26. Four disparate cases – (1) Injunction against caveat – (2) Residuary beneficiary and prospective testator's family maintenance claimant with no caveatable interest – (3) Offer of caveat not sufficient security for costs – (4) Failure to remove caveat as breach of mortgage.

This blog deals with 4 cases not warranting a blog in their own right, at times however dealing with arcane points. They are –
R.G. Murch Nominees Pty Ltd v Paul David Annesley & Ors [2019] VSC 107 (26 February 2019) Sloss J. – A further contribution by Mr Annesley, the subject of Blog 4, to the law on injunctions against caveats, he succeeding in this instance.
In the matter of the Will of Dorothea Agnes Baird [2019] VSC 59 (13 February 2019) Keogh J. – A reminder that a residuary beneficiary of an estate does not have a proprietary interest in a specific asset during administration, nor does a prospective testator’s family maintenance claimant have an interest in land in the estate.
Brooklyn Landfill & Waste Recycling Pty Ltd v Commonwealth Golf Club Inc [2019] VSC 52 (6 February 2019) Hetyey JR. – which in short held that the offer by the plaintiff’s director to consent to lodgment of a caveat over her property was insufficient security for costs. [40], [42]
S Pty Ltd v B V [2019] VSC 125 (4 March 2019) Lansdowne AsJ. – which in short, in the course of a much wider dispute, noted that a registered proprietor, who commenced a proceeding for caveat removal but by orders agreed that the proceeding be stayed, was in breach of his obligation under a mortgage to cause a caveat lodged without the consent of the mortgagee to be removed. [34]

R.G. Murch Nominees Pty Ltd v Paul David Annesley & Ors [2019] VSC 107 (26 February 2019) Sloss J.
The facts were:

  • The first defendant (Annesley) was director of a company which owned a rural property mortgaged to a bank. There had been lengthy litigation between the bank and the company.  In August 2018 the bank conducted a mortgagee’s sale at which the plaintiff, whose sole director was Mr Murch (Murch), entered a contract to purchase the property. The contract was settled, the plaintiff became registered proprietor and a mortgage by it was registered.
  • After settlement of the sale there were altercations between Murch and Annesley, allegations of violence by Murch, intervention orders, and the execution by the defendants of a document whereby certain defendants were purportedly appointed to take control of property of the plaintiff for the purpose of enforcing a security interest.
  • The plaintiff brought this proceeding in substance to prevent the defendants interfering with the plaintiff or what it purchased, including seeking an injunction against registering or attempting to register any caveat over the land and certain other land of which the plaintiff was registered proprietor. It relied on the body of past conduct of Annesley in the improperly lodging caveats and similar documents, recorded in judgments of various courts, as manifesting his modus operandi.

As to caveats her Honour found or held –

1.    The plaintiff was in substance applying for a quia timet injunction and so was required to demonstrate a threatened infringement of the plaintiff’s rights sufficiently clearly to justify the court’s intervention.  This application did not arise from previous caveat lodgment over the land but from the defendants’ history. [79]  

2.     Authorities related to quia timet injunctive relief established the following principles –

(a)  the plaintiff must show that what the defendant intended or was likely to do would cause immediate (or imminent) and substantial damage to its property or business.  However, no fixed or absolute standard of proof was required;

(b)  the court would have regard to the degree of probability of apprehended injury, the degree of the seriousness of the injury, and the requirements of justice between the parties. [79]

3.     There being no evidence of the relevant defendants threatening or intending to lodge caveats over the plaintiff’s land, the plaintiff’s apprehension that they may do so did not qualify as an ‘imminent’ threat, and accordingly no injunction would issue. [87]

In the matter of the Will of Dorothea Agnes Baird [2019] VSC 59 (13 February 2019) Keogh J.

The facts were –

·     Dorothea Baird, who had two sons Peter and Michael, was registered proprietor of a property at Rhyll and was also registered as a one third proprietor of a property at Wonthaggi. 

