did not reflect well on his credit (ie, his believability).  It probably also means that he was substantially paid in cash.  The second (and this is my interpretation) was that even on Mr Pech’s case,  mortgage payments made by Mr Pech were made by him to his mother who was then the person responsible for paying these into the bank which turned up as amounts deposited in NSW (for much of the time Mr Tai was away working in Queensland).  This meant that when Justice Robb went to analyse the banking records, he only gave Mr Pech credit for what was actually banked by Ms Lay.  Is it possible that Mr Pech paid his mother more than she banked?  Justice Robb does not appear to allow for that possibility. Maybe she wasn’t asked that.

That may be because his Honour had other reasons for favouring Ms Lay’s and Mr Tai’s account, including patterns of payment and expenditure on renovations which Robb J found more consistent with Ms Lai being the intended beneficial owner, and what his honour considered to be exaggerations in Pech’s account of his involvement in undertaking renovation work.

But Ms Lay herself also had a bit of a problem, which is that (as far as I can amount) she had been receiving Centrelink payments (as an invalid pensioner) on the basis that she was a single person for the period of her de facto relationship with Mr Tai, when every indication is that his income would, if the truth were know to Centrelink, wholly or very substantially preclude her receiving such payments.  She may also have been receiving rental assistance in relation to her occupation of a property which she now says she was the true owner of all along!  (Correction: I initially wrote “all along” but actually that was an issue which she and Robb J both danced around and away from probably because of this.  But it still doesn’t seem as though she was ever actually paying rent.)

Ms Lay’s status as a Centrelink recipient is probably why it appears to have been common ground that she was never the source of monies paid off on the mortgage, on the assumption that her living expenses fully accounted for her Centrelink income.  Indeed it appears that Mr Tai subsidised her living costs.

It’s obviously a murky tale.  I wasn’t there at the trial but I get the distinct feeling that the entire story has not been told on either side.

Pech made a last-ditch submission that if the judge found for Ms Lay, he should still decline to make an order in her favour because of the illegality of her conduct.  Justice Robb rejected this argument, on the basis that the illegality was not sufficiently bound up with the reason for the equitable ownership that she now claimed.

Further, as Robb J put it (at [63]):

Mr Pech went so far as to submit that, if his defence of illegality was not accepted by the Court, the Court should not grant the relief sought by the plaintiffs without imposing a condition that Ms Lay first make a disclosure to Centrelink, and then pay whatever amounts are required by Centrelink to remedy the consequences of her unlawful conduct. While that may be a proper course for the Court to take in an appropriate case, it may be observed that this was a very aggressive submission for Mr Pech to make against his mother.

I’m a bit surprised that Robb J found “aggression” in the context of such litigation, where, incidentally, Ms Lay’s lawyer had effectively pinged Pech for tax evasion, to be at all remarkable.  I expect there was a fair bit of antagonism on both sides.  Maybe (too many “maybe”s in this post, I know) what his Honour meant was that it was a vindictive submission: making his mother pay Centrelink back would not advance Pech’s own position in the slightest.

Anyway, with a lot of giving Ms Lay the benefit of the doubt and declining to draw in my opinion almost inescapable conclusions along with a lot of dodging around what the position was for the almost 5 years up to the date of the transfer to Mr Pech when Ms Lay was almost certainly receiving rent assistance in relation to claimed rent paid to Mr Tai, his Honour declined to impose such a condition.  He didn’t even refer the papers.






Conundrum 2

July 27, 2017

I’s taken me a while, but back to [2017] NSWSC 666.

You will recall that GS, a pharmacist who had been generous to many or at least relaxed in his attitude to recovering monies lent to many, died suddenly aged 65, survived by his two nieces, AC and CC, in whose favour an informal will was found.

OY disputed the validity of the will. He said he was GS’s surviving de facto partner. OY said this relationship, of many years’ standing, had been a secret.

Obviously there must have been some kind of a relationship between GS and OY. GS had advanced substantial sums of money to OY- well above the other amounts known to have been advanced by him to others – and he had given OY the means and authority to conduct his bank accounts.

To me, as a gay man, OY’s claim of there being a sexual relationship is a plausible one. On reflection, perhaps that is putting it too simply. To me it is plausible that, if there was a sexual relationship, it would have been conducted in complete secrecy in the way that OY alleged.

On the other hand, it is very easy to make up a story about someone who is dead. A court must scrutinize carefully any claims of dealings with deceased persons and especially where those claims rest entirely on the word of the surviving person who makes the claim.

Lawyers often talk about whether one judge or another is a good “draw” for their client. This preserves what in some ways must be a legal fiction, that there is some random process of selection of which judge hears a case. Often it may be that the selection of a particular judge from those available is a matter of chance, but the selection of judges itself is clearly far from being so.

In any case, it doesn’t look as Justice Slattery was a very good draw for OY. As he said at paragraph [28] of his reasons for judgment:

The Court soon began to doubt [OY]. Early in his evidence he explained how he deliberately deceived his first wife about his alleged relationship with [GS]. Without a flicker of shame he elaborated upon a cynical scheme to mislead his first wife, Ms [SK], into believing he was not with [GS] at night. His story of lying to his first wife is barely worthy of credit. But the fact that [OY] was prepared to parade such studied trickery carries its own significance. Why would one who shamelessly avowed deceit of a spouse, not practise deceit on this Court?

