Cameron v Milburn and Ors (Ruling)
[2015] VCC 542
•8 May 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| FAMILY PROPERTY LIST |
Case No. CI-14-03729
| ANGELA JOY CAMERON | Plaintiff |
| v | |
| DOROTHEA FLORENCE MILBURN | First Defendant |
| PETER JOHN TOMKINS | Second Defendant |
| TRACEY MAREE TOMKINS | Third Defendant |
| JAKE TOMKINS | Fourth Defendant |
| and | |
| REGISTRAR OF TITLES | Fifth Defendant |
JUDGE: | HER HONOUR JUDGE KINGS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 November 2014 | |
DATE OF RULING: | 8 May 2015 | |
CASE MAY BE CITED AS: | Cameron v Milburn & Ors (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 542 | |
RULING
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Subject: APPLICATION FOR SUMMARY JUDGMENT
Catchwords: Breach of Court Order – fiduciary relationship – breach of fiduciary duty – sale of real property – knowledge of solicitor in conveyancing transaction – summary judgment – no real prospect of success
Legislation Cited: Civil Procedure Act 2010, s63; Transfer of Land Act 1958, s89A(3); County Court Act 1958, s53; County Court Civil Procedure Rules, r.23.03
Cases Cited:Cameron v Milburn [2013] VCC 832; Cameron v Milburn (Ruling No 2) [2013] VCC 914; Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; Capital One Securities Pty Ltd v Soda Kids Holdings Pty Ltd [2012] VSC 163; Hospital Products Ltd v United States Surgical Corporation & Ors (1984) 156 CLR 41; Pederson v Larcombe & Anor [2008] NSWSC 1362; Breen v Williams (1996) 186 CLR 71; Sargent v ASL Developments Ltd (1974) 131 CLR 634
Judgment: Judgment for the first to the fourth defendants on the summary judgment application.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B Gillies | SLM Law |
| For the First Defendant | Mr M N C Harvey | Taylor Stratmann Lawyers |
| For the Second, Third and Fourth Defendants | Mr S Byrne | Stephen Peter Byrne, Lawyer |
HER HONOUR:
1 The plaintiff, Mrs Angela Cameron (“Angela”), is the daughter of the defendant, Mrs Dorothea Milburn (“Dorothea”). In this proceeding, Angela claims a fiduciary relationship and breach of fiduciary duty as against Dorothea. Further, Angela claims that Dorothea breached a Court Order made on 30 October 2013 in the County Court. The Order was made in respect to a previous County Court proceeding between these two parties (“the previous proceeding”).
2 Dorothea seeks summary judgment against Angela pursuant to s63 of the Civil Procedure Act 2010. Alternatively, Dorothea seeks an order that the Statement of Claim be struck out. Dorothea submits summary judgment should be granted, because Angela’s claim, namely that there was a fiduciary relationship between Dorothea and Angela, and a breach of fiduciary duty, has no real prospect of success. Alternatively, Dorothea submits that the Statement of Claim should be struck out, because it does not disclose a cause of action, or it is frivolous or vexatious, or it is embarrassing.
Evidence
3 Dorothea relied on the affidavit of Sarah Elizabeth Young, Solicitor, sworn on 23 October 2014.
4 Angela relied on the affidavit of Bethany Jane McNaught, Solicitor, and Craig William Cameron, her husband, both sworn on 4 August 2014. Both parties provided written submissions which both counsel addressed.
The current County Court proceeding
5 In August 2014, Angela commenced the current proceeding in the County Court naming Dorothea as the first defendant, Peter Tomkins, Tracey Tomkins and Jake Tomkins as the second to fourth defendants, and the Registrar of Titles as the fifth defendant. The Registrar of Titles took no part in the application.
6 Angela alleges that:
(a) Dorothea was the Registered Proprietor of land comprised in three Certificates of Title.
(b) In May 2012, Dorothea entered into negotiations to sell the land to the second, third and fourth defendants (the Tomkins).
(c) On 16 May 2012, Angela lodged a Caveat over the property based on a constructive trust or resulting trust as a result of the work done by her on the property. Dorothea requested the plaintiff to remove the Caveat.
(d) On 9 July 2012, Angela commenced proceedings in the County Court against Dorothea, seeking to substantiate the interest claimed in the Caveat.
(e) The hearing took place in June 2013 before Judge Misso, who delivered his Reasons for Judgment, together with supplementary Rulings on 1 August and 26 October 2013.
(f) Final Orders were made in the proceeding on 30 October 2013 (“the Order”).
(g) The Order was:
“1. The defendant (the first defendant in this proceeding) is estopped from denying promises made by George Russell Milburn that he intended to confer an interest in farm properties operated by him in the district known as Wando Vale to the plaintiff.
2. The defendant (the first defendant) deliver up to the solicitors for the plaintiff:
(a)duplicate Certificate of Title Volume 10268 Folio 838; and
(b)duplicate Certificate of Title Volume 11143 Folio 810.
3. The plaintiff, through her solicitors, prepare a transfer to effect the transfer of the land described in Certificates of Title Volume 10268 Folio 838 and Volume 11143 Folio 810 from the defendant to the plaintiff.
4. The defendant sign the Transfers and return them to the solicitors for the plaintiff within seven days of receipt. The plaintiff shall bear the cost of and incidental to the Transfers and the lodgement.
5. The defendant take all reasonable steps to sell the land described in Certificates of Title Volume 8327 Folio 323, Volume 5623 Folio 501 and Volume 3033 Folio 409 at best market price as soon as practicable (Sale).
6. The defendant is at liberty to retain the proceeds of the Sale (less commission and statutory charges) and use such proceeds for accommodation costs and living, medical, legal and incidental expenses.
7. Upon the defendant’s death, the plaintiff shall be entitled to the residue of such proceeds (including such converted into real or personal property).
8. The defendant pay the plaintiff’s costs to be assessed by the Costs Court, including the cost of transcription of the proceeding, in default of agreement.”
(h) Dorothea breached paragraphs 5 and 6 of the Order, as she failed to take all reasonable steps to sell the land at best market price as soon as practicable, and failed to retain the proceeds of sale and use such proceeds for accommodation costs and living, medical, legal and incidental expenses.
(i) The terms of the Order created a fiduciary duty upon each of the defendants to obtain the best market price as soon as practicable.
(j) In breach of the fiduciary duty and the Order, the property was sold.
(k) On 24 April 2014, Dorothea signed a Contract of Sale with the Tomkins.
(l) On 2 July 2014, Dorothea’s solicitors informed Angela’s solicitors of the sale of the property for a price of $504,714.14.
(m) Stratmann & Co Lawyers acted for all the defendants (other than the Registrar of Titles) on the Contracts of Sale. Settlement of the sale was due on 11 July 2014.
(n) The sale price is less than two property Valuations received in December 2013 and January 2014. The first Valuation in 2013 provided figures on the basis that the property was unencumbered, as well as a discounted value on the basis that it was encumbered by the lease to Tracey and Jake Tomkins. The second Valuation in 2014 also provided two values dependant on whether the property was encumbered or unencumbered by the lease.
(o) The property was encumbered by a lease between Dorothea and the lessees, Tracey and Jake Tomkins (“the Tomkins”), for a rent of $30,000 per annum plus GST, payable quarterly in advance, with a term of five years expiring 30 June 2015, with two further terms of five years. The lease is regarded as a lease at undervalue.
(p) Dorothea and the Tomkins knew that the sale of the property is a sale at undervalue and in breach of the Order.
(q) The property has not been put on the market, nor has the market been tested, so the best market value could be obtained.
(r) Angela has suffered loss and damage, being the loss on an undervalued sale. Angela seeks an interlocutory and permanent injunction, and alternatively, damages.
7 Dorothea filed a Defence dated 24 September 2014.
8 In essence, Dorothea says:
(a) Angela had no interest in or personal right over the property that would now give rise to a fiduciary duty between the parties.
(b) Currently, Angela has no interest in or personal right over the net proceeds of sale.
(c) Dorothea denies the Orders created a fiduciary relationship.
(d) Dorothea denies a breach of fiduciary duty.
(e) Dorothea denies that she knew the sale of the property was at an undervalue and in breach of the Order.
(f) Dorothea denies that she breached the Order.
(g) Dorothea admits that valuations were obtained, but says the valuations did not reflect the market price of the property where she was ordered to sell as soon as practicable.
(h) In the circumstances, Dorothea obtained the best market price for the property as soon as practicable in accordance with the Order.
9 The Tomkins were the purchasers of the property. They did not file a defence.
10 On 6 August 2014, Angela sought an injunction in the current proceeding. Judge Dyer heard the application and refused to grant the injunction sought.
