Hua v Tuckerman

The issues that require determination

1. The plaintiffs commenced their application by notice of motion filed on 10 July 2014, and proceeded upon the basis of an amended notice of motion filed in court on 29 July 2014.
2. The application was heard on parts of three separate days in the duty list on 29 and 31 July 2014, and 1 August 2014. The spread of hearing days was caused in part by pressure of business in the duty list, and also because the plaintiffs had not served evidence to establish that they had a good arguable case against any of the respondents, as is required by UCPR r 25.14(1)(b). The plaintiffs were given time to rectify that deficiency, which delayed the completion of the hearing.
3. During the course of the hearing the court was advised by counsel for the parties that they had, in principle, come to an agreement in relation to part of the relief sought by the plaintiffs, so that it would only be necessary for the court to determine the balance of the claim. At the end of the hearing, when the court reserved judgment, the parties had not completed their negotiations or agreed to any orders in respect of any part of the relief claimed by the plaintiffs.
4. The position of the plaintiffs was protected by interlocutory undertakings given to the court on 17 July 2014 by the respondents to the notice of motion. Those undertakings were given pending the determination by the court of the plaintiffs' notice of motion. The respondents advised the court at the end of the hearing that they were content for those undertakings to continue until the court could dispose of the notice of motion.
5. The court has now received the consent short minutes of order dealing with part of the relief claimed by the plaintiffs. These reasons for judgment deal with the outstanding claims.
6. In order to understand the effect of the consent short minutes of order that the parties have provided to the court, as well as the issues that remain for determination, it is necessary first to note the properties that are the subject of the freezing orders that the plaintiffs seek in their amended notice of motion.
7. The first property is known as 28A Annette Street Oatley (the "Oatley property"). The Oatley property is the present family home of Mr and Mrs Tuckerman. Mrs Tuckerman has always been the sole registered proprietor of the Oatley property.
8. The second property is Unit 1, 35 Alt Street, Ashfield ("Unit 1" and the "Ashfield property" respectively). Mr and Mrs Tuckerman owned the Ashfield property as joint tenants. As will be seen, in due course Mr and Mrs Tuckerman caused nine home units to be constructed on the Ashfield property. Later they caused a strata plan of subdivision to be registered that subdivided the Ashfield property into nine separate lots, which created a separate title for each of the units. Mr and Mrs Tuckerman sold eight of the lots, but retained Unit 1. On 7 May 2014, after the commencement of these proceedings by the plaintiffs, Mr Tuckerman executed a deed by which he purported to transfer his legal interest in Unit 1 to Mrs Tuckerman. That was done on the basis that, arising out of circumstances to which I will return, Mr Tuckerman held his legal interest in Unit 1 on trust for Mrs Tuckerman.
9. The Ashfield property is also relevant because, as I have noted, Mr and Mrs Tuckerman sold eight of the units before the plaintiffs commenced their action. Accordingly, those eight units are not directly the subject of the plaintiffs' claim for the making of a freezing order. However, most of the net sale price that was received from the sale of the eight units was applied towards the reduction of the mortgage that is secured on the title to the Oatley property. The eight units may therefore have relevance to the plaintiffs' present application for freezing orders.
10. The final property is unit 20/193 Canterbury Road, Canterbury (the "Canterbury property"). Mr Tuckerman and Mr Devine are part owners of the Canterbury property. On 24 April 2014 they entered into a contract for the sale of their interests in the Canterbury property.
11. The consent short minutes of order that the parties have provided to the court will have the following effect: (4) Mr Tuckerman and Mr Devine are released from the undertakings that they gave to the court on 17 July 2014: (orders 2 and 3). The consent orders make alternative arrangements in relation to the earlier undertakings. (5) Mrs Tuckerman is released from the undertaking that she gave to the court on 17 July 2014 in relation to Unit 1, on the same basis: (order 1). (6) The claims for relief in pars 1(a)(ii), 1(b)(ii), 2 and 4 of the amended notice of motion are dismissed, and the costs of seeking that relief are reserved. The claims dismissed respectively concerned a freezing order in respect of a possible chose in action by Mr Tuckerman as to an ownership interest in the Oatley property; a freezing order against Unit 1 at Ashfield; a freezing order concerning Mr Tuckerman and Mr Devine's interest in the proceeds of the contract of sale of the Canterbury property; and an order concerning the provision of information about the proceeds of sale of the eight units at Ashfield that have already been sold: (orders 4 and 5). (7) Mr Tuckerman and Mr Devine are required to serve affidavits concerning the nature and value of their assets and secured liabilities: (order 6). (8) All three respondents have liberty to apply to the court to vary or be released from the undertakings given by them as part of the orders: (order 7). (9) Pending the determination by the court of the claims in order 1(a)(i) against Mr Tuckerman and order 1(b)(i) against Mrs Tuckerman concerning their respective interests in the Oatley property, the undertaking given by Mrs Tuckerman to the court on 17 July 2014 in relation to that property remains in effect: (Note 1). (10) Mrs Tuckerman gives an undertaking to the court restricting her dealing with Unit 1 at Ashfield, which will be released on certain conditions: (Notes 2 and 3). The plaintiffs and Mrs Tuckerman entered into a deed dated 29 August 2014 concerning dealings with Unit 1: (Note 4). (11) Mr Tuckerman and Mr Devine give separate undertakings to the court restricting their dealing with their respective interests in the net sale proceeds of the Canterbury property on certain conditions: (Notes 5 to 8).
12. As the court understands it, the effect of the consent short minutes of order, when made, will leave open for determination by the court only the following claims in the amended notice of motion: 1. Upon the plaintiffs by their counsel giving to the Court the usual undertaking as to damages, order that, pending further order of the Court: a. the first defendant ("Tuckerman") by himself, or through his employees, agents, partners or others acting on his behalf or on his instructions, be restrained from selling, disposing, dealing with, diminishing the value of, encumbering or further encumbering his interest in: i. the chose in action comprising his right to claim as against Lenore Tuckerman a one half, or other ownership interest, in the real property situate and known as 28 (sic) Annett Street Oatley, being the whole of the land in Certificate of Title Folio Identifier 2/208942 ("the Oatley Property")… b. Lenore Tuckerman by herself, or through her employees, agents, partners or others acting on her behalf or on her instructions be restrained from selling, disposing, dealing with, diminishing the value of, encumbering, or further encumbering her interest in: i. the Oatley Property.

Have the plaintiffs established a good arguable case?

1. The plaintiffs bring their application for the remaining freezing orders that they seek under UCPR r 25.11 and r 25.14.
2. Relevantly, the first requirement of r 25.14 is that the plaintiffs establish that they have a good arguable case on an accrued or prospective cause of action that is justiciable in the court: see r 25.14(1)(b)(i).

The relevant principles

1. Judges of this court have accepted the correctness of the commentary in LexisNexis Butterworths, Ritchie's Uniform Civil Procedure NSW, vol 1 (at service 67) [25.14.5], to the effect that "good arguable case" has its provenance in the judgment of Mustill J (as his Lordship was) in Nimenia Maritime Corporation v Trave GmbH & Co [1984] 1 All ER 398 at 404, where his Lordship said: I consider that the right course is to adopt the test of a good arguable case, in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one the judge considers would have better than a 50% chance of success. See Errigal Ltd v Equatorial Mining Ltd [2006] NSWSC 953 per White J at [26]; Pure Logistics Pty Ltd v Scott [2007] NSWSC 595 per McDougall J at [12]; and Westpac Banking Corporation v McArthur [2007] NSWSC 1347 per Barrett J (as he then was) at [22]. I respectfully agree. The requirement that there be a good arguable case is a lesser standard than that there be a prima facie case.
2. I also respectfully agree with the further observations made by McDougall J in Pure Logistics at [12], where his Honour added, after referring to Nimeina: … His Lordship followed this by warning that "the court should not be drawn into a premature trial of the action, rather than a preliminary appraisal of the plaintiff's case." Although that warning was directed to the circumstance that, in the case before his Lordship, the dispute was to be resolved by arbitration, it is I think something to be borne in mind more generally. The Court is approaching the question on the basis of very limited evidence compared to what is likely to be led at trial. The Court should not - indeed, in my view, cannot - undertake more than a preliminary appraisal for the purposes of r 25.14.

