Coopharpash Pty Ltd v Carroll

This is an application in the Duty List for the extension of a caveat or, in the alternative, for the making of freezing orders. For the reasons which follow, both applications will be dismissed.

By summons filed on 6 October 2017 the plaintiffs seek relief including:

When the plaintiffs' application for interlocutory relief came on for hearing before me today, the plaintiffs filed a further notice of motion which sought this order:

Mr J Nathan of Counsel appeared for the plaintiffs. Ms A Avery-Williams of Counsel appeared for the defendants.

The essential facts were not seriously in dispute.

The first plaintiff is the trustee of the second plaintiff's superannuation fund. I will refer to the first plaintiff as the “Company" and to the second plaintiff as Mr Collins. The defendants are Mr Glenn Carroll and his wife, Mrs Michelle Carroll.

In late January or early February 2016 Mr Collins had a conversation with Mr Carroll in words to the following effect (the “Agreement”):

A copy of the Company's bank statement shows that on 10 February 2016 $185,000 was withdrawn from the Company's bank account. There was no dispute that, in accordance with the Agreement, the Company advanced that amount to Mr Carroll.

It was not contested that Mr Carroll paid Mr Collins’ life insurance premiums in fortnightly payments in accordance with the Agreement.

Mr Collins' evidence was that shortly after the loan advance had been made, he asked Mr Carroll to provide him with "some paperwork to record payment of the loan amount" and said to him on various occasions words to the effect of, "I need something in writing to justify where my superannuation is."

On 10 August 2016 Mr Carroll sent an email to Mr Collins with the subject heading "Super fund loan" and stating, "Please find attached document as discussed for the super fund loan."

The attached document included places for both Mr Carroll and Mr Collins to sign and stated:

Mr Collins subsequently made various requests to Mr Carroll to find out when the loan would be repaid. He received answers to the effect of "don't worry, you will get your money", or variations on that theme.

On 13 June 2017 Caveat AMxxxx (the “Caveat”) was lodged over Mr and Mrs Carroll's property (the “Property”). A title search shows that Mr Carroll has a 1/100th interest in the Property as tenant in common and that Mrs Carroll holds a 99/100th interest in the Property.

The caveator was recorded as Mr Collins. The particulars given in the Caveat of the estate or interest in the land claimed are "beneficiary of a resulting trust or, alternatively, beneficiary of a constructive trust". In the section of the Caveat marked "by virtue of the facts stated below", no facts have been set out.

On 16 June 2017 Mr Carroll attended the offices of Mr Collins' solicitors. Mr Carroll saw a Mr Tony Zreik, a paralegal in the employ of Mr Collins' solicitors. Mr Zreik has sworn two affidavits in relation to that meeting.

In his second affidavit affirmed 9 October 2017, Mr Zreik first gives evidence of an earlier conversation with Mr Carroll:

As to the meeting of 16 June 2017, in his first affidavit affirmed on 6 October 2017 Mr Zreik deposes:

In his second affidavit affirmed 9 October 2017, Mr Zreik gives this evidence in relation to the meeting of 16 June 2017:

It will be apparent from the facts which I have set out that Mr Carroll does not dispute his indebtedness to the Company.

On the basis of the evidence which has been led on the present application before me, I do not think it is reasonably arguable that the lender and relevant party to the Agreement is anyone or anything other than the Company. Mr Nathan sought to contend that Mr Collins was also a party to the Agreement, but the matters which I have set out above, in my view, make it perfectly clear that the Agreement was between the Company (through Mr Collins on the Company's behalf) and Mr Carroll.

Mr Nathan, entirely properly, conceded that the Caveat was bad on its face. So much is apparent from the fact that it does not disclose any facts upon which the allegation of a resulting or constructive trust is made. That would be enough to dispose of the question of whether or not the Caveat should be extended.

However, as Ms Avery-Williams pointed out, the Caveat suffers from a further defect, namely, that it describes the caveator as Mr Collins. On the evidence before me the only caveator could be the Company.

Those matters mean that the Court will decline to extend the Caveat.

The other aspect of the interlocutory relief sought by the plaintiffs in their summons was for leave pursuant to section 74O(2) of the Real Property Act 1900 (NSW) for the company to file a further caveat. I accept Ms Avery-Williams' submission that no such leave is required, because section 74O in its terms only applies when “the same caveator lodges a further caveat ". In this case, if there were to be a further caveat, then it would be lodged by a different caveator - the Company.

That disposes of the interlocutory relief sought in the summons. It is then necessary to deal with the application for a freezing order sought in the notice of motion filed today (see paragraph [3] above). I pass over the fact that the form of the relief sought and the manner in which it has been brought does not comply with Supreme Court Practice Note SC Gen 14 in relation to applications for asset preservation orders.

The application is brought on the basis that it said that the Company has a strong prima facie case or that there is serious question to be tried that Mr Carroll is indebted to the Company. So much may be accepted because it appears from the evidence that Mr Carroll does not dispute that he owes the Company the money which is the subject of the Agreement.

Mr Nathan then submitted that, on the balance of convenience, an order should be made restraining Mr and Mrs Carroll from disposing or dealing with their interest in the Property.

Mr Nathan pointed to the evidence of Mr Carroll's stated intention to refinance the Property in order to undertake a business venture out of which it was hoped to repay the Company. He said that was sufficient evidence of risk of dissipation of assets and the stultification of any likely judgment that might be obtained against Mr Carroll. I do not agree.

In my view the evidence of what is often referred to as "threat of dissipation" in this case is insufficient to ground the necessary inference of an intention to stultify any final judgment of the Court or the risk of that result. The mere fact that Mr Carroll wants to take steps to refinance, with or without a business venture, with the intention of trying to repay the loan is, in my view, an insufficient basis for the extraordinary relief constituted by an asset preservation order. On one view it goes the other way, demonstrating that Mr Carroll wants to put himself in a position to pay his debt.

As the matter presently stands, there seems to be no real doubt that the Company's legal rights are limited to a simple action in contract on the Agreement for recovery of the loan. Furthermore, on the evidence before me I would not be satisfied that there is a serious question to be tried that there was any intention between the parties to the Agreement to confer a proprietary interest in the Property so as to warrant a trust being found or imposed. Nor, in the absence of some relationship of dependency, family relationship or evidence suggesting a joint enterprise, do I think that there could be a serious question to be tried for relief by the imposition of a trust based only on references to the funds being advanced to purchase the Property.

However, in making these observations, I must emphasise that the matter has been argued before me on limited evidence primarily focussed on the question of the extension of the caveat. It may be that, if the matter proceeds further, evidence will emerge that will make good the entitlement to the final relief sought in paragraphs 3 and 4 of the summons (see paragraph [2] above).

The plaintiffs' claims for interim relief in the summons and for the orders sought in the notice of motion will be dismissed.

The orders of the Court are: