Simply Technology Pty Ltd v Blair

[2008] NSWSC 489

CITATION:	Simply Technology Pty Ltd v Blair [2008] NSWSC 489
HEARING DATE(S):	15/05/08
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
EX TEMPORE JUDGMENT DATE:	15 May 2008
DECISION:	(1) Order that the plaintiff's notice of motion as amended on 18 April 2008 is dismissed with costs; (2) Order that the second cross-claim is struck out with costs.
CATCHWORDS:	EQUITY [339][340]- Notice of motion filed by plaintiff seeking Mareva relief against second cross-defendant- How and when Mareva relief granted against third parties- Existing caveat on property- Caveat practically speaking protecting plaintiff- Thus no real threat that warrants Mareva injunction. PROCEDURE [85]- Notice of motion filed by second cross-defendant to strike out second cross-claim- Plaintiff lacks the requisite locus standi to claim the appropriate declarations- Misuse of cross-claim.
CASES CITED:	Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 Kuan Han Pty Limited v Oceanview Group Holdings Pty Limited [2003] FCA 1063
PARTIES:	Simply Technology Pty Limited (P) Cathryn Moore (Second Cross-Defendant)
FILE NUMBER(S):	SC 1810/07
COUNSEL:	R W Washington (P) A Lo Surdo (2XD)
SOLICITORS:	Hall Partners Pty Ltd (P) K P Farmer & Associates (2XD)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Thursday 15 May 2008

1810/07 – SIMPLY TECHNOLOGY PTY LTD v BLAIR

JUDGMENT

1 HIS HONOUR: The plaintiff's claim essentially is that it lent Mr Blair $870,000. At that stage the controller of the plaintiff and Mr Blair were close friends; they are no longer close friends. The plaintiff expected that Mr Blair would use that $870,000 to purchase a property and that he would repay the loan by selling a half interest in a property at Freshwater which he then held. There was some loose agreement giving the plaintiff a possible equitable charge over Mr Blair's interest in the Freshwater property.

2 However, what appears to have happened is that Mr Blair did not sell his interest in the Freshwater property, and that the property in which he now lives at Cromer is registered in the name of his de facto spouse for whom Mr Lo Surdo appears. The de facto spouse is named as the second cross-defendant and I will continue to call her by that title.

3 The Cromer property appears to have been purchased about the time of the loan but the title search shows that apart from the second cross-defendant being the registered proprietor there is a mortgage to the ANZ Bank, but I have been given no details as to the amount that that mortgage may secure.

4 The proceedings between the plaintiff and Mr Blair appear to be taking a leisurely course through the court system. Mr Blair has filed a cross-claim also for debt again a common law claim. He claims about $500,000.

5 I am unable to make any meaningful estimate of the result of the proceedings, but I will assume for present purposes, that the plaintiff will succeed either for the whole of its claim or for some $300,000 being the difference between the two claims. I would also assume on the material I have before me at the moment that if Mr Blair does suffer that sort of judgment, there is a real possibility that he will not be able to repay that amount and may go into bankruptcy.

6 The plaintiff says that there is a situation where it will probably receive a verdict against Mr Blair, Mr Blair will be unable to meet it, and if one looks at the fact dispassionately, one can see that the $870,000 must have gone into the Cromer property and the situation must be that the second cross-defendant holds her interest on resulting trust for Mr Blair on that basis. If Mr Blair goes bankrupt, his Trustee in Bankruptcy will be able to sue the second cross-defendant and recover the property, and it can then be used in execution for the plaintiff's debt.

7 In Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 405, the majority of the judges in the High Court held that there was jurisdiction to give Mareva relief against the third party where the third party would be amenable to a disgorgement process by the appointment of a liquidator, receiver, or other official to the defendant. Exactly what process is to be used to achieve that disgorgement has not yet been settled. However, as Biscoe J notes in his book Mareva and Anton Piller Orders (Butterworths, Australia, 2005) at [4.22] in Kuan Han Pty Limited v Oceanview Group Holdings Pty Limited [2003] FCA 1063, Conti J made an order against a non-party who was named as a respondent to a notice of motion for such relief but without being joined as a party to the proceedings. However, I would consider that in the ordinary case it would be proper to make the person against whom such Mareva relief is sought a defendant, not the least of the reasons for that is that a person being a defendant has the rights of a party to move to strike out or to seek other relief.

