Michaelopoulos v Pomering

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3383/01 CHRISTINE MICHAELOPOULOS -v- CHERYL POMERING and ORS JUDGMENT 1 MASTER: There are presently before the Court various interlocutory applications. 2 By notice of motion filed on 24 April 2003 the Plaintiff, Christine Michaelopoulos, seeks injunctive relief against the First Defendant, Cheryl Pomering, concerning various pieces of real property and concerning the rents from those properties. 3 An amended notice of motion was filed by the Plaintiff on 11 July 2003, the first day of the hearing before me. 4 By notice of motion filed on 22 May 2003 the First Defendant, Cheryl Pomering (to whom in this judgment I shall generally refer as "the Defendant"), seeks essentially an order for the withdrawal of certain caveats in respect to various pieces of real property, (including most of those properties which are the subject of the foregoing application of the Plaintiff). The operation of those caveats was on 9 August 2001 by consent extended until further order of the Court. By her notice of motion the Defendant also seeks the dissolution of a certain order said to have been made by consent on 6 July 2001. (I observe that, in fact, no order of that nature was made on 6 July 2001. However, on that date the Court noted an undertaking given by the Defendant to the Court in respect to the possession by the Plaintiff of certain property situate at and known as 21-23 Cary Street, Marrickville. As I understand it, the parties are content to accept that the relief sought by the Defendant in respect to the orders of 6 July 2001 is that the Defendant be released from the foregoing undertaking noted by the Court as paragraph 2 in those orders.) 5 By that notice of motion the Defendant also seeks an order that there be a separate trial of the issue of whether the Property (Relationships) Act 1984 applies to the relationship between the Plaintiff and the Defendant. 6 On 11 July 2003 Justice Austin, as Duty Judge in the Equity Division, made orders referring to me the hearing and determination of the aforesaid notices of motion. 7 The substantive proceedings were instituted by statement of claim filed (pursuant to leave in that regard granted on that day by Mr Justice Young, Chief Judge in Equity) on 3 July 2001. That pleading has subsequently been on two occasions amended, the present pleading being the further statement of claim filed on 4 December 2002. 8 That pleading contains 55 prayers for relief. Those prayers include relief under the Property (Relationships) Act 1984; relief in respect to an asserted resulting trust, an asserted constructive trust, an asserted equitable charge or lien; relief, including the taking of an account, in respect to an asserted partnership between the Plaintiff and the Defendant; and relief in respect to an asserted contract. 9 I have had the benefit of receiving written outlines of submissions from Counsel for the Plaintiff and for the First Defendant (those being the only parties involved in the present applications before me). After I had reserved my decision, a further written outline (entitled "Synopsis of the case for the First Defendant") was filed on behalf of the First Defendant on 3 August 2004. Those documents will be retained in the Court file. 10 It will be appreciated that the notices of motion presently before me are interlocutory applications, and that I am not conducting the final hearing of the proceedings. In this regard it is appropriate to record that on 23 May 2003 the aforesaid notices of motion were fixed to be heard by me on 11 July 2003 and that the estimated length of the total hearing of those notices of motion was one day. The hearing not having concluded on 11 July 2003, that hearing was adjourned to 15 September 2003, it being estimated that the balance of the hearing would occupy only that one further day. The hearing occupied the entirety of that day, and, not having then concluded, it was adjourned to Monday, 8 December 2003, the Court also reserving 9 and 10 December 2003. The hearing still not having concluded by the lastmentioned of those dates, it was yet further adjourned to Monday, 5 April 2004, the Court also reserving 6, 7 and 8 April 2004. That is, the hearing, which originally had been estimated by those in the best position to make such an estimation (the legal representatives of the respective parties) as being one day, in the event occupied nine days, divided into four separate tranches, with the concomitant inconvenience and delay both to the legal representatives of the parties and to the Court. On the lastmentioned date, 8 April 2004, I reserved my decision. 11 The present application of the Plaintiff (which, as I have already observed, is an interlocutory application) has as its purpose the preservation of the status quo pending the final determination of the proceedings. It is submitted on behalf of the Plaintiff that, unless orders of the nature presently sought are made, there will be nothing to prevent the Defendant from disposing of or charging or otherwise dealing with the properties which are the subject of the application and from dissipating the proceeds of such sale or mortgage. Thus, so it is submitted on behalf of the Plaintiff, even if she be successful in the substantive proceedings, she would be deprived of the fruits of her victory. 12 It is submitted that, in such circumstances, the Court needs to be satisfied only that there is a serious question to be tried, and that the balance of convenience favours the granting of the interlocutory relief sought. 