Alexander v Newtoun Pty Ltd
[2006] VSC 430
•30 October 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 9133 of 2006
| JACKIE ALEXANDER | Plaintiff |
| v | |
| NEWTOUN PTY LTD (ACN 006 858 788) and REGISTRAR OF TITLES | Defendants |
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JUDGE: | KAYE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 October 2006 | |
DATE OF JUDGMENT: | 30 October 2006 | |
CASE MAY BE CITED AS: | Alexander v Newtoun Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 430 | |
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REAL PROPERTY - Application for removal of caveat – Transfer of Land Act 1958 (Vic) – Mortgage – Dispute whether debt claimed by defendant owing – Order that caveat be removed conditional upon plaintiff paying disputed sum into a trust account.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A.R. Kirby | Belleili King & Associates |
| For the Defendants | Mr G.D. Bloch | Alan Schnider & Co. |
HIS HONOUR:
This is an application by originating motion by the plaintiff Ms Jackie Alexander for the removal of a caveat pursuant to s.90(3) of the Transfer of Land Act.
The plaintiff is the registered proprietor of land at 102 Koetung Parade, Mount Eliza. That property is the subject of a registered mortgage to the Adelaide Bank. By contract of sale date 23 August 2006 the plaintiff has agreed to sell the property to one Sally Louise Hornblow. Settlement of that contract was due on 29 September last but was not able to proceed because of the existence of the caveat which is the subject of this application. Since that date Ms Hornblow has been in possession of the premises, apparently, as a licensee.
The caveat in question is dated 3 July 2003. By it the first defendant Newtoun Pty Ltd claims an interest in the property as by virtue of an unregistered mortgage dated 30 June 2002. It is clear that notwithstanding the date of the mortgage that it was in fact executed in mid 2003. The mortgage has annexed to it the memorandum of common provisions. Clause 18(f) of that memorandum defines “moneys hereby secured” to include “principal moneys secured and each and all of the sums in which the mortgagor might now or hereafter be indebted or liable, or contingently indebted or liable to the mortgagee in any manner or on any count whatever, including interest.”
On the face of the mortgage it is expressed to provide security for moneys lent or agreed to be lent in the sum of $150,000. The first defendant is a company, the sole director and secretary of which is Mr John Edmund McCoombe. Mr McCoombe owns 50 per cent of the issued capital of the company. In mid 2003 he commenced a relationship with the plaintiff. That relationship has since ceased and as a result there is a dispute between the parties as to whether there are any moneys owing to the first defendant pursuant to the mortgage.
In essence, in these proceedings, the issue is whether the plaintiff owes any debt to the first defendant which is secured by the mortgage. The materials in relation to that debt are not particularly informative. The debt is said to consist of various amounts which are set out in an exhibit which is Exhibit JEM1 to the affidavit of Mr McCoombe sworn 18 October 2006. That exhibit is a letter of 28 November 2005 from Mr McCoombe to the plaintiff which says, "Please find attached a list detailing money borrowed from my companies until November 2005". Attached to that letter is a list in the form of a printout. From that list can be derived five categories of moneys which are alleged to be owed by the plaintiff to the first defendant, and to which I shall turn shortly.
The principles which govern an application such as this are well understood, and are not controversial in this case. They are usefully identified by Dodds-Streeton J in Her Honour's judgment in Goldstraw v Goldstraw,[1] especially at Paragraph 30. Her Honour there identified the principles that, firstly, it is the caveator who has the onus of establishing that there is a serious question to be tried that the caveator does have the interest or estate in the land claimed in the mortgage. Secondly, the caveator, if it is able to establish a serious issue to be tried, must also establish that the balance of convenience favours the maintenance of the caveat until trial. Ultimately, the power of the court under s.90(3) is discretionary.
[1][2002] VSC 491.
I turn then to the categories of debts said to be owing by the plaintiff to the first defendant under the relevant mortgage. They can be identified from the affidavit of Mr McCoombe sworn 27 October 2006 at Paragraph 3. Firstly, it is claimed that in June or July 2003 on behalf of the first defendant he reached an agreement with the plaintiff that she could take up residence at a property owned by another company, Brimmin Gem Pty Ltd at 1 McKeith Court, Mount Eliza.
Mr McCoombe says that pursuant to that agreement the plaintiff was to be charged a reasonable rent for her occupation of the property by Newtoun. Newtoun is alleged to be indebted to Brimmin Gem in the same sum, which the plaintiff is said to be indebted to Newtoun in relation to the use and occupation by her of that property, as Brimmin Gem made that property available to Newtoun for the purpose of renting it to the plaintiff.
The second category of debt said to be owing by the plaintiff relates to cars used by the plaintiff, which were owned by another company with which Mr McCoombe was associated, Carriages Pty Ltd. Mr McCoombe in his affidavit states that in about June or July 2003 the plaintiff told him she was behind in her lease payments relating to a four wheel drive she was then driving. On behalf of Newtoun McCoombe had reached an agreement with the plaintiff that Newtoun would make a car available for her use upon the basis that Newtoun would charge the plaintiff a reasonable rate for the use of the vehicle. Mr McCoombe asserts that $75 per week is a very cheap rate, and is therefore reasonable. He states that Newtoun is indebted to Carriages Pty Ltd in the same sum as the plaintiff is indebted to Newtoun for the use of the vehicles, as Carriages Pty Ltd made the cars available to Newtoun for the purpose of renting them to the plaintiff.
The third category of debt is said to relate to repairs to the plaintiff's property paid for by Brimmin Gem Pty Ltd in June or July 2003. Mr McCoombe states that in June or July 2003 the plaintiff told him she would be requiring assistance in refurbishing her property, and on behalf of Newtoun he reached an agreement with the plaintiff that Newtoun would make advances of the funds for that purpose. Mr McCoombe says that Newtoun duly arranged for such funds as were required for the refurbishment to be paid by Brimmin Gem at Newtoun's cost, and as a result Newtoun is indebted to Brimmin Gem for that amount.
The fourth sum of money said to be owed by the plaintiff to the first defendant relates to legal costs apparently incurred by the plaintiff in litigation. Mr McCoombe states that, pursuant to an agreement with the plaintiff, Newtoun was to procure those funds and that it did so by procuring Brimmin Gem Pty Ltd to provide the funds for the plaintiff.
The fifth category of debt is said to be home loan repayments made by Brimmin Gem at the behest of Newtoun, and thus it is said that Newtoun is indebted to Brimmin Gem in the same sum as the plaintiff is indebted to Newtoun. That category of financial assistance was not discussed before the execution of the mortgage by the plaintiff in Newtoun's favour. Mr McCoombe says that on a number of occasions in early 2004 the plaintiff asked him to loan her the funds as she was short in her house payments. Mr McCoombe states that he agreed to do so on the basis that such funds would be procured by Newtoun.
Mr Kirby, who appears on behalf of the plaintiff, has submitted to me that the materials deposed to by Mr McCoombe do not establish a serious issue to be tried in relation to any of those five categories, but in particular in relation to the first two categories. He submits, and I must say with some justification, that the materials which purport to establish the indebtedness of the plaintiff to the first defendant are sparse and, indeed, consist more of mere assertion rather than contain any evidentiary value.
Thus the first category relating to the use and occupation of the premises at McKeith Court, Mount Eliza do not contain any material relating to how it is that Brimmin Gem made the property available to Newtoun. Nor does it contain any material to identify what the relationship between Newtoun and Brimmin Gem was in relation to that property. The material is sparse, to say the least, as to what was a reasonable rental payable for the property.
Similar criticisms can be made of Paragraph 3.2 of the paragraph of Mr McCoombe in relation to the allegation that Newtoun arranged for Carriages Pty Ltd to make the cars available to it so that it could then rent them to the plaintiff. There is no documentation evidencing any debt from Newtoun to Carriages which has been put in evidence, nor has any documentation been produced to me to show how it is that Newtoun came to have the vehicles owned by Carriages Pty Ltd and made available to the plaintiff. Similar criticisms can be made in relation to the next three paragraphs, although perhaps not quite as strongly as conceded by Mr Kirby.
On the other hand, Mr Bloch, who appears for the first defendant pointed me to Paragraph 2 of the affidavit. In that paragraph Mr McCoombe stated that before execution of the mortgage he had discussions with the plaintiff relating to the first four categories of financial assistance. In the course of those discussions the parties agreed that the plaintiff would execute the mortgage in favour of Newtoun, and that Newtoun was to provide the financial assistance sought, to be secured against the plaintiff's property. It was submitted to me that it was comprehended that at least the first four categories of assistance as set out in Paragraph 3 could be said to fall within the terms of the mortgage.
At the end of the day, I have a feeling of disquiet about the lack of specificity in Paragraph 3 of Mr McCoombe's affidavit. The description of the relationship between Brimmin Gem and Newtoun is sparse and devoid of any real evidentiary support. On the other hand I do not consider that it can be said that the first defendant has failed on the five matters to establish a serious issue to be tried. In relation to the first matter there does not seem to be any contest other than that the plaintiff entered into occupation of the premises.
There does not seem to be any contest that the plaintiff did have some arrangement which fell within the terms of the type of debt that is referred to in Paragraph 3.1. Mr McCoombe has deposed that Brimmin Gem made the property available to Newtoun although, as I have said, there is no specificity as to what the nature of the relationship between the parties was in legal terms. Overall, I am satisfied that there is a serious issue to be tried, although in my view the first defendant has barely established such an issue.
I turn then to the question as to whether the balance of convenience favours the retention of the caveat. If I was to dismiss the plaintiff's application then, as matters presently stand, she would be unable to make a clean title and settle the contract of sale to Ms Hornblow. On the other hand if I was to allow the application, that would render the mortgage ineffective in real terms from the point of view of the first defendant.
In essence it seems to me that the question of balance of convenience could be most adequately and sensibly addressed by the orders which were discussed in argument with counsel, namely, ordering that the first defendant provide an executed withdrawal of caveat and, at the same time, ordering that a sum of money equating to the five categories of debt attested to by Mr McCoombe be paid into a trust account to bear interest, and to abide the resolution of proceedings to be issued by the first defendant against the plaintiff in relation to the debt.
The question which arises is how much ought to be paid into that trust account. Mr Bloch submitted that a sum of $95,000 should be paid, which would include interest, and also enough money to cover the costs of proceedings which would, presumably, be issued in the Magistrate's Court by Newtoun Pty Ltd against the plaintiff. In my view, and in the exercise of my discretion, I would not be disposed to order that the plaintiff pay into the trust account any amount to equate to the costs of the Magistrate's Court proceedings. As I have stated in these reasons the materials put forward by the first defendant are sparse, and on those materials as they stand, do not give me particular confidence as to the merits of any proceedings which might be issued by the first defendant. The issue of interest would, it seems, be fairly covered by any interest which is to be accumulated in the trust account into which the funds are to be deposited.
In those circumstance I would be disposed, subject to the formulation of appropriate orders, to order that the first defendant, as soon as practicable, provide to the plaintiff an executed withdrawal of caveat; that the plaintiff's solicitors be entitled to deliver that withdrawal of caveat to Ms Hornblow or her legal representatives on completion of the contract of sale; that a sum equivalent to the debt alleged in Paragraph 3 of Mr McCoombe's affidavit, namely $69,417 be held in an interest bearing trust account in the name of the first defendant's solicitors and the plaintiff's solicitors, and be dispersed as provided for in the next paragraph of the order. That is, unless by 1 December 2007 the first defendant issues a proceeding against the plaintiff to substantiate the estate and interest referred to in the caveat or otherwise, that sum, together with any interest, be paid to the plaintiff. Otherwise if the first defendant issues such a proceeding by that date then the sum, together with any interest, shall be held in trust pending the hearing and determination of that proceeding whereupon it shall be paid out to the party found to be entitled to the same.
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