Blog 98. Mortgagee takes priority over caveators purchasing under joint venture agreement.

Australian Commercial Mortgage Corporation Pty Ltd atf The Balmain Opportunity Trust v Negash [2025] VSC 502, Harris J. (19 August 2025). This case concerns a unique purchase arrangement, whereby in substance a number of persons purchased off-the-plan pursuant to a joint venture agreement and/or contract, and whose caveatable interests were postponed to a subsequently registered mortgage. The facts were –

In 2014 Emanda Pty Ltd (Emanda) entered into a contract to purchase land at Tarneit (the Property). Before settlement of its purchase it offered lots in the Property’s prospective subdivision for purchase. There were two relevant documents: a Deed of Joint Venture Agreement (JVA) and a contract of sale. The JVA provided –
- “In exchange for the Contributor contributing to the venture costs and paying the additional contribution, the Contributor is herein granted an Option to Purchase the Nominated Lot and at the completion of the project and upon the Nominated Lot being available for sale, if the option to purchase is exercised …, the additional contribution will be credited towards the purchase of the Nominated Lot by the Contributor (as Purchaser) upon settlement of the sale … pursuant to a Contract of Sale, …” (Recital F);

- “Emanda agrees to the Contributor joining the venture with Emanda to the extent of the Contributor contributing to the venture costs and paying the additional contribution in exchange for the Contributor being granted an option to purchase the Nominated Lot” (cl. 2.5);

- that “ESVC amount” was:
  “The share in venture costs payable by each Contributor, which is calculated based on the total of the venture costs divided equally between each Contributor (subject to the number of Lots nominated to each Contributor)” (cl 1.3); .

- that “additional contribution” was –
  “A sum of money payable toward the venture by the Contributor equivalent to the agreed value of the Nominated Lot, which is monies that will be later deemed as payment (or part payment …) of the Purchase Price for the Nominated Lot if the herein option is exercised ….” (cl. 1.3);

Clause 2.14.1 repeated this definition.

- “The Contributor’s contribution is payable as follows:
  (a) an initial sum of money on signing of this Deed, as specified in the Schedule herein (“initial contribution”);

(b) a further sum is to be paid by the date set out in the Schedule (“second contribution”); and

(c) the balance of the contribution payable by the Contributor is to be paid in instalments as set out in the Schedule herein (“subsequent contributions”) …, as set out in the Schedule herein for the term of the venture with any balance owed …, to be paid in full at settlement.” (cl. 2.14.10)

- The schedules to individual JVA’s varied between contributors. Each schedule provided for: the number, size and value of the lot; the ESVC amount, additional contribution and total contribution, and the dates and amounts of initial and second contributions. Item 7(b) in the Schedule read –

“7. Contribution/s:

…

(b) ESVC Amount Total: The amount shown in item 4

(i) Subsequent contributions: Instalment Amount:
Date payable: Weekly Fortnightly Monthly Quarterly
*circle appropriate one.
Date of payment of
First Subsequent
Contribution: Thirty (30) days after the payment of the Second Contribution being on”

In many of the JVA’s, item 7(b) in the Schedule was uncompleted and it was difficult to reconcile the amounts stated under different headings in the document.

- “The herein mentioned option to purchase is available to be exercised or waived by the Contributor once the Contributor receives notice by Emanda of the Nominated Lot being available for sale” (cl. 2.33.1);

- that a contract of sale would be entered into simultaneous with execution of the deed (cl. 2.6).
The contract of sale provided for price, deposit and balance payable. Special condition 22 referred to “Instalment payments outlined in deed of agreement”, and stated:
“The Purchaser and Vendor hereby agree that this Contract of Sale is subject to and conditional upon both parties entering into a deed of agreement for payments to be made by the Purchaser toward Development Costs.”

The court inferred that the “deed of agreement” was the JVA.

Some persons executed only one of the JVA or contract of sale.
The defendants which were legally represented gave evidence of paying over $2 m. in total under the contracts and deeds.
Emanda became registered proprietor of the Property in January 2017. It continued to offer interests in the land. Contributors lodged caveats, the 1^st to 9^th defendants (being largely those caveating until early 2025) claiming a “freehold estate”, with those caveating in July 2025 claiming as “lienee” based on a purchaser’s lien.
Two companies (Perpetual and Balmain Fund Administration) were lenders. In May 2022, following contact from Emanda’s mortgage broker, Mr Darjai, a loan originator at Balmain Nb Corporation Ltd, Mr Logan, provided an indicative funding proposal. On inquiry about the caveats Darjai in substance responded that: the director and primary representative of Emanda, Mr Seid, had asked his family members to caveat to protect Emanda’s interests; there were no agreements between Emanda and the caveators; the caveats were lodged on legal advice to meet the best interests of Mr Seid and the development; all caveats would be removed to facilitate refinancing; there were no third party investors; the caveats had been lodged because Mr Seid thought this would prevent any mortgagee from charging high penalty interest.
Logan gave evidence that he accordingly thought that the caveators had neither interests in the Property nor agreements with Emanda. There was also evidence that inquiries had been made of the municipal council on behalf of the prospective lenders.
On about 1 July 2022 Emanda entered into a loan agreement with Perpetual and Balmain Fund Administration secured by mortgage. On application by Emanda the Supreme Court ordered removal of the caveats to permit registration of the mortgage, with the caveators having the right to relodge their caveats thereafter. The mortgage was registered in August 2022 and the caveats were relodged.
Emanda defaulted under the mortgage. The mortgage debt was assigned to the plaintiff (ACMC). It exercised its power of sale as mortgagee by contract dated 23 December 2024 due for settlement on 10 August 2025.
In late June 2025 the contracts of sale and JVAs were terminated.
ACMC applied under the Transfer of Land Act s. 90(3) for removal of the caveats. On the day of the hearing it disclosed a sale price of $8.4 m. and a mortgage debt of about $7 m., leaving (after sale costs, tax and legal costs) little if any surplus. During the hearing it filed an affidavit concerning its financial position.

The Sale of Land Act 1962 s. 29A(1) provided that

“For the purposes of this Act a contract is a terms contract if it is an executory contract for the sale and purchase of any land under which the purchaser is-

(a) obliged to make two or more payments (other than a deposit or final payment) to the vendor after the execution of the contract and before the purchaser is entitled to a conveyance or transfer of the land; or …”

Section 29P prohibited a vendor from mortgaging land subject to the terms contract, and s. 29S(1)(a) rendered such a contract voidable by the purchaser before completion. Section 29S(1)(c) provided inter alia that a mortgagee with actual or constructive notice of the interest of such a purchaser could not exercise its remedies and must discharge the mortgage. Section 29V(1) provided that constructive notice only existed if notice of the purchaser’s interest would have come to the mortgagee’s knowledge if the mortgagee had made: (a) a proper inspection of the relevant land; and (b) such inquiries as ought reasonably to be made by the mortgagee of the mortgagor as to the rights of any person in possession; and (c) inquiries of the relevant municipal council; and (d) such searches, inquiries and inspections in the Office of the Registrar of Titles and Registrar-General as reasonably ought to have been made.

Harris J. removed the caveats, holding –

A caveatable interest could exist in unsubdivided land, but on subdivision the caveatable interest was limited to the particular lot sold. [37]
There was a serious question to be tried that the purchasers had equitable interests in the Property in the form of purchasers’ liens. These were based on their payments to Emanda as vendor, which, on termination of the contracts of sale and JVAs, were required to be repaid and secured by equitable liens. [35], [38], [39], [41], [49], [50]
It was unnecessary to determine the significance of the fact that following rescission of the contracts “freehold interest” was no longer an accurate description of a caveator’s interest. [42]
These contracts were arguably terms contracts. [52], [59]
ACMC did not have actual notice of the JVAs and of the contracts of sale. It did not have constructive notice within the meaning of s. 29S(1)(c) by reason of ss. 29V(1)(a) – (c) but whether it had such notice by reason of s. 29V(1)(d) was a difficult question. The search of the Registry showed the reason for the caveats, which referred to liens and freehold interests – but these did not reflect the existence of a terms contract. It was, however, arguable that a mortgagee with notice of any contract giving rise to interests in the land was required by s. 29V(1)(d) to inquire as to what the contract underlying the purported interests (in this case freehold interest) was. There was therefore an arguable case under the Sale of Land Act. [54], [57]-[59]
The balance of convenience was against maintenance of the caveats. This was chiefly because ACMC as first registered mortgagee had priority to the sale proceeds leaving very little surplus, and in light of the affidavit filed on its behalf ACMC had sufficient financial resources to satisfy any compensation awarded pursuant to the Sale of Land Act. Further reasons supporting this conclusion on the balance of convenience were that if the sale was not completed there would be prejudice to the purchaser without the likelihood of any greater surplus of funds. [60]-[63]
There would be no order as to costs, owing to the mortgagee’s right of indemnity. [65]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, September 2, 2025

Blog 96. Prima facie case of implied, resulting or constructive trust but caveat removed on balance of convenience.

