Goldstraw v Goldstraw [2002] VSC 491

Supreme Court of Victoria|2002-11-14|Before: DODDS-STREETON J.

TRANSFER OF LAND ACT 1958 (VIC) s.89, s.89A, s.90(3), s.118. CAVEATS - Interest necessary to support caveat under s.89(1) of Transfer of Land Act - Constructive trusts - Claims for matrimonial relief and child maintenance - Removal of caveat pursuant to of the - Caveator's onus to establish serious question to be tried as to entitlement to estate or interest claimed in caveat - Proper purpose of lodging caveat under - Lodgment of caveat for a collateral purpose as a bargaining chip in relation to an unrelated claim MAREVA INJUNCTION - Whether applicant has good arguable case or reasonable prospect of success - Whether real or serious risk that court process will be abused - Balance of convenience.

In the present proceeding, the plaintiffs seek, in essence, an order pursuant to s.90(3) of the Transfer of Land Act for the removal of a caveat lodged by the first defendant against the title to the plaintiffs' residential property. The first defendant seeks a Mareva injunction.

By originating motion filed 14 October 2002 the plaintiffs, Leonard George Ridgeway Goldstraw and Janis Maree Goldshaw, sought orders that:

(1) The requirements of Rules 5.03(1) and 8.02 of the Supreme Court Rules 1986 be dispensed with and that they be authorised to commence the proceeding by originating motion in Form 5C.

(2) Pursuant to s.90(3) of the Transfer of Land Act 1958 ("the Act") the second named defendant remove caveat No. AB418953E from the land in Certificate of Title Volume 9594 Folio 576 or if it has not been recorded, not record the caveat but reject it.

By order made 28 October 2002 Master Evans made the procedural orders in relation to Rules 5.03(1) and 8.02 and commencement by originating motion in Form 5C. He referred the proceeding for hearing on 12 November 2002.

By summons filed 11 November 2002, the first defendant sought orders, including orders that:

(1) The plaintiffs be restrained from dealing with the settlement proceeds of the sale of 8 Dunbar Court Greenvale in so far as the amount of $43,101, being the amount claimed in the application for a departure order fixed for mention in the Federal Magistrates' Court on 19 November 2002.

(2) The proceeds of settlement of the sale of 8 Dunbar Court Greenvale in so far as the amount of $43,101, being claimed in the Application for a departure order for mention in the Federal Magistrates' Court on 19 November 2002 and heard as a final hearing in or about the month of June 2003, be deposited in an interest bearing account in the names of the solicitors for the first named defendant and the plaintiffs and such sum shall not be disbursed without the consent of the solicitors for the first named defendant and the solicitor for the plaintiffs or order of this court."

The Parties

The first and second plaintiffs are Leonard George Ridgeway Goldstraw and Janis Maree Goldstraw, who are husband and wife. Since 5 February 1999, the plaintiffs have been the registered joint proprietors of the property situated at 8 Dunbar

Court Greenvale and described in Certificate of Title Volume 9594 Folio 576 ("the property") against which the caveat the subject of this proceeding is lodged.

The first defendant is Barbara Joy Goldstraw. The second defendant is the Registrar of Titles. The Registrar of Titles did not appear at the hearing before me. By a letter to the plaintiffs' solicitors dated 7 November 2002, the Registrar of Titles advised that he had no objection to the making of an order in the form proposed by the plaintiffs.

Mrs Barbara Goldstraw is the former wife of Mr Goldstraw. Mrs Barbara Goldstraw and Mr Goldstraw were separated in October 1992 and divorced in 1994, a decree nisi becoming absolute on 25 July 1995. By consent orders made on 28 September 1993 in the Family Court of Australia, there was a division of property between the parties to the marriage. Mrs Barbara Goldstraw obtained custody of the only child of the marriage, Simone Goldstraw ("Simone") who is now aged 17. Mr Goldstraw's uncontested evidence is that since September 1993 he has made all child support payments for Simone without dispute when due. On retrenchment from his job as a pilot for Ansett Airlines in September 2001, the Child Support Agency reduced the sum Mr Goldstraw was required to pay for Simone's maintenance to $21.67 per month. He continues to make such payments.

