Angelie Pty Ltd v Jeevaratnam
[2020] VCC 989
•2 June 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-18-05740
| ANGELIE PTY LTD (as trustee of the Angelie Superannuation Trust) and GANANPATHYPILLAY PAKTHAGURUNATHAN and CHANDRIKA PAKTHAGURUNATHAN | First Plaintiff Second Plaintiff Third Plaintiff |
| v | |
| KANESARATNAM JEEVARATNAM and JANANI JEEVARATNAM and NICK JIM COMBIS and ROBYN ERSKINE | First Defendant Second Defendant Third Defendant Fourth Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 2 June 2020 | |
CASE MAY BE CITED AS: | Angelie Pty Ltd & Ors v Jeevaratnam & Ors | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 989 | |
REASONS FOR JUDGMENT
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Subject: Summonses to set aside default judgments
Catchwords: Applications to set aside default judgments for possession; both mortgagors going bankrupt and being discharged; no reconvergence of subject land or right to attach judgment by bankruptcy trustees; second application by mortgagors dismissed for lack of standing; application by charge of same land to set aside judgment and be added as a party; no sufficient interest in charge to attach judgment; summonses dismssed
Legislation Cited: Limitation of Actions Act 1958; Transfer of Land Act 1958; Bankruptcy Act 1966; Property Law Act 1958
Cases Cited:Evans v Bartlam [1937] AC 473; Bendigo Bank Ltd v Demaria and Ors [2001] VSC 218; Tanaus v Abdo [2017] VCC 304; AVCO Financial Services Ltd v White [1977] VR 561; Delmo v Merrigal Pty Ltd (Unreported, VSC, 29 April 1988, Murphy J//BC8800726)
Judgment: 1. The Summonses of the first and second defendant, dated 30 January 2020 and the proposed joined party, Mr Kagakulasingam Sivanantha, dated 20 April 2020, are dismissed.
2.Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr C R Brown | Partners Legal |
| For the First Defendant | The First Defendant Appeared in person | |
| For the Second Defendant | The Second Defendant appeared in person | |
| For the Third Defendant | Colin Biggers & Paisley | |
| For the Fourth Defendant | Piper Alderman |
HIS HONOUR:
Background
1 I have before me two Summonses. The first, dated 30 January 2020 filed on behalf of Mr and Mrs Jeevaratnam, seeks relief by way of “an urgent injunction” to stop “the repossession” of the property at 7 Joanna Court, Mount Waverley, together with an order setting aside a default judgment for recovery of land against Mr and Mrs Jeevaratnam entered as long ago as 7 February 2019.
2 The Summons invokes s5 of the Limitation of Actions Act 1958 and seeks relief by way of the payment of costs and further or other relief. This Summons is dated 30 January 2020 and is supported by an affidavit of the same date.
3 The second Summons was filed as recently as 20 April 2020 on behalf of a non-party, Kanagakulasingan Sivanantha. This Summons seeks an order that the applicant be added as a party to the proceeding that the default judgment be “stayed”. Next, it seeks an order that “the defendants be directed to file their defences to my claims” and that “precedence and priority be provided to my caveat over and above the mortgage of the first, second and third defendants”. The Summons also seeks costs and further or other relief.
4 An earlier Summons filed in February 2019 came on for hearing before me on 24 September 2019. For reasons which I then gave, I dismissed the application to set aside the default judgment for possession against the first two defendants.
5 The default judgment pertaining to a Writ filed on 20 December 2018 gave judgment for the plaintiffs against the first defendant in default of defence and against the second, third and fourth defendants in default of appearance.
6 According to the plaintiffs’ Statement of Claim, Mr and Mrs Jeevaratnam were the registered proprietors of an estate in fee simple of the property known as 7 Joanna Court, Mount Waverley. It was said that by first loan agreement dated 25 June 2010, the first plaintiff, Angelie Pty Ltd, advanced $250,000 to Mr and Mrs Jeevaratnam, who agreed to mortgage the Mount Waverley property to secure their obligations under the loan agreement.
7 Then, by a second loan agreement dated 26 October 2010, Angelie Pty Ltd agreed to lend Mr and Mrs Jeevaratnam a further $100,000, and they agreed to mortgage their land, including the Mount Waverley property, to secure the obligations under that second loan agreement.
8 Next, it was said that mortgage number AJ390502U, securing the first and second loan agreements, was registered under the Transfer of Land Act 1958 as an encumbrance on the Mount Waverley property.
9 Next, it was said that there was a further loan agreement dated 5 July 2010, described as the third loan agreement, whereby the second and third plaintiffs, namely Gananpathypillay Pakthagurunathan and Chandrika Pakthagurunathan, lent Mr Jeevaratnam the sum of $171,500. Mr and Mrs Jeevaratnam agreed to mortgage their property, including the Mount Waverley property, and they granted mortgage number AJ390503S securing repayment of that third loan.
10 It was said that the monies secured under those mortgages was not repaid and notices to pay pursuant to s76 of the Transfer of Land Act were served on Mr and Mrs Jeevaratnam. It was also said that in 2010 and 2013 respectively, Mrs Jeevaratnam and Mr Jeevaratnam went bankrupt. The third and fourth defendants being their trustees in bankruptcy. By way of relief, the Statement of Claim sought possession of the Mount Waverley property, costs and further or other relief.
11 The narrative given so far indicates that by operation of s58 of the Bankruptcy Act 1966 the Jeevaratnams’ interest in the Mount Waverley property vested in their respective bankruptcy trustees. It seems, therefore, that any right to resist a claim for possession by the plaintiffs pursuant to the mortgages was vested in the bankruptcy trustees and not in Mr and Mrs Jeevaratnam.
12 Whilst both of the Jeevaratnams have now been discharged from their bankruptcies, discharge does not effect any automatic revesting of their pre-bankruptcy property in them.
13 A Summons seeking similar relief was filed in February 2019 on behalf of the Jeevaratnams. That Summons came on for hearing before me on 24 September last year following a series of abortive listings before inter alia Judge A Ryan and Judge Cosgrave. On 24 September, Mr Brown, counsel for the plaintiffs, told me that both of these judges had informed the Jeevaratnams that their February 2019 application to set aside the default judgment for possession against them could proceed if, and only if, they had obtained an assignment of rights from their bankruptcy trustees. As at 24 September last, no such assignment had been made and there was evidence before me that the trustees refused to make any such assignment. On this basis, I dismissed the 2019 Summons.
14 The Jeevaratnams’ 2020 Summons came on before his Honour Judge Cosgrave on 4 February. The matter was apparently not ready to proceed to a final determination. His Honour granted an interim stay of the judgment for possession but ordered the Jeevaratnams to pay the other parties’ costs thrown away by reason of the adjournment.
15 When the adjourned Summons came on before her Honour Judge Marks on 2 March 2020, she adjourned the matter over again until 21 April 2020, granting a further interim stay. She made a self-executing order (number 4) in the following terms:
“If the first and second defendants do not file any evidence by 4pm on 30 March 2020 that they have standing to make their application, the defendants’ summons filed 30 January 2020 be dismissed, and the first and second defendants pay the other parties’ costs of the summons, including reserved costs. The plaintiffs and third and fourth defendants have liberty to apply to seek their costs of the summons on an indemnity basis, upon reasonable notice to the first and second defendants.”
16 Her Honour made a further order (number 5) against Mr and Mrs Jeevaratnam for costs thrown away by way of the adjournment.
