Wichniewicz v Registrar of Titles
[2014] WASC 18
•24 JANUARY 2014
WICHNIEWICZ -v- REGISTRAR OF TITLES [2014] WASC 18
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 18 | |
| Case No: | CIV:1078/2014 | 24 JANUARY 2014 | |
| Coram: | EDELMAN J | 24/01/14 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | ANDRZEJ JRENEUSZ WICHNIEWICZ REGISTRAR OF TITLES AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD |
Catchwords: | Real property Caveats Whether any claim to rescind a sale of land is an interest in land supportable by caveat Whether caveator's claim has or may have substance Balance of convenience |
Legislation: | Transfer of Land Act 1893 (WA), s 137B(1), s 137C(2) |
Case References: | Aaronisle Pty Ltd v Thorpe [2005] WASC 87 Commonwealth Development Bank of Australia Ltd v Nertec Pty Ltd [1999] WASCA 311 His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15 Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 KWS Capital Pty Ltd v Love [2013] WASC 294 McCourt v National Australia Bank Ltd [2010] WASC 121 Palazzo Homes Pty Ltd v Goh [2010] WASC 407 Prater v Permanent Mortgages Pty Ltd [2010] WASC 278 R and I Bank of Western Australia Ltd v Lavery (Unreported, WASC, Library No 930567, 25 October 1993) Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870 Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672 Wildgum Nominees Pty Ltd v Land Alliance Pty Ltd [2009] WASC 244 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
REGISTRAR OF TITLES
First Defendant
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD
Second Defendant
Catchwords:
Real property - Caveats - Whether any claim to rescind a sale of land is an interest in land supportable by caveat - Whether caveator's claim has or may have substance - Balance of convenience
Legislation:
Transfer of Land Act 1893 (WA), s 137B(1), s 137C(2)
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : In person
First Defendant : No appearance
Second Defendant : Mr B C Smith
Solicitors:
Plaintiff : In person
First Defendant : No appearance
Second Defendant : Gadens Lawyers
Cases referred to in judgment:
Aaronisle Pty Ltd v Thorpe [2005] WASC 87
Commonwealth Development Bank of Australia Ltd v Nertec Pty Ltd [1999] WASCA 311
His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15
Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161
Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222
KWS Capital Pty Ltd v Love [2013] WASC 294
McCourt v National Australia Bank Ltd [2010] WASC 121
Palazzo Homes Pty Ltd v Goh [2010] WASC 407
Prater v Permanent Mortgages Pty Ltd [2010] WASC 278
R and I Bank of Western Australia Ltd v Lavery (Unreported, WASC, Library No 930567, 25 October 1993)
Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870
Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672
Wildgum Nominees Pty Ltd v Land Alliance Pty Ltd [2009] WASC 244
- EDELMAN J:
Introduction
1 This is an application by Mr Wichniewicz to extend the operation of a caveat which he lodged over land over which he is the registered proprietor. The second defendant, the ANZ Bank, is a mortgagee in possession of the land. The ANZ Bank has sold the land. Settlement cannot proceed until the caveat is removed. So the ANZ Bank objects to Mr Wichniewicz's application to extend the operation of his caveat.
2 For reasons I will explain, I proceed on the basis that Mr Wichniewicz's claim in support of his caveat has, or may have, substance. But the balance of convenience overwhelmingly favours the refusal of Mr Wichniewicz's application to extend his caveat.
The background to this application
3 Mr Wichniewicz is the registered proprietor of land at 22 Maw Close, Palmyra ('the Land').
4 The ANZ Bank is the first registered mortgagee over the Land.1 The mortgage to ANZ Bank secures a loan between Mr Wichniewicz and the bank dated 29 July 2008.2
5 Mr Wichniewicz defaulted on the loan. On 22 May 2012, this Court entered judgment for possession over the Land in favour of the ANZ Bank.3 The ANZ Bank took possession after execution of a Sheriff's Property Seizure and Delivery Order.4
6 On 23 November 2013, the ANZ Bank sold the Land. Settlement has not yet occurred. The ANZ Bank wishes to settle as soon as possible.5 To do so it needs to discharge Mr Wichniewicz's caveat and other encumbrances.6 So it applied under s 138B(1) of the Transfer of Land Act 1893 (WA) for notice to be served on Mr Wichniewicz requiring him to obtain a court order if he wished to extend his caveat.7 The notice was issued. Mr Wichniewicz's caveat expires at midnight tonight. He wishes to extend it.
