Wentworth v Rogers

[2003] NSWCA 346

CITATION:	Wentworth v. Rogers & Anor. [2003] NSWCA 346
HEARING DATE(S):	17 November 2003
JUDGMENT DATE:	25 November 2003
JUDGMENT OF:	Hodgson JA at 1
DECISION:	1. Upon the claimant giving to the Court the usual undertaking as to damages, Orders 2-7 made by Howie J on 27 October 2003 stayed until 26 November 2004. 2. This stay and the restraints imposed on the opponents by the orders and undertaking of 4 September 2001 shall not preclude the following: (a) transactions to which the claimant has given written consent; (b) leases of the land in Certificate of Title Folio Identifier 72/615640 on reasonable commercial terms terminable by the opponents on no more than three months' notice; (c) transactions of which the opponents have given 42 days' notice in writing to the claimant; (d) payment out of Court referred to in Order 7 of Howie J after the opponents have given 42 days' notice in writing to the claimant that they will seek such payment. 3. Extend time for the Amended Notice of Appeal, submissions, red appeal book, and indices to other books to 23 January 2004. 4. Costs of this application to be costs in the appeal.
CATCHWORDS:	PRACTICE - Appeal - Stay - Whether appeal has substance - Balance of convenience - Conditions of stay.
CASES CITED:	Calverley v. Green (1984) 155 CLR 242 Fox v. Percy (2003) 77 ALJR 989
PARTIES :	Katherine Wentworth - Claimant Gordon J. Rogers - 1st opponent Toni Rogers - 2nd opponent
FILE NUMBER(S):	CA 40474/03
COUNSEL:	The claimant appeared unrepresented No appearance for first opponent Mr. R. Lovas for second opponent
SOLICITORS:	Dorrough Smart, Surry Hills for second opponent

LOWER COURTJURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC11094/95
LOWER COURT JUDICIAL OFFICER :	Howie J

CA 40474/03
SC 11094/95

HODGSON JA

Tuesday 25 November 2003

WENTWORTH V. ROGERS & ANOR.

Judgment

1 HODGSON JA: On 9 May 2003, Howie J in the Common Law Division gave judgment in proceedings in which the claimant Ms. Wentworth had sought relief in the nature of that provided by s.37A of the Conveyancing Act 1919 against the opponents Mr. and Mrs. Rogers. In that judgment, Howie J dismissed the claimant’s summons, directed a verdict and judgment for the opponents on the claimant’s Statement of Claim, and ordered the claimant to pay the opponents’ costs.

2 On 14 July 2003, Howie J gave two judgments in response to an application by the claimant that he withdraw his judgment and disqualify himself by reason of bias, in which he refused that application.

3 On 27 October 2003, Howie J gave a further judgment in which he varied the costs order. He also varied orders made on 4 September 2001 imposing certain restraints on the first opponent, and relieved the second opponent from her undertaking given to the Court on the same day, and he ordered that money paid into Court in the proceedings together with interest be paid out to the opponents. However, he stayed those orders until 23 November 2003.

4 The relevant orders and undertakings of 4 September 2001 were the following, and were made by consent and upon the claimant giving to the Court the usual undertaking as to damages:

2. Orders that until further Order, the First Defendant, by himself, his servants or agents, be restrained from disposing of or encumbering his interest in the land comprised in Certificate of title Folio Identifier 71/615640.
3. Notes the Second Defendant’s undertaking that she will not by herself, her servants or agents, dispose of or encumber her interest in the land comprised in Certificate of title Folio Identifier 71/615640.
4. Subject to the Order 5:-
(a) Orders that until further Order, the First Defendant, by himself, his servant, or agents, be restrained from disposing of or encumbering his interest in the land comprised in Certificate of title Folio Identifier 72/615640.
(b) Notes the Second Defendant's undertaking that she will not by herself, her servants or agents, dispose of or encumber her interest in the land comprised in Certificate of title Folio Identifier 72/615640.
5. The First and Second Defendants may sell the land comprised in Certificate of title Folio Identifier 72/615640 for a gross sale price of not less than $105,000.00 and on the completion of any such sale the following amounts be deducted from the sale price:
(a) The costs, expenses and commission of the real estate agent or agents acting on the sale of the property; and
(b) The costs, fees and disbursements of the solicitor or solicitors acting for the parties on the sale of the property,
and the remainder to be paid into Court until further Order, including such order as may be made concerning the costs of the plaintiff of the foregoing variations of injunctions and undertakings.

