- Notable Unreported Decision
SUPREME COURT OF QUEENSLAND
Court of Appeal
General Civil Appeal
Supreme Court at Brisbane
21 May 2004
31 March 2004
Davies JA, Fryberg and Philippides JJ
Separate reasons for judgment of each member of the Court, each concurring as to the orders made
Appeal dismissed with costs
CONVEYANCING – LAND TITLES UNDER THE TORRENS SYSTEM – CAVEATS AGAINST DEALINGS – LAPSE, REMOVAL AND WITHDRAWAL – REMOVAL -where application to remove caveat successful at first instance – where appellant claimed equitable interest in and resulting constructive trust over house – where appellant alleged that property was alienated with intent to defraud creditors – appellant alleged an entitlement under s 228 of the Property Law Act 1974 as an unpaid judgment creditor prejudiced by the alienations to avoid the alienations – whether judge erred in finding no serious question to be tried under s 228 – whether serious case raised of alienation of property – whether serious case raised of intention to defraud creditors
Property Law Act 1974 (Qld), s 228
P J Dunning for the appellant
P M Robinson for the respondent
KPS Lawyers (Maroochydore) for the appellant
David Alexander (Maroochydore) for the respondent
 DAVIES JA: I have had the advantage of reading the reasons for judgment of Philippides J. I agree with her that this appeal must be dismissed. In what follows I gratefully adopt her Honour's statement of the relevant facts, the effect of the judgment in the primary court and the questions in issue in this appeal. As her Honour indicated, the principal questions in issue were whether the appellant showed on the evidence that there were serious questions to be tried as to whether there had been an alienation of property by Mr Purvis to Jedhar and, if so whether that had been with intent to defraud creditors, both within the meaning of s 228(1) of the Property Law Act 1974.
 Even if it be assumed that Mr Purvis alienated property to Jedhar, within the meaning of that section, the appellant was unable to show, even arguably, that the nature of that property was income payable or received rather than a contractual right to receive future income. She was unable to show, even arguably, that such contractual right was not effectively assigned. And she was unable to show, even arguably, that such contractual right was assigned by Mr Purvis to Jedhar after a time when the appellant's claim against Mr Purvis was likely to mature into a debt in the foreseeable future.
 What evidence there was before the court indicated that, if there was an assignment of property, it was of a contractual right to receive income. Such financial documents as were referred to in evidence tended to indicate that, at some unknown date, Sunshine Coast Regional Group Apprentices Limited (“SCRGAL”) paid Jedhar for work performed by Mr Purvis pursuant to invoices sent by Jedhar. This tended to indicate, in turn, either that Mr Purvis had, at some date unknown, ceased working for SCRGAL and commenced working for Jedhar; or that he had assigned to Jedhar his contractual right to receive future income from SCRGAL.
 On the assumption that there was an assignment of property but that the assignment was an assignment of the right to receive future income rather than an assignment merely of the income after it had been derived, there was no evidence of when this occurred. It was presumably some time before Jedhar commenced invoicing SCRGAL for work performed by Mr Purvis. Whilst it is true that s 228(1) is not restricted in its operation to an intent to defraud creditors existing at the time of the alienation, it does require that the intention be one to defraud persons whose claims are likely to mature into a debt in the immediate or foreseeable future. Because the appellant cannot show when Jedhar first commenced invoicing SCRGAL for work which Mr Purvis performed she cannot establish a serious question that, at the time it occurred, the appellant had any claim against Mr Purvis which was likely to mature into a debt in the immediate or foreseeable future. Nor was there evidence of the existence of any other creditors of Mr Purvis at any time which could have been arguably relevant. The appellant was therefore unable to show any serious question as to any relevant intention by Mr Purvis.
 For those reasons I agree with Philippides J that on the principal questions argued in this appeal the appellant must fail. I agree that the appellant also fails in respect of the other matters argued on her behalf, for the reasons given by Philippides J.
 FRYBERG J:I agree with Davies JA and on that basis, also with Philippides J.
 PHILIPPIDES J: This is an appeal against an order for the removal of a caveat lodged by the appellant (Mrs Grosse) over certain property in respect of which the respondent (Jedhar Pty Ltd) is the registered owner.
