Konkoly v Konkoly & Anor and Konkoly & Anor v Konkoly
[2022] VSC 74
•23 February 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2021 03849
| AKASHA KATARINA KONKOLY | Plaintiff/First Defendant by Counterclaim |
| v | |
| TIBOR GYOZO KONKOLY & ROBYN KONKOLY | Defendants/Plaintiffs by Counterclaim |
| REGISTRAR OF TITLES | Second Defendant by Counterclaim |
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JUDGE: | Irving AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1 February 2022 |
DATE OF JUDGMENT: | 23 February 2022 |
CASE MAY BE CITED AS: | Konkoly v Konkoly & Anor and Konkoly & Anor v Konkoly & Anor |
MEDIUM NEUTRAL CITATION: | [2022] VSC 74 |
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REMOVAL OF CAVEAT – Removal of caveat pursuant to s 90(3) Transfer of Land Act 1958 (Vic) – Constructive trust alleged arising from estoppel by encouragement - No caveatable interest disclosed on face of pleading – Balance of convenience favours removal of caveat - Application to remove caveat allowed - Wright v Insert Pty Ltd [2022] VSC 1 - Maverick Signs Pty Ltd v Cetinkaya and Anor [2022] VSC 27.
PRACTICE AND PROCEDURE – Application for summary judgment on the basis material facts not plead – No reasonable cause of action disclosed on face of pleading – Interests of justice do not favour summary disposal of proceeding - Claim struck out – Supreme Court (General Civil Procedure) Rules 2015 (Vic), ord 22 - Civil Procedure Act 2010 (Vic), ss 63-64 – Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; 42 VR 27 - Wheelahan v City of Casey (No 12) [2012] VSC 316.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff/First Defendant by Counterclaim | Dr J Van Beveren, solicitor | Van Beveren Lawyers |
| For the Defendants/ Plaintiffs by Counterclaim | Mr A M Donald of counsel | Bowman & Knox Lawyers |
| No appearance for the Second Defendant by Counterclaim |
HIS HONOUR:
Introduction
This matter involves a family dispute between Akasha Konkoly (plaintiff) and her parents Tibor Gyozo Konkoly and Robyn Konkoly (together the defendants) over the ownership of the property located at 170 Centre Road, Winchelsea South, Victoria (Property), more formally described in certificates of title:
(a) Volume 03040 Folio 822;
(b) Volume 07801 Folio 171; and
(c) Volume 00010 Folio 850.
The defendants have been the registered proprietors since they purchased the Property in 1985.
The plaintiff is the only child of the defendants. The defendants lived at the Property from 1990 until they moved to Brisbane in 1998. From February 2014, following the breakdown of her marriage, the plaintiff moved into the Property with her children.
In or around September 2021, the Property was listed for sale. On 14 October 2021, the plaintiff lodged caveats in respect of two of the three titles of the Property with dealing numbers AU914858R and AU914857T (Caveats). The grounds of claim specified in the Caveats read ‘implied, resulting or constructive trust’. The Caveats claim a freehold estate interest with an absolute prohibition on dealings.
On 15 October 2021, the defendants entered into a contract of sale for the Property with a third party purchaser. That contract is due to settle on 11 March 2022.
On 19 October 2021, the plaintiff commenced a proceeding in this Court in which she seeks a declaration that the defendants hold the Property on trust for her and an order for the transfer of the Property to her. The defendants deny that they hold the Property on trust for the Plaintiff. By counterclaim, they seek orders for the removal of the Caveats, to recover possession of the Property and damages.
By summons filed 20 December 2021, the defendants seek:
(a) summary judgment of the plaintiff’s claim and the defendants’ counterclaim, pursuant to s 63 of the Civil Procedure Act 2010 (Vic) (CPA) and ord 22 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules); and
(b) in the alternative, removal of the Caveats pursuant to s 90(3) of the Transfer of Land Act 1958 (TLA).
For the reasons given below, I will grant the alternative relief sought by the defendants for removal of the Caveats and further order that the plaintiff’s statement of claim be struck out.
