Plaintiff v Defendants

2 The first defendant, Maureen Therese Doyle (defendant) occupies the Land.

(a) for recovery of possession of the Land under Order 53 of the Supreme Court (General Civil procedure) Rules 2015 (Rules); and

(b) under s 90(3) of the Transfer of Land Act 1958 (TLA) that the Registrar of Titles remove a caveat on the title to the Land lodged by the first defendant on 7 March 2014.

4 The defendant opposed the plaintiff's application.

5 The second defendant, the Registrar of Titles, wrote to the Court on 6 July 2023 indicating she does not intend to appear or claim costs in the proceeding.

6 For the reasons below I have decided not to grant the plaintiff's application for possession on a summary basis but to make orders for the preparation of the application for a full hearing. I have also decided to grant the plaintiff's application for orders that the caveat be removed.

7 In addition to oral submissions, the plaintiff relied on:

(a) the affidavit of James Patrick Downey sworn 10 May 2023;

(b) the affidavit of James Patrick Downey sworn 11 July 2023;

(c) the affidavit of James Patrick Downey sworn 28 July 2023;

(d) affidavits evidencing service; and

(e) written submissions dated 18 July 2023 and 19 September 2023.

8 In addition to oral submissions, the defendant relied on:

(a) her affidavit sworn 4 July 2023;

(b) her affidavit sworn 9 September 2023;

(c) written submissions filed on 18 July, 19 September 2023 and 26 October 2023.

9 The defendant represented herself in the proceeding and accordingly is entitled to the assistance of the Court to ensure a fair hearing.[1] The defendant's evidence was that she, with her former husband, operated their building business and property development investments, had worked in a bank and as a financial planner/mortgage broker. Her evidence was that she suffers from PTSD, major depression and anxiety. My view was that the defendant was well able to articulate her case and to engage meaningfully in arguments involving complex matters of statutory construction.

10 On 3 May 2023 the plaintiff, in his capacity as the trustee of Mr Bourne's bankrupt estate, became the registered proprietor of the Land.

11 On 7 March 2014 the defendant caused caveat number AK952741L to be registered on the title to the Land, claiming an interest in the Land on the basis that the "registered proprietor holds his interest as trustee for the Caveator pursuant to a constructive trust and/or a declaration of trust from the registered proprietor made on 16 October 2007". The plaintiff says he has requested the defendant provide evidence of her alleged interest in the Land and that the defendant has not done so.

12 On 4 October 2016 the Federal Circuit Court of Australia made a sequestration order over the estate of the defendant. The Official Trustee remains the trustee of the defendant's bankrupt estate.

13 The plaintiff submitted that as at the date of the commencement of the defendant's bankruptcy, any divisible assets including any interest she has in the Land vested in the Official Trustee.

14 On 28 March 2023 the plaintiff, through his solicitor, wrote to the Official Trustee informing the Official Trustee that the plaintiff believes the defendant entered into occupation of the Land in or about late 2007 under an informal licence with Mr Bourne and that she lodged a caveat which was registered on the title to the Land in 2014.

(a) the defendant is currently the occupier of the Land and has been in occupation since at least 2007;

(b) on 16 October 2007 the defendant transferred her interest in the Land to Mr Bourne whereupon Mr Bourne became the registered proprietor of the Land;

(c) between 16 October 2007 and 10 July 2014 (the date Mr Bourne's bankruptcy commenced), the defendant was in occupation of the Land under an informal licence granted to her by Mr Bourne.

16 Following the commencement of Mr Bourne's bankruptcy the plaintiff:

(a) did not grant the defendant any extension of the informal licence granted to her by Mr Bourne;

(b) did not grant the defendant a new licence to occupy the premises;

(c) did not, until March 2023, formally revoke any licence granted by Mr Bourne prior to his bankruptcy nor any licence that may have continued notwithstanding Mr Bourne's bankruptcy.

17 On 28 March 2023 the plaintiff, through his solicitor, wrote to the defendant terminating, with immediate effect, the informal licence to occupy between Mr Bourne (and now the plaintiff as trustee of Mr Bourne's bankrupt estate) and the defendant. Notwithstanding the termination of the licence, the defendant remained in occupation of the Land.

