Makaritis v Makaritis

Injunction against possession proceedings

1. As already noted, Bill's notice of motion sought an injunction against HPH proceeding with its cross-claim for possession. This was based on language I used at the hearing on 10 December. In pre-Judicature times, a "common injunction" could be obtained in equity against the defendant proceeding with a claim at law. In a fused system, it might have been simpler to seek a stay of the cross-claim proceedings. But the language of the notice of motion made no difference of substance.
2. Counsel for Bill opened by submitting that he had an arguable claim to a proprietary interest in the property under a joint endeavour constructive trust (Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137). On Bill's version of events, there was an agreement whereby HPH would acquire the property and build a granny flat in which Bill would ultimately live. Bill was to contribute by putting in his equity in the property (less the funds required to pay Candice out) and HPH was to use the rental income from the property to pay the mortgage. The endeavour came to an end as a result of the parties falling out "without attributable blame" (Muschinski at 618, 620).
3. Arguably this would have been a "joint endeavour" for the purpose of the doctrine. The difficulty was that the final relief would involve an order for the sale of the property and repayment of the parties' contributions out of the proceeds: see Muschinski at 623-24. That would result in Bill having to vacate anyway. It therefore did not justify an interlocutory order keeping him in possession: Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199 at [15]-[16].
4. After I refused Bill's application for an adjournment, the ground appeared to shift. Counsel put Bill's claim on the basis of proprietary estoppel. The promised interest in the property was an entitlement to live at the property for the rest of his life. Counsel withdrew an earlier concession that even if Bill was successful the property would need to be sold.
5. Counsel submitted that, on Bill's evidence, Luke promised him that he could live in the property rent-free. Between March 2019 and June 2019, Bill acted on this promise to his detriment by transferring the property to HPH for less than its true value. He also spent his own money on the property following the transfer.
6. There were some evidentiary difficulties with the alleged promise. Counsel suggested that another term of the arrangement between the parties was that the property would be transferred to HPH to be held on trust for the benefit of Bill's children. Bill would retain control over the property. But the idea of Bill retaining control of the property was not consistent with the transfer to HPH, or the discretionary trust structure in fact adopted.
7. The borrowings from a third-party financier, which were and are secured on the property, presented another practical challenge. Pepper Finance had not been joined and counsel for Bill accepted that his claim could not take priority over Pepper Finance's mortgage. The suggestion was that HPH would rent out the property and use the rent receipts to service the mortgage and meet the outgoings. But this would only work if the rental income was sufficient (after tax) to cover the outgoings and the loan repayments. Bill's case therefore had to be (and was) that it was part of the arrangement between Bill and Luke that HPH was obliged to meet any shortfall itself.
8. A case framed in this way raised obvious questions about the balance of convenience. The property is HPH's sole asset and it has no other source of income. Counsel for Bill was effectively asking the Court to require HPH to keep a roof over Bill's head until the end of the proceedings. Counsel of course offered on Bill's behalf to give the usual undertaking as to damages. But counsel acknowledged that the undertaking would be effectively worthless if Bill failed in the proceedings.
9. There was evidence from Luke which addressed the balance of convenience. Luke stated in an affidavit made in February that Bill was interfering with attempts to rent the property out. Indeed, he had been told by an agent that it would be impossible to rent the property out while Bill was living there. Therefore, Bill's occupation of the property would leave HPH unable to fund the mortgage payments and outgoings.
10. There was also evidence from Luke that suggested Bill had other places to go if he could not live at the property. In an affidavit made in September last year, Luke stated that he was told by his father in June 2019, before the conveyance, that he could go to "Peter's place or to Dennis's place". Peter is Bill's second cousin and Dennis is his friend, Mr Dennis Zambellis. Luke also stated that Adam Makaritis, another of Bill's sons, had a spare bedroom available in a two-bedroom townhouse in central Newcastle.
11. There was no evidence from Bill to contradict this evidence from Luke. I concluded that, although Bill had an arguable case of proprietary estoppel, it was not a particularly strong one. More importantly, on the evidence the balance of convenience was strongly in HPH's favour. I therefore had to dismiss Bill's motion.

