Prem v Surma - [2024] WASC 308

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PREM -v- SURMA [2024] WASC 308
CORAM:   STRK J
HEARD:   31 MAY 2024
PUBLISHED           :   26 AUGUST 2024
FILE NO/S:   CIV 1610 of 2024
MATTER:   IN THE MATTER OF THE TRANSFER OF LAND ACT 1893 (WA) s 138
BETWEEN:   FELICHA CRYSTLE PREM
Plaintiff
AND
YVONNE CAMILLA SURMA
First Defendant
THE REGISTRAR OF TITLES
Second Defendant

Catchwords:

Real property - Caveat - Application to extend - Serious question to be tried - Balance of convenience - Sale of land - Turns on own facts

Legislation:

Transfer of Land Act 1893 (WA) s 138

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	RJ Squires
First Defendant	:	CE D'Angelo
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Vibe Legal
First Defendant	:	Main Legal Studio
Second Defendant	:	No appearance

Cases referred to in decision:

Bashford v Bashford [2008] WASC 138
Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179; (2007) 35 WAR 27
Bryson v Bryant (1992) 29 NSWLR 188
Cressy v Johnson [2009] VSC 52
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) ANZ Conv Rep 334
Elliott v Blanshard (1970) 17 FLR 7
Engwirda v Engwirda [2000] QCA 61
Gangemi v Gangemi [2009] WASC 195
Green v Green (1989) 17 NSWLR 343
Hibberson v George (1989) 12 Fam LR 725
J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546
Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 2] [2021] WASC 302
Kerabee Park Pty Ltd v Daley (1978) 2 NSWLR 222
KWS Capital Pty Ltd v Love [2013] WASC 294
Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22; (1992) 174 CLR 407
Lloyd v Tedesco (2002) 25 WAR 360
Magnolia Private Capital Pty Ltd v Floate [2022] WASC 131
Martin v Official Trustee in Bankruptcy [1990] Tas R 65
Midland Brick Company Pty Ltd v Welsh [2006] WASC 122; (2006) 32 WAR 287
Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 575
Miller v Sutherland (1990) 14 Fam LR 416
Palazzo Homes Pty Ltd v Goh [2010] WASC 407
Percy & Michele Pty Ltd v Gangemi [2010] VSC 530
Porter v McDonald [1984] WAR 271
Queensland Estates Pty Ltd v Co-ownership Land Development Pty Ltd [1969] Qd R 150
Re Sabri; Ex parte Brien v Australia & New Zealand Banking Group Ltd (1996) 137 FLR 165
Re The Victorian Farmers' Loan and Agency Co Ltd (1897) 22 VLR 629
Simmons v Love [2014] WASC 116
Sulinmo Properties Pty Ltd v Malloney (1985) ANZ Conv Rep 25
Veloudos v Young (1981) 56 FLR 182

Table of Contents

Introduction

The evidence

The applicant's evidence

Ms Prem's affidavit sworn 22 May 2024

Mr Shepherd's affidavit sworn 22 May 2024

Mr Shepherd's affidavit sworn 24 May 2024

Mr Shepherd's affidavit sworn 30 May 2024

Mr Barry's affidavit sworn 30 May 2024

The respondent's evidence

Ms Surma's affidavit sworn 30 May 2024

The factual background

Form of Caveat P957269

Overview of the parties' respective positions on 31 May 2024

The applicable principles

Extension of the operation of a caveat

Power to amend caveat

Disposition

Should the operation of the caveat be extended?

Form of Caveat P957269

Conclusion and orders

Sch A - Orders made on 31 May 2024

Sch B - Orders made on 20 June 2024

STRK J:

Introduction

On 23 May 2024, the plaintiff, Felicha Crystle Prem, filed an originating summons seeking relief pursuant to the Transfer of Land Act 1893 (WA). By a chamber summons filed on the same day, Ms Prem applied for an order extending the operation of Caveat P957269 registered against the property known as Unit 2, 76 Guildford Road, Mount Lawley in the State of Western Australia, being Lot 6 on Strata Plan 34095, and being the whole of the land described in Certificate of Title Volume 2167 Folio 250 (the Mount Lawley property). Caveat P957269 was lodged as an absolute caveat. By the same application, Ms Prem sought that Caveat P957269 be amended so as to not be an absolute caveat, but rather that it forbid the registration of any instrument affecting the estate or interest claimed by Ms Prem unless such instrument be expressed to be subject to her claim as caveator.
A certificate of urgency was filed with the chamber summons seeking an immediate hearing of the application, together with a memorandum pursuant to O 59 r 9 of the Rules of the Supreme Court 1971 (WA).
Yvonne Camilla Surma, the registered proprietor of the Mount Lawley property and Ms Prem's mother, was named as the first defendant in the proceeding. The Registrar of Titles was named as the second defendant and elected to take no part at the hearing of the application.
Ms Surma was served with the application and supporting papers less than one clear day before the hearing of the application. She attended court in person and although she had the benefit of legal representation from 29 April 2024 to 22 May 2024, she was not represented on 24 May 2024 when the application was heard. In light of the short notice afforded to Ms Surma, and in circumstances where Ms Surma indicated that she wished to obtain further legal advice, the hearing on 24 May 2024 proceeded as if ex parte.
After hearing counsel for Ms Prem, upon the affidavits filed in support of the application, and cognisant that a substantive proceeding had been commenced by Ms Prem by writ of summons indorsed with a statement of claim in relation to the Mount Lawley property (known as CIV 1617 of 2024), the operation of Caveat P957269 was extended by an interim order made pursuant to s 138C of the Transfer of Land Act until 11.59 pm on Friday, 31 May 2024.
Ms Prem's application was adjourned to 31 May 2024 for a hearing on an inter partes basis, and programming orders were made for the filing of further evidence and outlines of submissions.
At the inter partes hearing, Ms Prem moved for orders extending the operation of, and amending Caveat P957269 until further order. In the alternative, recognising that a contract for the sale of the Mount Lawley property to a third party was prevented from settling while Caveat P957269 remained in operation, Ms Prem moved for orders that allowed the settlement of that contract to occur on terms that required the net proceeds of sale after discharge of a registered mortgage to either be paid into court or be paid into a solicitor's trust account, until further order. Further, Ms Prem moved for an urgent court annexed mediation in the substantive proceeding (known as CIV 1617 of 2024).
As the alternative relief pressed had the effect of injuncting the distribution of the net proceeds of sale, Ms Prem's application was also supported by an undertaking as to damages in the usual form.
Before the inter partes hearing, Ms Surma re-engaged solicitors and through counsel was heard in opposition to the extension of Caveat P957269 on 31 May 2024.
After hearing counsel for Ms Prem and Ms Surma, the operation of Caveat P957269 was extended until further order of this court. Caveat P957269 was also amended so as to forbid registration subject to claim rather than absolutely.
I indicated to the parties that I would publish my reasons, which would include reference to the affidavit evidence filed and the complete citations for the authorities relied upon. My reasons are set out below.

