Ying v Perpetual Trustees Victoria Limited

[2015] HCATrans 165

[2015] HCATrans 165

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M108 of 2015

B e t w e e n -

XIAO HUI YING

Applicant

and

PERPETUAL TRUSTEES VICTORIA LIMITED (ACN 004 027 258)

Respondent

GORDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON THURSDAY, 16 JULY 2015, AT 9.32 AM

Copyright in the High Court of Australia

MR F.C.K. LIM:   May it please, your Honour, I appear for the applicant in this matter.  (instructed by Francis Lim Barristers & Solicitors)

MR A.T. STRAHAN:   May it please the Court, I appear for the respondent.  (instructed by Colin Biggers & Paisley)

HER HONOUR:   Thank you, Mr Lim.

MR LIM:   I am not sure whether we are supposed to be in robes.

HER HONOUR:   That is all right, I will speak to you regardless of how you look.

MR LIM:   Your Honour, this is the applicant’s application for stay of execution of the two orders, many of the orders made by the learned judge in the Supreme Court.  Your Honour, I have got some real argument, if I can ‑ ‑ ‑

HER HONOUR:   I think I have already read this document.  Is this the one that you sent through to the Court earlier?

MR LIM:   Yes, it is.

HER HONOUR:   Yes.

MR LIM:   Your Honour, this case involved my client who is the wife of the former registered owner.  The court has found that she knew nothing about the forgery, no money went to her.  The property was transferred to her.  Your Honour, the instruction was given by her husband to the solicitor on 1 March 2004 and then the transfer of land was signed by both of them and received by the solicitor who attended to the conveyancing on 23 March 2004 and she was subsequently registered as a proprietor on 29 March 2004.

Your Honour, there is no dispute that the loan agreement, mortgage documents, et cetera are – all did not bear her signature and the way the respondent’s business structure works is this, that they rely totally on the mortgage originator and although the agreement with ‑ there are three steps.  One is the mortgage originator would deal with the public or the borrowers, and then the…..by a trustee and then we need the respondent.  The respondent and the trustee, there is a deed of trust where he says that I am not responsible for whatever you do as the trustee, I can rely on the accuracy of whatever documents that you send.  And it flows down too from the trustee to the mortgage originator, the same thing.  I can rely on the accuracy of whatever documents you pass forward to me, although I have the right to audit your books, to inspect your books, but I am not legally obliged to do so.  And this sort of thing has caused – it can easily give rise to fraudulent conduct.

HER HONOUR:   But none of that is in dispute, is it, that is, there is no dispute that the documents were forged.  There is no dispute that the conduct of Mr Fitzgerald was less than satisfactory.

MR LIM:   Yes.

HER HONOUR:   The question which arose was whether or not the findings made by Justice Hargrave that the property was held on trust, which was upheld by the Court of Appeal, which you now seek to suggest gives rise to grounds for an application for special leave to appeal.

MR LIM:   Yes, my main ground, your Honour, is this, that there was a transfer of land from the registered proprietor to the applicant.  The transfer of land states clearly that it is for – the consideration was for love and affection ‑ ‑ ‑

HER HONOUR:   Yes.

MR LIM:   ‑ ‑ ‑ and love and affection has been held by this Court as sufficient consideration under the Confiscation Act of this State.

HER HONOUR:   Yes.

MR LIM:   The Transfer of Land Act in this State also says that a transfer of land is a deed, and a deed, your Honour – there is also authority that says that no oral evidence can be given to contradict whatever is stated in the deed.  The deed states clearly that the consideration was for love and affection and the courts here have also held that that is good enough as far as conveyancing is concerned.  It is effective to transfer legal beneficial interest in the land from the transfer or to the transferee.  Once that is registered my client becomes the full legal beneficial owner and they cannot use oral evidence given by anybody or any extrinsic evidence to contradict whatever is stated in the deed.