Barnard v Otten [2025] VSC 313, Irving AsJ (3 June 2025)

The facts were as follows –

Rhianna Otten was the daughter of Sharon Otten and sister of Declan Otten. Rhianna was until her death on 1 April 2024 the partner and fiancée of the plaintiff (Carl) (the couple). Carl deposed –
- Before 2018 the four of them discussed purchasing a property, including initially in Rhianna’s name, then to be subdivided and part be transferred into Sharon’s name. But the couple did not pursue this because of difficulty finding land and cost.
- Rhianna and Declan opened a joint bank account (the joint account) into which Sharon made deposits. This account was not used to pool funds for a property purchase. Sharon and Rhianna did not agree to purchase a property.
- In around 2020 the couple purchased a house at Corio (the Property) for $416,000, negotiated by Rhianna, using a loan from a financier secured by first mortgage and an $85,000 gift from the sale of Sharon’s house at Melton described by Sharon as an ‘early inheritance’. Rhianna became its registered proprietor. The couple and children lived in the house.
- With the couple’s agreement Sharon purchased, he believed using her proceeds of sale, and placed, a moveable granny flat onto the Property, into which Sharon and Declan moved in mid-2021, living rent free and not contributing to mortgage repayments.
- Until 1 April 2024 the couple made all mortgage repayments, being about $80,000, from their joint finances and also paid all rates, insurance and utilities bills. Sharon paid for gas supply to the granny flat.
On the other hand Sharon deposed –
- Following the sale of her property she had approximately $220,000. She agreed to Rhianna and Declan opening a bank account in their names so that she (Sharon) could make deposits to protect that money from her other daughter Taylah. She paid $100,000 into this joint account in October 2018.
- In 2018 Sharon and Rhianna began discussing property purchase. She (Sharon) suggested finding land with subdivision potential, to be purchased in Rhianna’s name and then subdivided so that sufficient for a granny flat could transferred into her (Sharon’s) name. They then involved Declan and Carl in their discussions.
- She paid $70,700 into the joint account in November 2019 and a further $25,907.50 between March 2018 and February 2020.
- The four persons created a Facebook group chat containing discussions about purchasing a property together.
- On 16 December 2020 the Property was purchased in Rhianna’s name using her (Sharon’s) contribution of $85,000 and the mortgage loan.
- She neither sought legal advice nor caveated because she was clear about her agreement with Rhianna. The couple and the children moved into the Property. The granny flat was subsequently constructed using Sharon’s funds from the joint account and she and Declan moved in. They did not contribute to loan repayments.
- The granny flat was not portable and its cost of relocation would exceed initial construction costs.
- At least fortnightly Rhianna borrowed money from Sharon and Declan for living expenses.
Rhianna died intestate. Subsequently her aunt made one mortgage repayment. Carl became registered proprietor of the Property in his capacity as administrator of Rhianna’s estate. The mortgage was in default with interest accruing inducing a default notice. Carl engaged an agent to sell the Property, requiring vacant possession.
Carl and Sharon were in dispute about possession of the Property. The mortgagee issued notices to vacate to her.
Sharon caveated over the Property claiming an implied, resulting or constructive trust with an absolute prohibition on dealing with it.
Carl applied under the Transfer of Land Act 903 for removal of the caveat. He also sought possession, which was dismissed because the Property had been vacated.

Irving AsJ ordered removal of the caveat, holding –

A joint endeavour constructive trust arose where there was a joint relationship or endeavour; an asset was acquired in the course thereof; the joint relationship or endeavour was prematurely terminated; one party had made financial or non-financial contributions for the purpose thereof; and it would be unconscionable to permit the other party to retain the benefit of the relevant property where the contributions were made in circumstances where it was not specifically intended that the other party should so enjoy it. [49]
A common intention constructive trust arose where there was a common intention or understanding that a person would acquire an interest in property and that person has acted to his or her detriment in reliance on that intention or understanding. [50]
Equity would presume that a person held property on resulting trust, proportionate to the contribution, where another person contributed to its purchase and the property was held in the name of the first person. If the contributor was the parent of the person holding the property, a rebuttable presumption of advancement arose. [51]
The caveator established a prima facie case of an interest in the Property by virtue of an implied, resulting or constructive trust, because –

1. her evidence was of providing monies pursuant to an agreement with the couple to purchase a property together sufficient to subdivide and accommodate a granny flat for Sharon and Declan;
2. her provision of $85,000 in purchase monies was undisputed, although the evidence of whether this was a gift to Rhianna conflicted;
3. a granny flat was established which Sharon and Declan occupied;
4. notwithstanding Carl disputing any agreement to jointly purchase the Property, and that the $85,000 was a contribution and not a gift, a prima facie case of Sharon’s asserted interest sufficed;
5. conflicts in evidence were to be resolved at trial.

[7], [66], [73]

However, the balance of convenience favoured removal of the caveat because: the mortgagee’s intention to sell the Property was undisputed and the caveat depressed the price; although the caveat claimed an absolute prohibition Sharon’s interests in the Property were at most not asserted to be to the whole Property; Sharon could claim on the funds remaining after the mortgagee was paid out. [7], [67]-[71], [73]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, August 05, 2025

Blog 94. Common Endeavour Constructive Trust.

This Blog deals with RNC Nominees Pty Ltd v Trotter [2025] VSC 207 in which Gray J., after considerable analysis, found a prima facie case of a common endeavour constructive trust over three properties and, on an exhaustive consideration of the balance of convenience, declined to remove caveats. This case was shortly succeeded by Trotter v RNC Nominees Pty Ltd [2025] VSC 224, which concerned an application for an injunction and will be the subject of the next Blog.

RNC Nominees Pty Ltd v Trotter [2025] VSC 207, Gray J.

The facts were –

The defendant’s husband, Gary Trotter (Gary), was the sole registered proprietor of three rural properties being ‘Hemphills’, ‘South-East’ and ‘Woods’. Two of these properties were largely black clays as was most of the third property.
A first registered mortgage over the properties was held by the National Australia Bank (NAB). In 2023 Gary mortgaged over 10 properties in total, including the three properties, owned by him or by associated persons or entities, operated as a farming business, to the plaintiff (RNC). The mortgages were registered as second mortgages. They secured money owed under a facility agreement between RNC and each of Beverly Farming Pty Ltd (Beverly Farming), Gary, the defendant Lorna Trotter (Lorna), and their son Andrew (Andrew), dated 24 May 2021.
On around 4 April 2024, Gary and Lorna, RNC and others entered a deed of forbearance. This deed recorded RNC’s debt as $7,197,591.97. Lorna was an obligor under a relevant agreement and also a guarantor of this debt.
On 1 May 2024 RNC issued a default notice for $7,385,926.38 plus interest.
On 6 May it as mortgagee entered into possession of the three properties and other mortgaged properties and appointed agents, they also being receivers and managers of Beverly Farming.
On 21 February 2025 RNC entered into three contracts of sale of the three properties due for settlement on 7 April 2025. Special condition 18 in each contract provided that if the vendor was delayed or prevented from completing the contract by a caveat it could extend settlement for up to 6 months to enable it to remove the caveat or take other steps necessary to transfer title.
On 18 March 2025 Lorna caveated over each property on the grounds of ‘implied, resulting or constructive trust’.
As at 2 April 2025, the estimated payout figure under the NAB mortgage was $4,762,745.15.
RNC applied under the Transfer of Land Act s. 90(3) for removal of the caveats.
The caveator deposed –
- When she married in 1974 Gary already owned Woods and owed certain debts. They soon bought another property registered in their joint names;
- They had run a farm in partnership since their marriage, being a formal partnership between them from 1976, also conducted for 16 years to 2012 with Gary’s brother and his wife;
- From the 1990s the brothers jointly owned Hemphills and another property. Gary became their sole registered proprietor in about 2012;
- Gary acquired a further property in 1994;
- Gary was given South-East by his mother in 2004;
- The farming partnership was conducted on all these properties;
- She contributed to work for the farming business in various ways, including on the three properties, this evidence being quite general;
- During their marriage she and Gary always understood that they owned everything together and the farm properties were joint marital assets, this evidence being quite general.
Andrew deposed to a family understanding that his parents had contributed equally to their marriage, and that properties held in his father’s name were owned by each equally.
On 2 April 2025 Andrew obtained valuations (the valuations) of the three properties at $6,525,000 in total, which if attained would leave about $1.7 m. for RNC after discharge of NAB’s mortgage.
In an affidavit filed on 2 April, being the evening before the hearing, Andrew criticized the sales process including the marketing campaign. He gave oral evidence expressing further concerns, without objection or cross-examination.
Andrew gave evidence: of a record sale in February 2025 of a nearby property (Lot 5) rich in ‘black soil’, which he suggested would increase the values of the properties; and that a week after that sale the receivers and managers told him that they would enter contracts of sale unless they received unconditional refinancing offers that day. The valuations had referred to sales in the previous 24 months but not to the sale of Lot 5. But they did refer to a recent sale of a property rich in black clays for $19,920 per hectare. However, for location reasons the valuation did not ascribe this figure to the properties, though nonetheless ascribing relatively high values to attain $6,525,000.
Andrew’s affidavit exhibited a solicitor’s letter disputing the three contracts and referred to a financing agreement between RNC and Beverly Farming, allegedly breached by RNC and thus invalidating all its actions including appointment of the receivers and managers. The letter foreshadowed an application for an injunction and requested a delay in settlement.
Andrew gave evidence of steps taken to refinance all mortgage debts.

RNC did not tender evidence of sale prices but provided a confidential exhibit to the court before the hearing and sought to apply ex parte for it to be kept confidential. The court required a formal application on summons supported by affidavit(s); this did not occur; and the confidential exhibit was not filed but a redacted version was filed not disclosing the purchasers or the prices. Counsel for the caveator applied for disclosure, ultimately of just the sale prices. Counsel for RNC submitted that the identities of the purchasers and the prices were market-sensitive information that might depress the future prices of the remaining seven properties.

