McVeigh v Huynh
[2008] FMCA 248
•12 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| McVEIGH v HUNYH & ANOR | [2008] FMCA 248 |
| BANKRUPTCY – Property – alleged transfer of interests in land between bankrupt and First Respondent – no such transfer established by evidence – cross-claim dismissed – costs order. |
| Bankruptcy Act 1966, ss.30,120 |
| Applicant: | DEAN ROYSTON McVEIGH (AS TRUSTEE OF ESTATE OF TRIEU NGUYEN) ALSO KNOWN AS DAVID NGUYEN |
| First Respondent: | THI BE NAM HUYNH |
| Second Respondent: | THE REGISTRAR OF TITLES |
| File number: | MLG 35 of 2007 |
| Judgment of: | Burchardt FM |
| Hearing date: | 5 February 2008 |
| Date of last submission: | 5 February 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 12 March 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr J.D.S. Barber |
| Solicitor for the Applicant: | G R Campbell |
| The First Respondent: | In person |
| The Second Respondent: | No appearance |
THE COURT DECLARES AND ORDERS
DECLARES:
THAT the transfer from Trieu Nguyen of his interest in the land described in Certificate of Title Volume 10174 Folio 712 to the First Respondent on or about 16 February 2004 is void against the Applicant.
THAT pursuant to s.30 of the Bankruptcy Act 1966 (“the Act”) the Applicant is entitled to be registered as the proprietor of a half interest as tenant in common of the land described in Certificate of Title Volume 10174 Folio 712.
ORDERS:
THAT the former interest of Trieu Nguyen in the land described in Certificate of Title Volume 10174 Folio 712 vest in the Applicant.
THAT the Second Respondent register:
(a)a transfer of the whole of the land described in Certificate of Title Volume 10174 Folio 712 from Dean Royston McVeigh as trustee of the former bankrupt estate of the First Respondent, to the First Respondent; and immediately thereafter;
(b)a transfer of a half interest as tenant in common of the land described in Certificate of Title Volume 10174 Folio 712 from the First Respondent to the Applicant.
THAT the First Respondent’s Cross-Claim be dismissed.
THAT the First Respondent pay the Applicant’s costs.
THAT pursuant to Rule 21.15 of the Federal Magistrates Court Rules 2001, the Court certifies that it was reasonable for the parties to employ an advocate.
THAT there be liberty to apply in respect of order 4 herein.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 35 of 2007
| DEAN ROYSTON McVEIGH (AS TRUSTEE OF ESTATE OF TRIEU NGUYEN) |
Applicant
And
| THI BE NAM HUYNH |
First Respondent
| THE REGISTRAR OF TITLES |
Second Respondent
REASONS FOR JUDGMENT
Dean Royston McVeigh, the Applicant, is the trustee in bankruptcy of the estate of Trieu Nguyen. Mr Nguyen is the former partner of Ms Huynh, the First Respondent.
In substance, what Mr McVeigh seeks is half‑ownership of Ms Huynh's home at 16 Chatterton Drive, Delahey (“the Delahey property”), where she lives with her children.
Ms Huynh resists that application because she says Mr Nguyen transferred his former half‑share in the property to her in exchange for her share in another property in Sydenham.
For the reasons that follow, I think that Mr McVeigh is right and should get the relief that he claims.
THE FACTS
A number of the facts in this case are admitted by the Defence filed by solicitors who acted for Ms Huynh until very recently.
It is not in issue that Mr McVeigh was appointed trustee of the bankrupt estate of Mr Nguyen by order of the Federal Magistrates’ Court on 12 October 2004 and that he continues to discharge that function.
The date of the act of bankruptcy of Mr Nguyen was 18 May 2004 (exhibit A2).
On 16 January 2004 Mr Nguyen and Ms Huynh transferred the entirety of the Delahey property to Ms Huynh (exhibit A1 - a certified copy of the transfer AC605731X provided by the Office of Titles Victoria pursuant to subpoena issued to its successor Land Victoria). It should be noted that the estate and interest transferred in that transfer is expressed as "all my estate in fee simple" and that the consideration is "natural love and affection".