HER HONOUR:   So that deals with one of the considerations that I must take into account on an application for stay?

MR LIM:   Yes.

HER HONOUR:   So as I understand the principle set out in Jennings, you seek to preserve the subject matter of the appeal.

MR LIM:   That is the most important thing because, your Honour, she came in 1997 – 1976 then she live in this place in de facto relationship with Mr Fitzgerald for a few years and then they got married in 2000.  All along she was living there, looking after his sick mother and sister, and she has got no other house except this particular house.  Your Honour, if a stay is not granted in the appeal what we have asked for is for the discharge of the mortgage and for the property to be – for the title to be returned to her.  If a stay is not granted and the judgment is executed, the property is sold, there is no way this Court can reinstate her back to her original position.  This case is very different because she did not owe any money to the respondent.  No loan was given to her.

HER HONOUR:   Is that right?  I thought the loan was given to her but it was a forgery.

MR LIM:   Yes.  The money never went to her.

HER HONOUR:   I understand that point.

MR LIM:   The disbursement authority also was forged.  Everything was forged.  I think this Court has to, in my respectful submission, make it known that this sort of conduct ‑ big institutions like the respondent cannot just let ‑ just cannot be released of the obligation by not caring about who they dealt with and just let their mortgage originator do whatever they have done, and then they hide under the Transfer of Land Act and says once registered we are protected.  Even this – your Honour, this State as well as Queensland and New South Wales have amended their Act and says that if a mortgagee bank did not take reasonable steps to ensure that the person they dealt with is the true owner and has authority to sign the mortgage the mortgage ought to be void.  They have done that already.

Here they have agreed that a transfer where the consideration was for love and affection is sufficient for purposes of the transfer.  What they are saying is there is a resulting trust.  The resulting trust, your Honour, is based on evidence outside this document, this transfer and this Court has not ruled firstly whether or not a deed, a transfer without consideration is effective to transfer the – leave a beneficial interest in the property to the transferee.  This Court has also not ruled on this other point which is the point relevant in our situation is whether or not a transfer where the considerations state that as love and affection – whether or not that is good enough to vest legal beneficial interest in the transferee and no extrinsic evidence or otherwise can be used to contradict what is stated in the transfer.

HER HONOUR:   Well, a lot of those arguments would go to your hearing on your application for special leave to appeal ‑ ‑ ‑

MR LIM:   Yes, your Honour.

HER HONOUR:   ‑ ‑ ‑ but they are not the only considerations that are relevant to an application for a stay.

MR LIM:   For a stay, your Honour, we are saying that if a stay is not granted this Court cannot ‑ it is not possible for this Court to give the relief that the appellant is seeking if she succeeds in the appeal, that is she wants the property back unencumbered.  The respondent – fine, they say that they are a big corporation, they have the money.  If the property is sold, so what, if you leave we will pay you back the money, money does not mean anything – does not mean the same thing to her, she wants the house that she has lived in since 1997.  She was a migrant from China and that is the only house that she has ever lived in.  There is no way the respondent ‑ if the applicant succeeds in the appeal, there is no way the respondent can get back the same house for her.

HER HONOUR:   I understand.  I will hear from Mr Strahan.  Mr Strahan.

MR STRAHAN:   May it please the Court.  As your Honour has correctly identified, the relevant principles are outlined in the Jennings decision.

HER HONOUR:   Yes.

MR STRAHAN:   We say that none of the factors that are pointed to in the Jennings decision are my learned friend’s way.  They are all my client’s way.  If I can deal with them ‑ ‑ ‑

HER HONOUR:   That is a big statement.

MR STRAHAN:   Well, with respect, your Honour, that is the submission, and it includes the balance of convenience.

HER HONOUR:   Right, do you want to go through the list?

MR STRAHAN:   Yes, your Honour.  Can I commence with whether my client will suffer loss?  Before I do that there was an affidavit of my instructing solicitor, Cathryn Patricia Prowse, filed last night.  Does your Honour have that?

