Declaration of a defacto relationship

Declaration of a defacto relationship

Luk & Choy [2016] FamCA 534 (30 June 2016)

The following is annotated:

INTRODUCTION

1. Ms Luk (“the applicant”) and Mr Choy (“the respondent”) were in a relationship from 15 July 2012 to 7 February 2014. By her Application filed 18 November 2015, the applicant sought a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”) that the parties’ relationship was a de facto relationship of a kind that attracts the jurisdiction of this Court to make orders for settlement of property.
2. The respondent, by his Response filed 17 December 2015 sought a declaration that the relationship was not of a kind that attracts that jurisdiction and a declaration that a de facto relationship never existed between the parties. In the alternative, the respondent sought other orders and declarations.
3. The onus is on the applicant to establish that a de facto relationship, within the meaning in s 4AA of the Act, existed between the parties.

THE PARTIES

9. The applicant was born in 1980 and at the time of the hearing she was 36 years of age. The respondent was born in 1978 and at the time of the hearing he was 38 years of age.
10. In 2007 the applicant came to Australia on a student visa. She completed a Master’s degree in 2009 and continues to reside in Australia. She now has permanent residence status in Australia. The respondent is a resident of China.
11. There are no children of the parties’ relationship.

BACKGROUND FACTS

12. In approximately May or June of 2012, the parties met through a dating website and commenced communicating. At this time and at all relevant times, the applicant lived in Australia and the respondent lived in China.
13. On 15 July 2012 the respondent travelled to Sydney and the parties met in person.
14. On 16 July 2012 the parties were sexually intimate for the first time.
15. While the respondent was in Sydney at that time he opened a bank account with the assistance of the applicant. He also purchased for the applicant a watch for approximately $7,450 and a handbag for approximately $3,360.
16. On 28 July 2012 the respondent returned to China.
17. On 25 September 2012 the respondent travelled to Sydney.
18. During this stay, the parties decided to purchase a property at E Street, Suburb B (“the Suburb B property”) off the plan, for the sum of $794,000. The respondent paid $3,000 as a holding deposit. The respondent said that the applicant agreed to fund half the purchase price. The applicant made arrangements for a mortgage to the Westpac Bank in the sum of $500,000.
19. On 9 October 2012 the parties both attended an appointment with a conveyancer. The conveyancer was employed by the firm of solicitors that represent the respondent in these proceedings. The respondent obtained a bank cheque for $76,400 as the deposit for the property.
20. On 11 October 2012 the respondent returned to China.
21. On 12 October 2012 contracts were exchanged on the Suburb B property.
22. In February 2013 the applicant travelled to City F, China, to visit her relatives. The respondent attended for approximately four days and stayed in a hotel. During this stay, the applicant deposed that the parties agreed to get engaged. The respondent purchased the applicant an engagement ring. It is the respondent’s evidence that he was pressured into buying the ring. At a family dinner, the applicant’s uncle announced the parties’ engagement to her extended family. The respondent said that this announcement was made without consultation with him.
23. After attending the applicant’s family celebrations in City F, the parties went on to visit the respondent’s province of G. They stayed there for eight days. During that visit the respondent introduced the applicant to one of his friends, a former work colleague.
24. The respondent deposed that at that time, the applicant asked him to sign a document relating to a mortgage in the sum of $500,000 that she arranged with the Westpac Bank for the purchase of the Suburb B property. The respondent said that he signed it on the basis that the applicant would pay the principal and the interest repayments of that loan.
25. In March 2013 the applicant undertook negotiations with the solicitor acting for the vendor of the Suburb B property, to fix a flooring issue.
26. On 19 April 2013 the respondent returned to Sydney as the property was due to settle. The respondent paid a further $248,839 towards the purchase price of the property. The parties continued to be sexually intimate.
27. The purchase of the property settled on 23 April 2013.
28. Between 23 April and 10 August 2013 the applicant purchased furniture for the property in the sum of $33,411.04.
29. The respondent returned to China on 28 April 2013.
30. In May 2013 the applicant moved into the Suburb B property.
31. In June 2013 the applicant undertook negotiations with the building manager of the Suburb B property to have some windows fixed.
32. The applicant deposed that in June 2013 she discovered that the respondent was using another dating website.
33. From 11 to 23 August 2013 the respondent spent time in Sydney, staying in the Suburb B property with the applicant.
34. From 17 to 20 September 2013 the respondent spent time in Sydney. There is no evidence about where the respondent stayed at this time.
35. On 23 January 2014 the respondent returned to Sydney and stayed in the Suburb B property with the applicant.
36. On 7 February 2014 the parties discontinued their relationship. The applicant deposed that on the following day, the respondent physically prevented her from leaving the house. She said that she hid in the toilet, that he kicked the door in, gripped her neck and attempted to force her to give him the contract of purchase for the property. The respondent said he left the property when he was evicted by the applicant. Neither party was cross-examined about those circumstances.
37. On 9 February 2014 the applicant’s mother came to Sydney.
38. On 21 February 2014 the respondent filed a Statement of Claim in the Equity Division of the Supreme Court of New South Wales (case number …) seeking a sale of the property and equitable distribution of the proceeds of the sale.
39. On 22 February 2014 the respondent returned to China.
40. On 21 July 2014 the applicant filed a Motion in the Supreme Court proceedings alleging that she lived in a de facto relationship with the respondent and seeking a transfer to the Family Court of Australia.
41. On 8 August 2014 Justice Darke of the Supreme Court transferred the parties’ proceedings to this Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). For reasons that are not apparent, the proceedings came before a judge of the Federal Circuit Court of Australia on 17 April 2015. That judge transferred the proceedings to this Court, noting the terms of the transfer order pronounced by the Supreme Court.
42. The applicant deposed that for the period until April 2016, she had paid a total of $73,083.52 in mortgage payments. In addition to this, for the period until the first quarter of 2016, she had paid utility bills of approximately $6,217 and strata costs of $13,360.52. She had paid council rates for the period up to August 2016 of $2,815.22.
43. On 13 April 2016 orders were made to list the hearing over two days commencing 26 May 2016 in relation to the existence of a de facto relationship as a separate issue.