The relevant principles
7 There is no need to set out the principles concerning the extension of a caveat in great detail. The power to extend a caveat derives from s 138C(2) of the Transfer of Land Act 1893 (WA). Counsel for the ANZ Bank relied on the principles I set out in KWS Capital Pty Ltd v Love.8 Omitting citations of authority they are as follows:
In assessing whether to grant the extension of the caveat the two broad issues are
(1) whether the caveator's claim in respect of the estate or interest in land 'has or may have substance', and
(2) whether the balance of convenience favours the retention of the caveat and the appropriate orders to be made.
The first issue is whether the caveator's claim in respect of the estate or interest in land 'has or may have substance'. This is sometimes expressed as whether the caveator can show that there is a serious question to be tried, or whether the caveator can prove a prima facie case.
The requirement that the caveator's claim of substance be in respect of the estate or interest in land has been held to mean that the claim must concern a 'proprietary interest' in land.
If the caveator's claim in respect of the estate or interest in land 'has or may have substance' then the caveat maybe extended. The exercise of the discretion to extend has sometimes been described as the 'balance of convenience'.
The issues of (1) whether the claim 'has or may have substance' and (2) whether the balance of convenience favours the extension of the caveat are not independent. Even if a claim has or may have substance, the caveat might not be extended having regard to factors including the apparent strength or weakness of the claim.
Whether the caveator's claim in respect of the Land has or may have substance
8 Mr Wichniewicz's caveat is an absolute caveat over the whole of the land in respect of improper dealings. He claims an estate or interest in the Land on the basis that, as recorded in his caveat, he is 'concerned that [his] title may be the subject of identity fraud and the forgery of instruments and documents purporting to be signed by the registered proprietor'.9
9 Mr Wichniewicz has filed an affidavit in support of his application. His affidavit is dated 21 January 2014. His affidavit is not clearly expressed. This is entirely understandable since he is not legally trained and also has some difficulty with English expression. Broadly, however, his affidavit contains allegations including the following:
(i) The ANZ Bank did not inform him of the sale of the Land and did not provide him with an account;
(ii) The Land was sold at an auction where there was only one bidder and the bidder, who purchased the Land, was the same person who had earlier failed to obtain finance;
(iii) There is a conspiracy between the lawyers for the ANZ Bank, Mr Wichniewicz's solicitor and the real estate agent including negligence, fraud and falsification of documents which has cost Mr Wichniewicz hundreds of thousands of dollars; and
(iv) When the ANZ Bank took possession of the Land, it damaged the property and took possession of his personal effects which have not been returned.
10 On the basis of the material before me on this application, if Mr Wichniewicz has an estate or interest in the Land which is capable of protection by this caveat then it would be an equity to rescind any sale of the Land by the ANZ Bank as mortgagee in possession. In Kerabee Park Pty Ltd v Daley,10 Holland J made remarks about subsequent encumbrances which extend also to a registered proprietor of land the subject of a mortgagee in possession:
... it would seem to me to follow that a caveator should have no right to prohibit registration of a dealing to which his alleged interest in the land would not entitle him to object, if he were to invoke the assistance of the court. A subsequent encumbrancer, registered or unregistered, has no right whatever to interfere in, or object to, a proper exercise by a mortgagee of the mortgagee's power of sale, and would have no ground on which to seek the intervention of the court, notwithstanding the fact that registration of the transfer to the purchaser would discharge or defeat all mortgage interests in the land whether registered or not ...
The only class of case which the defendants suggest might lead the Court, at the instance of a subsequent mortgagee or encumbrancer, to interfere to restrain registration of a transfer to a purchaser upon the exercise of a mortgagee's power of sale is that of fraudulent or improper sales, such as were instanced above. Assuming for the moment that the mere possibility of a fraudulent or improper mortgagee's sale would entitle the holder of an unregistered mortgage to lodge a caveat prohibiting the registration of all dealings with the land except upon notice to him, it would not follow, in my opinion, that a caveator would be justified in continuing to maintain his caveat, when requested by the mortgagee to withdraw it for the purpose of promoting the prospects of a successful sale by the mortgagee, when the caveator could not point to any circumstances suggesting that the mortgagee was, or might be, going to exercise his powers improperly, or might fail to apply surplus proceeds in the manner required by law.
11 This passage has been subsequently approved, including in this Court.11
12 Mr Smith, for the ANZ Bank, made submissions, for the purposes only of this application, on the basis that Mr Wichniewicz has a claim which has, or may have, substance. I also proceed on that basis and I assume that he has, or may have, an equity to rescind the sale of the Land. Nevertheless, there is a further obstacle in relation to whether such a claim can support a caveat.