In October 1996, Mr Goldstraw married his present wife, Mrs Janis Goldstraw, and they purchased the property in December 1998. The purchase price of $172,000 consisted of a small deposit from the purchasers' savings and the balance of $155,000 was borrowed from the Commonwealth Bank as mortgagee. The plaintiffs subsequently built a house on the property in 1999 and have occupied it since January 2001.

Mr Goldstraw deposes that no monies used to acquire the property and to build the house were connected with monies derived from the period of his marriage to Mrs Barbara Goldstraw.

On or about 16 July 2002, Mrs Barbara Goldstraw caused a caveat to be lodged against title to the property, being Caveat AB418953E. The interest claimed in the caveat is an estate in fee simple "pursuant to a constructive trust arising out of the marital relationship between the caveator and the registered proprietor, Leonard George Ridgeway Goldstraw."

The plaintiffs' then solicitor, by letter dated 2 August 2002, disputed Mrs Barbara Goldstraw's entitlement to lodge the caveat. By letter dated 13 August 2002 the solicitors of Mrs Barbara Goldstraw stated that she sought payment of $40,000 in exchange for withdrawal of the caveat.

On 30 July 2002, the plaintiffs applied to the Registrar to give notice to the caveator pursuant to s.89A(1) of the Act. The s.89A procedure provides, in essence, a means of removal of a caveat by causing it to lapse without having to obtain a court order. On 26 August 2002, Mrs Barbara Goldstraw made an application for child maintenance for Simone in the Federal Magistrates' Court (a Form 63 Application).

The Registrar, on receiving advice from Mrs Goldstraw's solicitors that the Form 63 Application was a proceeding in a court of competent jurisdiction within terms of s.89A(3)(b) of the Act, did not give notice to the caveator.

Mrs Barbara Goldstraw's solicitors informed the plaintiffs' solicitor by letter dated 13 August 2002 that she would withdraw the caveat in exchange for a payment of $40,000 as a contribution to the maintenance of Simone.

Mr Goldstraw deposes that despite efforts to obtain employment, he has not been employed since being made redundant as a pilot, when his employer, Ansett Airlines, went into administration in September 2001. He further deposes that he and Mrs Janis Goldstraw are obliged to sell the property due to their current financial circumstances.

The property is scheduled for auction on 23 November 2002. The scheduled auction gives rise to the urgency of the present applications.

Mrs Barbara Goldstraw's Form 63 Application in the Federal Magistrates' Court is scheduled for hearing on 19 November 2002. However, the plaintiffs' solicitor, Mr Hugh Raynal, by affidavit dated 11 October 2002, deposes to advice from the Associate to the relevant Federal Magistrate that the application is unlikely to be determined on 19 November 2002.

Mrs Barbara Goldstraw, by affidavit affirmed 23 October 2002, asserts details relating to the calculated net proceeds of sale of the property and Mr Goldstraw's financial circumstances. The net proceeds calculation is based on Mrs Barbara Goldstraw's view of what the property should realise upon sale.

In the affidavit of 23 October 2002, Mrs Barbara Goldstraw also provides details of the Form 63 Application in the Federal Magistrates' Court, pursuant to which Mr Goldstraw's net receipts from the sale of the property and inheritance may be taken into account. She specifies how her claim in the Federal Magistrates' Court to a lump sum of $40,000 is calculated and states her belief that Mr Goldstraw is voluntarily unemployed.

Mrs Barbara Goldstraw also provides details of her own financial circumstances, health and her daughter's needs. She deposes to her belief that it is Mr Goldstraw's intention to sell the property and to relocate in Asia for employment by Cathay Pacific Airlines.

On the basis of those contentions, and in support of her application for an injunction restraining the plaintiffs from dealing with $43,101 of the proceeds of the sale of the property, Mrs Barbara Goldstraw, by affidavit affirmed 11 November 2002, deposes that she instructed that the caveat be lodged "to protect my rights and legal remedies in respect of my application for a departure order in the Federal Magistrates' Court."

