(1) When creating a qualified folio of the Register for any land, the Registrar-General shall record in that folio a caution warning persons dealing with the registered proprietor that the land comprised therein is held subject to any subsisting interest, whether recorded therein or not.
(1A) Where, in the opinion of the Registrar-General, any of the documents which evidenced the title to land comprised in a qualified folio of the Register conveyed or purported to convey the land otherwise than for valuable consideration, the Registrar-General may, when creating the folio, include in the caution recorded therein a notation to that effect."
50 Bk … No … comprises an Acknowledgment by George Tadros that he is the Devisee under the will of Joseph Tadros and that he (George Tadros) "is entitled for the estate for which the same is devised to him by the said will" to the property - a metes and bounds description is given. I have earlier referred to some parts of the will. As at 25 June 2009 the caution remained on the title.
51 Joseph had notice of the rights of his mother and they could be enforced against him. Joseph accepted that his mother had the right to reside in the property for the periods stated in the will.
52 Each of the three sisters and the older brother of Joseph Tadros signed an acknowledgement in these terms:
"I … hereby acknowledge that George Tadros has fulfilled his requirement to pay me the amount of $10,000 owed to me as a beneficiary under the will of my late father, Joseph Tadros, by deducting this amount from the purchase price paid by my brother Joseph Tadros for the purchase of [the property] and that my brother Joseph Tadros is now responsible for this beneficial entitlement."
53 Joseph gave this explanation:
"… my siblings … each acknowledged that their beneficial interest under my late father's estate has been transferred from my brother George to myself …"
54 I doubt if George paid the legacies. Joseph seemed to regard himself as bound to pay them.
55 As to attendance at the Court hearing on 23 November 2007, I am unable to make a finding whether Joseph attended at that hearing. That was principally a contest between the evidence of the plaintiff and the evidence of Joseph. I did not regard the evidence of Tania and Mr Bashour as having weight. Many members of the Tadros family were probably at the District Court on 23 November 2007. Whether Joseph was amongst them I am unable to say on the evidence. There was nothing in the way in which Joseph gave evidence that would lead me to reject his evidence. I am also unable to make a finding whether Joseph knew of the District Court proceedings involving the plaintiff and George. In the normal course of events I would have expected two of the sisters and the older brother to have mentioned the proceedings to Joseph, but he insists that he was not told of them and I am not persuaded that I should reject his evidence. George probably did not tell Joseph. However, it is probable that the District Court proceedings played a part in George wanting to leave Sydney and George wanting money. George also probably had other debts. George did not welcome having any responsibilities for his mother or having to meet the outgoings for the property.
56 Joseph arranged the borrowing of the money after George asked him to be a guarantor of a loan. Joseph wanted to borrow as much as he could so that he could utilise some of the loan funds. It was arranged that the moneys borrowed would be paid to Joseph and that was done. George was not prepared to wait until Joseph decided to release some funds. He engaged Laing and Simmons to sell the property. Joseph subsequently arranged to buy this property.
57 Both George and Joseph, in fixing the purchase price in November 2007 and about February 2008 in the transfers, appeared to settle on the approximate price the property would realise on the open market. They did not appear to take into account the conditions in the will and the effect of these on the value of the devise.
58 I would infer that George in the transfer of November 2007 was intending to defeat and delay creditors. I would further infer that this intention underlay his transfer of February 2008. George wanted a certain amount of money and he was prepared to transfer his interest in the property to obtain it. Joseph was prepared to buy George out. I infer that Joseph probably realised that this would adversely affect George's creditors. He was aware that George had creditors. Joseph was prepared to shoulder the burdens of his mother's right of personal residence, the payment of outgoings and the payment of the legacies to his older brother and three sisters.
59 While I was not satisfied that Joseph was aware of the District Court proceedings and also their result, as mentioned, Joseph was aware that George had creditors, was in desperate need of a substantial sum of money, wanted to leave Sydney and no longer wished to accept the burdens of his devise. Joseph also realised that he was obtaining a benefit and was borrowing a substantial sum of money on the security of the property being transferred into his name.
