New South Wales Court of Appeal CITATION : Archer & Anor v Archer [1999] NSWCA 286 FILE NUMBER(S) : CA 40455/99 HEARING DATE(S) : 19 July 1999 JUDGMENT DATE : 20 July 1999 Una Evelyn ARCHER PARTIES : Ernest Robert ARCHER v Trevor Robert ARCHER JUDGMENT OF : Mason P LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT FILE NUMBER(S) : ED 2040/95 LOWER COURT JUDICIAL OFFICER : Windeyer J COUNSEL : A: J Conomy R: J Trebeck SOLICITORS : A: Peter Adams & Co, Solicitors, Sydney R: Garden & Montgomery, Solicitors, Cowra CATCHWORDS : Application for stay - No question of principle. Bridgewater v Leigh (1998) 158 ALR 66 CASES CITED: Paringa Mining & Exploration Co plc v North Flinders Mines Ltd (1988) 165 CLR 452 Jesasu Pty Ltd v Minister for Mineral Resources (1987) 11 NSWLR 110 DECISION : Injunction granted, appeal expedited THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40455/99 MASON P Tuesday, 20 July 1999 Una Evelyn ARCHER & Anor v Trevor Robert ARCHER JUDGMENT 1 MASON P: The appellant, Mrs Archer, originally sought an order that a transfer by her to her son Trevor of a one half interest in a property known as Sussex near Cudal, be set aside on the ground of undue influence. That property has now been sold. However, Mrs Archer seeks an order that a sum of money being one third of the proceeds of sale of Sussex, being the same as two thirds of a one half interest, be paid to her. She seeks that relief on the grounds of the transfer of the two thirds of her one half share was obtained by undue influence or through unconscionable conduct on Trevor's part. 2 This is a sad and troubling case. It is sad because it is a family dispute. It is troubling because of the facts and the concern that the litigation is being persisted in in circumstances that will just cause wasted expenditure. The proceedings were originally brought by Mr and Mrs Archer against Trevor Archer on the basis that each claimed that the transfer by them of Sussex to Trevor was procured by undue influence. The original proceedings were heard over 11 days in 1995 before Simos J. Simos J dismissed the claim of Mr Archer, but upheld the claim of Mrs Archer, at least in part, and his Honour made a declaration that the transfer by her to Trevor of her one half interest in Sussex was as to two thirds of that one half procured by the undue influence of Trevor. 3 Trevor Archer appealed to the Court of Appeal against the finding of undue influence. That appeal was expedited and upheld in a judgment delivered on 23 February 1999. The orders made by Simos J relating to Trevor's undue influence were set aside and a new trial was ordered. The new trial was heard in May of this year before Windeyer J. 4 In the light of the High Court's decision in Bridgewater v Leigh (1998) 158 ALR 66, the issues were enlarged to include a claim based upon unconscionable conduct in the alternative to the claim based upon undue influence. Windeyer J dismissed Mrs Archer's claim. In doing so he made findings of fact based in large part upon credibility findings adverse to Mrs Archer. His Honour clearly distinguished between the claims based upon undue influence on the one hand and those based upon unconscionability on the other, although as his Honour correctly observed the factual matrix was similar and to a large extent overlapping as regards the two alternative claims. Mrs Archer has appealed and has sought in effect orders maintaining the status quo pending the resolution of that appeal. 5 In 1994 Trevor decided to sell Sussex. He had suffered a work injury and it is clear that his capacity to continue to work Sussex as a rural property was affected. In aid of the then pending claims based upon undue influence, caveats were lodged against the land. It may be doubted whether those claims gave rise to a caveatable interest, in that the rights based upon a claim of undue influence are as I understand it, more in the nature of what is described as a mere equity rather than an equitable interest. Nevertheless leave was given by Windeyer J in 1995 to lodge further caveats after lapsing notices had been served. As I have said Trevor wanted to sell Sussex. 6 On 19 November 1996 an order was made giving Trevor power to sell Sussex on condition that the one third of the net proceeds of sale, not making any allowance for the sums required to discharge any mortgage or encumbrance, be paid into an account in the joint names of the solicitors for the parties to abide the outcome of the appeal then pending against Simos J's orders. 7 In paragraph 24 of his judgment given on the 27 May 1999, Windeyer J observed that those moneys, with interest, now total something over $214,000. It would appear that these moneys which have been referred to as the "controlled account" are now under the control of the solicitors for Trevor, but nothing turns upon that. 8 On 7 July 1999, Windeyer J dismissed the application made before him for in effect the continuance of the injunction requiring the retention of the controlled moneys. I have had regard to the reasons given by his Honour. Nevertheless the application before me is a fresh application. It is one which the High Court has indicated is one properly to be considered afresh, desirably by a judge other than the trial judge whose judgment is under appeal (see Paringa Mining and Exploration Co PLC v North Flinders Mines Ltd (1988) 165 CLR 452 at 459). 9 There has been some debate about the nature of the present application. It was at one stage described as a motion for a stay. In my view it is more properly to be seen as a motion for an injunction being a form of interlocutory injunction to preserve the subject matter of an appeal. The relevant principles have been discussed in Jesasu Pty Limited v Minister for Mineral Resources (1987) 11 NSWLR 110. There at 117, Kirby P said, Where there is an appeal as of right to this court which the appellant has exercised, where no more relief is sought than to preserve the status quo pending the outcome of the appeal, where the appeal appears to raise an arguable point, where no special prejudice is alleged, where the court could deal with the questions promptly and where the failure to give relief may involve serious (and arguably irreversible) damage to the appellant and loss of valuable rights, the balance of convenience favours the issue of an injunction upon appropriate conditions. 