McRae v Mackrae-Bathory
[2019] VSC 298
•7 May 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2019 01692
| ZACHARY AARON McRAE | Plaintiff |
| v | |
| RACHEL MACKRAE-BATHORY | Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 May 2019 |
DATE OF JUDGMENT: | 7 May 2019 |
CASE MAY BE CITED AS: | McRae v Mackrae-Bathory |
MEDIUM NEUTRAL CITATION: | [2019] VSC 298 |
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CAVEAT – Removal of caveats – Application under s 90(3) of the Transfer of Land Act 1958 (Vic) for removal of caveats over two properties registered in the name of the plaintiff – Caveats lodged by person claiming interest by virtue of an implied, resulting or constructive trust – Caveat inhibiting settlement of sale of one of two properties the subject of the claimed interest – Defendant’s claim for a constructive trust in respect of both properties persuasive but uncorroborated – Balance of convenience favours the removal of the caveat at settlement on undertaking of the plaintiff to use the net proceeds of the sale of the property to reduce mortgage secured over both properties – Goldstraw v Goldstraw [2002] VSC 491; Piroshenko v Gosjman (2010) 27 VR 489; Percy & Michele Pty Ltd v Gangemi [2010] VSC 530; Sylina v Solanki [2014] VSC 2; Carbon Black Lab Pty Ltd v Launer [2015] VSCA 126 referred to.
TRUSTS – Implied, resulting or constructive trust – Whether a basis in fact and law for finding a resulting or constructive trust in favour of the caveator – Sufficient basis for such a finding on an application for removal of the caveats – Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137; Cressy vJohnson (2009) VSC 52 referred to.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R A Yeboah | Mulbridge Lawyers |
| For the Defendant | Mr W Stark | Mirabella Solicitors |
HIS HONOUR:
Introduction
The plaintiff is the registered proprietor of two properties and has applied pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) (TLA) for the removal of two caveats, one registered on the title of each property at:
(a) Unit 5/3 Ridley Street, Albion, Victoria, being the land more particularly described in certificate of title volume 10518 folio 743 (the Ridley Street Property);
(b) 58 Eastlakes Boulevard, Lara, Victoria, being the land more particularly described in certificate of title volume 11387 folio 194 (Eastlakes Boulevard Property).
There is a mortgage over each property in favour of the Australia and New Zealand Banking Group Ltd (Bank).[1] The Ridley Street Property is the subject of a contract of sale which is due to settle on or about 14 May 2019. There is, accordingly, some urgency in the determination of the plaintiff’s applications, at least so far as the Ridley Street Property is concerned. The Mortgage secures an amount greater than the sale price of the Ridley Street Property.
[1]Being registered mortgagor AL367207L (Mortgage).
The defendant’s caveats each claim an interest in the land under an implied, resulting or constructive trust. The estate or interest claimed is an ‘interest as chargee’. Counsel for the defendant acknowledged in argument that such an interest is unlikely to have arisen as a result of such a trust and that the specification of that interest is likely to have been the result of a legal error.
The matter came on for hearing on 2 May 2019, at which time I made orders and stated that reasons would be given later. The orders made required the defendant to provide a withdrawal of the caveat registered on the title to the Ridley Street Property at settlement of the sale and the plaintiff to pay the net proceeds of sale (after the costs of sale and adjustments)(Net Proceeds) in reduction of the Mortgage. The plaintiff, by his solicitor, undertook that:
(a) at settlement of the sale of the Ridley Street Property he will apply the Net Proceeds in reduction of the Mortgage, save for the sum of $54,878. 64 which, by agreement with the Bank is to be paid in reduction of credit card debts owed by the plaintiff to the Bank and other banks (Credit Card Debts);
(b) he will not redraw any loan moneys under the Mortgage, which is also secured over the Eastlakes Boulevard Property until orders are made by a Court of competent jurisdiction (including the Family Court of Australia, the Federal Circuit Court or this Court) or the parties execute a written agreement, that permits the plaintiff to redraw loan moneys under the Mortgage.
