Dolan v Dolan

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0108

SHANNAN CHRISTINA DOLAN	Applicant
and
CHRISTINE KAY DOLAN	First Respondent
AND
REGISTRAR OF TITLES	Second Respondent

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JUDGES:	NIALL, OSBORN and KAYE JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	11 May 2023
DATE OF JUDGMENT:	8 June 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 136
JUDGMENT APPEALED FROM:	[2022] VSC 543 (Ierodiaconou AsJ)

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REAL PROPERTY – Caveat – Associate judge refused to order removal of caveat – Whether associate judge conducted a trial of the originating motion – Nature of order made the true issue – Order did not finally determine rights – Order interlocutory – No issue estoppel or res judicata arises.

REAL PROPERTY – Caveat – First respondent deposed to agreement in identical form as in proposed draft pleading – Whether paragraph in affidavit inadmissible on basis of being a pleading – Evidence relevant and on its face came from deponent’s personal knowledge – Paragraph capable of conveying contents of a conversation – Other evidence for agreement – Applicant’s counsel made concession on issue to which paragraph related.

REAL PROPERTY – Caveat – Associate judge accepted undertaking from first respondent – Whether associate judge erred in accepting undertaking where no evidence undertaking would meet ongoing liabilities – Applicant declined to engage on adequacy of undertaking at hearing – Applicant cannot subsequently complain amount was inadequate or associate judge should have rejected undertaking – Application to adduce fresh evidence that mortgage in arrears rejected – Application for leave to appeal refused.

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Counsel
Applicant:		Mr LEP Magowan
First Respondent:		Mr MA Taylor
Second Respondent:		No appearance
Solicitors
Applicant:	Aitken Partners
First Respondent:	Ramsden Lawyers
Second Respondent:	Land Use Victoria

NIALL JA
OSBORN JA
KAYE JA:

This application for leave to appeal is from a decision of an Associate Judge of the Court to refuse to order the removal of a caveat on a title to residential property in Lorne, Victoria. The underlying dispute is between Shannan Dolan (‘Shannan’ or ‘the applicant’) and her mother Christine Dolan (‘Christine’ or ‘the respondent’).[1]
[1]For convenience first names are used in these reasons.
Shannan is the sole registered proprietor of the property and wishes to sell it. Christine has lived in the property since construction of a house on the land was completed in late 2003 to early 2004. Between that time and 2006, she lived in the property with Shannan and from 2006 she has lived there alone or with her son. The property was created by subdivision of a larger block. Christine was a registered proprietor of the parent title and transferred her interest to Shannan in circumstances that are in dispute. Christine contends that she holds 93 per cent of the beneficial interest in the property pursuant to a common intention constructive trust.[2]
[2]Alternatively, she claims a 65 per cent interest pursuant to a resulting trust.
Fearing that Shannan would sell the property, Christine lodged a caveat. Shannan applied for an order to remove the caveat, which Christine opposed on the basis of her claim to beneficial ownership. The associate judge refused the application to remove the caveat on the condition that Christine undertake to pay an amount to cover mortgage payments and outgoings and to commence a proceeding in the Court to allow the determination of her claim to beneficial ownership.
Shannan seeks leave to appeal. The application for leave to appeal must be refused. Our reasons follow.