·     On her death Peter obtained probate of her will under which she left her interest in the Wonthaggi property to him, made dispositions of property other than of land, and left the net residue of her estate to both sons equally as tenants in common. 

·    Michael foreshadowed a testator’s family maintenance proceeding.  He also lodged caveats against both properties stating as the grounds of his claim
that he was a beneficiary under the will.

·      Peter brought this proceeding inter alia under the TLA s. 90(3) to remove the caveats.

His Honour held –

1.    That the caveator had not raised a serious question to be tried that he had an interest in the properties.  In particular –

(a) as a residuary beneficiary he did not have a legal or equitable interest in a specific asset of the estate during the course of administration, only a chose in action, or personal right, to compel proper administration of the estate by the executor.  Further, the residue did not come into existence until administration of the estate was complete;

(b) the proposed testator’s family maintenance gave him no interest in the property. [21]-[22]

2.   The balance of convenience also favoured caveat removal. [23]

21. Options – Indemnity costs – Injunction against caveating

Pollard v Pollard [2019] VSC 21 (8 February 2019) Daly AsJ. 

Kuipers v Harrington (No 2) [2019] VSC 190 (25 March 2019) Derham AsJ.

 

These two cases are in contrast.  Pollard illustrates that a well drawn option to purchase creates a caveatable interest.  Kuipers illustrates a badly drawn option clause, no caveatable interest, and consequential award of indemnity costs and enjoining of the caveator. 

Pollard v Pollard [2019] VSC 21 (8 February 2019) Daly AsJ.  This was not a case under the TLA s. 90(3) but was a trial in which, if the defendant succeeded (as she did), she would have a caveatable interest.  The facts were –

·       In 2004 the parties entered into a deed inter alia concerning a property owned by a company and later by the plaintiff which included (cl. 5.7) that if the plaintiff wished to sell it he must first give the defendant the option to purchase it: at a value calculated by multiplying the annual gross rent paid by the tenants at such time by 10 times; but if it was untenanted, then at current market value established by sworn valuation; and the defendant was to be given at least 30 days’ prior notice in writing of such intention to sell, with her then to exercise her option to purchase within 21 days of receipt of such notice;

·    In 2009 the defendant lodged a caveat on the grounds of “As beneficiary of an option to purchase pursuant to a written agreement” then describing the agreement;

·    In February 2018 the plaintiff informed the defendant that the property was going on the market, stated its market value according to a real estate agent, and asked her intentions.  At that time the property was leased to a tenant;

·      Initially the defendant stated that she was not interested in purchasing the property and that the caveat would only be lifted at settlement of a sale.  Subsequently she confirmed that she wished to exercise her right to purchase at 10 times the current annual rent; 

·       The plaintiff commenced proceedings seeking removal of the caveat.   

Daly AsJ found or held –

1.    The plaintiff was obliged to give the defendant the option to purchase the property at the price calculated in accordance with the Deed, ie to give 30 days’ notice of intention to sell and concurrently to give the option to purchase the property at ten times the annual rental receivable at the time of the notice.  The obligation to offer the property to the defendant for sale at market value only arose if the property was untenanted. [32]

2.    The defendant was only obliged to respond to an offer made in accordance with the Deed.  No such offer was ever made.  She was not required to enquire whether the property was tenanted. [35]

3. The defendant was entitled to an order for specific performance of the plaintiff’s obligations. [34], [37]-[46]

 

Kuipers v Harrington (No 2) [2019] VSC 190 (25 March 2019) Derham AsJ.

The chronology was –

·         The plaintiffs owned a 38.38 ha. property at West Rosebud.  On 4 April 2014 they and the first defendant executed a Heads of Agreement and a Deed of Agreement”.  Under the Deed the first defendant was to facilitate development of the property by subdividing it into ten acre lots, in return for transfer to him of one such lot.  Clause 7 of the Deed purported to give the first defendant the plaintiffs’ consent to the lodgement of a caveat over the land to ‘better secure the opportunity’ for the first defendant to develop it;

·         The Heads, described by his Honour as “an ill drawn document ([14]) –

·         Recited that:

·    the seller has agreed to grant to the option holder a three-year call option for the properties to either purchase the properties, source a joint venture partner or investor, source a funder to develop them or to source an ultimate buyer/buyers.  This was the only reference in the document to a period of three years for exercise of the call option;

·     if the option holder exercised the call option, the seller and the ultimate buyer and/or their nominees must enter into an unconditional contract of sale;

·     the option holder was entitled to earn the profit margin between the seller and buyer less any relevant costs, fees, and commissions due to third parties.

·         Defined:

·    “Expiry Date” of the Heads as “three years from the commencement date” (but the term “Expiry Date” was not subsequently used in the document);

·      “Option Call” as an irrevocable offer to enter into a REIV sale contract with an ultimate buyer.

·      Provided, in a Payment Agreement”, that for facilitating the subdivision the first defendant would receive a ten acre parcel;

·         Provided that “the seller grants to the option holder an irrevocable right and option: (a) to require the seller to enter into a contract of sale with either the option holder or the ultimate buyer (cl. 2.1(a)); (b) to nominate a person or entity as selected buy (sic) the option holder to enter into a contract as the ultimate buyer, to purchase the property or properties listed on this agreement and on the terms contained in this agreement”; (cl. 2.1(b));

·   Provided: that the “call option” may be exercised during the term of the agreement by notice (cl. 2.2); the option holder, the first defendant, must pay the seller (the plaintiffs) $1 which is deemed to be a holding deposit towards the purchase of the properties” (cl. 2.8); “This agreement can only be terminated by either of; the expiry of this agreement, or by mutual consent of both parties (cl 2.11);

·       Provided that (cl. 4):

“The seller consents and grants to the option holder and the ultimate buyer, an interest in the property for the purpose of securing the development approval, and when a Contract is offered, the option holder and/or the ultimate buyer are authorised to lodge a caveat on the title of the property, a) but the caveat shall be discharged in favour of mortgages to be lodged for a contract of purchase, b) the caveat will protect any equitable interest of the option holders until settlement of the contract by the ultimate buyer; c) cost of removal will be paid by the lodger of the caveat”.

·     Nothing then occurred until 2018 when, after the plaintiffs had entered into a contract to sell the land to someone else, the first defendant lodged a caveat claiming a freehold estate in the land pursuant to an agreement dated 4 April 2014;

·     On an application by the plaintiffs to remove this caveat Daly AsJ found that the caveator’s prospects of maintaining a claim for an interest in the land were modest at best and on the  balance of convenience the caveat should be removed;

·       A month after this removal the first defendant lodged a second caveat claiming an interest as chargee apparently on the ground that the Heads created a charge;

·    The plaintiffs applied under the Transfer of Land Act s. 90(3) to remove the caveat.  Before filing the summons the plaintiffs’ solicitors wrote foreshadowing an application for indemnity costs. 

Derham AsJ held –

1.    On its proper construction, the option right, if any, conferred by the Heads was limited to three years from the date of the agreement. [20]

2.    However the Heads were uncertain, and therefore void and unenforceable, because 

(a)    it was unclear who was responsible to pay the option holder the ‘profit margin’, how it was to be calculated or what if any costs were to be taken into account;

(b)     the price at which the land was to be sold was to be determined by later agreement;

(c)     many terms of the subsequent REIV sale contract were unknown;

(d)     the nomination provision was uncertain in its reference to “on the terms contained in this agreement” which were unidentified; and

(e)   it was unclear whether the contract of sale to be entered into was to be between the plaintiffs, the option holder and the ultimate buyer under which the option holder was to be paid some unidentified profit margin. [21]

3.    The wording of clause 4 (consent to caveat) was unclear as to what interest in the property was purportedly granted and it appeared that the right to lodge a caveat did not arise until a contract was offered to the sellers. [23]

