Sharon Ann Mihalic Administratrix Ad Litem of the Estate of Frank Mihalic (Deceased) v Paul Mihalic and Ana Mihalic [1986] ACTSC 52 (24 June 1986)

SUPREME COURT OF THE ACT

SHARON ANN MIHALIC Administratrix ad litem of the Estate of Frank Mihalic
(deceased) v. PAUL MIHALIC and ANA MIHALIC
S.C. No. 1079 of 1985
Caveat - Practice and Procedure

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Gallop J.(1)

CATCHWORDS

Caveat - application for removal - claim based on unpaid vendor's lien.

Practice and Procedure - object of pleadings - whether application for removal of caveat appropriate - action for recovery of money due.

Eng Mee Yong and Others v. Letchumanan s/o Velayutham (1980) AC 331

Kerabee Park Pty Ltd v. Daley (1978) 2 NSWLR 222

Gasiunas v. Meinhold (1964) 6 FLR 182

Easton v. Ardizzone (decision of Bowen CJ in Eq, delivered 9 August 1974)

Van Dyke v. Van Dyke (1976) 12 ALR 621

Sargeant v. A.S.L. Developments Limited [1974] HCA 40; (1974) 131 CLR 634

In Re Stucley (1906) 1 Ch 67

HEARING

CANBERRA
24:6:1986

ORDER

Caveat Registered No. 9437 be removed.

DECISION

By writ of summons issued on 24 September 1985 the plaintiff as Administratrix ad litem of the estate of the late Frank Mihalic (the deceased) instituted proceedings against the defendants for the sum of $54,582.02 plus interest from 25 September 1979, being the unpaid balance of purchase moneys owing by the defendants to the estate under a contract dated 28 August 1979 between the deceased and the defendants whereby the deceased agreed to transfer the whole of his right, title and interest in Block 7, Section 25, Evatt, in the Australian Capital Territory, for the sum of $70,000. The plaintiff also claims a declaration that the defendants hold the property in trust for themselves and the estate of the deceased as tenants in common in the proportions of the paid and unpaid parts of the purchase price.

2. By their defence and counterclaim delivered 28 April 1986 the defendants admit that the plaintiff is the widow of the deceased and admit the contract between them and the deceased. They further admit that they have paid to the deceased or at his direction, the sum of $15,417.98 pursuant to the contract as pleaded in the statement of claim but deny that they have not paid the whole or any part of the balance of $54,582.02.

3. They plead that by an oral agreement between them and the deceased prior to the transfer it was agreed that in satisfaction and discharge of all the rights and claims which the deceased had or might have had pursuant to the contract dated 28 August 1979, their son would accept, in satisfaction and discharge of the said rights and claims, payment by the defendants of $15,417.98 at the direction of their son and a forgiveness and release by the defendants of all debts and obligations then owed by him to them including the repayment of all sums lent by them to their son or paid on his behalf and payment of all money due and owing by their son to them for work done and materials provided by them for their son at his request. They also pleaded estoppel, the details of which it is not necessary to recite.

4. By their counterclaim the defendants seek an order that the plaintiff be restrained from lodging any further caveat on the title of the said property, a declaration that the caveat lodged is illegal in both form and substance, a declaration that the plaintiff has no caveatable interest in the said property, an order that the plaintiff show cause why the said caveat should not be removed, or alternatively, an order that the plaintiff withdraw the caveat within two days.

5. The defendants have applied by notice of motion dated 28 April 1986 and intituled in this action for orders that pending suit the plaintiff be restrained from lodging any further caveat on the title and an order that the plaintiff show cause why the caveat should not be removed. The motion came on for hearing on 27 May 1986. It was agreed that the caveat referred to in the pleadings and notice of motion had been withdrawn by the plaintiff prior to the institution of any proceedings and another caveat lodged in substitution therefor. By consent the pleadings were amended accordingly and the motion proceeded in respect of the substituted caveat. By affidavit sworn 24 April 1986 the defendants repeated the facts set out in the defence and swore to the truth of those facts. No evidence was tendered on behalf of the plaintiff.

6. The terms of the first caveat, a copy of which was annexed to the affidavit of the defendants, were as follows:

"TAKE NOTICE THAT I SHARON ANN MIHALIC of 15 Gundulu

Place, Giralang in the Australian Capital Territory,
home duties, am claiming an estate or interest in the
land particularised hereunder as beneficiary of the
intestate estate of the late Frank Mihalic as his widow
and on behalf of my infant child born of him in wedlock
namely Susan Ann Mihalic. The claim is that the land
particularised hereunder is held by the registered
proprietors on trust for the estate of the late Frank
Mihalic by resulting trust arising out of non payment
of the purchase price of $70,000. referred to in
contract of sale between Frank Mihalic as vendor and
Paul and Anna Mihalic as purchasers dated on or about
28 August 1979 pursuant to which transfer no. 316729
was registered. The estate or interest claimed on
behalf of the estate is the whole of the equitable
estate in all the unexpired residue of the Crown
Lease."

