DAVIES v DAVIES [No 2] - [2010] WASCA 151

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: DAVIES -v- DAVIES [No 2] [2010] WASCA 151

CORAM: NEWNES JA
MURPHY JA

HEARD: 10 MAY 2010

DELIVERED : 3 AUGUST 2010

FILE NO/S: CACV 126 of 2009

BETWEEN: KEVIN STEPHEN DAVIES
Appellant
AND
JILLIAN MAY DAVIES
First Respondent
THE REGISTRAR OF TITLES
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :KENNETH MARTIN J
File No  :CIV 2588 of 2009

Catchwords:

Practice and procedure - Injunction - Balance of convenience - Application to extend operation of caveat or for injunction to restrain respondent from dealing with land refused by primary judge - Alleged constructive trust in 1995 - Appellant's prospects of success weak - Failure by appellant to pursue underlying claim for long period - Turns on own facts

Legislation:

Administration Act 1903 (WA), s 14
Civil Judgments Enforcement Act 2004 (WA), s 15
Transfer of Land Act 1893 (WA), s 138B, s 138D(1)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant:     In person
First Respondent           :     Ms N M E Breach
Second Respondent      :     No appearance

Solicitors:

Appellant:     In person
First Respondent           :     Chris Baker & Associates
Second Respondent      :     No appearance

Case(s) referred to in judgment(s):

Bashford v Bashford [2008] WASC 138
Davies v Davies [2009] WASCA 238
Gangemi v Gangemi [2009] WASC 195
Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95
Ramage v Waclaw (1988) 12 NSWLR 84

JUDGMENT OF THE COURT: This is an appeal against a judgment of Kenneth Martin J of 16 October 2009, in which his Honour dismissed the appellant's application to extend the operation of a caveat over certain land and an alternative application by the appellant for an injunction restraining the first respondent from transferring, encumbering or otherwise dealing with the land until further order.

