Relationships

Defacto relationships - pre 2002 separation

Boys v Calderwood (High Court)

The Property (Relationships) Act, which came into effect on 1 February 2002, provides that all relationship property is to be divided equally between de facto partners. What happens if you separated before that date, or your relationship is terminated to avoid equal sharing?

In the recent High Court decision Boys v Calderwood, Ms Boys ran some interesting legal arguments to claim a share of the property pool, valued between $17 and $20 million.

Ms Boys and Mr Calderwood were in a relationship for 17 years. Mr Calderwood ended the relationship in January 2002 before the Property (Relationships) Act came into effect. He was a property developer/ investor who had gone bankrupt in 1991, but managed to accumulate further wealth. Ms Boys initially worked as Mr Calderwood's secretary but stopped working for him when the parties began living together. At this time, she looked after the parties' residences, attended to Mr Calderwood's domestic needs, looked after her son until adulthood, entertained both business and personal friends and family on a large scale and provided care and support to Mr Calderwood's elderly parents, his children and wider family.

Ms Boys argued promissory estoppel with alternative causes of action based on common intention or constructive trust. Ms Boy's claim for promissory estoppel was successful. The High Court agreed that Mr Calderwood had made various promises to Ms Boys that she would have sufficient assets to generate an independent income sufficient to enjoy a life style, which, taking account of their separation, reflected the style that they had enjoyed while living together. Ms Boys has established detriment by relying on the promise and ordering her affairs accordingly.

The claim of common intention was unsuccessful as there was no express promise made in respect of any particular property. There was no basis on which to find that a common intention existed.

The claim for constructive trust was successful against Mr Calderwood, but not against the trustees of the various trusts that owned the respective properties, as it was not claimed that any of the trustees had ever expressed an intention, implicitly or explicitly that Ms Boys would share in the trusts assets.

Ms Boys also claimed that the trusts were liable on the following grounds:

1. The trustees had ratified Mr Calderwood's actions.
2. Mr Calderwood had acted with the ostensible authority of the trustees.
3. The trusts were the alter ego of Mr Calderwood.

There was no evidence to support these claims, so they were rejected.

As Ms Boys had a claim against Mr Calderwood for promissory estoppel, the issue was what figure was appropriate to give effect to the promise. Balancing all relevant factors, including use of a lavish residence, use of a beach house and a villa in Fiji, the parties' general lifestyle, frequent overseas trips and a Mercedes vehicle, the High Court found that a figure of $3 million was just. That sum excluded assets that were in Ms Boy's possession valued at about $325,000, which included an expensive motor vehicle, furniture, shares and jewellery. The rationale behind the figure of $3 million was Ms Boys could buy a new house valued at $1.5 million, which would leave her with $1.5 million to invest. At 6.5% she would have an annual pre tax income of $97,500.

The Court made no assessment on what trusts could be imposed over the property, with regard to the constructive trust claim, as this was an alternate cause of action and Ms Boys had been successful with her first claim.

In summary, Ms Boys received $3 million from a property pool of between $17 -20 million dollars based on promises made during the relationship. The Court found this sum was just. For those of you wishing to keep assets tied up in companies and trusts, beware of constructive trust claims and any promises you make!

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Last updated: October 2005

This article is intended to be brief in nature and should be used for information only. It should not be relied on as legal advice.