13 The serious question is, so it is submitted, the entitlement of the Plaintiff to an interest in any or all of the various properties which are the subject of the present application. It is not necessary for the Court to be satisfied that the Plaintiff at the final hearing will ultimately be successful. It is necessary only that the Court be satisfied that the Plaintiff's claim is not doomed to failure. It is the submission of the Defendant, however, that the Plaintiff's claim against her is, in fact, doomed to failure. 14 The Defendant points to the fact that, according to the pleading, each of the foregoing asserted causes of action is substantially grounded upon the alleged financial contributions of the Plaintiff, which are particularised in paragraph 7 of the further amended statement of claim. 15 By that further amended statement of claim the Plaintiff alleges that she and the Defendant were in a domestic relationship from early 1992 until November 1999. The phrase "domestic relationship" is defined in section 5 of the Property (Relationships) Act as including a de facto relationship. The phrase "de facto relationship" is, for the purposes of the statute, defined in section 4 of the Act. The Property (Relationships) Act was amended in 1999 in order to remove from the foregoing definitions any reference to the gender of the parties to the relevant relationship. 16 In the instant case it is alleged by the Plaintiff in her statement of claim that she and the Defendant were in what may compendiously be referred to as a same sex relationship. 17 By her defence (filed on 26 June 2003) the Defendant does not deny the nature of the relationship between herself and the Plaintiff. However, she disputes the period of that relationship, asserting that it commenced in 1993 and concluded in December 1998. Further, she denies that the Property (Relationships) Act has application to that relationship, submitting that the relationship asserted by the Plaintiff terminated in 1998, before the amendment to which I have already referred had the effect of bringing such same sex relationships within the ambit of the statute, that amendment having application only on and from 1 July 1999. 18 Further, the Defendant points to the fact that, even if the statute does have application to the relationship between the parties to the present proceedings, the substantive claim has been brought by the Plaintiff after the expiry of the two year limitation period prescribed by section 18 of the Act. 19 It is for those reasons that the Defendant in effect seeks summary dismissal of the Plaintiff's claim under the Act. 20 Throughout the period of their relationship the parties, or at least the Defendant, were involved in a considerable number of real property transactions. Essentially, it was the case for the Plaintiff (who for more than twenty years has practised as a real estate agent) that she made financial contributions towards the purchases of many of those pieces of real property, whether or not she was shown on the title as being one of the registered proprietors of such property. 21 In respect to the properties which are the subject of the present proceedings the Plaintiff is not registered as one of the proprietors thereof. However, the Plaintiff asserts that, because of her direct financial contributions, the Defendant holds those properties on a resulting trust for the Plaintiff in the proportion of those contributions. 22 Further, that, because of her indirect financial contributions and because of the circumstances in which the properties were acquired and the nature of the relationship between the parties at the time of the acquisition of those properties, the Defendant holds those properties on a constructive trust for the Plaintiff in the proportion of those contributions, conformably with the principles in that regard enunciated by the High Court of Australia in such decisions as Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1985) 164 CLR 137. 23 It is in consequence of the foregoing asserted entitlements of the Plaintiff to interests under resulting trusts and to interests under constructive trusts that the Plaintiff seeks to maintain the caveats which she has lodged against the subject properties. 24 Further, as I have already observed, the Plaintiff claims an order for the adjustment of the interests of the parties in those properties, pursuant to section 20 of the Property (Relationships) Act. (It will be appreciated that a claim for such relief does not constitute an estate or interest in land, such as to entitle an applicant to lodge a caveat.) I have already recorded that the Plaintiff seeks an injunction restraining the Defendant from disposing of or charging or otherwise dealing with the subject properties, upon the ground that unless the status quo be maintained, the Plaintiff, if successful in her substantive claims (be that success grounded upon the existence of a resulting trust or of a constructive trust in her favour or upon her obtaining an order in her favour pursuant to section 20 of the Act), she is at risk of being deprived of the fruits of her victory. 25 The Defendant, on the other hand, has submitted that the Plaintiff has not established an entitlement to an injunction; that the Plaintiff's claims to an interest by way of a resulting trust or a constructive trust are doomed to failure (with the consequence that the caveats grounded upon such asserted interests can not be sustained); and, further, that the Plaintiff's claim for relief under section 20 of the Property (Relationships) Act is also doomed to failure - firstly, because the statute had no application to a same sex relationship at the time when the parties were in such a relationship; and, secondly, because, in any event, the Plaintiff has brought that claim more than two years after the termination of the relationship. 