Kang v Kwan - [2002] NSWSC 1187

No judgment structure available for this case.

CITATION: Kang v Kwan & 2 Ors [2002] NSWSC 1187

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 3510/99

HEARING DATE(S): 20/02/01-22/02/01; 13/03/01; 12/07/01; 13/07/01; 14/08/01-17/08/01; 28/08/01; 05/09/01; 07/11/01; 08/11/01; 19/11/01; 26/11/01; 19/03/02; 20/03/02

JUDGMENT DATE: 12 December 2002

PARTIES :

WEI LING KANG (Plaintiff)
CHRISTOPHER ANTHONY KWAN (First Defendant)
KATE WOOWIN (Second Defendant)
EILEEN WOOWIN (Third Defendant)

JUDGMENT OF: Santow J

COUNSEL : G C Lindsay, SC/ M A Robinson (Plaintiff)
M Einfeld, QC/ F Donohoe (First Defendant)

SOLICITORS: Legal Aid Commission NSW (Plaintiff)
Verekers (First Defendant)

CATCHWORDS: CONVEYANCING - sham transactions - whether loan and mortgage transactions bona fide - whether loan and mortgage transactions liable to be set aside - CONVEYANCING - whether the loan and mortgage transactions and discharge of mortgage and sale transactions constitute an alienation of property within the meaning of s37A of the Conveyancing Act 1919 - whether there was an intent to defraud creditors - meaning of "creditors" in s37A - whether bona fide purchaser for value and without notice - ESTOPPEL - whether a defendant could be precluded from asserting an entitlement to repayment of loan and rely on a mortgage in light of what was said in court - EQUITABLE LIEN OR CHARGE - whether the plaintiff held an equitable lien or entitled to a charge in equity to secure payment for work done on a house, when subsequent judgment otherwise frustrated by sham transactions, to prevent consequences of unconscionable conduct - equitable lien as an alternative to a constructive trust as a remedy for unconscionable conduct - CONSPIRACY TO INJURE - whether the loan and mortgage transactions constituted a conspiracy against the plaintiff - whether plaintiff suffered any damage.

LEGISLATION CITED: Conveyancing Act 1919 s37A
Evidence Act s125
Real Property Act 1900 ss42 and 43

CASES CITED: Abignano v Wenkart (1998) 9 BPR 765
Bahr v Nicolay (No. 2) (1988) 164 CLR 604
Cadogan v Cadogan [1977] 3 All ER 381
Clegg v Bromley [1912] 3 KB 474
Esanda Ltd v Burgess [1984] 2 NSWLR 139
Giumelli v Giumelli (1999) 196 CLR 101
Graham H Roberts Pty Limited v Maurbeth Investments Pty Limited [1974] 1 NSWLR 93
H. & G. & R. Nominees v Carlson Pty Limited (2000) V Conv.R 54-630
Hewett v Court (1983) 149 CLR 639
ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640
Jones v Dunkel (1959) 10 CLR 298
Kang v Kwan ([2001] NSWSC 698, 16 August 2001, unreported)
Lonrho Limited v Shell Petroleum Co Limited [1982] AC 173
Mackay v Douglas [1872] LR 14 Eq 106
Re Mackay (1951) 16 ABC 18
Mandarin International Developments Pty Limited v Growth Corp (Australia) Pty Limited (1998) 143 FLR 408
Middleton v Pollock [1876] 2 Chd 104
Morris v Morris (1982) 1 NSWLR 61
Munnings v Australian Government Solicitor (1994) 118 ALR 385
Roy Morgan Research Centre Pty Limited v Wilson Market Research Pty Limited (1996) 39 NSWLR 311
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 13 FCR 449
Snook v London 7 West Riding Investments Ltd [1967] 2 QB 786
Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 1 WLR 1072
Vander Lee & Ors v State of New South Wales & Ors ([2002] NSWCA 286
Waterwell Shipping Inc v HIH Casuality & GIO Ltd (NSWSC, Giles CJ CommD, 8 September 1997, unreported)

DECISION: See para 220

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SANTOW J

CHRISTOPHER ANTHONY KWAN
First Defendant
KATE WOOWIN
Second Defendant
EILEEN WOOWIN
Third Defendant

Table of Contents

INTRODUCTION

Overview

Persons Principally Involved – brief description

Plaintiff and those associated

Defendants and those associated

CHRONOLOGY OF FACTS

1991

1995

1998

1999

2000

QUESTIONS FOR RESOLUTION

Question 1 – Sham transactions?

Jones v Dunkel

PX12

Conclusion

Question 3 - Estoppel?

Question 4 - Equitable lien or charge in equity?

Question 5 - Priority of mortgage over equitable claim?

Question 6 - Conspiracy to injure?

Question 7 - Damage to Plaintiff?

OVERALL CONCLUSION AND ORDERS

JUDGMENT
12 December 2002

INTRODUCTION
Overview

1 These proceedings, in very broad terms, seek to challenge certain transactions carried out which had the practical effect of denying the availability of property against which to enforce a money judgment earlier obtained in the District Court in the Plaintiff’s favour. The challenge is not, primarily, against the party against whom the judgment was obtained (the judgment debtor). Rather it is against a third party’s property said to derive from the judgment debtor, when the latter claimed to have repaid a loan from the third party. That loan is challenged as is the supporting mortgage on a number of bases. These include that they were a sham, or a fraudulent conveyance. That challenge is defended on a number of grounds.

2 These proceedings thus arise out of earlier proceedings in the civil jurisdiction of the District Court. They were between the present Plaintiff, Wei Ling Kang, and the present Second and Third Defendants, Kate and Eileen Woowin. The latter are hereafter collectively referred to as “the Woowins” and individually (without any disrespect) as “Kate” and “Eileen” respectively. The third party earlier referred to is the First Defendant in these present proceedings, Christopher Kwan. I refer to him, for convenience and without any disrespect, as “Christopher”.

3 The substantive District Court proceedings were commenced by Statement of Claim initially in the Supreme Court filed 4 March 1996. They were preceded by two letters of demand by Legal Aid on behalf of the Plaintiff, to Eileen and Kate respectively, dated 1 February 1996. Those proceedings were subsequently transferred to the District Court in about October 1997. They were heard in the District Court between 28 July and 12 October 1999. This followed an earlier order for judgment obtained by the Plaintiff on 23 April 1999 which was later set aside upon and by virtue of Notice of Grounds of Defence filed by the Woowins. It also followed the Woowins’ successful application on 1 June 1999 before Judge Sidis to vacate the allocated hearing date to 28 July 1999. The circumstances in which that hearing date was vacated are relied upon as part of the Plaintiff’s case. This is insofar as they concern what was said in court concerning the Plaintiff’s caveat, mistakenly placed against a small part only of Kate Woowin’s Castlecrag property. There is a dispute as to whether, at the relevant time, Christopher was aware of that mistake.

4 In the substantive District Court proceedings tried before Herron DCJ (over 41 days) between 28 July 1999 and 12 October 1999, he found that the Plaintiff was entitled to reasonable remuneration for the work he had performed on the Woowin’s Castlecrag property. By that District Court judgment of 12 October 1999, Herron DCJ determined that Mr Kang was entitled, as against Kate and Eileen to:

(ii) $19,245 interest awarded to Mr Kang under the District Court Act 1983, s83A; and

5 That Judgment remains wholly unsatisfied. Execution upon it has not been stayed.

6 On the Plaintiff’s case in the present proceedings, the First Defendant Christopher, as is not denied, was a close personal friend and business associate of Kate and Eileen. Nor is it in dispute that he, from a date no later than mid-November 1998, had knowledge of the District Court proceedings and from time to time instructed solicitors to act for the Woowins in those proceedings. However, latterly (from late May 1999) Ms Linda Lau came also to exercise that role.

7 In late May 1999, prior to commencement of the hearing, the Plaintiff had caused a caveat to be entered on the title of the Castlecrag property then owned by Kate at 228 Edinburgh Road, Castlecrag. The caveat claimed “an equitable interest in the land of Kate Woowin arising from extensive building works and improvements effected on the land by [Mr Kang between 1991 and 1995] and for which no payment has been received”. However, the Castlecrag property was divided into two titles, with the principal title covering house property with a separate title in respect of a small laneway at the rear of relatively small value. In error, the caveat was entered on the title to the Castlecrag laneway but not to the house property.

8 The transactions challenged in the present proceedings commenced prior to the hearing, namely on 25 June 1999. That was when Kate and Christopher instructed the solicitors Verekers to prepare a mortgage (“the Mortgage”) of the Castlecrag property in favour of Christopher as well as a contract of sale of the property to a third party. The Mortgage, dated and registered on 28 June 1999, was granted in support of an alleged advance of US$430,580 agreed orally to be made by Christopher to Kate “in or about January 1998”. There was no written agreement for loan at the time or any other informal record, beyond the bank transfers. The only written record comes ex post facto, when Christopher instructs his solicitor about the terms for documentation some 18 months later, by letter dated 25 June 1999 (PX4, at 114); there are of course the affidavits of Christopher and Kate referred to below. Such advance, according to Christopher, was effected on 13 February 1998 by the transfer of that sum from Christopher’s account No. 275-321230 in the Hang Seng Bank in Hong Kong to the account of Kate, No. 275-308799 at that Bank, according to the affidavits of Christopher of 12 October 1999 with annexed bank records, and of Kate (DX14). Shortly after, on about 9 July 1999, Kate contracted to sell the Castlecrag property to a third party by a contract of sale dated and exchanged that day. Sale of the subject property to the third party was completed less than two weeks later, on 22 July 1999 for a sale price of $825,000, inclusive of a deposit of $82,500; on settlement, an amount of $743,717.03 (exclusive of the deposit) was paid as balance of the sale price adjusted for outgoings. The whole net proceeds of the sale were paid by the purchaser at the direction of Kate to Christopher. They comprised $804,987.98, made up of $741,380 (after minor deductions from the $743,717.03) and $63,607.98 (being the balance of the deposit after deduction of commission and legal costs). On the Plaintiff’s case it was paid “purportedly” pursuant to and in discharge of the Mortgage, though on that case, strenuously denied, the mortgage was either a fraudulent conveyance or a sham, and the loan was not genuine either. On the Defendants’ case there was no fraudulent conveyance and neither were a sham; this amount was thus actually and properly so applied. After payment of what was so claimed to be an amount owing by Kate and now secured by the Mortgage, being the amount originally allegedly lent by Christopher to Kate, the balance was remitted out of Australia. It remains out of the jurisdiction. That left the Plaintiff with nothing to satisfy his judgment against, unless these transactions were to be set aside or the Plaintiff’s interest otherwise satisfied by an equitable lien or charge against now Christopher’s Castle Cove property, which he purchased using this alleged loan repayment.

9 Thus, to quantify the above more precisely. Whereas $804,987.98 was paid by direction to Christopher, with the balance remitted overseas, the amount of the alleged loan, converted from US$430,580 at the favourable rate (to him) that Christopher contended was agreed (US$0.58 to A$1.00) produces A$742,379.29. That is still less than the $804,987.98 that went to Christopher, by some $62,000. Had instead the actual prevailing exchange rate been used on 13 February 1998 this would have been substantially more favourable to Kate (US$0.673 to A$1.00). It would have produced an amount equal to A$639,791.97, if one converted the US$430,580 to Australian dollars at that, the prevailing rate. This substituted exchange rate of 58 cents, represented on the Plaintiff’s case an immediate divestment of A$102,587.32. This was in return for an on-demand loan there being no evidence of any agreement to refrain from making a demand. Moreover, had an exchange rate been adopted as applicable on the date the Mortgage was actually discharged, being 22 July 1999 the rate would have been US$0.6488 to A$1.00. In that event, US$430,580 would convert to a lesser amount than $804,987.98 namely A$663,655.98. As regards his attack on these arrangements, as a sham, the Plaintiff’s pleading, denied by the First Defendant, is to be found in various parts of the Second Amended Statement of claim; see in particular at para 42 as particularised under paras (a) and (b) thereof.

10 To sum up. Unless one assumed not only an unfavourable exchange rate to Kate of 58 cents but also interest (claimed by the First Defendant to be 9% though the only later written version of what was agreed stipulated “nominal” interest) in every one of these three scenarios Christopher was over-paid; that is, he was paid more than he was allegedly owed. Thus treating interest as nominal, and so not in reality charged, he was paid A$804,987.98 but was allegedly owed (for the claimed loan of US$430,580) only

(b) A$639,791.97 at the 67 cent then prevailing exchange rate, at the time of the alleged advance, or

(c) A$663,655.98 at the 64 cent then prevailing exchange rate at the time of the discharge of the alleged advance.

11 The difference went, so far as the evidence goes, to China, to Christopher, with some $60,000 then lent back by Christopher to the Woowins to cover their District Court costs. All of this is difficult to reconcile with the notion of a genuine loan, an issue to which I will return. In particular why would anyone rationally agree to an on-demand loan capable of being called up immediately, at 9% interest and a grossly unfavourable exchange rate? And why would Christopher take advantage of his friend Kate to do so, unless the real arrangement was rather different, and designed between these two close friends to defeat Mr Kang? That in essence is the allegation of the Plaintiff.

