Dolan v Dolan
[2022] VSC 543
•14 September 2022 (revised 15 September 2022)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2022 01685
BETWEEN:
| SHANNAN CHRISTINA DOLAN | Plaintiff |
| v | |
| CHRISTINE KAY DOLAN | First Defendant |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 September 2022 |
DATE OF JUDGMENT: | 14 September 2022 (revised 15 September 2022) |
CASE MAY BE CITED AS: | Dolan v Dolan |
MEDIUM NEUTRAL CITATION: | [2022] VSC 543 |
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REAL PROPERTY — Caveat — Application to remove caveat — Whether serious question to be tried — Whether the balance of convenience favours maintenance of the caveat — Application to remove caveat not allowed — Caveat to be amended to reflect first defendant’s claimed interest in the property — Section 90(3) Transfer of Land Act 1958 (Vic) — Piroshenko v Grojsman (2010) 27 VR 489 — Lee v Yap [2021] VSCA 297 — Chan v Liu [2020] VSCA 28.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L E P Magowan | Aitken Partners Pty Ltd |
| For the First Defendant | Mr M Taylor | Merton Lawyers |
| No appearance for the Second Defendant |
TABLE OF CONTENTS
The property........................................................................................................................................ 1
Material relied upon.......................................................................................................................... 2
Background......................................................................................................................................... 2
Applicable principles – caveat removal......................................................................................... 8
Submissions........................................................................................................................................ 9
Shannan’s submissions................................................................................................................. 9
Christine’s submissions.............................................................................................................. 12
Analysis.............................................................................................................................................. 15
Is there a serious question to be tried?..................................................................................... 15
Does the balance of convenience favour maintenance of the caveat?................................. 17
Should orders for vacant possession be made?...................................................................... 19
Should orders for sale and distribution of net proceeds be made?..................................... 19
Conclusion......................................................................................................................................... 19
HER HONOUR:
There is a dispute between mother and daughter regarding a property in regional Victoria. The daughter seeks orders that her elderly mother, who has resided in the property for almost 20 years, vacate the property. Further, that the caveat that her mother has placed on the property title be removed and an agent be engaged to sell the property. The daughter seeks orders that the sale proceeds be applied to pay out the loan secured by a mortgage over the property, outstanding property rates and taxes, and the estate agent fees, commissions and conveyancing costs. The daughter seeks that the net sale proceeds then be distributed in the following way: 36% to her, $20,000 to her mother, and the remainder into a trust account pending resolution of the property dispute. For the reasons outlined below, none of the orders sought by the daughter will be made.
The daughter, Shannan Christina Dolan, is the plaintiff in this proceeding. Her mother, Christine Kay Dolan, is the first defendant in this proceeding. For clarity, I shall refer to these parties by their first names. The second defendant is the Registrar of Titles and takes no active part in this proceeding.
The property
The subject property is located in Lorne, Victoria. It is more particularly described in Certificate of Title Volume 10652 Folio 998 (the ‘property’).[1]
[1]Updated title search was provided via email to Chambers on 6 September 2022.
Prior to subdivision, the property was part of land more particularly described in Certificate of Title Volume 07379 Folio 791 (the ‘parent title’).
Shannan is the sole registered proprietor of the property.
In April 2021, Christine caused a caveat to be lodged on the property on the ground of ‘implied, resulting or constructive trust’, with the prohibition stated to be ‘absolutely’ (the ‘caveat’).[2]
[2]Caveat AU238646B contained in Exhibit SD-1 to the affidavit of Shannan Dolan affirmed 9 May 2022 (‘first Shannan affidavit’).
Material relied upon
Shannan relies upon her affidavits affirmed on 9 May 2022 and 24 August 2022 (the ‘first Shannan affidavit’ and the ‘second Shannan affidavit’ respectively), and the affidavit of her solicitor, Amanda Jayne Robinson, sworn on 25 July 2022.
Christine relies upon her affidavits affirmed on 12 August 2022 and 5 September 2022 (the ‘first Christine affidavit’ and the ‘second Christine affidavit’ respectively), together with the affidavits of:
(a) Ethan Barr-Hamilton, her solicitor, affirmed on 25 July 2022;
(b) Lachlan Andrew Boyle, her solicitor, affirmed on 11 August 2022; and
(c) David Baldry, sales consultant, affirmed on 12 August 2022.
