Yuan v Liu - [2019] SADC 134

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
YUAN v LIU
[2019] SADC 134
Judgment of His Honour Judge Tilmouth
16 September 2019
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS
Application for an extension of time for the removal of a caveat, refused on discretionary grounds.
Real Property Act 1886 (SA) s 191; Eng Mee Yong & Ors v Letchumanan [1980] AC 331; Registrar of Titles, Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42; Bellissimo v JCL Investment Pty Ltd [2009] NSWSC 1260; Aveling v Knipe (1815) 34 ER 580; Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536; AVCO Financial Services Ltd v White [1977] VR 561; Cradock v Scottish Provident Institution (1893) 69 LT 380; Dillwyn v Llewelyn (1862) 4 De GF & J 517; Crabb v Arun District Court [1976] 1 Ch 179; Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42; Cini & Ors v Pets Paradise Franchising (SA) Pty Ltd & Ors (2008) 102 SASR 177; Composite Buyers Ltd v Soong (1995) 38 NSWLR 286; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Stern v McArthur (1988) 165 CLR 489; Palm Gardens Consolidated Pty Ltd v PG Properties Pty Ltd (2009) 266 LSJS 46; Muschinski v Dodds (1986) 160 CLR 583; Black v Garnock (2007) 230 CLR 438; Family Law Act 1975 (Cth), referred to.
Porter v McDonald [1984] WAR 271; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198, applied.

