Month: October 2024

Blog 85. The Giurina litigation.

The cases in this Blog partially concern caveats and illustrate a persistent use of the legal system leading to loss of a property.  They are in chronological order: Giurina v Greater Geelong City Council & Anor [2023] VSCA 148; Giurina v Greater Geelong City Council & Anor [2023] VSCA 299; Giurina v Registrar of Titles [2023] VSC 784; Giurina v Sheriff (Vic) [2024] VSCA 112.  (There are many earlier Giurina cases but this Blog commences with the Court of Appeal caveat case).   The caveat points arising in these cases are:

Giurina v Greater Geelong City Council & Anor [2023] VSCA 148 – unlike the Transfer of Land Act s. 89A(1), which enables “any person interested in the land” to apply to the Registrar of Titles for service of a notice, an applicant for relief under s. 90(3) is not require to have an interest in the land.

Giurina v Greater Geelong City Council & Anor [2023] VSCA 299 – confirming the statement of law in the previous Court of Appeal case and also rejecting the proposition that where there is a warrant of seizure and sale (while saying nothing about the standing of the Sheriff to apply to remove a caveat from the title of a property subject to the warrant) only the Sheriff had standing to apply to remove the caveats by virtue of the warrants.

Giurina v Registrar of Titles [2023] VSC 784 – a proposed caveat by an executor, in his personal capacity, claiming that he held the land on trust for himself is untenable.

Giurina v Sheriff (Vic) [2024] VSCA 112 – where a court has made an order requiring leave for lodging further caveats, the court has a broad general discretion, to be exercised by reference to whatever considerations are relevant in the particular case, in determining whether to grant leave.

By way of background –

  • Carolina Nacinovich died in 2002.  At the time of her death she was the registered proprietor of a property in Geelong West.  She was still so registered.
  • Ermanno Giurina obtained probate of the will of the deceased.  By operation of s. 13 of the Administration and Probate Act the property vested in Giurina as executor at that time.  The deceased bequeathed the property to him ‘for his own use and benefit absolutely’.   Clause 5 of the will provided:

I give devise and bequeath the rest of my estate to my trustee upon trust to sell call in and convert into money … and after the payment of my just debts funeral and testamentary expenses and death estate and succession duties State Federal or otherwise to hold the residue upon trust for the following in equal shares …

and thereafter were named two other people.

  • In October 2003 Giurina made a handwritten note which he signed twice (once as executor and once as beneficiary), reading –

‘Note 11-10-2003

I assent as Executor to dispose of property at Geelong West … to myself as beneficiary as per [3] of Will of C. Nacinovich —  no liabilities that I am aware of – no power of sale anyway —  dispose of specific devise of Property only — chase up other matters re funds —  Ermanno Giurina —  Executor.

I accept assent — agree as beneficiary to pay for outgoings, costs, etc myself privately for Property — not claim anything against Nacinovich Estate — Ermanno Giurina

Beneficiary’

