Plaintiff v First Defendant

COSTS - Indemnity costs - whether defendant should pay the plaintiff's costs on an indemnity basis - Caveat not having a proper basis, costs awarded against the defendant on an indemnity basis - Goldstraw v Goldstraw [2002] VSC 491; Love v Kempton [2010] VSC 254; Sovereign MF Ltd (In liq) v EOS Janus Holdings Pty Ltd referred to_._

1 The plaintiff applies pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) (TLA) for the first defendant (Ms Yousif) to remove a caveat lodged by her over the property at 27 Montana Way, Mill Park, Victoria (Land).[1]

2 The plaintiff is the joint registered proprietor of the Land with his wife, Dina Hermiz (Dina). The plaintiff and Dina were registered as joint proprietors of the Land on 17 February 2010. The caveat to be removed was lodged by Ms Yousif on 1 February 2019 and claims a freehold estate in the Land on the basis of an implied, resulting or constructive trust.[2]

3 The second defendant has provided his usual letter stating he does not intend to appear in the proceeding.

4 The matter was heard on 14 March 2019 and I then announced that I would order the removal of the caveat and order the defendant to pay the plaintiff's costs on an indemnity basis. I stated at that time that I would provide the reasons later. These are the reasons.

5 The plaintiff relies upon his affidavit sworn on 19 February 2019 which advances the following facts.

6 On 1 December 2018, the plaintiff and his wife entered into a contract to sell the Land. The settlement of the contract was scheduled to occur on 7 February 2019. The contract is unconditional, and contains no provision to extend the date for completion. At the time of the entry into the contract there was no caveat lodged by Ms Yousif on the title to the Land.

7 The plaintiff is from a small town in Iraq. Ms Yousif also grew up in the same town. During the time the plaintiff resided in Iraq, he had no friendship or relationship with Ms Yousif, although he knew who she was. The plaintiff migrated to Australia in January 1997. Unbeknownst to him, Ms Yousif had also migrated to Australia at about the same time. They became intimate in 1998, but briefly. The result was that Ms Yousif fell pregnant and gave birth in September 1999. The plaintiff ceased his relationship with Ms Yousif at about this time and has never met the child, Jasmin.

8 In Iraq, the plaintiff was qualified, and practised, as a medical doctor. To qualify as a medical practitioner in Australia, the plaintiff undertook three years of training. This occurred from February 1999 to November 2001. During this period, the plaintiff earned a meagre income working at service stations. He paid child support to Ms Yousif during this period at a modest sum per week. Once he became qualified, he paid child support to Ms Yousif at the rate of 18% of his gross income. The plaintiff never resided with Ms Yousif. She has never provided him with any money or financial support of any kind.

9 The plaintiff married Dina in 2004. The Land was purchased in February 2010, about 11 years after the plaintiff had been involved with Ms Yousif. The plaintiff and Dina have lived together at the Land since it was purchased by them. Ms Yousif made no financial contribution towards the acquisition or maintenance of the Land, nor any contribution to the acquisition or maintenance of any other asset owned by the plaintiff before February 2010 or afterwards. The plaintiff has never made any promise to grant or transfer any interest in the Land to Ms Yousif. There is no order of any court that has vested, or requires the plaintiff to vest, any interest in the Land in Ms Yousif. There is no declaration of trust (or like arrangement) between the plaintiff and Ms Yousif in relation to the Land.

10 Before Ms Yousif lodged the caveat now sought to be removed she had lodged an earlier caveat on 14 January 2019. By that caveat, Ms Yousif claimed an interest in the Land pursuant to a court order under the Family Law Act 1975 (Cth). The plaintiff's solicitors were engaged and wrote to the solicitors named in that caveat to arrange for its removal. The lawyers named in the caveat informed the plaintiff's solicitors that they had advised Ms Yousif to remove the caveat and if she did not instruct them to do so they would cease to act for her. It was removed.

11 The caveat now sought to be removed was lodged on 1 February 2019. The solicitors who lodged the caveat are Anthonys Solicitors (Anthonys). The plaintiff's solicitors wrote to Anthonys on the 5 February 2019 setting out the background and demanded that the caveat be removed as there was no basis for it. The letter also informed Anthonys that should the plaintiff's sale of the land be delayed as a result of the improper lodgement of the caveat, the plaintiff will suffer loss and damage and will be seeking damages and costs on a full indemnity basis.

