Wells v Rouse & Ors [2015] VSC 533

2 The plaintiff is the sole registered proprietor of the land described in Certificate of Title Volume 110377 Folio 749, known as 101 High Street, Trentham (Trentham Property). She was in a relationship with the first defendant, Robert Rouse, between about August 2010 and May 2014. The second and third defendants are Robert's children. The plaintiff acknowledges that Robert Rouse made a gift of $63,240 to her in about March 2012. This sum is at the heart of the dispute between the parties.

3 The plaintiff seeks the removal of a caveat and an injunction restraining the first to third defendants from lodging any further caveat over the Trentham property.

4 On 8 August 2015, the plaintiff sold the Trentham property under a contract that provided for settlement dated 8 September of 2015. Then, by a contract of sale dated 11 August 2015, the plaintiff purchased land in Chewton. That contract also provided for a settlement date of 8 September 2015. Under a licence from the vendor of the Chewton property the plaintiff has been in occupation of that property since 5 September 2015. The title to the property is encumbered by a mortgage in favour of the National Australia Bank.

5 On 24 August 2015, Robert Rouse lodged a caveat in respect of the title to the Trentham property. He claimed an interest as chargee on the grounds of an implied, resulting or constructive trust. The plaintiff brought proceedings by originating motion seeking the removal of that caveat pursuant to s.90(3) of the Transfer of Land Act. On 16 September 2015, McDonald J ordered that the caveat be removed.

6 In extempore reasons, McDonald J stated that he was satisfied that the caveator had not taken the opportunity to place any material before the court, and there was nothing in the plaintiff's material to suggest any relevant interest that might sustain the caveat that had been lodged.

7 In addition, although he acknowledged that it was unnecessary to do so, his Honour made some pertinent observations about a document that had been produced which purported to be a deed evidencing a liability on the plaintiff to repay the sum of $63,240. These observations are relevant to the claim made today for an injunction restraining the first to third defendants from lodging any further caveat. The observations that were made by McDonald J are, firstly, that the liability to repay the sum of $63,240 arises only upon a written demand being made by Aurelia Rouse for repayment of that sum. There was no evidence before his Honour, and there is no evidence before me, to indicate that such a demand has been made. On its terms, the deed only gives a right to lodge a caveat in the event of default. In accordance with the terms of the deed, default could only occur 120 days after the service of the demand for payment.

8 The other pertinent observation is that the deed has not been signed by the plaintiff. Her evidence is that she had never seen this document until it was shown to her by her solicitor.

9 The plaintiff's solicitor has quite properly, in the absence of the defendants, drawn to my attention a number of other documents that were provided to the plaintiff by email. The first, apart from the deed, is a receipt for a bank cheque. However, the plaintiff does not dispute that she received the amount of $63,240 from the first defendant by way of a bank cheque.

10 Second, there is a bank statement from the Commonwealth Bank account of Aurelia Rouse for the period between 1 March 2012 and 30 March 2012. That bank statement indicates that there are many transfers from and to this account from another identifiable account. There is no evidence as to who is the proprietor of that other account. There is a withdrawal on 22 March that corresponds with the receipt for the bank cheque in the same sum of $63,240, but there is also on that day a credit entry in the bank statement in the same amount showing a deposit transfer from the other account. This bank statement in its unexplained state provides no basis for drawing any inference as to the source of the funds for the bank cheque.

11 The third document consists of four pages of a printout from computer accounting software that purports to be a profit and loss statement, and a balance sheet of the Brompton Trust for the 2014 and 2015 financial years. Both balance sheets show a loan from the plaintiff in the sum of $63,240 to be an asset of the Brompton Trust.

12 These four documents were provided to the plaintiff solicitors by an email from Arnand Rouse on 7 September 2015 with no explanation or information, simply as attachments to that email.

13 The relevant principles in relation to an application under s 90(3) of the Transfer of Land Act 1958 for removal of a caveat are:[1]

(a) The court's power under s 90(3) of the Act is discretionary.

(b) Section 90(3) is in the nature of a summary procedure analogous to the determination of interlocutory injunctions.

(c) A 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"[2] as claimed.

(d) If the caveator establishes a serious question 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.

