First Plaintiff v Second Defendant

Supreme Court of Victoria|2008-01-23|Before: BONGIORNO J

REAL PROPERTY - Application for removal of caveat - Constructive or resultant trust claimed - Whether serious question to be tried as to interest - Question already determined by another judge - Whether balance of convenience would in any case favour removing caveat - Transfer of Land Act 1958 (Vic), s 90(3) - Dennis Hanger Pty Ltd (ACN 006 036 031) v Linda Brown and Ors [2007] VSC 495.

a mortgage to the Bank of Western Australia Ltd;

a caveat lodged by Saxon Corporation Pty Ltd on 7 July 2005 claiming a leasehold interest in the land;

a caveat lodged by the first defendant on 13 December 2007, claiming an equitable interest in fee simple in the land pursuant to a resulting or constructive trust;

a caveat lodged by Sydney Road 333 Pty Ltd on 21 December 2007, claiming an estate in fee simple by virtue of a contract of sale dated 14 November 2007 by which it bought the subject property from the second plaintiff.

This application concerns the validity of the caveat lodged by the first defendant on 13 December 2007.

2 Maryvell Investments Pty Ltd was wound up in insolvency on 19 June 2006. The first plaintiff was appointed liquidator. After the winding up order was made the first defendant claimed to be entitled to possession of the property as lessee, under a lease from Maryvell Investments Pty Ltd dated 15 May 2006. On 15 February 2007 Master Efthim declared that the 2006 lease was void and unenforceable, as an uncommercial transaction pursuant to s 588FF(1)(h) and (j) of the Corporations Act 2001.

3 Mr Velissaris appealed against that order to a judge. The liquidator, by originating motion dated 22 March 2007, pursuant to RSC O.53, sought to recover possession of the property from Mr Velissaris, who remained in occupation of it despite the liquidation and the declaration of invalidity of the lease by which he purported to be entitled to possession. Mr Velissaris also sought leave to sue Maryvell Investments Pty Ltd (in liq). The appeal from Master Efthim and the other proceedings were all heard together by Dodds-Streeton J.

4 Mr Velissaris argued before Dodds-Streeton J that he was entitled to possession of the property independently of the 2006 lease (although his original claim was based on that lease) pursuant to a deed of agreement and settlement dated 10 March 1998, whereby the company conferred on him a right to occupy or possess the property rent free for life or as long as he wished. Subsequently, Mr Velissaris claimed that he had, "A licence coupled with an equity", to occupy the property on the ground that he had made mortgage payments in relation to the property, and given a guarantee and indemnity in reliance on his entitlement to lifelong rent free occupancy.

5 In the proceedings for possession brought by the liquidator it was necessary for Her Honour to determine whether Mr Velissaris, the sole director and shareholder of Maryvell Investments Pty Ltd, had at least an arguable case that he was entitled to occupation or possession of the relevant property. But Her Honour was unconvinced. By an order made on 9 August 2007 she dismissed Mr Velissaris' appeal against Master Efthim's order, refused him leave to sue the company in liquidation, pursuant to the Corporations Act 2001 and ordered possession of the property to be delivered up to Maryvell Investments Pty Ltd (in liq).

6 Mr Velissaris sought to appeal against the orders of Dodds-Streeton J but on 5 September 2007 the Court of Appeal dismissed both an application for a stay in respect of Dodds-Streeton J's orders and an application for leave to appeal.

7 On 17 September 2007 Mr Velissaris lodged an application for special leave to appeal to the High Court and a summons in the High Court seeking a further stay of execution. On 19 September 2007 Hayne J dismissed an application for a stay of execution and, on 1 November 2007, dismissed an application for an order restraining the liquidator from conducting an auction of the property. Hayne J said, in dismissing that application, "There is now, in my opinion, no reason to interrupt the further steps that are consequent upon the execution of that judgment".