Background

The application arose out of a dispute relating to the administration of the estate of the appellant's late father, Sidney Davies, who died intestate in 2003. In view of the parties' common surname, we will refer to the late Sidney Davies as Sidney. The appellant is Sidney's son by his first marriage. There are four other children of that marriage. The first respondent was the wife of Sidney by his second marriage.
Before turning to the relevant facts, we should note that it was common ground that, pursuant to s 14 of the Administration Act 1903 (WA), the first respondent was entitled to the sum of $50,000 from Sidney's estate (and interest at 5% on that sum from the date of death of Sidney until payment) and to one-third of the residue. The appellant and his siblings were entitled to the remaining two‑thirds of the residue in equal shares.
The material facts, as they appear from the affidavits filed in relation to the application before the primary judge, are as follows. Sidney and the first respondent were married in December 1985. By the beginning of 1995, they were the owners, as joint tenants, of a property in Gnobar Way, Mullaloo in which they lived; a property in Dampier Avenue, Mullaloo; and a property in Oleander Way, Kallaroo. At that time they were experiencing marital difficulties and agreed to separate. In that connection, they purchased a property in Coyle Road, Craigie which was registered in the first respondent's name alone, although the documents relating to a loan obtained for the purchase were signed by both Sidney and the first respondent.
At about the same time, a draft separation agreement was prepared by solicitors, on Sidney's instructions. The draft agreement provided for the transfer of the first respondent's interest in a company and a family trust to Sidney and the assumption by Sidney of any taxation or other liabilities of the first respondent in relation to those entities, and for a division of household furniture and effects. Relevantly for present purposes, the draft agreement also provided that the first respondent was to transfer to Sidney her interest in the Gnobar Way, Dampier Avenue and Oleander Way properties, and Sidney was to transfer to the first respondent any interest he had in the Coyle Road property. Under the draft agreement Sidney was to indemnify the first respondent for any liability she had under the mortgages over the various properties, including the Coyle Road property.
The draft agreement was never executed. The first respondent says she objected to its terms when Sidney showed it to her and he did not pursue the matter thereafter. The first respondent says that she and Sidney reconciled shortly afterwards, although they maintained separate residences.
The appellant, on the other hand, says there was no reconciliation and maintains that the draft agreement reflected the terms of an agreement made between the first respondent and Sidney. He alleges that Sidney complied with the terms of the draft agreement, but the first respondent failed to transfer the Gnobar Way, the Dampier Avenue or the Oleander Way properties to Sidney.
Some four years later, in or about March 1999, the Oleander Way property was sold. Shortly afterwards, in or about May 1999, Sidney and the first respondent purchased a property in Dunsborough as joint tenants and built a house on it. Upon Sidney's death in 2003, the Dampier Avenue property, the Gnobar Way property and the Dunsborough property passed to the first respondent by survivorship. At the time of the hearing before the primary judge, all but the Gnobar Way property had been sold by the first respondent. The Dunsborough property was sold on 29 March 2004 and the Dampier Avenue property on 18 February 2005. The first respondent sold the Coyle Road property on 19 July 2004. Shortly after Sidney's death in 2003, the first respondent commenced living in the Gnobar Way property.
The appellant contends that the first respondent held the Gnobar Way property on constructive trust, or pursuant to an equitable estoppel, initially for the benefit of Sidney, and then, after Sidney's death, for the benefit of Sidney's intestate estate. The appellant says that a constructive trust arose by reason of the purchase by Sidney of the Coyle Road property for the first respondent on the basis that Sidney would have the sole benefit of the Gnobar Way property. (The claim now pleaded by the appellant is referred to in [22] below.)
In January 2005, a solicitor, Mr Richard Cullen, was appointed as administrator of Sidney's estate. Letters of administration were granted to Mr Cullen on 30 November 2005. On 25 January 2006, Mr Cullen (as administrator of Sidney's estate) lodged a caveat over the Gnobar Way property claiming an estate in fee simple on the basis that the first respondent held the property on trust for the estate.
It appears that, in or about early April 2006, Mr Cullen was served with a notice under s 138B of the Transfer of Land Act 1893 (WA) notifying him that the caveat would lapse at the expiration of 21 days unless an order was obtained extending the operation of the caveat. By an application dated 12 April 2006, Mr Cullen applied for an extension of the caveat. The application was supported by an affidavit of Mr Cullen sworn the same day.
In that affidavit, Mr Cullen said, among other things, that one of the major tasks he had as administrator was to decide if he should issue proceedings to determine whether the Gnobar Way property was an asset of the estate. He said he had not yet made up his mind whether to issue the proceedings and, in order to enable him to make that decision, he had requested the first respondent and the children of Sidney, including the appellant, to give discovery of documents. Mr Cullen said it was important that the caveat be maintained at least until after discovery of documents had been given and he had decided whether or not to institute proceedings.
On 13 April 2006, an order was made by the court extending the operation of the caveat until further order.
A considerable period of time then elapsed until, on 17 February 2009, Mr Cullen wrote to the first respondent and the children of Sidney informing them that he had decided not to commence proceedings on behalf of the estate. Mr Cullen referred to the discovered documents produced by the first respondent and Sidney's children and to various witness statements and other documents he had obtained. He noted that the 1995 agreement upon which the claim of a constructive trust was based was not signed and there was little or no evidence to suggest that its terms had been accepted by the first respondent. Mr Cullen said he had considered at length all the facts surrounding the 1995 agreement and had come to the conclusion that he should not make a claim on behalf of the estate. He said he had sought opinion from counsel who was of the same view. Mr Cullen went on, however, to say that if any of Sidney's children wished to pursue such an action they were free to do so, but they would need to take their own advice on the matter.