The allegations in the statement of claim

1. The plaintiffs' statement of claim in this matter is a complex pleading of 148 paragraphs. It is a difficult document to summarise or encapsulate.
2. The subject matter of the investment was a proposed home unit development that was to be conducted by a company called Gosford 19-21 Project Pty Ltd ("Gosford") on land at 19 Donnison Street, West Gosford (the "Gosford Property"). Gosford was a subsidiary of MST Investment Corporation Ltd ("MST"). The first two defendants were directors of both Gosford and MST.
3. The plaintiffs allege that they made their investment of $2 million in reliance upon a substantial number of representations that they say were made to them by the first and second defendants at a number of meetings and in documents on and after 12 March 2009. The plaintiffs allege that most, if not all, of the representations made by the defendants were translated into Mandarin for them on behalf of the defendants by Zejun (Jack) Qian, who is alleged to have been a shareholder and employee of MST.
4. The principal representations are collected in par 53, which lists the representations upon which the plaintiffs claim they relied. The following alleged representations appear to be particularly significant: i. as at 13 March 2009 the value of the Gosford Property was not less than $4,000,000… iv. there was no debt secured against the Gosford Property, v. there were no encumbrances on the title to the Gosford Property, nor any other factors which would detract from its value as so represented to them, vi. there was no debt affecting the Project such that if [the plaintiffs] made the intended investment of $2,000,000 it would be available to fund construction of the Project, vii. construction of the Project and the Units could commence once [the plaintiffs] provided investment funds of $2,000,000… xiii. if ever, MST would to (sic) encounter financial difficulties, such difficulties would not have an impact on, nor otherwise affect Gosford, nor completion of the Project as Gosford was a separate legal entity to MST…
5. The statement of claim also contains allegations concerning the preparation of the documents upon which the plaintiffs made their investment, which involved the creation of a heads of agreement and a joint venture agreement. These agreements were prepared in English, but partial translations of the documents were prepared by Mr Qian and sent to the plaintiffs in China. The plaintiffs allege that they relied upon the translations, and also a partial translation of the English version of the final joint venture agreement that was prepared by a nephew of one of the plaintiffs. The plaintiffs allege (par 13) that representations were made to them in the partial translation of the heads of agreement. They allege (par 42) that there were material differences between the summary of the joint venture agreement, and the terms of the final version of the joint venture agreement in English, which they executed. The plaintiffs effectively allege that the attempted translation of the joint venture agreement that was made by the nephew did not cause the plaintiffs to understand the differences between the summary that they were given in Mandarin and the final version of the joint venture agreement. The plaintiffs separately allege (in par 58) that there were material differences between the versions of the joint venture agreement signed by the plaintiffs on the one hand, and by the first and second defendants on behalf of MST and Gosford on the other.
6. The plaintiffs allege that they paid $2 million to MST by various instalments between 16 April 2009 ($100,000 deposit) and 24 November 2010.
7. The plaintiffs allege (par 67) that MST lodged a development application for the project with the Gosford City Council on 1 February 2010, and (par 69) that the development application was rejected on 22 July 2010. MST and Gosford advised the plaintiffs on 23 December 2010 that the Council had rejected the development application (par 73). The plaintiffs paid a total of $400,000 to MST between the date the development application was lodged and the date the plaintiffs were informed that it had been rejected.
8. MST went into administration on 24 May 2011 (par 77), and on 4 November 2011 its creditors resolved that it be wound up under s 439C(c) of the Corporations Act 2001 (Cth) (par 88).
9. The first and second defendants advised the plaintiffs on about 15 January 2012 that construction of the project could not start because MST was being wound up, and Gosford did not have any capital with which to fund construction of the Project (par 90), and even if the Gosford Property was sold, there was a mortgage over the property to a third party that would have to be repaid before any money could be paid back to the plaintiffs (par 90).
10. The plaintiffs became aware for the first time on 30 September 2012 that the Gosford Property had been purchased in 2008 for $1,600,000 (par 113).
11. On 6 September 2013 the mortgagee sold the Gosford Property in exercise of its power of sale for $682,000 (par 119). That left no surplus to fund repayment of any part of the plaintiffs' investment.
12. The statement of claim contains many other allegations, which I have not found it necessary to summarise for the purposes of these reasons.
13. The plaintiffs allege that they made their investment through the first plaintiff, and that a partnership was created between her, MST and Gosford (par 120). They allege breaches of fiduciary duty by MST (pars 124 and 125), which they allege constituted a dishonest and fraudulent design on the part of MST. They allege that the first and second defendants assisted MST with knowledge of the dishonest and fraudulent design (par 126).
14. The plaintiffs also allege that the first and second defendants were persons involved in the conduct of MST and Gosford within the meaning of s 2 of the Australian Consumer Law and s 79 of the Corporations Act, and that, speaking broadly, the conduct of MST and Gosford alleged in various parts of the statement of claim constituted misleading and deceptive conduct within the meaning of s 18 of the Australian Consumer Law and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth). (I will ignore the apparent inconsistency concerning the allegations in relation to the Corporations Act and the ASIC Act). The plaintiffs ultimately allege (par 133) that, as persons involved in the conduct of MST and Gosford, the first and second defendants are liable to pay damages to the plaintiffs.
15. In par 138 the plaintiffs make a similar allegation against the first and second defendants in relation to their involvement in the conduct of MST and Gosford, which is alleged in pars 135 and 136 to have been unconscionable conduct.

The response of the defendants in their defence

1. The first and second defendants have filed a defence to the statement of claim, which responds in considerable detail to the allegations in that pleading. The defence was apparently prepared by the defendants personally, without professional legal assistance (although I understand that Mr Tuckerman is legally trained). As a general proposition the defendants deny or do not admit the allegations that they made representations to the plaintiffs, or engaged in the other wrongful acts alleged by the plaintiffs. The defence contains relatively detailed particulars to justify the defendants' position, which often appear to suggest that the statements or instructions made by the defendants to Mr Qian were not consistent with the allegations now made by the plaintiffs. The particulars to par 18 of the defence contain an admission that Mr Qian did interpret on behalf of the first and second defendants. Consequently, the resolution of many of the issues in this case may depend upon the court's findings as to what Mr Qian actually said to the plaintiffs in Mandarin, rather than what the first and second defendants said to Mr Qian.
2. The defendants effectively admit that the plaintiffs made the investments pleaded in the statement of claim. They admit that the development application was lodged and rejected as pleaded, and I interpret the particulars to par 73 of the defence as having the effect that the defendants admit that the plaintiffs were advised of the rejection some time later (although par 73 of the statement of claim is strictly not admitted). The defendants admit that MST was put into administration, and resolved by its creditors to be wound up, as alleged. The first and second defendants have admitted an allegation in the statement of claim (par 106(b)) that on 23 August 2012 the administrator of the mortgagee over the Gosford Property advised the second defendant that the amount then owed by Gosford to the mortgagee was in excess of $3,500,000. The defendants have also admitted that the mortgagee served Gosford with a notice under s 57(2)(b) of the Real Property Act 1900 (NSW) on 16 January 2013 (par 116), and that on 15 February 2013 the mortgagee was appointed as controller of the Gosford Property (par 118). The defendants have not admitted that on 6 September 2013 the mortgagee exercised its power of sale and sold the Gosford Property for $682,000 (par 119).
3. So far as the pleadings are concerned, it is significant that the defendants admit that the plaintiffs invested their $2 million for the purposes of a project that involved a development on the Gosford Property, MST did not have development approval at the time the plaintiffs were induced to enter into the joint venture agreement and invest their funds, the development application was subsequently rejected, and at the time the investment was made the Gosford Property was subject to a mortgage to a third party to secure a debt that was, by mid-2012 some $2 million more than the purchase price of the Gosford Property, when purchased in May 2008. The defendants admit that the mortgagee exercised its power of sale, although they have not admitted the sale, or the price upon the sale.

