Walter v Registrar of Titles
[2003] VSCA 122
•31 July 2003
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 5147 of 2001
| CARMEN WALTER - and - REGISTRAR OF TITLES | Appellant |
| First Respondent | |
| and | |
| GEOFFREY NIELS HANDBERG | Second Respondent |
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JUDGES: | ORMISTON and CHERNOV, JJ.A. and ASHLEY, A.J.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 31 July 2003 | |
DATE OF JUDGMENT: | 31 July 2003 | |
MEDIUM NEUTRAL CITATION: | [2003] VSCA 122 | |
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Real Property - Torrens System - Caveat - Caveatable Interest - Whether beneficial interest in discretionary trust sufficient to found caveatable interest - Whether constructive trust in existence - Whether in the particular circumstances bank's registered mortgages would take priority to interest under alleged constructive trust.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | In Person | |
| For the Respondent Handberg | Mr G. Clarke | Baker & McKenzie |
ORMISTON, J.A.:
I will ask Chernov, J.A. to give the first judgment in this matter .
CHERNOV, J.A.:
This is an appeal by Carmen Walter against the decision of Beach, J. sitting in the Practice Court, made on 7 May 2001, whereby his Honour ordered on an application of the second respondent, Geoffrey Niels Handberg ("the plaintiff"), that the first respondent, the Registrar of Titles ("the Registrar"), remove caveat No.X297906P ("the appellant's caveat") lodged by or on behalf of the appellant in the Office of Titles on 5 February 2001 in respect of land described in Certificate of Title Volume 10289 Folio 289 ("the Land"). The applicant claims a caveatable interest in the Land in the following terms: "The registered proprietor holds the property on trust for the Walter Family Trust and for the caveator pursuant to a constructive trust, breaches of the Constitution by NAB, breaches of common law rights." the plaintiff, who contends that the appellant has no caveatable interest in the Land, took proceedings by way of an Originating Motion filed 30 March 2001 to have the appellant's caveat removed. The appellant's case below, as it was before us, was that she had a caveatable interest in the Land as beneficiary:
(a)under a discretionary trust which, she alleges, is the beneficial owner of the Land and the trustees of which are her parents;
(b) of a constructive trust which, it was said, arose because of her unpaid work in relation to the development of the Land in the manner later described. It is convenient to mention at this point that the appellant has no legal training and represented herself before Beach, J., and again before us. But it should also be said that the appellant is no stranger to litigation or to representing herself in proceedings in which she has an interest. As is customary, the Registrar has not appeared at the hearing before
his Honour, or before us, but informed the Court that she would abide its decision.
In support of her case before Beach, J., the appellant filed two substantial affidavits, together with exhibits. The first affidavit is of some 22 pages and has 39 exhibits (222 pages) annexed to it. The second affidavit is 18 pages long and has five exhibits (67 pages) annexed to it. The plaintiff filed two affidavits, one of four pages with 11 exhibits (222 pages) annexed to it, and the other of two pages. On 7 May 2001 Beach, J. effectively held that, even if the appellant's parents held the Land for the family trust of which the appellant was a discretionary beneficiary, such an interest did not give her a caveatable interest in the Land. His Honour also rejected the appellant's claim that she had an equitable interest in the Land on the basis of the alleged constructive trust. It seems clear enough from his Honour's reasons that, in the main, he accepted the appellant's material insofar as it explained the chronology of relevant events leading to the sale of the Land, with which I will deal later.
By notice of appeal dated 21 May 2001 the appellant has appealed against the decision of Beach, J. Many of the grounds on which the notice of appeal is based are difficult to understand and a great deal of the appellant's written and oral submissions, to which I will refer later, are also attended with the same difficulty. Further, the bulk of the appellant's written submissions on which she relied bore no real relationship to the grounds set out in the Notice of Appeal. No doubt all this is largely due to the fact that the issues in the proceeding raise complex questions of land law and equity, thereby making it difficult for the appellant to isolate, and deal solely with, relevant issues. In the circumstances, the appellant was allowed to press all her contentions, and I will deal with each of them later. First, however, I shall set out the unfortunate circumstances that have led to this proceeding and its history.
