Supreme Court New South Wales Medium Neutral Citation: Thew v Woelms [2014] NSWSC 1554 Hearing dates: 23 October 2014 Decision date: 23 October 2014 Jurisdiction: Equity Division Before: Rein J Decision: See [13], [15] and [17] Catchwords: EQUITY - Property - Breach of Deed of Settlement - Where the District Court made orders in accordance with terms of the Deed of Settlement requiring payment of monies upon the sale of property - Ex parte hearing - Where the Court is satisfied that the defendant has been served - Where funds obtained from the sale have been disbursed by the defendant - Order for damages for breach of contract constituted by the Deed Legislation Cited: Civil Procedure Act 2005 Property (Relationships) Act 1984 Cases Cited: Wickstead v Browne (1992) 30 NSWLR 1 Texts Cited: Young, Croft and Smith, On Equity, Thomson Reuters, 2009. Category: Principal judgment Parties: Bruce Ian Thew (Plaintiff) Evelyn Joan Woelms (Defendant) Representation: Counsel: G Doherty (Plaintiff) Solicitors: Eddelbuttel Law (Plaintiff) File Number(s): 2014/186061 EX TEMPORE Judgment 1These proceedings relate to a matter that was before the District Court at Taree in 2005 and 2006 in which the plaintiff had made a claim under the Property (Relationships) Act 1984 ("the PRA") against the defendant following the termination of their twenty year relationship. The District Court proceedings were terminated when orders were made by consent on 19 September 2006 consequent upon a settlement entered by the plaintiff and defendant on 14 September 2006. 2The District Court orders were in the following terms: (1)In accordance with the Deed of Settlement dated and executed by the parties on 14 September 2006 the Defendant's property situated at 41 Macintosh Street, Forster (being the whole of the land in Folio Identifier 1/564392) is to be prepared for and listed for sale and after sale the net proceeds are to be divided as provided by the Deed of Settlement. (2)The Court notes the provisions of the Deed of Settlement dated 14 September 2006, a copy of which annexed hereto and marked with the letter "A". (3)In consideration for the execution of the Deed of Settlement, the Plaintiff consents to the making of Order 1 in his proceeding numbered 24 of 2005 and the Defendant consents to dismissal of her proceedings number 28 of 2005. (4)Each party to pay their own costs of the proceeding. 3By his Statement of Claim in these proceedings, the plaintiff claims that the defendant sold the property at 41 Macintosh Street, Forster ("the Property") referred to in Order 2 (and the Deed of Settlement) for $247,000 but in breach of the Deed and the Court order has not paid half of the net proceeds (less $30,000) to him as the Deed and the Court order required. 4The defendant has not filed a defence to the Statement of Claim and not appeared today when the matter was called. The plaintiff served the defendant in accordance with orders or substituted service obtained on 28 July 2014: see Court orders of 28 July 2014 and Notice of Motion filed 22 July 2014. Although the letters enclosing the Statement of Claim were returned with the words "not at this address" handwritten on the envelope: (1)one of the envelopes had, to the observation of Mr Eddelbuttel, the solicitor for the plaintiff, been opened and resealed; (2)the handwriting on both envelopes returned is recognised by the plaintiff as that of the defendant; (3)the address at which service was effected is a property owned by the defendant's mother Mrs Mavis Wallace (see Exh A, p 16); (4)the address at which service was effected is a property at which, it seems likely, a Mr Geoffrey Wallace resides or to which he has access, he being the brother of the defendant (see Exh A, pp 11- 13); (5)a further letter was served in the same manner advising of the hearing today and was, I was informed, not returned; (6)a process server was informed by a male occupant at the address for service that the defendant lives at that address, see affidavit of Mr Peter Charles Iverson of 14 July 2014; and (7)someone rang Mr Eddelbuttel's office on 29 August 2014 referring to himself as "the mail collector" and referring to a letter from Mr Eddelbuttel, see affidavit of Ms Alexa Mary Toohey of 3 September 2014. 5I am satisfied that the defendant has not only been served in accordance with the orders for substituted service but has had notice of the proceedings and today's hearing. 6The plaintiff relies on the affidavit of Mr Mark Eddelbuttel of 20 October 2014 and one of the plaintiff sworn today. On the evidence before me it is clear that the defendant has sold the Property to a third party for $247,000. That third party is now registered as the owner of the Property. 