Wei Li Qu v Anna Xue Kuang

[2007] NSWSC 514

CITATION:	Wei Li Qu v Anna Xue Kuang [2007] NSWSC 514
HEARING DATE(S):	02/05/07
JUDGMENT DATE :	2 May 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	2 May 2007
DECISION:	See paragraphs 23-25 of judgment.
CATCHWORDS:	EQUITY – Equitable remedies – Injunctions – Interlocutory injunctions – Injunctions to preserve status quo and property pending determination of rights – Prima facie cause of action where defendant transferred plaintiff’s property by forging memorandum of transfer then mortgaged property – Plaintiff lodged caveat over second property belonging to defendant in which plaintiff had no caveatable interest – Where inference available that defendant proposes to deal with second property so as to frustrate judgment by being unable to satisfy order that she discharge mortgage over first property – Injunction granted restraining defendant from dealing with second property on terms which minimise risk of damage to defendant and third parties.
PARTIES:	Wei Li Qu v Anna Xue Kuang
FILE NUMBER(S):	SC 4826/05
COUNSEL:	Plaintiff: S Brennan Defendant: R Horsley
SOLICITORS:	Plaintiff: Gregory Goold Solicitors Defendant: Paul Marsh Solicitor

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

WHITE J

Wednesday, 2 May 2007

4826/05 Wei Li Qu v Anna Xue Kuang

JUDGMENT

1 HIS HONOUR: These proceedings were commenced on 2 September 2005. The plaintiff was, from about 1998, the registered proprietor of land at 82 Woodlands Road, Taren Point. She claims to have been the beneficial owner of the land. That claim is disputed. In her defence, the defendant says that the plaintiff gave the defendant a power of attorney. The defendant is the plaintiff’s mother.

2 On or about 28 April 2004, the defendant forged the plaintiff’s signature on a memorandum of transfer to herself. It appears from her defence that she will claim that in 2002, the defendant had informed the plaintiff that she would transfer the property to herself after the plaintiff had lived in Australia for two years, and that she will claim there was a conversation in which the plaintiff agreed to that course. The defence also alleges that the defendant frequently used the plaintiff’s name, including by signing documents in the plaintiff’s name, and did so with the plaintiff’s knowledge and consent.

3 Those allegations in the defence are in dispute. The defendant has not chosen to put on any evidence on the present application to rebut the apparent strength of the plaintiff’s prima facie case.

4 The plaintiff claims orders for the transfer of the title to the Taren Point property to her. She also complains that in about October 2004, the defendant mortgaged the Taren Point property and raised $800,000 on security of the property. The defendant admits that she did obtain a loan of about $800,000 secured over the property.

5 At some time, the plaintiff lodged a caveat over a property registered jointly in the names of the defendant and a Mr Barry Hancock at 39 Simpson Street, Auburn. I would infer that the caveat was lodged in 2005, and I was told by counsel for the defendant that he did not dispute that inference. However, the plaintiff does not have a caveatable interest in that property.

6 A lapsing notice in relation to that caveat was served on or about 25 January 2007. Following the service of that lapsing notice, the plaintiff, through her solicitors, sought an undertaking from the defendant that the defendant would not deal with the property or her interest in it, and that if she sold the property, the net proceeds of sale would be paid into the defendant’s solicitor’s trust account, pending the final determination of these proceedings.

7 On 6 February 2007, the defendant’s solicitors responded by saying that the lapsing notice was served because the plaintiff had no caveatable interest in the property and that the defendant had no current intention to sell.

8 On 20 February 2007, the plaintiff’s solicitors sought an undertaking that they would be notified in writing of any exchange of contract for sale of the defendant’s property. That request was not responded to.

9 On 16 April 2007, the plaintiff filed a notice of motion seeking an order that the defendant be restrained from dealing with the property at 39 Simpson Street, Auburn. Interlocutory injunctive relief was granted up until today. When the matter was called on today, the defendant’s counsel proffered certain undertakings, but they were not acceptable to the plaintiff because the undertakings were only proffered on the basis that if they were accepted, the defendant would not have any onus in the future of saying that the discharge or variation of the undertaking was warranted. As there was no consensus, I have heard the notice of motion as a contested application.

10 There was no dispute that the plaintiff’s evidence established that she has a prima facie cause of action for relief claimed in the statement of claim. In paras 21 to 23 of her affidavit, the plaintiff deposes that:

“ (21) In around 2004, without my knowledge or permission, the defendant forged my signature on a transfer document and was subsequently granted a title by the Land Titles Office to the Taren Point property in her own name. Her ex-husband, Mr Barry Hancock, signed at the witness section allegedly witnessing the forged signature of mine.

