Rowston v Dunstan  NTSC 09
PARTIES: GEOFFREY BRUCE ROWSTON
TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO: 88 OF 2009 (20920654)
DELIVERED: 3 FEBRUARY 2011
HEARING DATES: 8, 9, 12 NOVEMBER, 14 DECEMBER 2010 AND 10 JANUARY 2011
JUDGMENT OF: MASTER LUPPINO
De facto relations – Existence of a de facto relationship – Commencement of de facto relationship – Adjusting property order – Allowance for capital gains tax.
Hayes v Marquis  NSWCA 10.
D v McA (1986) 11 Fam LR 214.
Jones v Dunkel (1959) 101 CLR 298.
Kardos v Sarbutt (2006) 34 Fam LR 550.
Evans v Marmont (1997) 21 Fam LR 760.
Parker v Parker (1993) 16 DFC 95-139.
Ottley v Chester  NTSC 38.
Mallet v Mallet (1984) 156 CLR 605.
Pierce v Pierce (1999) FLC 92-844.
NCH v RCH (2004) 32 Fam LR 518.
Biltoft (1995) 19 Fam LR 82.
Bland (1994) 19 Fam LR 325.
Harrison (1996) 129 FLR 74.
Rosati  Fam CA 38.
De Facto Relationships Act (NT) s 3A, 18.
Plaintiff: Ms Truman
Defendant: Mr Black
Plaintiff: Marris & Co
Defendant: Cecil Black Family Lawyer
Judgment category classification: B
Judgment ID Number: LUP1101
Number of pages: 33
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
Rowston v Dunstan  NTSC 09
GEOFFREY BRUCE ROWSTON
CORAM: MASTER LUPPINO
REASONS FOR DECISION
(Delivered 3 February 2011)
 This is an application pursuant to the De Facto Relationships Act (“the Act”) seeking an order adjusting the respective property interests of the parties.
 The prerequisite conditions for the making of an order specified in sections 14, 15 and 16 of the Act are admitted.
 Both parties agree that there was a de facto relationship and that it ended on 10 March 2008. The commencement date is in issue. The Plaintiff alleges that the relationship commenced in 1991. Although the Defendant admits they were in a close personal relationship as boyfriend and girlfriend from 1991, she asserts that the relationship commenced in November 1999.
 The Defendant’s evidence is that at the time she met the Plaintiff she was still living with her ex husband albeit that the marriage was faltering. The Plaintiff’s version is the Defendant and her ex husband had effectively separated and were living separate lives under the same roof.
 Although the Plaintiff agrees that he moved in with the Defendant at her home in Karama in November 1999, he maintains that the parties were in a marriage like relationship from about 1991. At that time the Plaintiff owned and lived in a house at Conigrave Street Fannie Bay. The Plaintiff agrees that the Defendant maintained her own residence in Karama at that time. The Plaintiff claims, and the Defendant denies, that the Defendant stayed with him most evenings until approximately 5 am when she would return to her home so that she was home when her young children woke.
 The Plaintiff asserts that a sexual relationship commenced shortly after the parties met in November 1991. The Defendant disputes that and says that a sexual relationship only commenced 6 months later. As this is well before the date the Defendant alleges is the commencement of the de facto relationship, little turns on the difference between the evidence of the parties on this issue.
 Despite asserting that the relationship commenced in 1991, the Plaintiff says that he maintained a separate residence until he moved in with the Defendant in November 1999. After selling the Fannie Bay home in November 1992 the Plaintiff purchased a house in Anula. He said that the Defendant and her children would regularly stay there overnight and for a short period they resided there permanently. After selling the Anula home in October 1994 the Plaintiff rented accommodation for a total period of approximately five years before moving in with the Defendant in November 1999. The Plaintiff claims that despite having these separate residences, from approximately May 1995 he stayed with the Defendant virtually every night. He said that those rented residences were kept largely for storage purposes as the Defendant’s home was not large enough to accommodate all of his possessions.
 One of the rented premises was a home in Northlakes. This was rented between May 1995 and March 1997. The Plaintiff said that while renting that home, after finishing work on weekdays he would drive to that home, change and then walk to the Defendant’s home where he would stay until the following morning. He would then walk back to the Northlakes home in the morning where he would get ready for work and then drive to work from there.
 The Plaintiff alleges that throughout the period of the relationship the Plaintiff and the Defendant were a typical couple in terms of their social life. The Defendant denies that and says, particularly up to 1999, that their interaction was occasional, it was not constant and was a boyfriend and girlfriend dating relationship rather than a marriage like relationship.
 In terms of domestic matters, relevant both to the issue of the existence of the relationship before 1999 and also to the issue of contribution generally, the Plaintiff says that he and the Defendant shared the household tasks. Again the Defendant denies this. The Plaintiff says that he paid for virtually all of the expenses of him and the Defendant and, to a lesser extent, for her children. He said this covered food, alcohol, motor vehicle expenses, entertainment, house repairs and maintenance, the payment of holidays and trips, travel for the Defendant’s parents from the Philippines and the purchase of furniture and other household items. The Plaintiff went into great detail in this respect.
 The Plaintiff had by far the greater income of the two. In the 1991 financial year his pre tax income was approximately $80,000. The amounts he deposed to for the period 1995 to 2008 show an average annual pre tax income over that period of approximately $64,000. The Defendant only began working in 1995, mostly in low paid jobs such as child care and working in a supermarket. Although she received child support from her ex husband and received Centrelink benefits at times, the evidence shows that her average annual pre tax income over the period of 1999 to 2008 was $21,000.
 Since the evidence of the parties was in direct conflict on the main issue, I now express my views concerning the reliance to be placed upon the evidence of the each of the parties. In the case of the Plaintiff there were parts of his evidence which I considered implausible. His evidence as to how he came to borrow money to purchase the house in Anula and what happened to the proceeds of sale of the Fannie Bay property cannot be accepted. In respect of the latter he is unable to account for what happened to approximately $115,000.
 Similarly he is unable to recall what he did with the net proceeds of sale of the Anula property which were approximately $30,000. The Plaintiff is a financial adviser by occupation. Although these are peripheral credit issues in that nothing turns on the disposal of those funds, it is difficult to accept that he could claim to not recall what he did with such large amounts of money despite the length of time that has elapsed, particularly given the Defendant’s allegation that the Plaintiff was a gambler.
 The Plaintiff’s claim to having rented homes largely as a storage facility is difficult to accept. Apparently the prospect of simply renting storage space did not occur to him until shortly before he finally moved in with the Defendant. At that time he said that he rented some storage space for some of his personal effects. That whole explanation is implausible.
 The other reasons given for maintaining a separate residence do not sit well with other known facts. The first reason was that the Defendant was in the process of finalising matters with her ex husband. However it appears that October 1994 was a convenient time for the Plaintiff to move in permanently with the Defendant. The Plaintiff had just sold the Anula property and the Defendant had finalised matters with her ex husband in May of that year.
 The second reason was due to the Plaintiff’s financial position. He became bankrupt in September 1996 although the bankruptcy was annulled in December 1997. He said that he wished to maintain the impression of a separate life to the Defendant to protect her from his financial plight. Why this was necessary or how this was achieved was not made clear. In any event it alone cannot account for why the Plaintiff continued to rent premises until November 1999. That is two years after his bankruptcy was annulled.
 The Plaintiff also exhibits poor recall of sizeable infrequent draws of money, some of which are proximate to the date of separation. I would have expected a better level of recall. Notwithstanding that lack of recall and detail he positively asserts that all of the expenditure was for “lifestyle” for himself and the Defendant. I find it difficult to accept that a financial planner could be so vague in this respect. It is curious in light of that that he could claim specific recall of an expenditure of $80 for a restaurant account many years before the separation. It is also odd that there is such lack of supporting documentation. All the Plaintiff has managed to produce is three receipts for expenditure.
 Also questionable is the Plaintiff’s assertion that an investment property purchased by the Defendant in Gunn was put solely into the Defendant’s name for tax purposes. His evidence is that the Defendant received a tax advantage by doing so. As far as I am aware that can only occur if the property was negatively geared. In a negative gearing situation the higher the income tax bracket of the owner, the greater the negative gearing advantage. Hence if that were a motivation for the acquisition of the property then I would have expected that it would at least be in joint names.
 There were however more criticisms of the Defendant’s evidence. She disputed, largely with only bare denials, the Plaintiff’s financial contributions. She dismissed the Plaintiff’s purchase of furniture and other household items, the performance of gardening work by the Plaintiff including his purchase of plants, his payment of entertainment and household expenses. I thought those were matters that an objective witness would have conceded. Of those she conceded, she played down their significance.
 For example, when questioned about various trips that the Plaintiff claims to have paid for her, her responses were that she did not ask for that or that she did not want to go on the trip or that she did not need to go. One of those trips was to the Philippines where the Plaintiff paid for them to stay at hotels. When challenged about that expenditure her response was that she would have been happy to stay with her family. Her actions belie that, given that she conceded that she stayed at the hotel with the Plaintiff.
 Likewise in respect of her denials of homemaker and other contributions by the Plaintiff. It is clear that the Plaintiff has purchased a number of items of a household nature or provided them for use by the family. Some are less significant such as DVD or CD players. Some are more significant such as air conditioners, a refrigerator and a stove. Apparently the Defendant’s ex-husband retained the refrigerator after the property settlement and the Defendant had no refrigerator. The Plaintiff then purchased one. The Defendant says that she did not ask the Plaintiff to do that and that she was happy not to have a refrigerator. Similarly in respect of the stove. The Plaintiff apparently replaced it as one of the elements was broken. The Defendant maintained that she was happy with the existing stove and the expenditure was simply the Plaintiff’s choice.
