Drake & Anor v Vineyard Marsden Park Schofield Investment Land Auctions

[2007] NSWSC 668

CITATION:	Drake & Anor v Vineyard Marsden Park Schofield Investment Land Auctions [2007] NSWSC 668
HEARING DATE(S):	07/06/07
JUDGMENT DATE :	28 June 2007
JUDGMENT OF:	Gzell J
DECISION:	Summons dismissed except for damages claim.
CATCHWORDS:	CONVEYANCING - Land Titles under the Torrens System - Indefeasibility of Title - Vendor finance - Ageement by Vendor, 1st defendant, to transfer title to plaintiffs upon payment of deposit by instalments - Failure to do so - Purchasers in default of instalment payments - Vendor transfers lots to 2nd defendant who becomes registered proprietor after plaintiffs' caveat lapses - 10 of 14 lots transferred to purchasers for value without notice - 2nd caveat over remaining 4 lots lodged - Plaintiffs seek to set aside transfer of 14 or, alternatively, 4 lots on basis of the fraud exception to indefeasibility of title under the Real Property Act 1900, s 42(1) - Submitted that transferee did not exist or, if she did, she took the transfers for no other purpose than to thwart the plaintiffs' interests
LEGISLATION CITED:	Real Property Act 1900
CASES CITED:	Briginshaw v Briginshaw (1938) 60 CLR 336
PARTIES:	Nicholas James Drake - First Plaintiff Belinda Gay Jump - Second Plaintiff Vineyard Marsden Park Schofield Investment Land Auctions Pty Ltd - First Defendant Siti Hariyani - Second Defendant
FILE NUMBER(S):	SC 1916/05
COUNSEL:	Mr R Colquhoun - Plaintiffs
SOLICITORS:	Crichton-Brownes Solicitors - Plaintiffs

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

THURSDAY 28 JUNE 2007

1916/05 NICHOLAS JAMES DRAKE & ANOR v VINEYARD MARSDEN PARK SCHOFIELD INVESTMENT LAND AUCTIONS PTY LTD & ANOR

JUDGMENT

1 On 9 October 2001, the plaintiffs, Nicholas James Drake and his partner, Belinda Gay Jump, purchased 14 lots of land at Riverstone from the first defendant, Vineyard Marsden Park Schofield Investment Land Auctions Pty Ltd, for $224,000.

2 The purchase was subject to vendor finance repayable by instalments. Robert Wilkie, a director of Vineyard, agreed that when the deposit of $22,400 had been paid, the lots would be transferred to Mr Drake and Ms Jump in exchange for a registered mortgage for the balance of the purchase price.

3 Mr Drake and Ms Jump took possession of the lots and built a house on two of the lots.

4 Instalment payments reached the 10% deposit in September 2002. Mr Drake approached Mr Wilkie for a transfer of the lots. Mr Wilkie said he would prepare the paperwork, but that did not happen. Mr Drake and Ms Jump seek orders for the transfer of the 14 lots to them.

5 The application is fraught with difficulty. There was no appearance for Vineyard or for the second defendant, Siti Hariyani, and there was no evidence that they had been informed that the matter had been set down for trial.

6 The affidavits in support of the application contained much hearsay. I have ignored that evidence save where it constitutes evidence of admissions.

7 Mr Drake and Ms Jump paid only $52,350 towards the purchase price but they seek the transfer of the lots without grant of a registered mortgage for the balance of the purchase price together with interest.

8 On 30 November 2003, an instalment payment of $2,000 was made. No further instalments were made until 1 May 2004 when $6,000 was paid. And the last instalment of $2,000 was made by Mr Drake and Ms Jump on 5 June 2004. Demands were made of Mr Drake to pay the balance of the purchase price but he and Ms Jump failed to do so.

9 There was no evidence of the terms of the vendor finance other than a document drawn up by Mr Wilkie in the form of a statutory declaration that he and Mr Drake signed. It contained the following special conditions:

“1. Instant Vendor’s Finance.
2. Instant possession on first payment of…$500…9.10.2001… Further…$9,500…10.10.2001…and then…$450…weekly interest free until total of 10% of the sale price is reached.
3. The balance of…10%…is to accrue interest of 10% calculated on yearly rests. Interest only payment for the fir…
4. When the land is refinanced a mortgage is to be issued by the vendor to VMPSILA in the purchaser’s name.
5. The land purchased is zoned Rural. Houses cannot be built. No one can say when the land will be rezoned. The area has been known to flood.”

