Rogers v Censori & Anor
[2009] VSC 309
•30 July 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 7435 of 2009
| SARAH JESSICA ROGERS | Plaintiff |
| v | |
| ERIS CENSORI & ANOR | Defendant |
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JUDGE: | OSBORN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 July 2009 | |
DATE OF JUDGMENT | 30 July 2009 | |
CASE MAY BE CITED AS: | Rogers v Censori | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 309 | |
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REMOVAL OF CAVEAT to facilitate sale by registered proprietor – Arguable claim by caveator – Balance of convenience – Section 90(3) Transfer of Land Act 1958
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W Stark | Conlan Lawyers |
| For the Defendant | Mr M McKenzie | Gerraty Partners |
HIS HONOUR:
The plaintiff seeks an order for the removal of a caveat which was lodged on 18 May 2009 by the defendant, claiming an estate in fee simple in land comprising a house in Pidgon Street, North Carlton.
The plaintiff has contracted to sell the land and settlement is due on 3 August 2009. The plaintiff is in need of the proceeds of sale in order to finalise the purchase of a property in Bendigo in which she intends to reside with the parties’ children.
The caveat recites the following grounds of claim:
Pursuant to a separation agreement under the Property Law Act 1958 (Vic) as amended, between the registered proprietor and the caveator dated 24 October 2008.
There is no dispute the parties entered into a separation agreement dated 24 October 2008, although it appears it was not executed by the plaintiff until 4 December 2008.
By the agreement the parties agreed to divide property acquired both before and during a relationship which ended in separation on 5 March 2005.
At the date of the agreement the plaintiff owned the Pigdon Street property and the defendant owned another property of lesser value at 162 Union Street, Brunswick.
The Pigdon Street property was acknowledged to be worth approximately $700,000 and was said to be encumbered by the following debt and contributions:
Debts
Elaine Censori
$170,000
Avamax Pty Ltd
$200,000
Contributions
Fast Wedge Pty Ltd
$200,000
Eris Censori
$150,000
It appears common ground that the property was also subject to a mortgage to the Commonwealth Bank of Australia.
The parties agreed they would take all reasonable steps to put into effect the division of assets provided for by the agreement ‘including the sale of any assets’. By paragraphs 13 and 14 it was agreed:
13ROGERS agrees that she will never make any claim against the assets to which CENSORI is entitled, as set out in Schedule 2 or any other assets of whatsoever nature into which such assets may from time to time be converted nor shall ROGERS make any claim at any time against any other assets hereinafter acquired by CENSORI from their income or capital or otherwise and such assets shall stand in the name of CENSORI solely and be for their exclusive use;
14CENSORI agrees that he will indemnify ROGERS against any future liabilities or responsibilities of any kind, including taxation, [in] association with CENSORI’S assets as set out in Schedule 2; …
Paragraphs 11 and 12 make parallel provisions in favour of the plaintiff with respect to assets described in Schedule 1.
Paragraph 17 of the agreement provided:
17Upon execution of this agreement CENSORI and ROGERS will be bound to make the transfer as set out in Schedule 1, Schedule 2, Schedule 3 and Schedule 4; as detailed therein by the settlement date being the 5th January 2009 (“settlement”).
Schedule 2 of the agreement contained the sub-heading ‘Assets to be owned by Censori for his exclusive use’. Under the heading ‘Real estate’ it stated:
1 – 200 PIDGON [sic] STREET, CARLTON (TO BE TRANSFERRED)
UPON PAYMENT OF $205,000 ON OR BEFORE 5TH JANUARY 2009
The figure $700,000 appeared in the column marked ‘Value’ next to this asset.
The agreement made other provisions expressed to be by way of ‘notes’ which included the following:
4Rogers is to receive rental from Pigdon Street Carlton and Censori will be responsible for all mortgage repayments until settlement (the 5th January 2009) in respect to the property at Pigdon Street. Rogers agrees to notify Censori of the amount required for each mortgage payment at least 48 hours before such payment is due.
The moneys due under the agreement were not paid by the defendant on the settlement date and no transfer of the Pigdon Street property took place.
On 14 January 2009 the solicitors for the plaintiff wrote to the defendant, protesting that the plaintiff required settlement and demanding interest on the moneys due or in the alternative stating the plaintiff would accept the continuing rental from her property in lieu of interest until settlement.