Both parties filed written submissions.
Background
While some facts are agreed and evident from the title search, many are not. I shall now outline the background and elements of the factual dispute.
On or about 17 December 1998, Christine, along with William Nicholas Ivens and Emma Louise Ivens (the ‘Ivens’) purchased the parent title for $105,000.[3] Christine says that she and the Ivens agreed to purchase the parent title and subdivide the land so to produce two separate blocks, with one for her and the other for the Ivens.
[3]Affidavit of Shannon Dolan affirmed 24 August 2022, [9] (‘second Shannan affidavit’).
The Ivens contributed half of the purchase price, namely $52,500. Christine deposes that she contributed $52,500 towards the purchase of her share of the parent title.[4] Shannan deposes that she contributed $20,000 towards the purchase of the parent title.[5] It is common ground that Shannan paid Christine $20,000 at about the time of purchase. Christine deposes that she and Shannan agreed 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.[6] This is disputed by Shannan.
[4]Affidavit of Christine Dolan affirmed 12 August 2022, [18] (‘first Christine affidavit’).
[5]Second Shannan affidavit, [9].
[6]Ibid.
Following settlement of the parent title, Christine became the owner of a one‑half share of the parent title, and the Ivens became joint owners of the other one‑half share of the land.[7]
[7]Certificate of Title contained in Exhibit CKD-1 to the affidavit of Christine Dolan affirmed 5 September 2022 (‘second Christine affidavit’).
Christine deposes that in or around 2000 to April 2002, she, together with Mr Ivens and his partner Angela Dantino, commenced their plans to subdivide the parent title (‘subdivision works’). Christine deposes that the subdivision works were paid by herself, Mr Ivens and Ms Dantino.[8] On the other hand, Shannan deposes that she financially contributed towards some of the subdivision works.[9]
[8]First Christine affidavit, [21]–[26].
[9]Second Shannan affidavit, [10].
Christine deposes that in the period from late 2000 to early 2001, she engaged and instructed an architect and a builder to design and prepare the engineering plans to construct the property. Christine deposes that she received a quote from Graham and Craig Daffy trading as GCD Builders (‘GCD’) and Mr Wayne MacTaggert, who was appointed by GCD to prepare further documentation and drawings for the house. Their quote for construction of a home on the property was for the amount of $140,360 plus extras of $4,850 (the ‘quote’).[10] Shannan denies that Christine was solely responsible for engaging the architect and GCD.[11]
[10]First Christine affidavit, [27].
[11]Second Shannan affidavit, [10].
Following receipt of the quote, Christine made enquiries with the Commonwealth Bank of Australia (‘CBA’) to secure a loan of $100,000 to $140,000 to partially fund construction of the property.[12] Christine deposes that she was unable to secure a loan without a guarantor from CBA due to her age and income level.[13] Thereafter, Christine deposes that she approached Michael Brennan of Bendigo Bank at Newcomb to secure a loan. She deposes that Mr Brennan advised her that if she transferred her interest in the parent title to Shannan, a loan could be secured in the name of Shannan on financially beneficial terms (the ‘Brennan advice’).[14]
[12]First Christine affidavit, [30].
[13]Ibid, [32].
[14]Ibid, [34].
In relation to the alleged Brennan advice, Christine deposes the following (the ‘proposal’):
Following receipt of the Brennan Advice, I:
a)discussed the Brennan Advice with Shannan;
b)proposed to Shannan (‘My Proposal’) that:
i.the Land, the future subdivision of the Land and the House would continue to be beneficially owned by me;
ii.I would however transfer my legal interest in the Land to Shannan for the purposes of Shannan securing the Loan on behalf of me;
iii.I would continue to be responsible for all aspects of the subdivision and the build;
iv.I 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.Shannan’s contribution of the Compensation, which would continue to be on the terms described in paragraph 14 above; and
B.the provision of any amount available to Shannan by way of FHOG, which would be applied to the build in consideration of myself otherwise assisting Shannan financially.[15]
[15]Ibid, [36].
