Li v Wang - [2020] SADC 97

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
LI v WANG
[2020] SADC 97
Reasons for Decision of His Honour Chief Judge Evans
29 July 2020
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL - PARTICULAR CASES
Application pursuant to s 191 of the Real Property Act 1886 to extend caveat over property until applicant's claim determined at trial. Respondent is the registered proprietor of land acquired during her marriage to the applicant. Applicant claims an interest in the land by having contributed to the acquisition, maintenance and improvement of the land. The respondent disputes the applicant has any interest in the land and says further, the Court does not have jurisdiction to hear the application for an extension of the caveat, as the Family Court has exclusive jurisdiction over the dispute. Further, the respondent asserts there is no prima facie case that the substantive relief sought is available and that the balance of convenience does not favour the extension of time for removal of the caveat.
HELD: Court has jurisdiction to hear Application. There is a prima facie case and the balance of convenience favours extending the caveat. Order that the time for the removal of the caveat be extended.
Real Property Act 1886 s 191; Family Law Act 1975 (Cth) ss 4, 31, 39, 44, 78, 79; Law of Property Act 1936 s 26, referred to.
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198; Nexus Mortgage Securities Pty Ltd v Mawson KLM Holdings Pty Ltd & Starmaker (No 51) Pty Ltd (1997) 193 LSJS 474; Stanford v Stanford (2012) 247 CLR 108; Hayes v O’Sullivan (2001) 24 WAR 40; Goldstraw v Goldstraw [2002] VSC 491; Day v Gould [2006] QSC 252; Paringawood Nominees Pty Ltd v Baulderstone [1999] SASC 380; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Acmnet Pty Ltd v AI Tel Pty Ltd [2007] SASC 96; Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137; Martin v Martin (1959) 110 CLR 297; Calverley v Green (1984) 155 CLR 242; Glynn v Commissioner of Stamp Duties (NSW) [1977] 2 NSWLR 673; Madison v Alderson (1883) 8 App Cas 467; Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd & Anor [1997] SASC 6391; JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282; McBride v Sandland (1918) 25 CLR 69; Regent v Millett (1976) 133 CLR 679, considered.

LI v WANG
[2020] SADC 97
Introduction

The respondent is the registered proprietor of certain land at Seaview Road, Lynton, South Australia, comprised in Certificate of Title Register Book Volume 5301 Folios 909 and 911 (‘the Property’).
The applicant claims an interest in the land and on 7 November 2019 caused a caveat to be lodged over the Property.
The respondent warned the caveat.
The applicant issued the within proceedings on 9 December 2019 seeking orders:
1 Extending the time for the removal of the caveat; and
2 That the respondent transfer the land to the applicant free of any mortgage or other encumbrance.
At the time of instituting proceedings, the applicant also filed an Interlocutory Application to extend the time for removal of the caveat until further order.
On 16 December 2019, this Court made an order extending the time for removal of the caveat until further order to enable the Interlocutory Application to be dealt with. Prior to making the order, the Court noted that it would make an order in those terms, but that it would not reverse or affect the onus of proof on the Interlocutory Application.
A timetable was set for the filing of affidavits and a hearing on the Interlocutory Application.
Three affidavits have been filed and read:
1      Affidavit of the applicant, Feng Li sworn 7 December 2019 (FDN 2);
2      Affidavit of the applicant, Feng Li sworn 27 February 2020 (FDN 7) (subject to the respondent’s objection to paragraphs 15 to 18 and exhibits FL2 and FL3);
3      Affidavit of the respondent, Dongling Wang sworn 14 February 2020 (FDN 6).
The matter came on for argument. I have also had regard to the initial written submissions of the parties and further written submissions filed by both parties following the hearing, in relation to the implications of the Family Law Act 1975 (Cth).
I am satisfied that the applicant has established a prima facie case or serious question to be tried in the sense referred to by the High Court in Australian Broadcasting Corporation v O’Neill[1] and that the balance of convenience favours the extension of the caveat until trial.
[1] (2006) 227 CLR 57 at [65], [70]; see also Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198, Cox J at 199, 203; Nexus Mortgage Securities Pty Ltd v Mawson KLM Holdings Pty Ltd & Starmaker (No 51) Pty Ltd (1997) 193 LSJS 474, 477, 479.
Background Facts
The applicant and respondent were married but are now divorced. They were married in China in June 1999.
Divorce proceedings were filed in Australia on 9 March 2018 and a divorce was granted on 4 August 2018.
The respondent commenced property settlement proceedings in China in March 2019. The parties are awaiting a decision from the Court in China. The respondent asserts the value of the matrimonial assets to be determined in China is the equivalent of something in excess of $211 million. No matrimonial property proceedings have been instituted in Australia.
The caveatable interest claimed by the applicant is:
To be beneficially entitled to an estate or interest in fee simple some at present indefinable share or shares in the land above described by virtue of having contributed to the acquisition, maintenance and improvement of the said land.
The Property was purchased, whilst the parties were married, on 4 August 2011 for $1,020,000. At the time of purchase, the respondent was living permanently in Australia with her two children. The applicant was living in China and visiting Australia from time to time. There has been, at all material times, a home on the Property.
There is a dispute as to who paid the purchase price for the Property. The applicant says he paid; the respondent denies that and asserts she paid for it from her savings and paid off the then mortgage in April 2016.
The applicant asserts that in July 2018, prior to the divorce, he reached an agreement with the respondent to transfer the Property to him.
The applicant says that in July 2018 he agreed to pay the respondent $1.2 million to enable her to purchase a property for her own use and that she would transfer the Property to him.
Pursuant to that agreement, and in part performance of it, the applicant says he transferred the equivalent of Australian $1.2 million plus the costs associated with the conversion of that money from Chinese to Australian currency.
The applicant says these payments were solely and exclusively to enable the respondent to purchase a property for her own use. The applicant alleges that he demanded the Property be transferred to him on the respondent’s return to Australia. Despite his demands, the applicant says that the respondent did not transfer the Property into his name on her return to Australia.
The applicant asserts that the respondent moved out of the Property in August 2018, but still refused to transfer the Property to him. The applicant further asserts that the respondent did not move back into the Property until December 2018.
The respondent disputes that there was such an agreement and, in effect, says the transfer of the $1.2 million and costs to her was by way of a ‘business loan’ to her to meet her and her children’s living expenses.
On his return to Australia on 17 October 2019 the applicant saw a for sale sign on the Property and ascertained that the Property had been mortgaged.
Jurisdiction
Does this Court have jurisdiction to hear and determine this matter given that the parties were married at the time the Property was purchased? The parties were divorced on 4 August 2018.
The Family Law Act (s 44) allows for property settlement proceedings to be instituted within 12 months of a divorce (with an ability to apply for an extension of time). No property settlement proceedings have been instituted by either party. There has been no application to the Family Court of Australia in relation to property of the marriage although property proceedings, apparently in relation to the Chinese property, were commenced in China by the respondent on 13 March 2019.
I have been referred to a number of conflicting authorities dealing with the issue of whether this Court has jurisdiction to extend a caveat in circumstances where the property was acquired during a marriage and there is, on divorce, a dispute as to its ownership. That is, does the Family Court have exclusive jurisdiction over the claim because the underlying interest claimed is a ‘matrimonial cause’ within the provisions of the Family Law Act.[2]
[2] See definition s 4, s 39.
Under s 4 of the Family Law Act, matrimonial cause means, relevantly in this case, proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings arising out of the marital relationship or in relation to concurrent, pending or completed divorce proceedings or validity of marriage proceedings between the parties. Proceedings is defined to mean proceedings in a ‘court’; ‘court, in relation to any proceedings, means the court exercising jurisdiction in those proceedings by virtue of [the Family Law Act]’.[3]
[3] s 4(1) of the Family Law Act.
Under s 31 of the Family Law Act, jurisdiction is conferred on the Family Court with respect to, relevantly, matters arising under the Family Law Act in respect of which matrimonial causes are instituted or continued under that Act. In the present case, there has been no relevant matter arising under the Family Law Act in respect of which matrimonial causes have been instituted.[4]
[4] See also s 39 of the Family Law Act.
The nature of the caveat proceedings confirm this conclusion. On an application for the extension of time for the removal of a caveat, the Court does not determine finally the entitlement of the caveator to its interest in the land.[5] Rather, it is in substance an application to preserve the status quo while the rights of the parties are finally determined.[6] In these circumstances, it is difficult to see why this Court does not have the power to extend the caveat when proceedings under the Family Law Act have not been instituted.
[5] Nexus Mortgage Securities Pty Ltd v Mawson KLM Holdings Pty Ltd & Starmaker (No 51) Pty Ltd (1997) 193 LSJS 474 at 476.