18 On 18 April 2023 the plaintiff, through his solicitor, wrote to the defendant's Official Trustee in bankruptcy to inform the Official Trustee of this proceeding and the plaintiff's intentions to sell the Land. On 3 May 2023 Ms Mu of the Australian Financial Security Authority responded indicating that the Official Trustee agreed to permit the defendant's caveat over the title to the Land to lapse in anticipation of the sale of the property. The Official Trustee requested the net proceeds of sale be held by the plaintiff for a period to allow the Official Trustee to determine whether the Official Trustee has a claim against the proceeds.

19 The plaintiff has served a copy of his amended originating motion on the Official Trustee.

20 By letter dated 4 May 2023 and addressed to the occupiers of the Land, the plaintiff's solicitor informed any occupiers of the Land that the plaintiff had terminated any informal licence to occupy the Land and provided any occupiers with 21 days to vacate the Land.

21 The defendant remains in occupation of the Land and opposed the plaintiff's application.

Transfer of the Land and purported tenancy arrangement

22 The defendant was formerly an employee of Mr Bourne in the financial planning industry. The defendant deposed that she had never been in a domestic or de facto relationship with Mr Bourne.

23 The defendant claims that in 2006 she purchased the Land on trust for her children using proceeds from a family law property settlement and bank finance.

24 The defendant said that in 2007 she purchased another property but asked Mr Bourne to act as bare trustee for both properties in order to secure bank finance. According to the defendant, Mr Bourne did not pay any consideration for the transfer of the Land.[2] This resulted in Mr Bourne becoming the registered proprietor of the Land. The defendant said that notwithstanding that Mr Bourne was the registered proprietor of the Land she never transferred her children's beneficial interest in the Land to Mr Bourne.

25 The defendant deposed to her agreement with Mr Bourne that the terms of the trust were that, approximately two years after the purchase, he would reconvey the Land to her as co-trustee, with the Land to be held in trust for the defendant's children. The defendant said she has no personal interest in the Land but that the caveat had to be lodged in her name personally rather than in her name as trustee for her children. She said further that her children arranged for the caveat to be lodged when they became concerned that Mr Bourne, who was by that time living in the defendant's other property, ceased paying rent. The defendant said her children were advised by a lawyer to lodge caveats over the Land, which the lawyer prepared and named the defendant as the caveator as she was the trustee.

26 The defendant deposed that she never entered into an informal licence agreement with Mr Bourne to occupy the land. The defendant said that as the land was owned beneficially by her children, she, as co-trustee, could not live on the Land rent free. To circumvent this, the defendant said that in 2007 she entered into a 12 month written residential tenancy agreement with Mr Bourne (the other co-trustee of the Land). The defendant said that in 2012 she entered into a further tenancy agreement which has automatic rolling 5 year extensions for an unlimited period of time. A copy of the tenancy agreement was exhibited to the defendant's first affidavit.

27 The defendant said that over ten years ago Mr Bourne contacted her when he became unemployed to ask if the defendant had a temporarily spare bed. Despite having reservations the defendant allowed Mr Bourne to occupy a room in the Land. The defendant said she asked Mr Bourne to remove a bath and was shocked when she came home to see he had completely gutted the bathroom. The defendant said she told Mr Bourne he had to pay to restore the bathroom. The defendant said that Mr Bourne had claimed to his trustee in bankruptcy that he had equity in the Land by virtue of his renovation of the bathroom.

28 The defendant said that in May 2018 Mr Bourne ceased paying rent for the other property the defendant had purchased and of which Mr Bourne was the registered proprietor as bare trustee. At the same time Mr Bourne applied to have the caveat removed from the title of that property. This led, according to the defendant, to her children engaging a lawyer to meet with Mr Bourne and his trustee in bankruptcy to discuss Bourne's claim that he held a proprietary interest in that property. The defendant alleged that Mr Bourne attempted to blackmail her, saying that if she did not offer him 50% of the property and pay $50,000 to his trustee in bankruptcy, Mr Bourne would give evidence against the defendant's ownership of the property. The defendant consulted a lawyer but was advised the costs of a trial and Mr Bourne's lack of assets meant pursuing the matter was not a financially viable option.

