White v Thompson

Julian John White (First Plaintiff / Applicant) Romeo Medina Libut (Second Plaintiff / Applicant) PARTIES : Byron Ward Thompson (First Defendant / Respondent) Jennifer Joy Thompson (Second Defendant / Respondent) Paul Weston as Trustee of the Bankrupt Estate of Byron Thompson (Third Defendant / Respondent)

Julian John White (unrepresented) COUNSEL : Romeo Medina Libut (unrepresented) D Brown (First and Third Defendants / Respondents) A Bingham (Second Defendant / Respondent)

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2008/00280717 JULIAN JOHN WHITE & ORS v BYRON WARD THOMPSON & ANOR JUDGMENT - EX TEMPORE

1 The background to the disputes between the parties is set out by Windeyer AJ in White & Anor v Thompson & Ors [2009] NSWSC 1103. On 9 April 2010 I dealt with some aspects of the Further Amended Notice of Motion filed on 6 April 2010 by the plaintiffs, Julian John White and Romeo Medina Libut, that included refusing an application for a stay of Windeyer AJ's orders. 2 The plaintiffs now seek the following orders in their Further Amended Notice of Motion: 2. That, as per Section 37A of the Conveyancing Act 1919 the purchase of the Somersby Property, comprising Folio Identifier 276/4889, is null and void.

That the Somersby property be sold and the proceeds placed in the Controlled Monies account as Seaforth Joint Venture assets and disbursed utilising the 28 February 2008 Seaforth Joint Venture accounting of Acting Justice Biscoe.

A Declaration that the Court Undertakings by Mr Thompson's counsel given on 13 May 2003 give rise to an equitable mortgage or equitable charge or equitable lien over the Somersby property, comprising Folio Identifier A/409546, securing the Seaforth Joint Venture parties accounting of Acting Justice Biscoe.

That, the Court Undertakings by Mr Thompson's counsel on 13 May 2003 be enforced.

That the Somersby property be sold and the proceeds placed in the Controlled Monies account as Seaforth joint venture assets and disbursed utilising the 28 February 2008 Seaforth Joint Venture accounting of Acting Justice Biscoe.

A Declaration that the Seaforth joint venture accounting entitlements or debts are secured creditors in relation to the voluntary bankruptcy of the Plaintiff, Mr Byron Ward Thompson commenced on or around 8 February 2008.

A Declaration that the First, Second and Third Defendants, Mr Paul Weston in persona and their solicitor's [sic] are in contempt of Justice Hamilton's Court Orders and Court Undertakings of 13 May 2003 by moving to dispose of and receive an interest of the Somersby property.

10A That, the Defendant's solicitors, as per Section 99 Civil Procedure Act 2005, are to pay all associated unnecessary costs.

10. Costs and Further or other Orders of the Honourable Supreme Court of NSW. 3 The plaintiffs are unrepresented. The first defendant, Byron Ward Thompson, and the third defendant, Paul Weston as Trustee of the Bankrupt Estate of the first defendant are represented by Mr David Brown, solicitor. The second defendant, Jennifer Joy Thompson, the wife of the first defendant is represented by Mr Alan Bingham, solicitor. Each of the defendants is a respondent to the Motion. Although not formally joined as respondents to the Motion, paragraph 8 of the Motion seeks declarations and orders against Mr Brown, Mr Bingham and also Mr Weston. 4 The applications in paragraph 8 in respect of the solicitors, Mr Brown and Mr Bingham and the Trustee in Bankruptcy, Mr Weston, have been dismissed. I have ordered that the plaintiffs pay those persons' costs on an indemnity basis and that they be prevented from taking any further steps until those costs have been paid. I have also ordered that those costs may be assessed forthwith. 5 The defendants have also proceeded with a Notice of Motion that is now the subject of Consent Orders: (1) that the plaintiffs only communicate with the defendants through their solicitors; and (2) that they not take any further steps in any respect in these proceedings without the leave of the Court. 6 In White & Anor v Thompson & Ors Windeyer AJ said: [35] …It would be an abuse of process for the plaintiffs to make some claim to proprietary interest in the whole or part of the Somersby property when first, their accounting proceeded on a different foot and second, when at least the interest of Mrs Thompson in the property was purchased from moneys due to her as a debt from her husband which were credited to him in the joint venture accounts. 7 His Honour also said:

[36] While a claim for interest in Somersby could have been brought as an alternative claim in the proceedings 2684/03 with the plaintiffs bound to elect between alternative remedies had that been done Mrs Thompson as joint registered proprietor would have had to be joined as a defendant. As any right to bring such a claim against Mr Thompson has now merged in the judgment obtained the plaintiffs ought to be estopped from bringing against Mrs Thompson a claim which if successful, would result in a judgment conflicting with that obtained. That would in my opinion be a clear abuse of process even though an additional party is involved. It is not an abuse in the nature of Reichel v Magrath (1889) 14 App Cas 665 as it is not the same case but it is a case which can no longer be brought against one defendant but which if it had been brought would have had to be brought against Mrs Thompson as well. The orderly administration of justice cannot allow this to be done. Cases where an estoppel has been found not withstanding an additional or new defendant has been involved include MCC Proceeds Inc v leman Bros International (Europe) [1998] 4 All ER 875; Morris v Wentworth-Stanley [1999] 2 WLR 470 and Rippon v Chilcotin [2001] NSWCA 142. The general principles in those cases as to abuse of process apply here.

[37] I add that irrespective of estoppel the claim against the share of Mrs Thompson in the Somersby property would fail. The plaintiffs were well aware that the contribution of Mr Thompson to the purchase price of Seaforth came from Mrs Thompson. When funds were available she was entitled to repayment. The price of a one half interest in Somersby was less than the debt. 8 On 9 July 2009 an undertaking was given to the Court by Mr Weston, as the Trustee in Bankruptcy of the Estate of the first defendant, that he would not deal with the Somersby property pending the plaintiff commencing proceedings. The plaintiff brought proceedings and they were the proceedings decided by Windeyer AJ on 15 October 2009. The plaintiffs failed to prove that they had a proprietary interest in the Somersby property. The orders made by Windeyer AJ included an order that "the undertaking of Mr Weston not to deal with the Somersby property is to be discharged". 9 As has been the usual way in this litigation, the plaintiffs made an immediate application to stay the orders of Windeyer AJ until the determination of the Appeal. That application came before White J on 5 and 6 November 2009. His Honour referred to the various judgments of the various judges of this Court without descending into the detail but summarised the background to the application for a stay: White v Thompson [2009] NSWSC 1266 at [6]. White J said that he did not think that it was seriously arguable that Windeyer AJ erred in concluding the relief sought in those proceedings in which the plaintiffs sought to have the Somersby land brought to account as a joint venture asset, was inconsistent with the order made in the 2003 proceedings before Hamilton J. His Honour also observed that there was no doubt that the plaintiffs had personal claims against the first defendant, Mr Thompson, and that the plaintiffs apprehended that Mr Thompson's disposition of the proceeds of sale of the Seaforth property was designed and had the effect of putting the property out of their reach to satisfy their claims. 10 His Honour also said: [26] The Further Amended Statement of Claim filed in proceedings 4817 of 2008 did not include a claim under section 37A of the Conveyancing Act 1919 (NSW) to avoid the disposition of the proceeds of sale of the Seaforth property as a disposition in fraud of creditors. The failure to make such a claim in the 2008 proceedings would stand as at least a very serious obstacle to such a claim being raised in later proceedings by reason of the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

