Bajc v Bajc
[2007] VSC 121
•20 April 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No 5683 of 2007
| ALEXANDER FRANK BAJC | Plaintiff |
| v | |
| FRANK BAJC and ANOR. | Defendants |
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JUDGE: | WARREN CJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 April 2007 | |
DATE OF JUDGMENT: | 20 April 2007 | |
CASE MAY BE CITED AS: | Bajc v Bajc | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 121 | |
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PROPERTY – Application for the removal of a caveat – Loan agreement – Constructive trust claimed – Action in contract statute barred – Balance of convenience in favour of applicant – Application granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T R Messer | Ainsworths |
| For the Defendants | Mr F H Deans | Deano’s Legal |
HER HONOUR:
The court has before it an application under s 90(3) of the Transfer of Land Act 1958 for the removal of a caveat. The application relates to land known as Lot 1, Duggan Road, Sheoaks, being the whole of the land more particularly described in Certificate of Title Volume 9703 Folio 866 ("the property").
The history of the transaction relating to the land is described in the affidavit of the plaintiff, Alexander Frank Bajc, sworn 13 April 2007. I will summarise that affidavit. In 1980, the older brother of the plaintiff was married and the first defendant, who is the father of the plaintiff, made a gift of the sum of $20,000 to the brother. Subsequently, in 1987, the first defendant entered into a contract for the purchase of the property. The purchase price was $33,000. The plaintiff deposes that he contributed $13,000 towards the purchase price and the first defendant contributed the balance, namely, $20,000. The plaintiff deposes that the first defendant told him at the time, that is, in 1987, that the $20,000 was to represent the first defendant's contribution to the purchase and intended as a gift for the plaintiff. He further deposes that, owing to concerns relating to the brother, the first defendant insisted on being registered as the joint owner of the property. He also insisted upon the signing of a loan agreement. Accordingly, on 17 June 1987, the plaintiff and the first defendant signed a formal loan agreement which is exhibited in the affidavit of the plaintiff. The plaintiff further deposes that it was the mutual intention of he and the first defendant that there would not be a requirement to make any payments under the loan and hence none was made. Further, the loan agreement provides that there is a principal sum to be repaid on 17 June 1997. There is no dispute between the parties that the money remained unpaid to this date.
Subsequently it transpired that the plaintiff and his wife wished to build a residence on the property. This was said to have occurred in 1993. At around that time, indeed on 22 December 1993, the first defendant transferred his interest in the property to the plaintiff. The consideration recited in the transfer was "desire to make a gift". Subsequently the plaintiff did not construct a residence on the property. By contract dated 25 January 2007, the plaintiff agreed to sell the property for the sum of $180,000. The plaintiff deposed in his affidavit that the sale of the property is now unconditional and settlement is due three days hence, on 23 April 2007.
A caveat was lodged by the first defendant on 2 April 2007 with respect to the property, whereby the first defendant claimed an estate in fee simple in the property, the grounds of claim being recited as "pursuant to a constructive trust between the caveator and the registered proprietor". The plaintiff denies that the first defendant has any interest in the property and further deposes that it was always the intention of the first defendant that the property would belong to the plaintiff. It is deposed that it was for this reason that the first defendant transferred the interest in the property to the plaintiff in 1993. Finally, the plaintiff deposes that, unless the caveat is removed, completion of the contract of sale will not be possible and accordingly the plaintiff believes that he will face the consequences that arise under that contract.
In his answering affidavit, the first defendant sets out the history of the matter. There is essentially no dispute between the parties that the $20,000 was not paid. However, it is deposed by the first defendant that in 1993, upon the plaintiff indicating his intention to construct a residence on the property, the first defendant agreed to have his name removed from the title so that the plaintiff could raise building funds. The first defendant deposes to his belief that his interest was held in trust for him by the plaintiff. As I have already indicated, it transpired that the construction of the residence did not proceed. Significantly, in his affidavit the first defendant deposes that, upon becoming aware that a residence was not to be constructed, he, the first defendant, informed the plaintiff that he had been "tricked" into providing the transfer and consequently demanded that the loan be repaid. The first defendant deposes that he has not received the money and that the plaintiff said he did not have the money to make the repayment and offered the property back. Otherwise, the affidavit of the first defendant deposes that no action was taken between 1993 and the present with respect to the loan, save that a broad statement is made that there have been "repeated demands" for funds and that none has been made.
For the purposes of this application the first issue to be determined is whether or not there is a serious question to be tried.[1] In this instance the question to be determined is whether or not the first defendant has made out an arguable case of a constructive trust with respect to the land. On the basis of the usual principles, it is necessary for the first defendant to demonstrate on an arguable basis that there was a common intention on the part of the legal owners that the party claiming the constructive trust should enjoy a beneficial interest in the property; secondly, that there has been detrimental reliance by that claimant on the common intention; and, further, that the imposition of the trust is necessary for the restoration to one party of contributions made to a joint endeavour.[2]
[1]See Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343; Austwide Property v Vukasinec [2004] VSC 333.
[2]See Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137.
The principles with respect to the determination of a constructive trust are well known. In the present case it is apparent that the arrangements between the plaintiff and the first defendant were in the nature of contract. There is insufficient matter deposed to in the first defendant's affidavit to make out the necessary factual matrix for the imposition of a trust as provided in the authorities adverted to. Clearly, there was an agreement in writing between the plaintiff and the first defendant with respect to the loan; hence, the contractual basis for their relationship arises. That loan was due, in accordance with the terms of the agreement, on 17 June 1997. For the purposes of the Limitation of Actions Act[3] the possibility of any claim arising under the contractual arrangement is statute barred. The only basis upon which time would continue to run would be in the event of fraud or an acknowledgment in writing under the Limitation of Actions Act.[4] Clearly no acknowledgment was written.
[3]See s 5.
[4]See ss 24-26 and s 27.
Turning to the matter of fraud, it is an allegation that should not be made lightly and evidence in the nature of the standard prescribed in Briginshaw v Briginshaw[5] would be necessary. However, at best - and in this respect it is the highest at which the case can be put for the first defendant - the only statement contained in the nature of fraud arises in the first defendant's affidavit, where he deposes:
"Very shortly after the transfer, the plaintiff announced that he was not going to build on the property, to which I said, 'I have been tricked into the transfer' and I demanded the loan be repaid. The plaintiff said he did not have money and offered the property back."
Fourteen years have elapsed since that alleged trickery occurred. No action is apparent from the affidavit, save, as I have already indicated, the assertion of repeated demands. The statements in paragraph 18 of the first defendant's affidavit just recited are reflective, furthermore, of a relationship between the first defendant and the plaintiff lying in contract, not in the nature of a constructive trust. In addition, there is the matter of acquiescence, laches and delay on the part of the first defendant in bringing any proceeding or action against the plaintiff. In any event, in accordance with the usual test, I cannot be satisfied that any fraud has occurred as would suspend or impact upon the limitation period with respect to any claim in contract.[6]
[5](1938) 60 CLR 336.
[6]See ss 5(1) and 27, Limitations of Actions Act.
Accordingly, even taking the best view possible, there is no basis for the first defendant to allege a constructive trust or, alternatively, an interest lying in contract, that now being statute barred on the face of the affidavit material before me.
In any event, there is a second aspect of the application to be considered, and that is the balance of convenience.[7] Even if a constructive trust had been made out or an interest in the nature of a contractual interest such as to satisfy the test for establishing an interest in land, I could not be satisfied that the balance of convenience lies other than in favour of the plaintiff. Settlement in a contract for the sale of the relevant land is due on 23 April 2007. No action has been taken by the first defendant with respect to the moneys allegedly owed for a period of 14 years. As I have already said, acquiescence, laches and delay arises. Furthermore, in considering and weighing up the balance of convenience on the basis of the delay and apparent inaction, then clearly the balance falls in favour of the plaintiff. Furthermore, I make the additional remark that even if a constructive trust, or for that matter a contractual interest, was made out - and, as I have said, I am not so satisfied - there would be no reason why the first defendant could not pursue his rights with respect to the plaintiff, subject to the limitations difficulty that I have already referred to.
[7]Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343; Mitrangas v Makalias [2003] VSC 251.
In all the circumstances, therefore, I cannot be satisfied that the first defendant has made out an interest in the land and accordingly I am satisfied that the caveat should be ordered to be removed. I would therefore make orders as sought by the plaintiff.
(Discussion ensued.)
The remaining matter to be considered is the matter of costs. Mr Deans, who appeared for the first defendant, urged that no order for costs be made, on the basis that an open offer had been made by the first defendant to the plaintiff that the first defendant was prepared to agree to the withdrawal of the caveat "on the basis that the proceeds of sale of the property be held in escrow subject to the resolution of the dispute between the plaintiff and me". In my view, the open offer does not affect the appropriate outcome with respect to costs, namely, that costs ought follow the event. It has been necessary for the plaintiff to come to court to seek to have the removal of the caveat effected. For the reasons I have stated, there is no basis upon which an arguable case to establish an interest in land has been made out and further, as I have already stated, the balance of convenience clearly fell in favour of the plaintiff. In my view, it is appropriate that costs follow the event and I will order accordingly.
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