29 The defendant deposed that due to her poor health and financial circumstances she has not engaged a lawyer for advice or representation. She said she was confused by the plaintiff's requests for documentation, some of which was either not in her possession or had been lost or damaged. The defendant said she decided to wait for the plaintiff to commence court proceedings so that "I knew exactly what I had to defend and what that process would involve." The defendant deposed that there are "hundreds of pages of evidence, including trust declarations and admissions made by Mr Bourne both in writing and orally in VCAT proceedings, whereby he confirms he is not the beneficial owner of the Properties." The defendant considered that because this proceeding was commenced by originating motion and concerned a summary application, it was not appropriate to provide extensive documentation to the Court.

30 The defendant denied she is the beneficial owner of the Land or that she ever told the plaintiff that she was. The defendant asserts she is a trustee only and holds the Land for the benefit of her children.

31 In response to the defendant's assertion that she is a tenant, the plaintiff deposed that prior to the commencement of this proceeding the defendant had not made that assertion to him and nor has the defendant paid the plaintiff rent since the commencement of Mr Bourne's bankruptcy on 14 July 2014. This was disputed by the defendant who referred to a proceeding in the Victorian Civil and Administrative Tribunal in June of 2020 involving a tenancy dispute, of which she said the plaintiff was aware.

32 On 10 July 2014 the Federal Circuit Court of Australia made a sequestration order over Mr Bourne's estate. On 11 July 2014 the plaintiff was appointed trustee of the bankrupt estate by a Certificate of Appointment issued by the Official Receiver.

33 On or about 7 August 2014 the plaintiff received Mr Bourne's statement of affairs. The statement of affairs, exhibited to the plaintiff's second affidavit, did not disclose the Land (nor any other real property) as an asset of Mr Bourne.

34 The plaintiff instructed his staff to undertake an Index Search at Land Use Victoria. The search revealed that Mr Bourne had two titles registered in his name, being the Land and a second property at 2 Powlett Street Sunbury (Powlett Street). The register noted the defendant's caveat over the Land and Powlett Street.

35 On 22 July 2014 the plaintiff wrote to the defendant to inform her of his appointment as trustee in bankruptcy of Mr Bourne's estate and to ask her to provide details of the claims made by her as caveator. On 15 August 2014 the defendant emailed the plaintiff's office and outlined, among other things, that Mr Bourne held the Land and Powlett Street on trust for her and her children. On 2 September 2014 the plaintiff wrote to the defendant asking for documents supporting her claims to the Land and Powlett Street. The plaintiff did not receive a response to this letter and believes there was no further communication between the parties until 2018.

36 On 4 October 2016, the Federal Circuit Court of Australia made a sequestration order over the defendant's estate. The Official Trustee was appointed trustee of the defendant's bankrupt estate.

37 On 31 August 2018 JRT Partnership, on behalf of the defendant, wrote to the plaintiff's solicitors, Serong Legal, asserting that the defendant had an interest in the Land (defendant's letter dated 31 August 2018). The letter enclosed a draft statement of claim, and included the following:

Our client acknowledges and accepts that the properties situated at 2 Powlett St, Sunbury (Powlett St) and 42 Ardcloney Dve, Sunbury (Ardcloney St) vested in James Patrick Downey (Mr Downey) in his capacity as trustee of the bankrupt estate of R H Bourne (Mr Bourne) under section 58 of the Bankruptcy Act (Cth) and remain vested in Mr Downey under pursuant to 129AA of the Act notwithstanding the discharge from bankruptcy of the Mr Bourne.

38 The plaintiff and his solicitors were not informed of and were not aware of the defendant's bankruptcy.

39 On dates unspecified in the affidavit material, the plaintiff's solicitors and the defendant's solicitors corresponded further, and a without prejudice meeting took place on 4 February 2019 concerning the defendant's claims. No agreement was reached at the meeting.

