Saba v Plumb

1. [1]

   MACFARLAN JA: In 2005 the first respondent, Mr Noel Plumb, and the second respondent, Ms Jeanette Minifie, purchased a property in which they subsequently lived in a de facto relationship. The purchase was mainly funded by Ms Minifie but Mr Plumb contributed as well. They held the title to the property as tenants in common: Ms Minifie had a 75% interest in the property and Mr Plumb had 25%.

2. [2]

   On 27 January 2011 there was a confrontation between Mr Plumb and Mr Anthony Saba, the appellant and a neighbour of the respondents. The police sought an apprehended violence order (“AVO”) against Mr Plumb on behalf of Mr Saba (the “Police AVO proceedings”) and Mr Plumb sought an AVO against Mr Saba (the “Plumb AVO proceedings”). These proceedings were on foot in 2011 and into 2012. Ultimately, on 15 March 2012 Mr Plumb succeeded on an appeal against the Police AVO that had been granted against him. The Plumb AVO proceedings continued. Relevantly, evidence was taken in those proceedings on 29 March 2012, including from Ms Minifie.

3. [3]

   In the meantime, the relationship between Mr Plumb and Ms Minifie had deteriorated and Ms Minifie had moved into a separate bedroom at the property in October 2011. In the period from January to March 2012 they discussed termination of their relationship and in March 2012 Ms Minifie “demanded” that Mr Plumb enter into a property settlement with her.

4. [4]

   On 4 June 2012 the respondents signed a Family Court document entitled “Consent Orders” in which they recorded an agreed settlement of their financial affairs. The settlement provided, inter alia, for Mr Plumb to transfer his 25% interest in the property to Ms Minifie and for Ms Minifie to grant to Mr Plumb a qualified “personal right to reside … for life” at the property.

5. [5]

   The Family Court made orders in accordance with the Consent Orders on 14 June 2012.

6. [6]

   On 28 September 2012 the Plumb AVO proceedings were dismissed. Subsequently Mr Plumb’s appeal against that order was also dismissed and indemnity costs were awarded against him. Those costs were assessed in 2015 as $232,187.12, including the costs of assessment. Judgment was entered in favour of Mr Saba against Mr Plumb for that amount.

7. [7]

   Due to his inability to enforce the judgment, Mr Saba commenced the present proceedings in the Equity Division, alleging that Mr Plumb’s disposition to Ms Minifie of his 25% interest in the subject property was voidable under s 37A of the Conveyancing Act 1919 (NSW). He alleged that Mr Plumb made the disposition with intent to defraud his creditors by rendering his property interest unavailable to satisfy Mr Saba’s judgment.

8. [8]

   Section 37A of the Conveyancing Act is in the following terms:

9. [9]

   After a six day hearing before Black J, his Honour dismissed Mr Saba’s claim and a defensive cross-claim filed by Ms Minifie contending that if Mr Saba’s claim was upheld, Ms Minifie should not be required to re-transfer the full 25% interest in the property as Mr Plumb’s actual beneficial interest was considerably less than that percentage. In so doing, his Honour rejected what he described as Mr Saba’s “primary claim” that:

10. [10]

    Mr Plumb was not represented in the Equity Division proceedings until counsel commenced to represent him a few days before the final hearing took place.

11. [11]

    On appeal, Mr Saba did not challenge the finding concerning his “primary claim” (see [9] above). Instead, he contended that the primary judge’s conclusion that Mr Plumb did not have the intention to which s 37A referred was implausible and inconsistent with “all the objective, incontrovertible evidence” (Notice of Appeal, ground 3). Moreover, he contended that, contrary to the primary judge’s finding, Ms Minifie had not established pursuant to s 37A(3) that she was a purchaser of Mr Plumb’s interest in the property and that she did not have notice of his alleged intent.

12. [12]

    For the reasons given below, I consider that Mr Saba’s appeal should be dismissed with costs.

Ms Minifie’s will

1. [13]

   On 3 June 2011 Ms Minifie made a will that provided, inter alia, for Mr Plumb to have a qualified right of residence at the subject property, with the residue of the estate to be left to Ms Minifie’s daughter.

Settlement offers

1. [14]

   Whilst the AVO proceedings were on foot, many written settlement offers were made by the parties to the proceedings, principally by Mr Saba.

2. [15]

   Mr Saba’s first offer of 9 June 2011 sought payment by Mr Plumb of 50% of Mr Saba’s legal costs. Those costs were stated to be $18,601, of which 50% was $9,300.50. The offer stated that further costs would be incurred in preparing for a forthcoming hearing and that costs would increase by approximately $5,000 per hearing day.

3. [16]

   In his offer of 5 August 2011 Mr Saba said that his costs then exceeded $30,000 but he would settle on the basis that Mr Plumb pay 40% of his costs on a party/party basis. On 24 October 2011 he indicated that he would require Mr Plumb to pay 80% of his costs. On 22 November 2011 he sought 50% of his party/party costs. His October and November offers stated that failing settlement he would seek indemnity costs. His offer of 22 December 2011 contemplated each party bearing their own costs. His letter of 6 March 2012 stated that his costs had “increased significantly since September 2011” and encouraged Mr Plumb to consider settlement. Mr Saba’s next offer was not made until 14 December 2012. The offer stated that Mr Saba’s costs were currently $208,898 and that Mr Saba offered to settle the case on the basis that Mr Plumb pay 50% of his costs. Again, his letter stated that failing settlement he would seek indemnity costs.

The court hearing on 14 February 2012

1. [17]

   On 14 February 2012 the Plumb AVO proceedings were listed for hearing before Magistrate Reiss. The following exchange occurred between counsel and the magistrate:

2. [18]

   His Honour’s oral judgment delivered on that day included the following:

3. [19]

   For these reasons, the magistrate declined to continue the interim AVO that had been made against Mr Saba.

The court hearing on 15 March 2012

1. [20]

   On 15 March 2012 Keleman DCJ upheld Mr Plumb’s appeal against the Police AVO made against him. His Honour declined to award costs in favour of Mr Plumb, leading to the following exchange:

The court hearing on 29 March 2012

1. [21]

   On 29 March 2012 evidence was taken before Magistrate Reiss in the Plumb AVO proceedings. Ms Minifie gave evidence-in-chief and was cross-examined.

