Langdon v Gruber
[2001] NSWSC 276
•12 April 2001
CITATION: Langdon v Gruber [2001] NSWSC 276 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 2434/96 HEARING DATE(S): 27, 28 April, 1 June, 17 August 2000 JUDGMENT DATE:
12 April 2001PARTIES :
Robin Langdon (P)
Gudrun Erdmute Filicitas Gruber (D1)
James Otto Gruber (D2)JUDGMENT OF: Austin J
COUNSEL : C A Needham SC with T J Morahan (P)
J Millar (D1)
In Person (D2)SOLICITORS: Clinch Neville Long (P)
Colin Daly Quinn (D1)CATCHWORDS: REAL PROPERTY - alienation of property with intent to defraud creditors - meaning of 'intent to defraud' - meaning of 'creditors' - meaning of 'purchaser' - whether transferee had notice of intent to defeat creditors - appropriate orders, when transfer effected by Local Court consent orders LEGISLATION CITED: Conveyancing Act 1919 (NSW) ss 7, 37A
Bankruptcy Act 1966 (Cth) ss 40, 121
Family Law Act 1975 (Cth) ss 46(1), 79
Local Court (Civil Claims) Act 1970 (NSW) s 69CASES CITED: Barton v Deputy Commissioner of Taxation (Cth) (1974) 131 CLR 370
Cadogan v Kennett (1776) 2 Cowp 434, [98 ER 1171]
Cannane v J Cannane Pty Ltd (In Liq) (1998) 192 CLR 557
Freeman v Pope (1870) 5 Ch App 538
Jones v Dunkel (1959) 101 CLR 298
Koop v Smith (1915) 25 DLR 355
Laurentian Bank of Canada v Glover (Ontario High Court, unreported, 28 July 1998
P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515
Patterson v BTR Engineering (Aust) Ltd (Court of Appeal of New South Wales, unreported, 7 December 1989)
Re Baxter; ex parte The Official Receiver (1986) 10 FCR 398
Re Trautwein (1944) 14 ABC 61
Rickards v Attorney-General (1844) 12 Cl&F 42, [8 ER 1306]
Silvera v Savic (1999) 46 NSWLR 124
SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288
Williams v Lloyd (1934) 50 CLR 341DECISION: See last four paragraphs
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISIONAUSTIN J
12 APRIL 2001
2434/96 ROBIN LANGDON V GUDRUN ERDMUTE FILICITAS GRUBER AND JAMES OTTO GRUBER
JUDGMENT
1 HIS HONOUR: On 26 September 1995 the plaintiff, Ms Langdon, obtained a judgment for Cdn$900,500 against the second defendant, Mr Gruber, in the Supreme Court of British Columbia. Mr Gruber is Ms Langdon's father. The judgment was in civil proceedings for damages for sexual assaults committed by him while Ms Langdon was a young girl. Mr Gruber has paid only $240 and the balance of the judgment debt remains outstanding.
2 The sexual assaults took place over a period of time (the period from about 1961 to 1968) while Ms Langdon and Mr Gruber and his first wife (Ms Langdon's mother) were living together as a family. Ms Langdon was born on 22 October 1955 and the assaults took place when she was between the ages of 6 and 13. The assaults came to an end after Ms Langdon, then aged 13 years, told her mother about what had happened, in a matter-of-fact way, when her mother was explaining to her the facts of life, and the mother confronted her husband. Neither the mother nor the daughter went to the police immediately. Indeed, the mother asked the daughter to forgive her father and not to mention it to anyone else. The daughter did not report the matter to the police until 1989, when Ms Langdon was a 34 year-old woman.
3 When the mother confronted Mr Gruber with the allegations in 1968 they argued, but the marriage did not immediately break down. They separated in 1971, although the trigger for their separation may have been his affair with another woman rather than his molestation of their child.
5 Mr and Mrs Gruber took a trip to Canada in 1992, remaining there until September 1992. Mr Gruber remained in Canada when Ms Gruber returned to Sydney. He was served with Ms Langdon's summons in the Canadian civil proceedings in November 1992 while he was still in Canada. He subsequently returned to Sydney.4 Mr Gruber formed a relationship with the first defendant and they found their way to Australia. By memorandum of transfer dated 23 March 1976 Mr Gruber and the first defendant became the owners as joint tenants of a property at 102 Ramsgate Road, Ramsgate, New South Wales. The property was initially mortgaged but the mortgage was discharged in 1977. Mr Gruber's marriage to Ms Langdon's mother was dissolved in 1978, and he married the first defendant (whom I shall call Mrs Gruber) on 10 April 1979.
The criminal proceedings
6 Mr and Mrs Gruber returned to Canada in March 1993. While they were there, the police arrested Mr Gruber and charged him in respect of the sexual assaults upon his daughter. He was detained on 23 March 1993. He was tried before Madam Justice Sinclair-Prowse in the Supreme Court of British Columbia, evidently without a jury. During the trial, Mrs Gruber attended the courthouse and gave him emotional support. On 25 June 1993, after a trial, Mr Gruber was convicted by the Supreme Court of British Columbia for indecent assault, gross indecency, having sexual intercourse with a female person under the age of 14 years, sexual intercourse with a blood relation, his child, and engaging in an act of anal intercourse. Madam Justice Sinclair-Prowse found that he had engaged in sexual intercourse with his daughter at least 15 times, and had anal intercourse with her on one occasion. He was sentenced to 11 years imprisonment, five of which were to be served concurrently.
8 Mr Gruber eventually applied for parole and was interviewed by the Canadian National Parole Board in May 1997. The Parole Board decided to grant his application for day parole. In the course of its reasons, the Parole Board said:7 He was imprisoned at the Mountain Institute in British Columbia. Mrs Gruber was aware of his imprisonment on the day of his conviction. She visited him in prison about once a week when she was in Canada, returning to Australia in September 1993.
9 He was released on 30 June 1997, and after staying temporarily with friends in Canada he and his wife returned to Sydney in August 1997 to reside in the Ramsgate property.
‘You are requesting full parole (voluntary departure) to return to Australia. You have community support and family there. A lien has been placed against your real property in New South Wales. It is the opinion of your supervisor that you represent a low risk to re-offend and given that a default judgment and liens exist in New South Wales, Australia, you are not regarded as using parole to frustrate the collection of the civil judgment.’
