Christine Giselle Glatz -v- Anthony Walsh [2007] NSWSC 405

New South Wales Supreme Court

CITATION : Christine Giselle Glatz -v- Anthony Walsh [2007] NSWSC 405

HEARING DATE(S) : 4, 5 and 13 December 2006

JUDGMENT DATE : 27 April 2007

JUDGMENT OF : Associate Justice McLaughlin

CATCHWORDS : Family Law. De facto relationship. Household consisting of parties, their child and two children of Plaintiff. Respective contributions of parties. Acquisition of various pieces of real property during relationship. Claim by Defendant for mesne profits.

LEGISLATION CITED : Property (Relationships) Act 1984

Bilous v Mudaliar (2006) NSWCA 38 CASES CITED : Biviano v Natoli (1998) 43 NSWLR 695 Davey v Lee (1990) 13 Fam LR 688

PARTIES : Christine Giselle Glatz (Plaintiff) Anthony Walsh (Defendant)

FILE NUMBER(S) : SC 5032 of 2005

COUNSEL : Mr J. J Ryan (Plaintiff) Mr P. J Livingstone (Defendant)

SOLICITORS : Mark Brown & Associates (Plaintiff) A B Torok & Co (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Friday, 27 April 2007

5032 of 2005 CHRISTINE GISELLE GLATZ –v- ANTHONY WALSH JUDGMENT 1 HIS HONOUR: These are proceedings under the Property (Relationships) Act (1984). 2 By statement of claim filed on 19 September 2005 Christine Giselle Glatz claims orders adjusting the interests of the parties in property, pursuant to section 20 of the foregoing Act. 3 The Defendant, Anthony Stephen Walsh, filed a defence and a cross-claim on 20 October 2005. The Plaintiff filed a defence to that cross-claim on 6 February 2006. Subsequently, the Defendant filed an amended cross-claim on 28 February 2006. 4 It was not in dispute that the parties had lived in a de facto relationship, although the parties were not in agreement as to the date of commencement of the relationship or the date of termination thereof. The Plaintiff asserted that the relationship commenced in July 1996 and continued until 22 December 2004, whilst the Defendant asserted that the relationship commenced in September 1996 and ended in or about January 2005. 5 It should also here be recorded that there were a number of interruptions to the de facto relationships between the parties. From the commencement of the relationship (whether it be in July 1996 or it be in September 1996) the parties lived in the Plaintiff's residence at 51 Tully Avenue, Liverpool ("the Tully Avenue property"). They lived separately and apart from February 1998 until June 1998, when they resumed cohabitation at the Tully Avenue property. It was asserted by the Plaintiff that from 22 December 2004 the parties lived separately and apart, but under one roof, at the Tully Avenue property, until 23 March 2005, when, according to the Plaintiff, the de facto relationship finally came to an end, with the departure of the Defendant from the Tully Avenue property. The Plaintiff (together with her three children) remained in the Tully Avenue property, and has continued to reside there to the present time. 6 According to the Defendant, the de facto relationship terminated in or about January 2005. 7 One child, a daughter Emily Louise Margaret, was born of the relationship between the parties, on 1 January 1997. Emily is now aged 10. The Plaintiff was born on 26 May 1962 in Algeria, and is presently aged 44. She came to Australia in September 1971, and became an Australian citizen in about 1996. The Defendant was born on 30 October 1967, and is presently aged 39. 8 At the commencement of the relationship, in the second half of 1996, the Plaintiff was residing in the Tully Avenue property, which at that time she was renting from the Department of Housing for $170 a week. By contract dated 29 April 1997 the Plaintiff purchased that property for $118,000. The Department had originally offered the property to the Plaintiff for $126,000, but had reduced that price on account of the renovations which the Plaintiff had effected thereon. The Plaintiff said that she had expended about $16,000 on those renovations. 9 The parties met in January 1995. At that time the Plaintiff had two children from her marriage to Stephen Hennessy, whom she had married on 5 October 1987. Those children were Benjamin James Daniel Hennessy (born on 3 February 1989, who is presently aged 18) and Brendan James Philip Hennessy (born on 29 September 1990, who is presently aged 16). The Plaintiff and Mr. Hennessy separated in September 1990, and the children remained in her care. The Plaintiff has received minimal child support from her former husband in respect to their children. 