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Latest Notable Cases samples

This is a sample (posted 20 May 2018) of "latest notable cases", which is posted monthly with live links for members at the Members' Home Page under Members' Practice News. Also available at our Members' Home Page (along with our E-Book, our up-to-the-minute family law and child support practice news, our online forms and precedents and our free legal help line) is our online members' Archive of all our back issue indexed case notes (assembled by topic and with live links to AustLII), useful papers and client brochures.

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Property – Escort agreed to move interstate with former client in exchange for his buying her a house – His doing so was held to be a gift despite the draw down of funds from his company and her signed acknowledgment of loan – Unconscionability could not arise as he got what he bargained for – Not just and equitable to require her to surrender home – She to repay him $180,000 paid to her as interim property settlement – Maintenance claim dismissed

In Higgins [2018] FamCA 243 (15 February 2018) Cronin J heard a financial case where an escort (the respondent) and her client (the applicant) married, after associating with each other for some years but never living together. Each party lived with a de facto partner and (in the respondent’s case) a daughter too. Meeting in 2006 when the applicant was 64 and the respondent 31 years of age, the latter was initially charging $275 per hour or $1,500 overnight for her services until the end of 2007 when the applicant began supporting her and her daughter by payments for clothes, shoes, cosmetic procedures, plastic surgery, rent and school fees.

The respondent said ([34]) that she was to provide the applicant with “companionship” in return, although she continued working as an escort until 2010 and (at [36]) said that she considered “repulsive” some things about the applicant. In 2010 she agreed to move with him from Brisbane to Melbourne if he bought her a house. A home was bought in her name, financed by his draw down of about $1.1 million structured as a loan from his company “PPL”. After the purchase she signed an acknowledgment of loan in that amount.

The parties married in 2012 (still not living together) but “separated” in 2015. The applicant’s company sued to recover the loan, while the respondent sought a declaration that the property was solely hers. She also sought spousal maintenance.

Cronin J said (from [41]):

“The respondent claimed that she was spending time with the applicant and as a consequence, made ‘sacrifices’ and ‘endured’ his behaviour because of his earlier statement that he would buy her a house. That endurance included talking with him each night that she was away from him and reassuring him of her interest in him by replying to his text or email messages. She bought him gifts but with his credit card. Throughout these periods apart, the respondent continued to live with her partner and daughter and that relationship was always known to the applicant. As such, it defies logic to say that this was anything other than a commercial arrangement except with friendship considerations thrown in.

[42] ( … ) The applicant was besotted with the respondent and generous because she fulfilled his needs. His attachment to the respondent becomes relevant in the next phase of the relationship when he sold his business in F Town and decided to move to Melbourne.

[43] Whilst it appears on the evidence that the respondent was dependent upon the applicant’s largesse, I am unable to determine (and do not need to [determine]) whether the respondent could have, or did, seek other work or other support. Her dependence was a choice with which both parties were content. For so long as she kept him content, she benefitted through the payment of her rent, various sums of money and gifts ( … )

( … )

[48] [As to the proposed moved to Melbourne] … the respondent described a conversation with the applicant in which she said she told him she ‘required’ the anticipated property to be registered in her name so that if something happened to him, she could not lose it. Rather than reject the respondent’s request, the applicant agreed and then said he would also buy a home for himself near the respondent so that they could ‘see each other regularly’. That is exactly what happened.

( … )

[51] The move to Melbourne was therefore always going to be on the basis of her care for the applicant. For him to be so entertained, the applicant had to provide her with the long term security of an unencumbered home. I find as part of this security, he was also content to pay for the respondent’s living arrangements. At no time did he require the respondent to be self-sufficient.”

As to whether the acknowledgment of loan signed by the respondent created a contractual obligation, the Court said (from [134]):

“Whether a contractual relationship arises depends ‘upon all the circumstances’ (Israel v Foreshore Properties Pty Ltd (in liq) (1980) 30 ALR 631) so all of what occurred is relevant.

[135] The applicant referred to Ashton v Pratt [2015] NSWCA 12. ( … )

( … )

[140] Pratt’s case revolves very much around its own particular facts but it highlights the importance of focusing on intention as objectively assessed. The applicant knew that just providing the respondent with a house to enable his ‘wants and needs’ to be fulfilled would not be sufficient because he agreed to contribute towards the respondent’s living costs. Until at least the auction, his promises would not have been legally enforceable using the Pratt approach which I accept. There was no de facto relationship and marriage was not then in contemplation. …

[141] The applicant wanted the respondent close by to continue an arrangement which suited them both and, as I have found, the conversations until at least after settlement were a gift because otherwise, the respondent would not have come to Melbourne.

( … )

[146] In this case, a retrospective view of what occurred does not assist because I accept that the respondent had no intention of committing herself to a legal obligation to repay the applicant or PPL anything.

[147] The conversations between the applicant and the respondent did not refer to a loan until after the settlement of the purchase had taken place. I find that the applicant’s language when raised with the respondent was that the funds of PPL that he took needed to be documented for tax effective purposes. Thus, the only formality and precision of legal language arose when Mr H and Mr K planned the tax structure for PPL.