12 Anthonys responded by letter dated 6 February 2019 relaying their instructions that:

(a) the plaintiff and Ms Yousif met in their birth country and have known one another since secondary school;

(b) they commenced their relationship in their early adult years and due to the war in their country each of the parties fled overseas;

(c) they resumed their relationship in Australia and were together for well over two years. During that time Ms Yousif fell pregnant to the plaintiff. Ms Yousif assisted the plaintiff whilst he was studying to be a doctor and made contributions both financial and non-financial;

(d) in these circumstances, Anthonys informed the plaintiff's solicitors that they had been instructed not to withdraw the caveat unless the plaintiff was willing to provide an undertaking to hold the net proceeds of the sale of the Land in the plaintiff's solicitors trust account, or in a controlled monies account in the joint names of the plaintiff and Ms Yousif.

13 The plaintiff's solicitors responded the same day disputing the allegations made in Anthonys letter regarding the relationship between the plaintiff and Ms Yousif and, amongst other things, stated:

(a) the only relationship between the plaintiff and Ms Yousif was a casual sexual relationship;

(b) they never lived together and they were never a couple;

(c) Ms Yousif made no contributions either financially or non-financially to the plaintiff and there has been no involvement between the plaintiff and Ms Yousif apart from the plaintiff undertaking a DNA test to determine whether he was the father of Ms Yousif's child and ongoing child support for that child;

(d) the plaintiff has never met Jasmin but continues to pay child support;

(e) the sale of the Land was due to settle on 7 February 2019. In the event that the caveat was not withdrawn and settlement does not proceed the plaintiff and Dina will suffer significant loss and damage;

(f) accordingly, if the caveat is not withdrawn and written confirmation of its withdrawal is not received by the end of 6 February 2019 the plaintiff will have no choice but to immediately make application to the court to seek the removal of the caveat and compensation pursuant to s 118 of the TLA.

14 Anthonys responded on 7 February 2019 stating that they had forwarded a copy of the plaintiff's solicitors letter to Ms Yousif and that she denied the allegations contained in that letter. They informed the plaintiff's solicitors that Ms Yousif is in the process of filing an application for property orders in the Federal Circuit Court of Australia and that Ms Yousif is representing herself in that proceeding.

15 As the plaintiff and Dina were unable to complete the sale of the Land they have agreed to let the purchaser into possession under a licence. There is a National Australia Bank limited mortgage registered on the title to the Land which secures a debt of approximately $710,000. The plaintiff and Dina are paying interest on that facility, but derive no income from the purchaser or the Land. The plaintiff and Dina are deprived of the benefit of the sale proceeds which they intend to use to purchase another residential property. In the meantime they earn no interest on the sale proceeds and pay interest on the debt secured against the Land.

16 Ms Yousif has a claim in the Federal Circuit Court for child support. Ms Yousif obtained orders in the Federal Circuit Court against the plaintiff on 3 April 2018 for adult child maintenance of $500 per week commencing on 9 April 2018. The application which led to the orders was heard in the absence of the plaintiff. According to the unchallenged evidence of the plaintiff, Ms Yousif did not serve the application on the plaintiff or otherwise provide notice of the hearing to him. Notwithstanding this, the matter was not brought back to court until the next return date mentioned in the order, 6 December 2018.

17 In support of the application for adult child maintenance, Ms Yousif filed a financial statement on 20 February 2018. This did not disclose that a property at 49 Herlitz Drive, Epping, was registered in the name of Jasmin Jade Hermiz on 26 April 2012, when Jasmin was about 12 years old.

18 On 3 January 2019 the plaintiff filed in the Federal Circuit Court proceeding an affidavit opposing the making of the any order that the plaintiff provide child support for Jasmin. The plaintiff disclosed in that affidavit that:

(a) Jasmin is registered as proprietor of the property at Herlitz Drive, Epping;

(b) Ms Yousif works for cash in hand at a business in Roxburgh Park;

(c) Ms Yousif, in her applications for child support, always had no income, yet she was able to buy the land at Herlitz Drive, Epping for $189,000 (when Jasmin was 12 years old) and then paid a private builder $200,000 in cash to build a house on the land;

(d) the first caveat was lodged shortly after the plaintiff's affidavit was filed in the Federal Circuit Court.

19 At the commencement of this proceeding, no proceeding had been commenced by Ms Yousif in the Family Court of Australia or in the Federal Circuit Court seeking an order in relation to the Land or claiming an interest in it.

