Dinh v Dang[2007] QSC 3

SUPREME COURT OF QUEENSLAND

[1] The applicant and the respondent are related by marriage.  The respondent and the applicant’s wife are sisters.  The applicant is the registered proprietor of a house in the western suburbs of Brisbane.  On 18 November 2004 the respondent lodged a caveat over the land, Lot 172 on SP 125046 in the County of Stanley, Parish of Oxley, title reference 50307247 claiming ‘an equitable interest as mortgagee of an estate in fee simple.’  By application dated 17 November 2006, two years after the caveat was lodged, the applicant seeks an order pursuant to s 127 of the Land Title Act that the caveat be removed. 

[2] The parties are Vietnamese.  The respondent’s case is that she lent her sister, the applicant’s wife, two sums of money, $91,000 in about June 2002 and a further sum of $51,380 between January and September 2003.  The respondent alleges that the loan was secured by a charge, or mortgage, over the applicant’s land which is the matrimonial home of Mr and Mrs Dinh.  There is no writing which evidences the charge or mortgage and, obviously, no such interest in the land has been registered.

[3] The applicant accepts that some monies were lent by the respondent to his wife but he asserts that they have been repaid in full.  He denies that his home was charged with the obligation to repay the loans and, on those grounds, he seeks an order that the caveat be removed.  The respondent claims that there are acts of part performance which take the case beyond the operation of s 59 of the Property Law Act 1974 and that the equitable mortgage may be enforced notwithstanding a lack of writing.

[4] The applicant advances three reasons why the caveat should be removed.  They are that:

(i)The loan was made to the applicant’s wife and not to the applicant, who has no obligation to repay, and his property is not answerable for the debt.

(ii)There is no note or memorandum of the mortgage which is therefore unenforceable.

(iii)The conversations on which the respondent relies for the creation of the agreement, or equitable, mortgage, are incapable as a matter of construction of amounting to an intention to charge the applicant’s land with the repayment of the debt.

[5] There is a great deal to be said for the applicant’s submissions on points (i) and (iii) but it is not necessary to deal with them.  I should say that if an arguable case for the retention of the caveat had been made out, the balance of convenience would favour the caveat.  The transactions between the parties are complicated, disputed, and entirely oral.  There appears to have been a distrust by the parties and their families of the banking institutions in this country and a dislike for the ordinary processes of recording business transactions.  The applicant’s family appears to have divested itself of some assets and may have diminished their capacity to repay any loan that may be found due and owing.  On the other hand there is no evidence that the applicant or his wife have any present intention of selling the house.  The caveat has remained in place for two years without apparently disturbing the applicant’s peace of mind and, as I say, if there were an arguable case for it, the status quo should be maintained.

[6] I am, however, persuaded that there is nothing in the way of part performance which would overcome the operation of s 59 of the Property Law Act so that the claimed equitable mortgage will not support the caveat. 

[7] There are two separate transactions of loan which should be described.  The first, the advance of $91,000 in June 2002 was made, on the respondent’s case, because the applicant and his wife could not borrow sufficient monies to buy a house.  Mrs Dinh approached her sister, Mrs Dang, because her husband was too embarrassed to do so.  She asked for the loan which was duly made and which provided the deposit for the purchase of the applicant’s matrimonial home.

[8] The respondent is the plaintiff in an action in the District Court, BD3570/04, which seeks the recovery of the monies allegedly lent and which is the action instituted in support of the retention of the caveat.  In that action it is pleaded, and the respondent’s affidavit confirms, that in the conversation in which the applicant’s wife requested the loan to enable her and her husband to buy the house she said, apropos of the promise to repay:

‘Sell house, sell door, sell everything and I must repay’; and

‘Lift the price of the house and take out the money again to repay it back to you’.

These remarks are said to amount to a promise that the land to be acquired partly by the lent proceeds would be charged with their repayment.

[9] The respondent claims that she demanded the loan be repaid in about March 2003 but the applicant, and his wife, have refused.  It will be recalled that the applicant alleges that the loan has been repaid in full.  The acts said to amount to part performance of the agreement to give a mortgage over the land to secure the repayment of the loan are set out in para 12(k), (l) and (m) of the respondent’s statement of claim in the District Court.  They are:

‘(k)in or about March 2003 the plaintiff saying to both the first defendant and the second defendant would they lift the house and repay the loan;

(l)the plaintiff thereby made demand, in accordance with the oral agreement for the mortgage or the charge, for the repayment of the loan to acquire the house, from the value of the house itself;

(m)in response to … those demands each of the first defendant and second defendant acknowledged their liabilities to the plaintiff to repay the loans to acquire the house and, if necessary, from the value of the house.’

[10] The plaintiff is the respondent and the first defendant is the applicant.  The second defendant is the applicant’s wife.  This rather cryptic pleading amounts to an allegation that in about March 2003 the respondent demanded the repayment of her loan and the applicant promised to make the payment ‘if necessary, from the value of the house’. 

[11] The second transaction cannot be described quite so succinctly.  It involves a money lending transaction in what is called a ‘Hui’ scheme which is a peculiarly Vietnamese institution.  It stems, so the evidence establishes, from a distrust of banking institutions in Vietnam and the recognition by families and friends that the only stable source of capital is that advanced by a syndicate of individuals who trust each other.  A hallmark of the schemes is their aurality and complete avoidance of written records.  The operation of the schemes is the subject of some detailed evidence which is not entirely coherent and which admits of some conflict.  In any event it is enough to say that the scheme involves the members of a syndicate, who will be known to each other, each contributing an amount of capital which is pooled.  The members of the syndicate bid for the right to borrow the money, which is augmented by further contributions.  The bid involves a promise to pay a specified sum for that right to borrow the capital.  The highest bid wins and the bidder borrows the money and pays the agreed bid fee which is the price paid to the contributors for the use of their money.  It is the equivalent of interest.