I will otherwise dismiss the defendants’ summons. I will hear the parties on the question of costs.
Parties
The Registrar of Titles is named as second defendant by counterclaim and in accordance with the usual practice, does not intend to take any active role in the proceedings and will abide by the decision of the Supreme Court in accordance with the principles enunciated in R v Australian Broadcasting Tribunal, Ex parte Hardiman & Ors.[1]
[1][1] (1980) 144 CLR 13, 35–6.
Proceedings
Writ and statement of claim
On 19 October 2021, the plaintiff filed a writ and statement of claim. The plaintiff says the defendants made representations to her, that she relied on those representations to her detriment and that the Court should prevent the defendants from resiling from those representations. The remedy she seeks is a declaration that the defendants hold the Property on trust for her and an order requiring the defendants to transfer their right, title and interest in the Property to her.
Although this is not a pleading summons, it is useful to set out the two critical paragraphs of the plaintiff’s claim, as they necessarily impact the balance of the relief sought.
Paragraph 11 of the statement of claim contains the representations relied upon by the plaintiff to support her claimed proprietary interest in the Property. It provides:
The representations
11.In or around February 2014 the Plaintiff entered occupation of the property further to representation by the defendants to the effect that:
a)The Defendants wanted the Plaintiff and her children to move into the property as her family home;
b)the Plaintiff could make any additions, alterations or modifications that she deemed necessary or desirable;
that the Property would be hers or otherwise left to her in their Will (“the representations”).
There are no particulars given in relation to paragraph 11 subparagrah (a) or (b).
Paragraph 12 sets out the alleged detriment and is in the following terms:
Performance
12.In reliance upon the representations of the Defendant, and to her detriment, the Plaintiff paid approximately $100,000 towards the improvements, repairs and maintenance.
PARTICULARS
Email correspondence between the plaintiff and First Defendant that admits the contributions made by the Plaintiff, copies of such emails are available for inspection at the office of the solicitors of the Plaintiff.
No further assistance is given in articulating the alleged representations or alleged detriment, nor has the plaintiff articulated the nature of the trust for which the plaintiff seeks a declaration. The plaintiff’s submissions in the application did not assist on this issue.
The defendants suggest that ‘the essence of [the plaintiff’s] case is one of estoppel by encouragement’ and opine that the ‘trust alleged appears to be a constructive trust’. This was not challenged or refuted by the plaintiff.
For the purposes of this application, I will assume this is the case the plaintiff seeks to advance and that this is the interest she seeks to protect by lodgement of the Caveats.[2]
[2]It is noted for completeness that a caveat has only been lodged on two out of the three titles comprising of the Property.
Defence and counterclaim
By notice of defence and counterclaim filed 24 November 2021, the defendants deny they hold the Property on trust for the plaintiff. They admit permitting the plaintiff to occupy the Property rent free, but say:
(a) such occupation was as a licensee only, revocable at will by the defendants and that the plaintiff’s right of occupation stands revoked;
(b) an implied term of the occupation by license was that the plaintiff would maintain the Property and keep it in good repair. However, the plaintiff had failed to do so; and
(c) the plaintiff knew of the defendants’ intention to ultimately sell the Property and use the net proceeds of sale to fund their retirement.
The relief sought by the counterclaim is an order for removal of the Caveats, an order for possession of the Property and damages. The defendants seek summary judgment of this relief, noting that possession is no longer pressed by the defendants.
The plaintiff’s defence to counterclaim filed 17 January 2022 largely repeats her claim as set out in her statement of claim or otherwise contains bald denials in response to the defendants’ defence and counterclaim.
Application
The defendants seek the relief in the summons on three broad bases. First, they say the plaintiff has failed to plead the material facts necessary to establish her cause of action, and point to a number of pleading deficiencies. Second, they say the plaintiff has failed to provide sufficient evidence supporting the facts alleged. On these two bases, they say that the plaintiff’s case has no reasonable prospects of success. Third, in relation to the alternative relief under s 90(3) of the TLA, they say the plaintiff has not demonstrated that there is a serious question to be tried and, in any event, the balance of convenience favours removal of the Caveats.