10 At the commencement of the relationship each of the parties was in full-time employment, the Plaintiff as a computer systems manager and the Defendant as a train guard. The Defendant had been employed by Rail Corp (and its predecessors) since he had been aged 16. Since June 2004 he has been receiving worker's compensation payments, as a result of a work related injury. The Plaintiff's taxable income during the first financial year in which she was in a relationship with the Defendant was $30,652, whilst the Defendant's taxable income in that year was $40,518. The Plaintiff was off work for a period of six months after the birth of Emily, and then returned to part-time work. She subsequently resumed full-time work. The Defendant was in full-time employment as a train guard throughout the period of the relationship. 11 Each of the parties disputed either the existence or the value of some of the assets asserted to be owned by the other party at the commencement of the relationship. 12 According to the Plaintiff, at the commencement of the de facto relationship she had the following assets, to which she ascribed the following estimated values, Dihatsu Applause motor car $15,000 Household furniture $5000 Cash in bank $2000 Debt owed by Plaintiff's sister $31,500 Total $53,500 13 It should here be observed that originally, in her primary affidavit (that of 30 November 2005), the Plaintiff said that the debt owed to her by her sister was in an amount of $12,000 and that the totality of her assets at the commencement of the relationship was $34,000. However, in her affidavit of 7 November 2006 the Plaintiff said that she had in her earlier affidavit made a mistake as to the amount which she had lent to her sister, and that the total amount so lent was $31,500. The Plaintiff said that her sister repaid that total sum during the period August 1996 to December 1997, by making cash repayments to the Plaintiff. The Plaintiff said that she did not charge interest upon those loans to her sister. Of the repayments, she said that she paid all but $6000 into the Defendant's Freedom Account with the St George Bank (in amounts totalling $25,500), and that she paid the remaining $6000 into the joint home loan account of herself and the Defendant, by two payments, each of $3000, made respectively on 13 June 1997 and 24 December 1997 and 24 July 1997. 14 According to the Defendant, at the commencement of the relationship he had the following assets, to which he ascribed the following estimated values. House property situate at 8 Wagani Street, Bli Bli, Queensland, (subject to a mortgage) $130,000 Ford Falcon motor car $12,000 Cash in bank $31,734 Superannuation entitlement $59,000 AMP endowment plan $10,000 Home contents (including bank notes) $10,000 15 During the course of the relationship the Plaintiff purchased from the Defendant for $67,500 a one-half share in the Bli Bli property. The Plaintiff funded that purchase price by borrowing $67,500 from the St George Bank. It would appear that the purpose of that purchase by the Plaintiff of a one half share in the Bli Bli property was to enable that amount of $67,500 then to be made available by the Defendant to the Plaintiff, to be used towards the purchase of the Tully Avenue property from the Department of Housing. Also, according to the Plaintiff, there was a tax benefit in the arrangements concerning the purchase by her of the half share in the Bli Bli property. The Plaintiff said that that purchase was funded, as follows, Joint savings of Plaintiff and Defendant $21,000 (approx) Loan repaid to Plaintiff by her sister $6000 (approx) Proceeds of sale of one-half share of Bli Bli property received by Defendant $67,500 Mortgage loan from St George Bank $27,500 Total $119,500 16 Although the Plaintiff originally said that of the foregoing amount of $27,500 only $25,00 was applied to the purchase of Tully Avenue, she later conceded that the totality of that amount was so applied. The Tully Avenue property was purchased in the joint names of the Plaintiff and the Defendant. 17 The Bli Bli property was at the time of the hearing (and, I gather, at the time of the termination of the relationship, and before) rented, currently for $220 a week. The rental moneys are applied to the outgoings on the property and to the mortgage debt secured thereon, which is owing to the St George Bank. 18 It should here be recorded that the Plaintiff accepts that the net value of the Bli Bli property at 21 September 1996 was the amount of $59,024 asserted by the Defendant. However, the Plaintiff said that the contributions made by her between July and September 1996 significantly reduced the mortgage debt on the Bli Bli property. It is somewhat curious that the relevant page of the Defendant's bank statements, which would be expected to disclose any such contributions by the Plaintiff, is omitted from the Defendant's evidence. 