Nguyen v Corbett

[2017] NSWSC 1689

Supreme Court

New South Wales

Medium Neutral Citation:	Nguyen v Corbett [2017] NSWSC 1689
Hearing dates:	2, 3, 4 August 2017; final written submissions received 18 August 2017
Date of orders:	07 December 2017
Decision date:	07 December 2017
Jurisdiction:	Equity
Before:	Parker J
Decision:	Transfers liable to be set aside
Catchwords:	Land Law – fraudulent conveyances – costs orders made against husband in previous proceedings – conveyance by husband to wife pursuant to property settlement following separation – intent to defraud creditors – prejudice to creditors – purchaser in good faith without notice – onus – compromise as valuable consideration – inference from facts – constructive notice – notice of agent – Conveyancing Act 1919 (NSW), ss 37A, 164 Equity – conveyance by husband to wife pursuant to property settlement following separation – alleged equitable proprietary interest of wife – contributions to joint account used for mortgage repayments – payments for renovations – “failed joint venture” equity – proprietary estoppel Judgments and Orders – conveyance by husband to wife pursuant to consent orders – setting aside consent orders – non-disclosure of liabilities – Family Law Act (Cth), s 79A
Legislation Cited:	Conveyancing Act 1919 (NSW), ss 37A, 164 Family Law Act 1975 (Cth), ss 79, 79A, 90G Law of Property Act 1925 (UK), ss 172, 199
Cases Cited:	Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Chan v Acres (2013) 51 Fam LR 90; [2013] NSWSC 1597 Coghlan v Alexander (1905) 5 SR (NSW) 441 Corbett v Nguyen [2008] NSWSC 1265 Green v Schneller (2002) 11 BPR 20,935; [2002] NSWSC 671 Huynh v Helleh Holdings Pty Ltd (2001) 10 BPR 19,333; [2001] NSWSC 1162 Lloyds Bank v Marcan [1973] 1 WLR 339; 2 All ER 359 Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3 Midland Bank Trust Co Ltd v Green [1981] AC 513 Milling v Hardie [2014] NSWCA 163 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 O’Regan and Phillips (Supreme Court (NSW), 31 July 1992, unrep) Semmens v Commonwealth (1989) 99 FLR 294; (1990) FLC 92-116 Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 Wentworth v Rogers [2004] NSWCA 430 Young v Lalic (2006) 197 FLR 27; [2006] NSWSC 18
Texts Cited:	Dewitt Moore, A Treatise on Fraudulent Conveyances and Creditors’ Remedies at Law and in Equity (1908, Matthew Bender & Co) Henry May, A Treatise of the Statutes of Elizabeth Against Fraudulent Conveyances; The Bills of Sale Acts, 1878 and 1882; and the Law of Voluntary Dispositions of Property (2nd ed, 1887, Stevens and Haynes) JD Heydon, MJ Leeming, and PG Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) Melville Bigelow, The Law of Fraudulent Conveyances (1911, Little, Brown & Co) Orlando Bump, A Treatise upon Conveyances made by Debtors to Defraud Creditors (4th ed, 1896, WH Lowdermilk & Co)
Category:	Principal judgment
Parties:	Ai Nhon Nguyen (Plaintiff) Avelina Corbett (First Defendant) James Edmund Corbett (Second Defendant)
Representation:	Counsel: RW Tregenza (Plaintiff) S Foda (First Defendant) PD Herzfeld (Second Defendant)   Solicitors: GJ Gooden (Plaintiff) Hicksons Lawyers (First Defendant) Meridian Lawyers (Second Defendant)
File Number(s):	2015/226458
Publication restriction:	Nil

Judgment

1. These proceedings concern a residential property at Baulkham Hills in Sydney. The property was formerly registered in the name of the second defendant, James Edmund Corbett, but has been transferred into the name of the first defendant, Avelina Corbett, who is his ex-wife. The steps taken to transfer the property are challenged by the plaintiff, who is a creditor of Mr Corbett pursuant to costs orders made in earlier proceedings in this Court.

2. The earlier proceedings were brought in 2004 by Mr Corbett against four defendants: Nguyen Ai Nhon (the plaintiff in these proceedings, who will be referred to as “Mr Nguyen” in this judgment); Nguyen Hoa Nhon and Nguyen Hau Nhon, who are brothers of Mr Nguyen; and a company called Abaco Machines (Australasia) Pty Ltd, of which they were all directors. I will refer to the earlier proceedings as the “2004 proceedings” and to the defendants in those proceedings (including the company) as the “Nguyens”.

3. The 2004 proceedings were protracted. The trial eventually took place, and judgment was delivered, in May 2012. Mr Corbett was only partially successful in his claims, and was largely unsuccessful on costs. Costs orders were made against him in June 2012. Part of Mr Corbett’s costs liability was subsequently quantified at $90,000. The Nguyens have moved to have the balance assessed. The amount claimed is over $400,000.

4. The Baulkham Hills property was purchased in the name of Mr Corbett in 1997, with finance from the Commonwealth Bank of Australia (“CBA”). On 12 August 2013, Mr Corbett transferred the property to himself and Mrs Corbett as joint tenants in equal shares and the property was refinanced with Westpac Banking Corporation (“WBC”). I will refer to this as the “first transfer”.

5. Meanwhile, in May 2013, Mr Corbett and Mrs Corbett had made a joint application to the Federal Circuit Court for a divorce. The application had been dealt with on the papers and the order had been made on 7 August, with effect from 8 September.

6. In March 2014, Mr and Mrs Corbett made an application to the Family Court for consent orders by way of property settlement consequent upon the divorce. The orders sought required Mr Corbett to transfer his remaining interest in the Baulkham Hills property to Mrs Corbett. The application was also dealt with on the papers, and the relevant orders were made in May 2014.

7. In June 2015, Mr Corbett transferred his joint share of the property to Mrs Corbett pursuant to the consent orders. I will refer to this as the “second transfer”.

Issues for decision

8. Mr Nguyen claims that the first transfer was made with intent to defraud Mr Corbett’s creditors. Mr Nguyen relies on s 37A of the Conveyancing Act 1919 (NSW) (“CA”), which relevantly provides:

Voluntary alienation to defraud creditors voidable

(1)   Save as provided in this section, every alienation of property, made … with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.

(2)   …

(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.

9. The defendants contend that Mr Nguyen was not “prejudiced” for the purpose of s 37A so far as the first transfer was concerned. The defendants’ case is that Mrs Corbett had an equitable proprietary interest in the property arising under the “failed joint venture” equity recognised in Baumgartner v Baumgartner (1987) 164 CLR 137 or by way of proprietary estoppel. Accordingly, so the argument runs, she had a pre-existing beneficial interest in the property and the legal interest she received under the first transfer was no more extensive than that pre-existing interest.

10. The defendants also dispute that Mr Corbett made the first transfer with “intent to defraud creditors” in the relevant sense. The defendants further contend that even if he did, Mrs Corbett was a “purchaser in good faith” not having notice of the intent to defraud creditors, giving rise to a defence under s 37A(3). It is common ground that the onus of establishing the s 37A(3) defence lies on the defendants: Wentworth v Rogers [2004] NSWCA 430.

11. As to the second transfer, Mr Nguyen seeks to have the property settlement orders set aside pursuant to s 79A of the Family Law Act 1975 (Cth) (“FLA”). That section relevantly provides:

Setting aside of orders altering property interests

(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

(a)   there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; …

the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

12. It is common ground that this Court has jurisdiction under s 79A to set aside the property settlement orders if grounds exist for doing so: Young v Lalic (2006) 197 FLR 27 at [37]-[49]. It is also common ground that, if the Court sets aside those orders, it has consequential power to set aside the second transfer. Mr Nguyen’s contention is that the orders are vitiated by a failure to disclose relevant facts to the Family Court. The defendants dispute that this is so and contend that the orders should be allowed to stand.

13. As an alternative to setting aside the property settlement orders and the second transfer pursuant to s 79A, Mr Nguyen contends that the second transfer can be directly set aside pursuant to CA s 37A. Mr and Mrs Corbett accept that on the current state of authority, the Court may exercise its power under s 37A without the property settlement orders having been set aside, although they seek to reserve this point for appeal if necessary. For the purposes of the proceedings before me, the defendants dispute that Mr Corbett made the second transfer with “intent to defraud creditors” and rely in the alternative on the s 37A(3) defence.

Factual findings

14. From the 1990s onwards, Mr Corbett has spent increasing amounts of time in Vietnam working on business activities there. The vehicle for Mr Corbett’s business activities in Vietnam is now a Vietnamese company called Aardwolf Industries LLC. This company is a wholly owned subsidiary of a company incorporated in the British Virgin Islands which is called Aardwolf Vietnam Limited. That company was incorporated in November 2006 with Mr Corbett as the owner of the sole issued share.

15. Mr and Mrs Corbett have three children. For convenience, and without disrespect, I will refer to them by their first names. All three of them are involved with the Aardwolf business. Helen lives in Vietnam and is the finance and administration manager of the Aardwolf business. Ben apparently also lives outside Australia and is involved with the business. Mark lives in Australia (at the Baulkham Hills property). He apparently handles the Australian end of the business.

16. Mr and Mrs Corbett were separately represented in the proceedings before me. Mrs Corbett and Helen gave evidence in Mrs Corbett’s defence. Mr Corbett gave evidence in his own defence.

17. I was not convinced that Mr Corbett’s evidence was reliable. As will be seen below, his evidence in these proceedings is unsatisfactory in various respects. There also were further instances where his evidence was inconsistent with earlier sworn statements. Some of the things he told me in evidence may have been correct, but, in view of other demonstrably unreliable parts of his evidence, I do not think I should rely on it except where supported by contemporaneous documents or it is contrary to his interest.

18. I found Mrs Corbett’s evidence of little assistance. It was generally vague. Mrs Corbett gave evidence with the assistance of an interpreter, even though all of the conversations between herself and Mr Corbett and her children had taken place in English and her affidavit had been sworn in English. I appreciate that it can be daunting for a witness to give evidence in a second language, but the interposition of an interpreter can often make it harder for the Court to evaluate the quality of the witness’ evidence. So it was in the present case. At the end of the day, I was simply unable to determine if some of the answers given by Mrs Corbett were deliberately vague or if they genuinely represented matters that she could not recall or did not know.