She further states that she believes that all the proceeds of sale may be transferred out of the jurisdiction and thus make nugatory any order for the maintenance of Simone.

It is a fundamental feature of a caveat under the Act that it must be supported by an estate or interest in land. The interest to be protected by the lodging of a caveat is a proprietary interest. This is enshrined in the terms of the legislation. Section 89(1) of the Act relevantly provides:

"Any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise ... may lodge with the Registrar a caveat ... ".

That is, in order to support a caveat, an interest "must be an interest in respect of which equity would give specific relief against the land itself, either by way of requiring the provision of a registrable instrument or in some other way, for example, ordering a sale to enable a charge to be satisfied out of the proceeds".[1]

In the present case, the caveat is stated to be based on an estate in fee simple "pursuant to a constructive trust arising out of a marital relationship between the caveator and the registered proprietor Leonard George Ridgeway Goldstraw".

An interest based on a constructive trust can form the basis of a caveat. [2] Such an interest could arise in a wide variety of circumstances. Examples include part performance of an agreement for disposition of an interest in land,[3] where parties have acquired land pursuant to a failed joint venture_,_[4] where the claimant has made an indirect contribution to the purchase price of property to which another party takes title,[5] or there is a common intention that a person will acquire an interest in a particular property to which another party holds legal title, and the person acts on that belief to his or her detriment, such that it would constitute a fraud to deny the interest intended to be acquired.[6]

Whilst circumstances which would give rise to a constructive trust over land may arise in the context of marital relationships or de facto relationships,[7] relevant authority establishes that the mere fact that a party has made a claim in the Family Court of Australia does not entitle that party to claim an interest in land. In Bell v Graham,[8] Kellam J noted that a party to a marriage might have an interest pursuant to a constructive trust, based on the same general principles which apply to parties who are not married [at 5]. For example, the trust may arise by reason of contributions of money or labour with respect to the land. Kellam J, nevertheless noted:

"It is clear that the relationship of marriage alone does not create a caveatable interest pursuant to a constructive trust".[9]

His Honour further observed that the right to seek an order conferring an interest in land under s.79 or other provisions of the Family Law Act:

".. does not give a party to a marriage a caveatable interest in land until such time as the Family Court makes an order in respect of their land."[10]

Section 90(3) of the Act provides:

"Any person who is adversely affected by any such caveat may bring proceedings in the Court against the caveator for the removal of the caveat and the Court may make such order as the Court thinks fit."

Section 90(3) is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The Court's power under s.90(3) is discretionary. In that context, it is recognised that the caveator bears the onus of establishing that there is a serious question to be tried that he or she does have the estate or interest in the land claimed.[11] That is, `in order to resist successfully the applications for removal of caveats (the caveator's) arguments must be directed towards the assertion of an interest in the subject land in the light of relevant principles of property and equity law".[12] Further, if the caveator does establish the serious question to be tried in relation to the estate or interest claimed, the weight of authority indicates that the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.

In the present case, the only material adduced by Mrs Barbara Goldstraw to establish that she has an equitable estate in fee simple based on a "constructive trust arising out of a marital relationship" is the Form 63 Application and the material in her affidavits filed in relation to that Application and in this proceeding.

The Form 63 Application seeks a departure order for child maintenance in respect of Simone. The affidavit of Mrs Barbara Goldstraw [Fletcher][13] provides details of Mr Goldstraw's financial circumstances following his redundancy. In particular, it provides details of the property, acknowledging that it was purchased in December 1998 by Mr Goldstraw and Mrs Janis Goldstraw. That is, the purchase occurred some years after the divorce of Mr Goldstraw from Mrs Barbara Goldstraw, and after the making of Family Court orders on 28 September 1993 dividing the parties' property and calculated to "as far as practicable, finally determine the financial relationships between them and avoid further proceedings between them".

