42 Since transfers to Mrs. Arsenic have been registered, I may need to consider whether she is protected by the indefeasibility provisions of the Real Property Act.
43 Finally, if I come to the view that relief should be given under s.37A leaving aside any consideration of the Local Court order, it will be necessary to consider the effect of the Local Court order and whether any relief can be given having regard to its existence, and if it can, precisely what relief should be given. This may also involve considering an application to amend made by the plaintiff.
44 I will deal first with all issues apart from the effect of the Local Court order, and then I will consider the effect of that order.
ISSUES APART FROM LOCAL COURT ORDER
Submissions
45 Both sides have provided written outlines of submissions, and I will leave them with the papers. In my outline here, I will refer mainly to the oral submissions.
46 Mr. Harris for the plaintiff first dealt with the credibility of Ms. Arsenic. He pointed to what he claimed was inconsistent evidence which she gave concerning the existence or otherwise of a de facto relationship with Mr. Savic, and also concerning assistance from Mr. Savic in making mortgage payments, particularly from rent from the Budgewoi property. He pointed out that Ms. Arsenic admitted that she doesn't always tell the truth, although she claimed that she did tell the truth when she took an oath on the Bible. He also submitted that she was not responsive to many questions, such as the signature on the document evidencing loans from Drago Posudio. Mr. Harris submitted I should find that she did not set out to tell the truth to the Court.
47 Mr. Harris submitted that s.37A of the Conveyancing Act may apply even if the debts in question are not in existence or even in contemplation at the time of alienation: Barton v. Deputy Commissioner of Taxation (1974) 131 CLR 370 at 374; Mackay v. Douglas (1872) LR 14 Eq. 106. "Intent to defraud" in s.37A includes an intention to defeat, delay or hinder: Lloyds Bank v. Marcan (1973) 1 WLR 1387 at 1392, Electrical Enterprises v. Rodgers (1988) 15 NSWLR 473 at 497. The intent can be inferred from the circumstances: P.T. Garuda Indonesia v. Grellman (1992) 35 FCR 515; Cannane v. J. Cannane Pty. Limited (1998) 72 ALJR 794 at 798. Where a defendant elects to give no evidence, a court can be bold in drawing inferences: S.S. Pharmaceutical Co. v. Qantas (1991) 1 Ll.LR 288 at 293; Jones v. Dunkel (1959) 101 CLR 298.
48 The evidence of Ms. Arsenic as to her intentions was irrelevant. She was not a purchaser within s.37A. In any event, her evidence as to her intentions should be rejected.
49 Mr. Aldridge for Ms. Arsenic submitted that she was a purchaser: by accepting the particular orders under the De Facto Relationships Act, she put herself in a worse position as regards making a further claim. In agreeing to the consent orders, she gave up any further rights under the Act, and undertook to accept obligations under the mortgage. Furthermore, she acted in good faith. She was concerned to make provision for her children. Although she was aware of Ms. Silvera's court proceedings, her evidence was that she was told they had very little prospects of success. The case against Mr. Savic was a novel one, and the Court should accept Mrs. Silvera's evidence that her intention was to protect her children. Furthermore, the Court should accept Mrs. Savic's evidence concerning her relationship with Mr. Savic, and in particular that there was no continuing de facto relationship. He was a regular visitor to the house, he looked after the children, and slept over on occasions. Ms. Arsenic herself worked most nights.
50 If any order was made, it should be limited to the Budgewoi property. There was a mortgage to the bank of the Macquarie Fields property, and third parties should not be prejudiced. Furthermore, Ms. Arsenic had borrowed money from the bank in order to build a house on the property, and she was paying off this mortgage.
51 In addition to referring to the cases of Cannane and Grellman, Mr. Aldritch also relied on Official Trustee in Bankruptcy v. Mitchell (1992) 38 FCR 364 at 371-3, and Williams v. Lloyd (1934) 50 CLR 341.