Gray J. declined to remove the caveats, holding –

The evidence supporting the existence of a joint endeavour constructive trust under which the caveator was a beneficiary, based on Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 and Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59, was very superficial. The mere fact that the farming partnership involved the couple and that its operations occurred on various pieces of land did not give the caveator an interest in any particular piece of land. Nonetheless, she had established a weak prima facie case of this trust. However, this was the court’s preliminary view, based only on her limited evidence, uncorroborated by Gary and without RNC having a meaningful opportunity to respond. This evidentiary weakness was also relevant to the balance of convenience. [21], [22], [25], [26], [27], [42], [43], [83]
A joint endeavour constructive trust only arose where the substratum of a joint relationship or endeavour was removed without attributable blame, and where the benefit of money or other property contributed by one party on the basis and for its purposes would otherwise be enjoyed by the other party in circumstances not specifically intended or specially provided for, equity then preventing that other party from asserting or retaining this benefit to the extent unconscionable. In this case –
1. The couple remained married and their farming endeavour had not come to an end or been ‘removed’; [30], [31]
2. It was however debatable whether the farming endeavour continued, at least in its intended form: the appointment of receivers and managers and the control of the land by agents of the mortgagee in possession had arguably ‘removed’ the ‘substratum’; [31]
3. This raised whether a joint endeavour constructive trust could be asserted against someone other than the ‘other party’ to the endeavour, in circumstances where that ‘other party’ was not the one retaining the benefit of the property – and whether in those circumstances it could be said to be ‘unconscionable’ for a third party mortgagee to ‘assert or retain the benefit of the relevant property’; [32]
4. The court’s preliminary view was that these factors did not prevent the trust arising. Nonetheless, the court acknowledged: that Lorna’s asserted equitable interest arose because of the operation of the doctrine on the conscience of the sole registered proprietor Gary; RNC’s position was different, as its registration conferred indefeasibility on its rights, notwithstanding Lorna being beneficiary of a constructive trust, subject only to fraud or to an in personam claim by Lorna, neither being asserted here; and accordingly RNC’s interests probably had priority over Lorna’s asserted equitable interests; [34]
5. Although these considerations did not preclude recognition of Lorna’s equitable interest they were relevant to the balance of convenience. [35]
[30]
Although some cases had treated the joint endeavour constructive trust as superseding the common intention constructive trust, and some cases conflated them, the Supreme Court had treated the latter as a distinct doctrine. Having found a prima facie case of a joint endeavour constructive trust it was strictly unnecessary for the court to form a view on the existence of a common intention constructive trust, but if it existed its prospects of success were no stronger than those of establishing a joint endeavour constructive trust. [24], [25]
Any proprietary interest held by Lorna existed even if there was no basis for subordinating RNC’s registered interests to her alleged interests or whether she might receive any return from the sale (also possibly relevant being that she was jointly and severally liable for Gary’s debt). [36]-[41]
As to the application for disclosure of the sale prices –
1. Section s. 90(3) of Transfer of Land Act did not confer jurisdiction to order production of the sale price information – it was unclear that s. 90(3) extended to procedural, interlocutory orders of this kind – it may be limited to dispositive orders relating to the caveat or dealings with the land; [48]
2. But the court had power to order disclosure of documents (in unredacted form) in the nature of discovery orders under the Supreme Court (General Civil Procedure) Rules 2015 or the Civil Procedure Act 2010. Perhaps the court could have ordered discovery, but that power had not been invoked here; [49]
3. The parties did not address whether RNC’s concerns could be allayed by the caveator agreeing to keep market-sensitive information confidential. Absent such safeguards, the court was disinclined to exercise its power, assuming it existed, to order disclosure of the prices. [50]
In contrasting the potential injury to the respective parties from the caveats remaining or being removed, or (in other words) taking whichever course appeared to carry the ‘lower risk of injustice’ should the course chosen turn out to have been ‘wrong’, the balance of convenience favoured maintenance of the caveats at least for a limited time, on balancing:
1. The weakness of Lorna’s prima facie case; [43], [63]
2. The non-disclosure of prices – this led the court to assume in the Lorna’s favour that the prices were substantially below the valuations. Importantly, this non-disclosure supported her having further time to consider whether to sue RNC and the agents for breach of their duties. On the assumption that the sales were for an undervalue, the removal of the caveats and consequent completion of the contracts could prejudice her as she was jointly and severally indebted to RNC for much more than the proceeds of sale, even if $6.525 m. had been achieved; [51], [52], [65], [66]
3. A mortgagee exercising a power of sale under the Transfer of Land Act s. 77 owed duties at least to the registered proprietor and maybe also to the holder of an equitable interest through the registered proprietor. But even assuming the sales were well below $6.525 m. Lorna had not articulated a clear claim relating to the sale process; [55], [56]
4. Nevertheless, because this was an urgent Practice Court application akin to an injunction application the court would on the balance of convenience weigh Andrew’s evidence about the sale process and alleged undervalue, notwithstanding that it was untested and that inferences of misconduct were impermissible against the agents, who were officers of the Court, without proper notice of this assertion and lack of evidence of breach of duty; [57]-[62], [64]
5. The indefeasibility of RNC’s mortgage and the subordination of Lorna’s asserted equitable interests to repayment of RNC’s debt; [63]
6. On an application for an injunction the court would consider whether damages were an adequate remedy. However damages were not an adequate remedy where rights to land were concerned. Lorna may assert an interest over approximately seven other titles, and so even if it was inevitable that the current sales would give her no return, she could suffer prejudice from their sale at undervalue in the form of enjoyment of her asserted equitable interests in the other properties. As all the titles covered the farming business, and given the presumption of the special nature of an interest in land, damages were inadequate, or at the very least this was arguable; [67]-[69]
7. The solicitor’s letter, which concerned the related dispute between RNC and Beverly Farming, carried no weight; [74]
8. There was no convincing evidence of prejudice to RNC if the settlement was delayed, special condition 18 having very significant weight; [76], [77]
9. There was no evidence that delay in repayment of RNC’s loan would cause it loss – the lapse of 9 months between its entry into possession of the land and into the contracts of sale could be due to market conditions or suggestive of no pressing need for a sale; [78], [79]
10. The court gave little weight to Andrew’s refinancing evidence because it was superficial, unlikely to succeed within the next few weeks, and if Lorna had caveated simply based on needing additional time for refinancing this would be perilously close to an attempt to use a caveat as a ‘bargaining chip’; [81], [83]
11. In summary the potential prejudice to Lorna of removing the caveats outweighed the lack of any imminent prejudice to RNC in maintaining them, provided she undertook to within a reasonable time, suggested by the court to be two months, sue the agents or RNC for alleged breach causing sales at an undervalue. The application for removal of the caveats would then return to court for further consideration. [84]-[87]

[62]

Caveats should be proportionate and properly adapted to the interests sought for protection. Consideration should be given to amendment so that these caveats did not prohibit any dealings absolutely and without qualification. [88]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, June 3, 2025

Blog 93. Two reprise cases.

This Blog covers two relatively short cases which are related to previous Blogs. Saad v Saad [2025] VSCA 29 (Whelan JA and Watson AJA) was an unsuccessful application for a stay of execution of the judgment of Gobbo AsJ in Saad v Saad [2025] VSC 15 ordering removal of a caveat, the subject of Blog 92, and alternatively for an injunction restraining dealing with the property pending determination of the caveators’ application for leave to appeal to the Court of Appeal. Perpetual Ltd v Doyle [2025] VSC 70 (Irving AsJ) arose out of facts related to Downey as Trustee of the Bankrupt Estate of Robert Henry Bourne v Doyle [2023] VSC 664, the subject of Blog 82.

In Saad v Saad [2025] VSCA 29 the Court of Appeal dismissed the application (pursuant to Rule 66.16 of the Supreme Court (General Civil Procedure) Rules) for a stay, and the injunction application, noting:

The decision at first instance was a discretionary judgment. The ultimate appeal could only succeed if an error of the kind described in House v The King (1936) 55 CLR 49 were established. This would be very difficult. [42](a), (e).
Being interlocutory, the existing decision, and the refusal of a stay, did not determine any issue against the applicants. There was no issue estoppel or res judicata. [42](b).
The applicants’ claims were mutually inconsistent, and part of their case was, at the least, vague and uncertain. [42](d), (e), (f).
Any uniqueness in the property attributable to it being a family compound was most probably already lost. [42](g))
The balance of convenience strongly favoured refusal of a stay both because the caveat was preventing the elderly registered proprietor dealing with the land and because, even if the applicants’ claims were eventually established, monetary compensation was likely to be the adequate remedy. [42](c, (f), (h).
The application for an injunction was refused for the same reasons. [43]

The court also reiterated two basic points related to applications under the Transfer of Land Act s. 90(3) for removal of caveats.

First, that although it had been observed that there was, as to the caveator’s claim to an interest in the land, no real difference between a serious question to be tried test and the prima facie case test, the latter was now preferred. [35]

Second, that although the courts had adopted the analogy of an interlocutory injunction and the consequent two stage test (ie had the caveator established: first, a prima facie case or serious question to be tried of having the claimed interest in the land, and; second, that the balance of convenience favoured maintenance of the caveat), s. 90(3) was broadly drafted, and accordingly the two stage test should only inform whether the court should exercise the discretion, not subsume or restrict the power conferred by s. 90(3). [36]

Perpetual Ltd v Doyle [2025] VSC 70 (Irving AsJ)

As background to this case it assists briefly to summarise parts of Downey as Trustee of the Bankrupt Estate of Robert Henry Bourne v Doyle [2023] VSC 664 (Downey), the subject of Blog 82. In Downey –

On 16 October 2007 the defendant (Doyle), who was the registered proprietor of land in Ardcloney Drive, Sunbury (the Land), transferred it to Robert Bourne who became its registered proprietor.
It appeared that between 16 October 2007 and 10 July 2014 Doyle 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 and the plaintiff was appointed as his trustee.
In 2016 a sequestration order was made over the Doyle’s bankrupt estate and the Official Trustee in Bankruptcy was appointed as her trustee.
On 28 March 2023 the plaintiff terminated any informal licence held by Doyle.
On 3 May 2023 the plaintiff became the registered proprietor of the Land and was informed that the Official Trustee agreed to permit Doyle’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. Doyle 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).