The course of the proceeding

On 15 April 2021, Christine lodged the caveat citing as the grounds of claim ‘implied, resulting or constructive trust’ and seeking absolute prohibition on dealing with the title.
On 10 May 2022, Shannan commenced a proceeding by originating motion in the Trial Division of this Court seeking the removal of the caveat. Amongst other things she also sought a direction that Christine ‘vacate the Property such that it can be sold’, a declaration that Christine ‘has trespassed’, and damages for trespass or alternatively mesne profits.
In support of the originating motion and a summons, Shannan swore an affidavit on 9 May 2022 in which she relevantly deposed that:
(a)she ‘contributed funds to the purchase of the Land’;
(b)she ‘built a residential house on the Property’;
(c)she obtained a loan from Bendigo Bank secured by mortgage over the property to fund construction of a house;
(d)she signed a building contract for the construction of the house;
(e)once completed, she lived with Christine at the house from late 2003 or early 2004 until April 2006 when she moved out. Christine continued to live there;
(f)between November 2004 and 2006, both she and Christine contributed to repayment of the loan through a joint account. After she moved out in April 2006, Christine paid the interest on the loan together with rates and other charges until around 15 April 2021; and
(g)there is no lease between Shannan and Christine.
In response to Shannan’s application to remove the caveat, Christine’s solicitor affirmed an affidavit on 25 July 2022 in which he conveyed his instructions that Christine was unwell but had instructed him to oppose the removal of the caveat and annexed a draft statement of claim (‘the proposed pleading’) which it was said would either be filed as a counterclaim to the originating motion or in a separate proceeding.
In the proposed pleading Christine alleges that:
(a)in early 1998 she separated from her husband, had approximately $15,000 in savings, had the care of her son and expected to receive a substantial settlement from the sale of the matrimonial home and began looking for land on which to construct a home;
(b)in 1998 she agreed with William Nicholas Ivens (‘Mr Ivens’) to buy the parent title and entered in to a contract to purchase the land for $110,000;
(c)in late 1998 she received $135,000 by way of a property settlement following the separation from her husband and Shannan received $20,000 from her parents;
(d)she and Shannan agreed that Shannan would invest the $20,000 into a house in which the family would reside and that when the house was sold she would receive an amount equal to her proportionate contribution to the land purchase, house construction and fit out;
(e)the parent title was acquired, subdivided and Christine arranged and paid for the construction of the house;
(f)Christine made inquiries with the Commonwealth Bank of Australia to secure a loan but was unable to do so without a guarantor;
(g)thereafter, Christine approached Mr Michael Brennan of Bendigo Bank, who advised Christine that if she transferred her interest in the land to Shannan, a loan could be secured in Shannan’s name on financially beneficial terms;
(h)Christine and Shannan had the common intention that the parent title and property would be transferred to Shannan but the parent title, property and house would continue to be beneficially owned by Christine; and
(i)Christine organised and funded the purchase of the land, construction of the house and repayment of the loan obtained in Shannan’s name.
Christine pleads that:
(a)based on the common intention, Shannan holds the property on trust as to 93 per cent for Christine and 7 per cent for Shannan; or
(b)alternatively, Shannan holds the property on a resulting trust as to 65 per cent for Christine and 35 per cent for Shannan; and
(c)Christine and Shannan are co-owners within the meaning of that term in s 222 of the Property Law Act 1958.
The prayer for relief in the proposed pleading seeks declarations as to the existence of either the common intention constructive trust (on a 93/7 split or such other shares as the Court may find) or resulting trust (on a 65/35 split or such other shares as the Court may find) and, pursuant to ss 225 to 232 and 234C of the Property Law Act 1958, the sale of the property and the division of the net proceeds in accordance with the beneficial interests determined by the Court.
Although the above synopsis is sufficient to convey its effect, for reasons that will become apparent it is necessary to set out verbatim three paragraphs of the proposed pleading:
8.       In or around late 1998:
(a) the plaintiff received the sum of $135,000 by way of settlement of her interests in property owned jointly by her and Mr Dolan (‘Property Settlement’); and
(b) the defendant received $20,000 from the plaintiff and Mr Dolan’s joint property (‘Compensation’) in recognition of the receipt of $5,000 some years earlier by the plaintiff and Mr Dolan on behalf of the defendant, being compensation for a horse riding accident.
9.       Upon the defendant’s receipt of the Compensation:
(a)      the plaintiff said words to the defendant to the effect that:
(i)      she should put the $20,000 away so she didn’t blow it;
(ii) the plaintiff intended to build a house for the family to reside initially and then for resale in the short to medium term (‘House’);
(iii) the defendant should invest the Compensation into the House so that she would have something for later in her life;
(iv) when the plaintiff sold the House the defendant would receive the money back as a percentage of the net proceeds of sale equal to the percentage that the Compensation made up of the total costs of and related to:
(A)creation of the Property by purchase of the Land and its subdivision;
(B)     preparation and construction of the House; and
(C) purchase and installation of whitegoods, floor coverings, window coverings, heating, lighting upgrades, furniture, and exterior paths, landscaping and driveway (‘Fitout’).
(b)     the defendant agreed.
…
25.     Following her receipt of the Brennan Advice, the plaintiff:
(a)      discussed the Brennan Advice with the defendant;
(b)     proposed to the defendant (‘Plaintiff’s Proposal’) that:
(i)the Land, the future subdivision of the Land and the House would continue to be beneficially owned by the plaintiff;
(ii) the plaintiff would however transfer her legal interest in the Land to the defendant for the purposes of the defendant securing the Loan on behalf of the Plaintiff;
(iii) the plaintiff would continue to be responsible for all aspects of the subdivision and the build;
(iv) the plaintiff would be responsible for payment of the Loan and payment of all other aspects of the subdivision and the build not covered by the Loan, save for:
A. the defendant’s contribution of the Compensation which would continue to be on the terms described in paragraph 9 above; and
B. the provision of any amount available to the defendant by way of FHOG,[3] which would be applied to the build in consideration of the Plaintiff otherwise assisting the defendant financially.
[3]First Home Owner Grant.

The facts in greater detail

The acquisition and subdivision of the parent title

By the time of hearing, each party had filed affidavits in which they endeavoured to provide evidence in support of their respective provisions. Christine’s first affidavit deposed to the facts set out in the proposed pleading. There was no cross examination. The following is largely drawn from the associate judge’s recitation of the evidence.
In December 1998, Christine, together with Mr Ivens and his daughter, Emma Louise Ivens (together, ‘the Ivens’) purchased the parent title being a block of land in Toorak Terrace, Lorne with a view to it being subdivided into two lots.[4] It was contemplated that after the subdivision, Christine would retain one block and the Ivens, the other.
[4]Certificate of Title Volume 07379 Folio 791.
The purchase price for the parent title was $105,000. The Ivens contributed half of the purchase price and became joint owners of a one-half share of the land. Christine also became a registered proprietor of the parent title as to one half.
There is a dispute about the source of the funds to pay Christine’s share of the purchase price. Christine deposes that she contributed $52,500 towards the purchase of her share of the parent title. Shannan deposes that she contributed $20,000 towards the purchase of the parent title. Shannan says this money was held by her parents and stemmed from a compensation payment awarded to her following an accident when she was 13 years old.
In a paragraph of her 12 August 2022 affidavit, that is essentially in the same form as paragraph 9 of the proposed pleading set out above,[5] Christine deposes that she agreed with Shannan that when Christine sold the house, Shannan would receive a percentage of the net proceeds of sale equal to the percentage of the $20,000 contribution of total costs relating to creation of the property by subdivision, preparation and construction of the house, and fit out. This is disputed by Shannan.
[5]The only difference being the affidavit is in the first person and refers to Shannan rather than ‘the defendant’.
In or around 2000, Christine and Mr Ivens commenced plans to subdivide the land (‘the subdivision works’), with the costs of the subdivision to be split between them. Again, there is a dispute between Christine and Shannan as to who paid Christine’s share of these costs. Christine says that the subdivision works were paid by herself, Mr Ivens and his partner Ms Angela Dantino. Shannan deposes that she financially contributed towards some of the subdivision works.
In contemplation of the subdivision being completed, Christine engaged an architect and builder to design and construct a home on the property and obtained a quote for the proposed works.
Christine says that she attempted to obtain a bank loan to fund the construction, but could not do so without a guarantor due to her age and income level. Christine says that she received advice from Mr Brennan of Bendigo Bank at Newcomb that if she transferred her interest in the parent title to Shannan, a loan could be secured in Shannan’s name on financially beneficial terms.
In a paragraph that is essentially identical to paragraph 25 of the proposed pleading, Christine deposes to the basis on which she says there was a common intention that she would retain beneficial ownership of the land and Shannan would receive a proportionate share based on her contribution of $20,000 to the purchase prince.
Christine deposes that Shannan accepted the proposal, and this is denied by Shannan.
Shannan deposes that Mr Brenan told her that Christine was unable to secure a loan due to her income, that Shannan could secure a loan if sub-division was obtained due to her income and that she was eligible for the First Home Owner Grant.
In May 2001, Christine transferred her interest in the parent title to Shannan. Shannan then obtained a loan to fund the proposed house construction using the title as security.
On or about 30 April 2002, the subdivision of the parent title was completed. Title to the subdivided lots was registered in the name of the Ivens and Shannan as tenants in common with two equal shares. By transfer dated 6 May 2002 and registered on 14 March 2003,[6] all the estate and interest in Lot 1, 21 Toorak Terrace, Lorne[7] (‘the property’) was transferred to Shannan.