19. Counsel for Mr Corbett pointed out that a number of points made in the evidence by Mr Corbett, Mrs Corbett and Helen were not challenged, and submitted that the Court should accept their evidence on these points. I do not necessarily accept this submission. The Court is not obliged to accept evidence merely because it is not specifically challenged. So far as factual issues raised by the affirmative defence under s 37A(3) are concerned, that is clearly so. But even where the legal onus lies on a plaintiff, the circumstances may cast an evidentiary onus on the defendant. In my opinion, such is the present case. I think that the circumstances of the two transfers and the application for the consent orders are such as to require explanation. It was clear at the hearing that counsel for Mr Nguyen was putting the propriety of the transactions in issue. In my opinion, it was not necessary for counsel to make a formal challenge to every aspect of the evidence given by the defendants’ witnesses.

20. Mr and Mrs Corbett were married in 1976. Initially, they lived at a residential property at North Rocks owned by Mrs Corbett. There was a mortgage on the property in Mrs Corbett’s name. Mr and Mrs Corbett had a joint account with the St George Bank into which they paid their incomes and out of which they paid for household expenses, including the mortgage payments.

21. Mrs Corbett became bankrupt in October 1995. According to Mr Corbett, this was as a result of income distributed to her out of a business controlled by him, in circumstances where the cash was not distributed and she consequently lacked the funds to pay the tax due on the distribution. He said he was able to make suitable arrangements to meet the liability but she was not.

22. Mrs Corbett’s bankruptcy resulted in the forced sale of the North Rocks property in 1997 and the purchase by Mr Corbett of the Baulkham Hills property to replace it. As already mentioned, the purchase was financed by the CBA. Mr Corbett was the borrower under the loan agreement and the mortgage was in his name.

23. According to Mr Corbett’s evidence before me, $57,000 was contributed to the purchase price by way of deposit. Mrs Corbett’s evidence was that around this time she received an amount of approximately $25,000 from her trustee in bankruptcy, representing a surplus following the sale of the North Rocks property. Mr Corbett thought the figure was $27,000. The suggestion was that this had been contributed to the deposit on the Baulkham Hills property.

24. Official records show that Mrs Corbett’s bankruptcy was discharged by effluxion of time in November 1998. Mrs Corbett was, therefore, still bankrupt in 1997 when the Baulkham Hills property was purchased. This makes it difficult to accept that the trustee would have released monies to her at that time. Furthermore, LPI records show that the date of transfer of the Baulkham Hills property was 21 May but the transfer of the North Rocks property was dated 23 July and was not registered until 18 August. Even if the forced sale of the North Rocks property did result in funds flowing back to Mrs Corbett, those funds cannot have been used to purchase the Baulkham Hills property. It is, therefore, clear that the suggestion of a contribution by Mrs Corbett cannot be correct.

25. In his affidavit, Mr Corbett said that he effectively began to live in Vietnam in 2000. He said that he commenced a relationship with another woman in Vietnam towards the end of 2000 and that since then, he has lived separately from Mrs Corbett, despite returning from time to time to Australia. But in cross-examination, Mr Corbett said that his business was not permanently in Vietnam in 2000, and that it was in 2003 when he began to manufacture his own products for his business and when he started to live “more permanently” in Vietnam. In Mrs Corbett’s affidavit, she said that she and Mr Corbett gradually grew more estranged and by 2005 they were living separate lives.

26. After the purchase of the Baulkham Hills property, Mr and Mrs Corbett continued to maintain a joint bank account into which they paid their income and from which they paid their household expenses, including mortgage payments.

27. Mr Corbett’s evidence was that he contributed the entirety of his income into the joint account until 2000, and thereafter contributed $2,000 per month into the account for the mortgage repayments. Mrs Corbett’s evidence was that from 2000, Mr Corbett, and for a period of time, Helen, on his behalf, would bring cash over from Vietnam to put into the joint account for living and household expenses, but that from 2012 he instead began transferring US$2,000 by direct deposit.

28. Mr Corbett commenced his proceedings against the Nguyens in May 2004. The proceedings concerned the terms of a deed by which he had agreed to transfer his shareholding in the company Abaco Machines (Australasia) Pty Ltd to Mr Nguyen and his brothers, the particular question before the Court being whether Mr Corbett was entitled to a sum of $50,000 under the deed in addition to his entitlement to superannuation benefits. The Nguyens filed a cross-claim against their former solicitor seeking damages in the nature of an indemnity from him against Mr Corbett’s claim under the deed, on the basis that the solicitor had been negligent in preparing the deed.

29. Helen, in her affidavit, stated that she began to work for Mr Corbett in January 2008. She said she became aware of other disputes between Mr Corbett and the Nguyens, relating to, for instance, the use and registration of trade marks, and was involved in those disputes to the extent of assisting Mr Corbett in his dealings with his lawyers. But she said only Mr Corbett dealt with his lawyers in relation to the 2004 proceedings.

30. In June 2008, the Nguyens made an application for security for costs in the 2004 proceedings on the ground that Mr Corbett, as plaintiff, was not ordinarily resident in Australia. They sought security in the sum of $160,000. An affidavit was sworn by Mr Corbett’s solicitor in October 2008 in opposition to the application. The solicitor stated that he had been informed by Mr Corbett that, among other things, Mr Corbett held a joint bank account with his wife; that the land value of the Baulkham Hills property was $340,000 as at 2005; that Mr Corbett had a mortgage of $102,000 with the CBA; that Mr Corbett believed he had $400,000 equity in the property; that Mr Corbett was “a resident of New South Wales and Australia”; that Mr Corbett resided at the Baulkham Hills property with Mrs Corbett; and that despite Mr Corbett’s business commitments in Vietnam “he is a resident of Australia and has a settled purpose of residing in Australia with his wife at Baulkham Hills”.

31. Meanwhile, control of Aardwolf Vietnam Limited, and hence of the Vietnamese business, had changed. In June 2008, eleven further shares were issued, nine to Mr Corbett, one to Helen and one to Ben. In October 2008, Mr Corbett transferred his ten shares in Aardwolf Vietnam Limited to Helen. The effect was to divest him of any formal interest in, or control over, the business. But it appears that, for practical purposes, Mr Corbett still controls its affairs. In the course of his evidence before me, when challenged about his ability to satisfy the costs orders, he stated that he could always “pay [himself] a bonus”.

32. The application for security came before White J in November 2008: Corbett v Nguyen [2008] NSWSC 1265. His Honour refused the application because of the evidence that Mr Corbett was living in Australia for part of the time and because of the delay in bringing the application: at [40], [44]-[46]. He ordered the Nguyens to pay Mr Corbett’s costs of the application.

33. The thrust of Mr Corbett’s instructions for the purposes of the security application was that he continued to be domiciled in Australia with Mrs Corbett at the Baulkham Hills property. On Mr Corbett’s evidence in these proceedings, those instructions were false; in fact, Mr Corbett was separated from Mrs Corbett and was living in Vietnam with no ongoing domestic ties to Australia.

14. Mr Corbett said that in “about” 2008 he asked Mrs Corbett for a divorce. She refused. According to Mr Corbett:

21.   I first raised with Avelina the possibility of divorce in about 2008. I cannot remember the detail of the conversation. She became very upset and very little was said.

22.   I again raised with Avelina the possibility of divorce in 2009. At this time, I prepared and signed some documentation to lodge with the Family Court of Australia in order to obtain a divorce and gave it to Avelina when I was visiting Australia. I cannot remember clearly the course of our discussion but its effect was that Avelina told me that she did not want to divorce and threw the documents away. The only sentence I can remember clearly is Avelina saying: “What have I ever done wrong to you?”

35. Mrs Corbett gave evidence confirming this, although she did not precisely identify the time beyond saying it was “later in 2008”.

36. According to Mr Corbett, from “about 2009” his practice when visiting Australia changed. He said that from this point he “generally” stayed with his mother in Crows Nest when visiting Australia. According to Mrs Corbett, however, Mr Corbett’s visit to Australia in 2011 was the first time that he did not stay at the Baulkham Hills property and stayed with his mother instead.

37. In early 2011, a dispute arose between Mr Corbett and the solicitors acting for him in the 2004 proceedings. According to Mr Corbett, by this stage he had spent over $600,000 on the proceedings. As a result of the dispute, his solicitors withdrew from acting and he was left for a time unrepresented. The proceedings were listed for directions on 11 February 2011 with a view to a hearing in March of that year, and Mr Corbett came to Australia to attend the directions hearing.

38. On 14 February, Mr Corbett lodged a caveat over the Baulkham Hills property in favour of Ms Caridad Lyons, who is Mrs Corbett’s sister. The caveat stated the interest claimed as follows:

For the provision of funding and for the lodgement of an absolute caveat. Interest claimed is AUD800,000 on any sale or settlement of the land.

39. The interest in the caveat was said to arise by virtue of an agreement styled “Contract for Provision of Funding and for the Lodgement of an Absolute Caveat”, a copy of which was attached to it. The address given for service of notices on him was the address of the Baulkham Hills property.

40. The Contract was a single page document signed by Ms Lyons and Mr Corbett and dated 10 February 2011 (the day before the directions hearing). In cross-examination, Mr Corbett said he could not recall signing it or having any discussions with Ms Lyons about it. He said it would have been arranged with Ms Lyons through Mrs Corbett or Helen as an intermediary. When asked who drafted the document, Mr Corbett eventually said they “must have hired someone to do it”. He offered the name “Chris Jones”, being someone who “was involved in setting up businesses”.

41. The Contract relevantly provided:

1.0   Party B [Ms Lyons] will providing funding for Party A’s [Mr Corbett] continued business expansion in Vietnam up to the limit of eight hundred thousand Australian dollars (AUD800,000). This funding can be provided at Party B’s sole discretion and when funds become available.

2.0   In return, Party A agrees to Party B to have the security of lodging an Absolute Caveat over Party A’s property at: [the address is given]

3.0   This caveat can be lodged by Party A acting as an Agent for Party B and at Party A’s expense, at any time after the signing of this Agreement.

4.0   If the property is ever sold, all payments available after the repayment of the Bank Loan, up to the value of AUD800,000 are to be made by direct transfer to Party B as per the following account:

…

6.0   The Absolute Caveat cannot be removed except by Party B or an Order of the Court.

42. The Contract made no provision for interest to be paid on the monies so lent.

43. Mrs Corbett could not recall who drew up the Contract, but said that she and Mr Corbett had called Ms Lyons and a friend, Ms Norma Leonard, to come to the house for the witnessing of the signatures. She said she understood that the Contract was trying to secure moneys advanced to Mr Corbett for his business in Vietnam on the Baulkham Hills property, and that Ms Lyons could sell the property to recover the moneys if not repaid. Helen was not cross-examined on the circumstances surrounding the formation of the Contract.