17 As a result of the COVID-19 emergency, this matter has been referred to me for determination “on the papers”. Far from providing evidence of an assignment of rights in their favour, the Jeevaratnams have provided no material in that respect. However, the plaintiffs’ solicitor, Ms Styles, swore an affidavit dated 6 April in which she exhibited the Reasons for Judgment of his Honour Judge Burchardt of the Federal Circuit Court dated 3 April 2020, in which his Honour summarily dismissed an application by the Jeevaratnams. (Exhibit JMWS16)
18 The application before his Honour sought to have the default judgment in this Court set aside, an application which was dismissed out of hand as incompetent. [23] His Honour concluded at [25] that the trustees have determined not to contest the proceeding in this Court and the judge was unpersuaded that that election should be set aside. He felt that even if action were taken to grant the Jeevaratnams’ standing in this Court to set aside the default judgment, their case would face “insurmountable credit difficulties”. His Honour noted that, whilst the case which the Jeevaratnams sought to make in this Court entailed a denial that they had received loan monies from the plaintiffs, the existence of those loans had been disclosed by Mr Jeevaratnam in his statement of affairs, which was verified by him on oath, and was admitted during his public examination in bankruptcy.
The Jeevaratnams’ case in support of their Summons
19 When the 2019 Summons came on for hearing before me in September of last year, Mr Jeevaratnam’s presentation to the court concentrated upon an alleged refusal on the part of the plaintiffs to advance further monies following the bankruptcy of Mrs Jeevaratnam. This led to the redevelopment project which the Jeevaratnams were involved in, in Hawthorn, turning into a loss maker. Mr Jeevaratnam was also critical of a number of things which his aunt did relative to that project.
20 In dismissing the application, I noted that what was urged in that regard before me had not been sworn to by affidavit and, in any event, there were difficulties in relying upon an unliquidated claim for damages in response to a claim for possession of mortgaged property.
21 In an affidavit sworn 30 January this year, Mr Jeevaratnam said, “I strongly deny that Angelie Pty Ltd advanced me or my wife any money by way of a loan”. (paragraph 4)
22 As to the third plaintiff, Chandrika Pakthagurunathan, he said that in June 2010 she had approached him to invest in a property development joint venture/project. The properties involved were at 2 Bethune Street, Hawthorn and 42 Wilma Avenue, Dandenong. He said that following his wife’s bankruptcy, Chandrika Pakthagurunathan declined to invest further money; one of the properties was seized and sold by the mortgagee, leading to “a huge financial loss” for the Jeevaratnams. (paragraphs 11-17)
23 He said the third plaintiff “effectively cheated me and took the Dandenong property from me and my wife”. (paragraph 18) He said that she never met his wife, Mrs Jeevaratnam, and that he “did not realise that Chandrika had made [him] sign three loan agreements dated 25 June 2010, 26 October 2010 and 25 January 2008 and two mortgages dated 22 December 2011 with full repayments dated due under the mortgages on 25 November 2011”. (paragraph 21)
24 In a further affidavit sworn 2 February 2020 he said, “Chandrika tricked and forced my wife and myself into signing the loan agreements and mortgages.” (paragraph 4) He said that she was threatening him and his wife when he asked why they had to sign these agreements. She said there was nothing wrong and “you will get 42 Wilma Avenue back if you sign the agreements”. He said that his wife was crying and they did not even get copies of the agreements. (paragraph 5)
25 In his affidavit sworn 30 January 2020, Mr Jeevaratnam says:
“The alleged loan agreements are fraudulent, illegal and invalid. The mortgages lodged my property [sic] was incorrect because my wife and I do not have any debt or financial obligation as my wife and I did not borrow any money from Angelie Pty Ltd, Gananpathypillay Pakthagurunathan or Chandrika Pakthagurunathan.” (paragraph 26)
Legal considerations
26 No irregularity, that is, non-compliance with the Court’s Rules, has been urged by the Jeevaratnam’s as affecting the entry of the default judgments against them. Applications to set aside regularly entered default judgments require a consideration of whether the applicant defendant has a defence on the merits, the reasons that the matter has been allowed to go by default, whether the application to set aside was made promptly after the judgment came to the notice of the defendant and, whether it was set aside, the plaintiff’s would be prejudiced in any respect which could not adequately be compensated for by a suitable award of costs. Evans v Bartlam [1937] AC 473, William’s Civil Procedure [21.07.15] 3337 [service 314]. Only the demonstration of a defence on the merits is an indispensable requirement for a successful application to set aside a regularly entered default judgment. For present purposes, I will assume, without deciding, that the Jeevaratnams have provided a satisfactory explanation as to how the matter was allowed to go by default, and have acted with the necessary promptness in seeking to set aside the judgment. As to this latter point, the default judgment was entered in February 2019 and the first Summons to set it aside was filed that same month.