The evidence

The applicant's evidence

On 31 May 2024 counsel for Ms Prem read six affidavits in support of the relief sought, and relied upon a written outline of submissions filed on 24 May 2024.

Ms Prem's affidavit sworn 22 May 2024

The first was the affidavit sworn by Ms Prem on 22 May 2024, to which she attached documents marked FP1 to FP8.
Among other things, Ms Prem deposed to the background to this proceeding and to the basis for her claim to an interest in the Mount Lawley property, including the circumstances in which Ms Prem came to receive moneys from her deceased grandmother's estate and her use of those moneys. Ms Prem attached various documents to her affidavit including a copy of the certificate of title for the Mount Lawley property; the caveat lodged by Ms Prem; the statutory declaration made by Ms Prem on 12 April 2024 in support of the caveat; the notice issued by Landgate pursuant to s 138B of the Transfer of Land Act; and various bank statements.

Mr Shepherd's affidavit sworn 22 May 2024

The second was the affidavit of James Andrew Shepherd, a solicitor employed by Vibe Legal (Ms Prem's solicitors), which was sworn on 22 May 2024, to which Mr Shepherd attached documents marked JS1 to JS11.
Mr Shepherd deposed to Vibe Legal's correspondence with the Ms Surma and with Main Legal Services. Mr Shepherd attached to his affidavit various correspondence, which included a copy of a contract for sale of land or strata title by offer and acceptance in respect of the Mount Lawley property dated 12 September 2012 (in which Ms Surma was named the Buyer), and a copy of a contract for sale of land or strata title by offer and acceptance in respect of the Mount Lawley property dated 8 April 2024 (in which Ms Surma was named the Seller).

Mr Shepherd's affidavit sworn 24 May 2024

The third was the affidavit sworn by Mr Shepherd on 24 May 2024, to which Mr Shepherd attached documents marked JS16 and JS17. Mr Shepherd attached to his second affidavit a copy of the writ of summons filed in proceedings known as CIV 1617 of 2024, and a certificate of title for a property known as 5 Radian Road, Beldon.

Mr Shepherd's affidavit sworn 24 May 2024

The fourth was the second affidavit sworn by Mr Shepherd on 24 May 2024, to which he attached documents marked JS18 and JS19. Mr Shepherd attached to his affidavit correspondence as between Vibe Legal (on behalf of Ms Prem) and Ms Surma exchanged on 24 May 2024.

Mr Shepherd's affidavit sworn 30 May 2024

The fifth was the affidavit sworn by Mr Shepherd on 30 May 2024, to which he attached documents marked JS20 to JS23.
By his affidavit, among other things, Mr Shepherd deposed to the filing of a writ of summons by which Supreme Court action CIV 1617 of 2024 was commenced, and service of the writ on Ms Surma. Mr Shepherd also deposed to the correspondence between the parties since 24 May 2024. Mr Shepherd attached to his affidavit a copy of the sealed writ of summons, together with the correspondence referred to in his affidavit.

Mr Barry's affidavit sworn 30 May 2024

The sixth was the affidavit sworn by Leo James Barry on 30 May 2024, to which he attached one document marked LB1. Mr Barry is the legal practice director employed by Vibe Legal. He attached correspondence sent to Main Legal Studio on 30 May 2024. He also described in his affidavit the trust account details of Vibe Legal.
Mr Barry further deposed that if funds were received into the Vibe Legal Trust Account pursuant to an order of the court, as the practise director of Vibe Legal, he would ensure that said funds were retained and not dispersed otherwise than in accordance with a court order.

The respondent's evidence

On 31 May 2024 counsel for Ms Surma read one affidavit, and relied upon a written outline of submissions filed on 30 May 2024.

Ms Surma's affidavit sworn 30 May 2024

Counsel read the affidavit sworn by Ms Surma on 30 May 2024 to which she attached documents marked YS1 to YS16.
Among other things, Ms Surma deposed to the background to this proceeding and to the basis for her opposition to Ms Prem's asserted claim of an interest in the Mount Lawley property, including the circumstances in which Ms Surma came to receive moneys from Ms Prem. Ms Surma attached to her affidavit among other things a copy of Caveat P957269; the statutory declaration made by Ms Prem on 12 April 2024 in support of the caveat; the notice issued by Landgate pursuant to s 138B of the Transfer of Land Act; various bank statements; copies of the contracts for sale of land or strata title by offer and acceptance in respect of the Mount Lawley property; and various correspondence.