44. Ms Lyons did not advance any monies to Mr Corbett immediately. A number of advances were made starting 18 months or so later (that is, starting in October or November 2012). The total amount eventually advanced was, according to Mr Corbett, $139,000, but some of this was apparently repaid. As will be seen, Ms Lyons released the caveat when she was asked to do so by Mrs Corbett in August 2013. She did this without requiring repayment of the outstanding balance.

45. Counsel for Mr Nguyen initially submitted that the Contract was a “sham”. Later he suggested that it provided a “veneer”. I do not accept the Contract was a misrepresentation of the parties’ real intentions. But it was clearly not the product of arm’s length negotiation. Rather, the driving force was Mr Corbett himself. Although the Contract is open to the interpretation that Ms Lyons was to be entitled to receive $800,000 on sale of the property irrespective of the amount she lent, it may be that all Mr Corbett wished to ensure was that if he borrowed further monies from Ms Lyons, she would be protected by being a secured creditor for the amounts actually lent. In my opinion, there is nothing wrong or discreditable with that in itself; however, it does show clearly that Mr Corbett knew that the Baulkham Hills property was at risk if he failed in the 2004 proceedings.

46. As I have mentioned, the 2004 proceedings went to trial (before Windeyer AJ) in May 2012 and his Honour delivered judgment on the substantive claims for relief later that month. Mr Corbett recovered a judgment of $24,281.26, representing the balance of his superannuation entitlements as agreed between the parties. But his Honour dismissed Mr Corbett’s claim that he was entitled to an additional $50,000 under the deed. As a result, the Nguyens’ cross-claim against their solicitor was dismissed.

47. Windeyer AJ delivered a separate costs judgment in June 2012. His Honour ordered Mr Corbett to pay 90% of the costs of the proceedings (subject to there being no costs for a particular day of the hearing). He ordered the Nguyens to pay their solicitor’s costs of the cross-claim, but ordered Mr Corbett to indemnify the Nguyens against those costs. He ordered Mr Corbett’s costs liabilities to be set off against the judgment sum and the costs of the security application which had been awarded in favour of Mr Corbett.

48. Mr Corbett was in Court when the costs judgment was delivered. He would have understood immediately that the effect of the judgment would be a substantial net payment to the Nguyens.

49. Helen (who was, I assume, in Vietnam at the time) said that she was aware that final orders had been made in the proceedings. She said that Mr Corbett told her no detail about the outcome of the proceedings, but she was aware that he had been partly successful and partly unsuccessful. She said she did not know one way or another about costs. Given all the money which Mr Corbett had expended on the proceedings and given the obviously large costs liability, Mr Corbett must have been extremely unhappy at the result. Mr Corbett may not have told her the full details, but it is difficult to accept that she would have been ignorant of the fact that the case resulted in him owing the Nguyens money.

50. At the end of July 2012, the solicitors for the successful cross-defendant wrote to the solicitors for the Nguyens, offering to settle the costs awarded to him in the sum of $99,000. In September, the solicitors for the Nguyens forwarded this letter to the solicitors for Mr Corbett. Correspondence continued between the solicitors for the Nguyens and the solicitors for Mr Corbett at least up until March 2013. At some later point, not identified in the evidence, the solicitors for Mr Corbett ceased to act.

51. In his affidavit, Mr Corbett acknowledged that at least some of this correspondence had been forwarded by email by his solicitors to him in Vietnam. Mr Corbett said, however, that he had not opened the emails. He said that his own solicitors were pursuing him for their own fees, which he did not consider he ought to have to pay. He said that he assumed that the emails were simply more demands for payment from his solicitors and that he ignored them. The emails were not in evidence and the issue was not further explored in cross-examination.

52. As I have mentioned, the joint application by Mr and Mrs Corbett for a divorce was lodged in May 2013. According to Mr Corbett, the initiative for the divorce came from him. Mrs Corbett had come to Vietnam in about February 2013 for the birth of Helen’s child. Mr Corbett said in his affidavit:

34.   In about May 2013, in Vietnam, I once again asked Avelina whether she would agree to a divorce. By that time, Avelina and I had been separated for approximately 13 years. I do not now remember the precise words that were spoken. However, to the best of my recollection, the discussion was something like:

Me:   “We have been living apart for 13 years now. I will be living permanently in Vietnam for the rest of my life. You don’t want to ever live in Vietnam, so I think it is in both our interests to get a divorce.”

Avelina:   “Alright then”.

Me:      “You can have the house”.

Mrs Corbett gave evidence to similar effect.

53. The application for the divorce was apparently prepared by Helen, with the help of Mr Corbett, using an “Application for Divorce” kit obtained from the Family Court website. It disclosed the date of separation as having been 1 January 2003.

54. The application was signed by Mr Corbett on 16 May 2013 in Vietnam. Helen said that she emailed it to Mark for Mrs Corbett to sign in Australia, which she did on 22 May, and that Mark then emailed it back to her. Helen lodged the application online on 22 May.

55. As at May 2013, there was still approximately $100,000 outstanding of the CBA mortgage loan. If the property was to be transferred, in whole or in part, to Mrs Corbett, then a re-financing would be required and Mr Corbett would need to satisfy the bank that he could meet the repayments. Helen discussed this issue with an Australian mortgage broker in May and June 2013. She was informed that CBA would not agree to change the mortgage from Mr Corbett’s name to Mr and Mrs Corbett’s names, and that it was difficult to find a bank which would lend against foreign income, but that WBC would be prepared to make the loan.

56. The desire to refinance with another bank meant that it was necessary to retain an Australian solicitor to undertake the necessary conveyancing work. Helen was given the name of Mr Aaron O’Rourke, solicitor, and retained him for this purpose. Subsequently, an application was made to WBC and a loan of $100,000 was approved on 8 August 2013.

57. On 7 August 2013 the caveat in favour of Ms Lyons was withdrawn, despite moneys still apparently being owed. Mrs Corbett was asked by Helen to request Ms Lyons to withdraw the caveat, and she did so. Mrs Corbett said that at the time she was aware of the caveat, but gave no further details.

58. As I have mentioned, the transfer was dated 12 August 2013. It was prepared by Mr O’Rourke, who signed it on behalf of Mrs Corbett. I infer that this was done under the instructions of Helen. Mr O’Rourke then sent the document to Vietnam for execution by Mr Corbett. It was signed by Mr Corbett and witnessed by Helen. The form used was a form of transfer without monetary consideration. The consideration was stated as “none”.

59. An application was made in Mr Corbett’s name for exemption of the transfer from stamp duty. For this purpose, Mr Corbett signed a form styled, “Exemption from Duty – Transfers between Married Couples and De Facto Partners”. The form contained questions directed towards the grounds for exemption. Mr Corbett in answering the form described Mrs Corbett as his wife and ticked the box adjacent to the following option:

The dutiable property is residential land, that is either:

Land that has erected on it a dwelling, which at the time of transfer was used as our principal place of residence, or

…

60. Clearly, Mr O’Rourke prepared the transfer and the application for exemption on the understanding that Mr Corbett and Mrs Corbett were a married couple. Mr O’Rourke did not give evidence. There is no suggestion that he knew when he prepared the documents that in fact an application for divorce had been lodged, or that when he lodged the documents that the order for divorce had actually been made. However, these facts must have been known to Mr Corbett and to Helen.

61. Mr Corbett’s statement that the Baulkham Hills property was his and Mrs Corbett’s “principal place of residence” is not consistent with the statement in the joint application for a divorce about separation in 2003, nor with Mr Corbett’s affidavit evidence about when he began to live in Vietnam. When pressed about this inconsistency in cross-examination, Mr Corbett could only offer that he must not have read the form closely.

62. Mrs Corbett said that Ms Leonard, who worked at the Australian Taxation Office, had told her that a transfer of only half the property would avoid incurring stamp duty. Mrs Corbett said she had then relayed this advice to Helen. Helen said that, although she now realised the advice was incorrect, she did not realise that at the time.

63. I do not accept that the operative reason for the transfer being lodged in the form in which it was lodged was to avoid having to pay stamp duty. Ms Leonard was not called as a witness and there is no independent evidence to substantiate what she said to Mrs Corbett.

64. In any event, even if Ms Leonard did give such advice, it would have been overtaken by events. In Helen’s affidavit, she stated that she had asked Mr O’Rourke “to arrange for [her] parents to be exempted from having to pay stamp duty on the transfer”, and it is clear that Mr O’Rourke was indeed responsible for the preparation of the necessary documents. There is no reason to suppose Mr O’Rourke had some sort of mistaken view about how stamp duty worked. I think the proper inference is that the transfer was done in two stages simply because Mr Corbett needed more time to pay off the mortgage and a mortgagee would be unwilling to allow the transfer of the entirety of the property to Mrs Corbett who had little to no income.

65. The WBC loan was repayable at a rate of $998 per month, resulting in a term of 12 years. Mr Corbett said that he ceased putting money into the joint bank account in February 2014, but he continued to pay down the loan, presumably by making direct payments.

66. Meanwhile, the Nguyens had settled their liability for their former solicitor’s costs of the 2004 proceedings in the sum of $90,000. On 8 August 2013, they issued a Statement of Claim out of the Local Court for $90,000 together with interest.

67. In his affidavit, Mr Corbett relevantly said:

49.   At the time of the events set out in paragraphs 33-48 above [from August 2013 to June 2015], I was aware that there were outstanding costs orders against me arising from the [2004] Proceedings. However, I was not aware that the defendants in those proceedings were pursuing recovery of their costs. In particular, I was not aware of the Local Court Proceedings or the judgement in those proceedings.

50.   When I arranged to transfer a half share in the Baulkham Hills House to Avelina in August 2013, it was over a year after the judgment in relation to costs for the Previous Supreme Court Proceedings had been handed down and to my knowledge none of the parties in those proceedings had made any attempt to seek recovery of their costs from me.