The Canadian civil proceedings
10 On 20 November 1992, while Mr Gruber was in Canada, Ms Langdon commenced the civil proceedings in the Supreme Court of British Columbia which ultimately led to the judgment debt to which I have referred. By the statement of claim filed on 22 December 1992, Ms Langdon alleged that the sexual assaults committed on her by her father were a result of coercion and the use of power, and violated the duty of care arising out of the relationship of trust between them. She alleged that the sexual assaults intentionally caused her nervous shock and that her father deceitfully misrepresented that the assaults were a consensual activity, with the result that she failed to report to other adults. She claimed that as a result of her father's conduct she was unable to undergo normal development and that she suffered psychological damage, depression and anxiety. She sought aggravated and exemplary damages.
12 He wrote a letter to the presiding judge dated 9 April 1994. The purpose of this letter was evidently to draw the judge's attention to some evidence in the criminal proceedings which, he said, proved that Ms Langdon's testimony in those proceedings was false. He said that he was ‘practically penniless’ and in gaol, and could not come to court or afford counsel. He complained that the charge he would have answered (evidently, according to other evidence, the charge of indecent assault) was dropped, and the prosecution relied on the most heinous charges, upon which it succeeded with the aid of irrelevant testimony and grand theatrics. Then he said:11 Mr Gruber filed an appearance in the proceedings on 8 December 1992. He filed a statement of defence on 15 January 1993, denying the sexual assaults and the misrepresentations and her loss. However, he did not defend the proceedings at the hearing.
‘Begging your forgiveness for writing all this, I felt as if I had to make one last ditch attempt at saving our old family home in Australia, our last earthly possession and only shelter for our old age. I fear that these people will attempt to pry it out of our hands and we are just too old to start again.
‘With this, I commit my life and that of my very dear and loving wife of twenty-one years into your hands.’
13 He wrote another letter to the British Columbia court at some time prior to the hearing of the civil proceedings in September 1995. The letter was apparently written in response to a notice to admit, issued in the Canadian civil proceedings. In it he claimed again that he was ‘virtually penniless’ and that he could not afford to attend the hearing. He said that the joint savings of himself and his wife had been used up on his legal expenses for the criminal trial. He said that Mr Juriloff, his counsel at the criminal trial, advised him not to attempt any defence of the civil action, as it would be futile.
14 Subsequently, he contended in answers to interrogatories in the present proceedings that he believed the Canadian civil proceedings would not succeed because Ms Langdon had lied at the criminal trial, and he felt that this would be proven in his criminal appeal. He admitted that if Ms Langdon's Canadian civil claim was successful, the court would order him to pay damages. He expressed deep remorse for what he had done to his daughter, although he denied that he had sexual intercourse with her. He said that he believed in 1994 that anything he owned in Australia was ‘out of bounds’ as far as recovery of the verdict in the Canadian civil proceedings was concerned. He said he had no intention that the house should be transferred into Mrs Gruber's name in order that Ms Langdon could not have recourse to it should she obtain judgment in the damages claim. Mr Gruber said that he had not at any time discussed the present proceedings with Mrs Gruber, because ‘I did not feel that it would be proper to discuss this case between us’.
16 On 30 April 1993 the Canadian civil proceedings were set down for trial, to be held on 25 April 1994. Ultimately the case did not proceed in April 1994 and was rescheduled for trial on 25 September 1995. In fact, the case was heard on 25 and 26 September 1995. Reasons for judgment were delivered by Justice McKenzie on 26 September 1995. He found that Ms Langdon had been unemployed for 15 years and her career prospects had been destroyed. She had been unable to establish secure and satisfying marital relationships and was unable to care for her children adequately. He found that these consequences were directly attributable to Mr Gruber's crimes. Since Mr Gruber showed no remorse or contrition, he found that there were grounds for aggravated damages.15 Ms Langdon's lawyers in the Canadian civil proceedings served a notice to admit upon Mr Gruber dated 4 July 1995. Mr Gruber replied on 19 July 1995. He denied that he had had sexual intercourse with his daughter and said that he had little or no knowledge of persons with mental and emotional breakdown, depression, emotional and mental disabilities.
Mrs Gruber's instructions for Family Law Act proceedings
17 On about 22 February 1994 Mrs Gruber consulted Mr Ian Ross of Colin Daley Quinn, solicitors in Kogarah. At that time Mr Gruber was imprisoned in British Columbia and the hearing of the Canadian civil proceedings was scheduled to begin on 25 April 1994. According to Mr Ross' evidence, which I accept, she instructed him to prepare documents to enable an agreement reached by her and Mr Gruber in relation to property settlement to be approved by a court acting under the Family Law Act 1975 (Cth). He was led to understand that Mr and Mrs Gruber had already reached an agreement, and therefore his role was merely to document and implement that agreement. He was not instructed to initiate proceedings for dissolution of the marriage and, in fact, no such proceedings have been initiated at any time.
18 Under s 79 of the Family Law Act 1975 (Cth), in proceedings with respect to the property of the parties to a marriage, the court may make such orders as it considers appropriate to alter interests in the property. It is not necessary for the court to make an order for the dissolution of marriage. Local Courts have jurisdiction to make orders under the Act, but where the assets at issue are valued at more than $20,000, the proceedings must be transferred to the Family Court unless both parties agree to the local court hearing and determining the matter: s 46(1).
19 Mrs Gruber gave instructions about the respective financial positions of herself and Mr Gruber, although the instructions were very limited. She identified the property at 102 Ramsgate Road, Ramsgate as a property jointly held by her husband and herself, and identified a Nissan van and a business which had been conducted by him under the name ‘Gruber Radio and Television’. She did not provide any valuations of these assets. She told Mr Ross that Mr Gruber had been in prison since June 1993 and that he was not due to be released for some time. She led Mr Ross to understand that there were no liabilities, actual or contingent, owing by her and Mr Gruber. She did not mention anything about the Canadian civil proceedings against Mr Gruber.
21 The Initiating Application stated that the marriage between Mr and Mrs Gruber still subsisted, giving 17 February 1994 (five days before Mrs Gruber consulted Mr Ross) as the date of separation. It sought orders in terms of the Draft Minutes of Proposed Orders. The Draft Minutes recorded the intention of the parties that the proposed orders would, as far as practicable, finally determine their financial relationship, and set out the following proposed orders:20 Mr Ross later prepared the relevant documents, on the basis that Mr Gruber had consented to the arrangements, and she signed the documents where appropriate. The documents comprised an application initiating proceedings under the Family Law Act, a Statement of Financial Circumstances, and a document entitled ‘Draft Minutes of Proposed Orders’. It was necessary for Mr Gruber to sign the last of these documents, and also to sign an ‘Affidavit of Understanding’, a document entitled ‘Notice of Address for Service’, an ‘Acknowledgement of Service’ and a memorandum of transfer of the property at 102 Ramsgate Road, Ramsgate.