19 Apart from the Bli Bli property, which was owned by Defendant at the commencement of the relationship, and the Tully Avenue property, which was purchased by the Plaintiff less than a year after the parties entered into their de facto relationship, the parties purchased three other pieces of real estate. They were a house property at 114 Broughton Street, West Kempsey, which has a present agreed value of $200,000; a house property at 116 Broughton Street, West Kempsey, which has a present agreed value of $175,000; and a house property at 40 Broughton Street, West Kempsey, which was purchased by the parties in January 2003 for $120,000, and was sold in September 2004, some months before their separation, for $180,000. According to the Plaintiff, the proceeds of that sale were applied to extinguish the mortgage on the Tully Avenue property. 20 The Tully Avenue property, which is unencumbered, has a present agreed value of $385,000. The Bli Bli property, upon which there is a mortgage debt of $123,000 currently outstanding, has a present agreed value of $287,500. 21 Until September 2005 (that is, some nine months after the termination of the relationship) the rental moneys from the Bli Bli property were applied to the outgoings on that property. Since September 2005 the Defendant has received the rental moneys from that property, which moneys he said he used to reduce credit card liabilities which had been built up during the period of the relationship. 22 The rent moneys from each of the two Broughton Street properties which presently remain in the ownership of the parties are applied to the respective outgoings on those properties. 23 At the time of the termination of the relationship (be that termination in March 2005, as asserted by the Plaintiff, or in January 2005, as asserted by the Defendant) the assets of the Plaintiff consisted of, House property at 51 Tully Avenue, Liverpool House property at 114 Broughton Street, West Kempsey (half interest) House property at 116 Broughton Street, West Kempsey (half interest) 1993 Daihatsu motor vehicle $1,500 ING account $5,028 TAB Corp shares $884 IAG shares $7,344 Coles Myer shares $5,412 Superannuation entitlement $49,117 24 At the time of the termination of the relationship the Defendant's assets, apart from the Bli Bli Property and his interest in 114 Broughton Street and 116 Broughton Street, consisted of, Account with Commonwealth Bank at St Mary's $10,000 IAG shares $6,350 Telstra shares $3,200 AMP shares $8,743 TAB Corp shares $823 AMP endowment plan $15,749 Holden Rodeo motor vehicle (owned conjointly by the Plaintiff and the Defendant) $5000 Superannuation entitlement Bank notes $100 Flock of pigeons 25 There was no precise evidence of the value of the Defendant's superannuation entitlement at the termination of the relationship. However, Exhibit 6 included the Defendant's 2006 statement from the State Authorities Superannuation Scheme, which disclosed a total benefit at 30 June 2006 of $100,801. There was no quantification of the commercial value, if any, of the Defendant's flock of pigeons (which throughout the relationship appear to have been accommodated in an aviary located upon the Tully Avenue property). 26 In addition, it was asserted by the Plaintiff that at the time of the termination of the relationship the Defendant owned HHG shares to a value of $1384 and a benefit with Grand United Demutualisation to a value of $5000, and uncashed prize cheques totalling $2000. 27 Further, it was asserted by the Plaintiff that the parties during the course of the relationship owned gold ingots weighing in total 27 ounces. I shall return to this alleged asset and to the somewhat curious circumstances surrounding the Plaintiff's allegation in this regard. 28 The Plaintiff also asserted that some of the shares held by the Defendant had been purchased from joint funds of the parties. 29 According to the Plaintiff, there were a number of joint liabilities of the parties after the termination of the relationship. Those joint liabilities (quantified as at the time of the making of the Plaintiff's primary affidavit on 30 November 2005) were as follows, St George portfolio loan taken out in 1998, upon which the Plaintiff has been paying interest since January 2005 $35,088 An estimated capital gain liability of $7,500 for each of the Plaintiff and the Defendant in relation to the sale of the property at 40 Broughton Street, West Kempsey, $15,000 Outstanding municipal rates on various properties, $5,500 (approximate) Total $55, 588 30 Neither of the parties seeks an adjustment in relation to personal property, although it was submitted on behalf of the Plaintiff that a significant part of those assets consisting of personal property, which the Defendant said that he owned at the termination of the relationship, had been acquired with joint funds of the parties. 