It was also ordered that unless by 3 June 2019 the defendant commences proceedings in a Court of competent jurisdiction (including the Family Court of Australia, the Federal Circuit Court or this Court) to substantiate her claims in caveat no. AR855520J registered on the title to the Eastlakes Boulevard Property, the Registrar of Titles shall, on application by the plaintiff pursuant to s 103 of the Transfer of Land Act 1958 (Vic), remove that caveat from the Register.
Applicable law
Under s 89(1) of the TLA, a caveat can only be lodged by a person claiming an estate or interest in the land. The estate or interest must be established to the requisite standard by the person who lodged the caveat, if the caveat is challenged.
The plaintiff’s application is made pursuant to s 90(3) of the TLA, where any person adversely affected by a caveat lodged under s 89 of the TLA is permitted to ‘bring proceedings in a court against the caveator for the removal of the caveat’. Section 90(3) empowers a Court to ‘make such order as the court thinks fit’, and thus gives the Court a discretion. The application is in the nature of a summary procedure analogous to the determination of interlocutory injunctions.[2] The procedure is consequently interlocutory in substance, even though it may give rise to a final order.[3] The principles applicable were dealt with by Warren CJ in Piroshenko v Grosjman.[4] They are well settled. The authorities establish the following:[5]
[2]Eng Mee Yong v Letchumanan [1980] AC 331, 337 (‘Eng Mee Yong’); Piroshenko v Gosjman (2010) 27 VR 489, 492–5 [12]–[23] (‘Piroshenko’); Goldstraw v Goldstraw [2002] VSC 491, [30] (‘Goldstraw’).
[3]Eng Mee Yong (n 2) 337; Smith v Callegari (1988) V Conv R 54-300, 63,858-9.
[4]Piroshenko (n 2) 491 [7]–[11].
[5]See, for example: Percy & Michele Pty Ltd v Gangemi [2010] VSC 530, [38]–[48]; Piroshenko (n 2) 492–5 [12]–[23]; Schmidt v 28 Myola Street Pty Ltd (2006) 14 VR 447, 457 [32]; Goldstraw (n 2) [30]; Sylina v Solanki [2014] VSC 2, [43] (‘Sylina’).
(a) the Court’s power under s 90(3) of the Act is discretionary;
(b) the caveator bears the onus of establishing that there is a serious question to be tried (in the sense of a prima facie case) that they have the estate or interest in land as claimed;
(c) if the caveator establishes a prima facie case to be tried in relation to the estate or interest claimed, the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial;
(d) there is a relationship between the strength of the case in establishing a prima facie case to be tried and the extent to which the caveator must establish that the balance of convenience favours the caveator; the stronger the prima facie case, the more readily the balance of convenience might be satisfied. It is sufficient that the caveator show a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the registered proprietor to deal with the property in question in accordance with its normal proprietary rights.
The prima facie case test is often used interchangeably with whether a serious question to be tried is established. The prima facie case test is to be preferred.[6] That does not mean that the caveator must show that it is more probable than not that at trial the plaintiff will succeed.[7] The caveator must show that they have a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat, or its equivalent, and the preservation of the status quo pending trial.[8]
[6]CFHW v Burness [2014] VSC 451, [17], citing Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 (‘O’Neill’); Carbon Black Lab Pty Ltd v Launer [2015] VSCA 126, [37] (‘Carbon Black’).
[7]O’Neill (n 6) 82 [65] (Gummow and Hayne JJ) referring to Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 (Kitto J, Taylor, Menzies and Owen JJ).
[8]Sylina (n 5) [43]; Piroshenko (n 2) 494 [16] citing O’Neill (n 6) 82.