Judgment for possession

1. As foreshadowed at the hearing on 8 February, the dismissal of Bill's motion was followed by an application on behalf of HPH for an order for possession. HPH's notice of motion was filed on 10 February and, without objection from counsel for Bill, dealt with on the same day. It was common ground that the making of a possession order would not prevent Bill from pursuing his claims against HPH in the principal proceedings.
2. Counsel accepted that there was no answer to the claim for possession, but asked for a stay of the operation of the order. I granted a limited stay to give Bill an opportunity to make an application for a longer stay, if so advised.
3. HPH's notice of motion also sought an order striking out Bill's statement of claim on the ground that it was inadequately pleaded. I put this aspect of the motion off and it was in the end overtaken by events.

Stay of possession order and extension of caveat

1. On 21 February a further notice of motion was filed on Bill's behalf. This involved two applications. First, an order was sought extending Bill's caveat (see [22] above) until the determination of his claims against HPH in the principal proceedings. Second, an extension was sought of the stay on the writ of possession until the determination of those claims. I heard the motion on 25 February.

Stay of possession order

1. It is convenient to deal first with the application for an extension of the stay. The ground was hardship. The application was supported by an affidavit from Bill which responded to Luke's evidence about other places Bill might live (see [49] above). The contention was that Bill in fact had no alternative accommodation available to him.
2. According to Bill's new affidavit, it would not be safe for him to stay with his son Adam. Adam is unstable and has anger management problems. Bill's cousin Peter could not accommodate him; his house is already full with his three children and his wife. Bill's friend Dennis is also an unsuitable host, as he currently lives with his two children and his mother.
3. Bill also gave evidence about the possibility of renting a single room in Newcastle. But he stated that he only has around $120 to $150 per fortnight left over after paying his expenses. He estimated that a single room in the Newcastle area would cost around $130 to $200 per week. There would also be no room for his personal possessions.
4. The immediate problem with the stay application was that in substance it was an attempt to re-litigate the earlier application to stay the possession proceedings. The fact that the evidence presented in support of the application could have been, but was not, presented in support of the earlier application, makes this clear.
5. There is no absolute rule against re-litigation of interlocutory applications of all types and in all circumstances. Nevertheless, it is a "settled rule of practice" that once the court has dealt finally with an application for interlocutory relief, it will not re-open its decision unless there is some relevant change of circumstances. See Nominal Defendant v Manning (2000) 50 NSWLR 139 at [10]-[11], [95]-[98].
6. No such circumstances existed in the present case. Indeed, it would have made a mockery of my decision to refuse the request for an adjournment on 8 February to allow that decision to have been circumvented in this way.
7. This was reason enough to refuse the application. In passing, I note that Bill's new evidence would not necessarily have compelled the extension of the stay. It would only have created a contested question of fact, which could not have been resolved on the application. But even if resolved in Bill's favour, that would not have allowed him to stay at the property forever. Bill proposed that he would assist in paying outgoings for the property. But nothing in Bill's new evidence answered Luke's earlier evidence about the financial impossibility of HPH accommodating Bill at the property. All of this just underlined how undesirable it would have been to allow Bill to re-open the issue.
8. For these reasons, I refused the application for the extension of the stay until determination of Bill's principal claim against HPH. I did however give an extension of a few weeks to allow for Bill to vacate in an orderly way.

