Talatala v Esguerra

[2020] NSWSC 994

Supreme Court

New South Wales

Medium Neutral Citation:

Talatala v Esguerra [2020] NSWSC 994

Hearing dates:

29 July 2020

Decision date:

29 July 2020

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1. Order that, pending further order, the respondent (Aurelio Esguerra, being the defendant in case number 2019/00392825) be restrained from commencing or prosecuting any proceedings in the NSW Civil & Administrative Tribunal (the Tribunal) for the purpose of obtaining as against the applicant a termination order, including but not limited to a termination order pursuant to ss 85, 87, 88 and 89 of the Residential Tenancies Act 2010 (NSW), and including issuing or purporting to issue a termination notice with respect to an alleged residential tenancy agreement of a periodic nature in relation to the property known as and situate at 14 Glenview Grove, Glendenning, NSW, 2761 (the Property) until the pending Supreme Court proceedings have been concluded by the making of declaratory and other orders of a final nature, including a general order for costs as sought by the plaintiff in these proceedings.

2.   Order that, pending further order, the respondent be restrained from taking any steps to enforce any order obtained from the Tribunal in relation to the premises erected on the Property.

3.   Order that, pending further order, the respondent be restrained from taking any steps towards a sale of the Property or taking any steps to invite prospective purchasers to enter into a contract for the sale of the Property or otherwise dealing with the Property.

4.   Note that the making of those orders is on the basis that the applicant will, without prejudice to either party’s rights in the proceedings, within 7 days and, subject to provision of the relevant mortgage account statements, pay the amount retained to date by the applicant in relation to the mortgage payments in respect to the Property, and the balance, if any, of those outstanding mortgage payments from November 2019 to date, within 21 days and undertakes to continue to pay the mortgage payments subject to the provision of ongoing mortgage account statements pending the hearing and ultimate determination of these proceedings.

5. Order that, pursuant to sch 4, cl 6 of the Civil and Administrative Tribunal Act 2013 (NSW), the proceedings presently in the Tribunal (RT 20/25455) be transferred to this Court to be listed together with the proceedings in this division.

6.   Order that these orders be entered forthwith.

7.   Order that the costs of this application be reserved.

8.   Direct the Registrar to obtain the file from the Tribunal.

Catchwords:

CIVIL PROCEDURE — Interlocutory applications — Application to restrain further prosecution of the Tribunal proceedings — Application to restrain dealings in real property — Whether an agreement was for tenancy or equitable interest — Transfer of proceedings to the Supreme Court

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), sch 4 cl 6

Civil Procedure Act 2005 (NSW), s 56

Duties Act 1997 (NSW), ss 8(1)(b)(ii), 304

Residential Tenancies Act 2010 (NSW), ss 85, 119, 187, 190

Cases Cited:

Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19

Category:

Procedural and other rulings

Parties:

Beth Talatala (Plaintiff/Applicant)
Aurelio Esguerra (Defendant/Respondent)

Representation:

Counsel:
J Shaw (Plaintiff/Applicant)
R Abbas (Solicitor) (Defendant/Respondent)

Solicitors:
Jessie Icao Solicitors (Plaintiff/Applicant)
R & J Lawyers Pty Ltd (Defendant/Respondent)

File Number(s):

2019/00392825

Publication restriction:

Nil

EX TEMPORE Judgment

1. HER HONOUR: This is an application by notice of motion filed on 10 June 2020 by the applicant, Beth Talatala (the plaintiff in the proceedings) against the respondent, Aurelio Esguerra (the defendant in the proceedings), seeking interlocutory relief – in essence to restrain the respondent from commencing or prosecuting any proceedings in the New South Wales Civil and Administrative Tribunal (the Tribunal) for the purpose of obtaining as against the applicant a termination order, (including issuing or purporting to issue a termination notice) with respect to an alleged residential tenancy agreement of a periodic nature in relation to a property situated in Glendenning, New South Wales (the Property) until the present proceedings in the Equity Division of this Court have been concluded by the making of declaratory or other orders of a final nature (including a general order for costs as sought by the applicant in the proceedings).

