Tieri v Ferguson and Registrar of Titles
[2017] VSC 799
•20 December 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2017 04897
| SILVANA TIERI | Plaintiff |
| v | |
| DEAN JOHN FERGUSON | First Defendant |
| and | |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | Keogh J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 December 2017 |
DATE OF JUDGMENT: | 20 December 2017 |
CASE MAY BE CITED AS: | Tieri v Ferguson and Registrar of Titles |
MEDIUM NEUTRAL CITATION: | [2017] VSC 799 |
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REAL PROPERTY – Caveats – Application for removal of caveat – Transfer of Land Act 1958
s 90(3) – No caveatable interest – Application by caveator for freezing order – Whether evidence to support application – Whether application made to provide security for potential claim – Application dismissed – Deputy Commissioner of Taxation v AES Services (Aust) Pty Ltd [2009] VSC 418 applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Ribbands | Melbourne Legal Chambers |
| For the First Defendant | Mr T Sowden | Conlan Cummings Lawyers |
| For the Second Defendant | No appearance |
HIS HONOUR:
I made orders in this matter in the Practice Court on 5 December. These reasons follow those orders.
Mr Tieri was the registered proprietor of the property situated at 75 Crookston Road, Reservoir (‘the property’). The property was sold by Bendigo and Adelaide Bank Ltd as mortgagee in possession. Settlement was due to take place on 5 December.
On 4 November 2016 Mr Ferguson lodged a caveat over the property, which included the following details:
Grounds of Claim:
Agreement with the following parties and date:
Parties:
The registered proprietor(s) George Braun
Date:
14/04/2014
Estate or Interest claimed:
Interest as charge
Prohibition:
Absolutely.
Mr Braun is the former de facto partner of Ms Tieri, and a former business partner of Mr Ferguson. Mr Braun was not a registered proprietor of the property.
Ms Tieri instituted this proceeding to obtain an order for removal of the caveat. Mr Ferguson agrees he does not have a caveatable interest in the property. In the circumstances I ordered that he provide a withdrawal of the caveat.
On 5 December Mr Ferguson made application by summons for freezing orders against Ms Tieri and Mr Braun to the value of $209,155 each. Mr Ferguson alleges that he, Ms Tieri and Mr Braun entered an agreement as borrowers with Fundco Commercial Pty Ltd (‘Fundco’) as lender pursuant to which Fundco loaned $350,000 to them. Mr Ferguson stated he subsequently repaid to Fundco the amount of a loan, interests and costs. He alleges that as a consequence he is entitled against each of Ms Tieri and Mr Braun to indemnity and contribution for a one third share of the amount required to discharge the loan. The issues raised on this application are whether there was:
(a) evidence sufficient to justify a freezing order; and
(b) lack of candour on the part of Mr Ferguson which should weigh against making the order.
What happened?
In March 2012 Mr Ferguson, Mr Braun and Ms Tieri executed a loan agreement with Fundco for advance of $350,000. The loan agreement provided that the borrowers were jointly and severally liable to Fundco for the amount of the loan plus interest, and entitled Fundco to secure the loan by mortgages over a property owned by Mr Ferguson and over the property. Fundco registered a mortgage over Mr Ferguson’s property, but not over the property.
Ms Tieri stated that in early 2012 Mr Braun requested that she provide security for a loan that he and Mr Ferguson required for a business they were operating, and that she executed documents which named her as borrower, including a mortgage over the property in favour of the lender. She stated the mortgage was not registered, and she was ‘…never advised if any funds were in fact advanced by the lender, to whom, for what purpose and/or based on what security.’ Ms Tieri stated she obtained no benefit from the loan and believed that if monies were advanced they were used by Mr Ferguson and Mr Braun as working capital in their business.
Ms Tieri and Mr Braun separated shortly after the loan agreement was made.
Mr Ferguson stated the loan was in default in April 2014, and that he sold his property used as security for the loan and paid to Fundco $416,411.60 in discharge of the debt.
On 4 November 2016 a conveyancing company instructed by Mr Ferguson lodged the caveat over the property. As stated the caveat named Mr Braun as registered proprietor, and made no reference to Ms Tieri.
On 18 November 2016 solicitors for Mr Ferguson wrote to Ms Tieri requiring reimbursement of $207,500 ‘…being half the monies recovered by Fundco.’
On 21 February 2017 Mr Braun lodged a caveat over the property on the grounds ‘Implied, Resulting or Constructive Trust’. Mr Braun agreed to remove the caveat.
A first mortgage was registered against the property in favour of Bendigo and Adelaide Bank Ltd on 7 December 2010. As stated above the property was sold by Bendigo and Adelaide Bank as mortgagee in possession.
Mr Braun appeared at the hearing on 5 December but was not represented.
Legal principles
The principles relevant to application for a freezing order were summarised by J Forrest J in Deputy Commissioner of Taxation v AES Services (Aust) Pty Ltd[1] as follows:
[1][2009] VSC 418.
First, that a freezing order, by its very nature, is a drastic remedy and a court must exercise a high degree of caution before taking a step which will interfere with a party’s capacity to deal with his or her assets.
Second, the order is not designed to provide security for the applicant’s claim. It is solely directed to preserving assets from being dissipated, thereby frustrating the court process.
Third, the applicant bears the onus both in satisfying the Court that the order should be continued and in satisfying the Court as to the amount which is to be the subject of the order.
Fourth, that an order can only be made on the basis of admissible evidence which supports the contentions made by the party seeking the order. Speculation and guesswork is no substitute for either the facts or inferences properly drawn from proved facts.
Fifth, that before such an order can be made it is necessary that the applicant establish –
(a) an arguable case against the defendant; and
(b)that there is a danger that the prospective judgment will be wholly or partly unsatisfied as a result of the defendant’s actions in either removing the assets or disposing or dealing with them so as to diminish their value.
Sixth, the balance of convenience must favour the granting of the freezing order.
Seventh, that there is no set process determining the exact nature of an order. The order will be framed according to the circumstances of the case.
Eighth, the applicant must establish with some precision the value of prospective judgment. The order should not unnecessarily tie up a party’s assets and property.
Finally, there may be discretionary considerations which militate against the granting of a freezing order, such as delay in bringing the application on before the court or a lack of candour in the materials placed before the court.
Analysis
I formed the view that the actions by Mr Ferguson were designed to provide security for his potential claim against Ms Tieri. Mr Ferguson lodged a caveat over the property in November 2016. Ms Tieri was not named as registered proprietor, and no caveatable interest was disclosed. Whilst acknowledging this was so Mr Ferguson declined to withdraw the caveat. He was aware that if the caveat was not withdrawn the Bendigo and Adelaide Bank Ltd intended on completion of the sale, to pay the net proceeds into court, rather than to Ms Tieri. Mr Ferguson was content to attempt to maintain the caveat to achieve this end. It was only at the last minute, after application to remove the caveat had been made, that Mr Ferguson indicated he would institute proceedings in this court against Ms Tieri and Mr Braun in respect of the Fundco loan, and made application for a freezing order.
Secondly, there was no evidence of any action by Ms Tieri to dispose of or deal with assets to diminish their value giving rise to a danger that a prospective judgment would be wholly or partly unsatisfied. The property was sold by the mortgagee bank, not by Ms Tieri.
Thirdly, there are discretionary considerations which militate against the granting of a freezing order. There has been delay by Mr Ferguson in commencing proceedings against Ms Tieri and in bringing this application. Mr Ferguson sought to maintain the caveat against the property without justification in order to provide security for his claim.
A freezing order is a drastic remedy. For the reasons stated, in the circumstances of the case, there is no justification for imposing that remedy.
Mr Ferguson also made application for a freezing order against Mr Braun, but led no evidence justifying such an order. It was apparent that Mr Ferguson’s real attention was directed to the net proceeds of sale of the property which, after withdrawal of the caveat and in the absence of a freezing order, would be paid to Ms Tieri. I declined to make the order sought against Mr Braun.
Conclusion
On 5 December I ordered that Mr Ferguson provide a withdrawal of the caveat, dismissed Mr Ferguson’s application for a freezing order, and made consequential orders including as to costs.
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