Erenshaw v TANAustralian Securities and Investments Commission - [2002] WASC 290

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: ERENSHAW -v- TANASIC & ANOR [2002] WASC 290

CORAM: EM HEENAN J

HEARD: 19 NOVEMBER 2002

DELIVERED : 19 NOVEMBER 2002

FILE NO/S: CIV 2582 of 2002

BETWEEN: THOMAS RICHARD GRAEME ERENSHAW
Plaintiff
AND
JOKA TANASIC
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Land - Torrens System - Caveats - Application to extend operation of caveat - Estate in fee simple as tenant in common claimed as a result of payment by caveator to registered proprietor - No evidence of agreement to become co-owner - Claim for equitable charge arising but not made in caveat - Excessive claim made by caveat

Legislation:

Transfer of Land Act

Result:

Application to extend caveat refused

Category: B

Representation:

Counsel:

Plaintiff:     Mr G P Mohen
First Defendant             :     No appearance
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Friedman Lurie Singh
First Defendant             :     No appearance
Second Defendant         :     No appearance

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

Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419
Leros Pty Ltd v Terara Pty Ltd (1991) 174 CLR 407

Case(s) also cited:

Nil

EM HEENAN J: In this application the plaintiff, Thomas Erenshaw, seeks an order for the extension of caveat number I39390 until further order of the Court. Mr Erenshaw has, by this same action, taken proceedings seeking a declaration that he is the beneficial and legal owner of seventy-seven one hundred and seventeenth shares as tenant in common of the property and he seeks a declaration that he be registered as a proprietor of an estate in fee simple as tenant in common of the property to that extent. That seems to be a particularly ambitious claim because this Court does not have the power, and never has had the power, to register somebody as a proprietor of land under the Transfer of Land Act. That is a process which can be achieved only by registration under the Act itself. The statement of claim in the proceedings also seeks a variety of supplementary relief, including orders for the sale of property, orders for the payment of balance of moneys found to be due after certain investigations, and the appointment of the Registrar of the Court to execute deeds in the name of the first defendant to enable the sale to proceed.
This claim is based on a history going back to November 1998 when the subject property was purchased by the first defendant and registered in her name as the sole proprietor of an estate in fee simple. That purchase occurred in November 1998 when the property was acquired for the sum of $117,000. The purchase was not met entirely from her own funds. Of the $117,000 there was a contribution to the deposit in the amount of $2000 made by the plaintiff at the first defendant's request, and $105,000 was borrowed on mortgage by the first defendant from the Commonwealth Bank of Australia. By simple arithmetic, therefore, there were borrowed funds of $107,000, implying that the first defendant contributed $10,000 of her own money towards the purchase.
The first defendant and the plaintiff lived together, although unmarried, from November 1998 until October 2001. During the period of their cohabitation the plaintiff, at the first defendant's request, paid a series of the first defendant's debts: a taxation bill of $10,555 in July 2001, a credit card account in June of 2000 in the sum of $3000. Why it would be suggested that those payments gave an entitlement to any equity in the land is not explained and it is hard to imagine.
Between July 2001 and July 2002 the plaintiff made substantial repayments of mortgage debt: $30,000 on 11 July 2001 and a further $45,000 on 17 July, a total of $75,000. Those repayments are in a different character because they enhance the defendant's equity in the sense of the excess of value over liabilities in the land. In addition, the plaintiff paid a series of instalments of principal and interest under the mortgage totalling $8300. It is also alleged that later payments totalling $8261 were made by the plaintiff at the defendant's request for the purchase of materials for and renovations to the property. There is no plea that the value of the property increased, to the same extent or to any extent, as a result of this expenditure.
It is then alleged that the plaintiff made a series of nonfinancial contributions towards the improvements of the property. Such routine household activities as brick paving and landscaping, erecting a pergola, the painting of some walls, the renovation of a bedroom and the rendering of 54 metres of a front brick fence are said to give rise to an equity in the land, although there is no basis pleaded for asserting that the value of the property improved to any measurable extent as a result of those activities.
Nevertheless in circumstances where the de facto relationship between the parties has now broken down and the property is presently worth $160,000, it is pleaded that the first defendant holds, as a constructive trustee for the plaintiff at least seventy-seven one hundred and seventeenth shares in the property as tenant in common. That odd fraction is brought about by mathematical calculations which show that the aggregate of the expenditure bears that proportion to the value of the land.
