Mihalic, S.A. v Mihalic, P.

[1987] FCA 149

VENDOR ANT) PTJFCHASER - contract for sale of land - transfer - purchase price not paid In full - vendor's lien as to unpaid

balance - action for recovery of balance - caveat protectinq lien

- whether election between action under contract and caveat

necessary.

REAL PFOPERTY - caveat - whether	sufficiently	identifyin?
interest to be protected.

PRACTICE AND PROCEDTJRE - security f o r costs - matter raised on

appeal - no evldence of finances of parties.

PRKTITE PWD PRDCDUFE - undertaklnq as to darnages - matter

raised on appeal - s.108 Res1 P r o p e r t v nrdlnance 1925 (A.C.T.).

Real Propertv Ordinance 197-5 (A.C.T. ) ss.l04(2).108.

Sarsenk 77. A . S . L . Deoelnpments Ltd. (1974) l31 C . L . R . 634

Hewett v. Court (1983) 149 C.L.R. 639

v. Tottenham and Hampstead Junctlon Railwav Co. (1868)

3 Ch. F.pp. 740

M m v. Isle of CIIicrht Rallwav Co. (1870) 5 Ch.App.414

Lvcett v . Stafford and TJttcxeter Railwav Co. ( 1 8 7 2 1 13 Eq.261

SHAFOM 3.NN MIHALIr v PAUL MIHALIC and FNA MIH4LIC

NO. A . C . T . G44 OF 1986

C- : Fox, Kelly and ETeaves JJ.

25 March 1987

Canberra

IN THE FEDERAL COURT OF AUSTRALIA )

)

ATJSTRALIAN CAPITAL TERRITORY No. A.C.T. G44 of 1986

)

DISTRICT REGISTRY ) )

DIVISION	GENERAL	)
ON APPEAL from the Supreme Court of the Australian Capital Territory
BETWEEN :
SHARON ANN MIHALIC
Administratrlx ad Litem of the
Estate of Frank Mihalic (Deceased)

Appellant and Cross-Respondent

AND :

PAUL MIHALIC and ANA MIHALIC

Respondents and Cross-Appellants

MINUTE OF ORDER

JUDGES W I N G ORDER: Fox, Xelly and Neaves JJ.

DATE OF ORDER:	25 March 1987
WHERE MADE:	Canberra .
THE COTJRT ORDERS THAT:

1. The appeal be allowed with costs.

2. The order of the Supreme Court of the Australian Capital Territory herein dated 2 4 June 1986 be set aside, and in lieu thereof, the application for removal of the cavea-. be dismissed with costs.

3 . The cross-appeal be dismissed with costs.

: - N Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COTJRT OF ATJSTRBLIA )

)

ATJSTRALIAN CAPITAL	TERRITOFY	)	No. A.C.T. G44 of 1986
I

DISTRICT REGISTRY

)

GENERAL DIVISION

)

ON APPEAL from the Supreme

Court of the Australian Capital

Territory

BETWEEN :

SI-LWON P.NN MIHALIC

Administratrix ad Litem of the

Estate of Frank Mihalic

(Deceased)

Appellant and Cress-Respondent

AND :

PAUL MIHiiLIC and ANI? MIHALIC

Respondents and Cross-Appellants

CORAM: FOX, KELLY AND MEAVES JJ.

D=: 25 MP-RCH 1987

REISONS FOR JUDGMENT

Ex TEMPOFE

THE COURT:

We are hearlng an appeal frgm the Supreme Court of the Australian Capital Territory in which it vas ordered that, a

caveat which had been lodqe? by the present appellant be removed.

The facts are n o t In dispute althouuh it is contended on

behalf nf the respondents that further evidence should	have been
qiven bp or on benalf of the appellant.

The app?llant is the administratrix ad 1i:em of the

estate of her deceased husband. (Apparently no simp’.e grant of

2.

administration has been taken out). Her husband, who was the

registered proprietor as lessee of a Crown lease of certain land

in the Australian Capital Territory, entered into an agreement

dated 29 Auqust 1979 to sell his estate and interest in that land

to the respondents for a consideration of $70,000. By memorandum

of transfer dated 25 September 1979 the leasehold interest was transferred to the respondents who, on 28 September 1979. became

reqistered as the proprietors thereof. At that stage only

$15,417.98 of the purchase price had been paid although the

memorandum of transfer acknowledged receipt of the whole of the

purchase money. So far as appears from the papers. no action was

taken in respect of the balance of $54.582.02 until 1985. The

respondents contend that the payment of this sum was satlsfied by

an agreement	in %he nature of an accord and satisfaction.	This
is disputed.

nn 24 September 1985 the appellant as plaintiff

cnmmenced proceedings against the respondents as defendants in

the Supreme Court by writ of summons claiming the unpaid amount

together wlth interest. On 4 October 1985 a caveat was lodged in

the office of the Reulstrar of Titles which, so far as material

to the present case, was as follows:

"TAKE NOTICE THAT I SHARON ANN MIHALIC of 15 Gundulu Place.

