Bond v Gray

Judgment 1Before the Court are two notices of motion which, together, require consideration of what interlocutory regime should operate pending determination of principal proceedings in which the plaintiff alleges (and the defendants deny) that the plaintiff and the first defendant, over about twelve years between 1998 and 2010, conducted in partnership a business operating brothels and escort agencies. 2The existence, terms and determination of the alleged partnership are hotly contested, though it is common ground that, if it existed, the partnership was based, essentially, on an oral agreement between the plaintiff and the first defendant, both natural persons. 3The plaintiff relies particularly upon two documents (one dated 24 September 2010, the other dated 30 September 2010) as containing admissions by the defendants; but the circumstances in which those documents came into existence are contested, driving one back to a contest between the relative veracity and reliability of evidence to be adduced from the plaintiff and the first defendant. 4The defendants other than the first are corporations owned and controlled by him. 5The plaintiff has sought to protect his interests by lodgement of caveats on the title of land owned by the defendants, and he seeks leave to file a fresh caveat: (a)Two caveats governed by the Real Property Act 1900 NSW (respectively numbered AH405201 and AH405191) are presently lodged on the title to land in Glenmore Road, Edgecliff, in New South Wales and, the defendants having served lapsing notices (under Real Property Act s74I), the plaintiff has the benefit of an extension of the caveats, by court order made under Real Property Act s74K, up to 5pm today. (b)Having allowed earlier caveats to lapse, the plaintiff seeks (under the Real Property Act 1900 NSW, s74O) the leave of the Court to lodge fresh caveats against the title of land in Victoria Street, Potts Point, New South Wales. (c)One caveat, governed by the Transfer of Land Act 1958 Vic (numbered AK055182Y) is presently lodged on the title to land in Harwood Street, Brighton, Victoria. 6The Court has jurisdiction to deal with the Victorian land by virtue of the Jurisdiction of Courts (Cross-Vesting) Acts of 1987, particularly the Victorian Act, s4 (3). 7Although the motions before the Court have been debated by reference to caveats, the plaintiff's case has been articulated in broader terms, extending to an application for interlocutory injunctive relief in lieu of the caveats if need be. 8The way both sides of the record have proceeded, the questions before the Court have to be dealt with as questions of substance, whatever form of relief may be granted or allowed to the plaintiff: Bayblu Holdings Pty Limited v Capital Finance Australia [2011] NSWCA 39; 79 ALR 166 at [20]. 9Those questions focus on: (a)Whether the plaintiff has established that there is a serious question to be tried. (b)Whether the balance of convenience resides on one side of the record or the other. (c)Whether any and, if so, what significance attaches to the plaintiff's admitted inability to provide security in support of an undertaking as to damages which the defendants contend, and the plaintiff accepts, should be a condition of any grant of relief to the plaintiff. 10The system for continuation of the operation of caveats, under challenge from a registered proprietor of caveated land, differs as between New South Wales and Victoria. 11In New South Wales, once a lapsing notice is served, the caveator wanting to sustain a caveat is obliged to obtain a Court order extending its operation. 12In Victoria, a registered proprietor challenges the continuing operation of a caveat by applying to the Court for an order that the caveat be removed: Transfer of Lands Act 1958 Vic, s90(3). However, if such an application is made, the caveator must, as in New South Wales, make out a case for the continuing operation of the caveat. 13Turning to the question of whether there is a serious question to be tried, the Court is confronted by pleadings loosely drafted and affidavits, on both sides of the record, sworn by solicitors on information and belief. The evidence to be relied upon in the principal proceedings has yet to be filed. 14At trial there will be a substantive contest, word against word, between the plaintiff and the first defendant. Questions of credit - unable to play any decisive role at this interlocutory stage of the proceedings - are likely to be paramount. 15In recognition of that, the defendants have drawn attention to the plaintiff's possession of criminal convictions which, they contend, are inherently, and objectively, inconsistent with the case which the plaintiff seeks to advance. It is not necessary for me to dwell very long on that contention. It is not a primary focus of the Court's present consideration of the orders that should be made. 16It is difficult to go beyond the formalistic presentations of the parties' respective cases presently advanced. It is, for example, difficult to see how the plaintiff's case against the first defendant extends to an estate or interest in land registered in the names of the corporate defendants owned and controlled by the first defendant. Conceptually, it is possible, but dependent upon either attribution to the defendants of an agreement that all land be treated as partnership property or demonstration that partnership property has been used in the acquisition of the land the subject of a claim. 17The evidence presently before the Court does not permit either possibility to be much more than simply noticed. Ultimately, everything appears likely, in the principal proceedings, to depend upon what was said, and done, as between the plaintiff and the first defendant. 18I am prepared, for the purpose of the current judgment, with reservations, to find that there is a serious question to be tried. 19That follows largely from the first defendant's execution of the document dated 24 September 2010, and his apparent preparation of a similar document dated 30 September 2010, relied upon by the plaintiff as containing admissions, allegedly made by the first defendant on behalf of all defendants, that the plaintiff is entitled to a share of any proceeds of sale of the subject properties. 20The plaintiff does not sue on the documents, but relies upon them as an acknowledgment of the broader case he seeks to make (ultimately focused on conversations between himself and the first defendant) to the effect that the two men were, or perhaps still are, partners and the subject properties are property of their partnership. 