Toh v Wu
[2018] VSC 36
•12 February 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2018 00102
| KENNY CHI FOONG TOH | First Plaintiff |
| WEY YIN CHOO | Second Plaintiff |
| - and - | |
| NIKKI WU | First Defendant |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | DALY AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Submissions filed by the parties on 1 February 2018 and 5 February 2018 |
DATE OF JUDGMENT: | 12 February 2018 |
CASE MAY BE CITED AS: | Toh & anor v Wu & anor |
MEDIUM NEUTRAL CITATION: | [2018] VSC 36 |
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COSTS – Application for removal of caveat pursuant to s 90(3) of Transfer of Land Act 1958 (Vic) – Order for removal of caveat in favour of plaintiffs owing to balance of convenience being overwhelmingly in favour of removal – No consideration of whether there was a serious question to be tried – Whether costs follow the event in circumstances where successful plaintiff had failed to notify caveator of intention to apply for removal of caveat when caveator represented by solicitors – Application made seven weeks after caveat lodged and seven business days prior to date for property settlement – Plaintiffs’ solicitors on notice of caveat since date of lodgement – Plaintiffs’ failure to attempt to procure a withdrawal of the caveat prior to making application – Failure to comply with overarching obligations under Civil Procedure Act 2010 (Vic) – Each party ordered to bear its own costs of the proceeding
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Charnley | GTC Lawyers |
| For the First Defendant | Ms C Hoe, solicitor | Monica Shamon Lawyers |
| No appearance for the Second Defendant |
HER HONOUR:
On 15 January 2018, the plaintiffs, the registered proprietors of a property at 3A Dover Street, Albanvale (‘property) issued a proceeding pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) (‘TLA’) seeking the removal of a caveat lodged on 28 November 2017 by the first defendant (the sister‑in‑law of the plaintiffs). The claim as stated in the caveat was expressed as ‘court order under the Family Law Act 1975’. The proceeding was listed with some urgency, given that settlement of the sale of the property was due on 29 January 2018. The proceeding was listed for hearing on 18 January 2018. The solicitors for the first defendant were served with the court documents on the afternoon of 16 January 2018, and at the hearing on 18 January 2018 applied for an adjournment of the hearing.
On 18 January 2018 I refused the application for an adjournment, and made orders removing the caveat over the property. While there was no determination of the question of whether there was a serious question to be tried as to whether the first defendant had a caveatable interest in the property, having reviewed the affidavit evidence and submissions prior to the hearing, I formed the view that the balance of convenience overwhelmingly favoured the removal of the caveat, particularly given that settlement of the sale of the property had been postponed on two previous occasions, and the evidence was that the purchaser’s offer of finance was due to expire. However, in order to preserve the position of the first defendant, who at that time had an outstanding application in the Federal Circuit Court (‘FCC’) to join the plaintiffs to a family law proceeding brought by the first defendant against her husband (‘family law proceeding’), and to restrain the sale of the property, I ordered that the net proceeds of sale be held in trust until 29 January 2018 (being the next return date before the FCC) or further order. I also reserved the question of costs pending the receipt of further submissions.
My view that the caveat should be removed promptly, without further argument, was in part influenced by the fact that, as at 18 January 2018, the first defendant had an application on foot in the family law proceeding to either restrain the sale of the property, or alternatively have the proceeds of sale of the property retained in trust pending the final determination of the family law proceeding. I formed the view that it was in the interests of the parties that the issues between them, including the disposition of the property, ought to be determined in the one proceeding, rather than fragmented across jurisdictions. As it turned out, the orders made by the FCC on 29 January 2018 indicate that neither the application for joinder of the plaintiffs or the application with respect to the proceeds of sale of the property were pursued. The orders made by the FCC on 29 January 2018 (which reserved to the first defendant to make a further application for joinder) were made by consent.
The plaintiffs submitted that there is no reason why the costs of the proceeding should not follow the event. While some conditions were imposed upon the removal of the caveat, the plaintiffs were substantially successful in their application. Further, the material relied upon by the first defendant in this proceeding, being the material also relied upon in the family law proceeding, did not support the interest claimed in the caveat. Finally, the relief sought by the first defendant in the family law proceeding was not relevant to the question of costs in this proceeding. The plaintiffs were forced to come to Court to have the caveat removed.
The first defendant submitted that:
(a) the caveat was filed to protect her interests in the property, as she was concerned that she would be unable to enforce any orders that might be made against the plaintiffs in the family law proceeding should the proceeds of sale of the property be released to the plaintiffs;
(b) after receiving a letter from the solicitors for the plaintiffs on or about 6 December 2017, after the caveat had been lodged, the first defendant’s solicitors served upon the plaintiffs’ solicitors copies of the documents supporting the first defendant’s case in the family law proceeding;
(c) neither the first defendant or her solicitors had been notified of the plaintiffs’ intention to apply to the Court to remove the caveat until the day before her solicitors were served with the application on 16 January 2018;
(d) by failing to give the first defendant notice of their application, and by failing to take the less expensive course of making an application under s 89A of the TLA, the plaintiffs breached their obligations under the Civil Procedure Act 2010 (Vic) to facilitate the ‘just, efficient, timely and cost effective resolution of the real issues in dispute’; and
(e) the first defendant suffers from financial hardship.
The first defendant submitted that the plaintiffs ought to pay her costs of the proceeding, or, alternatively, each party should bear their own costs.
In my view, each party should bear their own costs of the proceeding. In particular, there are special circumstances which warrant the (largely) successful plaintiffs not receiving their costs, being their failure to warn the first defendant that they intended to apply to this Court to seek the withdrawal of the caveat prior to issuing this proceeding.
Of course, there will often be circumstances where it is not necessary or practical to warn a party that such an application would be made. However, in the current case:
(a) the application was made some seven weeks after the lodgement of the caveat, and only two weeks (and seven business days) prior to the date for settlement of the sale of the property;
(b) the evidence filed on behalf of the plaintiffs confirms that the plaintiffs’ solicitors became aware of the caveat on the day it was lodged, were aware that the first defendant was represented by solicitors, and indeed communicated with the first defendant via her solicitor; and
(c) even taking into account the Christmas/New Year shutdown, there was ample time between 28 November 2017 and 15 January 2018 for the solicitors for the plaintiffs to attempt to procure a withdrawal of the caveat, perhaps on terms similar to those contained in the orders of 18 January 2018, or at least warn the first defendant of their intention to apply for the removal of the caveat, and the possible costs consequences of her refusing to withdraw the caveat. The only ‘warning’ provided by the solicitors for the plaintiffs to the solicitors for the first defendant was contained in their letter dated 6 December 2017, when they said they had instructions from the plaintiffs to make an application pursuant to s 89A of the TLA.
In these circumstances, the plaintiffs’ actions in bringing this proceeding without warning to the solicitors for the first defendant is somewhat analogous to the situation where a plaintiff takes advantage of the strict time limits in the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) to ‘snap on’ a default judgment, which, while regular within the terms of the Rules, has been frowned upon by the Courts as serving no useful purpose, and likely to increase the cost of litigation.[1]
[1]See Williams Civil Procedure [21.01.45] and the cases referred to in that paragraph.
In the current case, the plaintiffs submitted that they were forced to bring this proceeding to remove the caveat. With respect, that proposition was not fully tested prior to the plaintiffs coming to Court, and, given the time available, should have been. Instead, the first defendant (and, arguably, the Court) was ambushed with a substantial application a few business days prior to the settlement of the sale of the property.
As noted above, the merits of the plaintiffs’ application, which required the first defendant to satisfy the Court that there was a serious issue to be tried as to whether she had the interest in the property claimed, was not considered on 18 January 2018. The first point to note is that the interest claimed in the caveat is not, on its face, a recognised proprietary interest. However, if one reviews the underlying documents (being the affidavits and other documents filed by the first defendant in the family law proceeding), it is tolerably clear that the first defendant claims an interest in the property either pursuant to a resulting trust, or pursuant to a ‘common intention’ constructive trust. Of course, this Court is generally reluctant to permit a party to amend a caveat to remedy a defective claim,[2] but this prohibition is not absolute.[3]
[2]Yamine v Mazloum [2017] VSC 601, [37].
[3]See Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343, [46].
Of course, the plaintiffs deny that the first defendant has any such interest. They assert that the first defendant and her husband were merely tenants at the property, and point to documentary evidence that supports their contentions in that regard. They noted that a previous caveat lodged by the first defendant (which claimed an interest pursuant to an ‘implied, resulting, or constructive trust’), had been allowed to lapse after the plaintiffs brought an application under s 89A of the TLA.
Of course, it is not possible to determine the merits of the plaintiffs’ application, and the first defendant’s claim in the caveat, without further evidence and full argument. However, what I can glean from the material before me is that it does not appear that the first defendant’s claim was completely frivolous. Further, the plaintiffs were on notice for some months of the nature of the first defendant’s claim, with the solicitors for the parties having corresponded (albeit infrequently) since no later than 13 September 2017. In those circumstances, it was somewhat unfortunate that this proceeding was brought without warning, and so close to the settlement date as to severely compromise the first defendant’s ability to respond to the application in a comprehensive manner.
For completeness, I should add that the first defendant’s submissions concerning her alleged impecuniosity have not influenced my decision with respect to costs, in that while a party’s financial position might be relevant to the question of enforceability of a costs order, it is not a relevant consideration with respect to liability for costs. The only qualification to the above is that the first defendant’s financial position highlights the fact that, if her solicitors had received advance notice of the application to remove the caveat, the first defendant would have had an opportunity to seek advice and reflect upon whether she wished to defend a proceeding of this nature, with the associated financial risks, in her circumstances.
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