Christine deposes that Shannan accepted the proposal.[16] Shannan denies accepting the proposal.[17] She deposes that Mr Brennan told her that Christine was unable to secure a loan due to her income.[18] Further, 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.[19]
[16]Ibid, [37].
[17]Second Shannan affidavit, [13].
[18]Ibid, [11].
[19]Ibid.
By transfer dated 19 April 2001 and registered on 8 May 2001, Christine transferred her half of the share of the parent title to Shannan.[20]
[20]Transfer of Land contained in Exhibit SD-1 to the first Shannan affidavit, 12.
Christine deposes that the transfer of her interest in the parent title to Shannan occurred without receipt of any consideration from Shannan.[21] On the transfer of land certificate, the ‘Consideration’ is stated to be ‘An Agreement to Transfer’.[22]
[21]First Christine affidavit, [41].
[22]Transfer of Land contained in Exhibit SD-1 to the first Shannan affidavit, 12.
On or about 30 April 2002, the subdivision of the parent title was completed.[23] The property was registered in the name of the Ivens and Shannan as tenants in common with two equal shares.[24] One share was held by the Ivens and the other share held by Shannan.
[23]First Christine affidavit, [43].
[24]Historical title search contained in Exhibit SD-1 to the first Shannan affidavit, 16.
By transfer dated 6 May 2002 and registered on 14 March 2003, all the estate and interest in the property was transferred to Shannan.[25] The ‘Consideration’ is stated as: “In pursuance of an Agreement between the Transferors for partition of the said land and other lands and in consideration of another Transfer of Land of even date herewith (nothing being paid by the Transferee for equality of partition).”[26]
[25]Transfer of Land and Historical Title Search contained in Exhibit SD-1 to the first Shannan affidavit, 13–14.
[26]Ibid.
Christine deposes that between June 2001 to June 2002, she continued to work with GCD. She deposes that she negotiated an updated construction quote and contract with GCD to build the property (the ‘construction contract’). The quoted price to build the property was $150,000. Christine deposes that she directed Shannan to sign the construction contract with GCD in or around mid‑2002.[27] On the other hand, Shannan deposes that she alone signed the construction contract without any direction from Christine.[28]
[27]First Christine affidavit, [45].
[28]Second Shannan affidavit, [14].
Construction on the property commenced around July 2002.[29]
[29]First Christine affidavit, [49].
On 3 December 2002, Bendigo Bank registered a mortgage over the property.[30] A loan was established in the name of Shannan (the ‘loan account’). The overdraft limit of the loan account was $140,000.[31]
[30]Mortgage of Land contained in Exhibit SD-1 to the first Shannan affidavit, 17.
[31]Bendigo Bank Mortgage Statement contained in Exhibit SD-1 to the first Shannan affidavit, 18.
Shannan deposes that GCD was a builder that was known to her and that throughout construction of the property, she was able to secure subcontractors to reduce costs.[32] She claims that she paid, or arranged for her mother to pay, for the tradespeople by using the funds from the loan account.[33] On the other hand, Christine deposes that she had sole oversight and responsibility in instructing GCD and the architect throughout construction of the property.[34]
[32]First Shannan affidavit, [18].
[33]Ibid.
[34]First Christine affidavit, [53]–[54].
Upon completion of the property in or about late 2003 to early 2004, Christine, Shannan, and another family member moved into the property.[35]
[35]Ibid, [51]; First Shannan affidavit, [19].
Christine deposes that the costs associated with the acquisition, construction, and the fit‑outs contained in the property (‘overall build costs’), which in total amounted to no less than $301,654, were funded primarily from her personal resources and the loan account.[36] Christine deposes that Shannan’s contribution towards the overall build costs was around seven percent.[37] Christine further deposes that she made payment of all outgoings in respect of the property including council rates, home insurance, and the property’s maintenance and improvement costs.[38]
[36]Ibid, [56].
[37]Ibid.
[38]Ibid, [61].
On the other hand, Shannan deposes that the overall build costs were largely drawn down from the loan account.[39] She denies that Christine utilised her ‘personal resources’ to fund the overall build costs.[40] Shannan deposes that the overall build costs was not less than $195,785.[41]
[39]Second Shannan affidavit, [14].