2. Further orders are sought that, pending further order, the respondent be restrained from taking any steps to enforce any order obtained from the Tribunal in relation to the premises erected on the Property, and that the respondent be restrained from taking any steps towards a sale of the Property, or taking any steps to invite prospective purchasers to enter into a contract for the sale of the Property, or otherwise dealing with the Property. The application has some urgency because there are presently proceedings in the Tribunal which are listed for hearing on 5 August 2020.

3. On the present application the applicant relies upon an affidavit sworn by her on 10 June 2020, an affidavit sworn by her mother (Delia Laxamana) on 12 March 2020, and an affidavit of her solicitor, (Bernardo David) sworn on 14 February 2020, and has tendered various documents. The respondent to the application has relied on an affidavit affirmed 18 March 2020 by him in the substantive proceedings in this Division and has tendered certain email communications.

4. Briefly by way of background to the application, the respondent, Mr Esguerra, is the registered owner of the Property. The applicant, Ms Talatala, is the daughter of Mr Esguerra’s former de facto partner (Ms Laxamana) and is currently in occupation of the Property. The Property is the subject of a subsisting mortgage in favour of the Bendigo & Adelaide Bank (the Bank). The applicant alleges that an agreement was entered into, and formalised in a declaration of trust dated 12 April 2013, between the parties to the effect that if she made the necessary mortgage repayments to the Bank the respondent would transfer the Property to her, provided that she also agreed to transfer a Property owned by her in the Philippines which it is said the respondent considered to be valued at a fair and reasonable value of 11 million pesos.

5. The applicant claims that she relied upon the promise and commenced to meet the mortgage repayments as pleaded in her statement of claim (filed on 13 December 2019) in these proceedings at [2]–[5]. She claims that she also generated and signed a transfer document in favour of the respondent whereby he would become the owner of the Philippines property (albeit that the respondent has not been able to complete the transfer to date as he must travel to the Philippines to do so, and he is currently barred from travelling due to being in arrears for child support payments for children from a previous relationship).

6. There is annexed to Ms Talatala’s affidavit sworn 6 March 2020 a document headed “Declaration of Trust” dated 12 April 2013. That document includes on its face a declaration that, by virtue of the agreement between the parties for the swapping of the respective properties, Ms Talatala has an equitable and beneficial interest in the Property, in consequence of which Mr Esguerra’s consent to the lodgement of a caveat by her if necessary to protect her interest is recorded.

7. The applicant has indeed lodged a caveat dated 16 April 2018 over the Property claiming an equitable interest by virtue of the alleged declaration of trust. Pausing here, the document which is annexed to Ms Talatala’s affidavit and headed “Declaration of Trust” does not appear to be stamped. In the course of this application, the applicant, through her counsel, has undertaken that if there is duty payable on the declaration of trust, (and I here refer to s 8(1)(b)(ii) of the Duties Act 1997 (NSW) (Duties Act)), and she is the party primarily liable for the payment of that duty, then she will lodge the declaration of trust for payment of duty with the Office of State Revenue; and if she is not the party primarily liable for the duty, she will notify the Commissioner of the document and of the party primarily liable for duty and the details of that party. (I note that pursuant to s 304 of the Duties Act, for instruments effecting a dutiable transaction (such as a declaration of trust) to be received into evidence, the instrument must be duly stamped or arrangements must be made for it to be so stamped, and I have already noted the undertaking that has been proffered in relation to that issue in respect of the declaration of trust.)