HER HONOUR:   I do.

MR STRAHAN:   I would seek leave to file that in Court, if necessary.

HER HONOUR:   No, it is fine, it has been filed.

MR STRAHAN:   And to formally read that affidavit.  It does no more than update your Honour as to the position in relation to execution ‑ ‑ ‑

HER HONOUR:   Yes.

MR STRAHAN:   ‑ ‑ ‑ and to point out, if there be any debate about it – it sounds like there is not – that my client has assets to meet some sort of restitutionary order if need be.

HER HONOUR:   Yes.

MR STRAHAN:   In terms of the criteria, if I can commence with the loss that my client will suffer?

HER HONOUR:   Yes.

MR STRAHAN:   The value of the property was determined at the trial, and it is approximately 900,000 as at the time of the trial.  The judgment sum is for an amount in excess of that.  There are also the costs, and all of these matters – and there are no payments against the purported loan since April 2009 and Ms Xiao and her husband, who is the fraudster, have been living in the property since then.

In those circumstances, the longer it takes to get execution, the greater the loss will be suffered by my client.  It is unrecoverable loss.  There is no suggestion that there is any other asset available in the hands of Mr Fitzgerald to meet it.  So my client will clearly suffer loss.  Can I deal then with balance of convenience as well?

HER HONOUR:   Yes.

MR STRAHAN:   What I have just put to your Honour is obviously relevant to the question of balance of convenience.  I accept, as I must accept, that the consequence of no stay will be that the property is sold and that it will not be possible to return the property in specie to Ms Xiao but I would ask – I would make these submissions to your Honour.  As your Honour has heard this morning, the property was transferred to Ms Xiao in circumstances where it was part of a fraudulent transaction and that was in 2004.

We are not talking about a situation in which a person who has had a property in their name for a long time which they paid money for seeks to retain that property and seeks a stay in those circumstances.  This was part of the fraud that she got the property and that is a relevant consideration in terms of balance of convenience because it is accepted, as it must be, that she is not going to get the property back but she only got it because of the fraud.  If she is successful in obtaining special leave to appeal and if she is successful on the appeal then some sort of restitutionary order could be framed which would make her whole, at least in a monetary sense, and my client will be in a position to meet such an order.

So although she will be out of her home, which I accept is a serious matter, she will not be wholly without remedy.  By contrast, my client will be wholly without remedy.  The loss that it will continue to suffer in respect of a default against a loan that happened in April 2009 is ongoing and continuing while there is no execution.  So on the balance of convenience, there are clearly things to be said for Ms Xiao in light of the fact that she lives in the house, but when your Honour looks at it in toto the balance of convenience, I would submit, is my client’s way.  It can provide a remedy.  Ms Xiao cannot provide any sort of remedy that would maintain any sort of status quo.

Can I deal then, your Honour, with the fact that no application has been made to the Court of Appeal?  Jennings makes clear that one of the factors for your Honour to consider is whether appropriate steps have been taken to seek a stay before the court being appealed from.  No such application was made to the Court of Appeal.  No explanation for the failure to do that has been proffered by Mr Lim.  It is said in Jennings to be a factor that is relevant and it goes to the exercise of your Honour’s discretion.  It must be my client’s way accordingly.

That leaves the question of the merits of the special leave application itself, your Honour.  The submission is that there is no sensible prospect of special leave being granted.

HER HONOUR:   Do you wish to say anything more than what is set out in paragraph – I think it is 3 ‑ no, I withdraw that – paragraph 8 of your written submissions?

MR STRAHAN:   I can, if it will assist the Court, and I can do it by reference to the Court of Appeal’s decision and explain to your Honour the reasoning, what was – and why there is no error in that reasoning.  I do not wish to delay your Honour if your Honour is not going to be assisted by that, but I am in a position to do it and perhaps in fairness to my client I should take your Honour through it so that my client can be confident that all the submissions necessary were made.  Could I ask your Honour therefore to turn – does your Honour have a copy of the Court of Appeal’s reasons?

