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  This caveat was withdrawn on 10 December.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