Vaughan v Bongiorno

[2007] NSWSC 1398

CITATION:	Vaughan v Bongiorno [2007] NSWSC 1398
HEARING DATE(S):	31 October 2007
JUDGMENT DATE :	31 October 2007
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Mareva relief refused.
CATCHWORDS:	EQUITY [340] - Equitable remedies - Injunctions - Interlocutory injunctions - Injunctions to preserve property pending determination of rights - Mareva injunctions - Other matters - Nature of evidence required – Standard of proof - EVIDENCE [216] - Witnesses - Evidence in chief – Evidence of conversations – Form in which evidence may be given.
LEGISLATION CITED:	Property (Relationships) Act 1984
CASES CITED:	Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 Cardile v LED Builders Pty Limited (1999) 198 CLR 380 Earthline Constructions Pty Ltd v State Rail Authority of New South Wales NSWCA 26 February 1992 unreported Francisco Carlos Godinho (1911) 7 CrAppR 12 Patrick Stevedores Operations No 2 Proprietary Limited v Maritime Union of Australia (1998) 195 CLR 1 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 R v Noble [2002] 1 Qd R 432 Biscoe on Mareva and Anton Piller Orders (2005) [6.3] 7 Wigmore on Evidence (Chadbourn rev, 1978) §2097
PARTIES:	1288/06 Michael John Vaughan (P) Melissa Bongiorno (D) 6224/06 Davlite Pty Ltd (P) Melissa Bongiorno (D)
FILE NUMBER(S):	SC 1288/06; 6224/06
COUNSEL:	A Dlakic, Solicitor (P) L Travers, Solicitor (D)
SOLICITORS:	Johnston Vaughan Solicitors (P) Edwin Davey Commercial & Litigation Lawyers (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

WEDNESDAY, 31 OCTOBER 2007

1288/06 MICHAEL JOHN VAUGHAN v MELISSA BONGIORNO
6224/06 DAVLITE PTY LTD v MELISSA BONGIORNO

JUDGMENT

1 HIS HONOUR: This is an application for Mareva relief in rather contorted proceedings between the plaintiff and the defendant. The plaintiff is a man of 59, who is by profession a solicitor. The defendant is a woman of 33 who is, or certainly was at material times, a student. There was undoubtedly a sexual relationship between them over a period of years. Over that period, it seems undoubted that the plaintiff furnished nearly a million dollars to the defendant, a great deal of which was expended on the purchase of real estate in the defendant’s name or the support of loans raised for the purpose of purchasing that real estate.

2 Out of the somewhat contorted and unsatisfactory versions of the facts given in quite lengthy affidavits by both parties, there peer three scenarios as to the characterisation of the legal relations between the parties which could conceivably be asserted in the proceedings. The first is that the money was lent by the plaintiff to the defendant. The second is that the moneys were paid by the plaintiff into properties bought in the defendant’s name, which would lead to the existence of a resulting or other trust relating to those properties in favour of the plaintiff. The third is that there was in fact a domestic relationship between them that fell within the Property (Relationships) Act 1984 (“the PRA”) and that it might be appropriate for there to be an adjustment of interests between them under the PRA.

3 From these scenarios which, as I say, peer out of the evidence, one has been selected by the plaintiff to be propounded in his statement of claim, that is, that the funds were lent by the plaintiff to the defendant. There was not one loan but many. They are all asserted by the plaintiff in the statement of claim to be repayable on demand.

4 That is the case which the plaintiff seeks to make out as a basis for Mareva relief. He has had the advice of Senior Counsel and he has eschewed, through Mr Dlakic, solicitor, who has appeared for him today, any claim upon a trust basis being raised at this stage. It is certainly not appropriate for him to claim relief under the PRA because he specifically denies that there was a relationship which fell within the PRA.

5 From the numerous transactions traversed in the statement of claim the plaintiff has put forward before me the transaction or transactions relating to three pieces of real estate as being the loans selected to found an entitlement to Mareva relief. Those three properties are 5/389 Liverpool Street, Darlinghurst (“the Darlinghurst property”); 4/4 Elkhorn Avenue, Surfers Paradise (“the Elkhorn Towers property”) and 11/4 University Drive, Robina (“the Robina property”). In the case of each it is specifically alleged (pars 4, 44 and 52) that the loan would be repayable on demand.