Although the transferor is detailed as being both Mr Nguyen and Ms Huynh, this is doubtless because they were then in a joint tenancy. There is no doubt that the net effect was that Ms Huynh emerged as the sole proprietor of the Delahey property and that Mr Nguyen was the one who transferred his share to her in consideration of natural love and affection.
By a curious series of coincidences, the legal position has since changed. Ms Huynh was made bankrupt, erroneously as it turned out, and Mr McVeigh was appointed as her trustee. Mr McVeigh, as trustee, obtained the registered ownership of Ms Huynh's half‑share of the property. Mr McVeigh has since sought to return that half‑share to Ms Huynh, albeit that he has at all times intended to press the claim in this proceeding.
This slightly confusing set of events does not alter the more straightforward characterisation of the dispute that I have referred to above.
The correct position is that Ms Huynh ought to be - as things presently stand, pending the determination of this case - the registered owner of the whole of the property, of which Mr McVeigh now seeks relief in respect of half.
It is now necessary to return to the narrative that governs the property at 13 Ambridge Grove, Sydenham (“the Sydenham property”). Gerard Anthony Conlan, a legal practitioner, was called to give evidence. He conducts business under the name Law 554 at 554 Mount Alexander Road, Ascot Vale. He said that in early 2002 he acted for a Ms Pham, who, it is common cause, is a niece of Mr Nguyen and Ms Huynh although it is not clear to which of them she is biologically related. Mr Conlan deposed that he acted for Ms Pham not only in purchasing the Sydenham property but in obtaining some finance to assist her to do so.
Some months later, towards mid‑2003, Mr Conlan acted not for Ms Pham but for two mortgagees, whose mortgages he had himself arranged, and arranged the discharge of those two mortgages. The mortgages were $150,000.00 from a Mr Mordaunt and $20,000.00 from a Mr and Mrs Muhl. At that time Mr Conlan operated a mortgage practice.
Exhibit A17 is a transaction statement in respect of the purchase by Ms Pham of the Sydenham property. It shows that, in addition to the mortgages, the purchase price of $190,000.00 was made up of the First Home Owner's Allowance of $14,000.00, which was noted as being subject to approval, and a balance required of some $16,513.41, which figures of course would amount to more than $190,000.00 but in part reflected Mr Conlan's charges.
Mr Conlan confirmed that settlement of that sale was held on 1 February 2002 and that his instructions in relation to the purchase were from Ms Pham (P‑52). Mr Conlan did not recollect receiving instructions in relation to the purchase from anyone else. Mr Conlan explained that at that time the First Home Grant Scheme was such that there was $7,000.00 for being a first buyer and an additional $7,000.00 if it was a new home. He confirmed that that is what happened here. In answer to a question as to how the application was made he said:
We completed the application for Ms Pham. We completed it and we lodged it and we received the cheque for the $14,000.00
(P-54).Mr Conlan also confirmed at P‑54 that if he had been told someone else had an interest in the property other than Ms Pham he would not have permitted the application to go ahead, because eligibility for the $14,000.00 grant required that the Applicant be the sole owner and that there be a declaration that there was no other interest in the property on the part of any other person. He confirmed that:
It is just a declaration with the usual warning in relation to completing Commonwealth documents … that you would be committing an offence to include any false or incorrect, inaccurate information in that declaration.
He confirmed that such a declaration was completed by Ms Pham in this instance.
Although, under cross‑examination by Ms Huynh, Mr Conlan could not deny that it was possible that Mr Nguyen took Ms Pham to see him, although he had no recollection of this, in re‑examination, while he had no active memory of the matter, he did confirm that there was nothing that suggests he got instructions from Mr Nguyen.
