Burgtreus Pty Ltd v Burgin
[2005] VSC 339
•28 June 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 6008 of 2005
| BURGTREUS PTY LTD | Plaintiff |
| v | |
| STEPHEN ROBIN BURGIN and REGISTRAR OF TITLES | Defendants |
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JUDGE: | CUMMINS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 June 2005 | |
DATE OF JUDGMENT: | 28 June 2005 | |
CASE MAY BE CITED AS: | Burgtreus Pty Ltd v Burgin & Anor | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 339 | |
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PRACTICE COURT – constructive trust – removal of caveat – s.91(4) and s.103(1) Transfer of Land Act 1958.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. Moore | O’Keefe Pithouse |
| For the Defendants | Mr D. Connell | Walters & Associates |
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HIS HONOUR:
By summons on originating motion filed 12 May 2005 the plaintiff seeks, amongst facilitating and consequential orders, that the second defendant, the Registrar of Titles, be directed to refuse to make a recording of Instrument No. AD496245A in the Land Titles office, being a caveat sought to be lodged by the first defendant. By originating motion filed the same day, the same relief is sought.
The relevant history is set forth in a number of affidavits. The primary affidavit in support of the proceeding, is that of Mr Robin Frank Burgin of “Kongbool”, Balmoral, Victoria sworn at Hamilton on 11 May 2005.
Mr Burgin deposes that he is a farmer and the sole director and secretary of the plaintiff, which is the trustee of the Burgin Family Trust. There are two shareholders in the plaintiff; him and his wife, Mrs I.E. Burgin.
Mr Burgin (whom I shall refer to as Mr Burgin senior) deposes that the plaintiff holds no assets other than its capacity as a trustee of the Burgin Family Trust and that he is authorised to make the affidavit on behalf of the plaintiff. The plaintiff is the registered proprietor of “Kongbool”, Balmoral, on the Coleraine/Balmoral Road, and being land described in Certificate of title Vol. 10215 Folio 229. A search has disclosed an unregistered caveat lodged for registration in the dealing number I have cited. It was lodged on behalf of Mr Burgin senior’s son, Mr Stephen Robin Burgin, the first defendant. The second defendant has by letter acknowledged that the Registrar will abide the decision of the Court. The caveat states as the interest claimed an estate in fee simple. The grounds of claim are stated to be “financial contribution to purchase price of each property and labour and cost of improvements. Verbal arrangements”.
The brief history of the property is this. Kongbool was purchased by Mr Burgin senior pursuant to a contract of sale dated 29 October 1999 in the sum of $720,000. The contract provided for payment of final instalment of $326,000 on 15 January 2002. That obligation was financed by a loan raised by the plaintiff from Wesfarmers Landmark Limited, and secured by a first mortgage given by the plaintiff to Wesfarmers over the title to Kongbool. The first mortgage is registered on the title. It also secures a stock mortgage facility for cattle run on Kongbool.
On 26 November 2002 Mr Burgin senior signed a contract to purchase another property, on the Horsham Road at Balmoral, called the North Property, for the sum of $758,440. This is vacant farming land of approximately 1100 acres in imperial measurement.
The North Property was purchased and financed by a deposit of $75,000 and the balance plus related costs by a further loan from Wesfarmers secured by a mortgage over Kongbool and a further mortgage over the North Property. Possession was taken by the plaintiff on 20 January 2003.
At the end of 2003, it being Exhibit 4 to the primary affidavit, the plaintiff received a demand from Wesfarmers calling up all loans by it to the plaintiff. Negotiations were entered into in relation to refinancing. On or about 26 March 2004 Mr Burgin Jnr, the first defendant herein, lodged a caveat No. AC762264X over in part Kongbool. That caveat claimed an estate of fee simple. The grants of claim were “Equitable interest by way of constructive trust”. The caveat is in fact undated. Solicitors were retained by the Mr Burgin senior in relation to the removal of the first caveat. An application was made pursuant to s.89A Transfer of Land Act 1958 for its removal. In fact the caveat lapsed as Mr Burgin Jnr did not commence proceedings to substantiate the claimed interest. I shall refer to that hereafter as the first caveat.