12 The Plaintiff seeks to attack these transactions and to enforce an equitable lien against the First Defendant’s property. That property subsequently bought at Castle Cove, he claims, represents the proceeds of the sale of the Castlecrag Property paid to or at the direction of the First Defendant, a proposition which can be taken as correct. The contentions of the Plaintiff include first that the alleged debt was not genuine and the mortgage to secure it a sham. It is also contended that the alleged loan transaction, the mortgage of 28 June 1999 the sale and the discharge of the Mortgage from the proceeds of that sale effected between 9 to 22 July 1999 jointly or severally constitute an “alienation of property” by the Second Defendant within the meaning of the Conveyancing Act s37A. This is said to have been with the intent to defraud the Plaintiff as a creditor of Kate, pursuant to the District Court judgment in his favour, he being a person “thereby prejudiced” within the meaning of the section. This was in circumstances where it is alleged by the Plaintiff that Christopher was not “a purchaser in good faith not having, at the time of alienation, notice of the intent to defraud creditors” within the meaning of the section so as to satisfy that defence. The mortgage and loan, if they constitute genuine transactions or the end result of the money transfers, are thus said to be within the ambit of s37A, and are, according to the Plaintiff, voidable at the instance of the Plaintiff, as a “person thereby prejudiced”.

13 The Plaintiff in claiming an equitable lien or charge should be declared against Christopher’s Castle Cove property does so on the basis pleaded in the Second Amended Statement of Claim including by way of estoppel; see paras 10 to 29, and in particular

(b) they did not have notice of Mr Kang’s claim to an equitable interest in the Castlecrag Property at the time when Kate purported to charge and dispose of her interest in the Castlecrag Property as alleged in paragraph 18 hereof.

(c) the rights of the parties to these proceedings should be determined on the basis that (at the time Kate purported to charge and dispose of her interest in the Castlecrag Property as alleged in paragraph18 hereof) there was no caveat on the title to the Castlecrag Property in terms similar to the terms of the Caveat.

(d) the Castlecrag Property was not, at all material times, available to Mr Kang to satisfy any order or judgment made in favour of Mr Kang in the District Court Proceedings.

26. By reason of the facts pleaded in paragraphs 8 to 25 hereof, the attempt by Kate to charge or dispose of the Castlecrag Property, without the liability of Eileen and herself to Mr Kang being discharged, was unconscionable.

27. By reason of the facts and circumstances pleaded in paragraphs 10-26 hereof, the Castlecrag Property was at all material times charged in equity with the liability of Kate and Eileen to remunerate Mr Kang for work done at the Property.

(b) the proceeds of sale of the Castlecrag Property paid to him, or at his direction, upon completion of the sale of the Castlecrag Property were, and remain, charged with the liability of Kate and Eileen to remunerate Mr Kang for work done at the Property.

29. Accordingly, Mr Kang is entitled in equity: (a) to a charge, in an amount equal to the sum of $89,100.00 (pleaded in paragraph 6(a)(i) hereof) together with such interest as may be allowed by this Court, on; and (b) to satisfy his entitlements under the District Court Judgment and any entitlements to costs arising in the course of any appeal from that Judgment from, the interest of Christopher in the land known as 21 Cammeray Road, Castle Cove (“the Substituted Property”) which (as recorded in orders and notations made by Simos J on 3 November 1999) represents the proceeds of the sale of the Castlecrag Property paid to or at the direction of Christopher.”

14 The Plaintiff further alleges that the Defendants conspired, and carried into execution, a conspiracy against the Plaintiff for the purpose of preventing him from recovering any remuneration to which he might be entitled against Kate or Eileen for work done at the property.

15 The Plaintiff contends that the Defendants, including the First Defendant, conducted the District Court proceedings and secured a forensic advantage in those proceedings upon the express basis that the Castlecrag property would be available to satisfy orders made by the court in favour of the Plaintiff. Further, that no disclosure was made by the Defendants to the Court or the Plaintiff that the property was subject to a charge in favour of Christopher nor that the caveat ostensibly lodged by the Plaintiff over the Castlecrag property was in fact lodged only over the rear laneway and not the main title that was later mortgaged and sold after 1 June 1999. The Plaintiff contends that result gives rise to an abuse of process and estoppel (see [16] below) precluding the Defendants asserting against the Plaintiff the Mortgage or any charge over the property, with a consequent obligation to account.

16 The First Defendant disputes these claims and contends first and foremost, that the original loan for securing which he became the mortgagee of the Castlecrag property was a genuine transaction. Further that the mortgage was not a sham. Second, the First Defendant contends that the Plaintiff had no equitable interest in the property arising either from his right to remuneration nor the right of residence which the Plaintiff claims he was promised. In any event, the registered mortgage prevailed over any prior unregistered interest, there being no fraud, according to the First Defendant. Third, the First Defendant claims that the Plaintiff failed to establish the elements of an estoppel against the First Defendant with respect to his alleged failure to alert the Plaintiff (and/or Sidis DCJ at the application to vacate the date set down for hearing) that the caveat on Kate Woowin’s property had been inadvertently entered on the Castlecrag laneway. Indeed, the First Defendant claims that any representations made by Counsel or legal advisors in respect of a caveat being in existence to protect the Plaintiff’s costs cannot be said to have been made by him or by agents having his authority, and moreover, that at the relevant time he did not know that the Castlecrag Laneway was a separate parcel of land. Fourth, the First Defendant contends that the alienation of the Castlecrag property was not made with an intent to defraud creditors (for the purposes of s37A of the Conveyancing Act). Fifth, the Defendant contends that the Plaintiff’s claim of conspiracy is flawed because prior to judgment it was permissible for Kate to dispose of her assets as she wished and the Plaintiff suffered no damage or loss caused by the payment to Christopher because there was then no judgment. Nor did the evidence disclose a basis for concluding that such a judgment could not be satisfied from the assets of Kate Woowin that were temporally available within the jurisdiction.

17 Initially Kate and Eileen took an active part in these proceedings, retaining solicitors (not the solicitors for the First Defendant but Russo & Partners) and filing a sworn Defence and subsequently an Amended Defence on 9 June 2000. (Her affidavit of 9 August 1999 and earlier affidavit of 31 May 1999 (DX14) were filed in the District Court proceedings.) However, on 20 September 2000, Mr Russo filed a Notice of Ceasing to Act on behalf of the Woowins. Thereafter, attempts to contact the Woowins by the Plaintiff’s solicitors received no response. Accordingly, the Second and Third Defendants did not appear in the course of the Supreme Court proceedings before me, gave no evidence nor did they take any further part. The Plaintiff contends that, in relation to Kate and Eileen, as well as other potential witnesses, inferences against Christopher should be drawn, in accordance with the principles in Jones v Dunkel (1959) 10 CLR 298 at 320-1. The First Defendant submits that neither were available as witnesses, being in an unknown location, presumably in China.

18 The Plaintiff seeks a variety of relief including (paras 29 and 55(a) of the Second Amended Statement of Claim) a charge in equity – or equitable lien in respect of the amount claimed by the Plaintiff over the interest of Christopher in the property he acquired at 21 Cammeray Road, Castle Cove, representing the proceeds of sale of the Castlecrag property paid to or at the direction of Christopher. Orders are also sought pursuant to s37A of the Conveyancing Act 1919, together with an order for account and damage, in terms of para 55 of the Second Amended Statement of Claim. Damages are claimed in fact, by reason of an alleged conspiracy to injure the Plaintiff carried into execution by the Woowins and Christopher. Overlaying these claims is an estoppel claim, which asserts that Christopher, by representations and conduct on and after 1 June 1999, is estopped from “dealing with the sale proceeds” otherwise than as if charged in favour of the Plaintiff.

Persons Principally Involved – brief description

19 It is convenient first to list and briefly describe the persons principally involved, and others whose names appear in the evidence. The description of each is intended to be neutral and non-controversial.

CHRONOLOGY OF FACTS

20 I include below a chronology identifying where necessary points of dispute between the parties and their alternative versions. It generally incorporates the First Defendant’s additions to the Plaintiff’s version of the chronology. Its purpose is to provide a skeletal outline, to which can be fitted the analysis of the relevant transactions which follows. I have added occasional comment.

1991

21 14 December 1991: Plaintiff takes up residence at the Castlecrag property: Plaintiff’s Affidavit sworn 20 February 2000 para [2].

1995

22 5 October 1995: Plaintiff leaves the Castlecrag property after being arrested by the Immigration Authorities and is sent to the Villawood Centre: Supreme Court Transcript p134 line 39-45 (hereafter T, 134-135); District Court judgment of Herron DCJ of 29 October 1999 at p41.

23 10 December 1995: Date of commencement of conspiracy alleged by the Plaintiff. The Plaintiff claims that on this date the Third Defendant, Eileen Woowin (“Eileen”), with the acquiescence of the Second Defendant, Kate Woowin (“Kate”), and First Defendant, Christopher Kwan (“Christopher”), made statements to him to the effect: “If you sue you will get nothing. I will ask everyone to oppose you.”: Second Amended Statement of Claim para [53]

1998

24 Late January: Christopher claims that he agreed to lend funds to Kate: Affidavit of Christopher Kwan sworn 12 October 1999 para [4]

25 Early February: Christopher receives US$430,580 into his Hang Seng Bank account in Hong Kong remitted from China as compensation for resumption of his mother’s house in China: DX15

26 13 February 1998: Christopher transfers the sum of US$430,580 from his account No.275-321230 in the Hang Seng Bank in Hong Kong to the account of Kate, No. 275-308799 in the Hang Seng Bank in Hong Kong: Affidavit of Christopher Kwan sworn 12 October 1999 para [5] and Annexures “A” and “B”.

27 2 October 1998: Ms Tibbey (Plaintiff’s solicitor) swears an affidavit in support of application for substituted service of District Court Statement of Claim which annexes, inter alia, Land Title Office searches showing Castlecrag land comprises two titles: T, 514-516.

28 12 December 1998: Fax from Christopher to Mr Shannon Guilfoyle attaching Legal Aid letter dated 4 September 1998 and Notice of Listing dated 8 October 1998; inviting assistance on behalf of Kate; and recording “that this matter is so important it will determine whether Kate comes over for Xmas or not”: PX6 pp21, 138.

29 17 December 1998: Mark Stenberg (“Stenberg”) was retained by Christopher (via Shannon Guilfoyle) to act on behalf of the Woowins: PX6 p2. The instructions were to maintain “total client confidentiality” and to “act in the best and most favourable position and interest of [the Woowins] under [Christopher’s] instructions”: PX6 p12.

30 21 December 1998: Stenberg wrote letter to Christopher seeking proper instructions from the Woowins: PX6 pp2-3 (para 3) and p22.

31 22 December 1998: Christopher, by telephone, confirmed Stenberg’s instructions “to enquire as to the position with the Court”: PX6 p3 (para 4).

32 23 December 1998: Stenberg wrote letters to Christopher, Legal Aid and his law stationer confirming instructions to act for Woowins: PX6 p3 (para 5) and pp23-26.

33 28 December 1998: Over the Christmas holiday period, Christopher sent a fax to Stenberg protesting about the form of his letters of 23 December 1998, pointing out that he Christopher (an “interested third party”) was Stenberg’s client, not the Woowins, and that Stenberg in declaring himself the Woowins’ solicitor meant Legal Aid could formally serve documents initiating proceedings on Stenberg. Christopher requested that Stenberg “(p)lease establish the true facts of the service of the documents before we commit ourselves to a Court case that we are trying to avoid”: PX6 p3 (para 6) and pp27, 137.

1999

34 7 January 1999: Fax dated 5 January 1999 addressed to Stenberg by Shannon Guilefoyle. It records that Christopher “would like to confirm that he is your client at this stage with regard to [this] matter” and that he “would like to ensure that all the assets owned by the Woowin’s [sic] are fully protected. This is foremost in his mind and would also provide some peace of mind to the Woowins [sic]”: PX6 p136.

35 11 January 1999: Stenberg saw letter from Christopher denying retainer: PX6 pp28, 78.

36 13 January 1999: Stenberg letter to Christopher recording that he could not inspect documents in the Court file until a Notice of Appearance had been filed and noting that “we repeat our advices to you last year that as Solicitor for an interested third party, we do not have access to the Court file…”: PX6 p3 (para 7) and pp28, 79 and 150.

37 20 January 1999: Fax from Christopher to Stenberg stating that “at the moment, the Woowins have still not given me sanction to appoint a legal adviser” and inquiring about procedural steps. Christopher also states in this fax that “This point is not related to the Woowins’ case – I have a debtor who owes my company Australian dollars six thousand (A$6,000.00) plus interest. The debt was incurred on 20 March 1995”: PX6 p3 (para 8) and pp29, 79 and 150.