8 Here we have the situation where the plaintiff did not add the second cross-defendant as a party, rather he raised a second cross-claim. It is really doubtful whether a cross-claim can be used by a plaintiff for that purpose. The reason why there are cross-claims is to enable persons who are sued to lay off the risk or to seek indemnity. If a plaintiff seeks relief, then the plaintiff should do it by initiating pleadings. Accordingly, even if the case were properly pleaded in the second cross-claim, I would need to strike it out as being inappropriate. But if leave was sought, I may well give leave to amend the statement of claim.

9 The present second cross-claim seeks a declaration that the second cross-defendant holds her legal estate on trust for Mr Blair. The plaintiff has no locus standi to obtain such a declaration. That, accordingly, would mean that the principal declaration and the cross-claim must be struck out. It may be that in accordance with the Cardile case, the plaintiff may have a right to seek some Mareva leave against the second cross-defendant in which case, if it seeks to obtain its leave to amend its statement of claim and if it pleads it properly then the allegation may stand. But that is not what has happened to date. Accordingly, the notice of motion filed by the second cross-defendant for the proceedings for the second cross-claim to be struck out must succeed.

10 The plaintiff, however, still presses its claim for Mareva type relief against the second cross-defendant. It says that it has a well arguable case against her in the sense that it has a well arguable case against Mr Blair for debt, and it says that the basal facts are that the property was purchased about the same time as the loan; that the second cross-defendant has been given an opportunity to explain where she got the money, or to deny that the money came from the loan; and she has not taken advantage of any of that opportunity. She has not made any explanation. Accordingly, the Court should infer that the money came from the loan.

11 That, with respect, seems to me to reverse the onus. It is true that if a fact is in the court of a party and that party does not explain, the Court may draw inferences. But it is also true that a whole lot of documents could have been subpoenaed which would have given the Court a clearer picture as to how the Cromer property was purchased such as the solicitor's file who handled the purchase, the mortgage to the ANZ Bank and various other things. That has not happened. Accordingly, I do not consider that I should, in those circumstances, draw the inference nor do I consider that the inference is one which obviously should be drawn. Thus I have doubts as to whether as against the second cross-defendant the case is strong enough to give Mareva relief.

12 There is then the question as to whether the circumstances are such which show that unless the Court does intervene, then there is a very real chance of the plaintiff getting a judgment which will be nugatory.

13 The second cross-defendant says that the Cromer property is her home. She is in employment, she has three children. She tells the Court she has got no intention at all to do anything with the property; it is her home. Added to that the plaintiff has caused a caveat to be placed on the property. Now when one looks at the caveat, it is strongly arguable that it is completely invalid because it seeks to say that the second cross-defendant holds the property on trust for the plaintiff whereas the plaintiff's real case is that she holds the property on some sort of trust for Mr Blair.

14 The position is complicated even then by the fact that if she did use part or whole of that $870,000 we just do not know what the purchase price was, we do know how much the ANZ Bank contributed, we do not know what other equities exist between the second cross-defendant and Mr Blair, nor do we know the impact that the Property (De Facto Relationships) Act 1984 has on the situation.

15 However, Mr Washington, who appeared for the plaintiff, says, well, even granted those things there would still be some interest which would be able to be gained by Mr Blair's Trustee in Bankruptcy to have the second cross-defendant disgorged. That may be so and it may well be that the caveat would be removed if anyone asked for it to be removed.

16 Mr Lo Surdo for the second cross-defendant says she has no intention of doing so and points out if she did there would be 21 days notice given to the plaintiff. Mr Washington in riposte says that would just mean that the parties would be back here 21 days after that notice was received and we would be no further advanced and the Court should deal with the matter while it's before it.

17 The answer to that is that the caveat is there, it was put on by the plaintiff, it has the effect of a 21 day injunction, and that it shows together with the second cross-defendant's assertion that it is her home and she's not doing anything with it that there is no real threat which would warrant a Mareva injunction.

18 Accordingly the plaintiff's notice of motion as amended on 18 April 2008 is dismissed with costs. The second cross-claim is struck out with costs. However, the plaintiff may have leave to amend the statement of claim so as to make a claim against the person I have called the second cross-defendant provided that a draft of the proposed pleading is given to Kirsten P Farmer & Associates no later than 6 June 2008.

19 I will formally stand the second cross-defendant's notice of motion over to the Registrar's list on 16 June 2008 so that any argument can then happen.

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