When I first read this, I thought “Whoah!” There seemed to be a kind of paradox  – a variant on “all men [sic] are liars” – in this case, “all closeted gay men are liars.” So is no self-confessed closeted man to be believed?

What Slattery J found “barely worthy of credit” (credit here means worthiness of being believed rather than reflecting well on the teller) was OY’s claim that he used to go to a gambling club before leaving without placing a bet to spend time with GS.  OY said he did this so that he could produce the ticket to his then wife (who had already complained that he saw too much of GS) as, in effect, an alibi.

Slattery J didn’t accept this.  I’ve inserted in bold the numbers for his reasons:

[211] (1) First, it is difficult to accept that [OY] could have kept up this pretence for years, when he claims his visits to the deceased were regular. (2) Secondly, his claimed alibi was unstable. Other people frequented the same club and would have been able to see that [OY] had left to go elsewhere. (3) Thirdly, such an alibi was likely to create quite separate domestic concerns: that he was gambling away the family’s money. He sought to answer that threat by explaining that this poker club was not one where gambling for money occurred. But that does not meet the problem that to a person being shown sign-in slips at a gambling club it may not have looked that way. (4)Finally, [OY]’s case of arranging regular assignations with the deceased behind his first wife’s back infers that the deceased was complicit in this deception. How else could the deceased believe that a married [OY]t could spend so much time with him?

[212] (4A) But that is not consistent with the deceased’s character.  All the evidence about the deceased points to a man who  (4A1) had an open and friendly nature, (4A2) had deep moral feelings and religious scruples especially about his sex life, (4A3) maintained warm relationships with family and friends and (4A4) had never been involved in fraudulent activity. But [OY] seemed comfortable to accept that the deceased was as dishonest as he was in conducting this relationship.

That’s a lot of reasons. Maybe 2 is the best, were it not that many affairs are conducted under cover of equally risky alibis.  My own skepticism would be of the elaborateness and consistency of the claimed ruse rather than its fragility – why not a variety of garden husbandly lies?   3 assumes OY’s wife did not know/believe that no money was gambled at the club.  I don’t think I would be as ready as Slattery J is to take 1 and 4 (4A4 in particular is a stretch – how can you prove such a negative?) as from the start tending to preclude the truth of OY’s account.

There’s a lot more in the judgment and the judge had plenty more reasons to which I find myself without the energy to do justice.  The thing is, unlike the rest of us who can afford a Marabar-caves sort of indeterminacy, he did have to make up his mind. That’s his job.

From which you’ll probably realise that Justice Slattery totally dismissed OY’s claim, and upheld CC’s claim for repayment of all monies paid to or taken by Okan, with interest.  OY’s story was just that: the story OY had to tell if, following GS’s sudden death, he was to avoid having to repay the money he had already received from GS and hang on to the money he opportunistically grabbed by continuing to use after GS’s death his capacity to operate GS’s accounts. That OY had obtained monies on such a scale and authority to operate GS’s accounts in this way was not to be attributed to any sexual relationship between them, but rather that (at [312]) OY was an “intuitive and manipulative individual” who well understood and was close enough to take advantage of GS’s generosity.

So much (so far as the monies obtained by OY and his company in GS’s lifetime were concerned) for any credit in heaven which GS professed a hope to attain on account of funds unrepaid at his death.

Nieces and intestacy

Why, asked CC (rhetorically), would she seek to forge a will as OY claimed she had when, as GS’s nieces, she and AC stood to benefit anyway under what looked like otherwise being intestacy?

It is possible that this emerged during submissions as a result of a remark by the judge himself.  As he said at [688]:

the Court did raise the hypothesis in submissions that [GS]’s nieces would take on [GS]’s intestacy. But in the course of preparing these reasons it is clear that hypothesis was based on an erroneous assumption as to the present State of New South Wales law at the time of the deceased’s death. The nieces or nephews of an intestate in New South Wales have no entitlements; the State of New South Wales would be entitled to his estate: Succession Act, Parts 4.3 and 4.5.

I think his Honour’s first instincts were better than his afterthought.

This is the contents page to parts 4.3 and 4.5 of the Succession Act (part 4.4 deals with indigenous families) to which his Honour refers:


   127.    Entitlement of children
   128.    Parents
   129.    Brothers and sisters
   130.    Grandparents
   131.    Aunts and uncles
   132.    Entitlement to take in separate capacities


   136.    Intestate leaving no persons entitled
   137.    State has discretion to make provision out of property to which it becomes entitled

If you go by the contents listing alone, there is no section which, going by the headings, deals with the entitlements of nephews or nieces.  However, section 129 is as follows:

129 Brothers and sisters

(1) The brothers and sisters of an intestate are entitled to the whole of the intestate estate if the intestate leaves:

(a) no spouse, and

(b) no issue, and

(c) no parent.

(2) If no brother or sister predeceased the intestate leaving issue who survived the intestate, then:

(a) if only one survives-the entitlement vests in the surviving brother or sister, or

(b) if 2 or more survive-the entitlement vests in them in equal shares.

(3) If a brother or sister predeceased the intestate leaving issue who survived the intestate:

(a) allowance must be made in the division of the estate between brothers and sisters for the presumptive share of any such deceased brother or sister, and

(b) the presumptive share of any such deceased brother or sister is to be divided between the brother’s or sister’s children and, if any of these children predeceased the intestate leaving issue who survived the intestate, the deceased child’s presumptive share is to be divided between the child’s children (again allowing for the presumptive share of a grandchild who predeceased the intestate leaving issue who survived the intestate), and so on until the entitlement is exhausted.

If I am reading this aright, contrary to his Honour’s observations, nieces and nephews (and for good measure any intersex children of siblings) do have entitlements under intestacy in the event that their parents had an entitlement but predeceased the intestate person.  Siblings have an entitlement if a person dies without parents, spouse or issue.

If GS died without leaving a will, under s 129(1), GS’s parents having predeceased him and he dying single and childless, his brother would have been entitled to the whole of his estate. GS’s brother having predeceased him, under s 129(3)(b), that brother’s daughters, ie, AC and CC,  his nieces, would have been entitled to share that brother’s presumptive share equally.


In response to a complaint from GS’s family,  understandably aggrieved that his name has been dragged through the mud of accusations by OY which have been proven to be false, I  have removed GS and OY’s names from the body of this post and the previous post on this case.  I have also scrubbed any identifying names from the comments to that post.

Post post script

Meanwhile the case has gone on, including a pretty furious (and dismissed) application by CC that OY’s solicitor and barrister pay her costs.  As a lawyer myself, I hate that sort of application – I suppose out of self-interest.  The application was dismissed basically on the grounds that it was not up to OY’s solicitors and counsel to prejudge the truthfulness of OY’s instructions to them.  See [2019] NSWSC 584 at [47] and [48}.

You might have thought that, as a barrister herself, CC could have recognized this before bringing the application.

The judgment also deals at [118] to [137] with an eyebrow-raising aspect of conduct of the case by CC which put OY unnecessarily to additional costs, though not (so his Honour had already held in the main trial when the issue was raised in relation to CC’s credibility) deliberately.  CC incurred an adverse costs for this, though not (because not deliberate) on the indemnity basis.




A conundrum

July 9, 2017

Maybe we are all unusual people, if you can only look closely enough, but GS, who for many years conducted a pharmacy in Sydney’s south west,  must have stood out.

From the late 1980s, GS, who graduated as a pharmacist in 1973 when he was about 25, owned and ran a pharmacy at XX.  GS never married and you’d have to say that the pharmacy really must have been his life.   He befriended many of his customers, including the local “down and outs” from the caravan park nearby whom he would often invite in after hours to spend time with him after the pharmacy had closed.

GS was the “go to” man amongst his fellow shopkeepers at XX for making up a float at the start of the trading day.  He lent many people money, but if they didn’t pay him back was apparently content to leave that as something which would rest on their consciences or probably souls (he was devoutly religious) if they failed to repay him.  He told a friend “If I die and they owe me the money maybe God will put that in my credit to cover my sins.”

GS was a heavy smoker, and it seems that other aspects of his shopkeeping lifestyle were quite unhealthy.  In 2013, aged 65, he died suddenly at the pharmacy.

GS’s older and only brother, his father and his mother had predeceased him in 1980, 1979 and 1992.  He was survived by AC and CC , his brother’s daughters.  GS had told his nieces that they would find a will in his house.

GS had lived since 1983 in a house in Strathfield first owned by his father and later by him.  He was a bit of a hoarder.  His nieces and family friends set about tidying things up in the hope that the will would surface in the process.

A document later admitted to probate as a informal will was found in George’s bible (which was on the table next to his bed), folded around an old photo of AC and CC.  This appointed CC (who is a barrister by profession) as his executor and left GS’s estate of about $6 million to her and AC equally.

But there was another claimant.

OY claimed he had met George in 1999 when OY was 17 and GS about 51.  OY said he had been in a sexual relationship with GS from that time and was in a de facto relationship with GS at the time of GS’s death.  OY said that the document found in the bible must have been planted there and was not a will.  He said that probate of the will should be revoked, in which case (on his contentions) he would take the entire estate as de facto “widower” on intestacy.

As a fall-back OY claimed family provision on the basis of his asserted relationship with GS.  As a fall-back or parallel claim to that, OY also said that money which he had received from George in George’s lifetime was a gift rather than money that OY had to pay back. This was about $386K less payments by OY or his company in GS’s lifetime of about $82K – a net amount of $304K.

OY had also taken money out of GS’s accounts after GS’s death using means of operating these accounts which GS had given him.  Even if you are authorised to take money from someone’s accounts while they are alive, that authority ceases on their death and any money taken out after usually has to be repaid to the estate.  One way or another (as the heir on intestacy or by means of provision in a greater amount) OY sought to resist having to repay these post-mortem amounts, of about $206K.  OY had made a further $7-8K of withdrawals from GS’s accounts which were reversed by the bank when it stopped the account at CC’s request.

AC and CC knew about OY, because in 2011 GS had told them that he had lent upwards of $100K to OY for a tyre business on Canterbury Road in Lakemba.  AC and her husband had visited the business and met OY not long after that.  You could not blame AC and CC for feeling some disquiet about this, let alone about the full picture which came to light after GS’s death, not only of the substantial amounts which had passed in his lifetime, but also the post-mortem withdrawals from his accounts.

