Calabretta v Huyen Vi Buddhist Enlightenment and Charity Association Inc
[2023] VSC 405
•14 July 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2021 02925
BETWEEN:
| DOMENICO ALESSANDRO CALABRETTA AND GRAHAME WARD IN THEIR CAPACITY AS THE RECEIVERS AND MANAGERS OF MELBOURNE LINH SON BUDDHIST SOCIETY INC (RECEIVERS AND MANAGERS APPOINTED) (A0027004L) | First Plaintiff |
| and | |
| MELBOURNE LINH SON BUDDHIST SOCIETY INC (RECEIVERS AND MANAGERS APPOINTED)(A0027004L) | Second Plaintiff |
| v | |
| HUYEN VI BUDDHIST ENLIGHTENMENT AND CHARITY ASSOCIATION INC (A0091092Y) | Defendant |
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JUDGE: | Matthews J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 7 June 2023 |
DATE OF JUDGMENT: | 14 July 2023 |
CASE MAY BE CITED AS: | Calabretta & Anor v Huyen VI Buddhist Enlightenment and Charity Association Inc |
MEDIUM NEUTRAL CITATION: | [2023] VSC 405 |
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EQUITABLE LIEN – Claim that second plaintiff has an equitable lien in respect of real property – No evidence as to purpose of payments made by second plaintiff – No evidence of obligation by defendant to repay the second plaintiff – Equitable lien not made out on the evidence – Hewett v Court (1983) 149 CLR 639.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J Kohn of counsel | Nelson McKinnon Lawyers |
| No appearance for the Defendant |
HER HONOUR:
Introduction
In this proceeding, the plaintiffs seek a declaration that the defendant holds the property located at 134-146 Westcott Parade, Rockbank in the State of Victoria — being the property described in certificate of title volume 10415 folio 751 (‘Property’) —subject to an equitable interest in favour of the second plaintiff. The plaintiffs also seek orders, amongst others, that the defendant execute such deeds, instruments or other documents reasonably necessary to give effect to the declaration.
By order made on the Court’s own motion on 7 June 2023 by McDonald J, the trial of this proceeding was referred to me for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’), as I was an associate justice at the time of the hearing. On 14 June 2023, after the hearing and prior to delivering judgment, I was appointed as a judge of this Court.
For the reasons which follow, the Court declines to make the declaration sought and the proceeding will be dismissed.
Procedural background
The proceeding was commenced by writ and statement of claim filed 16 August 2021.
The defendant’s then solicitor, Tran Minh Phiuoc (‘Phiuoc’) filed a notice of appearance on 10 September 2021. No defence was filed.
On 22 July 2022, Keith JR made orders by consent that, inter alia, the defendant file and serve a defence by 16 August 2022, the parties make discovery by 11 October 2022, the parties attend a mediation by 8 November 2022, and the proceeding be listed for directions on 15 November 2022.
According to the Court file, no defence was filed in compliance with the orders made on 22 July 2022, whether by the date stipulated or at all.
At a directions hearing on 15 November 2022, the plaintiffs’ solicitor appeared and there was no appearance by or for the defendant. Keith JR noted in ‘other matters’ that the defendant has a solicitor on the record and the plaintiffs informed the Court that they have attempted to contact the defendant’s solicitor but have not received a response. Keith JR ordered the plaintiffs to file and serve any further evidence upon which they sought to rely, along with written submissions, by 6 December 2022 and the proceeding was to be listed for hearing not before 6 December 2022 on an estimate of 1 hour. The plaintiffs were directed to serve on the defendant a notice of the orders made that day.
The trial was subsequently listed for 2 March 2023 before me.
On 23 February 2023, the plaintiffs filed a summons seeking to vacate the trial date, as recently issued subpoenas were still being complied with and documents produced were being reviewed. On 28 February 2023, that summons was returned before me. I vacated the trial and re-fixed it for 7 June 2023. I also extended the date by which the plaintiffs were to file and serve any further evidence to 30 March 2023 and for written submissions by 21 April 2023. At that hearing, Mr T.D Thich sought to appear for the defendant. Mr Thich said he was an assistant to the president of the defendant. I gave leave for that day only. I noted in ‘other matters’ that by previous correspondence with the Court, Phiuoc had stated that they had ceased acting for the defendant and had filed a notice of ceasing to act. My associates informed Phiuoc that the notice of ceasing to act had not been accepted by the registry as the proceeding had been fixed for trial, but that an application for leave to cease acting could be filed and made returnable for 28 February 2023. No such application was filed before that date. I also noted that if the defendant wished to participate in the proceeding, including at the trial, it would need to either have Phiuoc take steps on its behalf or file an application to cease acting, or to obtain a new solicitor and have that solicitor go on the record.
On 31 May 2023, Phiuoc made an application, supported by affidavit, for leave to cease acting. On 1 June 2023, Mr Thich sent an email to my associates saying that the defendant had asked Phiuoc to withdraw from acting. I made orders on 2 June 2023 granting Phiuoc leave to cease acting.
On the afternoon before the trial, Mr Thich sent an email to my associates stating that the defendant had a new lawyer, who was busy in court all day, and that she would be in contact but that the defendant wanted the hearing for 7 June cancelled. My associates responded to the effect that the new solicitor would need to file a notice of appearance and that, unless there was an agreement to an adjournment, any such application would need to be made at the commencement of the hearing on 7 June. Mr Thich responded by email indicating that he understood the hearing would go ahead and that an adjournment application, if made, would be considered then.
When the trial commenced, Mr Thich sought to appear on behalf of the defendant. No new solicitor had filed an appearance or appeared at the hearing. I allowed Mr Thich an opportunity to address the Court to explain what the defendant wanted, and then ruled that he could not appear for the defendant and that the hearing would not be adjourned. Reasons in both respects were given orally at the hearing and are recorded in the transcript.
The hearing of the trial then proceeded.
Evidence
The plaintiffs rely on the affidavit of:
(a) James Foster sworn 23 February 2023 (‘Foster Affidavit’). Mr Foster is a solicitor employed by Nelson McKinnon Lawyers, the solicitors for the plaintiffs; and
(b) Grahame Ward sworn 30 March 2023 (‘Ward Affidavit’). Mr Ward is one of the first plaintiffs and is one of the joint and several receivers and managers appointed to the second plaintiff.
The second plaintiff was the registered proprietor of the Property from 26 June 2009 to 7 July 2015.[1]
[1]Exhibit bundle to the Ward Affidavit, being Exhibit GW01, pp 45-46.
On 7 July 2015, the second plaintiff sold the Property to the defendant for $1.4m.[2]
[2]A copy of the executed transfer of land is at Exhibit GW01, p 47.
The defendant obtained a loan from the Australian and New Zealand Banking Group Ltd (‘ANZ’) for the purposes of purchasing the Property, secured by a mortgage dated 2 June 2015 over the Property (‘ANZ Mortgage’).[3] The ANZ Mortgage is registered on the title to the Property.[4]
[3]A copy of the executed mortgage is at Exhibit GW01, p 49-50.
[4]A copy of the title search for the Property is at Exhibit GW01, p 45-46.
On 28 March 2020, the first plaintiffs were appointed joint and several receivers and managers of the second plaintiff by Istvan Pty Ltd (ATF Anyu Omara Trust) (ACN 621 692 082) (‘Istvan’).[5] Consumer Affairs Victoria was informed of the appointment of the receivers on 1 April 2020 and 9 April 2020.[6]
[5]Ward Affidavit, [6].
[6]Ward Affidavit, [8].
The second plaintiff is not a party to the ANZ Mortgage.[7]
[7]Ward Affidavit, [15].
Mr Ward deposes that the second plaintiff has made payments in the sum of $222,786.55 (‘Payments’) in satisfaction of the defendant’s obligations to the ANZ and other costs associated with the Property.[8]
[8]Ward Affidavit, [16].
Exhibited to the Ward Affidavit are bank statements for the three accounts from which the Payments are said to have been made. These are:
(a) an ANZ account in the name of ‘Melbourne Linh Son Buddhist Society Inc’ with an account number ending in 23899 (‘MLS Society Account’);
(b) an ANZ account termed ‘business extra’ in the name of ‘Melbourne Linh Son Buddhist Congregatio’[9] with an account number ending in 49605 (‘MLS Congregation Account’); and
(c) an account termed ‘business transaction account’ with the Commonwealth Bank of Australia (‘CBA’) in the name of ‘Melbourne Linh Son Buddhist Congregation Inc’ with an account number ending in 54342 (‘CBA Account’).
[9]I assume this is meant to be Congregation, but all of the statements are labelled in the manner described.
Also exhibited to the Ward Affidavit are the ANZ bank statements for two accounts in the name of the defendant:
(a) one termed a ‘business loan’ with an account number ending in 38951 (‘Defendant Loan Account’); and
(b) another termed ‘business extra’ with account number ending in 2945-94448 (‘Defendant Extra Account’).