HER HONOUR:   I do.  Yes.

MR STRAHAN:   If your Honour turns to paragraph 21 you can see where the Court deals with the question of the trial judge’s conclusions on what is described as the “trust question”.

HER HONOUR:   Yes.

MR STRAHAN:   It talks about the principles that were applied by the trial judge and notes that they were not in issue ‑ ‑ ‑

HER HONOUR:   Mr Strahan, I have read that, but what is the principal point you seek to make about these?  So why am I being taken to this material now in this application having regard to what is set out in paragraph 8?

MR STRAHAN:   Only this, your Honour.  There is no – in the reasons of the court there is no error disclosed, there is no error my learned friend has been able to point to.  The reasoning is sound.  So far from having a special leave point of public importance or clarifying principle, there is not even a standard appeal point that is an error in the court below.  What the court has done, which is to determine the arguments that were before it, it has done in accordance with orthodoxy and there is nothing that would attract the special leave jurisdiction.

And the reasoning very simply was it was put that a transfer for love and affection is a valuable consideration.  Your Honour can see that at paragraph 26.  The court rejected that.  The court resolved the case essentially on the basis that where you have a transfer for love and affection the question of what was the intention of the disposal becomes live and you can – there are presumptions that assist the court to determine that question but you can lead evidence around those presumptions to rebut them.  That was the basis upon which the trial was conducted below.  That was the basis upon which the Court of Appeal determined to refuse leave.  None of that gives rise to any controversy in a legal sense.  There are factual disputes.  The factual disputes were resolved.  The essential facts were not challenged.

I will not take your Honour through the reasoning any further, but I would say in conclusion to your Honour that it is an extraordinary jurisdiction to grant a stay.  Exceptional circumstances must be shown.  It would only be exercised where you have very strong special grounds demonstrated.  None of that has occurred on this application and accordingly it is submitted that the application should be dismissed with costs.

HER HONOUR:   Thank you, Mr Strahan.  Mr Lim.

MR LIM:   Your Honour, I respectfully submit that the transfer from Fitzgerald to the applicant in – he give the instruction, as I said, on 1 March, and then signed the transfer before 23 March.  After that he did what he did, the owner.  It is not part of the fraudulent scheme that the applicant was involved in.  The judge has found that she knew nothing about it until proceeding was brought by the respondent, so it cannot be said that it is part of the whole fraudulent scheme.

HER HONOUR:   I think the way Mr Strahan put it, it was part of Mr Fitzgerald’s fraudulent scheme, and one element of it was not only the fraudulent loans but also the transfer of the property to your client.

MR LIM:   Your Honour, a husband when he transferred something to the wife and then he goes on and do something else the wife is not in a position to – especially when the wife does not know anything about it, and also particularly where the respondent if they had done the right thing, this fraud would not have been perpetuated by anyone.  They just could not be bothered, and the judge has found that the mortgage originator knew about his forgeries.  The judge found that if the beneficiary’s interests stayed with Ms Xiao the mortgage originator’s conduct was unconscionable.  That was what the judge has found.

Your Honour, in relation to paragraph 8, some of the – I am not sure whether your Honour wants me to go to – some of the points that my learned friend said that was not raised by me in the Court of Appeal is not exactly correct, is not correct, and those two or three points that I did not raise before the Court of Appeal were merely points of law.  It is still based on the same factual situation, those undisputed factual situation that a transfer was signed, consideration was for love and affection.  There was no need for this Court to consider any new evidence and we are not seeking to introduce any new evidence.

I have, in my submission in the Court of Appeal, cited two cases:  one is House v Caffyn and the other one is the….of this Court and those arguments were in these two cases so it is not exactly correct that I did not raise all these points.  There are some points that I did not raise, especially the first one where I said that no third party can raise on behalf of someone a resulting trust in the property where this person did not authorise a third party to raise the resulting trust on his behalf.