[6] Ibid at 475.
The types of proceedings that may be instituted under the Family Law Act in relation to property of the marriage support the view that proceedings to extend the caveat may be heard by this Court. Section 79 of the Family Law Act confers on the Family Court a broad power when exercising jurisdiction to make a property settlement order. However, in Stanford v Stanford,[7] the High Court held that it is necessary to first consider (under s 79) whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. This is what is being determined in the current proceedings.
[7] (2012) 247 CLR 108.
An application may also be made, although less commonly, under s 78 of the Family Law Act for the Court to declare the rights of the parties in respect of property. Once such an application is made, an issue would arise as to whether this Court could make any determination of the parties’ interests in a property, but there could be no issue until such time arose.
There is considerable authority to the effect that a claim by one of the parties to a marriage for an interest in a property based on a constructive trust can be caveated even when Family Court proceedings are on foot.[8]
[8] See e.g. Hayes v O’Sullivan [2001] WASC 55 at [32]; (2001) 24 WAR 40; Goldstraw v Goldstraw [2002] VSC 491 at [26]-[30]; Day v Gould [2006] QSC 252.
I am satisfied that I have jurisdiction to hear the application to extend the caveat.
Legal Principles
The Court, on the application for an extension of time for the removal of a caveat, will apply the same test as that of an interlocutory injunction.[9] Therefore, the Court must determine whether there is a prima facie case in the sense described in the following paragraph and whether the balance of convenience favours an order extending the time for the removal of the caveat.[10]
[9] Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198 at 204; Nexus Mortgage Securities Pty Ltd v Mawson KLM Holdings Pty Ltd & Starmaker (No 51) Pty Ltd (1997) 193 LSJS 474 at 478-480.
[10] Ibid; Paringawood Nominees Pty Ltd v Baulderstone [1999] SASC 380 at [4], [14]-[16].
The applicant must make out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the end of the trial he will be entitled to relief.[11] The reference to a prima facie case does not mean that the applicant must show that it is more probable than not at trial he will succeed; it is sufficient that he shows a sufficient likelihood of success to justify in the circumstances the preservation of the status quo.[12]
[11] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 82 applying Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618.
[12] Ibid at 82.
The applicant must satisfy two further requirements, namely the balance of convenience (whether the inconvenience of damage that the applicant would likely suffer if the caveat is not extended, outweighs the inconvenience or damage that the respondent would suffer if the caveat is extended) and that damages are not an adequate remedy.[13] The onus lies on the applicant to satisfy these matters.
[13] Acmnet Pty Ltd v AI Tel Pty Ltd [2007] SASC 96 at [65] per Layton J.
The Courts have shown a willingness to impose a constructive trust requiring the legal owner of the land to hold land on trust for another in circumstances where the other person has made contributions to the acquisition, maintenance or renovation of property pursuant to a joint endeavour or relationship which has failed in circumstances where blame cannot be attached to either party.
In Muschinski v Dodds,[14] the High Court found that the parties held their respective legal interests in common upon trust for each other to repay each his or her respective contributions to the venture. Deane J (Mason J agreeing), held that it was appropriate to impose a constructive trust in the circumstances of that case to give effect to the general equitable principle which restores to a party contributions which he or she made to a joint endeavour which fails when the contributions have been made in circumstances in which it was intended that the other party should enjoy them.
[14] (1985) 160 CLR 583 at 614.
In Baumgartner v Baumgartner,[15] the High Court held that the assertion by one party after the relationship had ended that the property was his beneficially to the exclusion of any interest at all of the other, amounted to unconscionable conduct which attracted the intervention of equity and the imposition of a constructive trust at the suit of that other party.
[15] (1987) 164 CLR 137 at 147-148.
The underlying basis of the constructive trust is founded on the unconscionable conduct. As Deane J held in Muschinski:[16]
… Like most of the traditional doctrines of equity, it operates upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct … the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purpose of the relationship or the endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do …
[16] (1985) 160 CLR 583 at 619-620.
It is also necessary to consider whether the applicant has a resulting trust and whether the presumption of advancement operates in the present case to defeat the applicant’s claim for a trust.