38 25 January 1999: Stenberg letter to Christopher responding to the fax of 20 January 1999 observing that he is unable to obtain any information unless he has status as Solicitor for the defendants (the Woowins): PX6 p3 (para 8) and pp30 and 79.

39 27 January 1999: Christopher telephoned Stenberg’s office to say that Stenberg could now “officially” represent the Woowins in the proceedings: PX6 p3 (para 9) and pp79 and 150.

40 28 January 1999: Fax from Christopher to Stenberg confirming that the Woowins had accepted his “recommendation” to “officially” ask Stenberg “to represent them in the case”. The fax also records that Christopher was relieved that “we can now see what we are defending against” and that he looked forward “to working with [Stenberg] to assist the Woowins defend this case”: PX6 p3 (para 9) and pp31, 79 and 150.

41 2 February 1999: Stenberg received a letter from Legal Aid enclosing Statement of Claim, and noting that default judgment would be sought unless a Notice of Appearance was filed promptly: PX6 p3 (para 10) and pp32, 58.

42 4 February 1999: Stenberg conference with Christopher and Shannon Guilfoyle taking instructions (30 mins). Among other things the conference canvassed the prospect of the Plaintiff succeeding in application for summary judgment and the residential status of the Plaintiff and his wife: PX6 p151.

43 4-5 February 1999: Notice of Appearance filed on behalf of Woowins: PX6 pp3, 58, 79.

44 8 February 1999: Stenberg perused letter from Eileen to Senator Ruddock dated 22 March 1996 and Christopher’s letter dated 7 October 1997 to Department of Immigration: PX6 p151. Christopher’s letter is reproduced at PX6 pp100-102. In it he recorded that “apart from the Woowin family” he was the best person in Australia acquainted with the true character of Mr Kang (page 100); Mr Kang had threatened the lives and property of the Woowins (page 101); and Christopher needed to know Mr Kang’s “future status in Australia in order to be able to advise the Woowin family whether or not to return to Australia” and so, he urged, Mr Kang should be deported (page 102).

45 22 February 1999: The District Court listed the proceedings for hearing on 2 June 1999: PX6 pp4 (para 14), 64-65.

46 9 March 1999: Stenberg made inquiries about the availability of John Davidson of counsel for the hearing listed for 2-3 June 1999: PX6 p4 (para 15) and pp34, 79 and 153.

47 24 March 1999: Stenberg conference with Christopher and Shannon Guilfoyle taking instructions, including instructions to brief counsel, and providing advice on need for conference with Woowins, possible application for security for costs and the further evidence required (1 hour) PX6 p4 (para 17) and p154.

48 4 April 1999: Date of e-mail from Christopher to Kate recording (in para 2) that “the lawyer understands no contact but if urgently need to he will ask me that he wants to talk to Mum or you” and (in para 4) an entry reads “The house – I understand your concerns. But if I don’t put a caveat on the house you will not be protected”: PX6 p135.

49 10 April 1999: Stenberg’s employed solicitor Mrs Owen (identified at PX6 pp80 and 148) prepared, on this day (a Saturday), a brief for delivery to Mr Davidson: PX6 p5 (para 20). The brief was delivered on 12 April 1999: PX6 pp5, 80. It is reproduced at pp36-39. It observes that Stenberg & Associates is acting for the Woowins and receiving instructions from Christopher. At p38 Mr Davidson was requested “to advise generally” and to draw a defence; there is also a notation that Christopher was “most anxious to see counsel in conference”.

50 10 April 1999: Letter to Christopher enclosing a copy of Mr Davidson’s brief for his information: PX6 pp76, 155.

51 11 April 1999: E-mail from Christopher to Stenberg asking that “a meeting with our barrister” be set up “as soon as possible” and noting that the Woowins are concerned that there will be insufficient time to prepare the case and suggest an extension to the hearing date: PX6 p70.

52 12 April 1999: Stenberg perused Christopher’s e-mail (to Kate) dated 4 April 1999 and advised “re need to have caveat placed on title of house”: PX6 p155.

53 12 April 1999: Stenberg sent email to Christopher advising hearing date is not able to be vacated without good reason. Subsequently, Stenberg advised in respect of evidence needed to support an application for vacation: PX6 p155.

54 19 April 1999: Christopher instructed Stenberg by telephone to “do no other tasks until the barrister’s advice was received”: PX6 p5 (para 21) and pp40, 80. On the same day Stenberg had perused a fax from Christopher requesting advice whether a security specialist had been retained to inspect the house and “requesting advice re strategy re conduct of proceedings”: PX6 p156.

55 21 April 1999: Mr Davidson appointed a conference for 30 April 1999: PX6 p5 (para 22).

56 21 April 1999: E-Mail from Stenberg to Christopher notifying him of conference on 30 April 1999, that being the first available time: PX6 p77.

57 21 April 1999: Christopher faxed to Stenberg in anticipation of conference with Mr Davidson, recording that “both the Woowins and I have been quite stressed out about the imminent hearing date” and stating that Christopher was “banking on” Stenberg and Mr Davidson to “pull the Woowins out of this” difficulty: PX6 p95.

58 29 April 1999: Telephone conversation between Stenberg and Mr Davidson in which the matter was discussed generally, addressing briefly issues in respect of defence and vacating hearing date (18 minutes): PX6 p5 (para 23) and pp80, 157.

59 30 April 1999: Conference between Stenberg, Mr Davidson and Christopher: PX6 p5 (paras 24-25). Stenberg was engaged for 3.5 hours: PX6 p157. Davidson was engaged for 1.5 hours: PX12 p130. Detailed instructions were taken in respect of issues arising in the statement of claim, in assessing the state of evidence, vacation of hearing date and defence, and assessing the prospects of successfully defending the action: PX6 p157. Mr Davidson wanted a leader: PX6 p80. He advised that a brief should be delivered to Chris Barry, QC in relation to certain aspects of the matter, and Christopher accepted that advice: PX6 p5 (para 25). He advised that a silk be briefed about those aspects so that decisions could be made in relation to the way the action should be defended: PX6 p49 (paras 6-7). Senior counsel was to advise “re ramifications of the property being sold” to Christopher, the ability of the Court to set aside any such transaction, and the ability for any judgment to be enforced against the assets of the Woowins in China (Hong Kong): PX6 p157, 134, 148 (item 17). The brief to Barry, QC was delivered (and copied to Mr Davidson) on 5 May 1999. A copy was sent to Christopher on 17 May 1999.

60 5 May 1999: Stenberg received from the District Court Notices of Orders for Judgment against the Woowins: PX6 p6 (para 26) and pp48, 53, 80, 157. The Notices are reproduced at PX6 pp65 and 67.

61 5 May 1999: Stenberg briefed Barry, QC as requested by Mr Davidson: PX6 p6 (para 28) and pp80, 157. The brief is reproduced at PX6 pp42-45. It records (at p42) that Mr Davidson had asked that the specific questions the subject of the brief, referrable to the District Court proceedings, be referred to Barry, QC. It noted (at pp42-43) that Stenberg received instructions from Christopher as a friend, and on behalf, of the Woowins. It also recorded that the Castlecrag property was registered in the name of Kate: p43. At pp43-44 three specific questions were put to Barry, QC in the following terms:

“(1) Can the property at 228 Edinburgh Road Castlecrag be sold at market price to Christopher Kwan. Mr Kwan is owed approximately $600,000.00 by the Defendants [sic]. The value of the property is estimated to be $750,000.00. The balance purchase price of $150,000.000 would then be returned to China.

(2) If this is done is it possible for the Court set aside the sale.

62 5 May 1999: A copy of the Brief to Barry, QC was delivered to Mr Davidson under cover of a letter dated 5 May 1999: PX6 p6 (para 27) and pp41, 158. Mr Davidson acknowledged receipt of Stenberg’s letter in his “Initial Memorandum Advice” dated 11 May 1999: PX6 pp48-49 (paras 2, 4, 6 and 7).

63 11 May 1999: Mr Davidson’s “Initial Memorandum of Advice” delivered to Stenberg: PX6 p6 (para 29) and pp46-56. This advice dealt, principally, with the application of the Woowins to vacate the hearing date: PX6 p46-56. He acknowledged that Barry, QC had been briefed in accordance with instructions that were provided by Christopher, on behalf of the Woowins, on 30 April 1999: PX6 p49 (para 7) and p53 (para 24). Mr Davidson charged Schraders & Associates for this advice (see entry on Mr Davidson’s fee note – PX12 p130).

64 13 May 1999: In accordance with Mr Davidson’s advice (recorded at PX6 pp49-55) Stenberg swore an affidavit in support of a Notice of Motion seeking that the June 1999 hearing date be vacated: PX6 p6 (para 30) and pp57-67. He deposed that he had not met either of the Woowins but had been retained on their behalf by Christopher: PX6 p58 (para 6).

65 17 May 1999: Stenberg letter to Christopher enclosing the Notice of Motion and supporting affidavit (of Stenberg) sworn 13 May 1999. The letter noted that the Motion was returnable on 19 May 1999. It also enclosed the brief to Barry, QC dated 5 May 1999, Stenberg’s letter of the same date to Mr Davidson, Mr Davidson’s Advice dated 11 May 1999, and a copy of the Stenberg affidavit: PX6 pp68-69, 159.

66 18 May 1999: E-mail from Stenberg to Christopher noting that the Motion for vacation of hearing date was listed for 19 May 1999: PX6 p6 (para 33) and p70.

67 19 May 1999: Stenberg’s instructions were terminated by the Woowins and Christopher while he was at Court; he advised the Court accordingly and the Woowins’ Motion for vacation of the hearing date was dismissed with costs: PX6 p6 (para 34) and p160. On 20 May 1999 (see below) Mr Stenberg wrote to Christopher a letter relating to the Woowins’ peremptory determination of his retainer the previous day (PX6 pp71-72).

68 20 May 1999: Ms Tibbey (Plaintiff’s solicitor) lodges caveat over title to smaller parcel of Castlecrag land: Ms Tibbey’s affidavit sworn 20 February 2001 paras [7]-[8]. For convenience I will hereafter refer to this smaller parcel of the property as the “laneway”, but observe that there is, in fact, no separate, physical laneway that one can discern when one attends the property: T, 507.7.

69 20 May 1999: Stenberg asked Barry, QC and Mr Davidson to return their briefs: PX6 pp72, 160.

70 20 May 1999: Stenberg letter to Christopher recording inability to understand why his instructions had been withdrawn at such a critical time: PX6 p7 (para 35) and pp71-72. (See also entry on p17 of Stenberg’s bill of costs – PX7) Stenberg advises Christopher in the letter of the dismissal of the notice of motion in the District Court seeking vacation of the hearing date, the need for the defendants, the Woowins, to put on a defence and that he has asked both counsel briefed to return their briefs.

71 20 May 1999: Stenberg discussed the situation with Mr Davidson (6 minutes): PX6 p7 (para 38) and p160.

72 21 May 1999: Christopher responded to Mr Stenberg’s letter dated 20 May 1999 by a letter dated 21 May 1999 (PX4 p73 and DX18). In this letter Christopher sought to re-engage Stenberg on behalf of the Woowins: PX6 p7 (para 36): and pp73, 81 and 147. With that letter Christopher enclosed a letter dated 20 May 1999 signed, and faxed to him, by Kate (DX 18). By Christopher’s letter of 21 May 1999, Christopher also sought an urgent conference with Mr Stenberg at the “earliest possible time, excepting 21 and 25 May”.

73 The fax from Christopher and its attachment from Kate were read by Stenberg that day (see entry on p17 of Stenberg’s bill of costs – PX7).

74 21 May 1999: Discussion between Stenberg and Mr Davidson (6 minutes) requesting advice of Mr Davidson, asking him to appear on hearing on 2 June 1999. Mr Davidson advised Stenberg that Senior Counsel needed to be briefed as well (see entry on p17 of Stenberg’s bill of costs – PX7).

75 21 May 1999: Discussion between Stenberg and Christopher by telephone about a caveat (6 minutes); PX6 p133 (bottom file note) and p147; PX7 p17 Stenberg’s bill of costs). Stenberg says that, Christopher having re-engaged him on behalf of the Woowins, “instructions were then received by [Christopher] to lodge a caveat on the title of the property”: PX6 p147 (items 13-14).

76 21 May 1999: Telephone discussion between Stenberg and Christopher (24 minutes) discussing “strategy re conducting the defence in view of outcome of the notice of motion, advise further re lodging caveat on title of the property”: See entry on p17 of Stenberg’s bill of costs – PX7.

77 21 May 1999: Stenberg’s law stationer, John Blake, obtained a Folio Identifier search of Folio Identifier A/29028 (“the Castlecrag Property”) and Folio Identifier 1/521774 (“the Castlecrag Laneway”) at 5.11 pm-5.12 pm (PX6 pp131-132, 181 and 187) and faxed them to Stenberg’s office at 5.40 pm (PX6 p130) the same day, a Friday. The searches showed Mr Kang’s caveat entered against the title of the Laneway and no caveat recorded against the Property. The fax was addressed to Sandra Stenberg, Stenberg’s clerk (PX6 p148) but Stenberg personally perused the searches and noted lodgement of the caveat: PX6 p161; (See entries on p17 of Stenberg’s bill of costs – PX7).