Amalia Deniz was also called by the Applicant. She is a conveyancer who acted for a purchaser of the Sydenham property in 2003. From the contract, Ms Deniz confirmed that the purchase price was $237,000.00. She confirmed that she forwarded to Western Lawyers on or about 3 July 2003 a letter together with annexed requisitions as to title (exhibit A7).
Ms Deniz received answers under cover of a letter from Western Lawyers dated 11 July 2003. It appears that in the ultimate an amended version of the contract was sent to Ms Deniz, being executed under a power of attorney by Mr Nguyen, to whom Ms Pham had given a power of attorney, prepared by Western Lawyers.
It is clear from the documents to which I have referred that all of the documents of sale referred to Ms Pham as the owner of the property and that, from exhibit A11, the residue of moneys available after payment out of mortgage and other debts, including a debt to
Thy Tuyet Nguyen (who is not Ms Huynh's husband), was to be payable to Ms Pham.
At no stage was Ms Deniz notified of any trust involved in the matter (P‑32).
Mr Luong was the solicitor at Western Lawyers who acted for Ms Pham. He confirmed that he had received instructions from Ms Pham in writing as to what cheques were to be drawn at the settlement of the property (P‑37 to 38 and exhibit A12).
Mr Luong confirmed that he had received requisitions on title from the purchaser's conveyancers, and in answer to the question,
Did you answer those requisitions?
answered,
I answer under instructions from my client (P‑39).
Mr Luong confirmed that the answers he provided were prepared by him in accordance with his instructions from his client and that he had accurately recorded the instructions the client, Ms Pham, had given him (P‑40).
Mr Luong also confirmed that Ms Pham had provided to him water rate notices and council rate notices in respect of the Sydenham property and that she had given those documents to him (P‑40).
Mr Luong further confirmed that he drew a cheque for the balance of proceeds of sale in the sum of slightly over $36,000.00 in favour of Ms Pham (exhibit A16). He confirmed that he did not have instructions to pay that cheque to anyone else or that anyone else was entitled to the money or that anybody else had any interest in the land (P‑42).
Mr Luong also confirmed that the caveator referred to in the settlement documents relating to the sale of the Sydenham property by Ms Pham was not a relative of Ms Pham (P‑43).
Under cross‑examination by Ms Huynh, Mr Luong said:
Yes, before the settlement day Ms Pham came to my office and she gave me instructions in writing … one was for 554 for discharge of mortgage and 554 (indistinct) and my legal costs and the balance paid to her, the vendor and we got clearly instructions in writing and we followed those instructions (P‑44).
Mr Luong confirmed that he had only had instructions from Ms Pham (P‑45).
Although in the ultimate the contract was signed by Mr Nguyen, this took place because Ms Pham was often very busy and she came to Mr Luong's office to request him to prepare a power of attorney for her uncle if she was unable to attend to sign the contract. This took place in Mr Luong's office (P‑46).
I have set this evidence out in some detail because of the way in which Ms Huynh conducted her defence.
It should be noted at this point, however, that all the documents created both at the time that Mr Conlan was acting for Ms Pham and at the time that Mr Luong was acting for Ms Pham make no mention whatever of any interest in the land owned by anybody except Ms Pham.
This is scarcely surprising given that the purchase price provided by Ms Pham was composed in part of a $14,000.00 First Home Owner's Grant.
The sale documentation, and most particularly the requisitions on title, plainly assert on their face that Ms Pham was the sole registered owner of the property, subject obviously to any incumbrances.
Ms Pham was called to give evidence. I should say at the outset that, regrettably, I think there is force in the submission of counsel for the Applicant that she was an unsatisfactory witness.
The transcript does not fully reveal the extent to which she was evasive and uncooperative in her answers. I agree with counsel that there were a number of matters that counsel took her to that she must have understood but suggested she did not, most particularly her alleged incapacity to understand the requisitions on title. It should be noted that Ms Pham is a student nurse, and is at least 24 years of age
(she was plainly over 18 in 2002 when she was the nominal purchaser of the Sydenham property) and spoke fluent English.