5 The land referred to in those orders is land known as “Te Mata” near Tamworth, comprising Lots 71 and 72. Pursuant to Order 5, Lot 72 was sold and $115,891.19 was paid into Court. That amount together with interest still remains in Court. It would be paid out to the opponents if the orders of Howie J of 27 October 2003 take effect.

6 The claimant has appealed to the Court of Appeal from Howie J’s decisions of 9 May 2003 and 14 July 2003, and she intends to appeal from his decision of 27 October 2003. The current Notice of Appeal is one filed on 29 August 2003.

7 On 17 November 2003, I heard an application by the claimant filed on 10 November 2003, which in substance seeks a stay of the orders made on 27 October 2003, and orders having the effect of continuing the restraints upon the opponents which existed by virtue of the orders and undertaking of 4 September 2001, until after determination of the appeal. There was no appearance by the first opponent at that hearing, but in my opinion service on him was sufficiently proved. I reserved my decision, and on the claimant giving the usual undertaking as to damages, I continued the existing restraints until delivery of my judgment.

8 Before outlining the circumstances giving rise to the claim before Howie J, I should refer briefly to events in other proceedings. The claimant has certificates of costs in her favour by which she is entitled to execute against the first opponent for the sum of $226,509.37. It appears that the first opponent has certificates of costs in his favour against the claimant in the sum of $172,385.00, but that he is subject to consent orders which prevent enforcement of them. Writs of Execution were issued at the instance of the claimant, commanding the Sheriff to levy on the property of the first opponent, including the money held on deposit in the Supreme Court referred to earlier and the property being Lot 71 referred to earlier. On 7 April 2003, Shaw J stayed execution of those writs; and on 16 June 2003 Miles AJ dismissed an application by the claimant for removal of the stay, save that the stay was to be enforceable only until further order of the Court.

CIRCUMSTANCES

9 On 17 June 1981, the claimant commenced a private prosecution against the first opponent on charges of assault, including sexual assault, alleged to have occurred on 27 January 1977. Ultimately, the first opponent was acquitted on all charges by a jury on 26 July 1985.

10 On 13 December 1982, the claimant commenced proceedings for damages against the first opponent for personal injuries arising out of the same incident. After dismissal of the criminal proceedings, the first opponent put on a cross-claim in those proceedings seeking damages for malicious prosecution.

11 On 24 June 1994, the claimant obtained a verdict in her proceedings for damages in the sum of $2,000.00, and the first opponent was ordered to pay one-half of her costs of the proceedings. The first opponent’s cross-claim has not yet been finally determined. It is apparent that the proceedings have been drawn out; and as I understand it, the costs certificates to which I have referred have resulted from costs orders in these proceedings and perhaps in associated proceedings.

12 The dispute determined by Howie J concerns primarily Lots 71 and 72. They were purchased for $110,000.00 in 1981, in the names of the first and second opponents as joint tenants, with the purchase price wholly provided by the first opponent.

13 In 1994, the first opponent signed a transfer which, it appears, had the effect of severing the joint tenancy and converting it into a tenancy in common. He subsequently executed a deed, and also a mortgage in favour of the second opponent over his interest in the property. The deed acknowledged that the first opponent was indebted to the second opponent in the sum of $130,000.00, and stated that the first opponent would forthwith execute a mortgage over his interest in Lots 72 and 72. The deed provided for interest if demanded at the rate chargeable from time to time by Westpac Banking Corporation in relation to commercial transactions. The mortgage was in a standard form, and it stated that it was given to secure the performance by the first opponent of his obligations under the deed. It was these transactions that were attacked by the claimant in reliance on s.37A of the Conveyancing Act.

14 As mentioned earlier, Lot 72 has since been sold. It was in fact sold in November 2001 for $120,000.00, and it is the net proceeds of that sale that were paid into Court and are now retained in the Court.