20 At the time of the first return of the plaintiff's application, Ms Yousif had not been served with the court documents. Attempts at service had failed and an application was made for an order pursuant to r 6.10 of the Rules for substituted service. That order was made and service was effected in a variety of ways by 7 March 2019.[3]

21 On 13 March 2019 Ms Yousif filed a notice of appearance. On the same day she filed an affidavit. In that affidavit she makes submissions and gives evidence, as follows:

(a) the plaintiff was entitled to use the administrative procedure provided in s 89A of the TLA to have her caveat removed. Instead he commenced these proceedings, which were entirely unnecessary and an abuse of the process of the court. The application should be struck out with costs against the plaintiff;

(b) Ms Yousif is concerned with the conduct of the plaintiff in relation to providing the wrong mobile telephone number to the court for texting as required by the substituted service order. The plaintiff knew of the Ms Yousif's mobile number because it is used in the Federal Circuit Court proceeding she has commenced;

(c) Ms Yousif was never served with the court documents by anyone. She had a telephone call from Tony, her former lawyer at Anthony's, on 5 March and this is when she first became aware of this proceeding;

(d) there is a dispute with respect to Ms Yousif's relationship with the plaintiff. The plaintiff's solicitors letters to Ms Yousif's former solicitors, Anthonys, contain inconsistencies regarding the former relationship between them;

(e) Anthonys offered to 'solve' the matter by agreeing to withdraw the caveat on an undertaking by the plaintiff's solicitors to hold the net proceeds of sale of the land in trust;

(f) Ms Yousif has filed an application in the Federal Circuit Court on 12 March 2019 (in the same proceeding as she claimed adult child maintenance for Jasmin) for a property order, such application having been filed on 12 March 2019. The affidavit sworn in support of that application was made on 6 February 2018. In the affidavit Ms Yousif states, in substance:[4]

I met Mr Hermiz in my country (Iraq) and [we] knew each other since secondary school in late 1987. We commenced a relationship in early adult years.

Due to war in our country [we] went [in] separate directions and fled overseas. We resumed our relationship in Australia in January 1997. We had a relationship for over two years before I fell pregnant with his child in January 1999. Our daughter was born on 29 September 1999.

During our relationship I helped the respondent with financial and non-financial support and help. I paid for his English exam and helped him through translation of his study material. In addition to that I paid all the bills/rent, cooked, cleaned and washed for him. While he was formally living with his sister in 1997 and then moved in with his brother in 1998, he always stayed in my place. [I] Provided him with good environment to study and become a doctor. He did not have a job, I was working full-time in a medical centre at the time. He purchased his first property, second and third and now he has six properties. I did not know my legal right until now. I am seeking property orders over his properties.

(g) The orders that Ms Yousif seeks in the proceeding are, first, that the applicant be excused from particularising her claim until such time as the respondent provides full and frank disclosure of all financial documents. Second, that the net proceeds of sales of the property at 27 Montana Way, Mill Park, be held in the lawyer's trust account until such time as final orders are made. That application is dated 6 February 2019 that is stamped as filed on 12 March 2019.

22 The address given by Ms Yousif in her application in the Federal Circuit Court is 107/88 Epping Road, Epping. That is the address at which substituted service was ordered to be made by express post. The address Ms Yousif gives in her affidavit in this proceeding is 49 Herlitz Drive, Epping, the property apparently owned by her daughter. Ms Yousif maintained in the course of the hearing in Court that she had only received notice of the application from Anthonys and not via any posted material. Notwithstanding the address given in her application in the Federal Circuit Court being 107/88 Epping Road, Epping, she said that she had moved out of that address and was living at her daughter's house.

23 Under s 89(1) of the TLA, a caveat can only be lodged by a person claiming an estate or interest in the land. The estate or interest must be established to the requisite standard by the person who lodged the caveat, if the caveat is challenged.

24 The plaintiff's application is made pursuant to s 90(3) of the TLA, where any person adversely affected by a caveat lodged under s 89 of the TLA is permitted to 'bring proceedings in a court against the Caveator for the removal of the caveat'. Section 90(3) empowers a court to 'make such order as the court thinks fit', and thus gives the Court a discretion. The application is in the nature of a summary procedure analogous to the determination of interlocutory injunctions.[5] The procedure is consequently interlocutory in substance, even though it may give rise to a final order.[6] The principles applicable were dealt with by Warren CJ in Piroshenko v Grosjman.[7] They are well settled. The authorities establish the following:[8]

(a) the Court's power under s 90(3) of the TLA is discretionary;

(b) the Caveator bears the onus of establishing that there is a serious question to be tried that it does have the estate or interest in land as claimed;[9]

(c) 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;

(d) 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 Land in question in accordance with its normal proprietary rights.

25 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.[10] 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.[11]

26 An application to remove a caveat involves two steps:

(a) first, the Caveator must establish that there is a prima facie case - there is a probability on the evidence before the Court that the Caveator will be found to have the asserted legal or equitable rights or interest in the land;

(b) second, having done so, the Caveator must establish that the balance of convenience favours the maintenance of the Caveat on the title until trial and:[12]

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.[13]

27 The defendant is self-represented. She prepared her affidavit in response to the application herself, as she did with her application in the Federal Circuit Court. She is not familiar with the somewhat complex law relating to the maintenance of removal of caveats lodged over land under the operation of the TLA or the law relating to resulting, implied or constructive trusts to which I refer at some length blow.