Ms Pham's evidence was that she had been told to go and sign documents by her mother and her auntie (ie Ms Huynh).
Ms Pham denied that she was the owner of the Sydenham property and said that her uncle told her to sign papers to buy the house at Sydenham and to sign the papers when he sold it (P‑62). She said:
My uncle was the person who purchased the house under my name and I did not live there.
She said that she did not personally engage the solicitor (Mr Conlan) (P‑63) and said that she did not know whether she had read the papers that she signed (P‑63). I endeavoured to give the witness a warning that some of her answers might incriminate her, because of the attaining of the First Home Buyer's Grant of $14,000.00.
Although Ms Pham acknowledged that there was in the papers a $14,000.00 First Home Buyer's Grant and in response to a question that those funds were received by Mr Conlan replied,
I guess so.
She immediately thereafter said:
Do I have to answer this question? This is not related to me. I just signed papers. I wish not to answer that (P-65).
In respect if the $16,513.41 that was put towards the purchase over and above the mortgages and the First Home Buyer’s Grant Ms Pham said:
I don't know where the money came from (P-65).
When cross‑examined about the fact that Mr Luong, whom she admitted seeing twice, said that instructions for the sale of the Sydenham property were given by her, Ms Pham roundly denied that this was so. She said in respect of Mr Luong that:
I never talked to him (P‑67).
She said that she simply went to see him on two occasions and signed papers (P-67).
She went on to say, however, that she did in fact talk to Mr Luong, although she denied giving the instructions that gave rise to the answers to the requisitions on title (P‑68).
In respect of the rates notices exhibited in the proceeding, Ms Pham said these were in her name because her uncle had asked her to arrange that (she gave no explanation for why this had occurred).
In respect of the $36,000.00 cheque that was the ultimate proceeds of sale of the Sydenham property, Ms Pham acknowledged that this would have to go into her account and said this was deposited in the Commonwealth Bank in Sunshine (P‑74).
Ms Pham said, in response to a question that it was her money and she kept it:
That's incorrect. At the time when I put the money in, it was drawn out and went to my uncle - he was there with me … It was withdrawn from the teller … It would be in cash (P-74).
She said she gave the case to her uncle in the bank. When asked what denomination the notes were, she was unable to remember (P‑75).
The final witness called was Ms Huynh. In effect, I called her myself. As I observed on transcript, this case presented enormous forensic difficulties, given that it was apparent that Ms Huynh wished to resist the application but that her lack of English skills and the normal difficulties of self‑representation were really proving almost an insuperable hurdle for her.
In response to a question from me as to what her defence was, she said, relevantly (P‑79):
When we separated he said because the children, they had already got used to living in that house, so just let them stay in that house. The fact he borrow money or something I didn't know [sic].
All Ms Huynh's other answers were essentially to the effect that she was impecunious and that, should what Mr McVeigh want be granted, she would have nowhere to live.
When I came to ask Ms Huynh in submissions whether there was anything she would like to say by way of reply to counsel's address for the Applicant or anything else she wished to say, she said:
I just would like to say to you, your Honour, and the other side, I don't have the money to hire a lawyer for myself. I agree that it costs money for this proceeding but if I have to pay the money for the costs I just can only pay a little bit of that. I just don't have money. I don't know anything else to say (P‑90).
FINDINGS ON THE FACTS
To the extent that matters are in issue in this proceedings (and the formal matters, such as the date of bankruptcy and the date of the transfer are either not in issue or are beyond doubt), I have no hesitation in accepting the evidence and submissions put forward by the Applicant.
The First Respondent’s case is that the roughly $16,000.00 put forward to purchase the Sydenham property was put forward by her and her former husband, Mr Nguyen. She has called no evidence to prove that assertion at all. Ms Pham, who was the ostensible purchaser, said she did not know where that sum came from.