40 The plaintiff deposed that on 8 March 2023 the plaintiff wrote to Mr Bourne to extend the revesting time that applies to the Land pursuant to s 129AA of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) (plaintiff's letter dated 8 March 2023). The letter outlined:

You were made bankrupt on 10 July 2014.

...

You disclosed in your Statement of Affairs interests in properties at 2 Powlett Street, Sunbury VIC 3429 and 42 Ardcloney Street, Sunbury VIC 3429 which properties has vested in me under sections 58 and 116 of the Act.

On 7 August 2017 you were discharged from bankruptcy.

By section 129AA(3) of the Act, any property disclosed in your Statement of Affairs has been vested in me as the trustee of your bankrupt estate revests in you on the expiration of 6 years from the date of your discharge of bankruptcy unless I give to you a written extension notice under section 129AA(4) of the Bankruptcy Act stating that a later revesting time applies.

41 The plaintiff purportedly thereby gave notice to Mr Bourne that the revesting time for the purposes of s 129AA of the Bankruptcy Act was extended to 6 August 2026 with respect to the Land and Powlett Street.

42 On or around 16 March 2023 the plaintiff deposes that he became aware that the defendant had been made bankrupt in 2016, and that she had not been discharged from bankruptcy as she had not provided a statement of affairs. The plaintiff does not provide evidence as to how he became aware of this.

43 On 28 March 2023 the plaintiff's solicitors wrote to the Official Trustee notifying them of his interest in the properties and intention to seek orders for possession of the Land should the defendant not vacate the property. The letter noted the following:

In any event, consequent upon her being made bankrupt in 2016 it is further apparent to Mr Downey that to the extent that Ms Doyle did have any interests in the properties (which is not admitted), that such interests vested upon the commencement of her bankruptcy in the Official Trustee as trustee of Ms Doyle's bankrupt estate.

44 The plaintiff deposed to the belief that on 19 June 2023 Ms Cecelia Mu of the office of the Official Trustee emailed the plaintiff's solicitors informing him that as at that date, the defendant had not filed a statement of affairs with the Official Receiver.

45 The defendant deposed that she intends to seek an annulment of her bankruptcy which she said she only became aware of when she received an email from Ms Mu on 26 April 2023. As at the date of the hearing there was no evidence before the Court that the defendant had taken any steps to do so.

46 Order 53 applies where the plaintiff claims the recovery of land which is occupied solely by a person who entered into occupation or, having been a licensee, remained in occupation without the plaintiff's licence or consent or that of any predecessor in title of the plaintiff. The Order allows a plaintiff to apply to the Court for a judgment that the plaintiff recover possession of the land.

47 The principles relevant to an application under Order 53 were summarised by Derham AsJ in Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 241 as follows:

It is intended to enable a speedy resolution in favour of the proprietor of land of a dispute whereby trespassers are keeping the proprietor out;

It is intended to apply only in clear cases where there is no question to try;

The existence of a factual dispute does not deny the applicability of Order 53 where it is possible to resolve the dispute readily and fairly;

While an order for possession may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the Court is able to satisfy itself as to the material facts that bring the case within Order 53;

The jurisdiction should be exercised with great care;

Where an issue does emerge, the judge has discretion whether simply to dismiss the proceeding, to determine the issue or cause the issue to be subsequently tried. This includes giving directions as to the further conduct of the proceeding or ordering the proceeding to continue as if begun by writ pursuant to Rule 4.07 of the Rules; and

Where the Court gives judgment for possession under Order 53, it may grant a stay of execution.

48 The plaintiff submitted that despite repeated requests, the defendant had failed to produce evidence to him or the Court to support her claim that the Land was held on trust by Mr Bourne for her or for her children. The plaintiff submitted that even if the first defendant were to produce evidence of Mr Bourne holding the Land on trust for her, any rights she had in equity arising from such a trust are now vested in her trustee in bankruptcy. Further the plaintiff submitted that any right to occupy the Land held by the first defendant had vested in the Official Trustee as trustee of her bankrupt estate. I am not satisfied that this is the case if the Court were satisfied that the defendant occupied the premises on the basis of a valid tenancy agreement.

49 The plaintiff submitted that the first defendant occupied the Land as a licensee and that the licence to occupy had been revoked.

50 The defendant submitted that the Court should not make an order because there was clearly a factual dispute between the parties requiring a full hearing. The defendant said the following issues were in dispute:

(a) whether the first defendant occupied the Land as a licensee or as a tenant; and

(b) whether Mr Bourne's interest in the Land was held as a trustee or co-trustee for the benefit of the first defendant's children.

51 Based on the material before the Court on the hearing of the application I have reservations about the strength of the defendant's case. Notwithstanding those reservations, having regard to the principles relevant to an application under Order 53, I am satisfied that it would be inappropriate to determine the issues in dispute without a full hearing on the merits. I have reached this view because in the course of submissions the defendant asserted she had further documentary evidence she wished to place before the Court and because it appeared to me that a final resolution of the dispute may well involve an assessment of the credibility of any witnesses. Mindful that the power to make orders for possession should be exercised with great care, it is appropriate that I make orders for the orderly preparation of the dispute for trial.

52 Section 90(3) of the TLA permits any person adversely affected by a caveat, lodged under s 89 of the TLA, to bring proceedings in a court against the caveator for the removal of the caveat. Section 90(3) also empowers a court dealing with such an application to make such orders as the court thinks fit.

53 The legal principles regarding applications pursuant to s 90(3) of the TLA for the removal of a caveat are well established. Derham AsJ has summarised the applicable principles in AAGG Developments Pty Ltd v Saafin Constructions Pty Ltd [2020] VSC 768 as follows:

The applicable principles are not in dispute. In short summary they are:

The application is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The procedure is consequently interlocutory in substance, even though it may give rise to a final order.

The Court's power under s 90(3) of the TLA is discretionary.

The caveator bears the onus of establishing that there is a prima facie case that it does have the estate or interest in land as claimed.

The prima facie case test is often used interchangeably with whether a serious question to be tried is established. The prima facie case test is to be preferred. That does not mean that the Caveator must show that it is more probable than not that at trial the plaintiff will succeed. The Caveator must show that they have a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat, and the preservation of the status quo pending trial.

If the caveator establishes a prima facie case to be tried in relation to the estate or interest claimed, the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.

There is a relationship between the strength of the case in establishing a prima facie case to be tried and the extent to which the caveator must establish the balance of convenience favours the caveator; the stronger the prima facie case, the more readily the balance of convenience might be satisfied. It is sufficient that the caveator show a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the registered proprietor to deal with the property in question in accordance with its normal proprietary rights.

54 I have followed and applied these principles in coming to this decision, noting that the defendant bears the onus of establishing both a prima facie case to the interests claimed in the caveat and that the balance of convenience favours their maintenance on the title to the Property.

55 The defendant challenged the plaintiff's standing to bring the caveat removal application on the basis that Mr Bourne's interest in the Land has not vested in the plaintiff due to the operation of s 116(2)(a) of the Bankruptcy Act. Section 116(2)(a) of that Act precludes property held by a bankrupt in trust for another person from the definition of property that is divisible among the creditors of the bankrupt. I agree with the plaintiff's submission that s 116(2)(a) does not preclude the vesting of the land in the trustee in bankruptcy, being directed only to what property of the bankrupt is available for distribution to creditors.

56 The defendant also challenged the plaintiff's standing to bring the caveat removal application on the basis that the extension of Bourne's bankruptcy under s 129AA of the Bankruptcy Act only applies to property disclosed in the bankrupt's statement of affairs. Mr Bourne did not declare ownership of the Land in his statement of affairs nor claim the defendant owed him money for contributions made to the Land.

57 The plaintiff submitted that the defendant's interpretation of the Bankruptcy Act is flawed, in that s 129AA does not apply in circumstances where a property has not been disclosed in a statement declared by the bankrupt with the consequence that time did not run under s 129AA, and the trustee is still otherwise within time. Further, the plaintiff made reference to the defendant's letter dated 31 August 2018, which made the concession that the Land remain vested in the trustee pursuant to ss 58 and 129AA of the Bankruptcy Act, notwithstanding the discharge from bankruptcy of Mr Bourne.