68. Of course, it may be accepted that in August 2013 Mr Corbett was unaware of the Nguyens’ proceedings in the Local Court to enforce the costs indemnity: those proceedings were not commenced until August 2013 and judgment was not obtained until December. But, insofar as this evidence seeks to convey that Mr Corbett was unaware at the time of the first transfer of the likelihood of being pursued for costs, I do not accept it. The 2004 proceedings were hard-fought and expensive. In my opinion, any reasonable person in Mr Corbett’s position would have appreciated that sooner or later the costs orders would be enforced. Mr Corbett conceded in cross-examination that he had no reason to think that the Nguyens would not enforce the costs orders. Even if (which I do not necessarily accept) Mr Corbett had no express information at the time as to the progress of the costs assessment, he cannot have been unaware that the costs liability was hanging over his head.

69. The Statement of Claim was delivered to Mark at the Baulkham Hills property by a licensed process server. Mr Corbett’s affidavit stated that a copy of the Statement of Claim had been emailed to him in Vietnam by Mark on 4 October 2013. Mr Corbett claimed that he had not opened the email, and had not appreciated that he was being pursued for payment. Mr Corbett was cross-examined on this before me. It emerged that, at around the time Mark sent his email to Mr Corbett, they had a conversation which referred to the receipt of a document. However, Mr Corbett maintained that he was not told the nature of the document and that he did not open the email.

70. Following Mr Corbett’s cross-examination, the email was called for and produced to the Court. The heading of the email is “Statement of Claim against dad”. I indicated to the parties that I would proceed on the assumption that, even if Mr Corbett had not opened the email, the title would have been visible to him. There was no demur from the defendants.

71. Mark’s email was sent not only to Mr Corbett but also to Helen. She was recalled to give further evidence on the issue. She said she opened the email, skimmed through the content so as to observe that it was a Statement of Claim and told her father that he should read it. Mr Corbett was not recalled to give any further evidence, although an opportunity was afforded for him to do so. There was no evidence from Mark.

72. This sequence of events reflects poorly on Mr Corbett’s credit. Even if he did not open the email (which I do not accept), the title and the description given to him by Helen would clearly have conveyed to him that a claim was being made against him; it is not suggested that at the time there were any other potential claimants against him apart from the Nguyens. His failure to disclose this makes the evidence that he gave in his affidavit, and repeated in cross-examination, seriously misleading. It was far from being the whole truth.

73. Default judgment was entered against Mr Corbett in the Local Court proceedings on 24 December 2013 in the sum of $93,960.45. Following the entry of judgment, the Nguyens sought to have the judgment executed. They first sought to have execution levied against any available personal property of Mr Corbett. For this purpose, a Sheriff’s officer visited the Baulkham Hills property on 26 February 2014. He spoke to Mark and left empty-handed. Mark told Mrs Corbett (who was in Vietnam staying with Helen) about this. According to Mrs Corbett’s affidavit:

82.   On 26 February 2014 or a day or so later, Mark spoke to Helen and me on Skype from Sydney and said words to the effect: “Some people from the Sheriff came asking for Dad. I told them you and Dad are separated and he lives in Vietnam and they left. I think it was about some money Dad owes.”

74. Remarkably, when cross-examined about this paragraph in her affidavit, Mrs Corbett professed herself unable to recall anything about it. Mr Corbett, in cross-examination, said Mark had told him about the Sheriff’s officers in a telephone conversation. Mr Corbett could not recall the exact conversation, but eventually said that Mark had told him that a man who was probably from the Sheriff’s office had come to the house looking for him.

74. Meanwhile, an application to the Family Court was being prepared for consent property settlement orders. The application was taken from a standard form apparently published online and completed by Helen with assistance from Mr Corbett.

75. The orders sought relevantly were:

1.   That the Respondent Wife and Applicant Husband will within 60 days of the date of these orders take all necessary steps and execute all necessary documents to transfer all of the Applicant Husband’s right title and interest in the [Baulkham Hills] property…to the Respondent Wife.

2.   That other than set out in these orders, the parties have the sole right, title and interest in any property which is at the date of these orders in their respective possession, title or name including but not limited to moneys held in bank accounts or other investments, shares or unit in public companies or trusts, and motor vehicles, and each party will be solely liable for and indemnify the other party against all personal liabilities.

77. Part C of the application contained questions about other court orders and proceedings and related issues. Question 19 asked:

Is there any person who may be entitled to become a party to the case under Subsection 79(10) or subsection 90SM(10) of the Act?

78. FLA s 79(10) provides:

(10)   The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a marriage (the subject marriage):

(a)   a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;

…

(b)   any other person whose interests would be affected by the making of the order.

Section 90SM(1) confers the same entitlements as those in s 79(10), but in the context of an application for an order by a party to a de facto relationship.

79. In the circumstances, the question required the disclosure of the Nguyens’ claim (and probably also the loan from Ms Lyons). Instead, it was answered “No”. In cross-examination, Mr Corbett conceded that he had made no investigation as to what the legislative provisions referred to actually said Helen said she could not recall whether she had made any such investigation, but I am satisfied that she did not.

80. Part H of the application contained financial details. The only asset disclosed was the Baulkham Hills property. There was no reference to the Aardwolf business. Mr Corbett disclosed a gross weekly income of $770 ($40,000 annually).

81. Questions 50 to 57 in Part H required details of any liabilities of the applicant (Mr Corbett) and respondent (Mrs Corbett). Under question 50, relating to any “[a]mount owing on home mortgage”, Mr and Mrs Corbett disclosed the mortgage to WBC, with liabilities of $48,500 each. Question 56 asked for “[a]ny other liabilities”. It was left blank for Mr Corbett. In cross-examination, Helen said that at the time she had asked Mr Corbett what his liabilities were and that he did not tell her of any liabilities other than the WBC mortgage. Mr Corbett said he did not include the liability to the Nguyens because they were only “[p]otential liabilities” and he “hadn’t been summonsed”. Nor did he include a claim for $9,000 that his former solicitors had made against him, because he “didn’t agree with it”. Nor did he refer to the loan from Ms Lyons, which he said was “just an oversight”.

82. Questions 67 to 71 in Part H dealt with the proposed division of property. The application form provided for the applicant to answer and for the respondent to indicate agreement or otherwise to the statement made by the applicant.

83. Question 68 asked:

Were the financial contributions of the parties the same? (see s79(4)(a) or if a de facto relationship s90SM(4)(a) of the Family Law Act)

Mr Corbett answered “no” and provided the comment:

I made the greater contribution, as I was the financial provider.

84. Question 69 asked:

Were the non-financial contributions from each of the parties the same? (see s79(4)(b) or if a de facto relationship s90SM(4)(b) of the Family Law Act)

Mr Corbett again answered “no”, and commented:

My wife took care of the household affairs, as I worked full-time.

85. Mrs Corbett agreed with both answers. In her affidavit, she said that Mr Corbett “was always the main income-earner”.

86. The application required both the applicant and respondent to sign at the foot of each page and also to sign and date a “Statement of Truth”. Each Statement relevantly provided:

Mark [X] every box that applies.

…

2  O   I have read this application and the draft consent orders which I am now requesting this Honourable Court to make.

…

6  O   Apart from column 2 [in the case of Mrs Corbett’s Statement of Truth, this was obviously a misprint for “column 1”] of Parts H and I [not included in Mr and Mrs Corbett’s application] the matters stated in this application that are within my personal knowledge are true and all other facts are true to the best of my knowledge, information and belief and the orders sought are supported by evidence.

…

9  O   For financial orders - I have read and considered in the case of a marriage section 72, section 79, and subsection 75(2) and where there is a superannuation interest, Part VIIIB of the Family Law Act and in the case of a de facto relationship section 90SF, section 90SM, and where there is a superannuation interest, Part VIIIB of the Family Law Act.

…

I have read and understood this Statement of Truth

[A signature is provided]

87. None of the boxes were marked ‘X’ in either of Mr Corbett’s and Mrs Corbett’s Statement. But I do not think that matters. The parts of the Statement which I have quoted were clearly applicable.

88. Mr Corbett signed the application in the presence of Helen. Helen then sent the form to Mark to give to Mrs Corbett to sign. Both signatures appeared next to the typewritten date of 2 February. Mrs Corbett, under cross-examination, said Helen “explained” the document, but did not say what exactly was explained. She also said she did not add anything to the documents and simply signed them. She could not recall when she sent the documents back to Helen. Helen lodged the application on 4 March 2014.

89. The Family Court apparently sought further material in support of the application by way of requisition, although the requisition itself is not in evidence. This resulted in an affidavit being sworn by Mr Corbett. The affidavit was prepared by Helen using information provided by Mr Corbett. It was sworn on 17 April 2014 and was filed electronically by Helen. It showed Mr O’Rourke’s firm as the address for service. There is no evidence as to whether Mr O’Rourke played any part in drafting the affidavit.

90. The affidavit relevantly stated:

4.   I have been living in Vietnam since 1994 for work. My ex-wife and I have lived separate lives since then, and whilst I was living in Vietnam, my ex-wife continued to live in Australia in the family home. Since 1975 until the beginning of 2014, I always supported my ex-wife financially as she stayed at home to look after our 3 children and our only granddaughter. All of our three children are adults: 30, 36 and 37 years old. Our granddaughter is 14 years old, and she lives 50% of the time in the family home with our youngest son and my ex-wife.

5.   Because of the years and distance apart, it was inevidable [sic] that we would eventually get divorced. I also now have another partner in my life.

6.   I have not been back to Australia since the end of 2012. My eldest son and daughter all live and work in Vietnam. My only grandson also lives with my daughter in Vietnam. Since I see my immediate family here on a regular basis, I do not feel the need to go back to Australia and I no longer have any other affairs or commitments to deal with in Australia.

91. Mr Corbett also included in the affidavit in relation to his financial position:

There is $30,603.22 left to pay off the joint home loan, that I will pay out in full once we receive the consent orders.

92. The affidavit apparently satisfied the Family Court and formal orders were then made on the papers on 8 May.

93. The statement that Mr Corbett had no other “affairs or commitments” in Australia was false. It ignored the liability to the Nguyens which Mr Corbett was aware of. It also ignored the liability to Ms Lyons. In cross-examination, Mr Corbett said he did not think it was necessary to include the costs liability, as it had not been quantified. When asked why he did not disclose the moneys owing to Ms Lyons in the affidavit, Mr Corbett replied: “relationships were quite friendly and I don’t think I had to do it. I have intentions of paying that off”.