Relevant legal principles
The parties were not in dispute as to the applicable legal principles in respect of summary judgment applications, claims relying on estoppel by encouragement, and applications for removal of a caveat under s 90(3) of the TLA.
Summary judgment
With respect to summary judgment sought under s 63 of the CPA, the test is whether the respondent to the application has a real as opposed to fanciful chance of success.[3] The Court must apply the test by reference to the test’s own language, without recourse to the ‘hopeless’ or ‘bound to fail’ test. The power to terminate a proceeding summarily should be exercised with caution and should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action that cannot be cured by amendment or on the basis that the action is frivolous or vexatious or an abuse of process or where an application is not supported by evidence.[4] The Court must exercise the power to summarily dismiss a proceeding consistently with the overarching purposes of the CPA.
[3]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; 42 VR 27.
[4]Ibid, [35].
Where the Court is satisfied that a proceeding has no real prospect of success, under s 64 of the CPA the Court may order that the case proceed to trial and not be disposed of summarily because it is in the interests of justice to do so or because the dispute is of such a nature that only a full hearing on the merits is appropriate.
Estoppel by encouragement
At the hearing, the plaintiff did not dispute the principles identified by the defendants as being applicable to the determination of claims of a constructive trust based upon estoppel by encouragement.
The principles applicable to proprietary estoppel have been stated in well known cases such as Giumelli v Giumelli,[5] Donis v Donis,[6] and Sidhu v Van Dyke.[7] They were recently considered in Harrison v Harrison[8] as well as Harris v Harris.[9] To succeed, the plaintiff must establish that:
[5](1999) 196 CLR 101.
[6](2007) 19 VR 577.
[7](2014) 251 CLR 505.
[8][2011] VSC 459.
[9][2021] VSCA 138.
(a) the defendants engaged in conduct amounting to a representation or promise that the plaintiff would acquire from them an interest in the Property;
(b) the plaintiff reasonably believed or expected that she presently has acquired, or in the future will acquire, an interest in Property;
(c) the defendants knew or intended that the plaintiff held that belief or expectation and would act or abstain from acting in reliance on that belief;
(d) the plaintiff reasonably acted to her detriment and changed her position in reliance on her expectation or belief; and
(e) the detriment is such that it would be unconscionable for the defendants to assert their proprietary rights against the plaintiff, in the context of the plaintiff’s changed position, by not fulfilling the plaintiff’s expectation.
The plaintiff says a constructive trust attaches to the Property, as the remedy for her claim arising in proprietary estoppel.
Caveat removal
Finally, the parties were not in dispute about the principles relevant to applications for the removal of a caveat under s 90(3) of the TLA. Those principles have recently been summarised by Osborne J in Wright v Insert Pty Ltd.[10] In Maverick Signs Pty Ltd v Cetinkaya & Anor, Ierodiaconou AsJ examined the recent authorities outlining the principles relevant to caveat removal applications.[11] I gratefully adopt their Honours’ summaries of the principles and authorities which are well settled. It is unnecessary to rehearse them again here.
[10][2022] VSC 1, [7]-[9].
[11][2022] VSC 27, [36]-[39].
Pleading principles
Dixon J in Wheelahan v City of Casey (No 12)[12] identified the following principles in relation to pleadings:
[12][2013] VSC 316, [25].
(a) the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and, further, to define the precise issues for determination so that the Court may conduct a fair trial;
(b) the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action;
(c) it is not sufficient to simply plead a conclusion from unstated facts; and
(d) a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it.
The Court should consider the pleading as a whole and adopt a practical case management approach to any pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole.[13]
[13]Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2) [2017] VSC 556, [15].
All parties recognised that in the context of family relationships and communications, the Court should not expect or require the level of clarity and precision that might be expected in commercial contractual matters. I have taken this into consideration when considering both applications.
Submissions – pleading complaints
The defendants point to the plaintiff’s failure to provide particulars of the alleged representations or the alleged detriment in paragraphs 11 and 12 of the statement of claim respectively.