This is a point, your Honour, that I am not raising in the Court of Appeal but it is in any….be the point that this Court can, as the highest Court in this country, can still rule on it.

HER HONOUR:   Anything else, Mr Lim?

MR LIM:   That is all, your Honour.

HER HONOUR:   Thank you.  I propose to deal with the matter now, if I may.

The applicant seeks a stay of orders made by the Supreme Court of Victoria and the Court of Appeal of the Supreme Court of Victoria until the final determination of the applicant’s application for special leave to appeal to this Court, or until further order of this Court.

In the Supreme Court of Victoria, Justice Hargrave found that the applicant’s husband, Mr Fitzgerald, had acted fraudulently in obtaining loans from the respondent and that the respondent was entitled to judgment against him.  Prior to making those loan applications, Mr Fitzgerald had transferred land, being Lot 35 on Plan of Subdivision 7959, more particularly described in Certificate of Title Volume 8053 Folio 180 and known as 18 Frances Avenue, Vermont (“the Land”), to the applicant.  Justice Hargrave found that at the time that Mr Fitzgerald gave instructions about transferring the Land to the applicant, Mr Fitzgerald had the “definite intention of retaining his beneficial interest in the [L]and after transfer of the legal interest to [the applicant]”, which, with other factors, rebutted the presumption of advancement such that the Land was held on trust by the applicant for Mr Fitzgerald.

Justice Hargrave made a declaration that the Land was held by the applicant on trust for the benefit of Mr Fitzgerald, and made orders requiring the sale of the Land.  By way of summary, those orders included orders that Mr Wayne Lamb (“the Trustee”) be appointed as receiver and trustee for the sale of the Land to satisfy the judgment sum in favour of the respondent and that the Land vest in the Trustee on 27 March 2015.  The applicant and Mr Fitzgerald were required to give vacant possession of the Land to the Trustee by 4.00 pm on 27 March 2015 unless the judgment debt was paid in full beforehand. 

The applicant applied for leave to appeal from those orders to the Court of Appeal.  That application was dismissed.  The Court of Appeal, comprising of Justices of Appeal Beach and McLeish and Acting Justice of Appeal Dixon, held that the declaration in respect of the Land should not be disturbed.  The Court of Appeal varied the orders made by Justice Hargrave only as to time, with the effect that the Land vested in the Trustee on 10 June 2015 unless the judgment debt was paid in full beforehand and that the applicant and Mr Fitzgerald were required to give vacant possession to the Trustee by 4.00 pm on 10 June 2015.

The judgment debt has not been paid in whole or in part.  Significantly, on 17 June 2015, the Land was transferred to the Trustee for the purpose of selling the Land and a new Certificate of Title for the Land was issued with the Trustee as the registered proprietor.  On or about 24 June 2015, the Supreme Court of Victoria issued a warrant for possession.  On 8 July 2015, a Notice to Vacate the Land was left at the land requiring the applicant and Mr Fitzgerald to vacate on or before 31 July 2015.  As I understand the material before the Court, vacant possession has not yet been given.

Against that background, the applicant contends that a stay is necessary to preserve the subject matter of the appeal, the Land, and that if a stay is not granted any appeal would be rendered nugatory and there is a real risk that it would not be possible for the applicant to be restored substantially to her former position.

It is well known an applicant for a stay has the burden of persuading the Court that it should be granted:  see Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1997) 71 ALJR 814 at 815. Where special leave has not yet been obtained, as is the position here, it is an exceptional jurisdiction which required extraordinary circumstances to be shown in order to obtain a stay: see, for example, Edelsten v Ward (No 2) (1988) 63 ALJR 346 at 346.

