Jun Lin v Commonwealth Director of Public Prosecutions - [2005] NSWSC 431

No judgment structure available for this case.

CITATION:
Jun Lin v Commonwealth DPP & Anor [2005] NSWSC 431

HEARING DATE(S): 21/03/05
22/03/05

JUDGMENT DATE :

25 May 2005

JUDGMENT OF:
Patten AJ at 1

DECISION:
See paragraphs 50,51,52 and 53.

LEGISLATION CITED:
Conveyancing Act 1919
Real Property Act 1900
Proceeds of Crime Act 1987 (Commonwealth)

CASES CITED:
Alliance Bank v Brown (1861-73) All ER Rep 1451
McDermott v Black (1940) 63 CLR 161
Wigan v Edwards (1973) 1 ACR 457
Larking v Girvan (1940) 40 SR (NSW)
Troncone & Ors v Aliperti & Ors (unreported Court of Appeal 20 April 1994)
Jones v Baker (Unreported 2002 NSWSC 89)
Brown v Commonwealth Bank (1993) 63 SASR at188 and 203
Buchholz v Kempsey Shire Council (Austin J 2005 NSWSC 235)

PARTIES:
Jun Lin - Plaintiff
Commonwealth DPP - First Defendant
Deboran Chun (Also known as Deborah Law, and Deborah Kam Fung Law) - Second Defendant

FILE NUMBER(S):
SC 11638 of 2004

COUNSEL:
I. Archibald - Plaintiff
T Muir - First Defendant

SOLICITORS:
Plaintiff - A.A.T Legal
First Defendant - Director of Public Prosecutions(Commonwealth)

LOWER COURT JURISDICTION:

- 29 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Patten AJ

25 May 2005

No. 11638 of 2004

JUN LIN v COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS & ANOTHER

JUDGMENT:

1 His Honour: On 5 August 1993, Ms Deborah Chun, the Second Defendant (Ms Chun) pleaded guilty before Levine J to 9 counts under s.82 of the Proceeds of Crime Act 1987 (Commonwealth) (the Act). At the same time, a company Bipati Pty Ltd, in which Ms Chun and her husband were interested, pleaded guilty to 6 counts under the same section. Section 82 (1) of the Act, provides:

“A person who, after the commencement of this Act, receives, possesses, conceals, disposes of or brings into Australia any money, or other property, that may reasonably be suspected of being proceeds of crime is guilty of an offence against this section punishable, upon conviction, by:

(a) if the offender is a natural person – a fine not exceeding $5,000 or imprisonment for a period not exceeding 2 years, or both; or

(b) if the offender is a body corporate – a fine not exceeding $15,000.”

2 On 2 September 1993, Levine J convicted Ms Chun upon each of the 9 charges, but deferred sentence and ordered her release upon entering into a recognisance in the sum of $5,000, to be of good behaviour for a period of 3 years. One of the conditions of the recognisance was that she pay to the Commonwealth the sum of $3,000 on or before 31 October 1993. His Honour imposed a fine of $12,000 upon Bipati Pty Ltd in respect of each of the 6 charges, which it faced.

3 In addition to the penal orders, on the same date Levine J made orders against both Ms Chun and Bipati Pty Ltd under the Act. They included orders restraining them from dealing with their property, including after acquired property; for the forfeiture of identified property; for the payment of pecuniary penalties to the Commonwealth, in the case of Ms Chun $4.283,006.40, and in the case of Bipati Pty Ltd, $1,391,993.60; an order that the Official Trustee pay to the Commonwealth an amount equal to the pecuniary penalties out of identified property; and an order directing the Official Trustee to sell, or otherwise dispose of such property, and pay the proceeds to the Commonwealth in order to satisfy the pecuniary penalties. A number of ancillary orders were also made.

4 The orders of 2 September 1993, in so far as Ms Chun was concerned, identified 6 pieces of real estate which were the subject of restraining orders and were placed in the custody and control of the Official Trustee. The orders also, as I have indicated, affected after acquired property.

5 As seems to be common ground, the Official Trustee was unable to satisfy fully the pecuniary penalty order made against Ms Chun out of the properties specifically identified in the orders of 2 September 1993.

6 As it seems, Ms Chun, some years later, acquired a number of other pieces of real estate. As a consequence, on 20 November 2003, the Commonwealth Director of Public Prosecutions (DPP) filed an Amended Notice of Motion in proceedings 70940 of 1990, seeking various orders of which the principal was an order “Directing the Official Trustee to pay to the Commonwealth pursuant to s.49 (2A) of the Proceeds of Crimes Act 1987, an amount equal to the sum of $2,780,129.30, being the balance of the pecuniary penalty referred to in order 4 of this court dated 2 September 1993, out of the property of the Second Defendant (Ms Chun) listed in schedule”. The schedule listed properties known as 20 Epping Road, Double Bay; 51 Epping Road, Double Bay; 64 Burraneer Avenue, St Ives; 9/2 Point Street, Pyrmont; Shop 8/99 –111 Military Road Neutral Bay; 87 Springdale Road Killara; 2/42 Manning Road Double Bay and 4/42 Manning Road, Double Bay.