  • In 2019 Greater Geelong City Council made an emergency order under s. 102 of the Building Act 1993 concerning the house on the property.  Giurina, as executor, engaged in unsuccessful litigation against the Council concerning the order, resulting in orders for costs being made against him in his executorial capacity.
  • In March 2022, at the request of the Council, warrants of seizure and sale were issued against the property.  The warrants inter alia authorised execution to be levied by the Sheriff for the purpose of satisfying the costs orders.  In his capacity as executor Giurina unsuccessfully sought to set aside the warrants.
  • In July 2022 Giurina lodged a caveat, naming himself as caveator.  The estate or interest claimed was ‘freehold estate’, the grounds of claim were ‘estoppel’ and the prohibition was listed as ‘absolutely’.
  • In August 2022 Giurina lodged a second caveat, naming himself as caveator.  The estate or interest claimed was ‘freehold estate’, the prohibition was listed as ‘absolutely’, and the grounds of claim were stated as: “Beneficiary/ies under the will of … [Nacinovich] … where probate has been granted and all debts in the estate have been paid”.
  • The Council applied under the Transfer of Land Act s. 90(3) for removal of the caveats.  Section s. 90(3) materially provided that “any person who was adversely affected” by a caveat could bring proceedings for its removal.   Giurina argued that the Council did not have standing to make the application because, as a mere unsecured judgment creditor, it did not have an interest in the land.  Matthews AsJ rejected this argument and on 9 March 2023 directed the removal of the caveats and restrained Giurina from lodging any further caveat without leave ([2023] VSC 59).   Matthews AsJ also refused an application to stay these orders.
  • On 31 March 2023 Giurina filed an application for leave to appeal to the Court of Appeal on the single proposed ground of appeal that Matthews AsJ erred in law in concluding that the Council had standing to bring the caveat removal application pursuant to s. 90(3).
  • On 14 April 2023, Giurina applied to the Court of Appeal to stay the orders of Matthews AsJ.  In Giurina v Greater Geelong City Council & Another [2023] VSCA 148 Osborn and Kaye JJA refused to grant the stay sought on the ground that the proposed ground of appeal was not reasonably arguable, noting that, unlike the administrative procedure in s. 89A(1) which enabled “any person interested in the land” to apply to the Registrar of Titles for service of a notice requiring the caveator in substance to give notice of proceedings to substantiate the caveator’s claim, an applicant for relief under s. 90(3) was not require to have an interest in the land ([15(b)]).   The construction of s. 90(3) contended for by the applicant would result in an absurd outcome, namely that a judgment creditor could never obtain a removal of caveat under s. 90(3) in aid of the sale of real property pursuant to a warrant of seizure and sale ([15(e)]).

On 17 August 2023, Giurina filed an application in the Court of Appeal to amend his proposed grounds of appeal. By that application, he sought to add the following proposed grounds of appeal:

    1. Her Honour erred at law and on the evidence before her by concluding that [Mr Giurina] did not have a prima facie case [in relation] to the interest claimed in the first caveat and even if she was wrong about that the prima facie case was very weak and consequently the balance of convenience favoured [the Council].
    2. Her Honour erred at law and on the evidence before her by concluding that [Mr Giurina] did not have a prima facie case [in relation] to the interest claimed in the second caveat and even if she was wrong about that the prima facie case was very weak and consequently, the balance of convenience favoured [the Council].
    3. Her Honour erred at law in concluding that both caveats should be removed instead of maintaining them until the trial where any dispute of the factual issues or the claims which the caveats seek to protect can be determined.

In Giurina v Greater Geelong City Council & Anor [2023] VSCA 299 Beach and McLeish JJA heard the applications for leave to amend the grounds of appeal and for leave to appeal and (if leave was granted) the appeal.   Their Honours refused leave to amend the grounds and refused leave to appeal, holding –

  1. For the reasons given in Giurina v Greater Geelong City Council & Another [2023] VSCA 148, which their Honours adopted as their own, proposed ground 1 was not reasonably arguable. Their Honours further rejected the new submission that (while saying nothing about the standing of the Sheriff to apply to remove a caveat from the title of a property subject to a warrant of seizure and sale) only the Sheriff had standing to apply to remove the caveats by virtue of the warrants. [24]-[25]
  2. Proposed ground 2 was based on an alleged representation Giurina made to himself in 2003 and his conduct following the death of Ms Nacinovich, whereby he alleged that the property belonged to him personally by reason of a proprietary estoppel.  It was totally devoid of merit.  The balance of convenience was also against maintenance of the first caveat. [37], [38], [57]
  3. Proposed ground 3 was without merit. Although the bequest to Giurina was a specific bequest of the property to him for his use and benefit absolutely, the use of the word ‘absolutely’ did not mean that the property vested in him at the time of death of the deceased. Giurina had not made out a prima facie case that the property was no longer an asset in the estate. [47]-[49], [57]
  4. Proposed ground 4 was without merit. Giurina had taken no steps to commence the proceeding or articulate a claim for the trial he sought. If, as alleged owner of the property, he applied in his personal capacity to have the warrants set aside, it would be difficult to see how that could not be an abuse of process of the kind referred to in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. [51], [55], [57]
  5. Another reason for refusing leave to amend was because Giurina had stated that the reason for the application for leave to amend was because, after a previous hearing, it had become obvious to him that ‘to have any chance of succeeding’, he ‘had to add additional grounds’. [58]