4.    There was accordingly no serious question to be tried that the Heads gave the caveator a caveatable interest because:

(f)      there was no charging clause;

(g)     the call option was void for uncertainty;

(h)     the time for exercise of the call option had expired; and

(i)   the sellers’ consent to caveat was little better than a contractual consent to lodge a caveat in certain circumstances, which had not arisen and, if they had, would not give rise to an interest in the land. [24] 

5.    The balance of convenience also favoured removal of the caveat. [26]

6.    Indemnity costs were awarded against the caveator.  His Honour comprehensively recited the principles governing an award of indemnity costs.  An order for indemnity costs warranted by: the nominated basis for lodging the caveat, ie a charge, was untenable; the pre-summons warning; the caveator was attempting to use the caveat as a bargaining chip. [33]-[35]

7.    The first defendant would be enjoined against lodging any further caveat on the basis of the Heads or the Deed because the lodgement of the second caveat was frivolous, vexatious and an abuse of process.  The caveator had shown a profound disregard of the absence of any underlying basis for the second caveat and displayed that he was ready, willing and able to continue to disrupt any sale.  There was accordingly a prima facie case that he would continue to lodge caveats if not restrained. The balance of convenience also favoured the grant of an injunction. [36]-[37]

16. Injunction against future caveating

Lendlease Communities (Australia) Ltd v Juric & Anor [2018] VSC 107

 

(8 March 2018)  T Forrest J.

The Registrar was directed to remove a caveat lodged by the first defendant who had no possible interest in or connection with the land, but claimed an interest as “adverse possession by exclusive occupation” – he had lodged the caveat because of a long-standing grudge against the plaintiff and others.  In 2015 a court had ordered that a previous caveat lodged by him over land owned by entities in the Lendlease group, on the same untenable ground as the current caveat, be removed.  The plaintiff also obtained an injunction restraining the defendant for 5 years from lodging any further caveat over the land, over any titles derived from its titles and over any other land of the plaintiff.  The Judge observed that “the impugned caveat was lodged as some type of pre-emptive bargaining strike in his claim for one trillion dollars plus prime city real estate”.

4. Antidotes to repeat caveats: enjoining the caveator and Registrar of Titles.

Andrews Family Holdings Pty Ltd v Yellow Tractor Pty Ltd [2017] VSC 682 (8 November 2017); Andrews Family Holdings Pty Ltd v Yellow Tractor Pty Ltd (No 2) [2017] VSC 695 (14 November 2017).  Ginnane J.  

Mr Annesley entered a contract to purchase land from the plaintiff (“Andrews”).  In purported payment of the balance of price he tendered a document entitled ‘Promissory Note’ which was neither a permitted method of payment nor indeed in law a promissory note.  Andrews rescinded the contract.  The defendant (“the company”), of which Annesley was a director and which he had intended to nominate as purchaser, subsequently caveated, the caveatable interest being based on the rescinded contract.  The company was subsequently deregistered.  Andrews applied to remove this caveat under the TLA s. 90(3).  Ginnane J:

  1. Found no serious question to be tried that the company, even if still registered, had a caveatable interest: it was not a party to the contract and had no legal or equitable interest in the property.
  2. Also enjoined Annesley from lodging further caveats in respect of the land without leave. He noted that there was both authority for this course in the caveat context, ie Maryvell Investments Pty Ltd v Velissaris [2008] VSC 19, and the general curial power to grant injunctions given by the Supreme Court Act 1986 s. 37.  This case merited an injunction because Annesley had already lodged two caveats and did not foreswear lodging more.

Undaunted, on the day after this decision Annesley caveated in his own name claiming a purchaser’s lien.   The Titles Office had a copy of the court order but accepted the caveat albeit apparently issuing a requisition requiring Annesley to establish within 14 days that he had the court’s leave.   On an application for removal if this caveat Land Use Victoria argued that it had justifiably given Annesley ‘the benefit of the doubt’, the Registrar having a duty to accept a caveat for lodgment.   Ginnane J:

  1. Held this practice of giving the benefit of the doubt inappropriate for caveators whose previous caveats had been removed or had lapsed or were now subject to injunction. The Registrar’s statutory obligations included giving effect to directions of the Supreme Court (TLA s. 103).
  2. Permanently enjoined Annesley from lodging caveats in respect of the property, with indemnity costs.
  3. Enjoined the Registrar of Titles so that must forthwith reject and not record any caveat by Annesley over the property.

Commentary: This case is a rare case of the Registrar registering a caveat after an injunction was granted.  Otherwise, it succeeds previous cases such as where: the court orders the Registrar not to register any caveat without its leave or further order (Westpac Banking Corporation v Chilver [2008] VSC 587), or any caveat by any person other than a purchaser from the successful plaintiff without its leave for a certain period (Lettieri v Gajic [2008] VSC 378) or enjoins the lodging of further caveats (Marchesi v Vasiliou [2009] VSC 213; Wells v Rouse & Ors [2015] VSC 533).

3. Principles applicable to application to remove caveat under s. 90(3) of TLA

  • Absolute prohibition

  • Circumstances in which entitlement to payment for work on land caveatable

  • Injunction against future caveat

  • Amendment of caveat

  • Costs

  • Interest claimed being “implied, resulting or constructive trust”

  • Commentary

Yamine v Mazloum [2017] VSC 601 (3 October 2017) John Dixon J.

The timeline was –

Undated                         Plaintiff registered proprietor asks caveator to assist him to prepare property for sale.  Caveator subsequently alleges that in substance: the plaintiff asked him to work to finish his house and prepare it for auction; the caveator replied that a tremendous amount of work was involved which he could not even put a figure on, asked how he would be paid, and said that he would not help unless assured he could be paid; the plaintiff replied that he would be paid for his work from the proceeds of sale. 

March – 23 June 2017  Caveator moves into the property and allegedly fixes it for sale. 

8 July                               Property sold, settlement date 6 September, rescission notice served in September. 

26 July                             Caveat lodged, grounds of claim “implied, resulting or constructive trust”, estate or

interest claimed is a “freehold estate”, all dealings prohibited.

18 September                Following provision of information by caveator’s solicitors and inconclusive negotiations plaintiff foreshadows application to remove caveat, caveator offers withdrawal in return for $45,000 to be held in caveator’s solicitor’s trust account pending resolution of the dispute.

The plaintiff applied for removal of the caveat under the Transfer of Land Act 1958 s. 90(3). John Dixon J ordered removal of the caveat with costs. His Honour reasoned –

1. His Honour first recited certain standard principles, namely –

(1) The power under s. 90(3) was discretionary.

(2) Section 90(3) was in the nature of a summary procedure and analogous to the determination of interlocutory injunctions.

(3) The caveator bore the onus of establishing a serious question to be tried that the caveator had the estate or interest claimed. The caveator must show at least some probability on the evidence of being found to have the equitable rights or interest asserted in the caveat.

(4) The caveator must further establish that the balance of convenience favoured maintenance of the caveat until trial.

(5) As to the balance of convenience generally the court should take the course appearing to carry the lower risk of injustice if the court should turn out to have been wrong in the sense of declining to order summary removal where the caveator fails to establish its right at trial or in failing to order summary removal where the registered proprietor succeeds at trial.