 Another instance is the electrical repairs. Apparently the lighting in the Defendant’s house was inadequate or not functioning properly. The Defendant’s position is that she was happy with it the way that it was and it was simply the Plaintiff’s choice to organise that expenditure, despite conceding that the lighting was inadequate for her children’s study needs.
 The most obvious example is in relation to the provision of bedding. Following her property settlement the Defendant did not have a bed, nor did her children. They were sleeping on the floor. The Plaintiff therefore provided bedding for her and her children. The Defendant conceded that he did so and conceded that she then slept on the bed as did her children. Despite that she categorises the provision of the beds as simply solving a storage problem for the Plaintiff. I think it adversely impacts on the Defendant’s credibility that she demeans the Plaintiff’s contributions in this way.
 Her evidence in relation to the acquisition of the investment property in Gunn is also telling. Her evidence is that this was entirely her decision and that the Plaintiff was not consulted and had no input into it. The Plaintiff’s evidence is that he provided assistance and advice as to the selection of the property, the benefits of a DHA tenancy and in relation to the application for finance and the like. It is easy to prefer the Plaintiff’s evidence in that regard. It is implausible that the Defendant, being a relatively unsophisticated person wishing to purchase an investment property and living with a financial adviser, would not seek the Plaintiff’s advice. The Plaintiff’s evidence is objectively plausible in my assessment.
 As was the case with the Plaintiff’s evidence, there were also instances where the Defendant claimed a lack of recall of the expenditure of significant sums of money. Although significantly greater amounts were involved in the case of the Plaintiff, there were more instances in the case of the Defendant and they were more recent. The instances I refer to are an expenditure of approximately $10,000 in September 2000, $5,500 in August 2000, $9,000 in April 2001, another $10,000 in October 2001, $3,350 in November 2003 and $1,800 between October and November 2004.
 Very telling in respect of the Defendant’s credibility was her steadfast refusal to concede the financial contributions by the Plaintiff or her relentless demeaning of any contribution that she did concede. The situation was neatly summarised by Ms Truman, counsel for the Plaintiff, in her submissions where she said that despite a relationship of at least 10 years, despite the Plaintiff’s significantly greater level of income, despite the Defendant having a low pre tax income during relevant periods, the net result is that after the separation the Defendant has net assets of approximately $750,000 and by comparison the Plaintiff has only debts in excess of $100,000.
 The evidence that this submission is based on reveals that the Defendant has managed to save large sums of money and to make additional payments on her mortgages. This is despite denying any significant financial contribution by the Plaintiff, despite having a level of income which at times entitled her to welfare benefits as a supplement, and despite that she had two young children to support, albeit that she did receive some child support.
 Some examples highlight this. Her property settlement with her ex-husband resulted in her acquiring the entire interest in the Karama home in May of 1994. It was then subject to a mortgage of $34,000. Notwithstanding that her income then was largely in the form of welfare benefits and that she did not start working full time until 1998, the mortgage was paid off by January 2000. Her pre tax income in 1998/1999 was approximately $22,200 and in 1999/2000 it was approximately $20,800.
 In 2002 the Defendant expended $13,000, funded by credit card, on improvements to her Karama home with a view to accommodating her parents at a future time. Her pre tax income for the financial year ending 30 June 2003 was approximately $18,000. Allowing for taxation it is clear that without financial assistance she could barely survive let alone afford to spend $13,000 on improvements.
 Bank records indicate that in a seven month period ending November 1997 the Defendant had accumulated approximately $4,500 in savings. Her level of pre tax income in the relevant financial year again was only enough to barely survive on. Similarly documentation indicates that up to August 1998 she managed to save $6,000 approximately in the preceding nine months despite only commencing full time employment in that year. Similarly up to December 1999, and in the preceding five months, she saved $4,000. Her pre tax income for the financial year ended June 2000 was approximately $20,000.
 Records in respect of the mortgage for the Karama property indicates that in a five month period up to December 1999, when her pre tax income was approximately $20,000, she made approximately $5,300 in additional repayments on her mortgage. That represents approximately 25% of her pre tax income for that year.
 The evidence also suggests that the Defendant has made substantial extra payments on the mortgage for the Gunn property over the eight plus year life of that loan. Although the evidence is not entirely clear as to the precise amount involved, suffice it to say that it is significant enough to question the Defendant’s claim of lack of contribution by the Plaintiff.