YUAN v LIU
[2019] SADC 134
Civil
The parties

Quite uniquely for cases heard in the civil jurisdiction of this court, the parties to the within proceedings are husband and wife respectively. The applicant, Mr Yuan, is a Chinese Citizen in Australia on an entry permit. He hopes eventually to obtain Australian Citizenship. His wife is an Australian Citizen. They were married in Adelaide on 16 February 2017 and they separated on 21 June 2019. They have one child who resides with Ms Liu. Applications for parenting orders are currently before the Federal Circuit Court of Australia.
The underlying facts
In May 2017, they entered into a verbal arrangement as between themselves for the purchase of a house and land package situated in the Adelaide suburb of Tranmere. According to Mr Yuan, they agreed to register the property solely in the name of Ms Liu, as she was an Australian Citizen. This was done on the mutual understanding that the arrangement attracted a lesser rate of stamp duty. He claims his wife told him at the time that because they were married ‘it would not matter that my name was not registered on the Certificate of Title …’. The terms of this supposed arrangement is denied by Ms Liu.
Proceedings to enforce a caveat
In order to protect his interests in the property, Mr Yuan instructed his solicitors to lodge a caveat on 26 June 2019. This was duly entered on the Title. The caveat was warned by the Registrar General (now Land Services SA) for removal within 21 days of a notice dated 2 August 2019. The application for an extension of time within which to remove the caveat duly came before the court by way of interlocutory process on 22 August 2019. For reasons to become apparent, the court made an interim order extending the time for removal of the caveat ‘until further order’.
The principal issue agitated during the course of the interlocutory proceedings was whether Mr Yuan held an interest in real property sufficient to amount to a caveatable interest. A secondary issue related to the balance of convenience, on the contingency that a caveatable interest was identified.
It appears that Mr Yuan contributed at least $28,250 towards a joint bank account which was applied to the purchase of the property for a price of approximately $565,000. It also appears that he contributed funds to a joint bank account. However, it does not clearly appear whether joint funds were applied to the purchase. It is apparent that the parents of both parties each made financial contributions to the joint bank account.
A preliminary objection was taken by counsel for Ms Liu, that on any view of the facts most favourable to Mr Yuan, there was simply no interest in land capable of supporting a caveat. Ordinarily, that issue would require the matter be set down for oral hearing. The courts are understandably reluctant to decide such issues on interlocutory summons, except when the claim to the requisite interest is clearly without foundation: Porter v McDonald,[1] Registrar of Titles, Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd,[2] Eng Mee Yong & Ors v Letchumanan.[3] Otherwise the question for resolution on interlocutory process is limited to inquiring whether an applicant demonstrates ‘there is a serious question to be tried as to … [an] … entitlement to relief’: Australian Broadcasting Corporation v O’Neill.[4]
[1] [1984] WAR 271, 273-247, 276.
[2] (1992) 8 WAR 42, 48-49.
[3] [1980] AC 331, 335.
[4] (2006) 227 CLR 57, [19], [65].
Caveatable interest
The caveat as lodged, claims that Mr Yuan is:
… beneficially entitled to an estate or interest in fee simple (in some indefinable share or shares) in the land described having contributed to the acquisition, maintenance and improvement of the land described.
On its face, this appears to be a sufficient description of the interest claimed to support the caveat: Bellissimo v JCL Investment Pty Ltd.[5]
[5] [2009] NSWSC 1260, [7].
It is clear law that unless a caveator can demonstrate an express trust in land, the relationship will be limited to no more than donor and donee, or lender and borrower: Aveling v Knipe,[6] and Stephenson Nominees Pty Ltd v Official Receiver.[7] Expressed in another way, there must be an agreement amounting to mutual intention between the parties that the real property in question should constitute a security for monies advanced: AVCO Financial Services Ltd v White,[8] Cradock v Scottish Provident Institution,[9] Dillwyn v Llewelyn,[10] Crabb v Arun District Court.[11]
[6] (1815) 34 ER 580.
[7] (1987) 16 FCR 536.
[8] [1977] VR 561, 563.
[9] (1893) 69 LT 380, 382.
[10] (1862) 4 De GF & J 517, 522-523; 45 ER 1285, 1286-1287.
[11] [1976] 1 Ch 179, 187-188.
By its very nature, the Torrens Title system of land tenure requires a caveatable interest to amount to ‘a proprietary interest in land’: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd,[12] Cini & Ors v Pets Paradise Franchising (SA) Pty Ltd & Ors.[13] Section 191 of the Real Property Act 1886 (SA) facilitates the lodging of caveats by any person ‘claiming to be interested at law or in equity … howsoever in any land …’. The question before the court therefore is whether the rights claimed by Mr Yuan bring him within the terms of a ‘person … interested in law or equity … in any land’. An interest in land for which equity will issue specific relief is not limited to registrable interests: Composite Buyers Ltd v Soong.[14]
[12] (1992) 8 WAR 42.
[13] (2008) 102 SASR 177, [51].
[14] (1995) 38 NSWLR 286, 288.
It is well established that the extent of a purchaser’s interest in land is to be measured by the extent of protection equity will afford the purchaser: Stern v McArthur.[15] Such an interest will arise when the owner of property induces another to believe that he or she has an interest in the property: Palm Gardens Consolidated Pty Ltd v PG Properties Pty Ltd.[16] The content of the principle is, as Deane J observed in Muschinski v Dodds,[17] such that ‘equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so’.
[15] (1988) 165 CLR 489, 511-512, 522.
[16] (2009) 266 LSJS 46, [85].
[17] (1986) 160 CLR 583, 620.
The above materials demonstrate that Mr Yuan identifies a serious question to be tried as to a prima facie entitlement to a claim in equity capable of supporting a caveat. If this issue is pursued further by Ms Liu it should be determined by oral evidence, not on the papers.
The balance of convenience
This conclusion brings into play whether the balance of convenience favours maintaining the caveat, bearing in mind that a caveat is a form of statutory injunction: J & H Just Holdings Pty Ltd v Bank of New South Wales;[18] Black v Garnock.[19] This ‘second inquiry’ examines whether the inconvenience or injury which the applicant is likely to suffer if the caveat was removed, is outweighed by the injury which the respondent would suffer if it remains: Australian Broadcasting Corporation v O’Neill.[20] It is for the applicant therefore to demonstrate the balance of convenience favours him: Whallin v Bailbart Investments Pty Ltd.[21]
[18] (1971) 125 CLR 546, 552.
[19] (2007) 230 CLR 438, [7]-[8], [76].
[20] (2006) 227 CLR 57, [19].
[21] (1987) 47 SASR 198, 203.
The potential equity in the property relied upon by Mr Yuan is relatively minor when compared with the purchase price of $565,000. Ms Liu deposes to making far more significant contributions than he did. It appears she took possession of the property in December 2018 at a time when Mr Yuan was living in Sydney. According to her, they co-habited in the property for three months between 19 March and 19 June 2019, during which her parents and her son also resided there. After Mr Yuan left, that continued to remain the situation with her (or they) servicing the mortgage.
As seen above, Mr Yuan himself deposed to an expectation that his rights were determined by his marital status. As also noted above, there are extant proceedings before the Federal Circuit Court in respect of parenting. A Federal Court exercising matrimonial jurisdiction under the Family Law Act 1975 (Cth), exercises extremely wide and extensive powers to make property orders protecting or affecting the rights of married couples, including real property as well as property interests arising from contributions to joint bank accounts. There are equally wide powers to grant interlocutory injunctive relief. The mechanism of a caveat under State law is a rather blunt and imperfect instrument for the purpose of protecting those rights in the circumstances of this case.
In the combined circumstances the application to extend the time for removal of the caveat over the subject property is refused, because the balance of convenience dictates that course.
Conclusion and orders
Although Mr Yuan succeeds in establishing a potential caveatable interest in the subject real property, that issue cannot be determined solely on the interlocutory papers. On the other hand, his application to extend the time for removal of the caveat over that property is destined to fail on discretionary grounds.
The parties are entitled to be heard in relation to costs. In the meantime, the formal orders of the court are:
1. The application for an order extending the time for the removal of the caveat No 13132099 in respect of the land comprised in Certificate of Title Register Book Volume 6202 Folio 680, is refused.
2. The order made on 22 August 2019 extending the time for removal of the aforesaid caveat, is discharged.