But OY’s claim of a 14-year homosexual relationship with their uncle came as a complete shock to them.  As far as they were aware, although unmarried, GS had had a number of girlfriends in his life.  There was a bit more mystery over the circumstances in which GS had harboured in his home from 2005 to 2008 a (since deceased) married mother-of-five sex worker with a drug problem whom he had met on Canterbury Road.

To CC and AC OY’s claims were not only a shock but a calumny.

OY for his part maintained that his relationship with GS was secret for cultural reasons.  (OY’s cultural background is Turkish; GS’s was Greek.)  He rubbed salt in to the wound (so far as AC and CC were concerned) by claiming that GS was dismissive of and said disparaging things about them.

By the time the matter came to trial, it emerged that if OY was telling the truth, he had his own cultural reasons for keeping his relationship with GS secret, including two marriages of his own.  For good measure, witnesses claimed that even when married he was seen consorting with other women.

There was no evidence from anyone, even OY, of either GS or OY having any other same-sex relationship.

The matter was heard over 21 days in early 2016 before Justice Slattery. It took his Honour over a year to deliver his decision:  [2017] NSWSC 666.

That seems a long time, even if his Honour was off on leave for some of it, though the reasons are certainly lengthy.

If you’re the kind of person who likes to skip to the end of the book to find out the ending, or to look up the endings of TV serials on the internet (I am that kind of person) you can find out more there. Otherwise, you’ll have to wait until I have the energy to write another post.

Postscript:  May 2019

In response to a complaint from GS’s family, I am pseudonymising this post and the further post on this subject .

In  December 2018 OY was convicted in the District Court of fraud.  It’s not clear to me what exactly this was for: I presume at the least it was for withdrawals made by OY without authority from GS’s account after GS’s death.

Messy lives and a tangled web

March 6, 2009

Under the Property (Relationships) Act 1984 (NSW), people who have been in a de facto relationship which has come to an end can apply for an adjustment of their respective property interests. The usual principle is that their affairs should be disentangled in accordance with their respective contributions to property they have each acquired during their relationship. The exact wording is:

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…

and this is to be done “having to regard to”

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 (this is the feminist clause, at least in its genesis):

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 …[paraphrase: a child of the parties (this means both of them) or accepted into their household].

For relationships coming to an end on or after 1 March 2009, this act no longer applies, and different principles will apply under the (Commonwealth) Family Law Act, but there are still plenty of cases in the pipeline where the 1984 act will apply.

As a judge rightly pointed out in a matter where I recently appeared, people can have messy lives. It can often be difficult to work out exactly what the legal basis of their proprietary interests are, not least where they have had their own reasons for muddying the waters. The recent judgment in Whiting v Whiting provides a good example of this. The particular question it poses as I see it is what is the position when, after the relationship comes to an end, one of the parties receives an inheritance which is greater in amount as a result of contributions by the other or even by both of them together during the period of their relationship?

Mr Whiting and Mrs Whiting lived in a de facto relationship from 1968 to 2001. Mrs Whiting had a son from a previous relationship who grew up with them.

Mr Whiting was a builder and, it seems, also a developer. His businesses ran into financial difficulties. That is pretty much par for the course for builders and also for developers. In 1993, the Whitings moved from near Grafton (on the NSW north coast) to Bankstown (a suburb of Sydney) to live with and near Mrs Whiting’s mother, Mrs Holley. Mr Whiting built a second house on Mrs Holley’s block of land there.

In 1998, Mr Whiting went bankrupt as a result of a guarantee he had given for a loan to one of the companies through which he conducted his businesses. He was examined on the application of his trustee in bankruptcy, apparently in an attempt to identify whether his half share (the other half was owned by Mrs Whiting) in WTH, the company through which he had conducted his operations as a builder, was worth anything as a result of the house which had been built on Mrs Holley’s block of land. Mr Whiting said at that time that his [quasi] mother in law had given them somewhere to live so that they wouldn’t have to pay rent. When asked what Mrs Holley had given him in return for building a house on her land, he said “Nothing. Not a thing.” He said that there was no agreement between the company and Mrs Holley in relation to the construction of the house.

That is understandable – it wasn’t in his interests to assert any entitlement which would pass to his trustee in bankruptcy to be divvied up amongst his creditors. Nor was it in Mrs Whiting’s interest that any part of the property then owned by Mrs Holley and likely to pass to her would be subject to such a claim. But it would come back to bite Mr Whiting.

Mr Whiting continued to work as a builder, using WTH (at this stage half owned by his wife and half owned by the trustee in bankruptcy) as a vehicle for this. Mrs Whiting was involved as she was also a shareholder and (it seems) a director, perhaps the only director, and funds received by the company and paid out were banked or dealt with in an account of hers, as well (it would seem) as in account in the name of company. Not all the funds were banked. Mrs Whiting’s signature thus appeared on cheques, but her evidence was to the effect that she had no real knowledge of affairs and acted under the control of Mr Whiting.

In October 1999 Mrs Whiting bought the shares formerly owned by Mr Whiting from the bankruptcy trustee for $75,000. Her cousin (subsequently executrix of Mrs Holley’s estate) Mrs Houghton said that she had lent her this money out of her own (Mrs Houghton’s) own funds, and a written loan agreement had been drawn up by solicitors to record this. Mr Whiting said that this was a sham and the money really came from cash which was kept in a safe in their house, presumably being in part the unbanked funds received by the company which, in effect, Mr Whiting was operating, and otherwise from Mrs Whiting.