 In the period between September 2006 and May 2007 the Defendant’s bank records showed only one withdrawal of $100. Her pre tax income for that financial year was approximately $16,000. Absent evidence of her expenditure from other sources, and she produced none, clearly household expenses must have been paid by another source.
 I had other concerns about the Defendant’s evidence. She raised matters for the first time during cross-examination. Firstly, that she was of the view that the Plaintiff did not treat the relationship as being exclusive. That was not put to the Plaintiff in cross-examination. Secondly, that some of the funds that she had were provided to her by her family in the Philippines. This related to a sizable amount. There was no mention of that in her affidavit, nor in her evidence in chief. It also was not put to the Plaintiff during his cross-examination. Thirdly, the Defendant claimed that the Plaintiff had left her in 2005 but later begged her to allow him to come back. Again there was no mention of this in her affidavit and again it was not put to the Plaintiff. Such evidence was very important having regard to the issues in the case. She acknowledged the importance of that evidence but denied that she was making things up as she went along. I think the converse is indicated.
 There were also many indications that the Defendant’s evidence was rehearsed. The main instance was when she was cross-examined about events occurring in 2004 and she denied the parties were then in a de facto relationship. That had been conceded as part of her case. By way of explanation, the Defendant then claimed confusion about the meaning of “de facto”. That I consider implausible given the issues in the proceedings. That term must have been explained to her on numerous occasions before then. All of that suggests that her evidence was rehearsed. Her refusal to make the obvious concession about the Plaintiffs financial contributions is consistent with that assessment.
 Mr Black submitted that the Defendant should be preferred as her evidence was more believable and that she steadfastly maintained her position. Although the latter is true, the Defendant’s credibility cannot benefit if she steadfastly maintains an untenable position. I think the converse is true. Mr Black also submitted that the current financial plight of the Plaintiff is a basis for preferring the evidence of the Defendant as the Plaintiff has the greater motive for lying. I do not consider it appropriate to base the assessment of credit on motive. In most cases, there is motive on both sides. This case is no different. The Defendant has ample motive for lying about the extent of the Plaintiff’s contributions namely, to keep as much of the assets as possible.
 Although neither party emerged as a witness whose credit remained untarnished, this was much less so in the case of the Plaintiff. His evidence of contributions were largely consistent with the objectively provable facts. The level of the Defendant’s savings and expenditure are indicative of the availability of some external funds and that sits well with the Plaintiff’s version. Notwithstanding that, the Defendant steadfastly maintained any significant contribution by the Plaintiff but otherwise gave no legitimate explanation.
 The Defendant was also vague and evasive in her responses such that on one occasion I had to intervene and direct the Defendant to answer questions. Overall I thought the Defendant was an unsatisfactory witness. For these reasons, in general terms and save and accept where there is some corroborating objective evidence to support the Defendant’s version, I prefer the evidence of the Plaintiff to that of the Defendant wherever the two conflict.
 Based on that assessment of credit, I now consider the evidence to firstly determine the commencement of the de facto relationship.
 Section 3A of the Act sets out the factors that need to be taken into account in determining whether a de facto relationship exists. That section provides as follows:-
3A De facto relationships
(1) For this Act, 2 persons are in a de facto relationship if they are not married but have a marriage-like relationship.
(2) To determine whether 2 persons are in a de facto relationship, all the circumstances of their relationship must be taken into account, including such of the following matters as are relevant in the circumstances of the particular case:
(a) the duration of the relationship;
(b) the nature and extent of common residence;
(c) whether or not a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e) the ownership, use and acquisition of property;
(f) the degree of mutual commitment to a shared life;
(g) the care and support of children;
(h) the performance of household duties;
(i) the reputation and public aspects of their relationship.
(3) For subsection (2), the following matters are irrelevant:
(a) the persons are different sexes or the same sex;
(b) either of the persons is married to another person;
(c) either of the persons is in another de facto relationship.
 I was referred to various authorities. Firstly Hayes v Marquis a decision of the New South Wales Court of Appeal. In that case, dealing with a similar provision to section 18 of the Act in the New South Wales legislation, the Court said that the determination of the existence of a de facto relationship turns on an evaluation of the nature and extent to which they share a household and that it is ultimately a value judgment having regard to the indicia in the legislation to determine whether there is a relationship which fulfils the definition as a whole. It was also held that the question whether the statutory relationship exists is fact dependent and requires a practical approach. The concept of “living together” does not require the parties to live together fulltime.
 Further in D v McA Powell J said that the determination involves the Court in making a value judgment having regard to the factors set out in the legislation.
 Section 3A lists various factors which have to be taken into account. Determining whether two persons are in a de facto relationship requires consideration of all of the circumstances. It is clear from section 3A of the Act that a number of features of the current case are not conclusive. For example section 3A(3)(b) makes the fact of the Defendant’s marriage to another person irrelevant.
