Month: August 2023

Blog 76. A collection of claims, none amounting to a caveatable interest.

SJM v PMD & Anor [2023] VSC 349, Daly AsJ.

This case concerns a persistent user of the court system with sundry claims, none caveatable.  Interestingly Daly AsJ essays a definition of what is an estate or interest in land (this being the basis of a caveatable interest under the Transfer of Land Act s. 89).  Lawyers find it easier to say whether, in the particular circumstances of a case, an interest in land exists, than to define one.  Relying on Victorian authority her Honour stated –

“An estate or interest in land required to support a caveat must be an interest in respect of which equity would give specific relief against the land itself, either by way of requiring the provision of a registrable instrument or in some other way, for example, ordering a sale to enable a charge to be satisfied out of the proceeds.”

This is a comprehensive definition though not complete, because, for example it does not cover the interest of an adverse possessor, held caveatable in Nicholas Olandezos v Bhatha & Ors [2017] VSC 234 at [35], [37], nor rights of a legal not equitable nature.  In that case Derham AsJ stated at [18] –

“First, the Caveators must establish that there is a prima facie case – there is a probability on the evidence before the Court that the Caveators will be found to have the asserted legal or equitable rights or interest in the disputed land by adverse possession.”

Any general statement of what is an estate or interest in land also depends on context.  So in Stow v Mineral Holdings (Australia) Pty Ltd (1979) 180 CLR 295, which concerned the requirement that permitted objectors to the grant of a mining licence claim an estate or interest in land, Aickin J. stated at [21] –

“In my opinion the ordinary meaning of the compound expression “estate or interest in land” is an estate or interest of a proprietary nature in the land.  This would include legal and equitable estates and interests, e.g., a freehold or a leasehold estate, or incorporeal interests such as easements, profits a prendre, all such interests being held by persons in their individual capacity.  It does not embrace interests in which the person concerned has no greater claim than any other member of the public.”

  The facts were as follows –

  • The plaintiff and the first defendant (defendant) were in a de facto relationship for about a decade until 2010.  In 2003 the plaintiff purchased a property at Hoddles Creek of which she was sole registered proprietor and where they cohabited until she moved interstate in 2010, returning, she alleged, in 2012 to retake exclusive possession.  In 2012 the defendant caveated claiming an implied, resulting or constructive trust, the grounds of the claim being an alleged constructive trust.
  • On 15 August 2012 the Federal Magistrates’ Court made final consent orders in a proceeding commenced by the defendant including providing three alternatives for disposal of the property.  The first alternative (in paragraph 2 of the orders) was that the defendant pay the plaintiff $110,000 by 15 November 2012 in exchange for a transfer of her interest in the land with him discharging the mortgage and performing certain other obligations.  Failing this alternative being taken, the second alternative gave her an election to retain the property and to pay him $50,000 in exchange for withdrawal of the caveat.  Failing both the foregoing alternatives the property was to be sold and proceeds distributed in a particular manner.  Other orders included (in paragraph 5.2) that the parties would hold their respective interests in the land on trust pursuant to these orders.  The orders concluded that pursuant to s. 81 of the Family Law Act the parties intended them to, as far as practicable, finally determine their financial relationship and avoid further proceedings.
  • Due, the defendant alleged, to the plaintiff’s non-co-operation with his pursuit of the first alternative, he filed an application returnable on 31 October 2012 to enforce the final orders (the enforcement application) chiefly to require the plaintiff to give effect to the first alternative.  The case was not reached, but on that day the plaintiff’s solicitor deposed to holding the required completed Transfer document and that his client was ready, willing and able to settle the sale in accordance with the first alternative on 15 November.
  • Although the orders of 15 August required payment by 15 November the parties agreed to extend the time for settlement to 11.30am on 16 November.  The enforcement application was relisted at 10am on 16 November and stood down pending settlement of the transfer.  However, the transaction did not settle at 11.30am due to a discrepancy between the Transfer and a mortgage, the defendant’s lender Westpac requiring the parties to execute a new Transfer to conform with the terms upon which it had agreed to advance finance.  The defendant and his solicitors then took steps to remedy this and planned to be able to settle at 3:30pm.  However, at about 1.40pm the plaintiff elected to take the second alternative.  When the hearing resumed at around 2.30pm counsel for the defendant sought orders compelling the parties to attend settlement at 3:30pm.  The Federal Magistrate dismissed both this application and the enforcement application on the basis that both parties had complied with their obligations but the bank had prevented settlement, and that to order the parties to attend settlement at 3.30pm would conflict with the orders of 15 August.
  • In December 2012 and February 2014 the defendant refused the plaintiff’s tender of $50,000.
  • In January 2014 an application for leave to appeal against the dismissal of the enforcement application was itself dismissed but the judge commented in substance that instead of appealing the defendant should have commenced proceedings under s. 90SN(1)(c) of the Family Law Act which provided that if, on application by a person affected by an order in property settlement proceedings, the court was satisfied that a person had defaulted in carrying out an obligation imposed by the order and it was just and equitable, the court had a discretion to vary or set aside the order and if appropriate substitute another order.  An application to the High Court for special leave to appeal against the judge’s decision failed.
  • In February 2014 the defendant filed a contravention application in the Federal Circuit Court directed at the plaintiff and her solicitors.  This was dismissed in September 2014, and an application to the Family Court for leave to appeal against this dismissal was itself dismissed except as to a question of possession of chattels which was remitted to the Federal Circuit Court, and an application to the High Court for special leave to appeal against the Family Court decision was itself dismissed.  On the remitted question the defendant failed as did an appeal against this dismissal.
  • The plaintiff applied for removal of the caveat under the Transfer of Land Act s. 90(3), for an injunction restraining the defendant from further caveating, and for compensation under s. 118.  The defendant argued that he had an equitable interest in the land by reason of being the beneficiary of a trust created by the final orders dated 15 August 2012 and having the potential to bring an application to have the orders dismissing the enforcement application and/or the contravention application varied or set aside for fraud.  He also contended that failure of the transaction to settle at 11.30am on 16 November 2012 was not attributable to the action of his bank but to the plaintiff’s actions.

