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Karan v Nicholas

Karan v Nicholas

Case [2019] VSC 35 7 February 2019

Equitable Estoppel

Constructive Trust

Admissibility of Evidence

Specific Performance

Property Law

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2018 01948

FOTIOS (FRANK) KARAN (in his capacity as administrator of the estate of Soultana Karanicopoulos, deceased)	Plaintiff
v
THEO NICHOLAS	First Defendant
~~MATTHI NICHOLAS~~	~~Second Defendant~~

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	1 February 2019
DATE OF JUDGMENT:	7 February 2019
CASE MAY BE CITED AS:	Karan v Nicholas
MEDIUM NEUTRAL CITATION:	[2019] VSC 35

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REAL PROPERTY – Caveats – Application for removal of a caveat under s 90(3) of the Transfer of Land Act 1958 (Vic) (‘TLA’) – Caveat lodged by the first defendant pursuant to claim of an implied or constructive trust between the caveator as beneficiary and the registered proprietors as trustee over the subject property – Yamine v Mazloum [2017] VSC 601, referred to – Whether equitable interest exists in relation to contributions made to the property in reliance on a future interest in the property – Whether constructive trust comes into existence at the time that the conduct giving rise to the trust occurs – McNab and Anor v Graham and Anor [2017] 53 VR 311, applied – Balance of convenience favours the removal of caveat as both parties agree that the property should be sold at auction – Order for removal of caveat made subject to certain conditions.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Seelig	Destra Law
For the Defendant	Mr B Harding	Kennedy Guy

HER HONOUR:

The plaintiff, Mr Fotios (Frank) Karan is the administrator of the estate of his late mother (‘estate’). The first defendant, Mr Theo Nicholas, is his brother. They are beneficiaries of the estate in equal shares. The main asset of the estate is a property at 114 Edward Street, Brunswick (‘property’). Theo currently lives at the property, and he is also the sole registered proprietor of the neighbouring property at 112 Edward Street, where his late parents lived for many years.

The property has been the subject of a previous proceeding in this Court (‘earlier proceeding’). On 18 September 2018, Ierodiaconou AsJ dismissed an application by Theo for further provision in the form of a right to purchase the property based upon a valuation, rather than at public auction.[1] Frank has been taking active steps to sell the property, which is expected to realise in the vicinity of $2 million at auction. However, before giving clear title prior to sale, Frank is required to procure the removal of a caveat lodged by Theo on 7 August 2012. The caveat claims ‘an equitable estate in fee simple’. The grounds of claim is specified as follows:

By virtue of an implied and/or constructive trust between the caveator as beneficiary and the registered proprietors as trustee.

[1]Re Karanicopoulos; Nicholas v Karan [2018] VSC 537.

Frank issued this proceeding on 25 October 2018, seeking the removal of the caveat pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic). When…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Karan v Nicholas

Details

AGLC: Karan v Nicholas [2019] VSC 35
Case: [2019] VSC 35
Decision Date: 7 February 2019

CaseChat Overview and Summary

Karan, the first plaintiff, sought the removal of a caveat lodged by Nicholas, the first defendant, over a property. The caveat was based on Nicholas's claim of an implied or constructive trust over the subject property, asserting that he had a beneficial interest in the property. The second defendant, who was the registered proprietor of the property, supported the removal of the caveat. The matter was heard in the Supreme Court of Victoria.

The court had to determine whether an equitable interest existed in relation to contributions made to the property in reliance on a future interest in the property. The court also had to consider whether a constructive trust comes into existence at the time that the conduct giving rise to the trust occurs. The court considered Yamine v Mazloum [2017] VSC 601 and McNab and Anor v Graham and Anor [2017] 53 VR 311 in making its decision.

The court found that an equitable interest could exist in relation to contributions made to the property in reliance on a future interest in the property. However, the court found that a constructive trust does not come into existence at the time that the conduct giving rise to the trust occurs. The court found that the balance of convenience favoured the removal of the caveat as both parties agreed that the property should be sold at auction. The court made an order for the removal of the caveat subject to certain conditions.

The court ordered that the caveat be removed subject to the first defendant lodging a guarantee for $250,000 within 28 days of the order. The court also ordered that the sale of the property proceed as per the auction on the date specified, and that the proceeds of the sale be held in trust until the resolution of any claims between the parties.

Orders