Mr Ward then summarises, in the Ward Affidavit, the individual Payments in a table,[10] which are drawn from the bank statements referred to in paragraph 22 above. That table sets out the bank account from which the Payment was made, the date of the Payment and the amount of the Payment.
[10]Ward Affidavit, [16].
On the day of the hearing, the plaintiffs provided a revised version of the table, adding a column for the page number in the exhibit for the bank statement recording the bank account into which the Payment was deposited. At the hearing, I asked for this to be further revised to show which of the defendant’s two accounts the Payment was paid into and whether the Payment was moved from one of those accounts to the other (as had been submitted at the hearing). I was provided with this further update later on 7 June 2023.
Mr Ward deposes that, according to his review of the books and records of the second plaintiff, the Payments were not treated as a loan, gift or debt from the second plaintiff to the defendant.[11]
[11]Ward Affidavit, [20]. Copies of the financial statements of the second plaintiff for 2016, 2017, 2018 and 2019 are contained in Exhibit GW01, pp 345-422.
Mr Ward says that, in light of this, he believes that the second plaintiff has an interest in the Property in proportion to its contributions to the ANZ Mortgage and the other costs associated with the Property and that interest is held by the defendant pursuant to an equitable trust, charge or lien.[12]
[12]Ward Affidavit, [21].
On or about 16 June 2020, the second plaintiff lodged a caveat on the Property (‘Caveat’).[13] The Caveat claimed an interest in the freehold estate on the grounds of an implied, resulting or constructive trust, and prohibited any dealings on the title.
[13]Ward Affidavit, [22]. A copy of the caveat is at Exhibit GW01, pp 423-424.
On or about 2 August 2021, the plaintiffs received a notice from the Registrar of Titles pursuant to s 89A(3) of the Transfer of Land Act 1958 (Vic) (‘TLA’) in relation to the Caveat. I apprehend that this proceeding was commenced in response to this notice and so as to prevent the Caveat lapsing in accordance with the provisions of the TLA.
The plaintiffs’ statement of claim
In broad terms, the plaintiffs claim that the second plaintiff made the Payments[14] in satisfaction of the defendant’s obligations to the ANZ and other costs associated with the Property, that the payments were not intended to be a gift from the second plaintiff to the defendant, and that the second plaintiff was under no obligation to make the payments. The plaintiffs claim that accordingly, the second plaintiff has an interest in the Property in proportion to its contributions to the ANZ and other costs associated with the Property, and that interest is held by the defendant pursuant to an equitable trust, charge or lien.
[14]The Payments are particularised in a table which is identical to that in the Ward Affidavit as described in these reasons.
The plaintiffs claim a declaration that the defendant holds the Property subject to an equitable trust, charge or lien in favour of the second plaintiff in proportion to the second plaintiff’s contribution to the ANZ and other costs associated with the Property (‘Declaration’). They also seek orders that the defendant execute such deeds, instruments or other documents reasonably necessary to give effect to the declaration sought or that a registrar of the Court be ordered to execute the same if the defendant fails or refuses to execute them, and an order that all necessary enquiries be made and accounts taken of all dealings and transactions entered into in relation to the Property. The plaintiffs also seek an order that the Caveat be extended until further order of the Court.
At trial, the plaintiffs stated that the only basis upon which they pressed the Declaration was pursuant to an equitable lien, confirming that they no longer sought the Declaration on the basis of an equitable trust or equitable charge.
Plaintiffs’ submissions
The plaintiffs’ submissions are set out below.
The plaintiffs submit that an equitable lien in favour of the second plaintiff should be found to exist in respect of the Property.[15]
[15]See Hewett v Court (1983) 149 CLR 639 at 668 (‘Hewett v Court’).
They contend that, generally speaking, an equitable lien is a right against property (real or personal)[16] of another which arises automatically by implication of equity to secure the discharge of actual or potential indebtedness.[17] An equitable lien does not depend either upon contract or upon possession.[18] It arises by operation of law, under a doctrine of equity ‘as part of a scheme of equitable adjustment of mutual rights and obligations’.[19] It has been held that the essential feature for imposition of an equitable lien is that ‘solid and substantial justice’ requires it[20] or, put another way, that it would be unconscionable for the property owner to retain the benefit,[21] or that an equitable lien is necessary to protect a party against some inequitable loss.[22]
[16]The property may be ‘land or personalty or both’: Hewett v Court at 663 per Deane J citing Davies v Thomas [1900] 2 Ch 462 at 468; Re Stucley [1906] 1 Ch 67 at 75–6 and 79–80.
[17]Hewett v Court at 645 per Gibbs J; at 654 per Wilson and Dawson JJ; and at 663 per Deane J.