8 On 7 November 2007 Mr Velissaris instituted yet another proceeding in this Court. In that proceeding he applied for termination or stay of the liquidation of Maryvell and an injunction restraining the liquidator from selling the property and conducting an auction which would occur then on 14 November 2007. On 9 November Cummins J dismissed these applications and on 14 November 2007 the property was sold at auction.

9 On 11 December 2007 Mr Velissaris again went to court. This time he commenced a proceeding in the Federal Court, against Maryvell Investments Pty Ltd (in liq) and the liquidator. That proceeding sought, among other things, an injunction restraining the liquidator from effecting any settlement of the contract which he made on 14 November 2007. On 12 December 2007 Gray J dismissed Mr Velissaris' application for interlocutory relief. Finally, on 13 December 2007 Mr Velissaris lodged the caveat the subject of this proceeding and on 11 January 2008 this proceeding was commenced by the liquidator seeking removal of the caveat.

10 As I have already noted, on 14 November 2007, the liquidator sold the property by public auction in his capacity as liquidator of Maryvell Investments Pty Ltd (in liq). The contract of sale by which the property was sold provided for settlement on 18 January 2008, which date has now passed. Not surprisingly, the liquidator is anxious to complete the contract and to preserve as much of the company's assets as possible for its unsecured creditors, the only secured creditor, Bank of Western Australia Ltd, being owed an amount equal to most of the proceeds of sale of the property. To enable him to complete the contract, the liquidator has, accordingly, brought this proceeding to have Mr Velissaris's caveat removed. He did so in reliance upon s 90(3) of the Transfer of Land Act 1958.

11 The application came on for hearing before Forrest J on 15 January. His Honour considered that Mr Velissaris had not had sufficient time to deal with the issues raised by the proceeding and granted him an adjournment until today. He also ordered him to file and serve any affidavits upon which he sought to rely by 22 January, that is to say yesterday, and gave him leave to issue subpoenas to the first plaintiff, the purchaser of the property and the purchaser's solicitors, Mr Zervas. Mr Velissaris was not legally represented before Forrest J.

12 Late yesterday Mr Velissaris contacted my associate to complain that the Registry of the Court had refused to allow him to issue the subpoenas referred to, as the time allowed by the rules was by then too short. To assist Mr Velissaris, I informally directed the Registry to accept his subpoenas, which it did. It is important to note that neither Forrest J in giving leave to Mr Velissaris to issue those subpoenas, nor I in directing the Registry to accept them, made any determination as to their propriety or the relevance of the documents or evidence they sought to have produced to any issue relevant to this application. In the event each of those subpoenas was set aside as being irrelevant.

13 Mr Velissaris filed no affidavit material and when the matter came on for hearing today before me he sought another adjournment for at least three weeks to enable him to further prepare his case and obtain legal advice which he still lacked. That application for an adjournment was contested and argued at some length. The adjournment was refused for reasons which I gave at the time. Because Mr Velissaris had not filed any affidavit material, I permitted him the indulgence of giving viva voce evidence, reserving to Mr Forbes for the plaintiff the right to any remedial order that he considered appropriate having regard to Mr Velissaris's default in not filing his evidence in accordance with Forrest J's order. In the event, Mr Forbes cross-examined Mr Velissaris very briefly, only to identify the trust deed upon which Mr Velissaris based his case as being that which he produced to the Court whilst giving his evidence.

14 In his oral evidence, Mr Velissaris sought to canvass a number of grievances he has against the first plaintiff and it was extremely difficult to confine him to matters relevant to his establishing a caveatable interest in the property. In the end I think it is fair to summarise the evidence he gave which was relevant to the caveat issue as being that he filed the caveat on the instructions of the other beneficiaries of the Maryvell Family Trust and on his own behalf as beneficiaries of a "constructive or resultant trust", the language he used in the caveat itself although he never adequately explained what was meant by this. He was prevented from attempting to canvass the legal advice he had been given by a number of different lawyers, the various actions of the liquidator or the attempts he said he had made to settle the company's financial obligations so as to enable termination of the liquidation.