If so, this was a sham which Mr Whiting had some part in. In this way he had worked for the company and accumulated funds (when normally as a bankrupt you are required to make contributions over a fairly minimal wage towards paying off your debts) with which he probably got the trustee off his back and Mrs Whiting (but in reality Mr Whiting, so long as the relationship lasted) regained control of his business. In addition, the cash came from takings which were presumably never disclosed in the accounts of WTH or otherwise disclosed to the Taxation Office.

The relationship came to an end. On 25 March 2001 Mrs Holley asked Mr Whiting to leave and he was escorted from the property by the police.

After that, the business of WTH came to an end. Mrs Whiting collected amounts due to the company and presumably paid off the debts; she sold a truck and some other equipment. Any money left over, she kept. She said this was about $23,000.

In 2001 Mr Whiting commenced proceedings against Mrs Whiting for an adjustment of property following the end of their de facto relationship, and against Mrs Holley claiming that she held the property on constructive trust for him in respect of his contribution in relation to building the house and on the basis of various promises he said she had made to him. Mrs Holley was suffering from cancer and obtained an order for an expedited hearing (that is, an order for the matter to be determined more quickly). Justice Bryson dismissed the proceedings on 14 June 2002 because Mr Whiting had not complied with procedural directions. The effect of such a dismissal was simply to bring the proceedings to an end: it did not amount to a judgment in Mrs Whiting’s or Mrs Holley’s favour, though before Mr Whiting could commence fresh proceedings he would need to pay their costs of the dismissed proceedings.

Mrs Whiting died on 1 October 2002. Mrs Whiting inherited the bulk of her mother’s estate. In effect, this was the house, which was sold. Mrs Whiting bought another house with the proceeds and a relatively small mortgage.

You can understand that Mr Whiting may well have felt aggrieved. Whatever arrangement he and his wife had entered into to protect or retrieve his business and the accumulated and ongoing profits of his labours from his bankruptcy led, in the end, to all of those assets, such as they were, belonging to his wife (except, possibly, for some cash – see further below). He had built a house on his quasi-mother-in-law’s land, but his case had been thrown out of court because he wasn’t able to get it ready in time before she died. And now it was Mrs Whiting who ended up receiving whatever increase in the value of the property resulted from that house being built.

In April 2006, Mr Whiting commenced fresh proceedings against Mrs Whiting under the Property Relationships Act. He needed to obtain an extension of time to do this, but that was granted to him. His heart must have sunk when he found out that his case was to be heard by the same judge who had previously thrown his case out, since retired and now serving as an acting judge.

NSW judges are obliged to retire at 72. I am not a fan of the increasing practice to re-appoint them after that on acting commissions. The attraction for the state is that these appointments are cheap because they do not lead to fresh judicial pensions arising and they are for a fixed term so that, if judicial business declines, the state is not left with a judge who potentially must be kept in office until retirement age. There are other questions also about whether such judges have the necessary independence, since clearly the Attorney General need not re-appoint any acting judge whose decisions the government isn’t happy with.

And there is another factor which it is difficult to avoid being blunt about. Justice Bryson is a well-respected judge (he became a judge of appeal before he retired) but even before he went to the Court of Appeal he had a bit of a reputation for grumpiness on the bench. He’s always been prepared to be forthright and to make robust findings of fact. That’s good if he’s going your way but not so good if he’s going against you. These are characteristics which do not tend to diminish with age.

Obviously Mr Whiting’s case had its difficulties. He was caught up in a tangled web, but he was not the only one. After their separation, Mrs Whiting had entered into a number of transactions with her mother, including the sale of her jewellery collection (“the accumulation of many gifts which Mr Whiting had made to her over many years”) to her for $5,000 and subsequent purchase back, which appear highly colourable as attempts to disguise and minimise Mrs Whiting’s assets in order to foil any claim by him. Mr Whiting said the jewellery was worth between $50,000 to $100,000, but Justice Bryson rejected this evidence as Mr Whiting was not an expert valuer of jewellery. All Mr Whiting could have said was how much he paid for it, though obviously that might be less or more than it would now be worth. It’s not clear why he did not attempt to do this, other than the obvious difficulty one might have in giving evidence of such matters, particularly on the hop once the evidence was objected to at trial.

It would have been hard for Mr Whiting to get expert evidence as to the jewellery’s value because at a time when Mrs Whiting knew that Mr Whiting claimed the jewellery was worth, Mrs Whiting said that she had flushed it all down the toilet after “what she seems to have regarded as a disheartening experience at a mediation session.” Justice Bryson didn’t believe this, and found that she had either sold it or still had it.

So there was every reason why Mr Whiting might feel and behave rather combatively. Acting Justice Bryson took a set against him for this very reason. He said:

“Mr Whiting gave me a very poor impression while giving evidence. He gave evidence in a highly combative way, with some expressions of hostility. I do not regard his evidence as reliable.”

The remaining big ticket item in the dispute was whether any part of the enhancement of the value of the the property by reason of the building work undertaken by Mr Whiting or his company, now in Mrs Whiting’s hands, should be considered to be property of the relationship now available to be divided up. If it was property of the relationship, then it would generally then fall to be divided according to what the respective contributions of the parties were to that property, though in the case of such a long standing relationship this would usually be divided fifty-fifty.