Construction of the house on the property

[6]It is noted that in the Agreed Summary the date the property was registered was 3 January 2003. Nothing turns on this discrepancy.

[7]Certificate of Title Volume 10652 Folio 998.

Construction on the property commenced in around July 2002.
On 3 December 2002, Bendigo Bank registered a mortgage over the property. A loan was established in the name of Shannan.
The source of the funds to complete the construction is disputed. Christine claims that 93 per cent of the construction costs were funded by ‘personal resources’ and from the loan account, and that she paid all outgoings in relation to the property. On the other hand, Shannan claims the overall build costs were largely drawn from the loan account and denies that Christine utilised her ‘personal resources’ to fund the overall build costs.
In about late 2003 or early 2004, the construction of the house was finished and Christine and Shannan moved into the property and the mortgage was paid out of a joint account. On 6 April 2006, Shannan moved out of the property. Shannan claims this was the result of her relationship with Christine becoming strained, while Christine claims Shannan moved to Melbourne to study. Christine says she continued to pay the mortgage and all outgoings for the next 15 years.
On 9 April 2021, Shannan wrote to Christine telling her that she intended to sell the property and that Shannan owned at least 50 per cent of the property. In response, Christine lodged the caveat on 15 April 2021.

The application to remove the caveat

On 10 May 2022,[8] Shannan filed an originating motion, seeking, amongst other things:
1.The Plaintiff have leave pursuant to rule 45.05 of Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) to commence this proceeding by Originating Motion in Form 5C and that the requirements of rules 5.03(1) and 8.02 of the Rules be dispensed with.
2. An order pursuant to s 90(3) of the Transfer of Land Act 1958 and/or the Court’s inherent and accrued jurisdiction that [the caveat] lodged by the Defendant over the title of the Plaintiff’s property being [the property] be removed from the Register.
3. The Defendant be directed to forthwith vacate the Property such that it can be sold.
4.A declaration that the Defendant has trespassed as against the Plaintiff’s property.
5.Damages for trespass.
6.Alternatively, mesne profits.
[8]The underlined words ‘from the Register’ were added by amendment made on 29 July 2022.
On 22 June 2022, Shannan issued a summons seeking relief in the same form as paragraphs 1 to 3 of the originating motion, together with an order that there be ‘directions for the balance of the relief sought in the Originating Motion’. The summons was made returnable before JR Keith on 26 July 2022. In advance of the return of the summons, Christine filed an affidavit of her solicitor which exhibited the proposed pleading.
At the hearing on 26 July 2022, JR Keith ordered that the Registrar of Titles be added as the second respondent[9] and referred the summons to the associate judge for hearing on 6 September 2022.
[9]The second respondent has had no involvement in relation to the subject matter of this proceeding, though they have been served.
On 2 September 2022, McDonald J made orders referring the originating motion to the associate judge for hearing and determination. The parties were not aware of McDonald J’s orders at the time of the hearing before the associate judge.

The associate judge’s order

Following a hearing on 6 September 2022, on 14 September 2022, the associate judge published reasons for judgment and made an order, the effect of which is in dispute.
The ‘Other matters’ section of the order relevantly provides:
C. The plaintiff made applications by summons filed on 22 June 2022 (the ‘summons’) for removal of [the caveat] and vacant possession. The plaintiff made an additional application orally, and in paragraph 3 of her written submissions filed 31 August 2022, relating to sale of the property and distribution of sale proceeds. I shall refer to all these applications as ‘the plaintiff’s applications’.
D. On 14 September 2022, the Court delivered its judgment in respect of the plaintiff’s applications: see Dolan v Dolan [2022] VSC 543. The orders made below are consequential to this judgment.
E. Paragraphs 1 – 3 of the plaintiff’s originating motion filed on 10 May 2022 have now been determined. Paragraphs 4 – 6 of the plaintiff’s originating motion will need to be determined after determination of the parties’ interests in the subject property, which is the subject of the first defendant’s proposed proceeding. I decline to make directions in this proceeding. It would be premature to do so. The appropriate action is to list this proceeding for a directions hearing on a date to be fixed after commencement of the first defendant’s proposed proceeding.
F. The proper procedure in this Court is that the first defendant’s claims ought be made in a separate proceeding, commenced by writ. Paragraph 5 below requires the first defendant to commence her proposed proceeding within 7 days. The [Rules] apply regarding the filing of a defence. That proceeding will be listed for directions in due course.

The order also records a number of undertakings to the Court given by Christine which were expressed to operate until the determination of the proceeding or further order of the Court or agreement of the parties. Christine undertook to:
(a) use the funds in her Bendigo Bank account number [redacted] (‘Account’) solely for the purpose of and in accordance with these orders;
(b) make payments of $100 weekly to the Account on and from 9 September 2022 to and including 6 January 2023;
(c) make payments of $300 weekly to the Account on and from 13 January 2023;
(d) make direct debit payments of $200 per week to Bendigo Bank account number [redacted] in the name of [Shannan];
(e) pay $100 per week on the plaintiff’s directions towards rates and insurance on the subject property, to be used solely for that purpose by the plaintiff.
The orders relevantly included the following:
1. The plaintiff’s applications are disallowed.
2. Pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic), the first defendant has leave to amend [the caveat] to limit the interest claimed to an implied, resulting or constructive trust as to 93% of the freehold estate in the subject property.
3. The plaintiff pay the first defendant’s costs of, incidental to, and occasioned by the summons filed on 22 June 2022.
4. Save for paragraph 1, the plaintiff’s summons is otherwise dismissed.

