Sivanathan v Tanikawa and Registrar of Titles

[2011] VCC 1411

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL

GENERAL DIVISION

Case No. CI-11-00869

USHA SIVANATHAN	Plaintiff
v
KEIKO TANIKAWA	First Defendant
and
CHRIS McRAE (in his capacity as THE REGISTRAR OF TITLES)	Second Defendant

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JUDGE:	HIS HONOUR JUDGE LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	17 August 2011
DATE OF JUDGMENT:	24 August 2011
CASE MAY BE CITED AS:	Sivanathan v Tanikawa & Registrar of Titles
MEDIUM NEUTRAL CITATION:	[2011] VCC 1411

REASONS FOR JUDGMENT

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Catchwords: Application for removal of caveat pursuant to section 90(3) of the Transfer of Land Act 1958-serious issue to be tried-whether Court has power to amend caveat- Registrar ordered to permit amendment-Application for removal refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Twigg	Cornwalls Lawyers Pty Ltd
For the First Defendant	Mr K Cameron (Solicitor)	Keith R Cameron
HIS HONOUR:

1          This proceeding commenced by Writ on 1 March 2011.

2          The first-named defendant was the registered proprietor of all that piece of land known as 5 Linden Street, Box Hill South, in the State of Victoria, being the land more particularly described in Certificate of Title Volume 05425 Folio 850 (“the Box Hill land”).

3          Further, the first-named defendant is the registered proprietor of all that piece of land known as 19 Beach Street, Surrey Hills, in the State of Victoria, being the land more particularly described in Certificate of Title Volume 08177 Folio 127 (“the Surrey Hills land”).

4          By an agreement made in or around 30 March 2009 (“the agreement”), the plaintiff and the first-named defendant agreed to develop the Box Hill land by subdividing it and constructing a second dwelling. The statement of claim pleads that the agreement was partly in writing, partly oral and partly to be implied. Insofar as it is in writing, it is asserted the agreement is contained in a written document dated on or about 30 March 2009 and signed by both parties.

5          There were terms of the agreement pleaded. In summary form, it is alleged that the plaintiff was to provide the money for the cost of the subdivision and development. The defendant provided the land. In the written form of the agreement, the plaintiff is described as “the investor”.

6          In addition, the agreement provided as follows:

“3 The Vendor hereby acknowledges that the Investor has a caveatable interest in any and all real property owned by the Vendor, whether individually or jointly, as security for the Investment and all fees payable by the Investor to the Vendor pursuant to this Agreement. The Vendor hereby consents to the Investor lodging such a caveat and irrevocably undertakes to execute any and all documents and perform all acts required for the same.”

7          This application in part is about whether or not Clause 3 entitles the plaintiff to lodge a caveat over the title to the Surrey Hills land.

8          The agreement also has, as its commencing words and by way of preamble:

“This Agreement is entered into by Keiko Tanikawa of …………………. who, for the purposes of this Agreement will be known as the Vendor and ……………………….of ................who, for the purposes of this

Agreement, will be known as the Investor.

1 The Vendor hereby appoints..............................

as the Investor to be the only investor for 4 Linden Street, Box Hill South, Victoria. The Investor further authorises and directs the Vendor, and/or mortgagee, architect and solicitor to provide any further information upon reasonable request in order to complete the Plan of Subdivision.” (sic).

9          It can be seen that the agreement, insofar as it is in writing, is not happily drawn. The affidavit evidence shows that the plaintiff signed the agreement on the second page as Investor on or about 30 March 2009 (plaintiff’s affidavit sworn 12 August 2011 paragraph 2). It is also accepted that the first-named defendant signed as Vendor at about the same time.

10        However, the first page of the Agreement appears on the evidence to have been completed by the plaintiff’s husband and, on the first page the address of “19 Beach Street, Surrey Hills” was inserted in the hand of Raj Sivanathan, as were the words “Raj & Usha Sivanathan of 30 Wattlebird Burwood”.

11        In paragraph 1, which I have set out above, Raj Sivanathan complicated matters by inserting his name in the space to describe “the Investor” in paragraph 1.

12        In the statement of claim the plaintiff claims the sum of $107,968.00 being moneys alleged to have been advanced by her to the defendant and subdivision costs and expenses together with interest owing under the agreement.

13        This application concerns a caveat numbered AH460022P (“the caveat”) dated 27 August 2010 and lodged by the plaintiff as the investor pursuant to the agreement over the Surrey Hills land. In the caveat, the plaintiff claims an estate or interest in the Surrey Hills land. The caveatable interest is recorded as “interest as chargee”. Where the caveat form makes provision for a description of the grounds upon which the estate or interest is claimed, the caveat has the words “a charge in writing by Keiko Tanikawa and in favour of the caveator, Usha Sivanathan dated the 24th day of April 2009”.