13 It has been observed on several occasions in this Court that there is a conflict in authority concerning whether a registered proprietor's equity of rescission can support a caveat.12 The authority against a caveat is a decision of the Victorian Court of Appeal which held that no equitable interest in the land arises from a mortgagor's equity to set aside a sale effected by a fraudulent exercise of power until the equity had been established in curial proceedings.13 It may be that the contrary authority14 should be preferred on the basis that the Victorian approach takes an overly literal interpretation of the words 'interest in land'. After all, an equitable mortgage or equitable charge is not literally an interest 'in land'. They are interests in relation to rights to land. And it is well established that a equitable mortgage or equitable charge is a claim to an interest in land which can support a caveat.
14 For these reasons, it is sufficient in this case to proceed on the assumption that Mr Wichniewicz has, or may have, an estate or interest in the Land which is capable of protection by caveat. However, it is relevant that a number of Mr Wichniewicz's allegations are of a very general nature and are not supported by specific evidence. The general nature of his allegations in relation to any potential claim for rescission affects the assessment of the strength of his claim which must be assessed together with the factors affecting the balance of convenience.
Balance of convenience
15 The factors in relation to the balance of convenience strongly favour the rejection of this application. Four factors are relevant. Each points to dismissal of the application, particularly when considered together with the claims in relation to the Land which have or may have substance.
1. No undertaking as to damages which is of real substance
16 Practice Direction 4.3.4 provides that an undertaking will usually be required to be given by a party obtaining the benefit of an order extending the operation of a caveat. The absence of any undertaking has been described as an 'important indication that the plaintiff's application should be refused on the balance of convenience'.15 On the facts of a particular case, the absence of an undertaking can be 'a fundamental obstacle to relief',16 although in an appropriate, although rare, case the Court might dispense with the need for such an undertaking.17
17 The importance of the undertaking, and its effect on the balance of convenience, must be assessed together with the other factors affecting the balance of convenience, including a preliminary assessment of the strengths and weaknesses of the plaintiff's case. But the undertaking as to damages serves an important function of protecting the rights of the parties in circumstances in which any assessment of the merits of a case will almost always be provisional and very tentative. As Commissioner McKerracher (as his Honour was then) said, the undertaking is a 'means of preventing injustice before the rights of parties have been finally determined'.18
18 An undertaking which is of no economic substance places a defendant in a position little different from being without an undertaking at all.19 A caveat can be refused where the financial means of the plaintiff are unclear and the evidence filed by the plaintiff is insufficient to demonstrate financial capacity to meet any undertaking as to damages if necessary.20
19 Although Mr Wichniewicz did not offer an undertaking as to damages, it may be that he would have been prepared to do so if asked. The more fundamental issue is that on the evidence before the Court his financial means appear to be very limited and the sale price of the land exceeds the related debts to his creditors, which are increasing with the delay in settlement.
2. Interests of third parties
20 Another factor in the balance of convenience is the potential interests of third parties. These include the purchasers under the sale of the Land. They also include the holders of subsequent encumbrances such as Concorde Investments Pty Ltd, Voltron Enterprises Pty Ltd, Bunnings Group Ltd and the City of Melville.
21 The effect of the interests of all these parties means that, at best, the caveat could only be extended for a very short period in order to enable notice to be given to all these parties to permit them to make submissions about the effect on their interests. But even extending the caveat for a short period could cause prejudice to the interests of these third parties because the accrual of interest on Mr Wichniewicz's loan from the ANZ Bank means that with every day that the settlement is delayed, there will be less surplus from the sale remaining for the subsequent creditors.
3. The limited equity that Mr Wichniewicz has in the Land
22 A further factor relevant to the balance of convenience is that on the information before the Court, Mr Wichniewicz has no equity in the Land. Even if it were the case that the sale of the Land were at an undervalue, some, or all, of the loss from the sale at an undervalue would be borne by subsequent creditors rather than Mr Wichniewicz.
23 On Mr Wichniewicz's affidavit evidence, he agreed to a sale of the Land for $581,000 which was never completed because a finance condition was not met by the purchaser. In contrast, the sale by the ANZ Bank was for $570,000. The ANZ Bank has produced a preliminary seller's settlement statement dated 20 January 2014.21 According to the calculations in that statement only $26,508.34 remains after sale expenses, rates and charges, and after the balance of the debt to the ANZ Bank is deducted from the sale price of $570,000.
