Marchesi v Registrar of Titles
[2010] VSC 524
•17 November 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
No. S CI 04072 of 2010
| BRENDAN JOHN MARCHESI (as trustee of the bankrupt estate of Andrew Vasiliou, a bankrupt) | Plaintiff |
| v | |
| REGISTRAR OF TITLES IN THE STATE OF VICTORIA | Defendant |
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JUDGE: | FERGUSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 September 2010 | |
DATE OF JUDGMENT: | 17 November 2010 | |
CASE MAY BE CITED AS: | Marchesi v Registrar of Titles | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 524 | |
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REAL PROPERTY – Certificates of title not produced to trustee in bankruptcy – Order directing Registrar of Titles to cancel certificates and issue new certificates – Whether contempt proceedings or other proceedings requiring production should be commenced before orders should be made – Transfer of Land Act 1958 (Vic) s 103(1)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Galvin | Piper Alderman |
| For the Defendant | No Appearance | |
| For Mr A Vasiliou, Ms V Apostolou and Optquest Pty Ltd | Mr A Vasiliou appeared in person and, with leave, for Ms Apostolou and Optquest Pty Ltd |
HER HONOUR:
1. Introduction and summary of conclusions
In September 2004, Mr Brendan Marchesi, the plaintiff, was appointed as trustee of the bankrupt estate of Mr Andrew Vasiliou. Mr Vasiliou has since been discharged from bankruptcy but Mr Marchesi continues to be trustee of the bankrupt estate and to administer it. At the heart of this application is a property at 18 St Kilda Road, St Kilda. Mr Vasiliou was at the time of his bankruptcy and still is, recorded as the registered proprietor of that property on the register of land kept by the Victorian Registrar of Titles. However, he says that the property belongs to Optquest Pty Ltd as trustee for the Vasiliou Family Trust. Mr Vasiliou is the sole director and secretary of Optquest and he says that the company holds the certificates of title for the property and refuses to give them to Mr Marchesi.
The question of the beneficial ownership of the property was the subject of proceedings in the Federal Court before Jessup J. The reasons for judgment[1] record that in 1987 Optquest was appointed as the trustee of the Vasiliou Family Trust. Shortly before Optquest was deregistered in 1995, the company was replaced by Mr Vasiliou as trustee and he was subsequently replaced in 2003 by his wife, Ms Vasiliki Apostolou, as trustee. Mr Vasiliou and Ms Apostolou as trustee for the trust, were parties to the Federal Court proceedings but Optquest (which was deregistered at the time) was not. Jessup J held that at the date of his bankruptcy, Mr Vasiliou held the beneficial interest in the St Kilda Road property (and two other properties also registered in Mr Vasiliou’s name). His Honour found that the beneficial interest had not been transferred to Optquest (which was the trustee of the trust at the relevant time when the interest in the property was alleged to have been transferred). Under the Bankruptcy Act 1966 (Cth), upon the bankruptcy of Mr Vasiliou, the beneficial interest in the property vested in Mr Marchesi as trustee of the bankrupt estate. Ms Apostolou told Jessup J that she held the certificates of title. His Honour made orders that Ms Apolstolou deliver them up to Mr Marchesi. That did not occur. Through his lawyers, Mr Marchesi has asked both Ms Apostolou and Optquest to give him the titles, but to no avail.
[1]Marchesi v Apostolou [2007] FCA 986.
In those circumstances, Mr Marchesi seeks orders under s 103(1) of the Transfer of Land Act 1958 (Vic) directing the Registrar of Titles to:
(a)cancel the existing certificates of title for the St Kilda Road property;
(b)issue replacement certificates of title for the property in the name of Mr Vasiliou;
(c)record Mr Marchesi (in his capacity as trustee of the bankrupt estate) as the registered proprietor; and
(d)issue new certificates of title to Mr Marchesi.
Mr Marchesi’s solicitors sent copies of the originating motion, summons and affidavit in support to Mr Vasiliou, Ms Apostolou and Optquest for their information. They are not named as defendants to the proceeding. The Registrar of Titles is the only defendant.
Mr Vasiliou appeared before me on the hearing. He urged me to dismiss the application because he says Optquest holds the titles, has a lien over them and occupies the property. If I would not do that, Mr Vasiliou urged me to order that he and Optquest be joined as defendants to the proceeding and that there then be a further hearing.
For the reasons below, the orders sought by Mr Marchesi should be made and neither Mr Vasiliou nor Optquest should be joined as a defendant in this proceeding.
2. Certificates of Title and the need to produce them for registration of dealings with land
To appreciate the dilemma faced by Mr Marchesi and to assist with understanding the relevant case law, it is necessary to understand the procedures that have applied from time to time when registering dealings with Torrens system land under the Transfer of Land Act 1958 (Vic). The mechanics for registration have changed with the development of technology. In the past, the Registrar of Titles maintained a paper based register book. For each piece of land governed by the Act, there was an original certificate of title retained in the Titles Office (as it was previously known) in Melbourne. Each certificate of title had a volume and folio number. There was a duplicate paper copy of each original title and the duplicate was held by the person who had the controlling interest in the property. For example, if the property had been mortgaged, the mortgagee would hold the duplicate title; if it had not, then the registered proprietor would hold the duplicate.
With the advent of technology, that system has changed. The Registrar is still required to keep a register of land, but that register need not be paper based and may be in any form (including computerised).[2] The register consists of folios with each folio being a division of the register that relates to one or more parcels of land.[3] Now instead of two certificates of title (original and duplicate) being produced, the Registrar maintains the register and provides to the person entitled to it a certificate of title which contains the information in the register (or an extract of that information) on the folio for the relevant property.[4] These certificates of title (which include existing duplicate certificates of title created under the old paper based system) must be produced to the Registrar if a transfer of land or transmission application is to be registered unless the Court otherwise directs the Registrar under s 103(1) of the Transfer of Land Act.[5]
[2]Section 27(1)-(3) Transfer of Land Act 1958 (Vic).
[3]Section 27(4), (5) Transfer of Land Act 1958 (Vic).
[4]Section 27B(1), (6) Transfer of Land Act 1958 (Vic).
[5]Section 27E Transfer of Land Act 1958 (Vic).
Mr Marchesi therefore either needs the certificates of title for the property so that he can lodge them with a transmission application with the Registrar and become registered as the proprietor or an order directing the Registrar to register the transmission application without them.
3. In what circumstances will the Court make orders under s 103(1) of the Transfer of Land Act directing the Registrar of Titles to cancel a Certificate of Title?
Section 103(1) of the Transfer of Land Act provides:
In any proceeding in a court related to any land or any instrument or dealing in respect thereof if the court directs the Registrar to make any amendments to the Register or otherwise to do any act or make any recordings necessary to give effect to any judgment decree or order of the court the Registrar shall obey such direction.
The definition of “court” is a court of competent jurisdiction.[6]
[6]Section 4 Transfer of Land Act 1958 (Vic).
There are only a few reported authorities that have considered s 103(1)[7]. In Dotter v Evans[8] the purchaser of a property had obtained an order against a vendor for specific performance of a contract of sale. The purchaser then sought orders including orders under the Trustee Act 1958 (Vic) for vesting the property in the purchaser. At that time, s 58(1) of the Transfer of Land Act 1958 (Vic) provided that the Registrar enter a memorandum of the vesting order in the Register and on the duplicate title.[9] Gillard J concluded that the policy or purpose of the then s 58 was to avoid having two duplicate certificates of title for the one piece of land. Taking this into account, his Honour would only order that the vendor execute and provide to the purchaser a transfer of land and deliver the duplicate certificate of title to the Registrar so that the transfer could be registered. Gillard J indicated that if the vendor failed to comply with those orders, contempt proceedings might be brought. His Honour was of the opinion that the power under s 103(1) was a measure of last resort. He was mindful of the possible misuse that might be made of a second duplicate certificate of title and to avoid this, suggested that the Court should not make orders under s 103(1) until other avenues for transferring the title had been completely exhausted.
[7]The section has been amended since many of the cases were decided but the substance of the section remains the same.
[8][1969] VR 41.
[9]Section 58(1) of the Transfer of Land Act 1958 (Vic) has since been amended and now only requires the Registrar to make a recording of the order in any relevant part of the Register.
That case was soon followed by the decision of McInerney J in Casella v Casella.[10] In that case, the husband had been ordered to transfer property to his wife under the Matrimonial Causes Act 1959 (Cth). He refused to do this and orders were made directing the Court Registrar to execute transfers in the name of the husband. However, the Registrar of Titles would not register the transfers unless the duplicate certificates of title were produced. The husband was committed for contempt for refusing to hand over the duplicate titles. The wife sought orders under s 103(1) of the Transfer of Land Act directing the Registrar to register the transfer without production of the duplicate certificates of title or to cancel the certificates of title and issue fresh ones in the name of the wife. His Honour was however also concerned about making such orders which would leave a second duplicate title in existence. He would not make orders under s 103 until all other avenues for securing the production of the duplicate certificates of title had been exhausted. The duplicate titles appeared to be held by the husband’s friend. His Honour was of the opinion that the correct approach was for the husband to be required (through a court process of oral examination) to disclose the identity of the friend. The friend could then be required to produce the duplicate certificates of title. Only if that procedure failed to produce the duplicates did his Honour think an order should be made under s 103.
[10][1969] VR 49.
Both Dotter v Evans and Casella v Casella were distinguished by Lush J in Rizos v Rizos.[11] In that case, the County Court declared that the applicant, Ms Rizos, was entitled to one-half interest in a property and ordered the respondent, Mr Rizos, to transfer the half interest to her. He was willing to do that but the duplicate certificate of title and duplicate mortgage registered on the title were missing. Lush J distinguished the two earlier cases on the basis that in both of those cases, the duplicate certificates of title were not missing and it was clear that the party in possession of them was refusing to produce them. In the case before him, Lush J was of the view that it would be pointless bringing contempt proceedings against Mr Rizos and there did not seem to be any other useful step to be taken that would lead to the production of the duplicate title and mortgage. Therefore, the risk of having a second duplicate title in circulation appeared to his Honour to be minimal. He made orders directing the Registrar to register the transfer of the half interest without production of the duplicate title and to issue a new certificate of title and duplicate in place of the old title.
[11][1970] VR 150.
The next case considering s 103(1) was Marshall v Williams.[12] That was a decision of Gillard J. Mr and Mrs Marshall purchased a property from Mr Williams. The purchase price was to be paid by a deposit with the balance to be paid over 12 months once they had taken possession. When the final payment had been made, Mr Williams could not be located and so the duplicate certificate of title was not produced. Mr and Mrs Marshall therefore sought orders directing the Registrar to cancel the existing certificate of title and to issue in its place a new certificate of title with the transfer to be registered on the new certificate of title. This followed the type of orders made by Lush J in Rizos v Rizos. Gillard J noted that if such orders were made, the difficulties associated with a second duplicate certificate of title existing that he (in Dotter v Evans) and McInerney J (in Casella v Casella) had identified were overcome. His Honour made the orders sought.
[12][1974] VR 592.
Haslam v Money for Living (No. 2)[13] concerned a representative action in the Federal Court. A number of people had been induced to sell their homes and the proceedings had been commenced for orders setting aside the sales. Some of the applicants settled their claims and orders were sought so that effect could be given to the settlement. Tracey J made orders under s 33ZF of the Federal Court of Australia Act 1976 (Cth) requiring the Victorian Registrar of Titles to rectify the register so that those applicants who had settled their claims would each respectively be shown as the registered proprietors of the relevant property which they had sold. The Registrar opposed the making of such orders on the basis that the Victorian case law on the vesting provision, s 51 of the Trustee Act, and s 103 of the Transfer of Land Act was such that a vesting order was only available as a last resort when ordinary conveyancing procedures were not available. The Registrar relied on Dotter v Evans and Casella v Casella. In addition the Registrar relied on the decision of Warren J (as her Honour then was) in Re Purkiss,[14] in which her Honour had made a vesting order under s 51 of the Trustee Act. That case involved property in a deceased estate, where the trustee company that had obtained probate was no longer in existence and its successor was unknown. As such there was no‑one who could execute a transfer of land. Her Honour was satisfied that there was no ordinary conveyancing procedure available to remedy the problem and the order sought was a step of last resort.
[13][2007] FCA 1981.
[14][1999] 3 VR 223.
Tracey J noted that the “last resort” approach in the Victorian cases was relevant in guiding the exercise of discretion under the legislative framework that applied in those cases, but said it could not fetter the exercise of the discretion in other cases. His Honour also noted that he was exercising his discretion under different legislation and different and additional matters needed to be considered. Among the matters taken into account by his Honour were that if the orders were not made, the settlement agreement might collapse and the parties would suffer additional costs. His Honour also distinguished the Victorian cases because in the matter before him, it was not a question of non‑delivery of the duplicate certificate of title or otherwise failing to facilitate a transfer of title which was at issue (as in the Victorian cases) but rather the applicants were seeking orders to restore their names to the register as proprietors of the properties.
In the later case of Oxley v Boon[15], the property in question was registered in the name of Joanne Boon having previously been registered in the name of her parents, Mr and Mrs Oxley, who were the plaintiffs. Mr and Mrs Oxley claimed that the registration of the transfer of the property from them to their daughter was procured by fraud. They sought orders under s 103(1) of the Transfer of Land Act requiring the Registrar to amend the register so that they would be substituted as the registered proprietors of the property in place of their daughter. Hansen J (as his Honour then was) found in favour of Mr and Mrs Oxley. When considering the relief that ought to be granted, his Honour noted that the Registrar had indicated that rather than relief under s 103(1), it was first appropriate to make orders such as those made in Dotter v Evans. His Honour accepted that that was appropriate and ordered that Ms Boon execute an instrument of transfer in favour of Mr and Mrs Oxley and deliver the certificate of title to the Registrar so that the transfer could be registered.
[15][2009] VSC 222.
In my opinion, the reasoning in Dotter v Evans and Casella v Casella must be read and understood in light of the later remarks of Gillard J in Marshall v Evans. It is clear that the rationale for the last resort approach in the two earlier cases was the concern of both McInerney and Gillard JJ that if there were two duplicate certificates of title for the same land in existence then this would fly in the face of the Torrens system encapsulated in the Transfer of Land Act. Of particular concern to their Honours was the risk that a second duplicate certificate of title might make it easier for fraud or other improper dealings with the land to be effected. Once a solution to this problem was identified (by cancellation of the existing title and the issue of a fresh title such that two duplicates for the one piece of land would not exist) Gillard J was less concerned about making orders under s 103(1) of the Transfer of Land Act 1958 (Vic). [16] Whilst caution must be taken in making such orders, I do not think that it is necessary to exhaust every other avenue if doing so would not serve any practical purpose but rather would only serve to delay an inevitable application under the section at a later time. However, if there are other practical steps that can be taken that are likely to result in the production of the title without the need for orders under s 103(1) being made, then that route should be pursued in the first instance. An example of such a situation is Oxley v Boon. It is clear from the judgment in that case that the question of ownership of the property was the primary issue and the entitlement to a transfer and the certificate of title was not known until that issue had been determined. In those circumstances, the orders for delivery of a transfer of the property and the certificate of title served a practical purpose before the making of any orders under s 103(1). [17]
[16]Marshall v Evans [1974] VR 592.
[17]See also Moffet v Dillon, Unreported, Supreme Court of Victoria, Chernov J, 24 July 1997 where an order under s 103(1) Transfer of Land Act 1958 (Vic) was not required because the relevant party stated in effect that it would not hinder implementation of the Court’s judgment.
I should also note that whilst Warren J held that the making of a vesting order in Re Purkiss was a step of last resort in that case, it was not necessary for her Honour to consider whether that was a prerequisite to the making of orders under s 103(1). Further, as Tracey J noted in Haslam v Money for Living (No. 2), her Honour did not hold that such a finding was a prerequisite to the vesting order she made under s 51 of the Trustee Act.[18]
4. Who has the duplicate Certificates of Title and what steps have been taken to compel their production?
[18][2007] FCA 1981 at [11].
It is clear from transcript from the Federal Court proceeding that Jessup J formed the view that Ms Apostolou was in possession of the duplicate certificates of title for the St Kilda Road property after both Mr Vasiliou and Ms Apostolou confirmed that she had them. His Honour ordered that Ms Apostolou deliver up the St Kilda Road duplicate certificates of title to Mr Marchesi.[19]
[19]Order of Jessup J made 13 August 2007 in Marchesi v Vasiliki Apostolou as trustee of Vasiliou Family Trust and Andrew Vasiliou, Federal Court proceeding (P)VID235/2005.
It seems that his Honour was concerned that what is now being asserted by Mr Vasiliou in this proceeding would happen. After Ms Apostolou told him that she had the duplicate titles and his Honour had said that he would make an order requiring her to deliver them to Mr Marchesi, he said to Ms Apostolou, “Now, later, if anything happens, I don’t want to hear any funny business about it wasn’t where you thought it was or you couldn’t find it or somebody else has it.” As noted above, Ms Apostolou has not delivered the duplicate certificates of title to Mr Marchesi.
It is unclear to me who has physical possession of the duplicate certificates of title. It may be that Ms Apostolou has possession of them, but there is no sworn evidence by her one way or the other. Rather, there is only what she told Jessup J when she said she had them in 2007 and a more recent letter she wrote to Mr Marchesi’s solicitors stating that she did not have them and never has had them. She went on to say in that correspondence that all assets of the Vasiliou Family Trust (including the duplicate titles to the St Kilda Road property) are vested in Optquest.
Mr Marchesi’s solicitors have written to Optquest requesting delivery up of the duplicate titles. They have not been produced.
Optquest cannot have physical possession of the duplicate titles because a company can only operate through its officers, in this case Mr Vasiliou who is the sole director and secretary.
In an affidavit sworn by him he deposes that Optquest is the true owner of the property and collected all the duplicate titles. In correspondence, Mr Vasiliou, asserted that the duplicate certificates of title are in the possession of Optquest and that a court order directing Optquest to produce the duplicates is required before it would deliver them to Mr Marchesi. Mr Vasiliou told me from the Bar table that Ms Apostolou does not have the duplicate titles and that they are in a drawer. Mr Vasiliou submitted that Optquest has a lien over the duplicate certificates of title and is entitled to hold them. Mr Vasiliou also asserts that Optquest occupies the St Kilda Road property.
It is clear to me that Mr Vasiliou knows where the duplicate certificates of title are held, that he has access to and control over them (whether in his own right or in his capacity as a director of Optquest) and that he will not produce them in the absence of a court order made in proceedings to which Optquest is a party.
5. Should Mr Marchesi be required to take contempt proceedings against Ms Apostolou or seek orders against Optquest and Mr Vasiliou before orders are made in this proceeding?
5.1 Ms Apostolou – should Mr Marchesi be required to bring contempt proceedings?
Although proceedings for contempt against Ms Apostolou for failing to comply with the orders of Jessup J might be something that Mr Marchesi might pursue, it is uncertain whether such proceedings would result in delivery of the duplicate certificates of title to him because she may not have them now. What is certain though is that the bringing of contempt proceedings against Ms Apostolou would result in further delay and costs in finalisation by Mr Marchesi of the bankrupt estate.
5.2 Other proceedings between Mr Marchesi, Mr Vasiliou, Ms Apostolou and Optquest
Before considering whether Mr Marchesi ought to be required to seek orders against Optquest or Mr Vasiliou requiring them to produce the duplicate certificates of title, it is useful to have regard to the matters in issue and determined in the Federal Court proceedings and in other proceedings in this Court relating to the property.
(a) Federal Court proceedings
The Federal Court proceedings were brought by Mr Marchesi against Mr Vasiliou and Ms Apostolou as trustee of the Vasiliou Family Trust for declarations that the St Kilda Road property and two other properties were beneficially owned by Mr Vasiliou at the date of his bankruptcy. Mr Vasiliou contended that the beneficial interest in the properties was held by the Vasiliou Family Trust. As noted above, Optquest was the original trustee of the trust. Jessup J found that shortly before deregistration of Optquest, Mr Vasiliou appointed himself as trustee and subsequently appointed Ms Apostolou in his place as trustee of the trust. At the time of the Federal Court proceedings, Optquest was still deregistered and Ms Apostolou was at least acting as trustee and was sued in that capacity.
The claim that the beneficial interest in the properties was held by the family trust was based on two matters. The first was that Mr Vasiliou said he had made a gift of the property to the trustee in October 1987. Jessup J found that Mr Vasiliou had not done everything to vest the legal title to the properties in Optquest as donee and therefore equity would not recognise the gift as complete.[20]
[20]Marchesi v Apostolou [2007] FCA 986 at [56]-[77].
The alternative claim was that the trust’s beneficial interest arose out of a written agreement between Mr Vasiliou and Optquest made on 25 March 1989 and that Optquest had paid for the property[21]. Jessup J found that Optquest had not paid the full purchase price required under the agreement nor had it paid rates and outgoings in respect of the properties which it was required to do under the agreement. In those circumstances, the family trust did not obtain an equitable interest in the properties.[22] His Honour considered whether the written agreement was really an option to purchase rather than a sale agreement and whether if that was the position, this would give rise to the equitable interest in the property being held by the family trust. His Honour concluded that regardless of whether there was an option to purchase or not, the family trust did not hold an equitable interest in the property because of its failure to pay the rates and outgoings as it was required to do.[23]
[21]The text of the agreement is set out in the Annexure to these reasons.
[22]Ibid at [98] – [111].
[23]Ibid at [112]-[117].
His Honour could not identify any other basis upon which the family trust could be said to hold the beneficial interest in the properties as a result of the 25 March 1989 agreement.[24]
[24]Ibid at [118].
His Honour went on to hold that even if the agreement did give rise to an equitable interest, the transfer of that interest would have been void under s 121 of the Bankruptcy Act 1966 (Cth) as against Mr Marchesi because Mr Vasiliou’s main purpose in entering into the agreement was to prevent it being available to his creditors.[25]
[25]Ibid at [120]-[134].
Mr Vasiliou and Ms Apostolou appealed from the orders made by Jessup J (including the order that Ms Apostolou deliver up the duplicate titles). The Full Court dismissed the appeals.[26] Special leave to appeal to the High Court was refused.[27]
[26]Vasiliou v Marchesi [2008] FCAFC 129.
[27]Brendan John Marchesi (as trustee of Andrew Vasiliou, a bankrupt) [2008] HCASL 540.
(b) Supreme Court of Victoria proceedings and caveats over the property
There were also proceedings in this Court before Hansen J (as his Honour then was) in which Mr Marchesi was the plaintiff and Mr Vasiliou (in his own right and as trustee of the Vasiliou Family Trust), Ms Apostolou, Optquest (in its own right and as trustee of the Vasiliou Family Trust) and the Registrar of Titles were the defendants.[28] In those proceedings, Mr Marchesi sought orders for removal of a caveat and other related relief. It appears from the judgment that the caveat had been lodged on behalf of Optquest over the St Kilda Road property and the two other properties that had been the subject of the Federal Court proceedings. The grounds stated in the caveat appear to have been an equitable interest arising from the sale contract of 25 March 1989 which had been the subject of the decision by Jessup J in the Federal Court. It seems from the judgment that the caveat was lodged after leave to appeal from the decision of the Full Federal Court to the High Court had been refused. It also appears that the registration of Optquest was reinstated after the leave application had been refused. If a company is reinstated, it is taken to have continued in existence as if it had not been deregistered and any property that is vested in the Commonwealth (in the case of trust property)[29] or ASIC (in the case of other property)[30] re‑vests in the company.[31]
[28]Marchesi v Vasiliou [2009] VSC 213.
[29]Section 601AD(1A) Corporations Act2001 (Cth).
[30]Section 601AG(2) Corporations Act2001 (Cth).
[31]Section 601AH(5) Corporations Act2001 (Cth).
It seems that before the caveat which was the subject of the proceedings before Hansen J was lodged on behalf of Optquest, an earlier caveat had been lodged by Ms Apostolou. The caveat lodged by her also seems to have relied on the family trust having the beneficial interest in the property. Mr Marchesi obtained an order in the Federal Court for the removal of that caveat. Ms Apostolou initially failed to comply with that order. When she did withdraw the caveat, it was replaced by a caveat lodged on behalf of Optquest, again said to be based on the family trust having a beneficial interest in the property. Mr Marchesi obtained orders from the Federal Court requiring Mr Vasiliou to cause Optquest to effect the removal of the caveat lodged on its behalf. Mr Vasiliou and Optquest did not comply with that order. When that caveat was removed, a further caveat was lodged by Optquest. It was this caveat that was the subject of the proceedings before Hansen J. It was signed by the daughter of Mr Vasiliou and Ms Apostolou who was the sole director and secretary at the time of lodgement of that caveat. Mr Marchesi applied for orders removing that caveat on the basis that Jessup J’s judgment was of such effect that the caveat could not be sustained. Hansen J summarised the submissions made by Mr Vasiliou (on his own behalf and, with leave, on behalf of Optquest) as follows:
(a)[Mr Marchesi] had sued the wrong parties in the Federal Court proceedings. The correct party had been Optquest. Mr Vasiliou and Ms Apostolou should be removed from the … proceedings.
(b)It cannot be presumed against Optquest that Jessup J’s judgment was correct.
(c)If Optquest had been sued in the Federal Court [Mr Marchesi] would have lost. The evidence established that Optquest had paid for the property. Further, s 121 could not have been applicable when [Mr Vasiliou] did what he did in order to pay his liability to the Deputy Commissioner of Taxation, and the properties were transferred at above market value.
(d)If the ground of claim in the subject caveat was wrong or not open, the Court should … validate the caveat by referring to the equitable interest.
(e)Optquest wished to claim against [Mr Marchesi] for loss and damage suffered as a result of his negligent or improper conduct of the bankruptcy. Knowing that Optquest was the true beneficial owner of the three properties, he should never have brought the proceeding to establish the contrary. Nor, having obtained possession of Claremont [one of the properties], should he have left it untenanted and vacant. Claremont had lain empty for years, and been vandalised.
(f)Recognising all matters advanced, the Court should exercise its discretion to apply justice. This meant, … that [Mr Marchesi’s] application should be refused, the issue as to Optquest holding the equitable (and a caveatable) interest in the properties or at least Claremont should be re-litigated, and Optquest and/or Mr Vasiliou should be able to claim for their alleged loss and damage.[32]
[32]Marchesi v Vasiliou [2009] VSC 213 at [96].
His Honour ordered that the caveat be removed on the basis that there was no serious question or prima facie case to be tried as to Optquest holding the equitable interest in the property pursuant to the contract of sale. That was because it had been litigated before and determined by Jessup J and it did not matter that Optquest was not a party. This is because a trust acts through its trustee and the relevant trustee at the time (Ms Apostolou) was a party to the litigation. His Honour held that this constituted an issue estoppel and precluded the re‑litigation of the same issue.[33] An application for leave to appeal was refused.[34]
[33]Ibid at [98].
[34]Vasiliou (in his own right and as trustee of the Vasiliou Family Trust) and ors v Marchesi and anor, unreported Court of Appeal, 12 August 2009.
Mr Vasiliou told me at the hearing that there is other litigation on foot. Since the hearing, he has sent emails to my Associate. Attached to one of those emails was a copy of a Writ and Statement of Claim for a proceeding commenced in this Court on 29 October 2010. In that proceeding Optquest is the plaintiff and Mr Marchesi is the defendant. It is pleaded that at all material times, Optquest was the trustee of the Vasiliou Family Trust. The claim relates to the three properties that were the subject of the Federal Court proceedings and the relief sought includes orders for specific performance of the 1989 contract and a declaration that Optquest is entitled to be registered as proprietor of the St Kilda Road property. An injunction is also sought to prevent Mr Marchesi from selling the property. A summons seeking (amongst other things) an injunction until the trial of the action restraining Mr Marchesi from selling the property, was dismissed by Macaulay J on 5 November 2010.
In addition to the litigation referred to above, Mr Vasiliou told me that there had been earlier litigation when he opposed the bankruptcy application, when he sought to have Mr Marchesi replaced as his trustee in bankruptcy, when he sued his bank to prevent it from exercising its power of sale over one of the properties.
5.3 Optquest and Mr Vasiliou – should orders for production of the duplicate certificates of title be brought against them?
Against the background of the earlier and current litigation, whilst application might be made by Mr Marchesi for orders against Optquest and Mr Vasiliou for production of the duplicate certificates of title, it is unclear that such proceedings would serve any practical purpose. Mr Vasiliou again wants to re‑litigate the very issues that were determined by Jessup J in the Federal Court proceedings. In a nutshell, Mr Vasiliou still maintains that Optquest paid him for the property and is beneficially entitled to it. As I understand Mr Vasiliou’s submissions, they were that his appointment as trustee in place of Optquest was void because of restrictions in the trust deed as to who could be appointed trustee. Therefore, he says that Optquest remained as the trustee of the trust. Ms Apostolou’s appointment as trustee of the trust occurred after deregistration of Optquest and in Mr Vasiliou’s view that appointment was void because the effect of the deregistration was to vest the trust assets in the Commonwealth and upon reinstatement to re‑vest them in Optquest. The effect of this according to Mr Vasiliou, was that Ms Apostolou was never the trustee of the trust and was the wrong party to sue and as the correct trustee (Optquest) was not a party to the Federal Court proceeding, Jessup J’s orders have no effect against it. There is nothing new in this. In respect of similar arguments put to the Court of Appeal when it was considering the application for leave to appeal from the decision of Hansen J, Buchanan JA (with whom Ashley JA agreed) said:
[Optquest] was deregistered on 7 July 1995. The registration of the company was reinstated on 3 December 2008. It is not clear to me how the provision avails [Optquest]. If the property had vested in the Commonwealth, that circumstance cannot found a claim by [Optquest] to an interest in the property. In any event, the properties were not held by [Optquest] when it was deregistered: so much was held by Jessup J. Further, the Commonwealth took the property subject to the claims of [Mr Marchesi].[35]
[35]Vasiliou (in his own right and as trustee of the Vasiliou Family Trust) and ors v Marchesi and anor, unreported Court of Appeal, 12 August 2009 at [12].
Those observations are equally pertinent in this case.
Mr Vasiliou’s submissions also failed to recognise that whether the trust (as opposed to its trustee) has any beneficial interest in the property has been finally determined by Jessup J and that is the relevant issue. It does not matter whether the trustee was Optquest, Ms Apostolou or Mr Vasiliou. This is particularly so when Mr Vasiliou is the sole director of Optquest and fully participated in the Federal Court proceedings to put the case for the trust. The issues were fully ventilated before Jessup J and determined by him. As Hansen J and the Court of Appeal held, there is an issue estoppel which precludes re‑litigation of the issue and it does not matter whether Optquest was a party or not.[36]
[36]Marchesi v Vasiliou [2009] VSC 213 at [98]; Vasiliou (in his own right and as trustee of the Vasiliou Family Trust) and ors v Marchesi and anor, unreported Court of Appeal, 12 August 2009 at [14].
In an email to my Associate since the hearing, Mr Vasiliou has said that because it paid for the property, it belongs to Optquest regardless of whether it holds the property as trustee of the family trust or in its own right. In this regard, I note that in all of the proceedings (including the recent proceeding commenced in this Court), in the 1989 sale agreement and in argument before me, the capacity in which Optquest is said to have been acting is as trustee of the family trust. There was no evidence before me from which I can infer that it acted in its own right and not as trustee.
In the circumstances of this case, if Mr Marchesi were required to commence proceedings against Optquest for production of the duplicate certificates of title, before orders are made under s 103(1) of the Transfer of Land Act, all that is likely to occur is that it will seek to re‑litigate issues which it is estopped from pursuing. Orders might then be made requiring it to produce the duplicate titles but further costs and time will have been wasted. There would be even further costs and delay in the event of non-compliance with those orders. No practical purpose would be served by such proceedings.
The circumstances of this case are such that I do not think that it is necessary for Mr Marchesi to bring proceedings against Optquest for production of the certificates of title as a precursor to later seeking orders under s 103(1) of the Transfer of Land Act in the event that Optquest fails to produce them.
6. Should orders be made under s 103(1) of the Transfer of Land Act?
Mr Vasiliou submitted that this case is distinguishable from that in Marshall v Williams[37] because in that case it was not known who held the duplicate certificates of title but here, Mr Marchesi knows that Optquest has the duplicate titles. However, as noted above, Mr Marchesi’s solicitors have sought the duplicate titles from Optquest and they have not been produced and, for the reasons given, I do not think that in this case it is necessary for Mr Marchesi first to sue Optquest for production of the duplicate titles before seeking orders under s 103(1) of the Transfer of Land Act.
[37][1974] VR 592.
Nevertheless, the powers conferred on the Court by s 103(1) should be exercised with caution. Here, the following matters are relevant in the exercise of the discretion as to whether or not to make orders under the section:
(a)If the orders are not made, additional costs will be incurred and there will be further delay in the administration and finalisation of the bankrupt estate which began in September 2004.
(b)The risks associated with having a second “live” certificate of title in existence, can be overcome by the making of orders akin to those made in Marshall v Williams – if such orders are made, the principles of the Torrens system are not undermined.
(c)Whilst Optquest and/or Mr Vasiliou or Ms Apostolou may hold or control the existing certificates of title, neither they nor the family trust have any beneficial interest in the property.
(d)The beneficial interest in the property vested automatically in Mr Marchesi upon the bankruptcy of Mr Vasiliou[38] and Mr Marchesi is entitled to be registered as proprietor.[39] Therefore, it is not necessary for any vesting order to be made by the Court. In that sense, Mr Marchesi is one step further along the line than the plaintiffs in many of the earlier cases where the application was for a vesting order with ancillary orders sought under s 103.[40]
(e)There are no practical steps that Mr Marchesi could take to obtain the duplicate titles. This is particularly so having regard to the history of the litigation between Mr Marchesi and Mr Vasiliou, Ms Apostolou and Optquest and the orders that were made against each of them which were breached.
[38]Section 58 Bankruptcy Act 1966 (Cth); Marchesi v Apostolou [2007] FCA 986.
[39]Section 51 Transfer of Land Act1958 (Vic).
[40]Dotter v Evans [1969] VR 41; Marshall v Williams [1974] VR 592; Rizos v Rizos [1970] VR 150. See also Re Purkess [1999] 3 VR 223 where only a vesting order was sought and made, and Steinbarth v Peters [2005] VSC 87. Compare Casella v Casella [1969] VR 49 where no vesting order was sought but rather the application was for orders under s 103(1) of the Transfer of Land Act alone.
It is appropriate in the exceptional circumstances of this case to make the orders sought.
7. Should Mr Vasiliou and Optquest have been or be joined as parties to this proceeding?
Mr Vasiliou submitted on behalf of himself, Ms Apostolou and Optquest that if I was not prepared to dismiss Mr Marchesi’s application, then I should make orders for the joinder of him and Optquest as defendants to the proceeding. He envisaged that following joinder there would then be further argument.
Rule 9.06(b) of the Supreme Court (General Civil Procedure) Rules 2005 provides for the joinder of parties to a proceeding where:
(a)the person should have been a party or the joinder is necessary so that all questions in the proceeding can be completely determined; or
(b)there is a question between an existing party and the party to be joined arising out of, relating to or connected with any claim in the proceeding which it is just and convenient to determine.
The issue is whether if Optquest has rights (as trustee of the Vasiliou Family Trust) against Mr Marchesi, those rights will be directly affected by the orders made in this proceeding.[41] The orders that are sought are directed to the Registrar and, as set out above, require the Registrar to cancel the existing certificates of title, replace them with new titles and register Mr Marchesi as the proprietor. No relief is sought against any other person. Those orders do not directly affect Optquest or Mr Vasiliou (the issue of the trust’s entitlement to a beneficial interest in the property having been finally determined in the Federal Court proceedings).
[41]Pegang Mining Company v Choong Soon [1969] 2 MLJ 52; Alinta Asset Management Pty Ltd v Essential Services Commission (No. 1) [2007] VSC 32; News Limited v Australian Rugby Football League Limited [1996] 64 FCR 410.
Mr Vasiliou submitted that he should be joined as a party because his name is on the certificates of title to the property and that Optquest should be joined because it has a lien over the certificates of title, is entitled to them because of the money it has paid and because Optquest occupies the property. In the absence of any interest in the property, there is no basis for any lien such as that claimed by Optquest. Neither it nor Mr Vasiliou have any right to hold the certificates of title as security for the performance of any obligation by another person. If Optquest is in possession of the property, this has no bearing on Mr Marchesi’s entitlement to hold the duplicate certificates of title and to have the Registrar record him as the proprietor. The relief sought does not relate to possession of the property.
In correspondence to Mr Marchesi’s lawyers, the Registrar of Titles stated that he did not intend to appear in this proceeding. The Registrar stated that in matters such as this, he is not required to be a party to the proceedings and ideally, the application should be against the person refusing to deliver the title to the plaintiff. The Registrar then went on to say in his correspondence that if the order is granted, application would then need to be made under s 103 of the Transfer of Land Act to give effect to the order. The Registrar asked that his comments be brought to the attention of the Court. Counsel for Mr Marchesi submitted that the Registrar had misconstrued the nature of the application. Counsel noted that no relief was sought other than against the Registrar and it was not appropriate that any other person be joined to the application unless they were affected by it and no-one else is affected by it. I accept those submissions. The position may have been different if a vesting order had been necessary or if the issue of entitlement to the beneficial interest in the property had not already been determined by the Federal Court.
8. Conclusion
I will make the orders that have been sought by Mr Marchesi.
Annexure
Heads of Agreement – Sale Contract dated 25 March 1989
1. OPTQUEST PTY LTD is the Trustee Company of the VASILIOU FAMILY TRUST appointed on the 12th August 1987 at Melbourne in the State of Victoria.
2. ANDREW VASILIOU he is the donor of three properties named bellow vested in the Family Trust since the 8th of October 1987 originated by a DEED OF GIFT executed and declared on that day by the donor.
3. The properties that the equity & purchase and payment is made for in this agreement are:
a) 5/3 Alfriston, Elwood Vic 3184
b) 10 Claremont, St South Yarra Vic 3141
c) 18 St Kilda Road, St Kilda Vic 3182
4. The equity in those properties at the time of the gift being the 8th October 1987 is calculated and agreed to be of the sum of $182,000.00 (one hundred and eighty two thousand dollars).
5. The parties agree that this is a special payment and is made under special circumstance and is one off such payment and is irrevocable and final and full settlement of the equity amount on all above mentioned properties.
6. The purchaser being OPTQUEST PTY LTD acting on behalf of the Family Trust will not be responsible for any further demands lodged by any other parties against Andrew Vasiliou from this day onwards.
7. Andrew Vasiliou agrees that he will signed and execute any further documents that deem necessary to pass Title to the Trust on all properties names in this agreement in favour of the Trustee Company or to its any subsequent appointed Trustees of the Vasiliou Family Trust.
8. Further Andrew Vasiliou agrees not to deal with the above mentioned properties without a written consent and permission from the Trustee of the Trust.
9. Existing mortgagers or payments of rates and outgoings are as always has being is the responsibility of Family Trust and all income from those properties or profits it is the full entitlement to the Family Trust.
10. This agreement is enforceable upon the executors of each party in the even of the death of Andrew Vasiliou.
11. The payment of the above mentioned amount by the Trustee Company on behalf of the Family Trust is at no way an interpretation that the gift made by the donor Andrew Vasiliou on the 8th October 1987 is somewhat effected by this payment or made void or withdrawn by the donor in any way.
12. The payment of the equity to Andrew Vasiliou it allows the first name on this contract to enforce its rights and that of the Family Trust if deem necessary to be applied.
13. This agreement allows the bearer to deal with all that is necessary to transfer and to call in mortgagers and pay same surrender all deeds and duplicates of Titles from the relevant Bank or building Society or financier.
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