Plaintiff v First Defendant

2 Mr Mould is a son of the deceased. In respect of each caveat, Mr Mould claims an interest an absolute freehold estate or interest in the properties on the grounds of an implied, resulting or constructive trust.

3 The application brought by GWRM was listed for hearing on 7 June 2016. On that occasion, Mr Mould sought an adjournment of 7 days in order to file answering affidavits ('the GWRM proceeding'). This was notwithstanding that GWRM's affidavit in support of the application was filed on 23 May 2016 and its submissions were filed on 3 June 2016. The application for an adjournment of 7 days was refused but an adjournment was granted until for 2.15pm on 10 June 2016, with Mr Mould to file his answering affidavit by 9 June.

4 Ms Wakefield's application had been issued on 7 June 2016 but not formally served on Mr Mould ('the estate proceeding'). Mr Mould was aware of the pending application because he knew that Ms Wakefield made an application on 27 May 2106 for a grant of letters of administration pendent lite of the estate of the deceased with one of the purposes of the grant being to enable her to make an application for removal of Mr Mould's caveat over the estate property.[1]

5 On 7 June 2016, both proceedings were ordered to be heard and determined at the same time on 10 June 2016. On 10 June 2016, it was ordered that the evidence in each proceeding being evidence in the other proceeding.

6 The settlements of the sales of the three properties are imminent: for the property owned by the deceased on the day of the adjourned hearing and the first GWRM property no later than 30 June 2016. The second GWRM property is due for settlement upon removal of the caveat by 31 December 2016.

7 At the hearing on 10 June 2016, Mr Mould's solicitor filed an affidavit in the estate proceeding seeking an adjournment on the ground that as she was served with Ms Wakefield's affidavit at 4.08pm on 8 June 2016 and the originating motion at 2.16pm on 9 June 2016, she required a reasonable opportunity to respond to Ms Wakefield's affidavit. As will be evident from the history of the steps taken in the estate of the deceased set out in these reasons, the application for the removal of the caveat in the estate proceeding could not have been a surprise to Mr Mould. In addition, whilst Mr Mould's solicitor may not have been formally served with the originating motion until 9 June, she had a copy of it on 7 June at the first hearing. Ms Wakefield's affidavit simply referred to details of the estate and set out the debts owing on the estate property as well as updating some of the estimated liabilities referred to in the affidavit filed in the GWRM proceeding. Mr Mould was already familiar with the details of the estate debts because of his involvement in the probate proceeding referred at [11]. Counsel for Mr Mould did not press for the adjournment in the circumstances and the hearing proceeded at 2.15pm as scheduled.

8 At its conclusion late that afternoon, orders were made removing the caveats in both proceedings, with orders that Mr Mould pay the costs of the proceedings on an indemnity basis. Mr Mould sought a stay of the operation of the orders until 4pm on 16 June 2016, which was consented to by GWRM and Ms Wakefield.

9 I now publish the written reasons for making the orders on 10 June 2016.

10 By her will dated 30 October 2014 ('the will'), the deceased appointed her daughter, Susan Joy Hicks ('Ms Hicks'), and her solicitor, Ms Wakefield, as the executors of her will and estate. Ms Wakefield is a legal practitioner in the firm Wakefield Vogrig & Boote in Warragul.

11 On 29 July 2015, Ms Wakefield and Ms Hicks filed an application for a grant of probate of the deceased's will and estate ('the probate proceeding').[2] Under the deceased's last will, her shares in GWRM and another company known as Devon On Yarra Pty Ltd ('Devon On Yarra') pass to Ms Hicks and the residue of her estate is divided equally between her four children.

12 The inventory of assets and liabilities of the estate filed with the application show a net estate of $1,411,188. The assets of the deceased's estate included three properties; being a property known as 110 Beenak Road, Wandin North ('110 Beenak Road') valued at $618,000 and two other properties known as Shops 6 and 8, 2 Union Road, Wandin North respectively ('the Union Road properties') each valued at $276,000. The total value of the three properties is $1,170,000. The three properties are mortgaged to Bendigo and Adelaide Bank Ltd ('the Bendigo Bank') with the debt as at the date of death of the deceased being $590,815. Apart from her personal and household effects, the deceased also owned shares in three private companies, including 16,302 fully paid ordinary shares in GWRM valued at $552,000 and two shares in Devon On Yarra valued at $2.

13 GWRM is the registered proprietor of the properties known and 38-40 and 46 Hunter Road, Wandin North ('the Hunter Road properties') and 135 Beenak Road, Wandin North ('the 135 Beenak Road property'). At the date of the deceased's death, Devon On Yarra was the registered proprietor of a property known as 40-44 Coldstream West Road, Coldstream ('the Coldstream property').

14 On 27 August 2015, Mr Mould filed the grounds of objection for his caveat in the probate proceeding objecting to the grant on the grounds that the deceased lacked testamentary capacity, did not know and approve of the will or the will was procured by the undue influence of the deceased by Ms Hicks and a Mr Desmond Anderson. Mr Mould was then joined as a defendant in the probate proceeding.

15 If Mr Mould's challenge to the deceased's will succeeds, the deceased's penultimate will dated 23 October 1997 will ('the penultimate will') would stand as the deceased's last valid will, unless it was the subject of a successful challenge. The penultimate will appoints the deceased's accountant and her solicitor as the executors of her estate. Her shares in GWRM pass to Mr Mould, subject to forgiving him repayment of the amount owing to her by GWRM in her 'Number One Loan Account' and the direction that the amount owing to her by GWRM in her 'Number Two Account' is to be repaid by Mr Mould to her estate with provision for the date of the payment. If Mr Mould fails to pay that amount, then the gift of the GWRM shares to him fails and the shares are distributed to the deceased's remaining children in equal shares as tenants in common. The residue of her estate is then divided equally between her remaining three children, subject in respect of one of the children, that he repay a loan of $28,000 that was made to him by GWRM. In paragraph 5 of her penultimate will, the deceased declared as follows:

I DECLARE that whilst it may appear [Mr Mould] has received a greater benefit than my remaining children it is my wish to honour a commitment made to my son by my late husband which was that the property known as DEVON-ON-YARRA was to be given to [Mr Mould] absolutely so that all my farm properties could be run effectively which [Mr Mould] has been doing satisfactorily for several years.

16 The deceased's executors determined to sell the three properties in the deceased's estate to pay out the debt owing to the Bendigo Bank. At a directions hearing in the probate proceeding on 6 May 2016, the issue of the sales of the three properties and Mr Mould's caveats lodged on the titles was raised. Mr Mould informed the Court that he would remove the caveats filed over the two Union Road properties, but not over the 110 Beenak Road property. His position was that the executors should refinance the 110 Beenak Road property. The 110 Beenak Road property was sold for $550,000 with settlement scheduled for 10 June 2016. At the hearing on 10 June 2016, Ms Wakefield estimated the current liabilities of the estate at $667,018.64.

17 On 27 May 2016, Ms Wakefield made an application for a grant of letters of administration pendent lite of the estate of the deceased, limited to enabling her to ratify and complete the sales of the two Union Road properties, to apply the proceeds of the sale in payment of the estate's liability to the Bendigo Bank, to invest any remainder in the appropriate investment of trust moneys and to make an application for the removal of Mr Mould's caveat lodged over the 110 Beenak Road property.[3] Before making the application for a limited grant, Ms Wakefield informed Mr Mould that she was making the application. This application had also been foreshadowed at the directions hearing in the probate proceeding.

18 The Hunter Road properties and the 135 Beenak Road property are encumbered by a mortgage to one Robert John Mould, a person unrelated to Mr Mould or Ms Hicks. Mr Robert Mould's mortgage, as varied, secured an advance of $5,810,000 and was secured by additional properties, including the Coldstream property. As at 27 March 2014, prior to the sale of the Coldstream property, the solicitors for Mr Robert Mould claimed the total debt secured under his mortgage was $6,080,302.

19 In addition to the caveats filed over the Union Road properties and the 110 Beenak Road property, Mr Mould filed caveats over the Hunter Road properties and the 135 Beenak Road property claiming an absolute freehold estate or interest in the properties on the grounds of an implied, resulting or constructive trust.

20 Mr Mould also filed a caveat on the Coldstream property, which was owned by Devon on Yarra.

21 By contract of sale dated 5 March 2015, Devon On Yarra sold the Coldstream property for $6,011,000 with settlement due on 7 April 2015. Devon On Yarra sought the agreement of Mr Mould for the removal of his caveat over the Coldstream property to no avail and it issued a proceeding seeking its removal.[4] At the date of the hearing Devon On Yarra's application, Mr Mould had not issued a constructive trusts proceeding but did provide a draft statement of claim to the Court.

22 On 7 April 2015, Zammit J ordered the Registrar of Titles to remove Mr Mould's caveat over the Coldstream property and ordered that Mr Mould pay the costs of the proceeding.

23 Devon On Yarra then settled the sale of the Coldstream property but the settlement sum was not sufficient to repay the full amount owing under Mr Robert Mould's mortgage.

The contracts for the sales of GWRM's two properties

24 Ms Hicks deposed that that the Hunter Road properties and the 135 Beenak Road property are the only substantial assets of GWRM and GWRM decided that the properties should be sold to pay out GWRM's liabilities that exceed $3 million.

25 On 18 December 2015, GWRM signed a contract of sale to sell the Hunter Road properties for $4,060,000 with settlement 'due on 30 June 2016 or within 14 days of the vendor representative notifying the purchaser's representative in writing that the caveat has been successfully withdrawn, whichever is the earlier'.

26 On 10 February 2016, GWRM signed a contract of sale to sell the 135 Beenak Road property for $675,000 with settlement stated to be due on 18 April 2016, however, a special condition provides that the sale is 'subject to and conditional upon the vendors obtaining a grant of probate for the estate of Raie Mould and the withdrawal of caveat by 30/12/16 or on or before the settlement date'.

27 GWRM is concerned that if the caveats are not removed on both properties, it will be in breach of the contracts of sale and that the longer they take to settle, the larger the debts will become. Ms Hicks deposed that the outstanding amount under Mr Robert Mould's mortgage is $698,000 and she expects that, as of 1 July 2016, the default rate of 11.5% will apply to the outstanding amount as she expects that GWRM's liquid funds will be all but depleted by 30 June 2016. There is also the possibility of the ATO taking action to recover the amounts owing to it or for a director's penalty notice being served on Ms Hicks. In evidence was a garnishee notice from the ATO seeking payment of $694,431.69 that came to the attention of Ms Hicks on 7 June 2016. GWRM also considers that if the sales do not proceed, it will be likely that either the directors will place it in external administration or the ATO will seek to wind it up.

28 In her affidavit sworn 23 May 2016, Ms Hicks estimated GWRM's liabilities at $3,199,145.25. In a subsequent affidavit sworn 8 June 2016, Ms Wakefield deposed to certain changes to the original estimates which altered the total liabilities to $3,048,557.90 as follows:

(b) Amount owing to Falcone & Adams, solicitors $5,941.41

(h) Estimated capital gains tax liability on sale of

which are under investigation and estimated at $150,000.00

29 The solicitors for GWRM and Mr Mould unsuccessfully communicated with each other in an effort to have the caveats over the two properties removed without the necessity of issuing the two proceedings. As a result, at the May directions hearing in the probate proceeding, Mr Mould's position in respect of the removal of his caveats over these two properties was the same as with his refusal to remove his caveat over the 110 Beenak Road property, that is, that GWRM should refinance the debt over the two properties in order that he could pursue his constructive trust claim.

30 In May 2016, Mr Mould issued a proceeding against Devon On Yarra, GWRM and the estate of the deceased claiming a constructive trust over the Hunter Road properties, the 110 Beenak Road property, the 135 Beenak Road property and the Coldstream property ('the constructive trust proceeding').[5] In his statement of claim, he alleges that the deceased and Mr Mould's father represented to him that the properties were to be his properties, summarised as follows:

(a) In 1989 when he was 18 years old, Mr Mould argued with his father. In the evening after the argument, his parents visited him and said words to the effect 'you know the farm's yours, all this is for you' and he continued work on the farm properties for limited wages and without superannuation, which he had been doing for the past three years since he was 15 years old;

(b) In 1991 when he was 20 years old, after complaining that Ms Hicks was paid more than he was, his mother said to him that Ms Hicks 'would leave the farm one day and you won't need to because the farms will all be yours'.

