Blog 55. Alleged unconscionable dealing/undue influence – no caveatable interest established.

Pryse v Castleman & Anor [2021] VSC 833, Ierodiaconou AsJ (14 December 2021)

The facts were –

  • Gweneth Pryse had three children: the plaintiff Raymond, his sister Lorna, and his other sister the first defendant Colleen.
  • A farm at Walpeup dating at least from the lives of Gweneth’s late parents consisted of land in various Lots.  In 1994 Gweneth became registered proprietor of Lots 52 and 53.  Raymond worked on the farm.
  • In 2013 Gweneth and Raymond discussed the possibility of her giving him Lots 52 and 53.  In September 2013 he had an argument with Colleen’s husband about this.  In October 2013, Gweneth met twice with a solicitor to obtain independent legal advice on the transfer, eliciting letters of advice dated 2 and 18 October 2013 described by her Honour as “forthright and frank”.  The solicitor subsequently deposed in the caveat removal proceeding that: he was not the family solicitor; at the first meeting he conferred with Gweneth for over an hour and did not doubt her capacity to understand his advice and give instructions; on his recommendation she agreed to go away and think about the matters he had raised; during the second meeting it was apparent that Gweneth had understood and considered these matters; she wanted the farm to go to her son who had worked it all his life and wanted to keep the farm together and in the family.
  • After the advice Gweneth transferred the two Lots to Raymond who became registered proprietor. They executed a deed of agreement regarding the transfer of the land.  At this time he was aged 61 and she was aged 85.
  • In 2013 (it appears after executing the transfer) Gweneth moved from the farm to a house owned by Raymond in Walpeup.  Lorna also lived there.  Gweneth was physically frail.
  • In 2014 Colleen applied to VCAT to have an administrator and guardian appointed for Gweneth.  Three medical reports were produced, including from Drs Vowels and Wardill.  Dr Wardill met with Gweneth at her home.
  • In August 2014 Colleen sought leave to withdraw the VCAT application.  Initially VCAT refused to give leave as it was not satisfied that this would be in the best interests of the proposed represented person.  However, at the conclusion of the hearing leave was granted.
  • Gweneth died on 8 July 2021.  On 7 October Raymond executed a contract to sell the two Lots.  On 20 October Colleen lodged a caveat over them.  Raymond commenced this proceeding under the Transfer of Land Act s. 90(3) for removal of the caveats.  Settlement of the purchase was due on 15 December, being the day following the hearing.

Ierodiaconou AsJ held –

  1. The law on where a transaction would be set aside for unconscionable dealing was as stated by Mason J. in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 –

    “… if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interest, takes unfair advantage of his (A’s) superior bargaining power or position by entering into that transaction, his conduct in doing so is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that the situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.”  [41]

  2. Given the independent legal advice, there was no serious question to be tried of unconscionable dealing.  This was reinforced by the fact that the proposed transfer was discussed in the family and that Lorna deposed that Gweneth said she would give the land to Raymond. [43]
  3. In equity, a transaction, whereby a donor transfers property to a donee (or recipient), is voidable if the result of undue influence exercised by the recipient over the mind of the donor. [44]
  4. There was no serious question to be tried that the transfer was the result of undue influence.  Against the suggestion that Gweneth was not exercising her own free will was –
    (a)   the independent legal advice;
    (b)   the Wardill report indicated that Gweneth had capacity;
    (c)  Lorna deposed that her mother was “sharp as a tack until the day she died”.  [45]-[46]
  5. The doctrine of laches may have been applicable in light of the matters agitated before VCAT.  However it was unnecessary to consider this further. [48]
  6. The balance of convenience favoured removal of the caveat so that the sale could proceed.  Colleen had established no prejudice to her if the caveat was removed and there should be no order regarding preservation of the sale proceeds. [51]

Philip H. Barton

Owen Dixon Chambers West

Wednesday, May 18, 2022

Blog 54. Proprietary estoppel/Trusts

Groom v Leafbusters Pty Ltd (in liq) [2021] VSC 765, Cavanough J (20 November 2021).

Olsen v Olsen [2022] VSC 95, Ierodiaconou AsJ, (1 March 2022).

Konkoly v Konkoly & Anor [2022] VSC 74, Irving AsJ, (23 February 2022).

These cases concern trusts, mainly what Cavanough J compendiously described as the “common intention constructive trust (by way of proprietary estoppel)” (Groom v Leafbusters Pty Ltd (in liq)) at [4].  In that case caveats were lodged over a property based on various forms of trust.  In a long judgment following a final hearing, ie not a proceeding under the Transfer of Land Act s. 90(3), Cavanough J found that the claims of the caveator to an interest in land failed on the facts.  His Honour also stated certain legal points, one of which was engaged in the other two cases which were proceedings under s. 90(3).  In Olsen the caveator established a serious question to be tried of an interest in land based on proprietary estoppel or a constructive trust.  In Konkoly the caveator failed to establish a serious question to be tried of any interest in land. Continue reading “Blog 54. Proprietary estoppel/Trusts”

Blog 53. Priorities between equitable interests – whether earlier interest postponed for failure to lodge caveat.

The main case in this Blog is UDP Holdings Pty Ltd v Esposito Holdings Pty Ltd (in liq) (No 2) [2021] VSC 711 (29 October 2021), Richards J which concerns priorities.  See also Blog posts 13 and 45.

For completeness I first mention Antonie v Leith [2021] VSC 662 (15 October 2021), Matthews AsJ, which simply concerned whether a loan had been repaid.  An agreement, the terms of which were disputed, was made for the plaintiff to lend money to her sister the defendant or their mother, with provision for the plaintiff to lodge a caveat in respect of the loan.  The loan was made, the caveat was lodged, and money equalling the loan amount was paid to the plaintiff by their mother in November 2018, leading to the defendant seeking removal of the caveat.  The plaintiff characterized the repayment not as being of the loan but as an advancement of the defendant’s entitlement under their mother’s Will which would be eventually be repaid to the mother’s estate by deduction from the defendant’s share of the estate.   Matthews AsJ held that the November 2018 payment was of the loan and removed the caveat.