 The factors in sub-paragraphs (b)-(i) of section 3A(2) of the Act are particularly relevant to the current matter. Section 3A(2)(b) makes “the nature and extent of common residence” a relevant factor. That it is only a factor and not a mandatory requirement supports the view that parties do not necessarily need to cohabit to be in a de facto relationship. However, broadly speaking and in conjunction with the factor in section 3A(2)(f), in ordinary circumstances the existence of the separate residences is something which runs counter to the existence of a de facto relationship. I have assessed the Plaintiff’s explanations for maintaining separate residences as being implausible. However, the extent of common residence is not conclusive and it remains open to find that a de facto relationship existed notwithstanding the extent of common residence in this case.
 The existence of a sexual relationship is also a relevant factor by reason of section 3A(2)(c). There has been very little evidence as to the sexual nature of the relationship. The only evidence is as to the commencement to the sexual relationship. The Plaintiff asserts that it commenced almost immediately whereas the Defendant says that a sexual relationship commenced after a period of approximately six months. Based on my assessment of the credibility of the parties, I prefer the evidence of the Plaintiff to that of the Defendant on this issue. In any event, the existence of a sexual relationship is established and whether it occurred immediately or after six months has little impact in my view. The absence of any other evidence concerning the nature of the sexual relationship leads me to conclude that it was a typical sexual relationship throughout and therefore that supports the existence of a de facto relationship.
 As to the financial interdependence (section 3A(2)(d)), the evidence is strongly in favour of the Plaintiff’s position. Put simply the Defendant’s version that the Plaintiff contributed little financially cannot be maintained. On my assessment of the evidence his financial contribution was significant and coupled with the Defendant’s otherwise frugal lifestyle, they enabled the Defendant to build up assets. I am satisfied that without the financial contribution of the Plaintiff, the Defendant would certainly not have managed to pay off the mortgage on her Karama home as quickly as she did, if at all. Indeed she may well have struggled on her income to meet the payments and to meet the needs of herself and her children. The extent of the payments made by the Plaintiff goes well beyond what would be expected in a boyfriend and girlfriend relationship.
 As to homemaker type contributions referred to in section 3A(2)(h), although the Defendant had the greater homemaker contribution, there were also contributions by the Plaintiff sufficient to support the existence of a de facto relationship. The disparity in the contributions does not detract from the existence of a de facto relationship. Rather it is a matter of contributions and the balancing exercise. Overall there is sufficient commonality and sharing of homemaker contributions to support the existence of a de facto relationship.
 As to the degree of mutual commitment to a shared life (section 3A(2)(f)), the Defendant submits that the fact that the Plaintiff maintained separate accommodation pre 1999 runs counter to this factor and that position is arguable. However this needs to be looked at in conjunction with my findings as to the nature and extent of common residence. In addition, the Defendant agrees that early on in the relationship, in early 1992, the Plaintiff paid for her to attend her sister’s wedding interstate. She also conceded that the Plaintiff paid for her to attend as a support person when he travelled interstate for the purposes of his son’s surgery. This is a strong indicator of a mutual commitment to a shared life. The Defendant maintains that the relationship was a boyfriend and girlfriend relationship at those times, however I consider that this goes beyond what would be expected in a boyfriend and girlfriend dating relationship only.
 As to the indicia of reputation and public aspects of the relationship per section 3A(2)(i), the Defendant’s position is that there is no evidence of this pre 1999. However reference had been made to the possibility of corroborating evidence on this from two persons. Firstly and in the Plaintiff’s camp, from Mr Bill McLean. He was not called to give evidence and an appropriate explanation for that i.e., his absence overseas, was given. The Defendant has referred to a friend (Hiroti) and it seems to me that she might have been able to give some evidence in respect of this factor. Likewise, in the case of another of the Defendant’s friends, namely Nita Sturgess. Indications were given that Nita Sturgess was to be called. An affidavit by her had been prepared and served. At the time that Mr Black closed his case I was simply told that her evidence would not be relied upon and that she would not be called. I was given no explanation for that. Ms Truman, rightly in my view, submitted that I should draw an appropriate inference based on Jones v Dunkel. I am prepared to draw an inference that had Hiroti or Ms Sturgess been called, their evidence would not have supported the Defendant’s case.
 With that background there is little evidence otherwise of the public reputation aspect. There were references to outings at entertainment venues or for dinner outings but other than that it seems that the parties largely kept to themselves. That of itself does not detract from the existence of a de facto relationship. The evidence in relation to this factor is therefore neutral at best from the Defendant’s point of view.
 Looking at the evidence broadly and making the required value judgment, in my view having accepted the evidence of the Plaintiff, the application of the available evidence to the principles in section 3A(2) indicates the commencement of a relationship shortly after November 1991.