The plaintiffs' evidence on the application

1. In written submissions served the day before the commencement of the hearing of the notice of motion, counsel for the respondents took the points that the plaintiffs had not served evidence to establish that they had a good arguable case against any of the respondents. During the hearing counsel for the respondents also observed that, although each of the plaintiffs had sworn an affidavit verifying the statement of claim, and a certificate under s 27A of the Oaths Act 1900 (NSW) had been signed by the person who witnessed the signing of the verifying affidavits, there was no evidence that the statement of claim had been translated into a language understood by the plaintiffs, so that the court could not be sure that the plaintiffs properly understood all of the complex allegations contained in English in the statement of claim at this time they signed their verifying affidavits.
2. As to the second of these matters, the plaintiffs have served an affidavit of the second plaintiff affirmed on 29 July 2014, and by the solicitor and interpreter who witnessed the signing by the plaintiffs of their affidavits in which they verified the allegations in the statement of claim. Those affidavits provide evidence that the interpreter spent about two hours reading, interpreting and explaining the statement of claim to the plaintiffs before they verified the pleading. I accept that evidence as being adequate to meet the claim that the plaintiffs may not have understood the pleading that they verified.
3. The respondents' submission that the plaintiffs had not served any evidence at all to prove the allegations that they made in their statement of claim was correct. No explanation was provided by the plaintiffs concerning this omission. While I have accepted the observation made by McDougall J in Pure Logistics, which is extracted above, to the effect that the court should not be drawn into a premature trial of the action, and that the court is likely to have to decide the claim on very limited evidence, so that it will not be able to undertake more than a preliminary appraisal of the claim, it does not follow at all that it will be adequate for a plaintiff to rely upon a verified statement of claim to establish that the plaintiff has a good arguable case. It is impossible to generalise as to the nature and extent of the evidence that the plaintiff will be required to place before the court to establish that it has a good arguable case.
4. In the present case the statement of claim was filed on 17 April 2014, and the plaintiffs' initial notice of motion was filed on 10 July 2014. Directions for the service of evidence and outlines submissions were made on 17 July 2014, and the plaintiffs' claim for freezing orders was fixed for hearing on 29 July 2014. In the circumstances the plaintiffs were required to approach the hearing on the basis that it was a contested interlocutory hearing, in which they were required to establish that they had a good arguable case against the first and second defendants. It is true that they were not required to establish that they had better than a 50% chance of success on each of their claims. They had to establish that their claims were capable of serious argument. Subject to the significance of admissions made in any defence, it should rarely be the case that the existence of a good arguable claim will emerge solely from a verified statement of claim. A plaintiff in these circumstances should provide all of the evidence, albeit on an interlocutory basis, that is reasonably available in the time before the hearing to substantiate at least the significant elements of the plaintiff's claim. I stress that I am not stating a general principle, as the resolution of each case will depend upon its own circumstances. It should be enough to observe that plaintiffs must approach the hearing on the basis that it will be a contested interlocutory hearing.
5. In the present case the plaintiffs were permitted to file and read an affidavit of the first plaintiff affirmed on 29 July 2014. In par 13 of that affidavit the deponent makes a series of 29 assertions, including by reference to documents in an exhibit to the affidavit that became Exhibit B. The evidence does not address each of the allegations in the statement of claim, and it is not a simple matter to understand the relationship between the allegations that have been addressed, and those that have not. The plaintiffs did not assist the court with detailed submissions concerning the significance of the evidence contained in the affidavit. As the present exercise does not involve a premature trial of the action, and is in the nature of a preliminary appraisal, it will be sufficient for me to identify only those aspects of the affidavit that appear to have particular significance.
6. It is not helpful that the evidence is given in the form: "In paragraph 19, 21 and 23 of the Statement of Claim I recollect Tuckerman and/or Devine in making statements to my husband and I to the effect as pleaded in those paragraphs". Those paragraphs allege a significant number of different representations. The use of the device "and/or" has the effect of neutralising the evidence, given that the remaining issue in dispute on the amended notice of motion depends upon the potential liability of Mr Tuckerman, and not Mr Devine.
7. The first plaintiff adittionally, however, provides limited, specific evidence concerning some of the allegations made in the statement of claim.
8. One aspect of that evidence is that the statement was made to the plaintiffs that MST "owned" the Gosford Property (par 13(b)(i)). The implication of that statement is that the property was not encumbered by a mortgage. That representation is alleged in the statement of claim to have been made at the first meeting between the plaintiffs and the first and second defendants, so it should not matter which of the defendants made the statement, as it was made in the presence of both (par 19(a)).
9. The first plaintiff gives evidence to support the allegation that the plaintiffs were first told on about 15 January 2012 that the Gosford Property was subject to a mortgage (then said to secure a debt of approximately $2 million), and the first plaintiff would not have made the investment had she been aware of the mortgage (par 13(b)(x)).
10. Exhibit B contains a copy of the Transfer by Mortgagee in relation to the Gosford Property, which shows that the property was transferred for a consideration of $682,000. The transfer is not dated, but appears to bear markings concerning its registration dated in November 2013.
11. Exhibit B also contains copies of the heads of agreement in English, the partial translation of the heads of agreement, the partial summary of the proposed joint venture agreement, and copies of the two versions of the joint venture agreement. The plaintiffs did not provide any explanation of the basis of their claim that these documents, or anything contained in them, support the plaintiffs' claim for damages. This aspect of the plaintiffs' claim is not obvious or transparent. I have not attempted to fathom the nature of the plaintiffs' claim by conducting my own analysis of the documents.

The plaintiffs have established a good arguable case

1. Notwithstanding the deficiencies in the forensic approach that the plaintiffs have taken in their attempt to establish that they have a good arguable case against Mr Tuckerman, I have decided that the evidence justifies a conclusion in this case that the requirements of UCPR r 25.14(1)(b)(i) have been satisfied, sufficiently to justify further consideration of whether the freezing orders claimed should be made against Mr and Mrs Tuckerman.
2. I have reached that view in part upon a consideration of the detailed, verified, allegations made in the statement of claim, and the response made by the first and second defendants in their defence. Although the defendants have not admitted the making of any of the representations pleaded by the plaintiffs, or any other alleged wrongdoing on their part, they have not by their defence put any positive case capable of providing any explanation of the circumstances that induced the plaintiffs to invest $2 million into a building project for which development approval had not been applied, where the land the subject of the proposed development was mortgaged to a third party for a sum that was apparently more than its purchase price, and where MST and Gosford did not have the funds necessary to complete the project. There is a substantial likelihood that the plaintiffs were induced to make their investment by representations concerning its circumstances, which caused the plaintiffs to believe that their investment was sound. Nothing proffered by the defendants provides any rational basis for any alternative version of events, which would support the conclusion that the plaintiffs invested and lost their money because of risks that were known to the plaintiffs when they made their investment.
3. The defendants have not in their defence or in their evidence explained what happened to the plaintiffs' money.
4. The first plaintiff's evidence concerning the making of the representation that MST "owned" the Gosford Property, by itself provides some basis for concluding that the plaintiffs have a good arguable claim against Mr Tuckerman.

Are the plaintiffs' entitled to freezing orders?

1. As has been noted above, the claims in the plaintiffs' amended notice of motion that have not been resolved involve claims for separate freezing orders against Mr and Mrs Tuckerman in relation to the Oatley property.
2. Mr Tuckerman is one of the defendants in the proceedings, and I have found that the plaintiffs have a good arguable claim against him. The Oatley property is registered solely in the name of Mrs Tuckerman, and Mr Tuckerman does not have any established interest in that property. There is no suggestion that Mrs Tuckerman in any way participated in the wrongdoing alleged against Mr Tuckerman, or that she had any knowledge of the circumstances alleged in the statement of claim before that pleading was filed.
3. The claim against Mr Tuckerman requires that the plaintiffs satisfy that part of UCPR r 25.14(4) that provides (omitting irrelevant words): (4) The court may make a freezing order or an ancillary order or both against a … prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied because any of the following might occur: … (b) the assets of the… prospective judgment debtor or another person are: … (ii) disposed of, dealt with or diminished in value.
4. The plaintiffs submitted that they are entitled to the freezing order that they seek against Mrs Tuckerman, notwithstanding that she is a third party who was not involved in the wrongful conduct alleged in the statement of claim, because the case comes within each of the two sets of circumstances identified in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 405 per Gaudron, McHugh, Gummow and Callinan JJ, where their Honours said at [57] and [58] (omitting footnotes): [57] What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sought to be restrained? In our opinion such an order may, and we emphasise the word "may", be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which: (i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including "claims and expectancies", of the judgment debtor or potential judgment debtor; or (ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor. [58] It is that principle which we would apply to this case. Its application is a matter of law, although discretionary elements are involved.
5. The plaintiffs relied upon UCPR r 25.11(1), and not specifically on r 25.14(5), which provides: (5) The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a "third party") if the court is satisfied, having regard to all the circumstances, that: (a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because: (i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or (ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or (b) a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.
6. The application of UCPR r 25.14(5) will have substantially the same effect as the authority relied upon by the plaintiffs.
7. It will be convenient to begin by considering the material facts.
8. There is no allegation that any part of the plaintiffs' investment, as described in their statement of claim, has found its way into the Oatley property, by repaying any mortgage, or by funding any improvement to the property, or by any other means. The evidence does not disclose what happened to the money invested by plaintiffs.
9. As has been noted above, the plaintiffs allege in their statement of claim that they made payments as part of their overall investment in the period between 13 July 2009 and 24 November 2010. All transactions concerning the acquisition, improvement, financing and re-financing of the Oatley property, save for the sale of units 2 to 9 on the Ashfield property, occurred before 13 July 2009. It will be necessary to return in more detail below to the application of the proceeds of sale of the Ashfield units.
10. The plaintiffs prepared their outline written submissions dated 23 July 2014 on the basis of the evidence that had been served upon them before that date. Mrs Tuckerman swore an affidavit on 27 July 2014, which contains detailed evidence concerning the Oatley and Ashfield properties. The plaintiffs did not have an opportunity to reply specifically to that evidence. In effect they accepted Mrs Tuckerman's evidence at face value, and, by a further written submission dated 1 August 2014, explained the basis of their claim for freezing orders against both Mr and Mrs Tuckerman, relying partly on the evidence given by the latter.