27 Like Burkhardt J, I find the matters urged in support of the application to set aside judgment lacking in credibility. As his Honour observed, the mortgage debt asserted by the plaintiffs to exist was admitted by Mr Jeevaratnam in his Statement of Affairs and his Examination in Bankruptcy, both of which were on oath. The matters which now challenge the very existence of these transactions alleging that they were a mask for something different, emerged in circumstances where they might be seen as obviously self-serving. The Jeevaratnams are now threatened with eviction from their home. Nevertheless, as I understand the authorities, it would be wrong to make any credibility finding upon an application such as this, even in the relatively gross circumstances which now present themselves. It follows that the affidavit material relied on in support of the Jeevaratnam’s 2020 Summons adequately demonstrates a defence on the merits on the basis that the apparent mortgage loan transaction was really a mask or a cloak for a very different transaction, one by way of equity investment rather than loan. References to “cheating” might be thought to engage the fraud proviso which operates as an exception to the general indefeasibility granted to the interests of registered mortgagees under the Transfer of Land Act by virtue of s42 of that statute. What stands between the Jeevaratnams and success on their 2020 Summons is the same consideration which led to the failure of their 2019 Summons. That is, that the best title and right of possession for the subject residence and therefore the entitlement to resist seizure by the mortgagee lies not with the Jeevaratnams, but with their bankruptcy trustees, neither of whom seeks to have the judgment for possession in favour of the plaintiffs set aside.
28 Ms Jeevaratnam has also drawn attention to the fact that as at the date of the mortgages his wife was already bankrupt, hence, he says, the relevant mortgages were “void”. This cannot be so. The law seems to set its face against findings of nullity relative to instruments or transactions, preferring generally to regard these matters as matters of irregularity, save where a clear legal rule establishes nullity. In the present case, at the time of the mortgages, Mr Jeevaratnam, as a co-owner, was entitled to co-ownership of the residence, and as a co-owner to possession. He therefore had rights which he could render subject to the interests of the mortgagee or mortgagees. Assuming that the mortgage could have no effect at all on the co-ownership interest which Mrs Jeevaratnam had held in the residence prior to her bankruptcy, the mortgage would be regarded as effective as against Mr Jeevaratnam subject, of course, to other issues, such as alleged “fraud” on behalf of the mortgagee or mortgagees.
29 In their Summons, the Jeevaratnam’s also refer to and rely upon s5 of the Limitation of Actions Act 1958. This section deals with the period within which proceedings to enforce contracts and seek damages or other relief in relation to torts must be brought, providing that such actions “shall not be brought after the expiration of six years from the date on which the cause of action accrued”. The following subsection makes special provision relative to certain cases, for instance, imposing a one-year limitation period for the bringing of defamation proceedings (sub-s1AAA). Subsection 7 provides:
“Save as otherwise expressly provided an action shall not be brought to recover any arrears of interest in respect of any sum of money whether payable in respect of a specialty, judgment, legacy, mortgage or otherwise, or any damages in respect of such arrears, after the expiration of six years after they became due.”
30 Section 8 makes provision for actions to recover possession of land and provides:
“No action shall be brought by any person to recover any land after the expiration of fifteen years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person:
Provided that if the right of action first accrued to the Crown the action may be brought at any time before the expiration of fifteen years from the date on which the right of action accrued to some person other than the Crown.”
31 The Writ in this proceeding, leaving to one side consequential relief, seeks only possession of the property at 7 Joanna Court, Mount Waverley. The relevant limitation period would seem therefore to be the 15 years provided for in s8. The Statement of Claim would suggest that the relevant cause of action accrued either on 25 November 2011, when the moneys were alleged to have fallen due, or 14 days after service of the Notice to Pay under s76 of the Transfer of Land Act, viz, 14 days after 26 October 2017. (paragraph 23) No defence under Limitations of Action Act 1958 therefore appears to have been made out.
