Zurcas v Zurcas
[2008] VSC 379
•26 September 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST No. 7863 of 2006
IN THE MATTER of ZURCAS HOTEL-MOTEL PTY LTD (ACN 004 580 756) and ZURCAS PROPERTIES PTY LTD (ACN 004 791 583)
| ALEX ZURCAS | Plaintiff |
| v | |
| THOMAS ZURCAS | First Defendant |
| - and - | |
| URANIA ZURCAS | Second Defendant |
| - and - | |
| T & U ZURCAS HOLDINGS PTY LTD (ACN 004 885 358) | Third Defendant |
| - and - | |
| ZURCAS HOTEL-MOTEL PTY LTD (ACN 004 580 759) | Fourth Defendant |
| - and - | |
| ZURCAS PROPERTIES PTY LTD (ACN 004 791 583) | Fifth Defendant |
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JUDGE: | Kyrou J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25, 26 September 2008 | |
DATE OF JUDGMENT: | 26 September 2008 | |
CASE MAY BE CITED AS: | Zurcas v Zurcas | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 379 | |
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Real property – caveats – ex parte application for injunction restraining the Registrar of Titles from registering withdrawals of caveats – Transfer of Land Act1958, s 91(4) – reinstatement of proceeding that is struck out.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Levine | Frank Sanna, Solicitor |
| No appearance for the Defendants |
HIS HONOUR:
This is an ex parte application by summons by the plaintiff seeking injunctive relief restraining the Registrar of Titles from registering withdrawals of caveats in respect of three caveats that the plaintiff lodged on land owned by the third defendant, T & U Zurcas Holdings Pty Ltd. The plaintiff’s three caveats relate to Certificates of Title Volume 10610 Folio 121, Volume 10610 Folio 122, Volume 9537 Folio 473 and Volume 9746 Folio 959.
The plaintiff originally instituted this proceeding against the defendants, who are family members and family-owned companies, on 2 August 2006. The proceeding was resolved on 5 September 2007, with terms of settlement being signed that day. On 12 October 2007, Robson J made an order by consent dismissing all previous orders made in the proceeding and striking out the proceeding with a right of reinstatement.
Under cll 1 and 4 of the terms of settlement, the first, second, third and fourth defendants jointly and severally agreed to pay to the plaintiff the sum of $550,000, with $400,000 being payable by 30 September 2007 and the balance of $150,000 payable on or before 1 September 2008 or earlier if certain properties were sold. Clause 14.1 of the terms of settlement states that the third and fourth defendants charge in favour of the plaintiff and others all their right, title and interest in all their real estate, including the properties that are the subject of the plaintiff’s caveats, except perhaps Certificate of Title Volume 9746 Folio 959. The fourth defendant is Zurcas Hotel-Motel Pty Ltd. Clause 8 of the terms of settlement provides that in the event that the sum of $150,000 is not paid in accordance with cl 4, “the First, Second, Third and Fourth Defendants and the Plaintiff shall resolve between them how and when the sum of $150,000 shall be paid”. Clause 16.1 contains qualified mutual releases.
Clause 2 of the terms of settlement states that the parties agree to enter into the shareholders’ agreement that is attached to the terms of settlement. The shareholders’ agreement was in fact executed but is undated. Clause 4.8 of the shareholders’ agreement contains an acknowledgment by the parties that they have agreed for the third and fourth defendant to charge in favour of the plaintiff and the others described in cl 14.1 of the terms of settlement all their right, title and interest in all their real estate including the properties that are the subject of the plaintiff’s caveats except perhaps Certificate of Title Volume 9746 Folio 959. Clause 4.7 provides that the fourth defendant’s borrowings must not exceed $4 million.
In his affidavit of 25 September 2008 in support of his application, the plaintiff states that the balance of $150,000 has not been paid to him. He exhibits a letter dated 3 September 2008 that shows that the third defendant has received approval from Statewide Secured Investments Ltd (“Statewide”) for a loan of $300,000 to be secured by, among other securities, a registered second mortgage over the third defendant’s property located at 25 Doyles Road, Grahamvale (which is more particularly described in Certificates of Title Volume 10610 Folio 121 and Volume 10610 Folio 122) and the property located at 85 Doyles Road, Shepparton (which is more particularly described in Certificates of Title Volume 8021 Folio 124, Volume 9537 Folio 473 and Volume 9746 Folio 959). The loan has not yet been made.