 In 1992, Jedhar became the trustee of the Purvis Family Trust, a discretionary trust created in 1986. The potential beneficiaries of the trust are members of the family of Mr Robert Purvis and his wife Mrs Heather Purvis. In November 1986, the then trustee, the mother of Mrs Purvis, purchased a house at 11 Essex Court, Buderim, in respect of which Jedhar, as the current trustee, is the registered owner. Since February 2000, Mr Purvis has been the sole director of Jedhar. The Buderim property had been used as the Purvis family home. However, Mr and Mrs Purvis are estranged and Mrs Purvis has not lived in the house from late 1995. The house is mortgaged to Suncorp to secure a loan of $334,000 made to one of the family, Adam Purvis. For the purposes of that mortgage, a valuation was undertaken in January 2003, according to which the house was then worth $450,000.
 In June 2003, Mrs Grosse was awarded judgment against Mr Purvis for $178,000 together with interest and costs, in relation to conduct by him dating back to 1994. That judgment debt remains unpaid. Mrs Grosse is seeking to recover that judgement, at least in part, from the Buderim property owned by Jedhar. She commenced proceedings by which she claims against Jedhar that she has an equitable interest in the Buderim property, or an equitable charge or lien over it.
 The present appeal concerns a caveat lodged against the Buderim property, which Jedhar successfully applied at first instance to remove on the basis that Mrs Grosse had no caveatable interest. Mrs Grosse had also applied for an interlocutory injunction to restrain Jedhar from dealing with the Buderim property, and for a Mareva order in relation to other assets of Jedhar. That application was dismissed and no appeal is brought against that order.
Caveatable interest asserted
 The caveatable interest asserted by Mrs Grosse against Jedhar is founded upon an allegation that Mr Purvis alienated property in favour of Jedhar with intent to defraud his creditors so as to engage s 228 of the Property Law Act 1974 (Qld).
 Section 228 of the Act provides:
“(1)Subject to this section, every alienation of property, made whether before or after the commencement of this Act, with intent to defraud creditors, shall be voidable, at the instance of any person prejudiced by the alienation of property.
(2) This section does not affect the law of bankruptcy for the time being in force.
(3) This section does not extend to any estate or interest in property conveyed for valuable consideration and in good faith to any person not having, at the time of the conveyance, notice of the intent to defraud creditors.”
 Mr Purvis had been a senior employee of SCRGAL, a training company, in respect of which Mrs Grosse had been a director and was for sometime the chairperson. The allegations of fraudulent alienations of property stem from the allegations in paragraphs 3 and 4 of the statement of claim that from about 1994, Mr Purvis engaged in misconduct towards Mrs Grosse, from which he “knew, or is reasonable (sic) to expect he ought to have known, that he would be likely to become indebted to the plaintiff in a significant sum” and from those in the following paragraphs:
“5.At the same time as Purvis engaged in the conduct pleaded in para 3 and had the knowledge pleaded in para 4 he caused his employer, SCRGAL, make (sic) part of his remuneration payments to Jedhar instead of himself.
- The payments to Jedhar were solely for personal exertion work performed by Purvis for SCRGAL.
- Jedhar did not, and was not able to, do anything else by way of the provision of services to SCRGAL for such remuneration.
- Purvis caused Jedhar to apply that part of his remuneration that had been directed to it to improvements to the house.
- Purvis made statements over this period to the plaintiff to the effect that he had taken steps to put his assets out of the reach of his creditors.
- By causing the monies payable for his own work to be paid to Jedhar Purvis made, on each occasion, an alienation of his property for the purpose of s 228 of the Property Law Act (“the alienations”).
- The alienations were with the intention to defeat creditors, including a prospective creditor such as the plaintiff.
15.In the alternative, that the registered proprietor used monies to improve the value of the land, which monies were alienations of property in contravention of Section 228 of the Property Law Act and are voidable at the instance of the caveator. Consequently, the caveator is entitled to follow such alienations into the land as the holder of an equitable interest in the fee simple, or a charge or lien over it.”