28 It is the duty of the Court in relation to represented and unrepresented litigants alike to ensure that a hearing or trial is conducted fairly and in accordance with law.[14] Procedural fairness is 'an essential attribute of a court's procedure'.[15] What a judge must do to assist a litigant in person depends on the litigant, the nature of the case, and the litigant's intelligence and understanding of the case.[16] The judge cannot be the advocate of the self-represented litigant, for the role of the judge is fundamentally different to that of an advocate. The judge must maintain the reality and appearance of judicial neutrality at all times and to all parties. The assistance must be proportionate in the circumstances - it must ensure a fair trial and not afford an advantage to the self-represented litigant_._[17]

29 In the recent decision of the Court of Appeal in Roberts v Harkness,[18] which was applied in Doughty-Cowell v Kyriazis,[19] the Court made it clear that a litigant must have a reasonable opportunity of presenting her case. What amounts to a reasonable opportunity of presenting a case depend on the circumstances of the case, including the nature of the decision to be made, the nature and complexity of the issues in dispute, the nature and complexity of the submissions which the party wishes to advance, the significance to that party of an adverse decision ('what is at stake') and the competing demands on the time and resources of the court or tribunal.[20]

30 In the hearing I sought to apply the principles and guides stated above. I particularly explained to the defendant the nature of the application and the onus on her to raise a serious question to be tried for a trust of the kind claimed in the caveat. I ensured that Counsel for the plaintiff laid out in his oral submissions the law relating to the relevant circumstances in which resulting, implied or constructive trusts are recognised in the law. He did so at some length. I also explained the difficulties inherent in the recognition of a constructive trust, particularly, based on the facts advanced by her in her affidavit.

31 It is a fundamental feature of a caveat under the TLA that it must be supported by an estate or interest in land. The interest to be protected by the lodging of a caveat is a proprietary interest. That is, in order to support a caveat, an interest 'must be an interest in respect of which equity would give specific relief against the land itself, either by way of requiring the provision of a registrable instrument or in some other way, for example, ordering a sale to enable a charge to be satisfied out of the proceeds'.[21] An interest based on a 'resulting, implied or constructive trust' can form the basis of a caveat.[22] As Dodds-Streeton J noted in Goldstraw,[23] examples include part performance of an agreement for disposition of an interest in land,[24] where parties have acquired land pursuant to a failed joint venture_,[25]_ where the claimant has made an indirect contribution to the purchase price of property to which another party takes title,[26] or there is a common intention that a person will acquire an interest in a particular property to which another party holds legal title, and the person acts on that belief to his or her detriment, such that it would constitute a fraud to deny the interest intended to be acquired.[27]

32 Ms Yousif does not advance any basis known to the law for raising an implied, resulting or constructive trust in the Land. There is no suggestion that she made any financial contributions to its acquisition, so no resulting trust can arise. Cooking, cleaning and supporting the plaintiff financially whilst he studied for his Australian medical qualification more than ten years before the Land was acquired does not show that it is or would be unconscionable for the plaintiff to deny her an interest in the Land.[28]

33 In Baumgartner v Baumgartner,[29] the majority (Mason CJ, Wilson and Deane JJ) referred to the result reached by Deane J in Muschinski v Dodds[30] as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. Their Honours cited what Deane J had said in Muschinski v Dodds (at 620):

... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do: cf Atwood v Maude [1858] LR 3 Ch App 369 at pp 374-375 and per Jessel MR, Lyon v Tweddell (1881) 17 Ch D 529 at 531). (my emphasis).

34 The constructive trust based on unconscionable conduct has been most commonly imposed in the context of the breakdown of a de facto relationship where the legal interests in property are not commensurate with the respective parties' contributions to the property or relationship.[31] The contributions which the Court may take into account in determining the scope of constructive trusteeship extend beyond financial contributions to the purchase price of the property in issue.[32] The contributions need not necessarily have been made directly to the acquisition or improvement of the property in issue,[33] but it is not sufficient that one person has merely benefited from the contributions of another; those contributions must be linked, albeit indirectly, to the purchase, maintenance and improvement of the property.[34]

35 This is not such a case, taking the most beneficial view of the evidence of Ms Yousif. There is no factual basis for the conclusion that the plaintiff has, by the acquisition of the Land, the benefit of money or contributions made by Ms Yousif and that it would be unconscionable for the plaintiff to retain an interest in the Land which is not commensurate with his contribution.[35] So far as the evidence reveals, all the contributions to the purchase of the Land were made by the plaintiff and his wife and none, directly or indirectly by Ms Yousif. Her contribution, at best, is to assist him obtain his Australian medical qualification.