What relevant facts are agreed?

58. It is common ground that:
    1. the applicant is ordinarily resident in New South Wales and she was ordinarily resident there when she commenced these proceedings;
    2. whatever its nature, the parties’ relationship endured from 15 July 2012 to 7 February 2014, which is less than two years; and
    100. there are no children of the parties’ relationship.
59. The applicant has met the geographical requirement for a declaration under s 90RD of the Act (s 90RG).

What findings are required?

60. The question to be answered in these proceedings is whether the parties were in a de facto relationship after 1 March 2009 and if so, for what period/s. It is for the applicant to establish that the de facto relationship between her and the respondent extended or resumed after 1 March 2009.
61. If the applicant cannot establish that fact, a declaration in the nature of that sought by the respondent will be made and the applicant’s application for leave to file her application under s 90SM of the Act will be dismissed.
62. If the applicant can establish that fact, a declaration will be made about the duration of the relationship. In that event the applicant can then proceed with her application for leave to bring proceedings pursuant to s 90SM out of time.

DISCUSSION

63. The Court is to have regard to all the circumstances of the parties’ relationship and decide whether or not they had a relationship as a couple living together on a genuine domestic basis. Those circumstances may include all or any of the s 4AA(2) matters. No particular finding is necessary and the Court is at large to identify those particular matters that seem appropriate in the circumstances of the case. Similarly, the Court is permitted to attach such weight to any matter, as may seem appropriate in the circumstances of the case.

What does the applicant need to establish?

64. The applicant must establish that:
    1. her relationship with the respondent was a de facto relationship as defined in the Act; and
    2. she made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c); and

(c) a failure to make the declaration would result in serious injustice to her.

65. I turn to the evidence about the topics set out in s 4AA(2) of the Act.

(a) Duration of the relationship

66. The duration of the relationship as opposed to its character or import, is agreed. The parties commenced communicating online in approximately May 2012. The relationship in question commenced when they met in person on 15 July 2012 when the respondent travelled to Sydney to see the applicant.
67. The relationship broke down on 7 February 2014, when the respondent left the Suburb B property.
68. The dispute is about the nature of the relationship.

(b) The nature and extent of their common residence

69. It is the contention of the respondent that the parties lived under one roof for 77 nights. There was no challenge to that evidence.
70. Some of the cohabitation occurred on holidays or in hotels or other accommodation in Sydney. For a total of something like four to five weeks the parties lived at the Suburb B property together.