21Each of the documents relied upon by the plaintiff is unusual. First, its subject matter is, in terms, confined to an agreement between the plaintiff and the first defendant to share net proceeds of sale of land, not an interest in land per se. Secondly, it says nothing, expressly, about any partnership. Thirdly, though expressed to be "an agreement", it is not relied upon as anything other than an admission that the plaintiff has some entitlement vis à vis the land. Fourthly, there is a notation (here taken from the earlier of the two documents) to the effect that the agreement is "private and confidential" and "will be voided if shown to anyone". 22The plaintiff, it seems, contends that he was a silent partner, whose interest in the partnership between himself and the first defendant was kept from others involved in the conduct of the business, or businesses, allegedly the subject of the partnership. 23The first defendant asserts that he prepared or executed the disputed documents under duress. That assertion is part of the factual matrix that must be left to a final hearing to determine. 24I proceed on the basis that there is a serious question to be tried at a final hearing. 25The larger question, determinative of the parties' current dispute, relates to the balance of convenience, largely informed by the unavailability of an undertaking as to damages adequate to meet the dictates of justice. 26The plaintiff accepts that any of the relief he seeks, if granted, should be conditioned on his giving to the Court the usual undertaking as to damages (as defined by the Uniform Civil Procedure Rules 2005 NSW, rule 25.8) as the price of a grant of relief. He proffers that undertaking. 27By inter partes correspondence between solicitors, the plaintiff has expressly conceded that he "does not have substantial assets" and, by implication, that he does not have sufficient assets "to satisfy an undertaking as to damages". However, he contends that his impecuniosity is the result of the first defendant's exclusion of him from the partnership business. 28The evidence adduced before me does not permit any independent assessment to be made of the plaintiff's contention that his impecuniosity is a product of wrongful conduct on the part of the defendants. 29What is known is that the plaintiff lacks the resources to satisfy an undertaking as to damages; he is unemployed; when given notice to produce bank statements, he produced none; his solicitor was unable to assist the Court as to whether he even maintains a bank account; although he has depended on a friend to lend him money to fund, in part, his legal fees, he denies that there is anybody standing behind him in his conduct of the proceedings; and he has not proffered any form of support (eg, in the form of a third party undertaking or other security) for his undertaking as to damages. 30Weighing these factors in the balance, I have concluded that the appropriate course is to deny the plaintiff the interlocutory relief he seeks. He cannot, or will not (it matters not which), provide an effective undertaking as to damages. 31There is no evidence upon which the Court could reasonably conclude that the defendants have engaged, or will engage, in a process of dissipation of assets. 32The defendants contend, and the plaintiff calls into question their contention, that the presence of the plaintiff's caveats on the title to their land is an impediment to their conduct of business in the ordinary course or, particularly in relation to the land in Glenmore Road, their plans for land development. 33In my assessment, this is another of those factors which, in this case, is difficult to determine authoritatively on the evidence adduced by the parties. 34The nature of the allegations made by the plaintiff in the principal proceedings, in which he claims entitlements in equity, will render it in the interests of the defendants, no less than the plaintiff, to prosecute the principal proceedings expeditiously to a final hearing. 35As the evidence presently stands (confined pretty much to evidence given by solicitors on information and belief, with a handful of peripheral disputed documents), the balance of convenience favours a denial of ongoing interlocutory restraints on the defendants' freedom to deal with property registered in their respective names. 36Taking everything into account, I am comfortably satisfied that the interests of justice are likely to be best served by refusal of the interlocutory relief that the plaintiff seeks. 37Accordingly, I make the following orders: (1)Order that the interlocutory orders made for the extension of New South Wales caveats AH405201 and AH405191 be discharged. (2)Order that the plaintiff's amended notice of motion filed 26 November 2013 otherwise be dismissed. (3)Order (pursuant to s90(3) of the Transfer of Land Act 1958 Vic) that the Victorian Registrar of Titles remove caveat AK0551824 from the land in volume 10436 folio 536. (4)Order that the plaintiff pay the costs of the defendants of: (a)the plaintiff's amended notice of motion filed 26 November 2013 (in relation to New South Wales caveats); (b)the defendants' notice of motion filed 4 November 2013 (in relation to the Victorian caveat); and (c)the plaintiff's notice of motion filed 18 November 2013 (in relation to the production of documents). (5)Order that the plaintiff pay the costs of the Victorian Registrar Titles in connection with the defendant's notice of motion filed 4 November 2013. (6)Order that these orders may be entered forthwith. 38(Discussion with counsel). 39Having had the benefit of documents produced in the course of the hearing of the motions now dealt with by the Court, the defendants foreshadow that they intend to make an application for security for costs. 40It is not necessary for me to do more than to note that statement of intention, without more. 41The parties have agreed, subject to that notation, on the future course of the principal proceedings. 42Accordingly, I give the following directions: (1)Direct that the plaintiff serve, on or before 21 February 2014, any lay and expert evidence upon which he seeks to rely at a final hearing. (2)Direct that the principal proceedings be listed before the Registrar on 24 February 2014 at 9am for directions. (3)Reserve for further consideration whether leave should be granted (whether to the plaintiff or the defendants) to rely on expert evidence.