36 The necessity that there be unconscionable conduct means that a constructive trust will not be imposed on the ground of mere fairness,[36] as Brennan J said in Muschinski v Dodds:[37]

There is no jurisdiction in an Australian court of equity to declare an owner of property to be a trustee of that property for another merely on the ground that, having regard to all the circumstances, it would be fair so to declare. ... The flexible remedy of the constructive trust is not so formless as to place proprietary rights in the discretionary disposition of a court acting according to vague notions of what is fair.

37 The burden on Ms Yousif as the Caveator is to establish that there is a serious question to be tried (in the sense of a prima facie case) that she does have the estate or interest in Land claimed in the caveat, that is a freehold estate on the grounds of a resulting, implied or constructive trust. Having regard to the evidence and the analysis of the law set out above she has not discharged that burden.

38 In relation to the claim in the Federal Circuit Court proceeding, on the dissolution of marriage or the breakdown of a de facto or domestic relationship, the scope of the Federal Circuit Court's power to alter property interests is determined by the relevant legislation rather than the principles of constructive trusts.[38] The relevant power in relation to the breakdown of a de facto relationship is s 90SM of the Family Law Act 1975 (Cth).

39 Even if Ms Yousif's claim in the Federal Circuit Court disclosed that she and the plaintiff lived together as a couple on a genuine domestic basis sufficient to give that Court jurisdiction, which at present appears unlikely,[39] so that the Court might make orders for a division of the property of the relationship between the plaintiff and Ms Yousif, the commencement of such a proceeding does not give rise to any caveatable interest in the Land. There is long-standing authority that the Family Law Act 1975 (Cth) does not, of itself, give a party to a 'marriage' or a de facto relationship a caveatable interest in the land, although an order under the Act can have that effect.[40]

40 Ms Yousif has the burden of establishing a prima facie case that she has an interest in the Land as claimed in the caveat. The affidavit she has filed in support of her claimed interest in the Land does not support a finding that there is a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the plaintiff, as one of the registered proprietors, to deal with the Land in question in accordance with his normal proprietary rights. Nor does Ms Yousif establish a ground to maintain the caveat on the basis of her proceedings commenced in the Federal Circuit Court of Australia. There is at present no basis whatever for Ms Yousif to maintain the caveat over the Land.

41 For these reasons, I am satisfied that Ms Yousif has not established a serious question to be tried that she has an interest in the Land capable of supporting the caveat she has lodged.

42 Ms Yousif must further establish that the balance of convenience favours the maintenance of the caveat until trial. She has not done so. The plaintiff and Dina have contracted to sell the Land. They did so before Ms Yousif lodged any caveat over the Land. The plaintiff is undoubtedly prejudiced by the presence of the caveat and the restriction that it places upon completion of the sale of the Land. So too are the purchasers under the contract of sale.

43 I will therefore order that caveat AR894299J recorded on Certificate of Title Volume 10307 Folio 446 be removed.

44 Ms Yousif complained that by applying under s 90(3) of the TLA the plaintiff had adopted an expensive procedure which was burdensome to her when compared with the administrative procedure available under s 89A of the TLA. It was pointed out to Ms Yousif that the plaintiff had, by his solicitor's letters written before the commencement of the proceeding, demanded the removal of the caveat and threatened to seek indemnity costs and damages if she did not. She had the option of removing the caveat but did not do so.

45 In addition, Counsel for the plaintiff pointed out the differences, from the perspective of a plaintiff who had contracted to sell the Land before either the first or the second caveat was lodged, of the different procedures and the steps that could, and likely would, have been required in the event that the administrative procedure had been adopted. These include the necessity to wait out the period of 30 days under s 89A, within which Ms Yousif might have commenced a writ proceeding to make good the claim made in the caveat, with the need thereafter, assuming the facts stayed as they are before me, for pleadings and an application for summary judgment by the current plaintiff. The delays in that process were likely to be in the order of between four and six months. Meanwhile, the risk remained that the purchasers under the contract of sale would rescind the contract requiring the property to be resold (perhaps in a falling market). The very reason for the summary procedure is to enable application to be made that avoids that sort of delay where the case is clear, as it is here.

46 The plaintiff's letters before commencement of the proceeding made it clear that he would seek indemnity costs in the proceeding. At the conclusion of argument the plaintiff did so. Ms Yousif opposed any order for costs and, in particular, an order for indemnity costs. The difference between a standard order and an indemnity order was explained to her.