11 On 2 October 2014, Dorothea filed the current application seeking summary judgment under s63 of the Civil Procedure Act 2010, and in the alternative, the Statement of Claim be struck out pursuant to Rule 23.03 of the County Court Civil Procedure Rules 2008. Dorothea’s application was supported by the Tomkins, who were separately represented at the hearing of the application and addressed the Court.
The application by the Defendant
12 Section 63 of the Civil Procedure Act 2010 provides:
“(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim … has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a)…
(b)on the application of a defendant in a civil proceeding;
… .”
(my emphasis).
13 The effect of s63 is that a court, on the application of the plaintiff or defendant, or on its own motion, may give summary judgment in any civil proceeding if satisfied that a claim, defence or counterclaim has no real prospect of success.
14 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[1] Warren CJ and Nettle JA stated:
[1][2013] VSCA 158 at paragraph [35]
“a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
b) the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
c) it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.”
15 The effect of s63 is that there is a new, less stringent and more liberal test for summary judgment. Caution should be exercised in terminating proceedings. Proceedings should be terminated summarily when it is clear that there is no real question to be tried. Regard should be had to the fact that, if the application is granted, it will deprive the party of the opportunity to pursue her claim.
16 The new provisions are directed at achieving the overarching obligations to “facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute”.[2]
[2]Section 7(1), s8(1) and s9(1)(a) of the Civil Procedure Act 2010; Capital One Securities Pty Ltd v Soda Kids Holdings Pty Ltd [2012] VSC 163 at paragraphs [8] and [10]
Submissions
17 In paragraph 10 of the Statement of Claim, Angela alleges that the terms of the Order (made in the previous proceeding) created a fiduciary duty upon Dorothea to obtain the best market price as soon as practicable. While not raised in written submissions, Counsel for Angela (Mr Gillies) submitted that Angela also relied upon the claim for breach of Court Order.
18 Counsel for Dorothea (Mr Harvey) submitted the claim required Angela to firstly, establish that a fiduciary relationship exists, and second, that flowing from that relationship is the duty to obtain the best market price for the property. As to that, Mr Harvey submitted that there is no fiduciary relationship between Dorothea and Angela, and the fiduciary duty alleged is not known to the law.
Is there a fiduciary relationship?
19 Mr Harvey submitted that a reading of the Order does not reveal how or why the alleged fiduciary relationship arises. A reading of the principal judgment, the Ruling of 1 August 2013 (SEY 2) and the Ruling of 29 October 2013 (SEY 3) are all silent as to there being a fiduciary relationship or duty. As there is no express declaration of fiduciary relationship in the Order, Angela must show it is implicit. I accept that submission.
20 The High Court considered fiduciary relationships in Hospital Products Ltd v United States Surgical Corporation & Ors[3] (“the Hospital Products/Surgical Staples case”). Mason J said there are accepted categories of fiduciary relationships of trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. I accept that the Order does not create a relationship between Angela and Dorothea that falls within the accepted categories of fiduciary relationships.
[3](1984) 156 CLR 41
21 Mr Gillies referred to Pederson v Larcombe & Anor;[4] however, that case is distinguishable from this case, as that involved a real estate agent and vendor, a principal and agent, an accepted category of fiduciary relationship.
[4][2008] NSWSC 1362 at paragraph [7]
22 In the Hospital Products/Surgical Staples case, Mason J said that the accepted categories are not closed:
“The critical feature of [accepted fiduciary] these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. … .”[5]
[5](ibid) at paragraph [68]
23 Mr Gillies submitted that because Mr Harvey had submitted a proposed order to the Court in the previous proceeding, which was adopted by Judge Misso, this creates an undertaking by counsel and his client, Dorothea. This suggested that, in addition to the Court Order, there is at the same time an agreement or undertaking in place. I reject that submission. The parties were asked to submit terms of a proposed order. His Honour Judge Misso made the Order. The Order is a formal decision given in the previous proceeding between Angela and Dorothea. The Order disposes of the question in dispute in that proceeding. It is not a personal undertaking between parties, nor is it a personal undertaking given up by parties to the Court. It does not satisfy the critical feature of fiduciary relationships referred to by Mason J in the above passage.
24 Further, Mr Gillies submitted that the fiduciary obligation arises, because the Order requires Dorothea to sell the property for best market price. This is allegedly a circumstance in which a fiduciary, Dorothea, acts on behalf of, or in, the interest of another person, Angela, in the exercise of power which affects the interest of another person in a legal or practical sense.