The associate judge’s reasons

The associate judge summarised the affidavit evidence and then set out the applicable principles drawn from Lee v Yap[10] and Chan v Liu.[11] The associate judge then summarised the competing submissions.
[10][2021] VSCA 297 (‘Lee’).
[11][2020] VSCA 28 (‘Chan’).
The associate judge determined that Christine had established a serious question to be tried as to the extent of her interest in the property. Christine claimed a beneficial interest in the property pursuant to a common intention constructive trust or alternatively a resulting trust. The associate judge was satisfied that there was sufficient evidence to give rise to a serious question under both alternatives. In relation to the common intention constructive trust, the associate judge concluded as follows:
By her claim, Christine pleads the necessary elements of a common intention constructive trust. I am satisfied there is sufficient evidence to give rise to a serious question in this regard. Christine deposes as to the intention of the parties, alleging there was an agreement. For the purpose of this application, it was unnecessary for Christine to give evidence of the actual words used. I am satisfied that she has given evidence describing the alleged agreement. I decline to rule parts of Christine’s affidavit inadmissible on the grounds that those parts reflect the statement of claim. The claim was prepared on Christine’s instructions. It is premature to make any findings here regarding credibility. That is an issue for trial. Christine’s affidavit evidence is supported by sufficient factual evidence to give rise to a serious question. I refer to the following documentary evidence, already referred to above: Christine’s name was registered on the parent title upon purchase of that land, the property is registered in Shannan’s name with reference to an agreement in the transfer document, and Christine’s bank statements show her contribution to loan repayments. Moreover, it appears to be common ground between the parties that Christine contributed the majority of the purchase price to the parent title, that the mortgagee’s representative stated that Christine could not obtain a mortgage but Shannan could, that Christine made payments into the mortgage loan account over many years and only ceased after Shannan’s demand that she vacate the property, and that Christine has resided at the property for many years.[12]
[12]Dolan v Dolan [2022] VSC 543, [71] (Ierodiaconou AsJ) (citations omitted) (‘Reasons’).
The associate judge further determined that the balance of convenience favoured maintenance of the caveat prior to the determination of the competing interests of Christine and Shannan in the property. In respect of the balance of convenience, the associate judge said:
Christine has long resided at the property, is elderly, and there is evidence that she has invested her life savings into the property. Shannan seeks to end Christine’s occupation of the property and to sell it with a small proportion of the net proceeds ($20,000) to be distributed to Christine prior to resolution of the property dispute. Shannan has not initiated proceedings regarding that dispute. Christine proposes to issue such proceedings. The interest that she claims in the property is very substantial – 93% or alternatively 65%. If the caveat is removed prior to determination of the proposed proceeding, Christine would be severely prejudiced. Christine would be unable to reside in her home of many years and be without the necessary funds to purchase another property. The effect of her own evidence and that of Mr Baldry is that she is unlikely to secure rental accommodation within her home town, namely Lorne. Her evidence is that all her support systems are in Lorne.
On the other hand, Shannan’s evidence is that she is experiencing financial hardship with respect to payment of the mortgage loan account and expenses. I am satisfied that any prejudice in this regard can be met by the undertaking that Christine has proposed. This will have the effect of maintaining the status quo of many years until the proposed proceeding has been determined. To that end, I propose to make orders that Christine commence the proposed proceeding within seven days.[13]
[13]Ibid [77]–[78] (citations omitted).

Proposed grounds of appeal

In applying for leave to appeal the associate judge’s decision, Shannan raises the following proposed grounds of appeal:
Ground 1: The Learned Trial Judge erred in ‘determining’ [dismissing] paragraphs 1–3 of the Originating Motion filed 10 May 2022 at trial (that is, final orders) in circumstances in which:
(a) The Applicant (and her lawyers) were not aware that it was a trial and proceeded on the basis that it was the Summons being heard;
(b) it was wholly inappropriate to try the matter and make final orders in circumstances in which it was necessary to have a trial of contested issues of fact and law; and
(c)      the final orders give rise to issues of estoppel.
Ground 2: The Learned Associate Justice erroneously relied upon:
(a) a pleading being the First Respondent’s Draft Statement of Claim (‘the Proposed Pleading’) [not being evidence]; and
(b)inadmissible affirmed affidavit material, namely paragraphs [36] and [37] of the First Respondent’s affidavit affirmed 12 August 2022,
to determine that there was a serious issue to be tried. The Learned Associate Justice ought to have ruled paragraph [36] (and [37], which purports to show acceptance of paragraph [36]) of the First Respondent’s affidavit inadmissible and that there was no evidence of any ‘agreement’ grounding the alleged constructive or resulting trust, and accordingly ought to have determined the application on that basis (and granted the relief sought by the Applicant).
Ground 3: The Learned Associate Justice erred in failing to determine that, at best, [the] First Respondent would be entitled to a lesser equitable remedy, namely an order requiring Shannan to hold some of the monies realised through the sale of the Property on trust pending the final determination of the dispute (paragraph [81] of the Reasons).
Ground 4: The Learned Associate Justice erred in determining that there was no proper application for summary possession properly before the Court (paragraph [83] of the Reasons), in circumstances in which:
(a)      the orders were sought in the Summons;
(b) the Applicant is and was the registered proprietor of the Property;
(c)      the Applicant alleges that First Respondent is a trespasser; and
(d) there is and was no lawful basis upon which the First Respondent occupies the Property.
Ground 5: Even if the Court is not persuaded that any of the above grounds satisfy the Court that there has been a specific identifiable error in the process of the Learned Associate Justice’s reasoning, the result below is so unreasonable or plainly unjust that it must be inferred that in some way there has been a failure to properly exercise discretion (within the meaning of House v The King).[14]
[14](1936) 55 CLR 499.