47 Under s 24 of the Supreme Court Act 1986 (Vic) the power to award costs is in the discretion of the Court. Whilst the discretion is absolute and unfettered, it has to be exercised judicially, that is, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation.[41] In the exercise of the discretion, practices or guidelines have developed.[42] These practices or guidelines are not legal rules that confine the exercise of the discretion.[43]

48 Although costs are in the discretion of the Court, there is a settled practice (sometimes called a general rule) that in the absence of good reason to the contrary a successful litigant should receive his or her costs.[44] It is not, however, a legal rule devised to control the exercise of the discretion.[45] The purpose of a costs order is to compensate the successful party for the costs incurred, and not to punish the unsuccessful party. That purpose is a guide to the exercise of the discretion.[46]

49 The exercise of the discretion to award costs over and above the ordinary is exceptional, being reserved for cases where the losing party has engaged in unmeritorious, or deliberate or high-minded or other improper conduct such as to warrant the Court showing its disapproval and at the same time preventing the successful party being left out-of-pocket.[47]

50 The most famous statement of the 'unmeritorious' ground for an award of costs on an indemnity basis in recent times was made by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v Int Produce Merchants Pty Ltd[48] as follows:

I believe that it is appropriate to consider awarding 'solicitor and client' or 'indemnity' costs, whenever it appears that an action had been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.

51 Before making an order for indemnity costs, the Court needs to be satisfied that the conduct of the party warrants the ordering of costs on an indemnity basis. Special circumstances must be demonstrated which lift the case out of the ordinary.[49] Such conduct includes the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law, as well as the commencement or continuation of such proceedings for an ulterior motive.[50]

52 In this case, as in many others involving the forced removal of caveats,[51] the matters that support an order for costs on an indemnity basis are:

(a) the nominated basis for lodging the caveat was without merit. There is simply no tenable basis for the finding of a resulting, implied or constructive trust in favour of Ms Yousif;

(b) Ms Yousif engaged solicitors to lodge both her caveats. She had different solicitors acting for her when she lodged the first caveat. When those solicitors were requested, by letter dated 1 February 2019, to remove the first caveat they responded as follows:

This is to inform you that we have advised the Caveator Ms Linder Yousif that the caveat no. AR 833179P has been withdrawn with immediate effect and requested her to provide us written instructions to that effect.

If she is not acting as per our advice or do (sic) not provide instructions to withdraw the Caveat before 5 pm on 5 February 2019, we will not be representing her thereafter.

(c) Ms Yousif then changed her solicitors. She claimed in argument that in lodging the caveat and maintaining it after demands that it be removed, she acted on the advice of her solicitors, and upon advice of other lawyers she had consulted informally. She claimed that the mere fact that the solicitors had lodged the caveat itself provided a ground in support of the proposition that it had a proper basis;

(d) the plaintiff's solicitors' letter of 5 February 2019 put Ms Yousif squarely on notice that the plaintiff maintained that the claim entitling the lodgement of a caveat arising from an implied, resulting or constructive trust had no basis and was untenable and bound to fail. The solicitors also put Ms Yousif on notice that the plaintiff will be seeking costs on a full indemnity basis;

(e) The solicitors for Ms Yousif responded on 6 February 2019, after setting out the facts to which I have referred above (at [11]), that they had been instructed not to withdraw the caveat unless the plaintiff's solicitors were willing to provide an undertaking to hold the net proceeds of sale of the property in the firm's trust account or in a controlled monies account in the joint names of the parties;

(f) the plaintiff's solicitors responded the same day contradicting the factual allegations made on behalf of Ms Yousif and reasserting the proposition that there was no proper basis for the caveat, that settlement of the sale of the Land was due the next day, that in the event that Ms Yousif did not withdraw her caveat, the settlement would not proceed and the plaintiff and his wife will suffer significant loss and damage as a result. They concluded the letter by saying that if the caveat was not withdrawn by 6pm that day, the plaintiff will have no choice but to immediately make application to the Court to seek the removal of the caveat and will seek compensation pursuant to s 118 of the TLA. In the event that the plaintiff should issue such proceedings, he will also seek any costs incurred against Ms Yousif on an indemnity basis;

(g) the response from Anthonys was that they had forwarded a copy of the plaintiff's solicitors' letter to Ms Yousif and that she had informed them that she denied the allegations contained in it. They reiterated that Ms Yousif was in the process of filing an application for property orders in the Federal Circuit Court of Australia. In that matter Ms Yousif was representing herself. They conclude the letter saying 'as we are unable to take the matter any further, we request that your (sic) forward all further correspondence to our client directly.'

