v & L Zappia Pty Ltd v O'Connell
[2022] VCC 1735
•14 October 2022
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-22-03321
| V & L Zappia Pty Ltd (ACN 157 787 936) | Plaintiff |
| v | |
| Genevieve O’Connell | Defendant |
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JUDGE: | His Honour Judge Woodward | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 September 2022 and further written submissions dated 20 September 2022 | |
DATE OF RULING: | 14 October 2022 | |
CASE MAY BE CITED AS: | V & L Zappia Pty Ltd v O’Connell | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 1735 | |
RULING
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | M McKenzie | A B Natoli Lawyers |
| For the defendant | G Ryan | Dr George Ryan |
HIS HONOUR:
Background and outcome
1On 11 April 2022, the plaintiff (“Zappia”) entered into a contract (“contract”) for the purchase of a property at 12 Toogoods Rise, Box Hill North, Victoria (“property”). At the time of the contract, Genevieve O’Connell was living at the property with her 9 year old son. Ms O’Connell had lived at the property since she was born in 1970 – first with her parents until they moved to Brisbane in the late 1990s and then with her son since his birth in 2013. Zappia applies by originating motion issued pursuant to O53 of the Rules for recovery of the property. Ms O’Connell is named as defendant in the proceeding.
2I have serious reservations about the prospect of Ms O’Connell ultimately establishing any right to remain in occupation of the property. However, for the reasons below, I am satisfied that the summary procedure under O53 of the Rules is not a suitable vehicle for the resolution of this dispute between the parties. I will therefore make orders for the proceeding to continue as if commenced by writ, for the affidavits to stand in the place of pleadings,[1] and otherwise timetabling the proceeding to trial. Authenticated orders will accompany these reasons.
[1] Pursuant to r4.07 of the Rules
3Those orders include provision for a Judicial Resolution Conference before a Judicial Registrar of the court. I would strongly urge the parties to make the most of that conference and seek to resolve the proceeding on terms they can both live with. I particularly urge Ms O’Connell to do so, given my concerns about her prospects of successfully defending the proceeding at trial. Avoiding a summary determination may have given her some more time in the property, but it is likely that this reprieve will be short-lived. Further, if she continues to resist Zappia’s claim and loses, she will then almost certainly be facing a debt for Zappia’s legal cost, which by then are likely to be in many multiples of $10,000.
Order 53 procedure
4Order 53 creates a special procedure for the summary recovery of land in certain restricted circumstances different to the procedures under orders 21 and 22. Originating process is not by writ but originating motion in a special form (form 5E). The person or persons must be:
(a) a person or persons who entered into occupation without the plaintiff's licence or consent or that of any predecessor in title of the plaintiff; or
(b) a person or persons who, having been a licensee or licensees, remained in occupation without the plaintiff's licence or consent or that of any predecessor in title of the plaintiff.[2]
[2] Rules, O53(1)
5A tenant holding over after the termination of the tenancy is not within either category created by O53, and the service of notice on the tenant purporting to determine the holding over does not alter the position.
6The principles governing the application of Order 53 were conveniently summarised by Derham AsJ at first instance in Framlingham Aboriginal Trust v McGuiness[3] (“Framlingham Aboriginal Trust”) and referred to with approval by Tate JA in Chan v Chan[4] as follows:
(a) it is intended to enable a speedy resolution in favour of the proprietor of land of a dispute whereby trespassers are keeping the proprietor out;
(b) it is intended to apply only in clear cases where there is no question to try;
(c) the existence of a factual dispute does not deny the applicability of O53 where it is possible to resolve the dispute readily and fairly;
(d) while an order for possession may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the court is able to satisfy itself as to the material facts that bring the case within O53;
(e) the jurisdiction should be exercised with great care;
(f) where an issue does emerge, the judge has discretion whether simply to dismiss the proceeding, to determine the issue or cause the issue to be subsequently tried. This includes giving directions as to the further conduct of the proceeding or ordering the proceeding to continue as if begun by writ pursuant to r4.07; and
(g) where the Court gives judgment for possession under O53, it may grant a stay of execution.
[3] [2014] VSC 241
[4] [2020] VSCA 40 at [55]
Affidavit in support
7The affidavit in support of the application was sworn by Lisa Zappia on 16 August 2022. Ms Zappia is a director of Zappia. She deposes that Zappia purchased the property pursuant to the contract from Bryan Joseph O’Connell for $1,030,000. She exhibits a copy of the contract. The contract includes the following terms:
(a) In the Particulars of Sale, alongside “Settlement”:
“At settlement the purchaser is entitled to
vacantpossession of the property. With the current occupier/Tenant Genivieve [sic] O’Connell to be dealt with by the purchesers [sic]”(b) By a handwritten and signed clause 18 (errors and emphasis in original):
“The Property is being sold with the current Tenant/occupier Genivieve O’Connell. The Tenant or Occupier will be dealt By After Settlement by the Purchaser Mrs LISA MAREE ZAPPIA And or Nominee”
8Ms Zappia further deposes that the property was registered in Zappia’s name on 17 May 2022 and it remains the registered proprietor of the property. Ms Zappia confirms that Ms O’Connell currently occupies the property, and that she does so without the consent or authority of Zappia. Ms Zappia states that she confirmed this by contacting Ms O’Connell by telephone during the week of 8 August 2022, during which Ms O’Connell made comments to the effect that she would not be vacating the property, and asked how much money Ms Zappia would pay her to leave.
9In relation to her knowledge of the circumstances of Ms O’Connell’s occupation of the property, Ms Zappia deposes that, before the settlement, Mr O’Connell represented to Zappia by his real estate agent that Ms O’Connell had no legal rights to occupy the property and that he was taking active steps to have her removed from the property. She says that Mr O’Connell issued County Court proceeding CI-21-05421 against Ms O’Connell (“earlier County Court proceeding”) seeking vacant possession.
10Ms Zappia states that “I have been provided with various documents filed in that proceeding” but does not disclose in her affidavit when that occurred. In particular, it is not clear on the affidavit material whether Zappia (either through Ms Zappia or otherwise) was aware of the detail of the allegations and counter allegations in the earlier County Court proceeding (including Ms O’Connell’s claims that she held an equitable licence) when Zappia executed the contract.
11Ms Zappia continues by referring to correspondence received from Ms O’Connell’s solicitor stating that Ms O’Connell “claims shared occupancy with her father under a long-term equitable licence”, and that she offered to pay “a weekly licence fee of $250, the amount she was happy to pay her father”. Ms Zappia states that in the defence and counterclaim filed by Ms O’Connell in the earlier County Court proceeding, admissions and acknowledgements were made by Ms O’Connell to the effect as follows:
(a) the arrangement under which Ms O’Connell started residing in the property was a family arrangement;
(b) the arrangement was not intended to create legal relations between Ms O’Connell and her parents;
(c) the arrangement did not provide Ms O’Connell with exclusive possession
(d) Ms O’Connell’s parents came, visited and stayed at the property;
(e) Ms O’Connell denies the property is a rented premises subject to the Residential Tenancies Act 1997 (“RTA”).
12Ms Zappia also deposes as to the circumstances of a proceeding commenced by Ms O’Connell in VCAT. She states that Zappia’s solicitors provided notices to vacate dated 2 June 2022 and again on 27 June 2022. On 30 June 2022, Ms O’Connell filed an application with VCAT seeking an order requiring Zappia to enter into a residential rental agreement with Ms O’Connell pursuant to RTA s91S. Zappia’s solicitors filed submissions in that proceeding to the effect that VCAT did not have jurisdiction to deal with Ms O’Connell’s application. Ms Zappia deposes that the hearing proceeded on 29 July 2022 and Member Buljan made findings and orders that day, including that:
(a) “[Ms O’Connell] gave evidence at the hearing that there has never been a residential rental agreement in place and that her occupation of the property was by way of a family arrangement. This aligns with the pleadings set out in the defence of [Ms O’Connell] filed in [the earlier County Court proceeding]”;
(b) “in circumstances where there has been no residential rental agreement in respect of the property the subject of the application, the premises are not rented premises as defined in the [RTA] and for the purposes of section 91S of the [RTA]”;
(c) “accordingly, [Ms O’Connell] has no standing to make an application pursuant to section 91S of the [RTA] and the application is misconceived”.
13Ms Zappia concludes by confirming that Zappia, by its directors Ms Zappia and her husband Vincent, is intending to occupy the property forthwith and that she and her husband, as directors of Zappia, have had to pay rent on an alternative residential property. Ms Zappia deposes that Ms O’Connell has not paid any “agreed fee” to the plaintiff or to Mr O’Connell since January 2019.
Affidavit in response
14In her affidavit in reply sworn on 13 September 2022, Ms O’Connell confirms the background to her occupation of the property as set out above and that “full details of my possession of [the property] are set out in my Defence and Counterclaim” in the earlier County Court proceeding. Ms O’Connell asserts that, as set out in her defence and counterclaim, she has a right in equity built up over 20 years to remain in possession or occupation of the property with her son, “based on the application of principles of proprietary or equitable estoppel to my circumstances”.
15By way of a summary of her allegations in the earlier County Court proceeding, Ms O’Connell deposes:
“In 1997 my parents decided to move to Brisbane but wished to retain their house in Box Hill North. Commencing from early 1999 my parents made representations to me and lead [sic] me to believe I could live in the property for as long as I needed to, such representations including the reciprocal obligation on me to take care of the property, look after the furniture and personal items they left in the house, and make payments requested of me for rent or for the upkeep of the property.
…
I relied on my parents’ representations, looked after the property, made payments to my mother, attended to my parents’ needs in Brisbane whenever requested and in general made decisions about the way I live my life that fitted in with what was asked of me.”
16Ms O’Connell next sets out the circumstances in which she learnt of the sale of the property to Zappia and makes a series of allegations about Zappia’s attempts to gain possession of the property. She also deposes to matters concerning recent sales of similar properties in the area and a conversation she had with Ms Zappia, during which she alleges Ms Zappia said that Zappia decided to buy the property because “it was such a good deal”. It appears that Ms O’Connell may seek to rely on these matters to support an argument that Zappia has received consideration in the form of a discounted sale price in recognition of Ms O’Connell’s occupation of the property.
The application
17The hearing of the application was initially adjourned at Ms O’Connell’s request, to allow time for her solicitor Dr Ryan to return from a holiday overseas and prepare to represent her on the hearing of the application. It came on for hearing before me sitting as Duty Judge on 15 September 2022. Neither party had prepared an outline of submissions or sent through copies of authorities on which they sought to rely. Accordingly, it was not clear to me (nor, it would seem, counsel for Zappia) what legal principle Ms O’Connell proposed to rely on to support her claim for an “equitable license” over the property.
18In oral submissions, Dr Ryan for Ms O’Connell explained that the leading authority on which he relied was the decision of the English Court of Appeal in Inwards v Baker[5] (“Inwards”) and, in particular, the decision of Lord Denning MR. In that case, his Lordship held:
“It is quite plain from those authorities that if the owner of land requests another, or indeed allows another, to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there, that raises an equity in the licensee such as to entitle him to stay. He has a licence coupled with an equity. Mr Goodhart urged before us that the licensee could not stay indefinitely. The principal only applied, he said, when there was an expectation of some precise legal term. But it seems to me, from Plimmer’s case in particular, that the equity arising from the expenditure on land need not fail ‘merely on the ground that the interest to be secured has not been expressly indicated… the court must look at the circumstances in each case to decide in what way the equity can be satisfied.’
So in this case, even though there is no binding contract to grant any particular interest to the licensee, nevertheless the court can look at the circumstances and see whether there is an equity arising out of the expenditure of money. All that is necessary is that the licensee should, at the request or with the encouragement of the landlord, has spent the money in the expectation of been allowed to stay there. If so, the court will not allow that expectation to be defeated where it would be inequitable to do so. In this case it is quite plain that the father allowed an expectation to be created in the son’s mind that this bungalow was to be his home. It was to be his home for his life or, at all events, his home as long as he wished it to remain his home…
Mr Goodhart put the case of a purchaser. He suggested that the father could sell the land to a purchaser who could get the son out. But I think that any purchaser who took with notice would clearly be bound by the equity. So here, too, the present plaintiffs, the successors in title of the father, are clearly themselves bound by this equity. It is an equity well recognised in law.”
[5] [1965] 2 QB 29
19Dr Ryan also relied on the decision of the Full Court of the Supreme Court of Queensland in Wood v Browne[6] (“Wood v Browne”), in which Macrossan J cited Inwards with apparent approval.[7]
[6] [1981] 2 Qd R 593
[7] Ibid at 606
20During the course of Dr Ryan’s submissions, I identified (with the assistance of my associates) that a more recent decision of the Queensland Court of Appeal in King v King[8] (“King v King”) appeared to cast considerable doubt on Wood v Browne and the “heresy” propounded by Lord Denning (albeit in a decision proceeding Inwards namely, Errington v Errington and Woods[9]). In King v King, Chesterman JA held:[10]
“It would, I think, be wrong to accept (as Wood may have done) that a contractual licensee has any equitable proprietary interest in the land with respect to which the licence is granted. Protection is instead afforded by the implication of a negative stipulation that the licence will not be revoked and that any purported revocation may be restrained by injunction. The matter is thoroughly discussed in Equity Doctrines and Remedies, 4th ed (pp 759-766). It is not necessary to refer to the analysis which is irrelevant to the present application. What one takes from Errington and Wood is that the licensee’s right is personal, not proprietary, and cannot be transferred by the licensee.”
[8] [2012] QCA 39
[9] [1952] 1 KB 290
[10] King v King at [36] per Chesterman JA
21For his part, counsel for Zappia Mr McKenzie, was not in a position to respond directly to the principles and authorities relied on by Dr Ryan, and instead pressed upon me the indefeasibility of title conferred on Zappia under s42(1) of the Transfer of Land Act 1958 (Vic) (“TLA”) and the limited exceptions to that indefeasibility found in s42(2). In particular, he noted, the exception for a tenant in possession under TLA s42(2)(e) could not apply to Ms O’Connell, given her disclaimer of any rights as a tenant in the earlier County Court proceeding and the findings in the VCAT proceeding.
22Given the lack of opportunity for either Mr McKenzie or me to consider the arguments raised by Dr Ryan and the authorities he had cited, I made orders allowing the parties the opportunity to file short written submissions supplementing those made by Dr Ryan and Mr McKenzie during the hearing.
Parties’ written submissions
23In his submissions, Mr McKenzie argues that the matters relied on by Ms O’Connell do not rise to the level necessary to engage the principles discussed in the authorities on which Dr Ryan relied. Dealing first with Wood v Browne, Mr McKenzie noted that in that case the occupant was granted written permission to erect a dwelling on the owner’s land and “have free access to such dwelling at all times”. He submitted that the claim by Ms O’Connell does not involve any such capital work on the property.
24Mr McKenzie also argues that Ms O’Connell acknowledges that her father had, and continued to have, the right to use and enjoy the property with her, and thus there could be no suggestion that she had any right of exclusive possession. Mr McKenzie continues:
“One may well doubt that a parent permitting his own daughter to live with him is correctly identified as a licence. It is submitted it is a matter of personal rights only. A family matter not intended to create any formal legal rights (with this acknowledged by the defendant). It is far short of creating legal rights of any sort, much less property rights in the land. The defendant has acknowledged the rights in question are a licence, not a tenancy.”
25Turning to Inwards, Mr McKenzie again emphasises that this was a case where a person expended money on the land of another in the expectation, induced or encouraged by the owner of the land, that he would be allowed to remain in occupation. He says there was no such expenditure by the defendant in this case, and no inducement or encouragement of such expenditure. Mr McKenzie also relies on the decision in King v King, and a decision of the Supreme Court of New South Wales in Pirina v Pirina Holdings Pty Ltd.[11] He says that the latter stands for the proposition that, despite some dicta in English cases, it is now clear that a right for relief under the principle of proprietary estoppel does not confer an interest in land.
[11] [2015] NSWSC 1899
26Finally, Mr McKenzie refers again on the doctrine of indefeasibility. He says that it is clear that the highest Ms O’Connell can put her position is as a bare licensee. She has no equitable interest or tenancy and thus cannot sustain a proper basis for refusing Zappia, as registered proprietor, the unencumbered right to enter into the property and have an order for possession under O53.
27Dr Ryan’s written submissions begin by discussing the limited scope of O53 proceedings as summarised above. He again refers to Inwards and Wood v Browne (among others). He submits that whatever questioning of that latter decision in King v King, the principle of Inwards was approved although not applied on the facts, by the High Court in Olsson v Dyson.[12]
[12] (1969) 120 CLR 365
28On the question of indefeasibility Dr Ryan relies on the provisions of the contract set out above referring to Ms O’Connell’s occupation. He argues that Zappia’s claim to an indefeasible title entitling it to vacant possession is subject to what it has agreed in the contract and to the equitable fraud and in personam exceptions to indefeasibility, as well as the tenant in possession exception in TLA s42(2)(e).
29In relation to that particular exception, Dr Ryan refers to a number of authorities (including Burke v Dawes[13]) which, he argues, establish that the term “tenant” in that section is to be construed very broadly:
“Evatt J in Burke v Dawes referred to the remark of Hogg in Registration of Title to Land Throughout the Empire, by Hogg (1920) at p. 76: ‘the interest of a tenant has been construed so as to include every kind of occupation, from tenancy at will to a right to the fee simple, so that the enactments saving the rights of those in possession – adversely or non-adversely – in effect provide for all cases of possession, whether it be that of a mere intruder or of a person claiming as of right under a title good at law or in equity’.”
[13] (1938) 59 CLR 1 at 17-18 per Dixon J
30On the application of the in personam exception, Dr Ryan submits that Zappia, by committing itself in the contract to deal with Ms O’Connell, is required to accept the right she can establish she has to remain in possession. He argues that these rights arose out of the principles of proprietary or equitable estoppel. He says that: “In such circumstances the Plaintiff cannot set up the indefeasibility of its title to ignore what it has agreed (see generally Bahr v Nicolay (No. 2) (1988) 164 CLR 604)”. Dr Ryan concludes:
“As in Remar Australia Inc v Dayspring Community Ltd [2010] VSC 352 where the defendant submitted it had an equitable licence to remain on the land, the Defendant humbly submits that it [is] inappropriate for the proceedings to continue by way of summary process. She asks for the opportunity to present her case for having an interest in the property based on the principles of equitable estoppel arising against the former owner and which… She also argues [has] not been defeated by the Plaintiff’s indefeasible title”.
Analysis
31As noted above, I have serious reservations about the prospects of Ms O’Connell successfully defending Zappia’s claim in this proceeding on any of the bases articulated by Dr Ryan. In particular, to my mind, there are real doubts about the currency of the principle articulated by Lord Denning MR in Inwards. And even if the principle does persist in some form, there is considerable force in Mr McKenzie’s submissions that the matters relied on by Ms O’Connell, do not rise to the level necessary to invoke the principle and are, in any event, defeated by the principle of indefeasibility.
32However, for me to do justice to Dr Ryan’s thorough submissions and the many authorities on which he relies, I would need to engage in a process of review and analysis well beyond that which is appropriate in an application of this kind. In particular, I cannot rule out without such analysis some equity that operates to defeat or delay Zappia’s legal interest, or that the construction of “tenant in possession” in TLA s42(2)(e) is broad enough to encompass Ms O’Connell’s occupation. Perhaps more importantly, I would also need to do so without a complete understanding and proper testing of all the potentially relevant facts.
33For example, there is only scant evidence of the nature and extent of Ms O’Connell’s contributions to the property over the years of her occupation, and her assertions as to the representations made to her have not been tested. On the other side of the ledger, it is not clear what (if any) knowledge Zappia had of the nature and extent of Ms O’Connell’s claims when it signed the contract. There is also the suggestion in Ms O’Connell’s material that Zappia may have secured some discount on the purchase price of the property because of her continued occupation.
34In all the circumstances, having regard to the principles governing the application of O53 summarised by Derham AsJ in Framlingham Aboriginal Trust set out above, I agree with Dr Ryan that it is inappropriate for the proceedings to continue by way of summary process. There are clearly both legal and factual questions to try, and any attempt to resolve them in a summary way would in my judgment be inconsistent with the care these applications demand.
35On the question of the costs of the application, its outcome was finely balanced and the potential difficulties in proceeding under O53 really only became apparent in the course of oral submissions. Further, the work done by the parties in preparing the application will form the foundation of the proceeding going forward. I will therefore order that the costs of the application be costs in the proceeding.
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Certificate
I certify that these 13 pages are a true copy of the ruling of His Honour Judge Woodward delivered on 14 October 2022
Dated: 14 October 2022
Lyn Nguyen
Associate to His Honour Judge Woodward
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