15 He insisted that he had a legal right to lodge the caveat. He said, "I bought my daughter out in 2003", that he owned the property as beneficiary of the trust and that, "The company didn't pay a cent". He said that he had worked hard in a restaurant business which he conducted on the property and that he made the mortgage payments, or at least some of them, to the bank. He referred to the trust deed dated 30 January 1998 and was particularly adamant that the court take note of an amendment to that deed which purported to remove the trustee's right of indemnity from the trust assets in July 2005.

16 This amendment was purportedly affected by a unilateral declaration to that effect of Maryvell Investments Pty Ltd signed by him as sole director on 15 July 2005 which amendment he had consented to in a document which he signed in his capacity as Settlor of the Maryvell Family Trust the day before.

17 The principles to be applied to a case of summary removal of a caveat are well known. They have been recently referred to by Warren CJ in Dennis Hanger Pty Ltd v Brown & Anor in which Her Honour said[1]:

In an application for the removal of a caveat, the following broad principles apply:

1. The Court has a wide discretion under s 90(3);

2. The onus is on the caveator to justify the maintenance of the caveat;

The caveator must persuade the Court that there is a serious question to be tried as to the existence of the equitable interest claimed to support the caveat. If there is a serious question to be tried, the Court will not normally order the removal of the caveat on the basis of affidavit evidence, unless the balance of convenience favours removal.

18 In deciding the three proceedings which she did, Dodds-Streeton J determined that Mr Velissaris had no arguable case that he was entitled to possession of the property, hence she refused him leave to sue Maryvell Investments Pty Ltd in liquidation, dismissed his appeal against Master Efthim's determination that a lease under which he had purported to occupy the property was void and gave possession of the premises to the liquidator. I might say at this point that the evident contradictions between the case (or cases) Mr Velissaris put before Dodds-Streeton J and the case he has put on this application do not appear to have troubled him at all, a situation not materially different to that commented upon by Dodds-Streeton J in her judgment of 2 August 2007.

19 In the proceeding before Dodds-Streeton J Mr Velissaris had claimed at one time to be a lessee of the property and at another time a licensee. In the event Her Honour found that Mr Velissaris had no arguable entitlement to possession of the property. As the entitlement he now claims, namely a fee simple in equity, is inconsistent with this determination of Her Honour on the facts as she found them to be, there can be no serious issue to be tried raised by Mr Velissaris in this proceeding. The case has already been decided. The Court of Appeal declined to intervene. The High Court refused a stay on Her Honour's order for possession. All Mr Velissaris can point to at this stage is an application for special leave to appeal, a far cry from the interest he asserted in the caveat under attack. It cannot support the caveat.

20 In any event, even if there had been a serious issue to be tried, the balance of convenience would overwhelmingly favour removal of the caveat. Should this sale be postponed, the unsecured creditors of Maryvell Investments Pty Ltd would almost certainly get nothing from the liquidation. Extra costs would be incurred, both legal costs and those of the liquidator, which would consume all remaining assets of the company after the bank's indebtedness is discharged.

21 Mr Velissaris's claim was not asserted until 13 December 2007, a month after the sale took place, and no explanation has been put forward for his having made the claim earlier. Of course if he had done so he may well have been making claims inconsistent with his contentions in the litigation before Dodds-Streeton J, which ended only in mid-2007.

22 In the circumstances there will be an order that the Registrar of Titles forthwith remove the caveat lodged by the first defendant on 13 December 2007, on the property more particularly described in Certificate of Title Volume 4621 Folio 189.

(The Court proceeded to make orders, including injunctions preventing the lodging of further caveats both by Mr Velissaris and, ex parte, by his children Mary Velissaris [also known as Mary Patroungas] and Alexandros Velissaris as well as orders as to costs).

[1] [2007] VSC 495 at para 33.

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