Barrett v Gaudry

[2010] NSWSC 603

CITATION:	Barrett v Gaudry [2010] NSWSC 603
HEARING DATE(S):	10 and 11 December 2009, 8 and 9 March 2010
JUDGMENT DATE :	8 June 2010
JUDGMENT OF:	McLaughlin AsJ
DECISION:	1. I declare that the Plaintiff is entitled to a 40 percent interest in the equity of the parties in the Baulkham Hills property at the date of the termination of the relationship between the parties. 2. I order that, upon payment by the Defendant to the Plaintiff of the sum of $203,000, the Plaintiff transfer to the Defendant the right, title and interest of the Plaintiff in the Baulkam Hills property. 3. I order that the Defendant pay the costs of the Plaintiff of the proceedings. 4. I reserve to the parties liberty to apply, within 14 days of the date hereof, for a variation of order 3. 5. I reserve to the parties liberty to apply in respect to the implementation of order 2. 6. The exhibits may be returned.
CATCHWORDS:	FAMILY LAW - de facto relationship - adjustment of interests of parties in property - respective contributions of parties - house property held by Plaintiff as to 10 per cent and by Defendant as to 90 per cent - parties jointly liable for mortgage debt.
LEGISLATION CITED:	Property (Relationships) Act 1984
CATEGORY:	Principal judgment
CASES CITED:	Davey v Lee (1990) 13 FamLR 688 Bilous v Mudalia [2006] NSWCA 38
PARTIES:	Linda Michelle Barrett (Plaintiff) Linda Christina Gaudry (Defendant)
FILE NUMBER(S):	SC 2009/1650
COUNSEL:	Mr J. D. Blackah (Plaintiff) Mr S. Sloane (Defendant)
SOLICITORS:	Milne Berry Berger and Freedman Solicitors (Plaintiff) Peter Cornock & Associates (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Tuesday, 8 June 2010

2009/1650 LINDA MICHELLE BARRETT –v- LINDA CHRISTINA GAUDRY

JUDGMENT

1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984.

2 The proceedings were instituted by statement of claim filed by Linda Michelle Barrett on 24 February 2009. Subsequently, an amended statement of claim was filed on 16 April 2009. The Defendant Linda Christina Gaudry filed a defence on 23 July 2009.

3 It was not in dispute that the parties were in a de facto relationship for some years until February 2005. However, the parties disagreed as to the date of the commencement of the relationship. The Plaintiff asserted that the relationship commenced in August 1993, whilst the Defendant asserted that it commenced in the later part of 1996.

4 The parties met in February 1993, and shortly thereafter commenced a sexual relationship. The Plaintiff (who was born in 1969 and is presently aged 40) was at that time residing in rented accommodation. She has for several years been in full-time employment by Kwiksnax Pty Limited, receiving about $500 - $600 net a week.

5 According to the Plaintiff, the parties commenced cohabitation in 1993, in rented accommodation at Quakers Hill. However, it was the Defendant’s evidence that the parties commenced to live together in the Quakers Hill residence in March 1994. Each of the parties maintenaned a separate bedchamber in those premises. The Defendant’s cousin, Kathy Balgowan, was also a co-resident of the parties in that house.

6 The Defendant (who was born in 1965 and is now aged 44) had married in 1984 and had two children of that marriage, Andrew and Lauren. The Defendant had separated from her husband in 1993, and their Family Law property matters were resolved in March 1994 at about the same time as the parties moved into residence at the Quakers Hill premises. The Defendant’s children accompanied their mother into the Quakers Hill residence.

7 At the time when the parties moved into residence together, the Defendant was in part-time employment as a legal secretary, at Parramatta.

8 The evidence did not disclose with particularity the Plaintiff’s assets at the time when they commenced cohabitation. It would appear however, that she had some savings, a motor car, furniture, appliances and personal effects, and that the Defendant had similar assets.

9 At that time the Defendant also had moneys totalling $108,000 (which sum included about $70,000 received from her former husband by way of Family Law property settlement, and $30,000, as a result of a compensation claim).

10 In 1995 the parties conjointly purchased a café business at Parramatta, which they named Linda’s Café. In her affidavit evidence the Plaintiff said that she contributed savings of $7,500 towards that purchase, and that both parties borrowed $60,000 to pay for the fittings and the establishment of the business. However, under cross-examination the Plaintiff altered that evidence, and said, as I understood it, her contribution of $7,500 to the business was made at a later stage, and went towards paying off the business loan. It would also appear that the balance of that loan outstanding on the café was in 1996 paid out by a mutual friend of the parties, a Mr Spencer Lincoln. It would also appear that that payment by Mr Lincoln was in the nature of a gift by him to at least the Defendant (if not to both the Plaintiff and the Defendant conjointly), and that Mr Lincoln neither expected to be nor was repaid the amount which he had provided for the payment of the outstanding business loan, which (so far as I was able to gather) was ultimately treated as being in an amount of $35,000.