8. The applicant’s present application arises because there have been one or more applications made to the Tribunal pursuant to the Residential Tenancies Act 2010 (NSW) (Residential Tenancies Act) whereby the respondent has sought to obtain possession of the Property. As well as her claim to the beneficial ownership of the Property by virtue of the declaration of trust, the applicant maintains that she has carried out improvements on the Property in reliance on the representation that she could treat the Property as her own, and she relies upon the High Court decision of Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 for her claim that this gives rise to a proprietary interest in the Property by virtue of the principles of estoppel by encouragement.

9. It is submitted that unless appropriate injunctive relief can be obtained to restrain the taking of steps in relation to the Tribunal proceedings then the relief sought by the applicant in the statement of claim is, or is likely to be, rendered nugatory – hence the present application for interlocutory relief.

10. The respondent opposes the application for interlocutory relief. The respondent’s position is that the agreement was in fact an oral tenancy arrangement between the parties which had certain terms and conditions, including that the rent amount was to be equivalent to the mortgage repayments, that the applicant would maintain the property, and that the applicant would not alter or make improvements on the property without consent or approval from the respondent.

11. It appears not to be disputed that a letter giving notice was served on or about 4 July 2019 under s 85 of the Residential Tenancies Act requiring the applicant to vacate the premises; that the applicant refused to vacate the premises; and that the applicant has stopped paying any amount whatsoever, whether that be characterised as rent or mortgage repayments in respect of the Property from 11 November 2019.

12. I will not go through the procedural history of the applications before the Tribunal, suffice it to note there is some dispute between the parties as to what precisely happened when the matter came before the Tribunal on or about 28 May 2020; but in any event it is not disputed that there is a hearing listed before the Tribunal on 5 August 2020. Nor is it disputed that the Tribunal would not have jurisdiction to determine issues as to the equitable entitlements here claimed by the applicant in respect of the Property.

13. The respondent’s objections to the present application include a dispute as to the standing of the applicant to commence and prosecute the statement of claim and the notice of motion in these proceedings. It is submitted that the applicant has no basis for the relief that she claims in these proceedings and issue is taken with the validity or authenticity of the alleged declaration of the trust on a number of bases. The respondent denies execution of the alleged declaration of trust, but in any event says that it was a document executed by a third party, Ms Laxamana, and not by the applicant for the purpose of making it a binding agreement. Thus it is submitted that, on the face of it, the declaration of trust is an instrument which is not binding between the parties.

14. It is further submitted that the alleged agreement, the subject of the declaration of trust, is not enforceable against the respondent. Amongst other things, it is said that the property in the Philippines has no sufficient description or clear identification in order to create a valid and lawful consideration for the purposes of an agreement to exchange the properties. It is further submitted that in due course the evidence will establish that the applicant has no property in the Philippines which could have been the subject of the alleged exchange agreement. It is also said that, by discontinuing the payments from on or about 11 November 2019, the applicant has abandoned her exchange agreement.

15. As to the balance of convenience, the respondent submits that the applicant’s case does not have strong merits. Emphasis is placed on the financial hardship that the respondent says that he suffers by reason of the applicant’s failure to pay the amounts payable either by way of rent or by repayment of the mortgage loan account in respect of the Property. In oral submissions, it was said that the respondent has obtained a deferral from the Bank of mortgage repayments, but that the liability remains to pay the mortgage repayments. There is also an assertion made in the respondent’s written submissions that the applicant comes to this Court with unclean hands, and it is submitted that the applicant has an effective and adequate remedy available to her before the Tribunal in that the Tribunal has the power to dismiss the respondent’s termination of tenancy application for want of jurisdiction in the event that it determines that there is no tenancy relationship between the parties.

16. It is noted that under s 119 of the Residential Tenancies Act, the Tribunal has exclusive jurisdiction in relation to an order for termination of a residential tenancy agreement, and that under ss 187 and 190 of the Residential Tenancies Act, the Tribunal has jurisdiction and power to hear and make orders relevant for the purposes of a residential tenancy.

