Levinzon v Van de Velde
[2015] VSC 532
•23 SEPTEMBER 2015
IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
PRACTICE COURT
SCI 2017 04927
| YANI LEVINZON | Plaintiff |
| v | |
| LAURA CAMILLA VAN de VELDE | First Defendant |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF RULING: | 23 SEPTEMBER 2015 |
DATE OF JUDGMENT: | 23 SEPTEMBER 2015 |
CASE MAY BE CITED AS: | LEVINZON v VAN de VELDE |
| MEDIUM NEUTRAL CITATION: | [2015] VSC 532 |
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CAVEAT – Removal – Proceedings on foot to justify interest claimed – Property subject to contract of sale – Net proceeds to be preserved pending resolution of dispute – No new point of principle.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Appeared in person | |
| For the First Defendant | Mr J Ribbands | Defteros Lawyers |
| For the Second Defendant |
HIS HONOUR:
The plaintiff is the registered proprietor of the land in Certificate of Title Volume 10386 Folio 622, situated at and known as Unit 5/4‑8 Downard Street, Braeside. The land is the subject of an uncompleted contract of sale to a purchaser for $420,000.
To complete that sale, the plaintiff applies today for an order removing the caveat that stands fourth in line on the title, lodged by the first defendant, claiming an interest pursuant to an implied resulting or constructive trust.
The title to the property is encumbered or subject to caveats as follows. First, there is a registered mortgage in favour of the National Australia Bank. Second, there is caveat AL587860C in favour of a solicitor claiming an interest as chargee. Third, there is a caveat AL955408W lodged by the plaintiff's brother, also claiming an interest as chargee. Fourth, there is caveat AM005975B lodged by a finance company claiming an interest as chargee. Fifth, there is caveat AM065894M lodged by the first defendant claiming an interest on the ground of an implied resulting or constructive trust. Finally, there is caveat number AM068426G that has been lodged by the purchaser under the contract of sale, claiming an interest pursuant to that uncompleted contract.
Although these figures are indicative estimates, the claims represented by these encumbrances can be summarised as National Australia Bank, $285,000; N Levinzon, $150,000; Defteros Lawyers, $10,592; CEG Direct, $2,301; the estate agent, $10,560; and Spigler & Schwarcz , $1,300.
The court was informed by the plaintiff that his brother, Naum Levinzon, has agreed to withdraw his caveat at or prior to the settlement on a basis that does not involve the payment to him of any of the proceeds of sale.
The relevant principles in relation to an application under s 90(3) of the Transfer of Land Act 1958 for removal of a caveat are as follows. The caveator must satisfy the Court that:
(a) There is a serious question to be tried between the caveator and the plaintiff that the caveator has the estate or interest claimed by the caveat; and
(b) The balance of convenience favours maintaining the caveat until trial.
In Piroshenko v Grossman[1] Warren CJ explained that the first question required the caveator to establish that:
(a) there was a probability on the evidence before the court that he or she would be found to have the asserted equitable rights or interest; and
(b) that probability was 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.[2]
[1][2010] VSC 240
[2]Ibid.
I am satisfied that there is currently a proceeding on foot, being proceeding number MLC6334 of 2015 brought by the plaintiff against the first defendant in the Federal Circuit Court of Australia in which the question of the extent of any interest of the first defendant in the subject land is to be resolved as that proceeding involves adjustment of the interests of the parties on the breakdown of an alleged de factor relationship.
Second, there is a serious question to be tried in that proceeding as to whether the first defendant has an estate or interest in the subject land by reason of an implied resulting or constructive trust. That question arises in the following way. The first defendant contends that she contributed at least $180,000 towards the purchase of the property. Against this, the plaintiff contends that while he received some funds from the first defendant, they were not contributions made by the first defendant towards the purchase of the property, but rather were gifts. In support of that contention, the plaintiff exhibited a document that he contends was signed by the first defendant, acknowledging that gifts had been made to him from her.
The authenticity of this document is disputed and plainly the question of whether the first defendant does have the interest claimed by the caveat is dependent upon the outcome of these factual disputes, which will in due course be resolved in the Federal Circuit Court. For my purposes today, I am satisfied that there is a serious question to be tried that the first defendant may have the interest in the land which is asserted by her caveat. That being so, I need to consider where the balance of convenience lies.
In this respect, it is to be noted that, as I have said, the property has been sold and there is an uncompleted contract of sale awaiting settlement once the caveat is removed. The circumstances of the sale or its bona fides are not in dispute. In broad terms, the claims that are made against that purchase price are in the sums that I have already referred to.
The plaintiff acknowledges that the registered mortgagee, the National Australia Bank, is entitled to have its mortgage paid out in priority to all other claims. The payment of the claim of the first caveator, the plaintiff's former solicitor, in respect of a prior retainer by him of the solicitor for legal services is also not in issue.
The second caveat is that lodged by the plaintiff's brother and, as I stated, the court is informed that the plaintiff's brother will withdraw that caveat. The third caveat is also to be paid out from the funds made available at settlement, and is a caveat lodged by a finance company in respect of a motor vehicle finance agreement. The costs and expenses of the sale will also be deducted.
The first defendant has indicated that she would be prepared to provide, at settlement, a withdrawal of her caveat on the basis that the net proceeds of sale, after paying the mortgagee and the two caveats to which I have already referred and the costs and expenses of the sale, be paid into a controlled moneys account to be held by Defteros Lawyers on behalf of the plaintiff and the first defendant. The money would be held pending the hearing and determination of the proceeding in the Federal Circuit Court, or any further order of this court, or by written agreement between the parties.
In all of the circumstances, I am persuaded that the balance of convenience lies in favour of this approach and accordingly, I propose to make orders giving effect to that proposal.
The first defendant also seeks an order that the plaintiff pay her costs of the application and the plaintiff seeks and order reserving costs. It is the usual practice of the court to immediately deal with the costs of applications for the removal of caveats although there may be circumstances where it is appropriate to reserve the question of costs to the court resolving the substantive issues. Reserving costs to another court may require that court go through the process of informing itself of the circumstances that are relevant to the exercise of the discretion, when those circumstances do not form any part of the record before the court. I cannot see that my decision in respect of costs would be better informed by awaiting the outcome of the proceeding in the Federal Circuit Court.
What is significant in this case is that the plaintiff has, in effect, obtained the relief that he seeks, that is that the caveat be removed so as not to impede the settlement. In the usual course of events, the standard rule that costs follow the event would apply in favour of the plaintiff.
However, in this case the defendant, prior to the issue of this proceeding, offered to resolve the proceeding on substantially the basis upon which it has in fact been resolved. By a letter, dated 4 September 2015, the solicitors for the first defendant reiterated their client's instructions that she was prepared to provide a withdrawal of caveat provided that the caveats lodged by Defteros & Partners and CEG Direct Securities are satisfied, but not that of Naum Levinzon, and that the balance of the net proceeds of sale be paid into a controlled moneys account pending the resolution of the proceedings in the Federal Court. Had the plaintiff accepted that offer, the costs of the proceeding in which precisely that outcome has been achieved, would have been avoided.
On 18 September 2015, the plaintiff commenced this proceeding seeking the removal of the caveat. Immediately the solicitors for the first defendant re‑stated the offer that had previously been put, and noted that until particulars had been provided of the interests claimed against the property by the plaintiff's brother, no further meaningful negotiations could be entertained. After the issue of proceedings, the defendant formally re‑stated again its offer to resolve the issue.
In my view, the plaintiff did not act reasonably in rejecting these offers and in continuing to require the first defendant to incur legal expenses that could reasonably have been avoided. He was aware of the agreement reached with his brother but did not communicate it to the plaintiff. The first defendant’s offer was the sensible cost effective resolution of the dispute.
Accordingly, I shall order that the plaintiff shall pay the costs of the first defendant of the originating motion.
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