94. Meanwhile, in March, Mr Nguyen had caused a writ of execution to be recorded on the title of the property after the Sheriff failed to execute the writ for levy of personal property in February. However, the writ only related to Mr Corbett’s half share of the property as a joint tenant, and did not permit the property to be immediately sold, although it did prevent further dealings while it remained on the register. In May, Helen instructed Mr O’Rourke to prepare the transfer pursuant to the Family Court orders. Mr O’Rourke carried out a title search and discovered the writ, meaning that the transfer of the rest of the title to Mrs Corbett could not be effected. In Helen’s affidavit, she said that, after liaising with Mr O’Rourke, she showed the writ to Mr Corbett and that he responded: “Just leave it for now”.

95. In September 2014, the Nguyens commenced further proceedings in this Court, seeking preliminary discovery. Orders were sought that Mrs Corbett be examined as to Mr Corbett’s whereabouts and that she discover documents relating to the first transfer and the borrowing from WBC. Orders were also sought for discovery from WBC and from Ms Lyons.

96. Mrs Corbett attended Court on 27 February 2015 when orders were made against her. Neither Mrs Corbett nor Ms Lyons was represented in the proceedings.

97. Mr Nguyen’s writ lapsed in March 2015, 12 months after it had been lodged, and for some reason it was not renewed.

98. In late May 2015, Mrs Corbett retained a firm of solicitors, Hicksons, to act for her. The retainer was organised by Helen. Hicksons were subsequently able, because of the lapse and non-renewal of the writ, to have it removed from the register. They were then able to arrange the transfer of Mr Corbett’s remaining interest in the Baulkham Hills property to Mrs Corbett, which was registered on 2 July. The transfer was dated 22 June.

99. The present proceedings were commenced against Mr Corbett and Mrs Corbett in August 2015.

100. Mr Corbett’s liability under the Local Court judgment remains unsatisfied. In April 2017, an application for the assessment of costs for the 2004 proceedings was filed by Mr Nguyen in this Court. The total of the bill amounts to $410,955.32.

Consent property settlement orders and second transfer: FLA s 79A

101. In Semmens v Commonwealth (1989) 99 FLR 294, a Full Court of the Family Court set out the principles which apply when the Court is considering the making of property settlement orders under s 79 when that may affect the position of a third party creditor of one of the parties to the marriage. The Full Court said (at 302-303):

Neither the Family Law Act nor the Rules of Court require notices to be given to third parties in proceedings under ss 79, 86 or 87. Nevertheless there are cases where the orders sought by one or both of the parties may impinge upon the legitimate rights of third parties. Whilst it would not be appropriate to require parties to such proceedings to give notice in every case to all third parties who are or may be creditors of one or both of the parties, nevertheless in particular cases the failure by the parties to do so (or the court to direct such a course) may prejudice the rights of third parties.

…

Whilst we think it inappropriate, in the absence of Rules of Court to this effect, to require notices to be given to third parties in all such circumstances, it must be recognised that the failure to do so in particular cases can severely impinge upon the "legitimate interests of third parties" and may almost inevitably in many cases constitute a "miscarriage of justice" within s 79A. Consequently, in our view, where in a proceeding under ss 79, 86 or 87 it appears to either of the parties that there are interests of third parties which might be adversely affected by the orders which are being sought or the terms of the agreement, justice and common sense dictate that those third parties be given notice.

102. As I have already described, the information put forward in support of the application for consent orders was seriously misleading. The statement of Mr Corbett’s liabilities falsely omitted his costs liability from the 2004 proceedings. The statement that there was no person who might be entitled to become a party to proceedings, made in answer to question 19, was wrong. So was the statement in paragraph 6 of Mr Corbett’s affidavit that he no longer had any affairs or commitments in Australia. For reasons given below in connection with s 37A, I am satisfied that Mr Corbett was aware of a claim being pursued against him by the Nguyens, and made the application at least in part in an attempt to defeat or delay such claims. However, it is not necessary to rely on that finding for the purposes of s 79A. Even if the statements made to the Family Court had not been deliberately incomplete or misleading, that would make no difference. The question is an objective one which depends upon the impact of inaccurate or misleading statements on the Court’s process of adjudication.

103. Having regard to the principles stated by the Full Court in Semmens, I am satisfied that had proper disclosure been made, the Family Court would not then have proceeded immediately to the making of the orders. The Court would have been required to consider the impact on the Nguyens. Further information would have been required and, probably, the Nguyens would have been joined. It is not necessary to consider what orders would ultimately have been made if the Nguyens had been joined to the Family Court proceedings. It is enough to say that orders would not have been made as they were on 8 May 2014: compare Chan v Acres (2013) 51 Fam LR 90 at 107 [94] (Kunc J). It follows that the orders must be set aside.

104. The second transfer therefore cannot stand. Given that the transfer has been registered, it is not practicable to seek to have it delivered up and cancelled; rather, I will order that the defendants take steps to reverse it.

105. Counsel for the defendants foreshadowed that, should the consent orders be set aside, an application would still be pursued for property settlement orders in favour of Mrs Corbett under s 79. Section 79A expressly contemplates that that may occur. Counsel for the defendants foreshadowed that they would be seeking to have this application remitted to the Family Court. I indicated to the parties that I would consider the question following the delivery of judgment.

Second transfer: CA s 37A

Setting aside consent orders

106. Green v Schneller (2002) 11 BPR 20,935 involved a defendant who had costs orders made against her in defamation proceedings. The defendant transferred her interest in a property to her husband pursuant to consent orders under FLA s 79. Barrett J (as his Honour then was) analysed the authorities on the setting aside of consent orders pursuant to s 37A. His Honour held that a transfer could be set aside pursuant to s 37A without setting aside the earlier s 79 order: see at 20,940-20,941 [23]-[25], 20,942 [31]. As I have mentioned, the defendants before me sought to reserve their position on the accuracy of his Honour’s decision for appeal but accepted that I would follow it myself.

107. I have already concluded that the second transfer should be set aside because the underlying orders ought to be set aside pursuant to s 79A. For completeness, I now consider whether the second transfer would be set aside under s 37A independently of s 79A.

Intent to defraud creditors

108. The meaning of “intent to defraud creditors” was considered by the High Court in Marcolongo v Chen (2011) 242 CLR 546. The Court stated that the term “defraud” was to be understood as if it read “delay, hinder or otherwise defraud”: at 554 [19]. The Court also held that the intent to defraud need not be the sole, or even the predominant, motive of the transferor: at 565 [57]-[58].

109. The question of intent is directed towards the person who “made” the alienation. On this issue, Barrett J in Green v Schneller said that despite the interposition of a court order, the relevant alienation is made by the person who applied for the consent orders under s 79: at 20,942 [29]. The enquiry is, therefore, to focus on the intent of Mr Corbett.

110. When the consent orders were made by the Family Court in May 2014, Mr Corbett was well aware of the costs orders which had been made against him almost two years before. As I have found at [72] above, he had been aware since the previous October of the Local Court proceedings against him, and he knew the Sheriff had visited the Baulkham Hills property in February. I have no doubt that he was aware that the Nguyens were chasing him for costs and that the Baulkham Hills property, as the only asset in his name in the jurisdiction, was, or would be, their target.

111. As already mentioned, the judgment in the Local Court proceedings against Mr Corbett remains unsatisfied. In cross-examination before me, Mr Corbett was asked about his attitude towards payment. He professed himself willing to negotiate with the Nguyens about their costs. Nevertheless, I think it is obvious that Mr Corbett has no intention of paying anything to the Nguyens by way of costs if he can avoid it. There is no occasion for any negotiation; liability for the costs has been determined and Mr Corbett is legally obliged to pay them in full. Mr Corbett may contemplate some sort of compromise with the Nguyens involving resolution of all of the disputes between them (which are not limited to those canvassed in these proceedings), but if so, I think he wishes to bargain with the Nguyens on the basis that it will be difficult, or impossible, for them to enforce the costs orders against assets in Australia. There is no reason to suppose his attitude was any different in May 2014.

112. As already mentioned, the application for consent orders to the Family Court and the subsequent affidavit by Mr Corbett falsely omitted to refer to Mr Corbett’s costs liabilities to the Nguyens (and his borrowings from Ms Lyons). I do not accept the explanations offered by Mr Corbett for this in his evidence. I am satisfied that he made these false statements because all he was interested in was procuring the making of the consent orders. At best, his conduct was reckless and it may have been worse than that.

113. The consent orders had the effect of a final and binding compromise of the property rights Mr and Mrs Corbett had against each other arising out of their marriage. Mrs Corbett received the whole of Mr Corbett’s remaining interest in the Baulkham Hills property. In my opinion, the consent orders do not represent a genuine compromise. There is no evidence that Mr Corbett ever undertook any real analysis of what property division orders would be made by the Family Court in the event of a dispute. As the application itself stated, Mr Corbett had made the major financial contribution to the acquisition of the matrimonial assets. This is confirmed by Mrs Corbett’s own affidavit in these proceedings. A “compromise” which saw Mrs Corbett receive 100% of the Baulkham Hills property could never have been reasonable. The consent orders were simply a device to transfer the remainder of the property into her name.

114. In his affidavit, Mr Corbett said:

23.   At the time of the events referred to in the previous two paragraphs, [i.e. in 2008 and 2009 when Mr Corbett raised the possibility of divorce with Mrs Corbett] it was my intention to give to Avelina whatever property I owned, in Australia, as part of a divorce settlement, in particular the Baulkham Hills House. … [A portion of the paragraph was struck out at the hearing] … I thought that this was fair, given that: she was still living there, and I was not; I had no intention to return to Australia; she had contributed more to purchase the property than I had; and I felt responsible for her losing the North Rocks Property when she was made bankrupt in the early 1990s.

115. I accept that Mr Corbett’s immediate motive in making the transfer was to benefit Mrs Corbett. But it was not correct that Mrs Corbett had contributed more to the purchase of the Baulkham Hills property than Mr Corbett had. Mr Corbett may well have been influenced by the other considerations that he mentioned. However, he also candidly admitted in cross-examination that he preferred Mrs Corbett to get the house rather than for the Nguyens to get it. I am satisfied that his purpose, at least in part, was to defeat or delay attempts by the Nguyens to enforce payment against the property.

116. For these reasons, I conclude that the transfer was made by Mr Corbett with intent to defraud his creditors in the relevant sense. Mr Nguyen is entitled to succeed under s 37A with respect to the first transfer, subject to the defence under subsection 37A(3).

