RECENT SUPREME COURT CASES DEC 2017 – FEB 2018 (6 of 6)

Costs

Toh & Anor v Wu & Anor [2018] VSC 36 (12 February 2018) Daly AsJ.

The chronology was –

 

2017                            First defendant commences family law proceeding in Federal Magistrates Court
against her husband.  The plaintiffs in the subsequently issued Supreme
Court proceeding are her in-laws and are registered proprietors of a
property.  Application (not yet determined) to join plaintiffs as parties
to the family law proceeding and to restrain sale of property or have proceeds
of sale retained in trust pending determination of
proceeding.   

28 November 2017   Caveat lodged by first defendant over the property, grounds of claim being “court order under the Family Law Act 1975”.

15 January 2018       Plaintiffs notify intention to issue and issue s. 90(3) application. 

16 January 2018       Service of application and material in support.

18 January 2018       Hearing at which caveat ordered to be removed.  Order that net proceeds of sale be held in trust.  Costs reserved.

29 January 2018        Settlement of sale of property due.

Daly AsJ ordered that each party should bear their own costs of the s. 90(3) application.  Her Honour reasoned –

  1. In removing the caveat the court had not considered whether there was a serious question to be tried.  Although the interest claimed in the caveat was not prima facie a recognized proprietary interest the underlying documents tolerably revealed claims pursuant to a resulting or constructive trust, and the suddenness of the application severely compromised the caveator’s ability to respond.  However, the balance of convenience overwhelmingly favoured removal because of settlement and finance difficulties.  The removal was also influenced by the fact that, having regard to the existing Federal Magistrates’ Court proceedings, it was in the parties’ interests for property interests to be determined in one proceeding, not fragmented across jurisdictions.
  2. Special circumstances warranted the plaintiffs not receiving their costs, namely their failure to warn the caveator of the intended application.  While it would often be unnecessary or impractical to warn of an application, the application here was made some 7 weeks after lodgement of the caveat and only 7 business days before settlement of the sale was due.  The caveator was ambushed.
  3. The caveator’s alleged impecuniosity was irrelevant to the costs decision.

 

RECENT SUPREME COURT CASES DEC 2017 – FEB 2018 (5 of 6)

Whether related VCAT proceedings rendered an application under s. 90(3) an abuse of process. 

Van Klaveren v Otelta Pty Ltd and Ors [2018] VSC 10 (23 January 2018) Daly AsJ.

Save for several interesting ancillary points this was a simple case of a caveat being removed under s. 90(3) because of no serious question to be tried that the caveator still had a leasehold interest claimed in the caveat, nor did the balance of convenience favour relief.  The ancillary points were –

  1. A reminder that the application was interlocutory. Accordingly objections to the admissibility of a solicitor’s affidavits were rejected.  Under Rules of Court evidence in an interlocutory application may be given on information and belief and it “would be unusual, albeit not unheard of, for cross-examination to be permitted on what is really a summary procedure”.
  2. The judge grappled with the argument that the application under s. 90(3) was an abuse of process because there was a proceeding on foot elsewhere. This argument was based on Yuksels Nominees Pty Ltd v Nguyen & Anor [2015] VSC 663 where T. Forrest J had stated that if there is already a proceeding on foot to substantiate the caveat an application to remove the caveat is prima facie vexatious and will likely be stayed.  In that case the caveator had commenced a County Court proceeding not to establish a proprietary interest but for damages and accordingly that application was not stayed.  In this case the lessee while still in possession had commenced a VCAT proceeding in 2016, not yet heard, disputing the right of the landlord to terminate the lease and prematurely claiming relief against forfeiture.  In 2017 the lessor re-entered but the lessee did not seek a hearing for relief against forfeiture although this relief remained in the Points of Claim.  At interlocutory hearings, in one of which an application for an injunction to restrain sale of the property was refused, VCAT members treated the claim as being only for damages and refused leave to amend to assert the lease was still on foot.   Her Honour held that the VCAT proceeding was not one to substantiate the interest claimed in the caveat, noted that T Forrest J only used the expression prima facie, and that unlike the County Court VCAT had no jurisdiction under s. 90(3)

Finally, insofar as the caveator argued that the caveat should remain as security for payment of any damages ordered by VCAT, this amounted to the impermissible use of the caveat as a bargaining chip.

 

Commentary: Yuksels must be read with authority that it is permissible for a registered proprietor both to take the procedure for caveat removal under the Transfer of Land Act s. 89A and also to commence an application under s. 90(3): eg Nineteenth Jandina Pty Ltd v Hijim Pty Ltd [2004] VSC 298 at [21] per Osborn J –“The fact that proceedings by a caveator are on foot to enforce the interest which the caveat has been lodged to protect, is not a bar to the exercise of the Court’s discretion under s. 90(3)”.

RECENT SUPREME COURT CASES DEC 2017 – FEB 2018 (2 of 6)

A caveat removed on the balance of convenience to permit refinancing.

Six Bruce Pty Ltd v Milatos and Ors [2017] VSC 784, 19 December 2017, Keogh J. 