The material in Mrs Barbara Goldstraw's affidavits affirmed 23 October 2002 in this proceeding and affirmed 10 September 2002 in relation to the Form 63 Application, may be relevant to a determination of whether Mr Goldstraw should be required to pay a varied amount of maintenance for Simone or a lump sum of $40,000 under the Child Support Assessment Act (1989) and the Child Support (Registration and Collection) Act (1989). However, the material does not provide any basis for establishing that Mrs Barbara Goldstraw has an estate or interest in the property on any ground, whether pursuant to a constructive trust or otherwise.

In my opinion, the Form 63 Application does not constitute proceedings "to substantiate the claim of the caveator in relation to the land and the estate or interest" the subject of the caveat. The Registrar, however, was notified by the first defendants' solicitor that it did constitute such proceedings within terms of s.89A(3)(b) of the Act and therefore did not give notice that the caveat would lapse.

Before me, Mr Bristow, counsel for the first defendant, did not submit there was a caveatable interest. Rather, he submitted that there was a maintenance dispute. He referred to the letter of the first defendants' solicitor dated 13 August 2002, which sought $40,000 in return for the withdrawal of the caveat and submitted "it was not asserted at the time that there was a caveatable interest pursuant to a contract of sale, or deed, or some other property law document which would give rise to that title, but it was a holding position."

Mr Bristow further contended that "whilst it is an unusual use of the caveat, in my submission it is a practical and well used or often used method in order to get something to the bargaining table. I have conceded ... that the caveatable interest is not one which the court will uphold and I do not suggest that it will."

In the absence of any evidence to support Mrs Barbara Golstraw's entitlement to the estate and interest claimed in the caveat, her counsel's concession that no caveatable interest exists and Mrs Barbara Goldstraw's acknowledgment in her affidavit affirmed 11 November 2002 that the caveat was lodged to protect her rights and legal remedies under the Form 63 Application in the Federal Magistrates' Court, the plaintiffs' claim to have the caveat removed pursuant to s.90(3) of the Act must succeed.

In my opinion, the only proper purposes for lodging a caveat against a registered proprietor's title under s.89(1) of the Act are to protect the estate or interest claimed by the operation of the statutory injunction against the registration of subsequent dealings and to provide notice of the existence of the estate or interest to those who consult the Register. A caveat has a significant potential to obstruct the rights, and to damage the interests, of the registered proprietor and other parties.

Of particular relevance in the present case is the potential deterrence of purchasers. Given the potential for damage to a variety of parties, in my opinion the lodgment of a caveat for an ulterior or collateral purpose constitutes a serious misuse of the relevant statutory provisions.

That is fortified by s.118 of the Act, which provides that any person lodging a caveat without reasonable cause shall be liable to compensate any person who sustains damage thereby, as the court deems just.

I am unable to form a view on the merits of Mrs Barbara Goldstraw's Form 63 Application, or its prospects for success. While Mr Bristow contended that there was a very strong likelihood of success, Mr Moore, counsel for the plaintiffs, did not concede that. Whatever the merits of and justification for the Form 63 Application or other claims for additional maintenance contributions by Mr Golstraw, in my opinion, it was unjustifiable to lodge a caveat for which there was no legitimate basis in order to bring the registered proprietor to the bargaining table on an unrelated claim.

If a widespread practice developed of lodging caveats as bargaining chips in such contexts, it would undermine the operation of an essential feature of the Torrens system.

On 11 November 2002 the first defendant filed a summons seeking orders restraining the plaintiffs from dealing with the settlement proceeds of the property in relation to the amount of $43,101 (being the amount claimed in the Federal Magistrates' Court application) and requiring its deposit in a joint account.

In support of the application for those orders, the first defendant relies upon the assertion that it is Mr Goldstraw's intention "to sell the property and move with the proceeds to live in Asia for the purposes of securing employment with an overseas airline, namely, Cathay Pacific". No basis is given for that assertion.

In her affidavit affirmed 11 November 2002, the first defendant, in paragraph 6, again states her belief that the proceeds of the sale of the property "may be transferred out of the jurisdiction of this and the Federal Magistrates' Court of Australia and so make nugatory any order for the maintenance of the child Simone Goldstraw".