Irving AsJ. refused the application for possession but granted the application for removal of the caveat, holding in brief summary (the full holding is in Blog 82) –

The Land was vested in the plaintiff as Bourne’s trustee in bankruptcy.
To the extent that Doyle had any interest in the Land as trustee, that interest had vested in her trustee in bankruptcy.
Doyle accordingly had no prima facie case of the interest claimed in the caveat.

The case the subject of this Blog, Perpetual Ltd v Doyle [2025] VSC 70, concerns land at Powlett Street Sunbury (the Property), being the “other property” referred to the previous case. In this case Doyle alleged or the uncontested facts were –

When Bourne purchased the Property she entered an agreement with him that he would borrow funds for the purchase and be the registered proprietor holding it on trust for her, she holding her interest therein on trust for her daughters. Although the loan was to be taken out in his name she and/or her daughters would remain responsible for the mortgage repayments and outgoings.
In December 2007 Bourne mortgaged the Property to the plaintiff (Perpetual) to secure a loan of $347,700.00. The mortgage was registered.
More than 6 years later Doyle caveated claiming an implied, resulting or constructive trust on the ground of a constructive trust.
Bourne became bankrupt. His trustee in bankruptcy, Downey, became registered proprietor of the Property.
In 2023 Perpetual issued a default notice to Bourne, who did not rectify the default, and it now sought to sell the Property as mortgagee in possession.
In 2024 the Supreme Court dismissed an application by Doyle for an injunction to prevent the sale.
Perpetual applied under the Transfer of Land Act s. 90(3) for removal of the caveat. The second defendant was Doyle’s trustee in bankruptcy, who argued that any interest of Doyle in the property had vested in it.
An exhibit to an affidavit filed by Perpetual included a table of repayments of the Perpetual loan with numerous entries from at least 10 January 2011 to 5 January 2018 recording payments by either ‘Ms Maureen Doyle’ or ‘M Doyle’.

Irving AsJ. dismissed Doyle’s application that he recuse himself from hearing the application.

Irving AsJ. ordered removal of the caveat, holding –

An order for possession was not a precondition of Perpetual (or any applicant) having standing to apply for relief under s. 90(3). Perpetual had standing to bring the application. [61], [66]
As to her standing to oppose Perpetual’s application, Doyle did not assert that she had standing because of her asserted status as trustee for her daughters – she relied on her alleged trustee status to argue that the Property was not an asset in which her trustee in bankruptcy could claim an interest. However, it was appropriate to hear her on Perpetual’s application because she was the named caveator, Perpetual did not argue that she should not be heard, and the question whether any interest she had in the Property had vested in her trustee was unresolved. [63]
There was no credible evidence that Doyle’s trustee had agreed to annul her bankruptcy. [64]
Doyle’s claim to being the beneficiary of a constructive trust was grounded on her alleged agreement with Bourne referred to above. If left to her evidence alone, absent documentary evidence, there would not be a serious question to be tried that this trust existed. However, one possible inference from the table of loan repayments was that she had been responsible for at least some loan repayments, leading to the further inference of a trust. In order to accept that inference the court must be satisfied that it was more likely than other possible inferences. She had so satisfied the court. The combination of her evidence and Perpetual’s evidence of loan repayments raised real questions about Doyle’s interest in the Property, and so raised a serious question to be tried. [67]-[69]
However the balance of convenience did not favour maintenance of the caveat because: Perpetual’s interest in the Property had priority over any interest of Doyle’s; her caveat was lodged long after registration of its mortgage; it had no notice of existence of a trust when it took its mortgage; Doyle’s trustee in bankruptcy asserted that any proprietary interest she had vested in it; any surplus sale proceeds remaining after discharge of the mortgage would be dealt with under s. 77 of the Transfer of Land Act; Doyle’s application for an injunction prohibiting the sale had been dismissed; although Doyle asserted that the Property was required for a family home she did not depose by whom; she had not produced any tenancy agreement to support her assertion that the Property was tenanted; she had not explained the legal basis for her asserted right to let or occupy the Property; and her submissions about the Property’s poor condition were unsupported, apparently at odds with photographic evidence, and any suggested repair works were unfunded. [71]-[75]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, May 20, 2025

Blog 86. Where a director’s spouse has given a charge, is lodgment of a caveat by the chargee prohibited during a company administration?

Langdon v Tradelink Pty Ltd [2024] VSC 113, Gray J.

The facts were –

The plaintiff was married to Shane Langdon. Langdon Building Pty Ltd was incorporated in 2005. He became its sole director in 2007. It was a home builder.
In 2012 the third defendant (now known as Tradelink) agreed with the company to supply building materials on terms of credit by Tradelink as ‘Supplier’ to the company as ‘Customer’. The application for a credit account and agreement included a ‘Guarantee and Indemnity and Charge’ (Guarantee) signed by the plaintiff. This included her agreement: ‘To pay the Supplier … all monies which are now or may … be owing or remain unpaid by the Customer to the Supplier …’; that she as guarantor ‘To better secure the payment of all monies which the Guarantor may become liable to pay to the Supplier hereunder … charges all of its interest in real property both present and future … with the amount of the Guarantor’s indebtedness to the Supplier’; that she appointed the Supplier as her attorney in substance so that it could caveat over her real property – this clause also provided that ‘Each Guarantor undertakes to not … take any steps to remove any such caveat’.
In January 2024 voluntary administrators were appointed to the company. Next day Tradelink lodged a caveat over a property of which the plaintiff was sole registered proprietor based on its interest as chargee.
On 4 March 2024 the company’s creditors resolved to accept a deed of company arrangement (DOCA) proposed by Shane. The DOCA proposal included an initial and deferred cash contribution. A formal DOCA was not yet executed.
The plaintiff applied under the Transfer of Land Act s. 90(3) for removal of the caveat. She deposed that it was adversely impacting her ability to access a bank line of credit, secured by a mortgage, needed for funds required for the DOCA proposal.

Section 440J of the Corporations Act 2001 (Cth) provided –

‘440J Administration not to trigger liability of director or relative under guarantee of company’s liability

(1) During the administration of a company:
- (a) a guarantee of the liability of the company cannot be enforced as against
  - (i) a director of the company who is a natural person; or
  - (ii) a spouse … of such director; and
- (b) without limiting paragraph (a), a proceeding in relation to such a guarantee cannot be begun against such a director …;

except with the leave of the Court …’

Gray J dismissed the application, holding –

A caveat lodged under the Transfer of Land Act s. 89 was a statutory injunction, in the sense of preventing registration of new dealings with the title on the Register pending an application under s. 90 or administrative action under s 89A. [41]
In determining whether lodgment of a caveat was prohibited by s. 440J(1)(a) the principles of statutory interpretation were to be applied. These included: the statutory interpretation process must begin and end with the text used; where the words of a provision were clear, unambiguous, and could be intelligibly applied to the subject matter, the provision must be given its ordinary and grammatical meaning; the text must be interpreted in its context, and context should be considered at first instance, rather than at a later stage when ambiguity might arise; the context included the purpose Parliament intended to achieve, as discerned from the legislation itself, and relevant extrinsic material; the legislative context included the statute as a whole, with an assumption that Parliament intended interrelated provisions to operate coherently, giving effect to ‘harmonious goals’. [25]
By reason of s. 13 of the Acts Interpretation Act 1901 (Cth) section headings were part of the Act. [27]
The principal purpose of s. 440J was to remove any inhibition on directors commencing a voluntary administration. [35]-[36]
Lodgment or extension of a caveat relating to a charge or guarantee did not amount to enforcement, but to prioritisation, of security interests. The policy underlying s. 440J did not include that a secured creditor could not maintain this priority, even if that were thought necessary or desirable to facilitate a deed of company arrangement. [39]
There was at least a prima facie case that the caveator had an interest in the property as chargee. Accordingly lodgment of the caveat was permissible from the time the agreement and charge first applied to the property, well before any suggestion of the Guarantee being enforced. The subsequent commencement of company administration could not alter the fundamental character of the caveat’s lodgment as a step in protecting the chargee’s security interest from a loss of priority but not a step in enforcement of the Guarantee. Accordingly the lodgment of the caveat did not breach s. 440J(1). [20], [42]-[45]
This case was distinguishable from Waco Kwikform Ltd v Jabbour [2010] NSWSC 1379, being an application under s. 74K of the Real Property Act 1900 (NSW), in response to a lapsing notice, to extend the operation of a caveat lodged before the commencement of a company administration, which decided that s. 440J(1)(a) did not prohibit that application but that it was prohibited by s. 440J(1)(b) so as to require the grant of retrospective leave for extension. [30]-[34]
The balance of convenience favoured maintenance of the caveat. On the one hand, it was unclear whether the bank would not consent to, or allow the funds needed for, the DOCA. On the other hand the caveator had established a real risk of prejudice if its caveat was removed, in that it appeared likely that equity in the property may be diminished and there was a real risk that priority might be lost. The mere fact that removal of the caveat might help bring the DOCA proposal closer to operation did not outweigh this entitlement to priority. Further, because the DOCA was subject to other conditions precedent there was force in the caveator’s submission that the court could not be satisfied that even if the caveat was removed the DOCA would necessarily proceed – it weighed heavily against the plaintiff that if the caveat was removed the caveator could lose its priority yet the DOCA still not proceed. [49]-[53]

Philip H. Barton

Owen Dixon Chambers West

Friday, November 8, 2024

Blog 59. Mother and Son.

Fazal v Fazal [2022] VSC 165, Gorton J. (4 April 2022).

Fazal v Madappilly [2022] VSC 227, Gorton J. (9 May 2022).

These cases concern the same piece of land. The first case deals with the uncommon points of an application under the Transfer of Land Act s. 90(3) being brought by Summons in an existing proceeding, rather than by Originating Motion and Summons, and with abuse of process. The second case is more routine, there being a dubious caveatable interest but the balance of convenience favouring removal of the caveat, nonetheless raising two interesting points not explicitly touched on by Gorton J. First, the solicitors lodging the caveat could not decline to accept service: Transfer of Land Act ss. 89(4) and 113(3) (Blog 49). Second, in weighing the balance of convenience his Honour could have considered whether, as there was also a purchaser, the caveator was able to give the undertaking as to damages (Blog 56).

Fazal v Fazal [2022] VSC 165, Gorton J. (4 April 2022).

The facts were –

The plaintiff was the mother of the defendant.
In August 2018 the son purchased a property for $650,000 after obtaining a bank loan secured by a mortgage guaranteed by his mother. Work started to construct townhouses on the property.
Loan repayments fell into default, the bank took steps to enforce the mortgage, and with its agreement the son in November 2021 entered into a contract for sale for $865,000, with a 10% deposit that was paid, with settlement due on 21 January 2022.
On 17 January 2022 the mother lodged a caveat. The son applied for its removal under s. 90(3) of the Transfer of Land Act. The mother produced a 2018 declaration of trust to the court which she alleged, and he denied, was signed by him.
On 17 February after an opposed hearing a judge ordered removal of the caveat.
On 21 February the mother commenced a proceeding seeking, inter alia, a declaration that the proceeds of the sale were held on trust for her and equitable compensation. She made an interlocutory application to restrain the distribution of the proceeds of sale. The selling agent deposed that the value of the property was $850,000 – $900,000 and that the sale was for market value. The mother produced a valuation that the underlying unencumbered value of the property was $760,000 but that it was worth $1 m. with the planning permit and settlement of sale of three dwellings before the end of 2022. She also produced an affidavit in which the deponent swore that he would lend money to her and otherwise assist her completing the development, and lend money to her ‘to repay any outstanding home loans’.
The hearing of the interlocutory application on 25 February (the caveat not yet being removed) expanded from one seeking restraint of distribution of the proceeds of sale to one seeking restraint of the sale until trial. The judge however only ordered that the net proceeds of sale to be held in the son’s solicitor’s trust account until trial or further order.
On 27 February the mother lodged another caveat asserting the same interest as the previous one. The son made a further application under s. 90(3), by Summons in the proceeding commenced by his mother.

The mother among other things: stated that the property was hers and that she intended to appeal against the decision of 17 February; relied on material which had been before the court on 25 February; and referred to her recent proposal to the bank to repay the arrears, finish the development, and sell the property, not yet eliciting the bank’s substantive response.

Gorton J. held –

Although an application under s. 90(3) was normally made by Originating Motion and Summons it could be made by Summons in an existing proceeding. The filing of the Summons amounted to the bringing of ‘proceedings in a court against the caveator for the removal of the caveat’ as those words in s. 90(3) were to be understood. This outcome was supported by s. 8(1) of the Civil Procedure Act 2010. It was significant that the Summons was brought in a proceeding between the two relevant parties relating to their rights. [5]
A second interlocutory application for the same relief was an abuse of process if it would be unjustifiably oppressive to the other party, or would bring the administration of justice into disrepute. Ordinarily, an abuse of process was associated with commencement of a proceeding or application, rather than its defence. However although an application under s. 90(3) was not commenced by the caveator, the caveator was treated as if the caveator were the moving party seeking an interlocutory injunction. Accordingly, in substance, it was the caveator who was potentially abusing the process of the court by supporting a second caveat identical to a removed caveat. The maintenance of this caveat was an abuse of process. [13]-[15]

Fazal v Madappilly [2022] VSC 227, Gorton J. (9 May 2022).

Another caveat was lodged on 13 April 2022, ie nine days after the previous decision, by the first defendant Madappilly claiming a freehold estate based on an agreement with the son dated 5 August 2020. Further –

On lodgment of the caveat Madappilly’s solicitors wrote to the son’s solicitors stating their instructions that the son was attempting to sell the property in breach of the Constructive Trust Agreement and Construction Contract both dated 5 August 2020, under which agreements approximately $300,000 was owed to Madappilly.
They provided copies of these documents. The ‘Construction Contract’ was undated and purportedly signed on 5 August 2020. It was a contract between the son, one of two other alleged joint venturers (see further below), and a company associated with Madappilly, in which the son and one of the other parties declared that they intended to enter a contract to build townhouses on the property and appointed the company as building supervisor. It provided that the company would be paid a deposit of $300,000 upon execution of the agreement, and that it could charge for services at an hourly rate left blank. It then stated that the son and the joint venturer would ‘permit’ the company ‘to have equitable and beneficial interest in the land, pending making the deposit of $300,000’ and would when requested transfer the land “to [the company] to [the company’s] interest”.
In the ‘Constructive Trust Agreement’, dated and purportedly signed on 5 August 2020, the son declared that he intended to enter into a contract to purchase the property and that he confirmed that he held Madappilly’s interest in the property and/or benefits accrued or to accrue in respect of that interest upon trust for Madappilly absolutely subject to the terms and conditions set out in this deed. Madappilly’s interest was defined to mean ‘full interest in the… Property as tenants-in-common’.
The son’s solicitors stated that he denied having signed these documents and that ‘[t]he builder who actually was doing the construction on the property is not aware of your client’.
The son sought an order under the s. 90(3) for removal of the caveat. Madappilly’s solicitors advised that they were not instructed to accept service and did not hold instructions to continue to act.
Madappilly, who described himself as building supervisor, deposed that –
- In around mid-2019 he entered into an oral joint venture agreement with the son and two others; and the son undertook and represented to them that the son would pay the mortgage and other outgoings, would provide $150,000 towards the completion of the joint-venture, and that when the development was completed it would be sold;
- In reliance on those promises, he and the other two people jointly invested ‘around $500,000’ in the joint-venture in work and materials, and implicitly that the four persons were to share the net profits of sale.
The son identified the builder he had dealt with, deposed that he did not know who Madappilly was, and denied entering any joint venture agreement.
Madappilly produced to the court a valuation that the property was in its current state worth approximately $1 m. and that if $209,500 was spent completing the project the property could be sold for $1.635 m.
The net sale proceeds were under $140,000.

Gorton J. held –

The interest asserted by the caveator in his affidavit sat uneasily with any interest based on the agreements purportedly signed on 5 August 2020. The arrangements contained in the Construction Contract were entirely inconsistent with the affidavit evidence and at best gave a caveatable interest to the company not Madappilly. The Constructive Trust Agreement was unusually worded, and read strictly did not give Madappilly an equitable interest but confirmed that the son held Madappilly’s interest on trust for Madappilly. It was difficult to reconcile the two documents. Madappilly could not explain caveating asserting an interest based on an agreement reached on 5 August 2020 but now relying on an oral joint venture arrangement entered into the previous year. Turning to Madappilly’s evidence: he did not identify to what extent he contributed to the ‘around $500,000’, and so, even if his evidence was accepted did not establish the extent of his beneficial interest; and he produced no documents supporting provision of work and materials. Because of the inconsistency between what had been advanced by his solicitors and what was now advanced in court there was reason to doubt his version of events. [8]-[10], [15]-[17]
The court inferred that Madappilly either through his previous solicitors or now advanced arrangements known by him to be incorrect. However, in light of the affidavit material filed there was an issue to be tried that Madappilly had an equitable interest in the property, albeit one difficult to establish. [5], [17]
The balance of convenience favoured removal of the caveat ([25]) –

1. The alleged sum required to complete the project was said to be pursuant to the unproduced Building Contract and was unclear whether inclusive of landscaping expenses. [18]
2. It the contract of sale was completed the son could discharge the mortgage and stop interest running. [18], [24]
3. The contract of sale was on its face unimpeachable (note that his Honour states that the contract price was $850,000, but this seems to be a slip). [19]
4. The property was not the residence of either party and if the caveat was removed and the sale completed Madappilly would retain a cause of action against the son for damages. [20]
5. There was no evidence that the purchaser was other than bona fide for value without notice of the caveator’s alleged interest, the contract of sale being apparently specifically enforceable giving the purchaser an equitable interest and giving a claim for damages against the son if the sale did not proceed. Madappilly had not offered to indemnify the purchaser or the son against any liability in damages if the caveat remained. In one sense, the same issues arose as in a priority dispute between Madappilly and the purchaser, it being relevant that Madappilly had not caveated until after the contract of sale. [19], [22], [23]
6. There was no evidence that Madappilly or the other alleged joint venturers had the means to complete the development. [21]

Philip H. Barton

Owen Dixon Chambers West

Friday, October 13, 2022

Blog 52. Court of Appeal upholds registered proprietor’s appeal on balance of convenience ground.

Lee v Yap [2021] VSCA 297 (3 November 2021), Court of Appeal (Kyrou, McLeish and Walker JJA) is interesting because it deals with the scope of balance of convenience considerations. In particular the court clarified that the two-stage test (ie interest in land and balance of convenience) only informed how the court should exercise its discretion under the Transfer of Land Act s. 90(3) and did not subsume or restrict the power conferred by s. 90(3).

Before proceeding to the case, however, I welcome my first international follower Dr Jan Halberda of the Jagiellonian University, Krakow, Poland, founded in 1364. I met Jan at a Conference in 2016. I have sent him excerpts of the Transfer of Land Act with an explanation of the caveat procedure. I am reminded that Oliver Cromwell described English Law as a “tortuous ungodly jungle” and trust that Jan will not find that an apt description of this area of law.

This case is difficult to understand without listing the parties in connected proceedings –

This appeal –

Applicant Ms Lee (registered proprietor).