14 This is an application by the first defendant pursuant to Section 90(3) of the Transfer of Land Act 1958 (“the Act”) for the removal the caveat from the Surrey Hills land. By letter to the Court dated 7 July 2011 the first defendant sought an order to have the plaintiff’s claim dismissed and the caveat on the “Surrey Hills Land” removed.

15        By letter dated 3 August 2011, the first defendant (the “defendant”) sets out the relief she seeks, including:

(a)	an order that the plaintiff take all necessary steps to remove the caveat;
(b)	alternatively, that the second defendant is ordered pursuant to section 90(3) of the Act to remove the caveat; and
(c)	the proceeding be dismissed.

16 The first defendant’s proceeding is by Counterclaim dated 8 August 2011 and seeks summary relief under section 90(3) of the Act.

17        On 3 August 2011, the first defendant’s solicitor served affidavits of:

(a)	Keith Ross Cameron sworn 7 July 2011; and
(b)	Keiko Tanikawa sworn 7 July 2011.

16        On 12 August 2011, the plaintiff served affidavits of:

(c)	Usha Sivanathan sworn 12 August 2011;
(d)	Raj Sivanathan sworn 12 August 2011; and
(e)	Shakila Wjenayaka sworn 12 August 2011.

18        The plaintiff also relies upon the affidavit of Gino Polenza sworn 7 April 2011.

19        The parties agree that there has never been an agreement in writing between them dated the 24th day of April 2009. The primary issues in this application therefore are whether the agreement of 30 March 2009 permits the plaintiff to claim an interest as chargee; and if so, whether or not the caveat misdescribes the grounds of that interest; and if so, whether or not this Court has power to amend the caveat.

20 Section 90(3) of the Act is in the following terms:

“Any person who is adversely affected by any such caveat may bring proceedings in a court against the caveator for the removal of the caveat and the court may make such order as the court thinks fit.”

21 There are a number of principles which a court faced with an application under section 90(3) of the Act must apply. In Sulinmo Properties Pty Ltd v Maloney & Ors (unreported, WASC, 31 October 1984), Pidgeon J stated some of the general principles applying. His Honour said:

“The course I should follow is I consider to be found in Whalen, The

Torrens System in Australia at p 251 where he says:

‘If, on an application for removal of a caveat, the facts before the court show a right on the part of the caveator to maintain his caveat, the court of course will not order it to be removed, or order the caveator to bring an action to establish the right he claims. But, if the facts suggest doubt as to the right of the caveator to maintain his caveat, the court will not decide the matter on an application for removal.

… Stout CJ put the matter succinctly when he said in Plimmer
Bros v St. Maur (1906) 26 NZLR 294:

‘In my opinion the caveat cannot be set aside unless the claim to the estate appears to be without any validity. If there is a reasonable question to argue, the court should not remove the caveat, but permit the matter to be litigated.'”

22        In Goldstraw v Goldstraw [2002] VSC 491, at paragraph 30, Dodds-Streeton J summarised the jurisdiction in these terms:

“S90(3) is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The Court's power under s90(3) is discretionary. In that context, it is recognised that the caveator bears the onus of establishing that there is a serious question to be tried that he or she does have the estate or interest in the land claimed. That is, 'in order to resist successfully the applications for removal of caveats [the caveator's] arguments must be directed towards the assertion of an interest in the subject land in the light of relevant principles of property and equity law’. Further, if the caveator does establish the serious question to be tried in relation to the estate or interest claimed, the weight of authority indicates that the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.”

23        In Schmidt v 28 Myola Street (2006) 14 VR 447, at 457, Warren CJ said:

“… the proper exercise of the discretion under s 90(3) will involve considering: in which party’s favour the balance of convenience lies; whether there is a serious question to be tried; and whether the caveator claims an interest wider than what the caveator may be entitled. These questions inform the ultimate consideration, that is, whether the caveator has discharged his or her onus of justifying the maintenance of the caveat. The process is comparable to the exercise undertaken in granting or denying an interlocutory injunction. … .”

24        In Piroshenko v Grojsman & Ors [2010] VSC 240, at paragraph 7, Warren CJ also said:

“Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. Insofar as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two stage test used by the court when deciding whether to exercise its discretion to grant interlocutory injunctive relief. This approach has been established law in Australia since the decision of Lord Diplock in Eng Mee Yong v Letchumanan[1] was approved by the Full Court of the Queensland Supreme Court of Appeal in Re Jorss’ Caveat.[2] This two stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Register of Titles until trial. This is still the approach taken by the courts in Victoria when deciding applications under s 90(3) of the Act.” See Goldstraw v Goldstraw.[3] See also Theresa Bernstein v Georgakakis & Anor.[4]

[1] [1980] AC 331

[2] [1982] QDR 458, 464-5

[3]             (supra) at paragraph 30

[4] [2010] VSC 52

25        At paragraph 22, her Honour went on to say:

“… In order to avoid confusion as to the burden which must be discharged by the caveator, it may be that the courts would be better served by talking of a ‘prima facie case giving rise to a serious question to be tried’ or even ‘a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat’ when deciding such applications.”

26        A question arising in this case is whether or not the Court has the power to amend the Caveat.

27        In Martorella v Innovision Developments Pty Ltd & Anor [2011] VSC 282, Dixon J, at paragraph 65, said as follows:

“It remains the fact that the power expressed in s 90(3) is wide and unqualified. As Macaulay J concluded in Percy & Michele, the better view may be that although the power may be construed as enabling amendment of the estate or interest claimed in appropriate circumstances, when exercising its discretion the court should generally be less inclined to amend the interest or estate claimed than to amend the grounds of the claim or the scope of the protection asserted. In that case, Macaulay J identified four relevant matters going to discretion:

• the amendment sought is to the interest claimed and not just the grounds of claim or the scope of the protection;

• the circumstances in which the error was made;

• 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’. As has been pointed out, caveats act as an interlocutory injunction (albeit by an administrative act) and can have powerful and serious consequences. Wrongly formulated caveats should not easily be tolerated; and

• the overall merits of the claim for a caveatable interest of the kind that is sought by the amendment. In other words, the court should have regard to all of the same considerations that arise on applying for removal of a caveat in the terms sought.”

28        In Avco Financial Services Ltd v White [1997] VR 561, Gillard J was concerned with the amendment of a caveat. At page 563, his Honour said:

“An equitable charge for a debt is a security whereby only a right to payment of the debt out of the property is conferred by the owner of the property to the holder of the security. The remedy of the holder of the security on default in payment of the debt was to apply to a court of equity to have the property sold and the proceeds paid into court. … .

‘To constitute a charge in equity by deed or writing it is not necessary that any general words of charge should be used. It is sufficient if the court can fairly gather from the instrument an intention by the parties that the property therein referred to should constitute a security.’ … .”[5]

[5]             Cradock v Scottish Provident Institution (1893) 69 LT 380, at p. 382

29        In S & D International Pty Ltd (in liq) v Malhotra & The Registrar of Titles [2006] VSC 280, Gillard J found that he had the power to amend the grounds claimed in the caveat. At paragraph 16, he said:

“In Midwarren Estates v Retek,[6] Menhennitt J was of the view that s 90(3) did not authorise an amendment which would result in the substitution of an entirely inconsistent estate or interest. In my view, each caveat claimed an interest, namely, 50% share in the property which, of course, refers back to the description of the land and that ‘an estate in fee simple’ is claimed. In my view, the description reveals to any person who reads the caveat the nature of it. I think the grounds of claim are incorrectly stated and I am prepared to grant leave to Mr Malhotra to amend the grounds of claim, to make clear that he claims a half interest in the property as a unit holder in a unit trust.”

[6] [1975] VR 575 at 577

30        In deciding this application I apply the principles well established as the cases I have set out above show. In so deciding I have concluded that the plaintiff has established there is a serious question to be tried and that the balance of convenience favours the maintenance of the caveat until trial. I am also of the view that I should order amendment of the grounds of claim where set out in the caveat to reflect the fact the agreement was in fact entered into on 30 March 2009 and not 24 April 2009. My reasons are as follows.

31        In her affidavit sworn 12 August 2012 the plaintiff deposes to having signed the agreement on 30 March 2009 and as having loaned money to the first defendant and as having paid the costs and expenses of the sub division in accordance with the agreement. The plaintiff also deposes to the Box Hill property having been sold by the second mortgagee and of the first defendant having received $168,489.07 without repaying any money to the plaintiff. There is no evidence from the first named defendant that contradicts this evidence.

32        The plaintiff’s husband Raj Sivanathan deposes to having witnessed his wife’s signature to the agreement on 30 March 2009. Later that day, together with Shakila Wijenayake he witnessed the first defendant execute the agreement. He deposes to having written in by hand the addresses of the parties. He also deposes to the money being paid by the plaintiff pursuant to the terms of the written agreement and that she has not been repaid. Again, there is no evidence from the first named defendant that contradicts this evidence.

33        Shakila Wijenayake is a conveyancer. She deposes to having been approached by the first named defendant in March 2009 to assist the first named defendant in finding an investor to assist her in the sub division and development of the Box Hill land. She subsequently introduced the first named defendant to the plaintiff’s husband and an agreement was reached. She says that she prepared the written agreement on or around 30 March 2009. She also deposes to having witnessed the plaintiff and the first named defendant execute the agreement. She says in drafting the agreement at paragraph 3 she was attempting to give effect to the parties’ intentions. Again, there is no evidence from the first named defendant that contradicts this evidence.

34 On 1 February 2011 the first defendant through her solicitor, Keith Cameron issued a notice to the plaintiff as caveator under section 89A of the Act on the basis that the plaintiff ‘does not have the estate or interest’ in the Box Hill Land claimed by her in the caveat.

35        The first named defendant has sworn an affidavit in this application dated 7 July 2011. She denies executing ‘a charge in writing in favour of the plaintiff dated 24 April 2009’. Even though the plaintiff and her husband and Shakila Wijenayake each depose to the first defendant having executed the agreement on 30 March 2009, the first defendant has not responded to this evidence. Further, she makes no mention of having received any money borrowed from the plaintiff nor does she make mention of the costs and expenses of the sub division and development of the Box Hill land having been met by the plaintiff. What her affidavit focuses on is the fact that the caveat wrongly claims an interest pursuant to a charge in writing dated 24 April 2009 instead of 30 March 2009.

36        The first defendant’s solicitor Mr Cameron also swore an affidavit dated 7 July 2011. In his affidavit Mr Cameron takes up the fight for the first defendant deposing to having repeatedly sought a copy of the charge in writing dated 24 April 2009. He also seeks to draw a distinction between the interest claimed by the plaintiff as caveator in the caveat, namely an “interest as charge” and that claimed in the statement of claim in the prayer for relief, namely “an equitable interest...as chargee”. He makes the point at paragraph 17(b) of his affidavit where he deposes “appears to proceed on the basis that the plaintiff’s interest in the land arises by reason of the agreement and ‘the charge’ (whatever it is that the plaintiff means by that word)”.

37        In my view there are serious gaps in the evidence put before this court by the first defendant. I regard the approach of the first defendant as being disingenuous.

38        It is clear to me on the evidence that the plaintiff and the first defendant signed a form of agreement in writing on or about 30 March 2009. The parties acted on that agreement. There is a clear case to be tried that the plaintiff provided the money claimed in the proceeding to the first defendant who has not denied having received it nor has she denied not having repaid the money.

39        The first defendant argues she entered into an agreement not with the plaintiff who claims the interest as caveator, but with the plaintiff’s husband who has not lodged the caveat. That is a triable issue to be determined on the facts at trial.

40        The other argument advanced is that there was never an agreement or charge dated 24 April 2009 and the plaintiff has not produced one. That is the fact and is common ground. There is a triable issue as to whether the agreement in writing dated 30 March 2009 in fact constituted the whole of the agreement between the plaintiff and the first defendant and if so whether that agreement gave the plaintiff a charge as security over the Surrey Hills property. In my view the plaintiff has put before the court sufficient evidence to show there is a strong likelihood she will succeed on all of these issues at trial.

41        I regard the first defendant’s argument advanced which seeks to draw a distinction between the interest claimed in the caveat shown as “interest as charge” and that claimed in the statement of claim in the prayer for relief as “an equitable interest...as charge” as an argument without substance. As Mr. Twigg who appeared on behalf of the plaintiff submitted in his written outline, an interest as “Chargee” is sufficient description of the estate or interest claimed; see Caveats against Dealings Lindsay, at page 149 and footnote 52 Sanwa Australia Leasing Limited v Makrides (1988) NSW Conv R ¶55-424.

42        In his written submissions Mr Twigg advanced many reasons why the balance of convenience favours retention of the caveat over the title to the Surrey Hills land. There are a number of caveats by other parties claiming an interest in the same property. The first defendant has sold the Surrey Hills property with settlement due shortly. Were I to remove the caveat the plaintiff’s priority will have been lost. In my view that alone justifies retention of the caveat especially where (as here) there is no dispute the first defendant received the benefit of the plaintiff’s money and where she has not in any way indicated how and when she proposes to repay that money. The balance of convenience clearly weighs in favour of retention of the caveat.

43        It is clear to me on the evidence that when the caveat was drawn and lodged an error was made wrongly describing the charge as being dated 24 April 2009 instead of 30 March 2009. In my view in the exercise of my powers on this application I should not allow that error to distract any longer and I should order amendment of the grounds of claim in the caveat to ensure the error is rectified.

44        The orders are:

1.	The application for removal of the caveat is refused.
2.	The second defendant is ordered to permit the plaintiff to amend the grounds of claim in the caveat by deleting the words “24th day of April 2009” and inserting therein instead the words “30th day of March 2009”.
3.	The first named defendant is ordered to pay the plaintiff’s costs of and incidental to this application to be agreed or taxed on County Court scale ‘D’.