32 It follows that for fundamentally the same reasons as the 2019 Summons was ineffective, the Jeevaratnams’ 2020 Summons must likewise be dismissed. In their submissions in support of the present Summons, Mr and Mrs Jeevaratnam note that Burkhardt J rejected an attempt, which he characterised as “last minute”, to attack the conduct of the bankruptcy trustees and stated that an application along those lines, on proper notice, could be entertained. In September of last year, Mr Jeevaratnam urged me to adjourn the determination of his Summons so that the matter could be brought before the Federal Circuit Court. It must be said that the Jeevaratnams have had ample time to bring whatever application they wish before the Federal Circuit Court. The general requirement for applications to set aside judgments to be brought promptly points away from any approach which would allow an application to be brought without a proper basis having been laid, as appears to be the case here, leaving it to the applicant or applicants to deal with the lack of a proper basis at their leisure entailing further delays of many months. This approach would be contrary to principle, and a determination to simply put things off to see if something might turn up in the Federal Circuit Court would be inconsistent with the approach of McDonald J in Bendigo Bank Ltd v Demaria and Ors [2001] VSC 218.
33 The Jeevaratnams’ Summons is dismissed.
Summons of Mr Sivanantha
34 I turn now to the Summons filed by Mr Sivanantha. According to Mr Sivanantha’s affidavit dated 18 April 2020, between 2005 and 2010 he “advanced a total sum of about $600,000 by way of loans” to Mr and Mrs Jeevaratnam “to facilitate their investments in property development”. He said he was “assured that a second mortgage over their matrimonial home at 7 Joanna Court, Mount Waverley” would be provided. (paragraph 4)
35 This Mount Waverley property is the one for which the plaintiffs hold the default judgment against Mr and Mrs Jeevaratnam. Mr Sivanantha said the Jeevaratnams later told him that they had entered into “a joint venture” with the second and third plaintiffs to develop a property at 2A Bethune Street, Hawthorn. He said he was told this in “about October 2010” and that that development would repay his loan. He said:
“To allow any construction loans they may need I was requested not to enter a mortgage until the development is completed. However to assure me they provided me an agreement on 25 November 2009 confirming the loans”. (paragraph 6)
36
He referred to the Jeevaratnams’ history of bankruptcy, stating that this prevented him pursuing “my request for a mortgage”. (paragraphs 8-12) He said he “therefore registered a caveat on 17 March 2011 over the [Mount Waverley] property, to protect my interest”. (paragraph 13) He said the loans which he made were “declared in the statements of affairs by [the Jeevaratnams] and they were not challenged by the trustees”.
(paragraph 19)
37 Mr Sivanantha also filed a document dated 30 April 2020 styled “submission” which attached a number of pertinent documents as exhibits in the manner in which exhibits might be marked when authenticated by an affidavit. These documents included a copy of the caveat which he lodged relative to the Mount Waverley property on 17 April 2011, No. AH844705U. (Exhibit SK-1). This document claimed “[a]n equitable interest as chargee over the interest of Kanesaratnam Jeevaratnam…Pursuant to a charge in an agreement executed on 25 November 2010 …”, the caveat prohibited lodgement of dealings “absolutely” and was lodged on Mr Sivanantha’s behalf by Legoll Pty Ltd. Also included as Exhibit SK-2 was a copy of a letter dated 22 December 2006 headed “Loan Agreement”. In referring to a borrowing by Mr Jeevaratnam of $256,000 from Mr Sivanantha, this letter stated that Mr Jeevaratnam granted Mr Sivanantha “leave to place a Mortgage and/or caveat” on a property in the Australian Capital Territory. Exhibit SK-3 was the document dated 25 November 2010, which is apparently the basis for lodgement of the caveat. The early paragraphs refer to loan advances and are properly characterised in Mr Sivanantha’s affidavit as being “confirmations”. The penultimate paragraph reads:
“We hereby grant Mr Sivanantha and/or his estate/trustees/nominees the right to place a caveat for the amount represented by Schedule 1, on any (and all) of our properties including the properties held jointly with my any other persons (sic), to secure the loan”.