The factual background

Below is a summary of the factual background. It is summarised for the purposes of outlining the context in which Ms Prem's application was made, and does not give rise to any findings of fact.
From the affidavits filed, principally the affidavits of Ms Prem and Ms Surma, I understood Ms Prem and Ms Surma's respective positions to be as follows.
It was common ground that when the application was made, Ms Surma was the registered proprietor of the Mount Lawley property, which was subject to, among other things, a registered mortgage in favour of Westpac Banking Corporation, and Caveat P957269 in favour of Ms Prem. Further, that a notice issued pursuant to s 138B of the Transfer of Land Act dated 3 May 2024 had been received by Ms Prem from Landgate with respect to Caveat P957269, and if an order was not made extending the operation of the caveat, it would have lapsed at midnight on 24 May 2024. By the court's order made on 24 May 2024, the operation of the caveat was extended on an interim basis until 11.59 pm on Friday, 31 May 2024.
Ms Prem deposed that she was the sole beneficiary of the estate of her late paternal grandmother who died on 16 December 2010 when Ms Prem was 19 years of age. Letters of administration of her grandmother's estate were granted to Ms Prem by an order of the Supreme Court of Victoria on 10 July 2012. Ms Prem was then 20 years of age. Upon the distribution of the deceased's estate, Ms Prem received $307,726.45 (described in these reasons as the inheritance), which was deposited into Ms Prem's personal bank account held with the Commonwealth Bank of Australia (referred to in these reasons as the Prem CBA account).
At the time of her grandmother's death, Ms Prem resided with her mother, Ms Surma, and her stepfather, Miroslav Ferluga, at 5 Radian Road, Beldon.
Ms Prem deposed that in the period between her grandmother's death and distribution of her grandmother's estate, she and Ms Surma discussed Ms Prem handing over the inheritance to Ms Surma for Ms Surma to use to purchase an investment property. She deposed that Ms Surma had suggested that a property be purchased using the inheritance in Ms Surma's sole name. As to that suggestion, Ms Prem deposed that Ms Surma had told her that it would be best to have the property in Ms Surma's name as banks prefer to have a home buyer with a steady income to make mortgage repayments.
Ms Prem deposed that at the time, Ms Prem was a full-time student and working as a casual cook at Sizzler; Ms Surma had other investment properties and Ms Prem trusted Ms Surma's experience in property investment; and Ms Prem had understood from her discussions with Ms Surma that the property Ms Surma purchased using the inheritance would be held for Ms Prem's future benefit.
Ms Prem deposed that on or about 1 September 2012, about the same time that she received the inheritance, she gave Ms Surma authority to operate the Prem CBA account, so that Ms Surma could make withdrawals of the inheritance to purchase a property.
Ms Prem further deposed:
(a)that on 6 September 2012, a series of six transactions were made from the Prem CBA account resulting in the withdrawal of a total of $307,000;
(b)that the withdrawn moneys were transferred to one of two bank accounts which Ms Prem believed were accounts operated by Ms Surma (described in Ms Prem's bank statement as 'xx4867 NetBank' and 'CBA A/c NetBank'); and
(c)to the basis of her belief that the deposit paid to purchase the Mount Lawley property had been paid by Ms Surma from moneys in one of the two accounts to which Ms Prem's money had been transferred.
Ms Prem did not contend that she had funded the whole of the purchase price of the Mount Lawley property.[1] As to the circumstances surrounding the purchase of the Mount Lawley property, Ms Prem further deposed that:
(a)the Mount Lawley property was purchased in late 2012;
(b)it was her understanding from discussions that she had had with Ms Surma at the time that:
(i) around $200,000 of the inheritance was used by Ms Surma to fund the purchase of the Mount Lawley property;
(ii)around $100,000 of the inheritance was used by Ms Surma to fund renovations to the Mount Lawley property; and
(iii)Ms Surma had secured a bank mortgage to fund the remainder of the purchase price, and that rent from the Mount Lawley property would help service the mortgage.
[1] ts 43 (31 May 2024).
It was Ms Prem's evidence that following the purchase of the Mount Lawley property, Ms Surma did not tell her about the rental income or mortgage repayments, and she did not recall receiving any rent.
Ms Prem also deposed that that there were occasions when Ms Prem lent sums of money to Ms Surma which were later repaid, often with interest, but that Ms Prem understood these loans and repayments were separate to her inheritance and the Mount Lawley property.
Ms Prem deposed that her relationship with Ms Surma broke down in late 2019. She deposed that in January 2020, Ms Surma withdrew $80 from the Prem CBA account, which prompted Ms Prem to contact the bank and cancel Ms Surma's authority to operate the Prem CBA account. The transaction was subsequently reversed and removed from NetBanking, and Ms Prem closed the Prem CBA account in November 2021.
Ms Prem deposed that on or about 10 April 2024 she discovered the Mount Lawley property was advertised for sale and she then caused Caveat P957269 to be lodged.
On 12 April 2024 Ms Prem made a statutory declaration in support of Caveat P957269, in which she declared, among other things, that:
(a)the nature of the estate she claimed in the Mount Lawley property was 'an equitable interest as beneficial owner of the Land';
(b)on 12 September 2012 Ms Surma had purchased the Mount Lawley property;
(c)to the best of her knowledge and recollection, her inheritance was used by Ms Surma to purchase the Mount Lawley property as an investment for Ms Prem's benefit; and
(d)she understood that the Mount Lawley property was under contract for sale, without notice to her.
Ms Prem later became aware that on 8 April 2024, Ms Surma had entered into a written contract to sell the Mount Lawley property to a third party for the sale price of $515,000.
As noted above, on 24 May 2024 a substantive proceeding was commenced by Ms Prem by writ of summons indorsed with a statement of claim in relation to the Mount Lawley property (known as CIV 1617 of 2024). Among other things, in that proceeding Ms Prem pleads that:
(a)during the course of discussions that were had in the period between the death of Ms Prem's grandmother on 16 December 2010 and 1 September 2012, it was orally agreed between Ms Prem and Ms Surma that:
(i)Ms Surma would purchase a property using Ms Prem's inheritance for Ms Prem and Ms Surma;
(ii)the property would be registered in Ms Surma's sole name; and
(iii)Ms Prem would contribute towards the purchase price of the property and any subsequent improvements to it following its purchase by use of the inheritance,
(defined in the pleading as the Agreement);
(b)it was an implicit term to be inferred by the Agreement, alternatively on a proper construction of the Agreement it was agreed, that:
(i)the property purchased would be held by Ms Surma in equity for Ms Prem and Ms Surma in shares proportionate to their respective contributions to the purchase price of the property and any subsequent improvements to it; and
(ii)Ms Surma could not sell or transfer the property purchased without Ms Prem's consent and without accounting to Ms Prem in respect to Ms Prem's equitable interest in the property as described in (i) above; and
(c)consistent with the Agreement, Caveat P957269 expressed the estate and interest claimed by Ms Prem to be an equitable interest as beneficial owner of the Mount Lawley property by virtue of it being held on constructive trust for Ms Prem's benefit.

