Graham Rodney Friend v Lorraine May Sole

EX TEMPORE Judgment 1HIS HONOUR: This is an application by the plaintiff for an order pursuant to s 74O of the Real Property Act 1900 (NSW) (the "Act") for leave to file a further caveat in relation to a property at Euroka (the "Property"). That leave should be granted. 2The facts may be shortly stated. They are derived from an affidavit of the plaintiff. For reasons which will become apparent the defendant has not had an opportunity to file such evidence as she might have wished, although I do not understand the basic facts attested to by the plaintiff to be in dispute. 3The plaintiff and defendant first met in 1995. They formed a relationship in 1998. 4In 2000 they began cohabiting in what the plaintiff describes as a de facto relationship. 5In 2004 the plaintiff and defendant decided to purchase the Property. The plaintiff says that he and the defendant had a conversation to this effect: Me: Let's buy this in your name, we will live in it, I will pay the mortgage, rates and other expenses, and you hold the property for my benefit. All of the money leftover from the sale of Victoria Road, your superannuation, inheritance from your Mum's estate, any monies received from your worker's compensation claim and any long service leave owing to you will be yours. Then if you pass away before me you can leave the property to me, and if I pass away before you, I will give you a life tenancy and the property would then revert to Leiland [the plaintiff's son]. Lorraine: I agree. 6After the Property was purchased in the name of the defendant only and she later became the registered proprietor of the Property, the plaintiff made arrangements to have all of his wages paid directly into the mortgage that was taken out over the Property by the defendant. The plaintiff also says, and his affidavit supports this, that he paid the rates and maintenance associated with the Property such as water and electricity. 7In 2006 the relationship between the parties broke down. However, they continued to live separate lives under the same roof at the Property. 8In March 2010 the defendant listed the Property for sale over the objection of the plaintiff. The plaintiff says that acting on the advice of a relative he then took steps to lodge a caveat, which was recorded on the title against the title to the Property on 22 June 2011 (the "First Caveat"). 9The nature of the interest in the Property claimed in the First Caveat was a "personal and equitable interest" by virtue of these facts: The Caveator claims a financial and equitable interest in the property as he contributed financially to the purchase and has made regular loan payments since the date of purchase. The property is his only residential home and he has the care and responsibility of the general upkeep and day to day management of the property. 10In circumstances not entirely clear from the evidence, the First Caveat lapsed. 11On 7 December 2012 a further caveat (the "Second Caveat") in favour of the plaintiff was recorded against the title to the Property. The Second Caveat claimed the nature or interest in the Property to be that "the Caveator has an equitable interest in the property", but failed to state the facts by reason of which that interest was said to arise. 12No leave was sought pursuant to s 74O of the Act for the lodgment of the Second Caveat. There is no doubt that the interest claimed in the Second Caveat was the same as in the First Caveat. It follows, by reason of s 74O(2), that the Second Caveat has no effect. 13The defendant caused a lapsing notice to be issued in relation to the Second Caveat, which was served upon the plaintiff on 11 July 2013. 14As a result of a conversation between the plaintiff and the defendant which took place on or about 24 July 2013, the plaintiff became aware that the defendant had accepted an offer of $305,000 for the Property, but that contracts had not yet been exchanged. The original purchase price for the Property in 2004 was $298,000. 15On 26 July 2013 Pembroke J granted leave for the filing of the summons, notice of motion and supporting affidavit in these proceedings and made orders for short service. They were served on the defendant personally prior to 5.00pm on 29 July 2013 (two days ago). Copies were also emailed to the defendant's solicitors. However, all the defendant has had an opportunity to do is to retain counsel to appear today, the second last day on which the question of relief can be dealt with, without the benefit of her own affidavit and on quite limited instructions. 16For present purposes the order sought for leave to file a further caveat is, in its practical effect, no different to an order being sought to extend the Second Caveat. The legal principles applicable to the task before me are therefore identical to those which would apply to an extension application, requiring consideration of whether there is a serious question to be tried and the balance of convenience. 17In the course of argument I raised the possibility, with an eye to attempting to preserve the interlocutory nature of what was proposed, of making an order nunc pro tunc granting leave for the filing of the Second Caveat and then extending the life of the Second Caveat up to a fixed date to enable the defendant to come back and argue the matter on a more fully prepared basis, if she wished to do so. However, I am satisfied that, for the reasons set out by Brereton J in Redman Constructions Pty Limited v Tarnap Pty Limited [2005] NSWSC 1011 at [22]-[23] ("Redman Constructions"), it is not possible for such an order to be made. 18Turning then to the question of whether leave should be granted for the filing of the Third Caveat, I note that the interest in the Property claimed in the proposed Third Caveat is: The Caveator has an equitable interest in the land being a beneficial interest arising from either an implied, resulting or constructive trust. 