 On that basis I now turn to consider the evidence in relation to an appropriate adjusting order. The power to make that order derives from section 18 of the Act which provides as follows:-
18 The order for adjustment
(1) The order which a court may make under this Division with respect to the property of de facto partners or either of them is such order adjusting the interests of the partners in the property as the court considers just and equitable having regard to:
(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the partners to the acquisition, conservation or improvement of any of the property or to the financial resources of the partners or either of them; and
(b) the contributions (including any made in the capacity of homemaker or parent) made by either of the partners to the welfare of the other partner, or to the welfare of the family constituted by the partners and one or more of the following:
(i) a child of the partners;
(ii) a child accepted by the partners or either of them into the household of the partners, whether or not the child is a child of either of the partners; or
(iii) any person dependent on the partners who has been accepted by the partners or either of them into the household of the partners.
(2) A court may make an order in respect of property whether or not it has declared the title or rights of a de facto partner in respect of the property.
 The exercise of the jurisdiction in section 18 of the Act, per Kardos v Sarbutt and Evans v Marmont, involves three main steps. Firstly, the identification and valuation of the property of the parties which may be subject to an adjustive property order. Secondly, the evaluation and balancing of the respective contributions of the parties. This step typically results in an apportionment between the parties on a percentage basis of the overall contributions. Thirdly, the determination of the order required to recognise and compensate the parties for those contributions which is typically in line with the percentage determined by step two.
 The identification and valuation of the property of the parties is usually undertaken at the date of trial (Parker v Parker and Kardos v Sarbutt and Ottley v Chester). In cases where there have not been ongoing contributions by one party which have benefited the other party since separation, it may be appropriate to adopt the date of separation as the appropriate date. (Kardos v Sarbutt). In the current case, the identity and value of the property of the parties subject to an adjusting order is largely agreed.
 As to the evaluation and balancing of the contributions, there are a number of recognised principles which are applied in the course of this step. These are:-
· Contributions before cohabitation commences and those post separation and before trial are relevant (Kardos v Sarbutt).
· The Court is not required to approach the exercise of its discretion analogous to the taking of partnership accounts, rather it is preferable that the Court makes a holistic judgment in the exercise of a discretionary power of a general kind (Kardos v Sarbutt).
 In the course of the third step, the Court is concerned with what is just and equitable having regard to, and only to, the respective contributions of the parties of the type referred to in section 18 of the Act without regard to factors such as the respective needs of the parties (Evans v Marmont).
 The erosion principle has application in the current matter in respect of the Karama house. The effect of the erosion principle is that the significance of an initial contribution may be diminished over time, particularly in a long relationship, once all other contributions, including non financial contributions, are taken into account (Pierce v Pierce). This effectively involves an assessment of the weight to be attached to the initial contribution.
 At the commencement of the relationship the Plaintiff owned a house property at Conigrave Street Fannie Bay which was fully furnished at the time. That property was sold in November 1992 for approximately $195,000 yielding a balance of approximately $115,000 after discharge of the liabilities secured on that property. The Plaintiff claims he cannot recall what happened to the proceeds of sale of the Fannie Bay property. There is no evidence to show that these funds are a contribution by the Plaintiff for the purposes of section 18 of the Act.
 The Plaintiff then purchased a home in Driffield Street Anula in March 1993 for approximately $130,000. Virtually the entire purchase price was borrowed. The Plaintiff sold the Anula property in October 1994 and he was left with approximately $30,000 after payment of the liabilities. Again that has not been accounted for. Again, there is no evidence to show that these funds are a contribution by the Plaintiff for the purposes of section 18 of the Act.
 At the commencement of the relationship the Plaintiff also had a 1987 motor vehicle which he claims he gave to the Defendant to drive during the course of the relationship. For his own transport he acquired a cheaper motor vehicle and that was subsequently traded on the purchase of a 2004 Kia Carnival. That last mentioned motor vehicle cost $26,600 and was funded partly by way of sale of shares and the balance by credit card.
 The Plaintiff has been self employed as a financial adviser throughout. He currently conducts his own business. His income is derived from commissions generated from a register of clients which is owned by AMP and which he leases. He says that there is no value in the business itself. He currently earns approximately $55,000 per annum.
 At the commencement of the relationship the Defendant had an interest in the house property at Karama. That was jointly owned with her ex husband. That property was transferred to her as part of a property settlement in June of 1994. The value of the property for that purpose at that time was $137,000 and it was subject to a mortgage of approximately $34,000.
 The Defendant also owned a 1986 Toyota van at the commencement of the relationship but there was no evidence of its value.
 In 2002 the investment property in Gunn was acquired in the Defendant’s name only. That property cost $261,000 and was fully financed by mortgage. The loan on the property was increased by $55,000 in 2005 so that the Plaintiff could pay a tax debt. The Plaintiff asserts that he has been making payments based on that amount proportional to the overall loan since then.