Purchaser in good faith

117. Section 7 of the Conveyancing Act relevantly defines a purchaser as:

a purchaser for valuable consideration, and includes a lessee, mortgagee, or other person who for valuable consideration acquires an interest in property … and purchase has a meaning corresponding with that of purchaser.

118. The second transfer was expressed to be in consideration of the orders made by the Family Court, and those orders did effect a compromise of Mrs Corbett’s rights as against Mr Corbett. This was valuable consideration irrespective of the strength of Mrs Corbett’s claims: Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 at 698. Mrs Corbett was, therefore, a “purchaser” in the relevant sense.

119. The next question is whether Mrs Corbett acted in good faith.

120. As already mentioned, the second transfer did not take place until June 2015. But I think that the question of good faith has to be determined as at the date the consent orders were made by the Family Court (8 May 2014). Once the orders had been made, Mrs Corbett was entitled (and Mr Corbett was obliged) to proceed with the transfer. Mrs Corbett had compromised her rights and if she did so at that point in good faith, then subsequent knowledge of Mr Corbett’s intent to defraud would not affect the position.

121. Mrs Corbett, in her affidavit, said:

Only James was named as the owner of the Property. However, I always considered it to be my home.

122. It is unclear what Mrs Corbett meant by this, but if and to the extent that she had the view that the property was hers exclusively, that was not reasonable. In any event, the question of good faith must be determined by reference to the particular transaction under which Mrs Corbett was “purchaser”, namely the obtaining of the consent orders.

123. I have already concluded that there was no genuine element of compromise in the consent orders. I think that if Mrs Corbett had read and considered the application properly, she should have appreciated this.

124. The application had to be signed at the foot of each page by Mrs Corbett as the respondent and she did so. This included the page containing question 19, about third party interests being affected by the proceedings. Mrs Corbett was required to acknowledge that she had read and understood the Statement of Truth. That directed attention to the provisions of s 79, including potential third party interests. There is nothing to suggest that Mrs Corbett made any enquiries about this. The Statement of Truth also directed attention to the terms of the orders and the sufficiency of evidence to support them. There is nothing to suggest that Mrs Corbett considered this either.

125. Often, an absence of notice of the intent to defraud is sufficient to establish good faith. I consider the question of Mrs Corbett’s notice at a later point, but good faith is an independent requirement: Midland Bank Trust Co Ltd v Green [1981] AC 513 at 528. The application for consent orders was Mrs Corbett’s as well as Mr Corbett’s; on the face of it, she was party to misleading the Family Court. I am not satisfied that she signed the application genuinely believing that her matrimonial rights entitled her to the consent orders; she simply signed it because it was a necessary step in Mr Corbett giving her the remainder of the property. In my view, such conduct was not consistent with good faith.

126. Although under the consent orders Mrs Corbett gave up her matrimonial rights in exchange for the transfer of the balance of the property, I am not satisfied that she did so in good faith. The s 37A(3) defence fails. The second transfer is liable to be set aside under s 37A, independently of FLA s 79A.

First transfer: CA s 37A

127. The next question is whether the first transfer should be set aside as well as the second transfer.

Prejudice to Nguyens

128. As I have mentioned, the defendants contended that, as at the time of the first transfer, Mrs Corbett had equitable proprietary rights in the property which were at least extensive enough to support a half interest in the property. Accordingly, so they contended, the transfer of a half interest to Mrs Corbett did not prejudice the Nguyens.

129. In my view, this defence does not really arise in the circumstances of the case. The term “prejudice” must be understood in the context of s 37A, which includes hindering or delaying: see [108] above. The interest conferred on Mrs Corbett under the transfer was not just a half share in the property; it was a joint tenancy. If Mr Corbett had died, Mrs Corbett would have been left with the whole property, not just half of it. As subsequent events show, even if the Nguyens could have satisfied their claims from Mr Corbett’s remaining half share, it would still have been necessary to have the joint tenancy severed first. In my view, this is sufficient to establish hindrance or delay, and thus to establish prejudice arising out of the first transfer. It is not necessary to consider the extent of Mrs Corbett’s equitable interest, if any, in the property.

130. I will however consider the merits of the defence in case I am wrong in this view.

131. As I have mentioned, Mrs Corbett’s case for an equitable proprietary interest was put on the bases of both the “failed joint venture” equity (based on the principles in Baumgartner v Baumgartner) and proprietary estoppel. There were four components to Mrs Corbett’s alleged contribution to the Baulkham Hills property. The first component was the $25,000 (or $27,000 according to Mr Corbett) said to have been received from Mrs Corbett’s trustee in bankruptcy and contributed to the deposit on the Baulkham Hills property. The second was earnings Mrs Corbett contributed to the joint bank account. These were said to have amounted to approximately $250,000. The third component was some repairs and renovations to the house undertaken and paid for, it was said, by Mrs Corbett. These were said to have cost approximately $50,000. These three components totalled approximately $330,000. This was compared with Mr Corbett’s contributions. These were said to be confined to the joint bank account, to which Mr Corbett was said to have made contributions of $450,000. This resulted in a financial contribution by Mrs Corbett of 40% of the total. The fourth component was then said to be much greater non-financial contributions by Mrs Corbett, which, so it was argued, increased her equitable interest to well over 50%.

132. There are significant evidentiary and analytical problems with this case. In the first place, I have already rejected the suggestion that Mrs Corbett received a payment from her trustee which she applied to the deposit. I also think that there is no justification for treating Mr Corbett as having contributed nothing to the deposit. The evidence from Mr Corbett, which was not contested by Mrs Corbett, was that a deposit of $57,000 was paid. That money must have come from somewhere. Mrs Corbett was bankrupt. The only person who could have provided the deposit was Mr Corbett. It was suggested that he borrowed $20,000 from Ms Lyons and $10,000 from his mother, but this was only touched on in the evidence. It may be that it was repaid by Mr Corbett. In any event, the remaining $27,000 must, it seems, have come from him.

133. As to the contributions to the joint bank accounts, the calculations presented were that over the period 1997 to 2000 Mrs Corbett had contributed $120,000 as against Mr Corbett’s $140,000. Between 2001 and 2005 Mrs Corbett is said to have contributed slightly more than $120,000 compared with $120,000 from Mr Corbett. Mrs Corbett ceased working in 2006 and the only contribution alleged after that point was approximately $10,000 in superannuation; Mr Corbett was credited with $192,000 over the period from 2006 to 2013 (this was apparently calculated at $2,000 per month for eight years; but it is not clear, having regard to Mrs Corbett’s evidence, whether this should have been calculated at US$2,000).

134. On these calculations, Mrs Corbett is supposed to have contributed over the eight years from 1997 to 2005 more than $240,000 to the joint account, only slightly less than the amount Mr Corbett is supposed to have contributed ($260,000). These figures are difficult to accept in the light of the evidence that Mr Corbett made the major financial contribution to the household. There is also Mr Corbett’s evidence, already referred to, that from 2000 he was making regular payments which covered the mortgage repayments. Counsel for Mrs Corbett did not challenge this evidence in cross-examination or otherwise seek to deal with it. Furthermore, approximately $100,000 in debt remained when the property was refinanced with WBC in August 2013. The whole of that balance was repaid before the transfer took place in 2015 and this does not appear to have been taken into account in the calculations. (Some of the final repayment was said by Mr Corbett to have been funded by his mother, Ms Lyons, Helen and Mrs Corbett, but it was Mr Corbett’s debt which was being discharged and if these were loans or gifts then they would presumably be to Mr Corbett’s account)

135. There was no independent verification of the figures which underlay the calculations, although there appears to be no reason why bank statements should not have been obtainable at least from 2010 or so onwards. (In saying this, I acknowledge that a few bank statements from that period were tendered for other purposes, but this only underlines the omission). Given the uncertainties and inconsistencies to which I referred, I would not be prepared to accept the calculations as being even approximately accurate.

136. The Baumgartner equity focuses on the acquisition of property attributable to the pooling of resources by the parties to the relationship in question. In a case such as the present, the equity depends on the extent to which the party in whose name the property was acquired is able to pay off the mortgage debt as a result of the pooling of income: Baumgartner at 148-149, 153. As already mentioned, the evidence demonstrates that in August 2013 there was approximately $100,000 to pay off the mortgage on the Baulkham Hills property. But there is no evidence as to how much was initially borrowed, and accordingly, it is not possible to calculate the reduction in the mortgage debt over the intervening period, even if the parties’ respective contributions could be confidently determined for that period. The analysis is further complicated by the evidence of Mr Corbett, already referred to, that from 2000 onwards he was effectively living in Vietnam and separated from Mrs Corbett but was paying off the mortgage. On this state of affairs, the “joint endeavour” would have come to an end in 2000 and any equitable proprietary interest based on contribution would have ceased to accrue from this point.

137. The fourth component of the calculation, which involves a further adjustment of 10% or more in Mrs Corbett’s favour because of her greater non-financial contribution, runs into the same difficulties. The analysis is further complicated by the fact that each of the children turned 18 during the relevant period (Ben in 1994, Helen in 1995 and Mark in 2001). Mark is still, at the age of 34, living at the Baulkham Hills property, and there was no evidence as to when Ben and Helen moved out. They may have themselves made contributions, non-financial or financial, to the running of the household once they had left school.

138. As to the third component (the renovation works), invoices were provided for most of the works, although some of the invoices were actually addressed to Helen, not Mrs Corbett. Mrs Corbett’s affidavit contained some statements to the effect that payment was made partly from the joint account and partly from loans from Ms Lyons. That evidence was successfully objected to and no further evidence on the subject was elicited from Mrs Corbett in chief. There was no documentary evidence presented. I am thus left without evidence to establish that Mrs Corbett paid for the works herself, and to the extent that they may have been paid out of the joint bank account they would appear to have been funded by Mr Corbett. In any event, given that the works were undertaken in 2006 and 2012, it is questionable whether they took place within the period of the “joint endeavour”.

139. For these reasons, I think it is not possible on a Baumgartner analysis to attribute any particular share of the property to Mrs Corbett. (There is a further complication about how the Baumgartner analysis would apply for the period when Mrs Corbett was bankrupt, but it is not necessary to go into this for present purposes.)

