Pham v Enterprise ICT Pty Ltd (No 2)

[2017] NSWSC 583

Supreme Court

New South Wales

Medium Neutral Citation:	Pham v Enterprise ICT Pty Ltd (No 2) [2017] NSWSC 583
Hearing dates:	10 May 2017
Date of orders:	15 May 2017
Decision date:	15 May 2017
Jurisdiction:	Equity
Before:	Pembroke J
Decision:	See paragraph [16]
Catchwords:	ORDERS – form of orders setting aside fraudulent conveyance COSTS – indemnity costs – litigation resulting from dishonesty
Legislation Cited:	Real Property Act 1900 (NSW)
Cases Cited:	Bull v Wimble [2004] NSWSC 528
Category:	Principal judgment
Parties:	Andy Vuong Duc Pham – first plaintiff Thi Huong Giang Pham – second plaintiff Enterprise ICT Pty Ltd – first defendant Nadine Musabwasoni – second defendant Robert Sebie – third defendant
Representation:	Counsel: B Zipser – for the first and second plaintiffs R Killalea, Solicitor – for the first defendant A Duc – for the second defendant Robert Sebie – third defendant in person   Solicitors: Bui Lawyers – for the first and second plaintiffs Kazi & Associates – for the first defendant Remington & Co – for the second defendant Robert Sebie – third defendant in person
File Number(s):	2015/325044

Judgment

Introduction

1. On 26 April 2017, I delivered reasons in which I held that the transfer of certain land at Chiswick from the third defendant (Robert Sebie) to the first defendant (Enterprise ICT Pty Ltd) was fraudulent. I held that both the first and third defendants intended to defeat the plaintiffs’ rights as purchasers pursuant to the contract for sale of land dated 29 October 2014.

2. On 10 May 2017, I heard submissions from the parties as to the appropriate orders that should be made to give effect to those reasons. Some of those orders were contentious. What follows are the orders that I have made and my reasons for doing so.

Fraudulent Transfer

3. There should be a declaration and vesting order in the following terms:

1. Declaration that the transfer of lot 2 in DP 241738, known as 11 Tutt Crescent, Chiswick (the Property), from the third defendant to the first defendant (Enterprise ICT Pty Ltd) registered on 10 August 2015 dealing number AJ713539 was fraudulent, and that the title of the first defendant in the Property is defeasible for fraud, within the meaning of ss 42 and 43 of the Real Property Act 1900.

2. Order that the Property vests in the third defendant (Robert Sebie).

Cancellation and Replacement

4. Given the dishonest conduct of the first and third defendants, the most convenient and appropriate course to regularise the title to the Property is to make orders pursuant to Section 138 of the Real Property Act 1900 (NSW) for cancellation of the existing folio, the creation of a new folio, the issue of a new certificate of title and the delivery up of the existing certificate of title. I gratefully adopt the reasoning of Barrett J in Bull v Wimble [2004] NSWSC 528 at [10]-[12]. I make the following orders:

1. Order that the Registrar General:

1. cancel the existing folio of the register for the Property;

2. create a new folio of the register for the Property;

3. issue a new certificate of title for the Property, recording Robert Sebie as the registered proprietor.

2. Order that Enterprise ICT Pty Ltd forthwith deliver, or cause to be delivered, to the Registrar General the existing certificate of title for the Property.

Specific Performance and Completion

5. The orders for specific performance and completion of the contract for sale of the land dated 29 October 2014 require a number of refinements to reflect the particular circumstances of this case. They include the fact that the plaintiffs have not seen the Property for nearly three years and that its state of repair and consequential loan value may have diminished. I make the following declarations and orders:

1. Declaration that the plaintiffs have an equitable interest in the Property pursuant to the contract for the sale of land dated 29 October 2014 between the third defendant as vendor and the plaintiffs as purchasers (the Contract).

2. Order that the third defendant specifically perform the Contract insofar as it remains to be performed, including by the execution of all necessary documents and the taking of all necessary steps.

3. Order that the Registrar in Equity be authorised, in default of the third defendant’s compliance with Order (6), to execute all such documents and take all such steps in the name of the third defendant as may be necessary to ensure the performance and completion of the Contract.

4. Order that, within 14 days of the date of these orders, and in order to facilitate the obtaining of finance by the plaintiffs to complete the Contract, the first and third defendants provide access to the Property to the plaintiffs and their duly authorised agents, once only, for a period of up to four hours at a mutually agreed time.

Damages

6. The plaintiffs contend that they are entitled to damages resulting from the third defendant’s failure to perform the Contract. I dealt with this issue in principle in paragraph [58] of my judgment given on 26 April 2017 but it was examined more closely at this hearing. Among other things, counsel for the plaintiffs conceded that the Abbotsford premises which the plaintiffs ‘had to continue to lease’ while the third defendant failed to complete the Contract, was not merely their home. It was, and continues to be, the site on which they conduct a laundry business. They live in a flat at the rear of the premises.

