Category: Evidence on Application Under s. 90(3)

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

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

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

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

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

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

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

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

  The facts were as follows –

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

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

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

Philip H. Barton

          Owen Dixon Chambers West

        Wednesday, August 30, 2023

Blog 74. Leave to appeal against Blog 65 refused

Dolan v Dolan [2023] VSCA 136, Court of Appeal.

In this case the Court of Appeal refused leave to appeal from the decision of Ierodiaconou AsJ ([2022] VSC 543) the subject of Blog 65.   The Court of Appeal decision is particularly helpful because the court summarises a number of basic caveat litigation points arising under the TLA s. 90(3), namely:

  1. An application under s. 90(3) is interlocutory in nature, requiring application of the two-stage test of serious question to be tried and balance of convenience, not ordinarily requiring final determination of disputed factual issues or claims, and not giving rise to an issue estoppel or res judicata (although an application under s. 90(3) may amount to an abuse of process).
  2. Where an arguable case is established the caveator is generally required to commence a proceeding with a Writ and pleadings.
  3. As to admissibility of evidence.
  4. That an order removing a caveat to permit sale, with part of the sale proceeds being held on trust pending final determination of the dispute, may be appropriate where the caveator was not in possession or where the claimed interest conferred no possessory right, but may be inappropriate where the claimed interest, of which there was a serious question to be tried, conferred possessory rights or represented the whole or a substantial proportion of the beneficial proprietary interest.

It is helpful first to set out the original decision, commencing with the facts particularly relevant to the appeal –

  • In about 1998 the first defendant (Christine) and other persons purchased land at Lorne (the parent title) for $105,000 with Christine being registered as to a half interest.   They agreed to subdivide it into two blocks, with her taking one.  She deposed that she contributed $52,500 towards the purchase.  The plaintiff (Shannan), who was Christine’s daughter, deposed that she (Shannan) contributed $20,000 towards the purchase.
  • Due to her age and income Christine could not obtain a loan to fund construction of a house.   However, a Bendigo Bank employee advised that if she transferred her interest in the parent title to Shannan an acceptable loan could be secured in Shannan’s name.  Christine deposed that Shannan accepted her proposal to make this transfer so that Shannan could obtain a loan on Christine’s behalf, but that both before and after subdivision she (Christine) would continue as beneficial owner, and that Shannan also accepted other proposed terms relating to the transfer.  Shannan denied accepting this proposal.
  • In 2001 Christine transferred her moiety in the parent title to Shannan, the consideration stated in the Transfer being as “An Agreement to Transfer”.   Following subdivision, one block (the property) was transferred to Shannan, the consideration in that Transfer being stated as “In pursuance of an Agreement between the Transferors for partition of the said land …”, and Shannan in 2003 became registered proprietor of this block.  The bank established a loan account in Shannan’s name with an overdraft limit of $140,000 secured by a mortgage.
  • Christine deposed that the costs for acquisition of the parent title and construction and fit‑out of the house were funded primarily from her personal resources and from the loan account, Shannan only contributing about 7% of overall build costs.   Christine also deposed to making mortgage repayments and that she paid all outgoings including council rates, home insurance, and for maintenance and improvement.  Shannan deposed that the overall build costs were largely drawn down from the loan account, that from 2004 to 2006 she made loan payments, and that Christine did not use her personal resources to fund overall build costs.
  • Upon completion of the house in 2003/2004 Christine, Shannan, and another family member took up residence.  Shannan left in 2006.  In 2021 Christine caveated on the ground of ‘implied, resulting or constructive trust’.  Shannan applied under the Transfer of Land Act s. 90(3) for removal of the caveat.

Ierodiaconou AsJ dismissed the application, holding –

  1. There was a serious question to be tried that Christine was the beneficiary of a common intention constructive trust (she alleged as to 93% of the equitable title). This was supported by: her deposing to the required common intention or agreement; reference to an agreement in the Transfer (her Honour appears to state in the Transfer to Shannan of the subdivided block, but quaere this is a slip for the Transfer to Shannan from Christine); and Christine’s contribution to loan repayments.  Moreover, it appeared to be common ground that Christine contributed most of the purchase price of the parent title and that for many years she made payments into the mortgage loan account and resided on the property.
  2. There was a serious question to be tried that Christine was the beneficiary of a resulting trust (she alleged as to 65% of the equitable title) arising from her contributions to the purchase price of the parent title and to construction and fit-out.
  3. The balance of convenience favoured maintenance of the caveat because of: Christine’s long residence; her age being elderly; evidence of her investing her life savings into the property; the fact that Shannan proposed to sell the property with vacant possession with only $20,000 from the net proceeds being distributed to Christine pending resolution of the dispute; Christine’s claim of a substantial interest in the property; and Christine’s inability to buy another property or rent one in Lorne.  Any hardship for Shannan could be met by Christine’s undertaking to maintain mortgage and property expense payments, which would maintain the status quo of many years, and Christine being required within 7 days to commence a proceeding to establish her interest in the property.

