Irina Prodger v Trevor William Prodger (No. 2)

[2015] NSWSC 339

Supreme Court

New South Wales

Medium Neutral Citation:	Irina Prodger v Trevor William Prodger & Anor (No. 2) [2015] NSWSC 339
Hearing dates:	26 March 2015
Date of orders:	30 March 2015
Decision date:	30 March 2015
Before:	Slattery J
Decision:	Leave under Real Property Act, s 74O to lodge a further caveat refused. But an interlocutory injunction will be granted against the registered proprietor dealing with the property if the plaintiff provides an undertaking as to damages.
Catchwords:	REAL PROPERTY – application for leave to file a caveat – where previous caveat filed after settlement of land transfer but before registration – application of Real Property Act 1900 (NSW), s 43A – whether injunction should be granted to protect potential personal equity claim against current registered proprietor
Legislation Cited:	Family Law Act 1975 (Cth) Real Property Act, s 43A
Cases Cited:	Baumgartner v Baumgartner (1985) 2 NSWLR 406 Bell v Graham [2000] VSC 142 Cadagan v Cadagan [1977] 3 All ER 381 Castle Constructions Pty Ltd v Sahab Holdings Pty Limited (2013) 247 CLR 149 Irina Prodger v Trevor William Prodger & Anor [2015] NSWSC 287 Morling v Morling (1992) 16 Fam LR 161 Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671
Category:	Consequential orders (other than Costs)
Parties:	Plaintiff: Irina Prodger First Defendant: Trevor William Prodger Second Defendant: Jason Stuart Prodger
Representation:	Counsel: First Defendant: T.W. Marskell Second Defendant: T. Fishburn Solicitors: Plaintiff: no appearance First defendant: John Hamilton Maxwell, Maxwell & Co Solicitors Second defendant: Andrew McInnes, McInnes Legal
File Number(s):	2015/52679
Publication restriction:	No

Judgment

1. This is the Court’s second judgment in these proceedings. The Court’s first judgment dealt with procedural issues arising from the failure of the plaintiff, Mrs Irina Prodger to appear before the Court on 19 March 2015: Irina Prodger v Trevor William Prodger & Anor [2015] NSWSC 287. The present judgment considers one of two interlocutory claims that Irina Prodger makes against the defendants, Trevor William Prodger and Jason Stuart Prodger. The present claim is for leave under Real Property Act 1900, s 74O for the plaintiff to lodge a further caveat over property owned by the second defendant. The other group of interlocutory claims has been adjourned until 10 April 2015. Some further background is necessary to understand the plaintiff’s claims relevant to the Court’s determination today.

Irina and Trevor Prodger and their Properties

2. The plaintiff Irina Prodger and the first defendant, Trevor Prodger, married in October 1996 but separated in October 2014. On 16 February 2015 Irina Prodger commenced proceedings for property settlement under the Family Law Act 1975 (Cth) in the Federal Circuit Court of Australia consequent upon her separation. Those proceedings are due back before the Federal Circuit Court of Australia for further hearing on 8 April 2015.

3. The second defendant, Jason Prodger, is Trevor Prodger’s son by a previous marriage. Before he met Irina Prodger, Trevor Prodger was married to Gwenda Prodger. Trevor and Gwenda Prodger had two children, Jason and Trent, who are now both in their 30’s. As almost all the parties to the proceedings have the same surname or similar sounding surnames, without intending any disrespect to the parties, these reasons use the parties’ first names for convenience.

4. Irina was born in the Soviet Union in 1960. Before she came to Australia in April 1996 she was married in Russia and had two sons, Alex and Serje, who are both now in their 20’s. Shortly after Irina emigrated to Australia her two sons followed her and undertook their high school education in Australia.

5. Irina was self-represented in the proceedings. Mr Maskall of counsel appeared for Trevor. Ms Fishburn of counsel appeared for Jason. Alex and Serge have the surname of Irina’s previous marriage, Progadaev. Alex, the elder of the two is a better English speaker than his mother. The Court gave leave for him to speak on her behalf in the proceedings. He had undertaken a considerable degree of amateur legal research to present his case for his mother. Although he was not studying law, or otherwise legally trained, Alex had reasonable comprehension of the legal issues in the proceedings.

6. The plaintiff brings two main claims in these proceedings. The first is against Trevor in respect of their former matrimonial home, a property in Coomer Place, Goonellabah, near Lismore. At the hearing on 26 February 2015 this claim was adjourned to 10 April 2015, a date after the next hearing of the proceedings in the Federal Circuit Court. Her other claim is against Jason and Trevor in respect of an industrial property in South Lismore, on which a warehouse has been built, a property which throughout these proceedings all parties called “the shed”.

7. The Court has been asked now to determine, on an interlocutory basis, Irina’s claim against Jason and Trevor in respect of the shed: her claim to replace a caveat that has lapsed. She seeks leave to file a caveat on the title to the shed, which is now only in Jason’s name. A little history in respect of Irina, Trevor and Jason is necessary in order to understand Irina’s claims and the present interlocutory issue.