11 The Plaintiff and the Defendant each gave up her respective employment in order to work at the café. Much evidence was devoted to the respective activities of the parties in relation to that business, in which each of them worked.

12 In 1994 the parties went on an overseas trip to Europe (referred to as a Continki Tour), which occupied some months. It was the Plaintiff’s evidence that each of the parties paid her own costs and expenses for that trip, each totalling about $5,000.

13 The café business was sold in 2000. The Plaintiff thereupon resumed full-time employment, working for an entity, Shop Fast Pty Limited, where she received wages in the range of $500- $600 net a week. It was the Plaintiff’s evidence that after she had commenced that employment, she paid for all the household groceries, and was, in her own words, “the main shopper of the house”. The Plaintiff also said that she paid the major part of such outgoings as municipal rates and electricity, whilst the Defendant paid most of the expenses relating to her children, such as their clothing and all their school expenses.

14 The Plaintiff remained in employment with Shop Fast until 2003, when she was made redundant. Thereafter, she did some casual work, in total for about 5 to 6 months, before obtaining full-time employment with an entity known as Office Works, by which she has been employed since about the end of 2003. There she was originally employed as an order picker, and about six months later she was promoted to co-ordinator, in which position she received about $590 net a week.

15 When the Plaintiff was made redundant by Shop Fast, she received a redundancy payment of about $9,600. It was the Plaintiff’s evidence that that amount was used towards payment of the mortgage debt on the Baulkam Hills property and outgoings upon that property, and that the Plaintiff from that sum also gave to the Defendant an amount of about $4,000, to be used in a new part-time business which the Defendant was in the process of then establishing.

16 In the meantime the parties in 1996 had conjointly purchased a house property at Baulkham Hills. It is that property which is the subject of the substantial dispute between the parties, and concerning the interests of the parties wherein that the Plaintiff is presently seeking an adjustment.

17 The Baulkham hills property was purchased by the parties as tenants in common in unequal shares, the Plaintiff having a 10 percent interest therein and the Defendant having a 90 percent interest therein. It was the Plaintiff’s evidence that it was only a couple of weeks before the approval of the mortgage loan, that she became aware that her interest in the Baulkham Hills property was to be only 10 percent. She said that she did not expect to receive a 50 percent interest, at least at the outset. The Plaintiff’s evidence in this regard was that she did not know what percentage ownership she expected receive, although she later said that she expected that she would eventually have a 50 percent interest.

18 It was the Plaintiff’s evidence that, upon becoming aware of the fact that her interest was to be only 10 percent, she became concerned.

19 However, according to her evidence, it was only with the Defendant that she raised that concern and her dissatisfaction that she was to receive merely 10 percent, and that she did not raise it with the solicitor who was handling the conveyance (to whom she said she spoke on only one occasion – that being directly after she became aware that she would be an owner only as to 10 percent). Under cross-examination the Plaintiff said that she was not sure why she did not raise that concern with the solicitor.

20 Under cross-examination the Plaintiff ultimately gave the somewhat curious evidence that she did not know how her share of the mortgage payments were, in fact, made.

21 The purchase price of the property was $242,000. That purchase was funded by a contribution of about $60,000 from the Defendant; and the balance, in an amount of about $185,000, was borrowed, that borrowing being secured by way of mortgage over the property. The mortgage debt was repaid from the profits of the café business and from the drawings of the parties from that business. The Plaintiff did not make any direct contributions towards the mortgage repayments until December 2002. From then, until about August 2003, the Plaintiff’s contributions towards the mortgage repayments were more or less equal to those of the Defendant. However, from that latter time until the termination of the relationship in February 2005, the direct contributions of the Plaintiff were in amounts of about half the direct contributions made by the Defendant.

22 At the outset of the hearing it was noted that the agreed value of the Baulkham Hills property as at 25 August 2009 was $570,000. However, subsequently, on the third day of the hearing, 8 March 2010, it was noted that the agreed value of the Baulkham Hills property at that date was $580,000.

23 During the course of the relationship the parties in July 2002 conjointly purchased two investment properties in Queensland. Those purchases were totally funded by borrowings from the ANZ Bank, secured by mortgages. The repayments were met from the rent received from those properties and from the earnings of the parties. Those properties were later sold, resulting in a combined profit of about $55,000. That sum was applied by the parties towards the reduction of the mortgage debt in relation to the Baulkham Hills property.

24 In about 2001 the Plaintiff’s mother sold a house belonging to her, and from the proceeds of sale of that property the sum of $45,000 was deposited in the mortgage account of the parties, for the purpose of reducing the mortgage debt on the Baulkham Hills property. The Defendant had assisted the Plaintiff’s mother in preparing that house property for sale. It was the assertion of the Defendant that that sum of $45,000 in fact represented reimbursement for the Defendant’s expenses, and payment for her work in preparing that house property for sale. The Plaintiff, however, asserted that she, as well as the Defendant, had devoted time and energy to renovating and improving that house property belonging to the Plaintiff’s mother, and that that sum of $45,000 was intended to benefit the parties equally. That evidence was supported by the Plaintiff’s mother, Mrs Thomas, who said that it was her expectation that the $45,000 would be used to reduce the mortgage debt on the Baulkham Hills property.

25 Since the termination of the relationship in February 2005 the Defendant has remained in residence in the Baulkham Hills property.

26 At the time of the termination of the relationship, in early 2005, the only significant asset of the parties was the Baulkham Hills property, of which the present agreed value is $580,000.

27 The only significant liability of the parties at the termination of the relationship was the mortgage debt in respect to the Baulkham Hills property, which at that time stood at $72,000. It was the assertion of the Plaintiff that on a date or dates unknown to the Plaintiff, the Defendant had subsequently increased the mortgage debt upon that property. (At the time of hearing the mortgage debt was in an amount of about $128,000.)

28 It will be appreciated that the proceedings were instituted more than two years after the termination of the relationship between the parties in February 2005. On 27 March 2009 Associate Justice Macready, after a contested hearing, granted to the Plaintiff leave to institute the proceedings after the expiry of two years from the time when the relationship had come to an end.

29 There was considerable dispute between the parties concerning their respective financial contributions towards the relationship (especially towards the household expenses and towards the mortgage debt on the Baulkham Hills property); concerning their respective contributions (especially non-financial contributions) towards the café business; and concerning their respective contributions as homemaker and parent.

30 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.

31 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. Those documents will be retained in the Court file.

32 The amended statement of claim refers to an asserted constructive trust in respect to the Baulkam Hills property, and also to the Contracts Review Act 1980. However, it should be recorded that at the outset of the hearing it was noted that the Plaintiff seeks relief only under the Property (Relationships) Act. The relief sought in the amended statement of claim was that the Plaintiff should receive 50 percent of the net proceeds after the sale of the Baulkham Hills property and the payment of the mortgage debt thereon. (As has been observed, the Plaintiff’s legal entitlement in that property is 10 percent).

33 Although the Plaintiff worked full-time in the café, the Defendant, while working in the café, had other, part-time employment, in which she worked two days a week, with an entity known as L E Williams Hydraulics. Since the Defendant had the responsibility of preparing her children for school, and delivering them at school each morning, she did not usually arrive at the café until mid-morning, whilst the Plaintiff arrived and opened the café at about 6.30 or 7 am.

34 It should also here be observed that the amended statement of claim includes, in paragraph 6 (under the heading “Further matters going to contributions”) and in paragraphs 7 and 8, allegations of what are asserted to be instances of “the Plaintiff [being] subjected to domestic violence and other abusive behaviour on the part of the Defendant”. Those allegations were denied by the Defendant in her defence, and in her affidavit evidence. Those allegations and the denials thereof have little relevance to the claim of the Plaintiff for relief under the Property (Relationships) Act.

35 Further, paragraph 9 of the amended statement of claim makes allegations regarding an incident involving the two parties which is alleged to have taken place in about June 2005. That incident, which, if it occurred at all, is alleged to have taken place some four months after the termination of the relationship, is totally irrelevant to the present proceedings, and will be disregarded.

36 The Court should at the outset identify the assets of the parties at the commencement of the de facto relationship. It becomes necessary, therefore, that the Court should first identify the date of that commencement.

37 I have already observed that the Plaintiff asserted that it commenced in August 1993, when that the parties began to reside together in the rented premises at Quakers Hill; whilst it was the case for the Defendant that that the relationship commenced only in mid-1996, when the parties commenced cohabitation in the Baulkham Hills residence.

