Kusumanadi v Artemas (No. 2)
[2016] VCC 1834
•6 December 2016
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
COMMERCIAL DIVISON
EXPEDITED CASES LIST
Case No. CI-15-05083
| JOENG KUSUMANADI and MULJATI SULIMIHARDJA | Plaintiffs |
| v. | |
| JUN ARTEMAS and JULIA ARTEMAS | Defendants |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2 December 2016 | |
DATE OF JUDGMENT: | 6 December 2016 | |
CASE MAY BE CITED AS: | Kusumanadi & Anor v. Artemas & Anor (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1834 | |
REASONS FOR DECISION
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Catchwords: Practice and procedure – Declaration that transfer of land void as an alienation made with intent to avoid creditors – Form of order – Section 172 Property Law Act 1958 (Vic).
Practice and procedure – Interest – “Debt or sum certain” – “Written instrument” – “Date or time certain” – “Demand of payment” – Section 58 Supreme Court Act 1986 (Vic) – AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310, and Anchen v Da Costa [2005] VSC 191 followed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr C. Gunst QC and Mr A. W. Sandbach of Counsel | AJH Lawyers |
| For the Defendants For Westpac Banking Corporation For the Registrar of Titles | Mr P. G. Willis SC Mr S. Hay of Counsel Ms B. Bart | Liberogiannis & Associates Gadens Land Use Victoria Legal |
HIS HONOUR:
1Following the handing down of my reasons for judgment on 26 October 2016, the parties filed written submissions on the following issues:
a.the judgment sum;
b.the form of orders relating to the title;
c.the withdrawal of the plaintiffs’ caveat;
d.interest;
e.freezing order.
2The parties made oral submissions on 2 December 2016. These reasons record my decisions on the outstanding matters, apart from costs.
The judgment sum
3There was no dispute by the parties that based on my earlier reasons for judgment, judgment should be entered for the plaintiffs against the first defendant in the sum of $449,484.65.
The form of orders relating to the title
4In the reasons for judgment, I foreshadowed making an order as follows:
“Judgment for the plaintiffs against the defendants for a declaration that the transfer dated 8 August 2014 from the first defendant to the second defendant (“the transfer”) of the first defendant’s interest in the property at 5 Clery Avenue Donvale, being the whole of the land contained in Certificate of Title Volume 9003 Folio 769 (“the property”), is void pursuant to section 172 of the Property Law Act 1958 (Vic)”.
5In addition to an order to this effect, the plaintiffs submitted that they are “entitled to orders giving effect to the finding in the Reasons concerning the Donvale land and section 172 of the Property Law Act 1958 (Vic)”. They sought orders comprising a “declaration, and directions to the Registrar of Titles to give effect to the declaration”, as follows:
“3. The Registrar of Titles for the State of Victoria cancel the certificate of title of the property known as 5 Clery Avenue, Donvale, Victoria, being the whole of the land contained in Certificate of Title Volume 9003 Folio 769 (Lot 37 on Plan of Subdivision 096892) encumbered by registered Mortgage held in favour of Westpac Banking Corporation pursuant to dealing AL711407M lodged on 25 February 2015.
4.The Registrar of Titles for the State of Victoria create a new folio in the Register of Titles and issue a new certificate of title for the land in the property known as 5 Clery Avenue, Donvale, Victoria, being the whole of the land presently contained in Certificate of Title Volume 9003 Folio 769 (Lot 37 on Plan of Subdivision 096892) encumbered by a registered Mortgage held in favour of Westpac Banking Corporation pursuant to dealing AL711407M lodged on 25 February 2015 with JUN ARTEMAS and JULIA ARTEMAS as the registered proprietors.
5.The new folio created by the Registrar of Titles for the State of Victoria in accordance with orders 3 and 4 show the Defendants as the joint proprietors of the land presently contained in Certificate of Title Volume 9003 Folio 769 with their estate encumbered by a registered Mortgage in favour of Westpac Banking Corporation pursuant to dealing AL711407M lodged on 25 February 2015 but not by the caveat lodged by the Plaintiffs in dealing AM141987G”.
6On behalf of the defendants, it was submitted that, with respect to these proposed orders, the defendants “defer to the Registrar of Titles and the mortgagee, whose rights as an uninvolved but interested third party must not be prejudiced. The mortgagee’s interest over the whole of the land must not be disturbed without it being joined and heard. The principles are discussed fully in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 (a case concerning a mortgage that was known but unregistered) per French CJ, Gummow, Hayne, Heydon and Kiefel JJ at 44 – 48 [126] – [138]”.
7On 30 November 2016, the Registrar of Titles wrote to the plaintiffs’ solicitors commenting on the plaintiffs’ “proposed form of judgment”. The letter referred to sections 40 and 42 of the Transfer of Land Act and the “indefeasible title in the transferee” conferred by the Act.
8The letter suggested that the declaration proposed, that the transfer was void by virtue of section 172 of the Property Law Act, would only have application “as against the plaintiffs”.
9The Registrar considered that the further orders proposed by the plaintiffs “are not appropriate” as “Westpac Banking Corporation, being the mortgage[e], has control of the certificate of title”.
10The Registrar considered more appropriate orders would direct the defendants “to sign a transfer of land document in registrable form, transferring the estate in fee simple from the second defendant to the first defendant”, presumably with the second defendant as joint tenants.
11Other useful suggestions were made. All of these proposals by the Registrar were supported by Westpac’s counsel at the hearing and no serious argument was addressed against them by plaintiffs’ counsel.
12A draft form of order was circulated to the parties and the final form of the orders attached to these reasons reflects the further submissions made by all interested parties.
The withdrawal of the plaintiffs’ caveat
13After hearing further submissions from the parties, I consider that the plaintiffs’ caveat should be removed from the title at an early date. I found in my reasons for judgment that there was no proper basis for the caveat to remain.
14The plaintiffs will be given a reasonable period to file a withdrawal of caveat. If they fail to do so, the Registrar of Titles is directed to remove the caveat.
Interest
15The plaintiffs seek interest on the judgment sum pursuant to section 58(1) of the Supreme Court Act 1986 (Vic) from 21 December 2012, the date upon which Mr Artemas sold unit 1. Section 58(1) of the Supreme Court Act provides that:
“(1) If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate no exceeding the rate from the time being fixed under section 2 of the Penalty Interest Rates Act 1983…from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, from the time when demand of payment was made”.
16The plaintiffs submitted that:
a.the return of the plaintiffs’ capital investment and 50% share of the profit of the development was due for payment, as a debt and sum certain, upon the settlement of the sale of both units;
b.upon the sale of unit 1, it was possible to calculate the profit share. The plaintiffs’ capital investment in the development was always known to the parties, and was not in dispute at the trial;
c.the judgment sum became a “sum certain” that was “payable” at the time of the sale of both units “by virtue of some written instrument and at a date or time certain”;
d.alternatively, a “demand of payment was made” for the sum owing.
17On behalf of Mr Artemas, it was submitted that:
a.“the debt was not ‘payable by virtue of some written instrument’”;
b.“there was no debt ‘payable at a date or time certain’, being December 2012”;
c.accordingly, interest should only be payable “from the commencement of the proceeding”, pursuant to section 60 of the Supreme Court Act;
d.if section 58 does apply;
i.there was no “demand of payment”;
ii.the “delay by the plaintiffs in bringing their action is ‘good cause to the contrary’, that should disentitle them to interest prior to the issue of the writ”.
18Justice Kirby said in Victorian WorkCover Authority v Esso Australia Limited [2001] HCA 53; (2001) 207 CLR 520 at 546, that section 58, as well as sections 59 and 60 of the Act, have “the beneficial purpose of providing…for the award of interest to compensate parties who have been obliged to take ‘proceedings’ to recover a money sum and who in the meantime have been kept out of moneys which they could otherwise have used or upon which they could otherwise have earned interest”.
19The Court of Appeal in AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310 (“Lucas Drilling”), said at paragraph 171 that, according to Justice Kirby’s reasoning, “Section 58 of the Supreme Court Act should not be given a narrow meaning. Section 58 has the same beneficial purpose as section 60 and should be given a similarly broad application”.
20In Anchen v Da Costa [2005] VSC 191 (“Anchen”), Ashley J applied section 58 in circumstances where he had found at trial that the judgment sum “was held by the defendant on a constructive trust in favour of the plaintiff” (paragraph 1).
21In applying the section, Ashley J referred to the following matters which the plaintiffs submitted had application to the present proceeding:
a.“by sub-s. (3) a debt or sum payable, or a date or time, is to be taken to be certain if it has become certain” (paragraph 8). In the present case, I had determined that the judgment sum was payable upon settlement of the sale of the second unit;
b.“the sum certain was payable by virtue of a series of written instruments” (paragraph 17). The plaintiffs rely in the present case upon the following series of documents:
i.the business plan from the first defendant to the plaintiffs dated 12 August 2002, which provided for equal contributions towards the development, and by implication, the return of each party’s contribution and an equal division of the profits;
ii.a letter from the first defendant to the plaintiffs dated 30 April 2003;
iii.the contracts of sale of the two units;
c.“adjustments at time of sale” of a property do not render a sum “not certain, nor not payable by virtue of such instruments” (paragraph 17). In the present case, the expenses of the sale of the second unit had been calculated and fixed prior to the date of settlement;
d.“the sum certain was payable at a time certain – that is, the date of settlement” (paragraph 17).
22The terms of the agreement between the parties relating to the repayment of the plaintiffs’ contribution and the sharing of profits initially arose by reason of the conversations and actions of the parties. However, the terms for payment, and the timing of the payment were affirmed by the first defendant, both orally and in a text message sent to the second plaintiff on 1 August 2007, in which Mr Artemas stated that, “when everything is sold I will definitely send the money”.
23In these circumstances, I consider that it is not possible to construct a “written instrument” by combining documents as Ashley J did in Auchen. I consider that the parties had reached agreement, “otherwise” than “by virtue of some written instrument”, that the “sum certain” (the plaintiffs’ contribution plus 50% of any profits) was “payable” upon the sale of the second unit, and therefore the plaintiffs cannot rely upon that limb of section 58(1).
24The plaintiffs submit that, in these circumstances, interest should be payable “from the time when the demand of payment was made”. As a “demand of payment”, the plaintiffs rely upon “demands made by and on behalf of the plaintiffs for the payment of the money due to them [which] ought to be regarded as remaining in force at the time”. The plaintiffs rely upon “demands for payment…made in the period of 2007 to 2015, including a letter before action”.
25As I noted in Dumayne Property Group Pty Ltd v Balanced Securities Ltd (No. 2) [2016] VCC 1459 at paragraph 5, the Court of Appeal in Lucas Drilling considered that in construing the phrase “demand of payment”:
“a. a demand of payment ‘need not be in any particular form’;
b. a demand need not ‘specify the exact sum due’;
c. a demand must contain ‘a distinct demand of payment’;
d. ‘the word “demand” need not be used’;
e. a demand may be ‘clothed in the language of politeness’;
f. ‘the nature of the language is immaterial’;
g. the demand ‘must be of a preemptory character and unconditional’;
h.the ‘constitution of a demand may vary according to the circumstances of the particular case’”.
26I do not consider that I can regard demands for payment prior to the settlement of the sale of the second unit as “remaining in force” so that they were activated when the time for payment arose. However, these previous requests do, in my view provide the context for the discussion on 12 August 2013 when Ms Sulimihardja and two of her sons visited Mr Artemas at his home.
27The reason for the visit was for Ms Sulimihardja to ascertain when she and her husband would be paid what was owing to them. By his answers, it is clear that Mr Artemas understood that:
a.the plaintiffs were due to be repaid their contributions and a share of profit;
b.that amount was to be calculated and paid when both units were sold.
28In response to questions at the meeting, Mr Artemas said:
a.that the second unit was “still being rented” and, when it was sold, “I will calculate everything”;
b.that he was hoping property prices would “go up”, so that the second unit would be sold. He said, “It’s not a problem to sell or not to sell, if I get the money first I will pay everything…We are trying to get money. I need to pay everything first. I would like to hold on until the prices go up”.
29Accordingly, I consider that the plaintiffs made a “demand of payment” for the purposes of section 58(1) on 12 August 2013, and that the first defendant would ordinarily be liable to pay interest from that date.
30The first defendant asserts that “good cause is shown to the contrary” by reason of the plaintiffs’ delay in issuing the proceeding. There is no substance to this argument. Mr Artemas actively deceived the plaintiffs over a number of years about whether the two units had been sold. The plaintiffs only discovered that the second unit had been sold on 5 July 2015. A letter of demand was sent by their solicitors on 8 July 2015 and the proceeding was issued in the Supreme Court on 16 July 2015.
Freezing order
31The plaintiffs sought a freezing order “in aid of” the judgment. They submitted that “there is a danger that the…judgment will be wholly or partly unsatisfied as a result of the [defendants’] actions in either removing the assets or disposing or dealing them so as to diminish their value [and that] the balance of convenience [favoured] the granting of the freezing order”, relying upon the judgment of J. Forrest J in Zhen v Mo [2008] VSC 300 (“Zhen”) at paragraphs [21] to [30].
32The plaintiff relied upon the following findings that I had made in my reasons for judgment:
a.the transfer by Mr Artemas to his wife of his interest in the Donvale property was “clearly…to delay hinder or defraud creditors”;
b.Mrs Artemas had obtained “an advance on the security of the property [that] bore [at least, but probably more than] one of the indications or badges of fraud”;
c.Mr Artemas had “limited credibility” and, at the time the transfer was executed, his “financial position probably was particularly parlous”;
d.Mr and Mrs Artemas had engaged in conduct which reflected “a very casual attitude to obligations of disclosure and honesty”.
33The defendants submitted that a freezing order was not warranted and that Zhen “does not support an order in this case…[as a freezing] order is not designed to provide security for the applicant’s claim”. The defendants relied upon the decisions of Jackson v Sterling Industries (1987) 162 CLR 612, 621, 625 and Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1, [73].