60 I have applied the decision in Chen v Marcolongo; Chen v Lym International Pty Ltd [2009] NSWCA 326 and noted that there must be a fraudulent mental state under s 37A of the Conveyancing Act. The disponor's intent is critical. See Cannane v J Cannane Pty Ltd; Cannane v Official Trustee in Bankruptcy [1998] HCA 26; 192 CLR 557 at 567.
61 I would infer that George had the requisite intent, that Joseph probably realised this and facilitated George's actions.
62 The plaintiff contended that both the MDN and Citibank mortgages and advances constituted an alienation of property within s 37A of the Conveyancing Act 1919. The mortgages were alienations of property.
63 I am not satisfied that the first and second defendants were in regular contact between November 2007 and April 2008. As mentioned, there was some contact between them during the period between November 2007 and February 2008 and evidence of contact about mid 2008 (April - May approximately).
64 As to the allegation that Joseph gave no consideration to George in respect of the MDN and Citibank Advances, I do not think that is correct. It is probable that Joseph did not pay George $3,000.00 for the transfer of the 1% interest in the property. However, Joseph became liable in each instance to pay interest, repay the principal sum and to observe the covenants of the mortgages. Further, out of the Citibank Advance, Joseph caused $38,949.57 to be paid to George. Joseph also took with notice his mother's right of residence. She was living in the property.
65 I do not agree with the allegation in the Points of Claim that "At all material times [Joseph] had notice of George's intent to defraud the plaintiff". I am not satisfied that Joseph was present at the District Court on 23 November 2007, nor that he was aware of the District Court proceedings against George or their result. As mentioned, I infer that Joseph probably realised that George had a number of creditors, needed a substantial sum of money and that the mortgages granted would adversely effect the creditors of George (but not including any knowledge of the plaintiff's claim). That does not mean that the plaintiff is entitled to the amounts of the advances. In paragraphs 2, 3 and 4 of the Points of Claim the plaintiff acknowledges the limited estate of George.
66 The plaintiff did not seek to attack the mortgages to MDN Mortgages Pty Ltd and Citigroup Pty Limited in that they were not joined as parties. There is no valuation of the interest of George Tadros under the will of his father, i.e., of the devise of the property subject to the personal right of residence of his mother, the obligation to pay outgoings and the obligation to pay pecuniary legacies. That appears to have been the only asset George had. Mr George Tadros was not entitled to receive the full value of the property. George Tadros could live at the property along with his mother, but he left.
67 One of the problems any valuer will face is whether the standard life expectancy tables as to the life expectancy of Nazha Tadros should be applied. This may depend upon her state of health. A further matter may be whether Nazha Tadros is likely to have to enter a nursing home, and, if so, when.
68 Joseph Tadros submitted that the plaintiff specified, as was his duty, the relief which he sought. I was not prepared to grant that relief.
69 In Silvera v Savic (1999) 46 NSWLR 124 at [72] Hodgson CJ in Eq stated:
"What s 37A says is that the 'alienation' is 'voidable'. In my opinion, when an application is made under s 37A to the Supreme Court, that Court can achieve the effect of avoiding the alienation by such measures as seem appropriate in the particular case."
70 Counsel for Joseph Tadros submitted that, because the plaintiff had failed to specify any lesser relief to which the Court held the plaintiff was entitled and lead evidence justifying it, the plaintiff should not be given an opportunity where there were relatively small sums of money involved to improve his case and substantiate the relief to which he was entitled. That point has force. This was a case where there were significant factual disputes as to the knowledge of Joseph Tadros which cannot be satisfactorily resolved except to the extent I have indicated.
71 The Court should not ignore the conditions imposed upon the devise to George. Once the value of the devise to George is ascertained, I am minded to consider, as a means of avoiding the alienations, ordering that Joseph pay a sum equal to that value to the plaintiff. Joseph holds on his evidence about $160,000 to $170,000 in his Citibank loan account.
72 I am considering making the following declarations and orders: