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[2015] VSC 781
General information, not legal advice.
Supreme Court of Victoria
2015-12-17
RIORDAN J
Original judgment source is linked above.
REAL PROPERTY - caveat - application for removal under Transfer of Land Act 1958, s 90(3) - Piroshenko v Grojsman (2010) 27 VR 489, applied - order that caveats be removed.
1 This is an application brought by originating motion filed on 2 December 2015 in which the plaintiff, the Australia and New Zealand Banking Group Limited ('the ANZ'), seeks a number of orders regarding three caveats lodged on certificate of title volume 8861 folio 865 ('the Wildwood Road property').
2 The following caveats, each lodged on 29 October 2015, are the subject of this application.
(a) A caveat lodged on behalf of the second defendant, Mrs Sharlene Annesley, by her husband, the first defendant, Mr Paul Annesley, in which Mrs Annesley claims a freehold interest pursuant to an alleged agreement dated 19 September 2013 between Bankseea Pty Ltd ('Bankseea') and herself ('the Mrs Annesley caveat').
(b) A caveat lodged by and on behalf of Mr Annesley in which he claims a freehold interest pursuant to an alleged agreement dated 9 January 2015 between Bankseea and himself ('the Mr Annesley caveat').
(c) A caveat lodged on behalf of the third defendant, Carlton Ross & Associates Pty Ltd ('Carlton Ross'), by Mr Annesley in which it claims a freehold interest pursuant to an alleged agreement dated 5 May 2014 between Carlton Ross and Bankseea ('the Carlton Ross caveat').
3 A long history precedes this application, which I summarise as follows.
(a) On or about 15 May 2013, Mrs Annesley entered into a contract of sale with Bankseea to sell the Wildwood Road property.
(b) On 19 September 2013, Bankseea entered into a mortgage with the ANZ ('the ANZ mortgage') and registered it as a first mortgage security over the Wildwood Road property.
(c) On 10 December 2013, the ANZ issued a default notice to Bankseea under the ANZ mortgage.
(d) On 17 December 2013, Mr Annesley lodged a caveat ('the 2013 caveat') over the Wildwood Road property and another property on behalf of his wife. The 2013 caveat stated that the estate or interest claimed was an interest as charge. The basis for that claim was said to be 'part performance due to an agreement in writing' dated 19 September 2013 between Mrs Annesley and Bankseea.
(e) On 3 February 2014, the ANZ filed proceedings in the County Court against Bankseea and another seeking possession of the Wildwood Road property and another property.
(f) On 16 May 2014, Judge Cosgrave ordered summary judgment in favour of the ANZ and on 4 July 2014 those orders were amended to expressly include a reference that the ANZ recover possession of the Wildwood Road property. For reasons not presently relevant, the ANZ obtained further warrants on 17 April and 30 June 2015.
(g) On 5 October 2015, the ANZ entered into a contract of sale with a Ms Luppino for the Wildwood Road property, which was due to settle on 29 October 2015. At the request of Ms Luppino, the contract of sale did not proceed. Mr Annesley submits that the sale price of the Wildwood Road property, which he contends was a little over $1 million, was well below the true market value. Although the sale did not proceed, Mr Annesley contends that the proposed sale price is the evidence that supports the basis of his claim for a caveatable interest in the Wildwood Road property - being that the ANZ proposes to sell the Wildwood Road property at gross undervalue.
(h) On 19 October 2015, Judge Anderson made orders in the County Court restraining Mr Annesley until 5 pm on 10 November 2015 from hindering the sale, or settlement of the sale, of the Wildwood Road property arising from the ANZ exercising its powers as mortgagee in possession.
(i) On 21 October 2015, the ANZ filed an originating motion in the County Court seeking to remove the 2013 caveat.
(j) On 28 October 2015, Mrs Annesley filed a writ in this court (proceeding number S CI 2015 05592) seeking damages and other relief from the ANZ and others ('Mrs Annesley's proceeding'). On 20 November 2015, Mrs Annesley filed a summons seeking default judgment; and on 2 December 2015, the ANZ filed a summons seeking summary dismissal.
(k) On 29 October 2015, Judge Cosgrave heard the application for removal of the 2013 caveat. His Honour reserved his decision. On the same day, Mr Annesley lodged the three caveats the subject of this application.
(l) On 6 November 2015, Judge Cosgrave ordered that the 2013 caveat should be removed.
(m) On 1 December 2015, Mrs Annesley's application for default judgment in Mrs Annesley's proceeding was heard before Associate Justice Derham. As a result of Mrs Annesley not attending that application, the matter did not proceed and an adjournment was requested on behalf of Mrs Annesley. Associate Justice Derham made the following orders:
(a) for the removal of further affidavits lodged on the title to the land situate and known as [the Wildwood Property], being the land more particularly described in Certificates of Title Volume 08861 folio 856; and
(b) for this proceeding to be dismissed pursuant to s 63 of the Civil Procedure Act 2010-
and each such application shall be returnable in the Practice Court on 17 December 2015 at 10.30am.
4 At the hearing of the application, I indicated I was not proposing to deal with the respective applications for default judgment and summary dismissal in Mrs Annesley's proceeding; but I would deal with the application in this proceeding for removal of the three caveats.
5 Mr Annesley sought leave to make submissions on behalf of Carlton Ross and produced an email purportedly from Carlton Ross authorising him to do so. Likewise with respect to his wife, he sought leave to appear on her behalf on the basis that, as a result of the stress associated with this long course of litigation, she was not able to attend.
6 I was reluctant to provide leave because, as was submitted by Ms Gobbo, counsel for the ANZ, Mr Annesley is a defendant in Mrs Annesley's proceeding. However, as neither Mrs Annesley nor Carlton Ross were in attendance, I heard Mr Annesley's submissions with respect to why the three caveats should not be removed.
7 Mr Annesley produced a document to the Court, being an application for a prohibition certificate under s 13 of the Farm Debt Mediation Act 2011 ('the prohibition certificate application'). The prohibition certificate application purports to have been lodged by 'Bankseea Pty Ltd/Paul Annesley'; and relates to the ANZ mortgage.
8 An adjournment was sought to enable the Small Business Commissioner to consider the prohibition certificate application because it had only been received by the Small Business Commissioner, according to that document, on 30 November 2015.
9 Under s 14 of the Farm Debt Mediation Act 2011, the Small Business Commissioner, on application of a farmer, must issue a prohibition certificate if the farmer is in default under a farm mortgage and certain other conditions are satisfied. Section 14(2) of that Act provides that if a prohibition certificate is in force, a creditor must not commence enforcement proceedings against a farmer in respect of the farm mortgage held by that creditor.
10 Whether or not the Farm Debt Mediation Act 2011 is applicable will depend upon the resolution of a number of issues; most of which appear to be arguable. However, assuming Bankseea was a farmer and this proceeding, with respect to removal of the three caveats, is an enforcement action for the purposes of the Farm Debt Mediation Act, s 14(2) would only prevent enforcement against the farmer in default under the mortgage. The person in default under the mortgage is Bankseea. In my opinion, the applications in this matter are not applications against the farmer. Bankseea is not a party to this proceeding. For that reason, I have decided to refuse the adjournment application and proceed with the hearing of the application.
11 The application brought under s 90(3) of the Transfer of Land Act 1958 permits any person adversely affected by a caveat to bring proceedings in a court against the caveator for the removal of the caveat. Upon such an application, the court is empowered to make such orders as it thinks fit.
Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. In so far as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two-stage test used by the court when deciding whether to exercise its discretion to grant interlocutory injunctive relief. This approach has been established law in Australia since the decision of Lord Diplock in Eng Mee Yong v Letchumanan was approved by the Full Court of the Queensland Supreme Court in Re Jorss' Caveat. This two-stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Register of Titles until trial. This is still the approach taken by the courts in Victoria when deciding applications under s 90(3) of the Act.[3]
13 In accordance with that approach, Mr Annesley made submissions as to whether there was a serious question to be tried. His general submission was that the caveats were to provide security for the damages for which he contended the ANZ was responsible by reason of its fraudulent conduct, in particular, in entering into the ANZ mortgage with Bankseea in 2013.
14 Further, Mr Annesley submitted that the caveats are security for the damages which he says he is likely to suffer by reason of the demonstrated propensity by the ANZ to sell the Wildwood Road property undervalue. With respect to each of the particular caveats, he argued as follows:
(a) Mrs Annesley's caveat was based on the agreement between her and Bankseea dated 19 September 2013 and the damages to which she will be entitled on the ANZ mortgage being found to be invalid. The agreement of 19 September 2013 was not put into evidence before the Court.
(b) With respect to Mr Annesley's caveat, similarly he did not produce the agreement relied upon dated 9 January 2015 either in an affidavit or to the Court on the application. He contended that his caveat was for security of his claim arising from the likelihood of the sale of the Wildwood Road property undervalue, if the ANZ was allowed to proceed with that sale.
(c) With respect to the Carlton Ross caveat, once again Mr Annesley did not produce the agreement relied upon dated 5 May 2014; but he said that the claim was to secure fees due by Bankseea to Carlton Ross, an accountancy firm. He contended that the lodging of a caveat over the property of a client in those circumstances was not an unusual practice.