(1) that the husband transfer his interest in the ‘former matrimonial home’ at 102 Ramsgate Road, Ramsgate [the document said ‘Sans Souci’ but that word was struck out by hand and the word ‘Ramsgate’ was written above it and initialled by Mr Gruber and a Canadian lawyer called W Martin Finch];(2) that the wife transfer the Nissan van to the husband;
(3) that the wife be declared to have no interest in the business ‘Gruber Radio and Television’, and would if necessary execute any documents to give effect to that position;
(4) that the parties divide the furniture between them by arrangement;
(6) that of the value of the former matrimonial home, the sum of $50,000 be declared to be attributable to the provision of maintenance for the wife by the husband.(5) that the wife transfer to the husband at the husband's direction the proceeds of the joint bank account held by the parties with the St George Bank;
22 The Affidavit of Understanding by Mr Gruber stated that the Draft Minutes of Proposed Orders were a written agreement between himself and his wife for the settlement of all financial matters between them. It recorded that he was ‘personally convinced’ that the agreement was fair.
23 Mrs Gruber arranged for one of her adult children to transport the documents to her husband in Canada. The arrangement was that Mr Gruber's signature would be witnessed by Mr W. Martin Finch, from a firm of lawyers in British Columbia.
24 After the documents were despatched to Canada for Mr Gruber's signature, Mrs Gruber had several telephone conversations with Mr Ross or his secretary. Mr Ross' records show that there were six telephone calls to or from her during the period from 14 March to 7 April 1994. On 19 March she called Mr Ross' secretary to report that she had heard from her husband and, according to the secretary's file note, ‘all [was] organised’. On 23 March she reported that her husband would not sign the documents because the property was described as being located in Sans Souci rather than Ramsgate. It appears that this problem was overcome by Mr Finch altering the documents by hand and having Mr Gruber initial the alteration. Her daughter inquired later about when the hearing would take place.
26 Mr Gruber gave an account of his signing the documents in submissions which he handed up at the hearing before me. He said:25 Clearly Mrs Gruber was pressing for court approval of the property settlement to take place with expedition. There is nothing in the evidence to indicate that she had any pressing need for the orders to be made, in terms of her own personal position. She did not intend to sell the property, but simply to continue living there. In my opinion, her conduct suggests that she was aware that the civil proceedings in British Columbia were advancing towards hearing in the near future. Her conduct is consistent with her being aware that the proceedings were at that stage listed for hearing on 25 April 1994.
‘It was late March of 1994. I remember that day as it were yesterday. I was paged on the camp public address system and told to come up to ‘Visits’. On arrival, I was told that an attorney was asking for me. I had no idea of who he was or what he wanted of me. I had a feeling of great unease. There are chaps being called up there to receive their ‘Dear John’ letters nearly every other day; this time just happened to be mine. The man asked me to read then sign the documents from Kogarah Local Court releasing my share of the property at 102 Ramsgate Road to Mrs Gruber. It said nothing about a divorce being considered, but I knew that would be next. What was I to do? At one time, a good marriage; gone. There were no other options; I signed the papers. As if in sympathy with my feelings, an Arctic storm hit the camp shortly after. It snowed for days with a high wind that swirled the falling flakes into round tubes higher than the buildings. Nothing moved for days. Guards were snowbound right there with us, unable to return home, sleeping wherever they could. The inmates all curled up on their bunks and slept, most of all, me.’
27 I reject Mr Gruber's account. It is inconsistent with the view of Mr Finch, mentioned below, that Mr Gruber was not under any duress. It is inconsistent with his answers to interrogatories in which he said that ‘a lawyer came to the prison at some time during my sentence but I cannot recall his name nor when this was’. More importantly, it is incompatible with his letter to the court written about two weeks later, in which he expressed concern about ‘saving our old family home in Australia, our last earthly possession and only shelter for our old age’, and he referred to his ‘very dear and loving wife of twenty-one years’.
29 Mr Ross then filed the Family Law Act application with the Local Court at Kogarah. On 6 May 1994 the Court heard the application and made orders in accordance with the Draft Minutes of Proposed Orders. Mr Ross appeared on behalf of the applicant, Mrs Gruber, and mentioned the matter on behalf of Mr Gruber.28 The documents were subsequently returned to Mr Ross under cover of a letter from Mr Finch. The documents had been signed by Mr Gruber and witnessed by Mr Finch. The letter reported the opinion of Mr Finch that Mr Gruber was of sound mind and under no duress, and appeared to understand the documents and their effect, when they where explained to him.
Implementation of the Local Court orders
30 On 9 May 1994 a memorandum of transfer of the property at 102 Ramsgate Road Ramsgate, prepared in accordance with the Local Court's orders and previously signed by Mr and Mrs Gruber, was lodged at the Land Titles Office. It was registered on 30 May 1994.
31 Apart from the transfer of the Ramsgate Road property, it appears that nothing tangible was done to implement the orders made by the Court in the property settlement. The Local Court's orders required Mrs Gruber to transfer a Nissan van to Mr Gruber. But according to Roads and Traffic Authority records he already owned the van, having acquired it in 1989. The van was subsequently acquired by Speed-E-Gas (NSW) Pty Ltd on 11 November 1997. Nothing appears to have been done to confirm that the repair business was owned by Mr Gruber, although probably nothing needed to be done. Nothing appears to have been done to transfer the proceeds of the St George bank account at the direction of Mr Gruber.
33 In fact, Mrs Gruber went to Canada again in June 1994 and remained there until Mr Gruber's release from gaol in July 1997. She visited Mr Gruber in gaol each week. While she was in Canada, her daughter and her son resided in the Ramsgate house.32 The orders directed the parties to divide the furniture between them, but in fact the furniture remained in the Ramsgate Road property and was used there by Mrs Gruber. Upon its proper construction, the order to ‘divide’ the furniture was not satisfied by Mrs Gruber retaining all of the furniture. I reject Mr Ross' somewhat hopeful construction to the contrary.
Commencement of the present proceedings
34 Ms Langdon's Canadian lawyers, Schroeder & Co, were aware of the possibility of recovery against assets in Australia from an early stage. On 9 November 1992 they made contact with Australian lawyers, PA Somerset & Co, and arranged for a search to be conducted, which established that the property at 102 Ramsgate Road was at that stage held jointly by Mr and Mrs Gruber. Mr Somerset reported on 12 November 1992 that the property would be unlikely to be worth less than $200,000, but that since the property was in joint tenancy, the value of Mr Gruber's interest would be ‘very dubious’. No caveat was lodged at that stage. Nothing further appears to have been done for three years.