On 9 April 2009, Mr Cullen wrote to the first respondent and to the children of Sidney reiterating that he did not intend to commence proceedings in relation to the Gnobar Way property and adding that he had received legal advice that any one or more of the parties was able to institute proceedings in their own names without the need for his further involvement. He said he was prepared to consent to an order that any of the parties may institute their own proceedings and he was prepared to be bound by the order. He said he proposed to remove the caveat over the Gnobar Way property.
On 21 May 2009, the appellant lodged a caveat claiming 'an estate in fee simple as an equitable claim to co‑ownership'. In a statutory declaration lodged with the caveat, the appellant stated that as the administrator had declined to commence legal proceedings, he intended to commence legal proceedings in his own name on behalf of the estate for a declaration that the first respondent held the land on constructive trust for the estate and an order that she transfer it to the representative of the estate.
Four days later, on 25 May 2009, Mr Cullen withdrew the caveat he had lodged.
On 27 August 2009, upon the first respondent's application, the Registrar of Titles issued to the appellant a notice under s 138B of the Transfer of Land Act, notifying the appellant that the caveat would lapse on 16 September 2009 unless an order of the court was obtained extending the operation of the caveat.
By an originating summons dated 10 September 2009, the appellant applied for such an order. In the alternative, he sought an injunction restraining the first respondent from transferring, encumbering or otherwise dealing with the property until an order was made in proceedings which the appellant intended to commence to determine his claim for an interest in the property on behalf of the estate.
An interim order was made by the primary judge extending the caveat until the substantive hearing of the application. The originating summons came before his Honour for substantive hearing on 16 October 2009.
In the meantime, on 6 October 2009 the appellant had commenced proceedings against the first respondent in the general division of the court in action CIV 2726 of 2009 claiming, amongst other things, a declaration that the first respondent held the Gnobar Way property on constructive trust for the administrator of Sidney's estate and consequential relief. The other children of Sidney and Mr Cullen, as administrator, were joined as defendants to the action.
The appellant pleaded the alleged agreement between Sidney and the first respondent in the following terms:
28.In furtherance of the separation, [Sidney] and the first defendant orally agreed to divide their real property in the following manner:
(a)a property acceptable to the first defendant would be purchased in the name of the first defendant solely;
(b)the property purchased would be mortgaged to finance its purchase and the purchase of any other properties purchased but [Sidney] was to be solely responsible for the repayment of the mortgage; and
(c)other properties registered in the joint names of [Sidney] and the first defendant both at that time and in the future would be transferred to, and be owned by [Sidney] alone;
At the hearing on 16 October 2009, the primary judge refused the appellant's application for a further extension of the caveat. His Honour found that the appellant had no arguable claim to an interest in the Gnobar Way property sufficient to sustain a caveat. His Honour noted that the appellant was seeking, in effect, to stand in the place of the administrator to do what the administrator had decided not to do; that is, to have the claimed interest in the property brought into the estate to be administered by the administrator. That did not result, the judge said, in the appellant having a proprietary interest in the property.
The primary judge also dismissed the alternative claim for an injunction. His Honour considered that the appellant's claim of a constructive trust was a weak case, particularly having regard to the purchase by Sidney of the Dunsborough property as a joint tenant with the first respondent in 1999, some four years after the alleged 1995 agreement, and the failure by Sidney to take any steps between 1995 and his death in 2003 to compel the transfer of the other jointly owned properties to him.
On the balance of convenience, the primary judge observed that the caveat lodged by the appellant was, in effect, a replacement of the caveat that Mr Cullen had lodged and then later withdrawn. His Honour said that 'the matter has unsatisfactorily dragged on for too long' (ts 15). Mr Cullen had made a deliberate decision, confirmed by advice from counsel, not to seek to extend the operation of that caveat and not to pursue the claim. It was not suggested that in doing so he had acted other than entirely properly. His Honour said that the existing caveat appeared to be an attempt to re‑run, under the appellant's name, the arguments abandoned by Mr Cullen.
His Honour also noted that this was a 'domestic arrangement' and that the first respondent's ability to deal with the property had been interfered with since January 2006 when the administrator's caveat was lodged. In this regard, his Honour also took into account that the first respondent had recently entered into a contract to sell the Gnobar Way property.
The consequence of the decision of the primary judge was that the caveat lapsed and the contract of sale entered into by the first respondent in respect of the Gnobar Way property could proceed to settlement.
On 30 November 2009, the appellant unsuccessfully sought a stay of the orders made by the primary judge pending the determination of this appeal: Davies v Davies [2009] WASCA 238. In dismissing the application, Pullin JA pointed out that, the caveat having lapsed, no purpose would be served by a stay of the order of the primary judge refusing to extend the operation of the caveat [17]. If the appellant sought to preserve the status quo, it would be necessary to apply to the general division of the court for leave to lodge another caveat pursuant to s 138D of the Transfer of land Act. Pullin JA also concluded that no purpose would be served by interfering with the order of the primary judge dismissing the appellant's application for an injunction [19].
Pullin JA observed that it might be possible to formulate an order under s 15 of the Civil Judgments Enforcement Act 2004 (WA) which would have the same effect as a caveat, but his Honour decided that in view of undertakings offered by the first respondent, no order should be made. The application was therefore dismissed, subject to undertakings by the first respondent that:
1.she would use the funds from the sale of the Gnobar Way property to settle the purchase of the Hocking property; and
2.she would not sell or otherwise encumber the Hocking property unless by order of the court.
The undertakings were expressly given on the basis that the first respondent would be relieved of them if the appeal were dismissed. The appellant in turn gave an undertaking as to damages.
The contract of sale of the Gnobar property subsequently proceeded to settlement and the first respondent used proceeds from the sale to purchase the Hocking property (in accordance with the first undertaking).
The appellant appeals against the order of the primary judge dismissing the application for an extension of the caveat, and alternatively, against his Honour's order dismissing the application for an injunction.