Giurina v Registrar of Titles [2023] VSC 784, Barrett AsJ.  This was an application by Giurina for leave to lodge a caveat over the property (Matthews AsJ having restrained lodgment of further caveats without leave).  Giurina argued that –

  • he (as executor) was trustee for himself (as beneficiary) pursuant to a constructive, resulting or implied trust arising as a result of his personal expenditure (as opposed to his expenditure as trustee) in relation to the property.  He had deposed that since 11 October 2003, he believed that he had not performed any executorial acts and he had since been, personally and not on behalf of the estate, making payments for the property’s outgoings in his capacity as a specific beneficiary.  These outgoings covered: rates, valuation and charges; insurance; gardening; fencing; and maintenance.   The total was approximately $120,000 excluding maintenance.
  • the property was given to him absolutely by the terms of the will and was unavailable to satisfy any debts arising out of his administration of the estate.
  • as executor he had on 11 October 2003 assented to the transfer of the property to himself, and so the estate had been fully administered.

Barrett AsJ refused the application, holding –

  1. It was a fundamental principle of common law and equity that a person who held the entire legal and beneficial interest in a property cannot hold the property on trust for themselves.  If one person had both the legal estate and the entire beneficial interest in the land he held an entire and unqualified legal interest and not two separate interests, one legal and the other equitable.  If that person first held the legal estate upon trust for some other person and thereafter that other person transferred to the first person the entire equitable interest, then again the first person did not hold two separate interests but a single entire interest – he was the absolute owner of an estate in fee simple in the land.  The equitable interest merged into the legal estate to comprise a single absolute interest in the land.  However, although the trustee could not be the sole beneficiary, the trustee could be one of the beneficiaries. [23]-[24]
  2. Further, it was impossible for a constructive trust to be imposed to avoid any unconscientious or unconscionable conduct between Giurina and himself. [25]
  3. The argument that Giurina assented (pursuant to s. 41(1) of the Administration and Probate Act) to the transfer to himself of the beneficial interest in the property was also invalid: the only interest in real property that may be conveyed by assent was the interest held by the testator.  The process of assent did not enable a personal representative to separate the legal estate and equitable interest in real property. [27]
  4. It was accordingly not arguable that Giurina had the caveatable interest asserted. [28]
  5. Further, Giurina was personally liable for debts incurred by himself as executor.  Although he had a right to an indemnity out of the assets of the estate, an executor’s liability was not necessarily limited to the assets of the estate, eg the indemnity did not extend to costs of actions improperly commenced or defended.  Accordingly, his submissions as to the different capacities in which he held the property were both of limited weight and irrelevant to the question of leave. [32]-[33]
  6. Finally, even if the question of the availability of the property to satisfy costs orders was relevant to the question of leave it was not open to the court to upset the orders of Matthews AsJ that the Property was affected by the costs orders and the warrant.  [34]

Giurina v Sheriff (Vic) [2024] VSCA 112 (Walker and Orr JJA).   This was the hearing of two applications.  In the first application the respondent was the Sheriff.  In the second application the respondent was the Registrar of Titles.  The first application arose from an application by Giurina for an interlocutory injunction to prevent the Sheriff’s sale.  The second application arose from an application by Giurina for leave to lodge two caveats on the property.  The applications were heard at first instance in the Practice Court on 23 February 2024.  On 26 February, the day before the sale was due to occur, Forbes J. refused each application on a number of grounds.  Her Honour held that the test for granting leave an application for leave to lodge a caveat was like an application to remove a caveat under s. 90(3), and accordingly the test in relation to the caveatable interest was analogous to the interlocutory injunction test.  Her Honour further noted: there was no evidence of a declaration of trust by Giurina in favour of himself – this argument appeared to stem only from the words of the will, which empowered Giurina to act as trustee as well as executor, but which did not, of itself, create a trust relationship in respect of any particular property of the estate; even if a trust in favour of oneself could be made there was not a serious question to be tried that the applicant had a caveatable interest.   Giurina sought leave to appeal from her Honour’s decision.  In the caveat proceeding he also sought an extension of time in which to file his notice of application for leave to appeal.

