Trahana v Foley [2000] NSWSC 1086

New South Wales Supreme Court

CITATION : Trahana v Foley [2000] NSWSC 1086 FILE NUMBER(S) : SC 4784/98 HEARING DATE(S) : 2, 3 March, 19 May 2000 (Written Submissions to 20 July 2000) JUDGMENT DATE : 24 November 2000

PARTIES : George Apollo Trahana (Plaintiff; Cross Defendant) Veronica Christine Foley (Defendant; Cross Claimant) JUDGMENT OF : Master McLaughlin

COUNSEL : B. Richards (Plaintiff) E. Cohen (Defendant) SOLICITORS : Swaab Attorneys (Plaintiff) Mulally Mylott (Defendant) CATCHWORDS : De facto relationship - Adjustment of interests of parties in property - Relationship for a period of twelve years, but subject to a number of separations - Respective contributions of de facto partners - Various real property ventures - Defendant received no benefit from sale of property of which she was co-owner - Plaintiff purported to sign transfers in name of Defendant - Alleged authority of Plaintiff to do so - Conduct of Plaintiff and of witness in regard to execution of transfers. LEGISLATION CITED : Property (Relationships) Act 1984 CASES CITED : Evans v Marmont (1997) 42 NSWLR 70 DECISION : See paragraph 69

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 24 November 2000

4784/98 GEORGE APOLLO TRAHANA -v- VERONICA CHRISTINE FOLEY JUDGMENT

1 MASTER: These are proceedings under the De Facto Relationships Act 1984 (now known as the Property (Relationships) Act 1984). 2 The Plaintiff, George Apollo Trahana (by statement of claim filed on 24 November 1998), and the Defendant, Veronica Christine Foley (by cross-claim filed on 16 February 1999), each seeks an order adjusting the interests of the parties in property, pursuant to the provisions of section 20 of the Act. (It is appropriate here to record that, although by her cross-claim the Defendant sought orders for both interim maintenance (pursuant to section 28 of the Act) and, by way of final relief, for periodic maintenance (pursuant to section 27(1)(b) of the Act), those claims were expressly abandoned during the course of the hearing.) 3 It was not in dispute that the parties lived in a de facto relationship from about September or October 1985 until about mid-1998, although the precise dates of the commencement and the termination of the relationship were disputed. The Plaintiff originally asserted that the relationship commenced in October 1985 and terminated in April 1998, whilst the Defendant asserted that the relationship commenced in September 1985 and that the final separation occurred in July 1998. Under cross-examination the Plaintiff agreed that he could have been mistaken as to the commencement date, and that it could have occurred in September 1985. 4 No children were born of the relationship. 5 At the time of the commencement of the relationship the Plaintiff was aged 28 (having been born on 23 January 1957 in Cyprus) and the Defendant was aged 31 (having been born on 1 December 1953 in England). At the commencement of the relationship the Plaintiff, who was an architect by profession, was employed as such by Graham Boys, Architects, and the Defendant was employed by the same firm as a secretary/receptionist. 6 At the commencement of the relationship the Plaintiff was receiving a salary of about $30,000 a year. His assets consisted of savings, an unrestored MG motor vehicle and what he referred to as "furniture and contents". In both the statement of claim (paragraph 3(c)) and his affidavit sworn 19 November 1998 (paragraph 4(c)) the Plaintiff asserted that the savings held by him at the commencement of the relationship were in an amount of $65,000. Under cross-examination he agreed that he did not have savings in that amount in 1985. But the evidence was left in a somewhat unsatisfactory state as to how much in savings he asserted that he did have. (Although he said, T.18, that he had more than $18,000 at that time, he did not specify how much more.) 7 At the commencement of the relationship the Defendant was also employed by Graham Boys, as a secretary/receptionist. Her salary at that time was not revealed in the evidence. Her assets consisted of savings of about $12,000, and debentures in Westpac (which were redeemed in 1987 for about $4,000). She had no liabilities. 8 The evidence did not disclose where each party was living immediately before they commenced cohabitation. However, from the commencement of the relationship the parties resided in rented accommodation at various locations until they purchased, in October 1987, a house property situate at and known as 54 High Street, Willoughby. That property thereupon became their matrimonial home. 9 During the period from the commencement of the relationship until its termination the parties separated on a number of occasions. According to the Defendant, there were four such separations, including a separation from January to about June 1996. The Plaintiff, however, disputed the details of those alleged separations, saying in his affidavit of 29 February 2000 that there were eight separations. Those separations which be identified totalled one hundred and ten months (that is, according to the Plaintiff, the parties were physically together for only about one quarter of the period from the commencement of the relationship until its termination). The Plaintiff, however, under cross-examination agreed that the details given in paragraph 7 of his affidavit of 29 February 2000 concerning the various periods of separation were not accurate, and that that paragraph may, in fact, set forth the periods during which the parties were living together, rather than, as asserted, the periods during which they were living separately and apart. In regard to these asserted separations there is even inconsistency between the principal affidavit of the Plaintiff (that of 19 November 1998) and his affidavit of 29 February 2000. 