(c) In 1992 when the Coldstream property was purchased, his father represented that the property had been 'bought' for Mr Mould but was to be held in a trust to protect the property from any future matrimonial claim relating to Mr Mould;

(d) In January 1994, when he was 23 years old, his father met with his solicitor, Mr Finch, the deceased and Mr Mould and his father stated that the farms and share portfolio were to pass to Mr Mould and Mr Mould recollected that his father said he wanted to give the Coldstream property to Mr Mould separate to his will. Mr Mould says that this promise was confirmed in clause 5 of the deceased's penultimate will and his mother's instructions were confirmed in a letter dated 8 August 1997 by Mr Finch. In the letter, Mr Finch refers to the deceased's intention that the Hunter Road properties, the Coldstream property and the 110 Beenak Road property would pass to Mr Mould subject to him repaying $300,000 to compensate the deceased's other children for the transfer of the 110 Beenak Road property.

31 Mr Mould pleads that the deceased and his father made the representations knowing and intending that he would act on them and creating the belief that he would receive the farm properties and that the representations were also made by his parents when they were in effective and sole control of GWRM and Devon On Yarra. He pleads that he acted to his detriment in reliance on the representations and worked for limited wages, receiving limited drawings, not receiving superannuation or a share of the profits and did not seek alternative employment or take any steps to accept his father's offer in 1997 to transfer part of the farm to him personally. He then pleads that on the death of his father, his father's assets, including his interest in GWRM passed to the deceased and that it would be unconscionable to deny him an interest in the farming properties.

32 The pleading then claims various orders and declarations that might be summarised in the following manner: that his father and mother, then his mother alone, alternatively, GWRM hold the shares in GWRM as the owner of the farming properties upon a constructive trust for Mr Mould and the estate of the deceased holds its interest in the 110 Beenak Road property upon a constructive trust for Mr Mould, with alternative claims of an equitable charge or lien in favour of Mr Mould. Alternatively, that GWRM and the estate are estopped from denying Mr Mould the relevant interests claimed by him in either the shares or the estate land. In respect of the Coldstream properties, Mr Mould claims that Devon On Yarra holds the balance of the sale proceeds on trust for him.

Mr Mould's responses to the claimed estimated liabilities

33 In response to the estimated liabilities as assessed at $3,199,145.29 by Ms Hicks in her affidavit sworn 23 May 2016, Mr Mould was critical of GWRM's evidence and submitted that some of the liabilities were either contradicted by GWRM's own evidence or were wholly unsupported by probative evidence. By the time of the hearing, Ms Wakefield updated the estimates in her affidavit sworn 8 June 2016 and she estimated the liabilities at $3,048,557.90 and provided an explanation for the changes.

34 In particular, Mr Mould queried the amount of $80,000 said to be owing to Mr Anderson, the amount of the capital gains tax ('CGT') liability at $1,225,004.67 and the sundry creditors estimated at $250,000 and said that, if his queries were accepted, the estimated liabilities for GWRM were only $1,607,672.90. In respect of the CGT liability, in her affidavit sworn 8 June 2016, Ms Wakefield estimated the liability at $1,200,000. At the hearing, Mr Mould accepted that CGT would be payable but did not necessarily accept how Ms Wakefield had calculated the estimate. The estimate for sundry creditors was also changed in Ms Wakefield's affidavit to $150,000.

35 Mr Mould deposed in his affidavit sworn 9 June 2016 that Mr Robert Mould informed him that the amount of $698,907.44 owed to him will not be called upon until the constructive trust proceeding is heard and determined. Mr Mould also deposed that Mr Whiting informed him that the amount of $49,577.36 owed to him will not be called upon until the constructive trust proceeding is heard and determined. Mr Mould also deposed that the estimate of $544,826.82 owing for income tax is incorrect as it fails to take into account a management fee payable to a company owned and controlled by Mr Mould known as Wild Juice Pty Ltd and that Ms Hicks is aware of this. Mr Mould deposed that he has no way of verifying the tax amounts owing as Ms Hicks has denied him access to the books and records of GWRM and, save for a 14 month period when he was incarcerated at Beechworth Correctional Centre, he was responsible for running the farming business with his mother.

36 Mr Mould submitted that GWRM's evidence that it is unable to pay its tax liabilities without selling the Hunter Road properties and the 135 Beenak Road property was 'untruthful' given that the highest estimate for its tax liabilities total $1,913,011.73 and as the Hunter Road property sold for $4,060,000 this meant it was unnecessary for GWRM to sell the 135 Beenak Road property at $675,000.

37 Mr Mould says that he is opposed to the sale of the farming properties and if he is successful in the constructive trust proceeding, he wishes to continue the farming business.

38 Notwithstanding that he disputes the extent of the debts claimed to be owed by GWRM, Mr Mould made what his counsel described as an open offer contained in a letter dated 8 June 2016 to purchase the shares in GWRM which has been rejected by GWRM and Ms Wakefield.

39 Mr Mould proposed that he retain the Hunter Road properties and the 135 Beenak property, defined in the letter as 'the farming properties', notwithstanding that conditional contracts of sale are in place and settlement is imminent, on the basis that he pay the estate an amount of $1,437,154.71 for the estate's shareholdings in GWRM within seven days of the relevant parties signing an agreement for the sale of the shares. This amount was calculated assessing the value of the farming properties at $4,735,000 less the liabilities of $3,199,145.29 as set out in Ms Hick's affidavit sworn 23 May 2016, less a further amount of $98,700 being the loan owing to Mr Mould in the GWRM draft balance sheet for the year 2013. The amount of $1,437,154.71 was also subject to reduction to the extent of any further liabilities of GWRM that are not disclosed in Ms Hicks' affidavit. In addition, Ms Hicks would be required to resign as the current director of GWRM and Mr Mould would be appointed the sole director and he would also provide an indemnity to Ms Hicks in the agreement. Mr Mould would seek a loan from Mr Robert Mould to fund the payment of the offered amount and Mr Mould would also address the other liabilities of GWRM, namely, the ATO, amongst others. The amount paid would be held in trust pending the determination of the probate proceeding, subject to the payment of the usual estate expenses and costs. Mr Mould stated that if this offer were accepted, it would be unnecessary to sell the farming properties or the 110 Beenak Road property.

40 By return letter dated 9 June 2016, Ms Wakefield rejected the offer, sought clarification whether the offer meant that Mr Mould consented to the removal of the caveat over the 110 Beenak Road property and put forward an amount by way of counter offer, plus the further requirements of payment of the amount of $80,000 to reimburse Mr Anderson for amounts spent by him, the accounting fees estimated at $40,000, the estimated legal fees of $200,000 and the amount awarded for costs for the removal of the caveat in the Devon On Yarra proceeding in 2015.

41 Section 90(3) of the Transfer of Land Act 1958 provides:

Any person who is adversely affected by any such caveat may bring proceedings in a court against the caveator for the removal of the caveat and the court may make such order as the court thinks fit.

42 The principles relating to a removal of a caveat were set out by Warren CJ in Piroshenko v Grojsman:

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 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.

...

Therefore, consistently, in order for a caveator to satisfy the first limb of the test applied by the courts when deciding applications under s 90(3) of the Act, he or she must satisfy the court that:

1. there is a probability on the evidence before the court that he or she will be found to have the asserted equitable rights or interest; and
2. that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.[6]

43 In order to establish that there is a serious question to be tried, Mr Mould as the caveator must establish a 'prima facie case with sufficient likelihood of success to justify the maintenance of the caveat'.[7] Therefore, the onus falls on Mr Mould to establish that he has an interest in the three properties by reason of the asserted constructive trust. As stated by Warren CJ:

Caveats are not 'bargaining chips'. It is not sufficient for the caveator to establish a prima facie case that they have contractual, equitable or statutory rights against the caveatee; their interest or rights must attach to the property with respect to which the caveat has been lodged.[8]