To prevent an application to remove a caveat from succeeding a caveator must show the following:
(a) first, the caveator must establish that there is a prima facie case - there is a probability on the evidence before the Court that the caveator will be found to have the asserted legal or equitable rights or interest in the land;
(b) second, having done so, the caveator must establish that the balance of convenience favours the maintenance of the Caveat on the title until trial and[9] that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.[10]
[9]Piroshenko (n 2) 491 [7]; Carbon Black (n 6) [35] citing Piroshenko (n 2) 491 [7] (Warren CJ).
[10]Piroshenko (n 2) 493 [18].
The Court of Appeal in Carbon Black Lab Pty Ltd v Launer[11] approved the approach taken in Piroshenko and noted:
It is also to be observed that an application for removal of a caveat does not, at least ordinarily, present an occasion for the final determination of disputed factual issues or of the claims which the caveat seeks to protect. In McMahon v McMahon[12] Marks J referred to a number of authorities in which it had been held that it was not necessary or appropriate in an application for removal of a caveat finally to determine disputed questions of facts.[13] Those authorities reflect the reality that a prima facie case may be capable of being sustained by supporting evidence, without the need for the Court to answer the question whether or not that evidence should be accepted. The position may be different, as was the case in Simons v David Benge Motors Pty Ltd,[14] when no substantial issue of fact appears and the Court is able to have the claims in question fully argued and decided on a summons under s 90(3).[15]
[11]Carbon Black (n 6) [35], [38].
[12][1979] VR 239 (‘McMahon’).
[13]Ibid 245–6.
[14][1974] VR 585, 591.
[15]See McMahon (n 12) 245.
The relationship between the strength of the caveator’s case and the balance of convenience is affected by the particular circumstances and the ‘practicalities’ of each case. In Slater Walker Superannuation Pty Ltd v Great Boulder Gold Mines Ltd, Lush J expressed the nature of the relationship, in the context of an application for an interlocutory injunction, in this way:[16]
The weight to be given to the various considerations shown by the authorities to be relevant will vary from case to case. All the authorities say in one way or another that the plaintiff must show that he has a chance of success before he will be granted an interlocutory injunction. The authorities refer to the use of the injunction for the purpose of maintaining the status quo, or establishing or maintaining a state of affairs which is on the balance of convenience appropriate to be maintained until trial. They refer to avoiding irreparable harm to the plaintiff. There will be situations in which the plaintiff cannot expect to be granted an injunction unless he can show that he can prove positively the existence of his rights and the infringement of them. There will be other situations in which, though the plaintiff’s proof of his rights or the infringement of them 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. The possible variety of situations is unlimited.[17]
[16][1979] VR 107, 110.
[17]Cited with approval in Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23, 28; Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771, 774–5.
Lastly, it is appropriate to mention that the Court must, in determining whether to grant an interlocutory injunction, and the maintenance of a caveat on title is equivalent to such a grant, to
…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.[18]
[18]Bradto Pty Ltd v State of Victoria; Tymbook Pty Ltd v State of Victoria (2006) 15 VR 65, 73 [35]. See also Magna Alloys and Research Pty Ltd v Coffey [1981] VR 23.
Factual disputes
The evidence given by the plaintiff and defendant in this application shows that there are fundamental disputes of fact, indeed it is clear that one or other of the parties is not being entirely truthful. In the circumstances of this case, it is neither necessary nor appropriate to determine who is telling the truth, nor is it necessary to go into great detail regarding the evidence given by the parties.