Proposed ground 1

The parties’ submissions

Shannan submits that the associate judge took the general referral of McDonald J, of which the parties were not aware, to ‘elevate’ the hearing to a final hearing by way of trial in relation to paragraphs 1 to 3 of the originating motion, rather than a hearing of the summons. Shannan submits:
(a)the parties were not aware that this was what was occurring;
(b)Shannan was not heard in relation to whether the trial was appropriate; and
(c)the hearing was not an appropriate vehicle to finally determine part of Shannan’s rights.
Shannan also submits the determination gives rise to an estoppel.
Christine submits that it was open to the associate judge to deal with the relief sought in the originating motion on a final basis. Shannan’s summons was not one for interlocutory relief but rather sought a final hearing. The outcome was therefore a consequence of the nature of Shannan’s application, rather than prejudice from failure to serve the order of McDonald J. There was no ‘elevation’ of the summons. Christine submits there was no material error in failing to serve the order of McDonald J because the summons was bound to lead to a final hearing and because the authority granted to the associate judge was sufficiently signposted by JR Keith.
As to estoppel, Christine submits that the associate judge’s orders did not give rise to any cause of action or issue estoppel beyond that which ought to be expected in the face of Christine’s yet to be determined assertion of her own rights to the property. Given there was no estoppel, no substantive injustice to Shannan arises.

Analysis and conclusions

It appears that the point which lies behind proposed ground 1 is a perception that because the associate judge conducted a trial of the originating motion, and ‘determined’ paragraphs 1 to 3, an issue estoppel or res judicata arises in relation to the question of whether Christine has a caveatable interest. For a number of reasons, the applicant’s apprehension is misguided and we would refuse leave in respect of this proposed ground.
The question whether the associate judge conducted a ‘trial’ is a distraction. The true issue is the nature of the order made. The associate judge refused to order the removal of the caveat. The order reflecting that conclusion is order 4 dismissing the summons. We have no hesitation in concluding that the order was interlocutory in nature, in the sense that it did not finally determine any rights in the property. As an interlocutory order, it did not give rise to any issue estoppel or res judicata.[15]
[15]See Kuligowski v Metrobus (2004) 220 CLR 363, 373 [21] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ); [2004] HCA 34; Melbourne City Investments Pty Ltd v Leighton Holdings Ltd [2015] VSCA 235, [34] (Tate, Beach JJA and Robson AJA) (‘Leighton Holdings’); Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, 516–18 [20]–[24] (French CJ, Bell, Gageler and Keane JJ), 537 [90] (Nettle J); [2015] HCA 28.
We reach the conclusion that the order is interlocutory for the following reasons.
First, the relief sought by the originating motion was under s 90(3) of the Transfer of Land Act 1958. Section 90(3) permits any person adversely affected by a caveat to ‘bring proceedings in a court against the caveator for the removal of the caveat’ and empowers the court dealing with such an application to ‘make such order as the court thinks fit’.[16]
[16]Piroshenko v Grojsman (2010) 27 VR 489, 497 [11] (Warren CJ); [2010] VSC 240 (‘Piroshenko’); Carbon Black Lab Pty Ltd v Launer [2015] VSCA 126, [36] (Santamaria, Ferguson and McLeish JJA) (‘Carbon Black’); Lee [2021] VSCA 297.
In Carbon Black, this Court approved the following passage from Warren CJ’s judgment in Piroshenko:
Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. In so far as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two-stage test used by the court when deciding whether to exercise its discretion to grant interlocutory injunctive relief. This approach has been established law in Australia since the decision of Lord Diplock in Eng Mee Yong v Letchumanan was approved by the Full Court of the Queensland Supreme Court of Appeal in Re Jorss’ Caveat. This two-stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Register of Titles until trial.[17]
[17]Piroshenko (2010) 27 VR 489, 491 [7] (Warren CJ); [2010] VSC 240 (citations omitted), quoted with approval in Carbon Black [2015] VSCA 126, [35] (Santamaria, Ferguson and McLeish JJA).
The Court in Carbon Black went on to explain that an application for removal of a caveat does not ordinarily present an occasion for the final determination of disputed factual issues or of the claims which the caveat seeks to protect.[18]
[18]Carbon Black [2015] VSCA 126, [38] (Santamaria, Ferguson and McLeish JJA).
It is true that in some cases it may be possible for a judge to determine finally whether a claimed interest in land exists.[19] But the circumstances in which that is so must be rare and confined to those cases where there are no disputed questions of fact and the Court is able to determine the legal question. But that is not this case.
[19]McMahon v McMahon [1979] VR 239, 245–6 (Marks J) (‘McMahon’), and the reference to the decision of Norris J in Simons v David Benge Motors Pty Ltd [1974] VR 585, 591.
Not only is it usual for an application under s 90(3) to be brought by summons or an originating motion and for it to be determined by the two-stage test borrowed from the approach taken in applications for an injunction, but where an arguable case is established, the caveator will generally be required to commence a proceeding (generally by writ) to have the claim to an interest in the land determined. Thus in McMahon, Marks J found there was an arguable interest in the property but ordered the removal of the caveat unless in the meantime the caveator commenced a proceeding by writ seeking a declaration of her interest.[20]
[20]McMahon [1979] VR 239, 246–7.
Where, again as generally will be the case, the claimed interest in land said to support the caveat remains to be vindicated, it will be necessary for that to be done in a properly constituted suit. Given that factual disputes will almost inevitably arise, a writ and pleadings will generally be required. An originating motion, which is used as a vehicle under s 90 of the Transfer of Land Act to determine whether or not the caveat should remain on title, is ill-suited to such a dispute. Where that occurs, there may be no utility in keeping the originating motion on foot: the question of the rights in the property will be determined finally in the action commenced by the caveator. In the event that the interest is established, the conclusion will be reflected in the form of relief. Where the interest is not established, the Court will require the removal of the caveat. That will be the case whether or not the originating motion seeking the removal of the caveat remains on foot.
In this case, the associate judge referred to these principles. Moreover, the structure of the Reasons shows that she applied them. The associate judge considered whether Christine had established a prima facie case of an interest in the property in the form of a resulting or constructive trust, and whether the balance of convenience favoured the maintenance of the caveat.
The originating motion to remove the caveat provided for the occasion for the caveator to establish, to the level of an arguable case, an interest in the property. Once that hurdle was overcome and the balance of convenience favoured the maintenance of the caveat, the relief in the summons (which reflected the relief sought in the originating motion), was refused. Having regard to the nature of the issue before the associate judge, the Reasons and the form of the order, the refusal of relief self-evidently did not determine whether Christine has any equitable interest in the property.
We would add that seeking to use the originating motion to determine an action for mesne profits and damages is inappropriate, with such claims requiring pleadings.
For so long as the caveat remains in place, Christine has the protection of the interest that the claim is afforded by the Transfer of Land Act 1958. As that interest was in dispute, the associate judge ordered that Christine file and serve a writ and statement of claim substantially in the form of the proposed pleading provided to the associate judge. That course was entirely orthodox. Whether the associate judge dismissed paragraphs 1 to 3 of the originating motion or made the orders dismissing the summons was of no moment.
In any event, properly construed, the associate judge’s orders did no more than dismiss the summons. In Recital C of the ‘Other matters’ section, the associate judge defines the summons filed 22 June 2022 seeking the removal of the caveat as ‘the plaintiff’s applications’. Recital D records that the Court delivered its judgment on those applications on 14 September 2022. Using that defined term, order 1 provides that ‘the plaintiff’s applications are disallowed’ and order 4 provides that ‘[s]ave for paragraph 1, the plaintiff’s summons is otherwise dismissed’. An order for costs of the summons was also made. In the circumstances, Recital E which refers to the originating motion does not change the terms or effect of the order.
It follows that:
(a)the associate judge dismissed the summons;
(b)the order was interlocutory; and
(c)no issue estoppel or res judicata arises.
That is not to say that the decision refusing relief had no consequences. Although the existence of the claimed rights has not been determined, an application to remove the caveat in the absence of a relevant change in circumstances may be an abuse of process.[21]
[21]Leighton Holdings [2015] VSCA 235, [35]–[37] (Tate, Beach JJA and Robson AJA); Phillip Morris Ltd v Attorney-General for the State of Victoria (2006) 14 VR 538, 542 [20], 548–52 [46]–[63] (Maxwell P), 563 [120] (Ormiston JA); [2006] VSCA 21.
Before leaving this proposed ground we would observe that the misguided apprehension animating this proposed ground was also dispelled by the position taken by the respondent. Christine’s counsel accepted that no issue estoppel or res judicata arises, regardless of whether the order dismissed the summons or paragraphs 1 to 3 of the originating motion.
Proposed ground 1 proceeds on a false premise and must fail.

