41. Indemnity costs – Injunction against caveating – Mercury Draught Cider drinking caveator attracts both injunction and indemnity costs.

The two cases in this Blog are, but for one point, mundane cases of removal of hopeless caveats, indemnity costs and in the second case an injunction against caveating.  The one point is that in the second case the case for an injunction was so strong that the Associate Justice did not require an undertaking as to damages.  The mundaneness of the cases is also enlivened by some remarks by the caveator in the second case.

In Devine v Bernstone [2020] VSC 507, (17 August 2020), Croucher J, the facts were –
  • The plaintiff and defendant were involved in litigation pending before the County Court relating to monies which the defendant alleged were owed to him by a company of which the plaintiff is or was a director.
  • In 2018 the defendant caveated over a property owned by the plaintiff to protect his alleged interest under the agreements the subject of the County Court proceedings. His solicitors advised him that he had no caveatable interest and the caveat was withdrawn.
  • The plaintiff subsequently entered a contract to sell this property. Settlement was due on 28 November 2019 but was postponed because the defendant caveated again, this time on the ground of an alleged agreement dated 18 November 2019.
  • The plaintiff’s solicitors wrote to the defendant seeking details regarding the alleged agreement without response. They also requested that he remove the caveat to which he responded that he would do so in exchange for payment of $240,000.
  • The plaintiff commenced proceedings under the Transfer of Land Act s. 90(3) to remove the caveat. At the hearing in December 2019 the defendant (who was self-represented) said that the reference in the caveat to an agreement dated 18 November 2019 was erroneous, stated that he instead relied on an alleged conversation with the plaintiff and on a term in a loan agreement, but ultimately accepted that the caveat had no proper basis and withdrew his opposition to removal.

His Honour ordered the defendant to pay costs on an indemnity basis because of special circumstances, being –

  1. The ground stated in the caveat did not exist. [31]
  2. The alternative justifications for the caveat raised at the hearing were unmeritorious and the alleged conversation with the plaintiff was unsupported by evidence. [32]-[34]
  3. The caveat was lodged in wilful disregard of repeated advice to the defendant (including from his solicitors) that he had no caveatable interest. [35]
  4. The caveat was lodged with the ulterior motive of exerting pressure on the plaintiff to repay monies allegedly owed. [36]
  5. Because the defendant refused to withdraw the caveat the plaintiff had to commence this proceeding and so incur costs. [37]
  6. The plaintiff’s solicitors warned that indemnity costs would be sought. [38]

Royal Melbourne Institute of Technology v Galloway & Anor [2020] VSC 575, (9 September 2020), Derham AsJ.

RMIT owned the Oxford Scholar Hotel.  It entered a contract with Schiavello Construction (Vic) Pty Ltd (Schiavello) to redevelop and refurbish the hotel.  Schiavello engaged the first defendant as a subcontractor for the works.  He claimed that Schiavello owed him money.  RMIT called for expressions of interest, closing on 26 August, for the purchase of other land (“the land”) owned by it.  After this call the first defendant on 18 August lodged a caveat on the title to the land claiming a freehold estate pursuant to an agreement with the registered proprietor dated 3 August 2020.  Various expressions of interest were lodged and RMIT desired to advance the sale.

The first defendant had no legal relationship with RMIT, whose solicitors wrote to him twice seeking withdrawal of the caveat and warning that failing this proceedings would be issued and indemnity costs and compensation for loss suffered by RMIT would be sought.  He replied derisively including inviting the writer to “feel free to drop a slab around sometime”, stating that he drank Mercury Draught Cider, stating “see you in Court honey”, and accusing RMIT of behaving like foolish little children.

He also emailed RMIT: threatening to dump a truckload of rubbish outside the hotel and to put up posters at RMIT making allegations against RMIT; making personal threats against RMIT personnel; and demonstrating that he was aware of the baseless nature of the caveat and that he intended by it to inflict legal cost and media attention on RMIT.

RMIT applied for removal of the caveat under the Transfer of Land Act s. 90(3).  The first defendant acknowledged that the caveat was a desperate attempt to induce RMIT to intervene in his dispute with Schiavello.  Derham AsJ:

  • stated the criteria for caveat removal under s. 90(3) in conventional terms (eg see Blogs under Category “Caveat – Test for maintenance on s. 90(3) application”); [16]-[18]
  • removed the caveat on the ground of no prima facie interest in the land and (if necessary) balance of convenience; [20]-[22]
  • enjoined the first defendant against further caveating on the title of any land of which RMIT was registered proprietor.  Although an undertaking as to damages was offered by RMIT his Honour stated that the legal right to an injunction was so clear and the balance of convenience so weighted that an undertaking was neither necessary nor appropriate [24]; and
  • as the caveat was lodged for an ulterior motive and being used as a bargaining chip, ordered him to pay indemnity costs. [23], [25]

Philip H. Barton

Owen Dixon Chambers West

29 September 2020

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