By the substantive proceeding Ms Prem claims that she is entitled to relief which includes:
(a)a declaration that Ms Surma holds the Mount Lawley property on trust for Ms Prem and Ms Surma in shares proportionate to their respective contributions to the purchase price of the property and any subsequent improvements to it;
(b)an account or inquiry as to the equitable/beneficial ownership of the Mount Lawley property, and the parties' entitlements under the Agreement; and
(c)equitable compensation.
In her affidavit made in opposition to the extension to the operation of Caveat P957269, Ms Surma gave a different account of the circumstances in which she came to receive moneys from Ms Prem, and came to be the registered proprietor of the Mount Lawley property. Ms Surma deposed that a Commonwealth Bank account number ending 4867 (referred to in these reasons as the Surma CBA account) was opened by Ms Surma on 7 November 2011 and closed on 20 September 2013, and was used by Ms Surma for a variety of purposes, including the payment of personal expenses and transfers between accounts. Ms Surma did not dispute that a total of $277,000 (over four transactions) was transferred from the Prem CBA account into the Surma CBA account, but that due to the effluxion of time, Ms Surma's position was that she was not able to confirm whether other transfers from the Prem CBA account were made into another account to her benefit.
As to the circumstances surrounding the purchase of the Mount Lawley property, Ms Surma deposed that:
(a)on or around 12 September 2012 she entered into a contract to purchase the Mount Lawley property;
(b)settlement took place on or around 15 October 2012;
(c)the purchase price was $455,500 which was primarily financed by a loan from St George Bank in the amount of $400,000 with the remaining balance having been paid by Ms Surma from personal funds;
(d)she and Ms Prem did not discuss the purchase of the Mount Lawley property at the time or at any time, and Ms Prem did not contribute to the purchase, maintenance or renovation of the Mount Lawley property; and
(e)repayments to St George Bank were made by Ms Surma and her partner (Mr Ferluga) using personal funds and rental proceeds.
Ms Surma further deposed that since 30 June 2021, the loan account with St George Bank had been in arrears, and as at 28 March 2024, the arrears came to a total of $15,233.64.
As to the sale of the Mount Lawley property, Ms Surma deposed that on or about 12 April 2024, she decided to sell the Mount Lawley property and to accept an offer for the Mount Lawley property (having attempted to sell it in or about mid-2018, mid‑2020 and early 2022 without success). Settlement on the sale was initially scheduled to take place on 8 May 2024. For the purpose of this application, I understood that it was accepted by Ms Prem that there was no suggestion that the sale was anything other than a sale at arms length.[2]
[2] ts 49 (31 May 2024).
As to Caveat P957269, Ms Surma deposed that on or around 22 April 2024 she became aware through her settlement agent that a caveat had been lodged against the Mount Lawley property, and on 26 April 2024 instructed Main Legal Studio to prepare an application under s 138B of the Transfer of Land Act to remove the caveat.
In summary, it was Ms Surma's evidence that:
(a)at no time before lodging Caveat P957269 did Ms Prem ever make a claim or discuss with Ms Surma her belief that she holds an interest in the Mount Lawley property;
(b)there was no discussion or understanding reached as between her and Ms Prem that:
(i)Ms Surma would hold any funds in the Surma CBA account on trust for Ms Prem;
(ii)any funds transferred to Ms Surma would be used for the purchase, improvement, renovation, or in any way applied towards the Mount Lawley property; and
(iii)Ms Prem had any right or entitlement to the Mount Lawley property, or to any funds in the Surma CBA account;
(c)Ms Prem never received any rent or benefit from the Mount Lawley property, and there was no conferral or agreement between them about the Mount Lawley property because Ms Prem did not have, and prior to her lodging the caveat, had never claimed an interest in the Mount Lawley property or any funds in the Surma CBA account; and
(d)to the extent that Ms Prem had transferred any funds to the Surma CBA account:
(i)she and Ms Prem had had a very close relationship at that time, and Ms Surma had been a single mother and Ms Prem's sole parent from 1993 to 2002;
(ii)Ms Prem had been aware in 2012 that Ms Surma had financial difficulties;
(iii)among other things, Ms Surma paid for Ms Prem's legal fees so as to obtain the funds that Ms Prem was entitled to from her grandmother's estate;
(iv)once funds were obtained from the estate, Ms Prem gave the funds to Ms Surma;
(v)there was never an agreement, arrangement or trust spoken of or established; and
(vi)Ms Surma continued to provide for Ms Prem's needs while Ms Prem was studying full‑time, working casually as a cook at Sizzler and living with Ms Surma, as Ms Surma had always done.
Ms Surma deposed that she wanted Caveat P957269 to be withdrawn because Ms Prem did not pay for the purchase, maintenance or improvement of the Mount Lawley property; with Mr Ferluga's assistance, Ms Surma had paid for the purchase, maintenance and improvement of the Mount Lawley property, and all rates, taxes, insurance and incidental costs; the failure to withdraw Caveat P957269 would delay settlement and would adversely impact Ms Surma's financial position and ability to meet her other financial obligations (Ms Surma deposed to being the registered proprietor of three other mortgaged properties); and as a consequence of Caveat P957269, Ms Surma was in breach of the contract for sale entered into on 8 April 2024 as the purchaser had refused to extend the time for settlement, and daily interest of $122.95 continued to accrue.