35 On 26 September 1995 Schroeder & Co wrote again to Mr Somerset informing him that judgment had been obtained in British Columbia, and instructing him to proceed immediately to execute the judgment against the Ramsgate property. Mr Somerset reported that, according to his property search, the property at 102 Ramsgate Road had been transferred to Mrs Gruber pursuant to a court order. He explained that registration of the Canadian judgment would be reasonably complex and costly, and outlined the procedure. He expressed the opinion that there would be no point in registering the judgment and incurring further costs unless Mr Gruber had other assets in Australia. Schroeder & Co replied on the same day, drawing attention to the Fraudulent Conveyance Act of British Columbia, which is in similar terms to s 37A of the Conveyancing Act 1919 (NSW). Eventually the present proceedings were initiated for relief under that section.
37 In his submissions at the hearing before me, Mr Gruber sought to give an account of a telephone conversation between him and Mrs Gruber and Ms Langdon's husband on 18 March 2000. Mr Gruber claims that in this conversation Ms Langdon's husband said that he and his parents were now being accused by Ms Langdon of sexually assaulting her children, and gave an account of circumstances which led him to believe that Ms Langdon had lied at Mr Gruber's criminal trial. The husband also admitted to assisting Ms Langdon to initiate the present proceedings. Mr Gruber's account of the telephone call was not put into proper evidentiary form. I formed the view that evidence on that subject would be irrelevant. At most, it might undermine Ms Langdon's evidence in the criminal or civil proceedings in Canada. As far as the present proceedings are concerned, the judgment in the Canadian civil proceedings must be taken to constitute Ms Langdon as a creditor of Mr Gruber, and the issue is whether the defendants have sought to defeat her as a creditor contrary to New South Wales law.36 Ms Langdon commenced the present proceedings by summons filed on 13 June 1996. Subsequently she filed a statement of claim. Initially Mr Ross appeared on behalf of both defendants, but he filed a notice of ceasing to act for Mr Gruber on 25 November 1998. Mr Gruber endeavoured to obtain legal assistance through the New South Wales Bar Association's voluntary scheme. The administrator of the scheme was advised by counsel that if Mrs Gruber was represented at the hearing, Mr Gruber had no independent interest of a kind that would require separate representation. Consequently, Mr Gruber was unrepresented at the hearing. Ms Langdon amended her statement of claim, by leave, at the hearing, and Mrs Gruber filed a statement of defence on 24 May 2000. No statement of defence has been filed by or on behalf of Mr Gruber.
The claim to relief in the present proceedings
38 By her amended statement of claim, Ms Langdon contends that the consent orders in the Kogarah Local Court were obtained by her father for the purpose of putting his share of the Ramsgate property out of the reach of creditors, and in particular, out of her reach, so that Mrs Gruber could continue to reside there and he could join her there after his release from prison. She alleges that he intended to defeat her right to recover the Canadian judgment debt against the Ramsgate property. She claims that Mrs Gruber had notice of Mr Gruber's purpose and intention, or that she shared the same purpose or intention, or that she knowingly participated in Mr Gruber's scheme. She asserts that the transfer of the Ramsgate property is voidable under s 37A of the Conveyancing Act 1919 (NSW).
40 The relief sought by Ms Langdon is as follows:39 Ms Langdon also claims that the property settlement approved by the consent orders of the Local Court was a sham or device to conceal Mr Gruber's purpose and intention, the Local Court's orders being obtained by material non-disclosure or concealment of a material fact, namely the existence of the Canadian civil proceedings which were then pending.
41 Proposed orders 7A and 7B are as follows:
(1) declarations that the instrument of transfer of Mr Gruber's interest in the Ramsgate property to Mrs Gruber is voidable, and that (pending rectification of the Land Titles register) Mrs Gruber holds an undivided one-half share in the Ramsgate property on trust for Mr Gruber;(2) either an order that Mrs Gruber transfer an undivided one-half share in the Ramsgate property to Mr Gruber as tenant in common, or an order that the transfer of Mr Gruber's interest to her be set aside and that the Land Titles register be rectified to show Mr and Mrs Gruber as the owners of the property as joint tenants;
(4) either order 7A or order 7B.(3) an order restraining Mr and Mrs Gruber from dealing with the Ramsgate property for a sufficient time to enable Ms Langdon to have her Canadian civil judgment registered in New South Wales, and requiring them to give one month's notice to Ms Langdon's Canadian lawyer before dealing with the Ramsgate property after registration of the Canadian judgment;
42 By her defence, Mrs Gruber contends that she acquired Mr Gruber's interest in the Ramsgate property in good faith, without notice of any intention on his part to defraud Ms Langdon. She alleges that she acquired Mr Gruber's interest in the Ramsgate property for valuable consideration, as set out in the consent orders of the Local Court. She contends that she was, therefore, a ‘purchaser’ of Mr Gruber's interest in good faith without notice of any intent to defraud creditors, and is therefore protected by s 37A(3).
‘7A. An order that following upon any judgment in favour of the plaintiff in these proceedings, the proceedings be adjourned to enable the plaintiff to apply to the Local Court at Kogarah to set aside the consent orders made on or about 6 May 1994 in the first defendant's application for property settlement No 65 of 1994 or alternatively, an order directing the defendants to make such an application to the Local Court.
‘7B. Alternatively, orders that the property be sold by public auction (if not sold beforehand) before 30 July 2000 and the proceeds divided equally between the first and second defendants, and, an order that the second defendant's share of the proceeds be forthwith applied in satisfaction or partial satisfaction of the plaintiff's judgment against the second defendant for $CDN 900,500 and for the costs of these proceedings.’
The evidence of Mrs Gruber
43 One of the main factual issues in this case relates to Mrs Gruber's knowledge of, and collaboration with, Mr Gruber's intention at the time of the transfer. She gave affidavit and oral evidence to the effect that she had no notice of any intention to defeat the claim being brought by Ms Langdon in the Canadian civil proceedings. Ms Langdon submits that the Court should find that Mrs Gruber deliberately gave false evidence.
44 Having listened to Mrs Gruber's evidence and observed her demeanour in the witness box, and having subsequently considered the transcript of her evidence, I am persuaded that Ms Langdon's submission is correct.
45 First, her denial that she had any discussion with her husband before execution of the property transfer, or any contact with him at all after he was imprisoned and she returned to Australia, was implausible. They had been married for about 18 years at that time, and other evidence indicates that they were on close terms and that she believed in his innocence. It is almost inconceivable that in those circumstances she would have proceeded with the court application with no prior communication. On the contrary, the circumstances make it likely that she would have had quite detailed discussions or correspondence with him. His letter to the Canadian judge of 9 April 1994 shows that, at about the time she was instructing Mr Ross, he was very concerned that ‘these people’ would attempt to pry the family home in Australia, the last earthly possession of himself and his wife and their only shelter for their old age, out of their hands. It is plausible that he would have shared that concern with her, and that they would have worked together to avoid that consequence.
