Royal Melbourne Institute of Technology v Galloway
[2020] VSC 575
•9 September 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2020 03536
| ROYAL MELBOURNE INSTITUTE OF TECHNOLOGY (ABN 49 781 030 034) | Plaintiff |
| v | |
| BRADLEY GALLOWAY & ANOR (According to the attached Schedule) | Defendants |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 September 2020 |
DATE OF JUDGMENT: | 9 September 2020 |
CASE MAY BE CITED AS: | Royal Melbourne Institute of Technology v Galloway & Anor |
MEDIUM NEUTRAL CITATION: | [2020] VSC 575 |
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CAVEAT – Removal of caveat – Caveat lodged by person claiming freehold estate in land pursuant to an agreement – No agreement between the plaintiff and the defendant to support any interest in the land, let alone a freehold estate – Caveat inhibits the sale process for the sale of the land and may effect sale price and any potential buyers – Caveat lodged without proper basis – No serious question to be tried established – No interest in the property capable of supporting the caveat lodged – Even if a serious question to be tried, balance of convenience favours removal of caveat – Piroshenko v Grosjman (2010) 27 VR 489; Goldstraw v Goldstraw [2002] VSC 491; Carbon Black Pty Ltd v Launer [2015] VSCA 126.
INJUNCTION – Order restraining the defendant from lodging any further caveat of the plaintiff’s land – Caveat lodged as a bargaining chip – No possible basis disclosed for the defendant to claim an interest in land owned by plaintiff – Circumstances of the case warrant the grant of injunction – Andrews Family Holdings Pty Ltd v Yellow Tractor Pty Ltd [2017] VSC 682.
COSTS – Application made for summary removal of caveat – Caveat ordered to be removed – Caveat used as bargaining chip – Whether indemnity costs appropriate – Goldstraw v Goldstraw [2002] VSC 491; Diep v Tran & Ors (Costs) [2020] VSC 171.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M A J McKillop | MinterEllison Lawyers |
| The Defendant in person |
HIS HONOUR:
Introduction
The plaintiff (RMIT) is the registered proprietor of the land known as Lot 2A, 235-251 Bourke Street, Melbourne, Victoria (Land).[1] On 18 August 2020, the first defendant (Mr Galloway) lodged a caveat on the title to the Land claiming a freehold estate pursuant to an agreement with the registered proprietor dated 3 August 2020 (the caveat).
[1]More particularly described in Certificate of Title Volume 10910 Folio 858.
The plaintiff applies pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) (Act) to remove the caveat. In addition, RMIT seeks a further order restraining Mr Galloway from lodging any further caveat on land owned by RMIT without the leave of the Court.[2]
[2]By order of Justice John Dixon made on 7 September 2020, the hearing and determination of this application has been referred to an Associate Justice pursuant r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
At the hearing of the application on 8 September 2020, I made orders for the removal of the caveat, an order restraining Mr Galloway from lodging any further caveat on the title to the Land or on the title to any other land of which RMIT is the registered proprietor and for indemnity costs incurred by RMIT to be paid by Mr Galloway. I said I would deliver reasons later. These are those reasons.
Background
(RMIT) is the well-known University based in central Melbourne. It has various premises in and around the centre of the City of Melbourne from which it operates. One of those premises is the Land which is known within RMIT as Building 108. The Land is in fact a part of the building at 235-251 Bourke Street, Melbourne. The other parts of that building not owned by RMIT are the mezzanine, the retail precinct and levels 1 to 3. The land houses RMIT Online, RMIT's VCE School, RMIT Training and Foundation Studies and comprises classrooms, student services, lounges, general office spaces and open spaces.
RMIT has experienced financial challenges as a result of the COVID-19 pandemic, including a decline in revenue arising from a reduction in the number of student enrolments (particularly from international students). RMIT is taking a number of steps to improve its financial position, including by the proposed sale of the Land.
The application is supported by the affidavits of Chris John Crowther Hewison sworn on 4 September 2020 (Hewison Affidavit) and Kristen Josef Giansalvo, sworn on 4 September 2020 (Giansalvo Affidavit) as well as an affidavit of service. Mr Hewison is the Executive Director, Property Services and Chief Procurement Officer of the plaintiff. Mr Giansalvo is a Senior Associate at the plaintiff’s solicitors, Minter Ellison, and deposes to attempts to have Mr Galloway remove the caveat voluntarily.