The case the subject of this Blog is a sequel to AE Brighton Holdings Pty Ltd v UDP Holdings Pty Ltd [2019] VSC 688 and [2020] VSCA 235, the subject of Blogs 32 and 40.  Those cases had upheld UDP’s caveat over AE Brighton’s land grounded on a constructive trust arising from AE Brighton’s use of the moneys to which UDP was entitled.  Further, in UDP Holdings Pty Ltd v Esposito Holdings Pty Ltd (in liq) [2021] VSC 528 (26 August 2021) Richards J. held that UDP could trace the proceeds of the constructive trust into the land.  The land was sold and the net proceeds of sale, after payment out of UDP’s interest, which interest had priority over all other unregistered interests, remained in court.

The case the subject of this Blog was a dispute about entitlement to the funds in court between two of the holders of later unregistered interests, Temelkovski and Hagit Pty Ltd (Hagit).  The relevant facts were –

  • In 2013 AE Brighton entered a contract to purchase the land.
  • Before settlement of the contract of sale Temelkovski and AE Brighton entered an agreement on 5 November 2013 under which he agreed to make available a cash advance facility secured by a mortgage over the land and other security. The mortgage was executed on this date, with AE Brighton’s sole director Mr Esposito executing it on the company’s behalf.  Temelkovski did not register it or lodge a caveat.
  • The contract of sale was settled on 21 November 2013 and AE Brighton became registered proprietor on 2 December 2013. It drew down on the facility between 4 December 2015 and 25 September 2018.
  • In early March 2018 Hagit offered to lend money to Mr Esposito’s wife Violeta Esposito, who by then was the sole director of AE Brighton. Mr Esposito represented to Hagit that the security would include a second unregistered mortgage over the land.  Hagit’s solicitors conducted a title search which revealed two registered mortgages and two caveats by holders of unregistered interests other than that of Temelkovski.  Mr Esposito represented to Hagit that neither the caveats nor any other security interests would affect Hagit’s proposed security.
  • Ms Esposito signed the relevant documents on 5 March 2018. The security included a caveat and unregistered mortgage over the land.  The mortgage identified the mortgagor as ‘Violeta Stojcevski’ (by which name she was also known).
  • On 5 March 2018 Hagit advanced the funds to Ms Esposito. On 6 March 2018 it caveated over the land.
  • On 2 October 2019 Temelkovski caveated over the land based on the 2013 mortgage.
  • Between 8 and 12 October 2021, relying on an authority given, Hagit ‘amended’ the mortgage by replacing the mortgagor’s name of ‘Violeta Stojcevski’ with AE Brighton’s name.

Her Honour held that Temelkovski had priority –

  1. AE Brighton’s mortgage to Temelkovski remained an equitable mortgage notwithstanding that predated AE Brighton becoming registered proprietor of the land. A valid charge could be granted over future property. [15]
  2. The general rule for resolving competing equitable interests in land was, where the merits were equal, that the first interest in time had priority. However, the earlier interest could be postponed to the later by disentitling conduct by owner of the earlier interest.  The better equity was determined having regard to the conduct of each party in relation to their respective interests, a comparison of that conduct in all the relevant circumstances, and general considerations of fairness and justice.  The mere failure of the holder of the earlier interest to caveat did not dictate its postponement to the holder of a later interest who had searched the Register: it was but one circumstance to be considered. [33]
  3. Temelkovski had the better equity. Assuming, notwithstanding its subsequent amendment of the mortgage, that Hagit’s equitable interest dated from 5 March 2018, it postdated Temelkovski’s interest.  Temelkovski’s interest was not postponed because:

the mortgage was critical to Temelkovski’s decision to lend as it was the primary security; his failure to caveat was by itself insufficient to postpone;

no other conduct of Temelkovski had led Hagit to accept the land as security in the belief that Temelkovski’s interest did not exist – there were no dealings directly between them;

the land was not the primary security for Hagit’s loan;

the title search gave Hagit notice that the land was substantially encumbered, demonstrating that it was prepared to take a significant risk in accepting the property as security. [35]-[40], [43].

   Philip H. Barton

   Owen Dixon Chambers West

   Tuesday, April 5, 2022

Blog 52. Court of Appeal upholds registered proprietor’s appeal on balance of convenience ground.

Lee v Yap [2021] VSCA 297 (3 November 2021), Court of Appeal (Kyrou, McLeish and Walker JJA) is interesting because it deals with the scope of balance of convenience considerations.  In particular the court clarified that the two-stage test (ie interest in land and balance of convenience) only informed how the court should exercise its discretion under the Transfer of Land Act s. 90(3) and did not subsume or restrict the power conferred by s. 90(3).

Before proceeding to the case, however, I welcome my first international follower Dr Jan Halberda of the Jagiellonian University, Krakow, Poland, founded in 1364. I met Jan at a Conference  in 2016. I have sent him excerpts of the Transfer of Land Act with an explanation of the caveat procedure. I am reminded that Oliver Cromwell described English Law as a “tortuous ungodly jungle” and trust that Jan will  not find that an apt description of this area of law.

This case is difficult to understand without listing the parties in connected proceedings –

This appeal –

Applicant                              Ms Lee (registered proprietor).

Respondents                         Eng Hock Yap, Sau Lin Kam, Eng Hing Yap (caveators),

     Registrar of Titles.

The substantive proceeding (issued 2017) –

Plaintiffs                               Eng Hock Yap, Sau Lin Kam and Chin Huat Yap,

   (Adam Yap was formerly the second plaintiff).

