38. Removal of caveats by courts exercising Family Law jurisdiction

Comment. 

To non – Family Lawyers, including me, one approaches the topic of this Blog as approaching a rumoured mystery.  However on examination the jurisdiction of the Family Court and Federal Circuit Court to remove a caveat is considerable.  As the cases below show the jurisdiction is exercisable not only where one party to a marriage caveats over the other’s property, but also where one party to a marriage caveats over the property of someone joined as a party to a proceeding (typically a second respondent), and even over non – party caveators with notice of it who had not intervened, the Registrar of Titles also not being a party. This removal under the TLA s. 90(3) of a caveat lodged by a non-party is unique to Family Law. 

Examples of courts exercising Family Law jurisdiction ordering removal of caveats appear to date at least from Bowe & Bateman [2012] FamCA 392 where the court issued a mandatory injunction requiring removal of a caveat.  Then in Auricchio & Auricchio and Ors (No. 2) [2014] FamCA 240 Forrest J. followed Bowe but also held that the court could have ordered removal of a caveat under the Queensland equivalent of the TLA s. 90(3). 

This Blog deals with recent Victorian cases of removal of the following caveats – 

Green & Walls [2019] FamCA 76 – caveat by Husband thwarting performance of Family Court order. 

Tailor & Tailor [2019] FamCA 383 – caveat by Wife over property owned by Husband from before marriage.  Also a reminder of the basic proposition that an application under s. 79 of the Family Law Act for alteration of property interests was not a caveatable interest – see also Hermiz v Yousif  [2019] VSC 160 (Blog 22). 

Siebel & Siebel & Anor [2019] FCCA 3367 – caveat by Husband over property owned by second respondent (son). 

Skye & Saidel and Anor [2020] FamCA 18 – caveats by non-parties over land owned by the second respondent who was the Wife’s mother. 

Green & Walls [2019] FamCA 76, (22 February 2019), Cronin J.

·        In 2014 the Husband lodged a caveat over property claiming an interest on the basis of an “implied, resulting or constructive trust”.

·     Final property orders were made in 2016 in which the Wife was required to “discharge and refinance” the mortgage over that property, thereby releasing the Husband from the mortgage, and so she would be sole registered proprietor.  Contemporaneously with the refinance the Husband was required to withdraw the caveat.  If she could not obtain this release she was required to sell the property.  There was no order indicating that the parties held any property upon trust for the purposes of the completion of their obligations under the orders.

·      Because the Husband did not comply with a particular payment order the Wife was forced to put the property on the market, requiring removal of the caveat. 

Cronin J directed the Registrar of Titles to remove the caveat.  Because the orders of the Family Court were still executory it was still seized of the matter and had power to direct the removal of the caveat arising from its accrued jurisdiction [14]-[15].  More particularly – 

(a)   The claim for removal came within the “scope of the controversy” which is “identifiable independent of the proceedings… brought for its determination”.  The scope was not limited to matters “incidental” to that which attracted federal jurisdiction in the first place but was here incidental to the completion of the obligations under the 2016 orders; [22]

(b)    What was required to be identified was whether or not the claim which might otherwise appear to be outside of the Family Court’s usual jurisdiction was essential for the determination of the federal claim.  Here, the federal claim was determined in 2016 but the efficacy of the order as an exercise of the power of the Commonwealth depended upon the caveat issue being determined; [23]

(c)    The court had power either as a court of competent jurisdiction (within the definition in s. 4 of the Transfer of Land Act) or as part of its determination of the federal claim.  The use of the State law was essential, or an integral element of the controversy between the husband and the wife about the alteration of property interests.  Accordingly the exercise of power in s. 90 was within the jurisdiction of the court. [24], [26]

Tailor & Tailor [2019] FamCA 383, (2 July 2019), McEvoy J.

·      In February 2019 the Wife caveated over property which the Husband had owned from long before the marriage.

·      In May 2019 she filed an Initiating Application seeking final orders for the adjustment of property interests.  A few days later he filed an Application seeking orders including that the Wife forthwith remove the caveat.  This order was made upon the Husband’s undertaking not to sell, dispose of, or encumber the property without notice.  His Honour held –

1.   An application pursuant to s. 79 of the Family Law Act for alteration of property interests was not a caveatable interest. 

2.   Applying Auricchio & Auricchio and Ors (No. 2), if a party had lodged a caveat on a property the subject of litigation in the Family Court, an application for the removal of that caveat was properly to be regarded as arising out of a common substratum of facts and formed part of a single justiciable controversy.  It accordingly fell within the jurisdiction of that court which could require the party to remove the caveat by the issue of a mandatory injunction in these terms pursuant to the Family Law Act s 114.

Siebel & Siebel & Anor [2019] FCCA 3367, (21 November 2019), Judge Blake

·     The Applicant Husband advanced a sum to his son towards purchase of a property.  The son became registered proprietor. 

·    In 2017 the Husband lodged a caveat on the basis of an implied, resulting or constructive trust.  In 2018 he applied under s. 79 of the Family Law Act for a just and equitable division of property of the marriage.  As the Applicant asserted that the property should be transferred to him and the Wife and then be available for distribution between them as part of the asset pool of the marriage his son was joined as second respondent. 

·     The Federal Circuit Court held that the advance of money was an unconditional gift and so that no trust existed, but that even if there had been evidence of a resulting trust the presumption of advancement applied in favour of the son.  Accordingly the property was not part of the asset pool.

·     His Honour also ordered that the Husband withdraw the caveat failing which the Registrar of Titles was directed pursuant to s. 90(3) of the Transfer of Land Act to remove the caveat.  His Honour followed the reasoning of Cronin J. in Green & Walls:
the substance of the dispute before the Court concerned the ownership of the property and the efficacy of the orders made as an exercise of the Commonwealth power depended upon the caveat issue being determined.

Skye & Saidel and Anor [2020] FamCA 18, (17 January 2020), Macmillan J. 

·       In 2011 the second respondent, who was the mother of the Wife, provided the moneys for purchase of a property of which they and the Husband became joint registered proprietors. 

·       In 2014 D Pty Ltd lodged a caveat over the property on the basis of a Credit Account Application and guarantee for the supply of materials for a business, which was signed by the Husband in his capacity as a director – the Husband had agreed to charge his interest in any real estate in which he had a beneficial interest. 

·      In 2018 a second caveat was lodged by the liquidator of that company on the basis of an equitable mortgage given by the Husband over his interest in the property in settlement of proceedings by the liquidator against the company and the Husband. 

·     In 2018 the Wife filed an Initiating Application against the Husband seeking orders for property settlement.  The orders eventually sought included an order that she and the Husband transfer their interests in the property to her mother who was formally joined as second respondent.  In an Amended Response the second respondent sought a declaration pursuant to s. 78 of the Family Law Act as to the legal and beneficial ownership of the property and consequential orders.  The Wife sought a similar declaration. 

MacMillan J was satisfied that the caveators had been given notice of the proceedings, were aware of the orders sought and had elected not to intervene in the proceedings.

Her Honour held – 

1.    Although the second respondent was not a party to the marriage, where there was a single justiciable controversy the Family Court could exercise its accrued jurisdiction to make the orders the second named respondent sought: the Court could not determine the proceedings pursuant to s. 79 of the Family Law Act without first determining the husband and wife’s legal and equitable interests in the land.  Also s. 78 provided a proper judicial basis for the making of a declaration binding the parties to this proceeding so long as the proceedings in which the declaration was to be made was, as in this case, a matrimonial cause. [25]. 

2.    As the Husband and Wife held their interest in the land on a resulting trust or on a Muschinski v Dodds constructive trust for the mother the declaration sought would be made.  [27]-[31]

3.    If the Husband had an interest in the land he could charge or mortgage it without notice to the other registered proprietors.  However, as the Husband did not hold his interest in the property beneficially he had no interest to mortgage or charge which could sustain the caveats. [42], [45]

2.    Exercising the court’s power arising under the accrued jurisdiction the Registrar of Titles would be directed under the Transfer of Land Act s. 90(3) to remove the caveats. [53], [54], [56]

 

Philip H. Barton

Owen Dixon Chambers West

2 June 2020

 

 

 

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