38 Exhibit SK-4 was apparently a third document over the signature of Mr Jeevaratnam and dated 31 March 2011, dealing with loan calculations (part of Exhibit SK-3). It referred to the earlier document, describing it as one which Mr Jeevaratnam had signed “giving permission to Mr Sivananatha to place caveat/s on my properties. With this letter I agree that a further caveat can be placed for the amount stated in Schedule 2”. It produced further notes as to amounts outstanding (Exhibit SK-5). Further exhibits were constituted by correspondence with the Jeevaratnams’ bankruptcy trustees and their representatives.
39 In his affidavit Mr Sivanantha says, “execution of this default judgement will seriously prejudice my ability to recover any funds, advanced in good faith, well before the mortgages to the Plaintiffs”. (paragraph 17) He said the plaintiff’s mortgage was “invalid” and continued:
“I therefore seek that the default order be not allowed to be implemented pending hearing of this application and priority be provided for my caveat over that of the mortgage following determination of this application”. (paragraph 18)
40 In his submissions in reply, Mr Sivanantha said that the plaintiffs claimed they had made several loans “following oral agreements. It is clear they obtained agreements for these loans only later, and mortgage is even later than that, particularly from the second defendant while she was a bankrupt”. (Submissions, 21 May 2020, paragraph 2) Mr Sivanantha noted that he had not received notice of the present proceeding and therefore took no action. (Ibid, paragraphs 5 and 6) He said the plaintiffs’ claims arose out of the joint venture agreement relative to a property in Hawthorn East (Ibid, paragraph 8) He said he could not understand how the plaintiffs’ mortgage was registered since it post-dated his caveat. (Ibid, paragraph 9). Despite the present judgment’s being solely for possession, the plaintiffs would “want to sell and will demand my caveat to be withdrawn. If I do not they would file a case to get an order to make me remove it”. He said he was concerned that the moneys claimed by the plaintiffs would take the entire value of the property and “there will be no money against the caveat”. (Ibid, paragraphs 10 and 11) He said he therefore “asked priority for his caveat…If any amount is left over, then it can be provided to the mortgagees or trustees”. (paragraph 12) The validity of the mortgage, he said, should be set aside for a proper enquiry. He said he had “at all times considered to independently contest the matter by another proceeding. But prohibitive costs did not permit me and I decided to submit same in this proceeding”. (paragraph 16) He concluded, “it needs to be considered whether an invalid mortgage or a mortgage that was challenged would create an indefeasible interest in the property”. (paragraph 15) Mr Sivanantha said that the solicitors acting for the plaintiffs wrote a letter to him dated 17 January 2012, seeking his consent to the relevant mortgage or withdrawal of his caveat (Exhibit SK-10). Neither of those was forthcoming (email 18 May 2020). According to that email, Mr Sivanantha “neither gave [his] consent for the registration of mortgages nor provided them with the withdrawal of my caveat”. He concluded, “I am puzzled as to how the plaintiffs were able to register the mortgages”.