7The evidence reveals that a net figure of $220,000 was received on settlement by the conveyancer retained by the defendant: See p 64 of Exh A. Out of that amount funds were then disbursed by the payment of rates and for fees and disbursements: See Exh A, pp 61-64 and the following payment payments were then made: (1)$44,094.43 to discharge a mortgage to the Commonwealth Bank given by the defendant; (2)$12,000 to Mrs Mavis Wallace; (3)$25,000 to Mr Geoffrey Wallace; (4)$10,000 to Mr Peter Davis; (5)$10,000 to Mr Stephen Davis; (6)$40,000 to Westpac Banking Corporation; and (7)$79,641.25 to the defendant. 8Mr Wallace is, as I have mentioned, the defendant's brother. Mrs Wallace is the defendant's mother. Peter and Stephen are sons of the defendant by a former marriage (see para 34 of Mr Thew's affidavit). 9The mortgage to the Commonwealth Bank which was discharged was not on the property at the time of the settlement and the orders of the District Court (see Exh A p 65 and see para 20 of Mr Thew's affidavit of 24 October 2014) and constituted a breach by the defendant of her promise to the plaintiff not to encumber the property. The Westpac account is one in the name of the defendant. 10It follows that the adjusted net amount which was available for distribution (before deduction of the $30,000) was $220,735.68. The plaintiff was entitled to $110,367.84 less $30,000 i.e. $80,367.84. 11The plaintiff has not received that money from the sale, see para 19 of his affidavit and Exh A, pp 61-64. There is no question that the defendant has not complied with the orders made by consent by the District Court in July 2006 or obligations imposed on her by the Deed. 12In the Statement of Claim various forms of relief were sought but today the relief now sought is a determination of the amount due from the defendant to the plaintiff and ancillary orders to which I shall refer in a moment. 13In my view the plaintiff is entitled to an order that the defendant pay him his half share of the net proceeds. I do not think that the $30,000 should be deducted because the plaintiff has been put to considerable expense in endeavouring to deal with the defendant's breach and there is evidence from Mr Eddelbuttel that the costs and disbursements will exceed $30,000. 14Because the evidence establishes that all of the funds obtained from the sale have been disbursed by the defendant the relief might best be characterised as an order for payment of equitable debt as result of breach of constructive trust imposed on the defendant by virtue of the Deed and the Court orders (see on the topic of equitable debt Wickstead v Browne (1992) 30 NSWLR 1 at 14-15 per Handley JA and Cripps JA and see para 16.1140 in Young, Croft and Smith On Equity Thomson Reuters, 2009) or even more simply as sought in the alternative in the Statement of Claim, damages for breach of contract constituted by the Deed. 15The plaintiff has been out of pocket since the property was sold in January this year and the monies due to him were not paid. He is entitled to interest calculated in accordance with s 100 of the Civil Procedure Act 2005 as informed by Practice Note SC Gen 16. The interest calculated on $80,367.84 from seven days after the date of settlement i.e. from 28 January 2014 and using the rates indicated in the Practice Note is an amount of $3,849.94. 16I propose to order the defendant to pay the plaintiff's costs on an indemnity basis given the circumstances which I have recounted but noting that $30,000 towards those costs has been deducted in arriving at the figure to be paid to the plaintiff. If following assessment the costs and disbursements are found to be less than $30,000 the defendant should have liberty to apply to obtain a refund from the plaintiff to her of the difference between the $30,000 paid and the amount of costs so assessed. If on assessment the costs and disbursements are found to exceed $30,000 the balance will still be payable by the defendant. 17The actions of the defendant involve a significant breach of the orders of the District Court and may well constitute a contempt of Court with potentially very serious consequences. The defendant was represented by solicitors and a barrister in the District Court proceedings and the plaintiff says that he and the defendant were present in Court in the last stages of the litigation: see para 11 of Mr Thew's affidavit. I do not need to express any final views on that aspect of the matter but in granting the relief which has been sought by the plaintiff today, I do not intend to preclude the plaintiff from taking such further action in the District Court or elsewhere in respect of the failure to abide by orders made by that Court as he may be advised. ********** 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. Decision last updated: 06 November 2014