Grandeville Holdings Pty Ltd v Caglar
[2012] VCC 1031
•22 June 2012 (revised)
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-12-02894
| GRANDEVILLE HOLDINGS PTY LTD (ACN 005 460 828) | Firstnamed Plaintiff |
| LAKES PROPERTY GROUP PTY LTD ( ACN 099 385 145) | Secondnamed Plaintiff |
| v | |
| SINAN CAGLAR | Firstnamed Defendant |
| REGISTRAR OF TITLES | Secondnamed Defendant |
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JUDGE: | HIS HONOUR JUDGE GINNANE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22 June 2012 | |
DATE OF JUDGMENT: | 22 June 2012 (revised) | |
CASE MAY BE CITED AS: | Grandeville Holdings Pty Ltd & Anor v Caglar & Anor | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 1031 | |
REASONS FOR JUDGMENT
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REAL PROPERTY – Caveat – application to remove - whether contracts for sale of land affected by invalid exercise of power of attorney - application granted -Transfer of LandAct 1958 s 90 (3)
POWER OF ATTORNEY- whether witnesses required for valid power of attorney Instruments Act 1958 s106
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr T Best | De Wet Partnership |
| For the Defendant | Mr A Eidelson (solicitor) | Mr A Eidelson |
HIS HONOUR:
1 The plaintiffs seek orders that a caveat over a property situated at 51 Dandenong Road, East Frankston, be removed. Section 90(3) of the Transfer of Land Act 1958 gives the Court the power to make such an order. The terms of the caveat are as follows:
“The caveator being the previous title holder claims an equitable proprietary interest in the land in fee simple, the property having been bought by a company belonging to the caveator’s former joint-venture partner acting on a deficient instrument of power of attorney.”
2 The Registrar of Titles, who is the secondnamed defendant in this proceeding, has written a letter dated 21 June stating:
“On the basis of present information I do not intend to appear in the action. I do not intend to claim costs.”
3 The caveator must justify the caveat, which can only be lodged in respect of an estate or interest in land: s 89(1).
4 Two questions have to be decided. The first is whether there is a serious question to be tried, as to the question whether the caveator has an estate or interest in the land, and secondly, whether the balance of convenience favours the maintenance of the caveats.
5 In Piroshenko v Grojsman,[1] Warren CJ stated that:
“[I]n order for a caveator to satisfy the first limb of the test applied by the courts when deciding applications under s 90(3) of the Act,he or she must satisfy the court that:
1. there is a probability on the evidence before the court that he or she will be found to have the asserted equitable rights or interest; and
2. that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.”
[1](2010) 27 VR 489, at 493 [18].
6 The following facts appear in the plaintiffs’ affidavit:
· The property has been developed into four separate townhouses for sale.
· Contracts of sale have been entered into with regard to three of the four townhouses.
· Settlement dates for the sale of the three townhouses fall at the end of June and July respectively.
· The property has not as yet been subdivided.
· The plaintiffs allege that this subdivision cannot occur while the caveats remain in place.
· The plaintiffs allege that the sale of the properties is being jeopardised by the lodging of the caveats.
7 Apart from those facts, there are differing versions of the background to the joint-venture arrangement that existed. I need to consider the versions put forward by the plaintiffs and by the first defendant, Mr Caglar.
8 So far as the plaintiffs are concerned, Mr Frank De Groot swears in his affidavit that he and Mr Caglar entered into a joint-venture agreement in or about March 2007. There appears to be no dispute that that occurred. At that time, the property was owned by Mr Caglar and was subject to a mortgage to Westpac.
9 Mr Caglar was absent from Australia in Papua New Guinea for various periods after the joint-venture agreement was entered into. Mr De Groot states that Westpac issued a default notice in respect of payments due under the mortgage and took steps to enforce it. Mr Caglar granted Mr De Groot a general power of attorney on 26 June 2006. The power of attorney relied on by the plaintiffs states that:
1 I appoint Frank Aloysius De Groot… to act as my attorney with all matters relating to my financial affairs in Victoria, Australia.
2. I AUTHORISE my attorney to do on my behalf anything that I may lawfully authorise an attorney to do.
3. I DECLARE that this Power of Attorney shall continue to operate and have full force in all matters to do with my financial affairs in Victoria, Australia.
10 Mr De Groot also asserted that the second plaintiff, Lakes Property Group Pty Ltd (“Lakes Property Group”) made interest payments in respect of the Westpac mortgage, upon discovering that rent received from the property was not being used to service it, as he had been previously advised by Mr Caglar would occur.
11 Mr Caglar’s case is that he made significant contributions to the joint-venture project, through the payment of the rent, being received in respect of the property, into joint-venture funds. Mr De Groot, on the other hand, says all payments with respect to the development were paid by the second plaintiff, Lakes Property Group.
