Chow v Cheung [2008] NSWSC 843

New South Wales Supreme Court

CITATION : Chow v Cheung [2008] NSWSC 843

HEARING DATE(S) : 20/05/08, 21/05/08

JUDGMENT DATE : 18 August 2008

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Verdict and judgment for the plaintiff for $250,000 plus interest from 30 January 2002 to the date of judgment

CATCHWORDS : PRINCIPAL AND AGENT - attorney under power - use of power of attorney otherwise than for benefit of principal - whether principal had consented to such use - turns on own facts - no question of principle

LEGISLATION CITED : Civil Procedure Act 2005, s 101

CATEGORY : Principal judgment

CASES CITED : Peninsular and Oriental Steam Navigation Co v Johnson [1938] HCA 16; (1938) 60 CLR 189

PARTIES : Man Chow - Plaintiff Wendy Lin Ho Cheung (also known as Cheung Lin Ho Chow) - Defendant

FILE NUMBER(S) : SC 4031/06

COUNSEL : Ms E A Cohen - Plaintiff Mr J F Hassett, Solicitor - Defendant

SOLICITORS : K R Hewlett & Co - Plaintiff Hassett Dixon - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

MONDAY 18 AUGUST 2008

4031/06 MAN CHOW v WENDY LIN HO CHEUNG JUDGMENT 1 The plaintiff and the defendant were formerly husband and wife. The plaintiff claims damages for breach of a contract of agency. The breach is said by the plaintiff to have been committed by the defendant when, in 2002, she used a power of attorney given to her by the plaintiff. In exercise of the authority conferred by the power of attorney, the defendant executed a transfer to the parties' son Danny of the plaintiff's interest in a residential property at Matraville of which the plaintiff and the defendant were the registered proprietors as joint tenants. The transfer was made for an expressed consideration of $1-00. 2 The defendant says that, by using the power of attorney in that way, she was giving effect to an agreement made between the parties; and that the plaintiff, by becoming a party to the agreement, consented to the transfer. 3 Both parties conducted their cases on the footing that the plaintiff should be found entitled to the relief claimed unless the court found that the agreement alleged by the defendant had in fact been made between them. It was accepted on both sides that the agreement would be a complete answer to the plaintiff's claim. 4 The central issue is therefore whether the parties entered into the alleged agreement. The defendant bears the onus of proving that they did. 5 Before addressing that issue, I should refer to some matters of background. 6 The parties married in Hong Kong in 1977. They were Hong Kong residents. They together worked in and developed a business of printing faces for watches. In 1989, they moved to Australia with their two sons, Danny (born 1978) and David (born 1982). In accordance with conditions of immigration approval, they brought or remitted A$500,000 to Australia. The plaintiff remained in Australia for only a short time (perhaps a few days, perhaps somewhat longer) before returning to Hong Kong to attend to the business. 7 The parties purchased the Matraville property in 1990. They took title as joint tenants. The purchase price of A$238,000 was satisfied as to A$138,000 from the funds brought from Hong Kong and as to the balance by a loan from Westpac secured by mortgage of the property. The defendant and the two sons took up residence in the property. 8 The relationship between the parties had been strained before the move to Australia. It deteriorated thereafter: the defendant lived in Australia and the plaintiff in Hong Kong. The marriage was dissolved by order of the Family Court of Australia in 1993. It is unnecessary to go into the question of who initiated the divorce. It is fairly clear that it suited both of them to end the marriage. 9 In 1992, after the decision to separate had been made, the defendant went to Hong Kong and, during her visit, signed a "Change of Partners" form in respect of the parties' Hong Kong printing business. She signed as "Outgoing partner". The section for the names and signatures of "Existing partners" was left blank. The form was dated 19 June 1992 and was lodged with the Business Registration Office. 10 The power of attorney at the centre of the proceedings is dated 3 March 1994, that is, some ten months after the decree nisi in the divorce proceedings. By that power of attorney, the plaintiff conferred general authority on the defendant "limited to all matters and dealings in respect of or incidental to the sale of real property at and known as [address] Matraville". The defendant took steps to obtain registration of this power of attorney in the general register of deeds some four years later, in May 1998. It was registered as No 194 Book 4200. 11 When the power of attorney was created, the payments on the Westpac mortgage were in arrears. In June 1994, however, the plaintiff brought the payments up to date. He thereafter continued to make payments until the debt was paid in full in June 2000. 12 In 2001, the plaintiff created a second power of attorney in favour of the defendant. It is dated 6 December 2001. Again, there was a conferral of general authority subject to a proviso. The proviso was expressed in such a way as to allow the power to be used only for the purpose of raising loan finance on the security of the Matraville property. 13 On 29 January 2002, the defendant, using the 1994 power of attorney, executed a transfer of the plaintiff's interest in the Matraville property to the son Danny. The consideration was expressed to be $1.00. Stamp duty of $7,240 was paid on the transfer, indicating a value of $250,000 for the interest transferred. The transfer was registered. 14 The day after execution of this transfer, Danny created in favour of the defendant a power of attorney enabling the defendant to deal with the interest that had passed to Danny. 15 In May 2002, the defendant and Danny mortgaged the property to HSBC Bank as security for a loan of $235,000. 16 Soon afterwards, the defendant and Danny purchased a property at St Leonards. Some moneys for this were obtained by a loan from Westpac secured on that property. 17 On 30 December 2002, Danny transferred to the defendant his interest in the Matraville property. Again, the consideration was expressed to be $1.00. Stamp duty of $8,640 indicates a value of $290,000 for the interest transferred. 18 In July 2004, the defendant – by then the sole owner of the Matraville property – obtained a new mortgage loan from St George Bank on the security of that property. The loan was used in part to pay off the HSBC mortgage. A month later, she obtained a further loan from St George. The total sum secured was then $710,000. 19 In December 2005, the plaintiff discovered that he was no longer a registered proprietor of the Matraville property. He had solicitors in Sydney lodge a caveat. These proceedings followed service by the defendant of a lapsing notice in respect of the caveat. 20 I come now to the agreement said by the defendant to justify her use of the 1994 power of attorney in the way described at paragraph [1] above. It is pleaded as follows: "6. (c) In 1992, the Plaintiff and the Defendant entered into an agreement ('the Settlement Agreement') for the finalisation of their financial affairs following upon their separation on the following terms:- (i) The Defendant would transfer her interest in the business operated by her and the Plaintiff in partnership in Hong Kong to the Plaintiff. (ii) The Plaintiff would transfer his interest in the property [address] Matraville, being the property described in certificate of title Folio Identifier 163/16138 ('the Property'), to the Defendant. (iii) The Plaintiff would grant the Defendant a Power of Attorney for the purposes of dealing with the Property. (iv) The Plaintiff would discharge the mortgage in respect of the Property and would continue to make the mortgage payments in relation to the Property until the mortgage was discharged. (v) The Defendant would not make any claim for spousal or child maintenance or commence proceedings pursuant to the Family Law Act and would accept financial responsibility for the maintenance and education of their children Danny and David. Particulars The Agreement is partly oral and partly implied.