6 The criterion most frequently cited in this State for the grant of Mareva relief is the dictum of Gleeson CJ when Chief Justice of this Court in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321 - 322:

“The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.”

7 There has been a good deal of discussion of the degree of proof needed to establish the second matter in that criterion, namely, the apprehension of dispersal of assets. There has been less discussion of the quality of the evidence necessary to establish the first matter specified by Gleeson CJ as a prima facie cause of action.

8 As to the criterion by reference to which the first matter is to be established, Gleeson CJ spoke of the establishment of “a prima facie cause of action”. In Patterson’s case Meagher JA (at 326) broadly agreed with Gleeson CJ. Rogers AJA (at 328 – 329) preferred the formulation of the minimum standard of proof of the first matter as a “good arguable case”. In Earthline Constructions Pty Ltd v State Rail Authority of New South Wales NSWCA 26 February 1992 unreported, Kirby P at [2] used the formula “a serious question to be tried”. In the High Court, Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Proprietary Limited v Maritime Union of Australia (1998) 195 CLR 1 at [76] spoke of “a serious question” (to be tried). The formulation by Gaudron, McHugh, Gummow and Callinan JJ in Cardile v LED Builders Pty Limited (1999) 198 CLR 380 at [68] was of the applicant having “to show a reasonably arguable case on legal as well as factual matters”. I am indebted for this collection of formulae to Biscoe on Mareva and Anton Piller Orders (2005): see [6.3].

9 Going back to classic authority concerning interlocutory injunctions, it was said in the High Court in Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 at 622 that prima facie case means:

“that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief.”

10 I propose to continue to adopt, as I have now for some years adopted, the formulation by Gleeson CJ in the Patterson case of the establishment of a prima facie cause of action. I do not think that I should come to any different conclusion on this application if I adopted any of the other formulations mentioned. It seems to me that, in the formulation in the Beecham Group case, a prima facie case means that, if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief, these days what is referred to by “a probability” is not a probability in the sense of a better than 50 per cent chance of success. But the importance of the Beecham formulation for present purposes is a reference to the evidence remaining as it is, that is, the evidence before the Court on the interlocutory application. If that evidence is contested, of course, the conflict will not be resolved.

11 The problem for the plaintiff in this case is the quality of the evidence on which he relies to establish that the transactions between the parties were transactions of loan and that the loans were repayable on demand, which is the sole basis on which the plaintiff’s case is put in the statement of claim. The laws of evidence are not applied in general with any great strictness in civil proceedings in this Court these days. As to conversations, the old oratio directa rule upon which many of us were brought up proves on research to be a phantom and never really to have existed: see 7 Wigmore on Evidence (Chadbourn rev, 1978) §2097; Francisco Carlos Godinho (1911) 7 CrAppR 12; R v Noble [2002] 1 Qd R 432. Evidence is given and admitted in these days of conversations where it is necessary - as it is in this case because the agreements are said to be oral - in indirect speech.

12 The plaintiff’s affidavit was not objected to. The accounts he gives of the three transactions or sets of transactions on which the plaintiff relies in this application are given in terms of generality and imprecision. But, even in a general and imprecise way, the evidence does not succeed in giving versions of conversations which would support loans repayable on demand.

13 Mr Dlakic has conducted the application before me with vigour and resolution and has put the matters that could be put in support of his client’s case. Mr Dlakic has said that it is certainly clear from the evidence that the plaintiff believes, or it is his version, that these loans were repayable on demand and that he demanded repayment. The difficulty is that, in respect of the three transactions, there really is no account of conversations between the plaintiff and the defendant which could be taken as supporting a contract of loan repayable on demand or, to put it in the manner of the statement of claim, that there was a term of the loans that the moneys would be repayable on demand.

14 In relation to the Darlinghurst property, in the only sentence that really refers to the relevant conversation between the plaintiff and the defendant, the plaintiff states:

“To assist the defendant complete the purchase of the property I lent the defendant the balance of the purchase moneys and it was agreed that, upon the sale of the property, the money advanced by me would be repaid.”