140. It remains open to Mrs Corbett, where a Baumgartner analysis is not available, to justify her claim by reference to the doctrine of proprietary estoppel. But proprietary estoppel depends upon capital expenditure on the property in question. If it is legitimate to take account of mortgage repayments at all, then it is the capital component which matters. As already mentioned, Mrs Corbett’s case did not quantify the capital repayments made on the mortgage from the joint bank account. Nor is it clear how much of the repairs and renovations consisted of capital expenditure.

141. Furthermore, to the extent that the repairs and renovations constituted capital expenditure, relief by way of proprietary estoppel is discretionary and depends, or may depend, on the type of claim. Where a promise is made to the plaintiff of a certain interest in the property, then the usual remedy is an order compelling the defendant to transfer the interest so promised: Ashton v Pratt (2015) 88 NSWLR 281 at 307 [142]. I did not understand Mrs Corbett’s proprietary estoppel claim to be put on this basis, and she gave no evidence of having undertaken the works in reliance on any such promise. A proprietary estoppel claim could be put on the alternative basis that Mr Corbett had “stood by” while Mrs Corbett had done works on the property. A claim of that type would, however, not necessarily result in the recognition of a proprietary interest co-extensive with what was spent. It might be appropriate to take into account the extent to which the capital value of the works in question had depreciated by the time the issue came to be considered: Milling v Hardie [2014] NSWCA 163 at [55(3)], [69] (a promise case, so applying a fortiori). Mrs Corbett’s case did not include any evidence that the works had contributed to the value of the property as at August 2013. Accordingly, even if the other requirements for proprietary estoppel had been satisfied, the extent of any resulting proprietary interest would be unclear.

142. For these reasons, I conclude that it has not been established that Mrs Corbett had an equitable proprietary interest exceeding a 50% value of the property (or indeed, that she necessarily had any equitable proprietary interest in the property) at the time of the first transfer.

Intent to defraud creditors

143. In August 2013, when he made the first transfer in Mrs Corbett’s favour, Mr Corbett was not aware that proceedings had been commenced against him to enforce the costs orders. But he was aware that the orders had been made against him in 2012 and that the costs liability would be substantial. For reasons given at [68] above, I am satisfied that, if Mr Corbett did not know in August 2013 that the Nguyens were enforcing the liability against him, he knew that he could expect them to do so: compare Green v Schneller at 20,952 [93]).

144. It is clear that the first transfer was made pursuant to an overall plan to pay off the debt on the property as quickly as possible and to transfer the whole of the property, unencumbered, to Mrs Corbett. The prejudice to Mr Corbett’s creditors was obvious. In fact, Mr Corbett had clearly been aware, at the latest from mid-2008, when the application for security was made in the 2004 proceedings, that his assets were at risk. He had taken steps in October 2008 to divest himself of his interest in Aardwolf Vietnam Limited. In February 2011, he had taken steps to protect Ms Lyons by giving her security over the Baulkham Hills property for any future loans she might make. The first transfer comfortably fitted into this pattern.

145. Mr Corbett gave false instructions to his solicitors as part of his opposition to Nguyens’ application for security for the costs of the 2004 proceedings. He also falsely asserted that the Baulkham Hills property was his and Mrs Corbett’s matrimonial home in August 2013 in order to obtain an exemption from stamp duty. Although these falsehoods do not directly bear on what Mr Corbett’s intent was in making the first transfer, they show he was quite capable of acting dishonestly in order to secure a perceived financial advantage.

146. Mr Corbett’s evidence was that he had planned to transfer the property to Mrs Corbett for some time. The difficulty with this is that it does not explain why the transaction was effected when it was. On Mr Corbett’s evidence, he raised it with Mrs Corbett completely out of the blue in May 2013, not long after the Nguyens happened to have obtained a large costs order against him.

147. I do not accept that this was merely a coincidence. I am satisfied that Mr Corbett’s purpose, or least one of his purposes, in effecting the first transfer was to defeat or delay the Nguyens’ enforcement of their costs orders. The transfer is caught by s 37A(1).

Purchaser in good faith

148. Counsel submitted that Mrs Corbett was a “purchaser” because the first transfer involved a compromise of her matrimonial rights.

149. As I have mentioned, the transfer form described the consideration for the transfer as “none”. I am not sure that it is open to Mrs Corbett now to contend that this statement was incorrect. It was submitted for Mrs Corbett that “none” should be understood as a statement only that there was no monetary consideration, but there was no evidence from Mr O’Rourke, who prepared the form and signed it on Mrs Corbett’s behalf, to this effect. In any event, I do not think that the first transfer is properly characterised as a compromise. Mr Corbett’s account of the conversation in which Mrs Corbett was told she would be receiving the property (quoted at [52] above) did not refer to any such compromise; all that Mr Corbett claims he said was that he would give her the property. Mrs Corbett’s matrimonial rights could only be surrendered through the making of an order under FLA s 79 or a binding financial agreement: FLA, s 90G. After registration of the first transfer in August 2013, it remained open to her to pursue a claim against Mr Corbett for a property settlement out of Mr Corbett’s remaining assets. Accordingly, I think that the description in the form is the correct one; Mrs Corbett in fact provided no consideration for the first transfer and cannot be seen as a “purchaser” under that transfer. The s 37A(3) defence fails.

Notice of intent to defraud creditors

150. For completeness, I now consider whether, even if Mrs Corbett had been a purchaser in good faith for the purposes of the first transfer or the second transfer, she would have been a purchaser without notice.

150. Although not referred to in the parties’ submissions, CA s 164 needs to be considered. It relevantly provides:

Restriction on constructive notice

(1)   A purchaser shall not be prejudicially affected by notice of any instrument, fact, or thing, unless:

(a)   it is within the purchaser’s own knowledge, or would have come to the purchaser’s knowledge, if such searches as to instruments registered or deposited under any Act of Parliament, inquiries, and inspections had been made as ought reasonably to have been made by the purchaser, or

(b)   in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of the purchaser’s counsel as such, or of the purchaser’s solicitor or other agent as such, or would have to come to the knowledge of the purchaser’s solicitor or other agent as such, if such searches, inquiries, and inspections had been made as ought reasonably to have been made by the solicitor or other agent.

…

(3)   A purchaser shall not by reason of anything in this section be affected by notice in any case where the purchaser would not have been so affected if this section had not been enacted.

…

152. It was, and is, a rule of judge-made law in disputes concerning competing claims to property that an equitable interest does not prevail over a bona fide purchaser of the legal estate for value without notice of that interest. For the purposes of that rule, elaborate concepts of constructive notice developed, particularly in the context of real property under Old System title. Section 164 appears to have been enacted so as to specify the meaning of “notice” under the rule. There are some parallels between the bona fide purchaser rule and the effect of s 37A(3), but the analogy is not exact. Nonetheless, s 164 defines “notice” in general terms and, considering that it is found in the same statute as s 37A, as a matter of statutory interpretation s 164 would appear to govern the meaning of “notice” in s 37A(3). This approach has been followed in England under the corresponding provisions of the Law of Property Act 1925 (UK): see Lloyds Bank v Marcan discussed at [157] below.

153. There are three elements of notice under s 164(1). First, a purchaser will have notice if the fact in question is “within the purchaser’s own knowledge”. Second, a purchaser will have notice if the fact “would have come to the purchaser’s knowledge” if such of the specified searches, inquiries and inspections had been made “as ought reasonably to have been made by the purchaser”. Third, a purchaser will have notice if a solicitor or other agent of that purchaser, acting as such, has either of the first two elements of notice.

154. For the purposes of the first element, a question arises as to how the requirement of knowledge operates where the purchaser knows of facts from which the relevant fact may be inferred, but does not actually draw the inference. In my opinion, there is much to be said for the view that, in principle, that should be sufficient for the purposes of notice under s 164 (and therefore under s 37A as well). The relevant fact under s 37A is a state of mind: the intent of the alienor in making the alienation. This is not something which can be directly revealed by documents or by inspection of the land in question, as it may be for the purposes of applying the doctrine of bona fide purchaser to interests in Old System land. Strictly speaking, it is impossible to “know” what is going on in someone else’s mind. Often, in the absence of direct evidence (or, at least, reliable direct evidence) from the alienor, it is necessary to do what I have done in this case, which has been to infer the alienor’s subjective intent from the objective surrounding circumstances. Section 37A would have limited practical value if it did not reach cases where the purchaser simply fails to consider the alienor’s intent despite having knowledge of facts which would allow that intent to be inferred.

155. In my opinion, s 164 appears wide enough to cover conclusions which follow from known facts. Section 164(1) does not require that the relevant fact be “known” to the purchaser but only that it be “within the purchaser’s own knowledge”. In the ordinary use of language, a fact which is not immediately present to a person’s mind but can be deduced from other facts which can be recalled to mind can be said to be “within the knowledge” of that person.

156. The second element of notice under s 164 also calls for comment. On the face of it, s 164(1) in terms provides for a form of constructive notice. In this, it is consistent with the previous judge-made law concerning the bona fide purchaser doctrine: Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015) at [8-270]. Notice under s 37A would, therefore, likewise appear to include constructive notice under s 164(1).

157. In Lloyds Bank v Marcan [1973] 1 WLR 339, a husband granted a lease to his wife of his property for 20 years prior to it being seized by a mortgagee bank. Pennycuick VC dealt with similar provisions under the Law of Property Act 1925 (UK). His Lordship considered that notice under s 172(3), the equivalent of CA s 37A(3), now repealed, would “plainly include constructive notice” and that by reason of s 199(1), the equivalent of CA s 164(1), the wife was put on enquiry (as per sub-s (1)(a)) and the relevant facts were also within the knowledge of her agent solicitor acting in the transaction (as per sub-s (1)(b)): at 346-348. In any event, his Lordship found that the wife had actual notice of her husband’s fraudulent intent. The decision went on appeal but the issue of notice was not discussed.