25 As to that submission, Dorothea does not act on behalf of Angela. It is clear from the terms of the Order that Dorothea herself has an immediate interest in obtaining the best market price possible, since Dorothea is permitted to use the sale proceeds to pay for her own expenses. Dorothea had an immediate right to sell the property, and she has the immediate right to benefit from the proceeds. Angela’s right to any remaining sale proceeds is not enlivened until the death of Dorothea. In these circumstances, it is clear that Angela had no right or interest in the property before it was sold. The right of Dorothea to sell the property for best market price and use the sale proceeds is not contemporaneous with Angela’s right under the Order.
26 I conclude that the Order does not contain the features of a fiduciary relationship. The Order does not create an undertaking or agreement. Dorothea is not compelled by the Order to act for or on behalf of Angela; Angela has no current interest in the proceeds of sale; Dorothea is entitled to use the proceeds of sale wholly for her own benefit within the terms of the Order.
27 Accordingly, I conclude that the Order does not contain the critical features of a fiduciary relationship as stated by Mason J.
28 As the law stands, I accept that the Order cannot be the basis for a fiduciary relationship existing between Angela and Dorothea.
29 While it is unnecessary, for completeness, I will consider whether a fiduciary duty can exist.
Fiduciary duty
30 Mr Harvey submitted that the alleged fiduciary duty is unknown to the law. Counsel for Angela did not address this issue.
31 In Breen v Williams (Medical Records Access case),[6] Gaudron and McHugh JJ discussed fiduciary obligations, and said:
“In this country, fiduciary obligations arise because a person has come under an obligation to act in another's interests. As a result, equity imposes on the fiduciary proscriptive obligations - not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. If these obligations are breached, the fiduciary must account for any profits and make good any losses arising from the breach. But the law of this country does not otherwise impose positive legal duties on the fiduciary to act in the interests of the person to whom the duty is owed. … .”[7]
[6](1996) 186 CLR 71
[7](ibid) at paragraph [113]
32 There are two recognised fiduciary duties: the duty to avoid a conflict of interest, and the duty not to profit or benefit from the fiduciary obligation without full disclosure and consent. The pleading in paragraph 10 does not plead a recognised fiduciary duty. Dorothea was not in a position of conflict of interest, because Angela’s interest in the proceeds of sale does not arise until Dorothea’s death. By contrast, Dorothea had an immediate interest in obtaining best market price and using the proceeds of sale. There can be no conflict between the two – as the interests are not contemporaneous. There was no allegation that Dorothea wrongly or improperly profited from the alleged fiduciary relationship; at all times, Dorothea was entitled to sell the property and use the proceeds from the sale of the property pursuant to the Order.
33 On the basis of my reasoning, the Order cannot be the basis of a fiduciary relationship and its consequential duties. I accept the fiduciary duties are unknown to the law. The plaintiff has no real prospect of success on this cause of action. Thus, there should be summary judgment for Dorothea on this cause of action.
Breach of the Order
34 Mr Gillies submitted there was a further cause of action pleaded, namely, a breach of paragraphs 5 and 6 of the Order. Counsel did not address this cause of action in his written submissions, but addressed it orally.
35 The relevant paragraphs of the Order are:
“5.That the defendant take all reasonable steps to sell the land described in Certificates of Title Volume 8327 Folio 323, Volume 5623 Folio 501 and Volume 3033 Folio 409 at best market price as soon as practicable.
6.The defendant is at liberty to retain the proceeds of the Sale (less commission and statutory charges) and use such proceeds for accommodation costs and living, medical, legal and incidental expenses.”
36 In summary, Angela pleaded that Dorothea breached the Order, in that she sold the land for undervalue and, as a result, Angela has suffered loss and damage.
37 I was referred to no authority to support the submission that breach of an order of the Court gives rise to a cause of action which sounds in damages.
38 Section 53 of the County Court Act 1958 provides that the County Court has the same power and authority as the Supreme Court for compelling obedience to, and for punishing disobedience of, any judgment and order made by the Court.[8] Compelling obedience to, and punishing disobedience of, any judgment or order involves a different type of proceeding, but does not include a proceeding for damages. I accept that a breach of a court order does not provide a cause of action.
[8]Section 53 of the County Court Act 1958
39 Mr Gillies relied on s64 of the Civil Procedure Act 2010 and submitted that it was not in the interests of justice to dispose of the case. He submitted that the dispute is of such a nature that only a full hearing on the merits is appropriate. I reject that submission.