Defendants                          Ms Lee, Yap Brothers Holdings Pty Ltd, Eng Seng (Vincent) Yap, Eng Hing Yap.

2019 application in the substantive proceeding for appointment of receiver –

Applicants                               Eng Hock Yap and Adam Yap

Respondents                          As in substantive proceeding.

The facts were –

  • The applicant (Ms Lee) was a director of Yap Brothers Holdings Pty Ltd (the ‘trustee’).  In 2005 the trustee transferred a property in Glen Iris to her for no consideration.   This property was subject to a mortgage and to caveats lodged by the above caveators.
  • In the substantive proceeding it was alleged that this transfer was in breach of trust and held by Ms Lee on a resulting trust for the contributors of funds to the trustee, ie for the plaintiffs.  They also claimed that this transfer, after the loss of the trust deed had been discovered by Ms Lee in 1998, occurred in breach of her duties to the trust.
  • In 2019 an application was made in the substantive proceeding for appointment of a receiver to the trust to secure the trust property.  On this application Ms Lee deposed that the trust assets included cash, shares, and properties in Carlton and Balwyn.   The trustee’s directors also offered undertakings as to the assets of the trust.   The defendants also filed proposed orders including a proposed undertaking not to deal with the Balwyn and Carlton properties and the shares, and an undertaking (the Proposed Undertaking) by Ms Lee not to sell or otherwise deal with the Glen Iris property, pending resolution of the substantive proceeding.
  • At the receivership hearing, counsel for the applicants only sought that “the title deeds” (ie the duplicate certificates of title) of the Carlton and Balwyn properties be taken into control to prevent their use by way of mortgage deposit (ie, although the court does not say it, to prevent creation of an equitable mortgage).  (Because the Glen Iris property was subject to a mortgage and its “title deeds” were not in the defendants’ possession).  The application was abandoned on the defendants’ undertaking to lodge with the Prothonotary the title deeds to the Carlton and Balwyn properties and Ms Lee’s counsel giving an acknowledgement concerning trust distributions.  The undertakings included in the defendants’ proposed orders were not sought, the Proposed Undertaking having been rejected.
  • Later in 2019 the Court declared in the substantive proceeding that the trust had failed for uncertainty and the trustee held all its assets on resulting trust for those who had contributed property to the trustee at any time.
  • In April 2021 Ms Lee entered into a contract to sell the Glen Iris property with settlement due in June. This required removal of the caveats.  Correspondence between solicitors ensued, the upshot of which was that the caveators did not object to a sale for proper market value with the only outstanding issues being where the net proceeds of sale were to be held and what deductions were to be made before this pay in, in particular were agent’s fees and commission to be deducted?  (The agent was the third defendant in the substantive proceeding).
  • Following the breakdown of discussions Ms Lee sought removal of the caveats pursuant to the Transfer of Land Act s. 90(3). She offered an undertaking to the court at first instance and to the Court of Appeal to pay the net proceeds of sale, after discharge of the mortgage and usual sale expenses, into a solicitor’s trust account or into court.
  • At the hearing before McDonald J. it was was common ground that the caveators had an arguable case of a caveatable interest. However, before considering the balance of convenience, the judge observed that: the reason why there was no undertaking at the receivership hearing to lodge the Glen Iris title deeds was because the bank had them; the Proposed Undertaking was designed to address the applicants’ concern that there was a risk that the trust property would not be preserved; and it had not been suggested at the receivership hearing that there was any risk of Ms Lee selling the property.  His Honour also observed that her subsequent conduct in entering a contract of sale was therefore inconsistent with the basis upon which the application for the appointment of a receiver had not been pressed.
  • Counsel for Ms Lee submitted that a significant balance of convenience consideration was her preparedness to pay the net proceeds of sale into court. The judge stated that viewed in isolation this submission had force but that it was necessary to include in the assessment her conduct in entering into a contract of sale in light of the resolution of the receivership application.  He observed that it was extremely unlikely that the applicants would have abandoned the receivership application if there was any prospect of Ms Lee being free to sell the Glen Iris property.
    His Honour stated that the “gravamen” of the resolution of the receivership application was that the three properties would not be dealt with until the determination of the substantive proceeding (the “gravamen finding”).  Accordingly his Honour stated that the balance of convenience strongly favoured the maintenance of the status quo.
  • As to a submission that it was relevant that Ms Lee would suffer financial prejudice if the sale did not proceed the judge stated in substance that any adverse financial consequences were of her own making.
  • Ms Lee sought leave to appeal.

The Court of Appeal granted an application for an extension of time to appeal, granted leave to appeal and allowed the appeal, holding –

  1. The court reiterated caveat removal principles in standard terms (see eg Blog 1). [78]-[80]
  2. Because the court’s power under s. 90(3) was discretionary an applicant for leave to appeal against an exercise of that discretion must establish error of the kind identified in House v The King (1936) 55 CLR 499. [78]
  3. In dealing with the Proposed Undertaking the judge was aware that it was never given but that it was relevant to understanding how the receivership application came to be resolved. It was not legally irrelevant to the caveat removal application.  The judge had not treated it as decisive, rather the judge treated as significant the manner in which the receivership application had been resolved. [83]-[84]
  4. The proposition that the judge erred in giving substantial weight to a factor which did not on proper analysis bear upon the balance of convenience, namely the Proposed Undertaking, was erroneous. This argument proceeded on a mistaken understanding of what matters a court could permissibly consider when dealing with an application under s. 90(3).  Although the courts had adopted the two stage test (ie that the caveator must estate a serious question to be tried of an interest in the land and that the balance of convenience favoured maintenance of the caveat) s. 90(3) was drafted broadly and enjoined the court to make such orders as it thought fit.  The two-stage test could only inform the court in considering whether to exercise the discretion conferred on it in any particular case and, if it chose to do so, what form that exercise should take.  This test did not subsume or restrict the power conferred by the statute.  What a court may consider as going to the balance of convenience was unconfined.  Thus, in assessing the balance of convenience it was open to the judge to have regard to the manner in which the receivership application was resolved and the assumptions that underpinned that resolution. [85]-[86]
  5. The gravamen finding, which was based in part on the Proposed Undertaking, was erroneous. On its face that finding could potentially be understood as either a finding: that the parties had agreed to resolve the receivership application on the basis that the Glen Iris property would not be dealt with, or; (a somewhat strained reading of the finding) that Ms Lee’s conduct of the receivership application had induced the applicants to believe that the Glen Iris property would not be dealt with, based on which they agreed not to pursue their application.   Neither finding was open on the evidence.  There was no evidence suggesting an agreement of that kind and the rejection by the receivership applicants of the Proposed Undertaking suggested to the contrary.  The receivership hearing was conducted in a way suggesting that the concern was not with the Glen Iris property, but with the Carlton and Balwyn properties.  The gravamen finding treated Ms Lee as being constrained in the manner she would have been constrained had she given the Proposed Undertaking. [91]-[99]
  6. The gravamen finding plainly played a significant if not determinative role, infecting the judge’s assessment of the balance of convenience. [6(c)], [99]
  7. As to the judge’s reliance on the proposition that Ms Lee was the author of the circumstances she faced, a statement of that kind could be made in any case where the registered owner entered a contract of sale before removal of a caveat, and it was not a significant factor. It could also be said that the receivership applicants were authors of their circumstances because they had rejected the Proposed Undertaking. [100]
  8. As the Court of Appeal had before it the submissions and evidence that were before McDonald J, and as the matter was urgent, it was appropriate for it to make the orders that his Honour ought to have made, ie exercise afresh the s. 90(3) discretion, and not remit the matter. Ms Lee would plainly suffer immediate financial prejudice if the caveats were not removed and there was no real evidence that the caveators would suffer prejudice if the caveats were removed.  The balance of convenience favoured the removal of the caveats provided appropriate steps were taken to preserve the proceeds of sale.  The undertaking proferred by Ms Lee’s counsel sufficed. [104]-[109]

 

 

Philip H. Barton

  Owen Dixon Chambers West

  Thursday, February 17, 2022

Blog 51. Promise to make will in favour of caveator – Whether creating interest in land – But constructive trust based on proprietary estoppel.

Goldberg v Campbell and Shaw & Anor [2021] VSC 647 (8 October 2021), Matthews AsJ.  is the third round in the legal bout between Mr Mathers and the late Mr McColley.  The first two rounds were at VCAT under Part IV of the Property Law Act (ie co-ownership disputes): [2017] VCAT 1529, Mathers v McColley [2019] VCAT 1230.  See generally on Co-ownership Disputes the author’s paper on Foley’s site in June 2020.  The facts were –

  • The second defendant (Mathers) and Alexander McColley were registered proprietors as tenants in common in equal shares of a residential property.  Mathers deposed that they had on 29 March 2005 entered into a deed of arrangement whereby McColley could live there rent-free for life, or until he permanently vacated the property, on the proviso that he execute a will devising his share in the property to Mathers.
  • McColley lived there until August 2016 when he went into a nursing home.  He never made the contemplated will.
  • On 10 March 2017 Mathers caveated claiming a freehold estate on the grounds of an agreement with McColley dated 5 August 2016.
  • McColley died in 2019 leaving a will made in 2008.  The plaintiff, who was his executor and beneficiary, obtained probate of this will.  This half interest was the main asset of the estate.  In 2021 McColley’s daughter commenced a proceeding under Part IV of the Administration and Probate Act against the estate for testator’s family maintenance.

The plaintiff sought orders under s. 90(3) of the Transfer of Land Act for removal of the caveat and under Part IV of the Property Law Act for sale of the property and division of the proceeds.  The first defendant, a firm, were Mathers’ solicitors.

Matthews AsJ ordered removal of the caveat but granted a stay pending any application to amend the caveat, holding –

  1. There was no evidence of an agreement dated 5 August 2016. In any event an application to amend the caveat would have been futile because, assuming the deed was valid and enforceable, Mathers only had a contractual right to its performance sounding in damages.   Further, even a will of McColley devising his moiety would not have given Mathers a proprietary interest in that moiety, but merely a right to an order for due administration of the estate.   And even if there had been such a devise, the moiety would have been part of the estate subject to the claim for testator’s family maintenance. [34]-[40], [43]
  1. However, it was highly likely that Mathers had a prima facie case of a freehold estate in the moiety on the grounds of a constructive trust arising from the doctrine of proprietary estoppel. McColley had made a promise as to the future acquisition of ownership of his moiety by Mathers on which Mathers had been induced to rely to his detriment.  This trust came into existence at the time of reliance: while it was for a court to determine whether to declare the trust, the equitable interest arose from the date when the detrimental reliance rendered it unconscionable to depart from the promise.  There was a credible argument that the constructive trust came into existence when McColley commenced living at the property rent‑free after entering into the deed.  It was also possible that the trust came into existence when McColley made his will. [44]-[53]
  1. The balance of convenience favoured maintenance of the caveat provided it was amended to assert this trust. This supported a possible future order for transfer of McColley’s moiety to Mathers. [61]
  1. For identical reasons to those concerning the balance of convenience, any application for an order for sale under the Property Law Act Part IV was premature. [69]

      

Philip H. Barton

Owen Dixon Chambers West

     Tuesday, October 19, 2021

Blog 50. My Papers and Articles since 1981.

This is not a Blog about caveats but is a list of what I have written over 40 years, some of which I had lost track of.

Over the Summer of 1979–80 I did the Monash LLM subject “Company Liquidations” for which I wrote an essay.  Professor Baxt called me to his office and asked if it could be published, hence: “The law relating to disputed indebtedness where the winding–up of a company is sought on the ground of inability to pay debts”: Australian Business Law Review Volume 9 p. 94 (1981).

Then in 1984 I saw a notice on the Bar Notice Board that the University of Melbourne was offering $2,500 for someone to write a paper on property law.  This was the Pinkerton Scholarship.  No one at the University seemed to know the origin of this scholarship but I gathered that someone of that surname in Ballarat had left a capital sum to establish the scholarship a long time ago – I think I have since seen art in the Ballarat Art Gallery donated by someone of that surname.  And in preparing this Blog I have googled “Pinkerton Ballarat” and see this was Frank Pinkerton born 1858.  I asked my old College Tutor Ross Sundberg for a good topic, he supplied it, I got the scholarship, wrote the paper, and, I am sure through Ross’ good offices, it was published in the Australian Law Journal: “The applicability of Section 62 of the Property Law Act  1958 (Vic.) to the transfer of Torrens System land”: (1987) 61 ALJ 215.

Next was “Compensation for loss due to town planning restriction under Part 5 of the Planning and Environment Act 1987”: The Valuer and Land Economist Volume 33 p. 239 (1994).   Then from 1995 were Law Institute Journal articles.  Then compulsory CPD arrived for legal profession giving further opportunities.  This list will be updated from time to time.

1995

Recent decisions on Mortgagee/Lessee disputes.  LIJ March.

1998

Testator’s family maintenance – the new regime.  LIJ February.

Town planning: social and economic considerations.  LIJ May.

Town planning – the medium density maelstrom (with David Whitney).  LIJ October.

2002

Urgent injunctions.  LIJ March.

Injunctions & Interlocutory Relief in Proceedings related to Property.  LAAMS Seminar Paper

2003

Which court? Choices in Victorian civil litigation (with Alan Vassie). LIJ June.

2004

Defeating Testator’s Family Maintenance claims.  LIJ January – February.

2005

Modifying and Extinguishing Restrictive Covenants in Victoria. Television Education Network Seminar Paper, October.

2006

Modifying and discharging restrictive covenants in Victoria.  LIJ January – February.

2007

Amendment and Cancellation of Planning Permits.  Victorian Bar Seminar Paper, May.

2008

Rolling out the plans – Amendment and Cancellation of Planning Permits.  LIJ January – February.

The Rule in Saunders v Vautier.  Wills and Probate Bulletin, February.

Land protection – Caveats related to Unit Trusts.  LIJ July.

2009

Lease Terminations, Repairs and Make Good.  Television Education Network Seminar Paper, February.

Be aware – Caveats related to Constructive Trusts.  LIJ April.

Caveats and Trusts.  Southern Solicitors Group Seminar Paper, July.

2011

Costs Orders in Testator’s Family Maintenance proceedings.  LIJ December.

2012

Caveats – When and when not to lodge and recent developments.  Leo Cussen Seminar Paper, June.

Modifying and discharging restrictive covenants: an update.  LIJ December.

2013

The effect of Pre-Contractual Representations.  Legalwise Seminar Paper, March.

Wills and Probate Refresher.  CPDS Seminar Paper, March.

The effect of Pre-Contractual Representations.  Business Law Study Group Paper, May.

Interpretation of restrictive covenants.  LIJ October.

2014

Property Law Case Updates.  Legalwise Seminar Paper, March.

Sale of Land – Enforcing Rights and Remedies.  Foleys List Seminar Paper, July.

Sale of Land – Enforcing Rights and Remedies.  Foleys List Seminar Paper, November.

Testator’s Family Maintenance Legislative Changes and Update.  Foleys List Seminar Paper, November.

2015

New form of contract for sale of land and its impact on your practice.  Legalwise Seminar Paper, March.

Restrictive covenants and section 173 agreements.  Television Education Network Seminar Paper, May.

Malleability of a doctrine (proprietary estoppel).  LIJ May.

Proprietary estoppel – An oasis without palm trees or even water? (with Jim Mellas). Television Education Network Seminar Paper, August.

2016

Testator’s Family Maintenance Cases over the last two years – The rise of ancillary matters.  Foleys List Seminar Paper, February.

The Contract of Sale: Getting it right from the beginning.  Legalwise Seminar Paper, March.

Residential Tenancy Eviction.  Foleys List Seminar Paper, June.

2017

Issues arising at the end of a Retail Lease (Victoria).  Television Education Network Seminar Paper, March.

Property Law Case Law Update. Legalwise Seminar Paper, March.

Property Law Recent Developments. Leo Cussen Paper, April.

Ancillary issues in testator’s family maintenance litigation.  LIJ June p42.

Questionable Caveats – to lodge or not to lodge?  Leo Cussen Seminar Paper, July

VCAT Property Case Update.  Leo Cussen Seminar Paper, August.

Lease termination: where do disputes arise? – Legalwise Seminar Paper, November.

2018

Restrictive Covenants: Interpretation and Removal – Legalwise Seminar Paper, March 2018

Caveats (with Mark McKillop).  Foleys List Seminar Paper, March.

Electronic transactions involving property – signing on the digital line (with Emma Duke). Television Education Network Seminar Paper and Webinar, March.

Informal Wills. LIJ May.

Caveats – An Update.  UNSW Law Continuing Legal Seminar Paper, July.

Co-ownership disputes. LIJ August.

Electronic Contracts in Victoria (with Emma Duke). LIJ September.

Leases – Damages and Compensation.  Legalwise Seminar Paper, November.

2019

Co-ownership Disputes.  Legalwise Seminar Paper, March.

Lease Termination – Where do Disputes Arise? Legalwise Seminar Paper, June.

Eviction Notice!  Terminating the Commercial Lease – Leo Cussen Seminar Paper, August.

Sale of Land Amendment Act 2019.  Law Institute of Victoria (LIV) Seminar Paper, October.

Caveats and Contracts of Sale.  LIJ November (p 42).

2020

Caveats under the Transfer of Land Act.  Foleys List Podcast (February) and Paper (April).

Co-ownership Disputes.  Foleys List Podcast (May) and Paper (July).

Exclusion Clauses (with Sahrah Hogan).  Leo Cussen Seminar Powerpoint, June.

Concealment and Sale of Land.  LIJ October.

Recent Cases on Formation of Contracts of Sale of Land.  Foleys List Paper, Podcast, and Video November.

2021

Non-Disclosure, Sale of Land and Litigation.  Leo Cussen Seminar Paper, February.

Recent Cases on Performance and Breach of Contracts of Sale of Land.  Foleys List Paper and Podcast, March.

Co-ownership Disputes – Update.  LIJ April.

Insights into Co-ownership Disputes.  LIV Seminar Paper, August.

The Odd Couple: Caveat Update & Exclusion Clauses.  Commercial Litigation Specialist Study Group Powerpoint, September.

Victorian Cases on Contracts of Sale of Land and on Forged Mortgages in 2021.  Foleys List Paper and Podcast, December.

 

       Philip H. Barton

          Owen Dixon Chambers West

        Tuesday, October 19, 2021

Blog 49. Service on the lodger with filthy hands who caveated – Caveat removed “pronto”.

In Sokolovska v Galea & Anor [2021] VSC 435 (23 July 2021), Croucher J.  the facts were –

  • Ms Sokolovska and Mr Galea had a turbulent friendship.  After various vicissitudes she in 2019 allowed him to live in her property at Yarraville.  She subsequently deposed that they were not intimate partners and that he (said by the Judge to have “such filthy hands”): contributed nothing to their living expenses; was only a “property damaging squatter”; commenced renovations but left the kitchen in “a ripped-up state”; filled the premises with hoarded furniture and rubbish; refused to leave; left nails in the walls, drug paraphernalia in nooks and crannies and rubbish about the place; damaged plaster; caused her to lose rental income; failed to repay loans of thousands of dollars; threw glass bottles at her; lunged at her with a metal rod; fought with others; barricaded himself inside the house; and changed the locks and installed security cameras without her consent.
  • Finally a firm of solicitors lodged a caveat on behalf of Galea, without providing his address, with notices to that firm at its address, claiming a freehold estate on the grounds of an “implied, resulting or constructive trust”.
  • The plaintiff applied for an order under the Transfer of Land Act s. 90(3).  She emailed the firm of solicitors the necessary documents.  They replied that they were not instructed to accept service on behalf of Galea and no longer acted for him.  She then emailed the necessary documents to Galea personally.

Section 89(1) is the basic caveat provision and s. 89(4) provides: “(4) Every notice relating to any such caveat and any proceedings in respect thereof if served at the address specified in the caveat shall be deemed to be duly served”.  Further, s. 113(3) provides: “The address appointed in a caveat as the place at which notices relating to the caveat may be served shall be the address for service of the caveator”.

His Honour held that the caveator, who did not appear, was properly served by reason of s. 89(4).  The caveat was removed “pronto” [60].

 

       Philip H. Barton

          Owen Dixon Chambers West

        Tuesday, October 5, 2021

 

Blog 48. On being charged $11,828 for the “experience” of applying for a loan.

Skymation Pty Ltd v ALS342 Pty Ltd& Anor [2021] VSC 386 (20 July 2021), Daly AsJ. concerns a caveat based on a term in a contract constituted by a letter of offer of a loan.  The loan never proceeded but to the surprise of the registered proprietor the caveator claimed certain preliminary expenses, a solicitor asserting “your client cannot decide not to lend the money then charge our client $11,828.00 for the experience”.  Reading this case stirred my memory of reading a Victorian decision about 15 years ago in which a financier was attempting to recover its “up front” funds for another abortive loan.  I remembered the name of counsel, David Robertson QC, and he said it was Gippsreal Ltd v Kurek Investments Pty Ltd [2006] VSC 115 at first instance and Gippsreal Ltd v Registrar of Titles (2007) 20 V.R. 157, [2007] VSCA 279 on appeal.  He said that the successful argument for the “borrower” in that case was that the contract contained so many possible let-outs for the financier that the consideration provided by it was illusory.

Skymation also concerns whether a nominee “lender becomes a party to the contract of loan.  By contrast Blogs 8 and 28 concern caveats lodged by a purchaser who had nominated a substitute purchaser.