Form of Caveat P957269

When lodging Caveat P957269, Ms Prem identified her interest in the Mount Lawley property as an 'equitable interest as a beneficial owner of the Land'. Caveat P957269 was lodged as an absolute caveat, that is, it forbade the registration of any instrument affecting the estate or interest claimed by Ms Prem.

Overview of the parties' respective positions on 31 May 2024

In summary, it was submitted on behalf of Ms Prem that the interest she claimed in the Mount Lawley property was an equitable one (arising from a constructive trust, alternatively a resulting trust),[3] which constitutes a proprietary interest able to be protected by a caveat; that there was a serious question to be tried as to the existence of a caveatable interest; and that the balance of convenience favoured orders extending the operation of Caveat P957269 to allow Ms Prem to maintain the protection afforded to her by virtue of that caveat.
[3] ts 40 - 41 (31 May 2024).
As noted above, in the alternative and recognising that a contract for the sale of the Mount Lawley property to a third party could not settle while Caveat P957269 remained, Ms Prem pressed for orders that allowed the settlement of that contract to occur on terms that required the net proceeds of sale after discharge of Westpac's registered mortgage to either be paid into court or be paid into a solicitor's trust account, until further order.[4] Ms Prem also moved for an urgent court annexed mediation in the substantive proceeding (known as CIV 1617 of 2024).[5]
[4] Plaintiff's outline of submissions par 1.2.
[5] Plaintiff’s outline of submissions par 4.
Finally, Ms Prem accepted that the form of Caveat P957269 should be amended to be a 'subject to claim' caveat in accordance with the principle that a caveat should not go beyond the legitimate claim necessary to protect its interests, and sought an order amending the caveat.[6]
[6] Plaintiff's outline of submissions par 13.
In summary, it was submitted on behalf of Ms Surma that there was insufficient evidence to establish that the moneys advanced from the Prem CBA account to the Surma CBA account had been used to acquire, maintain or improve the Mount Lawley property, and therefore there was insufficient evidence to ground a serious question to be tried with respect to a constructive trust arising from the use of Ms Prem's inheritance.[7]
[7] First defendant's outline of submissions pars 3 - 9; ts 53 ‑ 62 (31 May 2024).
Further, it was submitted on behalf of Ms Surma that the balance of convenience favoured the immediate removal of Caveat P957269.[8] Among other things, Ms Surma complained that Ms Prem could have, but had failed to exercise her alleged rights at any time in the 12 years that followed the acquisition of the Mount Lawley property; submitted that Ms Prem's position and her rights would remain the same whether or not the operation of Caveat P957269 was extended; and submitted that the extension of the operation of Caveat P957269 would cause Ms Surma to suffer significant financial prejudice.[9]
[8] First defendant's outline of submissions par 10.
[9] First defendant's outline of submissions pars 10, 14.