40 First, the causes of action pleaded have no real prospects of success.
41 I am required to consider the overarching obligations of the Civil Procedure Act to “facilitate the just, efficient, timely and cost effective resolution of the real issues in the dispute”.
42 Angela and Dorothea have already been involved in a County Court trial before Judge Misso, with an application to re-open Angela’s case to have the judge take a different view of the relief he should grant. That application was unsuccessful.
43 Dorothea was required to seek the removal of Caveat AJ654223F, affecting land known as 543 Casterton-Edenhope Road, Wandin Vale, Victoria in the Supreme Court. Angela declined to execute a Withdrawal of Caveat to be handed over at settlement of the sale of the property. The Summons was heard before the Honourable Justice Almond. On 28 July 2014, his Honour ordered the removal of the Caveat over the property. Whilst acknowledging Almond J was considering a different test, I find the comments of Almond J salient when I consider the interests of justice in this case. Almond J said:
“It seems to me that His Honour’s orders neither expressly or implicitly purport to confer or recognise a proprietary interest in the three titles which comprise the Property. The Property was to be sold. It seems to me that Misso J’s orders give the first defendant rights to any residue from the proceeds of sale, remaining after Dorothea’s death, whether such residue is in the form of real or personal property at that time.
I accept that the language in the principal judgment, the ruling on 1 August and the orders themselves are inconsistent with the position advanced by the first defendant [Angela], whose grounds of claim have now shifted to rely upon Misso J’s orders.
If I am wrong and there is a serious question to be tried, I’m not satisfied the balance of convenience favours the maintenance of the caveat until trial of the issues.
In my view, the balance of convenience supports removal of the caveat so as to permit the sale to proceed. There is no evidence to show that Mr Tomkins is anything other than an innocent third party purchaser. Contracts have been exchanged and settlement of the transaction was due to occur on 11 July 2014 and is therefore now overdue. Any further delay will generate expense to Dorothea in the form of interest on loans from the aged care proprietor and potentially on legal expenses and possibly other loans that she has and secondly, may result in enforcement proceedings from the purchaser against Dorothea for breach of contract, with regard to the sale. Each of these would erode Dorothea’s financial position and likely reduce the amount of any residue ultimately available to Ms Cameron.
Finally, in passing, I note that the difference between the sale price and the sworn valuation, after allowing for the savings generated by a direct sale to the tenant amount to less than $35,000. A further dispute over a sum of this order of magnitude is difficult to justify. In all the circumstances, in my view, there should be an order that the caveat be removed.”
44 In the application before me, counsel for Angela submitted that the amount of $35,000 was incorrect. On the evidence before me, I accept the figure of $35,000 is a reasonable estimate of the difference between the actual sale price and the certified Valuation of LMB Linke in this case. I echo Almond J’s concerns as to the costs of continued legal proceedings between these parties. The concept of proportionality of costs must be considered. Given that I grant summary judgment in favour of the defendants pursuant to s63 of the Civil Procedure Act, it is not necessary for me to consider the alternative relief sought under Rule 23.02 of the County Court Civil Procedure Rules in this case.
45 In view of my findings in relation to the summary judgment application brought by Dorothea in respect to the causes of action pleaded by Angela, I enter judgment for the Tomkins. The Tomkins can be under no liability where Dorothea has been found to be under no liability in this case. I find there is no fiduciary relationship or duty between Angela and the Tomkins.
46 For completeness, I will deal with the submissions made by Mr Gillies against the Tomkins. I reject the submission that the Tomkins are fixed with the knowledge of the solicitor in respect of the previous proceeding between Angela and Dorothea. The Tomkins employed Stratmann & Co Lawyers in respect to the transfer of land. The same solicitors had acted for Dorothea in the previous proceeding between her and Angela. Mr Gillies relied upon Sargent v ASL Developments Ltd,[9] and in particular a passage by Mason J at 658. However, Sargent v ASL Developments Ltd was confined to the knowledge of the solicitor in the course of, and material to, the transaction in which the solicitor was employed. It does not apply in this case. Here, the solicitor acted for the Tomkins in respect to the transfer of land. The solicitor’s knowledge gained in the course of, and material to, the previous proceeding is unrelated the transfer of land to the Tomkins.
[9](1974) 131 CLR 634
47 On the basis of the foregoing reasoning, I am satisfied that Angela’s claims have no real prospects of success.
48 I order there be summary judgment for the first to the fourth defendants on the summary judgment application.
49 I will hear the parties on costs.
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