(e) As a general rule, when considering the balance of convenience, the court should take whichever course appears to carry the lower risk of injustice if the court should turn out to have been "wrong", in the sense of declining to order summary removal of a caveat where the caveator fails to establish its right at trial, or in failing to order summary removal of a caveat where the registered proprietors succeed at trial.

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

14 The documents referred to above reinforce the appropriateness in respect of the application today of the observations made by McDonald J when dealing with Robert Rouse's caveat on 16 September 2015. I apply, with respect, his Honour's observations to the caveat lodged by Arnand Rouse. None of these documents persuade me that there is a serious question to be tried as to whether the caveator can establish the interest claimed in the caveat. However, there is a more direct reason to order the removal of the caveat. The caveat claims an estate or interest as chargee on the grounds of an implied resulting or constructive trust. On its face the caveat is a nonsense. It is not possible for an interest as a chargee to arise on those grounds. For that reason alone the caveat should be removed.

15 The plaintiff seeks an order restraining the first, second and third defendants from lodging any further caveat. The court has power to grant that relief, either pursuant to the broad power to be found in s 90(3) of the Transfer of Land Act, which permits the court to make such order as the court thinks fit or pursuant to the court's inherent jurisdiction to prevent the abuse of its processes.

16 I will restrain the defendants for the following reasons. The two caveats that have been lodged, the first by Robert Rouse and the second by Arnand Rouse, both claim the same nonsensical interest. Secondly, the timing of the lodgement of the caveats is instructive. The second caveat of Mr Arnand Rouse was lodged on 16 September 2015, the day that the matter was before McDonald J in the Practice Court for the removal of the first caveat. It is not clear to me whether the caveat was lodged before or after Arnand Rouse became aware of McDonald J's order.

17 Further, the correspondence that has passed between Mr Arnand Rouse and the plaintiff's solicitor persuades me that there is a serious risk that, if the defendants are not restrained from filing any further caveats, they are likely to file a further caveat in order to thwart or interfere with the attempts by the plaintiff to complete her sale and purchase. The defendants were put on notice by the plaintiff solicitors that their conduct is causing loss and damage to the plaintiff through the need to postpone the settlement of those contracts. The purchaser of the Trentham land has served a notice of default. The time for remedying that default has now passed entitling the purchaser to rescind that contract. The plaintiff seeks to avoid that consequence by completing the contract as soon as possible.

18 I am satisfied that the plaintiff has an interest in seeking the removal of the caveat and in preventing the lodging of any further caveats and I am satisfied, as I have said, that there is evidence of a risk that the defendants will take further action. That is sufficient to justify restraining the defendants. Further, I am of the view that the balance of convenience favours granting an injunction.

19 The injunction in favour of the plaintiff is on the basis that the plaintiff gives the usual undertaking as to damages, and that the operation of the restraint will be until the registration of an instrument of transfer in favour of Pauline Ann Martin or earlier order of the court.

20 Next, the plaintiff seeks an order that the first and second defendants pay compensation for lodging a caveat without reasonable cause under s.118 of the Act. However, there is insufficient evidence before the court to deal with that application. I will refer it to an associate judge for hearing and determination and direct that any further affidavits upon which the plaintiff intends to rely and a copy of my order made today and information as to the date set by the associate judge for the further hearing of that application be filed and served on the defendants.

21 Finally, the plaintiff also seeks an order that costs be paid on an indemnity basis. For the reasons to which I have already referred in relation to the plaintiff's application for an injunction, I am persuaded that the caveats have been employed as bargaining chips or in some other way are an improper use of the process provided for in the Transfer of Land Act. I am satisfied that it is appropriate to order that the second defendant pay the costs of the plaintiff on an indemnity basis.

[1] Sylina v Solanki [2014] VSC 2 [43] (Elliott J), Percy & Michele Pty Ltd v Gangemi [2010] VSC 530, [38]-[48] (Macaulay J); Piroshenko v Grojsman (2010) 27 VR 489 at 491-492 [7]-[11], 492-494 [13]-[20] (Warren CJ); Schmidt v 28 Myola St [2006] VSC 343; (2006) 14 VR 447 at 457 [32] (Warren CJ); Goldstraw v Goldstraw [2002] VSC 491, [30] (Dodds-Streeton J).