Of course, Mrs Whiting received this from her mother after the relationship came to an end, so that usually it would not be considered to be property accumulated during the relationship. Gifts from family members during a relationship are normally credited to the person whose relative made the contribution.

Bryson AJ seems to have considered this question to be determined by whether or not Mr Whiting was entitled as against Mrs Holley to a constructive trust in his favour, so that whatever the extent of that trust, it was really his property before it came to Mrs Whiting. I am not sure if this is really the right approach. The statute requires consideration of “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 ” What about the extent to which Mr Whiting’s efforts increased the value of what Mrs Whiting ultimately inherited?

I also think his Honour overlooked the extent to which the improvement in the value of the house and also the company’s assets arose from the manner in which, as is common, Mr Whiting worked through his company but did not necessarily take payment in full from the company from his work, being content to leave the value of his labour in the company which at first he and his wife, and later he and his wife, owned.

This seems to me to be tied up with the source of the $75,000 with which the trustee was bought out. Here the clincher was the involvement of the cousin, Mrs Houghton, since his Honour wasn’t necessarily going to believe either Mr or Mrs Whiting.

At this stage, the best I can do is to quote from His Honour’s judgment:

21 In October 1999 Mrs Whiting bought the shares formerly owned by Mr Whiting from the bankruptcy trustee Mr Donnelly, in whom the shares had vested upon the bankruptcy. The price paid was $75,000.00. According to the evidence of Mrs Whiting and of Mrs Pam Houghton, her cousin, who was then a bank officer, the $75,000.00 was paid to Mr Donnelly by bank cheque which Mrs Houghton obtained, from her own resources, in an arrangement to lend that amount to Mrs Whiting. The arrangement is evidenced by a written loan agreement, prepared by solicitors.
22 According to Mr Whiting’s case this was not the true source of the $75,000.00 which was paid for the shares. He alleges that Mrs Whiting put money into Mrs Houghton’s control, and into Mrs Houghton’s bank account, by misdirecting funds in several ways and in several different instalments; one of these was by taking money in cash out of a safe in the house at Daphne Avenue which Mr Whiting and Mrs Whiting then occupied. It is not clear whose money this is said to have been: it is hardly likely to have belonged to Mr Whiting himself, in his circumstances as a bankrupt, and if it belonged to WTH it is not Mr Whiting’s business to complain if it was misappropriated, because he did not have any interest in the company at that time. The most probable origin of the funds in the safe were that they arose from work for which WTH was entitled to payment. If one real source of funds to pay for the shares was money out of the safe as Mr Whiting alleges, that would not be a contribution by Mr Whiting to Mrs Whiting’s acquisition of half the shares and consequent control of WTH.
23 I do not accept the account, given by Mr Whiting in paragraph 18.6 of his principal affidavit, according to which Mrs Whiting told him, not that she was to buy shares in WTH but that she had to pay the official trustee’s firm $75,000.000 “because they say they are going to take my mother’s home. I will pay them from the money in the safe and will take the rest out of the business bank account”. In Mr Whiting’s evidence he took $45,000.00 in money from the safe in the house at 19A Daphne Avenue and gave it to Mrs Whiting, and she told him that she and her mother would put the money in Mrs Houghton’s account, “or similar”. He mentioned other sources from which he conjectured money was obtained to pay to Mrs Houghton. I do not believe what he says about these things. I do not believe that he gave approximately $45,000.00 of the money in the safe to Mrs Whiting, and I do not believe that Mrs Whiting received any such sum, or that she put it and other sums into Mrs Houghton’s control, so as to give colour to the $75,000.00 being advanced by Mrs Houghton. Mr Whiting’s narration, which has elements of fantasy, is far outweighed by Mrs Houghton’s evidence: she appeared to me to be a sober and careful witness, a person very unlikely to be constructing a sham transaction, and I find that she was truthful about the origin of the money advanced. An aspect of what Mr Whiting says which I regard as strikingly improbable is Mr Whiting’s claim that he did not know at the time that Mrs Whiting was acquiring the shares in WTH. However this is significant only as to his credibility.
24 I am satisfied and I find that Mrs Whiting bought the shares using money lent to her by Mrs Houghton. I do not doubt the evidence of Mrs Houghton and I regard it as clear that she was the true owner of the money which she advanced.
25 In my finding Mr Whiting’s claim or theory about the true source of the $75,000.00 is luridly improbable. Evidence of Mrs Whiting, and also the evidence of Mrs Houghton, showed that the loan transaction was genuine, and they adhered to their evidence firmly. My confidence that their evidence on these subjects was accurate is not disturbed by what were said to be anomalies in their explanations of some banking transactions from about that time: or by any difficulties in their explaining banking transactions from later times. It is not surprising, and in no way suggests that their evidence on the main subject was fabricated, that they were unable to explain in detail other transactions recorded in their bank accounts about that time: or at later times. It would be unremarkable that cousins with a good relationship had other transactions or that there were other aspects of this transaction which they are unable to explain after 10 years.

I am never happy when a judge purports to determine such matters on demeanour or even on the basis that a witness is otherwise respectable. In my experience, such people are capable of all sorts of things, especially in family disputes. Bank officers are perfectly capable of lying with composure.