The Court of Appeal refused leave to appeal in the injunction proceeding and refused the application for an extension of time in the caveat proceeding, holding –

  1. The underlying basis for Giurina’s claims — that the estate has been fully administered, at least in relation to the property — was without merit.  In particular: the estate was the legal owner of the property, the property having vested in Giurina as executor upon the grant of probate but formal transfer of the registered title to the property to him not having occurred; the estate could not be regarded as having been fully administered until its assets had been distributed in accordance with the will; this was also why Giurina’s contention that he was a trustee of the property, holding it on trust for himself as beneficiary, lacked any prospect of success. [49], [50], [52], [84]
  2. The balance of convenience also weighed against the grant of an interlocutory injunction. [66]
  3. In determining whether to grant leave to lodge a further caveat the court had a broad general discretion to be exercised by reference to whatever considerations were relevant in the particular case.  In exercising that discretion it was permissible to adopt the approach taken by Forbes J., namely to assess whether the applicant for leave could demonstrate an arguable caveatable interest which, on the balance of convenience, should remain pending trial.  Even if the court was to conclude that Forbes J. made a specific error in the course of her reasoning it would make the same order, because the basis for Giurina’s asserted interest that he sought to protect by the caveats was the interest he invalidly claimed had resulted from the alleged completion of the administration of the estate. [83], [84], [86], [93], [94]
  4. Accordingly it would be futile to extend the time for filing of the notice of application for leave to appeal in the caveat proceeding. [96]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, October 29, 2024

Blog 84. A freehold estate?

The Victorian government publication “Guide to grounds of claim for caveats” lists “Freehold Estate” in certain circumstances under “Estate or interest claimed”.  In Alliance Developments Pty Ltd v Arbab & Anor [2019] VSC 832 (Blog 34) Garde J. stated at footnote [15] –

“At common law, there are three kinds of freehold estates – a fee simple, a fee tail and a life estate.  The most common freehold estate encountered in Victoria is the fee simple estate.”  Because it has been impossible to create a fee tail in Victoria for a long time (see Property Law Act  1958 Part VI) the field is reduced to fee simple and life estate.  In Marchmont v Keeshan [2023] VCC 2138 Judge Marks considered: caveats claiming a freehold estate; issue estoppel, Anshun estoppel or abuse of process arising from a previous caveat removal proceeding; and whether a stay should be granted pending an appeal from orders removing caveats, in the course of which her Honour considered the nature of a caveat.

The facts were –

  • In March 2017 the plaintiffs lent the defendant $50,000 pursuant to a written agreement.  On about 20 September 2017 the plaintiffs and the defendant entered a second agreement relating to the original $50,000 loan and to a further loan of $185,000.  Clause 8.1(b) of the Second Agreement in substance provided that if there was a default by the Borrower the Lender (i) ‘may call on the Borrower to provide a mortgage over real property determined by the Lender on such terms and conditions as are determined by the Lender, at any time prior to the Repayment Date’ and (ii) ‘At any time prior to the Repayment Date the Lender may, pursuant to this clause, lodge a caveat over any such real property it may determine as appropriate to provide security pursuant to sub-clause (a) hereof.
  • The defendant repaid part of the debt, the extent of repayment being disputed.
  • On 6 July 2020, the plaintiffs lodged caveats over properties owned by the defendant stating the ‘Estate or interest claimed’ as ‘Freehold Estate’ and the ‘Grounds of claim’ as ‘Agreement with [the Registered Proprietor(s)] dated 20/09/17’.
  • February 2023 the defendant, in the context of seeking a particular refinancing facility, applied to the Supreme Court to remove the caveats, resulting in a consent order dismissing the proceeding with no order as to costs.  Under “Other Matters” McDonald J. noted –

“The parties have agreed to resolve the matter with the First and Second Defendant consenting to a registration of first ranking mortgages over the properties the subject of the proceeding.  The First and Second defendants undertake to provide all relevant consents in writing for the registration of first ranking mortgages in relation to the facility referred to at paragraph 17 of the affidavit of Clinton Keeshan …”.

  • That refinancing did not proceed and the defendant now applied to the County Court under the Transfer of Land Act s. 90(3) for removal of the caveats.