On 15 January 2009 the then solicitors for the defendant advised that the defendant would be in a position to settle the matter early the following week. They went on to say that their client would not however be in a position to discharge the mortgage for a period of two to three months. They stated the defendant was prepared to be liable for all mortgage payments and would indemnify the plaintiff with respect to the mortgage and all outgoings associated with the property pending the discharge of mortgage.
Further on 2 February 2009 the then solicitors for the defendant wrote to the plaintiff’s solicitors and stated:
Our client is trying to confirm the balance of funds, so that he can pay out Sarah in full.
In respect to the debt over Pigdon Street, our client will be in a position to refinance that loan within two (2) to three (3) months and we understand that Sarah is agreeable to this, subject to our client being responsible for all outgoings and interest payments on the property.
In the event that our client was to default on any interest payment or other outgoings, the property could be sold to cover any exposure which Sarah may perceive that she has with respect to this property.
Finally, we apologise for the delay and do expect that settlement is immanent however this could mean two (2) or three (3) days or one (1) or two (2) weeks…[1]
[1]Exhibit GC1.
The reference to possible sale of the property was consistent with an e-mail which the plaintiff had received from the defendant on 28 November 2008. This stated in part:
You may receive your money by then (ie 5 January 2009) but it is not yet clear the property will transfer. If it doesn’t it will have to remain in your name until such time as transfer eventuates – which could take several years. If your [sic] opposed to that idea, I suggest you sell the property and take what is left because there will be no other moneys from me. If that is unacceptable, then we will have to go to court. [2]
[2]Exhibit STR6.
On 11 February 2009 the then solicitors for the defendant paid the sum of $40,000 to the solicitors for the plaintiff.
On 19 February 2009 the solicitors for the plaintiff wrote to the then solicitors for the defendant stating in part:
We now enclose our trust receipt for the recent deposit into our account from your client.
As you are aware, our client has purchased a property in Bendigo with settlement due next month. She is totally reliant upon your client providing the balance under the Separation Agreement in order to proceed with the matter on time. Accordingly, please confirm that you are making appropriate arrangements for the balance of $165,000 to be forwarded to us within the next two weeks …[3]
[3]Exhibit GC1.
After further letters between solicitors the defendant’s then solicitors e-mailed to the plaintiff’s solicitors a message which stated in part:
Simple answer is “no I do not have the money in trust”, despite promises and bounced cheques from the person who owes my client the money. I personally have contributed to the problem by lending this undesirable the deposit moneys and I am willing to assist once I am sure I can get the money back, but despite my best efforts I have been unable to make sure this guy has the funds.
Nevertheless I am presently trying to get this fellow a second mortgage on some property and believe I will have answer today …[4]
[4]Exhibit GC1.
The plaintiff’s solicitors responded that the plaintiff urgently required settlement in order to complete the purchase she was making. The defendant’s then solicitors responded by saying they would chase up their client. Further e-mail correspondence ensued and on 27 March 2009 the plaintiff’s solicitors advised that she had received a rescission notice in respect of her purchase. They stated that they needed to know whether or not the defendant would be providing the balance of funds due under the agreement. The defendant’s then solicitor responded that he was keen to settle but funds were not available. Further correspondence ensued. On 3 April 2009 the defendant’s then solicitor advised:
Our client has been promised funds and has relied on settlement of same to finalise this matter. Unfortunately as you are aware our client’s accountant has been misleading him and by extension this firm. We are now in the process of taking action against the accountant and against two other parties that owe our client money. None of this helps your client.
We believe we will recover funds for our client and he is keen to settle with Sarah, but unfortunately we cannot help out with today’s problem. …[5]
[5]Exhibit GC1.
On 15 April 2009 the plaintiff’s solicitor again sought advice from the defendant’s then solicitor as to the current situation. On 23 April 2009 when no advice had been received from the then solicitors for the defendant the plaintiff’s solicitor advised them in part:
I have now received instructions from Sarah to proceed with the sale of the property in Pigdon Street and subject to the proceeds from the sale, to issue proceedings against your client in relation to the shortfall pursuant to the Separation Agreement dated 24 October last year. …[6]
[6]Exhibit GC1.
