Toubia v Toubia

[2023] NSWSC 993

Supreme Court

New South Wales

Medium Neutral Citation:	Toubia v Toubia [2023] NSWSC 993
Hearing dates:	18 August 2023
Date of orders:	18 August 2023
Decision date:	18 August 2023
Jurisdiction:	Equity - Applications List
Before:	Kunc J
Decision:	Leave to lodge further caveat granted; defendant to pay plaintiff’s costs
Catchwords:	LAND LAW — Caveats — Lodgment of caveat claiming same interest as previous caveat — Lodgment with leave of court — No issue of principle
Legislation Cited:	Real Property Act 1900
Category:	Procedural rulings
Parties:	George Toubia (plaintiff) Tony Toubia (defendant)
Representation:	Counsel: D Priestley SC / A Gauga (plaintiff) RW Tregenza (defendant) Solicitors: Benchmark Lawyers (plaintiff) Rivera Legal (defendant)
File Number(s):	2023/108398
Publication restriction:	Nil

EX TEMPORE JUDGMENT (REVISED)

Introduction

1. Without disrespect, the Court will refer to the parties by their given names.

2. The plaintiff, George, and the defendant, Joe, are brothers. George was, at the relevant time, the sole shareholder and director of Reznov Enterprise Pty Ltd (Reznov), a building company. Joe was sole shareholder and director of TMR Investment Group Pty Ltd (TMR), a property developer. George and Joe are now in dispute about a development at Botany, which resulted in the construction of five terrace dwellings, each one now being a separate lot in the relevant deposited plan.

3. By motion filed 23 June 2023, George moves in the Applications List for leave pursuant to s 74O of the Real Property Act 1900 (NSW) to lodge a further caveat on the certificate of title for Lot 5 in the relevant deposited plan, being the fifth of the terraces constructed as part of the development. There is no dispute that an earlier caveat in relation to George's claim lapsed and that, while slightly differently expressed, the proposed further caveat claims the same interest as the lapsed caveat. It is not necessary to set out the circumstances for that lapsing, because the parties, sensibly if I may respectfully say so, agree that the present application should proceed as though it were an application for the extension of a caveat.

4. For the reasons which follow, the Court will grant the leave George has sought. Mr D Priestley of Senior Counsel appeared with Mr A Gauja of Counsel for George. Mr RW Tregenza of Counsel appeared for Joe.

George’s case

5. The Court has had the benefit of both written submissions from the parties as well as oral argument, all of which I have taken into account.

6. George's case is set out in his affidavit of 23 June 2023, as explicated in an amended statement of claim filed on 19 July 2023. In short, it claims a proprietary interest pursuant to any of a common intention constructive trust, a proprietary estoppel or a failed joint endeavour constructive trust in the terrace house which is the subject of the proposed caveat. There is also a claim for breach of contract and equitable damages.

7. The essence of the claim is that, pursuant to two agreements, the second superseding the first, George and Joe agreed that if George provided funds for the development at Botany and undertaking the relevant building works, then Joe would transfer one of the five lots created by the subdivision to George or his nominee. It is a claim of a kind with which the Court is well familiar. In the events which happened, George’s company Reznov undertook the development for Joe’s company TMR, the latter being the owner of the land on which the terraces were built.

8. In so far as George's affidavit evidence is concerned, one matter of real weight for today’s hearing is a text message in April 2018 in which Joe says to George,

"As I promised you:

1. You will have one terrace in your name as soon as approval comes in end of this month.

2. 50 per cent of profit Beaconsfield".

9. I draw attention to that evidence for the purposes of this application as it provides some prima facie support for what is otherwise largely apparently a case of oral arrangements between the two brothers.

10. George's evidence supports a prima facie case to the effect set out in the amended statement of claim.

Serious question to be tried

11. The focus of Mr Tregenza's attack was to seek to demonstrate that there was no such prima facie case or serious question to be tried by relying on answers to particulars that had been furnished to the amended statement of claim and financial documents that had been provided by Joe, which Mr Tregenza submitted decisively falsified George's claim. He submitted that this evidence was so clear on its face the Court could not be satisfied that there was a prima facie case or serious question to be tried.

12. Mr Tregenza's industry produced a two-volume exhibit of nearly 800 pages of financial records, which had clearly been the subject of close analysis by Joe's side of the record. With no disrespect to the thoroughness with which Mr Tregenza and those assisting him had reviewed the financial records, his submissions may be reduced to two propositions.

13. The first contention was that many of what were said by George to be payments made pursuant to the alleged arrangement between him and his brother were not in fact made by George to Joe, but were payments made by Resnov to TMR. Mr Tregenza placed great weight on the difference in legal personality between George and Joe and their respective companies.

14. Of course, as a matter of the strict legal position, issues of legal personality are important. They may, at the hearing of this case, prove to be decisive. However, for the purpose of an interlocutory application such as the present, I accept Mr Priestley SC's submission that this is the type of case where at a final hearing it would not be unusual for a court to be satisfied that payments made by George (through his wholly owned and solely controlled company) to Joe (through his wholly owned and solely controlled company) were, for the purposes of the causes of action pleaded, identical to, and intended to be, payments as between George and Joe pursuant to their alleged arrangement.

15. Mr Tregenza's reliance on concepts of strict legal personality is insufficient to persuade me that there is no serious question to be tried.

16. The second contention was that, even in relation to those payments which the financial records showed had been made by George from his bank account to Joe's bank account, the descriptions given by George on those electronic transfers were inconsistent with George's claim. That is to say, many of the descriptions which the Court assumes were entered on the electronic transfer form by George, do not appear to relate to the development at Botany.

17. One example is a description "Bass Hill, Resnov". I accept that on its face and without more that payment does not appear to relate to the arrangement which is the subject of the amended statement of claim. However, there are many other payments where the descriptions are uninformative or equivocal, such as "hey George", "good morning George" or "work Reznov" or just "George".

18. It is not for the Court, on an interlocutory application, to attempt to come to any final view as to whether or not specific entries in the financial records relate to the arrangement alleged in the amended statement of claim. With respect, the exercise which Mr Tregenza with admirable determination urged upon the Court is classically one for a final hearing, where the Court is seized of all the evidence and such matters are the subject of cross-examination.

19. The industry of those representing Joe in preparing such a detailed analysis of the financial records has, rather, for today's purposes, well satisfied me that there is a serious question to be tried about what these various payments were for and whether in fact they bear the character alleged by George for the purposes of making out his case.

20. I am therefore satisfied that, notwithstanding the matters advanced by Mr Tregenza on behalf of Joe, George has demonstrated a serious question to be tried.

Balance of convenience

21. Turning to the balance of convenience, on George's part it was submitted that the balance of convenience strongly favoured permitting a fresh caveat to be lodged (and thereby having the effect of an injunction against dealing with the relevant lot), because it related to the very subject matter in which George maintains he has a proprietary interest.

22. For Joe's part, reliance was placed on the only evidence advanced in opposition to the motion, being on information and belief from his solicitor. This was to the effect that if the caveat were permitted to be lodged, his client would "suffer significant damages".

23. There is no dispute that the relevant terrace is currently for sale. The solicitor's affidavit goes on to explain that the property is currently for sale in order to fund completion of another development project in relation to which Joe is said to be unable to obtain any further finance. His instructions were that if there was a delay in the other project or it was not completed, then Joe and TMR would face serious financial consequences, including potentially causing TMR to become insolvent and for Joe to be made bankrupt.

24. Evidence of such serious matters in that form is of little weight in the present circumstances, where it has not been suggested that Joe has had insufficient time to prepare adequately to oppose the motion. I also note that it appeared to be common ground, or at least not disputed, that Joe is currently living in the relevant terrace with his family.

25. An alleged shortage of financial resources also seems to me to be somewhat qualified by the evidence that of the other four terraces, one remains in the name of TMR and the other was transferred to Joe's son (although there is no evidence as to whether that transfer was for real consideration).

26. The evidence of Joe’s financial position was also something of a double-edged sword in the context of Mr Tregenza’s further submission that damages would be an adequate remedy, which Joe – as a successful property developer of substance – would be well able to meet. I accept Mr Priestley SC's submission that such a characterisation of Joe was thrown into doubt by the hearsay assertions that there is a possibility, if the further caveat is lodged, of the kinds of financial consequences for Joe and TMR to which I have referred.

27. I am therefore not satisfied that the balance of convenience is against the granting of the leave sought. On the contrary, I am satisfied that the balance of convenience is firmly in favour of George.

The usual undertaking

28. Finally, there was a passing attack on the utility of the undertaking which George proffers as to damages. Mr Tregenza relied on the fact that last year George had apparently transferred his family home into his wife's name under a family law settlement, but still resided there. That was the only fact to which Mr Tregenza could point. He put, quite properly and fairly, that he had no other evidence of George's financial circumstances.

29. This sole fact relied upon by Mr Tregenza goes nowhere. It certainly is insufficient of itself to cast doubt upon what the Court would otherwise not question, in the absence of any other evidence from Joe’s side, was the adequacy of the undertaking to be proffered by George.

30. For these reasons, the Court will grant leave for the lodging of the further caveat.

Costs and orders

31. After announcing this result, the parties addressed on the costs of the motion and the further conduct of the proceedings. Mr Priestley SC submitted that Joe should pay George’s costs. Mr Tregenza submitted that the costs should be George’s costs in the cause, so as to abide the ultimate outcome of the proceedings while reflecting George’s success on the motion.

32. I determined that Joe should pay George’s costs of the motion for the following reasons. The motion was a discrete step in the litigation determined by reference to matters that will not be revisited. It was firmly but unsuccessfully opposed by Joe. There was nothing to displace the usual presumption that costs should follow the event.

33. The Court’s orders are:

1. Upon the plaintiff giving to the Court the usual undertaking as to damages, pursuant to s 74O of the Real Property Act leave is granted to the plaintiff to lodge a further caveat in the form of annexure G to the affidavit of George Toubia sworn 23 June 2023.

2. The defendant to pay the plaintiff’s costs of the motion filed 23 June 2023.

3. Direct that these orders be entered forthwith.

4. The defendant is to file and serve his defence on or before 25 August 2023

5. The plaintiff is to file and serve all of his evidence in chief on before 29 September 2023.

6. Lists the proceedings for directions before the Registrar on 5 October 2023.

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Decision last updated: 21 August 2023