7. It is clear, on analysis, that the evidence to support the damages claim is unsatisfactory and of limited scope. Frankly, it is not sufficient to justify an award of damages. The damages claim assumes that as a result of the third defendant’s breach, the plaintiffs paid rent that they would not otherwise have paid, and as a consequence, have suffered financial loss. But this is far from obvious. The second plaintiff stated that once she and her husband obtained possession of, and commenced residing in, the Property, she no longer wished to own and operate the laundry business. But the fact is she did, and for all I know, the arrangement may have been profitable. The revenue from the laundry business presumably exceeded the rent paid for the Abbotsford premises.

8. There is no evidence that demonstrates that the plaintiffs are worse off as a result of being compelled to continue to rent the Abbotsford premises. And no attempt was made to compare their existing financial position with what it would have been if the Contract had been completed, a residential mortgage loan had been taken out, the laundry business had been closed and rent no longer paid for the Abbotsford premises. I am therefore not satisfied that the plaintiffs have demonstrated any proved loss and damage caused by the third defendant’s breach of contract represented by the rent they have paid for the Abbottsford premises, or any proportion of that rent.

Costs

9. I have no hesitation in concluding that the first and third defendants should pay the plaintiffs’ costs on an indemnity basis from the date of the transfer to Enterprise ICT. Litigation caused by an unwillingness to complete is one thing. But litigation which is the result of the third defendant’s dishonesty, in which his brother Richard Sebie participated, is of a different dimension. The complications and further litigation arising from that dishonesty should never have occurred. The first and third defendants should be accountable for their actions. The plaintiffs are entitled to be indemnified by the first and third defendants for the costs that they have incurred after 20 July 2015. There was never a bona fide dispute, merely dishonesty, and perhaps delusion on the part of the third defendant. I make the following orders:

1. I vacate any previous costs orders and order that the first and third defendants pay the plaintiffs’ costs of Supreme Court proceedings 2015/325044 on an indemnity basis.

2. I vacate any previous costs orders and order that the first and third defendants pay the plaintiffs’ costs of Supreme Court proceedings 2015/056505:

1. on the ordinary basis up to 20 July 2015; and

2. thereafter on an indemnity basis.

Set Off

10. The amount of the costs to which the plaintiffs are entitled, once agreed or assessed, should be set off against the adjusted settlement amount which they are liable to pay on completion of the Contract. I make the following orders:

1. Order that the Registrar in Equity:

1. fix a time and place for completion of the Contract; and

2. enquire into and certify the sum which, upon completion of the Contract, is payable by the plaintiffs having regard to all appropriate adjustments, subject to such further set off in favour of the plaintiffs, as may be determined, representing the amount of costs payable to them as a result of Orders (9) and (10) above;

3. be authorised to make such payments and give such ancillary directions as may be necessary to facilitate the completion of the Contract and the discharge of any encumbrances on the title to the Property.

2. Order that the plaintiffs pay the sum so certified into the Supreme Court to be held pending:

1. the determination of the amount of costs in Orders (9) and (10) above; and

2. the determination by the Family Court of Australia of the amount, if any, of the second defendant’s claim against the net proceeds of sale of the Property, after the set off of an amount for the plaintiffs’ costs.

Caveat by Rose Sebie

11. I propose to order the removal of a caveat on the title to the Property lodged in the name of Rose Sebie, the mother of the third defendant. This caveat appeared mysteriously after I had given judgment on 26 April 2017. I doubt its bona fides. I have not heard from Rose Sebie although the third defendant put some submissions on her behalf. Nonetheless, it would be a waste of time and resources to follow the usual course of allowing a lapsing notice to issue.

12. The caveat is transparently unsustainable. It is based on an alleged interest in the Property which is said to derive from a secured loan by Rose Sebie to the first defendant in July 2016. But given my findings, there can be no interest in the land deriving from the title of Enterprise ICT. Its title to the Property was obtained as a result of fraud and is defeasible. I have so ordered. Rose Sebie’s caveat is pointless. If there were a loan, she has her rights against Enterprise ICT. But the latter could not give her an interest in the land. I make the following orders:

1. I dispense with service on Rose Sebie of an application to remove Caveat No AM326605 registered on the title to the Property.

2. I order that the caveat be removed forthwith.

3. I order that, prior to completion of the Contract, the first and third defendants and Rose Sebie be restrained from lodging, or causing to be lodged, any further caveat or dealing in respect of the Property.

