Bing and Bing and Anor (No. 2)
[2009] FamCA 709
•24 July 2009
FAMILY COURT OF AUSTRALIA
| BING & BING AND ANOR (NO. 2) | [2009] FamCA 709 |
| FAMILY LAW – PROPERTY – Caveat lodged arising out of a charge granted by the Court over the wife's property entitlement – That order does not entitle the caveator to lodge a caveat over the land owned by the wife and husband and other entities |
| Family Law Act 1975 (Cth) Transfer of Land Act 1958 (Vic) |
| Bell v Graham [2000] VSC 142 Goldstraw v Goldstraw [2002] VSC 491 Hodges Hall v Jovanovic and Markov (1995) FLC 92-611 Penfold v Penfold (1980) FLC ¶ 90-800 Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343 Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 |
| APPLICANT: | Mr Bing |
| RESPONDENT: | Ms Bing |
| INTERVENOR: | ROCKMAN & ROCKMAN |
| FILE NUMBER: | MLF | 1745 | of | 2006 |
| DATE DELIVERED: | 24 July 2009 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | 21 JULY 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MR BROWN SC |
| SOLICITOR FOR THE APPLICANT: | NEVILE & CO |
| COUNSEL FOR THE RESPONDENT: | MR SCRIVA |
| SOLICITOR FOR THE RESPONDENT: | BUXTON & ASSOCIATES |
| COUNSEL FOR THE INTERVENOR: | MR ROCKMAN |
| SOLICITOR FOR THE INTERVENOR: | ROCKMAN & ROCKMAN |
Orders
That Rockman and Rockman forthwith withdraw the caveat lodged by them on 7 May 2009.
That Rockman and Rockman pay the costs of the husband of this application by agreement and in default of agreement, as shall be assess.
IT IS NOTED that publication of this judgment under the pseudonym Bing & Bing and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF 1745 of 2006
| MR BING |
Applicant
And
| MS BING |
Respondent
And
| ROCKMAN & ROCKMAN |
Intervener
REASONS FOR JUDGMENT
These are my reasons arising out of an interim application filed by the husband in the substantive property proceedings. The husband brought the application seeking orders against the wife’s former lawyers who have lodged caveats against the titles to a large number of real properties.
The wife did not participate in the interim proceedings.
The issue is whether the lawyers were entitled to lodge the caveats as a result of an order I made in February 2009.
On 24 February 2009 in interim proceedings to which Rockman and Rockman were interveners, I made the following orders:
1.That the wife forthwith charge in favour of Rockman & Rockman (“the firm”) to the extent of $200,000, her interest and entitlement in the property proceedings in case number MLF 1745 of 2006 including arising from the money due to the wife pursuant to the orders of Mushin J made on 9 February 2007.
2.That notwithstanding the quantum of the charge in paragraph 1 of these orders, the sum ultimately due (if any) to the firm for costs and disbursements shall be subject to any determination of this Court or other agreement between the wife and the firm.
3.Upon the payment to the firm after the determination of any costs dispute as between the firm and the wife, the charge referred to in paragraph 1 shall be deemed satisfied and discharged.
4.That until further order, the wife shall, upon receiving funds as a result of orders of the Court or as a consequence of any agreement between she and the husband, direct her solicitors to hold upon trust pursuant to the charge, the sum of $200,000 or such other sum as shall satisfy the determination as set out in paragraph 2.
I delivered reasons on that day. I said:
Because of the disparate arguments of the parties, it is important to look at exactly what the firm sought. It was:
Upon one or more of the parties or any of their related entities disposing of any of their or its assets then from the proceeds of such disposal or disposals a total sum of $200,000 is to be paid to Rockman & Rockman Solicitors in satisfaction of Order 1a the (sic) Orders of Justice Mushin made 9th day of February 2007 SUCH payment to be a first charge against such proceeds of sale. (my emphasis)
At paragraph 31 of my reasons, I said:
I think this is a security for costs case and there is some risk for the firm. In those circumstances, it is appropriate to make orders requiring any payment received by or on behalf of the wife to be charged with the firm’s entitlement generally. The only evidence I have is that the firm’s claim exceeds $200,000 but that that sum is challenged as excessive. Having regard to the size of the property pool in dispute, I see no prejudice to the wife in quarantining a sum of up to $200,000 and for that sum to be held upon trust by the current solicitors for the wife pursuant to the charge pending the determination of the costs dispute between the wife and the firm. I intend that any money received by the wife be so charged and that would include any money she receives under the “Barro”order. (my emphasis)
On 7 May 2009, Raymond Rockman on behalf of Rockman & Rockman executed a caveat under s 89 of the Transfer of Land Act (Vic) which was registered by the Registrar of Titles against a variety of certificates of title.
