Kings Creek Properties Ltd (in liq) v Palmer
[2002] VSC 591
•19 December 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 8159 of 2002
| KINGS CREEK PROPERTIES LTD (IN LIQUIDATION) AND OTHERS | Plaintiff |
| v | |
| ADRIAN PALMER AND ANOTHER | Defendant |
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JUDGE: | BEACH J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 19 December 2002 | |
DATE OF JUDGMENT: | 19 December 2002 | |
CASE MAY BE CITED AS: | Kings Creek Properties Ltd (in liq) & Ors v Palmer & Anor | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 591 | |
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REMOVAL OF CAVEAT – No caveatable interest.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Tsalanidis | Russo Pellicano Carlei |
| For the Defendant | Mr T.S. Lynch | Hunts |
HIS HONOUR:
The firstnamed plaintiff, Kings Creek Properties Ltd (in liquidation), is the registered proprietor of four properties on the Mornington Peninsula: one at 1040 Derril Road, Moorooduc, being the land in Certificate of Title Vol. 10396 Fol. 691; another at Lot 3, Myers Road, Bittern, contained in Certificate of Title Vol. 9849 Fols. 765 and 767; a third property at 210 Myers Road, Bittern, contained in Certificate of Title Vol. 9849 Fol. 764; and finally, Lots 64 and 68 Coolart Road, Bittern, contained in Certificate of Title Vol. 9689 Fols. 324 and 325 - all of which land I shall hereafter refer to as simply "the properties".
The firstnamed plaintiff leased the properties to a company called Australian Rural Group Ltd under four leases, two of which were to expire on 30 June 2004 and two of which were to expire on 30 June 2005. That occurred between the years 1998 and 2000.
On 30 June 1999, ARG leased to the firstnamed defendant, Adrian Palmer, 3.232 hectares out of the 26 hectares of land in Lots 64 and 68 Coolart Road. On 12 and 18 July 2002 the firstnamed plaintiff made demands on ARG for outstanding rent in respect of the properties for the period from 1 July 2002 to 30 June 2003. The sum outstanding at those times was a sum of $180,657.87.
On 22 July 2002 the second and thirdnamed plaintiffs, Clyde Peter White and Philip Newman, were appointed liquidators of the firstnamed plaintiff, Kings Creek Properties Ltd.
On 27 September 2002 administrators were appointed to ARG, the fact of their appointment constituting an event of default under the leases.
On 27 September 2002 notices of termination of the leases were served on ARG because of its failure to pay rent and because of the appointment to it of administrators.
Section 71(3) of the Transfer of Land Act 1958 provides:
"71. Sub-leases.
(3)If a lease is determined by forfeiture or operation of law or by surrender and any act or law relating to bankrupts, such determination shall determine the sub-lease."
It follows then that by virtue of the termination of the head leases between Kings Creek Properties Ltd and ARG, the sub-leases entered into between ARG and the first defendant on 30 June 1999 was also determined.
On 16 October 2002 the liquidators of the first plaintiff caused a notice to quit to be served on the firstnamed defendant in respect of the land he had agreed to lease from ARG. However, on 18 November last, the firstnamed defendant lodged Caveat No. AB702132P over all the properties of which Kings Creek Properties Ltd is the registered proprietor, claiming an equitable interest pursuant to a constructive trust.
There are lengthy grounds of claim attached to the caveat document, but what they boil down to is that the firstnamed defendant claims an equitable interest pursuant to a constructive trust arising from his lease agreement with ARG, unjust enrichment and unconscionable conduct by ARG. In those detailed grounds of claim the firstnamed defendant alleges that the registered proprietor of the properties was Australian Rural Group Ltd. That is simply not so, the registered proprietor, of course, being the present firstnamed plaintiff, Kings Creek Properties Ltd.
It is to be noted that on 25 November 2002, in the Supreme Court of New South Wales, in a proceeding between ARG, Kings Creek Properties and the liquidators, the court granted possession of the properties to the company and the liquidators, making at the time it did so a declaration that the leases were terminated on 27 September 2002.
On 21 and 27 November last, letters were sent from the plaintiffs' solicitors to the firstnamed defendant's solicitors requesting them to remove the caveat. However, the firstnamed defendant has refused to do so, and on 9 December an originating motion and summons were filed in this proceeding seeking orders that the firstnamed defendant's caveat be removed.
Finally, so far as matters of background are concerned, on 10 December 2002 the firstnamed defendant lodged a proof of debt in the liquidation of the firstnamed plaintiff.
The court has a wide discretion to determine whether or not to order that a caveat be removed. The principles that it bears in mind in determining such an action were clearly enunciated by J.D. Phillips, J. (as he then was) in Smith v. Callegari[1]. What a court must ask itself is whether there is a serious question to be tried in the sense that the claim of the caveator is neither frivolous nor vexatious and whether the balance of convenience favours preserving the status quo until the trial of the proceeding by preventing the caveatee from disposing of the land to a third party.
[1](1988) V.Conv.R. 54-300 at 63, 858-9.
In my opinion, having considered the evidentiary material placed before the Court, there is no serious question to be tried in the present case.
In the first place, the firstnamed defendant's caveatable interest cannot arise under a constructive trust arising from improvements made to the land. The firstnamed defendant did not himself make any of the alleged improvements on the land. Any moneys paid by the firstnamed defendant under his sub-lease were not paid to the firstnamed plaintiff but were paid to other entities. Finally, the firstnamed defendant has lodged a proof of debt in the liquidation of the company and that is inconsistent with a claim for any proprietary interest in all the land.
One also notes that the caveat as it stands at the present time is over all the land of which the firstnamed plaintiff is the registered proprietor, whereas, as I pointed out, the firstnamed defendant has only leased a small part of one of those properties. Indeed that much was recognised by counsel for the firstnamed defendant at the outset of the hearing of the application this morning.
Further, the Supreme Court of New South Wales has ordered that the plaintiffs recover possession of the land and in doing so declared that on 27 September 2002 the company, that is, the firstnamed plaintiff, terminated the leases with ARG. Again as I pointed out earlier, termination of the head lease immediately determined the sub-lease pursuant to the provisions of s. 71(3) of the Transfer of Land Act.
Even if there was a serious issue to be determined, in my opinion the balance of convenience in this case weighs heavily in favour of the plaintiffs.
The evidence demonstrates that most of the land has now been sold at auction, with one parcel only being currently under negotiation. The purchasers of the land are bona fide purchasers for value and are willing and able to settle their purchases on the due dates. The sale of the land has occurred with the agreement of the mortgagee of the land. If the sales do not proceed because of the caveat, the mortgagee of the land may well exercise its powers under the mortgage and the Transfer of Land Act and take possession of the land. That would only result in further costs, expenses and delays, and that would inevitably delay the administration of the liquidation of the company.
Accordingly I declare that the firstnamed defendant has no interest in the land contained in Certificate of Title Vol. 9689 Fols. 324 and 325, Certificate of Title Vol. 9849 Fols. 764, 765 and 767 and Certificate of Title Vol. 10396 Fol. 691.
I order that the firstnamed defendant forthwith withdraw and remove Caveat AB702132P from the said land.
I further order that the secondnamed defendant forthwith remove Caveat AB702132P from the land, and in the event that the said caveat has not been recorded the secondnamed defendant is ordered not to record the said caveat, to reject the said caveat and to return it to the lodging party.
I further order that the firstnamed defendant pay the plaintiffs' costs of and incidental to the proceeding including the reserved costs.
Finally, I direct that this order be prepared by the solicitors for the plaintiffs and brought to me for authentication.
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