CFHW Pty Ltd v Burness

Case [2014] VSC 451


IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2014 3812

CFHW PTY LTD (ACN  601 239 196)
(as trustee of the Watson Family Trust)
Plaintiff
v  

PAUL ANDREW BURNESS

and

MATTHEW JAMES JESS
(as trustees of the bankrupt estate of Robert Noel Watson)

and

REGISTRAR OF TITLES

First Defendant

Second Defendant

Third Defendant

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JUDGE:

Warren  CJ

WHERE HELD:

Melbourne

DATE OF HEARING:

18 August 2014

DATE OF JUDGMENT:

16 September 2014

CASE MAY BE CITED AS:

CFHW v Burness

MEDIUM NEUTRAL CITATION:

[2014] VSC 451

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REAL PROPERTY –  Removal of caveat  – Whether caveators established a prima facie case that they have the estate or interest which they claim in the land – Where interest claimed is a constructive trust resulting from loan moneys – No prima facie case – Balance of convenience favourable to the  removal of caveat – Transfer of Land Act 1958 s 90(3).

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APPEARANCES:

Counsel Solicitors
For the Plaintiff Mr J F Styring Robert James Lawyers
For the First and Second Defendants Mr J Kohn Beck Legal
For the Third Defendant No appearance

HER HONOUR:

  1. This application is brought by the original plaintiff, Comat Pty Ltd (‘Comat’), to remove a caveat lodged by the first and second defendants, Messrs Paul Burness and Matthew Jess as trustees  (‘the trustees’) of the bankrupt estate of Mr Robert Noel Watson.  The third defendant, the Registrar of Titles, did not participate in the hearing.  As will become apparent, Comat sought to amend their Originating Motion to substitute CFHW Pty Ltd (‘CFHW’) as the plaintiff in this proceeding.[1]

    [1]All references to the ‘plaintiff’ refers to CFHW, references to ‘Comat’ are references to Comat Pty Ltd.

  1. The plaintiff, by an Amended Originating Motion, seeks an order removing the caveat pursuant to ss 90(3) and 103(1) of the Transfer of Land Act 1958 (‘the Act’). In addition the plaintiff seeks an order under s 51(2)(b) of the Trustee Act 1958 that the property subject to this proceeding vest in a new entity called CFHW. 

Background

  1. Comat was incorporated on 2 July 2002 and is the trustee of the Watson Family Trust (‘the Trust’).  The Trust was established as a discretionary trust by deed on 12 July 2002.  Mr Watson and Ms Helen Mary Watson are named as the specified beneficiaries and the Watson Group Australia Pty Ltd is listed as an additional member of the class of general beneficiaries.  Mr Watson was the sole director of Comat from its incorporation until he was declared bankrupt on 30 April 2013. 

  1. On 2 September 2002 Comat was registered as the proprietor of 6/37 Domain Street, South Yarra (‘the property’).  It appears the property was originally purchased in Mr Watson’s name and then registered to Comat.  The property is subject to a registered mortgage by Westpac.

  1. In light of Mr Watson’s financial difficulties, on 8 April 2013 Comat passed a resolution which provided that:

In the event that the current Director is made bankrupt as…

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CFHW Pty Ltd v Burness [2014] VSC 451
Case
[2014] VSC 451
Decision Date

CaseChat Overview and Summary

CFHW Pty Ltd, a developer, sought the removal of a caveat lodged by Burness, a former director and shareholder, over certain land. The dispute centred on the enforceability of the caveat in light of the developer's assertion that it had satisfied the loan obligations upon which the caveat was based. The case was heard in the Supreme Court of Victoria.

The central issue before the court was whether the caveators had established a prima facie case that they held the estate or interest claimed in the land. Specifically, the court had to determine if the caveators had demonstrated a reasonable cause of action for the enforcement of a constructive trust arising from the loan moneys provided to the developer. The court also considered whether the balance of convenience favoured the developer's application to remove the caveat.

The court found that the caveators had not established a prima facie case for their claimed interest in the land. The evidence did not support the existence of a constructive trust, as the loan had been repaid and the developer had discharged its obligations. The court concluded that the balance of convenience favoured the developer, given the significant costs and delays associated with the continued existence of the caveat. Under the Transfer of Land Act 1958, section 90(3), the court ordered the removal of the caveat.

The court's final orders included the removal of the caveat and a direction that Burness pay the developer's costs of the application. The developer was granted the relief it sought, and the path was cleared for the development project to proceed.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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