58 The defendant also sought to highlight the discrepancies in the plaintiff's representations about Mr Bourne's statement of affairs. In his second affidavit, the plaintiff stated that Mr Bourne did not disclose the Land and the statement of affairs exhibited to that affidavit evinced the same. Conversely, in the plaintiff's letter dated 8 March 2023 extending the revesting time for the Land under s 129AA(4), the plaintiff asserted that Mr Bourne had disclosed the Land in his statement of affairs. The defendant submitted the plaintiff had deliberately misled the Official Receiver, the Registrar of Titles and the Court. The defendant also submitted that the plaintiff in his role as trustee ought to have better investigated the circumstances of the non-disclosure of the Land in 2014, alleging that the plaintiff was obligated to refer Mr Bourne for criminal investigation under the Bankruptcy Act. The defendant therefore asserted that the plaintiff and Mr Bourne should be referred for investigation for alleged breaches of the Bankruptcy Act, and ostensibly that these alleged breaches were further reason to deny the plaintiff's application.

59 I do not consider that the defendant's concession that the Land remained vested in the plaintiff in the defendant's letter dated 31 August 2018 to be a position from which she may easily resile. In any event, the plaintiff is the registered proprietor of the Land and, by virtue of s 42 of the TLA, acquired an indefeasible title upon registration. This is clearly sufficient standing to bring an application with respect to the removal of the caveat from the title to the Land.

60 As I stated during the hearing of the proceeding, the application before me did not pertain to the alleged breaches of the Bankruptcy Act by the plaintiff and Mr Bourne, and the alleged breaches are not matters I am required to determine on the application to remove the caveat. The alleged breaches do not go to issues relevant to the defendant's interest in the Land nor the balance of convenience. Whether or not the Land was disclosed in Mr Bourne's statement of affairs, or was accurately represented as not being in Mr Bourne's statements of affairs, does not impact the plaintiff's title and standing to bring this application.

61 To the extent the first defendant has any interest in the Land as trustee, that interest vested in her trustee in bankruptcy upon the commencement of her bankruptcy. This is the case notwithstanding her failure to file a statement of affairs and her stated intention to seek the annulment of her bankruptcy. The Official Trustee has consented to the caveat lodged by the defendant lapsing on the basis that the plaintiff hold the net proceeds of the sale of the Land while the defendant's trustee determines if the defendant's estate has any claim against those funds. The Official Trustee has chosen not to oppose the plaintiff's caveat removal application.

62 Accordingly, I am not satisfied that the defendant has established a prima facie case to be tried. I am also not satisfied that there is any good reason for the Court not to exercise its discretion to order the removal of the defendant's caveat. Having failed to establish a prima facie case, it is appropriate that the Court order that the caveat be removed.

63 For the reasons given above I have decided the plaintiff's application for an order for possession under Order 53 should be referred to a full hearing on the merits. I have decided to grant the plaintiff's application for orders that the Registrar of Titles remove the caveat.

(a) timetabling orders for the preparation of the plaintiff's application for possession orders; and

(b) the question of costs of the plaintiff's caveat removal application.

65 If the parties are unable to reach agreement on the terms of the orders within seven days of the date of this judgment, the proceeding will be relisted for mention and submissions on orders.

66 In relation to the defendant's caveat I will order that:

(a) Pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic), the second defendant is to remove caveat AK952741L from the land in the Register Volume 09064 Folio 573, being the property known as 42 Ardcloney Drive, Sunbury, Victoria.

JAMES PATRICK DOWNEY as Trustee of the Bankrupt Estate of ROBERT HENRY BOURNE

[1] Roberts v Harkness [2018] VSCA 215; (2018) 57 VR 334, [46]-[56].

[2] This appears to be contradicted by a signed registered transfer of the Land dated 20 December 2007 which indicates consideration of $366,000.00.