Brett Grimley Sales Pty Ltd v Petrovic
[2015] VSC 716
•9 December 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
| S CI 2014 03289 | |
| BRETT GRIMLEY SALES PTY LTD (ACN 006 222 046) | Plaintiff |
| v | |
| GORAN PETROVIC | Defendant |
| DRAGAN PETROVIC | Claimant |
| -and- | |
| S CI 2015 06143 | |
| GORAN PETROVIC | Plaintiff |
| v | |
| DRAGAN PETROVIC | First Defendant |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | GARDE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 December 2015 |
DATE OF JUDGMENT: | 9 December 2015 |
CASE MAY BE CITED AS: | Brett Grimley Sales Pty Ltd v Petrovic |
MEDIUM NEUTRAL CITATION: | [2015] VSC 716 |
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CATCHWORDS
CAVEAT – Removal of caveat – Claim for equitable interest by caveator – Undertakings given by legal owner to court to sell property – Undertakings largely complied with by legal owner – Serious issue to be tried – Balance of convenience favours removal – Caveat removed.
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APPEARANCES: | Counsel | Solicitors |
| S CI 2014 03289 | ||
| For the Plaintiff | Mr I Upjohn QC and Mr B Mason of Counsel | Lewenberg & Lewenberg |
| For the Defendant | Mr A R Kirby of Counsel | Nicholas O’Donohue & Co |
| For the Claimant | Mr R A Edmunds of Counsel | Messrs. Tasiopoulos Lambros & Co. |
| S CI 2015 06143 | ||
| For the Plaintiff | Mr A R Kirby of Counsel | Nicholas O’Donohue & Co |
| For the First Defendant | Mr R A Edmunds of Counsel | Messrs. Tasiopoulos Lambros & Co. |
| For the Second Defendant | No appearance | |
HIS HONOUR:[1]
[1]This is an edited version of an oral judgment given in the Practice Court on 9 December 2015.
There are two applications before the Court concerning the property at 16/693 Malvern Road, Toorak VIC 3124 (‘the Toorak property’), being the land described in Certificate of Title Volume 8408 Folio 543. By an originating motion in proceeding no. S CI 2015 06143 and summons on originating motion, Goran Petrovic (‘Goran’) seeks an order for the removal of caveat no. AL321577J from the Toorak property under s 90(3) Transfer of Land Act 1958 (Vic). He also seeks an order for possession of the Toorak property to effect the transfer of vacant possession to the purchaser. By a summons issued in proceeding no. S CI 2014 03289 (‘the 2014 proceeding’), Goran’s father Dragan Petrovic (‘Dragan’) seeks a declaration from the court that Goran holds his legal interest in the Toorak property on trust for Dragan and other orders.
On 12 August 2015, Goran undertook to the Court constituted by the Chief Justice to conduct on or before 4:00pm on 12 September 2015 a public auction of the Toorak property at a minimum reserve price of $505,000.00, and to take all reasonable steps to prosecute the auction and complete any sale. Goran also undertook to the Court to pay from the proceeds of sale in the following priority:
(a) the costs of and incidental to the sale;
(b) the amount required by the mortgagee to discharge the mortgage registered in dealing no. AF991677Q;
(c) the judgment debt together with interest and costs pursuant to the order of Costs Registrar Deviny made on 25 September 2014 together with certain other costs; and
(d) the balance to Goran.
On the basis of these undertakings, the Chief Justice restrained the Sheriff from selling the Toorak property.
In accordance with these undertakings, Goran sold the Toorak property on 12 September 2015 for a purchase price of $510,000.00. Settlement of the contract of sale is scheduled for 12 December 2015. Following withdrawal of a previous caveat lodged by him over the Toorak property, Dragan has filed caveat no. AL321577J, claiming an equitable interest as the beneficiary of a constructive trust.
Goran seeks to comply with his undertakings to the Court so that settlement of the Toorak property can proceed. As set out above, in order to comply with his understandings, Goran seeks orders from the Court, including an order directing the second defendant in the 2015 proceedings (‘Registrar of Titles’) to remove the caveat lodged by Dragan, and an order for possession of the Toorak property. The order for possession is sought to address the contingency that Dragan does not vacate the Toorak property prior to settlement.
The background to the dispute can be summarised as follows:
(1) in a proceeding in the County Court (‘the 2009 proceeding’), the plaintiff in the 2014 proceeding (‘Grimley’) obtained judgment in the principal amount of $52,900.00 as against Goran together with an order for costs. The judgment of her Honour Judge Kennedy was given following a five day trial. A freezing order was also made. A costs order in the amount of $230,000.00 was subsequently made by Costs Registrar Deviny. An appeal in the 2009 proceeding was dismissed by the Court of Appeal;[2]
[2]Petrovic v Brett Grimley Sales Pty Ltd [2014] VSCA 99.
(2) Grimley attempted to enforce its judgment by a warrant of seizure and sale lodged on the title to the property on or about 26 May 2015;
(3) in response to the attempted execution of the warrant by the Sheriff, Goran issued a summons dated 11 August 2015 in the 2014 proceeding;
(4) the summons was supported by the affidavit of Leila Bosnjak, his solicitor, which asserted Dragan’s interest in the property; and
(5) on the return of the summons, Goran gave the above mentioned undertakings, and the Chief Justice made the previously referred to orders.
In support of the caveat, Dragan relies on his own affidavit of 1 December 2015, and seeks that the Chief Justice’s orders be varied by the discharge of the undertakings given as to the distribution of the proceeds of sale of the Toorak property. Dragan seeks instead that the proceeds of sale after the payment of costs and the discharge of the mortgage be held in an interest bearing controlled monies account in the joint names of the respective solicitors pending determination of Dragan’s claim or consent of all the parties in writing. During the hearing, I was informed that Goran acknowledges that all monies remaining after the payments undertaken to be made out of the proceeds of sale of the Toorak property are the property of Dragan.
In his affidavit, Dragan deposes to his de facto relationship with Vesna Petrovic (‘Vesna’) and that in late 2007, a property in Fairfield owned by him and Vesna was sold and the proceeds of sale reinvested in the purchase of the Toorak property. This property was placed in Goran’s name so that Goran could get a first home owner’s grant, even though he appears not to have been eligible. The purchase price of the Toorak property was $340,000.00 and additional monies were required for stamp duty and purchase costs. On 7 January 2008, a sum of $360,000.00 was transferred from Vesna’s account to Goran’s account. Subsequently, Dragan carried out substantial renovations internally to the Toorak property. Dragan says that after he discovered that Goran had amassed a debt exceeding $200,000.00 to the ANZ Bank secured on the Toorak property, he made repayments to reduce the debt to $60,000.00. Dragan deposes that the debt secured by the ANZ mortgage now amounts to $140,000.00. Dragan produces a written agreement dated 14 February 2008, whereby Dragan acknowledges that he provided money to Goran to purchase the Toorak property, and is entitled to live in the property rent free for the rest of his life.
Dragan and Vesna were in a de facto relationship from the early 1980’s until 2005. Early on in their relationship, Dragan was involved in a car accident, suffering serious injuries. Thereafter, he was a pensioner, also doing some driving and delivery work, and looking after the children while Vesna worked. Vesna was employed as an office manager by Grimley from February 2000 until early 2008. She was subsequently convicted of 8 counts of theft from Grimley comprising 23 transactions over the period October 2002 until 1 July 2007.
The 2009 proceeding was undertaken by Grimley against Vesna, as a former employee of the company, and against Goran. The evidence before Judge Kennedy at the trial was that she had undertaken 164 transactions between December 2001 and November 2007 in circumstances where she took conscious steps to conceal these transactions from Grimley.[3] Dragan gave evidence at the trial.
[3]Brett Grimley Sales Pty Ltd v Petrovic [2013] VCC 62 (‘2009 proceedings’) [119].
Her Honour found that Dragan and Vesna agreed that their properties were owned equally between them. Vesna was the primary breadwinner but Dragan contributed financially to the relationship by assisting in caring for the family as well as making financial contributions from his pension and casual employment.[4] Goran was ordered to repay Grimley an amount of $52,900.00, from a larger sum of $360,000.00 paid by Vesna to Goran on 7 January 2008, as a voidable transfer intended to defraud creditors under s 172(1) of the Property Law Act 1958 (Vic).[5]
[4]Ibid [100].
[5]Ibid [124].
Grimley submits that Dragan is estopped from raising the claims in equity that he now brings, as the issues sought to be raised could have been ventilated years ago. It says that the issue of Dragan’s interest in the Toorak property was before the County Court in the 2009 proceeding. Dragan disputes this submission. Grimley submits that Dragan was a privy in interest of Goran and that he claimed under or through Goran.[6] In her judgment, Judge Kennedy refers to the fact that some of Dragan’s monies were used to buy the Toorak property.[7] Grimley says that Dragan was fully aware of where the funds were going , and could have sought the declaration previously but did not pursue any claim prior to 2015. It says that it was not appropriate for Dragan to delay taking steps to protect his position. Grimley also pointed to the fact that the judgment of Judge Kennedy was upheld on appeal in 2014.[8]
[6]See Ramsay v Pigram (1968) 118 CLR 271, 279.
[7]2009 proceedings [59].
[8]Petrovic v Brett Grimley Sales Pty Ltd [2014] VSCA 99.
It is plain that Dragan has long been aware of the need to secure his position as illustrated by the agreement that he had with Goran to provide monies to assist in the purchase of the Toorak property on the basis that he would live in it for life. Dragan said that this note was typed by a friend and signed by Dragan and Goran on 14 February 2008. Both signatures were witnessed.[9]
[9]Affidavit of Dragan Petrovic sworn 1 December 2015 (Dragan’s affidavit) [13].
There are many authorities dealing with the principles applicable in caveat removal applications. I will refer to one. In Piroshenko v Grojsman,[10] the Chief Justice summarised the requirements for a caveat under the Torrens system to be maintained. There must be a prima facie case that the caveator will be found to have the claimed equitable right or interest. Even if there is shown to be a prima facie case, the balance of convenience must favour the maintenance of the caveat. The court should make whichever order appears to carry the lower risk of injustice should it turn out at trial to have been wrongly made.
[10][2010] VSC 240.
In the present case, I am satisfied that there are serious issues to be tried in relation to Dragan’s claim. While he was not the principal breadwinner in the Petrovic household, his affidavit establishes that he contributed sums of money to the purchase of the Toorak property. He also incurred significant expense in renovating the Toorak property. On the other hand, it is extremely late in the day for his claim to be brought forward; long after the resolution of the 2009 proceeding between Grimley, Vesna and Goran. This litigation took over five years to complete including an appeal to the Court of Appeal. Dragan gave evidence at the trial of the 2009 proceeding that he had obtained legal advice from Goran’s solicitor. He says that he was informed of his rights and potential claim in relation to the Toorak property based on a constructive trust, but says that he was advised that there was no urgency in taking any action.[11] I am also satisfied that serious issues to be tried have been raised by Grimley viz whether Dragan is now estopped from bringing a claim based upon a constructive trust, and whether Dragan is a privy in interest to Goran and should be held to the result of the 2009 proceeding.
[11]Dragan’s affidavit [23].
In my view, the balance of convenience strongly favours the removal of the caveat for the following reasons:
(1) Dragan has had seven years and many opportunities to advance his claim for an equitable interest in the Toorak property since he first sought to protect his position through the agreement on 14 February 2008. He has not initiated a proceeding until very recently;
(2) Dragan gave evidence at the trial of the 2009 proceeding that he had a number of conversations and dealings with Goran’s solicitors, Joe Katz,[12] and more recently Leila Bosnjak.[13] According to an affidavit sworn by her, it was Dragan’s desire and agreement as late as August 2015 that the Toorak property be sold to meet the judgment debt.[14] According to Ms Bosnjak, it was intended after the sale of the Toorak property that Goran and Dragan deal with the balance of the Toorak property in accordance with their arrangement as documented.[15] Although it is not for me to finally determine the arrangements between Goran and Dragan, they may explain why Dragan’s interest in the Toorak property was not raised much earlier. Ms Bosnjak’s affidavit also refers to the Petrovic family making suitable living arrangements for Dragan.[16] Dragan appears to have acceded to the arrangements made for him by Goran until very recently;
[12]Ibid [23].
[13]Affidavit of Leila Bosnjak sworn 11 August 2015 (‘Bosnjak affidavit’) [6]; [7]; [10].
[14]Ibid[10].
[15]Ibid [14].
[16]Ibid [15].
(3) on 12 August 2015, the Chief Justice made detailed orders at the request of Goran, and received the undertakings proferred by him for the public auction of the Toorak property and the distribution of the proceeds of sale. Those undertakings were not only given, but they have now largely been honoured. It is very undesirable to alter the undertakings at this late stage;
(4) the Toorak property has been sold in accordance with the undertakings. This sale has been on foot for three months;
(5) settlement of the sale is to occur on 12 December 2015. There is a third party purchaser whose position and interest also deserves consideration. That purchaser expects settlement to go ahead on 12 December 2015;
(6) if the caveat is removed, Dragan will receive the balance of purchase monies after settlement and payment of expenses, given Goran’s acknowledgement of his claim; and
(7) Dragan still has the opportunity to pursue his claim by a fresh proceeding in the normal way.
For these reasons, I am of the view that the balance of convenience favours the removal of the caveat. This is now urgent having regard to the settlement on 12 December 2015.
In order to ensure that settlement proceeds, it is appropriate to make an order for possession of the Toorak property to avoid any disruption of the sale or settlement.
Orders will be made in the form generally sought by Grimley in the 2014 proceeding and Goran in the 2015 proceeding. Subject to any further submissions by counsel, Dragan’s summons dated 1 December 2015 in the 2014 proceeding will be struck out. This disposition does not constitute a bar to a future proceeding by Dragan should he be advised to pursue his claim.
Having said that, it is very strongly in the interests of all parties after so much expenditure on legal costs to see if the differences between them can be resolved. The amount in dispute is, in any event, not large. Following the settlement of the sale of the Toorak property and disbursement of the proceeds, the amount in dispute will be reduced even further. The costs likely to be incurred in further proceedings will be significant, as the taxed costs of the 2009 proceeding at $230,000.00 make very clear.
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