A copy of the caveat document was tendered by Mr Rockman. It claimed an estate or interest in the land as follows:
An equitable interest as Chargee
The grounds of the claim read:
Pursuant to a charge in favour of the Caveator made on 24 Day of February 2009 by Order of the Family Court of Australia whereby the said (wife) charged her interest in the land to the caveator.
The husband filed an application on 10 July 2009 in which he sought that the intervener withdraw the caveat and pay his costs.
In support of the application, the husband’s solicitor swore an affidavit which did little more than set out the argument and correspondence with Rockman & Rockman.
Senior Counsel for the husband agreed that this was effectively an application similar to s 90(3) of the Transfer of Land Act. That provision reads:
Any person who is adversely affected by any such caveat may bring proceedings in the Court against the caveator for the removal of the caveat and the Court may make such order as the Court thinks fit.
It was put by the husband that the caveators had no caveatable interest.
Mr Rockman did not file any material. Apart from drawing upon the definition of charge in Osborne’s Legal Dictionary, his argument was that the Registrar of Titles had accepted the caveat. He said however that until such time as the wife had a specific interest as a result of a court order, she had an interest in all of the property and as such, she had charged her interest in that property by virtue of the February orders. That included a situation in which the registered proprietor of the land was a company acting as trustee of a trust in which she was a beneficiary.
I am able to deal with the application notwithstanding there may be some dispute about power under s 90 of the State Act because Rockman & Rockman are parties and officers of the Court.
My first observation is that the orders of February 2009 directed the wife to charge her interest in the entitlements of the property settlement. The charge therefore arises out of the order rather than any agreement with the wife.
In Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 at 594 Buckley LJ said:
An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or is specially appropriated, to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is, by the appointment of a receiver or an order for sale.
The property which has been expressly made liable is the entitlement of the wife pursuant to her property settlement. Paragraph 2 of the orders I made, provided that the sum ultimately due (if any) to Rockman & Rockman for costs and disbursements was still to be subject to any determination of the Court. The charge was therefore limited to the specific terms of the order.
Section 89(1)of the State Act relevantly provides:
Any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise ... may lodge with the Registrar a caveat ...
In Hodges Hall v Jovanovic and Markov (1995) FLC 92-611, the Full Court of this Court in dealing with a caveat lodged by legal practitioners to protect their costs concerning a party said:
The primary purpose of a caveat is to provide a measure of protection or warning to the caveator; it also serves as a notice to registered interests and to others who may be dealing with the land of a contrary interest: see J and H Just (Holdings) Pty Limited v The Bank of New South Wales & Ors (1971) 125 CLR 546 at 552 per Barwick CJ ; Jacobs v Platt Nominees Pty Ltd & Ors (1990) V.R. 146 at 149-151 ; Bacon & Ors v O'Dea (1989) 25 FCR 495 at 506-7 ; Butler v Fairclough & Anor (1917) 23 CLR 78 ; Avco Financial Services Ltd v Fishman (1992) 1 V.R. 90 at 94 ; Abigail v Lapin (1934) AC 491 . As the Full Court of the Federal Court pointed out in Bacon v O'Dea , supra , at 506 it is ''not, in general, designed as a substitute for registration of an interest, but to preserve the status quo pending resolution of the claim underlying the caveat'' . In Kerabee Park Pty Ltd v Daley (1978) 2 NSWLR 222 at 228 Holland J said that ''The effect of a caveat is to prevent registration of any instrument which might have the effect of defeating the caveator's rights without giving the caveator the opportunity of invoking the assistance of the court'' .
It must be remembered in this case that it is not just the wife who has an interest in the land caveated. Whilst there may be a desire to further protect the costs of the legal practitioners, the fact is that they have an order of the Court which, because they are interveners, always entitles them to have a say in the proceedings. Lodging the caveat cannot give them any greater entitlement than the order.
In this case however, the problem is still whether the caveator has an interest in the land as claimed, arising out of the charge.
In Goldstraw v Goldstraw [2002] VSC 491 (14 November 2002) the Victorian Supreme Court held (citations omitted):
…in order to support a caveat, an interest "must be an interest in respect of which equity would give specific relief against the land itself, either by way of requiring the provision of a registrable instrument or in some other way, for example, ordering a sale to enable a charge to be satisfied out of the proceeds". (my emphasis)
…
An interest based on a constructive trust can form the basis of a caveat. Such an interest could arise in a wide variety of circumstances. Examples include …a common intention that a person will acquire an interest in a particular property to which another party holds legal title, and the person acts on that belief to his or her detriment, such that it would constitute a fraud to deny the interest intended to be acquired.
The interest of the caveator in my view could not fit the descriptions above.
In Bell v Graham, [2000] VSC 142, Kellam J observed that the right to seek an order conferring an interest in land under provisions of the Family Law Act:
...does not give a party to a marriage a caveatable interest in land until such time as the Family Court makes an order in respect of their land.
The point that needs to be considered from the observation of Kellam J is that the caveatable interest must arise out of the order giving the person an interest in the land. In my view, the orders of February 2009 did not give that interest to the caveator.
In Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343 (19 September 2006) Warren CJ said (citations omitted):
In my view the words in s 89(1) of the Transfer of Land Act are plain and ought to be applied as meaning what the words say. The words are cast so as to encompass a range of circumstances that may arise in the context of commercial transactions concerned with land. The categories are not closed by the imposition of a narrow concept of traditional "caveatability". In my view such an approach steers away from proper analysis and consideration of the nature of the interest that a caveator may seek to protect. In essence, a caveat is a quasi injunction to preserve the status quo. The word "otherwise" in s 89(1) is reflective of and consistent with that purpose.
Accordingly, in appropriate circumstances, an equitable interest in land is capable of supporting a caveat even where that interest will not compel the registered proprietor to deliver a registrable instrument.
The breadth of this proposition, and its potential for the lodging of unsubstantiated or vexatious caveats, is invariably tempered by the exercise of the wide judicial discretion in s 90(3) of the Act
…
In such proceedings, the onus is on the caveator to justify the maintenance of his or her caveat.
I respectfully agree with Warren CJ and whilst the categories of caveatable interest may not be closed, it must still follow that the interest pursued is that of the land. What the caveator here sought to protect and what was in fact ordered, was that from the entitlement of the wife in the property proceedings, the costs would be paid. There was no suggestion by, nor any orders sought by, the practitioners that to further protect their quantified interests, the wife should sign a charge that would have not only entitled them to lodge a caveat against various real property interests but also to enable them to lodge a registrable instrument.
As the Chief Justice said, the onus is upon the caveator to establish that there was a caveatable interest in the land as alleged. I could not be so satisfied here.
Upon granting the husband’s application, his counsel sought costs. That was opposed by Mr Rockman.
Section 117 of the Family Law Act 1975 (“the Act”) is the relevant statutory provision. It provides that each party shall bear his or her own costs. However, pursuant to sub-s (2), the Court may make such order as to costs as it considers just if it is of the opinion that there are circumstances to justify doing so.
In considering what order (if any) should be made the Court is required (inter alia) to have regard to the matters referred to in s 117(2A). I will not repeat them here. The two important considerations are that the legal practitioners have been wholly unsuccessful. Mr Rockman argued that it was at least an arguable case. Whilst that may be so, a legal firm should have access to research materials. In my view, arguable though it may have been, the caveat was a long bow to draw.
In Penfold v Penfold (1980) FLC ¶ 90-800 the High Court of Australia said that the general rule expressed by s 117(1) was not paramount to s 117(2). That is, when a court finds circumstances justifying an order for costs, the principle that each party should bear their own costs should give way.
Thus, S 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.
I find having regard to the fact that this was a legal issue and it did not involve non-lawyer litigants, the matter justifies an order for costs.
I am not in a position to determine those costs although I would not expect them to be high and accordingly, the appropriate order is that if the parties cannot agree on the quantum then the costs be assessed.
I certify that the preceding Thirty Six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin
Associate:
Date: 24 July 2009
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