7 On 3 May 2004, Dowd J made orders upon the Amended Notice of Motion, not relevant for present purposes, and on 8 July 2004 further orders were made by consent, again not relevant for present purposes. What is relevant is that the principal disputation between the DPP and Ms Chun, arising under the Amended Notice of Motion, was resolved by Consent Orders made on 4 March 2005. The orders then made declared that the property, described in the schedule to the orders, “is property covered by the restraining order of 2 September 1993”, and directed, pursuant to the restraining order, that such property be placed in the custody and control of the Official Trustee. It was further provided that the restraining order be varied to exclude the property of Ms Chun, other than the property described in the schedule, specifically properties known as 20 Epping Road, Double Bay and 87 Springdale Road, Killara, were so excluded.

8 There were six properties listed in the schedule to the orders of 4 March 2005, namely, 51 Epping Road, Double Bay, 64 Burraneer Avenue St Ives, 9/2 Point Street, Pyrmont, Shop 8/99 –111 Military Road, Neutral Bay, 2/42 Manning Road, Double Bay, (or the proceeds of sale thereof), and 4/42 Manning Road, (or the proceeds of sale thereof).

Ms JUN LIN’S CLAIM FOR RELIEF:

9 The Plaintiff (Ms Lin) commenced these proceedings by Summons on 12 May 2004, joining the DPP and Ms Chun as defendants. Ms Chun participated in preliminary stages of the proceedings but did not appear at the hearing, which I allowed to proceed ex parte against her. At commencement of the hearing, I gave leave for Ms Lin to amend the relief sought by her summons in a way which, in my opinion, differed in form, rather than substance, and had no potential to cause injustice to Ms Chun, despite the lack of notice to her.

10 The Further Amended Summons upon which the hearing before me was conducted sought relief (apart from formal orders and orders for costs) as follows:

“1. An order pursuant to section 48 (2) (d) of the Proceeds of Crime Act 1987 (Commonwealth) (“the POCA”) that the plaintiff have leave to make this application.

2. Declaration that the plaintiff is entitled to a charge (“the Charge”) over the interest of the second defendant in the properties described hereunder (“the Unsold Security Properties”), namely:

a. 20 Epping Road, Double Bay NSW, being the land comprised in Folio Identifier 1/800163,

b. 87 Springdale Road Killara being Lot 1 in Deposited Plan 740483, being the land comprised in Folio Identifier 1/740483.

3. Declaration that save for their sale, the plaintiff was entitled to register the Charge over the interest of the second defendant in the properties described hereunder (“the Sold Security Properties”) namely:

a. Unit 2/42 Manning Road, Double Bay being the land comprised in Folio Identifier 2/SP70390.

b. Unit 4/ 42 Manning Road, Double Bay being the land comprised in Folio Identifier 4/SP70390

c. Unit 9, 2 Point Street, Pyrmont being the land comprised in Folio Identifier 9/SP68998

d. 51 Epping Road, Double Bay being the land comprised in Folio Identifier 1/198298.

e. 4/2A Black Street, Vaucluse being the land comprised in Folio Identifier 4/344140

f. Shop 8/99-111 Military Road, Neutral Bay being the land comprised in Folio Identifier 8/SP63422.

4. Declaration that the plaintiff is entitled to trace her interest as Chargee pursuant to the Charge in the Sold Security Properties to the monies paid into this Court following the sale of those properties.

5. Declaration that the interest of the plaintiff in the monies paid into this Court prevails over that of the First Defendant.

6. Declaration that:

a. the principal amount secured by the Charge is $150,000.00 (“the Principal sum”).

b. as at 30 December 2003 the second defendant was, in addition to the principal sum, liable to the plaintiff in the sum of $30,000 in agreed interest to that day on the advance of the principal sum by the plaintiff to the second defendant.

c. interest has accrued on the principal sum from 30 December 2003 at the rate of ten per cent (10%) per calendar month

d. the terms of the Charge are as otherwise set out in the Deed of Loan Agreement between the plaintiff and the second defendant dated 10 November, 2003 subject to order e. below.

e. a term be implied into the Charge that in the event of breach by the Second Defendant of the terms of the Charge, including non-payment by the Second Defendant of the principal sum on 30 December, 2003 and any interest accrued, the plaintiff has a power to sell the properties which are subject to the Charge.

7. Order that within fourteen days the second defendant execute, stamp and deliver to the plaintiff in relation to the Unsold Security Properties a form of Charge in Form 06C issued by the Registrar-General in registrable form and incorporating these Orders.

8. Order that in the event of default by the second defendant with Order 7, a Registrar or Deputy Registrar of this Court in the Common Law Division be empowered to settle and execute in the name of the second defendant the form of Charge and comply in the name of the second defendant with any requisition which may issue from the Land Titles Office in order to permit the Charge to be registered.

9. Order pursuant to section 48 (3) (g) of the Proceeds of Crime Act 1987 (Commonwealth) that the interest of the plaintiff in the nett sale proceeds of the Sold Security Properties now paid into Court be excluded from the restraining Order made by this Court on 12 September 1993 in proceedings numbered 70940 of 1990 (“the Restraining Order”).