Daly AsJ ordered removal of the caveat on condition that on any sale or refinancing $50,000 be set aside to meet the defendant’s entitlements under the final orders, holding –

  1. An estate or interest in land required to support a caveat must be an interest in respect of which equity would give specific relief against the land itself, either by way of requiring the provision of a registrable instrument or in some other way, for example, ordering a sale to enable a charge to be satisfied out of the proceeds. [67]
  2. The allegation that there was fraud arising from the solicitor for the plaintiff’s affidavit sworn on 31 October 2012, or by counsel’s statements during the hearing on 16 November, was untenable. However, any claim to set aside an order for fraud, which in the case of the orders in the enforcement and contravention applications was accordingly very weak (the strength of the caveator’s claim being relevant to whether the caveat should be maintained), was a mere equity, not a proprietary interest, and so did not found a caveatable interest. [72]-[74], [86]-[90]
  3. Section 91(1) of the Evidence Act 2008 provided that evidence of a decision, or a finding of fact in another proceeding was inadmissible to prove the existence of a fact that was in issue in that proceeding. However, it was doubtful that s. 91(1) excluded evidence contained in reasons for judgment of admissions or concessions made by a party in the course of the other proceeding. The defendant had made such admissions or concessions to the effect that the plaintiff’s bank could discharge its mortgage by the scheduled date.  And the defendant or his counsel had in previous proceedings repeatedly acknowledged that the defendant’s bank was responsible for the failure to settle on 16 November 2012. [82]-[84]
  4. Any claim under the Family Law Act s. 90SN(1) was a statutory claim incapable of giving rise to an equitable interest. [90]
  5. The interpretation of the final orders and of the plaintiff’s entitlement to elect to take the second alternative had been litigated extensively. The defendant was estopped from further litigating either his entitlements under the final orders or the validity of this election.  Even if the question of the alleged fraud had not yet been expressly raised in previous court proceedings, then they should have been so raised having regard to the principles of Port of Melbourne Authority v Anshun (1981) 147 CLR 589.  It was unreasonable for the defendant not to have raised allegations of fraud in the actual enforcement and contravention applications. [90], [93]
  6. The court had considered whether the defendant had any caveatable interest, not just that claimed in the caveat (a claim to the constructive trust having been subsumed in the final orders). And, although in the final orders of 15 August 2012 paragraph 2 gave the defendant an equitable interest in the property akin to that of a purchaser (which alternative had not however been taken) and paragraph 5.2 created a trust, that trust did not survive one of the alternatives in the orders being taken. [71], [94]-[96], [99]
  7. The balance of convenience overwhelmingly favoured removal of the caveat because of the plaintiff’s financial circumstances. [100]
  8. Given the history of litigation and circumstances of the case the defendant was restrained from lodging any further caveats over the land. [103]

Philip H. Barton

          Owen Dixon Chambers West

        Wednesday, August 30, 2023

Blog 75. Masters v Cameron

Stathopoulos v Cremin & Anor [2023] VSC 238, Barrett AsJ. 