 It is thus alleged that Mr Purvis, with intent to defeat creditors, caused money payable by SCRGAL for work performed by him to be paid to Jedhar, at a time when he was engaged in unlawful acts towards Mrs Grosse and exposed to the damages ultimately awarded. The alienated property is said to have been Mr Purvis’ rights to payments from his employer or, alternatively, money held by him, which, in either case, was alienated in favour of Jedhar. It is alleged that those payments received by Jedhar were applied to the improvement of the Buderim property. Mrs Grosse alleges that as an unpaid judgment creditor she was prejudiced by the alienations of property and is entitled to avoid them. At first instance, she maintained that their avoidance had the consequence of giving her some equitable interest or entitlement in Jedhar’s property and, in particular, in the Buderim house.
The decision at first instance
 The learned primary judge considered the question of whether, assuming a case under s 228 of the Act was shown, it followed that Mrs Grosse had a caveatable interest in the Buderim property. That is, whether avoidance had the consequence of giving Mrs Grosse some equitable interest or entitlement in Jedhar’s property and, in particular, in the Buderim property. It is not necessary, nor desirable, on this appeal to consider that aspect of the decision at first instance, since this appeal focuses on the determination that, in any event, no serious case under s 228 of the Act was demonstrated.
 The learned primary judge found that Mrs Grosse had raised no serious case that the payments to Jedhar were fraudulent alienations of property for the purposes of s 228 of the Act. In particular, his Honour held that Mrs Grosse had not demonstrated a serious case that there were alienations of property in Jedhar’s favour in the amounts received from SCRGAL, nor that the purpose of any payments to Jedhar was to defeat Mr Purvis’ creditors.
 As to the issue of whether there was any serious case that Mr Purvis made alienations of property in favour of Jedhar, there was evidence before his Honour that SCRGAL paid for Mr Purvis’ services by making some payments to him and some payments to Jedhar. It was not in contention that, but for the personal exertions of Mr Purvis, no payments would have been made to Jedhar. His Honour identified two views as to Mr Purvis’ exertions resulting in payments to Jedhar.
 One view was that the payments were made pursuant to an agreement between SCRGAL and Jedhar. On that basis, his Honour considered that, even accepting that Mr Purvis caused Jedhar to make the relevant agreement with SCRGAL, there could be no question of alienation of property by Mr Purvis, since under that regime the property was never Mr Purvis’ to alienate.
 Another view identified by his Honour, and urged on behalf of Mrs Grosse, was that the right to any payment for his services remained in Mr Purvis and that there was no right which Jedhar enjoyed against SCRGAL. His Honour considered that, on that view, payments made to Jedhar were payments to which, as against SCRGAL, Mr Purvis would be entitled, but which he directed to be paid in favour of Jedhar. His Honour accepted that adopting this view would result in the conclusion that there had been alienations of property by Mr Purvis. However, his Honour concluded that there was no serious case in favour of the view that the right to any payment for his services remained in Mr Purvis, referring to the lack of documentary or other evidence in support of it.
 As to the alternative case pleaded by Mrs Grosse, that Mr Purvis simply made payments from his own moneys to improve Jedhar’s property, his Honour held that there was no direct evidence of such payments and no clear basis for inferring that they were made, especially when it was considered that Jedhar was for some years in receipt of its own income.
 His Honour also found that there was no serious case that the purpose of any payments made to or for the benefit of Jedhar was to defeat Mr Purvis’ creditors. His Honour observed that, although Mr Purvis had been bankrupt in 1994, there was nothing in the circumstances of Mr Purvis’ financial position from 1994 onwards which demonstrated that he had some particular reason to defeat creditors. Indeed, apart from Mrs Grosse herself, no actual or potential creditor was identified in the pleading. Further, Mr Purvis had not caused all of the payments for his services to be paid to Jedhar. The case at first instance placed emphasis on Mrs Grosse’s assertion that, at the time when she and Mr Purvis were in a personal relationship, Mr Purvis had claimed that the house had been acquired by the family trust as some protection against financial misfortune. In addition, reliance was placed on Mrs Grosse’s allegation that Mr Purvis claimed, during the proceedings that gave rise to judgment against him, that she would be unable to recover any judgment because he had caused assets to be held by others. His Honour held that neither of those allegations provided any strong indication of an intention of defeating Mr Purvis’ creditors. Nor did his Honour consider that any assistance was to be had from Mrs Grosse’s assertion that substantial improvements had been made to the Buderim property.
