Gold Road v Platt
[2019] VSC 714
•17 October 2019 (Revised)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
S ECI 2019 04377
| GOLD ROAD NO. 3 PTY LTD (ACN 620 057 776) AS TRUSTEE FOR GOLD ROAD UNIT TRUST NO. 3 | Plaintiff |
| v | |
| DAVID GEOFFREY PLATT | First Defendant |
| -and- | |
| ELIZABETH JOAN PLATT | Second Defendant |
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JUDGE: | Ginnane J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 October 2019 |
DATE OF JUDGMENT: | 17 October 2019 (Revised) |
CASE MAY BE CITED AS: | Gold Road v Platt |
MEDIUM NEUTRAL CITATION: | [2019] VSC 714 |
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REAL PROPERTY – Caveat – Whether defendants had an estate or interest in land – When registered proprietor purchased property under a contract with defendants – Whether consideration for contract illusory – Whether defendants entered into contract because of plaintiff’s misleading and deceptive contract – Whether defendants had an estate or interest in land – Order for removal of caveat Transfer of Land Act1958 s 90(3).
REAL PROPERTY – Registered proprietor seeking possession order – Defendants’ possession under licence – Licence determined – Possession order made – Supreme Court (General Civil Procedure) Rules 2015 order 53.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | G Lubofsky | Sladen Legal |
| For the First Defendant | In person | |
| For the Second Defendant | J Stavris | De Wet Partnership |
HIS HONOUR:
The plaintiff, which I will call Gold Road, seeks orders that it be granted possession of the land contained in Certificate of Title volume 3568, folio 408 and that the Registrar of Titles remove a caveat lodged by the defendants over that title. The land is 29 Beach Road, Hampton (‘the property’).
I will first deal with the caveat lodged by the two defendants, Mr David Geoffrey Platt and Ms Elizabeth Joan Platt, who were previously the registered proprietors of the property and who registered the caveat. They claim a freehold estate, and an absolute prohibition on Gold Road dealing with the land. Ms Platt, the second defendant, but not Mr Platt, is in possession of the property.
The plaintiff, Gold Road, became registered proprietor of the land on 1 October 2018.
The party claiming the estate or interest under a caveat must establish a prima facie case of an estate or interest in the land, after which the Court must consider the balance of convenience to determine whether the caveat should be removed.
The background to this matter is as follows. Evergrande Properties Pty Ltd was controlled by Mr Michael Elliott, a property developer who also controls Gold Road, the plaintiff. Evergrande entered into a contract with Mr and Mrs Platt, dated 28 March 2017, to purchase the property for $2.2m, which was less than the then Council valuation. That contract did not proceed at that time, and Evergrande commenced specific performance proceedings in this Court, while the Platts brought a redemption action by counterclaim.
Much of the Platts' case concerns how they came to execute the 2017 contract. They say that it was not intended that they transfer the title at that stage. But the Supreme Court litigation was settled by a Deed of Settlement, in which the parties provided mutual releases and accepted that the 2017 contract, subject to variations which included the substitution of Gold Road as the purchaser, was binding.
Settlement of the sale of the property to Gold Road occurred on 27 September 2018, and Gold Road paid to the Bendigo and Adelaide Bank the amount of $1,994,572.82, plus legal costs of $2,127.62, to discharge the Bank’s mortgage over the property. Gold Road's case is that it obtained these amounts under a 12 month loan from AusFinance Group Pty Ltd, which it must now repay. Evergrande also advanced the Platts $106,501.22 to repay money owing to Island Trader (Vic) Pty Ltd under a loan agreement. Thereafter, the property was transferred to Gold Road on or about 1 October 2018, and it remains the registered proprietor.
At the time they entered into the Settlement Deed, the Platts obtained legal advice from a solicitor, who gave legal certificates as to his advice.
The Platts contended that the consideration for the transfer of the property was illusory and that Mr Elliott and his company or companies may have acted in breach of the Australian Consumer Law by engaging in misleading or deceptive conduct. They referred to the wide remedies that the Court has if such conduct is proved: see s 243 of the Australian Consumer Law.
I will next describe the conflicting accounts of how Mr Elliott and the Platts came into contact.