44 In support of establishing a prima facie case, Mr Mould relies on his claim for his freehold interest in the three properties as a result of an implied, resulting or constructive trust. His pleading appears to rely solely on a constructive trust, rather than an implied or resulting trust. A constructive trust may give rise to a proprietary interest in a property.[9]

45 The constructive trust pleading includes a multiplicity of claims over various properties described as 'the farming properties' which include the Coldstream property. The trust relies principally on three representations made many years ago by Mr Mould's father when Mr Mould himself was aged between 18 and 23 years. The other representation is said to have been made by the deceased. There is no pleading that the deceased adopted the father's other three representations at the relevant time. The first representation was made in 1989 in respect of 'the farming properties' at a time when the Coldstream property had not yet been purchased by Devon On Yarra. The second representation was said to have been be made by the deceased to Mr Mould. The third representation was said to have been made by the father when the Coldstream property was purchased in 1992 and it was represented that the property would 'for' Mr Mould but held on trust for him to protect it from any future matrimonial claim relating to Mr Mould. At that time, Mr Mould was aged around 21 years. His matrimonial status is not pleaded. The fourth representation was said to have been made by the father in January 1994 which was around five months before the father's death in June 1994. This representation was that the farms and share portfolio would pass to Mr Mould, although Mr Mould recollected that the father wanted to keep the Coldstream property separate from his will.

46 Notwithstanding these three representations made by the father, upon his death in 1994, all of his assets passed to the deceased and not to Mr Mould, in apparent contradiction to the father's representations. If the representations were true, it would be more likely than not that the father would have ensured that his promises were fulfilled on his own death by leaving his share of the relevant assets to Mr Mould and not to the deceased.

47 Mr Mould also relies on the contents of the penultimate will and Mr Finch's letter dated 8 August 1997 yet these are also partly contrary to the representations. Clause 5 of the penultimate will refers to a commitment by the father to Mr Mould in respect of the Coldstream properties, not the Hunter Road properties, the 135 Beenak Road property or the 110 Beenak Road property. The reference to the part of the clause 'so that all my farm properties could be run effectively which [Mr Mould] has been doing satisfactorily for several years' is not necessarily a reference that all the farm properties are to pass to him. This is confirmed earlier by the gift of the deceased's shares in GWRM to Mr Mould, which is, importantly, subject to certain conditions which if not met by Mr Mould will mean that the gift of the shares will fail with the shares passing to his three siblings.

48 What must be remembered in this case is that the Hunter Road properties and the 135 Beenak Road property are owned by GWRM. Mr Mould's claim for a constructive trust as particularised refers to the shares in GWRM and Devon On Yarra and that somehow this translates as an interest in the properties owned by GWRM by way of a constructive trust as well as a constructive trust over the sale proceeds of the Coldstream property. Generally, shares in a company are regarded as personal property. This means that any interest of a shareholder in the share capital of a company does not extend to the property or assets that the company owns. A corporation may acquire an estate or interest in land that will support a caveat, but shareholders of corporate landholders cannot claim an interest in land. They merely have an interest in the shares from which benefits may flow. Generally, a share in a company does not confer upon the holder a legal or equitable interest in the assets of the company as it is a separate piece of property.[10] A shareholder has no proprietary interest, whether legal or equitable, in the assets of a corporation in which shares are held.[11] As stated by Lord Wrenbury:

the corporator even if he holds all the shares is not the corporation, and ... neither he nor any creditor of the company has any property legal or equitable in the assets of the corporation.[12]

49 Mr Mould's answer to this is that his father and mother treated the assets as owned by them, either in their own names or because the shares in GWRM and Devon On Yarra were owned by them and they were the directors of the two companies. This meant that his mother and father, individually, and on behalf of GWRM, made promises and representations to him that the farming properties would be his one day.

50 At best, if Mr Mould were successful in his constructive trust proceeding, his entitlement to the shares in GWRM do not give him an interest in the Hunter Road properties or the 135 Beenak Road property sufficient to support the caveats.

51 For these reasons, I determined that there is not a serious question to be tried and that Mr Mould does not have a prima facie case with a sufficient probability of success.

