Vidler v Vidler

[2009] NSWDC 319

CITATION:	Vidler v Vidler [2009] NSWDC 319
HEARING DATE(S):	7-10 September 2009
EX TEMPORE JUDGMENT DATE:	11 September 2009
JURISDICTION:	District Court - Civil
JUDGMENT OF:	Sidis DCJ
DECISION:	On the plaintiff's claim 1. Verdict and judgment for the plaintiffs in the sum of $163,137.62. 2. The first defendant is to pay the costs of the plaintiffs on an Ordinary basis up to and including the 31 August 2009 and on an indemnity basis thereafter. 3. The second defendant is to pay the costs of the plaintiffs on an ordinary basis 4. The exhibits are returned - On the cross-claim 1. The cross-claim is dismissed 2. The cross-claimant is to pay the costs of the cross-defendant
CATCHWORDS:	Debt recovery - Liability for debts of partnership - Reliance on Family Courts Orders when pre-conditions not fullfilled
PARTIES:	Lindsay Victor Vidler (Plaintiff/Cross-Defendant) Ellen Jane Vidler (Plaintiff/Cross-Defendant) Karen Elizabeth Vidler AKA Karen Elizabeth Wright (First Defendant/Cross-Claimant) David James Vidler (Second Defendant/Cross-Claimant)
FILE NUMBER(S):	12/08
COUNSEL:	R Foord (For the Plaintiffs/Cross-Defendants)
SOLICITORS:	Friedlieb Byrne Solicitors (For the Plaintiffs/Cross-Defendants) First Defendant/Cross-Claimant Self Represented Farrell Lusher Solicitors (For the Second Defendant/Cross-Claimant)

JUDGMENT

1 In this matter the plaintiffs have brought action to recover monies allegedly lent to the defendants between June 2006 and October 2006. The second defendant is their son. He did not defend the claim. He, however, cross-claimed against the first defendant, who was his wife and the daughter-in-law of the plaintiffs, seeking to rely on Family Court orders made in respect of their assets.

2 The affidavit evidence established the following. The defendants were married in September 2001. In July 2003 they purchased vacant land at 18-20 Railway Street, Wagga Wagga, with the intention of constructing units on that land. The title was registered in their names as joint tenants. In May 2005 they purchased a unit as an investment on the Gold Coast.

3 The evidence did not make it clear when construction work on the Railway Street project commenced, but in October 2005 they entered into a financing arrangement with the first defendant’s sister, Lorraine Dart, the purpose of which was said to pay out existing borrowings and to allow construction work to continue.

4 In February 2006 the defendants separated and a certificate of divorce was granted in June 2007. At the time of separation construction work continued. By June 2006 $480,000 had been drawn from the loan funds provided by Ms Dart. At that point Ms Dart declined to advance further funds. There was a dispute between Ms Dart and the first defendant as to the circumstances concerning the agreement to fund the project but that dispute I found to be irrelevant for the purposes of these proceedings.

5 The plaintiffs claimed to have advanced funds to pay suppliers of materials intended for incorporation into the Railway Street units. A schedule attached to their affidavits indicates that payments were made between 29 June 2006 and 4 October 2006. The payment made on 22 August 2006 met mortgage commitments on the Gold Coast unit.

6 The issues as between the plaintiffs and the first defendant were whether the monies that they advanced were lent to the defendants jointly or whether the advance was made only to the second defendant. Issues were also raised as to whether the monies were in fact used to purchase construction materials for the Railway Street project and, if so, whether the materials were used for that purpose.

7 It was apparent from the evidence that neither of the plaintiffs spoke to the first defendant directly concerning the loan or the terms of the loan. The first plaintiff Mr Vidler agreed that the first defendant had not spoken to him about loan funds and that his dealings concerning the advances were made with the second defendant, his son. The cheques, he said, were drawn to pay accounts from suppliers and no funds were paid into any joint or partnership accounts of the defendants. He agreed that he did not know if the materials paid for were used at the Railway Street project but said that this was the only project under consideration.

8 The second defendant’s evidence was that it was the first defendant who suggested that he ask his parents for financial support after Ms Dart declined to provide further funding. He said he spoke with the first plaintiff who agreed to the loan and asked for a contract to be drawn up. He spoke to the first defendant about this and she instructed a solicitor to draw up an agreement that she subsequently refused to sign.

9 All of the witnesses in this matter with the exception of Mr Daly, the solicitor, showed extreme antagonism to each other. In those circumstances it was very difficult for me to determine who was telling the truth about the arrangements made pursuant to which these monies were undoubtedly provided by the plaintiffs.

10 There was no clear evidence that the first defendant knew anything about the loan until late August or early September 2006 when the evidence established that she approached Mr Daly, a solicitor, to draw up a loan agreement. It was not suggested by any party that the loan agreement was ever signed.

11 The issue is one that does not require determination for the purposes of these proceedings. The first defendant agreed that the partnership continued between her and her former husband and that it continues to the present date because the project has not been completed and it has not been sold.

12 In those circumstances in the absence of any notice on her part to the contrary, the second defendant had the ostensible authority to bind the partnership to the arrangement that he entered into with his parents.

13 Unfortunately for the first defendant she is therefore also bound by that arrangement. She may well have a right to claim against the second defendant in respect of her allegations that he committed the partnership to a loan when he was not authorised to do so, but that does not assist her in defending this action.

14 In respect of the plaintiffs’ claim therefore there will be verdict and judgment for the plaintiffs.

15 The second defendant not having defended the claim will be liable to judgment also in these proceedings.

16 The cross-claim brought by the second defendant relied upon orders made in the Family Court relating to the property of the parties on 26 July 2007. Those orders provided for refinancing of the project, and the transfer of the second defendant’s interest in the Gold Coast unit to the first defendant. It provided that debts and loans were to be repaid by the first defendant and set out the manner and order in which those debts were to be repaid. Upon repayment of the debts and upon completion of the construction of the Railway Street development the first defendant was required to indemnify the second defendant in respect of third party creditors.

17 The second defendant relied upon those orders to claim an indemnity in respect of a judgment against him in these proceedings. After some active debate between myself and the second defendant’s representative I expressed the view that that indemnity could not be relied upon by the second defendant because the pre-conditions to the indemnity have not been put into effect.

18 Upon the reading of the consent orders made in the Family Court it is apparent that before the indemnity took effect it was necessary that the refinancing be undertaken, that transfers of interest in the properties from the second defendant to the first defendant be put into effect, that debts be paid out and that the Railway Street project be completed. None of those things has been done.

19 It is my view that enforcement of those orders is a matter for the Family Court and they are of no assistance to the second defendant in these proceedings.

20 The orders that I make are as follows:

1. There will be verdict and judgment for the plaintiffs against the defendants in the sum of $163,137.62. I note for the purposes of the order that the amount of the judgment excludes interest, the claim for which was not published.

2. The plaintiffs seek an order for indemnity costs against the first defendant on the basis of an offer of compromise served upon her that expired on 31 August 2009. No similar offer of compromise was served upon the second defendant. The first defendant is to pay the plaintiffs’ costs on an ordinary basis up to and including 31 August 2009 and on an indemnity basis thereafter.

3. The second defendant is to pay the plaintiffs’ costs on an ordinary basis.

4. The exhibits are returned.

5. The cross-claim is dismissed.

6. The cross-claimant is to pay the cross-defendant’s costs of the cross-claim.

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