Decision
52 On the question of the credibility of Ms. Arsenic, in my opinion she was prepared to give false evidence to the Court when she believed it suited her interests. In her affidavit to the Local Court, sworn to support an application for a consent order under the De Facto Relationships Act, she swore that she entered into a de facto relationship with Mr. Savic in 1982, which spanned approximately five years. In her evidence to the District Court on 20th November 1996, she asserted that there never was a de facto relationship. In her affidavit sworn for these proceedings, she swore "I have never considered the relationship as living together as husband and wife". In her oral evidence before me, she claimed confusion as to what constituted a de facto relationship. I accept that there are cases in which the existence or otherwise of a de facto relationship is unclear, and that this may be so particularly where one of the parties spends a lot of time away from the other, as apparently was the case here between 1982 and about 1988. However, from the terms and manner of her evidence before me, I have reached the clear opinion that Ms. Arsenic is prepared on this matter to say what she believes at the time to be to her advantage, and to take refuge in confusion when this suits her purpose.
53 In my opinion also, Ms. Arsenic is prepared to give false evidence about her financial means. I do not rely at all on the claim she made for privilege against self-incrimination. In her affidavit in the Local Court, she asserted to the effect that she had made the mortgage repayments on the Macquarie Fields property, because of Mr. Savic's poor financial situation since his work accident. However, it is clear that Mr. Savic was for most of the relevant time receiving over $600.00 per month rental on his Budgewoi property, in addition to an invalid pension; and Ms. Arsenic conceded that at least some of the mortgage payments were made from money he provided. In my opinion, Ms. Arsenic prevaricated about her own means, and failed to produce documents which would be expected if she were honestly setting out to properly inform the Court about her financial situation.
54 Turning to other evidentiary issues, I accept that in general statements made out of court by Mr. Savic are not any evidence against Mrs. Arsenic, even on the question of what Mr. Savic's intention was in making the transfers. However, some of his statements are admissible against Ms. Arsenic, for limited purposes.
55 Mr. Savic's loan application of 14th September 1994, and associated documents, are in my opinion business records showing that he obtained a loan of $25,000.00 towards the purchase of the Macquarie Fields property for $70,000.00. I do not think the fact that he gave his address as 15/412 The Horsley Drive, Fairfield in that document, to the police on 26th November 1994, and in his affidavit in support of his District Court Defence, is admissible against Ms. Arsenic. However, I note that Ms. Arsenic said in her evidence that Mr. Savic gave her address as his mailing address. The statements made by Mr. Savic about his intention on 2nd June 1995 and again on 6th June 1995 are in my opinion admissible evidence of his intention or wishes at the time: Evidence Act s.72. The contents of his affidavit of 2nd November 1995 may be admissible as to his intention, as against Ms. Arsenic, if I find them to be deliberate lies.
56 On the question of whether the failure of Mr Savic to give evidence in the case can give rise to a Jones v. Dunkel inference against Ms. Arsenic, I consider that other material in the case justifies a conclusion that there is a continuing close relationship between them, so that such inference can be drawn. First, there is Ms. Arsenic's admission that he would use her address as his mailing address, and the fact that it was given as his address in their joint document of 6th June 1995. Next, there is the process server's evidence that on 26th September 1996, Ms. Arsenic said that Mr. Savic lived at that address: the process server was not cross-examined on that evidence, and I accept it. Next, there is the payment by Ms. Arsenic over a considerable period of time of Mr. Savic's very substantial legal fees. The continuing relationship may or may not be a de facto relationship, but in my opinion it is sufficiently close and cordial to make it appropriate that the Jones v. Dunkel inference be drawn.
57 Next, I consider the relationship and legal and equitable rights of Ms. Arsenic and Mr. Savic at the time of the Local Court proceedings.
58 In my opinion, there was then a close and reasonably cordial relationship. On the balance of probabilities, I find they were living in the same premises, with their three children. I find that this was so on 6th June 1995 and 26th September 1996, so that it may be concluded that it was also the case in November 1995.
59 Turning to their legal and equitable rights in the various properties, it seems clear that Mr. Savic was the sole owner of 60 Doyle Avenue: Ms. Arsenic claims she lent him $5,000.00 to help with the purchase of the land, and $8,000.00 to help with the building of the house, but she does not claim that these were other than loans. It also seems clear that Ms. Arsenic was the sole owner of 58 Doyle Avenue and the unit in The Horsley Drive. As regards Macquarie Fields, Ms. Arsenic says she put in $20,000.00, Mr. Savic put in $30,000.00, and the bank contributed $25,000.00. She also says that Mr. Savic owed her $13,000.00, and that instead of repaying that, he would help her buy the land. Although for reasons I have given, I cannot rely on her evidence, I think all the circumstances support the view that she made a substantial contribution to the purchase of that property $10,000.00 of the $15,000.00 borrowed from Drago Posudio was borrowed at a time when that money too could have gone towards the property. On the whole, I am satisfied that Ms. Arsenic had an equitable interest in the Macquarie Fields property, and that is confirmed by contributions which I am satisfied she has made towards repaying mortgages on the property. Doing the best I can on the meagre and unsatisfactory evidence that I have, I find that her interest in the Macquarie Fields property, prior to the Local Court proceedings, was a one-half interest.
60 Next, I consider the intentions and understandings of the parties at the time of the Local Court proceedings, and the subsequent transfers.
61 In my opinion, there was no substantial change in their relationship at any time prior to the Local Court proceedings that would have given rise to any occasion for the application for such orders or the making of such orders. They were still living together in the same house. In my opinion, the Vine Street address given by Mr. Savic was a deliberately false address. In my opinion, both parties gave knowingly false evidence to the Local Court concerning their relationship, their means (in particular, omitting reference to Mr. Savic's rent from the Budgewoi property), and the source of payments for the Macquarie Fields mortgage. The consequence of the transaction was that Mr. Savic was left with substantially no assets. The timing of the transaction was shortly after Ms. Silvera's Statement of Claim was served. I have no evidence from Mr. Savic. I have found that Ms. Arsenic has given false evidence. In those circumstances, in my opinion I am justified in drawing the inference against Ms. Arsenic that the application for the Local Court orders and the consequent transfers were made by Mr. Savic with intent to defraud creditors, within the meaning of s.37A of the Conveyancing Act; and in particular, to defeat any claim Ms. Silvera might have against him.
62 In my opinion, Ms. Arsenic shared this intention with Mr. Savic, so that she is not protected by s.37A(3). In those circumstances, I do not need to consider whether the exercise of rights under the De Facto Relationships Act could be regarded as making her a 'purchaser' within that subsection. Furthermore, because of that finding, it is in my opinion clear that the indefeasibility provisions of the Real Property Act do not protect Ms. Arsenic. I am inclined to think that if a transferee acted in good faith and had no notice of the intent to defraud creditors, but did not have any protection from s.37A(3) because he or she was not a purchaser, the provisions of s.37A of the Conveyancing Act would prevail over the indefeasibility provisions of the Real Property Act. It is clear that the indefeasibility provisions of the Real Property Act do operate in favour of volunteers, but s.37A is a more specific provision which itself identifies the transferees against whom it is not to prevail. However, for reasons I have given, this is something I need not decide in this case.
63 It follows that, apart from the possible effect of the Local Court order, my opinion is that a case is made out in relation to the 60 Doyle Avenue property and a one-half interest in the Macquarie Fields property.
EFFECT OF LOCAL COURT ORDER
Submissions
64 Mr. Harris submitted that the Local Court had no power to make the order made on 7th November 1995. The evidence of the parties was that the de facto relationship ended in about 1987 and, since no leave was sought under s.18(2) of the De Facto Relationships Act, the two year limitation provided by s.18(1) of the Act applied. Furthermore, s.10 of the De Facto Relationships Act provides that a Local Court shall not have jurisdiction under the Act in relation to property of a value in excess of the amounts prescribed by s.12 of the Local Courts (Civil Claims) Act 1970, namely $40,000.00. In any event, an order that Ms. Arsenic transfer to Mr. Savic certain property would not be inconsistent with the Local Court order: it contained no declaration of the interests of the parties, but merely required certain transfers which were carried out. The Local Court order accordingly is spent.