10. Order that the monies paid into Court be paid to the plaintiff or as she may direct within seven (7) days.

STATUTORY PROVISIONS:

11 Sections 14,19,20,21,26,43,48 and 50 of the Act have some relevance to this case, at least as revealing the scheme of it. Those provisions which have particular application include:

“14. (1) Where a person is convicted of an indictable offence, the DPP may, subject to subsections (2), (3) and (4) apply to an appropriate court for one or both of the following orders:

(a) a forfeiture order against property that is tainted property in respect of the offence;

(b) a pecuniary penalty order against the person in respect of benefits derived by the person from the commission of the offence.

19. (1) Where:

(a) the DPP applies to a court for an order under this section against property in respect of a person’s conviction of an offence; and

(b) the court is satisfied that the property is tainted property in respect of the offence;

the court may, if it considers it appropriate, order that the property, or such of the property as is specified by the court in the order, is forfeited to the Commonwealth.

20. (1) Subject to subsection (2), where a court makes a forfeiture order against property, the property vests absolutely in the Commonwealth.

(2) Where a forfeiture order is made against registrable property:

(b) the Commonwealth is entitled to be registered as owner of the property; and

(2A) If a forfeiture order has been made against registrable property:

(a) the DPP has power, on behalf of the Commonwealth, to do anything necessary or convenient to give notice of, or otherwise protect, the equitable interest of the Commonwealth in the property;

(2) Subject to subsections (3) and (7), where a court makes a forfeiture order against property, a person who claims an interest in the property may apply to the court for an order under subsection (6).

(6) If a person applies to a court for an order under this subsection in respect of the applicant’s interest in property and the court is satisfied that:

(a) the applicant was not, in any way, involved in the commission of an offence in respect of which forfeiture of the property is sought, or the forfeiture order against the property was made, as the case requires; and

(ii) without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was, at the time of the acquisition, tainted property;

the court shall make an order:

(c) declaring the nature, extent and value (as at the time when the order is made) of the applicant’s interest; and

(i) if the interest is still vested in the Commonwealth – directing the Commonwealth to transfer the interest to the applicant; or

(ii) declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c).

(7) Subject to subsection (8), an application under subsection (2) shall be made before the end of the period of 6 months commencing on the day on which the forfeiture order is made.

26 (1) Where:

(b) the court is satisfied that the person derived benefits from the commission of the offence:

the court may, if it considers it appropriate:

(c) assess, in accordance with section 27, the value of the benefits so derived; and

(d) order the person to pay to the Commonwealth a pecuniary penalty equal to the penalty amount.

(2) Subject to subsections (3) and (4), the penalty amount is the value of the benefits as assessed under paragraph (1) (c)

(3) Where:

(a) property that is proceeds of the offence has been forfeited, under this Act or another law of the Commonwealth or under a law of a Territory, in relation to the offence; or

(b) a forfeiture order is proposed to be made against property that is proceeds of the offence;

the penalty amount shall be taken to be reduced by an amount equal to the value of the property as at the time of the making of the pecuniary penalty order

…………………………………….

43 (1) Where a person (in this section and section 44 called the defendant ):

(a) has been convicted of an indictable offence; or

(b) has been, or is about to be, charged with an indictable offence; the DPP may apply to the relevant Supreme Court for an order under subsection (2) against one or more of the following:

(c) specified property of the defendant;

(d) all the property of the defendant (including property acquired after the making of the order);

(e) all the property of the defendant (including property acquired after the making of the order) other than specified property;

(2) Where the DPP applies to a court for an order under this subsection against property, the court may, subject to section 44, by order:

(a) direct that the property, or such part of the property as is specified in the order, is not to be disposed of, or otherwise dealt with, by any person, except in such manner and in such circumstances (if any) as are specified in the order; and

…………………………………
48. (1) Where a court makes a restraining order, the court may, at the time when it makes the restraining order or at any later time, make any ancillary orders that the court considers appropriate and, without limiting the generality of this, the court may make any one or more of the following orders:

(a) an order varying the property to which the restraining order relates;
………………………

(2) An order under subsection (1) may be made on application by:

…………………………………………..

(3) Where:

(a) a person (in this subsection called the defendant ) has been convicted of, or has been charged or is about to be charged with, an offence;

(b) a court, in reliance on the conviction, charging or proposed charging makes a restraining order against property; and

(c) a person having an interest in the property applies to the court for a variation of the order to exclude the person's interest from the order; the court shall grant the application if:

(A) a pecuniary penalty order cannot be made against the defendant; or

(B) the applicant's interest in the property is not subject to the effective control of the defendant; or

(i) the applicant was not, in any way, involved in the commission of the offence; and
(ii) where the applicant acquired the interest at the time of or after the commission, or alleged commission, of the offence—the applicant acquired the interest:

(B) without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted property;

(i) any financial hardship or other consequence of the interest remaining subject to the order;

……………………………

50 (1) Where:

(a) a pecuniary penalty order is made against a person (in this subsection called the defendant ) in reliance on the defendant's conviction of an offence; and

(ii) property of another person in relation to which an order under subsection 28(3) is, or has been, made; in reliance on the defendant's conviction of the offence or a related offence or in reliance on the charging, or proposed charging, of the defendant with the offence or a related offence; then, upon the making of the later of the orders, there is created, by force of this section, a charge on the property to secure the payment to the Commonwealth of the penalty amount.