10 Throughout the period of the relationship the parties, either severally or conjointly, or through the vehicle of a company Vaneda Pty Limited ("Vaneda") (which company was acquired by the parties in 1988 and of which the Plaintiff and the Defendant were initially the sole shareholders and sole directors) entered into a number of real property transactions. Those transactions included the purchase, restoration and sale of house properties and the purchase and subsequent development (by way of construction of residential units) of various pieces of land. I shall in due course set forth details of those real property transactions. 11 In July 1992 the Defendant relinquished her involvement in Vaneda by transferring her one share therein to Peter Trahana, the Plaintiff's brother, who also replaced the Defendant as a director of the company. Since that time the Plaintiff has held 18 per cent of the shares in Vaneda, whilst his brother has held 82 per cent of the shares in that company. 12 The parties maintained separate bank accounts throughout the period of the relationship. However, they also maintained a joint account from 1990, and from that year also the Defendant had access to the Plaintiff's MasterCard facility with the Commonwealth Bank, against which she charged personal expenses. Those credit card debts were repaid from the joint account. During the Defendant's absence overseas after his departure from Australia in April 1998 (that being after the termination of the relationship, according to the Plaintiff, but whilst the relationship still obtained, according to the Defendant) the Defendant withdrew from the joint account the sum of $13,000. In consequence, the Plaintiff closed the joint account and terminated the MasterCard facility with the Commonwealth Bank. The Defendant has (with the apparent acquiescence of the Plaintiff) retained the benefit of that amount of $13,000. 13 The evidence did not present with particularity the financial and material circumstances of each party at the termination of the de facto relationship. Especially, it did not disclose the income of each party at that time. The assets of the Plaintiff consisted largely of the pieces of real property held either in his own name or in the name of a company in which he had an interest, and his liabilities consisted of the loans secured by and other liabilities in respect of those pieces of real property. The only significant asset of the Defendant at the termination of the relationship was her interest in the High Street property. 14 The Defendant was in full-time employment, in such capacities as receptionist, secretary and personal assistant, from the commencement of the relationship until April 1990. For the next two years she worked intermittently (for periods totalling about eleven months) as a receptionist and secretary. 15 The Defendant in about May 1992 suffered a disc protrusion, and was hospitalised for about three months. That condition affected her ability to work full-time. From January 1993 until about June 1995 the Plaintiff was engaged in selling cosmetics (of the Nutrimetics brand) direct to the public. From September 1995 until August 1997 she worked part-time, for two or three days a week, as a customer service representative for Optus Communications. At the termination of the relationship she was employed in a part-time capacity as a waitress in a coffee shop known as the Olive Tree Cafe at Crows Nest. 16 During the period of the relationship the Defendant also received a number of direct payments from Vaneda. According to the Plaintiff those payments totalled $8,000 in 1995, $12,000 in 1996 and $12,000 in 1997. The Defendant under cross-examination (but not in her oral evidence in chief) appeared to dispute receiving any payments from Vaneda. However, her bank records and copy income tax returns support the assertion that she did receive a number of direct payments from Vaneda, although not in the precise amounts asserted by the Plaintiff. 17 It was not in dispute that throughout the relationship the income of the Plaintiff (who throughout most of that period continued to work as a project manager or design manager, either as an employee or on a contract basis) was significantly higher than that of the Defendant. The Defendant eventually agreed that the Plaintiff's contributions from his income towards the day to day living expenses of the parties during the relationship were greater than the contributions of the Defendant. 