In about May 1995, the appellant's parents, Fritz Josef Walter and Ingrid Adelheid Rosa Walter, who then resided in Germany, as did the appellant, agreed to purchase the Land, which was then vacant, and paid a deposit of $10,000. The purchase was settled on 19 February 1997 and Mr and Mrs Walter became the registered proprietors of the Land on 13 March 1997. According to the appellant, they purchased the Land for the benefit of the Walter Family Trust ("the Trust") which was established by a deed of settlement dated 15 March 1996. The Walters planned to develop a brewery and restaurant business ("the Palatinat Restaurant") on the Land as part of the "Gateway Island Tours Project" in the Albury/Wodonga region and, later, to emigrate to Australia. Construction of the Palatinat Restaurant commenced in about July 1997 while the Walter family still resided in Germany. The bulk of the acquisition and construction costs were paid by Mrs and Mrs Walter from their own funds. It seems that they had a successful Peugeot dealership, repair shop and service station business in Germany. In about March 1998 the family emigrated to Australia in anticipation of the Palatinat Restaurant opening for business a few months thereafter. It was intended to operate the business through a corporate structure and, to that end, Palatinat Brewery Pty Ltd ("the company") was incorporated in April 1998, which then leased the premises from the Trust. At all material times the company was controlled by Mrs and Mrs Walter, their son and the appellant. In May 1998 the Palatinat Restaurant was opened for business by the Premier of this State in an air of optimism and notwithstanding that not all the building work was finished.
In order to fund the continued development of the project, Mr and Mrs Walter borrowed money from the National Australia Bank Limited ("the bank"). As security for the borrowings they executed in 1997, a guarantee and an all moneys mortgage over the Land which was registered in September 1997. I note that the instrument of mortgage does not describe the mortgagors as trustees of the Trust, although the guarantee that they also executed in respect of the loans makes it plain that they did so in that capacity. Later, the company also executed a guarantee and debenture charge over its assets in favour of the bank in relation to the loans which was duly registered by the bank.
On 16 December 1998 the Walters rearranged their finances with the bank and entered into two loan agreements. The first was for an interest only loan of $1m repayable in 12 months and the second was for a loan of $380,000 repayable over seven years. The documentation shows that the borrowers were Mr and Mrs Walter as trustees for the Trust. The funds were drawn down on 24 December 1998 and a little over $1m was used to pay out the existing loans, while the balance was paid into the company's bank account.
At or about that time, it became apparent that the Palatinat Restaurant was generating returns which were substantially less than those originally projected by the Walters and by December 1999, when the first loan was to be repaid, repayment could not be effected. The bank extended the period of the loan from time to time but ultimately called it up in late November 2000. In the result, it appointed the plaintiff as receiver and manager of the company, the Palatinat Restaurant business and the Land. The plaintiff thereupon proceeded to take steps to sell the Palatinat Restaurant and its freehold by auction on 2 March 2001.
The appellant and her family, however, sought to preserve the rights they claimed to have in relation to the Land and the Palatinat Restaurant, and, to that end, the appellant lodged her caveat on 5 February 2001 and Mr and Mrs Walter, their son, the company, and the appellant filed proceeding No.4486 ("the mortgage proceeding") in which they sought to set aside the above securities and claimed damages from the bank.
By summons dated 16 September 2001, the plaintiffs in the mortgage proceeding sought an interlocutory injunction to restrain the receiver and manager, the plaintiff in this proceeding, from selling the Land and the Palatinat Restaurant. The summons came on for hearing before Beach, J. sitting in the Practice Court on 27 February 2001. His Honour refused to grant the relief sought and it seems that an application to this Court to stay the auction was dismissed on 2 March 2001. On that day, the plaintiff sold the Land and the Palatinat Restaurant at public auction for $1.03m pursuant to a contract of sale under which settlement was to take place on 2 June 2001. The mortgage proceeding was heard this year and the decision has been reserved.