15 On behalf of the ANZ, Ms Gobbo submitted that Mrs Annesley's claim was identical to the basis on which the 2013 caveat was lodged, which was ultimately removed by order of the County Court. Therefore, under the Transfer of Land Act 1958, it should not have been recorded. Certainly having been recorded, she contended it should now be removed. She pointed to the fact that the agreement, on which the caveat was alleged to be based, had not been produced. In any event, the ANZ mortgage was indefeasible without proof of fraud, which she said had not been established.
16 With respect to Mr Annesley's caveat, she submitted that the agreement dated 9 January 2015 had not been produced. She further said that, if in fact there was any sale undervalue by the ANZ, that could not be determined until after the sale; and a caveat was not an appropriate method by which the prospect of such future damage could be secured. In any event, she said that if there was a sale undervalue, that would be the subject of a claim after the sale, and the relevant party with standing to pursue that claim would be Bankseea rather than Mr Annesley.
17 With respect to the Carlton Ross caveat, Ms Gobbo submitted that no evidence of the agreement dated 5 May 2014 had not been produced and that the securing of fees by way of a caveat would not be appropriate unless there was a charge or other security interest created by the agreement. In any event, she said that both the Carlton Ross caveat and Mr Annesley's caveat post-dated the mortgage and therefore could not be used as a basis to prevent a sale; and could not have priority over the registered mortgage of the ANZ.
18 In reply, Mr Annesley contested the proposition that there was no fraud by the ANZ and emphasised the fact that the very purpose, for which all of these caveats had been lodged, was to secure the damages that would be payable.
19 The fact is that the allegations of fraud against the ANZ cannot be determined today. Those allegations form the basis of the writ filed in Mrs Annesley's proceeding and I do not propose to dismiss that writ at this time. Accordingly, those claims, to the extent that they are able to be substantiated, may be agitated in that proceeding.
20 I accept Ms Gobbo's submissions and consider that the caveators have failed to establish that there is a serious question to be tried. In particular, the caveators have failed to produce any document supporting their claims for an interest in the Wildwood Road property and Mr Annesley's purpose of securing a claim for damages is not a proper basis for the lodging of the caveats.
21 I also consider that the balance of convenience, particularly given the history of this matter, does not favour the maintenance of the three caveats. The ANZ has given an undertaking as to damages and I consider in the circumstances it is fair to say that, to the extent that Mr Annesley or Mrs Annesley are able to make out any claim for damages by reason of the removal of the caveats, an order for damages pursuant to the undertaking would be an adequate remedy.
22 It was further submitted by Ms Gobbo that an injunction should be made restraining each of these parties from lodging any further caveats over the Wildwood Road property until further order. I consider that the history of this matter, as set out above, demonstrates that Mr and Mrs Annesley firmly believe that they have been wrongly dealt with by the ANZ and that they are entitled to continue to interfere with the sale of the Wildwood Road property. The conduct of Mr Annesley in filing the three caveats on the same day as his Honour Judge Cosgrave heard the application regarding the removal of the 2013 caveat, along with other conduct which has led him to plead guilty to contempt of court arising out of the possession proceedings, demonstrate that there is a real risk that Mr and Mrs Annesley have lodged these three caveats for the purpose of interrupting the sale of the Wildwood Road property by the ANZ; and, if not restrained, they are likely to do so again.
23 In those circumstances, I am prepared to order that the Mrs Annesley caveat, Mr Annesley caveat and the Carlton Ross caveat be removed. I will restrain the first to third defendants from lodging any caveats over the Wildwood Road property until further order. I will order that each of those parties pay the costs of this proceeding.
24 As I have indicated, in the absence of Mrs Annesley with respect to the application for default judgment, I am not prepared to dismiss her claim at this time. However, I accept the submissions of the ANZ that the statement of claim in its current form is embarrassing in that it is impossible to determine the causes of action brought against the ANZ. I propose to strike out the statement of claim and give leave to Mrs Annesley to replead and file an amended statement of claim by 22 January 2016. I should say that it is critical that Mrs Annesley provides a comprehensible statement of claim at that time otherwise I will consider seriously the prospect of dismissing the claim.
25 In Mrs Annesley's proceeding, I will adjourn the plaintiff's application for default judgment filed 20 November 2015 and the first, seventh and eighth defendants' application for summary dismissal filed 2 December 2015 to 29 January 2016.
[3] Ibid 491 [7] (citations omitted) endorsed in Carbon Black Lab Pty Ltd v Launer [2015] VSCA 126 [35].
ANZ
Annesley [2015] VSC 781
(2010) 27 VR 489