26 The principles upon which the Court will grant an interlocutory injunction in order to preserve the subject matter of proceedings in its present state pending a final hearing are well recognised. An applicant for such an injunction must establish that there is a serious issue to be tried and that the balance of convenience favours the granting of such interlocutory injunctive relief. 27 It is submitted on behalf of the Plaintiff that there is a serious question to be tried. In particular, it is submitted that the Plaintiff's affidavit of 20 August 2003 clearly shows what is described as "the trail of funds" and that those funds of the Plaintiff were paid to the Defendant, thus enabling the purchase of the properties referred to in paragraph 5 of the notice of motion to be effected. Although the Plaintiff recognises that the absence of records has caused her difficulty in tracing particular proceeds through particular properties, nevertheless it is submitted on her behalf that those properties are held, at least in part, on trust for the Plaintiff. 28 Further, and in any event, it is submitted on behalf of the Plaintiff that the evidence demonstrates a substantial financial contribution by the Plaintiff to the properties presently registered in the name of the Defendant, such as would give rise to a significant order under the Property (Relationships) Act. 29 The Plaintiff, in respect to her submission that there is a serious issue to be tried, relies upon various orders and undertakings which have been made or given by consent of the parties (including the undertaking of 6 July 2002 given by the Defendant, to which I have already referred). 30 As to the balance of convenience the Plaintiff submits that her claim could be entirely defeated if the properties are sold and the proceeds not accounted for or if the properties be further encumbered. Even if the Plaintiff not be ultimately successful in obtaining relief in respect to the asserted resulting trusts and constructive trusts, and succeeds only in obtaining relief pursuant to section 20 of the Property (Relationship) Act, it is the submission of the Plaintiff that the properties which are the subject of the notice of motion are the only assets available to the Defendant out of which she could satisfy any such order in favour of the Plaintiff. Indeed, relief under the Act could, so it is submitted on behalf of the Plaintiff, include an order for a transfer of one or more of those properties to the Plaintiff. 31 It is submitted on behalf of the Plaintiff that, in the absence of the orders sought, the Defendant could entirely defeat any substantive relief which the Plaintiff might ultimately obtain, by dealing with the properties before the final hearing. The Plaintiff also submits that it follows axiomatically that if the Plaintiff has an equitable interest in the property she also has an interest in the rents from those properties (the rents from those properties also being the subject of the interlocutory relief claimed by the Plaintiff). Therefore, she submits it is important that the rents be accounted for and that any net rents be retained, so that a proper accounting can in due course be conducted. 32 It is submitted that if an order of the nature sought by the Plaintiff for the preservation of the status quo not be made, the Plaintiff may suffer a significant and real prejudice. 33 The Defendant, on the other hand, submits that the effect of the orders sought by the Plaintiff, and of the continuation of the caveats, will not be the preservation of the status quo. Instead, the effect of those orders will be to maintain a situation of great economic and personal hardship for the Defendant, because it will prevent her from carrying on her principal business of the acquisition, renovation and sale of properties, whilst at the same time denying her access to the property which was her home until late 1998 (being 21-23 Cary Street, Marrickville). 34 The Defendant disputes the submission of the Plaintiff that the Plaintiff has an interest in the subject properties "because of the direct financial contribution made to them and because they were acquired as part of the relationship with the intention of the parties that both would benefit from their purchase". The Defendant in response says that there is no evidence at all of any direct financial contribution by the Plaintiff to the purchase of any property, let alone any of the six properties which are now the subject of caveats lodged by the Plaintiff. The Defendant also submits that the second assertion (that the properties were acquired as part of the relationship between the parties with the intention that both parties would benefit from their purchase) is not supported by the evidence. The Defendant also submits that that latter assertion, as a matter of law, is without substance. 35 The Defendant also submits that, even if ultimately the Plaintiff succeeds in obtaining an order for the adjustment of interests in property pursuant to the Property (Relationships) Act, any such order would be met out of the entirety of the financial resources of the Defendant, and that relief under the Act does not give the Plaintiff a specific right to any particular piece of property. 36 I have already referred to the fact that the hearing of these interlocutory application occupied eight days. Most of that hearing time was occupied by oral evidence, especially cross-examination of the two parties. 37 Much of that cross-examination had as its apparent purpose the establishment by the Defendant that the Plaintiff either did not make, or would not have been in a financial position to make, contributions of the nature asserted by her in paragraph 7 of the further amended statement of claim. I consider that that evidence would have been more appropriate to a final hearing of the substantive proceedings rather than to an application for interlocutory relief. 