[40]Ibid.
[41]Ibid.
Shannan deposes that from November 2004 to April 2006, her and Christine had a joint Westpac account where interest repayments on the loan for the property were directly debited, and that during this period Shannan paid $150 per week towards the loan.[42]
[42]First Shannan affidavit, [28].
Christine and Shannan continued to live at the property together until 6 April 2006, when Shannan moved out.[43] Shannan deposes that she moved out of the property due to her strained relationship with Christine.
[43]Ibid, [20].
Shannan deposes that Christine progressively became physically and mentally unwell, and was abusive towards Shannan and her family.[44] Shannan claims that there have been a number of intervention orders between Christine and herself and her family.[45]
[44]Ibid.
[45]Ibid, [22].
Christine deposes that on 9 April 2021, Shannan sent correspondence to her which alleged, among other things, that Shannan owned at least a 50% interest in the property and that she intended to sell the property.[46]
[46]First Christine affidavit, [63].
On 15 April 2021, Christine lodged a caveat over the property.
On 5 May 2021, Shannan sent a letter to Christine, demanding, amongst other things, that she vacate the property.[47] On 5 June 2021, Shannan sent Christine a notice to vacate the property.[48] Christine continues to reside at the property. Christine proposes to issue proceedings regarding the property dispute. She has a proposed statement of claim.
[47]Letter to Christine dated 5 May 2021 contained in Exhibit SD-1 to the first Shannan affidavit, 20–21.
[48]Notice to Vacate dated 5 June 2021 contained in Exhibit SD-1 to the first Shannan affidavit, 22–25.
Applicable principles – caveat removal
Section 90(3) of the Transfer of Land Act 1958 (Vic) is applicable. The applicable principles are not in dispute. The parties referred to Piroshenko v Grojsman.[49] I gratefully adopt the more recent principles given by the Court of Appeal in Lee v Yap[50] and Chan v Liu.[51]
[49](2010) 27 VR 489 (‘Piroshenko’).
[50][2021] VSCA 297 (‘Lee v Yap’).
[51][2020] VSCA 28 (‘Chan v Liu’).
In Lee v Yap, the Court of Appeal referred to the power conferred on the Court by s 90(3) of the Transfer of Land Act and Piroshenko:
Section 90(3) of the Transfer of Land Act 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 sees fit’…
In Carbon Black, this Court held that when a court is considering an application under s 90(3), the court applies the two-stage test used for determining an application for an interlocutory injunction. The 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 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.
As to the second proposition contained in ground 1, in our view it proceeds on a mistaken understanding of the matters that can permissibly be considered by a court when dealing with an application to remove a caveat under s 90(3) of the Transfer of Land Act. The authorities make clear that, although the courts have adopted the two stage test, s 90(3) is drafted broadly, and enjoins the court to make such orders as it thinks fit. Thus the two-stage test can only inform the court in considering whether to exercise the discretion conferred on it in any particular case and, if it chooses to do so, what form that exercise should take. The two-stage test does not subsume or restrict the power conferred by the statute. Nor, in our view, when a court is considering the balance of convenience on an application for removal of a caveat, is the court confined as to the matters it may consider as going to the balance of convenience...[52]
[52]Lee v Yap, [78]–[79], [85] (citations omitted).
In Chan v Liu, the Court of Appeal referred to the nature of an application to remove a caveat and the function of a caveat:
Ordinarily, an application for the removal of a caveat, being in the nature of an application for an interlocutory injunction, is not an occasion for the final determination of disputed factual issues, or of the substantive claims which the caveat seeks to protect…
As a starting point, it is important to bear in mind the function of a caveat. Section 89(1) of the Transfer of Land Act provides (inter alia) that any person ‘claiming an estate or interest in land’ under any unregistered instrument or dealing (or otherwise) may lodge with the Registrar a caveat forbidding the registration of any instrument ‘affecting such estate or interest’. Thus, essentially, the purpose of the lodgement of the second caveat, in this case, was to protect the right of the respondent to specific performance of the contract of sale of the property. So long as the caveat remained on the title, it prevented the applicants supervening that right, by selling the property to a third party.[53]
[53]Chan v Liu, [63]–[64] (citations omitted).