Mr Elliott stated in his affidavit:
In or around March 2017 I was approached by the Defendants and Cameron Schwaiger. Mr Schwaiger operated a company called Island Trader (Vic) Pty Ltd (Island Trader). Island Trader was thinking of becoming the second-ranked mortgagee of the Property, which at that time was owned by the Defendants. I was also told that the Defendants were formerly directors of a company, Anstra Technologies Pty Ltd (in liquidation) (ACN 094 949 292) (Anstra) and that the liquidator of Anstra had a charge over the Defendants’ interest in the Property as a result of a settlement reached to resolve a Supreme Court proceeding in 2016 that involved Anstra.
Mr Schwaiger and the Defendants told me that the liquidator [of] Anstra intended to exercise its power of sale pursuant to the 2016 settlement terms in the following few days and asked if I was interested in purchasing the property to provide them an exit so as to avoid that sale from taking place. The Defendants were, as I understand at the time, unable to procure another financier to prevent the liquidator from exercising its power of sale.
The proposal was that his company would purchase the property for $2.2m, which Mr Elliot considered a competitive price, taking into account that the capital improved value in the most recent council rates notice for the property was about $2.65m.
The Platts', particularly Mrs Platt's, case is quite different. It is that Mr Elliott had an association with Mr Schwaiger, that the only loan that they sought in 2017 was for $250,000 and that the contract for the sale of their property was to provide security. She said that they were ready, willing and able to repay the loan that was owing to Island Trader. They tendered the $250,000, by way of repayment but it was not accepted. She described conversations at a meeting in March 2017 with Mr Elliott that were to the effect set out in this paragraph. She said that it was never their intention to sell the property for $2.2m.
The settlement documents included a Settlement Deed, which provided that in consideration of the mutual promises contained in it, the parties agreed that the 2017 contract of sale was valid, binding and had been varied by the Deed of Variation. The Settlement Deed contained mutual releases, which can provide consideration.
The parties also entered into a Development Rights Agreement (‘DRA’). Its recitals included that the Development Manager, the plaintiff and the owner, the Platts, had agreed that the Development Manager would develop the land on the terms and conditions contained in it. A condition precedent, clause 2.1, was that the Development Manager would obtain a planning permit on terms and conditions acceptable to it at its absolute discretion. Each party to the DRA acknowledged that they were entering into the agreement for their own commercial benefit and for valuable consideration.
The DRA contained a best endeavours clause in clause 2.2, and in clause 3.3 the owners agreement to co-operate. Provision was made for the owners to obtain a balance payment as a right to share in the profit of the development (clause 5.1). Clause 10 gave the Platts the right to purchase a lot in the development. Clause 12.8 contained a no representation or reliance provision.
Gold Road's case is that it took steps to develop the property, with the four townhouses or apartments to be constructed on the property, but that the proposed development turned out to be commercially unviable. The Platts' case is that Mr Elliott’s contention about the viability of the project was incorrect and they rely on their own valuer’s letter in that regard.
Gold Road contended that the settlement agreements did not give the Platts a proprietary interest in the property. Rather it is the owner of the property and it is entitled to deal with it in its absolute discretion while the defendants are former licensees with no right to lodge a caveat. The reference to licensees is that under the Deed of Variation, the Platts were permitted to remain on the property while Gold Road determined the feasibility of the proposed development.
Gold Road's contention is that, since February, the defendants have not made interest payments under the loan agreement nor paid any licence fees. Gold Road also contended that the licence did not create or give rise to a landlord-tenant relationship or create any proprietary interest in favour of the Platts (see clause 12.2).
Gold Road served a notice of termination of the licence by a letter dated 18 April 2019, signed by Mr Elliott stating that:
Re: Vacation Notice of 29 Beach Road, Hampton
We refer to the Licence granted by the contract of sale dated 28 March 2017 (and varied by the Deed of Variation dated 26 October 2017) for you to occupy the abovementioned property.
Pursuant to clause 12.3, we now exercise our right to terminate the Licence and put you on notice of your requirement to vacate the property within 30 days of this notice (notice period).
Should you not vacate the property within or by the end of the notice period, we reserve our right to undertake the steps in clause 12.3(d) to secure the vacant possession of the property.