The present proceeding was, as I have said, instituted on 30 March 2001 whereby the plaintiff successfully sought an order that the Registrar remove the appellant's caveat. The appellant did not seek a stay of his Honour's order but, on 21 May 2001, filed a notice of appeal in which she contended that his Honour erred in a number of ways in ordering the removal of her caveat. Although the position is far from clear, it seems that, on 29 May 2001, the Registrar removed the appellant's caveat in accordance with his Honour's order but then, unbeknown to the plaintiff, did not register the transfer from him as receiver and manager of the Land to the purchasers. It would appear that the Registrar held up the registration pending advice as to the outcome of this appeal. When the plaintiff was advised of this position, correspondence ensued between his solicitors, the Registrar and the appellant and this culminated in the Registrar advising the appellant in early February 2003 that she should obtain either an injunction, or an agreement of the plaintiff to stay the registration of the transfer, otherwise it would be dealt with by her office in the usual way. Having failed to obtain the necessary consent of the plaintiff's solicitors, on 20 February 2003, the appellant filed a summons in this Court seeking a stay of the order of Beach, J. in this proceeding. The application came on for hearing before this Court constituted by Batt, J.A. and myself on 4 April 2003. The appellant's summons was dismissed, essentially on the bases that her prospect of success in the appeal was extremely weak and that there has been undue delay in the bringing of the application. Nevertheless, as the appellant confirmed this morning, the transfer of the Land remains unregistered and the certificate of title shows that Mr and Mrs Walter are the registered proprietors of the Land.
When the matter came on for hearing this morning, the appellant essentially submitted that judges who are Freemasons are not entitled to hear cases because the oath that a person must take before he can become a member of that society conflicts with the judicial oath. Consequently, she asked the members of this Court to disclose whether any of them was a Freemason. The learned presiding judge, speaking for this Court, told the appellant that, although she was not entitled to have that question answered, no member of it was a Freemason.
The appellant next submitted that this appeal was linked to the mortgage proceeding. That proceeding, which is concerned with the bank's entitlement to the benefit of the mortgage in question was said to bear upon the present proceeding in so far as the bank appointed the plaintiff receiver and manager of the relevant assets, and enabled him to have the necessary standing to execute the transfer of the Land to the purchasers. Consequently, the appellant said that any member of this Court with an interest in the shareholding of the bank he should disqualify himself on the ground of perceived bias. In the circumstances, the appellant asked the Court whether any member of it held shares in the bank or any other major bank or had an interest in any such shares.
The appellant was informed by the Bench that she was not entitled to such information in relation to banks other than the National Australia Bank Ltd. Nevertheless, one member of the Court told the appellant that he had no shares or interest in any of the banks. Another member of the Bench said that he had a modest holding in a bank other than the bank in question. I informed the appellant that I had an interest in a small shareholding in each of the National Australia Bank Ltd. and the other major banks but that such holding in the bank in question was so small that it was inconceivable that the outcome of this appeal could bear on its value. The appellant was further told by the Court that the entitlement of the bank as registered mortgagee was not the subject matter of this appeal and would, therefore, not require consideration by the Court. Nevertheless, the appellant submitted that I should disqualify myself from sitting on the appeal because she could not be satisfied that I could bring an impartial mind to the issues in the appeal. In support of that submission, the appellant referred the court to McKinnon v. Commonwealth Bank of Australia[1] where two judges disqualified themselves from hearing a special leave application to the High Court because the appellant, a litigant in person, objected to their Honours' hearing the matter due to the parcel of shares each held in the Commonwealth Bank notwithstanding that each such holding was small. In this appeal, however, no bank is a party to the proceeding. Importantly, the rights of the bank to the mortgage do not arise for consideration in this appeal. In the circumstances, therefore, I took the view that no reasonable apprehension of bias, in the accepted sense of that term[2], would arise if I were to take part in the hearing of the appeal. In the event, the appeal was heard by the Bench as originally constituted.
[1]Unreported, 20 June 2003, McHugh, Hayne and Callinan, JJ.
[2]See Ebner v. Official Trustee in Bankruptcy (2000) 205 C.L.R. 337.
I now turn to the appellant's grounds of appeal and the arguments in support of her contention that his Honour's order was vitiated by error. Her principal contention was that his Honour wrongly decided that the appellant failed to establish that she had a caveatable interest in the Land. In my view, however, his Honour made no error in that regard. It is plain that a beneficiary under a discretionary trust does not have an interest in land owned by the trust sufficient to found a caveat.[3] In any event , as was pointed out by Mr Clarke for the plaintiff, the appellant was bound by the lawful acts of the trustees of the Trust, Mr and Mrs Walter. It was not suggested by the appellant that they lacked the power to enter into the loan agreement or to execute the security documents in question, in particular the mortgage over the Land, or that they acted unlawfully in that regard. The fact that they had executed the mortgage without endorsing on it that they did so as trustees did not affect the interest of the bank as the registered mortgagee. On the appellant's own case, as set out in one of her affidavits, the bank was not aware of the existence of the Trust when it took, as set out in one of her affidavits, the mortgage.