The Court of Appeal refused leave to appeal, holding –

  1. The decision at first instance was discretionary and to impugn it the applicant must establish an error of a kind explained in House v The King (1936) 55 CLR 499. [83]
  2. The proposed ground of appeal that the Associate Judge had conducted a “trial” of the Originating Motion (without the applicant being aware of it) and had not just heard the Summons, whereby the final orders created an issue estoppel or res judicata that Christine had a caveatable interest, was misguided and a distraction. The true issue was that the nature of the order made, ie to refuse to order removal of the caveat, reflected in the conclusion in the order dismissing the summons, was interlocutory in nature, in the sense that it did not finally determine any rights in the property.  It was interlocutory because the relief sought was under the Transfer of Land Act s. 90(3) requiring the caveator to establish a serious question to be tried of an estate or interest in the land and that the balance of convenience favoured the maintenance of the caveat until trial.   An application for removal of a caveat did not ordinarily present an occasion for the final determination of disputed factual issues or claims.  Not only was it usual for an application under s. 90(3) to be by Summons or Originating Motion, and for it to be determined by the two-stage test, but where an arguable case was established the caveator was generally required to commence a proceeding to have the claim to an interest in the land determined in a properly constituted suit with a Writ and pleadings.  An Originating Motion was ill-suited to such a dispute and there may be no utility in keeping it on foot. [47]-[55]
  3. The Associate Judge had applied these principles. She had not determined whether the applicant had any equitable interest in the property, but done no more than dismiss the Summons.  No issue estoppel or res judicata [56], [57], [60], [61]
  4. However, in the absence of a relevant change in circumstances, an application to remove the caveat may be an abuse of process. [62]
  5. The submission that the Associate Judge was not entitled to rely on matters stated in a draft Statement of Claim exhibited to and repeated in a paragraph of an affidavit, and in particular the pleading of an agreement between Christine and Shannan, was rejected. The fact that a paragraph in an affidavit was in the same form as a pleading was inconsequential.  Admissibility of the paragraph was determined by reference to the Evidence Act 2008.  Although the form of the paragraph was open to the criticism that it was conclusionary it was admissible because the evidence was relevant and on its face came from the deponent’s personal knowledge.  The evidence was capable of reasonably bearing upon whether there was a triable issue of an agreement or understanding reflecting a common intention as to the beneficial ownership of the property.  The other evidence of an agreement included the change in title, the payment by Christine of part of the purchase price of the parent title and construction costs, and the fact that she continued to occupy the property without paying rent.  In any event, counsel had conceded before the Associate Judge that he was ‘not going to argue that there isn’t a prima facie case here in relation to the caveat’. [65], [71]-[75]
  6. The proposed ground of appeal that the Associate Justice should have determined that at best Christine was entitled to a lesser equitable remedy, ie an order requiring Shannan to hold some of the sale proceeds on trust pending final determination of the dispute, was not established. The Associate Justice was correct in concluding that Christine had raised a serious question to be tried that she held a beneficial interest in the property.  As to the balance of convenience, the caveat itself did not confer any rights on Christine to occupy the property for the purpose of the caveat nor (although likely to affect the ability to sell and price) prevent sale. [42], [84]-[89]
  7. In considering whether the balance of convenience favoured the retention of the caveat, it was necessary to consider the nature of the claimed interest and what the caveat was designed to protect. In cases where the caveator was not in possession or where the claimed interest conferred no possessory right, the claimed proprietary interest may be adequately protected by removing the caveat, allowing the property to be sold and, by orders or undertakings, for the proceeds or part of them to be secured until the respective interests in the property can be determined.  Conversely, where the claimed interest conferred possessory rights or represents the whole or a substantial proportion of the beneficial proprietary interest, it may be appropriate to maintain the caveat and so not alter the registered title pending trial.   In this context two points required examination –
    1. Did the interest claimed by Christine give her a possessory right to the property? On her primary case, she claimed to own 93% of the beneficial interest based on a common intention constructive trust. She had also been in possession since the construction of the house.  In those circumstances it was arguable that the equitable interest would follow the legal interest and give her a right to possession. Alternatively, establishment of her right to equitable relief may arguably also found an order restraining Shannan from evicting her.
    2. In her draft pleading and in her submissions at first instance Christine accepted that the property should be sold but only after determination of the respective equitable interests. Shannan’s submission that, in circumstances where both parties sought sale and distribution of proceeds, it was (necessarily) wrong for the caveat to remain was invalid.  It was open to the Associate Judge to conclude that the caveat should not be removed before the determination of equitable interests because the practical effect this would be a sale and transfer of title with the real risk of an order for possession against Christine.  Christine’s ability to secure alternative accommodation was heavily dependent on her knowing the extent of, and being able to realise, any interest she may have in the property, accordingly the status quo plainly favoured retention of the caveat.  And if Christine was successful on her primary claim and Shannan has no more than a 7% beneficial interest Shannan’s interest may possibly be satisfied without sale.  [90]-[93], [96]-[99]
  2. The Associate Judge was alive to possible prejudice to Shannan from maintenance of the caveat including exposure to mortgage repayments. She correctly decided that the undertakings proffered by Christine to pay certain amounts were adequate to meet any prejudice.  An application to lead fresh evidence to the effect that the mortgage had been in arrears was refused. [100], [102], [103]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, July 25, 2023