12 Mr De Groot also gives details of works which he says that he and Lakes Property Group performed in furthering the development. Mr De Groot says that he attempted to communicate with Mr Caglar while he was in Papua New Guinea. Mr Caglar denies that he received the communications. On 31 October 2007, Mr De Groot sent a letter to Mr Caglar in Port Moresby. Mr Caglar ‘s case is that he did not receive a copy of it. The letter stated:
“Further to my previous letter, I have received no response. Please respond as we cannot continue with the development while the property is in your name.
We have come to a complete impasse due to the rental not being banked into the account and I am unable to raise funding for the building due to the property being in your name.
I advise that I will use the Power of Attorney we executed when you were last in Australia to transfer the property into a company with myself as Sole director due to you not responding to our correspondence.
Westpac Bank has served Notice under the mortgage (attached) due to the shortfall in interest payments. I will make the interest payments but cannot continue indefinitely.
I have also sent the correspondence to your last known address here in Victoria in the hope that it may be forwarded to you.
Please respond to this letter urgently and advise when you may return to Victoria so the development can proceed as soon as possible.”
13 Mr De Groot then used the power of attorney to transfer the property to the first plaintiff, Grandeville Holdings Pty Ltd (Grandeville). It seems that the mortgage sum owing to Westpac was paid out by the second plaintiff, Lakes Property Group. Grandeville simultaneously entered into development financing arrangements with the National Australia Bank and those funds were also used to pay out the Westpac mortgage. A mortgage was given to the National Australia Bank as security for the funding provided to Grandeville. In addition, Mr De Groot gave a personal guarantee of the loan.
14 Mr Caglar’s case, on the other hand, is in essence this. He purchased the property in 2001 and in 2007, Mr De Groot, using a defective power of attorney sold the property, to the second plaintiff. It appears that the sale was to the first plaintiff, but nothing turns on that. Mr Caglar says he had no knowledge of the sale of the property. Mr Caglar accepts that on 26 June 2006, he gave Mr De Groot a power of attorney, which he signed before a witness, a Mr Andrew Zynsky. Mr De Groot, at that time, said that he required the power of attorney to implement the contract and complete the development. When the power of attorney was signed, Mr De Groot promised him that he would act completely in Mr Caglar’s best interests.
15 Mr Caglar then states that on a date unknown to him, but which he puts between 26 June 2006 and 17 September 2007, Mr De Groot fraudulently had the power of attorney signed by a fourth person, a Mr Christopher Thorne, purporting to be a witness. Mr Caglar says that, Mr Thorne, was not present when he signed the power of attorney. He alleges that Mr De Groot fraudulently purported to act for him in selling the property, first to the second plaintiff and then transferring it to the first plaintiff, and also defrauded the bank, as the mortgagee.
16 In separate proceedings in this Court, Mr Caglar has made similar allegations in support of applications for orders that the property be transferred back to him, or that the defendants in that proceeding, which include the current plaintiffs, pay him the value of the property, being approximately $1.5 million. Mr Caglar also says – I quote from paragraph 3 of his affidavit:
“In an open discussion between my solicitor and the solicitor for the Plaintiffs, I have through my solicitor offered to provide a letter of consent to allow the registration of the plan of subdivision upon my review of the documents pertaining to the settlement. I have further offered to withdraw the caveat at settlement provided I receive my share of the profit at settlement.”
17 Mr De Groot’s case in respect of these allegations made by Mr Caglar are that pursuant to the joint-venture agreement, Lakes Property Group advanced $70,000 to Mr Caglar by various advances made between March and September 2008, to assist him in commencing a business in Papua New Guinea. He then states that on 26 June 2006, Mr Caglar granted him a full power of attorney pursuant to the agreement. He states that both witnesses, I assume this is a reference to Mr Zynsky and Mr Thorne, were present at the time of the execution of the Power of Attorney. On 27 June, Mr Caglar left Australia for Papua New Guinea and his return air fare was paid by Lakes Property Group.
18 Mr De Groot states that in August 2006, he wrote to Mr Caglar and advised him that he had discovered that there were two caveats on the property and he gives details of the steps that needed to be taken to discharge those caveats. They are unconnected with the present caveat.
19 He states that following the letter dated 31 October 2007, to which I have previously referred:
“As I did not hear from Mr Caglar and given Westpac had commenced foreclosure proceedings against the Property because the mortgage was not being serviced I arranged for the payout of the Westpac mortgage by LPG and the purchase of the property by Grandeville in November 2007... Mr Caglar was not available to sign the mortgage documents for development finance. He also had an adverse credit record which prevented the granting of finance whilst the Property remained in his name. In order to mitigate loss and damage, and to comply with and give effect to the terms of joint venture agreement and the general power of attorney, the Property was transferred to the First Plaintiff. The grant of the general power of attorney by Mr Caglar was to cover any eventualities which would arise in his absence. At that time I also arranged and obtained funding for the development from the National Australia Bank...”