38 I am satisfied from the evidence that the de facto relationship between the parties commenced when they began to live together at Quakers Hill, and that that was in August 1993. I have already set forth the respective assets and liabilities of the parties at that time.

39 The Defendant’s two children, Andrew (born in 1987) and Lauren (born in 1989), at the commencement of the relationship were aged respectively six years and four years. Those children resided with the parties throughout the period of the relationship. There was considerable dispute between the parties regarding their respective contributions as homemaker and parent in relation to the children.

40 It was asserted by the Plaintiff that she was, in effect, as much a mother to the children as was their biological mother, the Defendant. That assertion was disputed by the Defendant, who denied that the Plaintiff had had any significant role in the care or upbringing of her children.

41 Throughout most of the relationship each of the parties was in employment, either full-time or part-time. While they operated the café the Plaintiff worked full-time in that business, and the Defendant (who was otherwise in part-time employment) worked part-time in that business. The Plaintiff contributed savings of $7,500 towards that business.

42 The jurisdiction invoked by the Plaintiff in the present proceedings is founded upon section 20 of the Property (Relationships) Act, subsection (1) whereof provides:

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.

43 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 must make a holistic judgment and must 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 of litigious exercises). (See Davey v Lee (1990) 13 FamLR 688; see also Bilous v Mudalia [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.)

44 In considering the claim of the Plaintiff the Court should not be diverted from the clear words of the statute, where, by section 20 (1), the Court is required to have regard to the respective contributions of the parties of the nature referred to in that subsection.

45 It was the evidence of the Plaintiff that she left all financial aspects of the relationship to the Defendant. During the period while they were conducting the café business the Plaintiff, who regarded herself as an equal partner with the Defendant in that business, received drawings of $50 a week for working 5 to 6 days a week in the café. She said that she was not aware of how her earnings compared with the earnings of the other staff members in the café and that neither had she any knowledge of the drawings of the Defendant from the café business.

46 The Plaintiff acknowledged that she made no contribution towards the deposit paid on the purchase of the Baulkham Hills property, and that the arrangement between the parties in that regard was that the Defendant would pay the entirety of the deposit and that the balance of the purchase price would be repaid by the parties equally. The Plaintiff said that the Defendant attended to all the paper work in this regard and that the Plaintiff just signed whatever documents the Defendant placed before her. The Plaintiff said that she understood that she was to be equally responsible for the mortgage repayment.

47 In respect to a number of matters which were in dispute between the parties, the only evidence was that of the parties themselves. Accordingly, it is appropriate that I should express my views concerning the reliance to be placed upon the evidence of each party, where that party’s evidence is not supported by evidence from any other witness, or by documentary evidence.

48 It was quite apparent during cross-examination that the Defendant, either as a result of poor memory, or for some other reason, gave unsatisfactory evidence concerning financial details (for example, the various loan applications (Exhibit E), and her banking transactions).

49 At one point, when questioned concerning various banking transactions, the Defendant gave the incredible response that she did not know whether she took $42,000 out of the joint mortgage account, and transferred that amount to her own personal account.

50 It was also apparent from her responses under cross-examination and from her manner of giving those responses that the Defendant felt very bitter towards the Plaintiff. The Defendant was not prepared to concede anything under cross-examination.

51 I regarded the Defendant as being not at all forthcoming in her responses under cross-examination. She was not prepared to make appropriate concessions. On occasion I regarded her responses under cross-examination to be deliberately evasive.

52 Where the only evidence on a matter in issue consists of the uncorroborated and conflicting oral evidence of each of the parties, I preferred the evidence of the Plaintiff to that of the Defendant.

53 I was most unfavourably impressed by the evidence of the Defendant’s former husband, David Paul Gaudry (both by affidavit and under cross-examination), concerning his involvement in the lives of the two children, Andrew and Lauren after the termination of his marriage to the Defendant. It was quite apparent that Mr Gaudry was determined to be as unhelpful as possible in his answers under cross-examination. For example, it was difficult to accept Mr Gaudry’s asserted lack of knowledge concerning the soccer coaching of his children by the Plaintiff.

54 I have already referred to the fact that the direct financial contributions made by the Plaintiff towards the mortgage repayments did not commence until December 2002, and that for a period of about eight months they were more or less equivalent to the direct contributions made by the Defendant, and that thereafter, until the termination of the relationship in February 2005, the Plaintiff’s direct contributions were about half of those of the Defendant. I have also referred to the fact that the Plaintiff made no direct financial contribution towards the deposit upon the purchase of the Baulkham Hills property.