Submissions
Shannan’s submissions
Shannan’s key submissions follow.
First, and primarily, Christine has improperly conflated her desire to remain in the property (as a trespasser pending sale of the property) with the balance of convenience factors. Convenience of occupation is not a relevant consideration for determination of this application.
Second, there is no claim by Christine which would entitle her to retain possession of the property. The principal allegation in her proposed statement of claim is of constructive trust. Christine says the parties have a common intention. To the extent that a trust exists, a beneficiary has a right to call on property, that is all.[54]
[54]Frankel v Paterson [2015] NSWSC 1307, [100] (Young AJA).
Third, even Christine does not allege she has an interest giving right to possession. There is no allegation that the parties are equitable tenants in common such that both would be entitled to possession. Christine does not seek a declaration of co‑ownership. Her proposed statement of claim seeks sale of the property.
Fourth, there is no evidence of the agreement that Christine alleges (and Shannan denies) regarding property ownership. Such evidence is needed.[55] There is no agreement established. The first Christine affidavit replicates the pleadings. It cannot seriously be suggested that those actual words were used by the parties. Shannan denies there was any agreement.
[55]Piroshenko, [7].
Shannan made substantial contributions to the property. She contributed funds to the purchase of the property. She also contributed, by her First Home Owner Grant, to the development of the property. She paid, or arranged for Christine to pay, for tradespeople directly. These amounts, and indeed the entire construction cost, were largely paid by drawing down the loan.[56]
[56]First Shannan affidavit, [18].
There is no evidence filed on behalf of Christine that the costs allegedly expended on the property were $301,654. Rather, there is a reference in the schedule of the proposed statement of claim. Paragraphs 14 and 36 of the first Christine affidavit are inadmissible because they replicate that pleading, which was drafted earlier than the affidavit. Even if paragraph 36 stands, it is an express oral trust and then fraud becomes an issue. The alleged fraud is an issue because it (a) concerns an alleged rental agreement and is inconsistent with the claim as pleaded, and (b) because equitable relief is sought.
Fifth, the relationship between daughter and mother is such that the presumption of advancement applies.
Sixth, Shannan obtained the land partly through herself. The parent title was subdivided and Shannan was one of the transferors.
Seventh, Shannan is the registered proprietor of the land. There is nothing to stop her removing Christine from the property. The caveat does not prevent that. Nevertheless, Shannan seeks those orders from the Court because that is the orderly process. She is prepared to allow some reasonable amount of time, a few weeks, for that process.
Eighth, the caveat is an absolute prohibition. It cannot be justified. It is not disputed that Christine has a prima facie case, however, it is weak.[57] The balance of convenience does not weigh in favour of maintaining the caveat. Equity will only permit relief to the extent necessary to protect against the unconscionability involved. At no stage does Christine claim she is in the position to pay Shannan out and become the sole registered proprietor of the property. A caveat should not be used as a bargaining chip.[58] The only proper purpose of a caveat is to protect the estate or interest claimed.
[57]Shannan relies on Piroshenko, [39]–[40].
[58]Shannan relies on BCA Asset Management Group Pty Ltd v Sand Solutions (Vic) Pty Ltd [2021] VSC 177, [9].
Ninth, the balance of convenience favours Shannan. The Court must determine the balance of convenience in respect of the caveat, not the balance of convenience at large.[59] Shannan has a mortgaged interest in the property and is not in a position to pay the mortgage and needs to sell the property. The mortgagor has agreed to capitalise interest on hardship grounds.[60] In the meantime, the value of the property is declining.[61] She has received no rent from Christine for the property and Christine has stopped making mortgage repayments. Christine is a trespasser. Shannan does not want Christine to pay rent or mortgage payments. She wants her to vacate the property. Shannan issued proceedings in the Victorian Civil and Administrative Tribunal (the ‘Tribunal’) seeking the property be vacated. The Tribunal dismissed the proceedings.
[59]Ibid.
[60]First Shannan affidavit, [36]; Letter from Bendigo Bank dated 12 November 2021 contained in Exhibit SD-1 of the first Shannan affidavit, 32.
[61]Second Shannan affidavit, [34].
Christine proposes to provide undertakings to pay the mortgage and expenses. She is effectively seeking the grant of an order, without any proper application, to allow her to maintain occupation of the property.
Christine’s submissions
Christine’s key submissions follow.
First, the summons contains an application that Christine be directed to vacate the property. However, Shannan has not made an application for possession. There is no relevant provision of law by which possession is sought. No application for possession has been properly moved.
Second, Christine claims there is a common interest constructive trust. A declaration of constructive trust results in an equitable interest in the property by way of co‑ownership. A co-owner is entitled to possession of the property.[62] The proposed statement of claim seeks a declaration as to co-ownership.
[62]Christine relies on King v Fister [2022] QCA 47, [24]–[26] and Bull v Bull [1955] 1 QB 234, 236–38. In rebuttal, Shannan relies upon Frankel v Paterson [2015] NSWSC 1307.
Third, Christine’s affidavit evidence regarding the common intention constructive trust is admissible. It is true that the evidence is not in the form of recollecting specific words and that the statement of claim was prepared prior to the affidavit. However, that claim was prepared on the basis of Christine’s instructions. Moreover, Shannan denies the alleged agreement, so there is no want of understanding regarding the allegation. Rather, there is a dispute on the facts as to whether Christine and Shannan had a common intention. Circumstantial evidence must be taken into account.
Christine says she was unable to receive a construction loan on her own due to her age and income position, that there were favourable terms upon which Shannan would be granted a loan, the relationship of mother-daughter provides a basis upon which Shannan would agree, and Christine would trust that she hold legal title of the property on her behalf.
At the time of the property purchase, Christine was 47 years old, recently divorced and in receipt of a property settlement, and the carer of her son. On the other hand, Shannan was 23 years old and employed as a cleaner.[63] Christine’s evidence is that although she would transfer her legal interest in the property to Shannan, the property would continue to be beneficially owned by Christine. Christine’s evidence is that Shannan accepted this proposal and there was a common intention between herself and Shannan as to the property. The very function of a common intention trust is that it will govern the relationship of the parties in appropriate circumstances where written formalities are not satisfied.[64] It is to avoid unconscionable use of the Statute of Frauds.[65]
[63]Shannan’s Notices of Assessment for the years ending 30 June 2002 and 2003 contained at Exhibit CKD‑4 to the second Christine affidavit.
[64]Christine relies on Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413, [402]–[406].
[65]Christine relies on Stowe & Devereaux Holdings Pty Ltd v Stowe (1995) 15 WAR 363, 357 [D]-[G].
There has been a significant lapse of time, and contemporary documents are a strong basis to determine the relative strengths of the claim. The parent title of the property was originally in Christine’s name and Shannan admits that Christine paid the majority of the purchase price. The parent title plainly shows that there were tenants in common, with Christine holding one‑half share and the Ivens holding the other share.[66]
[66]Historical title search of parent title is contained in Exhibit CKD-1 to the second Christine affidavit, 1.
Christine has provided documentary evidence of payments regarding the property.[67] It is agreed that the mortgage and loan against the property in the name of Shannan were not secured against the property until December 2002, at the earliest. This is strong evidence of Christine’s contribution towards the purchase of the property and construction of the residence on it. Christine contributed her inheritance of $139,459.10 and a payment of compensation of $62,000 towards the property loan account and this evidence is supported by bank statements.[68] It is not in dispute that Christine paid mortgage repayments, interest and expenses from April 2006 to April 2021, as well as paying the mortgage. As Shannan acknowledges, the disputed calculations as to each party’s contribution to the property cannot be determined in this application.
[67]Second Christine affidavit, [3]–[5]; GCD Builders progress payment invoice dated 20 September 2002 contained in Exhibit CKD-2 of the second Christine affidavit; Bendigo Bank transaction history statement dated 2 September 2022 contained in Exhibit CKD-9 of the second Christine affidavit.
[68]Exhibits CKD12, CKD13 and CKD14 to the first Christine affidavit.
Fourth, the presumption of advancement operates where there is a dearth of evidence.[69] The findings at trial will not be drawn by way of that presumption but rather on inferences to be properly drawn from evidence.
[69]Christine relies on Commissioner of Taxation v Bosanac [2021] FCAFC 158, [4]–[6].
Fifth, the proposed statement of claim seeks orders for the sale of property. These orders are sought subsequent to the declaration as to Christine’s rights in the property.
Sixth, the balance of convenience factors must necessarily be determined on the basis that Christine is in possession of the property. She occupies the property as a co‑owner. She has established a prima facie claim to co-ownership arising by way of constructive trust. To ignore Christine’s possession of the property since 2003 would be a gross injustice. For almost 20 years it has been her home. There is evidence of the generous nature of the home and her possessions. If forced to vacate now, she would be forced into a small rental property. The evidence of the real estate agent is that Christine is unlikely to secure rental property at Lorne [within her means].[70] She is 69 years old and has resided in Lorne since 1954. All her social and support networks are there. Christine’s life savings are in the property and she wishes to realise her equity in the property, or at least have the certainty of court orders prior to making new residential arrangements, likely by purchasing a new home.
[70]Affidavit of David Baldry affirmed on 12 August 2022, [10]–[18].
Christine proposes undertakings in which she would pay the mortgage on the property and expenses. She only ceased paying the mortgage because Shannan demanded she do so. Shannan has never demanded Christine resume payments. However, Christine has voluntarily restarted payments. Her solicitors requested Shannan’s solicitors advise them if the payments were insufficient to satisfy interest capitalising on the mortgage. Shannan’s concerns as to the servicing of the property loan and incurring interest are addressed by Christine’s payments and proposed undertakings. There is no evidence of a risk of further action by the mortgagor or of continuing risk to Shannan’s credit history.
Shannan’s concerns about the loss of rent and her own non-occupation of the property do not address the reality that the status quo has been possession of the property by Christine since 2002, nor the reality of Christine’s claim to a beneficial interest in excess of 90% of the property.
There is no expert evidence that property values in Lorne are declining and judicial notice should not be taken of that.
Seventh, it is accepted that the caveat should restrict dealings regarding the caveator’s interest in the property and not beyond. So long as that requirement is met, the wording of the caveat is appropriate. Here, leave is sought to amend the caveat to refer to Christine’s claim of a 93% interest in the property.[71]
[71]Christine relies on Lawrence & Hanson Group Pty Ltd v Young [2017] VSCA 172, [36]–[40], [93]–[98].
Eighth, orders for sale of the property now are opposed. They are inapt where the balance of convenience favours Christine.[72]
[72]Christine says the facts here are distinguished from those in Piroshenko, although the general principles in that authority are applicable.
In answer to the Court’s question: the Tribunal proceedings were dismissed for want of jurisdiction as the dispute is between property co-owners, not landlord and tenant.
Analysis
Is there a serious question to be tried?
Christine has established there is a serious question to be tried as to the extent of her interest in the property. By her draft statement of claim, Christine claims that she is the beneficial owner of a 93% interest in the property pursuant to a constructive trust arising from the common intention of the parties.[73] Alternatively, Christine claims a 65% interest in the property pursuant to a resulting trust arising from her contributions to the purchase price, construction and fit out of the property. I am satisfied that she has deposed to the material facts that she relies upon. Turning now to my reasons.
[73]The proposed statement of claim is contained in Exhibit ‘EBH-1’ to the affidavit of Ethan Barr-Hamilton affirmed on 25 July 2022.
I gratefully adopt the principles on trusts, including constructive and resulting trusts given by McMillan J in Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc.[74]
[74][2018] VSC 413, [387]–[408] (‘Imam Ali Islamic Centre’).
By her claim, Christine pleads the necessary elements of a common intention constructive trust.[75] 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.
[75]See particularly [46] in the proposed statement of claim contained in Exhibit ‘EBH-1’ to the affidavit of Ethan Barr-Hamilton affirmed on 25 July 2022. The corollary relief is sought in [48] and, under the heading ‘Claim’, paragraph (a), 11.
Alternatively, by her proposed statement of claim, Christine pleads the necessary elements of a resulting trust.[76] I am satisfied there is sufficient evidence to give rise to a serious question in this regard. It is undisputed that Christine contributed purchase monies to the parent title, which was then subdivided, and the property is held in the name of Shannan. Whether there was an agreement between them regarding the nature of Christine’s interest is in dispute. That factual dispute cannot be resolved here. It should be resolved at trial. So too the question of whether the presumption of advancement applies. Presumptions may be rebutted by evidence. The issue of Christine’s intentions is one for trial.