Whilst the relationship was subsisting, the obtaining of the shares in WTH by Mrs Whiting was not adverse to Mr Whiting’s interests: as a bankrupt he could hardly have purchased the shares himself and it was likely that it was necessary to give the impression to the trustee that Mrs Houghton was the source of the funds to buy the shares. It is true that it is mystifying that Mr Whiting claims not to have known that Mrs Whiting had purchased the shares, but in the light of the previous hypothesis explored by the trustee that WTH had some interest in Mrs Holley’s property or entitlement to be paid by her, the account that the payment was necessary to prevent the trustee taking Mrs Holley’s house seems quite plausible and I don’t find it particularly improbable that Mr Whiting didn’t understand the exact form of the transaction as opposed to what he said he had been told of its effect or its motivation. He doesn’t seem really to have turned his mind to who owned the other half of WTH at this time, even though he was still conducting his business through it and so allowing it to obtain any profit from that work (subject, that is, to how he dealt with the money in the safe).

As a cousin with good relations with Mrs Whiting and, it seems, Mrs Holley, there is every reason why Mrs Houghton might have got involved with this and now adhere to a version which advantaged Mrs Whiting. There is a strange coincidence between the $45,000 claimed to have been in the safe and the $30,000 said to have been lent by Mrs Houghton to Mrs Holley and the total of $75,000 paid to the trustee. It is not clear how, if ever, Mrs Whiting repaid the $75,000 to Mrs Houghton, though it is clear that they could not explain all the transactions between them. I don’t think Mr Whiting’s claims can be dismissed as “luridly improbable.”

In the end, his Honour disregarded the jewellery, which he held Mrs Whiting had (or its proceeds) and the cash from the safe, which he held (for reasons which he doesn’t really make clear) Mr Whiting had taken. He was left with the following assets of the relationship:

35 The assets at separation which had sufficient value and of which is sufficient is known for notice to be taken of them are these:

All the shares in WTH. These yielded $23,996.53, which Mrs Whiting received.

Furniture — Mrs Whiting has the furniture and I treat it as worth $10,000.

Optus Shares — these yielded $3000 which Mrs Whiting received.

Billiard table — this was sold and Mrs Whiting received $1000.

Kawai Grand Piano — Mrs Whiting has the Piano and I treat it as worth $1000.

1988 Honda Car — Mrs Whiting kept the car and it was worth $5,000.

36 I attribute the total $43,996.53 to the assets which went to Mrs Whiting on separation. This is a very imprecise evaluation.

His Honour is clearly not a musician or even a pianist. The piano was bought in 1989 and Mr Whiting said it was worth $10,000. That seems about right to me. Unless it is in truly terrible condition, it certainly can’t be worth less than seven or eight grand.

To return to the judgment:

38 This is meagre value indeed for a relationship which lasted over 30 years, and very little to fight a three-day lawsuit over, but it is all there is. A great deal was done about property work and earnings during the relationship. Mr Whiting was busy with building and development projects. Mrs Whiting was the main contributor at home and she worked for much of the time. At times there was considerable prosperity, with overseas holidays. Her son was about five years of age when the relationship began and left when he was seventeen. Mr Whiting took the place of a father towards him in many ways, although looking backwards the son is not happy with all his treatment and things ended badly between them. Still Mr Whiting did make a significant contribution at the time. Decades of effort and contribution by both parties produced very little result in terms of property acquired. Each party made large contributions of the kinds mentioned in s 20(1)(a) over the decades, of work and effort and also contributions of the kinds in s 20(1)(b), and there is no way of attributing the small proceeds to one or the other which can improve on equal attribution. The only assets at separation now available are the Grand Piano and some of the furniture. Money proceeds of assets can no longer be traced, but contributed in a general way to Mrs Whiting’s present asset position.
39 The power to order adjustment extends to all property now owned by the parties. Considerations of justice and equity relate primarily to assets at separation. Considerations of justice and equity could lead to a discretionary order for adjustment if they related to property acquired after separation, but only by reference to considerations which relate the acquisition to contributions made during the relationship. In concept contributions made during the relationship could bring about an acquisition after separation, but that has not happened in this case. In concept there can be contributions to welfare after separation, but that has not happened in this case.
40 Unlike what usually happens when proceedings are brought soon after separation, the parties re-established themselves in the five years and more until these proceedings were commenced. The parties’ present assets are available to be the subject of an order for adjustment. In the almost 8 years since separation Mr Whiting has re-established himself in business, has a home and an investment property in which he has minority co-ownership interests in his later relationship with a new partner, and has significant mortgage debts which he has earning capacity to enable him to deal with. Mrs Whiting has had employment most of the time. Mrs Whiting has a home which is mortgaged for an amount which it will be difficult for her to deal with having regard to her relatively modest earning capacity. Mr Whiting is relatively better off than she is. Mrs Whiting’s present asset position is almost wholly attributable to Mrs Holley’s testamentary gift. It is probable and I find that Mr Whiting obtained a large amount of cash at separation, used it to help re-establish himself and has not revealed its existence or value. This strongly disposes me against awarding him any sum: I do not know whether such an adjustment would be just. In a similar way I do not know what value passed to Mrs Whiting in the jewellery; but she is not asking me to award anything to her.
41 In my judgment the Court’s order should require delivery to the plaintiff of the Grand Piano, which is the only significant asset from the relationship now traceable; Mr Whiting values it at $10,000, but this is more than it is worth. No other adjustment should be ordered.
42 This is not a case where either party should have an order for costs.