31 It was not in dispute between the parties that the entirety of the purchase price and the associated acquisition costs of each of the properties at 40 Broughton Street, 114 Broughton Street and 116 Broughton Street, West Kempsey were borrowed from the St George Bank. The property at 40 Broughton Street was purchased in the name of the Plaintiff alone, but a one half interest in that property was subsequently transferred to the Defendant at this request. Nothing appears to turn upon that fact, and there is no distinction to be drawn between the financial contributions in respect to the acquisition of 40 Broughton Street, and those in respect to the acquisition of the other two properties in Broughton Street, each of which latter properties was purchased in the names of the parties jointly. Further, neither party asserts that she or he made a greater financial contribution than the to other, to the acquisition of each of these three properties. 32 The property at 116 Broughton Street was purchased by the parties in October 2001 in their joint names for the sum of $85,000 (which sum included stamp duty and legal expenses). That property was rented for $180 a week and the rent was applied to the payment of outgoings, including mortgage payments to the St George Bank. 33 In January 2003 the parties purchased in their joint names the property at 114 Broughton Street for the sum of $144,000. Again, the total purchase price, including stamp duty, costs and adjustments (totalling $4920) was borrowed from the St George Bank. That property is consists of two residential flats, which are rented for a total of $270 a week. The rent is applied to the payment of outgoings, including mortgage payments to the St George Bank. 34 Also in January 2003 the Plaintiff entered into a contract for the purchase of 40 Broughton Street, West Kempsey for $120,00. In addition, she paid a further $4085 for stamp duty, legal costs and adjustments on sale. The total of the purchase price and those additional costs were borrowed from the St George Bank. Subsequently, a one half interest in that property was transferred by the Plaintiff to the Defendant. The property at 40 Broughton Street was subsequently sold on 9 September 2004 for $180,000. After discharge of the mortgage ($126,586), and the payment of agent's commission ($4500) and other associated costs and expenses (including legal costs of $1100), an amount of $12,020 was applied to the discharge of the mortgage on the Tully Avenue property, and there was a balance remaining of $25,744. 35 It was the case for the Plaintiff that throughout the period of the de facto relationship she made significant financial and non-financial contributions to the Defendant, as well as making contributions in the capacity of homemaker and parent. 36 Among the financial contributions which the Plaintiff said she had made were deposits totalling $12,500 into the Defendant's bank account in October 1996. 37 Among the non-financial contributions were the involvement of the Plaintiff in the acquisition and the administration and management of the three properties in Broughton Street, West Kempsey. It was not suggested by the Defendant that he took any active role in those matters. 38 It was also the case for the Plaintiff that she was the primary parent and homemaker in the family comprising herself, her two children by her previous marriage, the Defendant, and the their child Emily. Nevertheless, the Plaintiff conceded that the Defendant contributed to the maintenance and school fees of her two sons. 39 Each party made allegations of domestic violence against the other, and each asserted that there had been abuse of drugs (especially marijuana) and alcohol within the household. Each party asserted that the other not only was using and was addicted to marijuana, but also was cultivating marijuana at the Tully Avenue property. That last assertion was borne out by Exhibit 1 (a photograph of the Defendant and Emily, which revealed a marijuana plant growing in the rear garden of that property.) The relevance of those allegations was, according to the Plaintiff, that in consequence of the Defendant's abuse of alcohol and drugs his contributions as a parent and homemaker decreased, and that, as a result, the Plaintiff's own contributions in those roles increased. 