By way of summary, the plaintiff maintains that he has never lived with the defendant as a couple in a de facto relationship and that there is no agreement between them sufficient to give rise to the constructive trust interest claimed in the caveats. He also says that:
(a) he met the defendant in 2004 when working with the Department of Human Services (Centrelink). At that time he was married. He and his then wife were not able to have children and he was desperate to do so. He discussed this with the defendant and she agreed to engage in In-Vitro Fertilisation (IVF) in order to have his child;
(b) the plaintiff divorced his wife in April 2009. In 2010 he and the defendant attempted IVF without success. They tried again in 2011 and were successful. The defendant gave birth to twins on 19 June 2012. Since the birth of the twins, until late 2018 or early 2019, the children lived with the defendant during the week and spent every weekend with the plaintiff;
(c) on 14 January 2019, the defendant attended the plaintiff’s residence at the Eastlakes Boulevard Property to pick up the children. The plaintiff told the defendant he intended to take full custody of them due to her drug usage, and abuse of the children. There was an argument which resulted in the defendant stabbing the plaintiff seven times with, he says, the intention of killing him. He says that the defendant was arrested by the Victoria Police and, on 15 January 2019, the Police obtained an intervention order on the plaintiff’s behalf against the defendant;
(d) as a result of financial hardship, the plaintiff determined to sell the Ridley Street Property and did so by contract of sale entered into on 15 March 2019. There is, at present, no dispute that the sale was at arm’s length at market price ($440,000.00). The plaintiff intends to use the net equity in this property to reduce the mortgage over the Eastlake Boulevard Property;
(e) shortly after he had obtained the intervention order against the defendant, the plaintiff received a letter from the Land Titles Office informing him of the lodging of the caveats, which occurred on 21 January 2019. There was then correspondence between the plaintiff’s conveyancer and the solicitor who had lodged the caveat on behalf of the defendant. This correspondence is not in evidence;
(f) on 8 April 2019, the plaintiff’s solicitors wrote to the defendant’s solicitors seeking the removal of the caveats. That letter gave notice that proceedings would be commenced if the defendant failed to remove the caveats by 12 April 2019. The plaintiff gives evidence that his solicitors contacted the defendant’s solicitors on 10 April 2019, at which time they were told that the defendant maintained that she had a proprietary interest in the two properties sufficient to support the caveats. The basis alleged was, essentially, that the plaintiff and defendant were in a spousal relationship. No response was received to the plaintiff’s solicitors’ letter of 8 April 2019 prior to the commencement of this proceeding on 17 April 2019.
The evidence of the defendant could hardly be more at odds with that given by the plaintiff. She swears that she and the plaintiff resided in a ‘full emotional and sexual’ de facto relationship between 2002 and 14 January 2019, and pooled their income together for joint expenses. They attended social functions as a couple and were known by all their mutual friends and extended family as being in a committed de facto relationship. At all times during this period, she and the plaintiff were in a bona fide de facto relationship resulting, she claims, in she having an equitable interest in both properties, which were acquired during the course of the relationship. The Ridley Street Property was acquired in November 2004 and the Eastlakes Boulevard Property was acquired in April 2013. She also gives evidence as follows:
(a) she met the plaintiff in 2002 and, within a period of six months, formed a de facto relationship with him and they commenced living together. He was married at the time, but separated from his wife. During the early part of the relationship they both used drugs and it was not possible for the defendant to conceive a child. In about 2007 both the plaintiff and the defendant took control of their drug issues and then jointly decided to have children. They were unable to conceive naturally and so commenced IVF treatment, which resulted in the birth of the twins in 2012;
(b) she gives a good deal of evidence about where they lived together from 2002, that she had savings of $20,000 at the commencement of the relationship which she contributed to the purchase of the Ridley Street Property, that they occupied that property as a couple until approximately 2015, that the Eastlakes Boulevard Property was purchased in about 2013, with some detail as to the financing of the purchase and the financing of the construction on the land of a new home. The plaintiff retained all of the defendant’s pension entitlements which he used towards their joint expenses. Her pension was paid into her Commonwealth bank account and withdrawn every two weeks and given to the plaintiff. The plaintiff completed all of the defendant’s important official documents and asked her to sign the documents once completed;