34The plaintiffs have obtained judgment, including interest, for a substantial sum. In the past, Mr Artemas has by his words and actions demonstrated a wilful disregard of his obligations to the plaintiffs. The defendants had by the transfer dated 8 August 2014 sought to isolate the Donvale property from the first defendant’s obligations to the plaintiffs.
35In these circumstances, it is appropriate that the Donvale property is not used by the defendants for other purposes until, either the first defendant has paid the judgment debt or the plaintiffs have had the opportunity to execute upon the Donvale property.
Costs
36The plaintiffs foreshadowed that they would “seek the costs of the proceeding on the indemnity basis”, after other issues had been determined. The plaintiff’s will apparently rely, in part, upon an offer of compromise. It is appropriate the issue of costs be addressed after all other issues in the proceeding have been determined. The parties agreed to file and serve written submissions on the issue of costs, once final orders in the proceeding were otherwise made.
Order
37The order will record the following in “other matters”:
“On 2 Dec 2016:
a.counsel for Westpac Banking Corporation (“the bank”) informed the Court that after orders have been effected returning the first defendant’s name to the Title as a joint registered proprietor of the Donvale property, the Bank would regard its security as existing over the whole of the land and not just in respect of the second defendant’s interest;
b.the solicitor for the Registrar of Titles informed the Court that the Registrar of Titles would, in these circumstance, regard the bank’s mortgage as running with the land”.
38The orders will be in the following form:
1.Judgment for the plaintiffs against the defendants for a declaration that the transfer dated 8 August 2014 from the first defendant to the second defendant (“the transfer”) of the first defendant’s interest in the property at 5 Clery Avenue Donvale, being the whole of the land contained in Certificate of Title Volume 9003 Folio 769 (“the Donvale property”) is, subject to the estate or interest of the bank as mortgagee, void pursuant to section 172 of the Property Law Act 1958 (Vic).
2.By 4pm on 12 December 2016 both of the defendants must execute and lodge with the Registrar of Titles a transfer of land in registerable form in respect of the transfer of the Donvale property from the second defendant as sole registered proprietor to the first and second defendants as joint registered proprietors. The transfer, must be prepared by the plaintiffs’ solicitors and forwarded to the defendants’ solicitors no later than 4pm on Wednesday 7 December 2016. If the defendants or one of them fails to execute and lodge with the Registrar of Titles the transfer of land by 4pm on 12 December 2016, the Registrar of the Court may, upon the filing of an affidavit attesting to the default, sign the transfer on behalf of the defaulting defendant and the transfer shall be returned to the plaintiffs’ solicitors who may lodge it with the Registrar of Titles on behalf of the defendants.
3.By 4pm on 12 December 2016 the plaintiffs must file a withdrawal of the caveat in respect of the Donvale property lodged in dealing no. AM141987G. If the plaintiffs fail to file a withdrawal of caveat in accordance with this order, the Registrar of Titles is directed to forthwith remove the caveat from the title pursuant to section 90(3) of the Transfer of Land Act 1958 (Vic).
4.Reserve liberty to apply in relation to paragraphs 2 and 3 hereof.
5.When the defendants have complied with the orders herein in respect of the judgment sum and any order for costs made in accordance with paragraph 9 hereof, the plaintiffs’ solicitors must, as soon as is reasonably practicable but no later than 14 days after the satisfaction of these orders, notify the Registrar of Titles of such compliance.
6.Until further order, the defendants and each of them, whether by their servants or agents or howsoever otherwise, are restrained from disposing of or further encumbering or in any other way dealing with the Donvale property, other than in compliance with the order in paragraph 3 herein. Liberty is reserved to the defendants to make application to the Court to modify this order in the event that they wish to raise money upon the security or sale of the Donvale property to meet their obligations in regard to the judgment sum and any order for costs made in the proceeding, or for any other proper purpose.
7.Judgment for the plaintiffs against the first defendant that the first defendant pay to the plaintiffs the sum of $449,484.65, together with interest pursuant to statute from 12 August 2013 to the date hereof of $151,496.63, total judgment $600,981.28.
8.Certificates pursuant to section 128 of the Evidence Act 2008 are given in respect of the following evidence:
a.the evidence of Jun Artemas given on 19 August 2016 as recorded in the transcript as follows:
i.between page 372, line 22 and page 384 line 21 (inclusive);
ii.between page 388, line 1 and page 389 line 11 (inclusive);
b.the evidence of Julia Artemas given on 23 August 2016 as recorded in the transcript as follows:
i.between page 493 line 21 and page 503 line 26 (inclusive);
ii.between page 506 line 20 and page 507 line 21 (inclusive).
9.The issue of the basis upon which the defendants must pay the plaintiffs’ costs of the proceeding shall be determined by the Court following the receipt of further submissions from the parties.
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Certificate
I certify that the preceding 11 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 6 December 2016.
Dated: 6 December 2016
Carla Cianfaglione
Associate to His Honour Judge Anderson
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