10 That statement is not to be read as a legislative code. The judgment of his Honour and the other judgments of the court contain a more detailed discussion of the relevant principles. 11 Counsel for the appellant, Mrs Archer, indicated that the principal basis for the appeal will be the argument that there was unconscionable conduct in the conduct of Trevor who prevailed upon his mother to make a gift in his favour in circumstances where he was aware of disadvantage under which she was placed at the time, and who brought her to Trevor's solicitor to have the relevant documentation made. It was submitted that Bridgewater establishes that the principles of undue influence and those of unconscionable conduct are distinct, and that submission is clearly correct. I should add it would appear to have been clearly recognised by Windeyer J. 12 I have already indicated that I find this a troubling, and I should add a borderline, application. My reason for that is that the facts as found in p 54 of Windeyer J's judgment appear to be a strong and sustainable conclusion of fact based upon uncontested matters or matters turning upon credibility findings not likely to be overturned. They are conclusions which indicate factual distinctions between the present case and Bridgewater. I do not understand the facts as found to indicate that Mrs Archer was at anything like the level of disability based upon age that Bill York was in Bridgewater. 13 Having said that, I am conscious of the fact that the matters which led the majority in Bridgewater to decide as they did recognised that Bill Bridgewater fully understood what he was doing, but nevertheless found that the emotional attachment and dependency which he had towards Neil, his nephew, were such as to enliven the unconscionability doctrine, and that when taken together with the circumstances of Bill being brought into Neil's solicitor, meant that there was unconscionability in the transaction which (like the present one) was effectively a gift. 14 Because I think this is an appeal that will need to explore in detail exactly what it was that moved the majority of the High Court in Bridgewater to find as they did, and because of the similarities between that case and this, I do not think it is enough to say that the facts as found by Windeyer J mean that the appeal is bound to fail. I must say, and I say this out of consideration for the parties, and the costs that would be involved, that my own view is that the appeal is not a strong one. Nevertheless it is not unarguable in the light of Bridgewater's case. There are other factors that are relevant. They include the balance of convenience and the issue of harm, possibly irreparable harm, to both litigants in this court. I must say that if this were a case to be determined just as on a stay of a money judgment, my view would be that there would not be a stay granted. But what troubles me and has ultimately moved me to order relief in this matter is some concern about the ultimate remedy that would be granted in the event, fairly unlikely though I think it to be, that the appellant succeeded in the appeal. 15 Prior to the sale of Sussex, her claim was one for recision of the transfer. That claim has been characterised as a mere equity, but it is a claim which if successful would have resulted in an order setting aside the transfer and ordering the revesting of the land, or the relevant part of the land, in Mrs Archer. As an applicant for equity she of course would have to do equity and relevant offsets would have to be taken into account. 16 There appears to be some debate amongst the academic authorities as to whether relief in the nature of equitable compensation is available. I refer to the discussion in Parkinson's Principles of Equity at p413 where reference is made to other authorities. For what it is worth, I would incline to the view that equitable compensation would be available. But having noted that a contrary view has been asserted in Meagher, Gummow & Lehane, Equity Doctrines and Remedies, I am reluctant to decide that matter without having heard argument and on an interlocutory basis. 17 When Simos J made the order that he did on 19 November 1996, it would appear that it was based on the view that Mr and Mrs Archer were then asserting a claim which if successful would have given them an interest in the land. What his Honour did was in effect to allow the land to be sold, but on a condition designed to protect their rights to the relief they were then seeking. In other words, the proceeds of the sale were to be treated as the equivalent of the land. I have not been referred to his Honour's reasons and I can only base that upon supposition deriving from the orders that he actually made. 18 It is because I have concern that it might ultimately be argued that the disposal of the moneys would put it beyond the power of the court to grant appropriate relief, and because of concern that the appeal might, and I emphasise might, become nugatory, if the moneys were to be entirely disposed of, that I think it appropriate to maintain the status quo pending the determination of the appeal. I think that is consistent with the intent of Simos J's order. It is to be remembered that at that stage the appeal was pending. Of course it was Trevor's appeal then, but the intent was that the fund be held to abide the result of the appeal which the parties expected would then have disposed of the rights of the parties. In fact the appeal led to another trial, which itself has become the subject of a further appeal. I am not suggesting that there was an issue estoppel, but I think that the principle that moved Simos J is, for the reasons I have indicated, one which I think is of some weight. 