The facts were –

  • The plaintiff (Skymation) was the registered proprietor of a property in Toorak.   Its director (Negri) had a long-running dispute with his son Richard about control of Skymation and beneficial ownership of the property.   Richard had been a director and secretary of Skymation, then resigned, then in 2019 clandestinely removed his parents and appointed himself director and secretary.   This was rectified but in the words of Daly AsJ he did not “resign”.  Richard also caveated over the property in February 2020, which caveat a judge on 15 September 2020 directed him to remove.
  • Negri enquired of a company (Assetline) about Skymation borrowing $400,000 secured by the property.  On 18 September 2020 he received a letter of offer from Assetline.  Later that day he executed and returned the Borrower Declaration included in the letter of offer with a non-refundable payment of $2,860.   The letter of offer was executed by directors of the first defendant (ALS342) and by Negri as the director of Skymation and as guarantor.
  • The letter of offer included:
    • “Assetline Investments Pty Ltd and/or its designated nominee (Assetline or Lender) are pleased to advise you that your application for finance has been approved on the terms detailed within this Offer Sheet and the attached Offer Terms.”;
    • Under the heading “Parties”: “Lender(s) Assetline Investments Pty Ltd and/or its designated nominee”;
    • Under the heading “Security”: “Other Security Such agreements, certificates and acknowledgements, securities and other documents as we or our solicitors may reasonably require”;
    • In the Offer Terms: “Any reference to “we”, “us” and “our” means the Lender”. The rest of the Offer Terms used the first person plural to describe the Lender;
    • That the Lender would instruct the solicitor to prepare and issue loan documents after the valuation and due diligence were completed;
    • That the Lender could withdraw from the proposed loan without liability;
    • Under cl. 25, that if Skymation withdrew from the proposed loan it was liable to pay what is referred to below as the ‘secured sum’, a charging clause attaching to this. The Lender was permitted to lodge a caveat to secure its interest as chargee over any real property owned by Skymation or Negri.
  • A director of ALS342 deposed that upon receipt of the executed letter of offer he instructed solicitors to prepare the loan and security documents.  On 25 September the solicitors provided a letter and these documents.  This letter described the lender as ALS342.
  • This letter also enclosed a “Checklist of required settlement documents” which included: a statutory declaration from Richard enclosing a certified copy of the executed company minutes of meeting resolving that he had resigned from Skymation and a resignation letter executed and dated by him.
  • On 30 September ALS342 lodged a caveat imposing an absolute prohibition on dealings and claiming an interest as chargee pursuant to an agreement dated 18 September 2020.
  • Negri could not obtain the resignation letter from Richard, no money was lent and the security documents were not executed.
  • In November ALS342’s solicitors wrote claiming $11,828.00 (‘secured sum’) comprising a legal fee, a 50% establishment fee and a costs of fund fee.  Skymation’s solicitors replied that:
    • ALS342 had not advised Skymation that documentation was required from Richard after completing its due diligence, and it should not have instructed preparation of loan documentation if unsatisfied with the due diligence;
    • Skymation had not withdrawn from the loan, rather ALS342 had decided not to provide it because of its insistence on documentation from Richard.  It could not do this and then “charge our client $11,828 for the experience”.

Skymation commenced this proceeding under the Transfer of Land Act s. 90(3) to remove the caveat.  ALS342’s director deposed that the proposed loan did not proceed because of the matters referred to in solicitors’ correspondence and because the security documents were unexecuted.  Negri deposed that Skymation desired to sell the property.  Skymation argued that it had no contract with a caveator and if there was a contract it did not owe the caveator anything.

ALS342 applied for leave to amend the caveat: to state the date of its interest as being 25 September 2020, and; if the court held that it had no rights, but Assetline did, to name Assetline as caveator.

Her Honour removed the caveat, holding –

  1. Where a contract permitted a party to nominate another party in substitution for the original contracting party, the substituted party did not acquire the rights and obligations of the original contracting party absent “compelling language” in the relevant agreement. Thus on the one hand in one previous case reference to “and/or nominee” in a contract of sale of shares was construed not to permit the substitution of another person as a purchaser, but on the other hand in another case a nomination clause in a contract of sale of land was construed as rendering the nominee as the purchaser, ie to effect a novation of the agreement, the vendor having known of the intended nominee before the contract was made.  [31]-[35]
  2. There was a prima facie case that the caveator was a party to the loan contract, by reason of the nomination clause in the letter of offer, and as such had assumed the rights and obligations of Assetline under the Offer Terms, because –
    • although the letter of offer referred to Assetline in the singular tense, there was a reference to Assetline’s “designated nominee” and repeated references to the lender’s obligations and rights using the first person plural;
    • of general commercial practice in the finance industry and the nature of the transaction;
    • of evidence that Skymation consented to this. [28], [43], [44]
  1. It was doubtful whether Skymation was indebted to ALS342 because –
    • the instructions to the solicitors to prepare the security documents may well have been premature because the checklist included documents which might ordinarily be required as part of a due diligence process (but, that said, cl. 14.1 of the Offer Terms may amount to Skymation’s agreement to immediately authorise ALS342 to instruct its solicitors to prepare the security documents before completion of due diligence);
    • it was at least arguable that ALS342 withdrew from the proposed loan. [28], [45]-[48]
  1. The balance of convenience favoured removal of the caveat.   In favour of the caveator was no sale being imminent and reduction in its ability to recover the alleged debt.  This was, however, outweighed by: Negri’s intention to sell; the impact of the caveat on prospective purchasers; the guarantor (ie Negri) being a man of substance; real doubt about the existence of the debt, and; because the charging clause permitted ALS342 to caveat over other property of Skymation or Negri. [28], [49]-[51].
  1. If it had been necessary to decide the matter leave would only have been granted to amend the caveat to substitute 25 September 2020 as the agreement date. [28], [52]

 

     Philip H. Barton

     Owen Dixon Chambers West

     Tuesday, September 28, 2021

Blog 47.  No contract of sale – No caveatable interest

In Hazelwood v Mercurio & Ors [2021] VSC 362 (22 June 2021) Daly AsJ –

  • primarily deals with an agent lacking authority to conclude a binding contract on behalf of a vendor (similar to the lack of authority of a solicitor: Leahy v Javni [2020] VSC 680 at [122]);
  • notes that, if a document existed whereby the vendor expressly authorised the agent to execute the contract on her behalf, it would be a breach of the Civil Procedure Act not to disclose it;
  • distinguishes English authority on whether an exchange of emails can comply with the Statute of Frauds;
  • held that if the caveators had established a binding contract the balance of convenience would have favoured them;
  • stayed the removal of caveat for 7 days to enable the caveators to apply for an injunction restraining completion of a further sale based on an alleged estoppel.