It is to be noted that the caveatable interest claimed is that the defendants hold the land on trust for the estate of the deceased by resulting trust arising out of non-payment of the purchase price of $70,000.

7. The substituted caveat which was lodged on 4 October 1985 claims a different form of caveatable interest. It is in the following terms:

"TAKE NOTICE THAT I SHARON ANN MIHALIC of 15 Gundulu
Place, Giralang in the Australian Capital Territory,
home duties, am claiming an equitable estate or
interest in the land particularised hereunder as
administratrix ad litem of the intestate estate of the
late Frank Mihalic (the deceased) pursuant to order of
the Supreme Court of the Australian Capital Territory
made on 20 September 1985 and as the widow of the
deceased and on behalf of my infant daughter born of
the deceased in wedlock, namely Susan Ann Mihalic, we
being the sole beneficiaries of the intestate estate of
the deceased. The claim is founded on the following
facts: 1. Between 30 October 1973 and 28 September
1979 the deceased was registered as and was in fact the
proprietor as lessee under Crown Lease of all the
estate and interest in Block 7 Section 25 Evatt in the
Australian Capital Territory registered in Volume 476
Folio 93 (the property); 2. By written contract dated
28 August 1979 executed by the deceased and Paul
Mihalic and Ana Mihalic (the caveatees) the deceased in
consideration that he transfer the whole of his right
title and interest in the property to the caveatees the
caveatees promised to pay him the sum of $70,000.00;
3. On 25 September 1979 the deceased transferred the
whole of his right title and interest in the property
to the caveatees as joint tenants; 4. The caveatees
paid to the deceased or at his direction the sum of
$15,417.98 pursuant to the contract but have not paid
the whole or any part of the balance of $54,582.02."

It is to be noted that the substituted caveat claims an equitable estate or interest in the land under an unpaid vendor's lien, although it does not describe the equitable estate or interest as such.

8. Several submissions were made on behalf of the defendants in support of the motion that the plaintiff show cause why the substituted caveat should not be removed.

9. The application is made pursuant to s.105 of the Real Property Ordinance 1925. A caveat may be lodged pursuant to s.104 of the Real Property Ordinance 1925 which is in the following terms:

"104.(1) Any settlor of land under the provisions
of this Ordinance transferring the land to be held by
the transferee as trustee, or any person claiming any
estate or interest in the land under any unregistered
instrument, or by devolution in law or otherwise, may
by caveat in the form of the Fifteenth Schedule forbid
the registration of any instrument affecting the land,
estate or interest, either absolutely or until after
notice of the intended dealing given to the caveator as
is required and enjoined in the caveat.

(2) Every such caveat shall state the name and
address of the caveator, and shall contain a sufficient
description to identify the land and the estate or
interest therein claimed by the caveator, and, except
in case of caveats lodged by order of the Court or by
the Registrar, as in this Ordinance provided, shall be
signed by the caveator or by his solicitor or agent or
attorney in the Territory.

(3) No such caveat shall be received unless some
address or place within the Territory is appointed
therein as the place at which notices and proceedings
relating to the caveat may be served.

(4) Every notice relating to the caveat or to any
proceedings in respect thereof if served at the address
or place mentioned in the caveat shall be deemed to be
duly served.

(5) Every such caveat may be withdrawn by the
caveator."

10. Section 105(1) provides for the Registrar to give notice of the receipt of the caveat to the registered proprietor and s.105(2) provides that the registered proprietor may summon the caveator to attend before the court to show cause why the caveat should not be removed. The power of the court provided by s.105(3) is to make such order as to the court seems fit.

11. First, it was submitted on behalf of the defendants that as the statements in the pleadings were not evidence, there was no evidence of the basis of the plaintiff's claim to have a caveatable interest. In my opinion the pleadings in this matter sufficiently identify the factual issues which have arisen between the parties. The plaintiff's claim is that there is a sum of $54,582.02 owing to the estate of the deceased, being the balance of the purchase moneys of $70,000 under the contract of sale between the deceased and the defendants dated 28 August 1979. The defendants deny that any money is owing. They say that they orally agreed with the deceased that he would accept the amount of $15,417.98 and the defendant's forgiveness and release of all debts and obligations owing by the deceased to them in full discharge of the purchase price. The statement of claim and defence clearly identify that issue.