40 In regard to these matters (and, indeed, in regard to most matters which were in dispute between the parties), I was not favourably impressed by the evidence given by either of the parties. I would be most reluctant to place reliance upon the unsupported evidence of either party. Neither did I regard the Plaintiff's mother (called in support of the Plaintiff's assertions) as being particularly reliable. Despite her response of outraged indignation at the suggestion put to her in cross-examination, it emerged that she also was not without experience as a user of drugs. 41 According to the Plaintiff there was a dramatic change in the conduct of the Defendant in the role of homemaker and parent about one month after the birth of Emily on 1 January 1997. The Plaintiff agreed that until then the Defendant had made considerable contributions in those roles. However, the Plaintiff said that about one month after Emily's birth the Defendant withdrew from such roles. The Defendant disputed that this was so, and asserted that he was actively involved as a homemaker and parent until the end of the de facto relationship. 42 I have already observed that I did not regard either the Plaintiff or the Defendant as being a particularly reliable witness. I would be reluctant to accept unquestionably the unsupported evidence given by either of the parties, concerning any matter of dispute between them. 43 It should be borne in mind, however, in assessing the Plaintiff's assertions concerning her role as homemaker and parent that in mid-1997, six months after Emily's birth, the Plaintiff returned to part-time employment, and subsequently she returned to full-time employment. Further, it should also be observed that throughout the entire period of the relationship the Defendant's work as a train guard was essentially from about 4am until late morning (sometimes considerably earlier). 44 I am prepared to accept that the Plaintiff was the primary parent and homemaker, especially during Emily's infancy. However, I am not persuaded that the extent of her contributions was as great, or that the extent of the Defendant's contributions was as slight as the Plaintiff would have the Court accept. In this regard, it should be noted that the Plaintiff under cross-examination conceded, albeit with reluctance, that the Defendant had made non-financial contributions towards the conservation and improvement of the Tully Avenue property. 45 I have considerable doubt concerning the Plaintiff's asserted asset at the commencement of the relationship, being the indebtedness to her by her sister, Veronique Joelle Glatz, in the amount of $31,500. The only evidence to support the change of that amount from the $12,000 stated in the Plaintiff's primary affidavit was the recollection of the Plaintiff herself. Neither she, nor her sister, was able to provide any documentary evidence supporting the higher amount. I am not persuaded that the amount of the sister's indebtedness was greater than the $12,000 which was the original assertion of the Plaintiff. 46 Similarly, I have very considerable doubt concerning the asset consisting of gold bullion which the Plaintiff asserted was a joint asset of the parties. The Plaintiff's evidence concerning the alleged hiding place of this gold, and her attempted explanation of why no reference had been made to this gold earlier the proceedings, either in her statement of claim or in her affidavit evidence, was far from persuasive. The Plaintiff could provide no documentation concerning her alleged purchases, in cash, of the gold bullion. The Defendant (whom the Plaintiff asserted had stolen this bullion from its hiding place) denied any knowledge of it. I am not satisfied of the existence of this alleged asset. The Defendant emerged very poorly from the evidence regarding money orders (to a value totalling about $2600) belonging to the Plaintiff, which (not to put too fine a point upon it) he had stolen from her. 47 It is in the light of the foregoing facts and circumstances that the Court must proceed to consideration of the claim of the Plaintiff and the cross-claim of the Defendant. 48 I have had the benefit of receiving a chronology and a written outline of submissions from Counsel for the respective parties. 