Unlike most previous Blogs this Blog does not concern an Application under the Transfer of Land Act (TLA) s. 90(3) but rather concerns a proceeding commenced following a notice by the Registrar of Titles under s. 89A(1), the plaintiff having caveated over the first defendant’s land claiming an equitable interest as purchaser under a contract of sale.  The registered proprietor applied for summary dismissal of the proceeding with consequential removal of the caveats.

Barrett AsJ considers at length principles of contractual interpretation, the law on the Instruments Act s. 126, and in particular the law where parties reach agreement on terms of a contractual nature but also agree that the matter of their negotiation shall be dealt with by a formal contract.  The foundational law is contained in the High Court judgment in Masters v Cameron (1954) 91 CLR 353 at 360 – 362 as follows –

“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases.  It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.  Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document.  Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution.  …

Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: … The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, … or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed. …

The question depends upon the intention disclosed by the language the parties have employed, and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape: … Nor is any formula, such as “subject to contract”, so intractable as always and necessarily to produce that result: … But the natural sense of such words was shown by the language of Lord Westbury when he said … “if to a proposal or offer an assent be given subject to a provision as to a contract, then the stipulation as to the contract is a term of the assent, and there is no agreement independent of that stipulation”. …

This being the natural meaning of “subject to contract”, “subject to the preparation of a formal contract”, and expressions of similar import, it has been recognized throughout the cases on the topic that such words prima facie create an overriding condition, so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract.”

There is arguably a fourth category, being a variation upon the first category, ie a class of case in which the parties are content to be bound immediately and exclusively by the agreed terms whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.

The facts were –

  • The first defendant (the vendor) was registered proprietor of Lots 1 and 2, 343 McGlone Road, Drouin.  On 3 September 2018 she and the plaintiff (Stathopoulos) entered into a contract of sale of, according to the document, Lot 2 but Stathopoulos pleaded it was of Lot 1 (the First Contract).  $5,000 was paid under this contract, which however did not proceed.
  • Stathopoulos deposed that between 30 March and 9 April 2020 he dealt with a Mr Shnall, who, in the week beginning on 30 March telephoned him saying that he was an estate agent calling on behalf of the vendor and in this conversation Stathopoulos offered $8m. for both lots.  (The vendor did not allege that Schnall was not acting for her, but deposed that on 9 April she received an offer in draft under cover of a letter from Schnall stating that his company was instructed to present this offer on behalf of a significant investor etc, without naming that investor).  Stathopoulos deposed that on 7 April Schnall told him that the vendor had rejected this offer to which he orally responded with four alternate offers.
  • Stathopoulos alleged: that later on 7 April Schnall emailed that these offers had been presented to the vendor, and Schnall sought four separate letters of offer in the terms set out in Schnall’s email, saying that, if these letters were provided by midday the next day, he would have the offer that the vendor selected signed off on the following Monday.  Schnall concluded “[l]ook forward to executing this deal for you George next week”.
  • Four letters of offer in the terms set out in Schnall’s email were emailed by Stathopoulos.  Offer 3 was in substance: the property to be purchased was 343 McGlone Road including the 1 acre lot improved by the vendor’s house; the price was $9m. payable as to $1.8m. on execution and the balance on 1 September 2021; it included a condition requiring the purchaser to pay $10,000 to cover the costs of contract preparation, refundable if the vendor did not execute the contract of sale and non-refundable if the purchaser did not execute it.
  • On 9 April Stathopoulos advised Schnall that his details were as on the First Contract, ie “George Stathopoulos and or nominee”.  Stathopoulos alleged that later that day Shnall contacted him, saying that he was with the vendor at her house, and that she accepted offer 3 for both Lots 1 and 2 and Schnall said:

“he would draw it up and get [the first defendant] to sign it, and that he would then meet me to get me to sign it.  He also told me that [the first defendant] wanted $20,000.00 for the contract preparation costs, which I communicated that I agreed to, to Mr Schnall, while he was in [the first defendant’s] presence.  In response to this, he then informed me that [the first defendant] said ‘Congratulations!”