The plaintiff’s affidavit suggests that, three months ago, he agreed to the abovementioned loan and agreed to receive $50,000 from that loan. On 3 September 2008, he signed an authority in favour of Tom Indovino of Indovino’s Lawyers, who were the solicitors on the record for the defendants in this proceeding, stating:
I Alex Zurcas, hereby request and authorise you to withdraw all Caveats that I have registered as Caveator on properties owned by T & U Zurcas Holdings Pty Ltd. I confirm that I will instruct you following the refinance if I wish to re-lodge the Caveats.
It appears that Statewide has requested the withdrawals of caveats as a condition of making the loan. The withdrawals of caveats were signed by Mr Indovino on the plaintiff’s behalf on 18 September 2008 pursuant to the abovementioned authority.
In his affidavit, the plaintiff states that on 23 September 2008, he was very concerned that if the loan went through, it would erode his overall financial benefits from the settlement and/or interests in the properties connected with the terms of settlement. He was also concerned that an amount of $7,341.40 would be deducted from the amount of $50,000 he expected to receive from the loan. On that day, he informed Mr Indovino that he wanted to have his withdrawals of caveats returned to him. On 24 September 2008, he faxed a letter to Mr Indovino stating that he no longer consented to the lodgement of the withdrawals of caveats. On the same day, he saw Mr Indovino and was given a letter dated 24 September 2008 stating that Mr Indovino had forwarded the withdrawals of caveats to Statewide’s solicitors on 18 September 2008. Mr Indovino’s letter is inconsistent with some aspects of the plaintiff’s affidavit. Later on 24 September 2008, the plaintiff faxed a letter to Statewide stating:
For your records I am attaching a copy of a letter sent to Indovino Lawyers withdrawing instruction for removing caveats on the subject properties that your company has issued a letter of offer for finance
Please could you ring me as a matter of urgency by no later than 430 pm today to advise that you undertake to return the withdraw of Caveats forthwith
Failing which you will leave me with no alternative but to make application to the court for an Injunction preventing the withdraw of caveats of which it is my understanding that your Solicitors hold
The plaintiff has not received a response from Statewide.
In his affidavit, the plaintiff states that “[t]he defendants’ solicitors dealt with me directly, and not my solicitors, Lennon Settle Mazzeo at the time”. However, the affidavit does not provide any details as to whether Lennon Settle Mazzeo acted for the plaintiff in connection with the withdrawals of caveats or the circumstances in which the plaintiff executed the authority in favour of Mr Indovino.
On 25 September 2008, the plaintiff issued a summons in this proceeding seeking an injunction restraining the Registrar of Titles from registering the withdrawals of caveats. The summons was issued notwithstanding that the proceeding has been struck out and has not yet been reinstated and notwithstanding that the Registrar is not a party to the proceeding.
Mr Levine, who appeared for the plaintiff, submitted that this is an urgent application because draw-down of the loan is imminent, resulting in the withdrawals of caveats being lodged. He was not specific about the timing of the draw-down loan. There was no evidence before me as to the timing of the draw-down, other than that the loan was approved on 3 September 2008 and the withdrawals of caveats were forwarded to Statewide on 18 September 2008.
Mr Levine submitted that the plaintiff has a caveatable interest over the relevant properties. He also submitted that as the authority the plaintiff gave to Mr Indovino was not expressed to be irrevocable, the plaintiff was entitled to revoke it. He therefore submitted that the plaintiff had established that there is a serious question to be tried. He also submitted that the balance of convenience favours the plaintiff because, if the withdrawals of caveats are lodged with the Registrar, s 91(4) of the Transfer of Land Act 1958 (Vic) will preclude the plaintiff from lodging any further caveats on the same properties in respect of the same interest. This submission appears to be correct.[1] Mr Levine also informed me that the plaintiff is prepared to give an undertaking as to damages.
[1]R & L Bell Pty Ltd v Casboult (2003) 6 VR 271 [9]-[10].
During argument, I raised with Mr Levine procedural issues relating to the summons, including the fact that the proceeding has been struck out and has not been reinstated. I drew his attention to the case of O’Brien and Fourth Taljan Pty Ltd v O’Brien & Nicholls Pty Ltd[2] which stated that “whilst there is a discretion to reinstate the proceeding such discretion should be exercised judicially and only if the court is satisfied that the circumstances warrant reinstatement”. Mr Levine said that in cases of urgency, the Court can authorise the commencement of a proceeding pursuant to r 4.08 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).