Purchase and renovation of the Oatley property

1. At this stage of the proceedings the evidence appears to establish that Mrs Tuckerman signed a contract to purchase the Oatley property for $950,000 on 23 August 2001. Before completion the price was reduced to $940,000. The deposit was $47,500. Mrs Tuckerman has given evidence that she agreed with her husband that the deposit would be paid out of her "share" of an overdraft facility that was secured by a mortgage over the Ashfield property, which at that time was owned jointly by Mr and Mrs Tuckerman. If the issue arises at a final hearing, there may be a question about the reality of the suggestion that an overdraft facility in the joint names of Mr and Mrs Tuckerman can validly be treated as being half that of Ms Tuckerman and half that of Mrs Tuckerman. For reasons that will appear below, this issue does not matter for present purposes.
2. Mrs Tuckerman put in evidence a letter from Citibank to Mr and Mrs Tuckerman containing a conditional facility approval to provide one facility in relation to the Ashfield property, and the second to finance the purchase of the Oatley property. The letter of offer is not signed by Mr and Mrs Tuckerman; however, Mrs Tuckerman said that she and her husband entered into the second facility. The amount of the facility was $665,000, divided into a fully drawn loan of $500,000, and a revolving facility of $165,000. Mr and Mrs Tuckerman were the borrowers. The security was a mortgage given by Mrs Tuckerman over the Oatley property, and a guarantee given by a company that Mrs Tuckerman described in her evidence as a family company. The fully drawn loan was to be repaid in 300 equal repayments of principal and interest.
3. Mrs Tuckerman said in her evidence that it was always intended that the Oatley property would be hers alone, and that she agreed with her husband that, when the opportunity arose to refinance the loan for Oatley, it would be put in her name alone. Mr Tuckerman also asserted in his evidence that it was always his intention that the Oatley property would solely be owned by Mrs Tuckerman.
4. Completion of the contract to purchase the Oatley property occurred on 14 December 2001, and on that day Mrs Tuckerman executed a mortgage over the property in favour of Citibank.
5. Also on 14 December 2001, completion took place of the sale of a property in Bardwell Park to which Mrs Tuckerman had become entitled under her late mother's will. Mrs Tuckerman drew down $525,551.15 from the second Citibank facility, and applied $368,744.29 from the proceeds of sale of the Bardwell Park property to pay the purchase price for the Oatley property.
6. Mrs Tuckerman said that she applied an amount of $44,000, when she received the balance of the deposit from the sale of the Bardwell Park property, to repay most of the amount of $47,500 that was the deposit for the Oatley property, which had been drawn out of the original Citibank overdraft secured on the Ashfield property. Accordingly, in substance, Mrs Tuckerman ultimately paid the deposit for the Oatley property out of her own funds.
7. Mrs Tuckerman also said that, at various times, she applied her own funds to repay the Oatley mortgage, including $31,004.46 from a superannuation fund, about $70,000 from the sale of shares she received as part of her mother's estate, and $50,000 from the sale of property at Penrith that was owned jointly with Mr Tuckerman and his brother and sister-in-law. Mrs Tuckerman said that Mr Tuckerman's share of the sale proceeds was not applied in reduction of the Oatley mortgage. Mr Tuckerman also gave evidence that he had not paid any of his own funds in repayment of the mortgage over the Oatley property.
8. Renovation work was carried out in relation to the Oatley property from about mid-2003 to 2008. Mrs Tuckerman proved that she obtained an Owner Builder Permit on 29 August 2003 from the NSW Office of Fair Trading. The total cost of the work was approximately $1,500,000, according to Mrs Tuckerman.
9. On 18 June 2004 Mrs Tuckerman discharged the second Citibank facility and entered into a new loan with St George. Mrs Tuckerman was the sole borrower of the amount of $1,050,000, which was secured by a mortgage granted by Mrs Tuckerman over the Oatley property. After the amount owed to Citibank of $587,505 was repaid, Mrs Tuckerman was left with a facility of $456,687. Mrs Tuckerman said that the St George facility was increased by various amounts between November 2005 and January 2006, and in April 2006 St George approved an overdraft facility that was increased to $700,000 in December 2007. These facilities financed the $1,500,000 cost of the works. Mrs Tuckerman provided documentary evidence that is sufficient at an interlocutory stage to substantiate her evidence.

Purchase and redevelopment of the Ashfield property

1. The Ashfield property was jointly acquired by Mr and Mrs Tuckerman in 1991, and was their matrimonial home until November or December 1999. In January or February 2000 Mr and Mrs Tuckerman entered into a facility agreement with St George with a limit of $1,720,000 to construct a block of nine units on the Ashfield property. Construction commenced in about February 2000 and finished in about March 2001.
2. After the completion of the construction of the units, in June 2001 Mr and Mrs Tuckerman refinanced the St George facility by entering into their first facility with Citibank, for an amount of $1,900,000, made up of a fully drawn loan of $1,600,000, and an overdraft with a credit limit of $300,000.
3. Mrs Tuckerman gave evidence that she agreed with her husband that they would each separately have the use of half of the overdraft limit for their own business purposes. At the time the first Citibank facility was entered into, Mr and Mrs Tuckerman advised Citibank that they contemplated applying for an increase in the facility at a later time to purchase a family home. In due course this aspiration led Mr and Mrs Tuckerman to enter into the second Citibank facility, which I have discussed above in connection with the purchase of the Oatley property.
4. Mr and Mrs Tuckerman initially rented out the nine units, which were not the subject of a strata title scheme.

Additional borrowings to assist MST

1. Mrs Tuckerman gave evidence that in November 2007, she and Mr Tuckerman temporarily increased the credit limit of the Citibank overdraft from its then amount of $459,500 to $759,500. The reason for this temporary increase of $300,000 was, according to Mrs Tuckerman, to assist Mr Tuckerman in relation to his business needs with MST. Mrs Tuckerman said that at that time she was not happy with the arrangement, and made an oral agreement with Mr Tuckerman that any amount drawn by him from the overdraft facility for his own business purposes was "going to come out of [his] share of the Ashfield property". Mrs Tuckerman also said that, in January 2008, she and Mr Tuckerman again temporarily increased the credit limit of the Citibank Overdraft to $759,500. The evidence is not explicit, but I infer that the original $300,000 increase was in some way repaid, and a further $300,000 increase arranged at a later time.
2. Mrs Tuckerman acknowledged that, in around August 2008, she was informed by her husband that MST was having some difficulty with Australian Unity, the lender for MST's project in Chatswood. Mr Tuckerman informed her that Australian Unity was pressing Mr Tuckerman and Mr Devine to provide directors' guarantees in relation to the Chatswood project. She also acknowledged that she became worried that, if Mr Tuckerman gave a guarantee, that would enable Australian Unity "to come after him personally if things went wrong with the Chatswood project", including for his share of the Ashfield property.
3. From this point of time one motivation for the steps taken by Mr and Mrs Tuckerman, in their property transactions in relation to the Ashfield property, was to protect Mrs Tuckerman's interests in the Oatley and Ashfield properties from the consequences of the difficulties that were emerging in relation to Mr Tuckerman's development business. These difficulties apparently first emerged in relation to a development project at Chatswood. The evidence does not explain the nature of that project.

Refinancing the borrowings on the Ashfield property by Australian Unity

1. Mrs Tuckerman said that, in around October 2008, she entered into an oral agreement with her husband in relation to a demand by Australian Unity that MST contribute an additional $400,000 to the Chatswood project, before it would release the rest of the money needed by MST to complete that project. The agreement was that $400,000 would be lent to Mr Tuckerman "from [his] share of Ashfield so that [he] can provide it to MST".
2. A consequence of this agreement was that it became necessary for Australian Unity to refinance the Citibank facility, and become the lender in relation to the Ashfield property. The amount that Mr Tuckerman ultimately needed to borrow was approximately $372,000, rather than $400,000.
3. Mr and Mrs Tuckerman applied for a credit facility with Australian Unity on about 22 October 2008. To support the application Australian Unity obtained a valuation report from DTZ, which valued the Ashfield property at $3,400,000. The date of valuation was 4 November 2008.