By mid-2004 Mr Burgin senior could not refinance the total obligation owed to the Bank and was required to sell Kongbool. He instructed estate agents to that end. Later in 2004 Wesfarmers obtained an order for possession of both Kongbool and the North Property to enable them to sell the properties as mortgagees in possession. Demonstrably it was better for the plaintiff and Mr Burgin senior if the properties were sold not as a mortgagee sale; and negotiations were entered into to facilitate that end.
On 8 February 2005 the plaintiff entered into a contract of sale to sell Kongbool for $1,400,000, a copy of which is exhibited as Exhibit 6 to the primary affidavit. On 23 March 2005 Mr Burgin senior received a letter from his son’s solicitors exhibited as Exhibit 7 stating that the son had a beneficial interest in Kongbool and that he wanted to take over the role of trustee from the plaintiff. There had sadly been a serious falling out between father and son. Mr Burgin senior in his affidavit denied that the son had any interest in Kongbool and became aware of the existence of the second caveat after the solicitor’s letter was received from his son on 23 March 2005.
Mr Burgin senior’s affidavit continues that there will be a shortfall of approximately $124,219 on the proposed sale, and that Wesfarmers has agreed to extend time to the plaintiff to refinance its debs until 31 July 2005, a critical date in relation to the present proceeding. The affidavit concludes that unless the caveat is removed in respect of both Kongbool and the North Property, Mr Burgin senior will be unable to refinance the balance of the obligation to the bank by the due date of 31 July 2005, and it is likely then the Bank Wesfarmers will exercise its rights as mortgagee and sell in that capacity.
An affidavit sworn 11 May 2005 by the Hamilton solicitor for the plaintiff, Mr Gerard O’Keefe, has also been filed. In that affidavit he confirms that the first caveat lapsed and was removed from the Registrar as I have recited. In relation to the present situation he deposed that the legal department of the Land Titles Office informed him that the caveat is still awaiting processing at the time of swearing.
An affidavit by Mr Stephen Robin Burgin, the first defendant, sworn in Melbourne on 17 June 2005 sets forth the history of the matter from his perspective. He deposes that he holds a beneficial interest in the land the subject of the caveat, by reason of his contributions to the purchase of the land, improvements made and work done by him. He deposes that he contributed some $130,000 of the purchase price of the land and his father, Mr Burgin senior, contributed $200,000 in relation to Kongbool. He deposes that the Trust used the money to obtain Kongbool which in turn was used as a security for the purchase of the North Property. He sets forth a brief history of the development of the land from the farming perspective and that he lived at Kongbool whilst responsible for its operation. He received no payment for his labour “as it was understood between my father and I that I would have a beneficial interest in the homestead and the land” (paragraph nine of his affidavit). He further deposes that all the land was placed in the Trust at his father’s suggestion and as there was family complications and he did so “on the basis of a constructive trust” (paragraph 11). He deposes that unfortunately in May 2004 without warning he was escorted off the property for no reason by police at the behest of his father. He was not permitted to remove any of his belongings or records and as a consequence all evidence of his contribution is in the possession of the plaintiff. He further deposes “The understanding between my father and myself was that I would be a beneficiary under the trust which I was led to believe was a discretionary trust. I now know I am not a nominated beneficiary”. In the circumstances the first defendant seeks to maintain the caveat to protect his contribution and interest.
An affidavit in response was sworn on 24 June 2005 by Mr Burgin senior in which in paragraph seven he denies the assertion of the first defendant that the first defendant has an interest in the North Property. Paragraph seven continues: “There never has been any agreement or understanding that the plaintiff would hold the North Property on trust for the first defendant. I also deny that he made contributions to the purchase of the Kongbool Property”.
The plaintiff applies pursuant to s.103(1) Transfer of Land Act 1958 for an order or direction that the Registrar refuse to make a recording of the second caveat and that the Registrar return the caveat to the solicitors for the first defendant. The caveat has not been registered and so proceedings are pursuant to s.103(1) of the Act for the relief that is sought in the summons and motion rather than s.90(3).
The essential points are these in my view. First, in my view the caveat, being the second caveat, covers the same ground as the first caveat and falls within s.91(4) of the Act. The first defendant lodged the first caveat as I have said around 26 March 2004, although it does not bear a date but it does bear a stamp of the Office of Titles. The stated interest there claimed was an estate in fee simple; the grounds of the claim an equitable interest by way of constructive trust. The second caveat, the subject of these proceedings, again claims an estate in fee simple; however the grounds of claim are “Financial contributions to purchase price of each property and labour and cost of improvements. Verbal agreements”. It is clear that a caveat ought not be accepted in the circumstance where the same interest is claimed in the second caveat as the first. That is established in Gurwitz v Gurwitz[1]; also Sinn v National Westminster Finance Ltd[2].
[1](1988) V. Conv.R. 54-317 64,052.
[2](1985) VR 363 at 366.
The second essential point is this. In order to establish a constructive trust the first defendant needs to show that his contribution was made in circumstances where the parties agreed or demonstrably intended that a trust be created. In the present case the first defendant says that he did so on the basis “of a constructive trust” (paragraph seven), but the highest it can be put by him is that there was “an understanding”, so expressed in the form of a noun in paragraph 12 and a verb in paragraph nine (“it was understood”). It is clear on the authorities that that is demonstrably sufficient. There has to be evidence of a clear sort of an agreement for an intention: Handberg v Walter and the Registrar of Titles[3]. In my view demonstrably there is insufficient material here to establish a trust or an intention on the first criterion appropriate for this proceeding.
[3](2001) VSC 177, particularly at paragraph 21.
It was put on behalf of the first defendant that the second caveat is not a replication of the first because in the second caveat the grounds claimed were “Financial contributions to purchase price of property, and labour and costs of improvements. Verbal arrangements”. In my view that also is inefficacious in support of the caveat. First, in paragraph 10 of the first defendant’s affidavit of 17 June he asserts a constructive trust. Second, insofar as the grounds of claim have shifted or purported to shift the later claim is inefficacious by reason of s.55(d) Property Law Act 1958, which provides that nothing in the preceding ss.53 and 54 shall affect the operation of law regarding part performance. The requirements for part performance are long established: McBride v Sandiland[4] where the criteria are set forth. The act relied upon must be unequivocally and in its own nature referable to the alleged agreement. There is nothing such here. Next, agreement means a contract of a general nature of that alleged. Again there is nothing such here. Next, it must have been done by the party relying upon it on the faith of the agreement, and by a party to the agreement, being a completed agreement and under the terms of the agreement in force, all of which are lacking here. In Cooney v Burns[5], again the requirement of clear evidence is set forth in a well-known passage.
[4](1918) 25 CLR 69 at 78-79 per Isaacs and Rich JJ.
[5](1922) 30 CLR 216 per Knox CJ at 222.
The highest that can be put here is that there was “an understanding” and that of course is in dispute in any event. But accepting for the purposes of this proceeding the assertions of the first defendant as to payment of money and work done, I conclude that it is insufficient to found other than a money claim. It is insufficient to substantiate the caveatable interest. The caveatable interest is the same in my view as that previously claimed, and on that ground fails. Further, the caveat or interest claimed in the second caveat fails to comply with the well-known principles in relation to part-performance under the authorities I have cited and the provisions of the Property Law Act 1958 I have cited.
A mere financial contribution – and by mere I am referring to its character rather than its quantum because the financial contribution asserted by the first defendant is substantial – does not of itself give rise to a caveatable interest; nor do contributions of labour and costs of improvements. Such contributions can, of course, found a money claim and can found it legitimately. However, they do not of themselves constitute a caveatable interest. There is of course a factual dispute as to what was financially contributed by the first defendant, but accepting for the purposes of this judgment the accuracy of the first defendant’s affidavit, in my view that does not as a matter of law of itself constitute a caveatable interest.
For those reasons I grant the relief sought on behalf of the plaintiff and I direct that the second defendant, the Registrar of Titles, refuse to make a recording of Instrument No. AD496245A in the Land Titles Office and that the caveat being that instrument be returned to the solicitor for the first defendant.
I further order that the first defendant pay the costs of these proceedings.
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