Mr Sivanantha’s “charge”
41 The document dated 25 November 2010, said to be the basis for Mr Sivanantha’s caveat and said to render him “a chargee” of the property, nowhere uses the word “charge”. It merely authorises the lodgement of a caveat. A caveat is not in itself a security interest. It can be regarded either as notice of an unregistered claim asserted by the caveator against the subject land or a mechanism to ensure that any adverse dealings are brought to the attention of the person claiming that unregistered interest, or perhaps both. As a matter of logic, therefore, an authority to lodge a caveat does not, by those words, create an unregistered or, indeed, registered interest in the subject land. Some authorities have regarded the grant of an authority to lodge a caveat in the context of a relationship of debtor and creditor as implying the creation of a charge, though the authorities are not easy to reconcile. I considered various authorities on this question in my decision, including Tanaus v Abdo [2017] VCC 304. Having regard to the nature of the present application, I should assume that the words in the document of 25 November 2010 do imply the creation of a charge. The document creates no additional contractual remedies beyond the lodgement of the caveat. The remedy of a chargee holding no additional contractual rights is to apply to the Supreme Court to have the subject property sold and the money paid into court. (AVCO Financial Services Ltd v White [1977] VR 561, 563 per Gillard J). A more elaborately or perhaps more aptly worded charge might create an out-of-court power of sale if allied with a Power of Attorney and a right of possession upon default, either by express words or perhaps by using the words “as beneficial owner I hereby charge the land”. (Property Law Act 1958, Schedule 4, Part III, s76(1)(c). The definition of “mortgage” in s18 of the Act, includes “any charge”. Nothing along these lines appears in the document of 25 November 2010. As noted above, Mr Sivanantha says he has abstained from taking any action by way of enforcement to avoid incurring legal costs.
The status of the caveat – s90 of the Transfer of Land Act
42 Section 89 of the Transfer of Land Act 1958 provides the authority for a claimant to an unregistered interest in land to lodge a caveat on the register book. Section 90 provides inter alia:
“90 Except in certain cases caveat to lapse after thirty days notice given to caveator
(1) Subject to this Act every such caveat except a caveat lodged by the Registrar shall lapse as to any land affected by any transfer or other dealing other than—
(a)a transmission under Division two of Part IV; or \
(b) a transfer or dealing as to which the caveator, or the caveator's agent, has consented in writing;
(c) in the case of a caveat lodged by or on behalf of a beneficiary claiming under a will or settlement—a transfer or dealing giving effect to the appointment of a new trustee or to any other transaction which in the opinion of the Registrar is not inimical to the interests of the beneficiaries; or
(d) a transfer or dealing which is expressed to be subject to the rights of the caveator; or
(e) a transfer or dealing the registration or entry of which is provided for in the caveat—
upon the expiration of thirty days after notice given by the Registrar to the caveator that a transfer or dealing has been lodged for registration, but in the case of a transfer or other dealing which does not dispose of the whole of the estate or interest of the registered proprietor in the land affected thereby the caveat shall lapse only to the extent necessary to permit the registration of the transfer or dealing.
(2)If before the expiration of the said period of thirty days or such further period as is specified in any order made under this subsection the caveator or the caveator's agent appears before -a court and gives such undertaking or security or lodges such sum as the court considers sufficient to indemnify every person against any damage that may be sustained by reason of any disposition of the property being delayed, the court may direct the Registrar to delay registering any dealing with the land for a further period specified in the order, or may make such other order (and in either case such order as to costs) as is just.
… .”
43 The apparent effect of these provisions is that in a circumstance such as the present where a caveat claiming an interest as chargee stands registered and a mortgage of the same land is lodged for registration, then unless the caveator consents to registration of the mortgage, which Mr Sivanantha has denied he did, or the mortgage is expressed subject to the interest of the caveator, which the plaintiffs deny, then registration of the mortgage would lead to the “lapsing” of the caveat “as to any land affected by [the mortgage]”. The plaintiffs concede they have no record of a consent from Mr Sivanantha (email, 21 May 2020). According to the same email, the plaintiffs’ solicitors “received verbal advice from the Titles Office to the effect that”:
“– a section 90 notice was sent by the Registrar to Mr Sivanantha on 2 February 2012 (and another Caveator, Huntingtower School Association on 12 January 2012) and that no response was received to that notice by the Titles Office from Mr Sivanantha; and
– the caveat lapsed for the purpose of registering the mortgages, but the lapsed Caveat remains on title and has the same effect before the registration of mortgages and the caveators continue to receive notices.” (Ibid)
44 The address for service of the caveat (Exhibit SK-1) is the Offices of Legoll Pty Ltd, 1 Clow Street, Dandenong. The Registrar of Titles is not a party to this proceeding and so there is no direct route whereby the Registrar’s explanation of the title’s situation may be obtained. In my view, however, the key is to be found in the final proviso appearing at the end of s90(1), which provides that in the case of a “dealing which does not dispose of the whole of the estate or interest of the registered proprietor in the land affected thereby the caveat shall lapse only to the extent necessary to permit the registration of the transfer or dealing”. A registered mortgage under the Transfer of Land Act creates an interest in the land in favour of the mortgagee but does “not operate as a transfer of the land thereby mortgaged or charged”. (s74(2) of the Act). The mortgage therefore falls within the proviso to s90(1) and is not deleted as giving notice of an unregistered encumbrance on the subject land.
Conclusion as to Summons
45 By virtue of s42 of the Transfer of Land Act, the interest of the mortgagee is indefeasible unless set aside for fraud. By its very nature, it is a more potent interest than Mr Sivanantha’s charge. Given that Mr Sivanantha has taken no enforcement action in court and seems not to be disposed to take any, to grant him the relief which he seeks would seem not only incongruous as a matter of priority in the competing claim, but also a recipe for paralysis. No doubt it would suit the Jeevaratnams, who would be allowed to remain in possession of their property indefinitely.
46 Submissions on behalf of the third defendant, Mrs Jeevaratnam’s bankruptcy trustee, point out that allowing the judgment for possession to proceed does not in itself invalidate or impinge upon Mr Sivanantha’s interest as chargee, an interest which can only extend to the share of the property formally owned by Mr Jeevaratnam because it was only he who signed the document which I have treated as creating a charge. If the property were sold, which it is reasonable to suppose would be if the plaintiffs ever obtained possession, it would be open to Mr Sivanantha to decline to withdraw his caveat unless he received what he thought was his proper “payout”. Alternatively, the matter would be left to be adjudicated by the Court. It is not obvious why it would be more economical for Mr Sivanantha to have these matters adjudicated as part of this proceeding rather than in a separate proceeding. Nor is it obvious why he should be allowed to “shoehorn” himself into a proceeding which has already concluded with a default judgment in circumstances where the persons who might be thought to have the legal right to attack that default judgment, namely the bankruptcy trustees, have determined not to. Mr Sivanantha contends the mortgage is `void’ because Mrs Jeevaratnam was bankrupt when she signed it. Her bankruptcy could scarcely render the mortgage void as regards her husband’s interest. Yet, Mr Sivanantha’s charge only operates with respect to the interest of Mr Jeevaratnam as the only person who signed the “charge” document.
47 The matters already referred to might be thought to be a series of considerations, some discretionary as to why the relief sought by Mr Sivanantha might not be granted. There is, however, a jurisdictional reason why it ought not be granted. Rule 1.14 of the Court’s Rules provides that the Court may exercise any power under the Rules, including the power to set aside a default judgment “of its own motion or on the application of a party or of any person who has a sufficient interest”. In Delmo v Merrigal Pty Ltd (Unreported, VSC, 29 April 1988, BC8800726), Murphy J of the Supreme Court of Victoria held that a party claiming to be entitled to specific performance of a contract for the sale of a piece of real estate had a sufficient interest to seek to set aside a default judgment against the land for specific performance of a purported sale contract for the same land to another party. The two alleged sale contracts could not co-exist. In the present case, there is no difficulty in a mortgage and a charge of the same land co-existing. If Mr Sivanantha were regarded as having standing under the Rules to seek to set aside the present judgment, it would mean that any mortgagee or chargee of the same land would have standing to seek to set aside a default judgment for possession of the land in favour of any other mortgagee or chargee. Here, granting these plaintiffs the right to possession of the subject land does not finally foreclose the claim made by a charge of the same land in the way that specific performance of one alleged contract must necessarily forever block specific performance of another.
Disposition
48 The two Summonses are dismissed.
Costs
49 I will hear any submissions or further submissions which the parties desire to make on the subject of costs. I will, in the interim, reserve them.
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