The concluding words of cl 3 were cut off in the copy before the Court.

10 Clause 4 is curious. If Mr Drake obtained refinance, Vineyard would be paid out. And no vendor would be involved to issue any mortgage to Vineyard in a purchaser’s name.

11 The evidence did not reveal the rights of Vineyard on default of instalment payment by Mr Drake and Ms Jump and, in particular, whether Vineyard could call up the balance of the loan and, upon default of payment, sell the lots.

12 Mr Drake and Ms Jump lodged a caveat over the lots, but failed to act on a lapsing notice filed by Vineyard. When the caveat lapsed, Vineyard transferred the 14 lots to Ms Hariyani for $100,000 and she became the registered proprietor of the lots on a folio of the Register that did not record the interests of Mr Drake and Ms Jump.

13 Ms Hariyani sold 10 of the lots to persons whom the evidence did not reveal to be other than bona fide purchasers for value without notice of the claims of Mr Drake and Ms Jump before they caused a second caveat to be lodged over the remaining four lots.

14 Mr Drake and Ms Jump argue that the transfer from Vineyard to Ms Hariyani was fraudulent and she does not hold her interest in the lots free from their interests in terms of the exception to paramountcy in the Real Property Act 1900, s 42(1). It provides that, notwithstanding the existence in any other person of any estate or interest that but for the provision might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in the case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded.

15 It was submitted that Ms Hariyani did not exist or, if she did, she was party to a transfer for no other purpose than to defeat the interests of Mr Drake and Ms Jump.

16 There was no direct evidence that Ms Hariyani did not exist. Nor was there any direct evidence of the purpose of the transfer of the lots from Vineyard to her. It was submitted that forward could be inferred from inconsistencies in the statements of Mr Wilkie’s daughter, Misty Wilkie, and the close relationship between them and Ms Hariyani, if she existed.

17 In late 2003, Mr Wilkie introduced Ms Wilkie to Mr Drake as his daughter. Mr Wilkie said that Mr Drake and Ms Jump were in areas. Ms Wilkie said Mr Drake should pay the money or they would take the blocks back.

18 In August 2004, after Mr Drake and Ms Jump had ceased paying instalments, Mr Wilkie said he needed the money and, maybe, Mr Drake and Ms Jump could keep the two blocks on which the house was built.

19 On 23 August 2004, Mr Drake and Ms Jump received a letter, signed by Ms Wilkie under a power of attorney for Vineyard, requiring them to vacate the premises as they were in breach of their contact having failed to pay interest instalments and repayments on agreed dates. The address of Vineyard was given as 47 Macintosh Street, Mascot.

20 The instrument of transfer of the lots from Vineyard to Ms Hariyani was dated 11 October 2004. It bore a signature, Siti Hariyani, and the signature of Ms Wilkie as attorney for Vineyard. Both signatures were witnessed by Solomone Moala whom the evidence suggests was the husband or partner of Ms Wilkie.

21 It was submitted that there was no evidence that the $100,000 was paid to Vineyard. But in respect of the transfers of lots from Ms Hariyani to third parties, there were in evidence a number of cheques in large amounts made out to Vineyard. That circumstance is consistent with Vineyard having granted vendor finance to Ms Hiriyani, as it did to Mr Drake and Ms Jump.

22 On the instrument of transfer to Ms Hariyani, her address was given as 47 Macintosh Street, Mascot, the same address Ms Wilkie gave for Vineyard in her letter of 23 August 2004. The address for Mr Maola was 794 Parramatta Road, Lewisham. That was the address given for Vineyard on a contract for sale of a lot in the area, but one not the subject of the contract for sale to Mr Drake and Ms Jump.

23 A search of a company, International Stock Transfer Agents Pty Ltd, revealed that the registered office was care of Mr Maola, Pacific Trade Centre, Suite 806, 368 Sussex Street, Sydney. That was the same address given for Siti Hariyani on transfers of some of the lots and on a contract for sale. It is likely, however, that the address was a business one. That would account for multiple addresses given for Siti Hariyani and Mr Maola. Indeed. The search also gave the address 47 Macintosh Street, Mascot for Mr Maola.