11 White J was not satisfied that the plaintiffs had demonstrated an arguable case on appeal and he refused to make an order staying Windeyer AJ's orders. The plaintiffs made further applications for a stay that were all unsuccessful. 12 The plaintiffs lodged caveats to try to prevent the sale of the Somersby property. I have been informed from the Bar Table and it is not in issue, that Mr Weston has sold the first defendant's interests in the Somersby property to the third defendant and that moneys have been paid to the plaintiffs as a result of that transaction, albeit that those amounts are not large. 13 The first plaintiff, Mr White, gave affidavit evidence that it was only when he and his co-plaintiff, Mr Libut, heard of the possible claims under s 37A of the Conveyancing Act raised by White J, that he knew of such a section. It was only after White J referred to that section that Mr White decided to bring an application in the terms of paragraph 2 of the Motion. As Windeyer AJ has said, it would be an abuse for the plaintiffs to make a claim of proprietary interests in the Somersby property having regard to the history in which these parties have engaged. 14 It was in 2003 that the first defendant wished to sell the Seaforth property, the subject of the dispute between the parties, and purchase the Somersby property. At that time the first defendant commenced proceedings against the plaintiffs to remove two caveats on the title of the Seaforth property. That was an application brought on urgently before the Duty Judge. At that time the parties entered into consent orders in which the plaintiffs agreed to remove the caveats on the basis that $800,000 of the proceeds of sale of the Seaforth property be put into a Controlled Monies Account pending further steps in the litigation. 15 Some days later the plaintiff made application to restrain the sale of the Seaforth property and the purchase of the Somersby property. On 13 May 2003 Hamilton J, who heard that application, Thompson v White [2003] NSWSC 401, said: 13. The first defendant's apprehension [being Mr White, the first plaintiff in these proceedings] of dispersal of the funds (or property into which funds may be translated) arises, he says, from dishonest or deceitful or unfrank dealings with him and the second defendant [being Mr Libut, the second plaintiff in these proceedings] by the plaintiff [being Mr Thompson, the first defendant in these proceedings]. He was aware that the plaintiff, as the registered proprietor, was intending from about November last year to sell the Seaforth property. However, he was not frankly appraised of the steps taken to sell it and was told by the first defendant that the expected price was $2 million only a few days before a price of $3.1 million was obtained. Furthermore, the evidence indicates the plaintiff raised an additional $250,000 under a mortgage of the Seaforth property and disbursed those moneys without informing the defendants of this fact, which he would certainly be obliged to do, if they were, as they allege, his co-owners beneficially of the property. Equally, he and his wife engaged in a transaction relating to the purchase of the Somersby property as early as 24 December 2002. On that day the plaintiff's wife exchanged a contract for the purchase of that property for $780,000 and paid a $39,000 deposit in respect of it. The plaintiff has deposed in an affidavit that he intended from that time to purchase that property and to employ proceeds from the sale of the Seaforth property in its purchase. The contract in favour of the wife was novated to the plaintiff and the wife jointly on 30 March 2003. It was only late in the day that the existence of this transaction, the identity of the purchasers and the intention to use funds from the Seaforth property in the purchase of the Somersby property was revealed to the defendants. I should add that there has been today no evidence by the plaintiff justifying or explaining his behaviour in relation to the transactions of the Seaforth property and the Somersby property that I have just mentioned. 16 Hamilton J increased the amount to go into the Controlled Monies Account by $200,000 and it was agreed that $100,000 was to be paid to Mr White and Mr Libut. Hamilton J also restrained Mr Thompson from selling or disposing of any interest in the Somersby property. From 13 May 2003, the Somersby property remained in the names of Mr and Mrs Thompson and the Court heard many applications in relation to the alleged joint venture and the status of the property leading ultimately to Windeyer AJ's judgment. 17 In May 2003, there was no alienation of property as that term is understood in s 37A of the Conveyancing Act. The first defendant, Mr Thompson, wished to purchase a property in his name (and that of his wife). Thus, as said during the debate before Hamilton J, the Somersby property would be available in Mr and Mrs Thompson's name. If one is to remove property as envisaged by s 37A of the Conveyancing Act, so that creditors cannot reach it, the usual step is to sell a property that you own, not purchase a property in your own name. In this instance, Mr Thompson purchased a property in his own name and that of his wife. He did so whilst being supervised by this Court with orders being made for the payment of the proceeds into an account and orders being made that, once purchased, the property should not be the subject of any transaction. 18 There was an exchange between Hamilton J and counsel for Mr Thompson, Mr Stevenson SC on 13 May 2003. The exchange was as follows: STEVENSON: … The bulk of the proceeds beyond those to be quarantined by Barrett J's orders are going into real estate at Somersby. The evidence is that is not an investment and that is to be the matrimonial home of Mr and Mrs Thompson. HIS HONOUR: So if it were to be called upon it would be there? STEVENSON: Yes. 19 That exchange is consistent with what I have said above, that far from removing property and alienating it so that creditors could not get at it, should they need to, Mr Thompson was in fact purchasing property in his own name and that of his wife. As I have said, the attempts made by Mr White and Mr Libut to establish a proprietary interest in the Somersby property have failed. 