The facts were –

  • The plaintiff vendor gave an Exclusive Sale Authority to an agent (whose employee was Campbell) to market an apartment and two separately titled car parking spaces in the Melbourne CBD.  The Authority provided that the agent would advertise, market and sell the property and that “sold” meant (in normal circumstances) “the result of obtaining a binding offer”.  Clause 13 also authorised the agent to –
    • instruct a legal practitioner or conveyancer to prepare a section 32 statement, contract of sale, agree the content of either document and advise and agree on other amendments or additions to either document;
    • fill-up a standard form contract or contract to record the sale as permitted by statute;
    • negotiate and, with the vendor’s approval, agree and record, or have the legal practitioner or conveyancer record, the final terms of, and obtain signatures to, the contract;
    • attend to contract exchange; receive the price and certain advice or notices; and make public certain information.
  • The caveators deposed that on about 11 February they made an unconditional offer to purchase the apartment and one car space for $750,000, with settlement within seven days. Campbell deposed that caveators imposed a very short deadline on the offer and that he conveyed it to the vendor.
  • The caveators deposed that on 16 February Campbell said that he had found a purchaser for the other space and that the vendor had accepted their offer.  Campbell disputed this, deposing that although he could not remember his exact words he had no intention of conveying that a sale had been completed until signing of a written agreement. 
  • The vendor deposed that Campbell told her that he had located a potential purchaser of the apartment and one car space and another purchaser of the second space, and that she instructed him to amend the documents accordingly.    
  • On 18 February Campbell emailed the caveators: stating that if they could “confirm the below points for me” he would start the paperwork.  The points were: whether they had a conveyancer; their full names and address; price $750,000 with a 10% deposit; as to time for settlement; solicitors’ details.  The email concluded: “New paperwork is getting drawn up at our end so nothing for you to do at this stage”.
  • The caveators provided full names, address, lawyer’s details, and stated that settlement would be on 12 March.  
  • On 24 February Campbell emailed an unsigned section 32 statement and contract.  His email stated that he had just received these documents and not yet reviewed them “so let me know any questions you have and I’ll work through them”.   The unsigned contract named the vendor, referred to the apartment and to particulars of title of one space, but omitted purchasers’ names, price and settlement date.  When a caveator queried this Campbell replied that he had “just hit send as soon as I received and so you could have your people quickly review it before signing”.
  • On being informed by Campbell that someone else had purchased the apartment and both spaces the defendants on 2 March caveated on the grounds of a “part performed oral agreement” with the plaintiff.   On 4 March this contract was executed.  The vendor issued a notice under s. 89A of the Transfer of Land Act (TLA), leading to the caveators issuing a Proceeding with a Statement of Claim.  The vendor issued this proceeding under s. 90(3).  Campbell deposed that on average more than ten apartments in the building would be marketed and sold in any year.

The Victorian Statute of Frauds provision, contained in the Instruments Act s. 126, provides that –

“An action must not be brought to charge a person … upon a contract for the sale … of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note”.

In their Statement of Claim the caveators alleged, in the alternative to breach of contract, that the vendor represented that she would sell the apartment to them, such that she was estopped from resiling from that representation. 

Daly AsJ held –

 

Philip H. Barton

Owen Dixon Chambers West

Friday, September 17, 2021

Blog 46. Mere domestic relationship – No caveatable interest – Indemnity costs.

Burghley Pty Ltd v Soames & Anor [2021] VSC 236, McMillan J, 5 May 2021.

The facts were –

  • In 2016 the plaintiff became registered proprietor of a property at Red Hill.   The purchase price had been paid or lent by its sole director (Mr Cecil).  The plaintiff paid stamp duty and other expenses using funds borrowed from the first defendant (Ms Soames).
  • Mr Cecil and Ms Soames cohabited at the property, according to him from about 4 January 2017 to 29 November 2018, according to her from about 20 December 2016 to 24 December 2018.
  • On 11 June 2018 the loan by Ms Soames was repaid with interest.
  • On 8 November 2020 the plaintiff entered a contract of sale with settlement due on 8 February 2021.
  • On 17 November 2020 Ms Soames caused a caveat to be lodged over the property, naming the caveator as her then solicitor.  This caveat was withdrawn on 10 December. 
  • On 24 December Ms Soames issued a Federal Circuit Court (FCC) proceeding seeking relief including a declaration that she had been in a de facto relationship with Mr Cecil. 
  • On 14 January 2021 Ms Soames by her solicitors lodged a caveat claiming an implied, resulting or constructive trust.   On 25 January her solicitors stated as to the basis of the caveat that: Ms Soames instructed that a trust relationship existed between “her, your client and the vendor of the property”, the merits of which would be determined by the FCC; they believed the interest would be deemed to be a constructive trust; until the FCC determined this she legitimately sought to protect her interest in the property, and; she would lift the caveat to permit settlement of the sale if the plaintiff’s solicitors undertook to retain the proceeds in trust pending the FCC decision.  

The plaintiff applied under the Transfer of Land Act s. 90(3) for removal of the caveat.  The solicitor for Ms Soames filed an affidavit in which no basis for lodging the caveat was identified.  At the hearing Ms Soames offered to withdraw the caveat in return for $300,000 from the sale proceeds being held in trust pending determination of the FCC proceeding. 

McMillan J. held –

  1. Neither a mere relationship, nor the existence of the FCC proceeding, created a caveatable interest. [20]
  2. Claims by Ms Soames that a caveatable interest arose from the following alleged circumstances were rejected: her working for nominal wages in a restaurant owned by a company of which Mr Cecil was director or shareholder; her assisting in renovations, absent a joint endeavour in relation to purchase of the property; matters concerning companies and the loan.  The caveator accordingly had no arguable caveatable interest and the balance of convenience favoured the plaintiff. [23]-[29] 
  3. The caveat was lodged for a collateral advantage or to bring pressure on the plaintiff – a serious misuse of the caveat procedure for an ulterior or collateral purpose.  No proper attempt to articulate the basis of the caveat was given.  By inference the caveat was lodged as a bargaining chip in the FCC proceeding.   The caveator was ordered to pay indemnity costs. [21], [32]-[34]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, July 6, 2021