Giralanu in the Australian Capital Territory, Home Duties, am

claiminq an equitable estate or interest in the land

particularised hereunder as administratrlx ad litem of the intestate estate of the late Frank Mihallc (the deceased)

pursuant to order of the Supreme Court of the Australian

Capital Territory made on 20 September 1985 and as the wldow

of the deceased and on behalf of my infant dauuhter born of the deceased in wedlock, namely Susan Ann Mihalic, we beins

the sole beneficlaries nf the Intestate estate of the

deceased.	The claim 1 s founded on the followina facts: 1.
Between 30	October 1973 and 28 September 1979 the deceased

was re.cristered as and was in fact %he proprietor as lessee

lmder Crown Lease of all the estate and Interest in Block 7

3 .

Section 25 Evatt in the Australian Capital Territory

registered in Volume 476 Folio 93 (the property); 2. By

written contract dated 28 August 1979 executed by the

deceased and Paul Mihalic and Ana Mihalic (the caveatees) the

deceased in consideration that he transfer the whole of his

right title and interest in the property to the caveatees the

caveatees promised to pay him the sum of $70,000; 3. On 25

September 1979 the deceased transferred the whole of his

right title and interest in the property to the caveatees as

ioint tenants: 4. The caveatees paid to the deceased or at

his direction the sum of $15,417.98 pursuant to the contract

but have not paid the whole	or any part	of the	balance of
$54.582.02."

There followed a description of the subject. land and thereafter

the caveat contlnued:

"The caveator forbids the registration of any memorandum of

transfer or lnstrumenr; affecting the said land until the

caveat be by me or by order of the Court or the Judge thereof

withdrawn, or until after the lapse of fourteen days from the

date of the service of notice of such intended registration

at the followinq address:- 15 Gundulu Place Giralanu in the

Australian Capital Territory."

That caveat replaced an earlier one numbered 9336 lodged on 30

J u l y 1985 which was withdrawn before the action was commenced.

A defence to the common law actlon was flled by the

respondents together with a counter-claim which related to the

-

caveat. ?.S amended, the principal claims therein were as

follows :

1 . 3.n order pendlna sult and permanently that the plamtlff

be restrained f r m lodalng m v further caveat on the

title to %he said property for so lonu as the defendants

or either of	them	are reglstered	as the proprietors
thereof.

2 .	A declaratlon that caveat lodged on dealing	FN 522653 is
irregular in borh form and substance.

3. B declaration that the plaintlff has no caveatable

interest In the said property.

4 . An order that the plaintiff show cause why the sald

caveat should not be removed.

4.

5. Further or alternatively an order that the plaintiff

withdraw the said caveat withln two days of the date

this order is made and that in default thereof the

Reqistrar execute a withdrawal of the said caveat for

and on behalf of the plaintiff."

On 28 April 1986 the respondents filed in the action a

notice of motion. The notice as amended durinu the course of the

hearing before the Supreme Court souqht orders as follows:

" 1 . That pending suit the plaintiff be restrained from

lodging any further Caveat on the title to Block 7

Section 25 Division of Evatt beinq the whole of the land

contained in Register Book Volume 476 Folio 93.

2 . An order that the plaintiff show cause why Caveat lodued

with the Reaistrar of Titles on dealinu RN 522653 beina

Caveat No.9437 forbiddlna the registration of any

Memorandum of Transfer or instrument on the Crorwn Lease

in Reaister Book Volume 4976 t s l c 7 F0110 93 should not

be removed. I'

The notice of motion came before the Supreme Court for

hearinu in May 1986. The learned ,Judge decided in favour of the

respondents on the footing that the appellant ouqht not to be

permitted to claim both an equitable interest in the leasehold bv

way of a vendor's lien protected by caveat and at common law for

the unpaid purchase price and apparently on the basis that the

claim at common law should have priority. The appellant was sald

to be pursuing alternative and inconsistent riqhts and, in

effect. his Honour held that something in the nature of an

election had occurred. His Honour found aqainst the respondents

on other submissions to which we will return.