20 Mr White has submitted that having regard to the exchanges with me during the course of argument, perhaps it would have been better to have waited until after the Appeal was heard for this application to be made. He submitted that if the plaintiffs win on the Appeal then everything may change in respect of his entitlement to an order under s 37A of the Conveyancing Act. Although I expressed a view during argument that as a prerequisite in relation to the cause of action under s 37A the plaintiffs had to prove they had an interest in the Somersby property, on reflection, I am satisfied it was not necessary for there to be an interest in the property as a prerequisite to that application. Rather, it was necessary to demonstrate that Mr Thompson had in fact alienated property with the intent to defraud the plaintiffs. The circumstances of this case demonstrate beyond any doubt that the evidence does not establish that there was an alienation of property with the intent to defraud creditors. 21 If the plaintiffs had been successful in establishing an interest in the property as at October 2009 before Windeyer AJ, the property was still available. It was in Mr Thompson's name and Mrs Thompson's name. There had been no alienation to avoid creditors. Consistently with what Mr Stevenson SC said in the exchange with Hamilton J on 13 May 2003, the property was there to be called upon and restrained under Court order. It was only after that judgment that the undertaking was discharged and the property was sold. 22 I am not satisfied I should accede to Mr White's application to defer ruling on this matter until after the Appeal. Having regard to the matters that I have just outlined, I am satisfied that I should dismiss paragraph 2 of the Motion. I dismiss paragraph 2 of the Motion. 23 I now turn to paragraph 3 of the Motion. As can be seen from the above, paragraph 3 seeks an order that the Somersby property be sold and the proceeds placed in a Controlled Monies Account. Having regard to what I have said above, and the dismissal of paragraph 2, paragraph 3 must fall with it. I dismiss paragraph 3 of the Motion. 24 Paragraphs 4 and 5 relate to the exchange between Hamilton J and Mr Stevenson that I have outlined above. Those claims must be seen in the light of the evidence that has been referred to and the steps that have been taken in this litigation. There is nothing in what Mr Stevenson said that would amount to an equitable mortgage or charge or equitable lien over the Somersby property. As I read that exchange, Mr Stevenson was dealing with an application in which the present plaintiffs were seeking to injunct both the sale of Seaforth and the purchase of Somersby. That was an exchange which sought to explain that, far from being deceitful and dishonest, the first defendant, Mr Thompson, was moving into a home in Somersby with his wife and the property would be there if called upon. But the words "if called upon" must be understood to mean legally called upon. Mr Stevenson was not in a position to provide, on behalf of his client in those few words, an equitable mortgage when rights between the parties had not been established. It all depended upon the plaintiffs establishing an entitlement of a proprietary nature in the Somersby property. 25 I dismiss paragraphs 4 and 5 of the Motion. 26 Paragraph 6 must fall with that order. As to paragraph 7, it seems to me that whether the accounting entitlements or debts itemised by Biscoe AJ, mean that the plaintiffs are the secured creditors should be a matter for the Trustee in Bankruptcy. Accordingly I dismiss paragraph 6 and 7 of the Further Amended Notice of Motion. 27 I have not yet said anything about the Anshun point raised by Mr Brown and Mr Bingham. As White J pointed out, this was an enormous obstacle for the plaintiffs. This litigation commenced in 2003. Since then there has been every permutation and combination of allegations of fraud and misconduct throughout the years against so many people. Mr White and Mr Libut sought to avoid a finding that they would be prohibited from bringing this application according to the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 on the basis that until White J mentioned s 37A of the Conveyancing Act they did not know about it. That is a most unimpressive submission. This Court cannot operate on parties claiming ignorance of the law and finding things out seven years after an event in a virtual side wind and then seeking to bring an action that should have been brought years ago. I do not have to decide this claim because I have heard the application and decided it on its merits adverse to the plaintiffs. It seems to me, in the circumstances, that had the Anshun point been taken at an earlier time, Mr White may well have been prevented from bringing the application. 28 I must also deal with the contempt cases against Mr and Mrs Thompson and Mr Weston as Trustee of the Estate of Mr Thompson. Mr White made an application against Mr Weston in his personal capacity and I have dealt with that. Having regard to the matters I have referred to above, there is no evidence upon which I could be satisfied that Mr or Mrs Thompson have committed a contempt of this Court. As I have said, the transactions in relation to the Somersby property have been subject to Court orders for the last 7 years. There have been undertakings that have been honoured and, it would appear, carefully honoured, not only by Mr Thompson, but also by Mr Weston in not dealing with the property consistently with the undertakings until formally discharged by this Court. The allegations of contempt against the three defendants are baseless. 29 I dismiss paragraph 8 of the Motion as against the first, second and third defendants, together with the Statements of Charge. 30 I order that the plaintiffs pay the defendants' costs of the Motion on an indemnity basis. That finalises this matter.

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