[76]Ibid, paragraph (b) (page 11).
There are a number of submissions made by Shannan which must be rejected.
First, the submission that any trust would be more appropriately characterised as an express trust and therefore no serious question arises on the proposed statement of claim. In Imam Ali Islamic Centre, McMillan J referred to the doctrinal debate about how a common intention constructive trust should be characterised.[77] This may be an issue for trial. It is sufficient here that Christine has established a serious question to be tried in respect of a constructive or resulting trust.
[77]Imam Ali Islamic Centre, [406].
Second, Shannan submitted that as a consequence of an alleged fraud, Christine has not established a serious question to be tried. It is improper to outline the allegations of fraud here. They are serious allegations and, if pursued, ought be properly made and determined at trial. It would be premature, and indeed unjust, to make any findings here that equitable relief would be denied to Christine on the basis she has unclean hands. I reiterate that any findings as to the credibility of Christine’s evidence are more appropriately determined at trial.
Does the balance of convenience favour maintenance of the caveat?
Weighing up all factors, I consider the balance of convenience favours maintenance of the caveat for the following reasons.
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.[78] 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.
[78]Draft minute of consent orders dated 24 August 2022 contained in Exhibit SD-2 to the second Shannan affidavit, 24–25.
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.
Shannan says she is prejudiced by any delay in the sale of the property as house prices are declining. There is no proper evidence before the Court that the housing market in Lorne is declining. I decline to take judicial notice of that.
Christine does not assert absolute ownership and, quite properly, has proposed an amendment to the caveat to reflect her claimed 93% interest in the property. The caveat ought be limited to protecting Christine’s claimed interest in the property. I have the power to amend the caveat pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) and intend to do so.[79] I am satisfied that the following form of order proposed by Christine should be made and will go no further than protecting Christine’s interests:[80]
Pursuant to s90(3) of the Transfer of Land Act 1958 (Vic), the first defendant has leave to amend registered caveat AU238646B to limit the interest claimed to an implied, resulting or constructive trust as to 93% of the freehold estate in the subject property.
[79]Lawrence & Hanson Group Pty Ltd v Young [2017] VSCA 172, [40]; Schmidt v 28 Mayola Street Pty Ltd (2006) 14 VR 447, [46].
[80]Ibid, [93]-[98].
Shannan forcefully submitted that because the property will eventually be sold, the caveat should be removed. Christine’s proposed statement of claim does seek that the property be sold. However, a declaration is sought regarding Christine’s claimed interests in the property. This is an issue that should proceed to trial. The balance of convenience does not favour removal of the caveat to enable sale prior to determination of the competing interests of Christine and Shannan.
Should orders for vacant possession be made?
Shannan submits that because Christine’s proposed statement of claim does not seek possession, and she is the registered proprietor of the land, orders ought be made that Christine vacate the property.
There is no proper application for summary possession properly before the Court. The orders for possession ought not have been pursued in this proceeding. The circumstances are that although Shannan is the registered proprietor of the property, she concedes that Christine has an interest in the property and has lived in the property for many years. Shannan’s application to the Tribunal to remove Christine as a tenant was unsuccessful.
Christine does not seek possession of the property in her proposed statement of claim. Nevertheless, she does make a claim of constructive trust. There is a legal dispute between the parties as to whether, if Christine is successful, her interests would give a right to possession. It is an issue for trial as to whether or not possession would be conferred and if not, the consequences.
Should orders for sale and distribution of net proceeds be made?
As discussed above, orders for sale and distribution of net proceeds should be made following trial.
Conclusion
I have competing sets of orders from the parties. I will give the parties an opportunity to make oral submissions consequential to this judgment.
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CERTIFICATE
I certify that this and the 19 preceding pages are a true copy of the reasons for judgment of Ierodiaconou AsJ of the Supreme Court of Victoria delivered on 14 September 2022.
DATED this fifteenth day of September 2022.
Associate
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