52 The issue of a prima facie case with a sufficient probability of success in respect of the 110 Beenak Road property was not addressed in submissions, with the focus on the Hunter Road properties and the 135 Beenak Road property. The maintenance or otherwise of the caveat on the estate property is dealt with under the balance of convenience.

53 The remaining issue is whether or not the balance of convenience favours removal of the caveats and what course carries the lower risk of injustice.[13]

54 Mr Mould submitted that the balance of convenience does not favour the removal of the caveats as the lower risk of injustice does not sit with GWRM or the estate of the deceased. He relied on the fact that the estimates of the liabilities were, as stated, contradicted by GWRM's evidence or unsupported by probative evidence for the reasons set out above.

55 Ms Hicks and Ms Wakefield made it clear in their affidavits that the liabilities were estimated. I am satisfied that GWRM and the estate have substantial liabilities with no means to pay them without completing the sales of the three properties. In respect of the estimated liabilities of GWRM, the tax liability for $694,431.69 was confirmed by the tender of a garnishee notice from the ATO. Another smaller amount of $49,170 is an estimated outstanding tax liability.

56 Mr Mould accepted that there will be CGT payable on the sale of the Coldstream property. The liability is an estimate until the accountants are able to calculate the actual liability. As the property was settled in April 2015, that liability will most likely be assessed in the 2015 tax year and prudent governance would dictate that provision should be made for the estimated amount.

57 I place no weight on Mr Mould's evidence that Mr Robert Mould and Mr Whiting will not call in the amounts owed to them until after the determination of the constructive trust proceeding. The amounts remain as liabilities and the debts simply deferred. Such a course does not strike me as prudent, particularly when penalty interest, in the case of Mr Mould's debt, will accumulate and increase the debt substantially.

58 Mr Mould did not dispute the solicitor's fees or the amounts due for electricity. He disputed the amounts owing to Mr Anderson which is not surprising in light of his allegation in the probate proceeding that Mr Anderson unduly influenced the deceased in making her will.

59 The amounts for claims for estimated sundry creditors is cautious. Having originally been estimated at $250,000, Ms Wakefield has reassessed it at $150,000 and Mr Mould accepts that at least approximately $76,000 is owed.

60 Mr Mould relies on his open offer which comes at a very late stage and is subject to him obtaining agreement from Mr Robert Mould. In my view, it is not a realistic offer in the circumstances where the contracts are due for settlement and there are such substantial liabilities to be paid.

61 Mr Mould also brushed aside any concerns for the purchasers' position if the contracts did not settle by taking the position that they were aware of the caveats being on the title when the contracts were signed.

62 As the director of GWRM, Ms Hicks must ensure that it can pay its debts as and when they fall due. She has determined that GWRM is not able to pay its liabilities without selling the Hunter Road properties and the 135 Beenak Road property. Mr Mould objected to the sale of the latter property on the basis that the estimated liabilities will be covered by the sale of the Hunter Road properties. On the current estimates, that seems plausible but it is not clear what future liabilities may come into existence. Any surplus of funds can be invested pending the clarification of future liabilities and the outcome of the constructive trust proceeding and the probate proceeding.

63 In respect of the estate, an administrator is not in the business of operating an estate as an ongoing concern. Section 37 of the Administration and Probate Act 1958 provides that all assets of an estate are available for payment of the debts of an estate. Ms Wakefield's application for a limited grant was made for that purpose as contained in the orders appointing her. Her role and her powers as the administrator of the estate is to collect in the assets so that the debts can be paid and, in doing so, protect the interests of the relevant beneficiaries: the role cannot include refinancing debt.[14] Such a perception misunderstands her limited role.

64 The contract for the Hunter Road properties is due to settle no later than 30 June 2016, the 135 Beenak Road property is subject to and conditional upon removal of the caveat by 31 December 2016. The 110 Beenak property was to settle on the day of the hearing. The liabilities of the estate and GWRM will continue to accrue. The mortgage to Mr Robert Mould secures $698,607.44 and interest accrues at 8.5% per annum. Repayments are made at the rate of $14,845.40 per quarter and Ms Wakefield expects the mortgage will be in default from 1 July 2016 onwards with the consequence that interest will be charged at the penalty rate of 11.5% per annum.

