Colony Constructions Pty Ltd v Zain Homes Pty Ltd - [2023] VSC 529

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST
PRACTICE COURT

S ECI 2023 03429

COLONY CONSTRUCTIONS PTY LTD	Plaintiff
v
ZAIN HOMES PTY LTD	First Defendant
(and others according to the Schedule attached)

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JUDGE:	Ginnane J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 August 2023
DATE OF JUDGMENT:	29 August 2023
CASE MAY BE CITED AS:	Colony Constructions Pty Ltd v Zain Homes Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 529

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REAL PROPERTY – Caveat – Contract of sale – Caveat claiming an implied, resulting or constructive trust and an estate or interest as a chargee – Serious question to be tried as to whether contract of sale rescinded – Caveat not claiming an estate or interest under the contract of sale – Whether caveator had an equitable lien or charge over deposit paid to vendor – Caveat removed on condition that deposit held in trust account – Transfer of Land Act 1958 s 90(3).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Harding	Aitken Partners
For the Defendants	Mr T Fitzpatrick	Merhi Lawyers

HIS HONOUR:

Colony Constructions Pty Ltd applies to remove a caveat lodged by the first defendant on the title of a property at Kilmore.[1] The caveator, Zain Homes Pty Ltd, the first defendant, to which I will refer as the defendant, is the purchaser under a contract of sale dated 18 February 2022 on a twelve-month settlement. The purchase price was $727,270 of which a deposit of $77,000 was paid. The caveat was lodged on 9 March 2023. It records the grounds of the claim as an implied, resulting or constructive trust. The estate or interest claimed by the caveat is an interest as chargee.
[1]This is a revised version of oral reasons for judgment given on 29 August 2023.

In a caveat removal application, the issues are as stated by Warren CJ in Piroshenko v Grojsman:[2] whether the caveator, that is the defendant, has established that there is a serious question to be tried, that it has the estate or interest which it claims in the land and secondly, whether the balance of convenience favours the maintenance of the caveat until trial. The onus is on the caveator to establish these matters.
[2](2010) 27 VR 489.

The serious question to be tried therefore must arise in respect of the estate or interest in land claimed in the caveat, which in this case is an interest as a chargee, with the grounds of the claim being an implied, resulting or constructive trust.

The defendant’s objective, as submitted by counsel, is to exercise its rights under the contract and obtain settlement. A planning permit has been issued in respect of the property which allows partial demolition of an existing building and the building of six units.

Two notices of default dated 20 February 2023 were served in respect of the contract. The vendor's notice was a Notice of Default and Rescission. The default was…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] VSC 529
Decision Date: 29 August 2023

CaseChat Overview and Summary

Colony Constructions Pty Ltd brought a case against Zain Homes Pty Ltd, seeking the removal of a caveat lodged by Zain Homes over a property. The dispute centres on the validity and nature of a contract of sale between the parties, with Zain Homes asserting an interest in the property based on an alleged trust or charge over a deposit they had paid. The matter was heard in the Supreme Court of Victoria.

The primary legal issues addressed by the court included whether there was a serious question to be tried regarding the contract of sale between the parties being rescinded, and whether Zain Homes had established a sufficient equitable interest or charge over the property that warranted maintaining the caveat. The court had to determine if Zain Homes' claims under the contract of sale, or otherwise, were sufficient to justify the continuation of the caveat under the Transfer of Land Act 1958.

The court found that there was no serious question to be tried as to whether the contract of sale was rescinded. Furthermore, Zain Homes did not claim an estate or interest under the contract of sale, but rather sought to establish an equitable lien or charge over the deposit paid to the vendor. The court concluded that Zain Homes had not demonstrated any equitable interest or charge over the deposit that would justify maintaining the caveat. Consequently, the court ordered the caveat to be removed on the condition that the deposit be held in a trust account, in accordance with section 90(3) of the Transfer of Land Act 1958.

The final orders of the court included the removal of the caveat from the property register, with the deposit held in a trust account until the resolution of any further disputes between the parties.

Orders