Transfer of Land Act 1893 (WA), s 138

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

Holland v Hodgson (1872) LR 7 CP 328

Jandric v Jandric [1999] WASC 22

Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583

1 This is the plaintiff's application for an order extending the operation of caveat I129642 over the land at 17 Blundell Street, West Swan ("the property").

2 The plaintiff appears in person. The first defendant is the plaintiff's mother. She is 78 years old and in ill health. She lives on the property and has done so for the past 20 odd years. Evidence of the first defendant's medical condition was provided by her medical practitioner who confirms that the first defendant may at some stage need to move into alternative aged care accommodation.

3 The history of the ownership of the property is as follows. It was purchased in 1982 for the sum of $83,000 by the five members of the first defendant's family being her then husband and her three children. The members of the family held the property as tenants in common in equal shares. Each of the children paid $4,000 towards the purchase price of the property. In 1994 the first defendant's husband transferred his one-fifth share in the property to the first defendant.

4 In September 1997 the first defendant's three children, including the plaintiff, transferred their one-fifth share in the property to the first defendant for the sum of $20,000 each. At the time of the transfer, the value of the property, at least for stamp duty purposes, was $225,000. It seems the property was unencumbered at the time of the transfer. Accordingly, the value of a one-fifth share of the property in September 1997 would be approximately $45,000.

5 In affidavits in support of his application, the plaintiff states that his mother coerced him to transfer his share in the property and assured him that in return for the transfer he would receive "a larger share of the property when she died and it is willed to me". According to the plaintiff the agreement he relies on is oral. In a subsequent affidavit the plaintiff said the first defendant may have used "friendly coercion" and that the first defendant used her position as his mother to emotionally persuade him to help her. It is said by the plaintiff in that affidavit that the agreement with the first defendant was that he would receive a one-third share in the property in her Will.

6 The plaintiff also deposes to improvements he has made to the property. He values the improvements at $18,000. It seems that one of the improvements on the property is a shed from which at material times he has carried on the business of motor vehicle repairer. However, it is clear from the plaintiff's affidavit that the improvements to which he refers were carried out prior to the transfer of his one-fifth interest in the property to his mother in September 1997.

7 There is some suggestion that the plaintiff is restrained under a violence restraining order obtained by the first defendant from accessing the property save to recover what he describes as his fixtures. However, the evidence did not adequately deal with these aspects and in particular the terms (as varied) of any violence restraining order.

8 The first defendant denies all of the allegations made by the plaintiff. She swears that it was made clear by her to all of her children, including the plaintiff, that the payment of $20,000 to each of them was the purchase price paid by her for their interest in the property and that there would be no more payments of any kind thereafter. She acknowledges that the plaintiff and her other two children undoubtedly have an expectation that they will be beneficiaries under her Will. However, she also gave evidence that it was likely in the near future that she will have to enter a home for the aged and in order to finance such a move it may be necessary for her to sell the property or use it as security for a loan.

9 The plaintiff lodged the caveat in June 2002. It provides that the interest claimed is an estate "in fee simple as a beneficial owner of one undivided fifth share" and forbids the registration of any instrument absolutely.

10 The onus lies on a caveator in proceedings under s 138 of the Transfer of Land Act 1893 (WA) to demonstrate that there is a valid caveatable interest, or, more correctly, that there is a serious question to be tried on the issue. A caveat will be extended unless the claim to an estate or interest in the land appears to be without foundation: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 48 per Owen J; Porter v McDonald [1984] WAR 271.

11 The courts will not, except in the most exceptional case, decide the matter on summons. The Court cannot resolve conflicts of evidence on affidavit.

12 Although the balance of convenience must also be considered in an application for an extension of caveat, it is unusual to refuse an order extending a caveat where an arguable case as to the existence of a caveatable interest has been demonstrated. That is so because the lapse or removal of the caveat has the potential to result in the destruction, for all practicable purposes, of the benefit of the proprietary interest purportedly protected by the caveat: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (supra).

13 The plaintiff relied on four grounds in support of his claim of a caveatable interest in the property. Firstly, the alleged agreement between himself and his mother pursuant to which, in consideration of the plaintiff transferring his one-fifth share in the property, his mother promised that he would receive a one-third interest in the property when she died. Secondly, his alleged interest as an unpaid vendor of his one-fifth interest in the property. This ground is in effect a re-statement of the first ground. Thirdly, that he had a right of access or entry to his workshop which could be protected by caveat. Finally, he relied on a constructive trust.

14 Insofar as the alleged agreement involves a specific promise to leave a one-third interest in the property to the plaintiff in the first defendant's Will, it is an agreement for the disposition of an interest in land which must be in writing: Horton v Jones [1935] HCA 7; (1935) 53 CLR 475; Gors v Henderson, unreported; SCt of WA (Steytler J); Library No 980499, 7 September 1998.