[18]Hewett v Court at 645 per Gibbs CJ.
[19]Davies v Littlejohn (1923) 34 CLR 174 at 185 per Isaac J, quoted in Hewett v Court at 645 per Gibbs CJ.
[20]Rose v Watson (1864) 10 HL Cas 672 at 684, Lord Cranworth, cited by Gibbs CJ with approval in Hewett v Court at 645.
[21]Morris v Morris [1982] 1 NSWLR 61 per McLelland J, cited in Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 38 per Young J.
[22]See McClintock, Equity 2nd ed, § 118 as referenced in Stephenson Nominees Pty Ltd v Official Receiver on behalf of Official Trustee in Bankruptcy; Ex Parte Roberts (1987) 76 ALR 485 at 504 per Gummow J.
The plaintiffs submit that Gibbs CJ in Hewett v Court describes an equitable lien as an adjustment of rights and obligations and that it ‘would be difficult, if not impossible, to state a general principle which would cover the diversity of cases in which an equitable lien has been held to be created’.[23]
[23]Hewett v Court at 645.
The plaintiffs say that in Hewett v Court, the High Court decided that work and labour done by a builder on the construction of a prefabricated house erected on the purchaser’s land gave rise to an equitable lien. They say that Deane J referred to the concept of an equitable lien in the following terms:
Though called a lien, it is, in truth, a form of equitable charge over the subject property … in that it does not depend on possession and may, in general, be enforced in the same way as any other equitable charge, namely, by sale in pursuance of court order or, where the lien is over a fund, by an order for payment thereout.[24]
[24]Hewett v Court at 663.
In their written outline, the plaintiffs submit that Deane J also laid down the following conditions as sufficient, although not necessary, for the implication of an equitable lien:[25]
[25]Hewett v Court at 668.
(a) there must be an actual or potential indebtedness on the part of the property owner to the other party arising from a payment or promise of payment, either of consideration in relation to the acquisition of the property, or of an expense incurred in relation to the property;
(b) the property (or, arguably, property including the property) must be specifically identified and appropriated to the performance of the contract; and
(c) the relationship between the actual or potential indebtedness and the identified and appropriated property must be such that the owner would be acting unconscionably or unfairly if the owner were to dispose of that property (or, if it is appropriate, more than a particular portion of the property) to a stranger, without the consent of the other party, or without the actual or potential liability having been discharged.
The plaintiffs submit that this test for the imposition of an equitable lien was confirmed in Coad v Wellness Pursuit Pty Ltd,[26] Porter v Bonarrigo,[27] and Western Pacific Developments Pty Ltd (in liq) v Murray t/as Murray Excavators.[28]
[26][2009] WASCA 68.
[27][2009] VSC 500.
[28][2000] VSC 436.
The plaintiffs submit that in the present case each of the three elements contemplated by Deane J in Hewett v Court are present:
(a) the second plaintiff has transferred the sum of $222,786.55 directly to the ANZ which discharged the defendant’s liability to the ANZ in relation to the Property which gives rise to an actual indebtedness of the defendant to the second plaintiff;
(b) the property in question is clearly identifiable, being the Property; and
(c) in all the circumstances of this case, it would be unconscionable for the defendant to sell the property at any time without repaying the second plaintiff out of whatever proceeds of sale became available.
In light of the above, the plaintiffs submit that the defendant holds the Property subject to an equitable lien in favour of the second plaintiff.
Consideration
Apart from what is set out above from Hewett v Court, the principles regarding an equitable lien are usefully summarised (including by reference to Hewett v Court) in Principles of Equity and Trusts:[29]
An equitable lien automatically arises where a debt can be proven and property is specifically identified, or related to, the performance of the agreement. An equitable lien should be distinguished from a possessory lien as it is not necessary for a creditor to have possession of property in order for a lien to arise in equity. To establish an equitable lien or a charge, all that needs to be proven is that it would be unconscientious to allow a debtor to dispose of property without recognising the interests of the creditor. An equitable lien is a right against property which arises automatically by implication of equity to secure the discharge of an actual or potential indebtedness.
[29]Hepburn, Samantha J Principles of Equity and Trusts (6th edition, 2020, The Federation Press) p 100.
In relation to the conditions said to be sufficient for the implication of an equitable lien (see paragraph 38 above), in their oral submissions the plaintiffs did cite the preceding sentences from the judgment of Deane J in Hewett v Court, being:
It is adequate for present purposes that I identify what I consider to be the circumstances which are sufficient for the implication, independently of agreement, of an equitable lien between parties in a contractual relationship.[30]
[30]Hewett v Court at 668.