20 Mr De Groot also describes how he negotiated the payment of $35,000 to obtain the withdrawal of the caveats over the property. Settlement of the sale of the property took place on 20 December 2007 and the amount of $320,179 obtained on settlement was disbursed with $251,063.79 going to Westpac, $35,000 to the caveator, and the balance of $34,115.53 being paid to Lakes Property Group.
21 As I have stated, Mr Caglar says he did not receive the letter of 31 October 2007. I do not consider that that is a critical factor in the present application for this reason. The key issue is: what would be the legal effect if Mr Caglar were right and the second witness, Mr Thorne, signed the power of attorney at a date after everyone else signed it?
22 Powers of attorney are authorised by the Instruments Act 1958. Section 106 (1) states:
“An instrument creating a power of attorney may be executed by, or by direction and in the presence of, the donor of the power.”
23 It was argued by the plaintiffs, that even if the power of attorney was later signed by another witness, as alleged by Mr Caglar, that would not materially alter the intent and effect of the document, since Mr Caglar deposes that he signed such a document and it was used for the purposes that he intended.
24 I state clearly that I am not deciding today whether the settlement moneys, or any other moneys belonging to the joint-venture, should be divided between the parties. That is not the task before me.
25 It is not a valid reason for lodging a caveat, that one party wishes to obtain settlement documents, or any other documents relating to contractual dealings with another person.
26 A caveatable interest has to be based on an estate or interest in land. I have to decide whether there is a serious question to be tried that, on the evidence before the Court, that Mr Caglar will be found to have the asserted estate or interest. I also have to decide whether the balance of convenience justifies the practical effect which the caveat has on the ability of the registered proprietor to deal with the property.
27 The interest asserted is identified in the statement of claim in the other proceedings in the County Court, in which orders are sought to have the property retransferred to Mr Caglar because of the alleged fraudulent exercise of a power of attorney.
28 I have assumed for present purposes, but obviously without deciding the point, that Mr Caglar could establish that Mr Thorne did not sign the power of attorney at the same time as Mr Caglar, Mr De Groot and Mr Zynsky. Even if that were the case, I am not persuaded that it would render the power of attorney invalid. I accept the plaintiffs’ submission that s.106 does not require any witnesses to a power of attorney, when executed by the donor and, even if it did, the addition of witnesses’ signatures at a later point would not materially alter the effect of the document within the rule in Pigot’s case[2].
[2](1614) 11 Co Rep 26b, 77 ER 1177
29 I am therefore not persuaded that there is a serious question to be tried that the exercise of the power of attorney to transfer the property ultimately to Grandeville occurred in an invalid manner.
30 I therefore do not consider that Mr Caglar has established a serious question to be tried that he does a sufficient estate or interest in the land to support a caveat.
31 I will however express my view about the balance of convenience. Mr Caglar submitted that it is common enough for caveats to be withdrawn at settlement and indeed that he had made an open offer that the caveat would be withdrawn. However, that open offer was made on the basis that there be a guarantee given about the payment of his entitlements under the joint-venture. As I have said, I am not deciding what entitlements Mr Caglar, or Mr De Groot may have. It would be impossible to determine those questions without hearing much further argument. On the other hand, Mr De Groot pointed to the fact that contracts had been signed for the sale of the townhouses. Settlement is due soon and there is a need to process the approval of the plan of subdivision. There is also some evidence of demands made by builders for payments, which cannot be made until the National Australia Bank provides funding and that in turn cannot be provided until the caveats are removed.
32 I consider the balance of convenience supports the removal of the caveat.
33 I therefore will make orders in terms of paragraph 1 and 2 of the summons and, thirdly, I will order that the second defendant, the Registrar of Titles, amend the Register by taking such action as is necessary to remove from the register Caveat No. AJ401502Q dated 3 January 2012 from Certificate of Title Volume 4698 Folio 581, being the land situated at 51 Dandenong Road, East Frankston, Victoria.
34 I have also heard argument about costs. It has been put on behalf of Mr Caglar that he has made open offers and his financial circumstances are also pointed to. As I have made clear, I am not deciding what financial interest Mr Caglar may have in the joint-venture property; I am only deciding an application brought to remove a caveat. The normal course that the courts apply, is that if a party has to come to court to obtain an order, it is entitled to its costs. I see no reason to depart from that course in this case.
35 I therefore order that the first defendant pay the plaintiffs’ costs.
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