55 Nevertheless, it should not be overlooked that the profit of about $55,000 which the parties made upon the purchase and sale of the two investment properties in Queensland was a profit to which the Plaintiff was entitled equally with the Defendant. Yet the entirety of that profit was used to reduce the mortgage debt upon the Baulkham Hills property, in which the Plaintiff had only a 10 percent interest, compared with the Defendant’s 90 percent interest.

56 Neither should it be overlooked that the Plaintiff’s mother provided an amount of $45,000, the entirety of which sum went to reduce the mortgage debt on the Baulkham Hills property. In this regard I recognise, however, that that payment by the Plaintiff’s mother can be characterised as being made in return for work performed upon her house, by way of restoration and renovation, with a view to obtaining (as, in the event, it did) a higher sale price. Despite the Defendant’s assertion that she alone had effected those restorations and renovations, I am satisfied that the Plaintiff also participated in those activities.

57 Further, it should also not be overlooked that the Plaintiff by becoming a co-borrower with the Defendant, became jointly liable with the Defendant for any default upon the mortgage, despite the fact that the Plaintiff’s legal entitlement was to only a 10 percent interest in the subject property.

58 Neither should it be overlooked that it is unlikely that the Defendant alone would have been able to borrow the entirety of the mortgage loan, and that without the participation of the Plaintiff, the Defendant could not have purchased the Baulkham Hills property on her own.

59 I am satisfied that the contributions of the Plaintiff as a homemaker and a parent were considerably greater than were conceded by the Defendant, even if they were not as great as the Plaintiff herself asserted.

60 I am satisfied that the non-financial contributions made by the Plaintiff to the relationship, especially those made by her in the café business, where her drawings were only $50 a week, as well as her non-financial contributions as homemaker and parent, were not adequately recognised by a 10 per cent interest in the Baulkham Hills property.

61 I am satisfied that the totality of the contributions of the Plaintiff should be recognised by a considerably greater interest in the Baulkham Hills property than her 10 per cent legal interest therein. In my conclusion that interest, although not as great as the interest to which I consider the Defendant is entitled, should be significantly greater than 10 percent. I consider that the Plaintiff has established an entitlement to a 40 per cent interest in the equity in that property.

62 I have already recorded that the present agreed value of the house property of $580,000. At the time of separation the mortgage debt outstanding on that property was $72,000. (The fact that that mortgage debt was subsequently increased by the Defendant, without the knowledge or consent of the Plaintiff, does not affect the entitlement of the Plaintiff to an interest calculated upon the basis of the mortgage debt at the time of the termination of the relationship).

63 In my conclusion the Plaintiff has established an entitlement to receive from the Defendant the sum of $203,000, being 40 percent of the equity in that house property (such equity being the present agreed value, less the mortgage debt outstanding at the termination). Accordingly, it is appropriate that an order should be made which would have the effect of bringing to a conclusion all financial relations between the parties, as contemplated by section 19 of the Act. Therefore, I propose to make an order that upon the payment by the Defendant to the Plaintiff of the sum of $203,000 the Plaintiff transfer to the Defendant the Plaintiff’s interest in the Baulkham Hills property, to the intent that thereupon the Defendant will become the sole registered proprietor of that property.

64 I have not heard any submissions regarding costs. The Plaintiff (as I have already observed) originally in her amended statement of claim sought an order that the house property be sold and that, after the discharge of the mortgage, the proceeds of sale be distributed equally between the parties. That relief was not pursued at the hearing. The Plaintiff ultimately sought relief which recognised her as having a 40 percent interest in the equity of the property.

65 The Defendant denied the entitlement of the Plaintiff to anything more than her legal interest of 10 per cent in the property.

66 The Plaintiff has been substantially successful in her claim. I consider that she is entitled to an order that the Defendant pay her costs. However, as I have not heard submissions as to costs, I will reserve leave to the parties to seek, within 14 days of the date hereof, a variation of that order.

67 Accordingly, I make the following orders:

1. I declare that the Plaintiff is entitled to a 40 percent interest in the equity of the parties in the Baulkham Hills property at the date of the termination of the relationship between the parties.

2. I order that, upon payment by the Defendant to the Plaintiff of the sum of $203,000, the Plaintiff transfer to the Defendant the right, title and interest of the Plaintiff in the Baulkam Hills property.

3. I order that the Defendant pay the costs of the Plaintiff of the proceedings.

4. I reserve to the parties liberty to apply, within 14 days of the date hereof, for a variation of order 3.

5. I reserve to the parties liberty to apply in respect to the implementation of order 2.

6. The exhibits may be returned.

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