On 5 April, Gold Road notified the Platts that the DRA was terminated. Gold Road wrote:
As you may be aware, we have obtained town planning advice and conducted a feasibility study of the proposed development of the Land.
I enclose a valuation prepared by M3property. The figures reflected in the valuation project the proposed development to be commercially unviable.
Accordingly, it is certain that condition precedent 3 in clause 2.1 in the DRA will not be satisfied, which will give us a right to terminate the DRA and deal with the Land at out our discretion.
We also refer to the loan advanced by Evergrande Properties Pty Ltd as trustee for the Evergrande Properties Trust (Evergrande) to you pursuant to the Loan Agreement dated 27th September 2018.
As you are aware, settlement of the sale of the Land did not occur within the terms prescribed by the Land Sale Contract (another Condition Precedent), which resulted in the loan advanced by Evergrande to you. This also gives us a right to terminate the DRA. We also give notice of our intention to bring the DRA to an end pending the payment of this loan amount within 14 days.
For the avoidance of doubt, this letter does not constitute a waiver of Gold Road No.3 Pty Ltd’s rights and obligations under the DRA nor a waiver of the Conditions Precedent under clauses 2.1 and 2.3.
Gold Road submitted that the 2017 proceedings were settled and subsequently dismissed without any right of reinstatement, and the parties provided mutual releases affirming the 2017 contract. It contended that the DRA always contemplated that, if the development did not proceed, then Gold Road would remain the owner of the property. It contended there was consideration for the settlement documents including the DRA. It argued that when the documents were read as a whole, they demonstrated an agreement to settle the Supreme Court proceedings. It had paid about $2.2m on behalf of the Platts and granted them a licence to occupy the property.
The Platts' case, particularly as advanced by counsel for Ms Platt, was that there was no consideration for the Deed of Settlement and the DRA. In that regard, Ms Platt stated that the parts of the DRA, particularly clauses 2.1 (b)3, 2.4 and 2.6(c), effectively enabled the Development Manager to acquire land for an undervalued amount of $2.2m, when its true value was $2.9m. The DRA did not require the Development Manager to attempt to develop it, but gave it an absolute discretion to deal with the property after 12 months.
Ms Platt pointed to the failure of the Development Manager to apply for a permit, and contended that Gold Road had repudiated the DRA by its letter of 5 April, to which I have referred. She contended that Gold Road was the only beneficiary of the DRA and that the settlement was a ‘hoodwink’ of her rights, that there was no consideration for the DRA and that Gold Road had repudiated the DRA. She challenged Gold Road and Mr Elliott's assessment of the development project’s viability.
Mr Platt made three points in particular. First he disputed Mr Elliott’s claim that Evergrande was involved with the Platts to provide them with an ‘exit’. He said that Mr Elliott wanted to acquire the property from the start, and that the DRA was a sham. Secondly, he submitted that the DRA and the development were viable and described the Beach Road property was one of the few properties within 20 kilometres of Melbourne with uninterrupted bay views.
Thirdly, he submitted that Gold Road had manufactured urgency for the removal of the caveat for the sale to purchasers who appeared not to be at arm’s length. He said that there was unconscionable conduct, and he pointed to his and his wife’s loss of their right to obtain an owner's share of the development profits.
In considering whether the Platts have shown a prima facie case to maintain their caveat, I do not make final determinations of the issues in the case.
The Platts’ claim to an estate or interest in land depends on the strength of their claim that they have a freehold estate in the property. In my opinion, the evidence does not establish that they have that estate. The registered proprietor is Gold Road. The Platts’ case, if proved, would probably provide a remedy in damages for breach of the DRA or other agreements based on their repudiation by Gold Road or for damages caused by misleading or deceptive conduct. The Platts pointed to the wide powers in the Australian Consumer Law, particularly under s 243, when a claim for misleading or deceptive conduct is established. But the few authorities on this question suggest that the possibility of a remedy under that provision does not create an estate or interest in land, see for example the judgment of Young J in the New South Wales Supreme Court in Df McCloy Pty Ltd v Oldfield & Anor.[1]
[1][1997] NSWSC 664.
In those circumstances, I do not consider that the Platts’ possibility of establishing a claim in misleading or deceptive conduct or the other claims that they advanced creates a caveatable interest in the property.