They say that in relation to the alleged representations:
(a) the pleading is vague and uncertain as to time, content, and at times, the maker. The defendants’ legal representative stated during oral hearing:
… the best that can be said is that in around February 2014, there were some representations made.
(b) the plaintiff has failed to state whether the alleged representations were oral, written or are to be implied;
(c) the pleading does not include any temporal connection to the period in or around February 2014; and
(d) paragraph 11 refers to a possible testamentary representation when it says ‘or otherwise left in their Will’. The defendants say this allegation is inconsistent with the relief claimed by the plaintiff, making the equity alleged against the defendants unclear.
The defendants further say that the alleged representations are not clear enough to be representations founding a constructive trust. This is the case even allowing for the Court taking into account the informality in how lay people speak to each other and avoiding a strict legalistic approach to family communications.
With respect to the alleged detriment paid by the plaintiff, the defendants say the amounts or payments are not particularised, nor is there reference to how the amount is constituted (other than a reference to the broad category of ‘improvement, repairs, or maintenance’).
The defendants also say that the affidavit evidence filed by the plaintiff does not assist the defendants to know the pleaded case they have to meet, nor does it disclose that there is a serious question to be tried.
Turning to the plaintiff’s response to these pleading complaints.
With respect to the pleading deficiencies raised by the defendants, the plaintiff’s legal representative:
(a) conceded that ‘the temporal aspect of the pleadings is unclear and it needs clarifying’;
(b) stated that the plaintiff has disavowed reliance on any alleged representations that the defendants would make a testamentary gift of the Property in favour of the plaintiff, saying:
The insertion of being in her will - that the representation’s been made as a testamentary - I believe are erroneous, when I consider the instructions that were given.
And perhaps the pleadings ought be altered in regard to removal of the testamentary component of that because it’s more that she was promised the farm, it would be hers, from day dot.
(c) said that the alleged representations were clear from the affidavit material and supporting documents filed by the parties and took the Court to a number of examples including, non-exhaustively, statements from the plaintiff’s affidavit which read as follows:
The ‘basic expectation of my parents was that when I moved back to the property that I would take it on as my own. Dad regularly said ‘you do whatever you want with the farm, it’s yours, don’t ask me’
When I moved back to the property, they told me to treat the place as my own, take responsibility for all necessary refurbishment, upkeep and renovations, including have other people live there, long-term arrangements.
(d) said that the Court had to take into account the informality in how family members speak to each other and avoid a strict legalistic approach to family communications and that:
If we try and look for the consistent, reliable evidence that would otherwise have been formed on a normal commercial contractual basis, we’re going to be wanting, and this case is going to be wanting because of the nature of the relationship between a father and a daughter in this sense.
Consideration
I agree with the defendants’ submission that the pleading does not identify all of the material facts necessary to establish the cause of action which she relies upon. None of the material facts necessary to establish the essential elements of a claim are separately or coherently pleaded. They are otherwise unable to be discerned on the face of the pleading. By way of example, material facts including the form of the representations, their time and date, who they were made by and where they were made, are all absent. Neither is the alleged detriment adequately particularised and the attempt to rely upon unparticularised ‘email correspondence’ as answering these deficiencies falls short of the bare minimum required of a pleading.
Considering the pleading as a whole, it cannot be said that the case advanced by the plaintiff in the statement of claim gives the defendants clear notice – or indeed, any real notice – of the case they need to meet at trial.
In these circumstances, I am satisfied that the plaintiff’s claim has no real prospect of success because the pleading fails to disclose a cause of action.