78 22 May 1999: Eileen Woowin sent a fax dated 22 May 1999 to the attention of Mr Eric Walsh headed “Top Urgent” (PX12 pp43-52 produced on subpoena from the records of their solicitors, Messrs Schrader & Associates, T, 704). This fax attached a number of documents marked with handwritten annotations.

79 23 May 1999: This is the date of a document entitled “Authority to Act” addressed by the Woowins to Linda Lau: PX6 p121. It was not seen by Stenberg until 25 May 1999: PX6 p162.

80 24 May 1999: Stenberg had telephone discussions with Christopher and Mr Davidson: PX6 p7 (para 39) and p161. Stenberg spoke to Christopher for 12 minutes in respect of the hospitalisation of Eileen Woowin and her anticipated length of rehabilitation, and had two telephone attendances on Mr Davidson, one for 12 minutes and the other for 6 minutes. These dealt respectively with the effect of Eileen Woowin’s inability to give evidence due to bad health, and the issue of engaging new Counsel because Mr Barry, QC was now unavailable: PX6 p161.

81 24 May 1999: Stenberg attended a conference in person with Christopher “taking instructions re: future conduct of matter” (1.7 hours): PX6 p161. This appointment was recorded in Stenberg’s diary as being set down for 11:00am: PX16 (entry for Monday 24 May 1999). During this conference Christopher made a call to the Woowins in China at 11.55am for a duration of 1,986 seconds, just over 33 minutes: PX22; T611.14-17; T628.30-35; PX6 p9 para 49.

82 24 May 1999: Mr Stenberg had requested earlier in the day, and his office received from his law stationer (at 12.06 pm-12.08 pm), a copy of Mr Kang’s Caveat and the Deposited Plans referred to in the Folio Identifier searches of the Property ordered and received by Mr Stenberg on Friday 21 May 1999: PX6 pp124-129 & 130.

83 24 May 1999: Christopher e-mailed to Stenberg advising a new e-mail address at 4.16pm: PX6 pp109, 161.

84 25 May 1999: Gerritt Reeves, solicitor, contacted Stenberg twice on behalf of the Woowins. He said that he had been consulted by Kate Woowin. Initially he asked that all further dealings with the Woowins be made direct and not through Christopher. He then left a message that Linda Lau, a friend of the Woowins, would contact him to provide instructions: PX6 p7 (para 40) and pp123 and 162.

85 25 May 1999: Telephone attendances by Stenberg on Linda Lau, in course of which she “made certain allegations against [Christopher] about not providing full details of the true situation in the case” and that Eileen was seriously ill in hospital and unable to travel (PX6 p7 para 41). Stenberg noted “concern [of Eileen and Kate] of conflict of interests in instructions provided to date [by Christopher]”: PX6 p162 (item 162/18 minutes and item 166/12 minutes) and pp120, 122, 163 (Item 168/6 minutes). File note of Stenberg reads “need to vacate hearing/thought MS [Stenberg] in cahoots with CK [Christopher] to lose house”: PX6 p122.

86 25 May 1999: Stenberg perused “Authority to Act” dated 23 May 1999 signed by the Woowins in favour of Linda Lau: PX6 pp121, 162.

87 25 May 1999: Stenberg telephone attendances upon Mr Davidson to discuss “possible conflict of interests between [Eileen and Kate]”, to note the unavailability of Barry, QC and to arrange a conference: PX6 p7 (para 42) and pp120, 122 and 162 (item 163/12 minutes and item 165/12 minutes).

88 25-26 May 1999: First Defendant claims that his role as agent for the Woowins is terminated; Linda Lau appointed in lieu: PX6 p121, Ex PX21, Affidavit of Jeremy Mackenzie sworn 21 February 2001 paras [2]-[3].

89 26 May 1999: Stenberg telephone attendance upon Christopher. File note records that Christopher would call Linda Lau; he “happy with [Linda Lau’s] instruction”; “OK to bank cheq funds in”; and “he wants best for Woowins”: PX6 p118. Stenberg apparently engaged 6 minutes: PX6 p163.

90 26 May 1999: Stenberg banked in his trust account a cheque for $5,000.00 received from Christopher on account of costs and disbursements of the Woowins: PX6 p117.

91 26 May 1999: Stenberg attendances on Linda Lau and Christopher to confirm that Ms Lau had given permission for Christopher to attend that day’s conference with counsel: PX6 pp118 and 163 (items 172 and 173).

92 26 May 1999: Stenberg exchange of e-mails with Kate with respect to the chance of appealing any adverse decision, vacating hearing date, and defence: PX6 p163 (items 169, 170 and 174) and pp82-94, 119. Also a telephone attendance: PX6 p163 (item 176). Kate’s email to Stenberg (on the subject of “top urgent-defence”) is reproduced at PX6 pp89-94. At p88 it says of Mr Kang (the Plaintiff) that “he dragged me into this case because I am the registered proprietor of the house and Kang wanted to make sure if his scheme could be completed, he knew where to get the money.”

93 26 May 1999: Barry, QC being unavailable, alternative senior counsel had been found: PX6 pp119, 163 (item 170).

94 26 May 1999: Conference between Stenberg, Mr Davidson, Linda Lau and Christopher in Mr Davidson’s chambers. Mr Davidson confirmed that he considered that there was a conflict of interests between the two Woowins and that they should be separately represented. He recommended engaging Mr Geoff Schrader to act for Eileen. A further conference was appointed for Friday, 28 May 1999: PX6 p8 (para 43) and pp74, 81, 115-116, 147, 163.

95 27 May 1999: Stenberg letter to the Woowins reporting on conference: PX6 p8 (para 44) and pp74-75, 113, 164.

96 27-28 May 1999: Stenberg was not kept informed of developments in arrangements for the conference with Mr Davidson on 28 May 1999 arranged at the conference of 26 May 1999: PX6 pp8-9 (paragraphs 45-48) and pp81, 107, 108, 111-112, 114, 164-165.

97 28 May 1999: Friday. Four and a half hour conference in Mr Davidson’s chambers attended by Mr Schrader and Mr Mackenzie, of Schraders & Associates, Linda Lau and Christopher (See entry on Mr Davidson’s fee note – PX12 p130). Subsequently, Mr Stenberg advised by Mr Davidson and Mr Schrader that his instructions had been terminated and that Mr Schrader was now acting for both defendants. Mr Schrader informed Mr Stenberg that he did not consider that there was now a conflict of interest between the defendants: PX6 p9 (para 47)

98 28 May 1999: By an e-mail dated 28 May 1999 terminating Stenberg’s retainer, Kate said “I am terribly sorry for such a short notice, for I have only learnt about the situation at night, 27th May 1999”: PX6 p108.

99 29 May 1999: Saturday. Mr Davidson read documents provided by Christopher and engaged in preparation in relation to affidavit evidence and Notice of Motion to vacate hearing dates (2 hours) - see entry on Mr Davidson’s fee note – PX12 p130.

100 29-31 May 1999: Conferences between Kate Woowin (and deponents to affidavits to be sworn) and her lawyers to prepare for application to vacate hearing date and defence of District Court proceedings: PX12 pp.130-131, PX4 p.225

101 Affidavits sworn by Kate Woowin, Linda Lau, Christopher, and Jeremy Mackenzie on 31 May 1999: PX21

102 30 May 1999: Sunday. Four hours conference in Mr Davidson’s chambers attended by Mr Mackenzie, Kate Woowin, Linda Lau and Christopher (See entry on Mr Davidson’s fee note – PX12 p131).

103 31 May 1999: Monday. Mr Davidson spent eight hours on the Woowin matter. First, conference in Mr Davidson’s chambers attended by Mr Mackenzie, Kate Woowin, Linda Lau and Christopher to prepare affidavits. Second, preparation of Notice of Motion documentation and consultations with Mr Mackenzie (See entry on Mr Davidson’s fee note – PX12 p131).

104 31 May 1999: Linda Lau called upon Stenberg to return to Christopher the $5,000.00 paid into his trust account on 26 May 1999 and called for an itemised account to be delivered to her: PX6 p106.

105 1 June 1999: Notice of Motion at District Court heard by Her Honour Judge Sidis. This proceeding was attended by John Davidson, Jeremy McKenzie, Kate Woowin, Linda Lau, Christopher Kwan and Amanda Tibbey: Affidavit of Amanda Tibbey sworn 31 August 2001 para 6. The Woowins successfully sought to vacate the hearing date (See entry on Mr Davidson’s fee note – PX12 p131).

106 Ms Tibbey sought that costs be paid before the new hearing date. In response John Davidson observed that “the plaintiff has taken a caveat over the premises at Edinburgh Road, Castlecrag so in the long term certainly the cost issue is something that is secured your Honour.” (transcript from District Court 1/6/99 p12 lines 36-45).

107 Judge Sidis made an order for costs against the Woowins and required Stenberg to show cause why he should not be required to indemnify the defendants in respect of the order for costs made against them: PX4 (1/6/99) p90 (transcript of District Court proceedings 1/6/99 – judgment of Sidis DCJ).

108 There is dispute between the parties as to whether Christopher Kwan was present in Court at the time that John Davidson made reference to the caveat over the Castlecrag property.

109 8 June 1999: A view occurred at 228 Edinburgh Road Castlecrag, attended (among others) by Mr Davidson, Christopher Kwan and Amanda Tibbey (2 hours) (See entry on Mr Davidson’s fee note – PX12 p131; Affidavit of Amanda Tibbey sworn 31 August 2001 para 23; PX11; T, 505.5-13).

110 9-10 June 1999: Correspondence between Stenberg and Schrader & Associates in which Mr Mackenzie observes that a number of communications sent to Mr Stenberg from Christopher Kwan were not included in Mr Davidson’s brief and requests Stenberg to forward copies of all documents held which were not included in the brief: PX6 p105.

111 11 June 1999: Stenberg affidavit (filed in the District Court proceedings on 6 July 1999) sworn: PX6 p2. The Affidavit outlines Mr Stenberg’s involvement in the Woowins District Court proceedings between 17 December 1998 and 28 May 1999 when his retainer was terminated.

112 11 June 1999: Stenberg letter to Law Society recording that one of the Woowins was out of the jurisdiction (Eileen) and had no assets in the jurisdiction whilst the other had resided, and was likely to continue to reside, in China and had only “one asset in the jurisdiction being a house which [Mr Kang] has placed a caveat over” (Kate): PX6 pp103-104.

113 18 June 1999: Mr Davidson undertook “research re enforcement of judgments” and had a discussion with Mr K Poulos, of counsel on that subject (PX12 p132).

114 25 June 1999: Christopher instructs Verekers Solicitors to prepare mortgage over Castlecrag Property: Affidavit of Christopher Kwan 12 October 1999, Annexure C. The letter referred to a loan made to Kate in January 1998 for US$430,000.00, a “nominal interest rate” [emphasis added], an agreed mortgage over the Castlecrag property and no deadline set for Chris to make a call on the funds. The letter noted that “The funds would have been borrowed at an exchange rate of 0.59” and that the mortgage agreement should be drawn up urgently for the parties to sign.

115 28 June 1999: Vereker Administration Pty Ltd searched Folio Identifier A/29028 (the Castlecrag property): PX6 p181.

116 28 June 1999: Christopher and Kate Woowin execute mortgage: PX4 p104. The mortgage provided that:

(ii) the Mortgagor shall pay to the Mortgagee interest on the advance in the amount of 9% per annum;

(iii) the principal and interest is repayable to the Mortgagee upon demand: PX4 p105 Annexure “A”
[Comment: The $741,380 corresponds approximately to the (lower) exchange rate of US$0.58 to A$1.00. The interest rate of 9% per annum was clearly not “nominal” as stated in the letter of Christopher to Verekers Solicitors (Mr Christie) dated 28 June 1999 (annexure C of affidavit of Christopher Kwan 12 October 1999). Christopher’s explanation of these instructions (para 11 of his affidavit and T, 584-5) is that he understood the word “nominal” to mean “normal”. The Plaintiff’s contention is that this explanation is incredible, given his education and commercial experience (T, 570-2) as was evidenced to me when he was in the witness box, and his own “obvious familiarity with the meaning of the word “normal” (PX14, formerly in F16 at p102).]

117 6 July 1999: A solicitor for Stenberg appeared before Judge Sidis to show cause why he should not be required to indemnify the Woowins in respect of the order for costs made against them on 1 June 1999. The Plaintiff’s solicitor was not present. Appearing for the Woowins, Jeremy McKenzie observed that “(t)he plaintiff indeed has a caveatable interest over the house so it is not like the interests are not protected. The house is of substantial value. If there is any order as to costs, the position is protected.”: District Court transcript (6/07/99) p12.1-6; see Affidavit of Amanda Tibbey sworn 31 August 2001 Annexure “G”.

