Category: TLA S. 89A

Blog 85. The Giurina litigation.

The cases in this Blog partially concern caveats and illustrate a persistent use of the legal system leading to loss of a property.  They are in chronological order: Giurina v Greater Geelong City Council & Anor [2023] VSCA 148; Giurina v Greater Geelong City Council & Anor [2023] VSCA 299; Giurina v Registrar of Titles [2023] VSC 784; Giurina v Sheriff (Vic) [2024] VSCA 112.  (There are many earlier Giurina cases but this Blog commences with the Court of Appeal caveat case).   The caveat points arising in these cases are:

Giurina v Greater Geelong City Council & Anor [2023] VSCA 148 – unlike the Transfer of Land Act s. 89A(1), which enables “any person interested in the land” to apply to the Registrar of Titles for service of a notice, an applicant for relief under s. 90(3) is not require to have an interest in the land.

Giurina v Greater Geelong City Council & Anor [2023] VSCA 299 – confirming the statement of law in the previous Court of Appeal case and also rejecting the proposition that where there is a warrant of seizure and sale (while saying nothing about the standing of the Sheriff to apply to remove a caveat from the title of a property subject to the warrant) only the Sheriff had standing to apply to remove the caveats by virtue of the warrants.

Giurina v Registrar of Titles [2023] VSC 784 – a proposed caveat by an executor, in his personal capacity, claiming that he held the land on trust for himself is untenable.

Giurina v Sheriff (Vic) [2024] VSCA 112 – where a court has made an order requiring leave for lodging further caveats, the court has a broad general discretion, to be exercised by reference to whatever considerations are relevant in the particular case, in determining whether to grant leave.

By way of background –

  • Carolina Nacinovich died in 2002.  At the time of her death she was the registered proprietor of a property in Geelong West.  She was still so registered.
  • Ermanno Giurina obtained probate of the will of the deceased.  By operation of s. 13 of the Administration and Probate Act the property vested in Giurina as executor at that time.  The deceased bequeathed the property to him ‘for his own use and benefit absolutely’.   Clause 5 of the will provided:

I give devise and bequeath the rest of my estate to my trustee upon trust to sell call in and convert into money … and after the payment of my just debts funeral and testamentary expenses and death estate and succession duties State Federal or otherwise to hold the residue upon trust for the following in equal shares …

and thereafter were named two other people.

  • In October 2003 Giurina made a handwritten note which he signed twice (once as executor and once as beneficiary), reading –

‘Note 11-10-2003

I assent as Executor to dispose of property at Geelong West … to myself as beneficiary as per [3] of Will of C. Nacinovich —  no liabilities that I am aware of – no power of sale anyway —  dispose of specific devise of Property only — chase up other matters re funds —  Ermanno Giurina —  Executor.

I accept assent — agree as beneficiary to pay for outgoings, costs, etc myself privately for Property — not claim anything against Nacinovich Estate — Ermanno Giurina

Beneficiary’

  • In 2019 Greater Geelong City Council made an emergency order under s. 102 of the Building Act 1993 concerning the house on the property.  Giurina, as executor, engaged in unsuccessful litigation against the Council concerning the order, resulting in orders for costs being made against him in his executorial capacity.
  • In March 2022, at the request of the Council, warrants of seizure and sale were issued against the property.  The warrants inter alia authorised execution to be levied by the Sheriff for the purpose of satisfying the costs orders.  In his capacity as executor Giurina unsuccessfully sought to set aside the warrants.
  • In July 2022 Giurina lodged a caveat, naming himself as caveator.  The estate or interest claimed was ‘freehold estate’, the grounds of claim were ‘estoppel’ and the prohibition was listed as ‘absolutely’.
  • In August 2022 Giurina lodged a second caveat, naming himself as caveator.  The estate or interest claimed was ‘freehold estate’, the prohibition was listed as ‘absolutely’, and the grounds of claim were stated as: “Beneficiary/ies under the will of … [Nacinovich] … where probate has been granted and all debts in the estate have been paid”.
  • The Council applied under the Transfer of Land Act s. 90(3) for removal of the caveats.  Section s. 90(3) materially provided that “any person who was adversely affected” by a caveat could bring proceedings for its removal.   Giurina argued that the Council did not have standing to make the application because, as a mere unsecured judgment creditor, it did not have an interest in the land.  Matthews AsJ rejected this argument and on 9 March 2023 directed the removal of the caveats and restrained Giurina from lodging any further caveat without leave ([2023] VSC 59).   Matthews AsJ also refused an application to stay these orders.
  • On 31 March 2023 Giurina filed an application for leave to appeal to the Court of Appeal on the single proposed ground of appeal that Matthews AsJ erred in law in concluding that the Council had standing to bring the caveat removal application pursuant to s. 90(3).
  • On 14 April 2023, Giurina applied to the Court of Appeal to stay the orders of Matthews AsJ.  In Giurina v Greater Geelong City Council & Another [2023] VSCA 148 Osborn and Kaye JJA refused to grant the stay sought on the ground that the proposed ground of appeal was not reasonably arguable, noting that, unlike the administrative procedure in s. 89A(1) which enabled “any person interested in the land” to apply to the Registrar of Titles for service of a notice requiring the caveator in substance to give notice of proceedings to substantiate the caveator’s claim, an applicant for relief under s. 90(3) was not require to have an interest in the land ([15(b)]).   The construction of s. 90(3) contended for by the applicant would result in an absurd outcome, namely that a judgment creditor could never obtain a removal of caveat under s. 90(3) in aid of the sale of real property pursuant to a warrant of seizure and sale ([15(e)]).

On 17 August 2023, Giurina filed an application in the Court of Appeal to amend his proposed grounds of appeal. By that application, he sought to add the following proposed grounds of appeal:

    1. Her Honour erred at law and on the evidence before her by concluding that [Mr Giurina] did not have a prima facie case [in relation] to the interest claimed in the first caveat and even if she was wrong about that the prima facie case was very weak and consequently the balance of convenience favoured [the Council].
    2. Her Honour erred at law and on the evidence before her by concluding that [Mr Giurina] did not have a prima facie case [in relation] to the interest claimed in the second caveat and even if she was wrong about that the prima facie case was very weak and consequently, the balance of convenience favoured [the Council].
    3. Her Honour erred at law in concluding that both caveats should be removed instead of maintaining them until the trial where any dispute of the factual issues or the claims which the caveats seek to protect can be determined.

In Giurina v Greater Geelong City Council & Anor [2023] VSCA 299 Beach and McLeish JJA heard the applications for leave to amend the grounds of appeal and for leave to appeal and (if leave was granted) the appeal.   Their Honours refused leave to amend the grounds and refused leave to appeal, holding –

  1. For the reasons given in Giurina v Greater Geelong City Council & Another [2023] VSCA 148, which their Honours adopted as their own, proposed ground 1 was not reasonably arguable. Their Honours further rejected the new submission that (while saying nothing about the standing of the Sheriff to apply to remove a caveat from the title of a property subject to a warrant of seizure and sale) only the Sheriff had standing to apply to remove the caveats by virtue of the warrants. [24]-[25]
  2. Proposed ground 2 was based on an alleged representation Giurina made to himself in 2003 and his conduct following the death of Ms Nacinovich, whereby he alleged that the property belonged to him personally by reason of a proprietary estoppel.  It was totally devoid of merit.  The balance of convenience was also against maintenance of the first caveat. [37], [38], [57]
  3. Proposed ground 3 was without merit. Although the bequest to Giurina was a specific bequest of the property to him for his use and benefit absolutely, the use of the word ‘absolutely’ did not mean that the property vested in him at the time of death of the deceased. Giurina had not made out a prima facie case that the property was no longer an asset in the estate. [47]-[49], [57]
  4. Proposed ground 4 was without merit. Giurina had taken no steps to commence the proceeding or articulate a claim for the trial he sought. If, as alleged owner of the property, he applied in his personal capacity to have the warrants set aside, it would be difficult to see how that could not be an abuse of process of the kind referred to in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. [51], [55], [57]
  5. Another reason for refusing leave to amend was because Giurina had stated that the reason for the application for leave to amend was because, after a previous hearing, it had become obvious to him that ‘to have any chance of succeeding’, he ‘had to add additional grounds’. [58]

Giurina v Registrar of Titles [2023] VSC 784, Barrett AsJ.  This was an application by Giurina for leave to lodge a caveat over the property (Matthews AsJ having restrained lodgment of further caveats without leave).  Giurina argued that –

  • he (as executor) was trustee for himself (as beneficiary) pursuant to a constructive, resulting or implied trust arising as a result of his personal expenditure (as opposed to his expenditure as trustee) in relation to the property.  He had deposed that since 11 October 2003, he believed that he had not performed any executorial acts and he had since been, personally and not on behalf of the estate, making payments for the property’s outgoings in his capacity as a specific beneficiary.  These outgoings covered: rates, valuation and charges; insurance; gardening; fencing; and maintenance.   The total was approximately $120,000 excluding maintenance.
  • the property was given to him absolutely by the terms of the will and was unavailable to satisfy any debts arising out of his administration of the estate.
  • as executor he had on 11 October 2003 assented to the transfer of the property to himself, and so the estate had been fully administered.

Barrett AsJ refused the application, holding –

  1. It was a fundamental principle of common law and equity that a person who held the entire legal and beneficial interest in a property cannot hold the property on trust for themselves.  If one person had both the legal estate and the entire beneficial interest in the land he held an entire and unqualified legal interest and not two separate interests, one legal and the other equitable.  If that person first held the legal estate upon trust for some other person and thereafter that other person transferred to the first person the entire equitable interest, then again the first person did not hold two separate interests but a single entire interest – he was the absolute owner of an estate in fee simple in the land.  The equitable interest merged into the legal estate to comprise a single absolute interest in the land.  However, although the trustee could not be the sole beneficiary, the trustee could be one of the beneficiaries. [23]-[24]
  2. Further, it was impossible for a constructive trust to be imposed to avoid any unconscientious or unconscionable conduct between Giurina and himself. [25]
  3. The argument that Giurina assented (pursuant to s. 41(1) of the Administration and Probate Act) to the transfer to himself of the beneficial interest in the property was also invalid: the only interest in real property that may be conveyed by assent was the interest held by the testator.  The process of assent did not enable a personal representative to separate the legal estate and equitable interest in real property. [27]
  4. It was accordingly not arguable that Giurina had the caveatable interest asserted. [28]
  5. Further, Giurina was personally liable for debts incurred by himself as executor.  Although he had a right to an indemnity out of the assets of the estate, an executor’s liability was not necessarily limited to the assets of the estate, eg the indemnity did not extend to costs of actions improperly commenced or defended.  Accordingly, his submissions as to the different capacities in which he held the property were both of limited weight and irrelevant to the question of leave. [32]-[33]
  6. Finally, even if the question of the availability of the property to satisfy costs orders was relevant to the question of leave it was not open to the court to upset the orders of Matthews AsJ that the Property was affected by the costs orders and the warrant.  [34]

Giurina v Sheriff (Vic) [2024] VSCA 112 (Walker and Orr JJA).   This was the hearing of two applications.  In the first application the respondent was the Sheriff.  In the second application the respondent was the Registrar of Titles.  The first application arose from an application by Giurina for an interlocutory injunction to prevent the Sheriff’s sale.  The second application arose from an application by Giurina for leave to lodge two caveats on the property.  The applications were heard at first instance in the Practice Court on 23 February 2024.  On 26 February, the day before the sale was due to occur, Forbes J. refused each application on a number of grounds.  Her Honour held that the test for granting leave an application for leave to lodge a caveat was like an application to remove a caveat under s. 90(3), and accordingly the test in relation to the caveatable interest was analogous to the interlocutory injunction test.  Her Honour further noted: there was no evidence of a declaration of trust by Giurina in favour of himself – this argument appeared to stem only from the words of the will, which empowered Giurina to act as trustee as well as executor, but which did not, of itself, create a trust relationship in respect of any particular property of the estate; even if a trust in favour of oneself could be made there was not a serious question to be tried that the applicant had a caveatable interest.   Giurina sought leave to appeal from her Honour’s decision.  In the caveat proceeding he also sought an extension of time in which to file his notice of application for leave to appeal.

The Court of Appeal refused leave to appeal in the injunction proceeding and refused the application for an extension of time in the caveat proceeding, holding –

  1. The underlying basis for Giurina’s claims — that the estate has been fully administered, at least in relation to the property — was without merit.  In particular: the estate was the legal owner of the property, the property having vested in Giurina as executor upon the grant of probate but formal transfer of the registered title to the property to him not having occurred; the estate could not be regarded as having been fully administered until its assets had been distributed in accordance with the will; this was also why Giurina’s contention that he was a trustee of the property, holding it on trust for himself as beneficiary, lacked any prospect of success. [49], [50], [52], [84]
  2. The balance of convenience also weighed against the grant of an interlocutory injunction. [66]
  3. In determining whether to grant leave to lodge a further caveat the court had a broad general discretion to be exercised by reference to whatever considerations were relevant in the particular case.  In exercising that discretion it was permissible to adopt the approach taken by Forbes J., namely to assess whether the applicant for leave could demonstrate an arguable caveatable interest which, on the balance of convenience, should remain pending trial.  Even if the court was to conclude that Forbes J. made a specific error in the course of her reasoning it would make the same order, because the basis for Giurina’s asserted interest that he sought to protect by the caveats was the interest he invalidly claimed had resulted from the alleged completion of the administration of the estate. [83], [84], [86], [93], [94]
  4. Accordingly it would be futile to extend the time for filing of the notice of application for leave to appeal in the caveat proceeding. [96]

Philip H. Barton

Owen Dixon Chambers West

Tuesday, October 29, 2024

Blog 82.  Two short cases.

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

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

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

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

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

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

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

 

Casey v Giderson (Costs Ruling).

The facts were as follows –

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

Philip H. Barton

          Owen Dixon Chambers West

Wednesday, June 12, 2024

 

Blog 72. Caveat lapses under Section 89A(5) but caveator obtains injunction

Luna v V & A Luna Pty Ltd & Anor [2023] VSC 126 (22 March 2023), Derham AsJ.

This case is interesting for disparate reasons.  First it affirms that the time for a caveator to give notice under the Transfer of Land Act s. 89A(3)(b) to the Registrar of Titles that proceedings had commenced is strict.  Secondly it shows that the erstwhile caveator may still be able to obtain an injunction having similar effect to the caveat (albeit at the price of an undertaking as to damages).  Thirdly, evidence of the agreement or understanding underlying an alleged constructive trust being weak, his Honour reflected –

“At present, the agreement or understanding, or even assumption, upon which Pasquale provided this assistance is not fully spelled out in his evidence.  But I remind myself after long experience of Australians of Italian origin, that a patriarchal feature of their family arrangements often results in the father, and perhaps the mother as well, holding the family’s wealth either personally or through companies and trusts, with the intention of sharing that wealth either equally or according to the deserts of the members of the family who have contributed to it.”

The Transfer of Land Act s. 89A provides –

(1) … where a recording of a caveat … has been made … any person interested in the land affected thereby … may make application … to the Registrar for the service of a notice pursuant to subsection (3).
…
(3) Upon receiving any such application … the Registrar shall give notice to the caveator that the caveat will lapse … on a day specified in the notice unless in the meantime either—

…
(b) notice in writing is given to the Registrar that proceedings in a court or VCAT to substantiate the claim of the caveator in relation to the land and the estate or interest therein in respect of which the application is made are on foot.

…
(5) Upon the specified day, unless—

…
(b) notice in writing has been given to the Registrar that proceedings as aforesaid are on foot—

the caveat shall lapse …

The facts were –

  • The first defendant (the company) was the registered proprietor of a 20 acre farm at Wollert.  In 2018 the plaintiff (Pasquale) caveated claiming a freehold estate in it based on an implied, resulting or constructive trust.
  • On about 12 December 2022 Pasquale received a notice under s. 89A(3) dated 8 December stating that the caveat would lapse on the first moment of 17 January 2023 unless before that date he gave notice satisfying the requirements of s. 89A(3).
  • The solicitor for Pasquale deposed that on 16 January she telephoned the Land Registry Services – Secure Electronic Registries Victoria (SERV) and was informed by Tiffany in the specialist registration team that, notwithstanding the clear terms of the notice, the final day to respond to it was 17 January.
  • On 17 January (after the first moment) the solicitor filed a generally indorsed Writ and the notice under s. 89A(3)(b) was given.  The basis of the claim as indorsed (observed by his Honour to “have only a slight conformity with the facts as later revealed”) was largely related to an alleged partnership between Pasquale and his late parents Arturo and Vincenza.  Pasquale’s brother, the second defendant (Antonio), was sued as executor of their estate.
  • On 18 January the solicitor was informed by an employee of SERV that the caveat had lapsed.
  • On 23 January 2023, Pasquale issued a Summons.  The Summons sought, first, a declaration that the notice under s. 89A(3)(b) filed on behalf of Pasquale was valid and substantiated his interest in the land and so remained in force, alternatively that 50% of the net proceeds of any sale be held for his benefit pending the determination of the proceeding.
  • On 24 January a judge granted an interlocutory injunction in substance enjoining the defendants from dealing with the land pending final hearing and made further directions.   After the hearing the solicitor for the defendants informed the plaintiff’s solicitors and the court by email that the land had been sold pursuant to a contract of sale some time ago, but that completion of the sale was 24 months hence.
  • Shortly before the hearing on 17 March (see below) the plaintiff’s solicitors learnt of transactions which they alleged were in breach of the injunction, in particular a mortgage and issue of a new electronic title with different title particulars.  The plaintiff filed a Summons seeking that the defendants be dealt with for contempt of the January Order.
  • At that hearing before Derham AsJ on 17 March counsel informed his Honour that the land had been sold by a contract dated December 2022 for about $15 m.  This apparently required a mortgage to be lodged with a countervailing Bank Guarantee to secure the sale.
  • Pasquale deposed in substance that:
    • he worked with his parents from the time of a partnership in a delicatessen in 1969 to build their wealth for the benefit of the whole family. His contributions over the years enabled his parents to acquire properties that ultimately fed the purchase price of the land.  In 1989 he arranged for a family trust to be established with the company as trustee, being a discretionary trust of which the primary beneficiaries were Arturo and Vincenza.  Thus, his efforts and work over a lengthy period contributed indirectly to the purchase price of the land in 1989 and those contributions were made either (not fully spelled out) with the agreement, or on the understanding, that he would share equally with the other members of the immediate family in the wealth accumulated.
    • he contributed directly both his labour and money in establishing a house on the land, and maintaining it, on the assumption that he would retain an equal share in the ultimate wealth created through his and his family’s efforts.
  • Antonio filed an affidavit substantially disputing Pasquale’s affidavit.  This included that Pasquale had been made bankrupt (in fact in 2003) and discharged in 2006.

Counsel for Pasquale submitted inter alia that: it was reasonable for Pasquale’s solicitors to rely upon the representations of Tiffany in lodging the material required by s. 89A(3) on 17 January 2023; the Registrar should be estopped from lapsing the caveat; the court had an inherent jurisdiction to make orders ‘voiding the lapsing of the caveat’.

Derham AsJ in substance continued the injunction (while altering its wording), holding –

  1. The caveat lapsed at the commencement of 17 January 2023 by reason of the operation of s. 89A(3) and (5). The court had no power to reverse this. [15], [49], [55], [56]
  2. The evidence in support of the plaintiff being the beneficiary of a constructive trust of the land was, at present, rather frail and somewhat sketchy: the prima facie case was not strong. It sufficed, however, that the plaintiff show a sufficient likelihood of success that in the circumstances justified the practical effect of the injunction on the defendants.  His Honour doubted as a matter of principle the defendants’ argument that the plaintiff could not take an interest pursuant to a constructive trust where he was also a beneficiary of the family trust: if it was unconscionable in the circumstances for the trustee of the family trust to deny that he had a proprietary interest in the land, why would his being a beneficiary of that trust, particularly one with no vested interest in its assets, be a barrier?   This argument required further elucidation. [26], [75], [77]
  3. With respect to the plaintiff’s bankruptcy and the possibility that his interest in the land had vested in his trustee in bankruptcy, it would be in the parties’ power to inform the trustee and give him an opportunity of being joined as a party. It was not, in his Honour’s preliminary view, satisfactory for the defendants to use this vesting as a defence without joining the trustee as a party. [76]
  4. On the balance of convenience, in the current circumstances where the plaintiff’s proof of his rights was not strong, an interlocutory injunction may be granted because to withhold it would do him irreparable harm while (the contract of sale having a 24 month settlement date) to grant it would not greatly injure the defendants. Maintenance of the status quo would not harm the defendants but to deny the injunction could injure the plaintiff by denying him protection against dissipation of the value of the land. [78]
  5. The further continuation of the interlocutory injunction would be subject to the plaintiff complying with the requirement to file further evidence in support of his claim. [79]

Philip H. Barton
Owen Dixon Chambers West
Thursday, April 20, 2023