18 It was asserted by the Defendant that she made direct financial contributions towards the relationship and towards a number of the real property transactions, and that she made indirect contributions towards those property transactions. She asserted that those indirect contributions included assisting the Plaintiff select sites for development, going to Council to seek information regarding possible development at selected sites, delivering documents and plans, making telephone calls at the Plaintiff's request to real estate agents, bank officers and others, advising on landscaping and gardening in relation to the developments and supporting the Plaintiff when he needed to work on the design of the developments at home after hours, in particular, offering constructive suggestions as to design matters, checking and sometimes preparing correspondence which needed to be sent to Councils and others in relation to the developments and handling correspondence regarding the developments at times when the Plaintiff was unavailable. 19 That latter assertion, of indirect financial contributions towards the real property transactions was not substantiated by the evidence. The contributions made by the Defendant in that regard were minimal, consisting of the taking of an occasional telephone message, the typing of a small number of letters (possibly between ten and twenty, at the most thirty) and, on one occasion, visiting the offices of a local Council in order to make an inquiry about a piece of land. 20 Despite the assertion of the Defendant that she performed the major part of the household duties throughout the period while she and the Plaintiff were living together, I am satisfied that the parties shared those activities; indeed, that during the period when the Defendant was incapacitated as a result of her back condition, and throughout other periods, the Plaintiff performed the major part of those activities and, in fact, throughout the entirety of the relationship, performed the major part of the ironing of the clothes of the parties. 21 During the course of the relationship the Defendant made a number of direct financial contributions to the purchase of pieces of real property. Those contributions consisted of $35,000 (being superannuation moneys which she was able to access), as well as two separate advances each of an amount somewhat in excess of $30,000 (each of those advances being funded by a gift to the Defendant from her mother of 15,000 pounds). 22 A very considerable quantity of the affidavit evidence filed on behalf of the Defendant was directed to what were asserted to be her present and likely future needs. 23 Consonant with the decision of the Court of Appeal in Evans v Marmont (1997) 42 NSWLR 70 (especially the joint judgment of Gleeson CJ and McLelland CJ in Eq.), the function of the Court in the present proceedings (which, it will appreciated, relate only to the adjustment of the interests of the parties in property) is to decide the competing claims of the parties in the context of the respective contributions made by each party to the relationship, being contributions of the nature described in section 20 of the Act. 24 It is no function of the Court in the present proceedings to consider the financial and material circumstances of the parties after the termination of the relationship, or the asserted needs of the Defendant at any time after the relationship came to an end, or the asserted future needs of the Defendant. (It is possible that evidence concerning those circumstances or those asserted needs might have been relevant in respect to the claims for interim maintenance and final relief by way of periodic maintenance sought by the Plaintiff in the cross-claim. However, as I have already recorded, those claims were expressly abandoned during the course of the hearing.) 25 The Defendant in advancing her claim relied upon an asserted expectation of marriage. The parties certainly discussed matrimony. Indeed, the Plaintiff purchased and presented to the Defendant a diamond engagement ring, for the stones in which he paid $2,600 and for the setting of which he paid $600. However there was a considerable divergence in the evidence of the parties concerning the date when and the circumstances in which the Plaintiff presented that ring to the Defendant. The Defendant asserted that it was presented to her only whilst she was conveying the Plaintiff to the airport to depart on an overseas trip in May 1998. The Plaintiff, on the other hand, said that the stones for the ring had been acquired (after consultation between the parties) in 1997, and that the ring had been made up to a design agreed upon by them in the following year, and that he had presented it to the Defendant well before he departed for overseas in May 1998 (that departure being, it will be recalled, after the date when, according to the Plaintiff, the relationship had terminated). 26 Whichever version be accepted, and I consider that of the Plaintiff to be the more likely, there is no doubt, firstly, that the parties did not marry, and, secondly, that, in defiance of the long standing convention in that regard, the Defendant has chosen not to return the engagement ring to the Plaintiff, and apparently she retains it to the present day. 27 I have already referred to the fact that during the period of the relationship the parties, either severally or conjointly, or through the vehicle of Vaneda entered into a number of real property transactions. The first of those was the purchase in October 1987 of a house property at 54 High Street, Willoughby ("the High Street property"). That property was purchased in the name of the Plaintiff alone, for $186,500. It was funded (according to the Plaintiff's affidavit of 19 November 1998) by $90,000 from the Plaintiff's savings, $20,000 from the Defendant's savings, and $80,000 borrowed from the Commonwealth Bank by way of first mortgage in the name of the Plaintiff, secured against the property. 28 According to the Defendant the purchase of the High Street property was funded by a gift of something over $60,000 (being the equivalent of 30,000 pounds sterling) from the Defendant's mother, a loan of $80,000 from the Commonwealth Bank of Australia secured by mortgage, and the balance from the joint savings of the parties. That is, upon the Defendant's evidence, that balance would be in an amount of about $46,500. 29 It emerged from the evidence of the Defendant under cross-examination that her mother had, in fact, advanced two amounts of 15,000 pounds each (that is, two amounts of something over $30,000 each). The first amount was used towards the purchase of the High Street property. The second amount was given some time later and was used towards reduction of the mortgage. It was in consequence of that second advance, and the request by the Defendant at that time for her name to be placed on the title, that the Plaintiff transferred the High Street property into the names of himself and the Defendant as joint tenants. 30 That house property became the matrimonial home of the Plaintiff and the Defendant throughout the period of the relationship, and, despite the various separations, at least one of the parties lived in that property from the time of its acquisition until the termination of the relationship. The Defendant has remained in residence in the High Street property since the termination of the relationship. 31 On 4 September 1988 the Plaintiff transferred the High Street property into the joint names of himself and the Defendant as joint tenants, in consideration of $1. 32 That property is still held by the parties as joint tenants. The mortgage has been discharged, the Defendant's mother having provided an amount of about $30,000 for the purpose of reducing the mortgage. The property is now unencumbered. 33 According to the Plaintiff he personally carried out extensive renovations to the High Street property on weekends, during holidays and after work. The cost of those renovations was, according to the Plaintiff, about $40,000. 34 The Defendant asserted that she had made physical contributions towards the maintenance and improvement of the High Street property during the period of the relationship. The extent of any such work performed by the Defendant upon the property was disputed by the Plaintiff. 35 Subsequently a house property at 289 Norton Street, Leichhardt, was in August 1995 acquired for a purchase price of $300,000. It was the assertion of the Defendant that she contributed superannuation moneys in an amount of about $35,000 towards this purchase price. The Plaintiff said under cross-examination that part of his contribution of $30,000 towards the purchase was an amount of $15,000 being the profit upon the sale of shares in the Commonwealth Bank which were held in the joint names of the parties. The property was sold in 1997, by which time the dwelling house upon the land had been painted, and three town houses had been constructed on the site. 36 The Norton Street property was acquired in the joint names of the parties. When it was sold, the Defendant signed the contracts for sale. However, she did not personally sign the transfers. I shall later in this judgment refer to the circumstances in which those transfers were executed. 37 The Defendant received no benefit from the sale of that property. The net proceeds of sale (representing a profit of $290,100) were paid to Vaneda and to another company, Arkos Pty Limited ("Arkos"), in which the Plaintiff also had an interest. The Plaintiff in his oral evidence asserted that the Defendant had agreed that the profits from that project should go to Vaneda. The Defendant denied that assertion, saying that the Plaintiff had never even discussed with her the destination of those profits. 