24 On 1 March 2005, a letter was hand delivered to Mr Drake, signed Siti Hariyani, stating that it was noted that Mr Drake still occupied her property despite several requests to leave. The letter gave notice that on 7 March 2005, Ms Hariyani would seek to regain possession of the premises.

25 Matthew Kevin Grew of Crichton-Brownes Solicitors spoke with Ms Wilkie on 7 March 2005. He asked whether she was the owner of the land on which Mr Drake and Ms Jump resided. Ms Wilkie said she was not the owner, her mother Siti Hariyani owned the land. In the same conversation, however, Ms Wilkie said that following the removal of the caveat the land was transferred to her. In subsequent conversations with Mr Grew, Ms Wilkie said she could speak on behalf of Ms Hariyani.

26 Ms Wilkie held a power of attorney on behalf of Ms Hariyani identified as of Banjaran Provence, Indonesia. Ms Wilkie may well have blurred the identity of the transferee from Vineyard as her rather than as Ms Hariyani.

27 On 10 March 2005, a facsimile number was given to Mr Grew as the number at which Ms Wilkie could be contacted. It was also the number given to the solicitors for Siti Hariyani. Mr Wilkie was also contacted at that number.

28 Ms Wilkie sent a facsimile to the solicitors on 21 March 2005 in which she said she would like to correct Mr Grew that Ms Hariyani was not her mother. She had given Ms Wilkie a power of attorney.

29 Mr Drake and Ms Jump said they had never met Ms Hariyani and their inquiries had not revealed any other person who had.

30 A writ of execution issued by third parties against Ms Hariyani, led to a report from the Office of the Sheriff of 12 May 2005 after execution was attempted at 47 Macintosh Street, Mascot. Ms Wilkie advised that Ms Hariyani had been deported to Indonesia. Ms Wilkie also said that she knew Ms Hariyana as she was in a relationship with her father.

31 The writ of execution followed judgment in the District Court against Ms Hariyani for recovery of a debt. It is unlikely that she did not exist since the plaintiffs in that action must have had some involvement with her that gave rise to the claim for repayment before that Court.

32 Notwithstanding the inconsistencies in statements made by Ms Wilkie, the obvious closeness of the association between Mr Wilkie, Ms Wilkie and Mr Maola revealed by the similarity of address and the inability of Mr Drake and Ms Jump to find any person who had met Ms Hariyani, I am not prepared to infer that she does not existence or, if she does exist, that the transfer of the lots to her was for no other purpose than to thwart the interests of Mr Drake and Ms Jump.

33 Ms Wilkie said that Vineyard had attempted to transfer the lots to Ms Hariyani, but was prevented from doing so by the caveat. The lapsing notice was therefore given. Mr Drake and Ms Jump had their opportunity to argue against the lapsing of the caveat. They did not do so. Ms Wilkie said that once the caveat was removed, the transfer of the lots to Ms Hariyani took place. Those procedures adopted to transfer the land were ordinary. And the close relationship between transferor and transferee is not sufficient to convert those ordinary steps into fraudulent ones on the part of Ms Hariyani.

34 Fraud is a serious allegation and a Court must feel an actual persuasion of its occurrence or existence before it can be found (Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362). I do not feel an actual persuasion that Ms Hariyani was guilty of fraud in taking the transfer of the lots from Vineyard. Furthermore, there was no evidence that the vendor finance was not subject to a term that in the event of Mr Drake and Ms Jump defaulting in payment of instalments, Vineyard was entitled to call in the balance of the finance and, in default of payment, to resell the lots.

35 Relief for Mr Drake and Ms Jump lies in damages. They are not entitled to set aside the transfer of the lots from Vineyard to Ms Hariyani.

36 In the alternative, Mr Drake and Ms Jump seek relief with respect to the four remaining lots. They seek a declaration that they are entitled to be registered as the proprietors of those lots and they seek orders for the transfer of them by Vineyard or Ms Hariyani.

37 To succeed in this alternative claim, Mr Drake and Ms Jump must establish that, because of fraud, Ms Hariyani’s interest as transferee is not protected by the Real Property Act 1900, s 42(1). For the reasons set out above they have failed to do so.

38 I dismiss all but paragraphs 5, 6 and 7 of the summons. I stand those paragraphs over before the Registrar for directions at 9.30 am on Thursday 5 July 2007.

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