(c) each of the properties was put into the plaintiff’s name, rather than the joint names of the plaintiff and defendant because the plaintiff told her that she had a bad credit rating. She trusted the plaintiff, as he managed all of their finances, and throughout their relationship the plaintiff always ‘indicated’ to her that she had an interest in both properties and was entitled to a half share of them, notwithstanding that they were registered in his name;
(d) contrary to the plaintiff’s evidence regarding the defendant having custody during the week of the twins, the defendant maintains that the children always resided with both the plaintiff and the defendant. Her evidence is that, at the time of their birth, she and the plaintiff resided with the plaintiff’s parents in Lara. They stayed there about two years and then moved to the Ridley Street Property;
(e) the plaintiff controlled their joint finances. During the entirety of their de facto relationship, the plaintiff and defendant were in receipt of social security entitlements. Although the plaintiff controlled their joint finances, he did keep the defendant informed as to the status of their financial position, including in relation to both properties and the Mortgage;
(f) she denies having stabbed the plaintiff and that she was ever arrested by Victoria Police. She was questioned by them but was not charged. She agrees that the intervention order was taken out on 15 January 2019 and that she attended the Court, but was not represented and was confused;
(g) shortly before the plaintiff and defendant separated, in January 2019, the plaintiff borrowed $25,000.00 from the defendant’s aunt, Hong Du, and a further $10,000.00 from the defendant’s father, Du Khac Truyen, in order to assist with upgrading the Ridley Street Property;
(h) the plaintiff’s application and supporting affidavit, with exhibits, was served upon the defendants solicitors on 18 April 2019. By letter dated 23 April 2019, the defendant’s solicitors wrote to the plaintiff’s solicitors, maintaining that the parties had been in a de facto relationship and that the defendant was prepared to remove the relevant caveat to enable settlement of the Ridley Street Property, providing agreement could be reached as to disbursement of the sale proceeds. The letter then stated:
Our client will agree to remove the caveat at settlement to enable the Ridley Street sale proceeds to be held in trust by your firm upon your understanding that the sale proceeds will not be disbursed to your client unless agreement is reached in writing between our respective firms or an order of the court is obtained. The ANZ bank may request all or some of the sale proceeds to be repaid. Kindly ascertain the intentions of the ANZ bank with respect to the disbursement of the sale proceeds.
(i) the plaintiff’s solicitors did not respond to this letter in a meaningful way prior to the hearing.
Consideration
It is a fundamental feature of a caveat under the TLA that it must be supported by an estate or interest in land. The interest to be protected by the lodging of a caveat is a proprietary interest; ‘[t]hat is, in order to support a caveat, an interest “must be an interest in respect of which equity would give specific relief against the land itself, either by way of requiring the provision of a registrable instrument or in some other way, for example, ordering a sale to enable a charge to be satisfied out of the proceeds”’.[19] An interest based on a ‘resulting, implied or constructive trust’ can form the basis of a caveat.[20] As Dodds-Streeton J noted in Goldstraw,[21] examples include part performance of an agreement for disposition of an interest in land,[22] where parties have acquired land pursuant to a failed joint venture,[23] where the claimant has made an indirect contribution to the purchase price of property to which another party takes title,[24] or there is a common intention that a person will acquire an interest in a particular property to which another party holds legal title, and the person acts on that belief to his or her detriment, such that it would constitute a fraud to deny the interest intended to be acquired.[25]
[19]Spencer v Spencer, (Supreme Court of Victoria, Hedigan J, 16 October 1996) 9, cited in Goldstraw (n 2) [24].
[20]Taddeo v Catalano (1975) 11 SASR 492; McMahon v McMahon (n 12); Goldstraw (n 2) [26].
[21]Goldstraw (n 2) [26].
[22]Ogilvie v Ryan [1976] 2 NSWLR 504.
[23]Muschinski v Dodds (1985) 160 CLR 583 (‘Muschinski’).
[24]Baumgartner v Baumgartner (1987) 164 CLR 137 (‘Baumgartner’).
[25]Hohol v Hohol [1981] VR 221.
