Fazal v Fazal
[2022] VSC 165
•4 April 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
S ECI 2022 00493
| ROONA FAZAL | Plaintiff |
| v | |
| HAMAD FAZAL | Defendant |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1 April 2022 |
DATE OF RULING: | 4 April 2022 |
CASE MAY BE CITED AS: | Fazal v Fazal |
MEDIUM NEUTRAL CITATION: | [2022] VSC 165 |
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REAL PROPERTY – Caveat - Transfer of Land Act 1958 s 90(3) – Application for removal of caveat – Whether filing of summons satisfies requirement to ‘bring proceedings’ – Where plaintiff lodged a second caveat in the same terms as earlier caveat – Where there was no material change in circumstances – Whether re-litigation of caveat in identical terms is abuse of process.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Self-represented litigant | |
| For the Defendant | Ms S Khan |
HIS HONOUR:
A. Introduction
The plaintiff, Ms Fazal, is the mother of the defendant, Mr Fazal. Mr Fazal is the registered proprietor of a property in Doveton (‘the property’). The property is mortgaged, and the loan is in default. With the agreement of the lender, and after it took steps to enforce the mortgage, Mr Fazal has signed a contract of sale for the property for $865,000. Ms Fazal has lodged a caveat over the property. On Friday 1 April 2022, Mr Fazal applied to me for an order that the caveat be removed so that he can settle the sale of the property. Ms Fazal opposed that order being made. After hearing argument, I made the orders that Mr Fazal sought, and said that I would give reasons later. These are those reasons.
B. The background to the application
The background to the application is as follows:
(a) The property was purchased in August 2018 for $650,000 with a loan from the bank guaranteed by Ms Fazal. Work started to construct some townhouses on the property.
(b) On 22 November 2021, Mr Fazal, he says, entered into a contract for the sale of the property for $865,000, with a 10% deposit that was paid, and with settlement due on 21 January 2022.
(c) On 17 January 2022, Ms Fazal lodged a caveat over the property. She produced a 2018 declaration of trust that she says was signed by Mr Fazal. Mr Fazal denies that he signed that document, and asserted that he is the beneficial owner.
(d) By an originating motion and summons filed 9 February 2022, Mr Fazal applied in the Practice Court under s 90(3) of the Transfer of Land Act 1958 for an order that the caveat be removed. That application was opposed.
(e) The application was heard by a judge of this Court, Forbes J, on 17 February 2022. Ms Fazal, who has legal training, was represented by solicitors at the time. On 17 February 2022, this Court ordered that the caveat be removed.
(f) On 21 February 2022, Ms Fazal commenced this proceeding by filing a writ endorsed with a statement of claim, in which she seeks, inter alia, a declaration that the proceeds of the sale of the property were held on trust for her, and equitable compensation.
(g) The same day, she filed a summons seeking an interlocutory order restraining the net proceeds of sale. That application was heard by the same judge who heard the caveat application. Ms Fazal was represented by solicitors and Queen’s Counsel. On 25 February 2022, orders were made by Forbes J restraining the net proceeds of sale and requiring them to be held in Mr Fazal’s solicitor’s trust account until trial or further order.
(h) Then, on 27 February 2022, Ms Fazal lodged another caveat over the property. The interest asserted in the caveat was the same interest that had been asserted in the first caveat, that had been removed by court order.
(i) By summons filed 31 March 2022 in this proceeding, the proceeding brought by Ms Fazal, Mr Fazal has applied, again, under s 90(3) of the Transfer of Land Act 1958 for an order that the caveat be removed. That is the application that is presently before me.
C. Is s 90(3) of the Transfer of Land Act 1958 engaged?
Section 90(3) of the Transfer of Land Act 1958 gives the Court power to make such order as it thinks fit if a person who is adversely affected by a caveat brings proceedings in a court against a caveator for the removal of the caveat. Ordinarily, such an application is brought by an originating motion and summons. The filing of an originating motion is, clearly, the ‘bringing of a proceeding’. But here, the application has been brought by summons in a pre-existing proceeding. Ms Fazal contends that for this reason the application does not engage s 90(3) of the Transfer of Land Act 1958.
The alternative open to Mr Fazal was to file another originating motion, which would cost several hundreds of dollars that he might never recover, or, perhaps to file a counterclaim. He could not return to his earlier originating motion, as that proceeding was completed when the Court authenticated its orders requiring the previous caveat to be removed.
In the unusual circumstances of this case, I consider that I am able to exercise the power given by s 90(3) of the Transfer of Land Act 1958 on the return of Mr Fazal’s summons filed in this proceeding. The question, ultimately, depends on whether by filing the summons in this proceeding, Mr Fazal has brought ‘proceedings in a court against the caveator for the removal of the caveat’ as those words in s 90(3) of the Transfer of Land Act 1958 are to be understood. Section 8(1) of the Civil Procedure Act 2010 requires me, when interpreting my powers, to give effect to the overarching purpose of facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute. Here, it is significant that the summons is brought in a proceeding between the two relevant parties and which relates directly to the property in issue and the rights that each party has or does not have in relation to that property. Indeed, in this proceeding Ms Fazal is seeking to establish that she is the beneficial owner of the land, and that is the very interest that she was seeking to protect by lodging the caveat. It would not be just or cost-effective to require Mr Fazal to commence a separate proceeding. In the unusual circumstances of this case, I consider that the observations of Derham AsJ in Walters v Perton (No 2) [2019] VSC 542 are applicable.
I ought record that Mr Fazal offered an undertaking to file a counterclaim were that required to regularise the application. In light of my conclusion expressed above, I do not require him to do so.
D. Abuse of process, or the implications from the earlier removal
When asked what had changed to justify her lodging a second caveat after this Court had on 17 February 2022 ordered her to remove the first caveat and then made orders, at her request, on 25 February 2022 restraining the proceeds of sale (which assumed a settlement and thus there being no caveat), Ms Fazal emphasised her belief that the property was hers, that Mr Fazal was acting improperly and unwisely, and that the decision made by the Court on 17 February 2022 was wrong and unfair to her. When asked about additional material, she referred to:
(a) the fact that she had in recent days contacted the mortgagor bank and offered to repay the arrears, finish the development, and then sell the property. The bank had noted her proposal, but had not yet responded. The proposal was made in a short, undetailed email;
(b) the fact that she had since lodged a complaint with the Legal Services Commission about Mr Fazal’s lawyers, and that the Legal Services Commission were investigating that complaint;
(c) an affidavit (not in the form of a formal court document) sworn by Mr El-Hissi on 25 February 2022 in which he swore that he would lend money to the plaintiff and otherwise assist her to allow her to complete the development at the property and lend money to her ‘to repay any outstanding home loans’; and
(d) the fact that on 24 February 2022, she had obtained a valuation of the property that stated the following:
The subject property has an underlying, unencumbered value of $760,000, however, that disregards the added value of the Planning Permit and three (3) dwellings that could be sold and settled before the end of 2022.
It is our considered opinion current market value is $1,000,000, including the added value of those in situ materials.
The property valuation described at paragraph (d) above was presumably in response to an affidavit sworn by Ms Kulasekara on 22 February 2022. Mr Fazal had obtained this affidavit from Ms Kulasekara who was the sales agent who had managed the sale. Ms Kulasekara deposed that she valued the property in the range of $850,000 to $900,000, and that the sale price achieved of $865,000 was in accordance with current market values for similar properties. The valuation was before Forbes J on the application to restrain the proceeds of sale, as was the affidavit sworn by Mr El-Hissi.
Further, the transcript indicates that at the hearing before Forbes J on 25 February 2022, and despite that hearing ostensibly being only the return of Ms Fazal’s application to restrain the proceeds of sale, the caveat had not then yet been removed, and Ms Fazal, through her counsel, stated:
Now, in our submission, what should happen is that (a) the matter needs to go to trial because there is a direct conflict of evidence on a central point; (b) pending trial … the settlement should not go ahead. It hasn't gone ahead so far, but the fact is that the development cannot occur by the plaintiff if the settlement goes ahead; and, (c) she should be allowed to make such profit as she's able to make by completing the development.
Forbes J observed, in her reasons given orally on 25 February 2022, that Ms Fazal, through her counsel, on that day ‘sought broader injunctive relief on the return of the summons today, seeking that I injunct the sale of the land until trial of the proceeding’. Her Honour did not give that relief.
That is, in substance, the identical argument that Ms Fazal wished to put to me. The fact that Ms Fazal has since made a communication to the bank to which she has not had a substantive response, and the fact that she has since made a complaint about Mr Fazal’s solicitors, do not alter the substance of the issues or the material that was considered by Forbes J.
Ms Fazal also informed me that she was intending to appeal the decision of Forbes J. As at the time of argument, no appeal document had been formally filed. I was provided with an unfiled application for leave to appeal, which sought only to set aside the decision of Forbes J made 25 February 2022, which was the decision made at Ms Fazal’s request to restrain the net proceeds of sale. I am prepared to assume, however, that Ms Fazal intends to appeal, or to seek leave to appeal, the decision of Forbes J that the caveat be removed.
A second interlocutory application for the same relief is an abuse of process if it would be unjustifiably oppressive to the other party, or would bring the administration of justice into disrepute.[1] Ordinarily, an abuse of process is associated with the bringing of a proceeding or application, rather than the defending of a proceeding or application, but the situation with an application under s 90(3) of the Transfer of Land Act 1958 is unusual. Although an application under s 90(3) of the Transfer of Land Act 1958 is commenced by the party seeking to have the caveat removed, the hearing of the application is treated as if the caveator were the moving party seeking an interlocutory injunction.[2] Accordingly, in substance, it is the caveator who is potentially abusing the process of the Court by asserting that a second caveat should not be removed in circumstances where the second caveat has been lodged by that party to replace an identical caveat that had already been removed pursuant to an order of the Court.
[1]PNJ v The Queen (2009) 252 ALR 612; 83 ALJR 384; 139 A Crim R 54; [2009] HCA 6, [3] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ).
[2]Piroshenko v Grojsman (2010) 27 VR 489, [7] (Warren CJ).
I consider that, in the circumstances of this case, having to redetermine whether Ms Fazal’s caveat ought remain on title, some six weeks after this Court has determined that it ought not remain on title, would bring the administration of justice into disrepute. In my view, the matters that Ms Fazal relied on to show materially different circumstances are insufficient to prevent a conclusion that the re-litigation of this issue would be an abuse of process. Ms Fazal’s option, should she wish to dispute Forbes J’s order removing the caveat, is to try to get that order set aside on appeal. Then, she would face the legal principles that apply, for good reason, including the need to obtain leave, and the need to establish that Forbes J’s decision was attended with error such that it should be set aside. It would bring the administration of justice into disrepute if Ms Fazal were able by bypass the appeal process by simply lodging a second caveat in the same terms as the earlier caveat, and start the process again before a different judge, in the hope of obtaining a different outcome.[3]
[3]Cf D A Christie Pty Ltd v Baker [1996] 2 VR 582, 602-604 (Hayne JA), 611-2 (Charles JA).
The additional matters that Ms Fazal sought to rely on do not affect my assessment that her conduct amounts to an abuse of the process of the Court. As noted above, Ms Fazal’s contention that she was the beneficial owner of the property and that Mr Fazal was acting dishonestly, and her desire not to have the property sold by him on the terms contained in the written contract of sale, were all before Forbes J. Forbes J accepted that there was an issue to be tried as to who was the beneficial owner of the property, which involved a question as to Mr Fazal’s honesty, but nonetheless determined that the balance of convenience favoured removal of the caveat. There was, as noted above, an associated order restraining the net proceeds of the sale.
Further, were it necessary to decide, I would conclude that her Honour’s conclusion was and remains the correct one. The fact that the property may (if Ms Fazal is correct) be worth more than the sale price, would mean that the frustrated purchaser would have a claim in damages for any difference between the sale price and the property’s value. There are serious issues to be tried as to who is the beneficial owner of the property. But the mortgage payments have not been made, the loan is in default, and the bank has taken steps to enforce its mortgage. Mr Fazal has, with the agreement of the bank, executed a formal written contract for the sale of the property. The agent has sworn that the sale price is reasonable. Her Honour’s orders have the effect of permitting the sale to go ahead, but restraining the net proceeds of the sale. It is difficult to see how the balance of convenience could favour any other solution, notwithstanding Ms Fazal’s belief or suspicion that the contract of sale is not enforceable.
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