Mr and Mrs Tuckerman's asset and liability statements

1. Mr and Mrs Tuckerman submitted an asset and liability statement dated 22 October 2008 to Australian Unity in support of their application, which dealt separately with the position of each of the applicants. Relevantly, in relation to the Ashfield property, the statement recorded that Mrs Tuckerman had an asset of $1,700,000, being half of the valuation, and a corresponding liability of $1,025,000. Mr Tuckerman's interest in the Ashfield property was also valued at $1,700,000, but the corresponding liability was $1,695,000; that is, $670,000 more than Mrs Tuckerman's liability. (No explanation was given as to why the Ashfield property was valued at $3.4 million for the purposes of the 22 October 2008 asset and liability statement, when the valuation took place on 4 November 2008).
2. I infer from the evidence that this $670,000 represents the second increase in the Citibank overdraft of $300,000, plus the $372,000 that Mr Tuckerman required for MST's purposes. The evidence is not explicit, but I infer that Mr Tuckerman received the additional $670,000 either from the Citibank overdraft, or the borrowing from Australian Unity, and that borrowing refinanced the whole of the Citibank overdraft.
3. If Mr Tuckerman's statement of assets and liabilities is taken at face value, it suggests that Mr Tuckerman only had a remaining equity of $5000 in the Ashfield property.
4. It should also be recorded that the Oatley property is shown as being exclusively owned by Mrs Tuckerman, with a value of $3,400,000, and a corresponding liability of $1,733,646. Mr Tuckerman's statement of assets and liabilities does not show him having any interest in the Oatley property.
5. Mrs Tuckerman referred in her evidence to an entry in the asset column of her statement to loans to the amount of $1,031,561, which she explained as a loan of $500,000 to her family company, a loan of $181,651 to MST, and a loan of $350,000 from her to her husband. She described the $350,000 loan as a "consolidated" loan. The $350,000 loan is reflected in Mr Tuckerman's statement as a liability. No evidence was given as to the circumstances in which this $350,000 loan was made.

Mr Tuckerman's 18 November 2008 letter to Mrs Tuckerman

1. On 18 November 2008 Mr Tuckerman wrote a letter to Mrs Tuckerman in which he said: It's a very hard thing that I and MST ask of you to do a gain (sic) assist MST with a further loan advance. I confirm that Australian Unity have agreed to recognise that once the additional $370,000 is borrowed against the Ashfield property that I can transfer anything I have left in the property to you. This was only fair as discussed, as I will have completely used up all my 50% share in the property and the rest, once all the huge debt is repaid, is really to your benefit. We cannot afford for me to transfer the property to you now but whatever equity remains after all these loans are repaid is yours and yours alone. I also ensured that Australian Unity cannot come after the Ashfield property for more than the $2,720,000 loan if down the track they were to pursue the guarantee that I have to give to A Unity. AU have agreed to this as they recognise that what is left after the 2.7 m is repaid is really yours not mine.

25 November 2001 deed between Mr and Mrs Tuckerman

1. On 25 November 2001 Mr Tuckerman entered into a deed with Mrs Tuckerman, which recited the making of the loan of $372,852.96. In the deed Mrs Tuckerman is described as the beneficiary, and Mr Tuckerman as the trustee. It contains a term that "the Settlor has paid the settlement sum of $10 to establish the trust". This provision is inexplicable, as there is no Settlor identified in the deed. The deed gives to Mrs Tuckerman a right "to lodge caveats as security for the provision of this Trust" (clause 4), as well as a right "to register a second mortgage over [the Ashfield property] as security for provision by the Trustee to the Beneficiary of this declaration of Trust, if requested by the Beneficiary" (clause 7).
2. The deed is singularly ill considered as a matter of law. It does not appear to contain any declaration of trust. However, it is described on the cover sheet as "Deed Declaration of Trust", and the attestation clause is preceded by "Executed as a Deed of Trust". I have already noted that clause 7 describes Mrs Tuckerman as "the Beneficiary of this declaration of Trust". Clause 14 provides: "This Trust pursuant to this Deed shall be would (sic) up within 50 years from the date of this Deed". The deed appears to proceed upon the basis that the Beneficiary had already provided consideration of $372,852.96. That consideration was described as a loan (see Recital F "to lend the Trustee").

Effect of the 18 November 2008 letter and the 25 November 2008 deed

1. It is convenient to make a number of observations about the significance of the letter and the deed, in the context of having set out the relevant parts of the documents.
2. First, both documents were prepared at a time when Mr and Mrs Tuckerman contemplated that Mr Tuckerman's solvency was at risk, and they had decided to embark upon a course of ensuring that Mrs Tuckerman's interests in the Oatley and Ashfield properties (which almost entirely covered all of the property available to the couple) were quarantined from the financial risks that they perceived were emerging in relation to Mr Tuckerman's property developments.
3. Secondly, in so far as the creation of a trust depends upon the intention of the settlor, both the letter and the deed may be capable of proving that the trust was created at the time Mr Tuckerman signed one or other of the documents. However, neither document is an unequivocal declaration of trust.
4. As I have noted, Mr Tuckerman was described as the trustee in the deed, and there is reference to a settlor, who is not identified. There is no reason why a trustee cannot declare a trust over property owned by the trustee, when the original trust was created by a settlement made by a third party, but, as I have said, the deed is not an unequivocal declaration of trust. While the grant of the right to lodge a caveat is consistent with an intention that the beneficiary's rights in the trust property will be protected by a caveat, the grant of the right to register a second mortgage over the Ashfield property is inconsistent with the deed creating a trust, and suggests that the right of the beneficiary was as a creditor.
5. Thirdly, the letter and the deed exhibit a fundamental confusion about whether the parties were dealing with a debt or a trust.
6. Both the letter and the deed appear on their face to be concerned with the $372,852.96 that Mr and Mrs Tuckerman jointly borrowed from Australian Unity on the security of the Ashfield property. They were not concerned with the earlier amount of $300,000 that was withdrawn from the overdraft facility that was formerly provided by Citibank. The Australian Unity facility apparently refinanced that part of the earlier borrowing. They were also not concerned with the unexplained debt of $350,000 that is included in Mr Tuckerman's statement of assets and liabilities.
7. Both the $372,852.96 and the $300,000 debts, that Mr Tuckerman received by way of borrowings from facilities secured on the Ashfield property, were not, strictly, loans made by Mrs Tuckerman to Mr Tuckerman. They were loans made by the lenders to Mr and Mrs Tuckerman, which the latter agreed could be used for the former's business purposes. Mr Tuckerman did not owe those amounts directly to Mrs Tuckerman. The natural way to consider those debts was that they were the responsibility of Mr Tuckerman out of his share of what otherwise would have been his equity in the Ashfield property. That is the way they are treated in Mr Tuckerman's statement of assets and liabilities.
8. Accordingly, when (as ultimately happened, and will be considered below) the units on the Ashfield property were sold, if the claim by Mr and Mrs Tuckerman that they treated their financial and property affairs as being entirely separate is accepted, the proceeds of the sale of the units should have been accounted for as between them on the basis that the two debts would be prepaid out of Mr Tuckerman's share in the equity.
9. Mr Tuckerman's statement of assets and liabilities showed that, on 22 October 2008, apparently in anticipation of the Australian Unity facility being entered into, at that stage Mr Tuckerman had equity of $5000 in the Ashfield property. That is after he has made notional provision for repaying the $670,000 consisting of the two loans. Ordinarily, if the Ashfield property was realised, say, one year later, at a price of $4,400,000, Mr Tuckerman would be entitled to his $5000 plus half the increase in value of $1 million.
10. The point of this analysis is that, putting aside the question of whether in fact Mr Tuckerman succeeded in declaring himself as the trustee in favour of Mrs Tuckerman of his remaining equity in the Ashfield property, the declaration of such a trust was not a natural commercial course to follow. Having made provision for repayment of the two debts owed to the creditors out of his equity in the Ashfield property, there was no reason for him to declare a trust of his equity in that property in favour of Mrs Tuckerman, save for the purpose of divesting Mr Tuckerman of that equity. In more simple terms, even if it is true that Mr Tuckerman had used up his equity at that point of time, it does not follow that he was not entitled to a half share of any increase in equity after that time. In saying this I note that neither the letter nor the deed was concerned with the other loan of $350,000.

Sale of eight units at Ashfield and disposition of the proceeds

1. Mrs Tuckerman gave evidence that 2010 and 2011 were very hard years financially and personally for herself and Mr Tuckerman. In mid-2011 they decided that they had no choice financially but to sell the Ashfield property, and for that purpose lodged a stratum plan to enable them to sell the units individually. Eight of the nine units were sold in the period January to April 2012. The total net price received was $4,020,948. A total of $2,828,132 was paid to Australian Unity. Of the balance $137,000 was paid to friends to whom the couple jointly owed money. That left a net amount of $1,055,816.
2. Mrs Tuckerman said that, by this time, Mr Tuckerman had no equity left in the Ashfield property, and that he had negative equity because of the "consolidated loan" of $350,000, the November 2007 loan to MST of $300,000, and the October 2008 loan to MST of $372,852 (giving a total of $1,022,852)
3. Mrs Tuckerman claimed that Mr Tuckerman also owed her interest on the loans, which she was not able to calculate in the time available. No evidence was given of any agreement between Mr and Mrs Tuckerman that he would pay interest to her, or as to the rate of any interest payable.
4. As Mr Tuckerman had no equity in the Ashfield property, Mrs Tuckerman claimed that she was solely entitled to the net cash. She said that she paid $962,966 off the St George loans that were secured over the Oatley property.
5. In reality, the $2,828,132 that was paid to Australian Unity effected repayment of the $300,000 and the $372,850 loans (that were not actually made by Mrs Tuckerman).