In Baumgartner v Baumgartner,[26] the majority (Mason CJ, Wilson and Deane JJ) referred to the result reached by Deane J in Muschinski v Dodds[27] 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 v Dodds (at 620):
… 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: cf Atwood v Maude [1858] LR 3 Ch App 369 at pp 374-375 and per Jessel MR, Lyon v Tweddell (1881) 17 Ch D 529 at 531).
[26]Baumgartner (n 24); see also Cressy vJohnson (2009) VSC 52, [183]–[202] (‘Cressy’).
[27]Muschinski (n 23).
The constructive trust based on unconscionable conduct has been most commonly imposed in the context of the breakdown of a de facto relationship where the legal interests in property are not commensurate with the respective parties’ contributions to the property or relationship.[28] 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.[29] The contributions need not necessarily have been made directly to the acquisition or improvement of the property in issue,[30] 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.[31]
[28]Muschinski (n 23); Baumgartner (n 24); see also Cressy (n 26) [183]–[202].
[29]Baumgartner (n 24).
[30]Green v Green (1989) 17 NSWLR 343, 369 (Mahoney JA); Lloyd v Tedesco (2002) 25 WAR 360, 364 (Murray J); LexisNexis, Halsbury’s Laws of Australia (online at 30 January 2018) 430 Trusts ‘1 Nature and Creation of Trusts’ [430–630].
[31]Engwirda v Engwirda [2000] QCA 61, [23]–[30]; Lloyd v Tedesco (2002) 25 WAR 360, 365, 379–80 (Murray J); Cressy (n 26) [197]–[200]; LexisNexis, Halsbury’s Laws of Australia (online at 30 January 2018) 430 Trusts ‘1 Nature and Creation of Trusts’ [430-630].
The defendant advances a variety of foundations for the finding of a constructive trust in her favour in the two properties. She claims direct contributions to the acquisition of the Ridley Street Property and contributions to the maintenance and mortgage payments of both properties through her pension entitlements which she gave to the plaintiff on a fortnightly basis. If her testimony is accepted there is a sensible basis for, and a sufficient probability of, the finding of a constructive trust in respect of both properties to the extent of an equitable estate in fee simple as a co-tenant with the plaintiff.
In respect of the critical matters relevant to the defendant establishing a prima facie case for the recognition of a constructive trust, her evidence is uncorroborated. However, having regard to the fact that the plaintiff and defendant agree that they have had children together, it seems to be more probable than not that her evidence that they lived together in a de facto relationship is true. Whilst recognising that it is neither necessary or appropriate in this application to determine disputed questions of facts, it is necessary to be satisfied that the defendant has a sufficient likelihood of success that justifies the practical effect of maintaining the caveat or, as the facts of this case show, requiring the net proceeds of the sale (or most of them) to be deployed in the reduction of the Mortgage which burdens both properties.
The defendant’s evidence is uncorroborated and at complete odds in significant respects with the evidence given by the plaintiff. But the interaction between the strength of the defendant’s case and the balance of convenience is such that the removal of the caveat at settlement on the proviso that the net proceeds of the sale (after payment of the Credit Card Debts) is applied in reduction of the Mortgage appears to carry the lower risk of injustice, whatever the outcome of the disputes.
Put another way, although the defendant’s proof of her right to a constructive trust depends on her uncorroborated evidence, and to that extent may appear not to be a strong case, the preservation of the bulk of the proceeds of the sale by their use in the reduction in the debt secured by Mortgage over the Eastlakes Boulevard Property, preserves to the defendant most of the benefit of the caveatable interest in the Ridley Street Property. To withhold that protection would do the defendant irreparable harm if she is successful in establishing her claimed interests, while to grant it will not greatly injure the plaintiff in the event that the defendant’s claims fail.
The Credit Card Debts, to be paid out of the proceeds of the sale of the Ridley Street Property before they are used to reduce the Mortgage, are admittedly substantial. But plaintiff asserted, and it appears from an affidavit required to be filed after the hearing, that the bulk of the debts were incurred by the plaintiff during the relationship that the defendant maintains existed between them. The plaintiff gives evidence that the Credit Card Debts were incurred to maintain his living expenses and complete the Eastlakes Boulevard Property. If, as the defendant maintains, she was living with the plaintiff until about 14 January 2019, then those living expenses are likely to have been incurred by the plaintiff for both his benefit and the benefit of the defendant. To the extent that the Credit Card Debts have been incurred in completing the Eastlakes Boulevard Property, the expenditure will ultimately benefit the defendant in the event that she is successful in maintaining her claim to a constructive trust.
It is clearly desirable to facilitate the settlement of the sale of the Ridley Street Property, due to take place on about 14 May 2019. That is because there is no suggestion that the contract is otherwise than at full value pursuant to an arm’s length transaction. The facilitation of the settlement of that sale, whilst preserving for the benefit of the defendant the bulk of the net proceeds of the sale, appears to me to strike the correct balance between the interests of the plaintiff and defendant pending the final determination of their disputes.
In relation to the caveat lodged on the title to the East Lakes Boulevard Property, it is clearly established law that where the caveator establishes a prima facie case but there is a conflict of testimony, the Court will not order a caveat to be removed but may order the caveat to be removed unless steps are taken to establish the caveator’s title within a certain time.[32] The caveat is a statutory injunction to keep the property in statu quo until the Court has an opportunity of discovering what the rights of the parties are.[33]
[32]Nicholas Olandezos v Bhatha & Ors [2017] VSC 234, [20], citing Ex Parte Vincent (1886) 12 VLR 566.
[33]Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222, 228.
There is at present no proposal for the Eastlakes Boulevard Property to be sold and no urgency for the removal of the caveat lodged by the defendant over that property. The Federal Circuit Court of Australia, and the Family Court of Australia, have jurisdiction to alter property interests in land in consequence of the dissolution of a marriage or the breakdown of a de facto or domestic relationship. In these circumstances, it is appropriate to order that unless within a reasonable time after the making of the order (which I have fixed as 3 June 2019) the defendant commences in a Court of competent jurisdiction a proceeding to substantiate her claims in the caveat registered on the title to the East Lakes Boulevard Property, the caveat should be removed.
Costs
At the conclusion of the hearing on 2 May 2019, there was a debate regarding the appropriate order as to costs. I determined at that time that the appropriate order was for the defendant to pay the plaintiff’s costs fixed in the sum of $1,400.00. The reasons for that order were, essentially, as follows:
(a) the plaintiff had demanded the removal of the caveat by letter dated 8 April 2019. There was no response to that letter until after the service of the originating motion by which this proceeding was commenced. That meant that the plaintiff had incurred the costs of the filing fees and of the preparation of the originating process, the affidavit of the plaintiff in support and the exhibits to it, before there was any response from the defendant;
(b) after the service of the originating process on the defendant there was, it was common ground, a change of solicitor by the defendant (indeed more than one change of solicitor) followed by a letter dated 23 April 2019 from the defendant’s solicitor making a proposal not dissimilar in substance from the result to which I have arrived in this case;
(c) after the defendant’s letter of 23 April 2019, the plaintiff responded rejecting the proposal. In these circumstances it was necessary for the defendant to put before the Court evidence to support her claimed interest in the two properties, and to engage a solicitor or counsel to appear to represent her;
(d) after some investigation, it emerged that the costs to which the plaintiff was put in the preparation of the originating process and affidavit in support was, broadly speaking, equivalent to the costs to which the defendant has been put as a result of the plaintiff rejecting the defendant’s proposal;
(e) this led me to the conclusion that the appropriate order for costs was to allow the plaintiff the disbursements incurred in issuing the originating process and paying the search fees incurred in putting forward exhibits to the affidavit in support, which I fixed in the sum of $1,400.00.
Conclusion
For these reasons, orders were made on 2 May 2019 as summarised above (see paragraphs 4 and 5) and costs orders were made as referred to in paragraph 27 above.
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