24 The expected surplus of $26,508.34, which is declining daily as interest accrues on the ANZ Bank loan, is not likely to accrue to Mr Wichniewicz. The evidence before the Court is that
(i) Concorde Innovations Pty Ltd claims $27,794.87 against Mr Wichniewicz under an equitable mortgage;22
(ii) Voltron Enterprises Pty Ltd claims $24,800 against Mr Wichniewicz under a charge;23
(iii) Bunnings Group Ltd claims to have an equitable charge, but it is not known to the ANZ Bank how much debt this charge secures.24
4. Any claim which Mr Wichniewicz has would not be extinguished
25 If the allegations made by Mr Wichniewicz are litigated, and if Mr Wichniewicz succeeds in those allegations, then he is unlikely to be prejudiced in recovery of his claims by the absence of his caveat. In other words, apart from rescission of any sale, the removal of the caveat will not, in substance, defeat or extinguish any monetary claims that Mr Wichniewicz has raised in his affidavit evidence.
26 As Beech J observed in Westpac Banking Corporation v Murray Riverside Pty Ltd,25 if one such allegation of breach were proved then Mr Wichniewicz could obtain an account on the footing of wilful default and compensation for any amounts found owing on the account. There is no basis to expect any difficulty in executing any resultant judgment against the ANZ Bank.
Conclusion
27 I have assumed, in the absence of any argument, that Mr Wichniewicz has a claim which has, or may have, substance and which can support his caveat. This was not conceded by the ANZ Bank, but its counsel simply made submissions on that assumption because, as I accept, the balance of convenience strongly favours the refusal of this application. The application must be refused. The reasons for this are, in summary, my preliminary assessment of any claim in light of
(i) the lack of any undertaking as to damages which is of substance;
(ii) the potential interests of third parties who are not before the Court;
(iii) the limited equity that Mr Wichniewicz has in the Land; and
(iv) that any claim that Mr Wichniewicz has would not be extinguished; and prospects of recovery have not been shown to be diminished, by the removal of his caveat.
28 Finally, even if I had been prepared to extend the operation of Mr Wichniewicz's caveat, there may have been a real question concerning whether, by analogy with cases concerning claims to restrain a mortgagee from exercising its rights,26 a condition of this order, or an 'ancillary order'27 would be that Mr Wichniewicz pay into Court the amount of the debt claimed by the ANZ Bank, or provide any additional security.
1 Affidavit of Ms Stack, 23 January 2014, [3], attachments TES 2, TES 3.
2 Affidavit of Ms Stack, 23 January 2014, [4].
3 Affidavit of Ms Stack, 23 January 2014, [5], attachment TES 4.
4 Affidavit of Ms Stack, 23 January 2014, attachment TES 5.
5 Affidavit of Ms Stack, 23 January 2014, [7].
6 Affidavit of Ms Stack, 23 January 2014, [7].
7 Affidavit of Ms Stack, 23 January 2014, [8].
8KWS Capital Pty Ltd v Love [2013] WASC 294 [32] - [36].
9 Affidavit of Ms Stack, 23 January 2014, TES 1.
10Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222, 228 - 229.
11His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15 [64] (Barker J); Bateson v Jones [2013] WASC 8 [47] (Pritchard J).
12McCourt v National Australia Bank Ltd [2010] WASC 121 [8] - [12] (Murphy J); Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433 [21] (Beech J).
13Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672. Cf Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow and Lehane'sEquity: Doctrines & Remedies (4th ed, 2002) [4-170].
14Sinclair v Hope Investments Pty Ltd[1982] 2 NSWLR 870, 875 (Needham J); Re McKean’s Caveat[1988] 1 Qd R 524, 525 - 526 (Ryan J); R and I Bank of Western Australia Ltd v Lavery (Unreported, WASC, Library No 930567, 25 October 1993, White J).
15McCourt v National Australia Bank Ltd [2010] WASC 121 [25] (Murphy J) citing Chia v Rennie (1997) 8 BPR 15,601.
16Prater v Permanent Mortgages Pty Ltd [2010] WASC 278 [3] (K Martin J).
17Palazzo Homes Pty Ltd v Goh [2010] WASC 407 [31] (Le Miere J).
18Aaronisle Pty Ltd v Thorpe [2005] WASC 87 [68].
19WildgumNominees Pty Ltd v Land Alliance Pty Ltd [2009] WASC 244 [73] - [77] (Murphy J).
20Wildgum Nominees Pty Ltd v Land Alliance Pty Ltd [2009] WASC 244 [73] - [77] (Murphy J).
21 Affidavit of Ms Stack, 23 January 2014, attachment TES 8.
22 Affidavit of Ms Stack, 23 January 2014 [11].
23 Affidavit of Ms Stack, 23 January 2014 [12].
24 Affidavit of Ms Stack, 23 January 2014 [13].
25Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433 [68].
26Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161; Commonwealth Development Bank of Australia Ltd v Nertec Pty Ltd [1999] WASCA 311 [5] - [7] (Owen J; Ipp & Murray JJ agreeing).
27Transfer of Land Act 1893 (WA) s 138C(2)(c).
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