46 Mrs Gruber's evidence that there was no such contact is inconsistent with other evidence. She told Mr Ross, according to him, that she had agreed with her husband to divide their property, and instructed him to prepare the Local Court documents as consent documents. His evidence implies that she was fully aware that a property settlement was open to her, and aware of the effect of making such a settlement. According to a file note, she telephoned Mr Ross' secretary to say that the signing of the transfer by Mr Gruber was ‘all organised’, implying that she had been in contact with him. She denied making this telephone call. I prefer the evidence of the file note.
47 Mrs Gruber denied knowledge of the pending Canadian civil proceedings at the time when she instructed Mr Ross. However, she had been in attendance during the criminal trial and on the day of sentencing, and assisted with the payment of the legal costs of the trial. She regularly visited her husband in Canada. She admitted in cross-examination that the Local Court order gave her ‘the security that I can stay there and in my place, its mine’.
48 Her evidence that she wished to divorce her husband was rendered implausible by other evidence. She had no discussion about divorce with Mr Ross, and gave him no instructions concerning a legal separation agreement. Only three weeks after the property settlement she returned to Canada, using most of their remaining savings to do so.
50 She was evasive and prevaricated in her oral evidence when questioned about the Nissan van and about where she deposited her pensions and allowances. She initially said that she had sold the van after the Local Court orders were made because she needed the money. Then she said that the purchaser had given it back to her in August 1997, without naming the purchaser. Later she admitted that she had sold the van to her husband's employer and that she and her husband were using it and paying for its registration. Although she said that she sold the van before going to Canada in 1994, the external evidence from Roads and Traffic Authority documents show that a transfer was not registered in the name of Speed E Gas until 1997.49 She denied that she wished to avoid losing her home to satisfy the judgment against her husband. However, she admitted that she wanted the security of staying in the home, and that she was concerned about how she would manage financially after her husband went to gaol, and that she wanted to keep the home intact for the sake of her children and would be sorry to see the house go. She also said, presumably as an account of her thinking and feelings at the time when the signed transfer and Local Court papers were returned from Canada, ‘I want that house, I have worked for it, I want to live here ...’.
51 The following provisions of the Conveyancing Act are relevant:
Voidable dispositions
52 The section derives from the Fraudulent Conveyances Act of 1571, 13 Eliz. c. 5, which in turn has been said to be merely declaratory of the previous general law: Rickards v Attorney-General (1844) 12 Cl&F 42, [8 ER 1306]. Although the section speaks of an intent to ‘defraud’ (a word which could have been construed narrowly), it has been given a broad operation. According to Kerr on the Law of Fraud and Mistake (7th ed by DL McDonnell and JG Monroe), p 302, ‘the one great object of this section is to prevent debtors from dealing with their property in any way to the prejudice of their creditors’. The statute ‘cannot proceed on too liberal a construction, or be too much extended, in suppression of fraud’: Cadogan v Kennett (1776) 2 Cowp 434, [98 ER 1171], per Lord Mansfield CJ.
37A(1) Save as provided in this section, every alienation of property ... with intent to defraud creditors shall be voidable at the instance of any person thereby prejudiced. ...
(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.’
The correct approach to the construction of s 37A
Meaning of ‘intent to defraud’
53 Consistently with the purposive approach to the interpretation of the section, the words ‘intent to defraud’ have been held to include an intention to defeat, hinder or delay, although if the transfer is for consideration, a real intent to defeat or delay creditors must exist: Electrical Enterprises Pty Ltd v Rodgers (1988) 15 NSWLR 473, 497. Even by the liberal standards of interpretation which are said to be applicable to s 37A, it is somewhat surprising that a provision which speaks of an ‘intent to defraud’ is said to be satisfied by an intent to defeat, hinder or delay. Perhaps the better way to put it is that if the debtor acts so as to defeat, hinder or delay creditors and thereby to prejudice them by putting his property beyond their reach temporarily or permanently, there are grounds for the Court to infer that the debtor has acted with a dishonest intention: Lloyds Bank v Marcan [1973] 3 All ER 754, 759 per Russell LJ.
54 It is not necessary to prove all of the ingredients of the tort of deceit. In Lloyds Bank v Marcan , at 760-1, Cairns LJ said that a dishonest intention must be shown, at any rate where the conveyance is for consideration. But in Australia, at least, it is not necessary for the plaintiff to bring actual proof that the debtor had in his or her mind an intention to defraud creditors; if it appears from evidence of all the circumstances that the transfer might be expected to have that effect, and has had that effect, the Court will attribute fraudulent intention to the debtor: Re Trautwein (1944) 14 ABC 61; P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515, 523-4; Cannane v J Cannane Pty Ltd (In Liq) (1998) 192 CLR 557, 566. However, the onus of proof of intent to defraud is on the plaintiff: Williams v Lloyd (1934) 50 CLR 341, 372.
55 If the conveyance is voluntary, it is easier to infer a dishonest intention than when it is made for consideration: Freeman v Pope (1870) 5 Ch App 538. And if the defendant chooses not to give evidence, the Court can be bold in drawing inferences along the lines considered in Jones v Dunkel (1959) 101 CLR 298: SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288, 293.
57 As a matter of construction of the section, the relevant intention is the intention of the transferor, although the intention of the transferee is relevant to the defence in s 37A(3), because a transferee who shares the transferor's intention to defraud creditors cannot be a purchaser in good faith without notice.56 There is Canadian authority for the proposition that, where the parties to the conveyance of property are related and the circumstances are suspicious, there is a presumption that the transfer is voidable: Laurentian Bank of Canada v Glover (Ontario High Court, unreported, 28 July 1998, p 9, citing Koop v Smith (1915) 25 DLR 355 (Supreme Court of Canada)). This probably means no more than that a transferor and transferee being related is a factor relevant to the court's decision on the transferor's intention.
‘Creditors’
58 At the time when Mr Gruber executed the transfer of his interest in the Ramsgate property, and at the time of lodgement and registration of the transfer, Ms Langdon was not his creditor. She became a creditor only when judgment was entered in her favour, more than a year later. This raises the question whether a transfer made with intent to defraud a person who subsequently becomes a creditor falls within s 37A. In my opinion, the section applies in such a situation. It is not necessary to take a particularly liberal construction to reach that conclusion, as long as one bears in mind the purpose of the section. Here the transfer was of Mr Gruber's only significant asset, and he executed it at a time when he expected the hearing of the Canadian civil proceedings to be imminent. He had been advised by his Canadian barrister not to attempt a defence of the proceedings because it would be futile. Therefore, there was a strong likelihood (and he understood that there was a strong likelihood) that a verdict would be entered against him in the relatively near future. If, in such circumstances, Mr Gruber transferred his interest in the property in order to remove it from the reach of Ms Langdon, it would be no distortion of the statutory language to say that he did so with the intention of defrauding her in her capacity as a creditor. The section does not literally require that the persons intended to be defrauded must all be creditors at the time of the transfer. To impose that construction on the statutory language would be to remove from its scope a situation falling squarely within the legislative policy and the object of the section. It is enough, in other words, that the intention is to defraud a person whose claim is likely to mature into a debt in the immediate or foreseeable future.