7 May 2014 deed between Mr and Mrs Tuckerman

1. On 7 May 2014 Mr and Mrs Tuckerman, as transferor and transferee, entered into a deed, the operative parts of which were as follows: WHEREAS the Transferor holds upon trust the sum of not less than $372,852.96 ("Sum Owed") for the benefit of the Transferee, being moneys lent to Chatswood 640-650 Project P/L (now in liquidation) ("Chatswood") in November 2008, from loan proceeds advanced by Australian Unity and secured against the property then known as 35 Alt Street Ashfield NSW, being then known as Lot 100 DP1029862; and AS the Transferee and Transferor are joint tenants of the Property; and As the Sum Owed was not repaid by Chatswood to the Transferee; It is agreed for the consideration of one dollar (which sum has been paid) that Transferor agrees to transfer legal title of his undivided share in the Property to the Transferee absolutely; and It is further agreed that upon the transfer being effected the amount outstanding and still held upon trust by the Transferor for the benefit of the Transferee shall be determined to be not less than the "Reduced Sum Owed" as follows: $372,852.96 ("Sum Owed") Less 50% valuation 7 May 09 $315,000 Reduced Sum Owed $57,852.96
2. Mrs Tuckerman's evidence makes it clear that this deed was entered into after Mr Tuckerman informed her that he and Mr Devine were being sued in relation to the Gosford project. She had a conversation with Mr Tuckerman in which she said: "… I'm not going to let those people try to get their hands on my money! You have to begin the process of transferring the title of Unit 1 in Ashfield to me. I was never paid back the $370,000 that I lent you to pay Australian Unity. That unit is now 100% mine". Mr Tuckerman agreed.
3. The supposed debt of about $370,000 that Mr Tuckerman owed to Mrs Tuckerman (in reality an amount borrowed by him from a lender on the security of their joint property) was thus used as the justification for the assignment without further consideration (except for $1) of Mr Tuckerman's half interest in Unit 1 to Mrs Tuckerman. It had also separately been used as the justification for whatever effect Mr Tuckerman's 18 November 2008 letter and the 25 November 2008 deed had. That is so in both cases even though the debt was actually repaid from the proceeds of sale of the other eight units at Ashfield.

Further consideration of disposition of Ashfield proceeds

1. It is necessary to consider further what happened in relation to all of the nine units that were constructed on the Ashfield property.
2. The following simplified calculation is carried out on the assumption that Mr Tuckerman did not effectively create a trust of the whole of his equity in the Ashfield property in favour of Mrs Tuckerman in November 2008 (that being only an arguable proposition), and it ignores interest effects (of which there is no evidence), and accordingly deals in round numbers. Net sale price 4,000,000 Payment to Australian Unity $2,800,000 Net receipt $1,200,000
3. Of this amount, each of Mr and Mrs Tuckerman were entitled to $600,000. After payment of the $137,000 owed to their friends, they were each entitled to half of what remained, and it would follow that each paid half of the $963,000 that was repaid to St George to reduce the mortgage over the Oatley property (or $481,500 each).
4. If, however, it is accepted that the conversations between Mr and Mrs Tuckerman in November 2008 were effective to make Mr Tuckerman responsible for the repayment of the extra $672,000 that were borrowed for his purposes, even if not effective to create a trust over his equity in the Ashfield property, it is necessary to redo the calculation to ensure that Mr Tuckerman repays the amount attributable to his extra borrowing out of his share of the net sale price. Mr Tuckerman's share of the original borrowing $1,695,000 ÷ $2,720,000 ×100 62% Mrs Tuckerman's share of the original borrowing $1,025,000 ÷ $2,720,000 ×100 38% Mr Tuckerman's share of repayment $2,800,000 × 62% $1,736,000 Mrs Tuckerman's share of repayment $2,800,000 ×38% $1,064,000 Mr Tuckerman's receipt from net proceeds $2,000,000 - $1,736,000 $264,000 Mrs Tuckerman's receipt from net proceeds $2,000,000 - $1,064,000 $936,000
5. If Mr and Mrs Tuckerman are assumed to have each repaid half of the $137,000 borrowed from friends (or $65,000 each), the amount that Mr Tuckerman would have repaid to St George would be $195,000 and the amount repaid by Mrs Tuckerman would be $867,500. The total repayment was $963,000.
6. As the debt of approximately $372,000 cannot be justified as the basis for two separate transactions by Mr Tuckerman in favour of Mrs Tuckerman, the effect would be, on the assumptions I have made, that Mr Tuckerman remains entitled to his half share in Unit 1. At the date of the purported assignment by the deed dated 7 May 2014, which referred to a valuation of Unit 1 as at 7 May 2009 of $630,000, Mr Tuckerman's interest in Unit 1 would have a value of $315,000. Mr Tuckerman gave evidence, to which no objection was made, that Unit 1 was valued as at 29 May 2014 at $550,000. On that basis Mr Tuckerman's interest would be valued at $275,000.
7. The point of all of these calculations, somewhat simplistic as they are, is that, if it is assumed that Mr Tuckerman did not effectively declare a trust over the whole of his equity in the Ashfield property in favour of Mrs Tuckerman, after allowing for repayment by Mr Tuckerman of the $300,000 and the $372,000 that were borrowed from commercial lenders on his behalf, an amount of approximately $195,000 has been paid by him off the loan secured on the Oatley property, and he retains an interest in Unit 1 that may be valued at or above $275,000. The total is $470,000 (and may be more depending on the actual value of Unit 1).
8. As noted above, if it is not established that Mr Tuckerman was to be solely responsible for repayment of the $672,000 debt out of his share in the proceeds of sale of the Ashfield property, then his contribution to the repayment to St George was about $480,000, so the total would be $755,000, or thereabouts.
9. These considerations leave Mrs Tuckerman as a creditor of Mr Tuckerman for the debt of $350,000, assuming that debt can be proved to be valid.