With respect to his Honour. we are clearly of the n e w

that the appellant 1s sntltled r;n maintain both the common law action and the caveat. The latter in fact protects a vendor's

5.

lien for the balance of the purchase money while the common law

action seeks payment of it. The two remedies, represented bp the

common law claim and proceedinus to enforce the vendor's lien,

are, in truth, complementary to each other. The appellant would

not, of course, be entitled, by recourse to both remedies, to

recover a greater sum than the sum proved to be owina on account

of the purchase price. Any moneys recovered bp the pursuit of

one remedy would have to be brought to account to reduce what

could be recovered by the pursuit of the other. B u t to recognise

this does not require the conclusion that the two remedies which

the appellant is seeklng to pursue reflect mutually inconsistent

rights so as to require her to elect between them: Sarqent v. A.S.L. Developments Ltd. (1974) 131 C.L.R. 634. Support for the vlew to which we have come is, we think, to be found in the discussion of the nature of a vendor's lien bp the High Court In Hewett v. Court (1983) 149 C.L.R. 639 to which his Honour was

seemingly not referred (see also W - v. Tottenham and Hampstead

Junction Railwav Co. (1868) 3 Ch. App. 740; Munns 77. Isle of

Wiaht Railwav Co. (1870) 5 Ch. App. 414; Lvcett v. Stafford and

TJttoxerer Railwav Co. (1872) 13 Ea_. 261). In the circumstances

of this case it is Impossible to see how %he true extent gf any

lien could be established except by action of some kind. Any

lien must eventually be founded on a proven debt and, if the appellant is to establish such a debt, it can only be established

by action.

It has been contended on behalf of the respondents that

the caveat the prlnclpal parts of which have already been set out

did not sufficlently "Identify the estate or interest" claime? by

6.

the caveator (s.104(2) of the Real Propertv Ordinance 1925).

What the caveat did was to set out rather fully the basis of the

claim, and, although it did not state in formal terms that what

was being claimed was a "vendor's lien", it was unnecessary for this to be done. It was made apparent that there was a sale for

a certain amount and that, while there had been a transfer. only

part of the purchase money had been paid. The claim was

expressed to be equitable in nature. The statement could be

qiven whatever legal descrlption was apparent and the only one

that seems appropriate is that of a vendor's lien, as it is known. The extent of the interest is made plain by a statement

of the unpaid amount. We see no adequate basis for challenuing

the sufficiency of the caveat. It could be added that,. if that

caveat were held inoperative for some reason. another one could

be lodged forthwith. Alternatively,	an interim injunction could
be sought to the same effect.

P. matter which was much pressed before the learned Judge

and has been pressed before us is that the appellant caveator did

not show cause before the learned Judge in the sense that no

witness was called to give evidence as to the question of unpaid purchase monies. This seems to us to be at best a very technical consideration. At the time nf the hearinq a statement of claim, a defence and a counter-claim had been filed, as had the notice

of motion. The defence set out both the payment In fact made,

and dealt with the question how the balance of $54,582.02 was

satisfied. The notice of motion simply souuht an order that the

appellant be directed to show cause. At the hearlng, the

application seeking an Order to show cause was merged with the

7.

question whether cause did exist. His Honour remarked upon the inadequacy of the procedural steps which had been taken and the

confusion thereby created but it seems to us that the tolality of

the material should be treated, as his Honour treated it, as sufficient upon which to consider whether cause was shown.

Argument relying upon the receipts clause of the

transfer, already referred to, has not been pursued.

We are, therefore. of the view that the appellant should

succeed.

After the conclusion of the prlncipal argument counsel

for the respondents asked that, if his clients should fail, an order be made that the appellant give security for costs of the actlon. This was based laruelp, if not wholly, upon a statement

made rlurlng the course of arqumenr;, in answer to a question from

the bench, that the claim against the subject property is the

onlv asset of the estate. We indicated at the time that we would

not make such an order, there b e m g no evidence before us upon

which an order could be properly based and the application

properly bemg a matter for the Supreme Court. An applicarlon

was also made, on the principle that a caveat operates in much

the same way as an interlocutory injunction, that the appellant,

if successful. should be required to give an undertaking as to

damages. We were of the view that this was not a matter proper

to be raised for the first time on the appeal, and we referred to

s.108 of the Real ProDertv Ordinance 1925. We, therefore,

refused those appllcations.

8 .

We cannot part with the case without noting that this

appeal cannot resolve the real issue in dispute between the

parties. That issue is whether any part of the purchase price

for the leasehold interest in the sub~ect land remains

outstanding. That question, which is essentially one of fact.,

remains outstanding in the suit with little apparent effort being

made to bring that issue to trial. It should be resolved as

expeditiously as possible and	we can only urge the parties to
co-operate to that end.

In our opinion, the appeal should be allowed with costs.

The order of the Supreme Court should be set aside and in lieu

thereof it be ordered that the application for the removal of the

caveat be dismissed with costs. The cross-appeal should be

dismissed with costs.

I certify that this and the

eight ( 8 > preceding pages

are a true copy of the

Reasons for Judgment herein

of the Court..

Assoclate

Dated: 25 d r c d 1987

Counsel for the Appellant/Cross-Respondent: T J Higqins QC

with B Hull

Solicitors for the Appellant/Cross-Respondent:	John Faulks &
Co.
Counsel for the Respondents/Cross-Appellants:	T M Johnstone

Solicitors for the Respondents/Cross-Appellants: Sneddon Hall &

Gallop

Date of hearing:	2 4 March 1987
Date judcrment delivered:	25 March 1987