Proposed ground 2

The parties’ submissions

Shannan submits that the sole evidence referred to by the associate judge in determining that there was a serious question to be tried were paragraphs 36 and 37 of Christine’s affidavit affirmed 12 August 2022. It is submitted that these paragraphs were inadmissible as evidence as they were a pleading.
Shannan submits that the associate judge’s approach denied the possibility of Shannan meaningfully engaging with Christine’s ‘evidence’. Shannan’s affidavit in reply specifically denied paragraph 36 on the basis that it was difficult to respond to and in the nature of pleadings, but the Reasons then rely upon what is said to be ‘common ground’ in circumstances in which Shannan was denied an opportunity to respond.

In relation to the alternative claim of a resulting trust, Shannan submits the court needed prima facie evidence of the agreement in order to determine there was a serious issue to be tried, rather than the associate judge’s approach of considering the issue of Christine’s intentions to be ‘one for trial’.[22]
[22]Reasons, [72].
Shannan submits that the Reasons contain an ‘impermissible conflation’ between allegations of material facts made in a pleading and admissible evidence.
Christine submits that Shannan’s argument incorrectly isolates paragraphs 36 and 37 as the ‘sole evidence’ supporting Christine’s claimed interest. Rather, the Reasons noted that Christine’s direct evidence is supported by the broader evidence of surrounding circumstances from which an inference may ultimately be drawn supporting Christine’s case. The associate judge utilised a common and appropriate analytical approach of assessing credibility by giving substantial emphasis to objective factual material and inferences arising from contemporaneous documents and inherent commercial probabilities, in preference to later recollections. With respect to paragraphs 36 and 37 themselves, Christine submits that the fact that the words are consistent with the pleading does not make the evidence inadmissible.
Christine submits that Shannan’s contention of error with respect to ‘common ground’ is not made out.

Analysis and conclusions

As already noted, in the proposed pleading, Christine pleaded an agreement between Christine and Shannan. In her affidavit, Christine deposed to the agreement in identical form as appears in the proposed pleading.
The applicant’s submission is that the paragraph in the affidavit which in substance reproduces paragraph 25 of the proposed statement of claim[23] is inadmissible because it is a pleading and a pleading is not evidence. That submission is rejected. The fact that a paragraph in an affidavit is in the same form as a pleading does not take the matter anywhere.
[23]Set out at paragraph 12 above
The question remains whether the paragraph in the affidavit was inadmissible. That question was to be determined by reference to the Evidence Act 2008. Apart from the fact that the applicant says that the paragraph is ‘a pleading’ which is a contention without merit, the objection is one of form: the evidence was relevant and on its face came from the deponent’s personal knowledge.
In our view, the form of the paragraph was far from perfect but not inadmissible. That is because it set out facts that, on their face, were relevant and based on the personal knowledge of the deponent. Although the paragraph is open to the criticism that it is conclusionary, it is capable of conveying the substance of a conversation between Christine and Shannan many years after the event. The lack of detail as to the place, time and precise form of the conversation may bear upon the weight to be given to the evidence, but the evidence is capable of reasonably bearing upon the question as to whether there is a triable issue that an agreement or understanding had been reached between the parties reflecting a common intention as to the beneficial ownership of the property.
We note that the applicant submits that this was the only evidence of the agreement. We do not accept that submission. There was other evidence, including the change in title, the payment by Christine of part of the purchase price of the parent title and construction costs, and the fact that Christine continued to occupy the property without paying rent, from which an agreement or understanding with Shannan may be inferred. Importantly, on the hearing before the associate judge, counsel for the applicant conceded that he was ‘not going to argue that there isn’t a prima facie case here in relation to the caveat’. Given that concession, and that the nature of the order sought was interlocutory, there is no merit in proposed ground 2.
Proposed ground 2 must fail.
It is convenient to address proposed grounds 3 and 5 together.

Proposed grounds 3 and 5

The parties’ submissions with respect to proposed ground 3

Shannan submits that the associate judge erroneously conflated the issue raised by the declaration sought by Christine in her proposed pleading with the issue raised by Shannan’s submission that the property ought to be sold. Insofar as Christine has an interest in the property, Shannan submits such an interest would ordinarily arise in relation to the trust or fund created by the sale of the property such that a declaration could be made as against the trust or fund created by reason of the orders sought.
Christine submits that there is no ‘conflation’, merely an acknowledgement of the foundation of Shannan’s submission that the property will be sold before confirming that the balance of convenience does not warrant removal of the caveat even in the face of this factor. Christine submits that Shannan’s contention that Christine’s interest would ordinarily arise in relation to the fund created by the sale of the property is unattributed and unreasoned.

The parties’ submissions with respect to proposed ground 5

Shannan submits that it has long been the practice of the Supreme Court (and the County Court) to almost always remove caveats where there is an offer to place funds the subject of dispute in trust or in Court to effectively ‘neutralise’ any balance of convenience factor, and the associate judge should have followed this practice. Shannan also submits the balance of convenience favoured the sale of the property in circumstances in which Christine has sought an order for sale in her own proposed pleading and there was no lawful claim or basis upon which she could maintain occupation. Shannan seeks to draw analogy to Lee[24] in these respects.
[24][2021] VSCA 297, [107], [109] (Kyrou, McLeish and Walker JJA) .
Shannan submits that the associate judge erred in accepting the undertaking proffered by Christine in circumstances in which there was no evidence that the undertaking would satisfy the mortgagee in relation to the default or costs associated with the maintenance of the property. Shannan submits the reality is that undertakings would not satisfy the mortgagee, and could not do so in a rising interest rate environment and in circumstances in which there was no evidence as to the amounts necessary to pay the mortgage. Shannan submits that the perverse result is Christine continues to unlawfully occupy the property despite making no claim to any right to possession and does not have to pay the true cost of maintenance of the property, in circumstances in which Shannan is in default of her mortgage obligations. There is now an active incentive for Shannan to continue to default and have the mortgagee sell the property.
Christine submits that the Shannon seeks only to reargue her case, shows no error in the exercise of the associate judge’s discretion and that the applicant’s submission as to the practice of the Court seeks to impermissibly fetter the associate judge’s discretion.