Determination

17. As to whether there is a serious question to be tried, I have noted the undertaking of the applicant in relation to the lodging of the declaration of trust for the payment of stamp duty to the Office of State Revenue. On the material before me, I am satisfied that there is a serious question to be tried as to whether the applicant has an equitable interest in the Property, or any interest in the Property above and beyond that of a tenant of the Property. The fact that the Tribunal has exclusive jurisdiction to determine the tenancy relationship between the parties does not mean that there would be a disposition of the claim presently made by the applicant in this Court as to an equitable interest in the Property, in which respect it is conceded (as noted) that the Tribunal would not have jurisdiction to deal with the matter.

18. In terms of the balance of convenience and prejudice to the respondent, there is an obvious prejudice to the applicant if the Tribunal proceedings are determined and she is ordered to give possession of the premises at a time when her claim to an equitable interest in the Property has not yet been determined, (although it would not necessarily be fatal to her claim in circumstances where there would be equitable relief payable to be granted if her equitable claim were to be established after the determination of the Tribunal proceedings). However, it is clearly not in the interests of the just, quick and cheap resolution of the real issues in dispute between the respective parties that there be a bifurcation of the issues in the dispute between them (as between the alleged tenancy arrangements on the one hand and the alleged equitable interest on the other hand) (see s 56 of the Civil Procedure Act 2005 (NSW)).

19. As to the prejudice to the respondent, that is put solely on the basis of financial hardship due to the fact that the applicant has ceased making the payments that were contemplated under the declaration of trust document. In the course of argument on this application, an undertaking has been proffered by the applicant, through her counsel, to pay the outstanding mortgage repayments on a without admissions basis, provided that mortgage account statements are provided to the applicant both from 11 November 2019 to date and going forward. The respondent does not object to the provision of mortgage accounts statements if that be required. I should add that I was informed that the applicant has been retaining in an account moneys referable to the mortgage repayments since the payment of those was stopped in circumstances where it was said that there had been a repudiation by the respondent of his obligations in relation to the arrangement.

20. The applicant also undertook through her counsel to indemnify the respondent against any loss that might be sustained in the event that the respondent is ultimately successful in the litigation. In other words, the applicant proffered the usual undertaking as to damages that is required ordinarily to be given on an application for interlocutory relief.

21. I note that pursuant to Sch 4 cl 6 of the Civil and Administrative Tribunal Act2013 (NSW) (Civil and Administrative Tribunal Act) there is power to transfer proceedings from the Tribunal to a court that has jurisdiction in the matter if the parties so agree; and the parties are here agreed. It seems to me consistent with the overriding statutory mandate for the just, quick and cheap resolution of the real issues in dispute that the Tribunal proceedings be transferred to this Court; not least this will obviate the risk of conflicting judgments in relation to the matter. I have noted that the usual undertaking as to damages has been proffered, and I am satisfied that it is appropriate in the circumstances that the proceedings in the Tribunal be transferred to this Court to be dealt with as part of the issues in relation to the claimed equitable interest.

22. Accordingly, on the usual undertaking of the applicant as to damages, and noting the undertaking of the applicant to comply with the requirements, if any, for the stamping of the declaration of trust on which the applicant relies, I will make orders pending further order in terms of the orders sought in prayers 1 to 3 of the notice of motion filed 10 June 2020. I will note that the making of those orders is on the basis that the applicant will, without prejudice to either parties’ rights in the proceedings and within seven days and subject to provision of the relevant mortgage account statements, pay the amount retained to date by the applicant in relation to the mortgage repayments in respect of the Property; and the balance, if any, of those outstanding mortgage repayments for the period from 11 November 2019 to date within 21 days; and undertakes to continue to pay the mortgage payments subject to provision of ongoing mortgage account statements pending the hearing and ultimate determination of these proceedings.

23. I will order pursuant to sch 4 cl 6 of the Civil and Administrative Tribunal Act that the proceedings presently in the Tribunal be transferred to this Court to be listed together with the proceedings in this division.

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Decision last updated: 31 July 2020