Ms Huynh did not give any evidence to support the assertion about the $16,000.00 either.
To the extent, even in the absence of such evidence, that I might be prepared to find that the $16,000.00 might have been put up by Mr Nguyen, it is perfectly clear, from the evidence of Ms Pham, as counsel for the Applicant submitted, would at its highest have been such as to give rise to an interest in the Sydenham property on the part of Mr Nguyen. There is no evidence that Ms Huynh put anything towards that property at all or that she ever had any interest in it.
Ms Pham's evidence was entirely to the effect that such interest as there may have been in the Sydenham property was that of her uncle alone. She made no mention whatever at any stage of Ms Huynh.
That, however, is not the end of the matter. I roundly reject the evidence of Ms Pham. Her evidence flies in the face of all the executed documentation. For me to accept her assertion that she was in effect no more than a nominee sub rosa for her uncle, I would have to find an elaborate fraud.
First, I would have to find that Ms Pham's application for the First Home Buyer's Grant was fraudulent because she signed the declaration, which I accept Mr Conlan says was executed, saying that she was the owner of the property and that nobody else had an interest in it.
If I was to accept what she said, that assertion was plainly false.
Moreover, I would have to accept Ms Pham's evidence over that of Mr Conlan as to the basis upon which Mr Conlan acted. I fully accept that Mr Conlan would never have forwarded an application for a First Home Buyer's Grant if he had known, as Ms Pham said he did know, that Ms Pham was not the proposed beneficial owner of the property.
While the evidence is not utterly beyond doubt, the evidence of Mr Conlan was to the effect that he acted for Ms Pham and that he did not act for Mr Nguyen. I accept that evidence.
Furthermore, and even more tellingly, the evidence of Mr Luong as to the preparation of the requisitions on title and his instructions generally, would have to be rejected for me to believe Ms Pham. I see no reason to accept that at all.
Mr Luong and Mr Conlan are solicitors in practice. There is no reason to suppose that there is any benefit to them in participating in a fraudulent series of transactions. Furthermore, there is no discernible reason why they should both lend themselves to what, on any view, would have been either fraud or, at the very least, serious and significant misrepresentation as to the true ownership of the property, both on its purchase and upon its sale.
I should only say in finality that Ms Pham's assertion that she went to the bank with a bank cheque in her own favour for $36,000.00 and was able to cash it before it had cleared and simply obtain a vast amount of cash in that order, strains credulity.
Only Ms Pham will know what was in her own mind. But it suffices for me to say that I reject her evidence, save where it is not independently corroborated.
In these circumstances, it is inevitable that I find that the Sydenham property was never owned by Mr Nguyen and that he had no interest in it of which he could dispose. This applies to an even greater and more forceful extent in respect of Ms Huynh. Even if I were to accept Ms Pham's evidence, it would grant an interest in the Sydenham property only in Mr Nguyen and not Ms Huynh.
Given that it is Ms Huynh's case she swapped the interest that she had in the Sydenham property for the interest that he had in the Delahey property at the time she separated from Mr Nguyen, it is immediately apparent that the defence must fail. (It should be noted this characterisation of Ms Huynh’s case is the same, in substance, both in the Defence that was filed and in the Amended Defence, which was not).
More to the point, however, the transfer on its face expressly relies upon love and affection as its consideration. As counsel for the Applicant rightly points out, this is a form of consideration rendered valueless by the terms of s.120 of the Bankruptcy Act 1966 (“the Act”).
The Second Respondent, The Registrar of Titles, has entered a submitting appearance. In the circumstances, I will declare that Mr McVeigh is the owner of Mr Nguyen's one‑half share in the Delahey property, and I will direct the Registrar of Titles to take such steps as may be necessary to ensure that the existing, and, on any view, erroneous, situation is rectified.
The Cross-Claim will clearly have to be dismissed with costs.
I certify that the preceding sixty eight (68) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Brooke Evans
Date: 12 March 2008
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