19The facts relied upon in support of that interest are specified as, The registered proprietor holds the real property on trust for the benefit of the Caveator. It was agreed at the time the property was purchased between the Caveator and the Caveatee that the Caveatee would hold the Caveator's interest in the property on trust for the benefit of the Caveator. The Caveator has made substantial payments towards the mortgage and paid all rates, water, electricity and maintenance expenses on the property since the date of purchase and is the beneficial owner or co-owner of the property. 20The interest which the Third Caveat claims relies upon well known equitable principles which apply when a property is registered in the name of one party but another party has made significant contributions towards the cost of acquisition or other expenses in relation to that property in circumstances where the presumption of advancement would not apply. 21In this case there does not appear to be any question that the presumption of advancement would apply. Therefore the plaintiff must satisfy me, akin to the test for an injunction, that there is a serious question to be tried that the plaintiff does have the interest claimed in the Third Caveat. I am satisfied on the evidence adduced by the plaintiff that there is such a serious question. 22The next matter is therefore the balance of convenience. The plaintiff says that he wishes to remain in the Property, which has been his home for nine years. Mindful of the question of the balance of convenience and the impending possible sale of the Property, the defendant has proffered an undertaking that the proceeds of sale, after the discharge of the mortgage over the Property and payment of any applicable expenses, would be paid into Court or otherwise secured pending the determination of the extent, if any, of the plaintiff's equitable interest in the Property and therefore in the proceeds of sale. 23An important feature of the present case is that, at the moment, contracts have not been exchanged for the sale of the Property. Furthermore, the evidence suggests that the plaintiff may have a very substantial interest by way of resulting or constructive trust in the Property, although whether it is as great as 100 per cent I am unable to say. 24I do not think that the defendant's proposed undertaking is sufficient to displace what I otherwise see to be the balance of convenience in the present case, particularly when the plaintiff appears on the evidence before me to have a strongly arguable case for a very substantial interest in the Property. 25In those circumstances I consider it appropriate to approach the matter of the balance of convenience in the same way as Brereton J did in Redman Constructions (at [31]) by reference to this proposition stated by Young J (as his Honour then was) in Kingstone Constructions Pty Limited v Crispel Pty Limited NSWSC, Young J, 12 March 1991; (1991) 5 BPR 11,987 that: ... normally when a caveat is proper in form and substance it will be retained even though this will cause harm to the registered proprietor: after all, the whole purpose of a caveat is to enable a brake to be put on the registered proprietor's dealing with his or her property, so as potentially to confer indefeasibility on another, whilst the claim of the caveator is resolved. 26Nevertheless, while I am disposed to grant leave for the lodging of the Third Caveat, it is appropriate that something be done to preserve the essentially interlocutory nature of the relief which I am asked to grant. That may assume some importance if, for example, a contract for the sale of the Property is in fact exchanged in due course. 27This is what Brereton J did in Redman Constructions, where his Honour observed at [37]: The orders which I shall make shall reserve leave to Tarnap to apply by notice of motion for removal of any further caveat. The purpose of reserving that leave is that, in recognition of the interlocutory nature of the current application, Tarnap should not be precluded from disputing any new caveat until any final hearing, and should also be permitted to do so should there be any development bearing on the balance of convenience. 28Finally, the Defendant suggested that s 74O could not apply in its terms until after the Second Caveat had lapsed or been withdrawn (cf s 74O(1)). Without necessarily accepting this proposition, for more abundant caution I will provide that the order giving leave for the lodgment will not take effect until the plaintiff withdraws the Second Caveat. 29HIS HONOUR: The orders I make will be as follows: (1)Subject to order 2, upon the plaintiff by his counsel giving to the Court the usual undertakings as to damages, order that the plaintiff have leave pursuant to section 74O(2) of the Real Property Act to lodge a further caveat in respect of the land comprised in folio identifier xxxxxxxxxx in the form which I have initialled and dated today. (2)Order 1 is to take effect immediately upon the lodgment by the plaintiff of a withdrawal of caveat in respect of caveat xx xxxxxx x. (3)Reserve leave to the defendant to apply by notice of motion for removal of the caveat referred to in order 1. (4)Stand the proceedings over for mention before the Registrar on 7 August 2013. (5)Order that the costs of the application be costs in the cause. (6)Direct that these orders be taken out forthwith.