The applicable principles

Extension of the operation of a caveat

The principles to be applied when considering whether to extend the operation of a caveat are well settled, and there was no controversy as between the parties as to the same.
Under s 137 of the Transfer of Land Act, a person claiming any estate or interest in land under the operation of the Transfer of Land Act may lodge a caveat with the Registrar of Titles. The purpose of a caveat against dealings is to operate as an injunction to the Registrar to prevent registration of dealings forbidden by the caveat until notice is given to the caveator, so that he or she has an opportunity to oppose such registration.[10] Section 137 provides that a caveat may be lodged, in an approved form, forbidding the registration of any person as transferee or proprietor of and of any instrument affecting such estate or interest, either absolutely, or until after notice of the intended registration or dealing be given to the caveator, or unless such instrument be expressed to be subject to the claim of the caveator.
[10] Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22; (1992) 174 CLR 407, 419.
The onus fell upon Ms Prem to satisfy the court that Caveat P957269 should be extended.[11]
[11] Transfer of Land Act s 138(2).
On such an application, the question for determination is whether or not the caveator can demonstrate they may have an interest in land which is capable of supporting a caveat. By its nature, a caveatable interest must be a proprietary interest in land.[12] This requires the interest to be a proprietary interest that is recognised at law or in equity.
[12] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50.
As is noted above, a caveat is a form of statutory injunction which prevents registration of a dealing against land until the caveator has been given a reasonable opportunity to justify the caveat by pursuing such remedies as they may have.[13] The caveator must satisfy the court that, on the evidence presented to the court, their claim for an interest in the property raises a serious question to be tried or that it may have substance.[14] Even if a claim may have substance, the caveat might not be extended having regard to factors including the apparent strength or weakness of the caveator's claim.[15]
[13] J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546, 552, 558; Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (44 ‑ 45); Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179; (2007) 35 WAR 27 [68].
[14] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (48 ‑ 50).
[15] KWS Capital Pty Ltd v Love [2013] WASC 294 [32] ‑ [36].
A caveatable interest must exist at the time a caveat is lodged. A caveat cannot be lodged to protect a future interest.[16] Further, the caveat must not go beyond the legitimate claim necessary to protect the rights of the caveator.[17] Removal of the caveat will, in many cases, have the effect of destroying the benefit of the proprietary interest claimed in the caveat.[18]
[16] Martin v Official Trustee in Bankruptcy [1990] Tas R 65, 69; Gangemi v Gangemi [2009] WASC 195 [38] - [45].
[17] Midland Brick Company Pty Ltd v Welsh [2006] WASC 122; (2006) 32 WAR 287 [342].
[18] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (50).
In the exercise of the court's discretion under s 138 of the Transfer of Land Act, the balance of convenience is a relevant factor. There is no rule of law that once an arguable case for a caveatable interest is established, removal of the caveat will only be ordered if it is shown that the 'circumstances are so unusual' that the caveat should be removed. The discretion is to be exercised having regard to the particular circumstances of the case.[19]
[19] Magnolia Private Capital Pty Ltd v Floate [2022] WASC 131 [12]; first defendant's submissions par 65.
I adopted and applied these principles in determining Ms Prem's application.

Power to amend caveat

As to the power to amend a caveat, as was observed by Le Miere J in Palazzo Homes Pty Ltd v Goh [2010] WASC 407 at [7], it is now generally accepted in Australia that the power to make such order as the court considers appropriate, or as to the court seems fit, in dealing with an application to remove a caveat, includes the power to order amendment of the caveat as a condition of its retention.[20] Further, his Honour noted that s 138(2) of the Transfer of Land Act provides that on a registered proprietor summoning a caveator to show cause why a caveat should not be removed, the court may make such order as the court or judge may seem fit. The power to make such order as the court may seem fit includes the power to order that the caveat be amended.[21]
[20] Le Miere J cited by way of example: Re The Victorian Farmers' Loan and Agency Co Ltd (1897) 22 VLR 629; Queensland Estates Pty Ltd v Co-ownership Land Development Pty Ltd [1969] Qd R 150; Elliott v Blanshard (1970) 17 FLR 7, 11; Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 575; Kerabee Park Pty Ltd v Daley (1978) 2 NSWLR 222, 229; Veloudos v Young (1981) 56 FLR 182, 186 ‑ 187; Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) ANZ Conv Rep 334.
[21] Palazzo Homes Pty Ltd v Goh [8], citing Porter v McDonald [1984] WAR 271, 275; Sulinmo Properties Pty Ltd v Malloney (1985) ANZ Conv Rep 25.
That said, the preponderance of authority in Australia is that the power to make such order as the court considers appropriate, or as to the court seems fit, in dealing with an application to remove a caveat does not empower the court to order the amendment of a caveat which would result in the substitution of a different estate or interest than the estate or interest claimed in the caveat.[22]
[22] Palazzo Homes Pty Ltd v Goh [9] ‑ [11].
Further, as to the exercise of discretion to amend a caveat, Le Miere J in Palazzo Homes Pty Ltd v Goh at [24] ‑ [25] observed that the court should not readily act in a way which might encourage the belief that caveats can be imprecisely formulated and then fixed up later. Caveats act as a form of interlocutory injunction, albeit by an administrative act, and can have powerful and serious consequences. Wrongly formulated caveats should not easily be tolerated.[23] Further, when considering whether to accede to an application to amend a caveat, the court should have regard to the overall merits of the case.
[23] Le Miere J citing Percy & Michele Pty Ltd v Gangemi [2010] VSC 530 [104] (Macaulay J), at [24] in Palazzo Homes Pty Ltd v Goh.

Disposition

Should the operation of the caveat be extended?