(c) Whether a sexual relationship exists

71. It is common ground that the parties had a sexual relationship.

(d) The degree of financial dependence or interdependence, and any arrangements for financial support, between the parties

72. The respondent bought gifts for the applicant, including a watch for approximately $7,450 and a handbag for approximately $3,360. It is common ground that following the joint purchase of the Suburb B property the applicant lived in the property and the respondent joined her there when he was in Australia. The respondent bought the applicant an engagement ring at a cost of something like $AUD30,000.
73. The conveyancer acting for the parties on the purchase of the Suburb B property spoke Mandarin. When she explained the relevant documents to the parties, the respondent largely left the discussions to the applicant. I take it that he relied on her. The respondent paid all of the initial contribution to the purchase of the property. Both parties signed up to a mortgage to secure their borrowings from the Westpac Bank. The applicant lived in the Suburb B property and she alone paid the mortgage instalments.
74. The applicant bought furniture for use in the Suburb B property. She paid other outgoings on the property.
75. The respondent gave the applicant a credit card which she used for a period of time. The parties had an argument about the applicant’s use of the credit card for the purchase of some furniture. The applicant later returned that amount, and the credit card, to the respondent.

(e) The ownership, use and acquisition of their property

76. The Suburb B property was bought by the parties as joint tenants. The parties jointly borrowed $500,000 from the Westpac Bank by way of a mortgage secured on the property but otherwise the respondent paid the balance of the purchase price. The applicant paid the mortgage repayments. She said that she increased her work days from five to six days per week in order to pay the relevant mortgage payments.

(f) The degree of mutual commitment to a shared life

77. There is the evidence of the parties’ electronic communications after they met on the internet.
78. It is the applicant’s evidence that the parties met on the internet in May 2012. She put into evidence the terms of her communications with the respondent by social media on 17 June 2012 and 25 June 2012.

80. There was no challenge from the respondent about the accuracy of the transcript but it was his case that some communications are missing and therefore what is reported is out of context. Without the detail it is not possible to draw any inferences from communications that are not in evidence.
81. The conversations in evidence hold the promise of a future relationship but they occurred prior to the parties meeting face to face, that is to say, prior to the agreed commencement date of the relationship. Importantly, there is no suggestion of written communication between the parties of a similar nature after those initial rounds of correspondence and after the parties met in person and commenced the relationship under consideration.

(g) The care and support of children

82. There are no children of the parties’ relationship.

(h) The performance of household duties

83. It is the applicant’s evidence that she did all of the housework at the Suburb B property, including cooking, washing, laundry and cleaning. Obviously, the parties were living together at the Suburb B property for a very short time.

(i) The reputation and public aspects of the relationship

84. There is scant evidence on this topic.
85. The applicant gave evidence that there was a housewarming party at the Suburb B property in August 2013. Some of her friends were in attendance. There was no challenge to that evidence by the respondent.
86. In February 2013 the parties attended a dinner with members of the applicant’s family in City F, China. During the dinner the applicant’s uncle announced the parties’ engagement to the family. The respondent said that this announcement was made without consultation with him. However, he does not say that he challenged or sought to correct the announcement, whether to the assembled group or to any individual.
87. After attending the applicant’s family celebrations in City F, the parties went on to visit the respondent’s province of G. They stayed there for eight days. During that visit the respondent introduced the applicant to one of his friends, a former workmate. When asked in cross-examination the respondent could not recall how he referred to the applicant on that occasion but he said that he might have referred to her as “girlfriend” or “friend from Australia”.
88. The respondent did not introduce the applicant to any members of his family during the visit despite the fact that his parents were present in that city while the parties were there in February 2013.

CONCLUSION

89. In my view the parties did not have a relationship as a couple living together on a genuine domestic basis. There was the promise of such a relationship in the parties’ early internet communication but that was not born out after their relationship commenced.
90. The parties met on the internet. Their early communications were suggestive of them both having aspirations for a long term, meaningful, personal relationship. They bought a house together, put it in joint names and jointly borrowed for that purpose. They stayed together at those premises and elsewhere during holidays but that amounted to short periods of time and accounted for only a small fraction of the duration of their relationship. They had a sexual relationship when they were together.
91. The respondent did not introduce the applicant to the members of his family and there was evidence that his parents were in the same city in G, China while the parties were there in early 2013.
92. Having found that the nature of the parties’ relationship was not such as to meet the statutory definition, no further inquiry is required. It falls to the applicant to bring the parties’ circumstances within the scope of Part VIIIAB and she cannot. The applicant’s application filed 18 November 2015 will be dismissed.