However, the plaintiffs did not cite the passage immediately preceding this, and I have set out the full passage here (citations omitted, emphasis added by me) as it is necessary to have regard to the full context:
It has been said that the doctrine of equitable lien “was introduced for the sole purpose of furnishing a ground for the specific remedies which equity confers, operating upon particular identified property, instead of the general pecuniary recoveries granted by courts of law”. In Whitbread & Co. Ltd. v. Watt Vaughan, Williams L.J. referred to the purchaser’s lien for his deposit as “a right which may be said to have been invented for the purpose of doing justice. It is a fiction of a kind which is sometimes resorted to at law as well as in equity”. General statements of this type lend some support for the approach that one should seek to identify a comprehensive principle covering the implication of any type of equitable lien. Apart from broad generalizations such as “the phrase equitable lien may not … do much more than express the opinion of the court that the facts give a priority to the party said to have it” however, it is difficult, if not impossible, to formulate any satisfactory statement of the necessary or sufficient circumstances for the implication of an equitable lien which is applicable to any relationship at all (e.g. the trustee’s lien over trust assets; the solicitor’s lien over the proceeds of an action). I do not propose to essay that task here. It is adequate for present purposes that I identify what I consider to be the circumstances which are sufficient for the implication, independently of agreement, of an equitable lien between parties in a contractual relationship. Those circumstances have, to some extent, been indicated in what has been said above. They are: (i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of the property or of an expense incurred in relation to it; (ii) that that property (or arguably property including that property) be specifically identified and appropriated to the performance of the contract; and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged. It may be that the above circumstances or tests, particularly (i), would be unduly restrictive if propounded as a statement of exclusion. As has been said however, they are formulated as a statement of what is sufficient rather than what is essential. Whether or not they exist or are satisfied in a particular case should, like most questions involved in the application of equitable doctrines, be determined by reference to the substance of the transaction rather than its form: “the general principle of disregarding the letter for the substance”.[31]
[31]Hewett v Court at 667-8.
Thus, the plaintiffs’ written outline did not refer to the fact that the conditions said by Deane J to be sufficient for the implication of an equitable lien were confined to instances where the parties were in a contractual relationship. While the plaintiffs’ oral submission cited that part of the passage I have underlined above, the confinement of the conditions to a contractual relationship was not emphasised by them. The earlier part of the passage was not cited at all. It seems to me, particularly from those parts of the passage I have underlined and bolded above, that not only was Deane J confining the three conditions to a contractual relationship, his Honour was specifically disavowing that these were necessary or sufficient conditions for an equitable lien that is applicable to any relationship at all.
Therefore, the three conditions sufficient for implying an equitable lien referred to by Deane J in Hewett v Court and relied upon by the plaintiffs are confined to instances where the parties are in a contractual relationship. This conclusion arises by the express terms of his Honour’s judgment.
Thus, the first question for me to address is this: is the relationship between the second plaintiff and the defendant such that a contract, or relationship of the types recognised in other cases, exists to support the implication of an equitable lien.
In the case before me, there is no evidence of any contractual relationship between the second plaintiff and the defendant in connection with the Payments. The only contractual relationship referred to is that of vendor and purchaser in respect of the sale of the Property by the second plaintiff to the defendant. Even here, there is no evidence of the contract of sale itself: all that is in evidence is the transfer of land form pursuant to which the defendant was registered on the title to the Property as the registered proprietor. There is no relevant contract between the second plaintiff and the defendant, and the plaintiffs did not submit that there was one.
The examples of situations or relationships referred to in Hewett v Court where an equitable lien was held to arise include: a purchaser’s lien on purchase price paid for property where the sale does not go through; a vendor’s lien for unpaid purchase money for the sale of property; parties in a partnership; trustee and beneficiary; and solicitor and client.
As Deane J notes, ‘the established examples of equitable lien are between parties in a contractual or quasi-contractual relationship’.[32] In this case, the second plaintiff and the defendant do not fall within a relationship recognised by the authorities as giving rise to the implication of an equitable lien.
[32]Hewett v Court at 663.
Even if it could be said that the three conditions set out by Deane J in Hewett v Court apply generally and not just to parties in a contractual relationship, I am not satisfied that the plaintiffs have established that all three of those three conditions have been met in this case.
In respect of the first condition, two elements must be established: that there is an actual or potential indebtedness on the part of the defendant to the second plaintiff arising from the Payments; and that the Payments were consideration in relation to the acquisition of the Property or of an expense incurred in relation to the Property.
