The cases in this Blog do not each merit a separate Blog.  They are –

Downey as Trustee of the Bankrupt Estate of Robert Henry Bourne v Doyle [2023] VSC 664, Irving AsJ.  This case concerned an application under s. 90(3) by a trustee in bankruptcy to remove caveats lodged by a person, herself subsequently bankrupt, claiming that the bankrupt registered proprietor had held the land on trust for her (to hold as trustee for her children).   The trustee in bankruptcy succeeded against the bankrupt caveator.

Casey v Giderson (Costs Ruling) [2023] VSC 472, Gray J.  Gray J. ordered that the administrator of the estate of a caveator, who had failed to commence proceedings within the time stipulated in a notice under s. 89A, but who nonetheless obtained an interim injunction ordering the Registrar to delay registration of any dealing with the property, to pay the costs of the registered proprietors.  His Honour confirmed that neither a caveat nor the time stipulated in the notice could be extended.

Downey as Trustee of the Bankrupt Estate of Robert Henry Bourne v Doyle.  The facts were –

• On 16 October 2007 the defendant, who was the registered proprietor of land (the Land), transferred it to Robert Bourne who became its registered proprietor.
• It appeared that between 16 October 2007 and 10 July 2014 the defendant occupied the Land under an informal licence granted by Bourne. On 7 March 2014 she caveated over it claiming that the “registered proprietor holds his interest as trustee for the Caveator pursuant to a constructive trust and/or a declaration of trust from the registered proprietor made on 16 October 2007”.
• On 10 July 2014 a sequestration order was made over Bourne’s bankrupt estate The plaintiff was appointed his trustee. The plaintiff neither extended the informal licence granted by Bourne nor granted a new licence.  In response to a request by the plaintiff for details of her claims she stated that Bourne held the Land and another piece of land on trust for her and her children, but did not respond to the plaintiff’s subsequent request for documents supporting this.
• In 2016 a sequestration order was made over the defendant’s bankrupt estate and the Official Trustee in Bankruptcy was appointed as her trustee.
• On 28 March 2023 the plaintiff, through his solicitor, wrote to the defendant terminating any informal licence held by her over the Land.
• On 3 May 2023 the plaintiff became the registered proprietor of the Land and was informed that the Official Trustee agreed to permit the defendant’s caveat to lapse.
• The plaintiff issued a proceeding for recovery of possession and under s. 90(3) of the Transfer of Land Act (TLA) for removal of the caveat. The defendant claimed or deposed inter alia that: in 2006 she purchased the Land on trust for her children; in 2007 she purchased another property but agreed with Bourne that he would act as bare trustee for both properties and would after approximately two years reconvey the Land to her as co-trustee for her children; Bourne paid no consideration for the transfer to him; she never transferred her children’s beneficial interest in the Land to Bourne; although she had no personal interest in the Land the caveat had to be lodged in her name personally (rather than in her name as trustee for her children); she never entered into an informal licence agreement with Bourne; following a 12 month residential tenancy agreement with Bourne in 2007 she in 2012 entered into a further tenancy agreement which had automatic rolling 5 year extensions for an unlimited period; there were “hundreds of pages of evidence, including in VCAT proceedings, whereby Bourne confirmed he was not the beneficial owner of the Properties.”; she was not a tenant and had not paid rent to the plaintiff (this was disputed).

Irving AsJ. refused the application for possession but granted the application for removal of the caveat, holding –

1. Section 116(2)(a) of the Bankruptcy Act 1966 (Cth) rendered property held by a bankrupt in trust for another person not divisible among the creditors of the bankrupt. It did not preclude the vesting of the land in the trustee in bankruptcy. [55]
2. The Land was vested in the plaintiff trustee in bankruptcy notwithstanding that it had not been disclosed in the bankrupt’s statement of affairs.  As registered proprietor the plaintiff by virtue of the TLA s. 42 had an indefeasible title giving sufficient standing to apply for removal of the caveat. [59], [60]
3. To the extent the first defendant had any interest in the Land as trustee, that interest had vested in her trustee in bankruptcy notwithstanding her non-filing of a statement of affairs and her stated intention to seek the annulment of her bankruptcy. [61]
4. The plaintiff accordingly had no prima facie case of the interest claimed in the caveat. [62]

 

Casey v Giderson (Costs Ruling).

The facts were as follows –

• The first and second defendants (the Gidersons) were registered proprietors of a property. On 25 September 2017 James Casey caveated over it claiming an interest as chargee on the grounds of an agreement dated 29 August 2017 with the registered proprietors.
• In 2022 Casey died in the USA.
• On 29 May 2023 there was communication between lawyers for the plaintiff (who subsequently obtained letters of administration of Casey’s estate) and the Gidersons the gist of which was: the Gidersons’ solicitor demanded withdrawal of the caveat on the ground that their signatures on the alleged loan agreement were forged by their son; the plaintiff’s lawyer requested documentary proof, eliciting copies of the Gidersons’ driver’s licences and passports, which it was said disclosed signatures different to those on the alleged loan agreement; the plaintiff’s lawyer requested evidence of the alleged forgery and an explanation of what action the Gidersons were taking about it, eliciting the response that their son had admitted forging their signatures and that they did not intend to take action against him.
• On about 31 May the deceased estate received a notice under the Transfer of Land Act (TLA) s. 89A that the caveat would lapse on the ‘first moment of 6 July 2023’ unless before that date the s. 89A application was abandoned or the Registrar received notice that proceedings to substantiate the claim of the caveator were on foot.
• On 1 June the Giddersons’ solicitors confirmed to the plaintiff’s lawyers that the s. 89A application had been lodged.
• On 30 June the Giddersons’ solicitors confirmed that the s. 89A application would not be abandoned.
• Also on 30 June Gray J. granted letters of administration ad litemof the estate to the plaintiff enabling the plaintiff to apply on behalf of the estate for relief pursuant to s. 90(2) of the TLA.   This grant was inutile because s. 90 was irrelevant.  On 4 July the plaintiff sought and obtained an amendment to the letters of administration including enabling the plaintiff to apply for an injunction.
• On 5 July the plaintiff commenced this proceeding seeking an injunction directed to the Registrar of Titles to delay registering any dealing with the property and seeking an order extending the caveat. On that day the court declined to make any order purporting to extend the caveat on the basis that it had no such power but granted an interim injunction ordering the Registrar to delay registration of any dealing with the property until the earlier of further order or the expiry of 28 days from the date of the order.
• Both parties sought costs. The defendants obtained costs of the proceeding commenced on 5 July.  An application that the defendants (not parties to that proceeding) should pay costs of the application for letters of administration was rejected.  The judge noted ([25]) that from 1 June 2023 there was clearly a controversy between the parties that could only be resolved by the plaintiff commencing a proceeding enforcing the alleged loan agreement (and another agreement).  It fell to the plaintiff to seek to avoid the statutory outcome of the caveat lapsing by meeting the requirements of s 89A(3)(b) — that is, by commencing the proceeding and not pinning their hopes on the Gidersons abandoning their s. 89A application ([26], [33], [62]).  The court could not extend the caveat ([40], [58]) nor purportedly suspend the operation of s. 89A ([53]).   The plaintiff’s decision to delay commencing a proceeding to establish the estate’s interest in the property until the end of the hearing on 5 July 2023 was therefore not reasonable and compounded previous delay ([53]).  The court had granted the interim injunction as an indulgence to a plaintiff whose actions were the main cause of making it necessary ([54], [57]).

Philip H. Barton

          Owen Dixon Chambers West

Wednesday, June 12, 2024