Basis of plaintiff's claims for freezing orders

1. The relief that the plaintiffs seek against Mr and Mrs Tuckerman therefore proceeds on the basis that Mr Tuckerman has, or had, some interest in the Oatley property, which the plaintiffs may be entitled to attach if they succeed in the proceedings and obtain a money judgment against Mr Tuckerman. By order 1(a)(i) they seek a freezing order in respect of the chose in action that they say is represented by Mr Tuckerman's claim to an interest in the Oatley property, notwithstanding that he is not registered as an owner of that property. Mr Tuckerman denies that he has any such claim or interest. It follows that Mr Tuckerman asserts that he does not threaten to dispose of his claim, assuming that, contrary to his own belief, he has one, in a way that might support the ability of the plaintiffs to recover an order for damages or compensation against him.
2. The relief that is sought against Mrs Tuckerman in order 1(b)(i) can only be in aid of the relief that the plaintiffs seek against Mr Tuckerman, in the sense that the freezing order, if granted, will preserve the net value of the Oatley property so that it is available, if the plaintiffs are able to establish that Mr Tuckerman has an interest in the property, or they are able to avoid any transaction by which Mr Tuckerman has transferred the interest that he has, or abandoned, in favour of Mrs Tuckerman.
3. The plaintiffs submitted that, what they described as the claim or expectancy of Mr Tuckerman, arises out of the traditional marriage relationship referred to by Justices of the High Court in Trustees of the Property of John Daniel Cummins v Cummins (2006) 227 CLR 278 at [71] where Gleeson CJ and Gummow, Hayne, Heydon and Crennan JJ said (footnotes omitted): The present case concerns the traditional matrimonial relationship. Here, the following view expressed in the present edition of Professor Scott's work respecting beneficial ownership of the matrimonial home should be accepted: It is often a purely accidental circumstance whether money of the husband or of the wife is actually used to pay the purchase price to the vendor, where both are contributing by money or labor to the various expenses of the household. It is often a matter of chance whether the family expenses are incurred and discharged or services are rendered in the maintenance of the home before or after the purchase. To that may be added the statement in the same work: Where a husband and wife purchase a matrimonial home, each contributing to the purchase price and title is taken in the name of one of them, it may be inferred that it was intended that each of the spouses should have a one-half interest in the property, regardless of the amounts contributed by them.
4. The initial position adopted by the plaintiffs was that Mr Tuckerman may be entitled to claim a 50% interest in the Oatley property, which interest they suggested may be valued at $2,000,000.
5. Their Honours started in Cummins at [68] by referring to the outcome of Calverly v Green (1984) 155 CLR 242, in which the High Court was concerned with the beneficial ownership of an improved property acquired as joint tenants by a man and a woman who had lived together for about 10 years as husband and wife. The decision of the court was that the presumption that they held the registered title in trust for themselves in shares proportionate to their contributions was not rebutted by the circumstances of the case. Their Honours then referred to the observations of Mason and Brennan JJ (as their Honours were then) at 259 by reference to the statement by Lord Upjohn in Pettitt v Pettitt [1970] AC 777 at 815 to the effect that, where spouses contribute to the acquisition of the property then, in the absence of contrary evidence, it is to be taken that they intended to be joint beneficial owners.
6. As appears from [72], in Cummins the court was concerned with a case where title to the relevant property had been placed jointly in the name of the two spouses, but there was evidence that would support a finding that the wife had contributed a disproportionate amount to the acquisition of the property compared with her husband. Their Honours said in [72] and [73] (omitting footnotes): [72] That reasoning applies with added force in the present case where the title was taken in the joint names of the spouses. There is no occasion for equity to fasten upon the registered interest held by the joint tenants a trust obligation representing differently proportionate interests as tenants in common. The subsistence of the matrimonial relationship, as Mason and Brennan JJ emphasised in Calverley v Green, supports the choice of joint tenancy with the prospect of survivorship. That answers one of the two concerns of equity, indicated by Deane J in Corin v Patton, which founds a presumed intention in favour of tenancy in common. The range of financial considerations and accidental circumstances in the matrimonial relationship referred to by Professor Scott answers the second concern of equity, namely the disproportion between quantum of beneficial ownership and contribution to the acquisition of the matrimonial home. [73] In the present litigation, the case for the disinclination of equity to intervene through the doctrines of resulting trusts to displace the incidents of the registered title as joint tenants of the Hunters Hill property is strengthened by further regard to the particular circumstances. Solicitors acted for Mr and Mrs Cummins on the purchase in 1970. The conveyance was not uneventful. The contract was dated 14 April 1970 and was settled on 27 July 1970, but only after the issue by the solicitors for the vendor on 10 July of a notice to complete. It is unrealistic to suggest that the solicitor for the purchasers, Mr and Mrs Cummins, did not at any point advise his clients on the significance of taking title as joint tenants rather than as tenants in common. Secondly, use of the valuation obtained in 1987 to fix what was shown as the purchase price for the acquisition by Mrs Cummins of the interest of her husband is consistent, as already indicated, with the conventional basis of their dealings which treated the matrimonial home as beneficially owned equally.
7. The present case is, in one sense, the opposite of that found in Cummins. Whereas in Cummins the question was whether the court should find that the beneficial ownership in the property should reflect the disproportionate contributions of the joint tenants, in the present case the question is whether Mr Tuckerman should be found to have a beneficial interest in the property notwithstanding that, when it was acquired, the title was placed solely in the name of Mrs Tuckerman. The answer to that question must be found in the evidence.
8. The outcome for which the plaintiffs contend does not necessarily follow directly from the extract from the judgment in Cummins upon which the plaintiffs rely. It is not entirely clear what a "traditional" marriage relationship is. The evidence shows that, while Mr and Mrs Tuckerman are married in the conventional sense, they kept their financial affairs separate to a significant extent. That the title to the Oatley property was placed solely in the name of Mrs Tuckerman was not a "purely accidental circumstance".
9. Following receipt of Mrs Tuckerman's affidavit, in their subsequent written submissions, the plaintiffs appear to put Mr Tuckerman's possible claim in relation to the Oatley property, as a result of the circumstances in which it was originally acquired, on an alternative basis to their initial submission. They submitted that the price of $941,795.29 was paid as to $570,051 from the Citibank facilities in their joint names (the deposit of $47,500 from the first facility, and the drawdown of $525,551 from the second Citibank facility), and as to $368,744.29 from Mrs Tuckerman's own funds. They then calculated that, on a mathematical basis, the interest of Mr Tuckerman would be 30.2% (half of the $570,000 as a percentage of the total purchase price).
10. The plaintiffs submitted that the respective beneficial ownership of Mr and Mrs Tuckerman depends upon their intention at the time the Oatley property was acquired, and the rights acquired at that time cannot be altered by subsequent events, without an enforceable agreement or conveyance (relying upon J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (LexisNexis, 7th ed, 2006) 247). However, the plaintiffs also rely upon Bloch v Bloch (1981) 180 CLR 390 per Brennan J at 402 for the proposition that, where parties acquire a property on the basis of an intention that any loan to fund the purchase price will be repaid, so that they will ultimately own the property free of debt, their intentions concerning contributions to the repayment of any secured debt should also be taken into account in determining their respective proportionate beneficial interests in the property.