Respondents Eng Hock Yap, Sau Lin Kam, Eng Hing Yap (caveators),

Registrar of Titles.

The substantive proceeding (issued 2017) –

Plaintiffs Eng Hock Yap, Sau Lin Kam and Chin Huat Yap,

(Adam Yap was formerly the second plaintiff).

Defendants Ms Lee, Yap Brothers Holdings Pty Ltd, Eng Seng (Vincent) Yap, Eng Hing Yap.

2019 application in the substantive proceeding for appointment of receiver –

Applicants Eng Hock Yap and Adam Yap

Respondents As in substantive proceeding.

The facts were –

The applicant (Ms Lee) was a director of Yap Brothers Holdings Pty Ltd (the ‘trustee’). In 2005 the trustee transferred a property in Glen Iris to her for no consideration. This property was subject to a mortgage and to caveats lodged by the above caveators.
In the substantive proceeding it was alleged that this transfer was in breach of trust and held by Ms Lee on a resulting trust for the contributors of funds to the trustee, ie for the plaintiffs. They also claimed that this transfer, after the loss of the trust deed had been discovered by Ms Lee in 1998, occurred in breach of her duties to the trust.
In 2019 an application was made in the substantive proceeding for appointment of a receiver to the trust to secure the trust property. On this application Ms Lee deposed that the trust assets included cash, shares, and properties in Carlton and Balwyn. The trustee’s directors also offered undertakings as to the assets of the trust. The defendants also filed proposed orders including a proposed undertaking not to deal with the Balwyn and Carlton properties and the shares, and an undertaking (the Proposed Undertaking) by Ms Lee not to sell or otherwise deal with the Glen Iris property, pending resolution of the substantive proceeding.
At the receivership hearing, counsel for the applicants only sought that “the title deeds” (ie the duplicate certificates of title) of the Carlton and Balwyn properties be taken into control to prevent their use by way of mortgage deposit (ie, although the court does not say it, to prevent creation of an equitable mortgage). (Because the Glen Iris property was subject to a mortgage and its “title deeds” were not in the defendants’ possession). The application was abandoned on the defendants’ undertaking to lodge with the Prothonotary the title deeds to the Carlton and Balwyn properties and Ms Lee’s counsel giving an acknowledgement concerning trust distributions. The undertakings included in the defendants’ proposed orders were not sought, the Proposed Undertaking having been rejected.
Later in 2019 the Court declared in the substantive proceeding that the trust had failed for uncertainty and the trustee held all its assets on resulting trust for those who had contributed property to the trustee at any time.
In April 2021 Ms Lee entered into a contract to sell the Glen Iris property with settlement due in June. This required removal of the caveats. Correspondence between solicitors ensued, the upshot of which was that the caveators did not object to a sale for proper market value with the only outstanding issues being where the net proceeds of sale were to be held and what deductions were to be made before this pay in, in particular were agent’s fees and commission to be deducted? (The agent was the third defendant in the substantive proceeding).
Following the breakdown of discussions Ms Lee sought removal of the caveats pursuant to the Transfer of Land Act s. 90(3). She offered an undertaking to the court at first instance and to the Court of Appeal to pay the net proceeds of sale, after discharge of the mortgage and usual sale expenses, into a solicitor’s trust account or into court.
At the hearing before McDonald J. it was was common ground that the caveators had an arguable case of a caveatable interest. However, before considering the balance of convenience, the judge observed that: the reason why there was no undertaking at the receivership hearing to lodge the Glen Iris title deeds was because the bank had them; the Proposed Undertaking was designed to address the applicants’ concern that there was a risk that the trust property would not be preserved; and it had not been suggested at the receivership hearing that there was any risk of Ms Lee selling the property. His Honour also observed that her subsequent conduct in entering a contract of sale was therefore inconsistent with the basis upon which the application for the appointment of a receiver had not been pressed.
Counsel for Ms Lee submitted that a significant balance of convenience consideration was her preparedness to pay the net proceeds of sale into court. The judge stated that viewed in isolation this submission had force but that it was necessary to include in the assessment her conduct in entering into a contract of sale in light of the resolution of the receivership application. He observed that it was extremely unlikely that the applicants would have abandoned the receivership application if there was any prospect of Ms Lee being free to sell the Glen Iris property.
His Honour stated that the “gravamen” of the resolution of the receivership application was that the three properties would not be dealt with until the determination of the substantive proceeding (the “gravamen finding”). Accordingly his Honour stated that the balance of convenience strongly favoured the maintenance of the status quo.
As to a submission that it was relevant that Ms Lee would suffer financial prejudice if the sale did not proceed the judge stated in substance that any adverse financial consequences were of her own making.
Ms Lee sought leave to appeal.

The Court of Appeal granted an application for an extension of time to appeal, granted leave to appeal and allowed the appeal, holding –

The court reiterated caveat removal principles in standard terms (see eg Blog 1). [78]-[80]
Because the court’s power under s. 90(3) was discretionary an applicant for leave to appeal against an exercise of that discretion must establish error of the kind identified in House v The King (1936) 55 CLR 499. [78]
In dealing with the Proposed Undertaking the judge was aware that it was never given but that it was relevant to understanding how the receivership application came to be resolved. It was not legally irrelevant to the caveat removal application. The judge had not treated it as decisive, rather the judge treated as significant the manner in which the receivership application had been resolved. [83]-[84]
The proposition that the judge erred in giving substantial weight to a factor which did not on proper analysis bear upon the balance of convenience, namely the Proposed Undertaking, was erroneous. This argument proceeded on a mistaken understanding of what matters a court could permissibly consider when dealing with an application under s. 90(3). Although the courts had adopted the two stage test (ie that the caveator must estate a serious question to be tried of an interest in the land and that the balance of convenience favoured maintenance of the caveat) s. 90(3) was drafted broadly and enjoined the court to make such orders as it thought fit. The two-stage test could only inform the court in considering whether to exercise the discretion conferred on it in any particular case and, if it chose to do so, what form that exercise should take. This test did not subsume or restrict the power conferred by the statute. What a court may consider as going to the balance of convenience was unconfined. Thus, in assessing the balance of convenience it was open to the judge to have regard to the manner in which the receivership application was resolved and the assumptions that underpinned that resolution. [85]-[86]
The gravamen finding, which was based in part on the Proposed Undertaking, was erroneous. On its face that finding could potentially be understood as either a finding: that the parties had agreed to resolve the receivership application on the basis that the Glen Iris property would not be dealt with, or; (a somewhat strained reading of the finding) that Ms Lee’s conduct of the receivership application had induced the applicants to believe that the Glen Iris property would not be dealt with, based on which they agreed not to pursue their application. Neither finding was open on the evidence. There was no evidence suggesting an agreement of that kind and the rejection by the receivership applicants of the Proposed Undertaking suggested to the contrary. The receivership hearing was conducted in a way suggesting that the concern was not with the Glen Iris property, but with the Carlton and Balwyn properties. The gravamen finding treated Ms Lee as being constrained in the manner she would have been constrained had she given the Proposed Undertaking. [91]-[99]
The gravamen finding plainly played a significant if not determinative role, infecting the judge’s assessment of the balance of convenience. [6(c)], [99]
As to the judge’s reliance on the proposition that Ms Lee was the author of the circumstances she faced, a statement of that kind could be made in any case where the registered owner entered a contract of sale before removal of a caveat, and it was not a significant factor. It could also be said that the receivership applicants were authors of their circumstances because they had rejected the Proposed Undertaking. [100]
As the Court of Appeal had before it the submissions and evidence that were before McDonald J, and as the matter was urgent, it was appropriate for it to make the orders that his Honour ought to have made, ie exercise afresh the s. 90(3) discretion, and not remit the matter. Ms Lee would plainly suffer immediate financial prejudice if the caveats were not removed and there was no real evidence that the caveators would suffer prejudice if the caveats were removed. The balance of convenience favoured the removal of the caveats provided appropriate steps were taken to preserve the proceeds of sale. The undertaking proferred by Ms Lee’s counsel sufficed. [104]-[109]

Philip H. Barton

Owen Dixon Chambers West

Thursday, February 17, 2022

Blog 47. No contract of sale – No caveatable interest

In Hazelwood v Mercurio & Ors [2021] VSC 362 (22 June 2021) Daly AsJ –

primarily deals with an agent lacking authority to conclude a binding contract on behalf of a vendor (similar to the lack of authority of a solicitor: Leahy v Javni [2020] VSC 680 at [122]);
notes that, if a document existed whereby the vendor expressly authorised the agent to execute the contract on her behalf, it would be a breach of the Civil Procedure Act not to disclose it;
distinguishes English authority on whether an exchange of emails can comply with the Statute of Frauds;
held that if the caveators had established a binding contract the balance of convenience would have favoured them;
stayed the removal of caveat for 7 days to enable the caveators to apply for an injunction restraining completion of a further sale based on an alleged estoppel.

The facts were –

The plaintiff vendor gave an Exclusive Sale Authority to an agent (whose employee was Campbell) to market an apartment and two separately titled car parking spaces in the Melbourne CBD. The Authority provided that the agent would advertise, market and sell the property and that “sold” meant (in normal circumstances) “the result of obtaining a binding offer”. Clause 13 also authorised the agent to –
- instruct a legal practitioner or conveyancer to prepare a section 32 statement, contract of sale, agree the content of either document and advise and agree on other amendments or additions to either document;
- fill-up a standard form contract or contract to record the sale as permitted by statute;
- negotiate and, with the vendor’s approval, agree and record, or have the legal practitioner or conveyancer record, the final terms of, and obtain signatures to, the contract;
- attend to contract exchange; receive the price and certain advice or notices; and make public certain information.
The caveators deposed that on about 11 February they made an unconditional offer to purchase the apartment and one car space for $750,000, with settlement within seven days. Campbell deposed that caveators imposed a very short deadline on the offer and that he conveyed it to the vendor.

