Lal v Patel; Patel v Lal

[2012] NSWCA 110

Court of Appeal

New South Wales

Case Title:

Lal v Patel; Patel v Lal

Medium Neutral Citation:

[2012] NSWCA 110

Hearing Date(s):

20 April 2012

Decision Date:

20 April 2012

Jurisdiction:

Before:

Macfarlan JA at [1]
Sackville AJA at [15]

Decision:

(1) The respondent is directed to file within a period of 4 weeks from today such submissions or evidence as she wishes to rely upon to establish that H Lal & Associates Pty Ltd and the Lal Family Trust were properly notified of the proceedings at first instance or, if they were not, that they do not now wish to be heard in the proceedings.

(2) The appellants are directed to lodge any submissions or evidence in response within 7 days thereafter.

(3) Any reply by the respondent is to be lodged within a further 7 days thereafter.

(4) Direct that the applications for leave to appeal and to strike out the Notice of Appeal be finally determined by the Court on the papers without the need for a further oral hearing.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

APPEAL - application for leave to appeal - no question of principle

Legislation Cited:

Conveyancing Act 1919 (NSW)
Supreme Court Act 1970

Cases Cited:

Texts Cited:

Category:

Principal judgment

Parties:

Patricia Lal (First Applicant)
Hasmukh Lal (Second Applicant)
Jaswanti Patel (Respondent)

Representation

- Counsel:

Counsel:
Applicants in person
M Suliman (Solicitor) (Respondent)

- Solicitors:

Solicitors:
Applicants in person
M Suliman (Respondent)

File number(s):

CA 2012/49614; CA 2011/305566

Decision Under Appeal

- Court / Tribunal:

- Before:

Biscoe AJ

- Date of Decision:

- Citation:

Patel v Lal [2011] NSWSC 603; Patel v Lal [2011] NSWSC 678

- Court File Number(s)

SC 2009/290378

Publication Restriction:

JUDGMENT

1. MACFARLAN JA: This is an application to strike out a notice of appeal and an application by the appellants named in that notice of appeal for leave to appeal.

2. By judgments at first instance dated 22 and 29 June 2011, Acting Justice Biscoe declared that a transfer for nominal consideration of a residential property by H Lal & Associates Pty Limited to the first appellant, Mrs Lal, was voidable under s 37A of the Conveyancing Act 1919 (NSW) as a transfer made with intent to defraud creditors.

3. Mrs Lal's husband, the second appellant, was the sole director and shareholder of the company which is now in liquidation. In reaching his conclusions the primary judge rejected Mr and Mrs Lal's argument that the transfer for a nominal consideration was justifiable because the company held the property as trustee for The Lal Property Family Trust and the transfer was simply designed to give effect to the replacement of the company by Mrs Lal as trustee of the property.

4. It was not disputed that the property was, both before and after the transfer, subject to a mortgage in favour of the Commonwealth Bank of Australia, which was a party to the proceedings at first instance. The bank has since sold the property in the exercise of its power as mortgagee.

5. As the sale realised less than the amount owing to the bank, the true owner of the property, whether that be the company or Mrs Lal, has no equity in it or in the proceeds of sale. As a result, the proceedings and any appeal in them, at least from a monetary point of view, are pointless. Subject to one matter, to which I will come, concerning the proper parties to the proceedings, in my view the notice of appeal should be struck out as incompetent upon the basis that there is less than $100,000 in issue on the purported appeal, see s 101(2)(r) of the Supreme Court Act 1970.

6. Likewise, and also, subject to the same matter, the application for leave to appeal should be refused because the proceedings are now pointless, there being no equity remaining in the property or in the proceeds of sale.

7. Mr Lal who spoke on behalf of himself and Mrs Lal on the hearing today contended that if the decisions of Acting Justice Biscoe were set aside, Mrs Lal would be able to make a claim against Mrs Patel but he could not, in my view, give any sensible explanation of the basis of any such claim. He also referred in his submissions to the prospect of an action by the bank against Mrs Lal for the shortfall in the proceeds of sale of the property as against the debt owed to the bank. Again, however, he could not give any sensible explanation as to why the prospect of such an action taking place would be affected by the success of any appeal in relation to the decisions of Acting Justice Biscoe.

8. Therefore, subject to the matter concerning constitution of the proceedings to which I will come, the appropriate orders would be first that the notice of appeal be struck out as incompetent and that the appellants be ordered to pay the respondent's costs and, secondly, that the application for leave to appeal be dismissed with costs.

9. The matter which I foreshadowed earlier concerning the constitution of the proceedings is that although H Lal & Associates Pty Limited was named as a party to the proceedings, it is not apparent from the judgments below that that company was served.

10. In the proceedings below, the plaintiff sought leave to proceed against the company and his Honour ultimately granted that leave but it is not obvious that the company was ever served. That is of significance because the company was the registered proprietor of the property and the proceedings concerned the validity of a transfer of the property from that company to Mrs Lal. The company was therefore clearly a proper party.

11. The Court is reluctant to leave the matter as it is because it appears, on the face of it, that the proceedings were determined without being properly constituted in terms of parties. There may be a simple answer to the Court's query, and it has been suggested on behalf of Mrs Patel that the liquidator of the company was in fact served. In my view Mrs Patel should be given the opportunity to fully explain the position before this application for leave is finally determined.

12. If the company has already been served and has chosen not to appear then probably nothing further need happen. If the company has not been served then contact with its current representative, whether that be a liquidator or ASIC, may indicate that the company does not have any interest in being heard. If that is the case then again nothing further need occur.

13. Alternatively, if that issue cannot be resolved, it may be that leave to appeal should be granted, limited to the issue concerning the proper parties to the proceedings.

14. In these circumstances, the application for leave to appeal and the application to strike out the notice of appeal should in my view be adjourned for a period to be discussed with the parties, directions should be made as to the lodgement of appropriate material and submissions in the meantime and a direction should be made that the further resolution of these applications occur on the papers without the need for another hearing.

15. SACKVILLE AJA: I agree with the Presiding Judge.

    [Discussion then ensued].

16. The following orders were then made by the Court:

    (1) The respondent is directed to file within a period of 4 weeks from today such submissions or evidence as she wishes to rely upon to establish that H Lal & Associates Pty Ltd and The Lal Family Trust were properly notified of the proceedings at first instance or, if they were not, that they do not now wish to be heard in the proceedings.

    (2) The appellants are directed to lodge any submissions or evidence in response within 7 days thereafter.

    (3) Any reply by the respondent is to be lodged within a further 7 days thereafter.

    (4) Direct that the applications for leave to appeal and to strike out the Notice of Appeal be finally determined by the Court on the papers without the need for a further oral hearing.

    **********