Yuksels Nominees Pty Ltd v Nguyen

[2015] VSC 663

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

CIVIL JURISDICTION

S CI 2015 05553

YUKSELS NOMINEES PTY LTD (ACN 006 261 810)	Plaintiff
v
JOANNE THU NGUYEN	First defendant
and
REGISTRAR OF TITLES	Second defendant

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JUDGE:	T. FORREST J
WHERE HELD:	Melbourne
DATE OF HEARING:	13 November 2015
DATE OF RULING:	23 November 2015
CASE MAY BE CITED AS:	Yuksels Nominees Pty Ltd v Nguyen & anor
MEDIUM NEUTRAL CITATION:	[2015] VSC 663

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PROPERTY LAW – Application to remove caveat – Whether or not an abuse of processes – Whether or not substantiation of caveat a component of another proceeding – No proprietary interest claimed in other proceedings – No prima facie case to justify maintenance of caveat – Balance of convenience in favour of the plaintiff – Damages an adequate remedy – Caveat removed - Transfer of Land Act 1958 ss 89, 89A, 90.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr H. Redd	Landerer & Company
For the Defendants	Mr J. Arthur	Titanium Lawyers Pty Ltd

HIS HONOUR:

1. Yuksels Nominees Pty Ltd, the plaintiff in this proceeding, (‘Yuksels Nominees’) is the sole proprietor of a property at Sun Crescent, Sunshine.  It wishes to develop that property and has received quotes of more than $12 million to carry out the proposed works.

1. Joanne Nguyen, the first defendant, is the plaintiff in County Court proceeding CI-14-0659.  In that action, she is suing Boran Real Estate Pty Ltd (‘Boran’), Yuksel Kemal (the principal of Boran and a director of Yuksel Nominees) (‘Kemal’) and Yuksels Nominees.  In the County Court proceeding, Ms Nguyen alleges in an Amended Writ dated 22 June 2015:

(a)that Boran (her former employer) and Kemal breached various terms of a contract that she had entered into with those parties whilst she worked for them between 2008 and 2014;

(b)that Kemal, Yuksels Nominees or any other entity controlled by Kemal, would (assuming certain preconditions were met) grant to the plaintiff –

(i)the right to purchase a penthouse in the Sun Crescent development at cost price;

(ii)the right to full listings of the Sun Crescent property upon plans being approved for the development.

1. On 7 November 2014, Ms Nguyen lodged a caveat on the title to the Sun Crescent property with the grounds of the claim stated to be ‘Oral Agreement with Yuksel Nominees Pty Ltd and Yuksel Kemal, part performed’. Kemal says he cannot borrow to finance the development unless the caveat is removed.

1. This application is brought by Originating Motion and Summons both filed on 26 October 2015. Yuksels Nominees seeks the removal of caveat number AL473131B registered on Certificate of Title Volume 11440 folio 621 (‘the Sun Crescent Development’) pursuant to s 90(3) of the Transfer of Land Act 1958 (‘the Act’).

1. The first defendant opposes the removal of the caveat.  She submits that this proceeding is an abuse of process as the substantiation of the caveat is a component of the amended County Court litigation.  This is a threshold issue that I need to determine.  If there is already a proceeding on foot to substantiate the caveat, this proceeding is prima facie vexatious and will likely be stayed.[1]

   [1]McHenry v Lewis (1882) Ch 397; Williams v Hunt [1905] 1 KB 512; Reynolds v Reynolds (1977) 2 NSWLR 295 at 306.

Is there proceeding on foot to substantiate the caveat?