DECISION OF PRIMARY JUDGE

15 Howie J was not satisfied that the 1994 transactions were entered into with intent to defraud creditors so as to bring into play the provisions of s.37A of the Conveyancing Act. He did not consider there was any other basis for relief to the claimant.

GROUNDS OF APPEAL

16 The Notice of Appeal contains 62 grounds. The first thirteen relate to alleged bias and lack of procedural fairness by the primary judge. The remaining grounds go to the substance of the decision.

SUBMISSIONS

17 The claimant contends to the effect that the appeal is on substantial grounds, that the balance of convenience supports the maintenance of the status quo until the appeal has been disposed of, and that otherwise the appeal could be rendered nugatory. She offers the usual undertaking as to damages.

18 Mr. Lovas for the second opponent submits that the appeal has no merit, that payment out of the money in Court and cessation of other restraints would not render the appeal nugatory, that there has been gross tardiness by the claimant in pursuing her case below and on appeal, and that her undertaking as to damages would have no value. He made a particular submission that, in so far as the various restraints relate to the half share of the property which has been owned by the second opponent since 1981, there is no basis for them whatsoever.

DECISION

19 The appeal directed to the merits of the decision is largely on matters of fact relating to the intentions of the opponents in 1994, and thus go largely to their credibility. Findings on credibility can generally be reversed only in exceptional circumstances: Fox v. Percy (2003) 77 ALJR 989. It is not possible on this application to consider all the grounds in detail and in depth, but it does seem to me that some may possibly have substance. In my opinion, it is appropriate to consider the balance of convenience on the basis that this is an appeal that is not without some chance of success.

20 There is some force in the submission of Mr. Lovas in relation to the half share in the property that the second opponent has had since 1981. The first opponent did provide the whole of the purchase price; but in the absence of evidence as to actual intention, the presumption would be that he intended to benefit his wife (Calverley v. Green (1984) 155 CLR 242) so that no resulting trust would arise. Furthermore, the first opponent’s evidence was that he did in fact intend to make a gift to his wife. If the second opponent had a one-half interest in the property as joint tenant from 1981 onwards, the conversion of that one-half interest into a tenancy in common, even if this were part of a scheme to defraud creditors, would not result in her losing that half interest.

21 On the other hand, I do not think Mr. Lovas’ submission that the claimant has no standing to claim that there was a resulting trust of the property is conclusive. In my opinion, it might be incidental to an exercise of the Court’s jurisdiction under s.37A to identify what property of the debtor has been affected by a transaction in a fraud of creditors; and if that property included an equitable interest by way of resulting trust, it may be possible in s.37A proceedings to obtain a declaration to that effect.

22 However, for the reasons I have given, it must be said that the chance of the claimant being able to establish positively that the first opponent’s intention in 1981 was not to confer a benefit on his wife seem quite remote.

23 I would add that, in support of his submission that the appeal was without substance, Mr. Lovas tendered a transcript which he submitted showed that the claimant engaged in irrational or fanciful reasoning. I do not consider that this material is relevant to assessment of whether this appeal has any substance. Accordingly, I do not admit that transcript into evidence.

24 I should also mention an argument put by the claimant to the effect that, because the mortgage over Lot 72 was discharged to allow the sale of Lot 72 to go ahead, there was no basis on which the second opponent could claim any right over the first opponent’s half share of the money paid into Court. In my opinion, in the absence of clear evidence to the contrary, the provision for payment of net proceeds of sale into Court would be on the basis that there would be the same rights in respect of those proceeds as there had been in relation to the property itself, prior to its sale.

25 On the material before me, I see no substance in the grounds of appeal based on alleged bias.

26 Turning to the question of balance of convenience, in my opinion there is a reasonable possibility that payment out could render a successful appeal nugatory. If it were established by a successful appeal that the opponents had acted fraudulently to defeat the claimant’s rights, it would be reasonable to apprehend a danger of dissipation of assets. It is true that these proceedings are pursuant to s.37A of the Conveyancing Act and are not in form proceedings for a Mareva injunction; but in my opinion Mareva considerations are not irrelevant to the question of what, if any, interlocutory relief should be provided in connection with s.37A proceedings. Although the claimant has expressed views as to the wealth of the second opponent, there is no reliable evidence about this.