65 Alternatively, Mr. Harris submitted that the Local Court could set aside an order made pursuant to a deception of the Court: Brooke v. Lord Mostyn (1864) 33 Beav. 457 at 459. This Court could make an appropriate declaration, and then make orders providing for an application to the Local Court to set aside its own order. Any necessary amendment to the summons to provide for that type of relief should be granted.
66 Mr. Aldridge submitted that while the Local Court order was on foot, Ms. Silvera could not seek orders which conflicted with it: Re Baxter (1986) 10 Fam.LR 758; Chamberlain v. Deputy Commissioner of Taxation (1988) 164 CLR 502. Further, the fact that the transfers were effected under compulsion of law meant that the requisite intent under s.37A of the Conveyancing Act must be lacking. This Court does not have the power to declare the Local Court order was made without jurisdiction, as sought in the summons: any approach to this Court must be by appeal or application for certiorari. Certiorari would not be available: Craig v. The State of South Australia (1995) 184 CLR 163. In any event, s.12(5) of the De Facto Relationships Act states that any failure of the Local Court to comply with the requirement to transfer matters where the property concerned was beyond the prescribed value does not invalidate any order; and failure to obtain leave under s.18(2) of the Act could not invalidate a consent order.
67 Mr. Aldridge submitted that no amendment had properly been sought to seek orders providing for an application to the Local Court. In any event, such orders would be inappropriate. There was no set priority between the rights of de facto spouses and the rights of creditors: cf. Deputy Commission of Taxation v. Swain (1988) 20 FCR 507.
Decision
68 Dealing first with Mr. Aldridge's submission that the intent required by s.37A could not be shown where the transfer was made pursuant to a Court order, I note that in this case I have found that the intent to defraud creditors applied to the whole transaction of applying for the consent order and effecting the transfers. In those circumstances, I see no reason why s.37A should not apply.
69 The case of Re Baxter (1986) 10 Fam.LR 758 does support Mr. Aldridge's contention that this Court should not make orders inconsistent with the Local Court order, while it stands. In that case, a husband and wife in 1959 entered into a terms contract with the Victorian Housing Commission to purchase a house as joint tenants. In 1971, the husband became bankrupt; and in 1976, he was discharged from bankruptcy. As a result of the bankruptcy, the Official Trustee in Bankruptcy claimed that the equity of the house was owned by himself and the wife as tenants in common in equal shares. In 1984, the wife applied to the Family Court for orders under the Family Law Act with respect to the house. In October 1984, the Family Court declared that the wife was the sole proprietor of the equity in the house, and ordered the husband to transfer all his interest in the terms contract to the wife. Subsequently, the Trustee applied to the Federal Court seeking directions as to whether the husband's interest in the house was vested in the Trustee. Northrop, J. held that the Federal Court should not determine the Trustee's application for orders inconsistent with the Family Court orders until the Family Court orders were set aside. This was notwithstanding his view that certain authorities to which he referred suggested that the Family Court had no power to make the declaration which it made in October 1984.