118 Her Honour Judge Sidis subsequently confirmed the order for costs made on 1 June 1999 against the Woowins to be paid as assessed without the application of any stay pending the outcome of the proceedings and required the Defendants to pay the costs incurred by Mr Stenberg: District Court transcript (6/07/99) p12.53-58.

119 9 July 1999: Vereker Administration Pty Ltd searched Folio Identifier A/29028 (the Castlecrag Property): PX6 p181.

120 9 July 1999: Kate exchanged contracts for sale of the Castlecrag property (A/29028) with an unrelated party, Stamsat Pty Ltd, for a sale price of $825,000.00.

121 14 July 1999: The District Court proceedings were the subject of an unsuccessful application made by Eileen and Kate on 14 July 1999 (before Her Honour Judge English) to vacate the already deferred hearing date of 28 July1 999 upon which the final hearing of the proceedings was to commence.

122 20 July 1999: Vereker Administration Pty Ltd searched Folio Identifier 1/521774 (the Castlecrag Laneway): PX6 p187.

123 22 July 1999: Settlement of sale of property between Stamsat and Kate. Transfer registered: PX4 p106. Net proceeds of the sale after commission and legal costs ($804,987.98) were paid by Kate by direction to Christopher, on the First Defendant’s case, pursuant to and in discharge of the mortgage: Affidavit of Christopher Kwan sworn 12 October 1999 para [15].

124 28 July 1999: District Court Hearing Commenced.

125 16 August 1999: Christopher assured Stenberg, by telephone, that he would pay Stenberg’s account for costs and disbursements: PX6 p178.

126 19 August 1999: Stenberg’s Statement of Account [addressed to the Woowins care of Christopher] “as per orders” made by Sidis DCJ on 6 July 1999: PX6 p143.

127 5 October 1999: Original Statement of Claim in these Supreme Court proceedings filed 5 October 1999 (Amended 8 February 2000, Amended for a second time 27 August 2001).

128 29 October 1999: Judgment in District Court proceedings for Plaintiff on claim for remuneration for building works. Plaintiff’s claim for wrongful imprisonment rejected: PX4 p17ff.

2000

129 18 July 2000: Stenberg sued the Woowins and Christopher, all as former clients, for his costs and disbursements: PX6 pp173-174.

130 22 August 2000: Judgment entered in favour of Stenberg: PX6 p175.

131 12 September 2000: A Writ of Execution issued (at request of Stenberg) against Christopher returned unsatisfied: PX6 p176.

132 16 November 2000: By consent, Stenberg’s judgment against Christopher was set aside upon Christopher submitting to an order for costs: PX6 p175.

QUESTIONS FOR RESOLUTION

133 I turn now to the issues requiring resolution, both factual and legal. These are stated in the form of a series of questions which I have formulated below.

134 Question 1 - Sham transactions?

(i) Was there a

loan transaction of 13 February 1998 between the First Defendant (“Christopher Kwan”) and Second Defendant (“Kate Woowin”) or was it a sham?

(ii) Was the mortgage of 28 June 1999 given over the Castlecrag property by Kate Woowin to Christopher Kwan a sham?

135 Question 2 - Fraudulent Conveyances?

(i) Did the alleged loan transaction, the mortgage of 28 June 1999 or the sale and discharge of mortgage effected between 9-22 July individually or in combination constitute an “alienation of property” by Kate Woowin within the meaning of s37A of the

Conveyancing Act

?

(ii) If the answer to question 2(i) is in the affirmative:

(a) Was the Plaintiff a “creditor” of Kate Woowin?

(b) If the Plaintiff was a creditor, was there an alienation of property by Kate Woowin with intent to defraud the Plaintiff, rather than the mere preference of one creditor over another, in terms of the principles discussed in Middleton v Pollock [1876] 2 Chd 104, Clegg v Bromley [1912] 3 KB 474 and Abignano v Wenkart (1998) 9 BPR 765?

(c) Was the Plaintiff a “person thereby prejudiced” within the meaning of s37A?

(d) Was the First Defendant, Christopher Kwan, “a purchaser in good faith not having, at the time of alienation, notice of the intent to defraud creditors” within the meaning of s.37A? (See Second Amended Statement of Claim – paras [38] and [39])

(iii) Depending on the answer to these questions, is the Mortgage and, if and to the extent it be found that the loan underlies the mortgage, the loan liable to be set aside under s37A of the

Conveyancing Act

and, if so, with what consequences? (see paras 49 and 50 of the second Amended Statement of Claim)

136 Question 3 - Estoppel?

With respect to the Plaintiff’s claim of estoppel:

(a) Can the Court be satisfied that Christopher Kwan was aware that on 1 June 1999 before Sidis DCJ Counsel for the Woowins made a statement to the effect that the Castlecrag property would be available to meet an order for the costs thrown away by the vacation of the hearing date of the District Court proceedings?

(b) If so:-

(i) was Christopher Kwan aware that the Plaintiff’s solicitor had made a mistake as to the title over which she had placed the Plaintiff’s caveat?

(ii) was Christopher Kwan aware that the Plaintiff’s solicitor was labouring under a misapprehension as to the title over which she had placed the Plaintiff’s caveat?

(iii) was Christopher Kwan aware that the Plaintiff was claiming to be entitled to a lien over the Property by reason of having undertaken the work which interest might compete with Christopher Kwan’s entitlement to a mortgage over the Property?

(c) Did the Plaintiff act to his detriment in reliance upon the representation made to Sidis DCJ by Mr Davidson?

(d) Did Christopher Kwan come under any (and if so what) duty to advise the Plaintiff of the Plaintiff’s solicitor’s mistake having regard to the fact that Mr Davidson’s statements to Sidis DCJ were made by him as counsel for the Woowins not Christopher Kwan?

(e) If the answers to (a)-(d) are in the affirmative, was Christopher Kwan thereby precluded (by application of principles governing abuse of process and estoppel) from:

(i) asserting an entitlement to repayment of the loan alleged to have been made on 13 February 1998;

(ii) relying on the Mortgage ?

137 Question 4 - Equitable lien or charge in equity?

In respect of the Plaintiff’s claim to an equitable lien or charge in equity:

(a) Did the contract relied upon by the Plaintiff for the recovery of payment for work done by him for the Woowins contain a provision (express or implied) entitling him to any (and if so what) interest in the Castlecrag Property so as on that basis to entitle the Plaintiff to an equitable lien or charge in equity over that property, or would otherwise such entitlement arise on the basis pleaded?

(b) If the undertaking of the work pursuant to that contract gave rise to an interest in the Property, was in any event such interest extinguished when the Plaintiff left the Property in 1995?

138 Question 5 - Priority of mortgage over equitable claim?

If the Plaintiff became entitled to an equitable lien:

(a) Did Christopher Kwan have notice of the lien?

(b) If Christopher Kwan had notice of the equitable lien, did he act unconscionably in registering the Mortgage obtaining thereby priority for the repayment of his loan?

(c) Did the Plaintiff’s interest prevail over Christopher Kwan’s interest as mortgagee of the Property?

(d) Was the conduct of Christopher Kwan such as to prevent him from retaining the net proceeds of sale of the Property in partial satisfaction of the debt owed to him by Kate Woowin?

139 Question 6 - Conspiracy to injure?

Did the creation of the loan, the entry into the Mortgage and/or the repayment of the loan by Kate Woowin involve:

(a) an intention on the part of Kate Woowin and Christopher to injure the Plaintiff; and

(b) the undertaking of any (and if so what) unlawful acts

or otherwise so as to constitute a conspiracy against the Plaintiff?

140 Question 7 - Damage to Plaintiff?

If the answer to question 6 is in the affirmative, has the Plaintiff suffered any (and if so what) damage by reason of that conspiracy and its being carried into execution?

Question 1 – Sham transactions?

141 The Plaintiff contends that there was no bona fide loan transaction between Christopher and Kate on or by the 13 February 1998. There was thus no loan capable of being secured by the mortgage over the Castlecrag property. On the other hand, the First Defendant claims that there can be no doubt that the original loan was a genuine transaction, that it was established by the Affidavit evidence of both of the participants and corroborated by the bank records identifying the transfer of the funds from Mr Kwan’s account to Ms Woowin’s in February 1998. I turn now to consider that evidence in greater detail.

142 Clearly, on Christopher’s own account, the agreement, if made, was oral. Not only was there no written agreement, there was no letter or contemporaneous diary note or other record produced, recording terms or referring to the loan. All there was, was the bank documents recording a transfer between an account in his name in a Hong Kong bank to an account in Kate’s at the same bank but bearing his PO box number. The only witnesses were Christopher and Kate between whom according to Christopher, there was then and thereafter a continuing, close friendship; T, 579, 581. That is not necessarily fatal but such extreme informality for so large a sum, even between friends, is a factor tending against there being any genuine loan though consistent with the money being provided by Christopher to Kate for investment on his behalf as further evinced by the common post office box number in the two addresses being Christopher’s box number. This is particularly when considered in context with other factors. There were, it is true, the bank documents though with the same box number, namely Christopher’s. Those documents of themselves provide no evidence as to the reason for the money transfer. It might have been equally a loan, or money made available to invest. Moreover, it should not be overlooked that the money belonged not to Christopher but his mother; it was not as likely that he would be lending his mother’s money to his friend, as against investing it for his mother. There is no evidence of a gift from mother to Christopher her son.

143 The First Defendant contends that in late January or early February 1998 he and Kate had a conversation in Guangzhou China in which she requested a loan of capital to do some trading in the foreign exchange and share markets; Affidavit of Christopher Kwan sworn 12 October 1999 para [4]. According to the First Defendant, Kate said that she was prepared to give him a mortgage over the property at Castlecrag at an exchange rate of 0.58 and 9% interest for the $US430,000 promised; Affidavit of Christopher Kwan sworn 12 October 1999 para [4].

144 To elaborate, the money in question, as I have said, was money of Christopher’s mother, not Christopher’s, being compensation for resumption of his mother’s house in China. She did no more than authorise him to remit the money out of China (Ex DX15 authority dated 1 October 1996, three certificates dated 6 February 1998, Foreign currency Sales Form debt 9 February 1998 and Remittance Acknowledgment dated 10 February 1998). That Kate, a foreign exchange dealer at the time (T, 635) might be given the money to trade for his mother would be perfectly explicable. That he would lend it to Kate for her to trade as principal is rather less credible. What actually happened was that on 13 February 1998 Christopher transferred the sum of US$430,580 from his account No. 275-321230 in the Hang Seng Bank in Hong Kong to Kate’s account in the same bank No. 275-308799: see statements of Bank Accounts Annexures “A” and “B” to Affidavit of Christopher Kwan sworn 12 October 1999. But significantly, the address for Kate on Kate’s account was Christopher’s own post office box in Chatswood, not Kate’s own address; see annexure B and T, 640. Clearly, a sum of US$430,580 changed hands. The Plaintiff contends that the transfer was facilitated solely for the benefit of Christopher rather than Kate; T, 640.8-20. In support the Plaintiff also emphasises the absence of written records of the alleged conversations and the fact that Kate and Christopher were the only persons privy to the alleged conversations; T, 640.50-59.

145 There are moreover a number of aspects of the claimed loan which cast doubt, cumulatively if not individually, on its genuineness, apart from what appears to be an unauthorised use of his mother’s money. First, he is, on his account, lending totally unsecured and undocumented. Documentation and security only comes into being on Christopher’s urgent instructions 18 months later, when clearly advice was then being sought by Christopher on behalf of Kate and her mother in the circumstances of the Plaintiff’s litigation and a proposal for disposal of the Castlecrag land to Christopher; see [152(b)] below. According to the note of 25 June 1999 to Mr Christie of Verekers from Christopher (PX4 at 114) “In January 1998 both Kate Woowin and I agreed to make a transaction of US four hundred and thirty thousand to be given to Kate”, and “a nominal interest rate was set …” adding “the funds would have been borrowed at an exchange rate of 0.59”. Yet despite that apparently clear statement there were the following discrepancies:

(b) the “nominal” interest rate (which Christopher, incredibly, equated to “normal” interest, despite his property and business sophistication, fluent English and use of the word normal in other context which showed he understood it as I explain further, below) became in the mortgage, for no apparent reason, 9%.

(c) On top of that supposed substantial interest rate, the funds were inexplicably to be borrowed at an exchange rate of 0.59 (there is confusion also between 0.59 and 0.58 as the rate but nothing hangs on that), according to the note; thus despite this exchange rate being already greatly to the advantage of the lender and the disadvantage of the borrower, when the prevailing market exchange rate was 0.67; that would have cost Kate immediately the sum of A$102,588 if called up; the loan, being on-demand, could have been called up immediately to her substantial disadvantage.

(d) The mortgage as documented refers to “the sum of $741,380 advanced on or about January 1998” when the loan advanced was in reality A$639,791.97; had the arrangement been as claimed, the mortgage would more appositely have been expressed as securing an advance of US$430,580, to be repaid in Australian dollars, to be converted at the (deemed) exchange rate of 0.59.