In support of the argument that the consideration for the DRA and other agreements was illusory, counsel for Ms Platt referred me to the decision of the Court of Appeal in Gippsreal Ltd v Registrar of Titles & Kurek Investments.[2] In that case, the lender or proposed lender claimed the sum of $125,000 for preliminary investigation and expenses when a loan offer which had been accepted by the borrower did not proceed. The Court of Appeal held that in the circumstances of the loan not proceeding there was no separate contract entitling the lender to claim those preliminary investigation expenses, and that there was no consideration for any severable contract concerning them.
[2](2007) 20 VR 157.
In contrast in the present case, I do consider that effect has to be given to the Settlement Deed, which contained mutual releases and reaffirmed the 2017 contract. In addition Gold Road paid a substantial sum to the Bendigo and Adelaide Bank on behalf of the Platts. That may have been less than the true value of the property but it still provided consideration.
The Platts’ evidence does not establish a prima facie case to support the caveat. I consider that any claim that they may have would be for damages. I cannot determine on this application, whether any such claim would succeed.
In those circumstances, it is strictly unnecessary for me to consider the balance of convenience, but I do note that Ms Platt said that, if the caveat were to be removed, then the sale should be by public auction. Doubt was expressed whether the current contract, which described the purchaser as a company DJYZ Pty Ltd as trustee for the Cho Renouf Family Trust – which is a contract for the purchase of the property for $3m– was a genuine contract. But there was no evidence that it was not genuine.
The other matter to which Gold Road points is its need to repay its loan to AusFinance. Most importantly, in my opinion, I have to keep in mind that Gold Road is registered proprietor, which normally carries the right to sell a property.
In those circumstances, the balance of convenience favours the removal of the caveat. I do consider that Gold Road is entitled to an order that the Registrar of Titles, pursuant to s 90(3) of the Transfer of Land Act1958, remove the caveat from the title to the property.
The other order sought by Gold Road is for an order of possession of the property under order 53 of the Supreme Court (General Civil Procedure) Rules 2015. That order 53 gives the court power to make an order regarding ‘…land which is occupied solely by a person or persons who entered into occupation or, having been a licensee or licensees, remained in occupation without the plaintiff's licence or consent…’
That pre-condition is established, because the Platts were in possession of the property pursuant to the licence given in the Deed of Variation and it was terminated by the April 2019 letter to which I have referred.
The principles relevant to whether the court should exercise its discretion to grant an order for possession involve, first of all, recognition that the court is given a discretion. The cases establish relevant considerations.[3] The power is intended to enable a speedy resolution in favour of the proprietor of the land subject to a dispute whereby trespassers are keeping the proprietor out. That is not an apt description of the present case.
[3]Framingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 241[41] (Derham AsJ); appeal dismissed [2014]VSC 354.
Secondly, the power is intended to apply only in clear cases where there is no question to try. Thirdly, the existence of a factual dispute does not deny the applicability of order 53 where it is possible to resolve the dispute readily and fairly. Fourthly, while an order for possession may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the court is able to satisfy itself as to the material facts that bring the case within order 53.[4] Fifthly, the jurisdiction should be exercised with great care. Sixthly, where the issue does emerge, the judge has a discretion whether to simply dismiss the proceeding, to determine the issue or cause the issue to be subsequently tried. This includes giving directions as to further conduct of the proceeding. Seventhly, where the court gives judgment for possession under order 53, it may grant a stay of execution.
[4]See Tolhurst Druce & Emmerson v Maryvell Investments Pty Ltd [2007] VSC 271, [193]-[195] (Dodds-Streeton J).
In my opinion, once the caveat is removed, the position is that the second defendant, Ms Platt, is in possession of the property. That possession for present purposes was initially under a licence granted by Gold Road, but the licence was determined. Gold Road is the registered proprietor.
I do not consider there is an issue to try about Gold Road’s entitlement to possession. As a matter of law, it is entitled to possession of the property and I so order. I note that only Ms Platt is in possession of the property.
I have power to grant a stay of that order. Ms Platt has lived in the property for a long time, and I will consider any submission for some short stay of the possession order.
Having heard submissions, I will grant a two week stay of the possession order.
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