Grounds of appeal

The first, third, fourth and fifth grounds of appeal allege, in effect, that his Honour erred in addressing the question of whether the appellant had or claimed a caveatable interest - ie, an arguable proprietary interest. It is alleged that his Honour erred in that regard on the basis that his Honour considered the question of the appellant's standing to caveat the property by reference to his interest qua beneficiary in having the estate properly administered insofar as it remained to be administered in relation to the constructive trust claim, rather than by reference to his claimed representative status in a derivative action. In this regard, it is alleged, in effect, that the judge misapplied the line of cases which have held that in exceptional circumstances a beneficiary of an estate (or trust) has standing to enforce a chose in action vested in the administrator (or trustee) in his or her own name on behalf of the estate (or trust); see, eg, Ramage v Waclaw (1988) 12 NSWLR 84.
Ground 2 alleges that the judge failed to have regard to all the evidence, in that his Honour's extempore reasons made reference to three affidavits of the appellant, but not to a fourth which was filed.
Ground 6 alleges, in effect, that the judge erred in holding, with respect to the balance of convenience, that the case for the claimed constructive trust appeared to be a weak one, and that in that regard, it was not open to his Honour to determine disputed questions of fact.
Ground 7 also relates to the balance of convenience. It is alleged that the judge erred in finding the balance of convenience favoured the removal of the caveat, and the dismissal of the application for an injunction, insofar as his Honour found that the appellant's caveat was prohibited from lodgement by s 138D(1) of the Transfer of land Act 1893.

Orders sought

The appellant sought to have the orders of the primary judge set aside and to have this court make orders as follows:
1)The appellant have leave to appeal and the appeal be allowed.
2)The orders made in the court below be set aside and the following orders be made instead:
a)it be declared that the appellant's claim to an estate or interest in the land situated at 31 Gnobar Way Mullaloo (Gnobar Property) within the meaning of s 137 had or may have had substance within the meaning of s 138 of the Transfer of Land Act 1893 (WA).
b)alternatively to a) that an injunction ought have been granted by the lower court in favour of the appellant restraining the respondent from in any way dealing with the Gnobar Property.
c)that the First Respondent's undertaking to the Court given on 30^th November 2009 to not sell or otherwise encumber the land situated at 6 St Louise Way, Hocking (Hocking Property), continue until further order of this Court of Appeal or the General Division of the Court.
d)that the balance of the proceeds of sale of the Gnobar Property (after the purchase of the Hocking Property) be paid into Court, pending the outcome of this appeal.
e)that the First Respondent account to the Appellant for the proceeds of sale of the Gnobar Property.
f)that the First Respondent pay equitable compensation or damages to the Appellant.
g)that the First Respondent pay interest to the Appellant pursuant to section 32(1) of the Supreme Court Act 1935 on any sum awarded at the rate of 6% per annum or at such other rate as this Honourable Court may think fit from the date of sale of the Gnobar Property until judgment.
h)the respondent pay the appellant's costs of CIV2588 of 2009 to be taxed in default of agreement.
i)alternatively to d) that the costs of CIV2588 of 2009 be costs in the main action CIV2726 of 2009.
3)The respondent pay the appellant's costs of CACV126 of 2009 to be taxed in default of agreement.
4)Alternatively to 3) that the parties to CACV126 of 2009 bear their own costs.
5)Alternatively to 4) that costs of CACV126 of 2009 be costs in the main action CIV2726 of 2009.