2. [22]

   In the course of the hearing, his Honour made the following observation:

3. [23]

   The Plumb AVO proceedings were adjourned to 14 June 2012 for final submissions. On 28 September 2012 his Honour delivered judgment dismissing the proceedings.

The Family Court Consent Orders of 14 June 2012

1. [24]

   As noted earlier, a form of Consent Orders was signed by the respondents on 4 June 2012 and approved by the Family Court on 14 June 2012.

2. [25]

   The document recited that Ms Minifie had contributed about 85% of the costs of acquisition, conservation and improvement of the subject property, whilst Mr Plumb had contributed about 15%. The parties’ assets were listed. Mr Plumb’s assets comprised his 25% share of the property, superannuation of $181,000 and cash of $3,000. In addition to providing for Mr Plumb to transfer his interest in the property to Ms Minifie, the document recorded an agreement that Ms Minifie “grants [Mr Plumb] a personal right to reside at [the property] for life”. The following agreement is also recorded:

Mr Plumb’s letter of 26 November 2013

1. [26]

   Mr Plumb sent the following email letter of 26 November 2013 in response to a request by Mr Saba for information as to his assets:

Mr Plumb’s evidence

1. [27]

   In his principal affidavit, Mr Plumb recounted that Ms Minifie had moved into a separate bedroom at the property in late 2011 and that in January 2012 she repeatedly told him that “she could not take any more of [his] emotional withdrawal, the stress, [his] depression and anger and the neighbours’ hostility towards her”.

2. [28]

   Amongst the statements he said that she made were:

3. [29]

   Mr Plumb then deposed to a conversation in March 2012 as follows:

4. [30]

   The first sentence of paragraph 67, which I have quoted immediately above, was admitted into evidence on the basis that it was to be treated as a submission only. It is not clear why this limitation was imposed because it was relevant to Mr Plumb’s state of mind which was a fundamental issue in the proceedings.

5. [31]

   In cross-examination, Mr Plumb elaborated on his discussions with his brother, an accountant:

6. [32]

   Mr Plumb also gave the following evidence in cross-examination:

7. [33]

   Mr Plumb gave the following evidence in cross-examination:

8. [34]

   Mr Plumb said in cross-examination that at the court hearing on 29 March 2012 Ms Minifie was “very strongly cross-examined” and appeared very stressed.

Ms Minifie’s evidence

1. [35]

   Ms Minifie’s principal affidavit included the following evidence:

2. [36]

   In answer to a suggestion put to her in cross-examination that Ms Minifie not only wanted the court case to go away but also for Mr Plumb to win it, she said “I was concerned about the harassment of myself”. When asked how she saw her settlement with Mr Plumb as a new beginning, she said “Just that I have legal control over the property and that gives me some certainty for the future”.

3. [37]

   She agreed that when the court proceedings were not settled by Christmas 2011 she felt anger and frustration. The following exchange then occurred:

4. [38]

   Ms Minifie said that she thought that on 29 March 2012 she heard the magistrate make the statement referred to in [22] above. She denied however that there was an argument “or anything like that” between herself and Mr Plumb after court on 29 March 2012. Her verified cross-claim is arguably inconsistent with this evidence as it alleges that on 29 March 2012 Ms Minifie “demanded” of Mr Plumb that their relationship end, that there be a property settlement and that the distribution of their property should reflect Mr Plumb’s “failure to honour his commitments in connection with the purchase” of the property.

Particularisation of Mr Saba’s case

1. [39]

   At an early directions hearing, the Court rejected Ms Minifie’s request for an order for pleadings. However, by letter of 5 May 2016 Ms Minifie’ solicitors sought particulars, including as to the events that Mr Saba relied upon. Mr Saba’s solicitors responded as follows:

2. [40]

   In answer to a request to specify each “motivation or intent” relied upon, the solicitors replied:

3. [41]

   The solicitors added the following in further answer to a number of questions:

4. [42]

   Ms Minifie’s solicitors complained about the adequacy of these particulars provided on behalf of Mr Saba but the Court (not constituted by the present primary judge) did not accept her complaint.

5. [43]

   As Mr Plumb’s state of mind as to the availability of his superannuation to satisfy Mr Saba’s costs judgment assumed particular significance in the primary judge’s judgment and in the argument on appeal, it is necessary to describe as follows what was said about it at the Equity Division hearing in addition to the references in evidence to which I have earlier referred and which I conclude below did not squarely raise the topic.

6. [44]

   The first reference was in Mr Saba’s closing written submissions which were delivered to the court on the morning that final addresses took place. The submissions included the following:

7. [45]

   The submissions added the further observation that superannuation “is just not accessible to a creditor”.

8. [46]

   In the course of the final address of Mr Barham, counsel for Mr Saba, the following exchange occurred:

9. [47]

   In his address, Mr Alexander, counsel for Ms Minifie, referred to the need for the court to consider “what Mr Plumb’s state of mind would have been in relation to his superannuation” and noted that Mr Saba bore the onus of proof. Mr Alexander later noted that questions were not put to Ms Minifie on behalf of Mr Saba about her state of mind in relation to Mr Plumb’s superannuation.

10. [48]

    In reply, Mr Barham referred the primary judge to the evidence quoted in [29] to [33] above and submitted that as Mr Plumb went to see his brother, an accountant, before the Family Court Consent Orders were signed, the “strong likelihood is that he knew exactly what the situation was with superannuation, and his answers reflect that”.

Legal principles

1. [49]

   In addressing the principles to be applied, the primary judge observed:

Whether Mr Plumb intended to defraud creditors

1. [50]

   In response to Mr Saba’s submission that the magistrate’s reasons given for refusing on 14 February 2012 to continue the interim AVO earlier granted in favour of Mr Plumb would have indicated to Mr Plumb that Mr Saba might succeed in the proceedings, the primary judge agreed that they would have emphasised the possibility that Mr Saba would succeed. The primary judge did not accept however that the magistrate’s reasons would have indicated to Mr Plumb that he was “bound to or likely to lose the application or was at substantially greater risk than Mr Saba as to the costs of the proceedings”. His Honour found that Mr Plumb was confident in his prospects of success but noted Mr Plumb’s evidence acknowledging that there was always a risk of loss of proceedings and an adverse costs order if that occurred.