146 Thus, if one takes into account both the 0.59 exchange rate and the supposed 9% interest rate on top, the effective interest rate over the 18 months is exorbitant. The $102,588 increment corresponds over one year to an interest rate already over 16%. So onerous an arrangement does not accord with the kind of deal that a sophisticated exchange dealer like Kate would make against her interest. Although no evidence was given on the point, there is nothing to indicate that she was not in a position to borrow against the Castlecrag property on reasonable terms and the terms claimed by Christopher to have applied were hardly reasonable, in particular a deemed unfavourable exchange rate of that order. Nor does it appear compatible in its onerousness with Kate and Christopher being such good friends. It looks more likely a device to eliminate any asset in Kate’s hands available to meet the Plaintiff’s judgment while restoring the money lost to the Woowins in China where it could not be traced.

147 So far as my impressions of Christopher as a witness, I found him intelligent and astute and certainly not someone who would confuse, with his sophistication and command of English, the word “nominal” for the word “normal”, as he claimed. I found him at times to prevaricate as, for example, on whether in September 2000 his assistance had been sought to find Eileen and Kate. He claimed to have no knowledge of where they were yet there was no suggestion that he was not a close friend of Kate’s on a continuing basis even if there had been tension (see [180] below) at some point in the arrangements with regard to Castlecrag. Summing up, I formed the impression that Christopher would not hesitate to do all he could to assist Kate and her mother in frustrating any future judgment that the Plaintiff might obtain and would not be excessively scrupled in how this was done.

148 It was thus hardly surprising that, faced with a claimed loan arrangement seemingly so one-sided against Kate, Mr Christie of Verekers made a diary note expressing his concern for “evidence of the loan occurring and of the agreement that it be secured” adding “made it clear I was only acting for him”; PX4, p115. If he were acting for Kate, he might indeed have had a conflict. Mr Christie follows this up with a letter of 19 July 1999 noting to Christopher that “you are to provide me with evidence of the relevant transaction and the agreement that it be secured” and asking again “Will you please let me have this information for my file as soon as possible”; PX4, p124. All he ever got, it appears, was Christopher’s bank statement with the Hang Seng Bank in Hong Kong, showing a deposit on 12 February 1998 of US$430,580 and a withdrawal next day of the same amount. Mr Christie, clearly in the First Defendant’s camp, was not called to give evidence, nor Christopher’s mother likewise, whose money was being used.

149 There is a further matter telling against the genuineness of the loan. When on 22 July 1999 Christopher received the whole of the net proceeds of sale of the Castlecrag property totalling $804,467.99 (T, 634) he immediately transmitted most of the money out of Australia to his same bank account in Hong Kong (PX4, p132 and following, affidavit paras 18, 19 and 21). But he then “lent” to and applied for the benefit of, the Woowins a substantial amount of money (roughly $67,000); affidavit paras 23-25, He did so without security and without subsequently receiving payment or making any demand for repayment; T, 634.

150 In considering the Plaintiff’s claim that the loan was spurious, it is also necessary to refer by way of background to the period prior to Christopher’s instructions to Verekers on 25 June 1999 to prepare the mortgage over the Castlecrag property. I turn first to Christopher’s email of 4 April 1999 to Kate which records that “The house - I understand your concerns. But if I don’t put a caveat on the house you will not be protected”; PX6 at 135. In cross-examination Christopher claimed that he wanted first and foremost, to protect his own interests in the property but considered that in putting the caveat on the property he was also protecting Kate’s interests because she would not need to pay his loan to her out of a source other than the house; T, 621.439-T, 622.3. That claim lacks plausibility, as the caveat could have no effect on her liability if genuine, to repay the loan; it would merely freeze the capacity to sell the house while the caveat remained thus protecting Christopher but not protecting her. Christopher would as a financially sophisticated and astute property manager of a family company in Sydney have appreciated that, it can confidently be said. Christopher also said that he understood Kate to be concerned that the anticipated litigation against the Plaintiff might be very expensive and that she was worried that Christopher was pressing his claim; T, 621.25-37.

151 In the conversation said to have taken place between Christopher and Kate in late January or early February 1998 in Guangzhou China, according to Christopher’s affidavit account (para 4 of affidavit of 12 October 1999) Kate offered Christopher 9% interest on the sum of US$430,000 advanced. Yet in the earlier letter of 25 June 1999, written just under four months earlier by Christopher to Richard Christie, at Verekers, instructing him to prepare the mortgage on Kate’s property and at a time when it was yet to be known what would be the property sale price, Christopher instructed Richard that a “nominal interest rate was to be set”. Christopher deposed in his affidavit of 12 October 1999 that at the time that he wrote the letter of the 25 June 1999 he understood the word “nominal” to mean “normal” and that the agreed rate of interest of 9% was consistent with this understanding. Two points in particular point to this being recent invention, and strongly militate against such an understanding, seriously undermining the credibility of Christopher’s evidence on this crucial point. The first is Christopher’s education and commercial experience. He obtained a Bachelor of Electrical Engineering in 1984 from the University of New South Wales, held a position as sales administrator with Mitsubishi Electric, was Product Manager with GEC, property manager of a family company in Sydney, and Managing Director of KHYCO (an overseas company), the latter which required him to attend to financial management of the company (T, 570-572). Second, is Christopher’s own evident familiarity in other circumstances with the correct meaning of the word “normal”. This was reflected in his letter of 7 October 1997 to the Department of Immigration in which he stated that the Plaintiff “would not normally be permitted to get into Australia under the points system” and that the Plaintiff should be deported immediately “so that the Woowin family can return safely and get on with their normal lives” (PX17).

“…if the relevance of evidence of an act done by a person depends on the court making a finding that the person and one or more other persons had, or were acting in furtherance of, a common purpose (whether to effect an unlawful conspiracy or otherwise), the court may use the evidence itself in determining whether the common purpose existed.”

169 Here, the evidence clearly points to a common purpose of avoiding the consequences of enforcement of any judgment should it be obtained, by removal of Kate’s property at Castlecrag and any proceeds of sale therefrom, so such proceeds are safely out of the jurisdiction.

170 Turning to the document at pp50 and 51 of PX12, the letter on its face purports to be to the First Defendant, Christopher, from Kate and indeed bears, at p51 the handwritten annotation “from Kate”.

171 The First Defendant strongly opposes the admission of this document at all and certainly against Christopher. Thus the First Defendant contends (see written submissions p13 para 40.4) that

“the document may well have been prepared by Eileen as a draft of a letter she proposed should be sent by Kate, for Kate’s acceptance or rejection. But there was no evidence that the draft was adopted (if ever seen) by Kate Woowin, and it was certainly not seem by Mr Kwan. It can provide no evidentiary basis at all upon which to found a contradiction of Mr Kwan’s and Ms Woowin’s evidence of their loan transaction of early 1998.”

172 Further, the First Defendant in those written submissions, at 40.5.1, states

“the Plaintiff appears to accept that the evidence did not establish that Mr Kwan had seen (or adopted) the document [PWS para 23 ‘whether or not Christopher saw …’]; the uncontradicted evidence was that he did not [t/s 570/11-13, 653/39]. Accordingly, the document could not constitute evidence of an admission by Mr Kwan.”

173 It is further submitted by the First Defendant that the document at pp50-1 was not shown to be a business record of the Woowin’s solicitors, Schrader & Associates, nor of Eric Walsh & Associates. That submission is elaborated as follows:

“Its availability as evidence of what did or did not pass between Kate and Mr Kwan is not enhanced by its possession in the hands of Eric Walsh & Associates. Indeed, the evidence related in PWS para 23 does not establish that the document was ever in the hands of any such business (whatever business that was) - it appears to have been sent by Eileen to Mr Walsh’s facsimile number, and may have been passed to his spouse, Ms Lau, as an incident of their personal relationship as much as in the conduct of any business of Eric Walsh & Associates.”

174 Finally, it is contended that it must be excluded under s69(3) of the Evidence Act which provides that the exclusion of the hearsay rule in relation to a document containing a representation where the documents is or forms part of the business records, does not apply

(a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, …”

175 I am satisfied that this group of documents including that at pp50-1 forms part of the business records of Eric Walsh & Associates, as is clear from the opening annotation to the fax at p43. Quite clearly Linda Lau played a role in the advice given. There is nothing to suggest that that role was purely as a friend and not connected to the business she conducted with her partner, Eric Walsh.

176 I am satisfied that s69(3) does not prevent the adducing of this evidence. As was said recently by Barrett J in Vitali v Stachnik [2001] NSWSC 303 [12]:

“The purpose of the exclusion is … to prevent the introduction through this exception to the hearsay rule of hearsay material which is prepared in an atmosphere or context which may cause it to be self-serving in the sense of possibly being prepared to assist the proof of something known or at least apprehended to be relevant to the outcome of identifiable legal proceedings.”

177 Here the “identifiable proceedings” then in contemplation were not the proceedings currently before me. Those earlier proceedings were proceedings in the District Court. Whereas, the proceedings before me are in this Court and were at the time not proceedings likely or reasonably probable but a mere possibility (compare Waterwell Shipping Inc v HIH Casuality & GIO Ltd (NSWSC, Giles CJ CommD, 8 September 1997, unreported). The present proceedings before me deal with the outcome of events that had yet to occur, even if they were in the planning.

178 Finally, there is no question but that the material is relevant to the First Defendant’s case. That case necessarily involves consideration of the extent to which Christopher and the Woowins and in particular Kate, shared a common state of mind. The relevant documents form part of a group sent by Eileen to the Woowins’ adviser. They include the principal opening document dated 21 May 1999, which Christopher acknowledged is a copy of a letter or part of a letter he sent to Kate, although he disclaimed knowledge of the length of the letter; T, 623, 643.

179 Finally, so far as the document at pp50-1 is concerned, and given the overriding context of the fax being sent following a telephone conversation between Linda Lau and Eileen, the following should be found:

(b) Both Kate and Eileen authorised Linda Lau to act on their behalf (PX6, p121); and

(c) She seems to have done so as an officer of “Eric Walsh & Associates” (PX6, p106).

180 The foregoing reinforces that the document was accordingly part of the business records of Eric Walsh & Associates. It contains representations by the Woowins in circumstances in which they are not available to give evidence and thus should be admitted to show, at the least, the state of mind of Kate and Eileen.

181 I turn now to the content of PX12 and in particular the document at pp50-1. It was attempted to be suggested by the First Defendant in the written submissions that the letter was drafted by Eileen for Kate to sign. That seems highly unlikely and I would find to the contrary were it necessary to do so. The letter is written complete with references to “Mum” or “my mother and I” and bears the clear stamp of an angry letter written by Kate with much of the anger directed at the lawyers. While on the state of the evidence I am not able to make a positive finding that the letter was actually sent to Christopher, and noting his denial that he received it, I am unable to make a finding one way or the other as to whether he did. However, even if he did not receive it, para 9, which I quote below, is highly relevant to the state of mind of Kate, and thus the intrinsic improbability of there having been a genuine loan made by Christopher to Kate in the terms he alleged or at all. I quote para 9 below:

“9. What make you say that we owe you 600,000 to the lawyers? If you want to help us to transfer our house to you, you still don’t need to create a case of owing you 600,000. And did not our house is worth 850,000, not 750,000? And what does it mean that the balance purchase price of 150,000 would be then returned to China? What does that mean? If like before, I could transfer the house to you as a gift, now that you are telling the world that I owe you money, if I give you the house, it would mean that I really owe you that much, have you ever considered my feelings? And where do you want me to transfer the money? If to China, then I would not be able to transfer it out of China later. I told you that you should not let the other side know that I have funds in Hong Kong, now you are telling them that, it seems you don’t really care what happens to the assets under my name, if I transfer the house to you because I owe you, then the house under your name probably would be safe, but the funds under my name would not be safe, the court would still treat it as the same as the house under my name. Besides, I don’t know what kind of action the court would take if it found that the house was transferred to you only days before the hearing. I hope you consider things on an overall scale, not just part of it.”

182 Quite clearly the above quoted paragraph reflects a disavowal of there being a debt of $600,000 with the obvious corollary that for Kate to be consistent she would deny any debt of a larger figure also; especially significant is the reference to “create a case of owing you $600,000” [emphasis added] suggesting that any debt of that kind would be mere contrivance. Moreover, the concluding sentence makes clear that there is a consciousness that the transaction would not escape remedial action from the court clearly indicating that it was not seen as a legitimate or above-board transaction for the monies to be remitted out of Australia to Hong Kong or China.

Conclusion

183 While the documentation in PX12 and in particular that at pp50-1 is not necessary to reach the conclusion that both the alleged loan and the associated mortgage were a sham, since I have concluded independently of that material that both were shams, nonetheless the material is both admissible and strongly supportive of that conclusion, notwithstanding the strenuous protestations in the First Defendant’s written submissions to the contrary.