70 To somewhat similar effect is the case of Morris v. Maroudas (1986) 70 ALR 98. That case concerned a franchise agreement entered into in April 1983 between Mr. and Mrs. Maroudas and Mr. and Mrs. Morris. Mr. and Mrs. Morris breached that agreement in June 1983. In July 1983, Mr. and Mrs. Maroudas commenced action in the District Court of Western Australia for damages for breach of that agreement. In September 1984, Mr. and Mrs. Morris executed deeds of assignment of their property to a trustee appointed for the purposes of Pt.X of the Bankruptcy Act 1966 (Cwlth). In January 1985, Mr. and Mrs. Maroudas obtained judgment in the District Court for $48,660.00 for breach of the franchise agreement. In December 1985, Mr. and Mrs. Morris applied to the Federal Court for orders that the judgment of the District Court be set aside (or that execution of the judgment be stayed), and for a declaration that they were released from the debt or liability claimed in the District Court proceedings. The Full Federal Court (Toohey and Spender, JJ., Northrop dissenting) held that the Federal Court had jurisdiction to hear the application; that there was no power in the Federal Court to set aside the District Court judgment; that Mr. and Mrs. Maroudas were owed a provable debt by Mr. and Mrs. Morris at the date of execution of the deeds of assignment; and that the appellants were entitled to a declaration that, by reason of s.230(1) of the Bankruptcy Act, the deeds of assignment executed by Mr. and Mrs. Morris operated to release them from their liability for breach of the franchise agreement. Spender, J. expressed the view that the Federal Court could also have made an order preventing Mr. and Mrs. Maroudas from executing their District Court judgment. Toohey, J. considered that such an injunction should not be granted, because it would effectively tie the hands of the District Court, notwithstanding the judgment entered by that Court.
71 However, in my opinion, the present case can be distinguished from both those cases. In both those cases, there was a plain inconsistency between the orders made in the Family Court and District Court respectively, and the orders sought from the Federal Court. In the former case, the Family Court had made a declaration of right; and in the latter case, there was a judgment for a sum of money. In the present case, the Local Court order did no more than to order a transfer of particular property from one person to another. Particularly in circumstances where that order was made by consent, and was obtained with the intention of defrauding creditors, as I have found, it should be given no wider effect. I am prepared to accept that an order directly setting aside the actual transfer made pursuant to the Court order would be inconsistent with the Court order; but in my opinion, s.37A can be given effect to in this case by other means.
72 What s.37A says is that the "alienation" is "voidable". In my opinion, when an application is made under s.37A to the Supreme Court, that Court can achieve the effect of avoiding the alienation by such measures as seem appropriate in the particular case. For example, the Court could declare that the effect of the Local Court order is spent by reason of its being carried out by the subsequent transfers, and then order appropriate re-transfers of the property. Such orders would not be inconsistent with the Local Court orders, nor could they give rise to any possible embarrassment by reason of the existence of conflicting Court orders.
73 For those reasons, notwithstanding the existence of the Local Court order, I would be prepared to order that Ms. Arsenic transfer to Mr. Savic the whole of her interest in the 60 Doyle Avenue property and one-half of her interest in the Macquarie Fields property. However, the object of this exercise is to provide property against which enforcement of the District Court judgment can be obtained. The re-transfer of the properties to Mr. Savic, followed by Writs of Execution and possible sale by the Sheriff, may not be the most effective way to achieve that end. It may be more appropriate to make declarations and orders that bring about an early sale of the 60 Doyle Avenue property, and the application of those proceeds towards that judgment, and possibly the costs in this case. If those proceeds are not sufficient, then consideration could be given as to what steps should be taken in relation to the Macquarie Fields property.
74 Because of the view I have taken, it is not necessary for me to decide whether or not I could have declared the Local Court order to have been made without jurisdiction, or set it aside, or made some provision for an application to be made to the Local Court to set that order aside. Because those matters were argued, I think it appropriate for me to express tentative views on them.
75 In my opinion, it would not have been appropriate to declare that the order was made without jurisdiction. In any event, as submitted by Mr. Aldridge, a lack of jurisdiction has not been affirmatively shown. Furthermore, there are difficulties in the way of this Court setting aside orders of the Local Court. Section 69(1) and (2) of the Local Courts (Civil Claims) Act 1970 are in the following terms:
69(1) Subject to subsection (2), all judgments and orders of a court exercising jurisdiction under this Act shall be final and conclusive.
(2) A party to proceedings under this Act who is dissatisfied with the judgment or order of the Court as being erroneous in point of law, may appeal to the Supreme Court therefrom.