Wegner v Mayberry
[2020] VSC 239
•1 May 2020 (revised 4 May 2020)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2020 01960
| TAMMI LAURELLE WEGNER (formerly MAYBERRY) | First Plaintiff |
| and | |
| NICOLE ERIN BUTKIEWICZ | Second Plaintiff |
| v | |
| BRADLEY DEAN MAYBERRY | First Defendant |
| and | |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | Kennedy J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1 May 2020 |
DATE OF JUDGMENT: | 1 May 2020 (revised 4 May 2020) |
CASE MAY BE CITED AS: | Wegner & Anor v Mayberry |
MEDIUM NEUTRAL CITATION: | [2020] VSC 239 |
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REAL PROPERTY – Caveats – Application to remove caveat under s 90(3) Transfer of Land Act 1958 (Vic) – Where defendant adduced no evidence to support interest - Where any interest of defendant had already vested in trustee in bankruptcy – Balance of convenience also favoured removal of caveat – Order for removal made – Transfer of Land Act (Vic) s 90(3) - Chan and Wong v Liu and the Registrar of Titles [2020] VSCA 28.
COSTS – Indemnity costs – Where caveat lodged for improper purpose - Where caveat lodged in disregard of known facts – Order for indemnity costs made.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr W Drent | Logie-Smith Lanyon |
| For the Defendants | No appearance |
HER HONOUR:
This is an urgent application to remove a caveat pursuant to s 90(3) of the Transfer of Land Act 1958 (TLA).
Alternatively, the application is for orders that the caveat be set aside pursuant to s 91(4) of the TLA on the basis that a caveat in respect of the same interest was previously removed by an order of this court.
Background
The first plaintiff (Ms Wegner) was married to the defendant (Mr Mayberry) on 2 May 2009 and later divorced on 9 December 2016. Together they have two children.
On 17 April 2015, Ms Wegner and the second plaintiff became the registered proprietors of two commercial office suites situated at Units 4 and 4A, 8 to 18 Whitehall Street, Footscray in the State of Victoria (more particularly described in Vol 11474 Folios 306 and 307 (the properties) as tenants in common with one of two equal undivided shares each. The purchase was funded through a bank loan secured by mortgage to the ANZ Bank.
On 5 April 2018, Ms Wegner’s ex-husband, the first defendant, lodged a caveat over the properties claiming an ‘implied resulting or constructive trust' (the first caveat). The first caveat contained an absolute prohibition and affected the interests of both plaintiffs.
By order made on 2 April 2019, Associate Justice Derham removed the first caveat and also ordered indemnity costs against Mr Mayberry (who did not appear).
On 23 July 2019, Mr Mayberry then became a bankrupt.
On 31 January 2020, Mr Mayberry lodged a subsequent caveat over the properties, (the caveat) again claiming an ‘implied resulting or constructive trust’.
On 21 February 2020, the plaintiffs’ solicitors wrote to Khiem Lam of Provey Conveyancing (the addressee for notices on the caveat) requesting removal of the caveat. They cited, inter alia, s 91(4) and alleged that any legal or equitable interest that Mr Mayberry may have had (which was denied) vested in the trustee in bankruptcy.
On 24 February 2020, the plaintiffs’ solicitors sent a copy of this letter to Mr Mayberry.
On 25 February 2020, Mr Mayberry responded by email stating, inter alia, that the registered caveat would not be removed until the plaintiffs refinanced both loans and released him from his obligations as a co-borrower.
On 27 February 2020, the plaintiffs’ solicitors again requested that the caveat be withdrawn and put the defendant on notice that an application for indemnity costs would be made absent such withdrawal.
Further correspondence therein followed but the caveat was not withdrawn.
On 28 February 2020, a contract for the sale of the properties was signed with a date for settlement on 4 May 2020. Given the contract price is $480,000 and the debt owed to the ANZ Bank is currently $540,000, there is a shortfall. Significantly, no amounts from the proceeds of sale will be payable to the plaintiffs or the first defendant.