Analysis and conclusions

The decision by the associate judge was discretionary[25] and in order to impugn the order, the applicant must establish an error of a kind explained in House v The King.[26] The associate judge referred to and applied the correct principles, drawn from Carbon Black and Lee.
[25]Ibid [78]; Carbon Black [2015] VSCA 126, [38] (Santamaria, Ferguson and McLeish JJA).
[26](1936) 55 CLR 499; [1936] HCA 40.
The associate judge was plainly correct to conclude that Christine had raised a serious question to be tried that she held a beneficial interest in the property.
Christine was originally on the parent title as a registered proprietor of the property, and it is not disputed that Christine paid at least part of the purchase price of the property. Christine has lived in the house since its construction and has paid the mortgage and other outgoings. Although in her originating motion Shannan claims mesne profits, there is no evidence of a written tenancy agreement and little evidence, apart from legal ownership and some evidence suggesting that Christine had obtained a concession in respect of utility payments on the basis she was a tenant, that would tend to support the conclusion that Christine occupied the house as a tenant or pursuant to a licence or permission from Shannan.
In paragraphs 14 and 36 of her affidavit affirmed on 12 August 2022, Christine said that she had put a proposal to Shannan which was accepted and which reflected a common intention that Shannan would hold the legal title and Christine would own the beneficial interest and be responsible for all costs associated with the property, subject to a proportionate return based on Shannan’s initial investment of $20,000 which was applied to the purchase price. In an affidavit by Shannan in response, sworn on 24 August 2022, says that it is ‘difficult to respond to parts of the [12 August 2022] Affidavit in that it does not contain evidence that is the nature of pleadings’ and, referring to paragraphs 14 and 36, said that ‘[f]or the avoidance of doubt, I deny those paragraphs’. A denial in that form is less than convincing.
Ultimately, the associate judge was right to conclude that these issues turn on disputed questions of fact that can only be determined at trial.
As to the balance of convenience, it is important to observe that the caveat itself did not confer any rights on Christine to occupy the property for the purpose of the caveat. It was not necessary for her to show a claim to a possessory title, and it was sufficient to show an interest in the property.
Nor does the caveat prevent the making of a contract for the sale of property. Nonetheless, although the caveat does not prevent the sale of the property, as a practical matter it is likely to affect the ability to secure a sale and to impact the price at which a sale may occur. Further, although not the subject of an order by the associate judge, it was plainly contemplated that Christine would remain in possession of the property pending resolution of her proceeding. However, whether or not the caveat remained in place did not determine, even on an interlocutory basis, her right to remain in the property.
In considering whether the balance of convenience favoured the retention of the caveat, it was necessary to consider the nature of the claimed interest and what the caveat was designed to protect. In cases where the caveator is not in possession or where the claimed interest confers no possessory right, the claimed proprietary interest may be adequately protected by removing the caveat, allowing the property to be sold and, by orders or undertakings, for the proceeds or part of them to be secured until the respective interests in the property can be determined. Such a course will often be appropriate.
On the other hand, where the claimed interest confers possessory rights or represents the whole or a substantial proportion of the beneficial proprietary interest, it may be appropriate to leave the caveat in place so there can be no change in the registered title until the issue concerning the claimed interest can be determined.
In this context, there are two points that require some examination.
The first point is whether the interest claimed by Christine gives her a possessory right to the property. The applicant submits that even if she has a beneficial interest in respect of the property it would not confer a right of possession to trust property. The submission called in aid the general proposition that a beneficiary of a trust does not have a right of possession of trust property. More specifically, Shannan relies on the decision of Frankel v Paterson[27] in which Young AJA observed that ‘[g]enerally speaking, a person who has an equitable fee simple in land is not, unless the trust is “at home” or the trust deed confers that right entitled to physical possession of the land’.[28]
[27][2015] NSWSC 1307.
[28]Ibid [99] citing Turner v Noyes (1903) 20 WN (NSW) 266.
On her primary case, Christine claims an interest in the property based on a common intention constructive trust. She relies on the following passage from the judgment of McMillan J in Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc:
The second class of constructive trust is a common intention constructive trust, which is distinct from the joint venture constructive trust. The court will construe a common intention constructive trust where:
(a) there is an actual or inferred common intention of the parties as to their beneficial interest in a property;
(b) there has been detrimental reliance on that common intention by the claimant; and
(c) it would be an equitable fraud on the claimant to deny his or her interest in the property.
The onus of proving such a trust lies on the party asserting the beneficial interest against the legal owner.
The parties’ intentions can be found or inferred from the party’s contemporaneous words and conduct, also having regard to the surrounding circumstances and context in which they were uttered or performed. The relevant intention may arise after the property has been acquired. The intention to be established need not designate a specific share of the property; it is sufficient that the claimant should have a beneficial interest.
The cases considering this form of constructive trust have commonly concerned persons in a domestic relationship, but the principle can be applied to disputes between parties to a commercial relationship.
A common intention constructive trust creates substantive rights and is not merely a remedy that arises when a court makes a declaration to that effect. The trust will generally take effect from the moment at which the conduct giving rise to its imposition occurs. The interest created may, however, be deferred in accordance with principles governing priority between competing equitable interests.[29]
[29][2018] VSC 413, [402]–[405] (McMillan J) (citations omitted).
That expression of principle was adopted by the Court of Appeal of Queensland in Nathan v Williams.[30]
[30][2020] QCA 138, [24] (Brown J, Sofronoff P and Philippides JA agreeing); cf Galati v Deans [2023] NSWCA 13, [1] (Macfarlan JA), [53]–[55] (White JA), [148]–[149] (Basten AJA).
On the basis of the alleged common intention constructive trust, Christine claims to be the owner of 93 per cent of the beneficial interest in the property. Additionally, she has been in possession since the construction of the house. In those circumstances, it is certainly arguable that the equitable interest will follow the legal interest and give her a right to possession. Alternatively, her right to equitable relief, if established, may arguably also provide a foundation for an order restraining Shannan from taking any steps to evict Christine. Much will turn on the basis on which the matter is determined.
The second point arises because in her proposed pleading, and in her submissions to the associate judge, Christine accepted that the property should be sold, however she contended that this should not occur until after the respective equitable interests have been determined. The applicant submits that in circumstances where both parties seek the sale of the properly and the distribution of the proceeds, it was wrong for the associate judge to allow the caveat to remain, thus preventing, delaying or at least prejudicing that outcome.
The issue for the associate judge was whether the caveat should be removed before the determination of the equitable interests. The associate judge concluded that removing the caveat risked Christine being severely prejudiced. As already noted, the removal of the caveat did not necessarily mean that Christine would be evicted and the associate judge was correct to observe that there was no application in proper form for possession. Nevertheless, the practical effect of removing the caveat would be a sale and transfer of title with the real risk of an order for possession being sought and obtained.
In those circumstances, it was well open to the associate judge to conclude that it was appropriate to keep the caveat in place pending the determination of the dispute over the equitable interests. That avoided the risk that the property would be sold and settled, requiring Christine to vacate the property before determination of the equitable interests. As the ability of Christine to secure alternative accommodation was heavily dependent on her knowing the extent of, and being able to realise, any interest she may have in the property, the status quo plainly favoured retention of the caveat. Further, if Christine is successful on her primary claim and Shannan has no more than a 7 per cent beneficial interest, it would not necessarily follow that a sale would be the only outcome, in the sense that it may be possible to satisfy Shannan’s interest without the need for a Court ordered sale.
The associate judge was alive to the prejudice that might be occasioned to Shannan including her exposure to repayment of the mortgage. To meet that contingency, Christine had proffered undertakings to pay certain amounts. Notice of the proposed undertakings had been given to Shannan in advance of the hearing and she was invited to respond to them. In response, Shannan had declined to engage on the amounts that were the subject of the undertaking and the adequacy of the undertaking to enable her to meet ongoing liabilities. In the course of argument before the associate judge on 6 September 2022, counsel for Shannan told that the associate judge that she ‘doesn’t want the undertakings, she doesn’t seek the undertakings and she rejects them’. It was not submitted that they were insufficient to meet the liabilities.
The associate judge published her Reasons on 14 September 2022 and heard argument on the form of order. In her Reasons, the associate judge had found that the proffered undertakings were adequate to deal with Shannan’s hardship in paying the mortgage loan account and expenses. In addressing the form of order, counsel for Shannan submitted that the undertakings were in fact inadequate, and referred to a letter from the Bendigo Bank that suggested the loan was in arrears and offered to adduce evidence on that issue. The associate judge refused to revisit the question.
Having taken the course she did on the hearing of the application, Shannan cannot fairly complain that the amount was inadequate or that the associate judge should have rejected the undertaking. There was no error in the associate judge considering that any prejudice occasioned by the caveat could be met by the undertakings.
On the present application, the applicant sought to rely on fresh evidence to the effect that the mortgage had been in arrears. We reject the application to adduce fresh evidence. The order was interlocutory, the applicant made a forensic decision not to contest the amount of the undertakings and it is not in the interests of justice for the applicant to be relitigate the issue in this Court. The so called fresh evidence was of a kind that could have been anticipated and went to an issue that was squarely raised and which the applicant refused to address other than in the peremptory way referred to above.
It follows that proposed grounds 3 and 5 must fail.

Proposed ground 4

No written submissions were made by the applicant in support of proposed ground 4. Shannan sought leave to amend proposed ground 4 at the hearing of the appeal. Christine opposed the amendment on the basis that the proposed ground had no submissions supporting it, and to allow it to continue would be to do an injustice to Christine. Leave to amend proposed ground 4 was refused at the hearing.
It is sufficient to observe that the associate judge was entirely correct to consider that there was no application in proper form for possession and self-evidently an order for removal of a caveat does not carry with it an order for possession.

Conclusion

The application for leave to appeal is refused.
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[2023] VSCA 136

8 June 2023