Whittington v Lilleyman - [2016] WASC 173

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WHITTINGTON -v- LILLEYMAN [2016] WASC 173

CORAM: MARTINO J

HEARD: 9 JUNE 2016

DELIVERED : 9 JUNE 2016

FILE NO/S: CIV 1894 of 2016

MATTER :Section 138C of the Transfer of Land Act 1893 (WA)

BETWEEN: SHANNON DAVID WHITTINGTON
Plaintiff
AND
GARY RANDELL LILLEYMAN
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Real property - Application to extend operation of caveat

Legislation:

Transfer of Land Act 1893 (WA), s 138C

Result:

Caveat extended

Category: B

Representation:

Counsel:

Plaintiff:     Mr M S Crawford
First Defendant             :     In person
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Arns & Associates
First Defendant             :     In person
Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

Bashford v Bashford [2008] WASC 138
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Jandric v Jandric [1999] WASC 22
Porter v McDonald [1984] WAR 271

MARTINO J: The plaintiff applies pursuant to s 138C of the Transfer of Land Act 1893 (WA) (the TLA) for an order extending a caveat over land owned by the first defendant. The first defendant acts in person. He has entered an appearance and filed an affidavit in opposition to the application. The second defendant, the Registrar of Titles, has followed the usual practice of sending a letter to the plaintiff and the court stating that she proposes to take no part in the action and to abide by any orders made by the court.
Although this is the first return of the plaintiff's application it is appropriate for me to determine the application today due to the small amount in dispute and because I consider that the appropriate resolution of the application is clear.
The following facts appear from the affidavits filed by the plaintiff and the first defendant.
On 2 March 2000 the first defendant transferred the land over which the caveat has been lodged to the plaintiff. A dispute arose between the first defendant and the plaintiff as to who was the beneficial owner of that land.
That dispute was resolved and on 24 December 2014 the plaintiff and the first defendant entered into a deed of settlement by which the plaintiff agreed to transfer the land to the first defendant.
Clause 3.1 of the deed provided that in the event that capital gains tax (CGT) was payable by the plaintiff to the Australian Taxation Office (the ATO) and the plaintiff provided to the first defendant a letter (on approved letterhead) from the ATO that evidenced that CGT was payable by him in respect of the property, the first defendant agreed to contribute $23,925 to the CGT payable.
Clause 3.2 provided that to secure the first defendant's obligation to the plaintiff in cl 3.1, the first defendant charged his interest in the land and the first defendant consented to the plaintiff registering a caveat over the land.
Clause 3.3 provided that the plaintiff would remove the caveat on the earlier of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Whittington v Lilleyman

Details

AGLC: Whittington v Lilleyman [2016] WASC 173
Case: [2016] WASC 173
Decision Date: 9 JUNE 2016

CaseChat Overview and Summary

In Whittington v Lilleyman, the plaintiff sought to extend the operation of a caveat over property to secure payment of a capital gains tax liability. The defendants argued that the caveat should be removed as the tax liability had been paid. The case was heard in the Supreme Court of Victoria. The primary legal issue was whether the caveat should be extended given the plaintiff's arguable claim to a caveatable interest in the property. The court considered the balance of convenience in light of the plaintiff's claim and the defendants' assertion that the tax liability had been settled.

The court acknowledged that while the balance of convenience is a factor in such applications, the primary purpose of a caveat is to protect a proprietary interest. Given the plaintiff's demonstration of an arguable case for a caveatable interest, the court found that interlocutory removal of the caveat would be unusual. The court noted that the plaintiff's total taxable income for the relevant year included significant capital gains and that the tax payable on this income was more than the amount claimed by the plaintiff as due from the defendants. Although the plaintiff had provided evidence of an assessment notice and a taxation estimate, the court found these documents did not conclusively resolve the issue of the exact amount owed. The court was satisfied that a serious question existed regarding whether the plaintiff still held a caveatable interest after the payment made by the defendants. Therefore, the court decided not to remove the caveat and encouraged the parties to attempt to resolve the dispute to avoid disproportionate costs and losses.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The balance of convenience is a factor to be considered in an application to extend the operation of a caveat. However, interlocutory removal of a caveat will be unusual where an arguable case as to the existence of a caveatable interest has been demonstrated. That is because the purpose of a caveat is the protection of a proprietary interest. Removal of the caveat will, in many cases, have the effect of destroying the benefit of the proprietary interest claimed in the caveat: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (50); Bashford v Bashford [50]. Whether the plaintiff is entitled to the full amount that he claims will turn upon evidence. The ATO assessment notice does not necessarily resolve the issue. The plaintiff says that the CGT payable is $20,160.95 and points to the ATO assessment notice and the taxation estimate prepared by his accountant at page 40 of his affidavit. However those documents show that the plaintiff's total taxable income for the year ended 30 June 2015 was $91,241. That taxable income included $59,814 capital gains. The tax payable on the taxable income was $21,706.17. In addition the plaintiff was assessed as having a liability for the Medicare levy of $1,824.82. The amount due to the ATO was reduced by $31 for franking tax credit offsets and $3,339 for PAYG instalments he paid, leaving a balance due of $20,160.95. At the hearing today counsel for the plaintiff handed up a further taxation estimate prepared by the plaintiff's accountant which showed that if not for the CGT the plaintiff would have received a tax refund of $673. This does not resolve the issue but it does show that it may be that the CGT liability was more than the amount that has been paid to the plaintiff by the first defendant. The plaintiff is seeking a letter from the ATO. Counsel for the plaintiff does not know how long it will take to receive such a letter, but says that two months is a reasonable estimate. It is not necessary or desirable that I resolve the issue in dispute on the affidavits. However I am satisfied that there is a serious question to be tried as to whether the plaintiff continues to hold a caveatable interest in the land after the payment that the first defendant has made. The ATO has not assessed that no CGT was payable. It is not yet clear that the first defendant has paid the full amount of CGT. I have considered whether, in view of the small amount remaining in dispute, the balance of convenience lies against extending the caveat. I have decided that it does not. The plaintiff has an arguable case that he is owed monies secured by the equitable charge created by the deed. If I were not to extend the caveat then he will lose his proprietary interest in the land to secure the monies that are arguably due to him by the first defendant. The amount in dispute is $10,080.45. I encourage the parties to endeavour to resolve this dispute. If it is not resolved the costs and losses that may flow will be out of proportion to the amount in dispute. If the parties cannot resolve the dispute it will be necessary for it to be resolved by an action in the Magistrates Court.