Lovrinov v Dean - [2021] SADC 159

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
LOVRINOV v DEAN & ORS
[2021] SADC 159
Reasons for Decision of her Honour Judge Deuter (ex tempore)
16 December 2021
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - EXTENSION
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL
The applicant applied for an order that the time for removal of caveats over two properties be extended until his claim had been determined by the Court.
The first and second respondents are registered proprietors of the properties. Both are vacant parcels of land upon which a multi-residence development was proposed. The applicant asserts that by the provision of architectural and other services provided he had contributed to an increase in the value of the properties. He also claims that he has contributed monies to pay rates, taxes and other charges. Limited evidence tendered to support the claims that are denied by the respondents.
HELD.
1. The applicant has not established a prima facie case with sufficient probability of success that he has any equitable interest in the properties.
2. Orders extending the time for removal of caveats revoked and no further extension of time for the removal of the caveats allowed.
Real Property Act 1886 (SA), referred to.
Australian Broadcasting Corporation v O'Neill [2006] 227 CLR 57; Adnyamathanha Traditional Lands Association v Minister for Energy and Mining SA & Anor [2018] SASC 142; Piroshenko v Grojsman & Ors [2010] 27 VR 489, considered.

LOVRINOV v DEAN & ORS
[2021] SADC 159
LOVRINOV v DEAN & ORS

This is an application made pursuant to the provisions of s.191(1)(g) of the Real Property Act 1986, (RPA). The applicant seeks to extend the time for removal of two caveats over separate pieces of land.
The application is opposed by the respondents who have warned the two caveats. In my opinion, and for the brief reasons that I outline now, the applicant has failed to establish that he has a caveatable interest in either property.
Background
The applicant has provided some detail of an interest he claims in two properties situated at 1005 Solandra Crescent (‘the Solandra property’), Modbury North, and 48 Famechon Crescent, Modbury North (‘the Famechon property’).
The properties are vacant allotments that are to be developed into a multi-dwelling residential project (‘the project’). The applicant deposed in his affidavits,[1] that he had a role in providing architectural services to the project in 2005 for which he has not been paid. He also claims that his sketches added considerable value to the project. In addition, the applicant claims that he was involved in promoting and finding buyers for the project and the proposed dwellings. A proposed sale of the project in 2019 at a price of $3,600,000.00 did not proceed due to, on his claim, the actions of the respondents. He alleges that those actions were calculated to cause him and others to suffer loss. The applicant claims that through 2020 he was continuing to work on the project by drawing additional plans and working with valuers to increase its value to $4,000,000.00.
[1] FDN 4 and FDN 10.
Finally, the applicant claims that he personally advanced over $180,000.00 towards council rates, holding charges, and fees for brokers, valuers and consultants in order to secure deals for the project and the properties.
The applicant's involvement in both properties arises out of his involvement in the company, Horizon Lifestyle Developments Pty Ltd (Horizon) as a director and shareholder of that company. The applicant alleges, without proof, that Horizon at one stage, owned both properties after he was able to negotiate a sale to the company from the Tea Tree Gully council. I have been provided with a copy of the certificate of title for the Solandra property that shows that Horizon owned the property from 24 January 2008 until 14 September 2010.[2]
[2] Exhibit RDP2 to the affidavit of Raymond Douglas Patrick (FDN 11).
The applicant deposes that he was a director of Horizon between 2004 and 1 November 2007, and that he remains a shareholder. However, records show the company was de-registered on 8 July 2012.[3] The applicant stated in court today, that until appearing before me, he did not understand how the Solandra property was transferred into the ownership of the respondents. He deposed in his first affidavit that in 2008, construction started on the Solandra property with security ‘expended’ by him pledging 80 allotments in another project at Elizabeth Park.[4]
[3] Exhibit GL-04 to the affidavit of the applicant (FDN 4).
[4] FDN 6.
This security was not explained further and documentary evidence was not provided to prove any of the property transactions deposed to. There is no documentation to substantiate claims that the respondents lodged caveats over any, and what Elizabeth Park allotments, and failed to advance funding or attend to settlement, meaning the property was repossessed soon after. In fact, I do not understand the nature of the property transactions being described by the applicant.
In relation to the second property, the applicant deposes that the first and second respondents in some way acquired that property from Horizon about the time the company was deregistered in 2012. Again, no documentary evidence is provided to explain that transaction. At the time of the alleged transaction, the applicant was no longer a director of Horizon, having ceased that role on 1 November 2007.
The respondents argue that none of the matters put forward by the applicant create a caveatable or equitable interest in either property.
Further affidavits were filed after the first hearing in this matter and the certificate of title for the Solandra property was tendered.[5] This document shows that in relation to the Solandra property that when it was transferred to Horizon on 28 February 2008, mortgages to Angas Securities Ltd, and the third respondent were lodged at the same time. In addition caveats were lodged over the property by the third respondent on 21 April 2008 and the Commissioner of State Taxation on 21 October 2009. Later Horizon lodged a caveat over the mortgage held by Angas Securities Ltd.[6]
[5] Exhibit RDP2 to FDN 11.
[6] This was completed on 17 December 2009.
These mortgages over the Solandra property were discharged when the property was transferred to the first and second respondents on 14 October 2010 with a new mortgage on the property held by Bendigo and Adelaide Bank Ltd.
A Purchaser's Settlement Statement[7] sets out the arrangements in relation to the sale of the property between the vendor (the third respondent) and the purchasers (the first and second respondents). This transaction occurred pursuant to a Power of Sale executed by the third respondent under its mortgage over the Solandra property. The purchase price paid was $1,500,000.00. Part of the settlement funds were also directed to Angas Securities Ltd to pay debt owed over the property. Bendigo and Adelaide Bank now hold a mortgage over the Solandra property.
[7] Exhibit RDP3 to FDN 11.
The respondents oppose any extension of the caveats arguing that there is no caveatable interest. They seek to have the caveats removed from the Solandra property as they are currently in the process of negotiating a sale of that property.
The respondents have engaged Raptis Real Estate as their agents for the sale of both the Solandra and Famechon properties. A sale agreement with Raptis is set out at Exhibit RDP4 to the affidavit of the first respondent of 16 December 2021. [8] This contract was signed on 10 December 2021.
[8] FDN 11.
A letter from Raptis Real Estate of 15 December 2021, is also tendered, whereby the respondents are advised that the real estate company is in negotiation with an unnamed buyer.[9] It is stated that the potential buyer is currently doing their due diligence on the properties, with a view to placing a contract. Any contract is subject to the due diligence satisfying all of their requirements and would also be subject to finance. However, it was expected that if there was a signed contract the settlement date would be at the end of January 2022. These matters were also confirmed by Mr Patrick (the second respondent) under oath by evidence given in court on 13 December 2021.
[9] Exhibit RDP5 to FDN 11.
Mr Patrick told the court that previously he and Mr Dean had two contracts over the properties, but each fell through when deposits were not paid and there was a refusal to attend settlement. It was for that reason a real estate company was engaged.
The respondents have submitted that the caveats currently on the titles for the properties is clearly a factor that would dissuade a purchaser from getting involved in the purchase of the properties.
Legal Principles
The court on an application for an extension of time for the removal of a caveat, is to apply the same test as that which is applied in the context of an interlocutory injunction. This means the court must determine whether there is a prima facie case established for the extension of the caveat, and then whether, on the balance of convenience, an order extending the time for the removal of the caveat should be made.
The onus is upon the applicant to establish a prima facie case, in the sense that, if the evidence remains as it is, there is a probability that, at the conclusion of the trial, he will be entitled to relief.[10] This does not mean that the applicant must show that it is more probable than not that he would succeed at trial. It is enough if the applicant can show there is a sufficient likelihood of success to justify the preservation of the status quo in the circumstances. If a prima facie case is established, there are two further requirements that the applicant must satisfy the court of:
(i)That the balance of convenience is in his favour. That is that the inconvenience, injury or loss that he would likely suffer if the caveats were not extended outweighs the inconvenience, injury or loss that the respondents would suffer if the caveat is extended;
(ii)That damages are not an adequate remedy.
[10] Australian Broadcasting Corporation v O'Neill [2006] 227 CLR 57 at para.82.
In addition these requirements, Doyle J recently confirmed that if a caveat is to be extended, then an undertaking as to damages should be provided by the applicant. In relation to giving that undertaking, the onus is upon the applicant to establish that he has the means to meet any damages caused to the respondent by the extension of any caveat.[11]
[11] Adnyamathanha Traditional Lands Association v Minister for Energy and Mining SA & Anor [2018] SASC 142 at [124] to [127].
In this matter no undertaking to damages was proffered. The respondents submitted that any undertaking would need proof of financial ability to support it. The respondents tendered documents to suggest the applicant would not have that financial ability. At the first hearing on 13 December 2021 the respondents’ counsel handed up a bankruptcy search for the applicant.[12] This set out that he had been bankrupt between 24 March 2015 and 12 April 2018. The applicant did not dispute this. The respondents also conducted a property search and found that the only real estate owned by the applicant was a property at Port Lincoln.[13] This property is heavily encumbered with a registered mortgage; five caveats, including one to the Trustee in Bankruptcy and one to the Commissioner of State Taxation; and three separate charging orders for judgment debts. Again, the applicant did not dispute this.
[12] This become exhibit RDP6 to FDN 11.
[13] Exhibit RDP8 to FDN 11.
Cavetable Interest – Does a Prima Facie Case Exist?
The test to be satisfied to claim a caveatable interest in a property was considered by Warren CJ in Piroshenko v Grojsman & Ors,[14] where he confirmed that the onus fell on the caveator to satisfy the two – stage test applied by the courts when deciding whether to exercise its discretion to grant interlocutory relief. The caveator must establish that they have an interest in the land in question; and having done so, establish that the balance of convenience falls in their favour. At paragraph 18, his Honour said:
… at both stages of the test, attention must be directed towards the relationship between the caveat which has been lodged, and the interest which is being claimed by the caveator.[15]
[14] [2010] 27 VR 489.
[15] Ibid at [18].
He went onto state that to establish an interest in land the caveator must satisfy the court that “there is a probability on the evidence before the court that he will be found to have the asserted equitable rights or interest”[16]
[16] Ibid at [18].
In addition, that probability must be sufficient to justify the practical effect which the caveat has in stopping a registered proprietor in dealing with their property. Chief Justice Warren summarised this as follows:
… the onus which the caveator must discharge is an onus with respect to an interest or rights in land. Caveats are not “bargaining chips.” It is not sufficient for the caveator to establish a prima facie case that they have contractual, equitable or statutory rights against the cavatee; their interest or rights must attach to the property with respect to which the caveat has been lodged [emphasis added].[17]
[17] Ibid at [23].
In this matter, for there to be a prima facie case established by the applicant he must prove some interest in the properties, an equitable interest. In this case, the application is made upon the basis of limited evidence from the applicant that he had been involved in a project to be developed on the properties for many years. He claims that the equitable interest in these properties exists for three reasons.
Firstly, upon the basis that had has been promoting the properties and the development site to various purchasers, and had successfully found good buyers for the properties. However, the respondents refused to sign any contracts for purchase since 2019. He submitted that this raised concerns that the respondents were ‘playing him’ and his buyers to a point of frustration and causing financial loss to all concerned.
Those allegations, and facts put by the applicant were not supported by any evidence. They also do not establish any rights to, or any equitable interest in, or attached to the properties concerned. That does not mean that there is not a claim in contract or a claim generally in damages for losses suffered by the applicant as a result of the work that he has carried out for the respondents and on their behalf. However, acting as an agent for the sale of land does not provide any interest, equitable or otherwise in the land. It is really in the nature of a claim of an agent who has been actively seeking purchasers, and advocating for the project, for some type of fee.
The second claim is that Mr Lovrinov has provided architectural services to the project. He says he was therefore able to prove to the respondents and prospective purchasers that the project was viable, and therefore increase its value. He says he has not been paid for this work. This claim is denied by the respondents, who say until this action they have not seen the plans produced by the applicant.
Again, in my view, this is a contractual claim and not one that creates an equitable interest in or any attachment to the properties. It is a claim that the applicant would be entitled to bring in this court again by way of a claim in damages. It does not however create property rights.
The third claim is that Mr Lovrinov has personally advanced over $180,000.00 towards council rates, holding charges, and fees to valuers, brokers, and consultants in order to secure deals to benefit the owners of the properties. He alleges that this was all done as a way to mitigate his losses, as if the land was sold to the buyers that he had obtained, he could then continue to work on the project as the architect and supervisor of construction, thereby earning income.
This is again a contractual claim for which damages may be sought by the applicant. However, there is no evidence before me that payments have been made personally by the applicant in regards to matters such as council rates or in any way attached to the land.
In a second affidavit filed by the applicant,[18] there are records of payments being made. However, there is no evidence that those payments were made by the applicant. Exhibit GL005 to FDN 10 attached documents regarding some payments made, however those payments were made by Pacific Capital Financial Services Pty Ltd, and in the name of a client, Thinking of Marketing Pty Ltd. In the argument before me today, the evidence appears to be that the applicant was working with Thinking of Marketing Pty Ltd, and its director Jonathan Leffler, in relation to the purchase of the properties, particularly the Solandra property. Pacific Capital Financial Services were engaged by Thinking of Marketing to raise $3,000,000.00 to $3,500,000.00 to purchase the properties. There is no evidence before me linking the applicant to Thinking of Marketing or Pacific Capital Finance
[18] FDN 10.
Conclusion
In all of the circumstances, I cannot find that any of the applicant’s work allegedly carried out in relation to the properties creates an equitable interest in those properties. That is not to say that Mr Lovrinov has not completed the work, or that he has not been involved in advocating for the project or attempting to sell it and add to its value. It is not to say and that he may not have a claim in relation to his losses in that regard. However, it is clear from the evidence that the respondents have owned the properties, particularly the Solandra property, since 14 September 2010. There is no connection between the applicant and the properties since that time, that creates an equitable or caveatable interest in the properties.
The applicant has failed to satisfy me that he has a prima facie case, which has sufficient probability of success to justify the caveats being maintained on the properties. The applicant has not established any equitable interest in the properties.
Orders
(1)    The orders made on 13 December 2021 are vacated and revoked;
(2)Any further extension of time for the removal of the caveats set out below, pursuant to s.191(1)(f) of the Real Property Act, is refused:
1.      Caveat 13659474 over Lot 1005, Solandra Crescent, Modbury North, being the whole of the land comprised in Certificate of Title, Register Book Volume 6065, folio 964; and
2.      Caveat 13659475 over 48 Famechon Crescent, Modbury North, being the whole of the land comprised in Certificate of Title, Register Book Volume 6121, folio 535.