Firstly and most importantly, the plaintiffs have not established that there is an ‘actual or potential indebtedness’ on the part of the defendant to the second plaintiff arising from the second plaintiff making the Payments.
There is no evidence whatsoever as to the nature or purpose of the Payments. The only evidence in this regard is Mr Ward’s review of the books and records of the second plaintiff and his statement that the Payments were not treated as a loan, gift or debt from the second plaintiff to the defendant. I have also reviewed the financial statements of the second plaintiff, as exhibited to the Ward Affidavit. If the Payments were made due to a loan from the second plaintiff to the defendant, then one would expect to see the loan listed as an asset of the second plaintiff. There is no mention of anything which could constitute such a loan, noting that other loans by the second plaintiff are recorded therein. If the Payments were made due to a debt owed by the second plaintiff to the defendant, then one would expect to see the debt listed as a liability of the second plaintiff, noting that other loans/debts owed by the second plaintiff are recorded therein. There is no mention of anything which could constitute such a debt. If the Payments were made as a gift or donation by the second plaintiff to the defendant, then one would expect to see that listed in the profit and loss statements as an expense. In this regard, I note that the profit and loss statement for the year ended 30 June 2016 in the expenses column records nil donations for 2016 and $100 for 2015.[33] The profit and loss statement for the year ended 30 June 2017 records donations in the income column but none in the expenses column.[34] The profit and loss statement for the year ended 30 June 2019 records donations in the income column, but does not list donations in the expenses column.[35]
[33]Exhibit GW01, p 347.
[34]Exhibit GW01, p 361.
[35]Exhibit GW01, p 401.
The bank statements were referred to in the plaintiffs’ submissions so as to prove the flow of the Payments from the second plaintiff’s bank accounts to the defendant’s bank accounts. That is, they were relied on to establish that the second plaintiff made the Payments and the defendant received the Payments.
The plaintiffs did not make any submissions as to whether the bank statements gave any indication as to the purpose for the Payments, other than saying that all which can be seen is that the second plaintiff’s money was used to pay the interest on the defendant’s loan with the ANZ.
I have reviewed the bank statements, and make the following observations:
(a) in the second plaintiff’s bank statements, most of the Payments are recorded as a transfer or payment to the second defendant;
(b) where the Payment amount is $187.50, this is recorded in the second plaintiff’s bank statements as ‘fee redirected from 3960-45992’. There is no evidence about an account with the number 3960-45992;
(c) in the defendant’s bank statements, most of the Payments (not the $187.50 amounts) are recorded as transfers from ‘Melb Linh Son’;
(d) where the Payment was made by the second plaintiff into the Defendant’s Extra Account, the full amount of the Payment is recorded as a credit and then another lesser amount is recorded as a debit with the notation payment to the defendant, and then that lesser amount is recorded in the Defendant’s Loan Account as a credit with the notation ‘interest redirected from’ the Defendant’s Extra Account;
(e) in the Defendant’s Extra Account, where the amount debited is $187.50, the notation reads as ‘fee redirected from’ the Defendant’s Loan Account;
(f) in the Defendant’s Loan Account, where the amount debited is $187.50, the notation reads as ‘loan administration charge’; and
(g) the Property appears to be mentioned in only one instance in the bank statements. One of the Payments claimed is a payment of $5,200 on 28 September 2016.[36] In the MLS Society Account, it is recorded as a transfer to the defendant. In the Defendant’s Extra Account, it is recorded as ‘ANZ internet banking funds tfer pay loan Westcott Linh Son’.[37]
[36]Exhibit GW01, p 107.
[37]Exhibit GW01, p 315.
The second plaintiff’s bank statements do not give any indication as to the purpose for the Payments.
The defendant’s bank statements also do not give any indication as to the second plaintiff’s purpose when making the Payments. The only Payment which may arguably be close is that referred to in paragraph 57(g) above. However there is no evidence before me as to where the notation ‘ANZ internet banking funds tfer pay loan Westcott Linh Son’ comes from. If it emanated from the defendant, then that does not reveal the second plaintiff’s purpose but may reveal how the defendant treated it. If it emanated from the second plaintiff, then it does not say anything about whether it was a loan (from the second plaintiff to the defendant), debt or a gift.
Thus, there is no evidence that the second plaintiff made the Payments in satisfaction of a debt it owed to the defendant, since there is no evidence of such a debt. There is also no evidence that the second plaintiff made the Payments as a donation or gift to the defendant.
There is no evidence that the defendant is obliged to repay the Payments to the second plaintiff, that is, there is no evidence that the Payments constituted a loan by the second plaintiff to the defendant.