(2) Where a charge is created by subsection (1) on property of a person, the charge ceases to have effect in respect of the property:

(a) upon the quashing of the conviction in reliance on which the pecuniary penalty order was made;

(b) upon the discharge of the pecuniary penalty order or the restraining order by a court hearing an appeal against the making of the order;

(c) upon payment to the Commonwealth of the penalty amount in satisfaction of the pecuniary penalty order;

whichever first occurs.

(3) A charge created on property by subsection (1):

(a) is subject to every encumbrance on the property that came into existence before the charge and that would, apart from this subsection, have priority over the charge;

(b) has priority over all other encumbrances; and

THE CASE FOR Ms LIN:

12 For the most part the facts relied upon by Ms Lin are set forth in her affidavits sworn respectively 3 March 2004, 12 May 2004, 9 June 2004, 5 August 2004 and 17 March 2005, which, if I may say so, were uniformly poorly and carelessly prepared, reflecting little credit upon the legal practitioners apparently involved. The affidavits were supplemented by some oral evidence and what emerged during cross-examination by Mr T. Muir, counsel for the DPP.

13 The earliest of the 5 affidavits deals with her association with Ms Chun but only in a most cursory manner with the circumstances by which she claims security over the properties specified in her Further Amended Summons. That aspect is dealt with more particularly in the affidavit of 12 May 2004.

14 The first affidavit contains these paragraphs:

“I say that I never knew that the Defendant, Deborah Chun, was a criminal or anything else like that and I never knew she was convicted of any offence, the subject of any police investigation or the subject of any proceedings under the Proceeds of Crime Act which I roughly understand to mean that the Government will receive her property and money.

I say that I am a widower, my husband had been ill for more than 10 years and died about a year ago and left me all on my own with my daughter who is 12 years old and my mother tongue is Chinese not English and I am not very good at understanding English or the Australian legal system or legal matters generally. I used to run a business with my husband who died of cancer. I desperately need the money back that I was conned into lending to Deborah Chun. All these money lent to Deborah are our hard working savings. I did not purchase any property because that I was in fear that my husband would die one day and I could not pay off the mortgage loan by myself. The fear had haunted me until my husband’s death.

……………………………….

Now I live on single mother pension, I do not own any property and do not have any savings in my bank account. If I could not get back my money then my daughter and I will suffer deeply. It will also affect my daughter’s future.”

15 In the affidavit sworn 12 May 2004, Ms Lin explained in greater detail how it came about that she lent Ms Chun money and how she claims to have acquired security over the property specified in her Further Amended Summons. Paragraphs in the affidavit, which I regard as relevant, read:

“1. On about 7/11/03, Linda Yang who is a finance broker called my mobile and said to me: “Do you have $200,000, dollars, as Deborah Chun may borrow the money for the purpose of paying 10% deposit of the purchasing a property (sic). I know that she wants to borrow the money”. I asked her “How did you know her”. Linda Yang said, “Deborah was one of clients of mine when I worked for the former real estate company”.

2. I said to Linda Yang, “I do not want to lend for a long period”. Linda Yang replied, “You can lend to Deborah for a one month period loan, it would be enough for Deborah.”

3. “I am not sure that Deborah really want to borrow it, if I can confirm it, I will go you your home”. I said, “It’s up to you”.

4. Linda Yang called me next day and said, ”Deborah wants to borrow the money urgently for a short period. I will meet you at your home”.

5. Linda Yang arrived my house in the morning time on 8/11/03.

7. I said to Linda Yang, “You need introduce Deborah to me and let me know her. You make an appointment with Deborah so that I can have look at the properties owned by Deborah”.

8. Linda called Deborah to meet me at Chinatown on 09/11/03, noon.

9. I went to inspect some of Deborah’s properties on that morning with Linda, Deborah and Deborah’s mother. Deborah showed us 20 Epping Road, Double Bay property first then 51 Epping Road, Double Bay property. Deborah also showed 2A Black Street, Vaucluse.

10. Deborah said to me when we were at 2A Black Street, Vaucluse, “My Vaucluse property can sell for $5m, which property do you want to use as your loan security property?”

11. I replied, “How much is worth 20 Epping Rd, property”. She replied, “$2.48 million, as I have signed the contract for sale of property and exchanged the contract”.

12. Deborah showed me a copy of the contract with purchase price of $2.48 million dollars.

13. I said to Deborah “How do you guarantee that you can return my money back in about one month time?”

14. Deborah Chun replied with the works (sic) to the effect, “I have signed contract and I will sell the property and then I can return your money back. If I cannot complete the sale on time because the purchaser has some difficulty of borrowing money from bank, I will sell my other properties and return your money back to you”. Linda Yang added, “I will refinance Deborah’s properties and return the money back to you”.

15. Deborah asked me, “What sort of interest rate are you asking for?”

16. I replied, “I do no want to lend for long period, I only want to lend for about a month with 7% monthly interest rate.”

17. Deborah Chun and her mother left us and Linda Yang and I went back to Chinatown.

……………………………………

22. On 10/11/03, I met Deborah Chun and Linda Yang at Suite 207, 661 George Street, Haymarket, the office of Hugo Ahwee Lawyers around 4.00pm. Eva Wu of Hugo Ahwee Lawyers drafted the loan agreement for us.

23. I handed over the cheque payment in favour of Deborah Chun to Ms Wu and told her, “I need loan agreement done properly and lodge a caveat over the 20 Epping Road property immediately. Ms Wu replied, “No problem, but it is too late to lodge caveat today, as it is 4.00pm now, I will do the caveat for you tomorrow.” ………………….

24. ………….. At that time just before the signing of the loan agreement, Deborah Chun said, “it’s near Christmas time, I want 2 months period loan.” I replied, “OK”. Ms Wu changed loan period to 2 months of loan agreement quickly.

25. I and Deborah Chun signed the loan agreement. Linda Yang signed as witness on the loan agreement.

26. Eva Wu said to me, “I will pay stamp duty and lodge the caveat tomorrow”.

27. However, I later found out that the caveat only was lodged about 13 days later.

28. I called the Hugo Ahwee Lawyer and talked Eva Wu and asked her, “Why my caveat has been delayed for about 2 weeks?” She replied, “I cannot just lodge one caveat for you, I have to wait until I accumulate a few more caveats then I will lodge them together”. I was very upset when I heard that and said, “ You promised me to do the caveat next day, so that I handed the cheques in favour of Deborah Chun to you”.

29. When Eva Wu handed over the title search after the lodgement of caveat over the 20 Epping Road Double Bay property, I noticed that there is a Commonwealth caveat over the 20 Epping Road property.

………………………………….

31. I wrote letter to Deborah to her and called her but without any reply. In my letter to Deborah I wrote, “If you can not return my money back, I need lodge caveat over all your properties or I will sue you”.

33. ……………….. Finally I met Deborah Chun on one night about 9.00pm.

34. I said to her that night, “I write to you and called you without any answer. You have to answer why there is a Commonwealth caveat over the property”. She said to me “It has been a long time matter. It is my ex-husband’s matter, however the Government cannot get the money from ex-husband so that the Government seized my property”.

35. She asked me to leave and told me, “You go home now I will meet you around 11.00am at level 5, Suite 503, 377-383 Sussex St, Chinatown tomorrow”.

36. The next morning, I think it was 13.01.04, I waited there until Deborah came. I said to her, “I need you give to me all your lists of the properties and I want to lodge caveat over all your properties”. Deborah replied, “OK”. She also handed over copies of title search to me.

37. Deborah Chun and I went to Chee Kiong Low Lawyers. Deborah Chun signed consent on the caveat which was going to be lodged over all her disclosed property.

38. In additional (sic) to the 20 Epping Road, Double Bay caveat, the caveat has been lodged over the 6 properties other than the security property mentioned in the loan agreement.

39. So far I do not have any savings and I cannot find a job. It is hard for my daughter and I live on single mother pension. My daughter and I live at a rented unit. My only asset is the 1989 Celica Toyota.

40. The $200,000 is my husband’s life savings and my life savings. My husband and I have never bought any property because of my husband’s poor health. I have been worried about the repayments of mortgage loan if we had bought any property. My husband died last year.

41. I have never known that the properties owned by the Deborah were tainted. I have never met Deborah Chun before until she was introduced through Linda Yang to me. At the time of the loan agreement entered, there was no Commonwealth caveat over the property.

16 The loan agreement referred to in paragraph 25 of Ms Lin’s affidavit is dated 10 November 2003. It refers to a loan of $200,000 and provides for security in rather unconventional terms by clause 2, as follows:

17 Curiously, the agreement makes no provision for the payment of interest except upon overdue monies. The explanation for that is possibly the fact that $180,000, rather than $200,000 was actually lent, although the evidence of Ms Lin on the point was contradictory and confused. However, nothing, which I am required to determine, turns on this.

18 In addition to the caveat lodged on behalf of Ms Lin against the property 20 Epping Road, Double Bay, she lodged caveats against another seven properties which stood in the name of Ms Chun, namely, 9/2 Point Street Pyrmont; 51 Epping Road, Double Bay; 87 Springdale Road, Killara; 4/42 Manning Road, Double Bay; 2/42 Manning Road, Double Bay; 8/99 Military Road, Mosman and 4/2A Black Street, Vaucluse. Ms Lin seeks relief in these proceedings in respect of those eight properties.

19 The caveat, in respect of property 20 Epping Road, Double Bay, was supported by Ms Lin’s Statutory Declaration of 10 November 2003. The nature of the interest claimed was “mortgage” and this was alleged to arise from “Equitable Mortgage” between the Caveator and the registered proprietor.

20 The caveats in respect of the other seven properties were in similar form. They were verified by Ms Lin’s Statutory Declarations dated 18 January 2004. Each claimed an estate or interest in the land “pursuant to an outstanding debt in respect of a loan agreement” by virtue of an instrument identified as “loan agreement” dated 10 November 2003, between Ms Chun and Ms Lin. In the box on the form headed “By virtue of the facts stated below”, there is inserted – “The registered proprietor consents to the lodgement of this caveat”. At the foot of the caveats there is what purports to be the signed consent of Ms Chun.

21 Ms Lin’s case, as I have so far stated it, received support from the affidavit and oral testimony of her friend Ying Qiao. It also, of course, received support from the loan agreement, itself, and the fact that Ms Chun consented to the caveats

22 In the result, although, in many respects Ms Lin was a very unsatisfactory witness, I accept her version of the events surrounding the making of the loan agreement and the lodgement of the caveats.

THE PROPERTY – 20 EPPING ROAD DOUBLE BAY:

23 While the form of words used in clause 2 of the loan agreement was unusual, to say the least, it seems clear that the parties intended to charge 20 Epping Road, Double Bay, as security for the repayment of the loan and that an equitable mortgage was created over the property.

24 Moreover, the DPP claims no interest in the property 20 Epping Road, Double Bay, it having been expressly excluded from the restraining order by the orders of 4 March 2005. Mr Muir made no submissions in respect of the property, whilst not conceding that Ms Lin should be entitled to the relief she seeks.

25 In my opinion, Ms Lin has established an entitlement to relief in respect of the property 20 Epping Road, Double Bay. I think it appropriate that there be a declaration in terms of paragraph 2 (a) of the Further Amended Summons and that there be consequential orders for the implementation of the charge. Those orders will, of course, need to consider the rights of any person having a prior interest.

THE PROPERTY: 87 SPRINGDALE ROAD, KILLARA:

26 Again the DPP claims no interest in this property and made no submissions regarding it, without conceding the entitlement of Ms Lin to any order. Mr Archibald, counsel for Ms Lin, submitted that, there being no appearance by Ms Chun, his client is entitled to relief in the event that a prima facie case is established. This question will need to be considered with the question whether Ms Lin established an entitlement to security over any of the properties mentioned in her Amended Summons, other than 20 Epping Road, Double Bay. It will be convenient to refer to those properties hereafter as the Secondary Properties.

WAS THERE AN AGREEMENT TO GIVE SECURITY OVER THE SECONDARY PROPERTIES?

27 As already indicated, Ms Lin ultimately registered caveats against all the Secondary Properties. None of them was mentioned in the loan agreement and the caveats registered in respect of them were somewhat inaptly drafted. Moreover, the only agreement relied upon by Ms Lin to support her claim to be entitled to security was an oral one, concluded, apparently, in January 2004. Apart from the circumstance that Ms Chun consented to the caveats, the evidence as to the terms of the oral agreement goes no further than paragraph 36 of Ms Lin’s affidavit of 12 May 2004, quoted above, and paragraph 33 of her affidavit of 5 August 2004:

28 The question immediately arises whether there was consideration to support an agreement moving from Ms Lin. It could only be a forebearance to sue, there being no suggestion of anything else.

29 Under the loan agreement, the principal sum had fallen due on 30 December 2003 and, therefore, when Ms Lin spoke to Ms Chun in January 2004 it was overdue for payment.

30 As pointed out in Cheshire & Fifoot Laws of Contract, 6th Australian Edition, at paragraph 222, there need not be an express promise, either to compromise or to forbear. It may be inferred from the circumstances including, in this case, the express threat to sue referred to in paragraph 31 of the affidavit quoted above.

The old, but still quoted, case of Alliance Bank v Brown (1861-73) All ER Rep 1451 was based upon facts not dissimilar to those now under consideration in that the Defendant granted security to the Plaintiff against an amount due for payment. Upon an action seeking to enforce the security the defendant demurred upon the ground that the agreement was nudum pactum. Kindersley VC overruled the demurrer saying:

“A general demurrer had been put in upon the ground that the contract stated in the bill was nudum pactum, it being contended that the defendant’s promise to hypothecate these cargoes was not founded upon consideration, there being no agreement alleged, or, as was argued by the demurrants, for forbearance for a single day, or even for an hour, and the question in this case was, whether some such promise was necessary. The bill states that the plaintiffs requested some security from the defendants, and a promise by the latter, which is contained in the letter of September 1864. Now, what is the effect of this letter? When a creditor demands payment of a debt, and in consequence of the application the debtor agrees to give a certain security without any promise of forbearance on the part of the creditor, although there is no obligation on the latter to forbear for a day or an hour, yet the creditor, in fact, does give, or must be assumed to give, and so it must be assumed that the debtor receives, forbearance to some extent, or in some manner or degree, however small. If the debtor were to say, “I refuse to give any security at all,” the creditor would no doubt, take instant proceedings. There is, therefore, the benefit of some degree of forbearance, so that the circumstances necessarily imply or involve the acquisition on the part of the debtor of a certain quantity of forbearance which would prevent the transaction from being nudum pactum, and on this ground the demurrer must be overruled.”

31 More recent examples of the courts inferring a promise of forbearance to sue are the High Court decisions McDermott v Black (1940) 63 CLR 161 and Wigan v Edwards (1973) 1 ACR 457, but as Jordan CJ pointed out in Larkin v Girvan (1940) 40 SR (NSW) 365 there is no consideration if the thing promised or performed is precisely the thing which the promisor is already bound to do and no more, and there is no dispute that he is bound to do it. There is no consideration if the promise is made purely gratuitously in respect of the performance of an existing undisputed obligation.

32 In this case, in my opinion, although there was clearly no obligation upon Ms Chun to provide further security, she was in default of her obligation to repay the loan on 30 December 2003. In that circumstance, I think that her agreement to the lodgement of further caveats was supported by a consideration of forbearance to sue.

WAS SECURITY ACTUALLY GIVEN?

33 Of course the oral agreement goes no further than a consent to the lodgement of further caveats. In that regard, however, I am of the opinion that Troncone & Ors v Aliperti & Ors (Unreported Court of Appeal 20 April 1994) is authority for the proposition that an authority to lodge caveats, in the absence of evidence of a contrary intention, implies the grant of such an estate or interest in the relevant land as would support them. In this case, there is no evidence of contrary intention and I conclude that Ms Chun intended to grant an equitable charge over the secondary properties in favour of Ms Lin.

34 The case then raises the difficulty of an absence of writing. Section 23 C of the Conveyancing Act provides:

“(1) Subject to the provisions of this Act with respect to the creation of interest in land by parol:

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,

(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,

(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.

(2) This section does not affect the creation or operation of resulting, implied or constructive trusts.”

35 The only writing possibly relevant in this case is constituted by the caveats over the secondary properties consented to by Ms Chun. The caveats do not, in my opinion, constitute writing for the purposes of s.23C. Ms Chun’s consent as contemplated by s.74 F(6) of the Real Property Act does no more, in my view, than avoid the need for the Registrar General to give notice to the registered proprietor. It purports to be, and in my opinion, constitutes no more than a consent to the registration of the caveats.

36 In the absence of writing, as required by s.23C of the Conveyancing Act, there remains the possibility that the requirement of writing was overcome by the application of the doctrine of part performance. Young CJ in Eq considered the question, upon somewhat similar facts, in Jones v Baker (Unreported 2002 NSWSC 89). The case concerned an oral agreement pursuant to which a caveat was lodged. The Plaintiff sought to extend the caveat and also a declaration that he had an equitable interest in the property, the subject of the caveat.

37 After referring to a number of authorities on the question, His Honour held that the doctrine of part performance extended to the case before him, rejecting the argument that it only applied to suits for specific performance.

38 In this case, the relevant acts of part performance, in my opinion, are the lodgement of the caveats by, or on behalf of, Ms Lin, with the consent of Ms Chun and the forbearance, in fact, of Ms Lin from taking action in respect of the overdue debt. On the basis that the contract was that, in consideration of Ms Lin forbearing to sue, she would be entitled to register caveats against, and take security over, the Secondary Properties, it seems to me that the acts referred to point unequivocally to the existence of such a contract. If I be wrong in concluding that there was part performance, I would hold that Ms Chun is estopped, by the fact that she consented to the caveats, from asserting that she did not agree to give security over the secondary properties. In saying that I am not unmindful of the caution given by Young CJ in Eq in Jones v Baker at paragraph 61. See also Buchholz v Kempsey Shire Council (Austin J 2005 NSWSC 235)

39 Accordingly, I hold that Ms Lin is entitled to the benefit of an equitable charge over all the Secondary Properties. It follows that in relation to 87 Springdale Road, Killara, she has established the same entitlement to relief as she established in respect of 20 Epping Road, Double Bay. She has also established a right to similar relief in respect of 4/2A Black Street, Vaucluse, which is not the subject of a restraining order.

Ms LIN AND THE COMMONWEALTH:

40 The fact that Ms Lin has been held entitled to relief against Ms Chun in respect of 20 Epping Road, Double Bay, 87 Springdale Road, Killara and 4/2A Black Street, Vaucluse and the fact that she has been held entitled to a security or charge over the remaining secondary properties (hereafter the Commonwealth Properties) does not, of course, dispose of her claim for relief under the Act, or her claims that, in some respect at least, her interests prevail over the Commonwealth as represented by the DPP.

41 As it seems to me, section 50 of the Act operated upon the orders of 2 September 1993, to fix subsequently acquired property of Ms Chun with a charge in favour of the Commonwealth in respect of any penalty amount outstanding.

42 According to the evidence, the Commonwealth is not only entitled to a charge under s.50 over the Commonwealth Properties in respect of the unpaid penalty, but it had caused caveats stating its interest in the properties to be registered against the relevant titles before Ms Lin entered into the agreement to take security from Ms Chun in January 2004.

43 On any basis, therefore, in my opinion Ms Lin has no entitlement to relief outside the Act. Section 50 must be given effect, according to its terms. The position is analogous to the statutory charge discussed by Debelle J at first instance, and by the Court in Banco in Brown v Commonwealth Bank (1993) 63 SASR at 188 and 203.

44 In my opinion, in light of findings already made, Ms Lin falls within s.48(3) of the Act and is entitled to apply to the Court for a variation of the restraining order to exclude her interests in the Commonwealth Properties. As the offence for which Ms Chun was convicted was an ordinary indictable offence, s.48 (3) (d) (ii) applies. I am satisfied, for the purposes of the clause, that Ms Lin’s interest in the property is not tainted, there being no evidence to suggest otherwise.

45 That being so, Ms Lin is entitled to have her application granted if the Court is satisfied that it is in the public interest to do so, having regard to all the circumstances, including those specifically mentioned.

46 One major barrier to the grant of relief to Ms Lin, as it seems to me, is the absence of evidence as to the values of the various properties mentioned in the proceedings and the quantification of the interests of persons other than Ms Lin in those properties. As Mr Muir pointed out, Ms Lin has the benefit of her charges over 20 Epping Road, Double Bay, which she initially regarded as adequate security, over 87 Springdale Road, Killara and over 4/2A Black Street, Vaucluse. As I understand the evidence, I have no way of knowing whether or not the interest of Ms Chun in those properties represents adequate security to Ms Lin for what is owed to her. I would regard this lack of evidence as a fatal bar to a conclusion that it would be in the public interest to exclude any of the Commonwealth Properties from the restraining order. For that reason alone, I would refuse to exercise jurisdiction under s.48 (3).

47 In any event, however, I am not persuaded that the alleged financial hardship of Ms Lin is as she rather glibly states in her affidavits. She was, as I have already indicated, a very unimpressive witness and her evidence as to her alleged impecuniosity and ignorance of business affairs was seriously undermined by Mr Muir’s cross-examination and the bank statements tendered during the course of such cross-examination. The application for exclusion orders should be dismissed.

48 On the second day of the hearing, Mr Archibald sought to further amend his client’s summons, so as to permit him to argue that the restraining orders made on 2 September 1993 ceased to be in force 6 months later, by virtue of s.57 (2) (k). I refused Mr Archibald leave to further amend the summons, both because of my view that his argument was untenable as a matter of law and because, in any event, of the prejudice such an amendment would cause the DPP.

49 The matter was tangentially raised in the DPP’s submissions, merely to record my conclusion that the restraining order remained in force, so as to impact upon the properties Ms Chun acquired some years later. Mr Archibald took this up in his reply to the DPP’s submissions, asserting, as I understand it, that if the restraining order ceased to be in force 6 months after 2 September 1993, this would be a matter which goes to the jurisdiction of the Court. I remain of the view expressed at the time I refused Mr Archibald leave to further amend the Summons, that s.57 (2) does not, in the circumstances of this case, have the effect he claims. In any event, however, I doubt whether his client has standing to challenge, in effect, the validity of orders made by consent in this court on 5 March, this year, between Ms Chun and the Commonwealth. Accordingly, I reject Mr Archibald’s contention that the Court, by virtue of s.57 (2) (k), is deprived of jurisdiction.

ORDERS AND DECLARATION:

50 Ms Lin has, I think, established an entitlement to declarations as sought in paragraphs 2,3 and 4 of the Further Amended Summons. She is also, in my view, entitled to declarations as sought in paragraphs 6 (a), (b), (c), and (d). On the face of it, I doubt whether she is entitled, in respect of any of the properties, to the order sought in paragraph 6 (e), but if she wishes to argue that matter, I give her leave to do so. Similarly, I give her leave to address submissions in relation to the orders sought in paragraphs 7 and 8.

51 I would refuse to make the declarations sought in paragraphs 5, 9 and 10. Moreover, there seems no evidence before me as to monies in court or the source of those monies.

52 In any event, it may well be appropriate to make further orders which give effect to these reasons. To give the parties an opportunity to consider their positions, I stand the matter over for the making of formal orders on 10 June at 9.30am. I will then hear argument as to costs.

53 I direct the Plaintiff, within 72 hours, to send a copy of these reasons by ordinary mail to Ms Chun at her last known address.

***************

Actions

Download as PDF Download as Word Document

Citations

Jun Lin v Commonwealth Director of Public Prosecutions [2005] NSWSC 431

Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

3

McDermott v Black [1940] HCA 4

Legione v Hateley [1983] HCA 11

CITATION:	Jun Lin v Commonwealth DPP & Anor [2005] NSWSC 431
HEARING DATE(S):	21/03/05 22/03/05
JUDGMENT DATE :	25 May 2005
JUDGMENT OF:	Patten AJ at 1
DECISION:	See paragraphs 50,51,52 and 53.

LEGISLATION CITED:	Conveyancing Act 1919 Real Property Act 1900 Proceeds of Crime Act 1987 (Commonwealth)
CASES CITED:	Alliance Bank v Brown (1861-73) All ER Rep 1451 McDermott v Black (1940) 63 CLR 161 Wigan v Edwards (1973) 1 ACR 457 Larking v Girvan (1940) 40 SR (NSW) Troncone & Ors v Aliperti & Ors (unreported Court of Appeal 20 April 1994) Jones v Baker (Unreported 2002 NSWSC 89) Brown v Commonwealth Bank (1993) 63 SASR at188 and 203 Buchholz v Kempsey Shire Council (Austin J 2005 NSWSC 235)
PARTIES:	Jun Lin - Plaintiff Commonwealth DPP - First Defendant Deboran Chun (Also known as Deborah Law, and Deborah Kam Fung Law) - Second Defendant
FILE NUMBER(S):	SC 11638 of 2004
COUNSEL:	I. Archibald - Plaintiff T Muir - First Defendant
SOLICITORS:	Plaintiff - A.A.T Legal First Defendant - Director of Public Prosecutions(Commonwealth)