Wu v Dardaneliotou [2008] NSWSC 1319 | Case summary

5778/08 Benxia Wu v Stratigoula Dardaneliotou JUDGMENT (ex tempore) 1 HIS HONOUR: By Summons filed on 20 November 2008, and first returnable today, the plaintiff Benxia Wu claims an order extending the operation of caveat AE296667 until further order. How not to conduct caveat proceedings 2 It must be said that these proceedings are hardly a model of how such applications should be conducted in the Duty Judge list. First, as I have said many times in the past, a Summons claiming an order extending operation of a caveat must include a claim for final relief. A Summons which claims, as this one does, only an order extending the operation of a caveat until further order is defective in not claiming any final relief. Secondly, there was a proposal to file a cross-claim seeking an order that the caveat be withdrawn in two days. As the caveat will lapse in two days if not extended, that cross-claim was entirely superfluous. Thirdly, the Summons was also met by a proposal to file a motion for summary dismissal, returnable on the first return date. The relief sought in a Summons can be granted on any occasion on which the Summons is before the Court, and the Summons can be dismissed on any occasion on which it is before a Court [(NSW) Uniform Civil Procedure Rules, r 6.7]; there is no use or utility in a Notice of Motion, returnable on the first return date, claiming summary dismissal. All this goes to incurring costs quite unnecessary for the parties to bear, and it is for that reason that I have made special costs orders in respect of some of the costs that have been incurred as the matter has proceeded. 3 Fourthly, and somewhat remarkably, in the context that, if it is to extend a caveat, the Court must be satisfied that the caveator's claim "has or may have substance", the relevant caveat in this proceeding does not find any place in the evidence at all. The Court is empowered under (NSW) Real Property Act 1900, s 74K(2), if satisfied that the caveator's claim "has or may have substance", to make an order extending the order of the caveat for such period as is specified in the order or until further order, or may make such other orders as it thinks fit, but if not so satisfied, shall dismiss the application. It is fundamental that on an application for the extension of a caveat an essential part of the evidence is what the claim is; that claim is to be found in the caveat itself, and without the caveat the Court can hardly be so satisfied. No substance in caveator's claim 4 The concept of a caveat that "may have substance" imports the test of a serious question to be tried familiar to the law of interlocutory injunctions. In exercising its discretion, if so satisfied, whether or not in fact to make an order, the Court has regard to the balance of convenience. However, the question of the balance of convenience does not arise unless and until the Court is satisfied that the caveator's claim has or may have substance. 5 In that respect, the first fundamental problem in the case is that, without evidence of the caveat and the claim in it, I cannot know what the caveator's claim is in order to assess whether or not it may have substance. That would be sufficient reason for refusing to extend the caveat. 6 However, by endeavouring to divine from the evidence what the caveator's claim might be, I shall proceed a little further to deal, as best I can, with the merits. As best as I understand the plaintiff's claim - from her affidavit and from the submissions advanced on her behalf - it seems that she asserts that profits from a business conducted in partnership by her and her estranged husband were used by the husband to purchase the subject property in the name of his mother, the first defendant. The plaintiff and her husband now having separated, there are proceedings between them for adjustment and settlement of property interests pursuant to (CTH) Family Law Act 1975, s 79, in the Federal Magistrates Court of Australia. She wishes to have an interest in the subject property included in the pool of assets for division in those proceedings. At this stage she has not, however, joined the first defendant, her mother-in-law, as a respondent in those proceedings. 7 At least as I understand the evidence - and making as many allowances as I can in favour of plaintiff - it would seem that the first defendant is the registered proprietor of the property. In those circumstances, she holds it free from any other interest except in the case of fraud or a personal equity binding her (being a recognised equitable claim against the property). Even if moneys provided by her son, the plaintiff's husband, provided part or the whole of the purchase money for the property, that does not establish that the plaintiff would have any equitable claim against the property. If the plaintiff's husband provided moneys towards the purchase price, then - even if there were a resulting trust - it would be in favour of her husband, not in favour of the plaintiff. Such a beneficial interest on the part of the husband would fall into the pool of the property divisible under Family Law Act, s 79, but it does not give the plaintiff any caveatable interest in the property. If she wanted to protect any claim that she might have against the property on that basis, then it would have to be by obtaining an injunction, rather than claiming any caveatable interest. 8 The only circumstance which, as it presently seems to me, could found an interest of the plaintiff in the property, would be if it could be shown that the defendant knew that the funds used to purchase the property were sourced in moneys to which the plaintiff had a claim, and were taken by the husband without the plaintiff's consent. Even taking at its highest the admission, attributed to the husband, that he used money taken by him from the business to buy a flat at Harris Street, that does not begin to establish the requisite knowledge on the part of the defendant of the source of the funds. So far as the defendant's evidence goes, any evidence that she understood that the purchase was sourced in cash savings to which the wife had a claim, was successfully objected to by and on behalf of the plaintiff and rejected. In any event, even if it had been admitted, it would not establish knowledge by the defendant that the funds were taken by the son for that purpose without the plaintiff's consent. 9 Accordingly, even in the absence of the defendant's evidence, I do not think the evidence shows that the caveat has or may have substance. 10 Then there is to be added the evidence of the defendant, which gives a plausible explanation for her having available assets from which the purchase of the Harris Street property could have been funded. Taking all the evidence together, I am quite unsatisfied that the caveat may have, let alone has, substance. It is, therefore, unnecessary for me to consider the question of the balance of convenience. 11 In those circumstances, I am required to dismiss the claim for an order that the operation of the caveat be extended. 12 As to whether the plaintiff wishes to proceed with the claim for final relief or to leave any such agitation to the Family Law proceedings I will hear counsel. 13 I refuse the application for interlocutory relief. I adjourn the proceedings to Monday, 15 December 2008, at 2:00pm before me. I order that the plaintiff pay the defendant's costs of the proceedings to date. 14 The test for whether the Court ought order that costs paid by one party of another be assessed on an indemnity - as distinct from the party-party - basis, may for present purposes be sufficiently summarised as requiring a judgment as to whether the proceedings have been unreasonably maintained or defended. A typical instance of that is a case where an offer of compromise or Calderbank offer has been made to the unsuccessful party, which the unsuccessful party does not better in the final outcome. Another instance is where the proceedings were, from the outset, liable to be summarily dismissed or the defence summarily struck out, on the basis that there was no triable cause of the action. 15 Ultimately, a Court must act on the material that has been put before it, rather than speculating what might have been available and by oversight might not have been put before it. In this case, on the material adduced, the application for interlocutory relief was doomed to fail, because of the absence of evidence of the caveat and the claim in it. More significantly, perhaps, the evidence did not disclose any tenable basis for suggesting that the plaintiff had a caveatable interest in the subject property. In the absence of any tenable basis for that claim, I think I must conclude that the proceedings were in the class of those that were doomed to fail or liable to be summarily dismissed on the material put before the Court at the time of the interlocutory application. It follows that I think that, so far as the interlocutory application is concerned, the costs which I have ordered to be paid in respect of it should be payable on an indemnity basis. 16 It does not follow that the proceedings ought now be summarily dismissed. Having only recently been instituted, there has not been a full opportunity to adduce all the evidence that might ultimately be tendered on the plaintiff's claim to beneficial interest in the subject land. The fate of that application, including whether it should be transferred to the Family Court, to be consolidated with the proceedings in the Federal Magistrates Court, on a final basis, will remain to be determined when the matter returns before the Court. 17 I order that the costs payable by the plaintiff to the defendant under the order made today be payable on the indemnity basis. **********

Wu v Dardaneliotou

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