2. [51]

   Having referred to Mr Plumb’s evidence of his confidence of success, his Honour said:

3. [52]

   His Honour then said that “the level of costs that Mr Plumb could reasonably have foreseen, in 2012, as recoverable by Mr Saba if Mr Plumb failed in the AVO proceedings in the Local Court is plainly a matter that is relevant to his intention in respect of the impugned transaction”. His Honour then referred to the settlement offers (as to which see [15] and [16] above) and described the amount of $9,300 that Mr Saba sought by his letter of 9 June 2011 as a “relatively modest amount” of costs. His Honour concluded that costs of the magnitude later incurred (totalling $232,187.20) could not reasonably have been foreseen in mid-2012 as likely to be incurred.

4. [53]

   The primary judge then referred to Mr Plumb’s evidence that he would “never touch [his] superannuation monies” (see [33] above) but noted that there was a real distinction between the position in mid-2012 (when the costs in view would have been “somewhere in excess of $30,000”) and those accrued at the time of the Equity Division hearing ($232,187.12).

5. [54]

   His Honour noted that “Mr Saba’s closing submissions proceeded on the assumption that a costs judgment could not be enforced against the monies held by [Mr Plumb] in a superannuation fund or funds” and continued:

6. [55]

   After referring to provisions of the Bankruptcy Act, his Honour proceeded as follows to reject Mr Saba’s claim against Mr Plumb:

7. [56]

   Later in his judgment, his Honour gave the following further summary:

Whether Ms Minifie was a purchaser in good faith without notice

1. [57]

   The primary judge proceeded on the basis that Ms Minifie bore the onus of establishing that she was a purchaser in good faith without notice.

2. [58]

   His Honour found first that Ms Minifie was “a purchaser for valuable consideration” within the meaning of the definition of “purchaser” in s 7. He held that Ms Minifie provided consideration both because she granted a right of residence in the property to Mr Plumb and because “she compromised the claims that would otherwise have been available to her in respect of that property under the Family Law Act.”

3. [59]

   On the issue of notice, his Honour referred, with apparent acceptance, to Ms Minifie’s evidence that the potential costs orders did not enter her mind when agreeing to the Family Court Consent Orders and found that her “opposition to the proceedings was driven by the very real effect that they were then having upon Mr Plumb and her relationship with him”. His Honour proceeded as follows to find that Ms Minifie did not have notice of Mr Plumb’s alleged fraudulent intent:

Ms Minifie’s cross-claim

1. [60]

   By her cross-claim, Ms Minifie sought a declaration to the effect that, prior to the transfer of Mr Plumb’s 25% interest in the property to her, she and Mr Plumb held interests in the property proportionate to their contributions. She contended that Mr Plumb’s contributions were considerably less than 25% of the total costs referable to the property and that his interest was accordingly substantially less than 25%. As a result, so Ms Minifie submitted, if Mr Saba's claim was otherwise well founded, she was not bound to restore a 25% interest in the property but only the lesser beneficial interest reflective of Mr Plumb’s contributions.

2. [61]

   His Honour said that he would have “held that Ms Minifie’s Cross-Claim should succeed as to the reduced percentage which she advanced” if Mr Saba had otherwise been successful in the proceedings.

Challenges to credit-based finding

1. [62]

   Fundamental to the determination of Mr Saba’s proceedings under s 37A of the Conveyancing Act were findings that needed to be made, and were made, concerning the subjective state of mind of Mr Plumb and Ms Minifie. Although consideration of the objective evidence was of considerable importance to the making of these findings, so also was the respondents’ affidavit and oral evidence. His Honour accepted their evidence on the critical questions and his findings were thus to a substantial extent credit-based. In these circumstances, the principles stated in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29], concerning appellate challenges to credit-based findings, are applicable.

2. [63]

   In accordance with these principles, for such a challenge to succeed, an appellant must establish that the relevant findings were contrary to “incontrovertible facts”, or “uncontested testimony”, or were “glaringly improbable” or “contrary to compelling inferences” (ibid).

Section 37A of the Conveyancing Act

1. [64]

   The principles applicable to an action under s 37A of the Conveyancing Act were authoritatively stated by the High Court in Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3. In that case, a property development company transferred a project property to a financial advisor of the company to put it out of reach of Mrs Marcolongo, a future creditor of the company in relation to another project. This Court refused relief under s 37A because it considered that that section was only enlivened where there was an “‘actual’ or ‘predominantly’ fraudulent intent or purpose to deprive creditors of their rights or the fruit of their rights and that this required an element of dishonesty’”, which it held was absent in that case (at [8]). The High Court reversed this decision, holding that Mrs Marcolongo had established an “intent to defraud creditors” as contemplated by the section.

2. [65]

   The plurality in the High Court (comprising French CJ, Gummow, Crennan and Bell JJ) first referred to the proposition accepted by the High Court in SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189; [2007] HCA 35 at [8] that “fraud is infinite in variety”. Their Honours emphasised that constructive knowledge or notice as understood in equity is insufficient for the purposes of s 37A, but rejected that the corollary was that an intention to defraud required “a desire to ‘cheat’ or ‘swindle’ those prejudiced” ([25]-[28]). Thus their Honours accepted at [32] that it is:

3. [66]

   Consistently with this, their Honours accepted the proposition stated in an earlier decision that:

4. [67]

   Whilst their Honours recognised that the existence of the intent to defraud referred to in s 37A may be inferred from objective circumstances, they accepted that it remained necessary to find as a fact that that intent existed (at [34]). In the case before their Honours, the intent to “defraud”, which they said “includes the hindering or delaying of creditors” (at [56]), was supported by admissions made in cross-examination by Ms Yang, the debtor’s principal. As described by Heydon J in his separate judgment at [78], Ms Yang admitted in cross-examination that “a reason for her signing the contract of sale on behalf of [the debtor] was to get the property away from those who might claim against that company and to avoid the company suffering a ‘big loss’ in the form of the $600,000 claim [of Mrs Marcolongo]”.

