Carnovale v Dimos [2006] NSWSC 1134

New South Wales Supreme Court

CITATION : Carnovale v Dimos [2006] NSWSC 1134 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 20, 21, 22 and 23 February, 26, 27, 28 and 29 June 2006

JUDGMENT DATE : 30 October 2006

JURISDICTION : Equity Division

JUDGMENT OF : Associate Justice McLaughlin at 1

DECISION : I stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes of order and, if desired, for argument as to costs.

CATCHWORDS : Family Law. De facto relationship. Adjustment of interests of parties in property. Commencement of de facto relationship. Respective contributions of parties. De facto relationship was of short duration.

LEGISLATION CITED : Property (Relationships) Act 1984

PARTIES : Domenic Luciano Carnovale (Plaintiff) Effie Julia Dimos (Defendant)

FILE NUMBER(S) : SC 2992 of 2003

COUNSEL : Mr. T. Hodgson / Mr. D. Barry (Plaintiff) Mr. G. Thomas (Defendant)

SOLICITORS : Egisto Solicitors (Plaintiff) A. Luong & Associates (Defendant)

- 24 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Monday, 30 October 2006

2992 of 2003 DOMENIC LUCIANO CARNOVALE –v- EFFIE JULIA DIMOS JUDGMENT 1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984. 2 The proceedings were instituted by statement of claim filed on 27 May 2003 by the Plaintiff Domenic Luciano Carnovale, by which he claims adjustment of the interests of the parties in property, pursuant to section 20 of the foregoing Act, together with other and consequential relief. 3 The Defendant filed a defence and a cross-claim, and subsequently an amended defence and cross-claim on 6 April 2005, and, later still, a further amended defence on 26 June 2006. By her cross-claim the Defendant also seeks relief under section 20 of the Act. 4 It was not in dispute that the parties were in a de facto relationship for several years, until October 2002, although the parties were not in agreement as to when that relationship commenced. The Plaintiff in his statement of claim originally said that it was in 1998, and that the relationship obtained for four years. However, at the commencement of the hearing leave was granted to the Plaintiff to amend paragraph 12 of that pleading by substituting the year 1999 and to amend prayer 1 by substituting a period of three years. 5 It was the case for the Defendant that the parties lived in a de facto relationship from about February 1997 until October 2002. 6 The Plaintiff, who was born on 3 June 1972, is now aged 34. The Defendant, who was born on 11 May 1967, is now aged 39. No children were born of the relationship between Plaintiff and the Defendant. The Plaintiff has never been married. However, the Defendant had previously been married, to Peter Dimos in 1984. Two children were born of that marriage, being Matthew William Dimos, who is now aged 20; and Pamela Paris Dimos, who is now aged 15. 7 At the time when she met the Plaintiff the Defendant was residing with her two children in what had been her former matrimonial home. The Defendant's former husband, Peter Dimos, with whom the Defendant says said she retained an amicable relationship, was also in residence with the Defendant and their children. Peter Dimos and the Defendant separated in 1996, and subsequently divorced, the decree becoming absolute in July 1999. Neither then nor subsequently were any orders made for settlement of property between the Defendant and Mr. Dimos. At the time when they separated the Defendant and Mr. Dimos were the owners of commercial premises at Revesby. Mr. Dimos at that time conducted a business, Sydney Master Painters and Decorators, which he still operates. During the period of their separation and since their subsequent divorce, to the present time, Mr. Dimos has made generous financial provision for the Defendant and their children, although there is no formal agreement or order in that regard. 8 The Plaintiff and the Defendant met in late 1996. However, the circumstances in which they met were in dispute between the parties, the Plaintiff asserting that they met personally, whilst the Defendant asserted that they met through the medium of an internet dating service. The Plaintiff was at that time residing with his parents at their family home at 82 Edenholme Road, Five Dock. 9 Shortly after they met the Plaintiff and the Defendant entered into a sexual relationship. In early 1997 the Defendant and her two children moved into rented accommodation at 46 Abbotsford Parade, Abbotsford. Subsequently, in October 1998, she and her children entered into residence with the Plaintiff in rented accommodation situate at and known as 26/7 Figtree Avenue, Abbotsford Cove. Until that time the relationship between the Plaintiff and the Defendant appears to have been largely, if not exclusively, of a sexual nature. Their activities in that regard were chiefly conducted in the Defendant's former matrimonial home, after the departure therefrom of the Defendant's former husband. Until that time the parties conducted their activities in various places and locations to which they resorted for such purposes. For the first few months of the Defendant's residence at Abbotsford Parade the sexual activities between the Plaintiff and the Defendant were carried out in secret, hidden from the knowledge of the Defendant's children (who in late 1996 were aged about eleven and about five), and the Plaintiff's nightly presence in the house was deliberately kept unknown from them. 10 It was not until April 1997 that the Plaintiff was introduced to the Defendant's children. It would appear that from that time onwards no attempt was made by the parties to keep secret the nature of the relationship between them. 11 At the time when they commenced their sexual relationship in late 1996 the Plaintiff was unemployed. He was residing with and was supported by his parents; he was not paying any rent or board to them. The Plaintiff at that time was the registered proprietor of a property situate at and known as 68 Toowoon Bay Road near Long Jetty ("the Toowoon Bay property"), which had been acquired by him in 1993. That property, which was unencumbered, had been purchased by the Plaintiff for the sum of $192,500, with an amount of $200,000 advanced to him by his parents for that purpose. The only other significant asset of the Plaintiff at the commencement of the relationship was a motor vehicle. 