12. Pleadings fulfil several functions which are as follows:

(1) to define with clarity and precision the issues or
questions which are in dispute between the parties
and fall to be decided by the court. The whole
object of pleadings is to bring the parties to an
issue and thereby diminish expense and delay;
(2) to require each party to give fair and proper
notice to his opponent of the case he has to meet
to enable him to frame and prepare his own case
for trial;
(3) to inform the court what are the precise matters
in issue between the parties which alone the court
may determine; and
(4) to provide not only a brief summary of the case of
each party, but also to constitute a permanent
record of the issues and questions raised in the
action and decided therein so as to prevent future
litigation on matters already adjudicated between
the litigants.

(For a full discussion of the object of pleadings and their historical development, see Bullen & Leake and Jacobs, Precedents of Pleadings, 12th Ed., pp.6-9).

13. The caveat under the Torrens system has often been likened to a statutory injunction of an interlocutory nature restraining the caveatee from dealing with the land pending the determination by the court of the caveator's claim to title to the land in an ordinary action brought by the caveator against the caveatee for that purpose. The Privy Council has accepted this as an apt analogy and has said that the onus that lies upon the caveator is to satisfy the court that on the evidence presented his claim to an interest in the property does raise a serious question to be tried. Having done so, he must go on to show that on the balance of convenience it would be better to maintain the status quo until the trial of the action by preventing the caveatee from disposing of his land to some third party (Eng Mee Yong and Others v. Letchumanan s/o Velayutham (1980) AC 331 at 337).

14. Because the application is interlocutory only the court must deal provisionally with both facts and law on scant materials and even on evidence which may be unsatisfactory in form. The practice of this court in that respect in interlocutory matters is well established (see also Meagher: Equity Doctrines and Remedies, 2nd Ed., para.2166 et seq.).

15. I reject the defendants' first submission.

16. The second submission on behalf of the defendants was that the caveat presently on the title is bad in form in that it does not state the nature and quantum of the estate or interest claimed. Section 104(2) of the Real Property Ordinance 1925 set out above requires that the caveat shall contain a sufficient description to identify the land and the estate or interest therein claimed by the caveator.

17. There are a number of New South Wales decisions to the effect that notwithstanding the terms of comparable legislation the requirement for a proper statement of the estate or interest of the caveator is that the caveat has to state the nature and quantum of the estate or interest claimed, and that the earlier cases based upon the legislation before amendment in New South Wales made in 1970 should be followed in this respect. The cases are set out in Kerabee Park Pty Ltd v. Daley (1978) 2 NSWLR 222 at 231.

18. Notwithstanding the criticism of those decisions and of the rule that required the quantum of the estate or interest to be specified in Gasiunas v. Meinhold (1964) 6 FLR 182 at 185-6, the rule should be followed and the caveat should state the nature and quantum of the estate or interest claimed under s.104(2) of the Real Property Ordinance 1925. In Easton v. Ardizzone, a decision of Bowen CJ in Eq, as he then was, delivered on 9 August 1974, a report of which appears as a footnote to Kerabee Park Pty Ltd v. Daley, supra, his Honour said that the principles previously laid down prior to the amendment of the Real Property Act 1900 (NSW) still apply to the legislation in its amended form. The amended s.72 of the Real Property Act 1900 (NSW) uses the same language as s.104(2) of the Real Property Ordinance. More recently, Mahony JA observed in Van Dyke v. Van Dyke (1976) 12 ALR 621 at 644 that the specification of the estate or interest claimed is at least significant in determining whether the width of the proscription embodied in the caveat is no more than appropriate. He went on to say:

"There has, in relation to the Torrens system
legislation throughout Australia and in particular in
this State, been a generally accepted view that there
should be some particularity in the specification of
the estate or interest upon which the caveator relies,
see Roclin Investments Pty Ltd v. Makris (1974) 7 SASR
485, and the cases there referred to: Investment &
Merchant Finance Corporation Ltd v. Kirkwood Estates
Ltd (1975) 5 ALR 191. In this State, the previous
s.72(2), which required that the caveat 'shall contain
a sufficient description to identify the land and the
estate or interest therein claimed by the caveator' was
interpreted in this way: Re Jones (1935) 35 SR(NSW)
560; Re Fairlie (1959) 76 WN(NSW) 475; cf, Gasiunas v.
Meinhold (1964) 6 FLR 182.

In 1970, s.72(2) was amended and the subsection in
its present form substituted. That subsection requires
that the estate or interest claimed shall not merely be
'identified' but be 'stated'. Having regard to the
course of decision in this State upon the subsection in
its former form, the statutory intention appearing from
the new s.72(2) is, in my opinion, that the requirement
that there be a statement of the estate or interest
claimed is mandatory."

I decline to follow the decision of Joske J. in Gasiunas v. Meinhold, supra.

19. However, in my view, the subject caveat does state with sufficient particularity the nature and quantum of the estate or interest claimed. It recites the facts giving rise to the claim that $54,582.02 is still outstanding.