Consideration

1. In the present case the evidence is that Mrs Tuckerman repaid the amount borrowed to fund the deposit soon after settlement of the purchase, out of money she received from the deposit paid on the sale of the Bardwell Park property. I would infer that it was the intention of Mr and Mrs Tuckerman, at the time of the purchase of the Oatley property, that Mrs Tuckerman would repay the amount of the deposit.
2. The fact that Mrs Tuckerman repaid substantial amounts of the money borrowed to purchase the Oatley property from her own funds, and ultimately refinanced the debt in her own name, does not have the effect that her beneficial interest in the property gradually increased in proportion to the amounts that she paid. In Shepherd v Doolan (2005) NSWSC 42 White J at [45] considered the circumstances in which changes may occur to the proprietary interests of the parties after the property was acquired, in the following terms: However, if there are to be changes to the proprietary interests of the parties after the property was acquired, the changes must occur according to the same principles as those upon which a constructive trust may arise for the first time. (Pettitt v Pettitt at 816). Where the parties make continuing but different contributions to the maintenance and improvement of the property, I do not accept that the beneficial interests which arose on acquisition of the property are changed merely because the parties later make disproportionate contributions of that kind. If the parties agreed or intended that they should vary their beneficial interest in the property, and one party acted to his detriment, then their beneficial interests could change during the course of the relationship. It may be possible to infer such an agreement or intention from what the parties did as well as what they said. The parties' later conduct may also provide a basis for inferring their intentions at the time the property was acquired. It might also be inferred that the parties intended at the time the property was acquired that their respective beneficial shares would be left to be determined at a future date, e.g. when the property is sold, based on their contributions at that time. (Gissing v Gissing at 909 per Lord Diplock; Burns v Burns per Fox LJ at 327).
3. In the present case both Mr and Mrs Tuckerman have given uncontradicted evidence that it was always their intention that Mrs Tuckerman would be the sole owner of the Oatley property, and only Mrs Tuckerman applied her own funds to making repayments of the debt. The evidence of the subsequent payments, and the refinancing of the debt in Mrs Tuckerman's sole name, supports a conclusion that the original intention at the time the Oatley property was acquired was that it would be paid for solely by Mrs Tuckerman.
4. It is important to remember the following cautionary observations made by their Honours in Cardile in relation to the proposal to make a freezing order against a third party who is not accused of personal wrongdoing. Their Honours said at [50] (omitting footnotes): [50] … There are significant differences between an order protective of the court's process set in train against a party to an action, including the efficacy of execution available to a judgment creditor, and an order extending to the property of persons who are not parties and who cannot be shown to have frustrated, actually or prospectively, the administration of justice. It has been truly said that a Mareva order does not deprive the party subject to its restraint either of title to or possession of the assets to which the order extends. Nor does the order improve the position of claimants in an insolvency of the judgment debtor. It operates in personam and not as an attachment. Nevertheless, those statements should not obscure the reality that the granting of a Mareva order is bound to have a significant impact on the property of the person against whom it is made: in a practical sense it operates as a very tight "negative pledge" species of security over property, to which the contempt sanction is attached. It requires a high degree of caution on the part of a court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct.
5. In the light of these considerations, and the evidence that I have considered above, I have concluded that the plaintiffs have not established that Mr Tuckerman has a sufficiently strong claim that he has a beneficial interest in the Oatley property, arising out of the circumstances in which that property was acquired, to justify imposing a freezing order on Mrs Tuckerman for that reason.
6. The plaintiffs alternatively submit that they, if they succeed in their claim against Mr Tuckerman, and become judgment creditors, may be entitled to an order avoiding some transaction between Mr and Mrs Tuckerman whereby she became entitled to an interest in the Ashfield property, or she received the benefit of Mr Tuckerman's share in Unit 1, or the net sale price of the other units, previously held by Mr Tuckerman, by application of s 37A of the Conveyancing Act, 1919 (NSW), on the basis that the transaction was an alienation of property with intent to defraud creditors. The plaintiffs also suggest that it will be open to them to seek the appointment of a receiver of Mr Tuckerman's chose in action against Mrs Tuckerman; or alternatively a trustee in bankruptcy of Mr Tuckerman could take proceedings to establish the chose in action.
7. The plaintiffs have not yet instituted any proceedings against Mrs Tuckerman in relation to any interest in property formerly held by Mr Tuckerman. The most that can be said is that the draft consent short minutes of order contain a provision in par 3 (a) that Mrs Tuckerman will be released from her undertaking to the court in relation to Unit 1 upon the earliest occurrence of a number of events, including "the determination of the plaintiffs' foreshadowed application under section 37A of the Conveyancing Act 1919 in relation to the Ashfield Property".
8. The question is whether, for the purposes of UCPR r 25.14(5), the court is satisfied, having regard to all the circumstances, that: (a) there is a danger that a judgment or prospective judgment against Mr Tuckerman will be wholly or partly unsatisfied because: (i) Mrs Tuckerman holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of Mr Tuckerman, or (ii) Mrs Tuckerman is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of Mr Tuckerman, or (b) a process in the court is or may ultimately be available to the plaintiffs as a result of a prospective judgment, under which process Mrs Tuckerman may be obliged to disgorge assets or contribute toward satisfying the prospective judgment.
9. All of the transactions involving the increase in the borrowing from Australian Unity to permit Mr Tuckerman to withdraw $372,000 for MST's purposes, the agreement that Mrs Tuckerman claims she made with Mr Tuckerman about that borrowing, the preparation of the 22 October 2008 statement of assets and liabilities, the writing of the 18 November 2008 letter by Mr Tuckerman, the "Deed Declaration of Trust" entered into on 25 November 2008, the arrangements for the disposal of the net proceeds of sale of Units 2 to 9 on the Ashfield property, and the deed dated 7 May 2014 in respect of Unit 1, happened at a time when Mr and Mrs Tuckerman feared for Mr Tuckerman's financial future, and were undertaken partly in order to quarantine the property of Mrs Tuckerman (and also that of Mr Tuckerman by reason of the proposition that he only had a $5000 equity in the Ashfield property).
10. The plaintiffs did not have an opportunity to challenge the evidence given by Mr and Mrs Tuckerman concerning those transactions and arrangements. Realistically, in interlocutory proceedings, without the benefit of the ordinary processes of the court, and in the absence of an ability to cross-examine the witnesses, the plaintiffs were not in a position to challenge the evidence that was given.
11. I have examined above the conceptual flaws in the documents apparently produced by Mr Tuckerman. I have also discussed the attempt by Mr and Mrs Tuckerman to use the debt of $372,000, as if it had been advanced by Mrs Tuckerman to Mr Tuckerman, when it was not, as a justification for an alleged declaration of trust by Mr Tuckerman in favour of Mrs Tuckerman of the whole of his interest as of November 2008 in the equity in the Ashfield property, as well separately as a justification for the assignment of his interest in Unit 1 to Mrs Tuckerman on 7 May 2014.
12. While it is possible that, at a final hearing, the court will find that Mr Tuckerman effectively declared a trust over his interest in the Ashfield property in favour of Mrs Tuckerman, there is a seriously open and arguable question available to the plaintiffs that such a trust was not effectively created.
13. If the transactions and conversations that occurred in November 2008 were ineffective to create the trust alleged by Mr and Mrs Tuckerman, they may not be able to sustain the alternative, but inconsistent, proposition that in reality Mr Tuckerman agreed that the whole of the additional $672,000 that he and Mrs Tuckerman borrowed in order to make advances to MST were to be repaid out of his share in the proceeds of sale of the Ashfield property, in a manner that would bind the plaintiffs or a trustee in bankruptcy of Mr Tuckerman.
14. As I have recorded above, Mr and Mrs Tuckerman have agreed to the making of a freezing order, on certain terms, concerning Unit 1 at Ashfield.
15. However, if the plaintiffs succeed in their claim against Mr Tuckerman, and seek to realise their judgment by avoiding transactions or trying to establish an entitlement of Mr Tuckerman to an interest in the Oatley property and Unit 1, it is not yet at all clear whether the plaintiffs will succeed in respect of one or the other, or both. If the plaintiffs are entitled to be protected by freezing orders, the orders should cover Mr Tuckerman's potential claim in relation to the repayment to St George of part of the loans secured over the Oatley property, as well as to Unit 1.
16. I should record here that, one argument put on behalf of Mr and Mrs Tuckerman was that the assignment that Mr Tuckerman purported to make on 7 May 2014 of his interest in Unit 1 to Mrs Tuckerman could not, as a matter of law, be avoided under s 37A of the Conveyancing Act, because an alienation that amounts merely to a preference of one creditor over another is not affected by the section: see Wentworth v Rogers [2004] NSWCA 430 at [63], [97] and [98]; affirming Abignano v Wenkart (1998) 9 BPR 16,765. I respectfully accept the correctness of that principle, but at this interlocutory stage, the argument falls foul of the conceptual confusion of Mr Tuckerman between trusts and debts. The 7 May 2014 deed exhibits an unresolved confusion about whether Mr Tuckerman was purporting to transfer his interest in Unit 1 to Mrs Tuckerman because he already held that property on trust for her, or whether it was an assignment by way of repayment of a debt. Furthermore, on Mrs Tuckerman's own evidence, she took the benefit of the whole of the proceeds of sale of Units 2 to 9 at some time in 2012, and, if she was entitled to do that, it led to the repayment of the $372,000 debt. If the composite $350,000 debt was valid, and remained owing to Mrs Tuckerman, the deed of assignment was not executed in purported repayment of that debt.
17. There is no evidence that Mrs Tuckerman has any intention to sell or increase the mortgage over the Oatley property. It is the family home, and it is likely that Mrs Tuckerman will wish to preserve it for the benefit of her family.
18. However, as has been noted, all of the relevant transactions took place in part for the purpose of quarantining Mrs Tuckerman's property. The evidence does not disclose the general financial circumstances of Mr and Mrs Tuckerman. It is possible that over the time that it takes for the court to determine the plaintiffs' claim, Mrs Tuckerman may increase the amount of the mortgage in a way that might prejudice the satisfaction of any judgment that the plaintiffs may obtain against Mr Tuckerman.
19. On the other hand there was no evidence that Mrs Tuckerman has any need to deal with the Oatley property in any manner that may be inhibited by the imposition of an appropriate freezing order in relation to the Oatley property.
20. As I have noted above, if it is not established that Mr Tuckerman was to be solely responsible for repayment of the $672,000 debt out of his share in the proceeds of sale of the Ashfield property, then his contribution to the repayment to St George was about $480,000. It would be about $210,000, if Mr Tuckerman was solely responsible for repayment of those decks.
21. In my judgment, in all of the circumstances, it is justified that the court make a freezing order in relation to Mrs Tuckerman's ownership of the Oatley property, that is limited to protecting the plaintiffs in relation to a sum of $500,000. It is appropriate to adopt a round figure at this stage of the proceedings, as the calculations I have undertaken above are broad and approximate. Protection of the plaintiffs in that amount should cover the highest claim that the present evidence suggests they may have against Mrs Tuckerman that is seriously arguable.
22. The freezing order that has already been agreed in relation to Unit 1 will protect the plaintiffs in respect of any claim they may be able to make in relation to the realisation of any judgment against Mr Tuckerman in respect of that property.
23. Mr and Mrs Tuckerman have not asked for a condition to be imposed upon the making of a freezing order against Mrs Tuckerman in respect of the Oatley property that the plaintiffs commence and prosecute s37A, or any other proceedings, and prosecute those proceedings with due diligence.
24. There is no evidence that the making of a freezing order against Mrs Tuckerman in respect of the Oatley property, limited to protecting the plaintiffs up to an amount of $500,000, will be likely to cause any identified damage or other detriment to Mrs Tuckerman. The solicitor for the plaintiffs gave evidence that the first plaintiff has a 8/10 interest in a property at 48 Moree Street, Gordon that appears to have been purchased in 2013 for $2,239,000, and is subject to a mortgage to secure a debt that was $1,567,300 as at 6 June, 2014. She also has equity of $140,000 in a property on the Gold Coast. I conclude that the usual undertaking as to damages the plaintiffs will be required to give will be valuable.
25. I will make the orders sought by the plaintiffs in par 1(a)(i) and 1 (b)(1) of the amended notice of motion. However the relief sought in par 1(b)(i) must be amended so that it is limited to protecting the plaintiffs in respect of the amount of $500,000.
26. I will ask the plaintiffs to amend the draft consent short minutes of order to reflect the conclusions in these reasons for judgement.
27. The draft consent short minutes of order already provide for the defendants to have liberty to apply to the court.
28. I will hear the parties as to costs. I have already noted that the hearing of the application was prolonged by the need for the plaintiffs to serve additional evidence.
29. The exhibits may be returned in accordance with the Rules.

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