On the basis of the materials before me, I was satisfied that Ms Prem had shown cause why Caveat P957269 should be extended. I weighed in the balance the following matters.
First, on the evidence presented to the court, I was satisfied that Ms Prem's claim to an interest in the Mount Lawley property raised a serious question to be tried and may have substance. Ms Prem had discharged her onus in this regard.
In so concluding, I note that I had understood it to be uncontroversial that some moneys were transferred from Ms Prem's account into an account controlled by Ms Surma. Ms Prem maintains that a total of $307,000 was transferred into two accounts controlled by Ms Surma. Ms Surma does not dispute that a total of $277,000 was transferred into the Surma CBA account from the Prem CBA account, but says that due to the effluxion of time, she had not been able to confirm whether other transfers made from the Prem CBA account were made to her benefit (that is, whether the whole of Ms Prem's inheritance was transferred into bank accounts controlled by Ms Surma).
Noting that it was accepted that at least $277,000 of the inheritance had been transferred, the real controversy for the purposes of this application as between Ms Prem and Ms Surma concerned the circumstances in which the moneys were transferred. As to the circumstances, there was conflicting affidavit evidence as to what (if anything) Ms Prem and Ms Surma had discussed with respect to the intended use of the moneys.
Counsel for Ms Prem submitted that the circumstances deposed to by Ms Prem gave rise to a common intention constructive trust. I accepted that Ms Prem's evidence as to her discussions with Ms Surma before the purchase of the Mount Lawley property (the pleaded Agreement), in a context where within days of the transfer of moneys to Ms Surma, Ms Surma entered into a contract to purchase the Mount Lawley property, grounded a serious question to be tried as to whether:
(a)there was a common intention to confer an interest in the Mount Lawley property on Ms Prem;
(b)Ms Prem acted to her detriment in reliance on that common intention; and
(c)it would be inequitable for Ms Surma to now deny that Ms Prem holds an interest in the Mount Lawley property.
In so accepting, I did not overlook Ms Surma's denial, on oath, of there having been any common intention. It was Ms Surma's evidence that she and Ms Prem did not discuss the purchase of the Mount Lawley property at any time, and that Ms Prem did not contribute to the purchase, maintenance or renovation of the Mount Lawley property. Nor did I overlook the matters emphasised by counsel on behalf of Ms Surma, which included:
(a)Ms Surma's evidence that prior to lodging the caveat, Ms Prem never claimed an interest in the Mount Lawley property or any funds in the Surma CBA account;[24]
(b)that there had been a contract to purchase the Mount Lawley land entered into in 2012, a loan, a mortgage, and an account from which moneys were drawn to pay the mortgage, all in Ms Surma's name;[25]
(c)counsel's submission that at best, the evidence might ground a question of substance as to whether Ms Prem held an interest in the Surma CBA account, which account was closed in 2013, but could not ground a question of substance as to whether Ms Prem holds an interest in the Mount Lawley property;[26]
(d)counsel's submission that if there was indeed an Agreement, as pleaded by Ms Prem, the moneys transferred to Ms Surma 'could have been applied to anything',[27] and that the evidence did not support a finding that the moneys advanced by Ms Prem were in fact used to purchase the Mount Lawley property (which evidentiary 'gap' was described by counsel as 'a break in the chain'),[28] so that at best Ms Prem might have 'remedies against the trustee, which are to seek an account, to seek damages, equitable compensation, etcetera, …' but not an interest in the Mount Lawley property;[29] and
(e)counsel's submission that the authorities relied upon by Ms Prem involved circumstances where 'clearly there is an interest in land and it was a question of the extent of the interest in land', whereas in this case, an interest in the Mount Lawley property had not been established, and therefore the application to extend the operation of the caveat must fail.[30]
[24] Affidavit of YC Surma sworn 30 May 2024 pars 33, 38; first defendant's outline of submissions par 5; ts 58 - 59 (31 May 2024).
[25] Affidavit of YC Surma sworn 30 May 2024 pars 10, 12, 15, YS3 (pages 20 -25), YS5 (pages 31- 32); ts 54 ‑ 55 (31 May 2024).
[26] ts 55 ‑ 58, 62 (31 May 2024).
[27] ts 60 (31 May 2024).
[28] ts 56 - 57, 61 - 62 (31 May 2024).
[29] ts 55 - 62 (31 May 2024).
[30] ts 55 (31 May 2024).