184 It follows that I would answer question 1(1) and (2) that there was no bona fide loan transaction of 13 February 1998 but the transaction was a sham, and likewise the mortgage of 28 June 1999 given over the Castlecrag property was a sham in law; that is to say in accordance with the principles discussed in Snook v London 7 West Riding Investments Ltd [1967] 2 QB 786 at 802C-E, discussed in Esanda Ltd v Burgess [1984] 2 NSWLR 139 at 153C-154A and ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640 at 655G-656C). It represents a transaction in which the parties intended not to create those legal rights and obligations that they subsequently gave the appearance of creating; Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 13 FCR 449. I find that there was no loan transaction of 13 February 1998 (merely a transfer, between accounts controlled by Christopher, of money belonging to his mother), nor any contractual commitment by Kate to provide a mortgage. I find that the mortgage of 28 June 1999 was merely a formal cloak to enable Kate, with the aid of Christopher, to remove from the jurisdiction the proceeds of sale of the Castlecrag Property so as to defeat any future judgment in favour of the Plaintiff.

185 It follows that the money received by Christopher must be regarded as having been received by him on trust for Kate and, to the extent that he acquired any title in the money, it is liable to be set aside pursuant to s37A of the Conveyancing Act. Thus, at law as well as in equity the money must be treated as belonging to Kate and, therefore, available to satisfy the claims of Mr Kang.

186 The foregoing answers both questions 1 and 2, though I should deal briefly with the matter of fraudulent conveyance under s37A of the Conveyancing Act.

187 Clearly, to the extent that any title was obtained to the money from the sale of the Property by Christopher, there was an alienation of property by Kate Woowin within the meaning of s37A of the Conveyancing Act. Though the Plaintiff had yet to obtain a judgment against Kate, it did not follow that there was not an existing obligation of Kate Woowin to Mr Kang, the Plaintiff. That the claim was in dispute is not to the point since that dispute was ultimately resolved in favour of the Plaintiff. Whatever be the meaning of the word “creditor” in other contexts, it would clearly defeat the purpose of s37A of the Conveyancing Act were properly claimed indebtedness of this sort to be defeated because unliquidated or resisted, resistance being ultimately without foundation so far as the amount found for the Plaintiff. While the other view is arguable; that “creditor” requires a liquidated debt, having regard to authorities in the liquidation context (Roy Morgan Research Centre Pty Limited v Wilson Market Research Pty Limited (1996) 39 NSWLR 311 at 320-2; Mandarin International Developments Pty Limited v Growth Corp (Australia) Pty Limited (1998) 143 FLR 408 at 422), here reference is not to a specific creditor. Rather it is to “creditors” in the plural, for whom it is consonant with the protection intended to be conferred, that it should extend to contingent or prospective creditors. Compare s462(2) of the Corporations Law, which expressly includes among those able to bring proceedings for winding up, “a creditor (including a contingent or prospective creditor)”, the parenthesis suggesting that creditor would even without these words of clarification, include a contingent or prospective creditor.

188 Indeed the notion that “creditors” should be so construed is supported by some of the cases where s37A has been applied. Thus it was applied to avoid a settlement made by a person about to embark on a hazardous business, to put his property beyond the reach of possible creditors; Mackay v Douglas [1872] LR 14 Eq 106; 41 LJ Ch 539; Re Mackay (1951) 16 ABC 18. Likewise, a conveyance to defeat a spouse’s claim in matrimonial proceedings, itself prospective, was held to be within the section; Cadogan v Cadogan [1977] 3 All ER 381; [1977] 1 WLR 1041. Here, the only known creditor was the Plaintiff, apart from the spurious loan arrangement purporting to render Christopher one.

189 It follows from the earlier reasoning that there was an alienation of property with intent to defraud the Plaintiff, rather than the mere preference of one creditor over another; that is, once it be concluded, as I have done, that there was no genuine debt owed by Kate to Christopher.

190 Clearly the Plaintiff was a “person thereby prejudiced” within the meaning of s37A.

191 Finally, it could not be said that the First Defendant Christopher, was a “purchaser in good faith not having, at the time of alienation, notice of the intent to defraud creditors” within the meaning of s37A(3). Having regard to my earlier findings, it is clear that Christopher shared a common purpose of defrauding the Plaintiff as a creditor of Kate Woowin. This is so, though the debt had still to be liquidated and was disputed, ultimately unsuccessfully in terms of the amount awarded there was at the time a prospective debt of $108,345 (plus interest thereon).

192 The pleadings of the Plaintiff in the Second Amended Statement of Claim at para 34A(c) correctly lays out the basis for inferring the requisite knowledge on the part of Christopher so as to preclude his reliance on the defence in s37A(3). That basis overlaps with matters going to whether the loan and mortgage are a sham. It is also to be found at para 38(c) of the Second Amended Statement of Claim. I am satisfied that the matters there pleaded are made out by the evidence particularised which is elaborated where necessary earlier in this judgment and in the chronology. I quote the relevant portion of the Statement of Claim as follows:

ii. the fact that, in providing those instructions, Christopher, Christopher instructed Mark Stenberg to maintain ‘total client confidentiality’ and to ‘act in the best and most favourable position and interest of [Kate and Eileen] under [his] instructions’ and ‘to ensure that all assets owned by [Kate and Eileen] are fully protected’ as a matter of foremost concern to him.

iii. the fact that, by an e-mail dated 4 April 1999 addressed to Kate, Christopher acknowledged Kate’s concern about protection of her interest in the Property and urged her to allow him to ‘put a caveat on the house’ to protect her.

iv. the fact that on or about 30 April 1999 Christopher, in conference with Mark Stenberg and John Davidson, provided instructions for Barry QC to be retained to express an opinion on arrangements involving a sale of the Property to Christopher and the removal of assets of Kate from Australia, as well as questions relating to the enforceability outside Australia of any judgment Mr Kang might obtain in the District Court Proceedings.

v. the fact that on or about 5 May 1999 Barry QC was briefed in accordance with those instructions, and a copy of the brief and related documents was delivered to Christopher on or about 17 May 199 by a letter addressed to him by Mr Stenberg.

vi. the fact that, between 20 May 1999 and 1 June 1999 or thereabouts Christopher, at various times had discussions with Messrs Stenberg, Davidson, Schrader and Mackenzie, Kate and Linda Lau about strategies of Kate and Eileen relating to the District Court Proceedings, in circumstances in which Mr Stenberg had discussed the topic of caveats with Christopher on or about 20May 1999 and had obtained title searches relating to the Castlecrag property, the Castlecrag Laneway and the Caveat between 21 and 24 May 1999 or thereabouts.

vii. the fact that the questions stated for Barry QC’s opinion on or about 5 May 1999 recorded a proposal by Christopher inconsistent with the terms of the Mortgage later executed by him.

viii. the fact that Christopher’s instructions to Messrs Stenberg, Davidson and Barry QC between 30 April 1999 and 17 May 1999 or thereabouts did not include any assertion of an entitlement to a mortgage interest in the Property or any part thereof

ix. the fact that, having suggested to Kate (by his e-mail to her dated 4 April 1999) and to Mr Stenberg (on or about 21 May 1999) that he might lodge a caveat against the Property, Christopher did not at any material time lodge such a caveat.

x. a typed letter dated 21 May 1999 addressed by Christopher to Kate, especially paragraphs 4 and 5 in which he recorded, inter alia, that ‘our legal advisers strongly advice to transfer the house immediately’ and ‘any of your funds in Hong Kong may have to be moved in case Hong Kong still has reciprocal agreement with Australia’.

xi. handwritten annotations of Kate (on a copy of a letter dated 17 May 1999 addressed by Mr Stenberg to Christopher) making, inter alia, reference to the Brief dated 5 May 1999 forwarded to Barry QC, a letter dated 5 May 1999 written by Mr Stenberg to John Davidson, and an Advice of Mr Davidson dated 11 May 1999.

xii. handwritten annotations of Kate (on a copy of a letter dated 5 May 1999 addressed by Mr Stenberg to Barry QC) referrable to questions stated for Barry QC’s opinion.

xiii. an undated letter (comprising 9 paragraphs on two pages) addressed by Kate to Christopher, apparently written on or about 19 May 1999, especially paragraphs 1, 2 and 9 (in which Kate, inter alia, invited Christopher to ‘take all the documents out of the house now’, directed him not to ‘use fax I sent you with my signature on’ and protested, in paragraph 9, about Christopher’s instructions to their lawyers that Kate owed him $600,000.00).

xiv. the fact that Christopher continued on and after 26 May 1999 to be in communication with Kate in relation to the conduct of the District Court Proceedings, including the fact that he conferred with Mr Davidson and others on 28 and 30 May 1999, swore an affidavit in the interests of Kate on 31 May 1999, attended court on 1 June 1999 and conducted a view at the Property for the purposes of the District Court Proceedings on or about 8 June 1999.

xv. the fact that Christopher (on or about 23 June 1999) instructed real estate agents to sell the Castlecrag Property and (on or about 25 June 1999) gave instructions to Messrs Verekers to undertake work to effect the Mortgage and the Sale on an urgent basis, in the context of the then pending trial of the District Court Proceedings.”

193 Thus to the extent that the mortgage and the loan agreement have any existence, that is to say are not nullities by reason of being shams, they and certainly any resultant disposition of property in the form of money payments) should be set aside pursuant to s37A of the Conveyancing Act 1919.

194 The Plaintiff is also entitled to an order that Christopher account to him (or as the Court may direct) for all monies paid to him or at his direction from the proceeds of sale:

Conveyancing Act

(ii) requiring that Christopher discharge his equitable obligations as necessary to pay to the Plaintiff the sum of $89,100 together with such interest as may be allowed by this Court and to satisfy his entitlements under the District Court judgment and any entitlements to costs arising in the course of any appeal from that judgment.

195 An order is also appropriate that Christopher will hold on trust for Mr Kang, or as the Court may direct, so much of the property known as 21 Cameray Road, Castle Cove (“the Substituted Property”) as represents for the purpose of these proceedings (as recorded in orders and notations made by Simos J on 3 November 1999) and the proceeds of the sale of the Castlecrag property paid to him, or at his direction, as may be necessary to satisfy the entitlements of Mr Kang under the District Court judgment.

Question 3 - Estoppel?

196 There are strong indications which might justify an inference that Christopher was aware that on 1 June 1999 before Sidis DCJ, when Counsel for the Woowins was making a statement to the effect that the Castlecrag property would be available to meet an order for the costs thrown away by the vacation of the hearing date, that it was not correct because the caveat applied only to the relatively valueless laneway. However, I do not need to reach a final conclusion on that matter in light of the conclusions I have earlier reached. I note that Christopher strenuously denies that knowledge.

197 He faces some difficulty in that denial. Ms Tibbey, in para 10 of her affidavit of 20 February 2001, paras 9 to 10 and 13 to 19 of her affidavit of 31 August 2001 and at T, 525-535 and 537 gave evidence that he was present when Mr Davidson made his representations about Mr Kang’s affidavit to Siddis DCJ on 1 June 1999, and when instructions were taken from the Woowins in conference on related questions “at Court”, he was present. Christopher indicated that he did not recall one way or the other; see T, 630, 643-4. Moreover I am satisfied that Ms Tibbey made a genuine mistake in lodging on the Plaintiff’s behalf the caveat on the wrong title. It is self-evident that had she known of her mistake she would have rectified it. He had reason to suppose Ms Tibbey was ignorant of the mistake as the mistake had been made in the first place from her office and had not so far been corrected. There is nothing absurd in the notion that Christopher might thus knowingly stand by while lawyers gave to the court incorrect information about the caveat.

198 On the other hand, there was evidence that Christopher was absent from the court from time to time on 1 June 1999 and may have not been in court when Mr Davidson referred to the caveat and to the extent that Ms Tibbey recalls otherwise, it is conceivable that her recollection was mistaken.

199 It does strain credulity to think that Mr Stenberg, who had title searches on 21 May 1999 and thus was on notice of the caveat being on only one of the two title deeds relating to the Property, failed to disclose that fact to Christopher, though again it is conceivable that he did. It will be recalled that on 24 May 1999 Mr Stenberg was conferring with Christopher personally and with the Woowins by telephone and at that time received a copy of the caveat. One would expect that Mr Stenberg would have discussed the caveat with Christopher and the Woowins at that time.

200 Thus despite my having some basis for concluding that Christopher was aware of the mistake when the matter occurred in court, I ultimately am not satisfied to the level that I would need to be that he was in fact aware of the position and knowingly failed to correct it when Mr Davidson said what he did on 1 June 1999 before Siddis DCJ. However, there is no need for recourse to principles of estoppel in the present circumstances as the Plaintiff succeeds without it.

Question 4 - Equitable lien or charge in equity?