The evidence of RMIT is that Mr Galloway has not ever been party to any agreement with it, has not been granted any form of interest in the Land on any other basis by RMIT and has no connection with the Land apart from having lodged the caveat. Mr Galloway was a subcontractor to Schiavello Construction (Vic) Pty Ltd (Schiavello), which carried out work on the redevelopment and refurbishment of another property owned by RMIT, namely the Oxford Scholar Hotel. Mr Galloway claims to be owed money by Schiavello arising out of his subcontract to that company. This claim is in dispute and Mr Galloway has, since about 1 March 2019, been demanding that RMIT intervene in the dispute and resolve it. Mr Galloway has more recently demanded that RMIT pay his debt, which he claims to be $140,000, if Schiavello does not pay it. There is no basis for the claim against RMIT, other than it is the owner of the Oxford Scholar Hotel.
On Monday 24 August 2020, Minter Ellison wrote to Mr Galloway on behalf of RMIT, the material parts of the letter are as follows:[3]
[3]The letter was sent under cover of an email of that date. See Exhibit KG-1 to the affidavit of Kristen Josef Giansalvo made 4 September 2020.
A title search of the Property shows that on 18 August 2020, you lodged the abovementioned Caveat on title to the Property claiming a freehold estate (as the estate or interest in the Property) on the basis of an alleged agreement between you and RMIT dated 3 August 2020.
The lodging of a caveat is a serious matter which can have serious and financial consequences. Pursuant to section 118 of the Transfer of Land Act 1958 (Vic) (Act) any person lodging with the Registrar of Titles without reasonable cause any caveat under the Act shall be liable to make to any person who sustains damage thereby such compensation as a court deems just and orders.
There is no legal or equitable basis, or reasonable cause, whatsoever for you to assert any estate or interest (caveatable interest) in the Property and lodge the Caveat over the Property. RMIT considers that you do not have any caveatable interest (including any freehold estate or interest) in the Property by reason of:
1.an ongoing dispute between you and Schiavello Construction (VIC) Pty Ltd (Schiavello) pursuant to a subcontract between Schiavello and an entity controlled by you in respect of demolition works relating to the Oxford Scholar Refurbishment Project at 427 Swanston Street, Melbourne, Victoria (Subcontract);
2.a claim by you that Schiavello owes you monies for the subcontracted works pursuant to the Subcontract; or
3.any purported claim by you against RMIT relating to the Oxford Scholar Refurbishment Project.
We are instructed that there is no agreement or contractual relationship between RMIT and you, or basis for you to make any claim against RMIT relating to the Oxford Scholar Refurbishment Project and the Subcontract. Your failure to resolve any dispute with Schiavello is a matter that does not, and should not, involve RMIT. Even if there were an agreement or contractual relationship between RMIT and you or a basis for you to make any claim against RMIT relating to the Oxford Scholar Refurbishment Project (both of which RMIT does not admit), it does not give rise to, or constitute, a caveatable interest (a claim of an estate or interest) in the Property by you.
We are otherwise instructed that RMIT has been, and will continue to be, adversely affected by the Caveat, and will suffer loss and damage should you fail to immediately withdraw the Caveat. The Property is currently on the market for sale by expression of interest. RMIT is concerned that the existence of the Caveat may complicate the sale of the Property, discourage prospective purchasers from acquiring it, adversely affect the value of the Property and add to the costs to realise the Property to the detriment of RMIT.
RMIT hereby demands that you withdraw the Caveat by no later than 5:00pm on Wednesday, 26 August 2020, failing which, we hold instructions to immediately commence a proceeding against you in the Supreme Court of Victoria for the removal of the Caveat pursuant to section 90(3) of the Act and/or make an application to the Registrar of Titles for removal of the Caveat pursuant to section 89A of the Act.
Please provide us with written confirmation of the withdrawal of the Caveat within the time specified. Please direct all correspondence in relation to this matter to us. No correspondence should be sent to RMIT, or any of its employees, in relation to this matter.
Should you fail to withdraw the Caveat by the time specified, and RMIT is required to take steps to remove the Caveat, we place you on notice that RMIT intends to rely on this letter on the question of costs, and will seek payment of its costs on a full indemnity basis in addition to compensation and damages from you pursuant to section 118 of the Act.
On Thursday 27 August 2020, Mr Galloway responded by email to this letter as follows:
Dear Kirsty,
Lovely to hear from you Monday afternoon.
Unfortunately, computer says no.
You’re going to make a lot of money out of RMIT Kirsty but it’s ok, you don’t have to thank me...but hey, feel free to drop a slab around sometime, I drink Mercury Draught Cider.
See you in Court honey.
Please serve Notice to Appear to this email.
Best,
Brad Galloway[4]
[4]Exhibit KG-2 to the affidavit of Kristen Josef Giansalvo made 4 September 2020.
On Friday 28 August 2020, Minter Ellison responded to this email as follows:
We refer to your email to us below regarding registered caveat AT524611L dated 18 August 2020 (Caveat) which you lodged on title to the property located at 235-251 Bourke Street, Melbourne, Victoria.
We suggest that you urgently seek independent legal advice regarding the Caveat, the basis on which you lodged the Caveat and the consequences of lodging a caveat without a caveatable interest or reasonable cause.
Any claim you allege to have against Schiavello or RMIT does not give you a caveatable interest in the property and a basis to lodge the Caveat.
RMIT will seek its costs in full, together with any loss and damage it suffers, as a result of the Caveat should you fail to withdraw the Caveat and RMIT is forced to seek and obtain an order from the Supreme Court of Victoria for the removal of the Caveat.
RMIT will provide you until 5:00pm on Monday, 31 August 2020 to seek independent legal advice, and withdrawal the caveat.
RMIT reserves all of its rights, including its right to produce all correspondence regarding the Caveat including this email and our letter to you dated 24 August 2020, to the Court on the question of costs.
Otherwise, please immediately cease sending any communication to RMIT employees in relation to this matter. All communication in relation to this matter must be sent to MinterEllison.
On Monday 31 August 2020, Mr Galloway responded by email as follows:
Thank you for your email.
My response remains unchanged.
There is now media interest in this matter, please advise once you have a hearing date and I'll pass it on to members of the media.
Sadly, I will decline your request to cease communication with RMIT employees; RMIT can expect many, many, many more emails from me until they take responsibility for the mess they’ve created and start behaving like responsible adults instead of foolish little children.
RMIT is concerned that Mr Galloway will, if not restrained, place a further caveat on the Land for the purpose of seeking RMIT’s payment of his claim. This is supported by email correspondence from Mr Galloway in which he has threatened to dump a truckload of rubbish outside the Oxford Scholar Hotel, and to put up posters at RMIT making allegations against RMIT, made personal threats against the Chancellor, Vice Chancellor and Chair of Academic Board, and has shown that he is aware of the baseless nature of the caveat and that he intends by the caveat to inflict legal cost and media attention on RMIT.
One example is an email dated 27 August 2020 to Ms Dionne Higgins, the Chief Operating Officer of RMIT, to which members of RMIT’s Council and other staff members were copied, in which Mr Galloway stated, after referring to a letter received from the solicitors for RMIT:
That must have cost you a bob or two Dionne, Minter Ellison aren’t cheap; I can only imagine how thrilled you must have been to discover there’s a caveat on 235-251 Bourke Street, you know, the building you’re trying to sell because all your precious Asian students have racked off and aren’t coming back.
Such a shame you won’t be able to sell it.
Or you could take me to the Supreme Court to get it lifted, which will cost you $20,000, but then a media release will go out to every print and online media organisation in Australia inviting them to come and watch….
And good luck with getting a hearing date, I understand Coronavirus has wreaked havoc with hearing times.
Even better luck recovering the costs from me.
The sale of the Land by RMIT is being conducted by expressions of interest, which closed on 26 August 2020. Twenty prospective purchasers have lodged expressions of interest. RMIT has selected 13 preferred bidders who will move to a shortlist. RMIT plans to invite those shortlisted to put a best and final offer by 3:00 pm on 8 September, with a final bidder being selected by RMIT on 11 September 2020. Once a final bidder is selected, it is expected that they will enter a further due diligence period of 45 days before a final contract.
The caveat was lodged RMIT after expressions of interest opened. RMIT is concerned that the presence of the caveat will adversely affect interest and bidding prices for the Land from the shortlisted bidders which are due to be given by 8 September at 3:00pm. In the longer term, the removal of the caveat is necessary to permit completion of a sale.
Applicable Law
Under s 89(1) of the Transfer of Land Act 1958 (Vic) (‘the Act’) 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. A caveat as like a statutory injunction. It has the purpose of protecting the caveator’s interest from being defeated by the registration of a dealing without the caveator having had an opportunity to invoke the assistance of the court to give effect to his interest, and to keep the property in its current status until the Court has an opportunity of discovering what are the rights of the parties.[5]
[5]Kerabee Park Pty Ltd Daley [1978] 2 NSWLR 222 at 228 per Holland J; see also Butler v Fairclough (1917) 23 C.LR. 78, 84, per Griffith CJ; J & H Just (Holdings) Pty. Ltd. v. Bank of New South Wales (1971) 125 C.L.R. 546, 552, 556.
The plaintiff’s application is made pursuant to s 90(3) of the Act. Under that provision, any person adversely affected by a caveat lodged under s 89 of the Act 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 principles applicable have been dealt with in many cases, particularly in Piroshenko v Grosjman,[6] and may be stated shortly as follows:
[6](2010) 27 VR 489 (‘Piroshenko’); Goldstraw v Goldstraw [2002] VSC 491; CFHW Pty Ltd v Burness [2014] VSC 451 [17]; Carbon Black Pty Ltd v Launer [2015] VSCA 126, [37] (Carbon Black).
(a) The application is in the nature of a summary procedure analogous to the determination of interlocutory injunctions.[7]
[7]Eng Mee Yong v Letchumanan [1980] AC 331, 337 (‘Eng Mee’); Piroshenko, Goldstraw v Goldstraw [2002] VSC 491 [30] (‘Goldstraw’); Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 82 (Gummow and Hayne JJ);
(b) The procedure is consequently interlocutory in substance, even though it may give rise to a final order.[8]
[8]Eng Mee, 337; Smith v Callegari (1988) V Conv R 54-300, 63,858-9; Joseph Lynch Land Co Ltd v Lynch, [1995] 1 NZLR 37, 43.
(c) A caveator bears the onus of establishing that there is a prima facie case that they have the estate or interest in the land that is claimed in the caveat.
(d) Establishing a prima facie case does not mean that the caveator must show that it is more probable than not that at trial the plaintiff will succeed. 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.[9]
[9]Piroshenko, [18].
(e) If the caveator establishes a prima facie case that they have the estate or interest claimed, the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.
(f) There is a relationship between the strength of the prima facie case and the extent to which the caveator must establish the balance of convenience favours the caveator; the stronger the prima facie case the more readily the balance of convenience might be satisfied.
(g) Caveats are not to be used as bargaining chips.[10] Lodging a caveat, without proper cause, to force another party to pay money in exchange for the withdrawal of the caveat, or to incur legal expense in commencing a Supreme Court proceeding, is an ulterior or collateral purpose, characterised by many judges of this court as a serious misuse of the relevant statutory provisions.[11]
[10]Goldstraw v Goldstraw [2002] VSC 491, [38]-[42]; Diep v Tran & Ors (Costs) [2020] VSC 171, [13] (John Dixon J).
[11]Diep v Tran & Ors (Costs) [2020] VSC 171, [13]; Goldstraw v Goldstraw [2002] VSC 491, [38]–[39]; Weingarten v Fletcher [2003] VSC 448; Luther v Milner [2009] VSC 595; Love v Kempton [2010] VSC 254, [30]; Piroshenko v Grojsman & Ors (2010) VR 489, 491 [23]; Ren v Shi [2012] VSC 271, [44]–[49]; Li v Xin [2013] VSC 107; Alliance Developments Pty Ltd v Arbab [2019] VSC 832.
An application to remove a caveat involves two steps. First, the caveator must establish that there is a prima facie case – that there is a probability on the evidence before the Court that the caveator will be found to have the asserted legal or equitable interest in the land. Second, having done so, the caveator must establish that the balance of convenience favours the maintenance of the Caveats on the title until trial.[12]
[12]Piroshenko; Carbon Black.
Consideration
Mr Galloway was given notice of the application by email, as he invited the solicitors for RMIT to do in his correspondence referred to above (see [9]). Service was proved. An invitation for Mr Galloway to attend by audio-visual link was sent. He appeared in person, and, in accordance with his threats made by correspondence, arranged for the attendance of a member of the media.
Mr Galloway was not able to satisfy me that he has any agreement with the RMIT pursuant to which he has any caveatable interest in the Land, let alone a freehold estate, or any agreement which would justify the lodging of any caveat on any land of which the RMIT is registered proprietor. His only basis is that he, or an entity he controls,[13] had a contract with Schiavello to undertake work on another property owned by RMIT, the Oxford Scholar Hotel and that he is in dispute with Schiavello regarding payment allegedly due under that contract. He acknowledged that the lodging of the caveat was a desperate attempt to induce RMIT to intervene in his dispute with Schiavello. He believes that the RMIT has a responsibility to do so, but is unable to give a legal basis for that belief.