The chronology was –

19 February 2016      Plaintiff becomes registered proprietor of a property using funds secured by registered first mortgage. It subsequently defaults under the mortgage.

20 May 2016              VCAT orders that a permit issue allowing construction of a four-storey apartment building on the property.

5 February 2017        Plaintiff contracts to sell the entire property to first defendant.  Deposit paid.   

20 March 2017          Purchaser nominates substitute purchaser.

3 July 2017                 Settlement date extended to 4 August 2017 on the basis that purchaser pay an additional deposit which it (not the nominee) does.   

31 July 2017               Purchaser learns of undisclosed drainage easement
affecting the property.

8 August 2017            Vendor serves rescission notice based on non-payment of balance of price.

14 August 2017          Purchaser services rescission notice based on alleged
non-disclosure of the easement in the vendor’s statement.  Vendor retains
deposit.

September 2017        Vendor enters joint venture agreement to develop the property. 

3 October 2017         Purchaser caveats on ground of lien to secure repayment of money paid under the contract.  Caveat does not name the nominee substitute purchaser.  Two registered mortgages and two previous caveats exist.  There is a subsequent caveat.

10 October 2017        Purchaser sues for return of deposit or declaration re caveat.

12 October 2017        Mortgagee sues vendor for repayment under mortgage. 

20 November 2017    Vendor receives refinance offer from other lenders.

27 November 2017    Vendor files Defence to purchaser’s proceeding substantially disputing the claim. 

The vendor commenced a proceeding under s. 90(3) to remove the purchaser’s caveat to permit refinance.  

Keogh J removed the caveat subject to conditions.  His Honour held –  

1.      There was a prima facie case that the caveator had the interest claimed.  The prospects of the vendor being excused under the Sale of Land Act s. 32K(4) for breach of the law in the section 32 statement were entirely uncertain.

2.      The caveat was not required to name the nominee. The effect of the nomination clause was to empower the purchaser to require the vendor to complete the contract by transfer of the property to the name of the nominee.  After nomination the nominee did not acquire rights as purchaser.

 

3.      However the balance of convenience favoured removal of the caveat because: most of the deposit had been released, presumably by agreement; the trial of the purchaser’s proceeding was distant; without the refinancing a mortgagee’s sale was likely; the vendor undertook not to deal with the property pending determination of the purchaser’s proceeding; the vendor agreed to charge the property to secure the amount of any judgment thus then enabling a further caveat; accordingly the purchaser’s position would probably be improved by the refinancing. 

RECENT SUPREME COURT CASES Dec 2017 – Feb 2018 (1 of 6)

Today’s blog is the first of six brief entries discussing recent Supreme Court cases.

 Whether a purchaser of a lot in land yet to be subdivided, who caveats over all the land, can, after subdivision and transfer to it of the lot sold, retain the caveat over the rest of the land.

 Bisognin & Anor v Hera Project Pty Ltd & Anor [2017] VSC 783 (15 December 2017) Daly AsJ.

 The chronology was –

13 March 2015          Plaintiffs enter contract to sell the southern portion (“southern lot”) of their soon to be subdivided land to the first defendant, retaining the northern portion (“northern lot”).

4 March 2016            Sloss J holds the vendors contractually required to undertake water supply and sewerage facility works.  Works remain unperformed. 

3 June 2016               Purchaser caveats claiming an estate in fee simple over the whole of the land, the interest claimed being as purchaser. 

16 December 2016    Court of Appeal holds the purchaser contractually required to pay fees (the “bonds”) on the vendors’ behalf to Water Authorities.  Payments subsequently made.

22 May 2017              Riordan J orders specific performance of the contract.  Vendors appeal seeking relief including recovery of southern lot.  Appeal subsequently heard but judgment reserved.

15 September 2017   Registration of plan of subdivision creating both lots.
Caveat remains registered over both. 

2 October 2017       Settlement of sale of southern lot. 

27 October 2017    Application to remove caveat under Transfer of Land Act s. 90(3). 

The purchaser argued that: the caveat was lodged to secure the vendors’ performance of their outstanding contractual obligations; by not undertaking the works the vendors had taken the benefit of the bonds; if the vendors did undertake the works and the bonds were refunded the vendors were required to repay the bonds to the purchaser, and this obligation created a lien or a resulting or constructive trust. 

Daly AsJ removed the caveat, holding –

  1. A purchaser of land anticipated to be subdivided could caveat over the whole of the land before subdivision, and over the purchased land after subdivision.  But on transfer of a subdivided lot the purchaser retained no interest in the unsold lot.
  2. The purchaser was in effect seeking to use the unsold lot as security for contractual obligations: but, absent a contractual term creating a charge, continuing actual or contingent liabilities of the vendor did not create a caveatable interest in the land retained.  
  3. Referring to authority that a purchaser had a lien over the property to secure repayment of the deposit if the contract ended, even if the vendors’ contingent liability to repay the bonds automatically created a lien there was no serious question to be tried that this created the estate or interest claimed in the caveat.