OTHER ISSUES

93. In case it would be of assistance to the parties in another context I will make some observations about the balance of the case which the applicant had to make. In the event that the nature of the relationship could be brought within the terms of the legislation, given its short duration she had to show that she made “substantial contributions”. In my view she may have been able to do that. She took on the obligations of a $500,000 mortgage and met other outgoings. She negotiated for work to be done on the property and furnished it.
94. In V and K [2005] FCWA 80, Holden CJ was of the view that “substantial” means “something more than usual or ordinary”. That formulation has been followed in numerous decisions. More recently, the Full Court comprising of Thackray, Ryan and Murphy JJ in Harriott & Arena [2016] FamCAFC 69 examined “substantial contributions”. The Full Court said at [62] that their Honours “are not attracted to the ‘something more than usual or ordinary’ definition”.
95. Their Honours noted that although it has been touched on (for example, in Redmond & Mullins [2015] FamCAFC 69) the meaning of “substantial contributions” has not been closely examined by the Full Court of this Court. Their Honours cited authority for the meaning of “substantial” which has been the subject of discussion in other courts. At [63]:
    63. To the best of our knowledge, the meaning of “substantial contributions” has not been the subject of careful consideration by this Full Court, although the matter was touched on in Redmond & Mullins [2015] FamCAFC 69, where V and K was cited. However, the meaning of “substantial” has been the subject of much discussion by other courts. Our review of those authorities indicates support for these observations of Deane J in Tillmans Butcheries Pty Ltd v The Australasian Meat Industry Employees’ Union [1979] FCA 85; (1979) 27 ALR 367 at 382:

The word “substantial” is not only susceptible of ambiguity: it is a word calculated to conceal a lack of precision. In the phrase “substantial loss or damage”, it can, in an appropriate context, mean real or of substance as distinct from ephemeral or nominal. It can also mean large, weighty or big. It can be used in a relative sense or can indicate an absolute significance, quantity or size. The difficulties and uncertainties which the use of the word is liable to cause are well illustrated by the guidance given by Viscount Simon in Palser v Grinling ( … [1948] AC 291 at 317) where, after holding that, in the context there under consideration, the meaning of the word was equivalent to “considerable, solid or big”, he said: “Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can according to the circumstances of each case…

64. Clearly the “substantial contributions” test is a subjective one. Any effort to elucidate its meaning by use of other words or phrases will simply replace one subjective test with another. It will remain a matter of impression whether the contributions are considered to be “substantial”. While recognising that the test is subjective, we are nevertheless inclined to agree with Thackray J, who said in Thorburn and Oswald [2007] FCWA 43 at [54] that a trial judge

would need to interpret the word “substantial” in the context of the financial position of the parties. What might appear to be a “substantial contribution” for people of limited financial resources, might not be substantial in a case involving very wealthy parties.

96. In the circumstances of this case, the applicant’s investment in the Suburb B property was a unique commitment by her. She does not hold a portfolio of investment properties and there is nothing to suggest that but for the respondent’s involvement, she would have made a commitment of the proportions involved here. True it is that she lived in the property but she did not have a free hand to use it as she wished. The respondent would not allow her to rent out rooms, for example.
97. Lastly, the applicant would have needed to demonstrate that a failure to make the declaration would result in serious injustice to her. I have some doubts about whether she could make that case. Presumably the argument would run that by a severance of the joint tenancy under New South Wales law, the applicant would lose the potential allowance for contributions of a non-financial kind and those of homemaker. In this case the latter contributions amounted to something done in four to five weeks, in the context of a relationship of about 18 months duration.
98. Next, she would lose the opportunity for argument in relation to adjustments that might arise from a consideration of the factors in s 90SM(4)(d) and (e). It is far from clear that the applicant would benefit under those paragraphs. In respect to s 90SM(4)(d), there was no evidence about the potential for orders to impact on the income earning capacity of the parties. As to s 90SM(4)(e), the respondent said that he owned two properties, respectively bought some time ago for RMB300,00 and RMB800,000. There is no evidence that the applicant has other real estate but she told the respondent and confirmed in her oral evidence that she has a prospect of inheriting three properties in China. Strangely, the applicant’s mother, who was a witness in her daughter’s case, gave conflicting evidence about that matter. However, the respondent is out of paid employment and has been unemployed since 2014. The applicant is employed as a Manager, and was earning in the order of $50,500 at the commencement of the parties’ relationship in July 2012. In her recent Financial Statement the applicant deposes to earning $1,269 per week, before tax.