I should say at once that the three properties that have been the subject of debate all remain unsold. The only reference to moneys lent for the Darlinghurst property being repayable on demand are in a subsequent paragraph where the plaintiff says that he recorded the amounts he advanced in a computer:

“as those amounts were to be repaid to me upon the sale of the property or upon demand.”

But that records a mental process or state of mind of the plaintiff at the time he made a computer entry. It does not advert to any conversation with the defendant.

15 In relation to the third property, namely, the Robina property, the defendant initially bought it with funds raised against other properties she owned. It was only subsequently that the plaintiff alleges that loans were made by him to the defendant to help support the property. Again, there is nothing in the material relating to that loan that suggests that, in a conversation whereby he agreed to lend the money in respect of that property, there was any talk of repayment on demand. There is evidence that, in respect of that property, the defendant said to the plaintiff:

“I will get a good price for this by the time I finish the course and I will pay you back every dollar that I owe.”

In other words what conversation was deposed to at about the time of the advance was in terms of repayment on sale.

16 The plaintiff has a slightly, but only slightly, better case in respect of the second property, the Elkhorn Towers property. There the plaintiff stated:

“The loan was advanced to the defendant on the basis the money would be returned to me upon the sale of the property or upon demand.”

That is not put forward as reflecting some conversation between them, but appears to refer to the basis in the plaintiff’s mind upon which the money was advanced. As well as having that defect, the formulation is ambiguous. It is not plain whether the demand could be made before the sale of the property or whether the loan was until the property was sold and thereafter until demand was made for its repayment.

17 Mr Dlakic has pressed on me that the above accounts constitute some evidence that the loans were repayable on demand and that the conversations have not been specifically denied by the defendant. That is not surprising, since her version in evidence adverts to other matters, because she says that the moneys were not provided by way of loan transaction at all. Mr Dlakic says that the material that I have adverted to specifies that there were loans repayable on demand; that they had not been objected to; and that I ought take them as establishing a prima facie case of loans repayable on demand.

18 It is here that the formulation in the Beecham case seems to me material. There is there a reminder that the establishment of a prima facie case depends upon the proposition that, if the evidence remains as it is, the plaintiff may obtain success at the trial which, in this case, is to take place before Palmer J early next year. The difficulty with this case is that there really is no evidence at all. The pieces of evidence that have been put forward are utterly inadmissible. Simply because they have been laid before me I am not obliged to act on them. They would not be admitted in that form at the trial. What is more, in so far as they suggest anything, the suggestion that they make is more to the effect that the loans were to be repaid on sale of the properties. This would not be a surprising formulation in the circumstances, since it is quite plain from all the material that there was no prospect of the defendant having funds to repay these loans unless properties were sold. It seems unlikely that the parties were contemplating repayment on demand.

19 However, I am not coming to any conclusion about the facts. I am simply stating that there is no such body of evidence as could be taken to establish even in a prima facie way the case that the plaintiff seeks to rely on to found Mareva relief.

20 In these circumstances, I do not need to proceed to the question of whether the apprehension of dispersal is established (I rather think it is, but that is by the by). The result of the foregoing is that the application for Mareva relief is refused.

21 Ms Travers, solicitor for the defendant, asks for an order that the plaintiff pay the defendant’s costs of the application, which would be the usual order in respect of an unsuccessful interlocutory application. Mr Dlakic objects to this order on the basis of statements earlier in the day by Ms Travers concerning the state of her instructions. However, whilst Ms Travers indicated that her firm was proposing to cease to act for the defendant, there was certainly no disavowal of her having sufficient instructions to appear today, which she continued to do. Furthermore, the costs concerned will be the costs of the notice of motion and costs relating to the notice of motion were incurred before today. So far as today’s costs are concerned, the plaintiff will be protected by the indemnity principle. If there is at the present time no such agreement between the defendant and her solicitors as to support a charge of costs by them to the defendant for today’s appearance, then, of course, the defendant will not incur the costs and, under the indemnity principle, will not be able to recover the same from the plaintiff. Those matters can be worked out in due course.

22 The orders of the Court will be:

(1) The plaintiff’s notice of motion filed on 5 October 2007 is dismissed.
(2) Order the plaintiff to pay the defendant’s costs of the motion.

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