 

37. Caveat claiming resulting implied or constructive trust removed – No prima facie case – Difference between “prima facie case” and “serious question to be tried” tests – Circumstances in which hearsay admissible on application under TLA s. 90(3).

SMAV Nominees Pty Ltd v Bakal Enterprises Pty Ltd [2020] VSC 203 (24 April 2020), Derham AsJ

Comment.   This case is interesting for the following reasons –

1.   It considers the circumstances in which hearsay is admissible on an application to remove a caveat under the Transfer of Land Act s. 90(3).  See also Blog 11.

2.     Derham AsJ considers whether the caveator has to show, as to the existence of its asserted legal or equitable rights in the land, on the one hand a prima facie case or on the other hand a serious question to be tried.  His Honour states that the first is the correct test (as previously stated in Blog 1) and indeed states (at [64]) that the first test requires a higher standard than the second, citing the decision of Warren CJ in Piroshenko v Grojsman [2010] VSC 240; (2010) 27 VR 489.  It is, however, difficult to find any case in which a court holds that a caveator met one and not the other test (in this case Derham AsJ finds that caveator failed both), and indeed in Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd [2015] FCA 888 at [33] (not a caveat case) Edelman J stated that the difference between the two tests is one of language not of substance.

3.   Although his Honour simply ordered that the caveator pay the plaintiff’s costs of the application he reserved liberty to apply in relation to his proposed orders.  It was ominous that he also found that the caveat had been used as a bargaining chip as this may foreshadow indemnity costs – see Blog 35 and previous Blogs on costs. 

The facts were –

·      In October and November 2017 the plaintiff’s sole director Mavroudis loaned Sabawi a total of $200,000.

·     In April 2018 Mavroudis was introduced to 294 Pound Road Hampton Park (“the property”) by Sabawi, whom he believed to be a licensed real estate agent.   On 13 April he signed a “Letter of Offer Expression of Interest” and paid a holding deposit of $10,000 to one of the vendors at the direction of Sabawi.

·    On or about 17 April 2018 Sabawi asked Mavroudis for his bank account details so that he could repay the loan of $200,000.  Mavroudis did this.  Sabawi subsequently advised Mavroudis that he had repaid the $200,000 to his account.  Mavroudis received the $200,000 into his account on 18 April 2018, recorded in his bank statement as “Inward Telegraphic Transfer 180490”.   

·   On 7 July 2018 Sabawi presented the contract of sale to Mavroudis for signing with the purchaser named as “294 Pound Road Pty Ltd” and the vendor’s estate agent named as a particular company formed by the two of them other than for the purpose of selling real estate.  Mavroudis signed only after insisting that the document be altered to show the plaintiff as purchaser and the sale as being by private treaty.   The plaintiff became registered proprietor. 

·  On 23 August 2019, the solicitors for the plaintiff and Mavroudis received a letter of demand from the then solicitors for the first defendant (“Bakal Enterprises”) demanding repayment of $200,000.  Among other things the letter alleged that, following discussion with an unnamed mutual friend, Bakal Enterprises had paid $200,000 into Mavroudis’s account on 18 April 2018 as a contribution towards a development on the property, which had fallen over.  Shortly before this letter Mavroudis received a telephone call to similar effect from, he gathered, Bakal, who was Bakal Enterprises’ sole director.

·        On 27 August 2019 the plaintiff’s solicitors responded, stating that Mavroudis’ first knowledge of these allegations was in this telephone call and refuting them.  On 16 September 2019 the then solicitors for Bakal Enterprises responded confirming that the mutual friend was Sabawi, enclosing a receipt so as to corroborate the statement that Bakal Enterprises and not Sabawi had made the $200,000 payment, and demanding its repayment. 

·     The plaintiff heard nothing further until receiving notice that Bakal Enterprises through its new solicitors Madgwicks had caveated on 10 February 2020 claiming a freehold interest in the property on the basis of a resulting implied or constructive trust.

·     The plaintiff’s solicitors demanded removal of the caveat and stated  that the $200,000 had been repayment of a loan by Sabawi.  On 27 and 28 February Madgwicks and the plaintiff’s solicitors communicated, in the course of which:

·       Madgwicks stated that Sabawi denied the loan, maintaining that the caveator had an interest in the land arising from the contribution of $200,000 towards its purchase;

·   the plaintiff’s solicitors provided documentary evidence of the $200,000 loan to Sabawi, foreshadowed caveat removal proceedings, reiterated Mavroudis’ previous account of the facts, and stated that: the plaintiff had purchased the property with its own funds and financial assistance from Mavroudis’s father; a planning permit for a subdivision of the property was imminent; the plaintiff had a very interested buyer once it could sell with plans and permits but that this was impeded by the caveat. 

·        On or about 5 March Bakal and Sabawi conferred with Madgwicks. On 12 March Madgwicks wrote to the plaintiff’s solicitors stating, after reiterating its instructions about the $200,000 payment, that Sabawi had instructed it that Mavroudis inappropriately altered the name of the purchaser in the contract of sale from 294 Pound Road Pty Ltd (to be incorporated between Mavroudis and Sabawi) to the plaintiff’s name and “[we] are informed by Mr Sabawi that this change was made under false pretences and without adequate payment to Mr Sabawi, who was instrumental in facilitating the sale in the first place …. Mr Sabawi is currently attending to swearing a statutory declaration confirming the above…”.

The plaintiff applied under s. 90(3) of the Transfer of Land Act for removal of the caveat.  Before the caveator filed any evidence Madgwicks offered in return for withdrawal of the caveat that $300,000 be held in trust pending determination of the dispute.

The material before the court included –

·      an affidavit by the caveator’s solicitor which stated that a statutory declaration was being prepared by Sabawi;

·       an affidavit by Bakal.  This affidavit exhibited a statutory declaration, inferred by his Honour to have been prepared by Madgwicks, said to have been made by Sabawi, containing Sabawi’s evidence including disputing Mavroudis’ account of the facts.   Bakal asserted that Sabawi had not sworn an affidavit because of the social distancing measures required in the COVID-19 pandemic. The statutory declaration omitted reference to the false pretences allegation contained in Madgwicks’ letter of 12 March.  It included that: in March 2018 Sabawi told Mavroudis that he was getting a friend to pay the deposit for the purchase; that after the $200,000 payment, Mavroudis acknowledged to Sabawi that the plaintiff had received the money; and he informed Mavroudis at the time of payment that the money was sent to him from Bakal for the purposes of the purchase.

·        Bakal’s affidavit contained a rendition of financial and property dealings between Sabawi and Bakal, with repetition of statements allegedly made by Sabawi about Mavroudis.  Bakal deposed –

·        that he did not know Mavroudis personally and other than the transfer of the $200,000 he had not had any relationship or dealings with him or his entities;

·        (partly denied by Mavroudis) as to an alleged involvement in this transfer of $200,000, garnished with further complex dealings.  He deposed that: on or about 18 April 2018, he transferred $200,000 to the plaintiff by electronic fund transfer, without contact between the plaintiff (or Mavroudis) and Bakal Enterprises (or Bakal); the details of who and when to pay were provided by Sabawi to him.  The reference on the payment produced by Bakal was “Deposit Pound Road”.  

·        affidavits by Mavroudis in which he deposed that when he signed the contract of sale he did not know, or know of, the caveator or anyone associated with it, and that he had not entered into any agreement, either personally or through any agent, with the caveator or any other party in relation to the property.  Mavroudis deposed that there was no truth in the account in the statutory declaration. 

The plaintiff submitted that the statutory declaration was inefficacious for non- compliance with the Oaths and Affirmations Act 2018 in its execution and witnessing. 

Derham AsJ held –

1.     Sabawi could have sworn an affidavit deposing to the matters in his statutory declaration.   The inconsistencies between the statutory declaration and matters raised in correspondence, in particular in the Madgwicks letter of 12 March, were relevant to an assessment of the strength of the caveator’s claim.  [27]-[28]

2.     However, regardless of the efficacy of that statutory declaration under the Oaths and Affirmations Act, the material in it was admissible because –

(a)     Under r. 43.03(2) of the Supreme Court (General Civil Procedure) Rules 2015, on an interlocutory application an affidavit may contain a statement of fact based on information and belief if the grounds were set out.  This included the identification of the supplier of the information, ie its source.  Nonetheless, the Court had a discretion to admit an affidavit non-compliant in this regard;

(b)     Section 75 of the Evidence Act 2008 provided that in an interlocutory proceeding the hearsay rule did not apply to evidence if the party who adduced it also adduced evidence of its source.  The source must be identified by name;

(c)     If Bakal’s affidavit had related the material in the statutory declaration as what he had been told by Sabawi it would have been admissible, this application being interlocutory and the source being disclosed. [51]-[56]

3.     His Honour set out the law on caveats in conventional terms, which, as this law is set out in Blog 1, it is unnecessary to repeat except in one regard.   His Honour noted that: the caveator bore the onus of establishing a prima facie case to be tried, ie a probability on the evidence that the caveator will be found to have the asserted legal or equitable rights or interest in the land, not that it was more probable than not that at trial it (his Honour states “the plaintiff” but this appears to be a slip) would succeed; and that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in accordance with their normal proprietary rights;

this test was often used interchangeably with whether the caveator established a serious question to be tried, but the prima facie case test was to be preferred;

the “prima facie case” test required a higher standard that the “serious question to be tried” test.  [30]-[33], [64]

4.     Where two people provided the purchase money for a property jointly, but the property was put into the name of one of them only, the property was, in the absence of a relationship giving rise to a presumption of advancement, presumed to be held on resulting trust in favour of the unregistered party in proportion to their contribution. [57]

5.     The caveator had not established a prima facie case or even, if it had been applicable, satisfied the serious question to be tried test, because Mavroudis gave evidence that he believed the payment of $200,000 was repayment of a debt and the evidence to the contrary was at best contained in Sabawi’s statutory declaration, which was of little weight, ambiguous and contrived.   Insofar as it purported to ascribe knowledge to Mavroudis of the purpose of the payment, it did not support a resulting trust claim: there was no identification of the supposed beneficiary of the trust beyond “a friend” and the ambiguous statement that the money was sent to the plaintiff by Bakal for the purpose of purchasing the property.  That might indicate that the beneficiary was to be Sabawi or Bakal.   The only objective evidence supporting the caveator’s claim was the payment of $200,000 itself and the record that Bakal produced that it related to “Pound Road”.   However, there was no evidentiary link between the payment of $200,000 and the payment of the deposit nearly three months later. [58]-[65], [76]

6.     For the same reasons there was also no prima facie case of a Muschinski v Dodds constructive trust.  There was no evidence of consensus between the caveator and the registered proprietor which could give rise to a joint endeavour. [66]-[69]

7.    There was no suggestion that the existence of a claim for restitution gave rise to any equitable interest in the property. [70], [76]

8.     The caveat had been used as a bargaining chip to obtain payment of $200,000.  Although there were many cases in which a caveat dispute was resolved as proposed by the caveator’s solicitors, with the addition of a mechanism for the resolution of the dispute sometimes involving the caveator commencing a proceeding, the registered proprietor was entitled to deal with its property as it saw fit without being restrained by the injunctive effect of the caveat unless the caveator established a proper basis for the caveat. [73]-[76]

9.     The caveator was ordered to pay the plaintiff’s costs of the application.  His Honour however reserved liberty to apply in relation to his proposed orders. [77]

Philip H. Barton

Owen Dixon Chambers West

26 May 2020

 

11. 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)”.