However, I am not satisfied it is in the interests of justice to summarily dispose of the proceedings and determine the parties’ claims. I say that because:
(a) I am not satisfied that even with amendment to the statement of claim, there is no serious question to be tried. On the current state of the plaintiff’s case, it is not clear whether the plaintiff will continue to claim a proprietary interest in the Property or merely a claim for recovery of money she has expended. This issue can be clarified, along with the removal of the alleged testamentary representation, with amendment;
(b) the power to terminate proceedings must be exercised with caution. In circumstances where the summons has been brought on with no prior pleading contest, it would not be in the interests of justice to summarily shut the plaintiff out without providing her with the opportunity to amend and replead;
(c) it appears neither party wishes to lose the contract of sale, which only requires removal of the Caveats to proceed. To this, the evidence of the negotiations between the parties suggests that any claim brought by the plaintiff is capable of resolution, if successful, by an order for payment of money only; and
(d) justice between the parties can be achieved by removal of the Caveats only, should the balance of convenience favour it.
I will order that the plaintiff’s statement of claim dated 19 October 2021 is struck out. I do so under both the Court’s inherent power and under the summons filed by the defendants where they seek ‘any other order the Court thinks fit’. This is because the plaintiff’s claim will embarrass, prejudice and delay the fair trial of the proceeding and it leaves the defendants not knowing what case they need to meet.
Having determined that the plaintiff’s claim fails to disclose a cause of action, but that the interests of justice do not lie in disposing of the proceedings summarily, I turn to the alternative relief sought in the summons under the TLA.
Caveat removal
As the caveatable interest claimed by the plaintiff is effectively the same interest claimed in her substantive application, it flows from my conclusions above that I cannot be satisfied at present that the plaintiff has demonstrated that there is a serious question to be tried that she has an interest in the Property, by virtue of a constructive, resulting or implied trust.
I interpolate briefly to note that throughout the hearing, both parties took the Court through some of the affidavit material filed in the proceedings. Even absent the defects in the plaintiff’s pleading, the evidence relied upon by the plaintiff to demonstrate the representations was evidence of the plaintiff’s beliefs based on a general assertion that unspecified representations had been made. That evidence was often ambiguous and of a level of generality insufficient to establish a serious question to be tried.
I now turn to the second limb of the test under s 90(3) of the TLA - the balance of convenience.
Balance of convenience
Even if I am wrong in relation to whether there is a serious question to be tried, I find that the balance of convenience favours the removal of the Caveats.
I am on this view because:
(a) the Property has now been sold and completion is scheduled for mid-March 2022;
(b) the evidence before the Court is that the plaintiff has agreed to remove the Caveats so as not to disrupt the sale, albeit on conditions not agreed by the defendants;
(c) the defendants’ assertion that the plaintiff has vacated the Property has not been denied or corrected by the plaintiff; and
(d) to the extent that the dispute between the plaintiff and defendants relates to the payment of $80,000 (or $100,000 as referred to in the statement of claim) in recompense of amounts spent by the plaintiff on the Property, maintenance of the Caveats would be unduly restrictive on the defendants’ right to deal with their Property, where the Caveats as registered seek to prohibit dealings absolutely.
Conclusion
For the reasons given above I am satisfied that the plaintiff’s claim as currently pleaded has no real prospect of success but that the interests of justice in this case require that I do not determine the application summarily. It is appropriate, however, in my view to strike out the plaintiff’s pleading.
In relation to the defendants’ caveat removal application, I am satisfied that notwithstanding that the plaintiff may amend her case, it is appropriate in all the circumstances of this case to determine the application. I cannot be currently satisfied that the plaintiff has established that there is a serious question to be tried that she has the interest she claims in the Property. In any event, the balance of convenience favours the removal of the Caveats. I will order that the Caveats be removed forthwith.
I will hear from the parties on the question of costs.
SCHEDULE OF PARTIES
| S ECI 2021 03849 | |
| BETWEEN: | |
| AKASHA KATARINA KONKOLY | Plaintiff |
| - v - | |
| TIBOR GYOZO KONKOLY | First Defendant |
| ROBYN KONKOLY | Second Defendant |
| AND BETWEEN: | |
| TIBOR GYOZO KONKOLY | First Plaintiff by Counterclaim |
| ROBYN KONKOLY | Second Plaintiff by Counterclaim |
| - v - | |
| AKASHA KATARINA KONKOLY | First Defendant By Counterclaim |
| REGISTRAR OF TITLES | Second Defendant By Counterclaim |
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