15 However, an oral agreement would be enforceable if there were acts of part performance. The test of part performance is whether there are any acts which are unequivocal and in their own nature referrable to the alleged agreement: Gors v Henderson (supra). There is no evidence before me of any acts which could arguably be said to be unequivocal and in their own nature referable to the alleged agreement relied on by the plaintiff. Accordingly, there is no arguable case that the plaintiff has a specifically enforceable agreement giving rise to an interest in the property which can be protected by caveat.

16 Further, there is no evidence before me of an arguable claim that the plaintiff has an enforceable entitlement to access the property. It appears the improvements referred to by the plaintiff were constructed before the transfer of his interest in the property in 1997. Further, there is no evidence of any arrangement or agreement between the plaintiff and the first defendant concerning access to the property by the plaintiff.

17 That leaves the constructive trust ground relied on by the plaintiff. I am satisfied that the same facts relied on to establish the alleged agreement also give rise to arguable claims in undue influence, unconscionable conduct (as to which, see Powell v Powell [2002] WASC 105) and estoppel. A court may grant proprietary relief by way of a constructive trust of an interest in the property if the plaintiff succeeded on these grounds: Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101.

18 However, although there may be a prima facie entitlement to a constructive trust of an interest in relevant property, a court must first be satisfied that there is no other appropriate equitable remedy falling short of the imposition of a trust: Giumelli v Giumelli (supra) at 112-113. That is, the constructive trust in these circumstances is a remedial response to a claim for equitable intervention not a pre-existing right which the court recognises and gives effect to.

19 There has long been a debate as to whether a constructive trust is a right or a remedy and some commentators draw a distinction between institutional constructive trusts and remedial constructive trusts: see Ford H A J and Lee W A, "Principles of the Law of Trusts", 3rd ed, Law Book Company, Australia, 1996, par 22060. The dichotomy is between those categories of cases where it is practically certain that, if the court were asked to declare that a constructive trust existed, it would do so and other situations capable of leading to a declaration by a court that a constructive trust exists but in respect of which there may be uncertainty as to whether some other equitable remedy might be awarded. Included in the former category are a fiduciary receiving a bribe, a mortgagee who, having sold chattels, holds surplus proceeds after paying expenses and recouping what is owed on the mortgage, the constructive trust affecting a donor of a gift complete in equity and the constructive trust which gives efficacy to an agreement for mutual Wills. In such cases, the predictability of the outcome is such that the constructive trust is said to arise at the time of the relevant conduct and the beneficiary of the trust has a beneficial interest in the trust property from that time which (if the property is land) can be protected by caveat. In these cases, there is an obvious analogy with the equitable proprietary interests that arise when the remedy of specific performance is available such as in the case of a specifically enforceable agreement for the sale of land or an agreement to lease.

20 On the other hand, it is difficult to see how it can be said that in the case of a truly remedial constructive trust, a person has an estate or interest in property which can be protected by caveat before the remedy has been obtained.

21 However, it is unnecessary for me to determine that question in this case because the caveat is irregular on its face. It is an absolute caveat in circumstances where it should have been framed to protect the limited interest claimed by the plaintiff, being at most a one-third interest in the property after the first defendant's death; Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129; Midland Brick Corporation Pty Ltd v Welsh & Anor [2002] WASC 248. The plaintiff's interest would be adequately protected by a subject to claim caveat. The caveat being irregular, should not be extended.

22 However, I am willing to consider granting an injunction until further order restraining the first defendant from creating, disposing or dealing with any estate or interest in the property on certain conditions. As the first defendant has no immediate or short term need or intention to deal with the property, the balance of convenience would appear to currently favour the plaintiff. That may change. If the matter cannot be resolved the dispute should be determined as soon as possible.

23 The proposed orders would be in the following terms:

1. Subject to orders 2 and 3 hereof, the first defendant be restrained from creating, disposing of or dealing with any estate or interest in the property at 17 Blundell Street, West Swan being the whole of the land in certificate of title 2114, folio 246 ("the property").

2. It is a condition subsequent to the continuation of this injunction that within 14 days from [specify date] the plaintiff:

(a) file an undertaking as to damages in the usual form;

(b) commence proceedings in this Court by writ of summons for the purpose of determining the plaintiff's claims to an interest in the property.

3. In the event the conditions in order 2 are satisfied, the injunction will be until further order.

4. Each party is to have liberty to apply on 7 days notice for the discharge or variation of the injunction.

24 If the plaintiff failed to satisfy the conditions within the specified time, the injunction would come to an end. If the plaintiff satisfied the conditions it would be open to the first defendant to apply to vary the injunction if her personal circumstances change or if any other relevant matters occur such as any unsatisfactory delay in the prosecution of the action. I will hear from the parties on the proposed orders.

25 As the plaintiff appears in person, I strongly recommend that he obtain legal advice on the merits of his claim and advice as to the purpose and effect of the undertaking as to damages.