[12] The respondent asserts that each Hui syndicate has a ‘master’ or organiser who makes himself, or herself, personally liable for the repayment of the funds contributed by each syndicate member in the event that the borrower of the funds should default.  The respondent further asserts that the master pledges his or her own assets, real and personal, with that obligation of repayment.

[13] The respondent’s case is that the applicant and/or his wife was and/or were a master for a scheme in which the respondent advanced the sum of $51,380 which has not been repaid so that, in accordance with the terms of the scheme, the applicant and/or his wife are personally liable for the repayment and had pledged their assets with that obligation.  The applicant’s only remaining asset is the house property in respect of which the caveat has been lodged.

[14] Again, as I have mentioned, there is an embarrassment of writing.  The respondent pleads that the following were acts of part performance ‘of the oral and implied agreement to lend money under the Hui scheme and for the first and second defendants to charge their real and business property with this due performance …’:

‘(a)the plaintiff agreed to participate in the Hui schemes pleaded in paragraph 13 above;

(b)the plaintiff and the second defendant, on behalf of herself and the first defendant, entered into the mutual contracts by mouth;

(c)the plaintiff made the initial contributions to each of the Hui schemes towards the initial loans received by the first and second defendants, as required by each of the written Hui Schedules;

(d)the plaintiff continually met her regular financial obligations to pay the Hui value of her live shares at each meeting of each scheme;

(e)at the time of the early termination of the Hui schemes the plaintiff had not drawn on the scheme funds on any of her shares in any of the Hui schemes and had not recovered the value of the loans made to her by each of the schemes;

(f)the first and second defendants preparing and distributing the written Hui Schedule;

(g)the plaintiff and the first and second defendants completing their Hui schedules;

(h)the first and second defendants acknowledging their obligations to the plaintiff by arranging with her, in October 2003, to repay these debts, from which agreement they subsequently resiled after repaying only approximately $13,800.’

[15] The acts amount to no more than the advance of monies by way of loan pursuant to a Hui scheme and the applicant’s ‘acknowledgment’ that he would repay the advance and that, in accordance with Vietnamese custom his assets would be answerable for the repayment. 

[16] These acts are, in my opinion, incapable of amounting to acts of part performance to take the transaction outside the scope of s 59.  It must be understood that the respondent’s case is that she is a secured lender to the applicant.  The interest which she asserts gives her an interest over the applicant’s land is that of equitable mortgagee.  It is not enough that she alleges, and perhaps proves, that she lent money to the applicant.  She must prove that the applicant contracted to mortgage his land to secure the repayment of the loan and that the respondent partly performed that contract. 

[17] Whether conduct by a plaintiff seeking to enforce an oral contract for an interest in land can amount to part performance depends upon whether the acts are ‘unequivocally and in their own nature, referable to some such agreement as that alleged’: per Lord Selborne in Maddison v Alderson (1888) 8 App Cas 467 at 469.  This test ‘has been consistently accepted as a correct statement to the law’: Per Gibbs J (with whom the other members of the court agreed) in Regent v Millett (1976) 133 CLR 679 at 683.  The acts relied upon must be unequivocally and in their own nature referable to some contract of the general nature of that alleged: see McBride v Sandland (1918) 25 CLR 69 at 78. 

[18] By ‘some such agreement as that alleged’ is meant some contract of the general nature of that alleged, some agreement for the disposition of some interest in the land in question: see Cooney v Burns (1922) 30 CLR 216 at 222.

[19] These statements of principle form an insuperable barrier to the respondent.  The acts of part performance relied upon do not point, even equivocally, to the disposition of an interest in land.  Debts are commonplace things, as are secured debts.  The advance of money and demand for its repayment do not point in any degree to a promise to encumber land with the obligation to repay the debt.  An indication by a debtor that he will sell property to raise the money to repay the loan is no indication that his property was charged with the repayment.  It would be different if the creditor went into possession of the land to secure his repayment but nothing of that sort is alleged here.  There is no more than a demand for repayment and a promise to make it. 

[20] It was pointed out in Maddison (at 480) that acts recognised as part performance ‘have been (almost, if not quite, universally) relative to the possession, use, or tenure of the land’.  The payment of money by itself is insufficient to amount to an act of part performance though it may take on that complexion if accompanied by other conduct, but here there is no more than a demand for repayment and a promise to make it.

[21] In Francis v Francis [1952] VLR 321 there was an agreement for a loan, an advance of money, documents of title delivered to the lender and an oral agreement made to give a legal mortgage as security.  This was sufficient to amount to acts of part performance but the critical feature was the delivery of documents of title.  Without some act of that character there is nothing to give the transaction a semblance of a secured loan as opposed to an unsecured one.

[22] The respondent’s alleged caveatable interest is without substance.  The caveat should be removed and the respondent should pay the applicant’s costs of the application to be assessed on the standard basis.

[23] The respondent lately filed an application to have the action removed from the District Court to this court, the amount in dispute being slightly in excess of the monetary jurisdiction of the District Court.  I will make the order.  The action is one which should be brought on quickly.