12 On 3 October 1997 the Plaintiff purchased for $160,000 the franchise business Michel's Patisserie at Lane Cove Plaza. That purchase, which was effected through the vehicle of Carnovale Enterprises Pty Limited, was funded by a borrowing of $150,000 from Westpac, which borrowing was secured by a mortgage over the Toowoon Bay property. On 1 December 1998 the Plaintiff refinanced that loan with the National Australia Bank. 13 The business Michel's Patisserie at Lane Cove was acquired by the Defendant as franchisee under a franchise agreement with the owner of various businesses, each known as Michel's Patisserie. The Plaintiff acquired that franchise through the vehicle of his company, Carnovale Enterprises Pty Limited. The Plaintiff and his sister were the sole directors and the sole shareholders of that company. The Defendant at no time was a director or a shareholder of that company. The business commenced operation in August 1997. When the Plaintiff's sister ceased to be involved in the business some six months later, the Defendant did not acquire her shares or become a director of the Plaintiff's company. 14 In August 1998 a company, DAG Investments Pty Limited ("DAG") was incorporated, of which the Plaintiff owned one half of the shareholding, the other half being owned by his sister Julie Tampion and his brother-in-law Alan Tampion. The directors were the Plaintiff and Mr. Tampion. In April 1999 DAG set up business at Birkenhead Point, as franchisee of Michel's Patisserie at that location. That business was funded by an advance of $100,000 from the National Australia Bank, secured by a floating charge. DAG sold the business in 2001 for $220,000, the proceeds being distributed as to $100,000 to the National Australia Bank, and the balance between Mr and Mrs Tampion. The Plaintiff (who was what might be described as a silent partner in that enterprise) did not receive any of the proceeds of that sale. 15 The Plaintiff during the course of the relationship acquired a share portfolio, administered by T. D. Waterhouse Investor Services in two accounts, each owned by the Plaintiff through the vehicle of his company Carnovale Enterprises Pty Limited. The value of that portfolio, according to accounts from T. D. Waterhouse Investor Services, placed in evidence on behalf of the Plaintiff, varied between $27,415 in July 2001 and $26,475 in June 2003. 16 At the time when they first met and entered into a physical relationship the Defendant also was not in employment. Her only assets consisted of a BMW motor car (said to have been worth about $30,000), as well as furniture and personal effects. In 1997 the Defendant established herself as an interior designer at Five Dock, contracting out her services as such. According to the Defendant, her BMW motor car was worth about $30,000. However, that vehicle was subsequently involved in a motor accident, and the Defendant received an insurance payout of $20,000, which she said she used towards family expenses. 17 It emerged under cross-examination of the Defendant that she had entered into an agreement with her former husband that he would pay to her an amount of $300,000 at some future time. Between 1999 and 2002 Mr Dimos had paid to the Defendant a total amount of $54,000 in partial satisfaction of that agreement. The existence of that agreement was not entirely consistent with what was stated by the Defendant in her affidavit of 30 March 2005, where she said (paragraph 4) that with Mr. Dimos she has "had an amicable relationship since our separation and have received $2,000 a week from him by way of an informal agreement in relationship to my entitlements of spouse maintenance, child support and property settlement". In addition to her entitlement under that agreement, it was the Defendant's evidence that she was receiving from Mr. Dimos $2,000 a week (or a total of $104,000 a year). That evidence was supported by Mr. Dimos. The Defendant's income tax returns for 2000 and 2001 (Exhibit H) disclose that she received amounts of $108,175 and $112,125 respectively, each of those amounts being paid to her by Sydney Master Painters and Decorators. 18 During the course of their relationship there was no intermingling of the finances of the Plaintiff and the Defendant. However, in August 2002 (only about two months before the separation of the parties and the termination of the relationship in October of that year) the Plaintiff and the Defendant conjointly purchased, as tenants in common in equal shares, a house property situate at and known as 7 The Parade, Drummoyne ("the Drummoyne property"). The purchase price of that property was $695,000, which was funded by a loan of $911,000 from Permanent Custodian Limited (trading as Wizard), in the joint names of the Plaintiff and the Defendant, secured by mortgages over the Drummoyne property, the Toowoon Bay property and the Plaintiff's franchise business at Lane Cove. The amount of that loan was disbursed as follows: Drummoyne property (including $695,000 purchase price) $725,000 Refinance lease for BMW motor vehicle AHY.40F $79,000 Payout NAB mortgage over Michel's Patisserie at Lane Cove $104,300