5. [68]

   The plurality in Marcolongo v Chen also made clear that the intent to defraud contemplated by s 37A need not be the sole or predominant intent in relation to the transaction in question (at [57]). No doubt however the intent must be of some significance and not, as Heydon J put it, “‘merely incidental’ to other intentions” (at [87]).

6. [69]

   Further, as earlier confirmed in Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; [1998] HCA 26 at [10], s 37A is enlivened by an intent to defraud future creditors and an intent to defraud any present or future creditor will suffice. As a result, I refer below to the relevant issue as being whether Mr Plumb intended to defraud Mr Saba, that being the way in which Mr Saba framed his case.

Whether he believed his superannuation funds would be available

1. [70]

   As indicated, Mr Plumb’s state of mind concerning a creditor’s ability to access his superannuation entitlement was fundamental to the primary judge’s reasoning (see [53] to [56] above). This entitlement was identified in the Family Court Consent Orders as being $181,000 (see [25] above). In evidence, Mr Plumb indicated that in 2012 he was entitled to draw on that entitlement (no doubt because of his age), although whether he was entitled to access the whole of it was not made clear.

2. [71]

   In cross-examination, Mr Plumb stated firmly that he would not draw on his superannuation to pay the costs debt due to Mr Saba but, as the primary judge pointed out, this assertion related to the debt as it stood at the time of the Equity Division hearing. His statement did not indicate what his attitude would have been in June 2012 to payment out of his superannuation of whatever he then thought might be the potential debt. What he thought that amount might be was not explored in the evidence but it can be inferred that he would have thought that it would be far less than the amount of the subsequent costs judgment of $232,187.12.

3. [72]

   Mr Plumb’s belief in June 2012 as to whether Mr Saba could, as a matter of law, obtain access to Mr Plumb’s superannuation to satisfy his judgment was relevant to whether Mr Plumb intended by the transfer of his 25% interest to defraud Mr Saba. If Mr Plumb believed in June 2012 that Mr Saba would be unable directly to attach his superannuation to satisfy any costs judgment in favour of Mr Saba and that any trustee in bankruptcy of Mr Plumb’s estate would similarly be unable to use it for that purpose, an inference that Mr Plumb intended to defraud Mr Saba was capable of being drawn. To put it in reverse, if Mr Plumb thought that Mr Saba could use Mr Plumb’s superannuation to satisfy any costs judgment in favour of Mr Saba, it is most unlikely that he intended to defraud Mr Saba by transferring his 25% interest in the property to Ms Minifie. The primary judge recognised this in stating:

4. [73]

   As recorded earlier (see [54] to [56] above), the primary judge concluded that Mr Saba did not establish that Mr Plumb knew that his superannuation funds would not be available to meet a future costs judgment in Mr Saba’s favour. His Honour declined to draw an inference that Mr Plumb knew this when the proposition that he did know or believe it was not put to him in cross-examination and he therefore did not have an opportunity to respond to it. His Honour considered that the absence of pleadings or particulars identifying any issue as to the superannuation funds was significant in determining whether Mr Plumb had been afforded procedural fairness. His Honour took into account in this context that Mr Plumb was self-represented “for much of the case” (in fact until shortly before the final hearing).

5. [74]

   For the following reasons, I consider that the primary judge’s approach was correct.

6. [75]

   Mr Saba’s claim was one alleging an intent to defraud. As noted earlier, fraud can take a variety of forms (see [65] above). A particular type of fraud is no less fraudulent in nature because it differs from other types of fraud. As the High Court indicated in Marcolongo v Chen, the intent to defraud to which s 37A refers involves dishonesty, albeit that that dishonesty may be constituted by an intent to delay or hinder creditors without involving “a desire to ‘cheat’ or ‘swindle’ those prejudiced” (ibid).

7. [76]

   In these circumstances, the principle that allegations of fraud “must be pleaded distinctly and with particularity and clearly proved” (Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 573; [1995] HCA 68) is applicable to the present case. The principle is reflected in r 15.3 of the Uniform Civil Procedure Rules 2005 (NSW) requiring a pleading to “give particulars of any fraud … on which the party relies” and r 15.4(1) which requires that a pleading that alleges any “condition of mind” (which is defined to include any fraudulent intention: r 15.4(2)) must give “particulars of the facts on which the party pleading relies”.

8. [77]

   As became apparent in final address at first instance (and as reflected in Mr Saba’s submissions on appeal), Mr Saba relies as a central element of his fraud case on the assertion that upon transfer of Mr Plumb’s 25% interest in the property, Mr Plumb was left with no significant assets with which he could satisfy any costs judgment in favour of Mr Saba and, in particular in this respect, that Mr Plumb’s superannuation funds were not available for such purpose.

9. [78]

   There being no pleadings, this was an essential matter for Mr Saba to particularise prior to the hearing at first instance, especially when Mr Plumb acquired legal representation only shortly before the hearing. It does not matter for present purposes that a judge (not being the primary judge) declined to order Mr Saba to provide further particulars. Mr Saba has to bear the consequences of the absence of proper and timely notice of his case being given to Mr Plumb. He may have been able to overcome that difficulty by raising the issue directly in the cross-examination of Mr Plumb but, if he had, arguably Mr Plumb would have been entitled to complain of the absence of earlier notice.

10. [79]

    In any event, it was not squarely raised with Mr Plumb in cross-examination. It was suggested to him in cross-examination, first, that he was not “proposing … to touch” his superannuation funds and, secondly, that in those circumstances “the only way that any costs order would be met, other than by way of assets being sold, would be by money in joint bank accounts or by Ms Minifie contributing” (see [33] above). He agreed with the former proposition but did not give a full response to the latter, and was not pressed to go further. It could be argued that it was implicit in the latter proposition (which was put to Mr Plumb in cross-examination a second time) that he believed that Mr Saba would not be entitled to obtain access to Mr Plumb’s superannuation funds. That he had that belief however was not squarely put and Mr Plumb did not respond clearly to it when it was put to him implicitly.

11. [80]

    On appeal, Mr Saba submitted that the primary judge should have found that Mr Plumb believed that his superannuation funds were unavailable to his creditors because, although Mr Saba bore the onus of proving Mr Plumb’s fraudulent intention, Mr Saba had made out a prima facie case that Mr Plumb had the relevant belief, with the result that Mr Plumb bore an evidentiary onus of leading evidence to contradict that case (see Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 at [53]; Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2014] NSWCA 440 at [53]-[55]). He submitted that he had established that prima facie case because it was common knowledge in the community that superannuation funds were protected from creditors.

12. [81]

    I do not accept that submission. The Court is not able to infer that the alleged fact is so notorious that it can be assumed that every member of the community, including Mr Plumb, was aware of it in June 2012. In my view, whether Mr Plumb believed that to be so needed to be established by evidence. In criminal law, there is a general principle that ignorance of the law is not an excuse but that does not equate to a presumption that everyone knows the law (Krahe v TCN Channel Nine Pty Ltd (1986) 4 NSWLR 536 at 546; Ostrowski v Palmer (2008) 218 CLR 493 at 500; [2008] HCA 30).

13. [82]

    Mr Saba thus did not establish a prima facie case on the superannuation issue and an evidentiary burden was not cast on Mr Plumb to lead evidence to contradict it. Rather, the point was a matter for Mr Saba to prove in discharge of his legal onus. As the primary judge held, he did not do this.

14. [83]

    In the circumstances that I have described in [75] to [79] above, it would in my view have taken a strong prima facie case on this point to shift an evidentiary onus to Mr Plumb. The claim against Mr Plumb was a serious allegation of fraud. In accordance with the principles stated in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; [1938] HCA 34 and reflected in s 140(2) of the Evidence Act 1995 (NSW), he was entitled to be notified of the matters Mr Saba relied upon to support his case and to have the gravity of the allegation against him taken into account in the determination of the proceedings. The Court’s satisfaction as to any liability he might have was not to be arrived at “by inexact proofs, indefinite testimony, or indirect inferences” (ibid). Reliance upon an inference as to general community knowledge concerning a creditor’s right of access to its debtor’s superannuation funds would have been of that character.

Assuming that belief that superannuation protected not established

1. [84]

   Mr Saba submitted on appeal that “even if Mr Plumb thought his superannuation could be accessed by creditors”, Mr Saba was still entitled to succeed because the property transfer still had “the effect that it protected the family home from claims by prospective creditors” (written submissions [64]).

2. [85]

   I do not accept this submission. After a lengthy hearing, the primary judge found that the respondents’ family settlement was a bona fide agreement designed to deal with a genuine breakdown in their relationship. The property interest transfer formed part of that agreement. In the absence of a finding that Mr Plumb believed that he would not have any other assets to meet a costs order in favour of Mr Saba, it would be difficult, if not impossible, to draw an inference that an additional purpose of the settlement was an intent to defeat creditors. The primary judge did not draw it and, in the absence of error being established, it is not this Court’s role to re-examine the facts to decide whether it should be drawn. Rather, this Court’s role is to determine whether not drawing the inference was, in effect, glaringly improbable in light of the evidence before his Honour. Mr Saba did not establish that it was. Whilst there was much evidence highlighting the importance the respondents placed on their home, it did not compel the inference for which Mr Saba contends.

3. [86]

   In summary, Mr Saba relied upon the following matters as compelling the inference that Mr Plumb, at least in part, was motivated by an intent to hinder or delay Mr Saba in enforcement of any costs judgment.

4. [87]

   Mr Saba contended that:

5. [88]

   Whilst these matters raise a serious question as to Mr Plumb’s intent, they do not, at least in the absence of a finding that Mr Plumb believed that the transfer of his interest to Ms Minifie would prevent Mr Saba enforcing any costs judgment, indicate that his Honour’s judgment was “glaringly improbable” or otherwise within one of the epithets used in Fox v Percy (see [63] above). Notwithstanding these matters, it was open to his Honour to find that the property transfer was driven by Ms Minifie’s desire, acted on by Mr Plumb, to leave the property to her daughter, which she could not be sure of being able to do if there was an outstanding interest held by Mr Plumb.

6. [89]

   Before concluding on the question of Mr Plumb’s intent, it is necessary to deal with the following further submissions made by Mr Saba on appeal.

7. [90]

   First, Mr Saba complained that the primary judge acted on a presumption that parties to litigation always think they will succeed. Although his Honour made passing observations to this effect, his Honour, correctly, focused on Mr Plumb’s individual state of mind. Whilst finding that Mr Plumb was confident of his success, he appropriately referred to Mr Plumb’s evidence that he recognised “that there was always a risk of [the] loss [of] proceedings and of a costs order if that occurred” (Judgment [60]). There was therefore no error in his Honour’s approach.

8. [91]

   Secondly, Mr Saba was critical of his Honour’s remark that s 37A may rarely be enlivened where the defendant to proceedings under that section has not faced a substantial damages claim brought by the other party. I do not see this remark as having done more than state the obvious, namely, that alienations of property to defraud creditors are most commonly made in response to large substantive claims made or to be made against the transferor. His Honour did not suggest that the section could not apply where, as here, the only prospective liability was one for costs.

9. [92]

   Thirdly, Mr Saba submitted that his Honour erred in taking into account Mr Plumb’s unawareness of the actual amount of any costs order that might be made against him. However, what his Honour relevantly said was that “the level of costs that Mr Plumb could reasonably have foreseen, in 2012, as recoverable by Mr Saba if Mr Plumb failed in the AVO proceedings in the Local Court is plainly a matter that is relevant to his intention in respect of the impugned transaction” (Judgment [69]). There was no error in this observation. What Mr Plumb could reasonably have foreseen in this regard was one factor, amongst others, that was relevant to determining what his intention was in June 2012. His Honour did not, erroneously, suggest that Mr Plumb’s ignorance of the precise amount of the costs was fatal to Mr Saba’s s 37A claim.

10. [93]

    Nor was there any error in his Honour referring in this context to the amount of costs sought by Mr Saba in his offer letter of 9 June 2011 as “relatively modest”. Compared to the time and effort thus far expended by Mr Saba in relation to the AVO proceedings, the undoubtedly escalating costs of the continuing proceedings and the apparent value of Mr Plumb’s share of the property and his superannuation (as recorded in the Family Court Consent Orders), the description of the amount as “modest” was not inapt.

11. [94]

    Fourthly, Mr Saba contended that the primary judge “failed to give sufficient weight to the absence of material witnesses who could have corroborated the alleged domestic circumstances of the first and second respondents and their expectations as to the outcome of the proceedings”. He referred in this respect to some 10 or 11 persons whom Mr Plumb failed to call and to documentary evidence that he failed to tender. He submitted that these people “could have variously given evidence about the circumstances of the Transfer, the legal advice given to Mr Plumb about his prospects in the AVO proceedings (given legal professional privilege had been waived by Mr Plumb … ), the couple’s financial arrangements, and the breakdown of the de facto relationship”. The documents referred to were said to relate to similar topics.

12. [95]

    Mr Saba’s submissions did no more than speculate that these persons were able to give evidence that bore upon the critical issue of whether Mr Plumb had an intent to hinder or defeat a claim that Mr Saba might make, the implication in Mr Saba’s submissions seeming to be that Mr Plumb may have made an admission to one or more of these persons. In these circumstances, at least one of the conditions described by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 202 as necessary to attract the principle in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 was not fulfilled:

13. [96]

    This approach was referred to with approval by the plurality in ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17 at [169].

14. [97]

    Similar observations are applicable to corresponding submissions by Mr Saba that Ms Minifie did not call various persons to give evidence.

Whether Ms Minifie was a purchaser without notice

1. [98]

   As I have held that Mr Saba did not establish that Mr Plumb intended to defraud Mr Saba, the question of whether Ms Minifie established a defence under s 37A(3) does not arise. Nevertheless, it is appropriate to deal with that defence as follows, making an assumption, contrary to my finding, that Mr Plumb did have that intent.

Whether a purchaser

1. [99]

   The word “purchaser” in s 37A of the Conveyancing Act is defined in s 7 of the Act to mean “a purchaser for valuable consideration”. As noted at [58] above, the primary judge found that Ms Minifie gave consideration, first, by her grant of a right of ongoing residence to Mr Plumb and, secondly, by agreeing in the Family Court Consent Orders to a compromise in respect of claims that “would otherwise have been available to her in respect of [the] property under the Family Law Act”.

2. [100]

   In challenging these findings, Mr Saba first submitted that, according to the figures appearing in the Consent Orders, “Mr Plumb was exchanging a 40% interest in the … property for a right to reside at the property for life”. Even if this is the effect of those figures, they do not assist Mr Saba as it is not for this Court, nor was it for the primary judge, to assess the value of the consideration given by each party to see whether it equated or bore some other asserted relationship. It is sufficient to conclude that the right to reside at the property was an apparently valuable right that Ms Minifie gave to Mr Plumb. As the High Court indicated in Barton v Official Receiver (1986) 161 CLR 75 at 86; [1986] HCA 44, in this context the Court does not make any inquiry as to the adequacy of consideration, it being sufficient if the transferee has given consideration for its purchase “which has a real and substantial value, and not one which is merely nominal or trivial or colourable”.

3. [101]

   Secondly, Mr Saba submitted that the right of residence that Mr Plumb obtained under the Family Court Consent Orders was something he already had as his 25% interest in the property gave him a legal right of occupation as a co-owner. However, the rights were different because the right of occupation that he had as a co-owner could be defeated by Ms Minifie obtaining from the Court an order, albeit discretionary, under s 66G of the Conveyancing Act, appointing trustees for sale of the property. On the other hand, as a result of the Consent Orders, Mr Plumb had, at least arguably, a right to restrain Ms Minifie from selling the property unless she arranged to bind the purchaser to give effect to Mr Plumb’s continuing right of occupation.

4. [102]

   Thirdly, Mr Saba submitted that the “legal quality of the right of residency agreed on by the parties” could be disregarded and regard had only to the “practical reality” that Mr Plumb continued to reside on the property after the Family Court Consent Orders as he had done before. The nature of Mr Plumb’s legal rights cannot however be disregarded. By the Consent Orders, he received a right that was, for the reasons I have identified, different in character from that which he had before. It does not matter that his right has not yet been formalised by an instrument other than the Consent Orders, as the agreement evidenced by that document was plainly intended to have binding effect.

5. [103]

   Fourthly, Mr Saba submitted that there was no evidentiary basis for the primary judge’s conclusion that Ms Minifie compromised claims under the Family Law Act that she would have had in respect of the property. However, there was evidence that Mr Plumb and Ms Minifie lived in a de facto relationship, purchased the property together and made differential contributions to the purchase and maintenance of the property, and that Ms Minifie contended that her registered interest in the property did not adequately reflect the contributions she had made. This evidence was sufficient to indicate that Ms Minifie had a potential claim to a Family Court property settlement. Her foregoing of that constituted consideration for the transfer of Mr Plumb’s 25% interest in the property to her.

6. [104]

   In these circumstances, I do not consider that there was any error in the primary judge’s conclusion that Ms Minifie was a purchaser for valuable consideration.

Whether Ms Minifie had notice of Mr Plumb’s alleged intent to defraud Mr Saba

1. [105]

   As noted above, the primary judge found that, when agreeing to the Family Court Consent Orders, Ms Minifie did not have notice of the alleged intent of Mr Plumb to delay or hinder Mr Saba in his enforcement of any costs order that he might obtain (see [59] above). His Honour found that, instead, Ms Minifie was focused on the difficulties in her relationship with Mr Plumb and how they could be addressed. This accorded with her evidence that a potential costs order did not enter her mind when agreeing to the Family Court Consent Orders. On her evidence, she believed that her relationship with Mr Plumb could not withstand the continuation of the AVO proceedings which Mr Plumb was determined to pursue. She thus sought a settlement that would terminate the financial aspects of their arrangements and enable her to pass full ownership of the property to her daughter. Whilst Mr Plumb was given a right to continue to reside in the property, Ms Minifie obtained his registered 25% interest which she thought was not proportionate to the contributions he had made in relation to the property.

2. [106]

   Whilst Ms Minifie said that she wanted to protect her interest in the property to enable her to leave it to her daughter in good condition, this did not necessarily mean that she believed that Mr Saba might take Mr Plumb’s 25% interest in the property to satisfy a judgment in his favour. The primary judge had the advantage of seeing and hearing the witnesses give their evidence. His Honour’s conclusion about Ms Minifie’s state of mind involved the determination of a credit issue. I do not consider that his conclusion was glaringly improbable or otherwise inconsistent with the evidence.

3. [107]

   Ms Minifie’s concessions that she was aware of a risk that court proceedings could be lost and that the losing party might be ordered to pay costs were relevant for his Honour to consider but did not require a different conclusion to that which his Honour reached. That is particularly so when Ms Minifie did not say, and the proposition was apparently not put to her in cross-examination, that she believed that Mr Plumb would have insufficient assets to pay any costs found to be due to Mr Saba. As with Mr Plumb, it was not suggested to Ms Minifie in cross-examination that she believed that Mr Plumb’s superannuation funds would not be available for that purpose.

4. [108]

   For these reasons, Mr Saba’s challenge to his Honour’s finding that Ms Minifie established that she did not have relevant notice in my view fails.

Other issues

1. [109]

   During argument on the appeal, a number of issues concerning the relief that should be granted to Mr Saba in the event that he was successful on his appeal were addressed. As his appeal clearly fails and the issues are of some complexity, I do not consider it necessary to deal with them. Likewise, it is unnecessary to deal with Ms Minifie’s cross-claim (see [60] and [61] above) as this would only have arisen if Mr Saba’s appeal had been successful and in any event was not pressed by Ms Minifie on the appeal.

ORDER

1. [110]

   For the reasons I have given, Mr Saba’s appeal should be dismissed with costs.

2. [111]

   SACKVILLE AJA: I agree with the orders proposed by Macfarlan JA and, subject to what follows, with his Honour’s reasons.

3. [112]

   As the primary Judge recorded, the principal claim made by the appellant (Mr Saba) at trial was that the respondents’ personal relationship had not broken down and that the consent orders made by the Family Court in June 2012 did not constitute a genuine adjustment of their property rights in consequence of the alleged breakdown. [1] The primary Judge accepted the evidence given by the respondents (Mr Plumb and Ms Minifie, respectively) that their relationship had indeed broken down and that the Family Court orders represented a genuine adjustment of their property rights. Mr Saba does not challenge these findings on the appeal.

4. [113]

   Mr Saba mounted an alternative case at trial. The primary Judge described this case as a “claim that the transaction was, on its face, an attempt to defeat or delay Mr Saba’s claim for costs”. [2] It is, however, fair to say that the alternative case was subsidiary to the principal claim, which rested on a sustained attack on the credibility of Mr Plumb and, to a lesser extent, Ms Minifie.

5. [114]

   A good deal of the cross-examination of Mr Plumb, as the primary Judge remarked on more than one occasion, seems to have been of marginal relevance to the issues in the proceedings. But the thrust of the cross-examination was to challenge Mr Plumb’s claim that his relationship with Ms Minifie had broken down and that the consent orders were made in consequence of that breakdown. It was put to Mr Plumb that his objective in executing the consent orders was to divest himself of as many assets as possible in order to protect himself from a potential costs claim by Mr Saba. Mr Plumb rejected these suggestions and his denial was accepted by the primary Judge.

6. [115]

   The alternative case presented at trial faced the difficulty that it is not easy to disentangle a claim that a transaction was fraudulent because it involved an elaborate pretence perpetrated by two persons, from a claim that even if the impugned transaction was genuinely negotiated between these persons it is nevertheless liable to be set aside as a fraud on a third party. It was suggested to Mr Plumb in his cross-examination (and denied by him) that he appreciated that Mr Saba’s interests would be affected by the making of the consent orders. However, this suggestion was made in the context of a cross-examination directed to establishing that the very reason Mr Plumb entered into the consent orders was to prevent Mr Saba from enforcing any future costs orders. It was not put to Mr Plumb – no doubt because it would have been very difficult to do so – that even though the consent orders represented a genuinely negotiated adjustment of property rights between the parties, Mr Plumb appreciated that the effect of the orders was to prevent or impede Mr Saba from enforcing any costs order he might obtain in the future.

7. [116]

   Mr Newlinds SC, who appeared with Ms Jeliba for Mr Saba, developed the alternative argument on the appeal. His main submission was that on the facts found by the primary Judge both Mr Plumb and Ms Minifie appreciated that there was a substantial risk that Mr Plumb would lose his case against Mr Saba and be subjected to an adverse costs order. Even if the breakdown of their personal relationship was genuine and the Family Court orders represented a genuine adjustment of their financial relationship, the effect of the orders, so Mr Newlinds argued, was to defeat or delay Mr Saba’s prospective claim as a judgment creditor. This followed from the fact that the transfer of Mr Plumb’s 25 per cent interest in the co-owned property to Ms Minifie deprived him of the one asset against which execution of any judgment debt could have been levied. This was sufficient to establish that Mr Plumb had the necessary intent to defraud creditors within the meaning of s 37A(1) of the Conveyancing Act.

8. [117]

   Mr Newlinds correctly emphasised that the High Court has given a “liberal construction” of s 37A(1) of the Conveyancing Act to reflect the statute’s purpose of suppressing fraud. [3] Thus an alienation of property is voidable if the alienor intends to hinder, defeat or delay a creditor (or potential creditor), even though the alienor does not actually intend to defraud or does not appreciate that his or her acts are dishonest. [4] Nonetheless, s 37A(1) of the Conveyancing Act applies only where the alienor has an intention to hinder, delay or defeat creditors and in that sense has acted dishonestly. [5]

9. [118]

   It is not easy to see how a finding to that effect could be made against Mr Plumb having regard to his evidence that the consent orders represented a negotiated arrangement with Ms Minifie and that he did not consider that Mr Saba’s interests would be adversely affected by the making of the orders. Mr Plumb described the latter suggestion as “ridiculous”, a denial that the primary Judge appears to have accepted.

10. [119]

    Mr Newlinds attempted to overcome the difficulty created by the credit-based findings in two ways. The first was to invite the Court to draw an inference as to Mr Plumb’s intention from the objective circumstances of the case. Mr Newlinds invoked the proposition endorsed by the High Court in Marcolongo v Chen that an intention to delay or defeat creditors can be more readily inferred, even in the absence of evidence of a direct intention, where the outcome is a necessary consequence of a voluntary settlement. [6] Mr Newlinds submitted that Mr Plumb had divested himself of his interest in the East Ryde property without receiving any benefit. In effect Mr Plumb had voluntarily disposed of his sole asset that could be used to satisfy creditors.

11. [120]

    The findings of the primary Judge establish that the transfer of Mr Plumb’s interest in the East Ryde property was the consequence of a negotiated arrangement between the parties following the breakdown of the relationship. The terms of the arrangement may have been unusual, but they satisfied each party’s objectives. Ms Minifie wanted full legal title to the property primarily because she wanted to be able to leave the property to her children. Mr Plumb wanted to be able to live in the property for life, bearing in mind that the design of the house was such that the parties could live separately on different levels. Both wanted to be free from potential claims by the other. In this respect Mr Plumb was aware that Ms Minifie claimed to have contributed more than 75 per cent of the purchase price of the property and claimed to be entitled to an increase in her interest in the property. The consent orders achieved the parties’ objectives.

12. [121]

    It is true that Mr Plumb was entitled by value of his interest as tenant in common to remain in possession of the property, subject to Ms Minifie’s concurrent right to remain in possession. But Mr Plumb’s interest as co-owner was always liable to be terminated and converted into money if Ms Minifie applied for an order under s 66G of the Conveyancing Act for the sale of the co-owned property. The terms of the consent order conferred a personal right on Mr Plumb, presumably enforceable against Ms Minifie, to reside at the East Ryde property for life. Mr Plumb’s transfer of his interest in the East Ryde property was therefore not a voluntary settlement in the sense used by the High Court in Marcolongo v Chen.

13. [122]

    Mr Newlinds also challenged the primary Judge’s finding that he was not satisfied that Mr Plumb was aware that his superannuation entitlements were immune from attachment by a judgment creditor. In my view, it is by no means clear that even if that challenge succeeded, it would justify a finding that Mr Plumb intended to defeat or delay Mr Saba’s potential claim as a judgment creditor. Mr Plumb’s awareness that his superannuation entitlements were protected would not necessarily undercut his evidence that he never adverted to the effect the consent orders or transfer might have on any future costs order that Mr Saba might have obtained. In any event, I agree with Macfarlan JA’s reasons for rejecting the challenge. The only comment I would add is that if, as Mr Newlinds submitted, it is common knowledge in the community that superannuation entitlements are immune from execution at the suit of a judgment creditor, it is curious that the legal representatives took so long to identify the correct statutory source of the immunity.

14. [123]

    The second way in which Mr Newlinds sought to overcome difficulty created by the primary Judge’s credit based findings of fact was to challenge some of those findings. The challenge was not pursued in a systematic fashion and, in my opinion, no basis was shown for interfering with the primary Judge’s assessment of the evidence.

15. [124]

    EMMETT AJA: The question in this appeal is whether an order should be made that the transfer on 14 June 2012 of the one quarter share held by the first respondent, Mr Noel Plumb, as tenant-in-common of a property situated at East Ryde was voidable. The transferee was the second respondent, Ms Jeanette Minifie. The appellant, Mr Anthony Saba, sought the order under s 37A of the Conveyancing Act 1919 (NSW).

16. [125]

    Section 37A relevantly provides that every alienation of property made with intent to defraud creditors is to be voidable at the instance of any person thereby prejudiced. However, s 37A does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.

17. [126]

    Mr Plumb had commenced proceedings against Mr Saba in the Local Court seeking apprehended violence orders against him. Ultimately, Mr Plumb was unsuccessful and he was ordered to pay Mr Saba's costs of the proceedings. Absent any interest in the East Ryde property, Mr Plumb will be unable to meet the order for costs. Hence, Mr Saba seeks to void the transfer made by Mr Plumb to Ms Minifie.

18. [127]

    The East Ryde property was acquired by Mr Plumb and Ms Minifie in October 2005. Mr Plumb acquired a 25% interest as tenant-in-common and Ms Minifie acquired a 75% interest as tenant-in-common. Mr Plumb and Ms Minifie lived together in the East Ryde property. However, in 2011, their relationship began to deteriorate and thereafter worsened.

19. [128]

    On 14 June 2012, orders were made by consent by the Family Court of Australia implementing a property settlement between Mr Plumb and Ms Minifie. The orders recorded the agreement between Mr Plumb and Ms Minifie that Ms Minifie had made a substantial contribution of 85% to the acquisition, conservation and improvement of the assets that were acquired and built up during their relationship and that Mr Plumb made a modest contribution of about 15% to the acquisition, conservation and improvement of the assets acquired and built up during their relationship. The orders provided for Mr Plumb to transfer his one quarter interest in the East Ryde property to Ms Minifie and for Ms Minifie to grant Mr Plumb a lifetime right of residency in the East Ryde property.

20. [129]

    Mr Saba brought proceedings against Mr Plumb and Ms Minifie in the Equity Division. Although the transfer was made pursuant to orders made under s 79 of the Family Law Act 1975 (Cth), it is common ground that it is nevertheless open to the Court in an appropriate case to make an order under s 37A voiding the effect of the transfer. On 19 May 2017, for reasons published on that day, a judge of the Equity Division ordered that Mr Saba’s claim be dismissed. By Notice of Appeal filed on 18 August 2017, Mr Saba appealed from the orders made by the primary judge.

21. [130]

    I have had the advantage of reading in draft form the proposed reasons of Macfarlan JA for dismissing Mr Saba’s appeal with costs. I agree with the orders proposed by Macfarlan JA for the reasons proposed by his Honour.