(6) The stronger the case that there was a serious question to be tried, the more readily the balance of convenience might be satisfied. It was sufficient that the caveator showed a sufficient likelihood of success that in the circumstances justified the practical effect of the caveat on the registered proprietor’s ability to exercise normal proprietary rights. [15]

2. His Honour also noted authority for the proposition that “a caveat may only be lodged in a form commensurate to the interest it is designed to protect”. [16]

3. The argument that the caveator’s entitlement to be paid for his work on a quantum meruit was enforceable in equity by a constructive trust was invalid. The plaintiff did not accept any intention to charge or secure the land with the obligation to repay the cost of the work or to create any beneficial interest in it. The concept of salvage, deriving from Re Universal Distributing Co Ltd (1933) 48 CLR 171 at 174 – 5 per Dixon J, was inapplicable: the current case concerned property rights, not rights in insolvency and the property was preexisting and not converted into a fund for the benefit of claimants. There was only an oral agreement for services on a quantum meruit. [19], [24], [26] – [32]

4. If the caveator now evinced an intention to lodge a further caveat claiming an interest as chargee, an injunction would likely lie. [33]

5. No application to amend the caveat was made, and the discretion to amend would not have been exercised because:

(1) The application would have been to amend the interest claimed ie to chargee or equitable lienee, an amendment of interest claimed “not usually be[ing] permitted”, not merely to amend the grounds of claim or scope of protection. [35]

(2) The circumstances the grounds or interest claimed were erroneously stated was were relevant: the caveat was lodged not by an unrepresented person but by a solicitor certifying that he had taken reasonable steps to verify the identity of the caveator and had retained the evidence supporting the claim. [36]

(3) The court should not encourage the belief that caveats could be imprecisely formulated and then fixed up later: a caveat was in effect an interlocutory injunction by administrative act with possible serious consequences. Wrongly formulated caveats should not easily be tolerated. Caveats should not be used as bargaining chips. [37]-[38]

(4) The court should have regard to all of the considerations that arise on applying for removal of the caveat in the terms of the amendment sought. If this caveat was amended the caveatable interest claimed would still lack merit because even if the caveator’s version of the oral agreement was proved it would not create a charge or an equitable lien. [39] – [40]

6. His Honour not merely awarded costs but also reserved liberty to the plaintiff to make any application pursuant to r 63.23 as it may be advised against the first defendant’s solicitors. [44]

7. His Honour noted in passing that use of the phrase “implied, resulting or constructive trust”, which identified three different forms of trust, was “usually evidence of a degree of loose thinking”. [20]

Commentary –

1. His Honour deals with the principles applicable to s. 90(3) and amendment of caveats at length and touches on other interesting points now expanded on.

2. The stress on a caveat not imposing an absolute prohibition if inappropriate is expanded on in Lawrence & Hanson Group Pty Ltd v Young [2017] VSCA 172 to be the subject of a future Blog.

3. Other cases related to whether works on land will create a caveatable interest are –

• Walter v Registrar of Titles [2003] VSCA 122 at [18] – mere work and labour done not caveatable;

• Depas Pty Ltd v Dimitriou [2006] VSC 281 – a builder was found to have at most a contractual right to, and perhaps even an equitable interest in, half a joint venture’s net profit, but not a half interest in the land;

• An equitable lien will give rise to a proprietary and so caveatable interest, a foundational statement on equitable liens being that of Deane J in Hewett v Court (1983) 149 CLR 639 at 668. Caveat cases where no lien was established are: Western Pacific Developments Pty Ltd (in liq) v Murray [2000] VSC 436 and HG & R Nominees Pty Ltd v Caulson Pty Ltd [2000] VSC 126;

• In Popescu v A & B Castle Pty Ltd [2016] VSC 175 Ginnane J held that the only Romalpa clause conferring an equitable interest in land was one entitling the holder to enter upon the land to sever and remove the fixtures, and accordingly removed a caveat based on a clause simply providing that all materials used in a contract remained the supplier’s property until paid in full.

4. As to injunctions against future caveats, or the similar order that the Registrar not register any caveat without its leave or further order see also Westpac Banking Corporation v Chilver [2008] VSC 587, Lettieri v Gajic [2008] VSC 378, Marchesi v Vasiliou [2009] VSC 213; Wells v Rouse & Ors [2015] VSC 533.

  1. 5. The reservation of liberty to apply for costs against the solicitors ties in with an increasing judicial tendency to so order, eg Gatto Corporate Solutions Pty Ltd v Mountney [2016] VSC 752.