201 Again it is not necessary for me to answer this question in light of my conclusions earlier reached.

202 However, I should deal briefly with this question. At the outset it should be made clear that the basis pleaded for such a claim to an equitable lien or charge in equity was not limited to the implication, if any, to be derived from the contract relied upon by the Plaintiff for the recovery of payment for work done by him for the Woowins. To the extent that reliance is placed on that contract alone, as distinct from the events that subsequently occurred involving unconscionable conduct of the kind I have earlier described, I would agree that ignoring the latter and viewing the contract alone there would not be the basis for entitlement to an equitable lien or charge in equity. I agree with the First Defendant’s submission that it is clear that an agreement between a builder and a home-owner for building work could not, without more, create any interest in land, absent an express term in the building contract having such effect. I would also agree that it has never been the law that “building contracts confer any interest on a builder that can be categorised as a proprietary interest in land”; Graham H Roberts Pty Limited v Maurbeth Investments Pty Limited [1974] 1 NSWLR 93 at 104-5. The correct position is that expressed by Beech J in H. & G. & R. Nominees v Carlson Pty Limited (2000) V Conv.R 54-630 at 64,522 [30]:

“… in the absence of an express contract with the building owner that he shall have a lien over a building in respect of work performed by him on the building, a building contractor has no lien over a building or the land on which it is situated in respect of such work, unless the building owner encouraged him to form such a belief or acquiesced in him forming that belief.”

203 Insofar as the Plaintiff contends that he was promised a right to reside in the residence while he was carrying out the work, I agree with what is said in the First Defendant’s written submissions at paras 13 to 14 which I quote below:

expectation

for two years

he

204 However, there is another basis for equity to allow an equitable lien or charge. It would be allowed as an alternative to a constructive trust to remedy the First Defendant’s unconscionability. On the latter, I should interpolate there is no evidence that interests of innocent third parties would be affected so as to preclude the more expansive remedy of a constructive trust, though an equitable lien or charge is a more proportionate calibrated remedy. This is in contrast to the position in Giumelli v Giumelli (1999) 196 CLR 101 at 112, and 118 where a constructive trust remedy allowed below needed first to be set aside, because of its effect on innocent third parties; instead an equitable charge was substituted. That was held by the High Court to sufficiently vindicate the promises by the parents to register a particular lot in their son’s name.

205 The relevant principle upon which an equitable charge or lien would be allowed in the present case stems, therefore, not just from the original arrangements for the Plaintiff to carry out renovations and building work upon the property of Kate Woowin. It finds its basis in the proposition that it would be unconscionable for Christopher, as the recipient of the proceeds of sale of the relevant property which he applied in purchasing his own Cameray property, to be permitted to hold that substituted property free of any means of asserting the claim of the Plaintiff, in circumstances where he participates in a scheme to injure the Plaintiff and benefit the Woowins; compare Morris v Morris (1982) 1 NSWLR 61 per McClelland J which anticipated the broader approaches of Gibbs CJ and Deane J in Hewett v Court (1983) 149 CLR 639 at 648 (Gibbs CJ), 668 (Deane J).

206 Hewett v Court (supra) involved property which was specifically identified and appropriated to the performance of the relevant contract. The case was one where the remedy was granted in relation to the owner of the property and not someone claiming from that owner. But both Gibbs CJ and Deane J were careful to emphasise that cases recognising the existence of an equitable lien are not confined to one narrow category and that the list is not a closed one (per Gibbs CJ at 646). Deane J stated that “they [the tests] are formulated as a statement of what is sufficient rather than what is essential” (at 668), in setting out the major preconditions for an equitable lien in these terms (at 668):

“(i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of the property or of an expense incurred in relation to it … (ii) that that property (or arguably property including that property …) … be specifically identified and appropriated to the performance of the contract; and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged … they [the tests] are formulated as a statement of what is sufficient rather than of what is essential.”

207 There are also cases which have conferred the remedy of an equitable charge where application of the tracing rules would not have vindicated the claimant’s rights. This was on the basis that such a charge would not operate to the detriment of innocent third parties in the way that a trust remedy might do; see in particular Lord Templeman in Space Investments Ltd v Canadian Imperial Bank of CommerceTrust Co(Bahamas) Ltd [1986] 1 WLR 1072 and generally the thorough treatment in Fiona R Burns “The Equitable Lien Rediscovered: A Remedy for the 21st Century” (2002) 25 (1) UNSWLJ 1.

208 Thus in the present circumstances where the property in respect of which an equitable lien or charge is claimed can be clearly identified as derived from property upon which work was done by the claimant, and where it would be unconscionable for that claim in respect of that work to be defeated in a practical sense by the deliberate dissipation of the proceeds of sale of that property so as to defeat that claim, then without detracting from the capacity to provide a remedy by way of remedial constructive trust, where there are no innocent third parties who would be adversely affected thereby, an equitable lien or charge should also be available by way of alternative remedy, consistent with principle. I would so order here.

Question 5 - Priority of mortgage over equitable claim?

209 Given my earlier conclusion that the mortgage was a sham and vitiated by fraud, registration of the mortgage could not prevail as a registered interest over any prior interest of the Plaintiff. The exception for fraud is recognised in ss42 and 43 of the Real Property Act 1900. While “there is no fraud in merely acquiring title with notice of an existing unregistered interest when taking a transfer with knowledge that its registration will defeat such an interest” (Bahr v Nicolay(No. 2) (1988) 164 CLR 604 at 613, 614, 652-3) here there clearly was fraud. The mortgage was fraudulent and could not in any event prevail over the Plaintiff’s interest.

Question 6 - Conspiracy to injure?

210 I may deal with this issue briefly having regard to the answers to the earlier questions which make answering this question strictly unnecessary if the earlier answers are correct.

211 First, these arrangements occur with intent to injure, and have no legitimate basis in any genuine pre-existing debt or mortgage.

212 Second, the Plaintiff does have an equitable interest in the Property insofar as a remedial constructive trust or equitable lien are both available to vindicate the Plaintiff’s claim and to redress the unconscionable conduct of the Defendants.

213 It is then said that notwithstanding each of the foregoing, there is a fundamental flaw in the Plaintiff’s “conspiracy” case in that damage is a necessary element of the civil cause of action; Lonrho Limited v Shell Petroleum Co Limited [1982] AC 173 at 188; Munnings v Australian Government Solicitor (1994) 118 ALR 385 at 389-90.

214 It is said that in this case the Plaintiff has failed to prove that he suffered any relevant damage resulting from the Defendants’ conduct. It is said that the Plaintiff’s claimed loss of the capacity to levy execution of the property, if and when judgment came to be entered, is illusory, as at the time of the conspiratorial agreement or acts there was no District Court judgment whose execution was thus capable of being circumvented.

215 Then it is said that the evidence discloses no basis for concluding that the District Court judgment could not be satisfied from the assets of Kate (or her mother) presently available and within the jurisdiction, the argument being put in these terms (quoting from the First Defendant’s written submissions)

55.2.2 Ms Woowin still owns, at least, the four-metre wide strip of land at the rear of the property. The land on which the residence stands was sold in 1999 for $825,000.00 [PX4 p.106]. The former laneway land is contiguous to that residential land and the neighbouring residential property to the south. Prima facie, the Court could expect that a parcel of land of almost 80 sq.m. in a residential area such as Castlecrag would have some, perhaps considerable, value.

55.2.3 The Plaintiff, upon whom the onus remains to prove the necessary element of damage, failed to call any evidence as to the absence of value of the 80 sq.m. land, and certainly failed to establish that it had no value (the statement of Ms Woowin in annexure “D” to her 9.8.99 District Court Affidavit [Ex. PX19] (that the value of the land was “nil” is itself of nil weight, absent any demonstration by the Plaintiff of any valuation expertise of Ms Woowin).

55.2.4 Simply put, the Plaintiff failed to make good this essential element of his claimed cause of action.”

216 The short answer to this argument is this. The Plaintiff had a good cause of action whose vindication was deliberately sought to be frustrated, though judgment had yet to be obtained, by the manoeuvrings that took place. Those manoeuvrings were by entry into sham transactions and fraudulent conveyances. They were unlawful, as well as fraudulent. Had they succeeded, there is no question but that the Plaintiff would suffer damage in that the later anticipated District Court judgment could not have been in any practical sense vindicated against assets of the relevant Defendants.

217 To suggest that the four metre wide strip of land would be capable of satisfying the current judgment debt, with interest and the cost orders, apart from the substantial cost of the present proceedings, is a submission utterly without merit and which deserves emphatic dismissal. That Ms Woowin has described the value of the relevant four metre wide strip of land as “nil” does not require her to be an expert. She should know well enough the value of her own property or former property. No evidence has in any event been advanced to suggest to the contrary that her assessment is other than correct. But even if it were not correct, the value it would need to carry would on no basis conceivably satisfy the entitlement of the Plaintiff pursuant to the original District Court judgment with accruing interest and the costs associated with the lengthy hearings in this Court. The submission to the contrary is without foundation.

218 Thus were it necessary to determine this, I would conclude that the requirements for a conspiracy have been made out.

Question 7 - Damage to Plaintiff?

219 In all the circumstances, given the amplitude of remedy available through an account, a constructive trust and/or equitable lien, such damage as the Plaintiff has suffered should be remediable in the relevant orders earlier contemplated.

220 The Plaintiff has succeeded in essentially all of its challenge to the Defendants’ conduct. I have indicated the orders that I consider warranted. I invite the parties by 19 December 2002 to submit orders giving effect to this judgment. Prima face costs should follow the event but the parties are invited to address me on costs if they so wish.

**********

Last Modified: 02/11/2003

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Citations

Kang v Kwan [2002] NSWSC 1187

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CITATION:	Kang v Kwan & 2 Ors [2002] NSWSC 1187
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 3510/99
HEARING DATE(S):	20/02/01-22/02/01; 13/03/01; 12/07/01; 13/07/01; 14/08/01-17/08/01; 28/08/01; 05/09/01; 07/11/01; 08/11/01; 19/11/01; 26/11/01; 19/03/02; 20/03/02
JUDGMENT DATE:	12 December 2002
PARTIES :	WEI LING KANG (Plaintiff) CHRISTOPHER ANTHONY KWAN (First Defendant) KATE WOOWIN (Second Defendant) EILEEN WOOWIN (Third Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	G C Lindsay, SC/ M A Robinson (Plaintiff) M Einfeld, QC/ F Donohoe (First Defendant)
SOLICITORS:	Legal Aid Commission NSW (Plaintiff) Verekers (First Defendant)
CATCHWORDS:	CONVEYANCING - sham transactions - whether loan and mortgage transactions bona fide - whether loan and mortgage transactions liable to be set aside - CONVEYANCING - whether the loan and mortgage transactions and discharge of mortgage and sale transactions constitute an alienation of property within the meaning of s37A of the Conveyancing Act 1919 - whether there was an intent to defraud creditors - meaning of "creditors" in s37A - whether bona fide purchaser for value and without notice - ESTOPPEL - whether a defendant could be precluded from asserting an entitlement to repayment of loan and rely on a mortgage in light of what was said in court - EQUITABLE LIEN OR CHARGE - whether the plaintiff held an equitable lien or entitled to a charge in equity to secure payment for work done on a house, when subsequent judgment otherwise frustrated by sham transactions, to prevent consequences of unconscionable conduct - equitable lien as an alternative to a constructive trust as a remedy for unconscionable conduct - CONSPIRACY TO INJURE - whether the loan and mortgage transactions constituted a conspiracy against the plaintiff - whether plaintiff suffered any damage.
LEGISLATION CITED:	Conveyancing Act 1919 s37A Evidence Act s125 Real Property Act 1900 ss42 and 43
CASES CITED:	Abignano v Wenkart (1998) 9 BPR 765 Bahr v Nicolay (No. 2) (1988) 164 CLR 604 Cadogan v Cadogan [1977] 3 All ER 381 Clegg v Bromley [1912] 3 KB 474 Esanda Ltd v Burgess [1984] 2 NSWLR 139 Giumelli v Giumelli (1999) 196 CLR 101 Graham H Roberts Pty Limited v Maurbeth Investments Pty Limited [1974] 1 NSWLR 93 H. & G. & R. Nominees v Carlson Pty Limited (2000) V Conv.R 54-630 Hewett v Court (1983) 149 CLR 639 ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640 Jones v Dunkel (1959) 10 CLR 298 Kang v Kwan ([2001] NSWSC 698, 16 August 2001, unreported) Lonrho Limited v Shell Petroleum Co Limited [1982] AC 173 Mackay v Douglas [1872] LR 14 Eq 106 Re Mackay (1951) 16 ABC 18 Mandarin International Developments Pty Limited v Growth Corp (Australia) Pty Limited (1998) 143 FLR 408 Middleton v Pollock [1876] 2 Chd 104 Morris v Morris (1982) 1 NSWLR 61 Munnings v Australian Government Solicitor (1994) 118 ALR 385 Roy Morgan Research Centre Pty Limited v Wilson Market Research Pty Limited (1996) 39 NSWLR 311 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 13 FCR 449 Snook v London 7 West Riding Investments Ltd [1967] 2 QB 786 Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 1 WLR 1072 Vander Lee & Ors v State of New South Wales & Ors ([2002] NSWCA 286 Waterwell Shipping Inc v HIH Casuality & GIO Ltd (NSWSC, Giles CJ CommD, 8 September 1997, unreported)
DECISION:	See para 220