Judge Marks removed the caveats, holding –

  1. The reference to ‘sub-clause (a)’ at the end of sub-clause (b)(ii) was to be construed as a reference to sub-clause (b)(i). [27]
  2. There was no serious question to be tried that the plaintiffs had the estate or interest claimed, because –
    1. Each caveat “overclaimed”, in that cl. 8.1 gave no sort of freehold estate interest but at most a charge or something akin to a chargeable interest.   This case was distinguishable from 187 Settlement Road v Kennards Storage Management [2022] VSC 771 (Blog 69) where a ‘freehold estate’ was claimed in circumstances involving a right which might later turn into holding the freehold estate, in that that caveator had a conditional right to purchase that land.  The highest interest ever available to the plaintiffs under cl. 8.1(b) was the right to call on the defendant to provide a mortgage. [21], [24], [25], [28], [31]
    2. Clause 8.1(b) did not entitle the plaintiffs to restrain any dealing with the freehold estate.  An unregistered charge, unregistered mortgage, or even a registered mortgage, did not prevent the registered proprietor of the land from granting further charges or mortgages.  The principal vice in a caveat which overclaimed in the manner of these caveats was that they could achieve that unjustified effect.  This was a key reason underpinning the requirement for a caveator to establish a serious question to be tried of the estate or interest claimed and not some other interest.  This case was analogous to those in which a creditor claimed ‘an estate in fee simple’. [29], [30]
  3. Further, on the proper construction of the second agreement, a ‘call’ under cl. 8.1(b)(i) was likely necessary before a caveatable interest arose (and there had not been one). [35]
  4. The balance of convenience also favoured removal of the caveats over some of the properties, because, having regard to amount arguably secured, the plaintiffs would have been protected by maintaining caveats on the other properties.  There was no identifiable prejudice to the caveators from this removal, but the registered proprietor needed to avoid the consequences of the first mortgage being in default. [36], [37], [39]
  5. None of the doctrines of issue estoppel, Anshun estoppel or abuse of process, founded on the existence of the Supreme Court order, barred this application.  In particular –
    1. although an issue estoppel could arise where a final order was made, including by consent, the estoppel could only exist in respect of matters necessarily resolved by the earlier order and where the decision was ‘final and conclusive on the merits’.  Nothing as to the validity of the caveats was necessarily resolved as a step in reaching the ‘determination’ made in the Supreme Court order; [49]-[51]
    2. An Anshun estoppel precluded the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable for the claim not to have been made or the issue not to have been raised in that proceeding.  There was no hearing on the merits in the Supreme Court: it was not arguable that it was unreasonable for claims or arguments as to the validity of the caveats (and the overclaim) to have been made in circumstances where the first proceeding was settled at an early stage without any submissions being made. [52]-[53]
    3. An abuse of process existed where in an earlier proceeding a claim was made or an issue raised and determined, or where it ought reasonably to have been so made or raised for determination. It was not the case that arguments about the validity of the caveats ought reasonably have been made in the Supreme Court proceeding in circumstances where it was settled at an early stage without submissions being made.   The circumstances underlying this application and the earlier one were different – the consent orders in the Supreme Court proceeding were tied to a particular refinancing facility being sought. [55]-[56]
  6. An application for a stay to allow time to appeal was refused.   The consequence of the orders removing the caveats did not have the effect of extinguishing whatever security the plaintiffs were entitled to over the land.  A caveat did no more than provide notice of an asserted security interest.  It did not create, nor did its removal extinguish, rights over the land.  The only effects of removing the caveats would be: to enable the defendant to refinance, involving discharge of old and registration of new mortgages; (at worst for the plaintiffs) if the properties were ultimately sold, potentially prejudice the priority of their asserted equitable rights as chargee against (hypothetical) equitable claimants to the proceeds of sale.  There was no risk of the defendant dissipating the properties. [63], [65]
  7. Section 91(4) of the Transfer of Land Act, which provides that a “caveat that has lapsed or been removed by an order of a court shall not be renewed by or on behalf of the same person in respect of the same interest” did not prevent lodgement of a fresh caveat where a caveat was removed for claiming the wrong interest (as had occurred here). [65]

Philip H. Barton

Owen Dixon Chambers West

Wednesday, October 23, 2024