Feng v Theoharopoulos and Ors
[2002] VSC 158
•9 May 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6741 of 2000
| LI LI FENG | Plaintiff |
| v | |
| LEON THEOHAROPOULOS BILL THEOHAROPOULOS JUFEN ZHU | First Defendant Second Defendant Third Defendant |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22 April 2002 | |
DATE OF JUDGMENT: | 9 May 2002 | |
CASE MAY BE CITED AS: | Feng v Theoharopoulos | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 158 | |
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PRACTICE & PROCEDURE – application to set aside a previous order obtained on the return of a summons for final judgment – no appearance for the plaintiff to the first summons – impact upon the interests of the current registered proprietor – no particulars advanced to establish fraud – application dismissed
Supreme Court (General Civil Procedure) Rules 1996 – Rule 21.07
Kostanellis v Allen [1974] VR 596
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mrs J Tooher | McGrath & Misso |
| For the Firstnamed and Secondnamed Defendants | Mr K Baker | Macpherson & Kelley |
HER HONOUR:
This proceeding was initiated by writ on 6 September 2000. By the amended writ filed in this matter on 9 April 2001 the plaintiff sought a declaration that she was entitled to be registered as the proprietor of an estate in fee simple in an undivided share of one half of the land described in Certificate of Title Volume 10249 Folio 748, known as unit 5, 20 Tarella Road, Chelsea (“the land”), as tenant in common with the third defendant. She pleads that the first and second defendants sold the land to the third defendant, who sold a half share to her. By their counterclaim filed on 25 July 2001 the first and second defendants claimed an order that the caveat W550263V lodged by the plaintiff on 25 January 2001 (“the caveat”) be removed from that certificate of title.
On 7 November 2001 the first and second defendants brought a summons in the Practice Court seeking summary judgment on the claim and counterclaim, pursuant to Rules 22.08, 22.01 and 23.03 of the Supreme Court (General Civil Procedure) Rules 1996 (“the Rules”). An affidavit by Kelly Stowe, sworn on 30 October 2001, of service on the plaintiff by prepaid post at the land of a notification of the date and time of the adjourned directions hearing was before the Court. There was no appearance for the plaintiff and I made orders that summary judgment be given for the first and second defendants on the counterclaim, the proceeding be otherwise struck out, the caveat be removed, and for possession, damages and costs.
Since then the land has been transferred by the first and second defendants to G. Spot Investments Pty Ltd, described by the first defendant in his affidavit of 6 March 2002 as “an arm’s length purchaser”. Mr Willemsen, solicitor for the first and second defendants, deposes that the transfer was registered on 21 March 2002. The title search exhibited to his affidavit shows that title is also subject to two mortgages. One of those mortgages was registered on 21 March 2002, but was in existence prior to the registration of the transfer, when it was evidenced by a caveat registered on 27 January 2000. The other mortgage was registered on 15 September 1997 and transferred on 21 March 2002. The plaintiff has resided on the land for a number of years, and still resides there, despite the order for possession made on 7 November 2001.
By a summons issued on 24 January 2002 under Rule 21.07 of the Rules, the plaintiff seeks that the orders made on 7 November 2001 be set aside, save for the order for removal of the caveat, which has already been removed pursuant to that order. She deposes that she was not aware of what had occurred until she received a notice from the Sheriff’s office, although her affidavit does not indicate when that notice was received. Mrs Tooher, for the plaintiff, indicated that her client only became fully aware of the order which had been made when the Sheriff sought to enforce that order on 16 January 2002. Assuming that to be so, while the delay in issuing this summons was not unreasonable from the point of view of the plaintiff, the defendants might be forgiven for thinking that no steps were to be taken to set the orders aside. In particular, no caveat was lodged in respect of the interest claimed in the writ (as opposed to the interest claimed in the caveat which was set aside, as to which see [11] to [13] below).
Both counsel referred me to the case of Kostanellis v Allen[1] , arising under Order 5 Rule 14 of the County Court Rules as they then stood, providing for a general discretion in the court to set aside an order and judgment obtained on the return of a summons for final judgment. After consideration of authority, the Full Court (Gowans, Crockett and Harris JJ) said (with paragraphing breaks added):
What emerges from these authorities is that under a rule such as O.5, r14, what the judge is required to do is to determine what, in his opinion, is the just way in which the court's discretion should be exercised. To do this must involve weighing up the extent to which the defendant is prejudiced by allowing the order and judgment to stand and the prejudice to the plaintiff in setting them aside.
In many cases the situation will be that the plaintiff will not suffer any prejudice that cannot be remedied by an appropriate order as to costs. So far as the defendant is concerned, if he is unable to comply with r14(b), [prescribing that there must be an affidavit disclosing the grounds of defence except where the judgment was entered irregularly] the order and judgment cannot be set aside and there would appear to be little purpose in doing so.
On the other hand, if the defendant does show on affidavit a prima facie defence on the merits it would seem that usually he will be seriously prejudiced if he is debarred from being able to present his defence at a trial of the action. One cannot tell until this has been done whether or not the defendant will succeed in such a defence.
While it is undoubtedly relevant to the judge to consider what explanation the defendant has for not appearing on the return of the summons of final judgment, the weight to be attached to his explanation will depend upon the circumstances. Thus, for example, where the explanation shows that his non-appearance was due to some mistake or to his being misled, this may well assist the court in deciding to exercise its discretion in his favour.
Again, the explanation given may reflect on the question whether the defendant has made out a prima facie defence on the merits. However, it does not necessarily follow that if the explanation does not amount to something which can be categorized as a "sufficient reason" the defendant's application should fail.
It must all depend on the circumstances.