  • On 9 and 10 April 2020 the parties respectively signed a short document headed ‘Offer to Purchase – Key Terms and Conditions’, which Stathopoulos alleged was the “Second Contract”.  Its substantive terms included: the “Properties” were both Lots; the price was $9m. payable as to $1.8m. “on the execution of the Contract of Sale” and the balance on 1 September 2021; “Contract  This offer is subject to the purchaser and vendor executing a legally enforceable Contract of Sale”; “Exclusivity  The vendor confirms that they will immediately upon acceptance of this offer cease any other negotiations and will not start any new negotiations in respect of the property [whilst] contract negotiations with the Purchaser are underway”; “Contract Preparation Payment” being in substance as in Offer 3 with the amount increased to $20,000; a term imposing confidentiality on the vendor.  The vendor signed this document under the words, headed “Acknowledgment by the Vendor”, “I, the undersigned, agree to the above-mentioned purchase details, key terms and conditions”.
  • Stathopoulos deposed that between 12 and 29 June 2020 the vendor congratulated him on completing the deal, enjoyed discussing his development plans, stated that she was particularly happy that the Precinct Structure Plan allowed for a school to be part of the development, and on 23 June said that she would tell her solicitor Mr Bridge to “hurry up” with the contracts and send them to him.
  • On 24 June the vendor emailed Stathopoulos that she had forgot to mention that she wanted the contract to include terms permitting her to continue living in the house for a year after settlement rent free and requiring him to pay rates until settlement.  Stathopoulos deposed that later that day he told Bridge that he agreed to these requests and that the vendor wanted Bridge to “hurry up” with issuing the contracts (Bridge replying that he knew what she wanted), and that in answer to Bridge’s question he confirmed that his details were the same as in the First Contract.
  • On 30 June 2020 the vendor’s solicitors emailed Stathopoulos stating –

“The Vendor Statement and Contract of Sale are ready to be finalised.
In order to proceed, can you please provide me with your full name and/or entity purchasing the property and your lawyer details.”

Stathopoulos replied “I am waiting on a GST ruling from the ATO”.

  • In April 2021 a dispute erupted between Stathopoulos and the vendor’s solicitors as to whether any contract existed.  Stathopoulos had not by this time paid the $20,000 for preparation of the contract.
  • In May 2021 the vendor entered a contract to sell Lot 2 to another purchaser due for settlement in May 2023.  In March 2022 Stathopoulos caveated over the land described in the Second Contract claiming an equitable estate in the land as purchaser.  The vendor applied under s. 89A(1) for removal of the caveats and in due course Stathopoulos gave notice to the Registrar of commencing this proceeding for specific performance of the alleged Second Contract.  The vendor counterclaimed seeking removal of the caveats.  She also issued a Summons seeking summary dismissal of the proceeding.

Barrett AsJ dismissed the application for summary dismissal, holding –

  1. There was a real question to be tried whether the Second Contract was a binding agreement, and the plaintiff had a real not merely fanciful prospect of success. While there was force in the argument that the facts fell within the third category of Masters v Cameron  it was open to the plaintiff to argue that the words “subject to contract” were not decisive and that circumstances both before and after the alleged contract supported its existence.  Consideration of those matters would probably involve consideration of the parties’ relationship through negotiations and at least one signed contract and of discussions post-dating the alleged Second Contract.  Further what occurred in the lead up to the signing of the Second Contract, including the dealings of the parties with Schnall, was somewhat obscure and could be relevant to questions of agency and attribution of knowledge.  Finally, immediately before Schnall took the four offers to the vendor he stated that he looked forward “executing this deal for you … next week” and shortly after this the vendor signed a document in which she agreed “to the abovementioned purchase details, key terms and conditions”.   The terms of the alleged Second Contract headed “Exclusivity” and “Contract Preparation Payment” did not detract from the conclusion that there was a real question to be tried whether the Second Contract was a binding agreement. [37], [50], [51]
  2. Section 126 of the Instruments Act required that the agreement on which the action was brought, or a memorandum or note of the agreement, was 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. The vendor carried the onus of establishing non-compliance with s. 126.  If Schnall was acting as her agent then it was arguable that, on 9 April 2020, she by her agent received the four offers under cover of an email that specifically identified the plaintiff as the purchaser.  There were significant questions whether the Second Contract contained a sufficient description of the purchaser, either directly by reason of Stathopoulos’ signature, or by the description as purchaser, or having regard to extrinsic evidence that accompanied the four offers, or other evidence.  On this the plaintiff had a real as opposed to fanciful prospect of success and that there was a real question to be tried. [54], [59], [65]
  3. As the question involved an interest in land the balance of convenience favoured the status quo. [52]
  4. Accordingly the caveats would remain. [67]

Barrett AsJ set out at length the law related to: contractual construction including the admissibility of post-contractual conduct ([35], [45]); the Masters v Cameron categories ([36]); and the Instruments Act s. 126 ([55], [58], [60]-[63]).

Philip H. Barton

          Owen Dixon Chambers West

        Tuesday, August 8, 2023