(1) Thompson v White (2) White v Thompson - [2006] NSWSC 110

CITATION: (1) Thompson v White (2) White v Thompson [2006] NSWSC 110

HEARING DATE(S): 02/03/06

JUDGMENT DATE :
2 March 2006

JURISDICTION: Equity Division

JUDGMENT OF: Barrett J

EX TEMPORE JUDGMENT DATE: 03/02/2006

DECISION: Applications dismissed with costs

CATCHWORDS: REAL PROPERTY - caveat - application for extension - caveator shown to be party to joint venture - property subject to caveat purchased with proceeds of sale of joint venture asset - whether caveator shows prima facie claim to interest in property - need for undertaking as to damages - caveator having liabilities substantially exceeding assets - undertaking not of substance - PROCEDURE - order quarantining funds pending determination of entitlements to them - one party seeks release of part of funds - whether Mareva-type exception for legal expenses applicable

LEGISLATION CITED: Real Property Act 1900, s.74K

CASES CITED: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Stern v McArthur (1988) 165 CLR 489

PARTIES: (1) Byron Ward Thompson - Plaintiff
Julian John White - First Defendant
Romeo Medina Libut - Second Defendant
(2) Julian John White - Plaintiff
Jennifer Joy Thompson - First Defendant
Byron Ward Thompson - Second Defendant

FILE NUMBER(S): SC (1) 2685/03; (2) 1563/06

COUNSEL: (1) Mr S.J. Blanks, Solicitor - Plaintiff
First Defendant in person
(2) Plaintiff in person
Mr S.J. Blanks, Solicitor - Defendants

SOLICITORS: (1) SBA Lawyers - Plaintiff
First Defendant in person
(2) Plaintiff in person
SBA Lawyers - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

THURSDAY 2 MARCH 2006

2685/03 BYRON WARD THOMPSON v JULIAN JOHN WHITE & ANOR
1563/06 JULIAN JOHN WHITE v JENNIFER JOY THOMPSON & ANOR

JUDGMENT

1 On 8 December 2005, Gzell J delivered a judgment concerning a dispute between Mr White, Mr Thompson and Mr Libut centred upon a property at Seaforth of which Mr Thompson was previously the registered proprietor, a property at Somersby into which part of the proceeds of the sale of the Seaforth property was channelled and a sum of $1 million being a quarantined segment of the Seaforth sale proceeds. The sum of $1 million is held in a controlled moneys account under the control of solicitors in accordance with an order made by me on 9 May 2003 and varied by Hamilton J on 13 May 2003. The orders I made were made by consent. Those made by Hamilton J were made upon a contested hearing in which his Honour found that there was an arguable case of a proprietary interest in the Seaforth property on the part of Mr White.

2 The orders in respect of the deposit part of the proceeds of sale of the Seaforth property in the controlled moneys account included Order 6 as follows:

“The solicitors hold the sum in the account until further order or until agreement is reached between the plaintiff and the defendants as to the further retention or release of the sum.”

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] NSWSC 110
Decision Date: 2 March 2006

CaseChat Overview and Summary

In the High Court, Thompson and White were parties to a joint venture which was wound up, with assets sold to satisfy debts of the venture. The proceeds were used to purchase a property, which White then placed under a caveat. Thompson sought an extension of the caveat, which was granted by the lower court. Thompson then sought to release some of the funds pending determination of the parties' entitlements. White opposed this, arguing that the funds should be quarantined pending resolution of the matter. The central legal issue was whether Thompson's caveat demonstrated a prima facie claim to an interest in the property, and if so, whether an undertaking as to damages was necessary. Additionally, given Thompson's liabilities substantially exceeded his assets, the court had to determine if his undertaking was of substance. Furthermore, the court had to decide whether there was a Mareva-type exception for legal expenses when funds were quarantined pending the determination of the parties' entitlements.

The court held that Thompson's caveat was valid as it demonstrated a prima facie claim to an interest in the property. However, the undertaking as to damages provided by Thompson was not of substance, as his liabilities substantially exceeded his assets, and he did not show any other means of satisfying a potential judgment against him. Regarding the funds, the court found that they should be quarantined pending resolution of the matter, but a Mareva-type exception for legal expenses was not applicable in this case. The court emphasised the importance of the caveator providing a substantial undertaking to cover potential damages to ensure the validity of the caveat.

Consequently, the court dismissed Thompson's application for an extension of the caveat, as his undertaking as to damages was not of substance. Furthermore, the court ruled that the funds should remain quarantined pending the resolution of the parties' entitlements, with no exception for legal expenses. The court's decision underscored the need for a prima facie claim to an interest in the property and a substantial undertaking as to damages to support a valid caveat. The court's ruling also highlighted the importance of maintaining the quarantine of funds until the dispute between the parties is resolved.

Orders