McCulloch v Fern

[2000] NSWSC 729

Reported Decision: (2000) NSW ConvR 55-952

New South Wales

Supreme Court

CITATION:	McCulloch v Fern [2000] NSWSC 729
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2095/99
HEARING DATE(S):	20 & 21 July 2000
JUDGMENT DATE:	21 July 2000
PARTIES :	Kevin Francis McCulloch (P) Donald John Fern (D1) Androula Fern (D2)
JUDGMENT OF:	Hamilton J

COUNSEL :	R Sergi (P) D A Allen (D1 & 2)
SOLICITORS:	Kennedy & Cooke (P) A Relf & Co
CATCHWORDS:	CONVEYANCING [184] - Torrens system - Caveats against dealings - Who may lodge - Person who lodged earlier caveat - Whether interest claimed in earlier caveat was the same interest - Circumstances in which leave to lodge will be granted.
LEGISLATION CITED:	Real Property Act 1900 s 74O(1) & (2)
CASES CITED:	Bell v Mainbarder Pty Ltd 7 November 1991 NSWSC unreported Calverley v Green (1984) 155 CLR 242 Hanover Investments v Registrar-General [1999] NSWSC 21 Taylor v Commonwealth Development Bank of Australia [1992] ANZ ConvR 161
DECISION:	Leave granted to lodge second caveat in respect of same interest.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 21 JULY 2000

2095/99 KEVIN FRANCIS McCULLOCH v DONALD JOHN FERN & ANOR

JUDGMENT

HIS HONOUR:

1    This is the hearing of a notice of motion by the plaintiff in these proceedings to extend the operation of caveat 6711548 lodged in respect of the land in folio identifier 87/880417 (“the land”). The application is necessitated by reason of a lapsing notice in respect of the caveat.

2    A short history of the matter is as follows. At a time when the plaintiff’s wife was unfortunately dying of cancer, she became involved with the defendants who were conducting a form of religious community. Shortly beforehand in 1986 they had purchased the land from a John Hankinson for $115,000 and had satisfied the purchase money by paying $20,000 and by giving a mortgage back to Mr Hankinson to secure the balance of $95,000. Some time thereafter, probably in 1988, the plaintiff’s wife paid $93,325 to Mr Hankinson. This was paid to satisfy $90,000 of the $95,000 mortgage debt, the balance being interest to that time. I do not intend to go at great length into the circumstances surrounding the payment of those moneys. Suffice it to say that, in my view, the evidence available shows an arguable case that the plaintiff may be entitled to have a trust interest in the property declared in his favour. The $93,325 was paid out of a joint bank account of the plaintiff and his wife and represented the proceeds of a matrimonial home which they had then recently sold. The evidence appears to show that the plaintiff certainly did not intend his half share of the moneys to be a gift to the defendants and, as I say, while the circumstances have not yet been rendered entirely clear, they raise to my mind an arguable case that there was a trust interest in favour of the plaintiff and his wife, whose interest passed to the plaintiff on her death. Consequently the whole interest, if it be declared, will vest in him.

3    The plaintiff’s long delay in doing anything about the enforcement of the interest and laches were put as grounds why this application ought be refused. Whilst I understand that a defence of laches may be agitated at the trial, in light of the explanation given for the delay in bringing the proceedings, I do not think that the delay should lead to an application for interlocutory relief by the plaintiff being refused.

4    The existence of the trust interest is denied on behalf of the defendants. However, whether or not it exists involves contested questions of fact which must be determined at a trial. The balance of convenience strongly indicates that there should be interlocutory relief, since no immediate inconvenience to the defendants is put forward as arising from the maintenance of a caveat on the title or an injunction in lieu, and the plaintiff faces a much greater inconvenience by reason of the risk which naturally exists of contrary adverse interests being created by the proprietors, or the proceeds dissipated upon sale before the trial. In saying this, I am not suggesting that there is any evidence of an inclination of the defendants to do those things in derogation of the plaintiff’s interests, but it appears that they regard the property as theirs to deal with as they like, and in that state of mind may very well do so unless restrained.

5    However, the defendants have raised objections, which do in my mind have some substance, to the continued existence of the present caveat. The history of the matter is that, when the plaintiff turned to do something about his claimed interest in the land, he first placed a caveat on the title being caveat 5241566 lodged on 25 November 1998 (“the first caveat”). The first caveat claimed an interest in land stated as follows:

“The caveator is entitled to two undivided one-third shares in the land as tenant in common with the registered proprietors”

and stated the relevant facts as follows:
“By the payment by the caveator of $93,325.00 of the purchase monies of land to the vendor of such land”

The first caveat lapsed as a result of a lapsing notice and was not immediately replaced. When it was replaced, it was replaced by the present caveat 6711548 lodged in March 2000 (“the second caveat”). The second caveat stated the interest claimed as:

“An equitable interest arising out of an implied/constructive trust or a Mortgage between the Caveator and the registered proprietor”

It stated the relevant facts as follows:

“In July, 1988 Kevin Francis McCulloch and his late Wife Maureen Maree McCulloch paid, at the direction of the registered proprietor, the sum of $93,325.00 to John Robert Hankinson, the first Mortgagee of the registered proprietor’s property (then being known as Folio Identifier 7/701071) and to date, no such monies have ever been repaid to the Caveator by the registered proprietor.”

Mr Allen, of counsel for the defendants, takes the objection that the second caveat arises “in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat” within the meaning of s 74O(1) of the Real Property Act 1900 and by virtue of subs (2) of that section has no effect.

6    There is no doubt in my view that the second caveat purports to be based on the same facts as the first. In the second caveat the person to whom the $93,325 was paid was described as the first mortgagee rather than as the vendor (and this is in accordance with the facts as they now appear). However, it was the same payment of $93,325 and there was only one such payment between the same parties. It seems to me that the first caveat and the second caveat should be regarded as based on the same facts within the meaning of the section. However, a more vexed question arises as to whether the claim is in respect of the same “estate, interest or right”. The ambit of this expression has not been explored by the Courts and remains somewhat unclear: see per Young J in Taylor v Commonwealth Development Bank of Australia [1992] ANZ ConvR 161. On the one hand, what was originally claimed was clearly a resulting trust arising from payment to the vendor on purchase of the land, but it is now plain that the payment, although made to the person who was historically the vendor, was made to him after the sale and in his guise as mortgagee, rather than in satisfaction of the payment of the purchase price: see Calverley v Green (1984) 155 CLR 242 at 257. The trust interest now claimed is of the nature of an implied or constructive trust, which in equity arises or is declared in circumstances different from those which give rise to a resulting trust. It may not matter much in this case what ruling I make, since if I hold that it is a different interest the result will be that the existing caveat may remain on the title, whereas if it is in respect of the same interest it must be declared to be of no effect pursuant to s 74O, but I propose in any event, for reasons which I shall hereafter give, to give leave to lodge a fresh caveat.

7    It does seem plain to me from the terms of s 74O(2) that I should have to follow this course, because the wording of the section appears to me plainly to indicate that such leave cannot be granted after the lodgment of the caveat. I agree in this regard with the decision of Sperling J in Hanover Investments v Registrar-General [1999] NSWSC 21. In that case his Honour also took the view that the words in s 74O(1) should be given a wide meaning. Again, I think his Honour is right in taking that view. The aim of the provisions of the Act is to restrict the use in an obstructive way of successive caveats based upon essentially the same subject matter; to construe the words “the same” broadly will assist that objective, whereas to construe them narrowly and take the view that interests defined in a legalistically or technically different fashion will escape the section appears to me to be inimical to the legislative intent.

8    In those circumstances, whilst the same payment is specified in the one caveat as a resulting trust and in the other caveat as an implied or constructive trust, I take the view that the second caveat is in respect of the same estate as well as being based upon the same facts as in the first caveat within the meaning of s 74O. In those circumstances, I propose to declare that the second caveat has no effect by virtue of that section.

9    However, Young J has made it plain in Bell v Mainbarder Pty Ltd 7 November 1991 NSWSC unreported that one of the grounds upon which leave may be given to lodge a second caveat is that the caveator would be entitled to an injunction to restrain transactions, and it is preferable in the public interest to keep a caveat on the title rather than restrain by injunction the registered proprietors from dealing with the title. This in my view is such a case.

10    It flows from the reasons that I have already given that, in my view, an interlocutory injunction would be appropriate in the circumstances, and I think the publicity provided by a caveat, so that the world may be warned of the claimed interest, is a more satisfactory way of maintaining the status quo than simply granting an injunction inter partes. In those circumstances I propose to grant leave to file a fresh caveat. A fresh caveat has been brought forward this morning by Mr Sergi, of counsel for the plaintiff. After discussion with counsel I have made one alteration to that. That caveat is Exhibit A3 in the proceedings. I propose to order that the plaintiff have leave to lodge a fresh caveat in terms of Exhibit A3, a copy of which ought be attached to the order when entered.

…oOo…

11    The question of costs has been argued before me. The plaintiff has succeeded upon an interlocutory application for relief in the form of a fresh caveat. In my view, the ordinary order in such a case, analogous to a successful application for an interlocutory injunction, would be that the costs of the application be the plaintiff’s costs in the proceedings. However, Mr Allen points out to me two significant matters. One is that, by a letter from his solicitors to the plaintiff’s solicitors dated 15 June 2000, an offer was made of undertakings to the Court in lieu of injunctions that would have given to the plaintiff a great deal of the protection which he has pressed for. Perhaps this alone might not avoid the usual order, in that the plaintiff did press for and obtain greater relief by way of a further caveat. However, the second matter of which Mr Allen reminded me was that the plaintiff did press for an extension of the existing caveat. On the question as to whether or not the existing caveat could be justified and extended the plaintiff has lost and that caveat has been ruled as of no effect under s 74O(2). What he has obtained in lieu is leave to lodge a fresh caveat, which is in essence by way of an indulgence. In all the circumstances the appropriate order for the costs of this motion is that there be no order as to the costs of the motion.

…oOo…

Last Modified: 09/26/2000