(h) a caveat is not available as a bargaining chip.[52] The lodging of caveat is a serious business. It has the potential to affect commercial transactions and the lives and financial interests of others, as Dodds-Streeton J in Goldstraw:

...the only proper purposes for lodging a caveat against a registered proprietor's title under s.89(1) of the Act are to protect the estate or interest claimed by the operation of the statutory injunction against the registration of subsequent dealings and to provide notice of the existence of the estate or interest to those who consult the Register. A caveat has a significant potential to obstruct the rights, and to damage the interests, of the registered proprietor and other parties.

...the lodgement of a caveat for an ulterior or collateral purpose constitutes a serious misuse of the relevant statutory provisions.[53]

(i) As Forrest J noted in Love v Kempton,[54] a person who lodges a caveat without proper grounds -

...should be brought to book if others are forced to resort to court proceedings to remove a caveat which has no proper basis. The costs associated with the exercise are heavy and the differential between party/party costs and indemnity costs is, as Winneke P noted in Spencer, considerable. In this case to require an innocent vendor to pay the differential between party/party costs and indemnity costs, occasioned by the delinquent conduct of the caveator cannot be permitted.

53 The inference from the correspondence that preceded the application is that Ms Yousif was attempting to use the caveat as a bargaining chip. Taking the facts she advanced in her affidavit and as asserted by her solicitors in their letters at the highest, there is no tenable basis for any caveatable interest in the land in her favour and the solicitors should have been aware of that. Taking into account these matters, and the conclusion I have reached as to the complete lack of a proper basis for the lodgement of the caveat, this is a case where it is appropriate to make an order that the defendant pay the plaintiff's costs on an indemnity basis.

54 The plaintiff also sought to reserve its right to make a claim for costs against the solicitors who lodged the caveat.[55] It is appropriate to do so. The lodgement of a caveat over land is a serious matter and they should not be lodged where there are no grounds. Solicitors who lodge caveats have a responsibly to ensure that there are proper grounds for the interest claimed before lodging a caveat.

[1] Application by Originating Motion and summons filed on 22 January 2019.

[3] Affidavit of Lachlan John Mahon made 6 March 2019 and the order of the Court for substituted service made on 4 March 2019.

[4] Some changes to the grammar and punctuation have been made to make the material more comprehensible.

[5] Eng Mee Yong v Letchumanan [1980] AC 331, 337 (Eng Mee); Piroshenko v Grosjman (2010) 27 VR 489, [12]-[23] (Piroshenko); Goldstraw v Goldstraw [2002] VSC 491, [30] (Goldstraw).

[6] Eng Mee [1980] AC 331, 337; Smith v Callegari (1988) V Conv R 54-300, 63,858-9; Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37, 43.

[7] Piroshenko (2010) 27 VR 489, [7]-[11].

[8] See, eg, Percy & Michele Pty Ltd v Gangemi [2010] VSC 530, [38]-[48] (Macaulay J); Piroshenko (2010) 27 VR 489, [13]-[20] (Warren CJ); Schmidt v 28 Myola Street [2006] VSC 343; (2006) 14 VR 447, 457, [32] (Warren CJ); Goldstraw [2002] VSC 491, [30] (Dodds-Streeton J); Sylina v Solanki [2014] VSC 2, [43] (Sylina).

[9] TLA s 89(1).

[10] CFHW Pty Ltd v Burness [2014] VSC 451, [17], citing Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 82 (Gummow and Hayne JJ) (O'Neill); Carbon Black Pty Ltd v Launer [2015] VSCA 126, [37] (Carbon Black).

[11] Sylina [2014] VSC 451, [20]; Piroshenko (2010) 27 VR 489, 494; O'Neill [2006] HCA 46; (2006) 227 CLR 57 82.

[12] Piroshenko (2010) 27 VR 489; Carbon Black [2015] VSCA 126.

[13] Piroshenko (2010) 27 VR 489, [18].

[14] MacPherson v The Queen [1981] HCA 46; (1981) 147 CLR 512, 523; Dietrich v The Queen [1992] HCA 57; (1992) 177 CLR 292; Werden v Legal Services Board [2012] VSCA 278; (2012) 36 VR 637, [53].

[15] Assistant Commissioner Condon v Pompano Pty Ltd [2013] HCA 7; (2013) 252 CLR 38, 99 [156].

[16] Abram v Bank of New Zealand (1996) ATPR 41-507, 43,341, 43,347 ; Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85; (1999) 84 FCR 438, [27]-[29], [33]; Platcher v Joseph [2004] FCAFC 68, [104]; Tomasevic v Travaglini [2007] VSC 337; (2007) 17 VR 100, 130.

[17] Tomasevic v Travaglini [2007] VSC 337; (2007) 17 VR 100, 130.

[18] [2018] VSCA 215.

[19] [2018] VSCA 216.

[20] Roberts v Harkness [2018] VSCA 215, [8]-[49].