[3]See Gartside v. Inland Revenue Commissioners [1968] A.C. 553 at 607 per Lord Reid with whom Lord Morris and Lord Guest agreed.
I am also of the view that there is no merit in the appellant's claim that she had a caveatable interest in the Land because she was a beneficiary under a constructive trust which, according to the appellant, came into existence because of her contribution to the improvements that were made to the Land. Such contribution, said the appellant, took the form of unpaid work by her in respect of the development of the Palatinat Restaurant. A constructive trust arises by operation of law and irrespective of the parties' intention. It is remedial in its origin and arises where, according to the principles of equity, it would be a fraud for the person on whom the court imposes a trust to assert beneficial ownership of the property in question.[4]
[4]See Jacobs' Law of Trusts in Australia, 6th edn., para.[1301] and Muschinski v. Dodds (1986) 160 C.L.R. 583 at 613 -616 per Deane, J.
There is, however, no suggestion by the appellant that it would have been a fraud for the trustees of the trust - Mr & Mrs Waler - to deny her claim that she has a beneficial interest in the Land merely because she carried out unpaid work in relation to the development of the Palatinat Restaurant. For that reason alone, I consider that the appellant has not made out a case that she has a beneficial interest under any constructive trust, let alone one that gives her a beneficial interest in the Land to support her caveat.
Another reason why this part of the appellant's claim must fail is that, as his Honour said, whatever contribution the appellant made to the development of the Palatinat Restaurant was for the benefit of the company rather than the trust. In my view, given that the appellant did not settle in Australia until approximately February 1998, such a conclusion was clearly open to his Honour. Properly characterised, any relevant claim that she might have is one for work and labour done and not as beneficiary of a constructive trust which is supposed to give her an equitable interest in the Land.
In any event, even if the appellant had an interest in the Land under a constructive trust for which she contends, that interest would be postponed to that of the bank.
This morning the appellant, in substance, conceded in an answer to a question posed by Ashley, A.J.A. that she did not begin such work until after the bank's mortgage was registered. It follows, therefore, that even if it could be said that she acquired an equitable interest in the Land because of her work for the Trust, that interest was clearly postponed to that of the bank under its registered mortgage.
I now turn to the other arguments of the appellant put in support of her attack on his Honour's decision. As I have said, they are not based on the grounds of the appeal but, for the reasons I have given, it is appropriate to consider them. I do so briefly because, as it will be apparent, all of them are misconceived.
(a) The appellant contends that the mortgage proceeding has not been determined and that the decision in that case "could have implications on the current matter". As I understand the appellant's argument, she claims that, if the mortgage was set aside, the plaintiff would have no standing to pursue the removal of the caveat. This argument, however, goes nowhere. As I have said, the caveat has already been removed. In any event, this contention does not demonstrate error on the part of his Honour. If the mortgage was set aside in the mortgage proceeding, this would not vitiate his Honour's order. At most, it might deprive the plaintiff of standing to insist that the registration to the purchasers be effected by the Registrar. Consequently, as I have said, there is nothing in this contention.
(b) It is also asserted that His Honour failed to give the appellant a fair opportunity to be heard, in particular, his Honour failed to give her appropriate time to make submissions and lead relevant evidence. In my view, this complaint has no merit. No material has been placed before us that supports the claimed denial of natural justice. The appellant could not point to any relevant evidence or submissions that she would have put before his Honour if more time had been given to her. Moreover, no complaint such as is now made was put to his Honour. Had that occurred, the judge would have had to deal with that in his reasons, however briefly. But no reference is made in his Honour's reasons to any complaint of this nature. Furthermore, given the affidavit material that the appellant filed in support of her claim and to which I have referred, it is difficult to see what further material she could have put before Beach, J. As I have said, the appellant did not identify any such relevant material to us.
(c) The appellant further asserted that "his Honour should not have disposed of the matter upon the Plaintiff Respondent's application and upon affidavit material". Again, this complaint is, in my view, without merit. The real complaint is that the judge should not have sought to resolve the conflicts that were made in he affidavit material. But his Honour was not called upon to resolve such conflict; it simply did not exist. His Honour essentially accepted the factual context as was presented by the appellant so that, even if there was any conflict, that was resolved in favour of the appellant. Not surprisingly, most of the material before his Honour consisted of documents which spoke for themselves and there was no relevant evidentiary conflict, as I have said. The real dispute between the parties was of a legal nature.