The caveators deposed that on 16 February Campbell said that he had found a purchaser for the other space and that the vendor had accepted their offer. Campbell disputed this, deposing that although he could not remember his exact words he had no intention of conveying that a sale had been completed until signing of a written agreement.

The vendor deposed that Campbell told her that he had located a potential purchaser of the apartment and one car space and another purchaser of the second space, and that she instructed him to amend the documents accordingly.

On 18 February Campbell emailed the caveators: stating that if they could “confirm the below points for me” he would start the paperwork. The points were: whether they had a conveyancer; their full names and address; price $750,000 with a 10% deposit; as to time for settlement; solicitors’ details. The email concluded: “New paperwork is getting drawn up at our end so nothing for you to do at this stage”.

The caveators provided full names, address, lawyer’s details, and stated that settlement would be on 12 March.
On 24 February Campbell emailed an unsigned section 32 statement and contract. His email stated that he had just received these documents and not yet reviewed them “so let me know any questions you have and I’ll work through them”. The unsigned contract named the vendor, referred to the apartment and to particulars of title of one space, but omitted purchasers’ names, price and settlement date. When a caveator queried this Campbell replied that he had “just hit send as soon as I received and so you could have your people quickly review it before signing”.

On being informed by Campbell that someone else had purchased the apartment and both spaces the defendants on 2 March caveated on the grounds of a “part performed oral agreement” with the plaintiff. On 4 March this contract was executed. The vendor issued a notice under s. 89A of the Transfer of Land Act (TLA), leading to the caveators issuing a Proceeding with a Statement of Claim. The vendor issued this proceeding under s. 90(3). Campbell deposed that on average more than ten apartments in the building would be marketed and sold in any year.

The Victorian Statute of Frauds provision, contained in the Instruments Act s. 126, provides that –

“An action must not be brought to charge a person … upon a contract for the sale … of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is 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”.

In their Statement of Claim the caveators alleged, in the alternative to breach of contract, that the vendor represented that she would sell the apartment to them, such that she was estopped from resiling from that representation.

Daly AsJ held –

Accepting, for present purposes at least, that –

- to comply with s. 126 a contract of sale need not be contained in a single, self-contained document; [33]
- a sender of an email, by identifying themselves as the sender, can be considered to have “signed” the email; [33]
- section 126 should be construed as to accommodate “accepted contemporary business practices”; [34]

nonetheless, the vendor had not signed anything. The only signatory was Campbell, who was authorised to market the apartment but not to enter a contract on behalf of the vendor. In the Authority there was a material difference between the definition of “sell” and the phrase “endeavour to sell”. More importantly, cl. 13 did not authorise the agent to sign any contract on behalf of the vendor, but contemplated personal execution by the vendor and purchaser. [35]-[39]

What was stated in the foregoing holding was based on the non-existence of a document in which the vendor not only confirmed her acceptance of the caveators’ offer but also expressly authorised the agent to execute the contract on her behalf. If such a document existed, it should have been disclosed by the vendor in accordance with s. 26 of the Civil Procedure Act headed “Overarching obligation to disclose existence of documents”. [46]
The English decision in Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltdas to whether an exchange of emails between parties to a negotiation can constitute an agreement in writing for the purpose of the Statute of Frauds, was distinguishable. There was a material difference between English and Victorian legislation. [40]-[44]
If it had been necessary to consider the balance of convenience, this would have favoured the caveators because:

- notwithstanding Campbell’s evidence that the sale of properties equivalent to the apartment was not rare, this apartment was particularly suitable to the caveators’ needs;
- while the vendor not unreasonably considered that, absent an executed contract, she was free to deal with the apartment, and was now exposed to claims by the new purchaser, she entered this contract knowing that the caveators asserted that they had a contract with her and so she assumed the risk of this being established. [47]

The caveators had not argued that their estoppel claim created an immediate equitable interest supporting a caveat. However this estoppel claim might found injunctive relief. Accordingly the order for removal of the caveat would be stayed for 7 days to enable the caveators to apply for an injunction as they may be advised. [24], [48] – [50]

Philip H. Barton

Owen Dixon Chambers West

Friday, September 17, 2021

36. Arguable case of constructive trust but caveat removed on balance of convenience due to conflict with pre-existing orders of Family Court – Undertaking as to damages should have been offered – Harvey v Emery & Ors [2020] VSC 153 (2 April 2020), John Dixon J.

Comment. This case is a good example of an arguable, but not strongly so, interest in the land being trumped by the balance of convenience – John Dixon J. engages in a careful balancing exercise against the background of existing Family Court orders. Several further general principles emerge –

1. Non-parties to a marriage claiming an interest in land the subject of Family Court proceedings should expeditiously intervene in those proceedings.

2. An undertaking as to damages is not commonly required as the price of maintenance of a caveat. Boensch v Pascoe [2019] HCA 49 at [113] (Blog 29) explains how caveats differ from interlocutory injunctions in this respect. However, John Dixon J. states an exception, being that such an undertaking is invariably required when a caveat was not removed in circumstances where third party rights would be detrimentally affected.

3. The case illustrates that a registered proprietor taking the s. 89A procedure can subsequently take the s. 90(3) procedure.

In Harvey v Emery & Ors [2020] VSC 153 the facts were –

• The plaintiff was married to Daniel Emery who was the son of the defendants. In about early 2018 the plaintiff and Daniel entered a contract to acquire a property as their family home for $950,000. They agreed that it would be acquired solely in her name to protect it from his creditors. The price comprised: her contribution of $200,000; an advance by the defendants to her of $200,000; the balance by bank finance secured by first mortgage. The plaintiff became sole registered proprietor.

• As noted by the judge, it could only be determined at a subsequent trial whether this advance (and any subsequent claimed expenditure) by the defendants was: a loan, and whether to the plaintiff or Daniel or both, and for what purpose, or; an equity contribution in the context of a broader joint enterprise to which the defendants were parties, with the ultimate purpose of providing accommodation to the plaintiff, Daniel, their children and the defendants. Related to this, were the defendants either chargees or beneficiaries of a resulting or constructive trust?

• After settlement of the sale the plaintiff briefly resided at the property, vacating due to conflict in the relationship with Daniel that led to its breakdown. Daniel remained in possession of the property for a period before being placed in custody for undisclosed reasons.

• In proceedings between the plaintiff and Daniel the Family Court made consent orders in March 2019 including to the effect that –

• the plaintiff would transfer the title to the property to him on him refinancing the bank loan to discharge her mortgage and release her from the debt obligation, and on payment by him of $200,000 into her solicitors’ trust account;

• if Daniel was unable to refinance the property was to be sold with net proceeds broadly being disbursed in varying proportions between the plaintiff and Daniel after payment of costs and discharge of the mortgage;

• The parties held their respective interests in the property on trust, with Daniel having the sole right of occupancy and sole liability for mortgage payments and outgoings.

• Daniel was unable to refinance and so could not comply with this order, leading to further Family Court orders in October 2019 including –

• that plaintiff recover possession of the property to effect its sale, in accordance with the March orders, and Daniel was restrained from caveating or from encumbering the land;

• directions for the conduct of the sale and for the distribution of the proceeds. The direction in respect of the priority of distribution of the proceeds was in substance: (a) – (d) payment of the costs and expenses of sale and for discharge of the mortgage; (e) payment to the plaintiff in reduction of the amounts due to her pursuant to the March orders with interest; (f) payment of any remainder to Daniel in reduction of the amounts due to him pursuant to the March orders; a further order relating to the balance owing in respect of a truck and other minor orders.

• The defendants were not party to the Family Court proceedings and did not seek to intervene. The settlement of the Family Court proceedings assumed that the whole of the beneficial interest in the property was matrimonial property.

• In November 2019 the defendants caveated claiming a freehold estate absolutely prohibiting all dealings on the grounds of an implied, resulting or constructive trust.

• The plaintiff applied under s. 89A of the Transfer of Land Act for removal of the caveat. In response the defendants commenced a Supreme Court proceeding against her seeking a declaration that the property was held on trust for them as to an amount equivalent both to the above advance of $200,000 and to $120,000 expended on renovations (“the trust proceeding”).

The plaintiff applied pursuant to s. 90(3) to remove the caveat. Daniel was not a party to either proceeding although he appeared to be a necessary party to the trust proceeding. He apparently expressed a strong interest in retaining ownership of the property. The defendants alleged that after the plaintiff had vacated the property, but with her acquiescence, they invested labour and expended approximately $120,000 in renovations and improvements and to enhance its value, in furtherance of a joint endeavour to acquire and improve an extended family home. The plaintiff disputed this.