On 8 April 2020, Harrick Lawyers, solicitors for the trustee in bankruptcy, gave consent to the sale of the properties. This was after they had undertaken enquiries to satisfy themselves that the transaction, the subject of the contract of sale, was an independent arm’s-length transaction.
The Registrar of Titles is also aware of the proceeding, and has advised the court that he has no objection to orders in the form currently proposed.
Although the first defendant has not been personally served with the originating process, there is evidence that this process has come to his notice by email. In such circumstances, I am satisfied that he has been served pursuant to r 6.11 of the Rules, but has chosen not to appear.
Principles
Pursuant to s 90(3) of the TLA, any person who is adversely affected by a caveat may bring proceedings against the caveator for removal of the caveat.
In the recent Court of Appeal decision of Chan and Wong v Liu and the Registrar of Titles,[1] the Court of Appeal (Beach, Kyrou and Kaye JJA) stated:[2]
In Piroshenko v Grojsman, Warren CJ outlined the principles that a court should apply when determining an application under s 90(3) of the Transfer of Land Act, in terms that have been accepted and followed in subsequent decisions. In particular, her Honour, having considered the authorities, concluded that, in order to resist an application for removal of a caveat, the caveator must persuade the court of the following:
(1)there is a probability on the evidence before the court that he or she will be found to have the asserted equitable rights or interest; and
(2) that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.
Chief Justice Warren qualified those propositions by noting that the discretion, conferred by s 90(3) of the Transfer of Land Act, is expressed broadly, and ‘enjoins the court to make such order as it thinks ‘fit’. Accordingly, her Honour considered, the test adopted by the court ought not to restrict the power conferred by the statute.
[1][2020] VSCA 28.
[2]Ibid, [42]-[43].
Analysis
I am not satisfied that the caveator (who bears the onus[3]) has established any arguable right or interest. He has not appeared before me this morning, nor has he adduced any evidence to support the existence of any such equitable right. In any event, even if he did have such an interest, it will now be vested in the trustee in bankruptcy.[4]
[3]Piroshenko v Grojsman (2010) 27 VR 489, [7].
[4]See s 58 and see also s 116 of the Bankruptcy Act 1966 (Cth).
The first defendant has thereby failed to demonstrate any probability that he will be found to have the right asserted in the caveat (being an ‘implied, resulting or constructive trust’).
Secondly, the balance of convenience strongly favours the removal of the caveat in this case. I say this by reason of the following matters:
(1) the retention of the caveat is liable to have an adverse effect on the impending sale which is liable to affect the rights of a third party purchaser;
(2) that it is in the commercial interests of all parties, including the first defendant, that the properties be sold so as to reduce the outstanding debt to the ANZ;
(3) that there is evidence, against the background of the COVID-19 crisis, that the properties may otherwise not achieve a sale later and/or for the same price; and
(4) that the trustee in bankruptcy consents to the sale after checking that the sale was at a price that was appropriate and was an independent, arm’s-length sale.
I am therefore satisfied that it is appropriate to make the order for removal under s 90(3).
It is unnecessary in such circumstances to determine whether or not it would otherwise be appropriate to make orders pursuant to s 91(4).
Costs
The plaintiffs have also sought an order for indemnity costs.
The correspondence suggests that the caveator has lodged his caveat for the improper purpose of seeking to extract a commercial advantage i.e. to seek to remove his contractual obligation as a co-borrower, rather than to protect some actual interest in the properties. He has further lodged the caveat following the removal of the first caveat without seeking to provide evidence of any fresh or different grounds.
Indemnity costs are therefore appropriate on the basis that the caveator has lodged his caveat for a collateral purpose[5] and further in disregard of known facts.[6]
[5]Goldstraw v Goldstraw [2002] VSC 491, [38]-[39].
[6]Ugly Tribe Co Pty. Ltd v Sikola [2001] VSC 189, [7].
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