Besanko J in Roberts-Smith v Fairfax Media Publications Pty Ltd (No 41) said that (citations omitted, emphasis added by me):[38]
In a circumstantial case, all of the circumstances that are established by the evidence are to be considered and weighed in deciding whether the circumstances raise a more probable inference in favour of what is alleged. … Sir Frederick Jordan in Carr v Baker said (at 306):
The existence of a fact may be inferred from other facts when those facts make it reasonably probable that it exists; if they go no further than to show that it is possible that it may exist, then its existence does not go beyond mere conjecture. Conjecture may range from the barely possible to the quite possible.
[38][2023] FCA 555 at [169].
To the extent that it is possible to draw any inference from the available evidence, the available inferences would be that the Payments were made to discharge a debt owed by the second plaintiff to the defendant; or that the Payments were made as a loan from the second plaintiff to the defendant; or that the Payments were a gift from the second plaintiff to the defendant. The problem here for the plaintiffs is that any one of these inferences is equally as likely as the others such that no inference can reliably be drawn.
Thus, there is no evidence that the defendant is indebted, actually or potentially, to the second plaintiff at all. In my view, while it is not explained by Deane J in Hewett v Court, ‘potentially’ likely means ‘contingent’. I do not think it is intended to encompass situations where the payments could be pursuant to a loan, debt or gift, with none being more likely than the other. An obligation on the part of the defendant to repay the Payments to the second plaintiff, in other words, a debt, has not been proven.
That, in my view, is sufficient to dispose of the proceeding, since there is no basis for the implication of an equitable lien. However, I will go on to set out my views on the other aspects of the plaintiffs’ case.
The second element which must be established is that the Payments were in connection with the Property. The plaintiffs contend that the Payments were used to discharge the defendant’s liability to the ANZ in relation to the Property.
The bank statements for the Defendant’s Loan Account are evidence for the existence of a loan to the defendant from the ANZ. The bank statements for the Defendant’s Loan Account reveal that:[39]
[39]Exhibit GW01, p 232.
(a) on 30 June 2015, the loan was drawn down in the amount of $980,000;
(b) on 3 July 2015, stamp duty on a transfer of land was debited in the amount of $77,000;
(c) on 10 July 2015, fees for the registration of a discharge of mortgage, the registration of a mortgage, and the registration of a transfer of land were debited; and
(d) on 30 July 2015, interest was charged to the Defendant’s Loan Account and credited as paid by redirection from the Defendant’s Extra Account.
Apart from the bank statements for the Defendant’s Loan Account, there is no direct evidence as to a loan between the defendant and the ANZ. There is no loan agreement in evidence (this does not appear to have been sought in either of the subpoenas issued by the plaintiffs to the ANZ). There are the matters deposed to in the Ward Affidavit as set out at paragraph 18 above, however, this appears to be an inference drawn or assumption made based on the existence of the ANZ Mortgage and its registration on the title to the Property.
Thus, while there is evidence of a loan from the ANZ to the defendant and there is evidence of the ANZ holding a mortgage over the Property, there is no evidence to directly link the Defendant’s Loan Account (being the only ANZ loan account of the defendant in evidence) with the ANZ Mortgage. There is also no evidence that the purpose of the Defendant’s Loan Account was to purchase the Property. The plaintiffs did not make any detailed submissions about this issue. Rather, they took me through the evidence as to the ANZ Mortgage, observing that the memorandum of common provisions (‘MCP’) was in evidence but not taking me to that, and effectively assuming that it went without saying that payments made to the defendant’s ANZ accounts satisfied the defendant’s obligations to the ANZ in respect of the loan secured by the ANZ Mortgage. Having reviewed the MCP myself, it appears that the ANZ Mortgage was an ‘all monies’ mortgage such that it secured all monies owed for any reason to the ANZ by the defendant.[40]
[40]A copy of the MCP is at Exhibit GW01, pp 51-85; see clause 2.2 for the definition of ‘Secured Money’.
I therefore find that the majority of the Payments made to the Defendant’s Loan Account were applied to satisfy the defendant’s obligations to the ANZ, obligations which were secured by the ANZ Mortgage. The situation with the Payments made to the Defendant’s Extra Account is less straightforward:. There is no evidence before the Court as to whether the second plaintiff or the defendant directed that payments made to that account be redirected to the Defendant’s Loan Account or whether that was an action taken unilaterally by the ANZ. I do not think anything much turns on that, however, seeing as the bulk of the Payments made to the Defendant’s Extra Account were redirected to the Defendant’s Loan Account in satisfaction of the interest accruing on the latter. The Payments referred to in this paragraph were made by the second plaintiff.