While acknowledging there was a conflict on the evidence, I proceeded on the basis that the resolution of the conflict was a matter for the trial of the substantive action, not a matter to be resolved in the disposition of the caveat application. Nor was it appropriate for the court to undertake a preliminary trial of the action.[31] Having given careful consideration to Ms Prem's evidence, I was satisfied that Ms Prem's claim to an interest in the Mount Lawley property raised a serious question to be tried and may have substance.
[31] Bashford v Bashford [2008] WASC 138 [48]; applied in Simmons v Love [2014] WASC 116 [49]. See also Porter v McDonald (276), cited with approval in Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 2] [2021] WASC 302 [8].
As to the submission summarised at [73(c)] above, I did not accept that at best, Ms Prem's evidence might ground a question of substance as to whether Ms Prem held an interest in the Surma CBA account, which account was closed in 2013, but could not ground a question of substance as to whether she holds an interest in the Mount Lawley property. To so find would be to ignore Ms Prem's account on oath as to the discussions that she deposed that she had had with Ms Surma before moneys were transferred to Ms Surma and before the Mount Lawley property was purchased.
Nor did I accept that a lack of evidence that the moneys transferred were in fact used to purchase the Mount Lawley property was determinative as to whether Ms Prem's claim to an interest in the Mount Lawley property raised a serious question to be tried. Ms Prem's contributions did not have to be made directly to the acquisition or improvement of the Mount Lawley property for Ms Prem to establish a constructive trust.[32] That said, it would not be sufficient if Ms Surma were to merely have benefited from the contributions of Ms Prem; the contributions made had to be linked, albeit indirectly, to the purchase, maintenance and improvement of the Mount Lawley property.[33] In this case, and for the purposes of this application, Ms Prem's account on oath as to the circumstances in which moneys were transferred provided that link.
[32] Hibberson v George (1989) 12 Fam LR 725; Green v Green (1989) 17 NSWLR 343, 369; Miller v Sutherland (1990) 14 Fam LR 416; Re Sabri; Ex parte Brien v Australia & New Zealand Banking Group Ltd (1996) 137 FLR 165, 174 - 175; Lloyd v Tedesco (2002) 25 WAR 360, 364 - 365. Compare Bryson v Bryant (1992) 29 NSWLR 188, 231 (provision of labour as opposed to the contribution of money should not be excluded from determining interests under a constructive trust, but with the qualification that the provision of labour must be linked to the acquisition, maintenance or improvement of the property which is in dispute).
[33] Engwirda v Engwirda [2000] QCA 61 [23] - [30]; Lloyd v Tedesco 365, 379 - 380; Cressy v Johnson [2009] VSC 52 [197] - [200].
Having considered the matters raised by counsel for Ms Surma, I was satisfied that Ms Prem had discharged her onus with respect to establishing that Ms Prem's claim to an interest in the Mount Lawley property raised a serious question to be tried and may have substance.
Secondly, I weighed in the balance the strength or weakness of Ms Prem's claim, and considered that there were factors that impacted upon each. I considered Ms Prem's conduct in facilitating the transfer of moneys from the Prem CBA account to have been consistent with her evidence as to the oral agreement reached with Ms Surma before the purchase of the Mount Lawley property (the pleaded Agreement). Further, Ms Surma had accepted that at least $277,000 had been transferred and received into an account that she controlled. On the other hand, there was Ms Surma's denial on oath of the Agreement and of any common intention, and save for the lodgment of Caveat P957269, there was no evidence of either Ms Prem or Ms Surma otherwise having acted in a manner consistent with Ms Prem's asserted proprietary interest in the Mount Lawley property (by the sharing of rates, rental income or otherwise).
In considering the strength and weakness of Ms Prem's claim, for the reasons set out above, I did not accept counsel's submission that it was fatal to the proprietary interest claimed that Ms Prem had not proven that the inheritance had been used by Ms Surma to acquire the Mount Lawley property.
Having regard to all of the evidence, I was not able to characterise Ms Prem's claim as either strong or weak.
Thirdly, I was cognisant of the detriment that the removal of Caveat P957269 may have to the interests of Ms Prem. There was no doubt that the removal of the caveat over the Mount Lawley property would have had the effect of destroying the benefit of Ms Prem's proprietary interest in it.
Fourthly, I weighed in the balance the evidence before me of the prejudice to Ms Surma if the operation of the caveat was extended. There was evidence of prejudice in that:
(a)a daily penalty accrued under the contract for sale;
(b)the loan secured by a mortgage over the Mount Lawley property was in arrears; and
(c)Ms Surma had extensive financial commitments, which due to injury, her husband could not assist her in meeting. Ms Surma's financial circumstances were described by counsel as being 'dire'.[34]
[34] First defendant's outline of submissions par 10.
Fifthly, I was cognisant of Ms Prem's willingness to compromise so as to allow the settlement of the sale contract to proceed on terms that required the net proceeds of sale after discharge of the registered mortgage to either be paid into court or be paid into a solicitor's trust account, until further order. Further, Ms Prem had moved for an urgent court annexed mediation in the substantive proceeding (known as CIV 1617 of 2024).
In light of the above, I considered there to be a good prospect of agreement being reached as between the parties that would permit the sale to complete, Westpac to be repaid and the mortgage withdrawn, while preserving the net proceeds of sale. Further, I was aware that the court was able to accommodate an urgent court annexed mediation.
Sixthly, I weighed in the balance the operation of s 140 of the Transfer of Land Act, which provides for compensation to persons aggrieved by the wrongful lodging and maintenance of a caveat, and that Ms Prem had further proffered an undertaking as to damages.
In the end, I considered Ms Prem to have satisfied me that the balance of convenience favoured the maintenance of Caveat P957269.
Having weighed all of these matters in the balance, on the evidence before me, Ms Prem had shown cause why the caveat over the Mount Lawley property ought be extended.

Form of Caveat P957269

Ms Prem acknowledged by the originating process and in the submissions made in support of the application that her absolute caveat went beyond the legitimate claim necessary to protect her rights, and that Caveat P957269 should have been expressed to operate only to protect Ms Prem's rights as the beneficial owner pursuant to a constructive trust (as has been asserted and deposed to). That is, Ms Prem accepted that she should have lodged a 'subject to claim caveat', not an 'absolute caveat'.
As to the proposed amendment of the caveat, counsel for Ms Surma was not heard in opposition to the same and informed the court that Ms Surma left the matter to the court in the exercise of its discretion.[35]
[35] ts 67 (31 May 2024).
Having due regard to the overall merits of Ms Prem's application, I was satisfied that the requested amendment ought be made and that it was appropriate that the continued operation of Caveat P957269 be conditional upon that amendment.

Conclusion and orders

For these reasons, I was satisfied that Ms Prem has shown cause why the caveat over the Mount Lawley property ought be extended, and that is was also appropriate that it be amended. On 31 May 2024 I made orders in the terms reproduced at sch A to these reasons.
At the conclusion of the hearing, programming orders were also made referring this proceeding and CIV 1617 of 2024 to an early court annexed mediation, and this proceeding was otherwise adjourned to 18 June 2024 with liberty to apply.
For completeness, I note that by the consent of Ms Prem and Ms Surma and upon the undertaking as to damages proffered by Ms Prem (referred to above), on 20 June 2024 orders were made in the terms reproduced at sch B to these reasons, which facilitated settlement of the Mount Lawley property. Since the making of the orders, the net proceeds of sale have been paid into court. However, the costs of the application to extend the operation of the caveat (which were reserved on 24 May 2024 and on 31 May 2024) have not been adjudicated or agreed.

Sch A - Orders made on 31 May 2024

Sch B - Orders made on 20 June 2024

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KO
Associate to the Judge
26 AUGUST 2024