The e-mail concluded ‘if you have any worthwhile instructions, please advise me.’
No offer to settle was received from the defendant.
In or about early May the plaintiff put the Pigdon Street property up for sale and on 18 May 2009 the caveat now in issue was lodged.
On 25 May 2009 the solicitors for the defendant also wrote to the plaintiff’s solicitor asserting a continuing interest in the Pigdon Street property on the part of the defendant and alleging breaches of the separation agreement by the plaintiff.
On 25 May 2009 the solicitors for the plaintiff wrote to the defendant’s solicitors stating in part:
As you are no doubt aware, your client did not and has still not settled the balance of moneys due under the Agreement. Accordingly, in our view, the Separation Agreement has been fundamentally breached by your client and our client is therefore not required to carry out a transfer of the property in Carlton North which, as you are aware, has been listed for auction this Saturday 30 May. The former solicitors for your client were informed immediately our client decided to proceed with the sale of that property and we have heard nothing further from those solicitors since that notification was provided more than six weeks ago …
We note that your letter does not provide any alternative for payment to our client for the moneys due under the Agreement together with the numerous incidental costs, expenses and interest associated with the frustration which has been caused by the fundamental breach of that Agreement by your client. However, should your client make a definite proposal for settlement of all moneys due to our client under the Agreement and ancillary matters and for payment to take place not later than 12 noon on Friday 29th of May our client would consider re-instatement of the Separation Agreement and for the auction to be withdrawn. We await your advices in that regard.[7]
[7]Exhibit GC3.
On 25 May 2009 the defendant’s solicitors sent a further letter to the plaintiff’s solicitors by facsimile transmission making no offer of payment but stating in part:
In the circumstances, your client cannot in good conscience enter into a contract of sale of the property knowing full well our client will oppose the sale and will seek to enforce his rights to the property.
In the event your client alleges a breach of the separation agreement, your client must bring proceedings to enforce the agreement.[8]
[8]Exhibit GC3.
On 26 May 2009 the plaintiff’s solicitors replied stating in part:
Our client will be proceeding with the auction on Saturday and, thereafter, we will be taking steps to arrange for removal of your client’s Caveat.
Alternatively, as proposed in prior correspondence, your client may enter into arrangements with us for payment of all outstanding monies by way of bank cheque not later than 12 noon this Friday. If full payment is made pursuant to that arrangement, the auction will obviously be withdrawn.[9]
[9]Exhibit GC3.
The property was auctioned and sold on 30 May 2009 for a price of $731,000.
On 1 June 2009 the solicitors for the plaintiff advised the defendant’s solicitors that the property had been sold at auction.
The purchaser failed to pay the deposit and the sale fell through.
The defendant’s solicitors responded the same day asserting the defendant’s rights pursuant to the separation agreement.
On 17 June 2009 the plaintiff’s solicitors gave notice of intention to issue proceedings for removal of the caveat and went on to say:
To avoid any such proceedings, we invite you to confirm within the next seven days that you have instructions to lodge a Withdrawal of the Caveat on the basis that the nett sale proceeds from the sale of the property be paid into a nominated trust account pending the resolution of the dispute between our respective clients. [10]
[10]Exhibit GC4.
On 19 June 2009 a second contract of sale was entered into for the price of $670,000. It is this contract which is due for settlement next week.
The defendant now maintains he is still entitled to rely upon the separation agreement entered into at the end of last year. There are it seems to me a series of interrelated difficulties confronting his position:
(a) the agreed price for the property was not tendered on the date stipulated by the agreement and the obligation to transfer was expressed by reference to payment of a sum certain by that date;
(b) after initial extensions of time the plaintiff has expressly required that the defendant perform his part of the agreement but he has not been able to do so;
(c) the agreed price has not been tendered since;
(d) the defendant comes to Court still failing, refusing and neglecting to tender the agreed price and offering no undertaking to pay the agreed price within a specified time period.
The sale of the property occurred in circumstances where the defendant had himself advised the plaintiff at about the time of the agreement (28 November 2008) that she could sell the property if he was unable to settle the purchase. Further it took place at a time when the defendant had objectively evinced a continuing incapacity to settle and made no satisfactory offer to settle when invited to do so. In these circumstances there is in my view a very strong case that the plaintiff was entitled to treat the defendant’s conduct as amounting to repudiation of the settlement agreement with respect to Pigdon Street.
The defendant has contended before me:
(a) that the plaintiff has breached arrangements with respect to the parties’ children as they were set out in the separation agreement;
(b) he is entitled to set off against the sum payable to the plaintiff in respect of the Pigdon Street property moneys paid by him towards the mortgage over the property prior to the making of the agreement;
(c) he is entitled to rental from the property since 6 January 2009; and
(d) he cannot settle in the absence of full information as to the amount now due pursuant to the mortgage held by the Commonwealth Bank over the property.
As to the first matter, the defendant cannot both reprobate and approbate the agreement. He cannot rely on the plaintiff’s breach as a basis for failing to comply with the agreement and simultaneously seek to rely upon it.
As to the claimed set-off in respect of moneys paid by the defendant prior to the settlement agreement, the agreement provides no basis for such a set-off and its terms are inconsistent with such a set-off.
As to the claim for rental, the defendant cannot claim title to the Pigdon Street property until he pays the price payable for the property under the settlement agreement. Note 4 to the agreement makes clear that the plaintiff is entitled to receive rental until settlement.
As to the failure to update the amount payable to the Commonwealth Bank under the mortgage, I am satisfied this is not the reason the defendant has failed to complete the purchase in accordance with the settlement agreement. He has simply lacked funds. He has never purported to be in a position to tender payment to the plaintiff and discharge the mortgage to the bank. He now states that he hopes to receive moneys enabling full settlement in early August.
The relevant principles which I must apply were summarised in Shaw v Yarranova Pty Ltd,[11] by Hollingworth J. The Court must first consider whether there is a serious question to be tried – that is, whether the caveator has a caveatable interest in the land. Despite what I have said above, counsel who appeared for the plaintiff was prepared to concede that there was an arguable basis for such an interest and put the plaintiff’s case on the basis of the balance of convenience.
[11][2005] VSC 94.
Accordingly, I should not order the caveat removed on the basis the defendant’s claim has been shown to have no arguable basis.
If a sufficiently arguable claim is established the Court must then consider the balance of convenience between the parties.[12].
[12]Ibid, [46].
That question must be affected however by the view I take of the caveator’s case. The two requirements of a serious question to be tried and a balance in favour of interlocutory leave are not separate and exclusively independent of each other and must ultimately be examined together.[13]
[13]Nicholas John Holdings Pty Ltd v ANZ Banking Group Limited [1992} 2 VR 713, 723.
In the present case the balance of convenience favours the exercise of the broad discretion granted by s 90(3):
(a) the caveator’s claim is weak;
(b) he has taken no active steps to effect the completion of the transfer contemplated under the settlement agreement;
(c) he still does not undertake to complete full settlement by a date certain;
(d) the balance recoverable on the sale of land under the current contract will, it appears, be no more than $60,000 less expenses (the plaintiff’s counsel concedes no interest has been paid in the mortgage since January);
(e) the loss of the sale will cause the plaintiff incidental loss and the protraction of this proceeding will be significantly costly in relative terms having regard to the value of the property in issue. This will be true even if the property were capable of resale for a sum in the order of $700,000 as the defendant says it should be;
(f) at the time of the separation agreement the defendant himself suggested the property should be sold if he was unable to payout the plaintiff and the mortgage. The appropriateness of the sale of the property as a sanction for default on his part was echoed in a subsequent letter from his solicitors;
(g) the resolution of the underlying financial dispute between the parties is better suited to other jurisdictions;
(h) the plaintiff has assumed obligations with respect to the purchase of property in Bendigo, in the legitimate expectation that the defendant would pay out the moneys envisaged by the settlement agreement in a timely manner, but he has failed to do so;
(i) there is no reason to suppose the plaintiff will dissipate the net proceeds of the proposed sale of the land. Rather the evidence suggests that she will as her counsel submits apply them to the Bendigo purchase;
(j) it is neither just nor convenient to allow further potentially protracted dispute while the property is effectively frozen.
Accordingly, I will order that the caveat be removed and hear counsel as to the question of costs.
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