[21] Spencer v Spencer, Hedigan J, Supreme Court of Victoria, 16 October 1996, 9; cited in Goldstraw [2002] VSC 491, [24].

[22] Taddeo v Catalano (1975) 11 SASR 492; McMahon v McMahon [1979] VicRp 23; [1979] VR 239; Goldstraw [2002] VSC 491, [26].

[23] Goldstraw [2002] VSC 491, [26].

[24] Ogilvie v Ryan [1976] 2 NSWLR 504.

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

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

[27] Hohol v Hohol [1981] VicRp 24; [1981] VR 221.

[28] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, 620, 623

[29] [1987] HCA 59; (1987) 164 CLR 137; see also Cressy v Johnson (2009) VSC 52, [183]-[202] (Kaye J).

[30] [1985] HCA 78; (1985) 160 CLR 583.

[31] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583; Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137; see also Cressy v Johnson (2009) VSC 52, [183]-[202] (Kaye J).

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

[33] Green v Green (1989) 17 NSWLR 343, 369 (Mahoney JA); Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360, 364 (Murray J); Halsbury's Laws of Australia, online edition, paragraph [430-630] (as at 30 January 2018).

[34] Engwirda v Engwirda [2000] QCA 61, [23]-[30]; Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360, 365, 379-80 (Murray J); Cressy v Johnson [2009] VSC 52, [197]-[200] (Kaye J); Halsbury's Laws of Australia, online edition, paragraph [430-630] (as at 30 January 2018).

[35] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, 620 (Deane J) (see also at 599 (Mason J)); Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137, 149-50 (Mason CJ, Wilson and Deane JJ); National Australia Bank Ltd v Maher [1995] VicRp 23; [1995] 1 VR 318, 321 (Fullagar J); Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460, [107] (Ward J);

[36] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, 594-5 (Gibbs CJ), 608 (Brennan J), 615-16 (Deane J); see Halsbury's Laws of Australia, online edition, paragraph [430-635] (as at 30 January 2018).

[37] [1985] HCA 78; (1985) 160 CLR 583, 608.

[38] Halsbury's Laws of Australia, online edition, paragraph [430-625] (as at 30 January 2018).

[39] No declaration of interest pursuant to s 90SL of the Family Law Act 1975 (Cth) is sought and insofar as the application is under s 90SM of the Act for the alteration of property interests, it is outside the limitation period fixed by s 44(5) and depends on the existence of a de facto relationship within the meaning of s 4AA of that Act. In that regard, on the facts before me it is not likely that Ms Yousif can establish that she and the plaintiff had a relationship as a couple living together on a genuine domestic basis.

[40] In the Marriage of Stevens (1991) 15 Fam LR 51, 52; Bell v Graham [2000] VSC 142, [18]-[19]; Goldstraw [2002] VSC 491, [27].

[41] See, eg, Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 537; cited with approval in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 86 [34].

[42] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 86 [35].

[43] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 537; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 86 [35].

[44] Ritter v Godfrey [1920] 2 KB 47, 52; Donald Campbell and Co Ltd v Pollak [1927] AC 732, 809; Milne v Attorney-General for the State of Tasmania [1956] HCA 48; (1956) 95 CLR 460, 477.

[45] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 86 [35].

[46] Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 563 (Toohey J, Mason CJ agreeing), 567 (McHugh J); Ohn v Walton (1995) 36 NSWLR 77, 79.

[47] Australian Guarantee Corp Ltd v De Jager [1984] VicRp 40; [1984] VR 483, 502; PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24; Fountain Selected Meats (Sales) Pty Ltd v Int Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397, 401.

[48] [1988] FCA 202; (1988) 81 ALR 397, 401. See also Spencer v Dowling [1996] VSC 51; [1997] 2 VR 127, 147, 163; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189; Murdaca v Maisano [2004] VSCA 123.

[49] Bass Shire Council v King (unreported 15 August 1994), referred to with approval by Winneke P in Spencer v Dowling [1996] VSC 51; [1997] 2 VR 127, 147.

[50] Love v Kempton [2010] VSC 254, [19].

[51] See, eg, Love v Kempton [2010] VSC 254, [23]-[34]; Sovereign MF Ltd (In liq) v EOS Janus Holdings Pty Ltd [2013] VSC 347, [13]-[20].

[52] Goldstraw [2002] VSC 491; Piroshenko [2010] VSC 240, [23].

[53] Goldstraw [2002] VSC 491, [38], [42]; see also Luther v Sayer [2009] VSC 595; Love v Kempton [2010] VSC 254, [29].

[54] [2010] VSC 254, [30].

[55] See Pearl Lingerie Australia Pty Ltd v TGY Pty Ltd; Pearl Lingerie Australia Pty Ltd v John Giarratana [2012] VSC 451.