[2][2001] VSC 411, [30].
I asked Mr Levine why the application was made without notice to the defendants. Mr Levine said that the matter was urgent, without specifying any particular prejudice that would arise if the defendants were given notice of the application.
I informed Mr Levine that it appeared from the plaintiff’s affidavit that there was a discussion approximately three months ago in which agreement was reached that the loan would be obtained from Statewide, that the plaintiff would receive $50,000 out of the loan and that the plaintiff would withdraw his caveats to facilitate the loan. I informed Mr Levine that the plaintiff’s affidavit does not give any details of any such agreement and therefore I am not in a position to assess whether, for example, there are any issues that affect the plaintiff’s alleged right to revoke his consent to the withdrawals of the caveats. Mr Levine agreed that the plaintiff’s affidavit does not provide details of the nature of any agreement that may have been reached.
The absence of details of the agreement referred to above has troubled me. So have the following features of the plaintiff’s application:
(a)The plaintiff has not provided a satisfactory explanation as to why the application has been made without notice to the defendants. This is of concern because the proceeding has involved complicated litigation between the parties which commenced on 2 August 2006 and finally settled on 5 September 2007. Also, given that the plaintiff notified Statewide in his letter of 24 September 2008 that if they did not give the undertaking he sought, he would be left with no alternative but to seek an injunction, there is no apparent reason why the plaintiff could not have given notice of his application to the defendants and Statewide, if he intended to seek any relief against that company.
(b)The proceeding has been struck out and no application has been made by the plaintiff to reinstate the proceeding.
(c)The plaintiff’s summons seeks an injunction against the Registrar, who is not a party to the proceeding, and does not seek any relief against the defendants.
(d)The plaintiff has not provided details of when the loan would be drawn-down, or whether any injunction that the Court grants might jeopardise the loan or otherwise cause prejudice to the defendants. Without this information, I have not been able to properly assess where the balance of convenience lies.
(e)The plaintiff has not produced to the Court the caveats or photocopies of the Certificates of Title. Much of the information about ownership of the properties and which caveats relate to which properties, was provided to me from the Bar table after Mr Levine obtained instructions from the plaintiff and his instructing solicitor during the hearing.
(f)Mr Levine’s submission that the authority granted by the plaintiff to Mr Indovino was not irrevocable is not persuasive, given that by the time the plaintiff sought to revoke the authority, it had already been acted upon. Mr Levine’s submission that, at the very least, it was imprudent for Mr Indovino to be dealing directly with the plaintiff in relation to the authority was also unpersuasive. There is simply no material before me to enable me to draw any inferences about the circumstances in which the plaintiff dealt directly with Mr Indovino.
(g)The plaintiff’s affidavit does not adequately explain why he has changed his mind regarding the withdrawals of the caveats between 3 September 2008 (when he signed the authority) and 23 September 2008 (when he sought the return of the withdrawals of caveats). He does not point to any actual or threatened conduct of the defendants between the abovementioned dates that has caused, or will cause, him prejudice. His expressed concern about the alleged breach of the defendants’ obligations under cl 4 of the terms of settlement to pay him $150,000 is unconvincing, as he executed the authority after the due date for payment. The references in his affidavit to borrowings by his three brothers do not appear to be relevant, as they are not defendants. In relation to his complaint that the $50,000 he expected to receive from the loan would be reduced by the amount of $7,341.40, there was insufficient material to enable me to understand why that deduction is to be made. Finally, the relevance of the plaintiff’s concern that the fourth defendant has exceeded the borrowing cap of $4 million in the shareholders’ agreement is not apparent, as that company does not own any of the land that is the subject of the plaintiff’s caveats and is not the borrower in respect of the loan of $300,000.
Having regard to the above circumstances, I have not been persuaded that it is appropriate for me, in the exercise of my discretion, to grant the ex parte relief sought by the plaintiff. I therefore dismiss the plaintiff’s summons.
However, I am prepared to hear further from Mr Levine in relation to any orders the plaintiff may require to facilitate an urgent hearing of an application upon notice for injunctive relief.
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