19 I have already indicated my view as to the likely outcome of the appeal, and my anxiety that Trevor not be prejudiced beyond what is necessary in order to prevent the appeal from being rendered nugatory. I do not see why relief should not be moulded in such a way as to see that Trevor is not disadvantaged in any way in relation to costs, or that his right to defend the position which is the outcome of the trial below and a position which, for what it is worth I think he will probably succeed in defending, should be prejudiced in any way through lack of funds. It is here where his own financial position I think is as much to his advantage as to his detriment. In a schedule handed up near the end of the argument yesterday I was referred to the evidence indicating the costs still outstanding, and the likely costs to be incurred in the appeal. Rather than expose the appellant to an application for security for costs, I think it appropriate that the interlocutory relief that the appellant seeks should be moulded so as in effect to allow Trevor to draw down on the controlled fund with respect to his costs. 20 I propose to expedite the hearing of the appeal, and in case there should be some damage incurred by Trevor by reason of him not being able to obtain full enjoyment of the moneys which under Windeyer J's judgment are his, I sought from the appellant an undertaking as to damages and that has been forthcoming. 21 MASON P: Gentlemen, I see that both Mr and Mrs Archer are appellants. 22 TREBECK: The grounds of appeal shows that Mr Archer senior appeals only on the issue of costs. 23 MASON P: That is right, yes. 24 TREBECK: And that's right, there was an indemnity costs order made against both of them, and unless he is an appellant, in the event that the mother is successful, the Court of Appeal won't have jurisdiction to unwind the indemnity costs order, at least of the second trial. 25 MASON P: Yes. 26 TREBECK: Not of the first but at least of the second trial, so he's correctly and appropriately a second appellant. 27 MASON P: Now is the undertaking as to damages offered by both appellants? 28 CONOMY: Your Honour, I am caught in a bit of a problem with that, I was trying to get my solicitor on the phone, Mr Ash as who argued it yesterday, and I have some trouble doing that before you came on the bench. Perhaps I should-- 29 MASON P: Mr Trebeck, I may not have been listening and it may be the issue just passed both sides by. My impression such as it is is that the undertaking was given only on behalf of Mrs, but I see in your submissions that you've framed the draft orders on the basis of Mr and Mrs giving an undertaking as to damages. 30 TREBECK: Well I did that over the lunch hour, and Mr Ash has come back after lunch and gave the undertaking, I was looking through my notes. I thought he had given that undertaking on behalf of both, but my note is not clear, but that won't affect your Honour, your Honour can just simply say on the undertaking as to damages, by both. In the event of undertaking the damages on both, by both. 31 MASON P: I have this problem, I am not sure that it was offered on behalf of both, and I'm not sure that the logic of my reasoning leads to both being required to give it because it's really only Mrs Archer who is propounding a proprietary interest, so I'm minded to make the undertaking only hers. It is probably quite academic-- 32 TREBECK: They are both movers of the motion, both appellants. Both sought the orders. The appellants will at 945-- 33 MASON P: Yes I see, yes. Mr Conomy, what I will do is I will treat it as an undertaking for both but you will have liberty to move the court today if in fact I have misunderstood the position and it's not offered by Mr. If you wish to move the court I suggest you come at 2.15 and obviously you would have to give Mr Trebeck notice of that. 34 CONOMY: Thank you your Honour, I think that will suffice thank you. 35 MASON P: For these reasons I make the following orders. 1. Upon the claimants' undertaking as to damages I order that subject to the proviso which I shall state, the moneys held in the controlled moneys account at the St George Bank, remain in that account until the determination of the appeal or further order. That order is made on the proviso that Trevor Robert Archer is at liberty to withdraw from that account moneys remaining due to his solicitors for the conduct of the first appeal, the second trial, the applications before Windeyer J on 7 July 1999, this application and amounts which will become due to his solicitors in respect of their costs and disbursements in relation to the present appeal, such withdrawals not to exceed in total $109,000. 2. I grant liberty to the parties to apply on seven days notice to vary order 1. 3. I order that the hearing of the appeal be expedited. 4. Costs of the motion to be costs in the appeal. 36 CONOMY: I haven't done yet an appeal with the different coloured books. The last appeal involved the pile of seven appeal books I had yesterday. All of those seven books were tendered as exhibit something or other in the first trial, and all the new appeal will consist of is those seven appeal books, plus three days of transcript, plus one or two exhibits I think which were just tacked on. In those circumstances I thought it would be right to draw to your attention it could be appropriate to mould special directions that there would only be one more old appeal book and that would save the appellants a lot of time, trouble and expense. 37 MASON P: Can I indicate that - I won't make this a formal direction, you can tell the Registrar this that the appeal books are to be prepared taking account of the fact that we have a set of appeal books from the earlier appeal. Hopefully there are still multiple sets. 38 CONOMY: Well at least it would only be photocopying to create more, not the extra costs. 39 MASON P: Well you'll need to inquire of the Registry, I think their practice is that once an appeal is disposed of all multiple copies are pulped except one, but you may be lucky. But space is a real premium downstairs. But at least if it's just a photocopying job that will be easier than creating fresh ones. 40 CONOMY: Thank you your Honour. ************ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.