158. Counsel for Mr Corbett seemed to accept that s 37A(3) included constructive notice and cited Lloyds Bank v Marcan, among other cases, as authority for that proposition. However, it is necessary to consider the effect of Coghlan v Alexander (1905) 5 SR (NSW) 441. In that case, Coghlan and Johnson were solicitors. Coghlan agreed to buy Johnson’s office furniture, as part of a larger arrangement whereby Johnson was to open an office in Cowra for Coghlan. Johnson told Coghlan that he owed moneys on a bill of sale over the furniture and to his landlord for rent. Coghlan agreed to buy the furniture for the amount of these two debts. Johnson was, however, also indebted to Alexander. Alexander seized the furniture. The primary Judge found for Alexander. The Full Court allowed an appeal from the primary Judge’s decision. Darley CJ, with whom the other members of the Court agreed, said:

The learned Judge held that, having regard to all the circumstances the plaintiff was put upon his enquiry, and that not having made further enquiries as to Johnson’s financial position, he showed a want of bona fides. He held, however, that there was no intent to defraud on the plaintiff’s part, and that he had no direct notice or knowledge of any fraud. I am of opinion that his Honour’s decision is erroneous in law. No such duty to enquire as his Honour holds to have been thrown on the plaintiff, is imposed by law. If it were, no one could do business with safety. If that were the law, a man who goes into a shop to buy goods would have to enquire whether the tradesman owed debts. (His Honour cited passages from May’s Fraudulent Conveyances, 2nd ed., pp. 7, 8).

159. The decision in Coghlan v Alexander is, of course, binding on the Court as a matter of precedent. It has been applied in O’Regan v Phillips (Supreme Court (NSW), 31 July 1992, unrep) and Huynh v Helleh Holdings Pty Ltd (2001) 10 BPR 19,333. Nevertheless, there may be some doubt as to what exactly Coghlan v Alexander now decides as a matter of binding precedent. The case was decided under the Elizabethan statute, prior to the enactment of ss 37A and 164. If s 37A, which is now the applicable provision, picks up s 164, it is to the language of s 164 which the Court must now look. Strictly speaking, therefore, the only relevance Coghlan v Alexander might have would be under the previous judge-made law preserved by sub-s (3). But it would be very difficult to see the Full Court as having decided that constructive notice was generally inapplicable to the bona fide purchaser doctrine as it had developed in the law of priorities, or to reconcile s 164 with that view.

160. It is not easy even to interpret Coghlan v Alexander as having decided that notice under the Elizabethan statute could never include constructive notice. The pages apparently cited by the Full Court from May’s Fraudulent Conveyances described the Roman civil law and did not put forward any clear proposition that constructive notice would not suffice: see Henry May, A Treatise of the Statutes of Elizabeth Against Fraudulent Conveyances; The Bills of Sale Acts, 1878 and 1882; and the Law of Voluntary Dispositions of Property (2nd ed, 1887, Stevens and Haynes) at 7-8. A line of late 19th and early 20th century American texts discussing the Elizabethan statute and its various successors also supports the view that notice included constructive notice: see Orlando Bump, A Treatise upon Conveyances made by Debtors to Defraud Creditors, (4th ed, 1896, WH Lowdermilk & Co) at 209-213, 493-494; Dewitt Moore, A Treatise on Fraudulent Conveyances and Creditors’ Remedies at Law and in Equity (1908, Matthew Bender & Co) at 577-578, 611-625; Melville Bigelow, The Law of Fraudulent Conveyances (1911, Little, Brown & Co) at 589. However, as will be seen, there is no need to resolve this question finally.

161. Mrs Corbett was aware that Mr Corbett was previously in business with the Nguyens and had fallen out with them and established his own business in 2001. But she denied having any knowledge of the costs orders in favour of the Nguyens until the preliminary discovery proceedings were brought against her in late 2014. She also denied any knowledge that the transfers in her favour were motivated by a desire to defeat or delay creditors.

162. I am quite prepared to accept that Mrs Corbett had little interest in Mr Corbett’s business activities in general, and in any litigation to which he was involved in particular. But I find it difficult to accept that Mrs Corbett was completely unaware of the proceedings against the Nguyens. Mr Corbett apparently visited Australia on frequent occasions between the beginning of the proceedings in 2004 and the end of the proceedings in mid-2012. On Mr Corbett’s evidence, it was not until 2008 or 2009 that he began to stay at his mother’s house, rather than the Baulkham Hills property, when he came to Australia and on Mrs Corbett’s evidence that did not happen until 2011. Helen also knew of the litigation and remained in regular communication with Mrs Corbett. Mr Corbett was supporting Mrs Corbett financially throughout the period, and the cost of conducting the litigation cannot have made that easy. I think it would be surprising if over all of the period from 2004 to 2012, the major piece of litigation in which Mr Corbett was embroiled was not mentioned.

163. Mrs Corbett’s case on notice also left many questions unanswered. On her evidence, when previously asked for a divorce by Mr Corbett she had refused. Yet, in May 2013, when he asked again she immediately agreed. On her evidence, nothing had apparently changed in the meantime. Mrs Corbett did not explain what she made of the fresh request or why she changed her mind.

164. In order to effect the first transfer, Ms Lyons had to be persuaded to give up the security interest (or, at least, what the parties believed to be a security interest) represented by her caveat. Mrs Corbett also had to join in the refinancing of the mortgage with WBC, and for that purpose to accept liability to repay the mortgage debt owed by Mr Corbett. On Mrs Corbett’s own evidence, she was aware of her sister’s caveat over the property and it was she who obtained Ms Lyons’ consent to withdraw the caveat. Her evidence did not explain this in any detail. Ms Lyons was not called. Nor did Mrs Corbett explain why she agreed to assume liability to WBC for the mortgage debt rather than simply waiting for Mr Corbett to clear the mortgage.

165. So far, I have been considering the question of notice by reference to matters of which Mrs Corbett may personally have been on notice, but it is clear that the matters of which any “solicitor or other agent” of Mrs Corbett was on notice must also be taken into account.

166. Mr O’Rourke acted for Mrs Corbett in connection with the first transfer, and signed it on her behalf as transferee. Clearly, Mr O’Rourke was an agent for Mrs Corbett for the purpose of notice, and he was not called to give evidence as to what he knew about the transaction. But there is also Helen’s role to consider. As already mentioned, it was Helen who prepared the joint application for divorce which Mrs Corbett signed. Helen also arranged the WBC loan application which Mrs Corbett would have signed as a borrower. Helen also instructed Mr O’Rourke in connection with the transfer. Helen was not a professional advisor to Mrs Corbett, but I do not think that matters. Section 164 speaks of a “solicitor or other agent”. I do not see it as necessary that an agent under s 164 be remunerated or be a professional. Mrs Corbett relied upon Helen to prepare relevant documents and to give relevant instructions on her behalf. In my opinion, this means that Helen’s notice of relevant matters is to be attributed to Mrs Corbett.

167. I have already doubted that Helen was unaware that costs orders had been made against Mr Corbett in 2012 (see [49] above). Helen appears to have been looking after financial and administrative matters for her father. The effect on Mr Corbett’s creditors would have been obvious to her. There was no explanation in the evidence for Mr Corbett having made the transfer when he did apart from seeking to defeat or delay the Nguyens, and Helen did not in her evidence explain why she thought the transaction was taking place. It is not necessary to consider what constructive notice Helen may have had, based on searches and inquiries which might have been undertaken. Even if Mr Corbett may not have told her in so many words why the transaction was taking place, a reasonable suspicion arises that she drew the inference for herself, or, at least, that she knew of facts which made that inference clear. The onus lies on Mrs Corbett to demonstrate lack of notice on the part of herself and on the part of each of her agents, Mr O’Rourke and Helen, and I find that the evidence is either absent (in Mr O’Rourke’s case) or insufficiently persuasive to do so.

168. So far as the second transfer was concerned, on her own affidavit evidence, Mrs Corbett was aware from about 26 February 2014 that officers of the Sheriff had visited the property looking for Mr Corbett and that Mark believed this was a result of Mr Corbett’s debts (see [73] above). Mrs Corbett was, therefore, on notice at that point that Mr Corbett’s creditors were chasing him. Although Mrs Corbett’s signature on the application for consent orders appeared next to the typewritten date of 2 February, the application was not lodged until 4 March. Notice received up to that date, at least, was effective against her. (Actually, notice up to the date of the orders, 8 May, would probably have been effective.)

169. As mentioned, it appears that from 2013 onwards it was always intended to transfer the whole of the Baulkham Hills property to Mrs Corbett, and the transaction was only done in two stages because Mr Corbett needed time to pay off the debt on the property. Mrs Corbett may well have seen the consent orders (which would lead to the second transfer) as part of a process which had begun with the first transfer in 2013. However, that does not mean that events after 2013 are not relevant to notice. In my view, once Mrs Corbett knew, as she clearly did from the end of February 2014, that Mr Corbett’s creditors were chasing him, an onus lay on her to rebut any inference of a link between the transfer and the creditors’ claims. I find the evidence insufficient to rebut the inference and establish a lack of notice.

170. The position is clearer still if Helen’s state of knowledge as at August 2014 is taken into account. Helen had actual knowledge of the Local Court proceedings from October 2013 onwards. She was instrumental in the preparation of the joint application for consent orders and Mr Corbett’s subsequent affidavit. She must have appreciated that the statement in the application and the affidavit to the effect that Mr Corbett had no further affairs or commitments in Australia was false. Even if Mr Corbett did not disclose his intent to defeat or delay the Nguyens, an even stronger suspicion arises than that which arose as at August 2013 that such an intent was within Helen’s knowledge, and I find the evidence insufficient to rebut that suspicion.

171. I am not satisfied that Mrs Corbett has established that she lacked notice, either at the time of the first transfer or of the consent orders, of the intent to which I have found Mr Corbett had to defeat or delay his creditors. If I had been satisfied that Mrs Corbett was a purchaser in good faith, I would still have concluded that the s 37A(3) defence concerning both the first and second transfers failed on notice grounds.

Conclusion and orders

172. For these reasons, I have concluded that:

(1)   the consent orders should be set aside under the Family Law Act 1975 (Cth), s 79A(1);

(2)   in consequence of this, and also independently under the Conveyancing Act 1919 (NSW), s 37A, the second transfer is liable to be set aside;

(3)   the first transfer is also liable to be set aside pursuant to the Conveyancing Act 1919 (NSW), s 37A.

173. I will hear the parties, to the extent necessary, on consequential orders and directions, including:

(a)   the appropriate form of orders to set aside the consent orders and the transfers;   

(b)   whether orders should be made for the sale of the property;

(c)   further proceedings to determine Mrs Corbett’s equitable proprietary interest in the property, and for orders by way of adjustment of property rights under the Family Law Act 1975 (Cth), s 79;

(d)   costs.

174. The orders of the Court are:

1. Direct that the plaintiff bring in Short Minutes of Order to give effect to this judgment, with liberty to apply in the event of any disagreement.

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Decision last updated: 07 December 2017