20. I reject the defendants' second submission.

21. The defendants' third submission was that the plaintiff has commenced an action for the recovery of money and for a declaration that the defendants are trustees of the property for themselves and for the estate of the deceased as tenants in common. Yet, by the terms of the substituted caveat, the plaintiff claims an equitable estate or interest apparently as an unpaid vendor. It was submitted that the plaintiff may claim that the defendants are indebted to the estate for the unpaid balance of the purchase moneys, namely $54,582.02, or she may claim an interest in the subject land but she should not be permitted to claim both. By bringing the action for recovery of the unpaid money she has made an election to pursue that remedy.

22. This submission raises the question whether the application for removal of the caveat should have been brought in the action instituted by the plaintiff for the recovery of money. In defence of the action the defendant has raised a counterclaim seeking an order pending suit and permanently that the plaintiff be restrained from lodging any further caveat on the title, a declaration that the caveat is irregular in form and substance, a declaration that the plaintiff has no caveatable interest and an order to show cause why the caveat should not be removed. I question whether that is an appropriate counterclaim in a claim for money due. However, the plaintiff has not sought to strike out the counterclaim and has supported the defendant's right to bring this application in the action if for no other reason than that she relies on the pleadings to identify the factual issue. Hence it is not inappropriate to pursue the claim for interlocutory relief set out in the counterclaim.

23. The equitable doctrine of election, as opposed to the common law principle, has been expounded in Lissenden v. C.A.V. Bosch Limited (1940) AC 412 at 418. The common law principle is stated by Mason J. in Sargeant v. A.S.L Developments Limited [1974] HCA 40; (1974) 131 CLR 634 at 655 as follows:

"A person is said to have a right of election when
events occur which enable him to exercise alternative
and inconsistent rights, i.e. when he has the right to
determine an estate or terminate a contract for breach
of covenant or contract and the alternative right to
insist on the continuation of the estate or the
performance of the contract. It matters not whether
the right to terminate the contract is conferred by the
contract or arises at common law for fundamental breach
- in each instance the alternative right to insist on
performance creates a right of election.

Essential to the making of an election is
communication to the party affected by words or conduct
of the choice thereby made and it is accepted that once
an election is made it cannot be retracted (R. v.
Paulson (1921) 1 AC 271, at p.284; Tropical Traders
Ltd. v. Goonan [1964] HCA 20; (1964) 111 CLR 41, at p 55). No
doubt this rule has been adopted in the interests of
certainty and because it has been thought to be fair as
between the parties that the person affected is
entitled to know where he stands and that the person
electing should not have the opportunity of changing
his election and subjecting his adversary to different
obligations."

24. In the former case Viscount Maugham observed that the equitable doctrine of election has no connection with the common law principle, which puts a man to election whether he will affirm a contract induced by fraud or avoid it, whether he will in certain cases waive a tort and claim as in contract, or whether in a case of wrongful conversion he will waive the tort and recover the proceeds in an action for money had and received (to give a few instances only). Such cases mainly relate to alternative remedies in a court of justice.

25. The words or conduct ordinarily required to constitute an election at common law must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other (Sargeant v. A.S.L Developments Limited, supra, per Stephen J. at 646).

26. I turn to the evidence touching upon the subject whether the plaintiff has made an election or not. Her claim, brought by way of the institution of the proceedings by writ of summons accompanied by a statement of claim, is for money. It is true that she also claims a declaration of trust but there are no facts pleaded to substantiate a trust. In any event a trust is an entirely different concept to an unpaid vendor's lien. Even though the words of the substituted caveat do not refer to an unpaid vendor's lien, counsel for the plaintiff has made it plain that that is the nature of the equitable estate or interest claimed. So, on the one hand, the plaintiff is claiming money and a declaration of trust and, on the other, she is claiming an interest against the property as an unpaid vendor. A vendor's lien is in the nature of a charge against the property sold. It is a claim to an entitlement to be paid out of the subject matter of the assignment in question (In Re Stucley (1906) 1 Ch 67).

27. The plaintiff cannot have it both ways. On the one hand she claims an amount of money, on the other she claims an interest in the property and seeks to freeze all dealings in relation to that property as an unpaid vendor. In my view, by the institution of the proceedings for recovery of money and a declaration of trust (which is not supportable on the facts pleaded) the plaintiff has made her election to pursue her common law remedy for the payment of the balance of the purchase moneys. She ought to be confined to her claim for money. It is true that if successful in that claim she may be able to levy execution against the title of the property. Her action for damages, however, should be litigated without any proscription against dealings with the property itself.

28. The defendants also argued laches on the part of the plaintiff, but I do not find it necessary to rule on that argument.

29. I order that Caveat Registered No. 9437 be removed. I shall hear counsel on the question of costs.