 The current assets, liabilities and financial resources of the parties, with agreed values, or values as I find them, in round figures, are:-
1. Karama property $465,000
2. Gunn investment property 560,000
3. Celica motor vehicle 1,200
4. Kia motor vehicle 9,000
5. Plaintiff’s Commonwealth Bank account 5,500
6. Plaintiff’s AMP easy saver account -
7. Defendant’s Australian Central Credit
Union accounts 10,700
8. Defendant’s AMP Investment Builder accounts 19,000
9. Defendant’s Westpac Rocket account 5,900
10. Defendant’s Commonwealth Investment Portfolio 20,300
11. Defendant’s AMP shares 5,100
12. Defendant’s share of bank account
with S LuDizon 1,000
13. Plaintiff’s AMP superannuation 12,200
14. Defendant’s AMP superannuation 22,100
15. Defendant’s REST superannuation 3,500
16. Defendant’s motor vehicle 8,500
 The liabilities comprise:-
1. Westpac Mortgage over Gunn property $280,000
2.Defendant’s credit cards 9,100
3.Plaintiff’s credit cards 118,400
4.Plaintiff’s ATO debt 5,400
5.Plaintiff’s BAS debt 5,100
 In terms of the appropriate approach to take to the question of the adjusting order, in my view the global approach is the preferred approach in this case. A number of issues were raised which require consideration before determining the pool of assets. The first relates to the Plaintiff’s BAS debt. That debt arises as a result of the income derived by the Plaintiff. It is this same income which the Plaintiff says that he applied to the parties’ lifestyle and from which his financial contributions were made. In my view it should be treated in that same way as income tax and accordingly it should be included in the liabilities for the purposes of determining the net value of the pool. Likewise in the case of the Plaintiff’s tax debt.
 The Defendant purchased a motor vehicle for approximately $20,000 post separation. This was financed by extending the mortgage over the Gunn property by approximately that amount. Mr Black submits, on authority of NCH v RCH that parties are entitled to continue to provide for themselves and are not obliged to account for all post separation dealings. He maintains that the Defendant’s expenditure on the motor vehicle was necessary and reasonable as it was not an expensive motor vehicle. I agree and I have therefore included the asset and the related liability in the list of assets and liabilities.
 Next the credit card debts of the Plaintiff. Mr Black submitted, based on Evans v Marmont that I should take into account economic mismanagement and disregard them. He was critical of the extent of the credit card debt incurred by the Plaintiff particularly because of the high interest rate that credit cards attract. He submitted that I should disregard all of the Plaintiff’s debts on account of mismanagement and the lack of proof as to the expenditure. He argued that there was insufficient proof as to how the debts were incurred or how they related to the relationship. He relied on Biltoft as authority for the proposition that liabilities can be wholly or partly disregarded on this basis. By lack of proof, Mr Black presumably means a lack of corroboration given that the Plaintiff’s evidence is proof if accepted. I have accepted that evidence and Mr Black’s submission is untenable in light of that and I reject it.
 However, although I have accepted the Plaintiff’s evidence as to the nature of the expenditure in general terms, his evidence as to the amounts expended is vague and the amounts claimed are prima facie excessive. I cannot accept that the extent of the debt claimed over the period it was incurred can all be attributable to expenditure on the relationship absent some better evidence or supporting documentation. In my view an appropriate adjustment needs to be made for non relationship expenditure and I think a 20% deduction is appropriate.
 Mr Black also submitted that the Gunn property should be disregarded for the purposes of an adjusting order. He submitted this on a number of bases. Firstly the Gunn property was only able to be purchased by utilising the Karama property as security and he submits that 75% of the value of the Karama property represents the Defendant’s contributions alone. I cannot accept Mr Black’s proposition. I think that is an over simplistic view of the relative contributions of the parties. On my findings and having accepted the Plaintiff’s evidence of his substantial contributions and expenditure on account of the relationship, he has a significant indirect contribution to the Karama property.
 Secondly Mr Black argued that the Gunn property should be disregarded due to the Plaintiff’s lack of involvement with the purchase. The evidence in this respect was highly contentious. I have accepted the Plaintiff’s version. As such not only do I find that the Plaintiff was involved in the decision to purchase the property and in respect of the necessary arrangements, he additionally has the indirect financial contribution by his contributions to the relationship expenditure.
 Therefore the Gunn property forms part of the pool. The Defendant has made contributions by way of payment of stamp duty and acquisition expenses. This was paid from funds derived from her child support payments. The Plaintiff cannot claim an indirect contribution in respect of those amounts and therefore an appropriate adjustment should be made. I have allowed for that when determining the appropriate percentages for division.