Ground (a) – Error in the test actually applied to determine the application
 It is accepted that the learned primary judge correctly identified the relevant test to be applied on a removal of caveat application as being whether there was a serious question to be tried. However, it is said that, having correctly directed himself as to the relevant legal principle, his Honour erred in the test that he in fact applied to decide the application. The criticism is that the test applied by his Honour was one of which party, on the evidence before him, was “more likely” to succeed and that, on the material before his Honour, it was demonstrated that there was a real issue to be tried under s 228 of the Act, albeit one that his Honour regarded as weak.
 I am unable to accept the submission that because in passages of the judgment his Honour referred to considerations of “likelihood” that his Honour failed to apply the appropriate test as to whether there was a serious question to be tried. The references to likelihood must be seen in the context of his Honour’s conclusion that there was no evidence indicating a serious case to be tried and as referring to the speculative and tenuous nature of the inferences which were being urged on behalf of Mrs Grosse in the absence of appropriate evidence. Further, some of the references to likelihood, of which complaint is made, were clearly addressed to the issue of balance of convenience. There is no substance in this ground.
Ground (b) – Error in the evaluation of the evidence
Ground (f) – Error in law in not treating money paid at the alienor’s direction as property for the purpose of s 228 of the Act
 The two aspects of the case upon which his Honour considered that a serious case to be tried had not been demonstrated were firstly, that payments received by Jedhar were alienations of Mr Purvis’ property and secondly, that any such alienations were made with the intention to defeat creditors.
 It is said that the tenor of his Honour’s reasoning demonstrated that the ultimate question as to whether Mrs Grosse’s claim pursuant to s 228 of the Act was one that could be maintained required the weighing of competing evidence and inferences and that, upon a full hearing of the case, some of the matters that appeared unlikely to his Honour on the limited material available before him might not appear so unlikely.
 In support of the case put on behalf of Mrs Grosse that the payments made by SCRGAL were made pursuant to a contractual relationship between it and Mr Purvis, so that the payments received by Jedhar were alienations of Mr Purvis’ property, counsel relied primarily on statements made by Mr Purvis in the course of an oral examination. However, I fail to see how any of the statements relied upon support the case contended for by Mrs Grosse. On the contrary, the statements support the view that the relevant employment relationship was one between SCRGAL and Jedhar; see for example the statement that Mr Purvis “was the legs for Jedhar when it was subcontracting as a consultant to SCRGAL” and other statements of a similar nature. Nor do I consider that Mr Purvis’ actual performance of the work on behalf of the corporate entity, Jedhar, attracts the significance asserted on behalf of Mrs Grosse, in the absence of any evidence of the relationship contended for by Mrs Grosse. Mrs Grosse produced no documentary evidence to support her case as to the relationship between SCRGAL and Mr Purvis. Indeed, it can be said that Mrs Grosse’s affidavit effectively adopted Mr Purvis’ contention as to the employment situation with SCRGAL. I therefore consider that his Honour was correct in his characterisation of the relationship between SCRGAL and Jedhar.
 It is convenient to now turn to ground (f) that his Honour erred in law in not treating money paid at Mr Purvis’ direction as property for the purpose of s 228 of the Act. It was argued that, even if the characterisation of the payments made to Jedhar was as found by his Honour, there was nevertheless an alienation of property for the purpose of s 228. This submission proceeded on the basis of a contention that it was Mr Purvis’ work and time that was involved in performing the services for SCRGAL and that he directed the entity to which the payments should be made. It was said that the manifest intention of the legislation would be circumvented if a debtor could with impunity render service, “but ensure that the value received in exchange for it went to some other party.” It was thus submitted that, even on the view of the evidence accepted by his Honour, what Mr Purvis was alienating was a chose in action against SCRGAL, namely a right to be paid for his services and that there occurred a series of alienations. However, the difficulty with that submission is that this scenario was not sufficiently demonstrated on the evidence before the court, and indeed was contrary to it; see for example the statements of Mr Purvis in the oral examination.
 In my opinion, his Honour was correct in concluding that there was no evidence demonstrating a serious case that the payments received by Jedhar were alienations of Mr Purvis’ property.