[13]AAA Construction Force Pty Ltd.
The facts referred to above show that there is no substance to the claim made in the caveat to a freehold estate in the Land. It is quite clear that there is no basis whatever for the caveat Mr Galloway has lodged. The correspondence I have extracted above shows that Mr Galloway was on notice of the lack of any basis for his caveat and has lodged and maintained the caveat as a means of putting pressure on RMIT to assist him in his dealings with Schiavello. That is an improper use of the caveat procedure and is an instance of the use of a caveat as a bargaining chip.
Even if there were a basis for such an interest as is claimed in the caveat, the balance of convenience strongly supports the application because of the loss being caused to the RMIT. The sale of the Land is an important part of the reorganisation by RMIT of its financial affairs in the wake of impacts of COVID-19 restrictions on its business. The land is of considerable value and the sale will free funds that can be deployed to continue the operation of the University for the benefit of students and in the employment of staff. The caveat has the potential to impact on the sale price, and given the prospective sale value, the size of that impact in monetary terms could be significant. The potential deterrence of purchasers selected to participate in the next stage of the sale process is of particular relevance.
I am satisfied that in the particular circumstances of this application, and given the potential for damage to the sale process in which RMIT is engaged, the lodgment of a caveat by Mr Galloway for an ulterior or collateral purpose constitutes a serious misuse of the relevant statutory provisions. That is fortified by s 118 of the Act, which provides that any person lodging a caveat without reasonable cause shall be liable to compensate any person who sustains damage thereby, as the court deems just.
The plaintiff also applies for an order restraining by injunction Mr Galloway from lodging further caveats in respect of the Land or any other land of which RMIT is the registered proprietor. The Court has granted injunctions in that form when it has been appropriate to do so.[14] The Court has a general power to grant injunctions[15]. The RMIT, by Mr Hewison, proffered the usual undertaking as to damages if it were necessary. In this case, however, the legal right to an injunction is so clear (the absence of any agreement with RMIT conferring an interest in any land owned by the RMIT) and the balance of convenience so weighted in favour of the grant of such an injunction, that in my view an undertaking as to damages is neither necessary nor appropriate. It is plain that Mr Galloway has sought to use the opportunity to lodge the caveat for the purpose of putting illegitimate pressure on the RMIT. He has threatened to continue to harass RMIT with emails and the like. There is a real risk that he will seek to hold RMIT to ransom again by lodging another caveat over the title to the Land or the title to other land registered to RMIT. An injunction will be granted restraining Mr Galloway from lodging any caveat over the Land or any other land of which RMIT is registered proprietor.
[14]Andrews Family Holdings Pty Ltd v Yellow Tractor Pty Ltd, [2017] VSC 682; Maryvell Investments Pty Ltd v Velissaris [2008] VSC 19 (Bongiorno J).
[15]Supreme Court Act 1986 s 37.
Where it is found by the Court that a caveat has been lodged for an ulterior motive it has been held proper to order indemnity costs.[16] This is such a case. I will order that the plaintiff’s costs of the application be paid by Mr Galloway and be assessed on an indemnity basis.
[16]Diep v Tran & Ors (Costs) [2020] VSC 171 [16].
Conclusion
For the above reasons orders were made as follows:
(a) The requirements of rule 5.03(1) and 8.02 of the Rules be dispensed with and the Plaintiff is authorised to commence this proceeding by originating motion in Form 5C.
(b) The second defendant, the Registrar of Titles, is ordered pursuant to section 90(3) of the Transfer of Land Act 1958 (Vic) to remove the caveat dated 18 August 2020 numbered AT524611L from the land described in certificate of title volume 10910 folio 858 (Land).
(c) The first defendant is restrained from lodging any further caveat in respect of the Land and any other land registered in the name of the plaintiff.
(d) The first defendant must pay the plaintiff's costs of and incidental to this proceeding on an indemnity basis.
(e) Reserve liberty to apply as to the further working out of this order.
(f) Otherwise the proceeding is dismissed.
SCHEDULE OF PARTIES
| S ECI 2020 03536 | |
| BETWEEN: | |
| ROYAL MELBOURNE INSTITUTE OF TECHNOLOGY (ABN 49 781 030 034) | Plaintiff |
| - v - | |
| BRADLEY GALLOWAY | First Defendant |
| THE REGISTRAR OF TITLES | Second Defendant |
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