...

(22) She later refinanced the property with ING without my permission. My understanding is that the amount of refinancing increases the mortgage on the property to about $800,000. I have not received any part of that money or benefited from it.

(23) I did not find out about these dealings until I did a title search in mid March 2005 after a conversation with the defendant which left me suspicious. ”

11 It was not in dispute that the injunctive relief sought is not to be granted in order to provide security to the plaintiff for her claim in these proceedings. Rather, the jurisdiction to grant the relief sought arises to prevent an abuse of process by the frustration of the administration of justice. It arises where the plaintiff shows that there is a real risk that the defendant may deal with her assets so as to deprive the plaintiff of the fruits of the judgment to which she may become entitled by putting herself in a position where she will be unable to discharge the alleged unauthorised borrowings on the security of the Taren Point property.

12 Where the evidence establishes a prima face case that the defendant has dealt dishonestly with the plaintiff, that may provide a basis for an inference that such a risk of dissipation of assets for an improper purpose exists.

13 The defendant gave no evidence on the application. The plaintiff’s affidavit does establish a prima facie case of dishonest dealing with the plaintiff’s property.

14 The plaintiff says that an inference that the defendant intends to deal with her property, and to do so in a clandestine way, can also be drawn from the service of the lapsing notice with respect to the caveat lodged in respect of the Auburn property, coupled with the defendant’s refusal to give notice of any exchange of contracts for the sale of the Auburn property.

15 The defendant submits that no such inference can be drawn. A proprietor is entitled to serve a lapsing notice where, as here, the caveator has no caveatable interest. Nor can a plaintiff establish a threat of improper dissipation of assets simply by demanding an undertaking to be given notice of things about which he or she has no right to be given notice.

16 As general propositions, this is correct. However, the particular circumstances have to be taken into account. Had the lapsing notice been served in 2005 shortly after the caveat was lodged, then the submission that no inference adverse to the defendant can be drawn from the serving of the lapsing notice would be unanswerable. However, the caveat was lodged in 2005. The lapsing notice was not served until January 2007. The defendant could be expected to explain why the lapsing notice was served when it was.

17 The plaintiff also has cause for concern that the defendant will be unable to satisfy an order that she discharge the mortgage over the Taren Point property. I do not understand why the defendant would not be prepared to give the requested notice of her intention to deal with that property.

18 The inference that the defendant proposes to deal with her interest in the Auburn property so as to frustrate a judgment is an available inference. It can be more readily drawn as the defendant did not give evidence on the application.

19 I do not consider that such an inference should not be drawn because the defendant was willing, through her counsel, this morning, to proffer an undertaking not to deal with her interest in the property except with the written consent of the plaintiff or further order of the Court. It is consistent with that offer that in the absence of such an undertaking, and in the absence of an order of the Court, the defendant proposed to deal with her assets so as to defeat the judgment.

20 The jurisdiction is to be exercised with caution. The injunction sought has the potential to cause harm to a third person, namely Mr Hancock, who is a joint owner of the property. It also appears that, at present at least, the plaintiff does not have substantial assets to satisfy her undertaking as to damages. Accordingly, an order should be framed in such a way as to minimise the risk that it will cause damage to the defendant or to third parties.

21 The defendant, through her solicitor, asserted in correspondence, although she did not give evidence to this effect, that she had no intention to sell. Assuming that what, through her solicitor, she asserted to be the case is true, it is unlikely that any damage would be suffered by an order that until further order the defendant by herself, her servants and agents not deal with her interest in the property at 39 Simpson Street, Auburn, folio 1/960273 without:

(a) first having given ten days’ notice in writing to the plaintiff of her intention to do so; or
(b) the written consent of the plaintiff; or
(c) further order of the court,

and to grant liberty to apply on three days’ notice.

22 On the plaintiff providing the usual undertaking as to damages I propose to make such an order.

23 On the plaintiff, through her counsel, giving the usual undertaking as to damages I order:

1. That until further order, the defendant, by herself, her servants and agents, not deal with her interest in the property at 39 Simpson Street, Auburn, folio 1/960273 without:

(a) first having given ten days’ notice in writing to the plaintiff of her intention to do so; or

(b) the written consent of the plaintiff; or
(c) further order of the court

2. I grant liberty to apply on three days’ notice.

24 The plaintiff did not obtain the interlocutory relief in the form in which she sought it. I order the costs of the notice of motion, including reserved costs, be costs in the proceedings.

25 These orders may be entered forthwith.

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