 As to the contention that there was a serious case of an intent to defraud, it was argued that the corporate vehicle, Jedhar, was resorted to for the purpose of limiting Mr Purvis’ liability and exposure for his offending conduct. It was argued that that use of the corporate vehicle gave rise to an inference of an intent to defraud, when combined with the allegation made by Mrs Grosse that she would be unable to recover any judgment because he had caused assets to be held by others. However, even accepting the proposition that Jedhar was used as a means of limiting liability (and I do not consider that that conclusion was open on the evidence), it would be necessary to show that such use of a corporate vehicle was accompanied by an intent to defraud. In this case, the mere use of a corporate vehicle is not by itself indicative of such an intent. That is particularly so in the present case, where, apart from Mrs Grosse herself, there was no allegation, nor any evidence, of any actual or potential creditor of Mr Purvis. Furthermore, as his Honour observed, the evidence indicated that Mr Purvis had not caused all of the payments for his services to be paid to Jedhar. I also observe that Jedhar had become the trustee in 1992 well before the offending behaviour was found to have commenced in 1994. In my opinion, his Honour was correct in concluding that there was no serious case supporting the alleged intent to defraud creditors.
Ground (c) – Error in principle in removing the caveat on the ground that there existed a prior registered mortgagee
 It was submitted that the learned primary judge erred in principle in removing the caveat on the ground that there existed a prior registered mortgage, as that was not a relevant consideration. It was contended that the mere existence of a prior registered interest was not a sound basis for removing a caveat, unless there was some appreciable prospect of inconvenience or detriment to that registered interest by the existence of the caveat, which was not the case here. The respondent conceded that the existence of a prior mortgage ought not to be a decisive factor in removing a caveat. However, this ground does not raise any matter of relevance to the issue on this appeal. It is clear that in concluding that the caveat should be removed, his Honour’s decision did not turn on the existence of a prior mortgage. Rather, it turned on his Honour’s finding that no serious case under s 228 of the Act had been made out.
Ground (d) – Error in failing to give due regard to the fact that the caveat operated as notice to the world at large of Mrs Grosse’s claim
 It was submitted that the learned primary judge failed to give due regard to the fact that the caveat operated as notice to the world at large of the claim made by Mrs Grosse in the proceedings commenced by her and provided protection to her in relation to any subsequent dealings that may become registered. The complaint made is that the learned primary judge, in approaching the matter as he did in considering that interlocutory relief other than a caveat, if otherwise justified, would provide Mrs Grosse with an adequate remedy, failed to recognise that one of the features of the caveat is that it operates as notice to the world at large.
 While a caveat does have the effect of providing notice to the world at large of the claim on which it is based, such a benefit was only available to Mrs Grosse if she had made out a serious case for the interest claimed. That was not demonstrated in this case. This ground also fails.
Ground (e) – Error in principle in removing the caveat on the ground that the caveatable interest claimed required a favourable exercise of a discretion
 It is submitted that the learned primary judge erred in principle in removing the caveat on the ground that the caveatable interest claimed required the favourable exercise of a discretion. Alternatively, it was said that his Honour placed too much weight on that consideration. There is nothing of merit raised in this ground. While his Honour made observations as to the discretionary nature of the equitable remedies claimed by Mrs Grosse, those observations had no bearing on his Honour’s determination that no serious case had been raised under s 228 of the Act.
Ground (g) – Error in treating the registered mortgagee, Suncorp, as having its registered interest as its primary security, when in fact the mortgage was provided as third party/ collateral security
 It appears to have been conceded at first instance by counsel for Mr Purvis that the mortgage was provided as collateral security; that is, security for a loan over another property. However, I fail to see that this ground raises any matter of relevance. The nature of the security was irrelevant to his Honour’s finding that no serious case had been shown under s 228.
 I would dismiss the appeal with costs.
For example, because there was no consideration, passing to the assignor, for such assignment. See Holroyd v Marshall (1862) 10 HLC 191 at 211; Tailby v Official Receiver (1888) 13 App Cas 523 at 547; Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1 at 26 - 27.
But presumably after the date in 1992 when Jedhar became the trustee of the Purvis Family Trust.
Langdon v Gruber  NSWSC 276; Silvera v Savic (1999) 46 NSWLR 124.
- Published Case Name:
Jedhar P/L v Grosse
- Shortened Case Name:
Jedhar Pty Ltd v Grosse
 QCA 167
Davies JA, Fryberg J, Philippides J
21 May 2004
- White Star Case:
No Litigation History