The disposition of the appeal

It is convenient to mention ground 2 at the outset. In our view, that ground has not been established. We are not satisfied that his Honour's failure, in the extempore reasons, to refer to the fourth affidavit signifies that his Honour disregarded that evidence - particularly where it is clear from the transcript that his Honour records the admission of the evidence. In any event, the appellant contends that the significance of the alleged oversight is that the judge erred in relation to his findings the subject of appeal in grounds 1, 3, 4 and 5. For the reasons indicated below, even if error were established on those grounds, the appellant has not established that the appeal should succeed.
We do not consider that for the purposes of determining this appeal it is necessary to canvass grounds 1, 3, 4, 5 and 7 of the grounds of appeal. That is because, in our view, no error has been shown with respect to ground 6, and the apparent weakness of the appellant's case, together with other factors referred to by his Honour which are not challenged, are capable of supporting the conclusion that the appellant's applications were properly dismissed by reference to considerations relevant to the balance of convenience. Even if the appellant were to be successful on the other grounds (and it is unnecessary to express any view as to that), it was open to his Honour to conclude that the remaining considerations relevant to the balance of convenience, including the weakness of the appellant's case, did not justify the maintenance of the caveat, or the grant of an injunction.
The constructive trust is alleged to have arisen in consequence of a common intention, or agreement, in 1995 by or under which Sidney and the first respondent would separate and divide their respective entitlements to matrimonial properties. There was no executed agreement to that effect. A draft had been prepared but was never signed by Sidney or the first respondent. In the ensuing eight years up to his death in 2003, no steps were taken by Sidney in purported pursuance of any agreement of the kind now alleged, by the appellant, to have the Gnobar Way property, the Dampier Avenue property or the Oleander Way property transferred from joint names into his name. Moreover, in 1999, four years after the alleged common intention or agreement, the Dunsborough property was purchased by Sidney and the first respondent in joint names, it remained thereafter in joint names, and they built a house on it. So not only were existing properties not transferred to Sidney, but in 1999 a new property was purchased, in joint names and a house was established on it.
It was open to his Honour, in these circumstances, to conclude that the claim for a constructive trust (or an equitable estoppel) appeared to be a weak one. A preliminary assessment of the prospects of success of such a claim for the purposes of considering the balance of convenience is appropriate: Bashford v Bashford [2008] WASC 138 [104]. As to the balance of convenience generally, see Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95 [20] ‑ [21], [29]; and Gangemi v Gangemi [2009] WASC 195 [45]. Contrary to the appellant's allegation, his Honour's assessment did not involve the determination of any disputed issues of fact.
His Honour also had regard to the fact that the property had been caveated for the three preceding years by the administrator's caveat, thereby interfering with the first respondent's ability to deal with a domestic property, against a background that 14 years had passed since the alleged events giving rise to the claim without any advancement or resolution of the underlying claim alleged by the appellant in the caveat.
In our view, it was and is open to conclude, having regard to these discretionary considerations alone, that the appellant had not shown that the balance of convenience, bearing in mind the apparent weakness of the appellant's claim, justified the maintenance of the caveat or the grant of an interlocutory injunction.

Conclusion

We would dismiss the appeal.