49 Section 20 (1) of the Property (Relationships) Act provides, in respect to a domestic relationship (which phrase is by section 5(1) defined to include a de facto relationship), On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to: (a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and (b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely: (i) a child of the parties, (ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties. 50 In approaching a claim for adjustment of the interests of parties in property pursuant to section 20(1) of the Property (Relationships) Act, the Court makes a wholistic judgment and should not attempt to evaluate the respective contributions of the parties as if it were undertaking a reductionist process analogous to the taking of partnership accounts (notoriously one of the most time consuming and expensive or litigious exercises). (See Davey v Lee (1990) 13 Fam LR 688; see also Bilous v Mudaliar (2006) NSWCA 38 at [43], where Ipp JA said that some situations do not lend themselves to either a pure global approach or a pure asset by asset approach in determining what orders should be made.) 51 By her statement of claim the Plaintiff seeks substantively orders that the Defendant transfer to her his interest in the Tully Avenue property and in the properties at 114 and 116 Broughton Street, West Kempsey, and that the Plaintiff pay to the Defendant the sum of $32,000. However, on 16 February 2007 (that is, after my judgment herein had been reserved), application was made by the Plaintiff, and consented to by the Defendant, to amend that relief, to the effect that the property at 114 Broughton Street, West Kempsey be sold and that the net proceeds of sale (after payment of legal costs, agent's commission and the mortgage thereon) be divided between the parties as to 65 per cent to the Plaintiff and 35 per cent to the Defendant. 52 By his cross-claim the Defendant seeks orders to the effect that each of the properties at Tully Avenue, 114 Broughton Street and 116 Broughton Street be sold and, after payment of commission, professional costs and disbursements and discharge of any mortgages, the balance of the proceeds of sale be disbursed between the parties as to 75 per cent to the Defendant and 25 per cent to the Plaintiff; that the Plaintiff transfer to the Defendant her interest in the Bli Bli property; that the Plaintiff pay to the Defendant mesne profits and interest thereon in respect to rental received by her upon each of the foregoing properties. The Defendant's claim for mesne profits, although not abandoned, was not the subject of submissions on his behalf at the hearing. 53 I have already recorded that the parties were in dispute concerning the dates of commencement and termination of the de facto relationship. Nothing turns upon the slight difference asserted for the commencement (July 1996 by the Plaintiff, and September 1996 by the Defendant) or for the termination (22 December 2004 by the Plaintiff, and in or about January 2005 by the Defendant). 54 I consider that the respective contributions of the parties during the relationship should be recognised by orders the effect whereof is that the Plaintiff retain the Tully Avenue absolutely and the Defendant retain the Bli Bli property absolutely, and that each party retain the totality of the assets of personalty currently held by that party; further, that the properties at 114 and 116 Broughton Street, West Kempsey should each be sold and the net proceeds of sale be divided equally between the parties. 55 I do not understand how the Defendant can be entitled to mesne profits in respect to the properties at Tully Avenue or at Broughton Street. There has been no ouster of the Defendant from any of those properties (see Biviano v Natoli (1998) 43 NSWLR 695, where the Court of Appeal considered the effect of the departure of one of the parties to a de facto relationship, in consequence of an apprehended violence order: such an order precipitated the departure of the present Defendant from the Tully Avenue property in January 2005). There has never been any income derived from the Tully Avenue property, which was the matrimonial home of the parties throughout the entirety of the relationship. The claim of the Defendant for mesne profits in respect to each of the properties will be dismissed. 56 It will be appreciated that the Plaintiff will receive considerably less than was claimed by her, and that also the Defendant will receive considerably less than was claimed by him. In those circumstances, I consider it appropriate that there should be no order as to costs, to the intent that each party should bear her or his own costs of the proceedings. However, if either party wishes to seek some other order in respect to costs, an opportunity will be given to that party to do so. 57 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 to reflect my conclusions herein, and, if desired, for argument as to costs. **********