65 The total liabilities of GWRM and the estate are substantial with little or no resources to pay them without the settlements for the three properties being concluded. If the properties are not sold, it is likely that GWRM will be placed in external administration or liquidated, thereby increasing the liabilities with external administration fees and costs.

66 The probate proceeding and the constructive trust proceeding are unlikely to be heard in the near future. Even if Mr Mould were successful in these claims, the liabilities must be paid. The only evidence as to the financial position of Mr Mould is tangential in that his open letter of offer states that his offer of payment of the funds would be borrowed by him.

67 The plaintiffs continues to pay ongoing liabilities that will be incurred by the estate and by GWRM. If the caveats are removed and the contracts concluded, there should be a surplus of funds in both the estate and GWRM which can be held and not disposed of pending the determination of the probate proceeding and the constructive trust proceeding apart from usual business and estate expenses.

68 For these reasons, I determined that the balance of convenience favoured the removal of the caveats and that the removal carries the lower risk of injustice.

69 As stated at the outset, orders were made that Mr Mould pay the costs of the proceedings on an indemnity basis. In making an order for indemnity costs, I considered that Mr Mould's conduct in opposing the removal of the caveats caused loss of time to the court and to the other parties and unnecessary costs have been incurred. This conduct, in my view, justified the making of a special costs order as it fell within the scope of circumstances described in the authorities that warrant a special costs order.[15]

70 My reasons are that in April 205 when Devon On Yarra made its application to remove the caveat on the Coldstream properties, Mr Mould produced a draft statement of claim in respect of his constructive trust claim, similar in substance to the pleading in the constructive trust proceeding. By letter dated 17 May 2016, Ms Wakefield informed his solicitors that she had received the writ and statement of claim in the constructive trust proceeding. She then informed his solicitors that she would be making an urgent application to remove the caveats over the Hunter Road properties and the 135 Beenak Road property, that the application was substantially similar to the application made by Devon On Yarra in April 2015 where a costs order was made against Mr Mould and that the solicitors were clearly aware of GWRM's liabilities and the need to address them immediately. Ms Wakefield asked Mr Mould's solicitors to advise in writing whether he would withdraw the caveats by 20 May 2016 and if so, GWRM would undertake to hold the net proceeds of sale in trust pending the determination of the constructive trust proceeding other than to pay proper expenses in the usual way. If he did not, her instructions were to seek the removal of the caveats and her letter would be produced in the issue of costs as has occured.

71 Given the outcome of the April 2015 proceeding, Mr Mould was aware of the likely outcome of these proceedings and acted unreasonably in refusing to consent to the removal of the caveats. This has caused costs to be incurred by the plaintiffs unnecessarily and has used a substantial amount of the Court's resources at short notice.

[6] Piroshenko v Grojsman (2010) 27 VR 489, 491, 493.

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

[10] Charles v Federal Commissioner of Taxation [1954] HCA 16; (1954) 90 CLR 598, 609 (Dixon CJ, Kitto and Taylor JJ).

[11] Macaura v Northern Assurance Co Ltd [1925] AC 619, 626; Ten Pin Properties Ltd v Bowlarama (NZ) Ltd (Unreported, High Court of New Zealand, Tipping J, 18 December 1989) 3; Helm Corporation Ltd v Latestar Pty Ltd (Unreported, Supreme Court of Victoria, Hayne J, 16 June 1994) 25.

[12] Macaura v Northern Assurance Co Ltd [1925] AC 619, 633.

[13] Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65, 73, [35]; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57.

[14] Dowling v St Vincent de Paul Society Victoria Inc [2003] VSC 454 (20 November 2003) [27] (Nettle J).

[15] Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225.; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (14 June 2001); Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 [12]-[18] (14 September 2012). The decision at first instance was affirmed by the appellate decision on the issue of special costs: Sunland Waterfront (BVI) Ltd & Anor v Prudentia Investments Pty Ltd & Ors [2013] VSCA 237 (6 September 2013) [538]-[551].