27 The history of these proceedings has been long and tortuous, but on this application it is not possible for me to determine that this is substantially the fault of the claimant. However, it would be appropriate to craft orders so as to ensure that they will not be continued if there is any tardiness by the claimant in prosecution of the appeal.

28 Mr. Lovas sought to cross-examine the claimant as to her financial position, in order to support his submission that her undertaking as to damages would be of no value. I did not permit that cross-examination, because, apart from one matter that can be dealt with by crafting of the orders, there is no evidence, and no reasonable possibility in the absence of evidence, that restraint will cause substantial damage. The one matter to which I referred is that the opponents are apparently no longer in occupation of the property, and at present the orders may be such as to preclude them leasing the property. In my opinion, any restraint in relation to the property should now be qualified so as to permit leases on reasonable commercial terms, so long as those leases can be terminated on no more than three months’ notice. Otherwise, there is no evidence that loss would be caused to the opponents by not dealing with this property, or by leaving money in Court accruing interest. I would not infer in the absence of such evidence that there is a substantial possibility of significant damage arising from these matters.

29 On the whole, in my opinion, the appropriate course is to continue the restraints, without distinguishing the half interest which the second opponent has apparently had since 1981, but subject to various qualifications.

30 The first qualification is that leasing should be allowing to the extent indicated. Second, I would propose to make the restraint not absolute, but rather a restraint from certain transactions taking place without the written consent of the claimant, or without the opponents first giving 42 days’ notice to the claimant of a proposed transaction or withdrawal of money from the Court. If such notice is given, the onus would be on the claimant to apply for an to justify restraint of the notified transaction; but if there was no evidence from the opponents of significant need for the transaction and if the claimant had acted expeditiously on the appeal, I would expect that, as in the present application, the claimant would discharge that onus, and also that costs would be ordered against the opponents. On the other hand, if on such an application there was evidence of significant need to undertake the transaction and of damage if the restraint were continued, the claimant would need at least to show that the opponents would be protected by a worthwhile undertaking as to damages. And if the claimant had not acted expeditiously in pursuing the appeal, I would expect that she would fail in seeking to restrain the proposed transaction.

31 The third qualification is that I would propose to continue the restraint for one year, a time within which it should be possible to have the appeal heard, if the claimant acts expeditiously.

ORDERS

32 When I reserved my decision, I extended the time for certain procedural steps until mid-December. My reason was that mediation between the parties is to take place on 9 December, and my view was that it was in everyone’s interest to give that mediation every possible chance of success. A requirement that the claimant take substantial steps to prosecute this appeal in the meantime would in my opinion be detrimental to the prospects of a successful mediation.

33 It is unlikely that the appeal would progress far before Christmas in any event. To assist the mediation, I think it would be appropriate to extend the time for the Amended Notice of Appeal, submissions, red appeal book, and index to other books, to 23 January 2004. If this time limit is not complied with, it would then be open to the opponent to give the 42 days’ notice to which I have referred, and the claimant would bear a substantial onus of justifying extension of the restraint, which it would be hard to discharge unless she showed that the default in having this material by 23 January 2004 occurred notwithstanding her acting with due diligence.

34 I make the following orders:

1. Upon the claimant giving to the Court the usual undertaking as to damages, Orders 2-7 made by Howie J on 27 October 2003 stayed until 26 November 2004.
2. This stay and the restraints imposed on the opponents by the orders and undertaking of 4 September 2001 shall not preclude the following:
(a) transactions to which the claimant has given written consent;
(b) leases of the land in Certificate of Title Folio Identifier 72/615640 on reasonable commercial terms terminable by the opponents on no more than three months’ notice;
(c) transactions of which the opponents have given 42 days’ notice in writing to the claimant;
(d) payment out of Court referred to in Order 7 of Howie J after the opponents have given 42 days’ notice in writing to the claimant that they will seek such payment.
3. Extend time for the Amended Notice of Appeal, submissions, red appeal book, and indices to other books to 23 January 2004.

4. Costs of this application to be costs in the appeal.

**********

Last Modified: 11/26/2003