(d) There is also no substance in the appellant's contention that his Honour decided the case before him on the assumption that the mortgage proceeding would be decided in favour of the bank. As I have said, there is no relevant connection between the two proceedings and, in any event, his Honour's reasons show that his conclusion was unaffected by what might or might not be decided in the mortgage proceeding. I mention for completeness that, even if Mr and Mrs Walter as mortgagors have the right to set aside the mortgage sale, this would not, of itself, give the appellant an equity in the Land that would support the caveat. Moreover, even if it did, no such equitable interest can arise until the equity is made good, in this context, until the mortgage is set aside and such an equity would be clearly postponed to that of the bank's interest.[5]
(e) Similarly, the appellant's claim that his Honour should have only determined if the appellant had an arguable case and, if she did, that he should have adjourned the matter "to trial", shows a misunderstanding of the proceeding by the appellant. The hearing of the Originating Motion was the trial on the issues raised by it and it is evident on the face of the Originating Motion that final orders would be sought on its return.
(f) The appellant further asserts, as I understand it, that, at the hearing of the mortgage proceeding, the bank's counsel stated that the plaintiff's appointment as receiver was limited to "the income of the Land" and, therefore, he had no authority to sell the Land and, consequently, had no standing to have the caveat removed. The material before us, however, does not support that any relevant admission was made on behalf of the bank in the mortgage proceeding or otherwise. Thus there is no evidence that the plaintiff's appointment was limited as is contended for by the appellant. In the circumstances, this claim cannot assist the appellant in demonstrating the relevant error by his Honour.
(g) The appellant has also challenged his Honour's decision on a number of constitutional grounds which, in essence, contend for the invalidity of the Constitution Act 1975 (Vic.) and of the Supreme Court, including this Appeal Division. The principal argument was that Royal Assent could only be given by way of a signature by Her Majesty and since the purported assent to the legislation in question was not signed by her, the Act is invalid. Thus, it was said, his Honour's decision was unlawful because he had no capacity to sit on the case and, equally, we did not have the capacity to sit to hear the appeal. Putting aside the inherently contradictory nature of this submission and the appellant's application to this Court, the short answer to this claim is that it was put forward by the appellant and determined by Batt, J.A. and myself on 4 April 2003 at the hearing of the appellant's application for an order to stay the order of Beach, J. of 7 May 2001, to which I have referred earlier. Strictly, therefore, the appellant is precluded from raising the same issues before us, but even if there were no such inhibition, I would reject her arguments based on the invalidity of the Constitution for the reasons given by Batt, J.A. on 4 March 2003.
[5]See Swanston Mortgage Pty. Ltd. v. Treplan Investments Pty. Ltd. [1994] 1 V.R. 672.
In the circumstances, therefore, I consider that the appellant has not shown that his Honour erred in his decision and, consequently, I would dismiss the appeal.
ORMISTON, J.A.:
I agree with the conclusions stated by Chernov, J.A. and the reasons that he has given for them.
ASHLEY, A.J.A.:
I also agree.
ORMISTON, J.A.:
The order of the Court, therefore, is that the appeal be dismissed.
MR CLARKE:
I apply for costs, if the Court please.
ORMISTON, J.A.:
Do you want to say anything about costs?
APPELLANT:
I don't like costs; who does?
ORMISTON, J.A.:
You don't like costs or you don't want to pay the costs?
APPELLANT:
I beg your pardon, your Honours.
ORMISTON, J.A.:
I was asking what you said, I couldn't hear you.
APPELLANT:
I said, who likes costs? I don't like the costs.
ORMISTON, J.A.:
That is what I thought you said; you don't like them?
APPELLANT:
Indeed.
ORMISTON, J.A.:
What arguments can you put to the Court that you shouldn't pay them?
APPELLANT:
That is every time my difficulties to put the argument in a proper way, and I have to say, I am in the hands of my Lord Jesus Christ. Thank you.
ORMISTON, J.A.:
Yes, well, you persist with your application, do you?
MR CLARKE:
I am instructed to, your Honours, yes.
ORMISTON, J.A.:
Well, the order of the Court, therefore, is that the appeal be dismissed with costs.
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