The principles to be applied in determining whether to exercise the extraordinary jurisdiction of this Court in granting a stay pending the hearing and determination of an application for special leave to appeal were identified by Justice Brennan in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] (1986) 161 CLR 681 at 685. It was common ground that considerations impacting upon the exercise of the Court’s discretion include, first, whether there is a substantial prospect that special leave to appeal will be granted; second, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; third, whether the grant of a stay will cause loss to the respondent; and, finally, where the balance of convenience lies.

In an affidavit filed in support of the summons the applicant describes the prospect of a grant of special leave as “substantial”.  The substantive merits of the application are not to be determined today.  It must be said, nonetheless, that having regard to the material currently before the Court, it is not immediately apparent that the Court of Appeal has fallen into error.

Next, although the orders in the Supreme Court of Victoria were stayed by consent pending the determination of the leave for appeal in the Court of Appeal, those stay orders have expired and, as has been seen, the Court of Appeal varied the orders of Justice Hargrave as to time only.  The time for compliance with those orders has expired.  Moreover, in compliance with the orders made by those Courts, steps have now been taken to transfer the Land to the Trustee for the purpose of selling it.  There is no evidence that the applicant sought to obtain a stay from the Court of Appeal pending the determination of the special leave application.  The practice of the Court is that an application for a stay should first be made to the court below and a failure to do so may result in the court refusing the application:  see Advanced Building Systems at 816.

Third, there is no direct evidence that the respondent would suffer a loss if a stay were granted.  However, as counsel for the respondent pointed out, Justice Hargrave proceeded on the basis that as at 7 October 2014, the land was worth approximately $900,000.  Judgment was given for the respondent against Mr Fitzgerald in the amount of just over $1.2 million.  It is reasonably plain that to stay execution of a judgment given at trial and affirmed in the Court of Appeal and to keep the respondent out of its funds for a further amount of time would cause loss to the respondent.

Finally, where does the balance of convenience lie?  There is no doubt the applicant will suffer prejudice if a stay is not granted.  She will lose her family home.  However, despite the unfortunate circumstances of this case, the balance of convenience lies with the respondent.  The applicant failed at trial and on appeal.  The orders of Justice Hargrave and the Court of Appeal operated by reference to particular dates, apparently to give Mr Fitzgerald time to pay the judgment debt.  Those dates have passed.  The judgment debt has not been paid and no amount has been paid since at least April 2009.

There is nothing to suggest that the applicant is in a position to pay or secure the judgment debt pending the hearing of the application for special leave to appeal.  Title to the Land has already transferred to the Trustee for the purpose of selling the Land and, no less significantly, the respondent has informed the Court that if a stay is not granted and the applicant obtains special leave to appeal, succeeds in her appeal to this Court and is ultimately held to be the beneficial owner of the Land, but the Land has been sold, then the respondent has the capacity to pay the applicant a sum reflecting the loss sustained by reason of the sale of the Land.

For those reasons I am not persuaded that the applicant’s prospects of success in obtaining special leave to appeal to this Court are sufficient to outweigh the other considerations, including loss to the respondent and the balance of convenience.  In these circumstances I am not persuaded that it is in the interests of justice in this case that the Court, in the exercise of an exceptional jurisdiction, should grant a stay.  The application for a stay should be dismissed.

In relation to costs, the costs of the application should be the respondent’s costs in the application for special leave to appeal.  A consequence of that order will be that if special leave to appeal were refused the costs of the application for stay would be payable by the applicant to the respondent.  By contrast, if the application for special leave to appeal were to be granted, the costs of the application for stay would lie where they fall.

Does any party seek to be heard about the form of those orders?

MR STRAHAN:   No, your Honour.

MR LIM:   No, your Honour.

HER HONOUR:   The orders are therefore as follows: 

1.The application by summons filed 16 June 2015 is dismissed.

2.Costs of the summons are the respondent’s costs in the application for special leave to appeal.

Counsel are excused.  Thank you.

AT 10.09 AM THE MATTER WAS CONCLUDED