60 There is more direct authority, however, in Silvera v Savic (1999) 46 NSWLR 124. In that case proceedings were commenced against the defendant in the District Court for assault. Some months later, but before the hearing, consent orders were made under the De Facto Relationships Act 1984 (NSW) (as it then was) in the Local Court, the effect of which was to transfer substantially all of the defendant's assets to a de facto wife. The plaintiff obtained a judgment in the District Court and applied to the Supreme Court under s 37A of the Conveyancing Act to avoid the transfers pursuant to the consent orders. Counsel for the plaintiff submitted to Hodgson CJ in Eq that s 37A may apply even if the debts in question are not in existence or even in contemplation at the time of alienation (at 133). His Honour had no difficulty in applying the section notwithstanding that the judgment in the assault proceedings was obtained after the property had been transferred.59 Case law supports this conclusion. One of the acts of bankruptcy in s 40 of the Bankruptcy Act 1966 (Cth) is where the debtor departs or remains out of Australia ‘with intent to defeat or delay his or her creditors’(s 40(1)(c)(i)) . In Barton v Deputy Commissioner of Taxation (Cth) (1974) 131 CLR 370, Stephen J held (at 374) that an intent to defeat or delay one or more existing or anticipated creditors was a sufficient intent for the purposes of that provision. Consequently, an act of bankruptcy could be committed by a person who departed from Australia whilst aware of an impending income tax assessment. Section 121(1) of the Bankruptcy Act provided, before the 1996 amendments, that ‘a disposition of property ... with intent to defraud creditors, not being a disposition for valuable consideration in favour of a person who acted in good faith, is, if the person making the disposition subsequently becomes bankrupt, void as against the trustee in the bankruptcy’. In P T Garuda Indonesia Ltd v Grellman , the Full Federal Court applied the reasoning in the Barton case to s 121, making it clear that in their opinion, the same reasoning applied to s 37A.
A voluntary transfer?
61 The question whether Mr Gruber's transfer of his interest in the Ramsgate property was for valuable consideration or voluntary, is relevant in two ways. First, as I have indicated, in determining whether an alienation has occurred with intent to defraud creditors, the Court takes into account whether the alienation was voluntary or for value, and is more willing to find a dishonest intention where the transfer is voluntary. Secondly, the defence in s 37A(3) is available only to a ‘purchaser’, defined in s 7 of the Conveyancing Act to mean a person who acquires an interest in or charge on property for money or money's worth. Therefore, if the transfer by Mr Gruber was voluntary, and the ingredients of subsection (1) are made out, Mrs Gruber has no defence.
62 Mrs Gruber submits that the transfer was for valuable consideration. She says that the transfer was one element of a settlement of property and spouse maintenance rights under the Family Law Act. Other elements included the orders with respect to the Nissan van, the proceeds of the joint bank account, the furniture, and Mr Gruber's interest in the business known as Gruber Radio and TV. The settlement also provided that an amount of $50,000 of the value of Mr Gruber's interest in the Ramsgate property was to be attributable to the provision of spousal maintenance for Mrs Gruber by Mr Gruber. Mrs Gruber did not make any claim for maintenance for six years, and she says this was in reliance on the settlement in her favour.
63 On the face of it, the transfer was part of a settlement under the Family Law Act and there were elements of valuable consideration supplied by Mrs Gruber in the overall settlement arrangements. But Ms Langdon says that the property settlement, and the consent orders reflecting it, were obtained by material non-disclosure, or by concealment of a material fact from the Local Court. This is because the application stated that there were no proceedings pending against the parties, and the supporting documents signed by the parties did not disclose the Canadian civil proceedings. Therefore, says Ms Langdon, the property settlement was a sham or a device to conceal the purpose and intention of Mr Gruber, shared by his wife, to defeat Ms Langdon's claim.
64 In support of this submission, Ms Langdon says that the relationship between Mr and Mrs Gruber had not broken down and they had no reason to make a property settlement at that time; and that their intention was to continue to reside in the property as soon as Mr Gruber was released from gaol. Mr and Mrs Gruber did not, according to Ms Langdon, act on the consent orders except by transfer of the property to Mrs Gruber. In fact, Ms Langdon says, Mrs Gruber acted inconsistently with the consent orders by not dividing the furniture and by selling the Nissan van. The effect of the settlement, says Ms Langdon, was that Mr Gruber was left with no substantial assets from which to meet Ms Langdon's claim.
65 It cannot be said, in my view, that the Local Court orders were a mere sham. Orders of a Local Court are valid unless set aside (Local Court (Civil Claims) Act 1970 (NSW) s 69 (1)), and generally speaking, it is for the Local Court rather than this Court to set aside its orders, in the absence of any appeal or case for certiorari: Silvera v Savic , at 139-140. As long as the Local Court orders stand, it cannot strictly be said that the transfer was a voluntary transfer.
67 That being so, my view is that while this is not strictly a case of voluntary transfer, the fact that no consideration has been received by Mr Gruber for the transfer is highly relevant to the determination of whether there was an intent to defraud. On the other hand, my opinion is that Mrs Gruber was a ‘purchaser’ because the property settlement consented to by the parties and implemented in the Local Court orders involved executory consideration on her part.66 However, it is established by the evidence, in my view, that the provisions of the Local Court orders other than for the transfer of property were not implemented. Mr Gruber has in fact received nothing in exchange for the transfer of his interest in the Ramsgate property. I accept Ms Langdon's submission that the evidence shows that the orders with respect to the Nissan van, the furniture and the bank account have not been implemented at all. Nothing has been done about Mr Gruber's business, which always belonged to him but became virtually valueless (apart from some minor items of equipment) once he was sent to gaol. I do not accept that, had the property settlement not taken place, Mrs Gruber would have claimed, or recovered, any maintenance payments from Mr Gruber beyond what she in fact received through his use of their joint account to deposit his prison wages. Therefore, while the transfer was not strictly voluntary, Mr Gruber has not received any valuable consideration in respect of it, and there is no likelihood that he will do so.