Extension of caveat

1. As filed, Bill's caveat claimed the following interest in the property: Estate In Fee Simple By virtue of: Beneficial Interest In Trust Details supporting the claim: The Caveator has a personal equity in the property by virtue of the unconscionable conduct of registered proprietor in 2019 in obtaining a transfer of the land from the caveator to the registered proprietor.
2. This formulation of the claim might have been justified if Bill had been pursuing a claim for rescission of the transfer (although in that event rescission should have been expressly mentioned). But, as we have seen, if a claim for rescission had ever been intended, it had been abandoned as untenable by the time the February hearings took place. As presented by counsel, the interests claimed were an entitlement to live in the property for the rest of Bill's life (proprietary estoppel) or an entitlement to have the property sold and Bill's contributions repaid from the proceeds (joint endeavour constructive trust).
3. When I put this to counsel, he informed me that it was not possible, using the PEXA system to enter a caveat in these terms. Counsel stated that all that is available through PEXA is a drop-down menu with a fixed list of specified interests, such as "estate in fee simple". It is not possible to describe the interest claimed in bespoke language.
4. If this is correct, it needs to be changed. There is a statutory requirement that the caveat state the interest claimed by the caveator: Real Property Act 1900, s 74F. Where the caveator is seeking specific performance of an obligation to execute a transfer, or a mortgage, then the caveator's claimed interest can be stated in a standard form. But the list of caveatable interests is not closed and should not be arbitrarily restricted.
5. Bill's proprietary estoppel and joint endeavour constructive trust claims gave rise to equitable proprietary interests which were caveatable. I did not understand counsel for HPH to contend to the contrary. And, while neither claim justified an injunction entitling Bill to remain in possession until the hearing, a caveat against dealings gave rise to quite different considerations. Such a caveat would not prevent HPH from renting out the property. It would only prevent HPH from dealing with the property, to the possible prejudice of Bill's alleged proprietary interest in the proceeds.
6. In these circumstances I concluded that Bill should be entitled to maintain a caveat over the property which properly reflected the interests he now claims. I therefore granted leave under s 74O of the Real Property Act for Bill to lodge a fresh caveat reflecting those claims. That caveat was to operate until further order of the Court and HPH was to be entitled to apply to have it removed in the event of a change in circumstances.

Orders

1. The orders of the Court made on 8 February 2022 on Bill's notice of motion filed 28 January 2022 were: 1. Decline the application for an adjournment. 2. Order the applicant pay the respondent's costs of the application. 3. Order that the motion be dismissed. 4. Order that the applicant pay the respondent's costs of the motion.
2. The orders of the Court made on 10 February 2022 on HPH's notice of motion filed 10 February 2022 were: 1. … 2. The Court orders that the plaintiff is to give to the cross-claimant/second defendant possession of the whole of the land contained in Certificate of Title Folio Identifier [XX], being the land known as [XX] Maryland in the State of New South Wales and all improvements on the land. 3. The Court grants leave to the cross-claimant/second defendant to issue a writ of possession in relation to the premises referred to in order 2 in fourteen (14) days, being on and after 24 February 2022. 4. The Court orders the cross-defendant to pay the costs of the Cross-Claim. 5. Order the respondent/cross-defendant pay the applicant/cross-claimant's costs of the motion to date.
3. The orders of the Court made on 25 February 2022 on Bill's notice of motion filed 21 February 2022 are: 1. Order that the time after which leave is granted to the cross-claimant/second defendant to issue a writ of possession in relation to the premises referred to in order 2 made on 10 February 2022 be extended until 22 March 2022. 2. Upon the plaintiff undertaking to make and pursue with all reasonable dispatch an application for the expedition of the proceedings and upon the plaintiff giving the usual undertaking as to damages, grant leave under the Real Property Act 1900 s 74O for the plaintiff to lodge a caveat claiming the following interest in the property: 1. an entitlement to live at the property rent-free for the term of the plaintiff's life; or 2. alternatively, a charge ranking second after the registered mortgage on the property for the contributions made by the plaintiff to the joint venture between the plaintiff and the second defendant, as formulated by plaintiff's counsel in the course of submissions today. 1. Note that the caveat is intended by the Court to operate until further order only and the second defendant may apply, in the event of any relevant change of circumstances, to have the caveat removed as if it had previously been the subject of a lapsing notice and an order that it be extended until further order. 2. Direct that the plaintiff's notice of motion for expedition be filed within 7 days. 3. Order that the notice of motion be otherwise dismissed. 4. Order that the plaintiff/applicant pay the respondent/second defendant's costs of the motion. 5. Grant liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 April 2022