A resulting trust will be presumed where, on the purchase of land, the legal title to the land is vested in someone other than the person, who is proven by parol evidence, to have provided the purchase money.[17] However, a different resulting trust applies when the parties are married. In this case, where both parties have contributed and legal title is not held equally, a presumptive married person’s equal contribution resulting trust will arise so that the legal title holder will hold half absolutely and any additional amounts in trust for the benefit of their spouse.[18] That presumed resulting trust arises from the assumption that married parties share property equally and that rebuts any presumption based on contribution alone.
[17] Jacobs’ Law of Trusts in Australia, 8^th ed at [12-10].
[18] Hepburn Principles of Equity and Trusts, 4^th ed at [37.3.2].
Where the transferor and transferee have a close relationship (including relevantly in the present case, husband and wife) to the extent that the transferor is under a natural obligation to provide for the transferee, there is no resulting trust but a presumption that the property was vested as an absolute gift or as an advancement.[19]
[19] Martin v Martin (1959) 110 CLR 297; Calverley v Green (1984) 155 CLR 242 at 249-50.
The resulting trusts, discussed above, and the presumption of advancement can be rebutted by evidence to the contrary. Thus, in Muschinski v Dodds, the Court held that the presumed resulting trust cannot prevail over the actual intentions of the parties as established by the overall evidence. Similarly, in Glynn v Commissioner of Stamp Duties (NSW),[20] Reynolds JA held that the presumption of advancement may be rebutted by acts and declarations made before or at the time of purchase or immediately after, such that they constitute part of the overall transaction. The rebuttal evidence may be inferred from other evidence.[21] As Jacobs says:[22]
In other words, the law endeavours always to give effect to the intentions of the parties, but in the absence of any evidence of such intention, but the bare fact of the transfer to someone other than the purchaser it presumes, unless the contrary is proved, in the first case in favour of the person providing the purchase money and, in the other, in favour of the wife of child or person in loco filii.
[20] [1977] 2 NSWLR 673.
[21] Hepburn (above) at [37.3.3].
[22] Jacobs’ (above) at [12-13].
The claim by the applicant that he has an interest in the Property arising from the alleged purchase of the property in 2018 requires a consideration of the law of part performance. Pursuant to s 26 of the Law of Property Act 1936, a contract for the sale of land must be in writing. However, s 26(2) of that Act expressly preserves the law as to part performance. The principle of part performance is a rule of substantive law and not of evidence.[23] In Madison v Alderson,[24] Earl Selborne LC held:
All the authorities show that the acts relied upon as part performance must be unequivocally and in their own nature, referrable to some such agreement as alleged.
[23] Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd & Anor [1997] SASC 6391 citing Meagher Gummow and Lehane, Equity Doctrines and Remedies (3^rd ed), at [2045].
[24] (1883) 8 App Cas 467 at 479.

To similar effect was the decision in JC Williamson Ltd v Lukey and Mulholland,[25] where Dixon J (as he then was) held:
Equitable relief is obtainable, notwithstanding the Statute of Frauds, by a party who in pursuance of his contract has done acts of performance consistent only with some such contract [as alleged] …
[25] (1931) 45 CLR 282 at 297.
The acts relied on must be consistent with some such contract, that is some contract of the general nature of that alleged.[26] The mere payment of money has generally not been treated as a sufficient act of part performance.[27] The payment of money has been regarded as equivocal, that is referrable to a variety of possible arrangements, for example a mere contract[28] and not a contract of the general nature of that alleged.
[26] McBride v Sandland (1918) 25 CLR 69 at 78; Regent v Millett (1976) 133 CLR 679 at 683.
[27] Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd & Anor [1997] SASC 6391.
[28] Ibid.
Prima Facie Case
I am satisfied that the applicant has established a prima facie case that he has an interest in the Property as caveated. On the evidence on the application, I am satisfied that the applicant has established, on a prima facie basis, either an interest by way of a constructive trust or resulting trust arising from his contribution of the purchase price in 2011 when the Property was acquired.
I note in this regard that there is a genuine dispute between the parties to almost all aspects of this transaction; there is a dispute as to the parties’ respective interest in the Property at the time of its acquisition; who paid for the Property; what if any agreements had been reached in relation to the Property; what money was paid from the applicant to the respondent for, or in respect of, the Property; the source of that money; and the purpose for the payments.
However, given the evidence of the applicant that he contributed the purchase price and in the absence of any evidence to the contrary, other than the evidence of the respondent herself, I find that the applicant has established the prima facie case necessary to grant the relief sought. The position may have been different if there was independent evidence adduced to the contrary. The evidence does suggest that the applicant was in China at the relevant time and that the parties had very extensive assets in China from which they could draw upon.
I form this view, notwithstanding the respondent’s submission as to the applicability of the presumption of advancement. Given the factual disputes about the initial purchase of the Property, and the subsequent agreements in relation to the property, the determination of the applicability of the presumption of advancement or any rebuttal of such presumption, should be determined at the same time as, and in light of, the findings on the disputed facts and all of the circumstances surrounding the parties’ claimed interest in the Property.
However, I am satisfied for the purpose of this application that the applicant has adduced evidence which is capable of rebutting the presumption of advancement. The applicant has adduced evidence as to his actual intentions that he did not intend to provide a gift of the Property to the respondent. The parties’ extreme wealth and the fact that he was in China at the time also provide evidence from which an inference may be drawn that it was matters of convenience, rather than an intention to make a gift, that led the respondent to be the sole legal owner of the Property.
I am also satisfied that the applicant has established a prima facie case that he entered into an agreement to purchase the Property in 2018 and therefore has an equitable interest in the Property. The evidence establishes, on a prima facie basis, there has been a sale and purchase of the Property by oral agreement, together with part performance. In accordance with the principles that I have discussed above, the payment of money by itself would not be a sufficient act of part performance, it being equivocal, but that act, coupled with the respondent moving out of the Property, is in my mind, sufficient to find, on a prima facie basis, that there is an enforceable sale and purchase agreement between the parties.
Although this potential agreement is not the interest that is caveated, it will no doubt be a matter at trial. Given my conclusion as to the interest that has been caveated, I do not need to decide whether to give the applicant leave to amend the interest he has caveated, or permission to lodge a fresh substituted caveat in relation to the alternative or additional interest.
Balance of Convenience
As to the balance of convenience, I have had regard to the matters raised by the respondent, including her concern that if she is unable to sell the Property, she will be unable to access funds ‘for my and the children’s living expenses to meet the standard of living to which we have become accustomed’, that there has been no agreement to pay spousal or child maintenance, and that she ‘may not be able to repay the mortgage loan for the mortgage’. However, having decided there is a prima facie case and noting that the respondent proposes to sell the Property should the caveat not be extended, and given the lack of financial details provided as to the respondent’s financial position, and noting that the applicant has provided the usual undertaking as to damages, I am satisfied that the balance of convenience favours the extension of the caveat to enable the true issues in dispute between the parties to be determined. Further, I note in cases where a proprietary interest is claimed, the balance of convenience will often favour the party claiming that interest, as if the caveat is not extended and the Property sold (as would likely be the case) the applicant will lose that proprietary interest in the Property.
If there is an application by either party to the Family Court, or there is further material that the respondent says is relevant to this issue, it is open to the respondent to apply to have the order reviewed or varied.
Extending the time to remove the caveat will give the parties an opportunity, if so advised, to consider any such application.
It may be that the respondent does find herself in a position where she may be unable to meet the mortgage payments in relation to the property, or that she is suffering from some other relevant financial hardship, in which case it will always be open to her to apply to have the order reviewed, including for consideration of an order apportioning ongoing mortgage payments between the parties if there is a prospect that the property may be the subject of a mortgagee sale.
As Cox J said in Whallin v Bailbart Investments:[29]
It will always be open to the caveatee to have the order reviewed – because of changed circumstances, for instance, or because of the caveators dilatoriness in prosecuting the litigation.
[29] per Cox J at 203.
At the Interlocutory stage, I am satisfied that the balance of convenience lies with maintaining the status quo, preserving the property and allowing all issues to be fully ventilated at the full hearing.
Having regard to the matters raised by the respondent in relation to her financial position, I consider it would be appropriate for this matter to be heard as expeditiously as possible. In those circumstances, I propose to make orders for an early trial of the substantive matter and for the allocation of a Judge to hear that matter.
Conclusion
I am satisfied that on all of the material before me that there is a prima facie case that the relief is available. Further, I am satisfied that the balance of convenience favours an extension of the time for the removal of the caveat, which will maintain the status quo, and that I have jurisdiction to make the order sought.
For the reasons that I have expressed above, I confirm Order No. 1 made on 16 December 2019, that the time for the removal of the caveat be extended until further order.
I will hear the parties as to costs and a timetable for the substantive hearing.