38 It is not necessary in an application of the nature of that presently before the Court for the Plaintiff to establish that she will inevitably be successful at a final hearing. It is necessary only that she establish that there is a serious issue to be tried - that is, in the instant case that her claim is not doomed to failure. 39 It is not necessary, indeed I do not consider it appropriate, for me in the present applications to make specific findings concerning the various factual matters relied upon by the Defendant as establishing that the Plaintiff either did not or could not make contributions of the nature alleged by her. Suffice it to say, that I consider that there is evidence which establishes in this regard that there is a serious issue to be tried. That is, I consider that there is evidence which, if accepted, would support the existence of the contributions asserted by the Plaintiff. The Plaintiff should not be deprived of the opportunity of having her claim determined by the appropriate tribunal at a final hearing. 40 I would, however, here observe that the fact that the Defendant at an earlier stage in the proceedings may have consented to various interlocutory orders and may have given the undertaking of 6 July 2001 does not in my view necessarily establish that there is a serious issue to be tried; neither can such consent or undertaking of the Defendant preclude the Defendant from now disputing that there is such a serious issue to be tried. 41 In respect to the balance of convenience, it was submitted on behalf of the defendant that a granting of the injunctive relief and a continuation of the operation of the caveats would occasion significant hardship to the Defendant. Nevertheless, the Defendant was not able to identify the various moneys which she had received through two bank accounts (the St. George account and the Viridian account). In these circumstances, I am not satisfied that there would be any significant hardship to the Defendant. Further, I consider it to be a legitimate inference form the evidence presently before the Court that the Defendant intends further to encumber the present properties the subject of the present proceedings, in order to acquire additional properties in the course of her business activities.

42 As to the question of whether or not the amendments to the Property (Relationships) Act which took effect on 1 July 1999 have application to the relationship between the Plaintiff and the Defendant, it will be appreciated that there is a serious dispute between the parties as to the date upon which that relationship terminated, the Plaintiff asserting that it terminated in November 1999 (that being after the commencement of the appropriate legislative amendment), whilst the Defendant asserted that it terminated in December 1998 (that being before the commencement of the foregoing amendment). It will be appreciated, therefore, that there must ultimately be made a finding as to the date of the termination of the relationship. The Plaintiff should not be precluded from having that matter decided in the course of a final hearing. 43 Similarly, the Defendant submits that the Plaintiff's claim under the Property (Relationships) Act is doomed to failure because it was not instituted within two years of the termination of the relationship. It will be appreciated, however, that the proceedings were instituted on 3 July 2001. Thus, it is of importance to establish whether the relationship terminated before July 1999. 44 But, in any event, the Court has a discretion under section 18 of the Act to allow proceedings to be instituted after the expiry of that two-year period. It is not usual for an application for an extension of that limitation period to be dealt with separately and before a final hearing of the substantive claim for relief under the Act. The factual matters relevant to the determination of such an application for extension may emerge only at the final hearing. In the instant case, during the course of oral submissions I stated that I did not propose to make a finding at this stage of the proceedings that the Plaintiff's claim under the Act is defeated by the expiry of a limitation period. I expressed the view that I considered this to be a matter which should be properly determined after the totality of the evidence has been presented at a final hearing of the proceedings. 45 In respect to the present applications for interlocutory relief, the Defendant made submissions concerning the credit of the Plaintiff. I do not consider that it is appropriate in interlocutory applications of the nature of those presently before me that I should determine that application on issues of credit of the parties; or, indeed, in the circumstances of the instant case that I should make findings as to credit. 46 The Defendant in this regard points to the inconsistencies between the evidence given by the Plaintiff in her affidavit of 8 May 2003 (and maintained by her under cross-examination) concerning direct financial advances made by her to or for the Defendant and the statutory declaration signed by her on 22 September 1999 (exhibit 10). The Plaintiff's responses under cross-examination that she may not have read that statutory declaration before signing it are relevant to the reliance which at a final hearing may be placed upon the Plaintiff's evidence. But those inconsistencies and the explanations offered by the Plaintiff in that regard should not deprive the Plaintiff of her entitlement to have disputed questions of fact determined by the appropriate tribunal at the final hearing of the proceedings.