Nowhere is it pleaded, and nowhere is there any evidence, that there has been an agreement between the plaintiff and the first defendant that there should be a transfer in the title to the land or that the plaintiff should be a tenant in common in equal or other shares. The unstated premise is that the making of these payments by themselves, without anything more, gives rise to an interest in fee simple in the land equal to the proportion between the sum of the expenditure and the current value of the land. No authority has been cited to me to support such an extraordinary or revolutionary proposition.
Nevertheless it is clear that a person who repays, at the request of another, part of the principal of a mortgage on land or who makes contributions towards the repayment of mortgage instalments, whether of principal or interest, can thereby obtain an interest in the land in order to protect the value of a payment which the circumstances reveal was never intended as an outright gift. There is no suggestion in this case that any of these payments were intended to be an outright gift, and in the absence of the relationship of a marriage between the parties, there is no presumption of advancement that there is such a gift.
It follows that, in my view, this plaintiff has a strong arguable case to say that he has an interest in this land to protect the expenditure which he has made in repaying the mortgage at the request of the first defendant. If it could be shown that expenditure on other alleged improvements was agreed by the first defendant to give rise to an interest in the land, or even if it could be established that that expenditure actually effected an appreciation in the value of the land, then the value of the appreciation thereby resulting would support a charge in equity over the land to protect that expenditure and so avoid it being treated as a gift to the sole advantage of the registered proprietor.
I had indicated, before this case was recalled in the list, that I was satisfied that the evidence before the court showed a strong arguable case that the expenditure referred to in the statement of claim, at least insofar as it related to the contributions towards the deposit, the substantial capital repayments on the mortgage and the various payments for instalments of principal and interest under the mortgage, gave rise to a charge in equity equivalent to the amount of the expenditure outlaid.
On examining the matter more closely, I am also prepared to acknowledge that this evidence would possibly give rise to an entitlement by the plaintiff to be subrogated to the rights of the bank as mortgagee and to the benefit of its securities to protect his interest in the land, so that the equitable charge would become a statutory charge if the mortgage were to be assigned to him. Such an assignment could be procured if the plaintiff was able, perhaps necessarily with the cooperation of the first defendant, to pay out the entire balance of the mortgage. That way he would enjoy both a legal and an equitable charge, but neither of those alternatives would make him a tenant in common in the land.
When it comes to the question of whether this equitable charge over the land should result in an extension of the existing caveat in respect of which this present application is brought, one goes to the caveat itself to examine its terms. The caveat is one of the exhibits to the affidavit of the plaintiff sworn 15 November. The interest claimed by the caveator is an interest in fee simple as beneficial co‑owner as to the interest of Joka Tanasic, and it relies upon a statutory declaration of the plaintiff made 26 February 2002. That declaration does not appear to be in evidence. It follows that the caveat asserts a right to be registered as co-owner in tenant in common, a claim which manifestly exceeds anything that can be shown by the evidence filed in support of the caveat or in support of this application or by the claim in the writ which has issued. This means that although the plaintiff may have a caveatable interest in the land which may be enforced by an order of this Court or by an appropriate caveat over the land this particular caveat asserts an unjustifiable claim well in excess of what may be actually supported.
It was decided by the High Court of Australia on appeal from this court that under the provisions of the Transfer of Land Act, and in particular s 137 and the 18th schedule of the Act, that a caveat must specify the interest claimed and that this obligation means that the caveat must mention the interest claimed explicitly. A previous decision of this Court in Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 to this effect was expressly approved by the High Court in Leros Pty Ltd v Terara Pty Ltd (1991) 174 CLR 407. In that latter case a caveat, lodged by a bank, was held to sufficiently specify the bank's interest as mortgagee because it was not necessary to state the amount of security but it was held that it did not sufficiently specify its claim to the benefit of an option granted and that, consequently, the option was not protected by the caveat.
By parity of reasoning I consider that in this case the claim made by this caveat to an interest in fee simple as tenant in common in this land cannot be sustained. No other interest being claimed by the caveat, there is no justification for the court to order its extension. While this leaves the first plaintiff's claim to an equitable charge over the land unprotected, this can readily be remedied by lodging a caveat which claims an equitable charge or a right to subrogation under the mortgage. But that is not what this caveat does. For those reasons I decline to extend the caveat.