The exceptions to the finding in the preceding paragraph are as follows:
(a) the evidence regarding the Payments in the amount of $187.50 from the second plaintiff’s bank accounts is confusing and inconclusive. These are not recorded as payments to the defendant in the second plaintiff’s bank statements, and the notation is ‘fee redirected from 3960-45992’. As noted above, there is no evidence about an account with that number. I am not satisfied that these Payments in the amount of $187.50 were made by the second plaintiff to the defendant;
(b) the amount of $4,900 on 28 June 2016 is claimed as a Payment by the plaintiffs. The relevant statement for the MLS Society Account records a debit on that date in that amount as a transfer to the defendant.[41] The bank statement for the Defendant’s Extra Account records a credit of $4,900 on that date with the notation ‘ANZ internet banking funds tfer pay loan Thang’. It then lists two debits on 1 July 2016: one for $4,764.80 to the defendant; and the other in the amount of $187.50 as ‘fee redirected from’ the Defendant’s Loan Account.[42] The bank statement for the Defendant’s Loan Account for 30 June 2016 records a debit of $187.50 for ‘loan administration charge’, a credit of $4,697.67 as ‘interest redirected from’ the Defendant’s Extra Account, and a credit of $187.50 as ‘fee redirected to’ the Defendant’s Extra Account.[43] There is no evidence as to ‘Thang’. Without more, and there is no more, there is no evidence that this claimed Payment was received by the defendant; and
(c) the amount of $3,000 on 30 November 2018 is claimed as a Payment by the plaintiffs. The relevant bank statement for the MLS Congregation Account records two debits on that date, each of $3,000: one recorded as a ‘withdrawal’; the other as ‘ANZ Internet Banking Payment 907425 to Great Prajna Paramita’.[44] The bank statement for the Defendant Loan Account records a ‘loan payment’ of $3,000 on 30 November 2018 and gives no other detail.[45] Without more, and there is no more, there is no evidence that this claimed Payment was made to the defendant and received by the defendant.
[41]Exhibit GW01, p 102.
[42]Exhibit GW01, p 312.
[43]Exhibit GW01, p 233.
[44]Exhibit GW01, p 190.
[45]Exhibit GW01, p 238.
However, this is not enough. While the majority of the Payments have a sufficient connection with the Property, that is insufficient where there is no evidence that the defendant was indebted to the second plaintiff for the amount of those Payments.
Rather, the plaintiffs would have the Court infer that there was such indebtedness by reason of the Payments being used to discharge the defendant’s liability to the ANZ in relation to the Property. As stated above, there is insufficient evidence to support an inference of indebtedness and being able to link the Payments to the Property does not serve to bolster that.
Insofar as the second of Deane J’s conditions in Hewett v Court is concerned, while it is true as the plaintiffs submit that the Property is specifically identified, it cannot be said that it is ‘appropriated to the performance of the contract’. There is no contract.
Insofar as the third of Deane J’s conditions is concerned, given I have found that the plaintiffs have not established an actual or potential indebtedness in respect of the Payments, it cannot be said that the relationship between that non-existent indebtedness and the Property is such that it would be unconscionable for the defendant to dispose of the Property without discharging its (non-existent) liability to the second plaintiff.
In determining this case, I have been very conscious of the statement made by Gibbs CJ in Hewett v Court that:
The fact that there is no authority precisely in point does not mean that in the present circumstances no lien can arise. The rules of equity are not so rigid and inflexible that it is necessary to discover precise authority in favour of the existence of a lien before one can be held to have been created. I do not of course intend to suggest that the courts may proceed on general notions of justice without regard to settled principles.[46]
[46]Hewett v Court at 649.
I note that this statement was made in the context of there not being any authority referred to where the contract was of the same type as that considered in Hewett v Court.
Despite the rules of equity being not so rigid and inflexible, I consider that this case falls outside the settled principles which govern the creation of a proprietary interest in the nature of an equitable lien, and I find that no such interest was conferred (via implication by law under a doctrine of equity) on the second plaintiff.
I therefore decline to make the declaration sought by the plaintiffs or the other relief sought in the statement of claim.
Conclusion
It follows that the proceeding should be dismissed.
The plaintiffs are directed to confer with the defendant as to a form of orders to give effect to this judgment, including as to costs, and to provide a proposed form of orders to my Chambers by 21 July 2023. If there is disagreement as to the form of orders (or as to costs), written submissions of no more than 3 pages may be filed by that date. I will finalise the orders (including as to costs) on the papers after 21 July 2023.
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