That does not strike me as entirely fair.

Mrs Whiting gets away with the jewellery because she has it or its proceeds and therefore is not asking to be awarded anything in relation to it, but Mr Whiting has the unknown amount of cash held against him on what to me seems to be pretty flimsy (and certainly totally unarticulated) reasoning. No account has been taken of the extent to which his work contributed to the balance of the proceeds from the company or the value of Mrs Holley’s property when sold which then passed to Mrs Whiting, even if that work should be counted as part of their joint efforts (and maybe this is where the case went off the rails). In other words, I don’t agree with his honour or at least I have considerable doubts on the basis of the reasoning as he sets it out that:

In concept contributions made during the relationship could bring about an acquisition after separation, but that has not happened in this case.

I can’t see how it is at all relevant that other money received by Mrs Whiting can no longer be traced: she is better off by its receipt, even if she has spent it.

To take into consideration their relative financial positions now would be relevant under the Family Law Act now but it is really stretching it to bring it in under the rubric of what is just and equitable under the Property (Relationships) Act.

The problem for Mr Whiting is that the vigour (aka forthrightness) with which Acting Justice Bryson has made adverse conclusions about his credit is likely to be an obstacle to any appeal.

At least he got the grand piano.

One size fits all

October 19, 2008

A story in yesterday’s SMH is rather amazingly headlined “Prenuptial rights for same-sex, unmarried.”

It appears to be a paper-thin rewrite of a press-release designed, amongst other things, to drum up business for the family-law lawyer (quite a different thing from a family lawyer), Sally Nicholes, “principal of Nicholes Family Lawyers.”

Here are some of the highlights or lowlights, since nobody ever seems to click on links:

UNMARRIED and same sex-couples may soon be able to sign “prenups”, giving de factos many of the same legal rights as those who are wed.

Reforms to the Family Law Act before the Senate would allow agreements to be drawn up by de factos to cover spousal and child maintenance, as well as the division of property in the event of a relationship breakup.

Allow, or necessitate – you be the judge.

The bill was circulated in Federal Parliament on September 18 and is awaiting consideration by the Senate. If the legislation is passed, it is expected to be enacted by March.

That bit is, I think, out of date, so far as the Senate passed the bill with amendments on 18 October.

A de facto relationship can be heterosexual or homosexual and can exist even if one of the people involved is legally married to someone else or has another de facto partner.

The act goes beyond property matters:

The legislation will also mean that a court can force a partner out of the home if they are violent or acting inappropriately to the other person.

“This is pretty dramatic stuff and it is a big change,” Ms Nicholes said. “It is going to be huge, particularly with the spousal maintenance.

“What I have often found amazing is that someone could be in a de facto relationship for 30 years and have no obligation for spousal maintenance. But you could be married for one year and have more rights.”

Well, one person’s rights are another person’s obligations. I don’t know if I find it so amazing as Ms Nicholes does, because I always thought that was what marriage was about. Living together is often something quite different – but you will now need to go to a lawyer to do anything about that. How realistic is that?

She agreed that the amendments may make marriage a less attractive prospect for some couples.

“It just depends on how legally minded a couple are,” she said. “[But] some will come back to romance – to actually get married not for legal reasons, but romance.”

Funnily enough, that is the one point which I think is totally wrong in a glass-half-full-half-empty kind of way. The amendments will mean that, apart from the actual expense of a marriage and a formal divorce when or if the time comes, you will have nothing to lose from getting married at all, because you are all in the same procrustean bed for everything else.

In fact, it is not just pre-nups which may now be advisable, but mid-quasi-nups, because in an amazing and little-heralded step, the parliament has now enacted (subject to the amended bill now passing the Reps, though none of the the Senate amendments alter this particular aspect as far as I can make out) that all presently existing de facto relationships (including gay and lesbian ones) will, if they come to an end after the commencement of the proposed amendments to the Family Law Act, be subject to the jurisdiction of the Family Court (at least in NSW and in other states which have referred the power to the Commonwealth), not only to determine the division of property, but also to make ongoing orders for spousal or quasi-spousal maintenance, potentially for the rest of each party’s life.

Because de facto relationships do not depend on any juridical act, you might even be in a de facto relationship without realising it, and conversely think you are when in fact you are not. You’ll have to wait till later to see what the other party might think and do about it. The only way, so far as I can make out, that you can define the situation is if you can broach the matter with the other person (there may be more than one other person!) and reach agreement with them. But you will both have to agree that you are in fact in a de facto relationship, even if you want to bring it to an end, and for the deal to stick you will both have to go and see lawyers.

This, to me, is astounding. It is going to come as a shock to a great many people further down the road when it is too late to do anything about it. I wish the powers that be had paid a little more attention to Patrick Parkinson’s piece in the SMH in August, which although it sidestepped the question of gay marriage, made the point very clearly. As Professor P put it in his opening para:

The Federal Government must be very keen on marriage, despite the institution’s falling popularity in the population. It is so keen, it seems, that it wants to impose upon people all the financial obligations of marriage whether they have chosen them or not.

Quite frankly, I have very little faith in the capacity of the Family Court, schooled in the way of marriage, to make appropriate orders for de facto relationships which may well have been entered into and conducted on a totally different basis. Ms Nicholes’ comments are a worrying harbinger of their likely mindset.