‘Intention to defraud’ in the present case
68 In my opinion, it is very clear that Mr Gruber took part in the process of ‘alienation’ of his interest in the Ramsgate property with intent to defraud Ms Langdon's claim in the pending Canadian proceedings. For the reasons I have given, that amounts to an alienation with intent to defraud creditors for the purposes of s 37A(1). For the purposes of these conclusions, the ‘alienation’ of Mr Gruber's interest in the Ramsgate property comprised his agreeing with Mrs Gruber to consent to orders under the Family Law Act and executing documents accordingly, the making of those orders by the Kogarah Local Court, and the registration of an instrument of transfer accordingly.
69 The cases demonstrate that an intention to defeat or defraud a creditor may be inferred from the surrounding circumstances. In present case there is some direct evidence of Mr Gruber's intention, and the surrounding circumstances point unequivocally to such an intention.
70 The direct evidence is in Mr Gruber's two letters to the British Columbia Court, to which I have referred, and his answers to interrogatories. They show that Mr Gruber had been advised that any attempt to defend the Canadian civil proceedings would be futile, and also that Mr Gruber was very concerned to prevent Ms Langdon from prying away his only substantial asset, the Ramsgate home.
71 Mrs Gruber instructed Mr Ross at a time Mr Gruber must have regarded as a critically important time, since at that stage he believed that the Canadian hearing was imminent. Finding, as I do, that Mrs Gruber was in communication with her husband, the fact that she pressed Mr Ross to proceed as soon as possible supports the view that Mr Gruber had an intention to defeat Ms Langdon's claim.
73 Mr Gruber has put on no defence in answer to the allegation of fraud, although he was represented by solicitors until November 1998 and notwithstanding the directions of the Court that affidavits be filed. Nor has he put on any evidence in answer to the allegation of fraud, despite his former legal representation and the directions of the Court that affidavits be filed. He has offered no explanation for making the transfer, except for the false claim that he felt compelled to sign the documents as a prelude to divorce. His failure to give affidavit or oral evidence in these proceedings supports the Jones v Dunkel inference that his evidence would not assist his or Mrs Gruber's case.72 The alienation was of virtually all Mr Gruber's assets. It was made in favour of his wife, with whom he was on close terms at all relevant times. He received no valuable consideration for it, as I have said. The transfer did not, and was not intended to, deprive him of the use of the Ramsgate property as his home, after his release from gaol.
Mrs Gruber's position
74 I have found that Mrs Gruber was capable of being regarded as a ‘purchaser’ for the purposes of s 37A(3). The question is whether she was a purchaser in good faith without notice of Mr Gruber's intention to defraud or defeat Ms Langdon's claim.
75 My conclusion as to Mrs Gruber's credit means that her oral evidence cannot be trusted. I infer from the circumstances that, in all probability, she actively participated with Mr Gruber in forming the intention to defeat Ms Langdon's claim. But at the very least she had actual notice of his intention.
76 Counsel for Mrs Gruber submitted that it was not open to the Court to find that Mrs Gruber shared or participated in her husband's dishonest intention, because that proposition had never been put to her in cross-examination. However, counsel for Ms Langdon put it to Mrs Gruber that she was insecure about her interest in the house because she knew Ms Langdon was about to get a judgment that could be enforced against Mr Gruber. In my opinion, that is sufficient to give Mr's Gruber the opportunity to give evidence that she did not share her husband's dishonest intention. She denied the proposition put by counsel, but I do not believe her.
78 Counsel for Ms Langdon submitted that Mrs Gruber had imputed notice of Mr Gruber's intention because of the constructive notice possessed by Mr Ross. The basis for this is the contention that Mr Ross acted for both parties on the application to Kogarah Local Court. However, I am not satisfied that this was so. He mentioned the matter in court for Mr Gruber, but that does not mean that he purported to appear for Mr Gruber. Further, even if Mr Ross acted for both parties, I do not accept that he had constructive notice of Mr Gruber's intention to defraud his daughter's claim. I do not see any basis for concluding that Mr Ross was under an obligation to make further inquiries which would have discovered the existence of the Canadian civil proceedings. I therefore do not accept the submission that Mrs Gruber had imputed notice of her husband's fraudulent intention, although it is strictly unnecessary to deal with the point because I have found that she participated in his fraud or had actual notice of it.77 Mrs Gruber was, I have found, on close terms with her husband at all relevant times. She said that in 1994 she had decided that she wanted to be alone, but I do not accept that evidence. It is self-serving, I do not regard her as a credible witness, and there is other evidence pointing to a continuing close relationship up to 1997 and beyond (in addition to matters already mentioned, there are the representations by Mr Gruber to the Canadian parole board). She stayed in Canada after Mr Gruber was imprisoned, believing in his innocence and visiting him approximately weekly. She returned to Australia for a period of time during which she put the property settlement in place, and then returned to Canada, against visiting him regularly. He was very concerned about saving the Ramsgate property from Ms Langdon's claim, as I have found, and I reject Mrs Gruber's evidence that the matter was not discussed between them. She instructed Mr Ross than a property settlement had been agreed, and then sought to have her instructions implemented as soon as possible. After the making of the consent orders she did nothing, apart from registration of the instrument of transfer, to act in accordance with the orders. In the result, she was a willing and active participant in the fraudulent alienation of the Ramsgate property. For the same reasons, she at the very least had actual notice of Mr Gruber's intention to defraud Ms Langdon's claim.
Effect of the Local Court orders
79 A problem arises in the present case because Mr Gruber transferred his interest in the Ramsgate property pursuant to orders of the Kogarah Local Court under the Family Law Act. If the Court intervenes under s 37A, it might be said to be acting inconsistently with those orders. On the assumption that this Court cannot set aside the orders made by the Local Court, Ms Langdon has suggested, as an alternative to direct intervention, that orders be made requiring an application to the Kogarah Local Court to set aside its orders.
80 In Re Baxter; ex parte The Official Receiver (1986) 10 FCR 398 a husband and wife entered into a terms contract to purchase real property. Subsequently the husband became bankrupt, and some years later the wife obtained a declaration by the Family Court under s 78 of the Family Law Act that she was the sole proprietor of the property, and an order that the husband transfer his interest to her. The question for the Federal Court was whether it should consider an application by the Official Receiver for relief on the basis that the Family Court order did not bind him. Northrop J referred to the extensive authorities supporting the proposition that an order of the Family Court made after the bankrupt's property has vested in a trustee in bankruptcy does not affect the trustee's title. However, he decided that the Federal Court should refrain from hearing the application while the Family Court order remained in existence, since to do so might lead to conflicting orders of the Federal Court and the Family Court.