47 It will be appreciated that the views which I have expressed concerning the serious issue to be tried and concerning the claim of the Plaintiff not being doomed to failure are also relevant to (indeed, determinative of) the question of the continuation of the operation of the caveats. 48 Unless I were to be satisfied - which I am not - that the claim of the Plaintiff in respect to a resulting trust and a constructive trust was without substance and that she had not established an entitlement to have her claim determined at a final hearing, then it follows that the caveats which she had lodged in order to protect her interests in respect to the subject properties must be maintained until the final hearing. 49 Accordingly, I propose to grant the injunctive relief sought by the Plaintiff in the amended notice of motion which was filed by her on 11 July 2003. I propose to dismiss the application by the Defendant in respect to the withdrawal of the caveats, and for a separate trial of whether the Property (Relationships) Act has application to the relationship between the Plaintiff and the Defendant. In respect to the Defendant's claim for relief concerning certain rental moneys received by or on behalf of the Plaintiff, it should here be recorded that at the conclusion of submissions Senior Counsel for the Plaintiff stated that the Plaintiff was prepared to consent to an order in terms that moneys held by the Plaintiff in respect to the Cary Street property (being the subject of prayer 10 in the Defendant's amended notice of motion of 5 April 2004) be paid to the Land Tax Office. Accordingly, I propose to make an order along the lines sought by the Defendant in paragraph 10, but requiring payment by the Plaintiff, not to the First Defendant but to the Chief Commissioner of Land Tax.

50 It is not appropriate that the Court should grant as interlocutory relief orders in the nature of an account relating to past rent received by the Defendant or (since an estate agent is to be appointed to collect future rents) relating to future rent to be received by the Defendant (such relief being sought in paragraphs 6 and 7 in the notice of motion of 11 July 2003). Neither is it appropriate that by way of interlocutory relief the Court should make orders sought by the Defendant concerning rent received by the Plaintiff in respect to the upstairs unit at 21 Cary Street, Marrickville or in respect to Lot 9, Dusthole, Berowra Waters, or concerning a certain sum of money said to be held by the Plaintiff in trust for the Defendant. 51 I propose to stand the matter over to the Registrar's List for further directions. 52 Accordingly, I make the following orders:

(1). I make orders as sought in paragraphs 1 to 5 and paragraph 8 in the notice of motion filed by the Plaintiff on 11 July 2003. (2). I order that the balance of the aforesaid notice of motion stand over generally, with liberty to restore on seven days' notice.

(3) I make an order as sought in paragraph 10 in the amended notice of motion filed by the First Defendant on 5 April 2004, substituting for the words "the First Defendant" where firstly appearing the words "the Chief Commissioner of Land Tax". (4). I order that the aforesaid amended notice of motion filed by the First Defendant on 5 April 2004 be otherwise dismissed.

(5). I order that the costs of each of the aforesaid notices of motion be the costs of the Plaintiff in the proceedings. (6). I stand the proceedings over to 19 October 2004 before the Registrar.

Last Modified: 10/15/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.