1. On 13 November, Yuksels Nominees made application to the Registrar for review of a notice pursuant to s 89A(3) of the Act.[2] On 24 December 2014, the Registrar informed the plaintiff’s then solicitors that he had been notified that ‘proceedings in a court of competent jurisdiction to substantiate the claim of the caveator in relation to the land … are on foot’ and that no further action on the s 89A(3) application would be taken by that office.[3]  On 19 February 2015, solicitors for the plaintiff wrote to Land Victoria Legal and contended that the County Court proceedings did not set out any claim to substantiate an interest in the relevant property.[4] The Registrar replied in writing on 24 February 2015 stating that he interpreted s 89A(3)(b) to be satisfied upon the receipt of an assertion that there is a proceeding on foot to substantiate the caveator’s claim and that it was unnecessary for him ‘to investigate whether this assertion is correct’.[5]  Solicitors for Yuksels Nominees then disputed whether the County Court claim constituted a proceeding which sought to justify the maintenance of the caveat.  This dispute continues despite the first defendant, by leave, amending her statement of claim on 11 June 2015 to add Yuksel Nominees (the proprietor of the property) to that proceeding.

   [2]Exhibit YK8.

   [3]Exhibit YK9.

   [4]Exhibit YK10.

   [5]Exhibit YK11.

1. I am of the view that the current County Court proceedings are not ‘a proceeding in a court to substantiate the claim’ of the first defendant within the meaning of s 89A(3)(b). The Writ does not seek declaratory relief that Ms Nguyen has a caveatable interest in the property; there is no reference in the entire 27 page document to the caveat or to s 89(3)(b) of the Act. I shall set out paragraphs [13]-[15] of the Amended Statement of Claim and the prayer for relief:

13.On 21 October 2010, the Plaintiff and Yuksel attended an onsite auction resulting in Yuksels Nominees Pty Ltd (Yuksels Nominees) successfully purchasing a mixed use development site located at 32-36 Sun Crescent, Sunshine, in the State of Victoria. (Sun Property)

14.By an agreement made with the Plaintiff on or about 19 October 2010, if Yuksel and/or Yuksels Nominees or any other entity or nominee controlled by Yuksel, succeeded in purchasing the said property he would reward the Plaintiff for providing her expertise and knowledge to assist with the purchase. (Fifth Agreement)

PARTICULARS

The Fifth Agreement was party oral and partly to be implied.

Insofar as it was oral it was constituted by a verbal discussion between the Plaintiff and Yuksel on or about 19 October 2010 at Boran’s office, the substance and effect of which is as alleged.

Insofar as it was implied the implication arises from the fact that the Plaintiff researched the Sun Property prior to auction and attended the onsite auction in order to give business efficacy to the Fifth Agreement.

15.There were terms of the Fifth Agreement as follows:

a)Upon the successful purchase of the Sun Property, Yuksel and/or Yuksels Nominees or any other entity or nominee controlled by Yuksel would apply to re-develop the said property as a mixed residential and commercial project.

b)The Plaintiff would be entitled to full listings of the Sun Property upon approved plans and permit to build approximately five retail shops and fifty apartments.

c)Upon approved plans and permit to develop the said property Yuksel and/or Yuksels Nominees or any other entity or nominee controlled by Yuksel to sell to the Plaintiff one penthouse apartment at cost price from the Sun Property development.

…

AND THE PLAINTIFF CLAIMS

A.As against the first defendant (Boran), damages.

B.As against the second defendant (Yuksel), and further or in the alternative the third defendant (Yuksels Nominees), damages.

C.A declaration that:

C.1the first defendant (Boran) holds the sum of $103,013 representing the Plaintiff’s confirmed commissions and superannuation entitlements, excluding the confirmed commissions and superannuation entitlements from the Foundry Property, held in the Boran Real Estate Trust Account on trust for the plaintiff (or such sum as the Court determines); and

C.2the first defendant (Boran) holds the sum of $191,301 representing the Plaintiff’s confirmed commissions and superannuation entitlements from the Foundry Project, held in the Boran Real Estate Trust Account on trust for the plaintiff (or such sum as the Court determines);

C.The sum of $34,104 representing the Plaintiff’s outstanding wages and leave.

D.An order that the first defendant (Boran) calculate the Plaintiff’s unconfirmed commissions and superannuation entitlements from sales, listings and marketing of properties pursuant to the Twelve Agreements (or such sum as the Court determines after discovery);

E.An order that the Restraint of Trade term referred in paragraph 5(f) be declared unreasonable, unenforceable and/or void.

F.Interest calculated pursuant to statute.

G.Indemnity costs, alternatively the standard basis.

H.Such further or other orders as this Honourable Court considers appropriate.

1. It is true that the first defendant claims to be entitled to damages said to arise from the breach of ‘the Fifth Agreement’ (relating to the Sun Crescent Development), but this, in my view, does not mean that a proceeding is on foot to substantiate the caveat. In the County Court proceeding, the first defendant does not seek to establish any proprietary interest in the Sun Crescent property, but rather seeks to claim damages for breach of an alleged agreement. Paragraphs [13]-[15] of the Statement of Claim do no more than allege an oral agreement which, if established, would give rise to damages, which is the remedy sought. 

1. Assuming that I am correct in this analysis, it follows that this s 90(3) proceeding is not prima facie vexatious. Another proceeding is not being maintained in another court in respect of the same subject matter.  I turn now to the merits of the plaintiff’s application.

Legal principles

1. Caveats under the Torrens System are treated by the courts as analogous to applications for interlocutory injunctive relief.  Their registration is administrative and an application for removal casts an onus on the caveator to satisfy the two-stage test used by the court when deciding whether or not to grant discretionary injunctive relief.[6] Although the courts have adopted the two-stage test as an aid to the consistent exercise of the s 90(3) discretion, the section requires the court to make ‘such order as it thinks fit’ and the test utilised by the court cannot circumscribe the power conferred by statute.[7]  Thus, the caveator will need to establish a ‘prima facie case’ that it has the estate or interest claimed in the land which entitles it to the maintenance of the caveat.[8]  Assuming this to be established, the court will then consider with whom the balance of convenience lies.[9]  A critical and perhaps decisive consideration is whether damages will provide an adequate remedy in the event the caveat is removed.[10]  The contractual, equitable or statutory right must attach to the caveated property and not simply lie against the proprietor of that property.[11]

   [6]Piroshenko v Grojman & ors [2010] 27 VR 489.

   [7]Ibid, [11].

   [8]Ibid, [12]-[14].

   [9]Ibid, [38].

   [10]Ibid, [20].

   [11]Ibid, [23].

Prima facie case

1. I consider that the first defendant does not have a prima facie case to justify the maintenance of the caveat.  She argues that there is a serious issue as to whether the County Court in her current proceeding will impose a constructive trust in her favour, or recognise her interest in some other manner.  Mr Arthur for Ms Nguyen, relying on the dicta of Deane J in Muschinski v Dodds,[12] argued that a constructive trust is available in any case where some principle of equity calls for the imposition upon the legal owner of property  of the obligation to hold or apply the property for the benefit of another.  The difficulty I have with this argument is that Ms Nguyen, as her claim is currently constituted, does not seek that the property be held or applied for her benefit. She seeks damages in the County Court. It is inappropriate, in my view, to hypothesise as to whether and how her claim may mutate in the future.

   [12](1985) 160 CLR 583 at 616-17.

Balance of convenience

1. I consider the fact that damages are the sole relief sought in relation to the Sun Crescent Development is also telling in considering the balance of convenience.  It is impossible, in my view, for the plaintiff to maintain that damages are an inadequate remedy when the only remedy claimed in the County Court action are damages.

1. Further, I am unable to conclude that there is any great disadvantage to Ms Nguyen if the caveat is removed. A mediation in the County Court action is fixed for 15 December 2015 and the trial is set down for April 2016. Ms Nguyen’s claim for damages will stand or fall on its merits and there is no suggestion made to me that Kemal or his associated companies will be unable to pay an award of damages.

1. Kemal deposes that there is a real disadvantage to his companies as he cannot put finance in place to fund the development whilst the caveat remains. This assertion is not disputed, although Ms Nguyen counters by claiming that the project is not yet at a stage where finance is required. In a large development such as this, it is plausible that having finance in place early would be highly desirable, particularly where sales off the plan are proposed.

1. For these reasons I have concluded:

(a) That this s 90(3) proceeding is not vexatious; and

(b) That I ought order the removal of the impugned caveat pursuant to s 90(3) of the Transfer of Land Act 1958.