Despite the late filing of the summons on the afternoon of 11 November 2002, the plaintiffs sought that the first defendant's application be determined. They sought and obtained leave to file the affidavit of Leonard Goldstraw sworn 12 November 2002 in relation to the first defendant's application for an injunction.

In paragraph 3 of the affidavit of 11 November 2002 Mr Goldstraw deposed:

"I am not in receipt of, nor have I accepted, any job offer from overseas airline, aviation company, or employer; I have no application for employment with any overseas airline, aviation company or employer currently pending; I have no intention of making any such application with any overseas airline, aviation company or employer in the near future; I have no intention of travelling overseas either for employment or any other purpose, in the near or mid-term future; I have no intention of removing the proceeds of the sale of the property at 8 Dunbar Court Greenvale, or any part thereof, out of Australia temporarily"."

Mr Goldstraw's evidence that he has since September 1993 made all child support payments in accordance with assessment when due is not disputed. There is no evidence to suggest that he has not fully satisfied all his maintenance obligations or that he has ever attempted to evade his legal duties.

I accept that Mr Goldstraw has no present intention to relocate overseas or to transfer his assets out of the jurisdiction. I am satisfied that there is no evidence before me to suggest that Mr Goldstraw, even if employed overseas, would be likely to fail to comply with any maintenance or related orders made in favour of his daughter Simone.

The injunction sought by the first defendant is in the nature of a Mareva or freezing injunction, which operates, inter alia, to prevent a defendant from removing assets from the jurisdiction so as to frustrate execution under proceedings brought by the plaintiff.

Relevant authorities recognise that an injunction granting Mareva relief constitutes a drastic remedy imposing a significant restriction on the rights of the property owner. It is well established that "it requires a high degree of caution on the part of a court invited to make an order of that kind.[14]

It is also well recognised that it is not the legitimate function of a Mareva injunction to provide "a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears may not be satisfied".[15] Rather, its proper purpose is to prevent abuse of the process of the court.[16]

The authorities indicate that in exercising the discretion as to whether to make a Mareva injunction, it is necessary first to determine whether the applicant has a good arguable case or a realistic prospect of success; secondly, whether there is a real risk that the court process will be abused, in that the judgment in favour of the plaintiff will remain unsatisfied unless the injunction is granted. Thirdly, whether the balance of convenience favours the grant of an injunction.[17]

In the present case, the strength of the first defendant's Form 63 Application is disputed. I am not in a position confidently to determine whether it has realistic prospects of success. However, even if it be assumed that the first defendant has a good arguable case, or realistic prospects of success, there is no evidence to conclude that there is a serious risk that any order made in her favour will not be satisfied. The first defendant has, at best, a belief or suspicion that Mr Goldstraw will relocate overseas. That belief is based on the assertion that "as with a number of other Ansett Airline pilots, it is something that would be likely to happen for an airline pilot who can't get work here, to try to get work overseas." Against that belief is Mr Goldstraw's deposition that he has no such intention. The first defendant adduces no evidence that Mr Goldstraw has ever, in the past, flouted the law or evaded his maintenance obligations or that he is likely to do so in the future.

Accordingly, the first defendant has failed to establish that there is a serious risk that any order made in her favour pursuant to the Form 63 Application will not be satisfied. Therefore, it is unnecessary to consider the balance of convenience or Mr Moore's submission that the relief sought in the first defendant's summons is at best tenuously related to the originating process.

In the circumstances, I consider that the first defendant has not established a basis for the relief sought and the application for the orders made by summons filed on 11 November 2002 fails.

[1] Spencer v Spencer, Hedigan J., Supreme Court of Victoria, 16 October 1996 at p.9.

[2] Taddeo v Catalano (1975) 11 SASR 492; McMahon v McMahon [1979] VicRp 23; [1979] VR 239.

[3] Ogilvie v Ryan [1976] 2 NSWLR 504.

[4] Muschinski v Dodds (1985) 160 CLR 483.

[5] Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137