 Considering now the application of the erosion principle in respect of the Karama house, its significance is more apparent given my finding as to the commencement of the relationship. Even with some allowance on that account, the more substantial contribution in respect of that property lies with the Defendant. That property has greatly appreciated in value over the last 10 years and in my view this impacts on the appropriate allowance for erosion.
 I have come to the conclusion that the appropriate allowance for erosion can be set off in the balancing of the financial and non financial contributions. The Defendant has made the greater non financial contribution during the relationship particularly up to the time that she commenced employment. Taking a broad global approach, a set off is appropriate.
 An adjustment has been claimed by the Plaintiff to reflect that the Defendant has remained in occupation of the Karama home since separation while he has had to pay rent. I think that approaching this adjustment based on the rent paid by the Plaintiff for alternate accommodation is appropriate. The Plaintiff’s evidence is that he has paid rent since separation on 10 March 2008 at the rate of $360 per week. Total rental on my calculations is therefore of the order $54,000. Clearly the Plaintiff is not entitled to an adjustment for the full amount of rent. A proportionate adjustment to reflect his potential interest in the Karama property is appropriate and I calculate that at $24,000 in round figures. Allowance also needs to be made for expenditure that the Defendant would have incurred in respect of the house, such as for rates, utilities, insurance, repairs, replacements and maintenance, during that period. I estimate these at approximately $3,000 per annum and therefore the amount for adjustment purposes is $15,000. This very closely represents 2% of the net pool of assets and I will set the adjustment at that level.
 Turning now to consider the appropriate adjusting order, the Plaintiff seeks an adjustment based on an equal division of the net pool. The Defendant submits that at best the extent of the Plaintiff’s contributions set off what he would otherwise have to pay the Defendant for rent. Based on the contributions, I consider that a 50/50 adjustment in favour of the Plaintiff is excessive. Likewise, Mr Black’s position is untenable in light of my findings.
 In my view a just and equitable adjustment is one based on a 60/40 distribution in favour of the Defendant. As I have set off the balancing of non financial contributions against erosion principle factors, the only further adjustment is on account of the rental adjustment. That then results in a net adjustment of 58/42 in favour of the Defendant.
 The net value of the pool is $731,100 which makes the Plaintiff’s entitlement $307,100. The Plaintiff has the assets listed in paragraph 65 and numbered 4, 5, 6 and 13 totalling $26,700 in value. He has the liabilities listed in paragraph 66 and numbered 3, 4 and 5 totalling $128,900. Applying the 20% reduction against the credit card debt ($23,700 also in round figures) reduces the liabilities to $105,200. After deducting the amount of $26,700 as the value of his assets, the net becomes $78,500. That translates to a payment by the Defendant to the Plaintiff of $385,600 on the basis that each party retain all assets currently in their possession or in their names and likewise be responsible for all liabilities in their own names.
 That leaves only the question of possible capital gains tax liability. Mr Black has flagged the likely necessity for the sale of the Gunn property to enable the Defendant to satisfy any adjusting property order. On the evidence that I have heard that seems likely. The authorities such as Bland, Harrison and Rosati all accept that an appropriate allowance should be made where it can be calculated and where there is some certainty that the expense will be incurred. As likely as I believe the sale of the Gunn property is, on the evidence that I have heard the Defendant may wish to retain that. Clearly and adjustment for capital gains tax purposes is not appropriate if she is to retain the property.
 The capital gains tax liability, on the evidence is $57,000. In my view the Defendant should have a period of time, one month should be sufficient, for her to elect whether she wishes to retain that property. If she elects to retain that property no allowance on account of capital gains tax will then be necessary. I would allow a further fourteen days from the election to pay the Plaintiff his entitlement.
 If she elects to allow the property to be sold or if she defaults either in making an election within the allowed time or in payment, in that event I would order the sale of that property with an appropriate order for adjustment based on the liability of $57,000. That appears to be the most viable way of addressing the any possible uncertainty as to the sale of that property. I will however hear the parties as to the form of final orders and as to any consequential orders.
 I will also hear the parties as to costs.
  NSWCA 10
 (1986) 11 Fam LR 214
 (1959) 101 CLR 298
 (2006) 34 Fam LR 550
 (1997) 21 Fam LR 760
 (1993) 16 DFC 95-139
 (2006) 34 Fam LR 550
  NTSC 38
 (2006) 34 Fam LR 550
 (1984) 156 CLR 605
 (1997) 21 Fam LR 760
 (2006) 34 Fam LR 550
 (2006) 34 Fam LR 550
 (1997) 21 Fam LR 760
 (1999) FLC 92-844
 (2004) 32 Fam LR 518
 (1997) 21 Fam LR 760
 (1995) 19 Fam LR 82
 (1994) 19 Fam LR 325
 (1996) 129 FLR 74
  Fam CA 38