The Second Defendant

13. It is no longer necessary to provide for a stay of these orders pending the making of an application by the second defendant – as I contemplated in paragraph [61] of my judgment given on 26 April 2017. That is because the plaintiffs have proposed, and the second defendant has agreed, to a regime that preserves the second defendant’s entitlement to make a claim – if she has one – against a fund that will be represented by the net proceeds of sale upon completion of the contract, subject to the set off for the plaintiffs’ costs that I have ordered.

14. There is however a complication arising from the fact that on 25 June 2015 the second defendant obtained an order from the Federal Circuit Court of Australia that Robert Sebie ‘be restrained from selling, transferring, mortgaging or in any way … dealing with the marital home’. The second defendant is now protected and no longer needs that order. I make the following further order to ensure that there is no conflict between the orders of this court and those of the Federal Circuit and/or Family Courts:

1. I order the second defendant to take all appropriate steps, within 21 days of the date of these orders, to withdraw, or have the Court revoke, Order 1 of the Consent Orders originally made on 25 June 2015 in the Federal Circuit Court of Australia.

Registrar in Equity

15. The Registrar in Equity should have continuing oversight of the performance of these orders. I make the following orders:

1. I list the proceedings for mention before the Registrar in Equity on 15 June 2017.

2. I order that these orders be entered forthwith.

Declarations and Orders

16. I set out the declarations and orders that I have made in full below:

1. Declaration that the transfer of lot 2 in DP 241738, known as 11 Tutt Crescent, Chiswick (the Property), from the third defendant to the first defendant (Enterprise ICT Pty Ltd) registered on 10 August 2015 dealing number AJ713539 was fraudulent, and that the title of the first defendant in the Property is defeasible for fraud, within the meaning of ss 42 and 43 of the Real Property Act 1900.

2. Order that the Property vests in the third defendant (Robert Sebie).

3. Order that the Registrar General:

1. cancel the existing folio of the register for the Property;

2. create a new folio of the register for the Property;

3. issue a new certificate of title for the Property, recording Robert Sebie as the registered proprietor.

4. Order that Enterprise ICT Pty Ltd forthwith deliver, or cause to be delivered, to the Registrar General the existing certificate of title for the Property.

5. Declaration that the plaintiffs have an equitable interest in the Property pursuant to the contract for the sale of land dated 29 October 2014 between the third defendant as vendor and the plaintiffs as purchasers (the Contract).

6. Order that the third defendant specifically perform the Contract insofar as it remains to be performed, including by the execution of all necessary documents and the taking of all necessary steps.

7. Order that the Registrar in Equity be authorised, in default of the third defendant’s compliance with Order (6), to execute all such documents and take all such steps in the name of the third defendant as may be necessary to ensure the performance and completion of the Contract.

8. Order that, within 14 days of the date of these orders, and in order to facilitate the obtaining of finance by the plaintiffs to complete the Contract, the first and third defendants provide access to the Property to the plaintiffs and their duly authorised agents, once only, for a period of up to four hours at a mutually agreed time.

9. I vacate any previous costs orders and order that the first and third defendants pay the plaintiffs’ costs of Supreme Court proceedings 2015/325044 on an indemnity basis.

10. I vacate any previous costs orders and order that the first and third defendants pay the plaintiffs’ costs of Supreme Court proceedings 2015/056505:

1. on the ordinary basis up to 20 July 2015; and

2. thereafter on an indemnity basis.

11. Order that the Registrar in Equity:

1. fix a time and place for completion of the Contract; and

2. enquire into and certify the sum which, upon completion of the Contract, is payable by the plaintiffs having regard to all appropriate adjustments, subject to such further set off in favour of the plaintiffs, as may be determined, representing the amount of costs payable to them as a result of Orders (9) and (10) above;

3. be authorised to make such payments and give such ancillary directions as may be necessary to facilitate the completion of the Contract and the discharge of any encumbrances on the title to the Property.

12. Order that the plaintiffs pay the sum so certified into the Supreme Court to be held pending:

1. the determination of the amount of costs in Orders (9) and (10) above; and

2. the determination by the Family Court of Australia of the amount, if any, of the second defendant’s claim against the net proceeds of sale of the Property, after the set off of an amount for the plaintiffs’ costs.

13. I dispense with service on Rose Sebie of an application to remove Caveat No AM326605 registered on the title to the Property.

14. I order that the caveat be removed forthwith.

15. I order that, prior to completion of the Contract, the first and third defendants and Rose Sebie be restrained from lodging, or causing to be lodged, any further caveat or dealing in respect of the Property.

16. I order the second defendant to take all appropriate steps, within 21 days of the date of these orders, to withdraw, or have the Court revoke, Order 1 of the Consent Orders originally made on 25 June 2015 in the Federal Circuit Court of Australia.

17. I list the proceedings for mention before the Registrar in Equity on 15 June 2017.

18. I order that these orders be entered forthwith.

Decision last updated: 15 May 2017