Glensborough Estate Pty Ltd v Frajman
[2009] VSC 591
•14 December 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
| AT MELBOURNE PRACTICE COURT | |
| No. 10617 of 2009 | |
| GLENSBOROUGH ESTATE PTY LTD and Anor | Plaintiff |
| v | |
| FRAJMAN and Ors | Defendants |
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| JUDGE: | OSBORN J |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 14 December 2009 |
| DATE OF JUDGMENT: | 14 December 2009 |
| CASE MAY BE CITED AS: | Glensborough Estate Pty Ltd v Frajman |
| MEDIUM NEUTRAL CITATION: | [2009] VSC 591 |
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PROPERTY - Removal of caveats from title – Caveatable interest held by lessee terminated on termination of lease – Goldstraw v Goldstraw [2002] VSC 491 - Zampichelli v Zampichelli [2009] VSC 489 - Pyrenees Vineyard Management Limited v Frajman (2008) 69 ACSR 95 - Transfer of Land Act 1958 ss 89, 90 - Supreme Court (General Civil Procedure) Rules 2005 r 6.02
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Moller | O’Donnell Salzano Lawyers |
| For the Defendant | No appearance | |
| HIS HONOUR: |
The plaintiffs in this matter seek orders for the removal of caveats on the basis the caveators no longer hold caveatable interest in the land in issue.
The application is made pursuant to s 90(3) of the Transfer of Land Act 1958 which provides that any person who is adversely affected by a caveat may bring proceedings in the court against the caveator for the removal of the caveat and the court may make such order as the court thinks fit.
In Goldstraw v Goldstraw,[1] Dodds-Streeton JA usefully summarised the authorities with respect to this provision as follows:
Section 90(3) is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The court's power under s 90(3) is discretionary. In that context it is recognised that the caveator bears the onus of establishing that there is a serious question to be tried that he or she does have the estate or interest in the land claimed, that is, “In order to resist successfully the applications for removal of caveats, the caveator's arguments must be directed to the assertion of an interest in the subject land in the light of relevant principles of property and equity law.” Further, if the caveator does establish the serious question to be tried in relation to the estate or interest claimed, the weight of authority indicates that the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.
[1] [2002] VSC 491, [30].
Notice of the application has been given in writing to the solicitors for the caveators at the address recorded in the respective caveats. In addition, a further letter giving notice of the application has been sent to the individual caveators by the solicitor for the plaintiffs.
Section 89(4) of the Transfer of Land Act provides that every notice relating to any such caveat in any proceedings in respect thereof if served at the address in Victoria specified in the caveat shall be deemed to be duly served.
As Kaye J held in Zampichelli v Zampichelli,[2] after reviewing the relevant authorities, s 89(4) is to be regarded as an exception to r 6.02(1) of Chapter 1 of the Rules and thus entitles a plaintiff in an application such as that before me to serve proceedings by post on the address nominated by the caveator in the caveat. In the circumstances I am satisfied that proper notice has been given of the application.
[2] [2009] VSC 489.
I turn then to the facts of the matter. The Glenkara Estate Vineyard project is a registered management investment scheme. It was established with the aim of growing and selling wine grapes on a vineyard located near Landsborough in central Victoria.
The first plaintiff owns the vineyard, the second plaintiff is the responsible entity for the conduct of the project.
Under the project, each of its members, who are known as growers, leased a portion of the vineyard. Each such portion was described in the project documentation as a vineyard allotment and comprised about half a hectare. A number of the growers lodged caveats in respect of their interest in these allotments as the project documentation expressly allowed them to do.
Evidently because of prolonged drought conditions the project has not proved viable. In June 2008 the growers resolved to wind up the project and the leases were terminated and the growers' interest ceased. Nevertheless the caveats have not been removed.
The plaintiffs now apply for removal of the caveats in order to enable a new investment proposal to be implemented with respect to the vineyard.
The structure of the project and the relevant leasehold arrangements were described in some detail by Judd J in Pyrenees Vineyard Management Limited v Frajman.[3] His Honour summarised the situation in paras 4 to 10 of his judgment as follows:[4]
The project was established under a project deed between the plaintiff as responsible entity, Glensborough as owner of the freehold of the land, Sandhurst Trustees Ltd as the investors’ representative and the growers who subscribed for interests in the project at different times. Under stage 1 of the project, Glensborough leased 168 half hectare vineyard allotments to growers. Each lease was for 20 or 21 years. Stage 1 allocations were made on or before 30 May 1998. Thereafter, a further 438 vineyard allotments were allocated to subscribing growers under stage 2.