John Dixon J. held –

1. If the allegations in the trust proceeding were proved, the defendants’ beneficial interest ought to have been excluded from the matrimonial property available for division in the settlement reached between the plaintiff and Daniel. [15]

2. If the defendants’ contentions were correct, they had been adversely affected by the Family Court’s orders. They could enliven the Family Court proceedings, either by applying to intervene and seek a rehearing or by appeal. There was potential for conflict between the resolution of the trust proceeding and the execution of the orders of the Family Court. There were compelling reasons to cross-vest the trust proceeding to the Family Court to be dealt with in conjunction with a reopening of the property settlement orders. This application under s. 90(3) was not the appropriate forum for determination of issues between the parties. [25]-[27]

3. The defendants had demonstrated some probability that they may be found to have an equitable right or interest in the land as asserted in the caveat, ie a freehold estate in the land based on a joint endeavour giving rise to a constructive trust. And if the renovation expenditure was added the defendants’ percentage claim to the beneficial interest would correspondingly increase. However, although there was a serious question for trial of such a constructive trust the claim did not appear to be strong. It was more probable that the defendants would establish an equitable lien or charge limited to the initial $200,000 advanced, this not being the interest claimed in the caveat. [4], [13], [28], [31], [32], [43], [45]

4. A relationship existed between the strength of the case establishing a serious question to be tried and the extent to which the caveator must establish that the balance of convenience favoured maintenance of the caveat. Because the constructive trust claim was not strong the balance of convenience obligation fell more heavily on the caveators. There were significant negative practical consequences for the plaintiff if the caveat was maintained, being –

(a) Frustration of the sale ordered by the Family Court, in circumstances where none of the material facts affecting that order were, or since had been, placed before that court at the material time;

(b) The plaintiff would breach the contract of sale, affecting the purchaser’s rights in a manner with adverse consequences for the plaintiff, which could culminate in her reopening the Family Court proceedings to adjust the value of the pool of matrimonial assets underlying their resolution;

(c) Other than belatedly, the defendants had not offered any undertaking as to damages, notwithstanding that this undertaking was invariably required when a caveat was not removed in circumstances where third party rights would be detrimentally affected. Having regard to the belatedness of the offer it was not deserving of weight in the absence of evidence of its worth;

There was insufficient evidence that the plaintiff had sold at an undervalue, and if the property market was falling the sale should proceed. [5], [33], [39], [45]-[52]

5. The course that carried the lower risk of injustice, if it should turn out that his Honour was wrong, was to order that the caveat be removed on the following conditions –

a) amendment of the trust proceeding and it being transferred to the Family Court;

(b) relief of the plaintiff of the obligation to comply forthwith with the orders of the Family Court, and in lieu order that the proceeds of sale be distributed in accordance with paragraphs 7(a) – 7(f) of the order of October 2019 and that the balance remaining be deposited into an interest bearing account and not be disbursed save by further order of the Family Court. [53]-[59]

Philip H. Barton

Owen Dixon Chambers West

19 May 2020

35. Costs – Judge busts caveator poker player – Colakoglu v Ozcelik [2020] VSC 139 (25 March 2020), John Dixon J; Diep v Tran & Ors (Costs) 2020 VSC 171 (9 April 2020), John Dixon J; Wegner & Anor v Mayberry [2020] VSC 239 (1 May 2020), Kennedy J.

Comment. Colakoglu is a mundane caveat removal case in which a caveator, who removed the caveat after service of a s. 90(3) application, was ordered to pay costs on a standard basis – it was unclear whether there had been reasonable cause to lodge the caveat but clear that, in negotiations immediately before its withdrawal, he maintained it inappropriately as a bargaining chip to extract funds to cover his costs. Diep and Wegner are the latest manifestations of the practice of judges visiting hopeless caveats with indemnity costs. The caveator in Diep did not help his case by stating that he would not remove the caveat until there was “an offer on the table” and that he “plays poker and was happy to spend a couple of hundred thousand dollars to make a point”. From the time of the decision of Dodds–Streeton J. in Goldstraw v Goldstraw [2002] VSC 491 at [42] judges have repeated that caveats are not to be used as “bargaining chips”, which the caveator in Diep literally did. From the blogger’s dim recollection, in vernacular terms the caveator “went bust”, and indeed Google confirms that to “bust” a player in poker (as John Dixon J. did) means you are relieving them of all their chips.

In Colakoglu v Ozcelik [2020] VSC 139 the facts were –

The plaintiff and first defendant were married, had purchased a unit then placed in the plaintiff’s name but to which the first defendant claimed he had contributed giving rise to a trust, and proceedings were on foot between them in the Federal Circuit Court in which the beneficial interest of the parties could be adjusted under the Family Law Act.
The plaintiff listed the property for sale with the first defendant’s consent, his solicitors advising that he had foregone his interest in the property and had no interest in the proceeds of sale.
A contract of sale was accordingly entered into with settlement scheduled for 19 March. However, on 3 March, notwithstanding their earlier advice, the first defendant’s solicitors lodged a caveat claiming a resulting and/or constructive trust.
The plaintiff sought consent to withdrawal of the caveat, on the basis that the sale proceeds would be held by her solicitors in a solicitor’s controlled money account for the benefit of both parties pending resolution of the family law issues. Before the time for settlement of the contract arrived the parties were not in dispute that the contract ought to settle with the balance of proceeds of sale being paid into trust.
However, the first defendant did not remove the caveat, delaying settlement. But after the plaintiff commenced a proceeding under the TLA s. 90(3) the first defendant withdrew the caveat and the contract settled

John Dixon J. ordered that the costs of the application be paid by the first defendant on a standard basis, dismissed an application for costs against his solicitors, and referred an application for compensation under s. 118 for case management. His Honour held –

As to whether there was a serious question to be tried, as the unit was to be converted into a fund to be held in trust pending resolution of the family law dispute, the beneficial interest of either party was unaffected, and accordingly whether the first defendant disclaimed any interest in a trust as the plaintiff submitted, or whether he ever had such interest as the first defendant now contended, was a matter for trial. [7]
The balance of convenience favoured removal of the caveat. [16]
The evidence on whether the first defendant had reasonable cause to lodge the caveat was unclear, because he did not engage with the plaintiff’s allegation that he disclaimed any interest in the unit when consenting to its sale. However, in the negotiations immediately before the withdrawal the caveat continued to be maintained inappropriately as a bargaining chip to extract funds to cover his costs. [13], [22]

In Diep v Tran & Ors (Costs) [2020] VSC 171 –

The first defendant lodged a caveat asserting a caveatable interest on the basis of an agreement dated 1 May 2019. He ignored requests for a copy of this agreement: it was never sighted.
The plaintiff’s solicitors requested withdrawal of the caveat, being met with the response that it would not be removed until there was “an offer on the table” and that he “plays poker and was happy to spend a couple of hundred thousand dollars to make a point”.
The plaintiff’s solicitors suggested that the caveat be withdrawn, the settlement proceed and the net proceeds of the sale be placed in a trust account pending resolution of the dispute. The caveator responded in substance: “you said you were going to make an offer, there’s no offer of money. Why would I remove my caveat if you are not going to give me money?”
After caveat removal proceedings were issued the caveat was withdrawn.

His Honour ordered that the caveator pay indemnity costs because: he provided no justification for the interest claimed by his caveat; before issuing the proceeding the plaintiff’s solicitor made a reasonable proposal for retention of the net proceeds of sale; the caveat was used as a bargaining chip to extract a monetary offer – a serious misuse of statutory provisions for an improper or ulterior purpose.

In Wegner & Anor v Mayberry [2020] VSC 239 –

The first defendant lodged a caveat on the ground of an implied, resulting or constructive trust over land of which the first plaintiff, his former wife, was a registered proprietor as tenant in common with the second plaintiff. The purchase of the land had been funded by bank finance secured by mortgage.
In April 2019 this caveat was removed by court order with indemnity costs.
In July 2019 the first defendant became bankrupt.
In January 2020 the first defendant lodged a second caveat on the same ground as the first. On being requested to remove it he refused until the plaintiffs refinanced and released him from his obligations as a co-borrower. He was given notice that unless the caveat was withdrawn indemnity costs would be sought.
In February 2020 the plaintiffs entered a contract to sell the land for a price below the mortgage debt, the solicitors for the first defendant’s trustee in bankruptcy consented to the sale, and caveat removal proceedings were commenced.

Kennedy J ordered removal of the caveat because the caveator had not established any arguable right or interest in the land (and any interest would now be vested in his trustee in bankruptcy) and the balance of convenience favoured removal: the caveat would adversely affect the sale; it was in everyone’s interests that the mortgage debt be reduced; there was evidence that market may be falling; and the trustee in bankruptcy had consented to the sale.

Indemnity costs were awarded because the caveat had been lodged for a collateral purpose and in disregard of known facts.

Philip H. Barton

Owen Dixon Chambers West

12 May 2020

Category: Balance of Convenience – general

Blog 98. Mortgagee takes priority over caveators purchasing under joint venture agreement.

Like this:

Blog 96. Prima facie case of implied, resulting or constructive trust but caveat removed on balance of convenience.

Like this:

Blog 94. Common Endeavour Constructive Trust.

Like this:

Blog 93. Two reprise cases.

Like this:

Blog 86. Where a director’s spouse has given a charge, is lodgment of a caveat by the chargee prohibited during a company administration?

Like this:

Blog 59. Mother and Son.

Fazal v Fazal [2022] VSC 165, Gorton J. (4 April 2022).

Fazal v Madappilly [2022] VSC 227, Gorton J. (9 May 2022).

Fazal v Fazal [2022] VSC 165, Gorton J. (4 April 2022).

Like this:

Blog 52. Court of Appeal upholds registered proprietor’s appeal on balance of convenience ground.

Like this:

Blog 47. No contract of sale – No caveatable interest

Like this:

36. Arguable case of constructive trust but caveat removed on balance of convenience due to conflict with pre-existing orders of Family Court – Undertaking as to damages should have been offered – Harvey v Emery & Ors [2020] VSC 153 (2 April 2020), John Dixon J.

Like this:

35. Costs – Judge busts caveator poker player – Colakoglu v Ozcelik [2020] VSC 139 (25 March 2020), John Dixon J; Diep v Tran & Ors (Costs) 2020 VSC 171 (9 April 2020), John Dixon J; Wegner & Anor v Mayberry [2020] VSC 239 (1 May 2020), Kennedy J.

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Fazal v Fazal [2022] VSC 165, Gorton J. (4 April 2022).

Fazal v Madappilly [2022] VSC 227, Gorton J. (9 May 2022).

Fazal v Fazal [2022] VSC 165, Gorton J. (4 April 2022).

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this: