First Mortgage Company Home Loans Pty Ltd v R & a Cab Co Pty Ltd

[2007] VSC 427

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 8628 of 2007

FIRST MORTGAGE COMPANY HOME LOANS PTY LIMITED (ACN 104 268 448)	Plaintiff
v
R & A CAB CO PTY LTD (ACN 080 885 114)	First Defendant
And
REGISTRAR OF TITLES	Second Defendant

---

JUDGE:	COLDREY J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 OCTOBER 2007
DATE OF JUDGMENT:	2 NOVEMBER 2007
CASE MAY BE CITED AS:	FIRST MORTGAGE COMPANY HOME LOANS PTY LIMITED v R & A CAB CO PTY LTD & ANOR
MEDIUM NEUTRAL CITATION:	[2007] VSC 427

---

Caveat – Application to remove caveat – Whether a caveatable interest – Transfer of Land Act 1958, sections 42 and 43.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A. Flower	Hunt & Hunt
For the First Defendant	Mr P. Fox	John Matthies & Co

HIS HONOUR:

1. First Mortgage Company Home Loans Pty Limited (“the plaintiff”) seeks relief by way of Amended Originating Motion that a caveat AE875701E dated 2 February 2007 and lodged by R & A Cab Co Pty Ltd (“the first defendant”) in respect of property situated at 289-293 Dorset Road, Croydon, Victoria (Certificate of Title Volume 08824 Folio 058), be removed pursuant to s.90(3) of the Transfer of Land Act 1958 (“the Act”).

1. That caveat claimed an equitable interest in fee simple in the subject land pursuant to a declaration of trust made on 8 July 2005 by Australvic Property Management Pty Ltd (Australvic) that it held the land on trust for the caveator (the first defendant).

1. In an affidavit dated 15 October 2007, sworn on behalf of the first defendant, Mr Rocco Calderone, a property developer, deposes to establishing a joint venture with the company Australvic, (apparently a creature of one Michael Kyriakou) to profitably refinance some building developments so that they could be completed at a profit which was to be shared equally between the parties.

1. The affidavit states that the subject property (amongst others) was transferred to Australvic pursuant to a joint venture established in August 2005.  Strangely, the declaration of trust bears a date prior to the purported agreement, but nothing turns on this point.

1. In essence, the deponent claims that the representations by Kyriakou which induced these transactions were false and, in contravention of an undertaking not to further encumber the Dorset Road property, Kyriakou borrowed an additional $100,000 against it.  Consequently, on 5 February 2007, the first defendant terminated the joint venture with a demand that Australvic re-transfer the relevant properties.  Following Australvic’s refusal to do so, caveats were lodged by the first defendant.  (Again, the caveat the subject of this application appears to have been lodged prior to that date). 

1. In any event, in the meantime, Australvic, having become the registered proprietor of the property since 15 November 2005, entered into a mortgage with the plaintiff.  The mortgage itself is dated 28 October 2005 and is shown as being registered on 15 November 2005.

1. According to an affidavit dated 25 September 2007, sworn by Ms Gail Halcoop on behalf of the plaintiff, the mortgagor (Australvic) defaulted on the repayment of the debt secured by the mortgage in about September 2006.  That default not having been remedied, the plaintiff, on 25 January 2007, obtained a court order for the possession of the property.  Thereafter, on 15 March 2007, the plaintiff entered into possession of the property and, on 21 July 2007, the plaintiff entered into a contract to sell the property with settlement scheduled for 19 September 2007. 

1. According to Ms Halcoop’s affidavit, (which I regard as sufficiently conforming to the requirements of knowledge, information and belief), prior to the lodging of the caveat on 2 February 2007, the plaintiff was unaware of any declaration of trust.  This proposition is, in effect, uncontradicted.  The only assertion relevant to the situation in Mr Calderone’s affidavit is that he was “informed by Kyriakou and verily believed that he advised the Mortgage Broker who was assisting him generally in regard to the refinancing of the properties of the terms of the Joint Venture and that Australvic, although the transferee, only held the property as Trustee.”[1]

   [1]Para [21].

1. In my view this falls well short of demonstrating that the plaintiff had any notice of the existence of any declaration of trust.

1. Section 42 of the Act provides indefeasibility of title in relation to registered interests in the absence of fraud. There is no evidence of fraud in this case other than that which may, on the materials, be attributed to Australvic. Further, the various exceptions to indefeasibility set out in s.42(2) of the Act are inapplicable. For completeness I should add that the factual situation disclosed does not require the invocation of s.43 of the Act on behalf of the plaintiff.[2]

   [2]See, for example, Perpetual Trustees Victoria Ltd v G. Gheorghui [2007] VSC 412 per Harper J at paras [14]-[17] as to the applicable law.

1. The circumstance that the registration of a subsequent dealing in the land extinguishes all prior unregistered estates or interests is clearly enunciated by the High Court in Leros Proprietary Limited v Terara Proprietary Limited & Anor[3];  other cases supportive of this proposition were also cited in argument.

   [3](1991) 174 CLR 407 at 418-19 per Mason CJ, Dawson and McHugh JJ.

1. In my view the principle articulated in the High Court judgment is entirely apposite to the present case.

1. On behalf of the first defendant I was referred to a number of cases including that of Vassos & Anor v State Bank of South Australia & Anor.[4]  This was a decision of Hayne J in which his Honour affirmed the principle that, unless a mortgagee (or his agent) had engaged in fraud, the mortgagee acquired an indefeasible title by registration.

   [4](1993) 2 VR 316.

1. As I have already indicated, there is no evidence whatsoever of fraud (as defined) by the mortgagee in the instant case.

1. Insofar as other authorities cited (which I shall not list) may be said to bear upon this matter at all, I prefer the judgment of Justice Hayne in Vassos’ case which may be said to affirm the operation of the Act as conferring immediate indefeasibility.

1. Accordingly, in the circumstances I have set out, I do not agree with the submission made on behalf of the first defendant that there is a serious issue to be tried in this case. It follows that the relief sought by the plaintiff should be granted. That is, the relevant caveat should be removed pursuant to s.90(3) of the Act.

1. Unless persuaded otherwise I propose to make further orders in the form of the draft submitted to the Court by counsel for the plaintiff.

---