8. In her family law proceedings Irina claims against Trevor a declaration that she holds an interest in their former matrimonial home at Goonellabah. Trevor is the registered proprietor of that property. She has filed an affidavit in these proceedings which details the claim that she is making in her family law proceedings. Irina’s allegations in this affidavit are at this stage all untested. Therefore all this Court can do is set out her allegations about the past. The Federal Circuit Court will decide these issues. Irina’s affidavit deposes to her financial and non-financial contributions to the matrimonial home and the liabilities that Trevor incurred in the course of their marriage, liabilities that are now secured over the matrimonial home. Trevor incurred some of these liabilities to pay out his first wife Gwenda and to provide working capital to support his business, Trevor Prodger Crushing Pty Ltd, a rock and gravel crushing operation (“the business”).

9. Irina’s case in the family law proceedings is that the financial requirements of the business and the need to service the existing loans to pay out Gwenda meant that by March 2002 Trevor’s crushing business is said to have borrowed about $180,000 secured by Trevor’s guarantee and secured by a second registered mortgage that Trevor had executed over the matrimonial home. This borrowing was further secured by a guarantee that Trevor’s mother, Audrey provided, supported by a first mortgage over Audrey’s property and over the shed, which she then owned. Irina Prodger’s case in the family law proceedings is that she did not give Trevor any consent to give this personal guarantee for these borrowings and importantly that she did not give her consent to his registering the second mortgage supporting that guarantee over their matrimonial home. She says that Trevor did not consult her about those transactions before entering into them.

10. Irina’s case is that by September 2004 Trevor had increased these facilities so that their total at that time was some $315,000, all supported by the first mortgage over Audrey’s residence in Lismore and the shed property and the second mortgage over the matrimonial home. At that stage, as indicated, the shed was still in Audrey’s name. It was transferred into Trevor and Jason’s joint names only in 2007.

11. But according to Irina’s case in the family law proceedings, in about 2007 the crushing business took on further substantial financial obligations for the purchase of new equipment. Jason also began work in the business in circumstances in which Irina says he became a financial burden on the business. No doubt many of these allegations will be disputed in the family law proceedings. But that is not the present issue. They are set out here so that they can be understood within the factual narrative.

12. Jason was on the payroll of the business until 2011, after which he became an independent contractor to the business. Irina claims that Trevor’s charges as an independent contractor to the business have been so high and Jason’s work so unproductive that the business will soon be insolvent.

13. The Commonwealth Bank reviewed the financial affairs of the business in mid-2013. By 2014 the bank was closely guiding Trevor towards the sale of business assets and personal assets in order to reduce the business’ obligations to the Bank. It was in this context that the sale of the matrimonial home to Jason seems to have occurred. This transaction is the subject of the claim that has been adjourned.

Recent Prodger Property Transactions

14. Irina’s case in the Federal Circuit Court is that Trevor is now carrying though a series of transactions to fulfil a threat that he made to her in the course of their marriage that she would receive nothing from him if their marriage ended. Again, her allegations are yet to be determined.

15. The relevant transactions concerning the shed commence in mid-2014. By then Trevor and Jason had become the registered proprietors of the shed as joint tenants. On 31 October 2014 contracts were exchanged for Jason to purchase Trevor’s interest in the shed for $200,000. Gwenda provided the funds to effect the purchase, secured by a registered first mortgage over the shed property dated 4 November 2014. According to an affidavit filed on Jason’s behalf this transaction settled on 5 November 2011 after Jason’s and Gwenda’s legal representatives searched pre-settlement and found no caveat on title from Irina or anyone else. Jason’s lawyers, McInnes Legal, say that at that time they had no notice of any dispute concerning the shed.

16. After settlement the certificate of title, discharge of mortgage stamped transfer, stamped mortgage and electronic notice of sale (eNOS) were sent to their lodging agent for lodgement for registration.

17. The lodging agents notified McInnes Legal that Irina had filed caveat AJ29924H. Her caveat is dated 7 November 2014. It claimed “an equitable interest arising from a constructive or resulting trust” in both the shed and the matrimonial home. The facts relied on in support of this claimed interest were that, “The joint funds of myself and my husband have been utilised for the maintenance and preservation of the land referred to including mortgage repayments”.

18. On 2 December 2014 McInnes Legal wrote to Irina’s solicitors pointing out that the shed had been valued by a licensed valuer at a market value of $300,000, so that the sale of a half interest at $200,000 was not at an undervalue.

19. McInnes Legal then sought the removal of Irina’s caveat. Further correspondence took place and McInnes Legal lodged a lapsing notice under Real Property Act, s 74I.

20. McInnes Legal claim that the lapsing notice was served at the matrimonial home on 5 January 2015. But Jason only sought to prove service by a statutory declaration and not by an affidavit on which he could be cross-examined. The Court rejected the admission of that statutory declaration ito evidence. Irina’s caveat lapsed on 28 January 2015 and was removed from the register. Irina was then informed of the lapsing on 5 February 2015. In response she commenced these proceedings on 15 February 2015 Irina relevantly seeking orders under Real Property Act, s 74O for leave to lodge a further caveat over the shed, despite the lapsing of the previous caveat.

21. In a separate transaction Trevor sold the matrimonial home to Jason at about the same time and is seeking to use the proceeds to pay down his business and personal debt. But Irina’s issues concerning that have now been adjourned until after the matter is next before the Federal Circuit Court, where she can pursue her possible relief in respect of that transaction.

Consideration and Conclusion

22. Ms Fishburn argues persuasively for Jason that Jason and Gwenda both now have the benefit of indefeasibility of title. Irina’s caveat was lodged too late. Jason and Gwenda had taken documents of title at settlement and therefore had the benefit of Real Property Act, s 43A, which gives protection against notice of an interest such as Irina’s received between settlement and registration: Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671 at 676. Irina’s caveat was lodged after s 43A protection was in place. Moreover, Ms Fishburn argued, correctly in my view, that Irina’s claim in her family law proceedings, which she seeks to protect through this caveat, is a claim only to a judicial declaration of an interest in Trevor’s property (including the shed) and is not a present equitable interest in that property: see for example, Morling v Morling (1992) 16 Fam LR 161 and Bell v Graham [2000] VSC 142. In response Irina argued, on the basis of Baumgartner v Baumgartner (1985) 2 NSWLR 406 (“Baumgartner”), that a caveatable interest may arise between de facto spouses by virtue of a constructive trust. But the Baumgartner line of authority relates to de facto spouses, which is not Irina’s situation.

23. In my view, this therefore is not a case where the Court should grant leave to file a further caveat under s 74O leave, given the apparent strength of Jason’s indefeasibility of title.

24. Despite the success of Ms Fishburn’s primary arguments, Irina may nevertheless (and consistent with the Torrens system of indefeasibility) have some personal equities against Jason that may allow her to set aside the sale of the shed against him: Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149; [2013] HCA 11 at [31]. The evidence Irina advances, though untested, suggests that Jason (but not Gwenda) may have been a willing and knowing instrument of Trevor’s alleged schemes to shift Trevor’s property away from Irina’s reach in the Federal Circuit Court. Though Irina’s evidence is unspecific, as might perhaps be expected from a litigant in person, the evidence nevertheless traces the outline of a case of Jason’s knowing involvement in attempts by Trevor to defeat Irina as a possible contingent creditor through her family law proceedings. But of course Jason may have given full value for the shed and the real ultimate question may become Trevor’s disposal of the proceeds of sale of his interest in the shed.

25. The plaintiff’s primary claim in the Federal Circuit Court proceedings is for a judicial declaration of an interest in the matrimonial home. For the reasons given above it is doubtful that before such a declaration were made that she would yet have any identifiable equitable interest in that property. Thus proving that Trevor became by his conduct a constructive trustee of her interests in the shed property may be quite difficult.

26. But Irina may nevertheless have a basis to set aside this transaction under Conveyancing Act, s 37A as a voluntary transaction with intent to defraud creditors. Conveyances intended to defeat spouses in family law proceedings have long come within this section: Cadogan v Cadogan [1977] 3 All ER 831; [1977] 1 WLR 1041. These observations should not be interpreted as findings that such a case will succeed at trial; but merely observations that there is a serious question to be tried on that issue.

27. The Court will therefore allow Irina to have an injunction for a short period until the matter comes before the Federal Circuit Court, based on her claim to a personal equity against Jason. That Court will then have plenary jurisdiction under the Family Law Act 1975 (Cth) to decide whether a similar injunction should be granted to preserve Irina’s claims to remedies in that Court.

28. But an interlocutory injunction will not be granted, unless the plaintiff gives the usual undertaking as to damages. After this matter was argued last week the plaintiff returned to Lismore and she is not expected to be represented at the time of giving judgment. The Court will only accept an undertaking as to damages in open court here in Sydney from Irina herself, or from a legal representative instructed on her behalf. Her son Alex cannot provide it for her. So she will either have to engage a lawyer in Sydney for this purpose or re-list the matter so she can attend in person to give the undertaking. The Court will grant liberty to apply on one day’s notice through my Associate to permit her to reapproach the Court to give the usual undertaking as to damages, so the injunction set out in the orders below can commence.

29. For the reasons given, the Court orders and directs, as follows:

1. The plaintiff is granted liberty to apply to re-list the proceedings upon 24 hours’ notice in order to give the usual undertaking as to damages.

2. Should the plaintiff give the usual undertaking as to damages to the Court, then the Court will order that until further order the Second Defendant, Jason Prodger be restrained from disposing of or otherwise dealing with all his legal and beneficial interest in the shed property, which property is more specifically described in the Summons in these proceedings.

3. Otherwise list the proceedings for further mention on 10 April 2015 before me at 9.30am.

4. Costs reserved.

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Decision last updated: 30 March 2015