38 During the period of the relationship there were properties at a number of other locations which were acquired, developed and subsequently sold by the Plaintiff. These were properties at 64 Ferris Street, Annandale (acquired in or about 1992, in the name of Vaneda); 106-108 Short Street, Balmain (acquired in or about March 1994, in the name of Vaneda); and 310 Elswick Street, Leichhardt (acquired in December 1994, in the name of Vaneda). The existing house upon the Annandale land was demolished and two terrace houses were constructed upon that land. Each of those terrace houses was sold in early 1994. Upon the Balmain land two town houses were constructed. One was sold upon completion, and the other was rented out until about August 1998, when the Plaintiff entered into residence therein. Upon the Leichhardt land three town houses were constructed and at least two were sold. 39 Subsequently 360 Norton Street, Leichhardt was acquired in about 1996 (in the name of Vaneda). Upon that site were then constructed eight residential units. Six of those had already been sold at the time of the hearing of the present proceedings. 40 In general, each of those later property ventures was funded, at least in part, from the profit generated by the preceding venture, together with amounts advanced by the Plaintiff and his brother (in the proportion 18 per cent to 82 per cent) and a loan from a lending institution (usually the Commonwealth Bank) secured by a mortgage. 41 The agreed present values of each of the foregoing properties which are still owned either by the parties in their own names or by Vaneda or by Arkos are set forth in Exhibit 5. However, those agreed values are of little assistance to the Court, since they relate to the date of the hearing, not to the date of the termination of the relationship. Similarly, I do not consider that the expert evidence presented by the respective parties (by Arnold Levenberg, chartered accountant, on behalf of the Plaintiff, and by Jennifer Anne Exner, chartered accountant, on behalf of the Defendant) concerning the valuations of the various pieces of real estate and of the various companies in which the Plaintiff has an interest are of any significant assistance to the Court, since the evidence of those expert witnesses relates essentially to present values, rather than to values at the time of the termination of the relationship. 42 Further, the present valuation of the Plaintiff's minority shareholding in those companies cannot in any way be determinative of the ultimate exercise by the Court of its discretion to grant appropriate relief under section 20 of the Act in such a fashion as to reflect the respective contributions of the nature described in that section which were made by each party during the course of the relationship. 43 The extent of the respective financial contributions of the parties to the foregoing real estate transactions was the subject of controversy in the pleadings, in the affidavit evidence, and in the oral evidence. 44 It would appear, however, that there is no dispute that the Defendant contributed two amounts of somewhat over $30,000 each (each having been a gift to her from her mother) towards the original purchase and towards the reduction in the mortgage upon the High Street property. Further, that she made contributions from her savings towards the purchase of that property. Further, that she contributed about $35,000 to the purchase of 289 Norton Street, Leichhardt. 45 The direct financial contributions towards the High Street property and 289 Norton Street were reflected in the fact that each of those properties was (ultimately in the case of High Street, initially in the case of Norton Street) registered in the joint names of the Plaintiff and the Defendant. 46 I have already observed that there was a considerable divergence in the evidence of the parties concerning the extent of their contributions, both direct and indirect financial contributions, towards the acquisition, conservation and improvement of the various pieces of real property, in particular, the High Street property, as well as their non-financial contributions towards the relationship. Most of the evidence in that regard consisted of assertions by one party and denials of those assertions by the other party. Each party was cross-examined concerning such assertions and denials. It is appropriate, therefore, that I should express my views concerning the credibility of each party. 47 I did not regard either party as being a particularly accurate witness, or a person upon whose evidence the Court could confidently rely where that evidence was not supported by some other evidence of a documentary or objective nature. 48 The circumstances surrounding the execution of the transfers upon the sale of the property at 289 Norton Street, Leichhardt, reflected most unfavourably upon the Plaintiff. That incident may be described as follows. The Defendant did not execute the transfers. What purported to be her signature was placed upon each document by the Plaintiff. He said that he had the Defendant's authority to do so. She denied giving him any such authority. But, in any event, the Plaintiff's brother, Peter Trahana, signed the transfers as witness to the execution thereof by each of the parties. According to the evidence of the Plaintiff he needed the transfers in a situation of urgency. He sought and obtained by telephone the permission of the Defendant to sign the transfers on her behalf. He so signed. He then requested his brother to witness those signatures. (They were in a cafe in Norton Street, Leichhardt.) His brother refused. The Plaintiff in the presence of his brother telephoned the Defendant. The Defendant, so he said, again authorised him to sign and to have his brother witness her signature. His brother, who had heard only the Plaintiff's side of that alleged conversation, thereupon signed as witness. Even on the version of the Plaintiff and his brother, it is doubtful whether the Plaintiff's brother ever saw the signature "V. Foley" being placed upon the transfers. 49 The Defendant denied not only the original authorisation of the Plaintiff to sign the transfer on her behalf, but also the subsequent telephone conversation alleged to have been effected in the presence of the Plaintiff's brother. 50 I regarded as totally unsatisfactory the evidence of the Plaintiff and his brother concerning the circumstances surrounding the signing of the transfers. No explanation whatsoever was offered as to why the Plaintiff could not have obtained the signature of the Defendant to the documents when he went home. After all, they were living together at the time. Further, the telephone call which the Plaintiff said he made to the Defendant after his brother at the outset refused to sign as witness to the purported signature of the Defendant on the transfers was a conversation of which the Plaintiff's brother heard only one side. There was no reason whatsoever why, if such a conversation did take place, the Plaintiff could not have handed the telephone instrument to his brother and have allowed his brother to hear from the Defendant's own voice her authority, firstly, for the Plaintiff to sign her name, and, secondly, for the Plaintiff's brother to sign as witness. Further, even if there had been such an authority given by the Defendant, the Plaintiff's brother could not, truthfully, in the fashion in which he did, authenticate each document as having been signed in his presence by the Defendant. His statement to that effect was false. 51 I consider that this incident reflects extremely badly upon each of the Plaintiff and his brother. The purported signature "V. Foley" appearing on the transfers was described by Counsel for the Defendant as a forgery. That description is one which Counsel was certainly justified in using. There was nothing upon the document to indicate either that the signature "V. Foley" had been written thereon by anyone other than Miss Foley herself, or that the purported witness had not seen that signature placed upon he document by Miss Foley. It is quite possible that the Plaintiff and his brother have each committed a criminal offence. I propose in this regard to direct the Registrar to refer the papers in this matter to the Director of Public Prosecutions so that he may consider what action if any should be taken against either or both of the Plaintiff and Peter Trahana. 52 Further, in respect to the credit to be given generally to the evidence of the Plaintiff, it should here be observed that in a number of instances under cross-examination he agreed that assertions made in his affidavits were not true. For example, he agreed that the assertion made by him in paragraph 6 of his original affidavit that he had contributed $90,000 from his savings to the purchase of the High Street property was not true. Further, he agreed that the assertion in his affidavit that he had sanded the floor in that property was not true, this work having been performed by a tradesman. 53 Further, it was asserted by the Plaintiff during the course of his cross-examination that the property at 64 Ferris Street, Annandale had been financed by his personal savings and by borrowings from his family. There was no reference whatsoever in any of his affidavit evidence concerning such alleged borrowings from his family. The Plaintiff was not able in his oral evidence to recall how much he had put into the purchase. There was no evidence offered by any other member of his family to substantiate this allegation he had made borrowings from his family. 54 The Plaintiff also under cross-examination agreed that there were various inconsistencies in the assertions made by him in his principal affidavit concerning the various real property transactions. Those inaccuracies and inconsistencies included the assertion in his affidavit that an amount of $260,000, being part of the funding of the purchase of 289 Norton Street, Leichhardt, was borrowed from the St George Bank in the name of the Plaintiff alone, whereas, he agreed under cross-examination, it was borrowed in the joint names of the parties. 55 I have already referred to the admitted inaccuracies, and blatant inconsistencies, in the affidavit evidence of the Plaintiff concerning the various separations of the parties during the period of the relationship. The Plaintiff does not seem to have treated very seriously the fact that his affidavits were sworn statements made by him under oath, the contents of which affidavits he swore to be true.