[1][1974] VR 596 at 605
In her affidavit in support of this application, affirmed on 5 March 2002, appropriately attested by an interpreter, the plaintiff deposes that she does not speak, understand or read English, and was therefore unaware of the urgency and significance of the situation and of the fact that her attendance was necessary at the adjourned directions hearing on 7 November 2001. At the time she was having difficulty paying her solicitors, and they had informed her that they were unable to continue to represent or advise her unless she immediately paid their fees. Thus, she deposes, she was unrepresented at the hearing and due to her lack of English language skills she was unable to represent herself. She does not suggest that she was unaware of the date of the hearing.
I note that on 17 October 2001 at a directions hearing Master Wheeler authorised the plaintiff’s solicitors to file a Notice that a Solicitor has ceased to act, and the directions hearing was adjourned until 7 November 2001 in the Practice Court. Those solicitors have since resumed acting for the plaintiff.
In her affidavit of 1 March 2001 the plaintiff deposes that she came to Australia in March 1997 from the People’s Republic of China. It appears from that affidavit, although it is not expressly stated, that she has remained in Australia since that date. She received notification of the hearing by post from the solicitors for the defendants. She is the plaintiff in this proceeding, and one would have expected her, knowing that she was a party to litigation affecting her home, to have sought advice, on receipt of the notification of the hearing, from some person who could read English, if only to ascertain whether or not it related to that litigation.
Mrs Tooher, for the plaintiff, submitted that her client’s Chinese cultural background meant that she held integrity and honesty in high esteem and believed that the payment of money for property established indisputable title to that property, and that she did not understand the need to be present in court to prove her title to the land. However, there is no evidence before me as that matter, and it is not dealt with in her client’s affidavit. Further, the plaintiff’s initiation of this proceeding indicates that she had been made aware that it was necessary to take steps in the court if she were to establish the title which she claims.
The writ was issued in response to a notice sent by the Registrar of Titles, at some date prior to 18 September 2000, on the application of the first and second defendants, under section 89A of the Transfer of Land Act 1958 to the effect that the caveat would lapse on a specified day unless notice was given that proceedings in a court of competent jurisdiction were on foot to substantiate the claim of the plaintiff as caveator.
The caveat was lodged by a firm of solicitors who are not the firm acting for the plaintiff to whom I have previously referred. It is dated 31 January 2000 and was lodged on 8 February 2000. The grounds of claim of the caveator are given as “Contract of Sale dated 21/6/1999 between the caveator and Leon Theoharopoulos [i.e. the first defendant].” At that time the first and second defendants were the joint registered proprietors of the land. In her affidavit of 1 March 2001 the plaintiff deposes:
It is also true, as the first Defendant says in paragraph 7 of his affidavit, that I did not enter a contract of sale in respect of the unit which is dated 21/6/1999. However, as I am advised and believe, I nevertheless have an interest in the unit as purchaser under the sale from Mrs Zhu [the third defendant] to which I have deposed.
As to “the sale from Mrs Zhu”, the plaintiff deposes in that affidavit to her belief that the third defendant had bought the land from the first and second defendants for $125,000, had sold a half share in it to “members of another family named Wang”, and had sold the remaining half share to the plaintiff for $62,500. This is supported, in part only, by an affidavit of the third defendant sworn on 19 April 2002. The plaintiff deposes that she exhibits as LLF1 a copy contract of sale and continues “I am informed by Mrs Zhu and believe that it is a true copy of a contract of sale of the unit from the Defendants to her, which she entered into in March 1997.” The only copy before the Court of LLF1 is a copy attached to the plaintiff’s affidavit of 5 March 2002 which exhibits her affidavit of 1 March 2001 and the exhibits to that affidavit. That document marked LLF1 is a photocopy of a signed but undated contract of sale of the land between the first and second defendants as vendors and the plaintiff as purchaser for $125,000; not a contract of sale from the first and second defendants to the third defendant. In her affidavit of 5 March 2002 she further deposes that the third defendant “has never agreed to give up her interest in the property in question and has never knowingly signed any document to that effect.”
The evidence does not show that the plaintiff had the interest in the land which was claimed in the caveat, which was in any case inconsistent with the interest claimed in the writ.
Mrs Tooher submitted that there were many unresolved facts as between the parties, and much conflicting evidence which needed to be brought to court and tested, and that this could be achieved by the ordinary processes of litigation if the matter were reinstated. In her submission the plaintiff had an arguable case, notably in reliance on part performance, and estoppel. She submitted that there was material to suggest that there was collusion and fraud in the transfer to the current registered proprietor.
The reasons given by the plaintiff for her failure to appear on 7 November 2001 are understandable; however, I have expressed my view as to those reasons at [8] and [9] above.
The reinstatement of the proceeding would materially affect the defendant, and also the current registered proprietor. The justice of the case requires consideration of the interests of that registered proprietor. The plaintiff seeks inter alia that after reinstatement that registered proprietor be joined as a defendant. However, there is no material before the Court which would go to establish a case that the transfer to that registered proprietor was not at arms’ length.
The claim of fraud is a serious matter, and fraud requires to be pleaded specifically with full particulars.
Whatever the prejudice to the plaintiff may be, it seems to me that, in light of the matters indicated by Mrs Tooher, which I have not set out in any detail, the reinstatement of this proceeding is not the appropriate path for the plaintiff to take in order to seek the resolution of her dispute with the first and second defendants.
Having considered these matters, I have formed the view that this is not an appropriate case for the exercise of the power of the Court to set aside a judgment obtained in accordance with Order 21. The application will be dismissed. Counsel may wish to make submissions as to costs.
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