81 However, in Silvera v Savic Hodgson CJ in Eq took a different approach. In that case, as in the present case, the transfer was made pursuant to an order of a Local Court, although the order was made under the De Facto Relationships Act rather than the Family Law Act. His Honour distinguished Re Baxter , pointing out that in Re Baxter there was a plain inconsistency between the orders made in the Family Court and the orders sought from the Federal Court. In the case before his Honour, however, the Local Court order did no more than require the transfer of particular property from one person to another. While an order directly setting aside the transfer made pursuant to the Local Court order would be inconsistent with that order, s 37A could be given effect to by other means.
82 His Honour identified four ways of giving effect to s 37A in such a case:
· First, the Court could declare that the effect of the Local Court order was spent by reason of its being carried out through the transfer of the property, and could then order appropriate re-transfers of the property. The re-transfer of the properties would be followed by writs of execution and possible sale by the sheriff. That may not be the most effective way to satisfy the plaintiff's rights.
· Therefore, a second approach would be to make declarations and/or orders that would have the effect of bringing about an early sale of the property and the application of the proceeds of sale towards the plaintiff's debt.
· Thirdly, his Honour found that the ‘alienation’ rendered voidable by s 37A in the case before him was the whole process of obtaining the Local Court order and the consequent transfer. Without expressing a final view, his Honour thought that s 37A might itself be a source of jurisdiction for the Supreme Court to set aside an order of a Local Court obtained by fraudulent intent to defeat creditors.
· Finally, the Supreme Court could make a declaration and/or orders requiring one of the parties to make an application to the Local Court to set aside its order.
83 It seems to me that I should avoid Hodgson J's third suggested approach, given that his Honour did not make a final decision on the matter. The fourth suggested approach has the disadvantage that it involves some avoidable cost and delay. That leaves me to choose between the first and second approaches.
84 It seems to me that the first approach is clear and relatively unproblematic. The relevant order of the Local Court has, indeed, been spent by the execution and registration of the transfer of Mr Gruber's interest to Mrs Gruber. An order for the re-transfer of the property would clearly not be inconsistent with the Local Court orders in those circumstances. Such an order would give effect (in substance, though admittedly not perfectly) to Ms Langdon's equity under s 37A to avoid the transfer. Given that the joint tenancy has been severed, the appropriate order is that Mrs Gruber transfer an undivided one-half share to Mr Gruber as tenant in common.
85 In this case, execution will involve registration of the Canadian judgment, if it has not already occurred. Counsel for Mrs Gruber submitted that I should not make any order unless the Canadian judgment has been registered in this jurisdiction. However, registration of the judgment is not a prerequisite to my recognising Ms Langdon as a creditor of Mr Gruber, and therefore it is not a prerequisite of relief under s 37A. It is relevant only to the question of enforcement of the creditor's claim by execution against the debtor's assets.
87 Concerns of this kind may explain why, in Silvera v Savic , Hodgson CJ in Eq adjourned the matter after delivering his reasons for judgment, to see if agreement could be reached as to how the judgment could best be implemented. His Honour said (at 140) that if agreement could not be reached in a short time, he might order the re-transfer (in other words, pursue the first approach) but stay the orders for a short time in the hope that some other efficient means of dealing with the matter could be agreed. It seems to me, with respect, that this is the correct approach and I should follow it here.86 I appreciate the practical disadvantage that orders reflecting the first approach would then leave Ms Langdon to execute against the property. A forced sale by the sheriff may not maximise the return to the parties. However, I hesitate to impose the second approach on the parties. It seems to me that, unless they are made by consent, orders for the sale of the property and the application of Mr Gruber's half share of the proceeds towards Ms Langdon's judgment would go beyond the plaintiff's equity to set aside the fraudulent transfer. Further, orders of that kind might give Ms Langdon an unfair advantage over Mr Gruber's other creditors, if there are any at this stage.
Conclusions
88 Ms Langdon has made out her claim for relief under s 37A of the Conveyancing Act with respect to the ‘alienation’ of Mr Gruber's interest in the Ramsgate property, constituted by the agreement of Mr and Mrs Gruber, implemented by consent orders in the Local Court, and followed by a registered transfer. Mrs Gruber cannot avail herself of the defence in s 37A(3).
89 If necessary, I shall make the orders in paragraphs 1 and 3 of the amended statement of claim, declaring that the transfer is voidable and ordering Mrs Gruber to execute an instrument of transfer of an undivided one-half share in the Ramsgate property to Mr Gruber as tenant in common and lodge it for registration within seven days. In my opinion it is also appropriate to make an order along the lines of order 2 in the amended statement of claim, on the maxim that ‘equity regards as done that which ought to be done’. The order would declare that, pending registration of the transfer, Mrs Gruber holds an undivided one-half share in the Ramsgate property on trust for Mr Gruber.
91 I intend to stand the proceedings over for three or four weeks, following the approach taken by Hodgson CJ in Eq, in the hope that the parties can agree on an orderly procedure for satisfying Ms Langdon's claim, thereby avoiding a forced sale upon execution against the Ramsgate property. I shall direct Ms Langdon to bring in short minutes of orders at the next hearing, along the lines outlined above. The orders are to be made in the event that no such arrangements can be agreed. I shall hear any argument as to costs on that occasion, although at this stage I am inclined to order Mrs Gruber to pay Ms Langdon's costs of the proceedings, with no order for costs for or against Mr Gruber (given his limited role in the proceedings and at the hearing).90 I shall not make orders 4, 5, 7A or 7B in the amended statement of claim, for reasons already given. Order 6 would restrain Mr and Mrs Gruber from dealing with the Ramsgate property for such time as the Court may allow, to enable Ms Langdon to register the Canadian judgment in New South Wales, and thereafter it would restrain them from doing so unless they first gave one month's notice in writing to Ms Langdon's attorney in Canada. The justification for such an order is that it would prevent a possible abuse of process, and also prevent any further steps being taken by Mr and Mrs Gruber with an intent to defeat Ms Langdon's claim. It appears to me that an order in this form is appropriate. There is an analogy between such an order and a Mareva order, where it is necessary for the plaintiff to establish a danger that by reason of the defendant's dealing with or disposing of assets, the plaintiff will not be able to have her judgment satisfied: Patterson v BTR Engineering (Aust) Ltd (Court of Appeal of New South Wales, unreported, 7 December 1989). That has been established in the present case. While I should avoid taking any steps that would give Ms Langdon's unsecured debt priority over any other unsecured creditors of Mr Gruber, it is appropriate to restrict Mr and Mrs Gruber's freedom of disposition in this limited way, to give Ms Langdon the opportunity to take steps to protect herself. Since I intend to stand the proceedings over for some time before orders are made, only a very short period will be allowed in the order for registration of the Canadian judgment, assuming it has not been registered by that stage.
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