Westpac Banking Corporation v Dimopoulos

[2006] VSC 10

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 10050 of 2005

WESTPAC BANKING CORPORATION	Plaintiff
V
LENA DIMOPOULOS and THE REGISTRAR OF TITLES	Defendants

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JUDGE:	OSBORN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	20 JANUARY 2006
DATE OF JUDGMENT:	24 JANUARY 2006
CASE MAY BE CITED AS:	WESTPAC BANKING CORP. v DIMOPOULOS & ANOR
MEDIUM NEUTRAL CITATION:	[2006] VSC 10

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Application for removal of caveat – Balance of convenience favours removal of caveat.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms M Loughnan	Corrs Chambers Westgarth
For the First Defendant	Mr T Zervas	Stonnington & Zervas

HIS HONOUR:

1. The plaintiff ("the bank") makes application by a summons filed 20 December 2005 for orders that a caveat lodged by the first defendant on the land comprising certificate of title volume 9611 folio 988 (“the land”) be removed. 

1. The land is registered in the name of Joseph Emmanuel Stafrace (“Stafrace”).  Sandhurst Trustees Pty Ltd has the benefit of a first mortgage registered on 28 May 1997.  The bank holds a second ranking mortgage registered on 28 May 2003.  The first named defendant’s caveat was noted on title on 9 September 2004. 

1. The bank’s mortgage secures continuing credit given to Stafrace. 

1. The first defendant’s caveat claims an estate in fee simple on the grounds of an equitable interest by virtue of an implied, resulting or constructive trust. 

1. On 22 December 2005 judgment was entered against Stafrace in favour of the bank entitling the bank to recover the possession of the land and requiring Stafrace to pay the bank the sum of $1,498,500. 

1. The bank proposes to conduct a public auction of the land on 25 February 2005.  The first named defendant has sworn an affidavit detailing aspects of a de-facto relationship between May 1997 and April 2000 with Stafrace followed by marriage to Stafrace.  She says that the land constituted their matrimonial home until the breakdown of the marriage in June 2005.  She further says that she contributed monies towards the purchase of the home and towards expenses relating to the maintenance of the home and towards improvements of the home. 

1. She further says that she has made an application to the Federal Magistrates’ Court seeking declarations as to an interest in the land.

1. The relevant principles to be applied are summarised by Dodds-Streeton  J in Goldstraw v Goldstraw

"Whilst circumstances which would give rise to a constructive trust over land may arise in the context of marital relationships or de facto relationships, relevant authority establishes that the mere fact that a party has made a claim in the Family Court of Australia does not entitle that party to claim an interest in land. In Bell v Graham, Kellam J noted that a party to a marriage might have an interest pursuant to a constructive trust, based on the same general principles which apply to parties who are not married [at 5]. For example, the trust may arise by reason of contributions of money or labour with respect to the land. Kellam J, nevertheless noted:

"It is clear that the relationship of marriage alone does not create a caveatable interest pursuant to a constructive trust".

His Honour further observed that the right to seek an order conferring an interest in land under s.79 or other provisions of the Family Law Act:

".. does not give a party to a marriage a caveatable interest in land until such time as the Family Court makes an order in respect of their land."

Section 90(3) of the Act provides:

"Any person who is adversely affected by any such caveat may bring proceedings in the Court against the caveator for the removal of the caveat and the Court may make such order as the Court thinks fit."

Section 90(3) is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The Court's power under s.90(3) is discretionary. In that context, it is recognised that the caveator bears the onus of establishing that there is a serious question to be tried that he or she does have the estate or interest in the land claimed.  That is, `in order to resist successfully the applications for removal of caveats (the caveator's) arguments must be directed towards the assertion of an interest in the subject land in the light of relevant principles of property and equity law".  Further, if the caveator does establish the serious question to be tried in relation to the estate or interest claimed, the weight of authority indicates that the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial." [1]

[1][2002] VSC 491 at [27]-[30].

1. In the present case although the first defendant has made application to the Family Court claiming an interest in the land sold, such claim does not give rise to a caveatable interest.

1. Conversely the first defendant has established a serious question to be tried with respect to an equitable interest in the land arising out of the contributions she has made to the purchase, maintenance and improvement of the land.

1. The interest claimed pursuant to the caveat is subject to the prior registered interest of the bank by reason of s 42 of the Transfer of Land Act 1958. 

1. There is no evidence and no suggestion that the bank obtained its registered mortgage by fraud, or that its right to assert its priority is affected by any in personam right claimed by the first defendant.

1. There is no evidence nor suggestion that the plaintiff misled or deceived the first defendant as to the level of secured debt prior to the making by the first defendant of any contributions towards the purchase, maintenance or improvement of the land.

1. This is so despite the fact that there is evidence that Stafrace misled the first defendant as to the level of the secured debt.

1. The balance of convenience favours the removal of the caveat.

(a)The first defendant asserts that she does not oppose the sale of the land, and I am satisfied the removal of the caveat may assist such sale to achieve the market value of the land;

(b)The debt secured is in the order of $1.5M.  The value of the land is said by the bank to be less than $1M.  The first mortgagee is secured with respect to a sum in excess of $200,000.  The first defendant does not contest the asserted value of the property or more particularly she does not contest that the mortgagees' registered interests secure sums which together substantially exceed that value of the property.  The first defendant has no net equity in the property, justifying the maintenance of the caveat. 

(c)The first defendant does not assert a desire to preserve the property in issue as such.  As I have said she does not object to its sale.  If she were able to establish some equitable claim against the bank hereafter there is no doubt the bank would be able to meet any judgment in equitable damages

1. Accordingly, although the first defendant has established that there is a serious question to be tried with respect to an equitable interest in the land:

(a)       such interest is subject to the prior registered interest of the bank;

(b)the value of the land is not such as to render the defendant’s interest of any value; and

(c)the balance of convenience overwhelmingly favours removal of the caveat.

1. In the circumstances the bank is entitled to the orders sought.

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