Luna v & a Luna Pty Ltd
[2023] VSC 126
•22 March 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2023 00158
BETWEEN:
| PASQUALE LUNA | Plaintiff |
| v | |
| V & A LUNA PTY LTD (ACN 007 80 547) & ANOR (according to the attached Schedule) | Defendants |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 17 March 2023 |
DATE OF JUDGMENT: | 22 March 2023 |
CASE MAY BE CITED AS: | Luna v V & A Luna Pty Ltd & Anor |
MEDIUM NEUTRAL CITATION: | [2023] VSC 126 (revised 5 April 2023) |
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PROPERTY LAW – Caveat – Whether possible or appropriate to reinstate lapsed caveat –Neither possible nor appropriate – Transfer of Land Act 1958 (Vic) s 89A.
INJUNCTION – Interlocutory – Whether continuation of interlocutory injunction initially ordered should be continued – Principles applicable – Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Bradto Pty Ltd v State of Victoria (2006) 15 VR 65.
TRUSTS – Constructive trusts – Whether family members intention to pool financial resources – Whether proprietary remedy may be available at trial – Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137; Giumelli v Giumelli (1999) 196 CLR 101.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Bobko | Lawcorp Lawyers Pty Ltd |
| For the Defendants | Mr H Forrester | DSA Lawyers |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Background......................................................................................................................................... 3
The Writ............................................................................................................................................... 5
Defendants’ affidavits....................................................................................................................... 7
Plaintiff’s further affidavits........................................................................................................... 12
Defendant’s Submissions............................................................................................................... 17
Plaintiff’s Submissions................................................................................................................... 19
Consideration – Caveat................................................................................................................... 20
Interlocutory Injunction Application.......................................................................................... 24
Constructive Trust – Principles..................................................................................................... 25
Interlocutory Injunction – Consideration................................................................................... 28
Conclusion......................................................................................................................................... 30
HIS HONOUR:
Introduction
By summons dated 23 January 2023, the plaintiff sought urgent relief to, in substance, preserve the subject matter of the litigation, although that is not in terms the relief he sought to obtain, as I shall explain. The summons was supported by affidavits which purported to show, as the Judge recorded in his Order (referred to below), that the Registrar of Titles had resolved to cause caveat AR211958H (the ‘Caveat’) over the title of the first defendant’s land to lapse with effect from 24 January 2023. That land is described in Certificate of Title Volume 09070 Folio 221, being a 20-acre farming property at 105 Summerhill Road, Wollert, Victoria (the ‘Wollert Land’ or the ‘Land’).[1]
[1]Unfortunately, the plaintiff’s affidavit material misdescribed the volume number of the Title as ‘volume 970’ instead of the correct volume number 09070, as the exhibits to the affidavit of Lily Silvana Angelovski made 23 January 2023 (‘Angelovski affidavit’) make clear. This error found its way into the order of O’Meara J made on 24 January 2023. This did not mislead the defendants, and Counsel for them who appeared on 17 March 2023 accepted that it was a typographical error.
The hearing of the application came on before O’Meara J on 24 January 2023. The defendants were represented and made submissions opposing the making of orders, but, as O’Meara J noted in the order:
It became apparent that the parties would be content with the ordering of interim relief together with a timetable directed to the further return of the hearing of the summons before the judicial officer in charge of the hearing of the Property List on 7 March 2023.
O’Meara J ordered that:
Subject to further order of the Court, the defendants may not lodge or seek to undertake any sale or other dealing affecting the land described in Certificate of Title volume 970, folio 221 (sic) pending the final hearing or other determination of the claims made by the plaintiff in this proceeding.
Directions were made for the filing of further affidavit material and the further hearing of the application was adjourned to the judicial officer in charge of the Property List on 7 March 2023. There is no indication that any undertaking as to damages was sought by the defendants; certainly, no undertaking was recorded as given by the plaintiff. The hearing of the matter was referred to me by order of McDonald J made on 1 March 2023.[2]
[2]Pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’).
After some delay, the matter came before me on 17 March 2023 and I made orders continuing the injunction the subject of the order of O’Meara J and ordering the filing of pleadings, further affidavits and the holding of a mediation. At the time, I stated that I would provide these reasons within 7 days.
During the hearing, I was informed by the parties that on the day O’Meara J made his orders, but after they were pronounced, the solicitor for the defendants informed the plaintiff and the Court by email that the Wollert Land had been sold pursuant to a contract of sale some period of time ago, but that completion of the sale is 24 months away, so that no amendment of the orders should be necessary. Justice O’Meara’s associate responded by email that his Honour noted the defendants did not consider that the orders will need to be amended, which would be consistent with the plain meaning of the language of the order that, subject to further order of the Court, any sale or dealing not be undertaken to completion. In the circumstances, unless the parties required a further hearing, his Honour was content to leave the existing order in place.
Shortly before the hearing, the plaintiff’s solicitors undertook a search of the Wollert Land and discovered transactions that appeared to be in breach of the injunctive order made on 24 January 2023, in particular, a mortgage of the Land and also that a new electronic title had issued for the Land with different title particulars. The plaintiff applied by summons filed on 15 March 2023 for the defendants to be dealt with for contempt of the order. That summons was before me for directions and the orders I made on 17 March 2023 included directions relevant to progressing that contempt application.
I was told from the Bar table that the Wollert Land had been sold by a contract entered into in December 2022, with a different solicitor acting for the first defendant, for about $15 million. That apparently required a mortgage to be lodged with a countervailing Bank Guarantee, to secure the sale, in circumstances that are not yet clear.
Background
The plaintiff claims to have an equitable proprietary freehold interest in the Land. The registered proprietor of the Land is the first defendant (the ‘Company’). The second defendant (‘Antonio’) is sued as the executor and trustee of the deceased estate of Arturo and Vincenza Luna, the parents of the plaintiff (‘Pasquale’) and the second defendant.[3]
[3]In the case of family members having the same surname, it is more convenient to use Christian names, and no disrespect is intended.
The Caveat was lodged on 5 July 2018 claiming a freehold estate in the Wollert Land based on an implied, resulting or constructive trust. The Caveat was not in evidence before the Judge at first instance and nor before me. But as I shall explain, that is not material as the Caveat has clearly lapsed.
As related below by reference to the affidavits filed on behalf of the defendants, on 11 November 2022 the solicitor for the Company, Mr Joseph Di Mauro, wrote to Pasquale’s solicitor, Mr Donato Smarrelli, demanding material to substantiate the interest in the Wollert Land claimed in the Caveat. This presumably resulted in Mr Smarrelli instructing Ms Angelovski (as she relates in her affidavit sworn 23 January 2023) to arrange a conference with Pasquale, which was held on 24 November 2022. Pasquale attended with his son Domenico as did Mr Smarrelli. They received instructions to commence proceedings to preserve his interest in the Wollert Land.[4]
[4]In the Angelovski affidavit in support of the summons, the reference to receiving instructions from Mr Smarrelli seems to be unrelated to any other fact deposed to and is only explicable after seeing the evidence of Mr Di Mauro concerning his letter of demand sent on 11 November 2022, well before receipt of the Notice.
On about 12 December 2022, Pasquale received a notice under s 89A(3) of the Transfer of Land Act 1958 (Vic) (the ‘TLA’). It was also received at the office of Pasquale’s solicitor on about that day. That notice (the ‘Notice’) was dated 8 December 2022 and specified that the Caveat will lapse on the first moment of 17 January 2023 unless before that date, relevantly, ‘you give me written notice that satisfies the requirements of section 89A(3) of [the TLA] in the approved form’.[5]
[5]Exhibit LSA-1 to the Angelovski affidavit, 1.
It is well known that s 89A of the TLA enables a person interested in land, in this case the registered proprietor, to make application to the Registrar for the service of a notice to a person who has lodged a caveat on the land that the caveat will lapse on a day specified in the notice unless, relevantly, notice in writing is given to the Registrar that proceedings in a court or VCAT ‘to substantiate the claim of the caveator in relation to the land and the estate or interest therein in respect of which the application is made are on foot.’[6] The notice must specify a day not less than 30 days after the day on which the notice is served.[7] On the specified day, unless, relevantly, notice in writing has been given to the Registrar that proceedings as aforesaid are on foot, the caveat ‘shall lapse as to the land and the estate or interest therein to which the application then relates, and the Registrar shall make all necessary amendments in the Register.’
[6]TLA s 89A(3)(b).
[7]TLA s 89A(4), and if the notice is served by post not less than 30 days after ‘the day on which it is introduced into the course of post’.
Pasquale’s solicitor dealing with the matter, Ms Angelovski, who had been given the Notice on about 20 December 2022, went on leave on 22 December until 16 January 2023. On her return from leave on 16 January 2023, she called the Land Registry Services – Secure Electronic Registries Victoria (‘SERV’) to clarify the process for giving the notice required by s 89A(3)(b) of the TLA. She ended up speaking to Tiffany in the specialist registration team who told her, notwithstanding the clear terms of the Notice, that the final day to respond to the Notice was 17 January 2023. On that day, the solicitor filed the generally indorsed Writ (referred to below) and a conveyancer in Pasquale’s solicitor’s office filed the notice under s 89A(3)(b) of the TLA.
On 18 January 2023, Ms Angelovski received a telephone call from a Mr Chris Hardy of SERV. They had a conversation ‘to the effect’ that the Caveat had lapsed and was due to be removed on 24 January 2023. Ms Angelovski told Mr Hardy of the issue of the Writ and the filing of the notice under s 89A(3)(b) the previous day, and of her conversation with Tiffany. Mr Hardy told her that the time limits were strict, and the Caveat ‘would lapse on 24 January 2023’.[8] This is, of course, not what the legislation provides. The Caveat lapsed on 17 January 2023.[9] But the information given by SERV explains the timing of the application and the mention in the order of O’Meara J (in Other Matters) that the affidavits before him deposed to circumstances in which the Registrar of Titles had resolved to cause the Caveat ‘to lapse with effect from today’.
[8]Angelovski affidavit [22], confirmed by the affidavit of Janine Capone made 23 January 2023 (‘Capone affidavit’). I seriously doubt that an officer of SERV would have said that the Caveat would lapse on 24 January 2023 where it clearly had lapsed pursuant to s 89A(5) on 17 January 2023. What is likely is that it was said that the further step to be taken by the Registry of making all necessary amendments in the Register would happen on 24 January 2023.
[9]TLA s 89A(5).
The Writ
Pasquale’s proceeding was commenced by generally indorsed Writ on 17 January 2023. The basis of the claim as set out in the indorsement appears to have only a slight conformity with the facts as later revealed, and is as follows:
(a) Pasquale was in partnership with his parents in a farming and grazing venture from 1969;
(b) in 1989, the Company purchased the Wollert Land as bare trustee for the partnership with funds from the sale of some unidentified property owned by the partners.
(c) the partners agreed to put sheep and cattle to graze on the Wollert Land in continuance of their partnership;
(d) Arturo maintained the Wollert Land and grazed livestock until some unstated time when he was no longer able to do so due to old age;
(e) from 1969 (sic) to 1989, Pasquale contributed funds to the conservation and maintenance of the Wollert Land;
(f) in about 1989, Pasquale arranged to build a new home on the Wollert Land for his parents and he to reside together. He worked with assistance of Arturo on demolition work, footings, brickwork and framing for the new house;
(g) from 2014, Pasquale began again to maintain the Wollert Land, including purchasing livestock, growing fodder, carting water, installing a trough and mending fences on the Wollert Land; and
(h) on 5 July 2018, Pasquale caused a caveat to be lodged on the title to the Wollert Land claiming an unspecified interest (presumably a freehold interest) based on an implied, resulting or constructive trust (the Caveat).[10]
[10]Caveat AR211958H.
Pasquale claimed the following relief:
(a) a declaration that Pasquale had been in partnership with Arturo and Vincenza in respect of the purchase and development of the Wollert Land;
(b) a declaration that at all material times the Company held its interest in the Wollert Land as trustee for and nominee of the partnership;
(c) an order pursuant to s 39 of the Partnership Act 1958 (Vic) dissolving the partnership (notwithstanding that Arturo and Vincenza are known to have died and the death of either of them dissolves the partnership – see s 37);
(d) an order that the partnership be wound up under the direction of the Court and that a receiver be appointed to the partnership;
(e) orders for all necessary inquiries and the taking of accounts of all partnership dealings and transactions;
(f) an order that Arturo and Vincenza are liable to account for and pay to Pasquale, for the benefit of the partnership, all profits made by them and any amount otherwise owing to Pasquale;
(g) alternatively (if there was no partnership), a declaration that the Company holds such proportion as may be found by the Court of its interest in the Wollert Land on trust for Pasquale; and
(h) interest, costs and such other relief as the Court considers appropriate.
The Indorsement ends with the statement that Pasquale intends to file a statement of claim. In this regard, I observe that in the order of O’Meara J he noted that Counsel for Pasquale stated that the obligations of the parties to file pleadings would continue according to the requirements of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) unaffected by the orders made. No statement of claim was filed within 30 days after the defendants’ appearance filed on 20 January 2023, as required by r 14.02 of the Rules.
On 23 January 2023, Pasquale issued a summons seeking, first, a declaration that the written notice filed in accordance with s 89A(3)(b) of the TLA on PEXA on or about 17 January 2023 is valid and substantiates Pasquale’s interest in the Wollert Land and by virtue thereof the Caveat ‘shall not lapse on 24 January 2023 and remains in force over’ the Wollert Land. Secondly, in the alternative, the summons sought an order that the defendants undertake to hold 50% of the net proceeds of any sale of the Wollert Land for the benefit of Pasquale pending the hearing and determination of this proceeding. The summons was supported by the Angelovski affidavit and the Capone affidavit, but no affidavit of Pasquale. It is this summons that gave rise to the order of the Judge on 24 January 2023.
Defendants’ affidavits
In accordance (almost) with the orders of O’Meara J made on 24 January 2023, on 24 February 2023 the defendants filed affidavits of Antonio Luna, made 24 February 2023 (‘Antonio’s affidavit’) and Joseph Di Mauro, solicitor, made also on 24 February 2023 and written submissions.[11]
[11]The order required the defendant’s affidavits and submissions to be filed by 17 February 2023 and Pasquale’s further affidavits by 3 March 2023.
Antonio’s affidavit gives, in substance, the following evidence:
(a) he is engaged in the security industry and is Pasquale’s younger brother. He is unmarried and has no children;
(b) his security business has been very successful and that has enabled him to assist his parents and the Company with the purchase of the Wollert Land by taking over the loan re-payments due in respect of the Wollert Land when his parents retired and could no longer afford them. the Company did not generate any income at the time, the time not being specified;
(c) the Wollert Land was acquired in 1989 and the Company was incorporated to effect the purchase. The original shareholders and directors were Arturo and Vincenza;
(d) the purchase of the Wollert Land was funded by the sale of four Villa Units (the ‘Villa Units’) at 61 O’Connor Street, Reservoir, Victoria, which were owned by Arturo and Vincenza, and a loan, which Antonio took over, evidenced by a loan agreement dated 15 March 2001;
(e) on 16 November 2001, all the shares in the Company were transferred to Antonio and he was appointed the sole director and secretary;
(f) since 2001, Antonio has contributed all monies needed for the repayment of rates and taxes for the Wollert Land and, since 16 November 2001, all expenses relating to the Company, which has not traded;
(g) Pasquale was born in 1952, and so was 14 years old (sic) when he claims to have started the partnership alleged in the general indorsement. But there was no such partnership, and no tax returns or accounts were ever prepared for such a partnership. The Company has never filed any tax returns as a partner of any venture and does not hold a PIC number required to trade in livestock;[12]
[12]As I understand it, a PIC number is a Property Identification Code (PIC) allocated by Agriculture Victoria. This property registration system allows the movement of livestock (cattle, sheep, goats and pigs) between properties to be traced via the National Livestock Identification System (NLIS) database.
(h) all the farming business at the Wollert Land has always been conducted under a PIC number associated with AVA Luna Pty Ltd (ACN 078 372 719) rather than by the Company or any partnership as claimed by Pasquale. The name AVA Luna was chosen as it was the initials of the parties conducting the business at the Wollert Land, being Arturo, Vincenza and Antonio Luna;
(i) in about May 2004, Pasquale was declared bankrupt and to Antonio’s knowledge Pasquale did not disclose to his Trustee in Bankruptcy, Mr Paul Anthony Pattison, any partnership as alleged, and that is because none ever existed;[13]
[13]At the hearing, Counsel for the defendants tendered an extract from the National Personal Insolvency Index maintained by the Australian Financial Security Authority showing that Pasquale was made bankrupt by a sequestration order on 13 February 2003 and discharged on 14 August 2006, after several objections to discharge based on a failure to disclose a beneficial interest in property, a void transfer of property, providing false or misleading information to the Trustee and disposing of property without receiving consideration in money and failing to explain that to the Trustee.
(j) Antonio is at a loss to understand how Pasquale claims to have contributed to the conservation or maintenance of the Wollert Land between 1969 and 1989, as alleged in the general indorsement, as the Land was only acquired in 1989;
(k) there were never any plans prepared for the construction of a new home on the Wollert Land. There was a renovation of an existing double storey solid brick house on the Wollert Land. The plans referred to by Pasquale were for a renovation and were paid for by Arturo as it was his intention to live in the house with Vincenza;
(l) Pasquale and Antonio assisted their father when he commenced the demolition of part of the house, however neither of them was involved in any meaningful way with any of the building works. The footings were constructed by Antonio’s uncle, Michele Calleguri, and the brick work was performed by a person named Rocco. There was no framework undertaken.
(m) Antonio had exclusive use of the Wollert Land until about 2020 when Pasquale asked him to allow him to move his sheep there as he was required, by the RSPCA or the Council, to move them off his tennis court in Templestowe.
(n) about a few months later, Antonio’s niece Vincenza Luna (presumably Pasquale’s daughter) asked Antonio if she could have keys to the Wollert Land so she could take her children there to ride their motor bikes. This he agreed to do and did;
(o) subsequently, Pasquale moved more sheep to the Wollert Land. Antonio did not take issue with this as it meant the grass at the property was kept in check and his niece, who had a special needs child, took the child to the farm to look at and feed the sheep;
(p) Antonio never sought remuneration from Pasquale because they were related, and he was doing Pasquale a favour. He understands Pasquale may have worked tending to his sheep, but he has not repaired the water trough or done anything to assist the grass to grow, as he alleges;
Joseph Di Mauro, the defendants’ solicitor, gives evidence as to the application for the Notice and, relevantly, that before that was done, he wrote, on 11 November 2022, to Mr Donato Smarrelli, Ms Angelovski’s principal, advising that he acts for the Company and:
(a) that his instructions are that Pasquale has no claim whatsoever relating to the Wollert Land;
(b) that the Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (rr 3.1, 4 and/or 5.1) require that a legal practitioner must ensure that any caveat they place on a property has a reasonable ground for its lodgement;
(c) that Pasquale was declared bankrupt well after the purchase of the Wollert Land and did not disclose any interest in it to his Trustee;
(d) that Pasquale did not contribute any funds to the acquisition, conservation or maintenance of the Wollert Land. Instead, Pasquale has only visited the Wollert Land and been allowed to graze sheep there with the permission of the Company;
(e) in light of these facts, he asks that Pasquale provide, with appropriate particularity, the basis upon which Pasquale has sought to place the Caveat on the title to the Wollert Land and provide appropriate supporting evidence for the claim made;
(f) noted that in Legal Services Commissioner v Kotsifas,[14] Senior Member Smithers held that ‘legal practitioners have a duty to ensure that they are not a party to the lodgment of caveats unless there is a sufficient basis to contend the client truly has the caveatable interest’;
(g) asked that Pasquale provide details as to why it was considered appropriate for the prohibition to be absolute and drew attention to the observations of Warren J in Piroshenko v Grojsman[15] that ‘a caveat may only be lodged in a form commensurate to the interest it is designed to protect’; and
(h) noted that the Company is seeking to dispose of the Wollert Land and that the Caveat has caused it to not be able to proceed with sales.
[14][2014] VCAT 1615.
[15](2010) 27 VR 489.
Mr Di Mauro received no reply to this letter.
Before the date fixed for the further hearing of Pasquale’s application on 7 March 2023, my Chambers notified the parties on 3 March 2023 that Pasquale had not filed his statement of claim as required by the Rules (r 14.02). Pasquale was content to proceed with the hearing of the adjourned application in the absence of pleadings. The defendants expressed no view.
Pasquale failed to comply with the timetable set by O’Meara J for the filing and service of further affidavits and submissions. On 3 March 2023, the Court received consent minutes extending the time for the filing of that material and adjourning the hearing. On 6 March 2023, I made orders extending the time for Pasquale to file his material and adjourning the further hearing of Pasquale’s application to 17 March 2023.
Plaintiff’s further affidavits
Pasquale Luna made an affidavit on 10 March 2023 (‘Pasquale’s affidavit’). The affidavit includes a good deal of background material that is not relevant to establishing the equitable interest he claims, so I have been selective in what I set out below. The affidavit is also internally inconsistent in some respects and is sketchy in its description of the facts and circumstances that might give rise to a claim for a constructive trust in respect of the Wollert Land. The result is that the evidence in support of such a trust is, at present, rather frail. He gives evidence to the effect set out in the following paragraphs.
When he and his parents arrived in Australia in 1961 and 1962, he was five years old. When his English improved, he was able to assist his parents by being their translator. He assisted them in looking after their financial affairs for many years.
He married in 1975 and moved out of the family home but continued to assist his parents in their various affairs until the late 1990s when he had a ‘falling out’ with them.[16]
[16]Pasquale’s affidavit [7].
It was always his parents’ intention that the family would work collectively to grow the family’s assets to be shared between them equally. This included his personal assets. His parents’ view was that holding assets in their names would protect them for his benefit from any family law-related property claims in the event he and his wife divorced. He agreed, and his wife did not mind the arrangement as they never intended to separate.
In about 1968, Arturo purchased a property at Lot 5 Massey Avenue, Reservoir, Victoria (‘Lot 5’) for the purpose of establishing a business in the property. In about 1969, he and his parents entered into a partnership to open and operate a continental delicatessen at Lot 5. The partnership traded as AV&P Luna and the shares were equal. That partnership filed its first tax return in the 1969-70 financial year.
On 18 July 1973, Arturo purchased and became the registered proprietor of the property located at 61 O’Connor Street, Reservoir, Victoria. The title exhibited to Pasquale’s affidavit, however, shows that Vincenza also became a joint proprietor. At the time of the purchase, Pasquale worked as a draftsman and had started a construction company called Roto Pty Ltd. I note in this connection that the ASIC search he exhibits to his affidavit shows the incorporation of Roto Pty Ltd on 16 December 1988. Be that as it may, Arturo and Pasquale had discussed purchasing the property in Pasquale’s name but decided that it should be in Arturo’s name. The proposal was to build the Villa Units on the property, indeed Pasquale states it was his intention to do so and to rent them out to create more wealth for the family.
It would seem that the Villa Units were in fact constructed on the O’Connor St land as, in 1989, when the Villa Units were ‘finally’ sold, Arturo asked Pasquale what they should do with the proceeds. Pasquale’s initial proposal was to purchase a warehouse to assist in the running of his importing business. He offered to pay half the rent of the warehouse to his parents or to Antonio, whichever they wanted him to do. It was always his intention that things were equal between Antonio and him.
Arturo wanted to purchase the Wollert Land with the proceeds from the sale of the Villa Units. Arturo wished to build a large family home big enough for all of the family, including Pasquale’s wife and three children, and Antonio, to live in. Pasquale agreed with that proposal.
In March 1989, Pasquale arranged for the V&A Luna Family Trust to be set up and for a corporate trustee, the Company, to be established. The trust deed is exhibited to his affidavit and shows the trust to be a typical discretionary trust. Under its terms, the trustee holds the trust property, including, I take it, the Wollert Land, upon a trust to distribute income and capital as they see fit, when they see fit, among a number of specified beneficiaries and their families. The primary beneficiaries are Arturo and Vincenza, and the general beneficiaries are the primary beneficiaries and, in short, their family. I note in passing that the interest that any beneficiary may have under that trust is an expectation, or hope, that the trustee, if and when it decides to distribute the land as a trust asset pursuant to clause 6 of the Trust Deed, will, in the distribution, give him a share. As a matter of law, it does not amount to a present interest in the land itself.
Pasquale makes comments on Antonio’s affidavit. Much of the commentary is not relevant to his claim, as is much of what Antonio relates. Relevantly, Pasquale says that he gave his parents a retail outlet located at the Westend Market, Sunshine, where they would sell goods he was importing (thus contributing to their assets), and that he allowed Antonio to run his security business from Pasquale’s offices located on the corner of Separation St and High St, Northcote, rent free. Pasquale says that Antonio had very little knowledge of their parents’ dealings, including their various agreements and understandings with him relating to the family’s assets and Antonio was rarely, if ever, involved in any decisions his parents and Pasquale made, including investments such as the purchase of the Wollert Land. He says Arturo had a great deal of trust in him on all family decisions until their disagreement and falling out in 2009.[17]
[17]Pasquale’s affidavit [34]. This is inconsistent with the statement in the next paragraph and may be a typographical error.
Pasquale and his parents had disagreements from time to time. As a result, things became untenable between Pasquale’s family and his parents, and this led to him stopping works at the Wollert Land in about 1997.[18]
[18]Pasquale’s affidavit [25].
During the period from 1997 to 2008, when Pasquale was not on speaking terms with his parents, it appeared to him that his brother arranged to have his parents resign as directors of the Company. He has no knowledge of the circumstances that led to the transfer of the loan referred to in paragraph four of Antonio’s affidavit. He understood that there may have been a small mortgage on the Wollert Land because in 2004 Arturo offered Pasquale the opportunity to take a transfer of that land in return for paying out the mortgage. Pasquale did not have the money at the time and thought it would be unfair to Antonio.
The Wollert land was purchased for about $500,000.00 in 1989. The purchase price came from the sale of the Villa Units constructed on the O’Connor St property.
In relation to the development of the Wollert land, Pasquale says that he drafted the plans and completed the permit application and undertook to complete most of the demolition works with his father and father-in law-assisting him. He would often attend the Wollert Land with his family and would help to cook and clean whilst his children played. His brother Antonio was very rarely present and would be working long hours trying to establish his security business. He acknowledges that his uncle dug the footings and he, Pasquale, boxed and poured the footings. Pasquale was solely responsible for arranging the trades, including the bricklayer Rocco, who was known to him having completed the brickwork on the units at O’Connor St and the house that Pasquale built for his parents at 66 Massey Avenue, Reservoir, Victoria.[19] In about 1989, Arturo and Pasquale purchased a John Deere earthmover for $11,000.00 which was contributed to 60/40 by both of them. Pasquale used the earthmover to dig out the driveway and paid for and installed the crushed rock for the new driveway. Other work that he performed at the Wollert Land was to install the boxing and steel for the ‘deco’ columns installed for the front entrance, installing the concrete slab on the second level following the demolition of the steps in the kitchen and cutting concrete in the entrance foyer to assist in construction of the area.
[19]Pasquale’s affidavit [39]. This is the only mention, in passing, of Pasquale building a house for his parents at this address, and there is no information as to what happened to it or the proceeds of its sale, if any.
Antonio abandoned the Wollert Land after Arturo stopped looking after it. The property has been extensively vandalised, windows have been broken, graffiti covers the inside of the house, fires have been lit inside the house, power lines have fallen on the property and all of the copper piping has been stolen. Additionally, there is no longer any livestock on the property.
In about late 2017, following reconciliation with his parents, Arturo asked Pasquale to check on the Wollert Land. Pasquale explained to him his observation that the grass was overgrown, and the house had been extensively vandalised. He told his father that he would put some sheep on the property and board-up the house. He then told Antonio that he would put sheep on the property. At that time, he carried out further works on the Wollert Land, fixing the fencing, installing security cameras, boarding up the house and putting a lock on the gate. He gave Antonio a key to that lock. Pasquale disputes Antonio’s assertion that he had to remove sheep from his property. He also says that his daughter does not have a key to the Wollert Land. Whenever his daughter visited, it was with his supervision.
Pasquale’s wife, Teresa Luna, also made an affidavit on 10 March 2023 (‘Teresa’s affidavit’) in support of Pasquale’s claim to an interest in the Wollert Land. She fills a few gaps in Pasquale’s account, in particular that in her understanding the O’Connor St property was owned by Arturo, Vincenza and Pasquale; that in about September 1976, Pasquale commenced construction of a house for Arturo and Vincenza at 66 Massey Ave, Reservoir, which was completed in about October 1977; that Arturo and Vincenza always relied on Pasquale for their affairs, including building their new home at Massey Ave; and confirmed the gift of a retail outlet at the Westend Market, Sunshine, selling homewares, toys and ornamental giftware, to which Pasquale and Teresa supplied the stock for which Arturo and Vincenza rarely paid. They kept the proceeds of sale, as agreed between Pasquale, Teresa, Arturo and Vincenza.
Defendant’s Submissions
At the same time as they filed their affidavits, the defendants filed short written submissions making the following points:
(a) the Caveat has lapsed in accordance with s 89A(5) of the TLA as the proceedings were not commenced prior to 17 January 2023 nor was the requisite notice given before that time;
(b) the time limits under the TLA are strict and not subject to modification or change: Tawafi v Weil;[20]
[20][2017] VSC 643 (Digby J).
(c) pursuant to 91(4) of the TLA , Pasquale cannot seek to renew the Caveat once it is lapsed: Tawafi v Weil;[21]
[21]Ibid [27].
(d) the Registrar of Titles, who ought to have been joined to this application – particularly given the allegations made by Pasquale’s solicitors – has properly refused to allow a renewal of the Caveat. In this regard, I note that there is no evidence before the Court as to an attempt by Pasquale to lodge another caveat, or to ‘renew’ the Caveat;
(e) accordingly, Pasquale’s first application in the summons cannot succeed.[22] For now, he may continue his action against the defendants claiming an interest in the property. He is precluded from placing a further caveat on the property;
[22]It will be recalled that by the first relief sought in the summons was a declaration that the written notice filed in accordance with s 89A(3)(b) of the TLA on PEXA on or about 17 January 2023 is valid and substantiates Pasquale’s interest in the Land and by virtue thereof the Caveat ‘shall not lapse on 24 January 2023 and remains in force over’ the Land.
(f) the assertion that Pasquale’s solicitors were somehow misled by the Registrar of Titles does not impact the position. Pasquale does not point to any provision of the TLA or any principle of law or equity that would alter the position;
(g) in any event, the claim about being misled by the Registrar of Titles should not be accepted. The Registrar of Titles has not been joined, the identity of the employee not determined, and the file notes of conversations not disclosed. There has been no subpoena of documents or witnesses from the Registrar of Titles.
(h) one would expect a serious allegation to be supported by better evidence than that of the very solicitor who has apparently misunderstood the law as well as the clear instruction on the Notice. Given the potential for preservation of self-interest, the Court should be wary of potentially self-serving evidence unsupported by corroborating documents or other evidence;
(i) if, for some reason not yet apparent to the defendants, the Court is able to allow a new caveat to be filed; it should not do so. There is no prima facie case against the defendants. Pasquale’s indorsement of claim is nonsensical. It refers to non-existent parties. It refers to conservation and maintenance of the Land between 1969 and 1989 – yet the property was purchased in 1989;
(j) there is no basis for the allegation of a partnership. It is also noted that no such matter was raised in the now-lapsed Caveat;
(k) the Company was owned and controlled by Arturo and Vincenza Luna, until it was transferred to Antonio Luna absolutely in 2001. At no stage has there been any ownership connection with Pasquale – who was bankrupt in 2004;
(l) there is no evidence or basis advanced as to the reason why any partnership between Pasquale and his parents (which is denied in any event) would lead to a right in the property owned by the Company. The claim is a nonsense; and
(m) the summons should be dismissed, and Pasquale ordered to pay the costs of the defendants on an indemnity basis.
At the hearing, Mr Forrester of Counsel addressed the more pertinent issue of Pasquale’s claim that he has a prima facie case for recognition of a proprietary interest in the Wollert Land pursuant to a constructive trust. He pointed to the somewhat sketchy evidence concerning whether Pasquale contributed to the acquisition or maintenance of the Wollert Land and the inconsistencies in, and impossibility of, some of his evidence. More relevantly for this stage of the proceeding, he pointed to Pasquale’s Bankruptcy in 2003 and submitted that if Pasquale had acquired an interest of the kind he claims (especially if it should have been acquired at the time of purchase of the Land in 1989), it vested in his Trustee in Bankruptcy pursuant to s 58 of the Bankruptcy Act 1966 (Cth), and any interest he held is subject to control of that Trustee pursuant to the Act. The second point made is that the Land was acquired by the Company as trustee of the V&A Luna Family Trust. He is a beneficiary of that Trust. Pasquale, who says he caused the Trust and Company to be formed to acquire the Land, cannot take an interest pursuant to a constructive trust where he is a beneficiary of the V&A Luna Family Trust.
Plaintiff’s Submissions
The first submission made by counsel for Pasquale is that it was reasonable for Pasquale’s solicitors to rely, and they were entitled to rely, upon the representations made by an officer of the Registrar of Titles in lodging the material required by s 89A(3) on 17 January 2023. Rather ambitiously, counsel for Pasquale submits:
The legal principles underpinning a party's ability and entitlement to rely on representations made by an agent are well established. Indeed, there is an entire body of law and legislation dedicated to protecting parties who rely on misrepresentations to their detriment, both in general law terms and equity.
Then it is submitted that the Registrar should be estopped from lapsing the Caveat, in circumstances where Pasquale was in substantial compliance. Alternatively, the Court has an inherent jurisdiction to make orders ‘voiding the lapsing of the caveat’ and declaring that Pasquale be placed back into the position he would have been in had the lapsing not occurred before the filing of the material required by s 89A(3) of the TLA.
In relation to the claimed interest in the Wollert Land arising out of a resulting, implied or constructive trust, it was submitted that Pasquale’s affidavit and Teresa’s affidavit sufficiently establish the contributions that were made by Pasquale, directly through work on that Land, and indirectly through assisting his parents build up their wealth ever since the delicatessen partnership established in 1969. It was contended that the evidence rises to the level of a prima facie case to establish a constructive trust giving rise to an equitable freehold interest in the Wollert Land, and that the balance of convenience favoured the maintenance of the Caveat. Further, it was said that this is a case which can only be determined after a ventilation of all the relevant evidence.
In the circumstances, maintaining the Caveat, or declaring that it did not lapse, is a cost effective and practical method by which to continue to protect Pasquale’s interest and maintain the status quo. Alternatively, if the Court is not minded to deal with the Caveat in this way, 50% of any proceeds of any sale of the Wollert Land should be paid into Court pending the hearing and determination of the proceeding.
Consideration – Caveat
The submissions of the defendants in relation to the lapsing of the Caveat are incontrovertible. The operation of s 89A of the TLA in the circumstances of this case is clear and the Caveat had lapsed by the time of the application before O’Meara J.
The section, so far as relevant to this matter, is as follows:
89A Removal of caveat on application to Registrar
(1)Subject to the provisions of this section, where a recording of a caveat (not being a caveat lodged by the Registrar) has been made pursuant to section 89(2), any person interested in the land affected thereby or in any part thereof may make application in an appropriate approved form to the Registrar for the service of a notice pursuant to subsection (3).
(2)An application under this section shall—
(a)specify the land and the estate or interest therein in respect of which it is made; and
(b)be supported by a certificate signed by a person for the time being engaged in legal practice in Victoria, referring to the caveat and stating the person's opinion that, as regards the land and the estate or interest therein in respect of which the application is made, the caveator does not have the estate or interest claimed by the caveator.
(3)Upon receiving any such application and certificate and upon being satisfied that the applicant has an interest in the land in respect of which the application is made, the Registrar shall give notice to the caveator that the caveat will lapse as to the land and the estate or interest therein in respect of which the application is made on a day specified in the notice unless in the meantime either—
(a)the application is abandoned by notice in writing given to the Registrar by or on behalf of the applicant; or
(b)notice in writing is given to the Registrar that proceedings in a court or VCAT to substantiate the claim of the caveator in relation to the land and the estate or interest therein in respect of which the application is made are on foot.
(4)The Registrar shall not cause a day to be specified in the notice that is less than 30 days after the day on which the notice is served or, if the notice is sent by post, the day on which it is introduced into the course of post.
(5)Upon the specified day, unless—
(a)the application has been abandoned as aforesaid; or
(b)notice in writing has been given to the Registrar that proceedings as aforesaid are on foot—
the caveat shall lapse as to the land and the estate or interest therein to which the application then relates, and the Registrar shall make all necessary amendments in the Register.
Sub-section 89A (6) deals with the abandonment of an application under the section and s-s 89A (7) deals with the outcome of proceedings of the kind referred to in paragraph 89A(3)(b) and the powers of the Court, VCAT and the Registrar as a result of the failure of the caveator to substantiate its claim or the proceeding being discontinued, withdrawn, struck out or dismissed. Neither of these provisions are relevant to this application.
The application made pursuant to s 89A(1) is not in evidence. But the Notice issued by the Registrar pursuant to s 89A(3) is in evidence, dated 8 December 2022, and it shows that ‘Application Removal of Caveat AW349235M (E)’ was made and gives notice under s 89A(3) of the TLA as follows:
“The above application has been made to me under section 89A(1) [of the TLA] to remove Caveat AR211958H (the Caveat).
I GIVE YOU NOTICE THAT the Caveat will lapse on the first moment of 17/01/2023 as to:
LAND OR INSTRUMENT AFFECTED: 9070/221
ESTATE OR INTEREST AFFECTED: FREEHOLD ESTATE
APPLICANT(S) V.& A. LUNA PTY LTD
APPLICATION LODGED BY: DSA LAW PTY LTD
unless before that date either: -
(a)the section 89A(1) application is abandoned by notice in writing given to me by or on behalf of the applicant with the consent of or on behalf of the caveator;
OR
(b)you give me written notice which satisfies the requirements of section 89A(3) of the [TLA] in the approved form available at added)
It is thus clear that the applicant under s 89A(1) is the Company, being the first defendant and the registered proprietor of the Land. It has made application to the Registrar for the service of a notice under s 89A(3) to Pasquale as caveator that the Caveat will lapse on a day specified in the notice. The Registrar is required by s 89A(4) not to specify in the notice a day ‘that is less than 30 days after the day on which the notice is served or, if the notice is sent by post, the day on which it is introduced into the course of post’. The evidence given by Ms Angelovski is that the Notice was received at her firm’s offices on 12 December 2022.[23] The day specified in the Notice is 17 January 2023, which is undoubtedly more than 30 days after the Notice was ‘introduced into the course of post’.
[23]Angelovski affidavit [7].
The Notice makes crystal clear, however, that the day specified is the day on which the Caveat will lapse unless, to adopt the language of s 89A(3), ‘in the meantime’ notice in writing is given to the Registrar in accordance with, relevantly, s 89A(3)(b) of the TLA. Thus, the specification that the Caveat will lapse on the first moment of 17 January 2023 adopts a correct interpretation of the section and to make it really clear, the Notice goes on to say that the Caveat will lapse ‘unless before that date’ the actions set out in either s 89A(3)(a) or s 89A(3)(b) are taken.
The operation of ss 89A(3) and 89A(5) have the consequence in this case that the Caveat lapsed at the commencement of 17 January 2023. Because these proceedings were not commenced, nor was the requisite notice given, before that day, the lapse of the Caveat had happened long before 24 January 2023 and, in my view, there is nothing that can undo that fact. It is a legislated consequence of the giving of the Notice. I would expect the date of 24 January 2023 as the date for removal of the Caveat as stated in evidence by Ms Angelovski, is a reference to the administrative act of taking it off the Register.
The claim based on misrepresentation is both misconceived and pointless. It is misconceived because, first, in the face of the legislated operation I have set out, there is no power apparent to me for the Court to reverse what the Parliament has prescribed. There are circumstances in which the TLA enables a lapsed caveat to be reinstated to the Register: see for example s 90(4) of the TLA. Second, the Registrar is not a party to the proceeding and, even if they were, and a misrepresentation case were made out against them, it is more than likely that the proximate cause of the failure of Pasquale’s solicitor to comply with the Notice was a failure properly to read and understand it.
Moreover, even if it were within the power of the Court to do so, it would be pointless to reinstate the lapsed Caveat. I apprehend the learned Judge reached the same conclusion when he granted the interlocutory injunction on 24 January 2023. It is pointless because at best the Caveat, whilst registered, operates a little like an injunction, because to maintain it in response to an application under s 90(3) of the TLA the caveator must satisfy the two elements of injunctive relief, by establishing a prima facie case and satisfying the balance of convenience to maintain the Caveat until trial. The learned Judge took the course of cutting through arguments about the status of the Caveat by making an order that held the status quo. That is a better solution than attempting to reinstate the lapsed Caveat.
It is the continuation of that interlocutory injunction that was the heart of the application heard on 17 March 2023.
Interlocutory Injunction Application
The principles applicable to an application for an interlocutory injunction were identified by the High Court in Australian Broadcasting Corporation v O’Neill.[24] Pasquale must demonstrate a prima facie case. This requirement is to be understood as whether there is a serious question to be tried as to Pasquale's entitlement to relief, not whether it is more probable than not that Pasquale will succeed at trial. The sense in which the test is understood is that Pasquale must prove prima facie a sufficient likelihood of success to justify in the circumstances preservation of the status quo pending trial. In context, it must show that he has a putative legal or equitable right in respect of which final relief is sought which will justify the restraint sought. The requisite strength of the probability of ultimate success depends on the nature of the rights asserted and the practical consequences likely to flow from the interlocutory orders sought. The injury which Pasquale is likely to suffer must be one for which damages will not provide an adequate remedy.
[24](2006) 227 CLR 57, [19] (Gleeson CJ and Crennan J), [65]–[83] (Gummow and Hayne JJ); see also Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, [8]–[13].
The balance of convenience must favour the granting of an injunction. The balance of convenience requires a consideration of the relevant matters favouring or militating against the granting of an injunction and will necessarily involve a consideration of the strength of Pasquale's claim, assuming that a serious issue has been identified. In Victoria, this consideration is further clarified by the decision of the Court of Appeal in Bradto Pty Ltd v State of Victoria.[25] The court must, in determining whether to grant an interlocutory injunction, take whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong, in the sense of granting an injunction to a party who fails to establish his right at the trial or in failing to grant an injunction to a party who succeeds at the trial.[26]
[25](2006) 15 VR 65.
[26]Bradto Pty Ltd v State of Victoria; Tymbook Pty Ltd v State of Victoria (2006) 15 VR 65, [35]; see also Magna Alloys and Research Pty Ltd v Coffey [1981] VR 23.
These organising principles are applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed.[27]
[27]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 68 [19] (Gleeson CJ and Crennan J).
There is a relationship between the strength of Pasquale’s case in establishing a serious question to be tried and the extent to which Pasquale must establish that the balance of convenience favours the grant of the injunction. The stronger the case in establishing a serious question, the more readily the balance of convenience might be satisfied. On the other hand, there will be other situations in which though the plaintiff’s proof of his rights is not strong, an injunction may be granted because to withhold it would do the plaintiff irreparable harm while to grant it would not greatly injure the defendant. It is sufficient that Pasquale show a sufficient likelihood of success that in the circumstances justifies the practical effect which the injunction will have on the defendants.[28]
[28]Slater Walker Superannuation Pty Ltd v Great Boulder Gold Mines Ltd [1979] VR 107, 110 (Lush J); Magna Allows & Research Pty Ltd v Coffey [1981] VR 23, 28; Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771, 775; Sylina v Solanki [2014] VSC 2, [43].
Constructive Trust – Principles
There is a great deal of law on the subject of constructive trusts. Not all of it, by any means, is capable of applying to the facts of this case. Each case depends on its own peculiar circumstances. What follows is a selection of the relevant principles.
Broadly speaking, a court of equity will intervene, possibly with a proprietary remedy, if a legal owner of property is unconsciously asserting his legal rights in denial of representations he has made, or assumptions he has induced, that another person will have an interest in that property, where that other person has acted to his real detriment on the faith of that representation or assumption. Generally, the Court construes the facts to find a constructive trust.[29]
[29]Giumelli v Giumelli (1999) 196 CLR 101.
A constructive trust may be imposed upon a legal entitlement to property in order to prevent a person from asserting or exercising his or her legal right in respect of that property in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct.[30] In this case, the ‘legal entitlement’ is the legal ownership of the Wollert Land. In Baumgartner v Baumgartner,[31] the majority (Mason CJ, Wilson and Deane JJ) referred to the result reached by Deane J in Muschinski v Dodds[32] as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. Their Honours cited what Deane J had said in Muschinski (at 620):
Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do…
[30]Muschinski v Dodds (1985) 160 CLR 583, 620, 623.
[31](1987) 164 CLR 137.
[32](1985) 160 CLR 583, 620.
Thus, a constructive trust will be imposed where the substratum of a joint relationship or endeavour ends, without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances where it would be unconscionable for that other party to retain a benefit with respect to the relevant property not commensurate with his or her contribution.[33] The unconscionability criterion dictates that a constructive trust may be imposed even if this is contrary to the express or implied intention of either or both of the parties.[34]
[33]Ibid 620 (Deane J), 599 (Mason J); Baumgartner v Baumgartner (1987) 164 CLR 137, 149-50 (Mason CJ, Wilson and Deane JJ); National Australia Bank Ltd v Maher [1995] 1 VR 318, 321 (Court of Appeal, Fullagar J); Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460, [107] (Ward J).
[34]Koh v Chan (1997) 139 FLR 410, 428-9 (Supreme Court of Western Australia, Murray J). See also Kais v Turvey (1994) 11 WAR 357 (Full Court).
The contributions which the Court may take into account in determining the scope of constructive trusteeship extend beyond financial contributions to the purchase price of the property in issue.[35] The contributions need not necessarily have been made directly to the acquisition or improvement of the property in issue,[36] but it is not sufficient that one person has merely benefited from the contributions of another; those contributions must be linked, albeit indirectly, to the purchase, maintenance and improvement of the property.[37]
[35]Baumgartner v Baumgartner (1987) 164 CLR 137.
[36]Green v Green (1989) 17 NSWLR 343, 369 (Court of Appeal, Mahoney JA); Lloyd v Tedesco (2002) 25 WAR 360, 364 (Murray J).
[37]Engwirda v Engwirda [2000] QCA 61, [23]-[30]; Lloyd v Tedesco (2002) 25 WAR 360, 365, 379-80 (Murray J); Cressy v Johnson [2009] VSC 52, [197]-[200] (Kaye J).
The necessity that there be unconscionable conduct means that a constructive trust will not be imposed on the ground of mere fairness,[38] as Brennan J said in Muschinski v Dodds:[39]
... There is no jurisdiction in an Australian court of equity to declare an owner of property to be a trustee of that property for another merely on the ground that, having regard to all the circumstances, it would be fair so to declare. ... The flexible remedy of the constructive trust is not so formless as to place proprietary rights in the discretionary disposition of a court acting according to vague notions of what is fair.
[38]Muschinski v Dodds (1985) 160 CLR 583, 594-5 (Gibbs CJ), 608 (Brennan J), 615-16 (Deane J).
[39](1985) 160 CLR 583, 608.
This is not to deny the relevance of notions of fairness and justice to the traditional equitable notion of unconscionable conduct.[40] The unconscionability of a refusal to recognise an equitable interest can arise not merely from events occurring at the time of acquisition but from subsequent events.[41]
[40]Muschinski v Dodds (1985) 160 CLR 583, 616 (Deane J).
[41]Green v Green (1989) 17 NSWLR 343, 353, 355 (Gleeson CJ).
Although the High Court of Australia has authoritatively stated that the basis of constructive trusteeship in cases of contributions to property or a relationship rests in unconscionable conduct, Australian courts continue to entertain arguments, usually as an alternative to the argument based on unconscionable conduct, based on the previous approach of imposing a constructive trust according to the actual or inferred (but not imputed) common intention of the parties.[42] The relevant common intention may be derived from the evidence of express agreement or the making of admissions, or it can be inferred from, for example, the making of contributions to the cost of property, or meeting expenses in maintaining it.[43] The latter highlights that a common intention constructive trust may arise from an agreement or common intention arising after acquisition of the relevant property.[44]
[42]See for example Green v Green (1989) 17 NSWLR 343 (Court of Appeal, Gleeson CJ).
[43]Allen v Snyder [1977] 2 NSWLR 685, 690-1 (Glass JA), 698 (Samuels JA); Vedejs v Public Trustee [1985] VR 569, 572-3 (Nicholson J); Shepherd v Doolan [2005] NSWSC 42, [37]–[38] (White J); Williams v Parris [2008] All ER (D) 235.
[44]DPP (Vic) v Ali (No 2) [2010] VSC 503, [75] (Hargrave J).
Even with the proof of the requisite intention, equity will not intervene by means of constructive trusteeship in the absence of detriment or material disadvantage to the claimant such that it would be fraud on the claimant for the other party to assert that the claimant has no beneficial interest in the property.[45] Disappointed expectation is not of itself sufficient to constitute detriment for this purpose.[46]
[45]Ogilvie v Ryan [1976] 2 NSWLR 504; Hohol v Hohol [1981] VR 221, 225 (O'Bryan J); Cooke v Cooke [1987] VR 625; Higgins v Wingfield [1987] VR 689, 694-6 (McGarvie J); Loone v Tasmanian Trustees Ltd [1987] Tas R 146; Green v Green (1989) 17 NSWLR 343, 354-6 (Court of Appeal, Gleeson CJ).
[46]Higgins v Wingfield [1987] VR 689.
The requirements of a common intention or a common assumption as to a state of affairs, and reliance upon that intention or assumption to one's detriment, serve to characterise this form of 'constructive trust' as a form of proprietary estoppel.[47]
[47]Higgins v Wingfield [1987] VR 689, 695-6 (McGarvie J); Austin v Keele (1987) 10 NSWLR 283, 290; Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460, [111]-[118] (Ward J).
Interlocutory Injunction – Consideration
The evidence, particularly of Pasquale, is that he worked with his parents from the time of the partnership in the continental delicatessen in 1969 to build their wealth for the benefit of the whole family. His contributions over the years enabled Arturo and Vincenza to acquire the properties that ultimately fed the purchase price of the Wollert Land. Thus, to put it succinctly, his efforts and work over a lengthy period contributed indirectly to the purchase price of that Land and those contributions were made either with the agreement, or on the understanding that he would share equally with the other members of the immediate family in the wealth accumulated.
In addition, he says he contributed directly both his labour and money in establishing the house on the Wollert Land, and maintaining it, and that he did so on the assumption that he would retain an equal share in the ultimate wealth created through his and his family’s efforts. At present, the agreement or understanding, or even assumption, upon which Pasquale provided this assistance is not fully spelled out in his evidence. But I remind myself after long experience of Australians of Italian origin, that a patriarchal feature of their family arrangements often results in the father, and perhaps the mother as well, holding the family’s wealth either personally or through companies and trusts, with the intention of sharing that wealth either equally or according to the deserts of the members of the family who have contributed to it.
The somewhat sketchy nature of the evidence at present means that the prima facie case is not strong, as it depends on the provision of more material and, likely as not, careful research of family papers and the titles of the properties acquired along the way, as well as more evidence of conversations and discussions between the members of the family, from time to time. It is sufficient, however, that Pasquale show a sufficient likelihood of success that in the circumstances justifies the practical effect which the injunction will have on the defendants.
With respect to Pasquale’s Bankruptcy and the possibility that Pasquale’s interest in the Wollert Land has vested in his Bankruptcy Trustee, it will be in the parties’ power to inform the Trustee of that and give him the opportunity of being joined as a party to this proceeding in order to make that claim. It would not, in my preliminary view, be satisfactory for the defendants to use the vesting of his interest in the Land as a defence without joining the Trustee as a party.
The defendants also submit that Pasquale cannot take an interest pursuant to a constructive trust where he is a beneficiary of the V&A Luna Family Trust. As a matter of principle, I am not sure that is right. If it is unconscionable in the circumstances for the trustee of the Family Trust to deny that Pasquale has a proprietary interest in the Land, why would his being a beneficiary of that Trust, particularly a beneficiary with no vested interest in the assets of the Trust, be a barrier. This is an argument that clearly requires further elucidation.
The balance of convenience needs to be looked at in relation to the strength of the prima facie case. In the current circumstances where Pasquale’s proof of his rights is not strong, an interlocutory injunction may be granted because to withhold it would do him irreparable harm while to grant it would not greatly injure the defendants. That is because, as the Court was told at the hearing, the Company has entered into a contract to sell the Wollert Land for a very great sum and the completion of that contract is not due for about 24 months, perhaps a little less by now. Maintenance of the status quo will not harm the defendants and to deny the interlocutory injunction has the potential to injure Pasquale by denying him the protection against dissipation of the value of the Land, pending the trial of the proceeding, by measures taken by the Company. If the proceeding is prolonged for any reason, it lies in the Company’s power to seek a variation of the injunctive order to enable the completion of the contract of sale with the retention of some part of the proceeds in trust to abide the outcome of the proceeding.
I should add that the continuation of the interlocutory injunction is subject to satisfactory compliance by Pasquale with the requirement to file further evidence in support of his claim and will necessarily be subject to legal arguments, either at a further interlocutory stage or at trial, as to the legal effect of Pasquale’s Bankruptcy and the use of the Family Trust to purchase the Land.
Conclusion
For these reasons, on 17 March 2023, I ordered that, upon the plaintiff giving the usual undertaking as to damages, the injunctive order made by O’Meara J on 24 January 2023 is discharged and replaced with the following:
Subject to further order of the Court, the defendants may not lodge or seek to undertake any sale or other dealing affecting the land described in Certificate of Title Volume 09070 Folio 221 and its successor or replacement title, being Certificate of Title Volume 12546 Folio 934, or any other Certificate of Title for any part of the land previously the subject of Certificate of Title Volume 09070 Folio 221, pending the final hearing or other determination of the claims made by the plaintiff in this proceeding.
As I have said, I also made directions for the filing of pleadings, further affidavits and a mediation, as well as making directions for the contempt application.
SCHEDULE OF PARTIES
| S ECI 2023 00158 | |
| BETWEEN: | |
| PASQUALE LUNA | Plaintiff |
| - v - | |
| V & A LUNA PTY LTD (ACN 007 80 547) | First Defendant |
| ANTONIO LUNA (who is Executor and Trustee of the Estate of ARTURO LUNA, deceased and VINCENZA LUNA, deceased) | Second Defendant |
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