When subscribing for an interest in the scheme under stage 1, each grower entered into a vineyard lease. Glensborough was lessor and the plaintiff was appointed manager. A nominal rental of $150 per year was payable. Each grower agreed to procure the establishment of a vineyard on the vineyard allotment in accordance with a development plan. The grower was required to bear all costs incurred in respect of the development and to cultivate, maintain and manage the vineyard. Glensborough was entitled to terminate the lease if the project was terminated in accordance with the project deed. On termination the grower had the option of selling all vineyard improvements to Glensborough or removing the improvements . If the grower exercised the sale option, Glensborough was required to pay to the grower the improvements fee prescribed in the schedule.
Each vineyard lease was subject to and conditional upon the grower entering into, on or prior to its commencement date, a development agreement with the plaintiff for the development of each vineyard; a management agreement with the plaintiff for the management of each vineyard; and a grape purchase agreement.
Under stage 2, vineyard allotments were sub-leased to growers by the plaintiff, which had taken a head lease from Glensborough. The terms of each sub-lease between plaintiff and grower were, in material respects, the same as each lease between Glensborough and grower, except that the agreement, under which a grower might become entitled to the improvements fee, was recorded in a separate option agreement between Glensborough and grower.
The project suffered from inception through lack of water for irrigation. In 2002 the plaintiff recommended to growers, who agreed, that a 14 km pipeline be constructed to pipe water from the Wimmera river to the vineyards, providing an alternative source of water for irrigation. The cost of the pipeline was shared between growers and Glensborough. The growers contributed $2400 per vineyard allotment while Glensborough paid the balance, in the sum of $200,000. It also made a water rights capital contribution of $195,000. Each grower received an interest in the pipeline pursuant to a pipeline reversion agreement with Glensborough under which the grower was entitled to a reversion payment calculated by reference to the effective life of the pipeline and grower contribution. Each grower was required to sell his, her or its interest in the pipeline to Glensborough 30 days after the termination of a vineyard lease. There was no option to exercise.
The continuing drought and a decision made by the water management authority prevented the diversion of any useful quantity of water through the pipeline to the vineyards. As a consequence, grape production rapidly diminished and so did revenue. The plaintiff sought financial accommodation from a related entity, Stanford Financial Services Pty Ltd, which in turn was funded by the National Australia Bank. As at 30 September 2008 Stanford had advanced loans totalling $3,760,120.
Winding up
The National Australia Bank recently withdrew its support. An attempt by the plaintiff to restructure the project was not successful and on 23 June 2008 the growers directed the plaintiff to wind up the project. As a consequence, the head lease and each vineyard lease was terminated.
[3] (2008) 69 ACSR 95; [2008] VSC 252.
[4] Pyrenees Vineyard Management Limited v Frajman (2008) 69 ACSR 95; [2008] VSC 252, [4] – [10].
His Honour's judgment was the subject of appeal to the Court of Appeal but on 20 November 2009, the appeal was dismissed.
Critically for present purposes, both the stage one and stage two leases referred to in the judgment of Judd J provided that upon termination of the term of the relevant project, the grower must promptly withdraw any caveat it may have lodged under the lease arrangements. I am satisfied the project was terminated by the resolution on 23 June 2008 of the growers to wind up the project. Consistent with that resolution the head lease, vineyard leases, management agreements and development agreements, relating to the project, have all been terminated. Notices of termination of the vineyard leases, management agreements and development agreements were sent to each of the growers on 13 October 2008 and a notice of termination of the head lease has been executed by the first plaintiff and the second plaintiff.
The interest claimed in each of the caveats is identical namely as an interest as lessee under a lease with the first plaintiff dated on or about 30 June 1998. As I have said, I am satisfied that each such lease has been terminated and I am further satisfied that the leases themselves required withdrawal of the caveats upon such termination.
In addition, the present application is unopposed and nothing is raised on behalf of the caveators pursuant to s 90(3) of the Transfer of Land Act.
Accordingly, I propose to make orders for the removal of the caveats in accordance with the form of order tendered to me and I will execute that order today upon receipt of the further affidavit of service which counsel has indicated to me should be lodged with the Court shortly.
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