[148] I consider it is also important to record that, to the extent there were any discussions between the applicant and the respondent, at no time did he indicate that he was discussing, negotiating or offering to make a loan in his capacity as the director of PPL. It is to be remembered that the ‘loan’ was recorded in the books of account. That record does not assist the applicant if he cannot establish that there was an intention to create legal relations. I do not accept that the language used indicates that the respondent was contracting with PPL. I am satisfied she thought the arrangement was just to help out the applicant because of the tax problem. That helping out is, in my view, the same sort of concept considered in Pratt.

( … )

[151] … I find the acknowledgment document did no more than reflect that the respondent was agreeing to be used as part of the structure to assist the applicant to avoid the inevitable consequences [Ed. including Division 7A consequences] of his drawing down of the funds of PPL before his advisers had decided what to do.

( … )

[174] [Queens counsel for the respondent] … submitted the court ought to accept this was not a loan but a gift. He submitted that … one should conclude that the applicant had never raised with the respondent anything about any loan or encumbrance prior to the auction and that therefore it was improbable that he did so at the time he alleged it arose. It was submitted that the solicitor’s file note shows the improbability of the applicant’s position. I accept that.”

As to the question of an equitable trust argued for the applicant, Cronin J said (from [175]):

“Insofar as the applicant and/or PPL assert some form of trust [Queens counsel for the wife] … submitted that the evidence established that the respondent moved to Melbourne thereby displacing her family and there was little dispute about the way the purchase of the house in B Street was effected. He submitted that subsequent changes could not alter the gift and that therefore, no form of constructive trust could arise. I accept that too.

( … )

[179] … Unconscionability was said by Jessel MR in Lyon v Tweddell [1881] 17 ChD 529 at 531 (quoted by Deane J in Muschinski v Dodds [1985] HCA 78 … and explained by the High Court in Baumgartner [[1987] HCA 59], to be determined by a court guided by equitable principles, not by any idiosyncratic, unstructured or untutored concepts of unconscionability. Having found that the applicant made the respondent a gift, unconscionability cannot arise. The applicant always intended the respondent to have the home and it was at least his intention that, at various times, she would look after him.

[180] The applicant knew the respondent had no money and was living with her partner and child. In my view, unconscionability therefore cannot arise because the applicant got what he bargained for.

( … )

[183] On the findings I have made, the intention of the applicant in providing the money, was that the house was intended to be beneficially owned by the respondent. There could be no suggestion of a presumption of advancement here because the parties had never lived in a de facto relationship. Even if one might contemplate that a loan arose subsequently, it was never suggested that the house was encumbered by that loan.

( … )

[210] If unconscionable conduct is a stand-alone concept, it cannot assist the applicant because of what I earlier said but it can guide and influence the exercise of discretion. I find there was no special disability here; this was a commercial arrangement. The humorous banter between the parties in Brisbane might have indicated some form of dependency on the part of the applicant but he was prepared to buy the necessary affection he craved. It was later that he saw his needs being acquired in the same way by the gift of a house because without it, he would not have had the person to whom he had become attached, nearby. That arrangement was therefore a commercial one for his convenience. I do not find there is any basis to presume any disability here at all. There was no manipulation or unconscionability on the part of the respondent … Here, the marriage did not change anything.

[211] In Stanford (supra) [(2012) 247 CLR 208], the High Court whilst contemplating s 79 made reference to the principles in s 43(1) including that the court had a role designed to protect the institution of marriage. Here, the parties never intended their marriage to be for the purposes of the protection of a relationship in the sense of a marriage. Their relationship had a distinct commerciality about it.

[212] In my view, it would not be just and equitable to alter the respondent’s interest in her house on the basis of the contribution made by the applicant and that he somehow did not get what he bargained for.”

The respondent’s application for spousal maintenance was dismissed and she was ordered to repay $180,000 paid to her as an interim property settlement (no final property adjustment order being made).

NOTE – A further 6 cases are summarised for members this month at our Members’ Home Page under “latest notable cases” under the following headings:

Property – De facto thresholds – Evidence that parties “presented as a couple” is meaningless – Mere denial without offering contrary evidence also inadequate – Regular attendances together at family Christmases and birthdays did support trial judge’s finding of a de facto relationship

Property – Judge’s labelling of debt as “matrimonial” and “not matrimonial” was inappropriate – Exclusion of husband’s post-separation tax debt was in error (as was the equal division of superannuation without allocating a base amount or giving procedural fairness to trustee)

Children – Reversal of care to father after a finding of alienation by mother – Mother’s time not to commence for four weeks – Appeal by father in which he argued for a moratorium of 36 months (or as recommended by the single expert) dismissed – Held that it was open on the expert’s evidence for the court to use its discretion to suspend maternal time for one to six months

Children – Rehabilitated alcoholic mother was granted her application for 7 year old daughter to move from paternal grandmother’s care in Perth to hers in Sydney

Spousal maintenance – Wife’s interim application to reside in jointly owned investment property at husband’s expense treated as an interim maintenance application – Sole occupancy granted subject to vacant possession by tenant and wife contributing $180 per week towards mortgage repayments

Child support – Enforcement – Leave granted to payer to apply for departure order – His late lodgment of tax returns created arrears of $10,575.82 – Redundant father caring for children for 150 nights a year successfully reduces child support to nil