Ryan v Kalocsay [2009] NSWSC 1009 (10 August 2009)

Last Updated: 28 September 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Ryan v Kalocsay [2009] NSWSC 1009


JURISDICTION:
Equity

FILE NUMBER(S):
3376/08

HEARING DATE(S):
10 August 2009

JUDGMENT DATE:
10 August 2009

EX TEMPORE DATE:
10 August 2009

PARTIES:
Gregory John Ryan (Plaintiff)
Zsuzsanna Katalin Kalocsay (Defendant)

JUDGMENT OF:
Slattery J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Plaintiff: Ms J McIntosh
Defendant: Ms S Mahmud

SOLICITORS:
Plaintiff: Peter Cornock & Associates
Defendant: Ms Mahmud appeared on a pro bono basis with the assistance of the New South Wales Bar Association


CATCHWORDS:
REAL PROPERTY
torrens title
caveats against dealings
removal of caveat
trial imminent
caveat a potential obstacle to the defendant raising funds for her legal representation
balance of convenience

LEGISLATION CITED:
Property (Relationships) Act 1984
Real Property Act 1900

CATEGORY:
Principal judgment

CASES CITED:
Bell v Graham [2000] VSC 142
Beneficial Finance Corporation v Multiplex Construction Pty Ltd [1995] 36 NSWLR 510
Hayes v O'Sullivan (2001) WASC 55
Martin v Glennan & Anor (1979) 2 NSWLR 234
Morling v Morling (1992) 16 Fam LR 161

TEXTS CITED:


DECISION:
Order removal of the caveat



JUDGMENT:

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


SLATTERY J

MONDAY 10 AUGUST 2009

3376/08 GREGORY JOHN RYAN v ZSUZSANNA KATALIN KALOCSAY

JUDGMENT [Re Application for Removal of Caveat]

1 HIS HONOUR: I have before me today the defendant’s notice of motion for adjournment of the hearing date and for removal of the caveat over the property the subject of these proceedings, which I will refer to in this judgment as “the Riverstone property”. The nature of this application was briefly outlined in the judgment I gave in this matter last Friday, 7 August 2009. This judgment concerns only one aspect of the motion before me, namely, prayer 2 for the removal of the caveat. The question of the adjournment of the hearing date and the question whether the solicitors on the record for the defendant should be given leave at this stage to withdraw from the proceedings, are yet to be argued before me.

2 It is likely to be of assistance in dealing with the question of any adjournment and the question of whether or not the solicitors are given leave to withdraw for the parties to know whether or not the caveat over the property is to remain or is to be withdrawn by order of the Court. The existence of the caveat over the property is likely to be an impediment to the defendant raising funds for the purposes of engaging new solicitors or paying counsel to defend herself. Therefore the resolution of the caveat question may bear upon whether there should be an adjournment and upon the question of whether the solicitors should be given leave to withdraw. This judgment does not cover the history of the solicitors, Messrs Austen Brown & Boog attempting to withdraw from the matter or any other issues in relation to the adjournment.

3 In these proceedings the plaintiff seeks a declaration under the Property (Relationships) Act 1984 that he has an equitable and caveatable interest in the property at Riverstone registered in the defendant's sole name. The full title details and address of the Riverstone property will not appear in this judgment because of the Court's policy against the public disclosure of information in a way that might contribute to identity fraud. The title details of the Riverstone property can be ascertained from the Court's file.

4 The plaintiff seeks a final order pursuant to s 20 of the Property (Relationships) Act 1984 that the defendant pay the plaintiff the sum of $120,000. That is the quantum of the equitable interest that the plaintiff claims in the Riverstone property.

5 The application for removal of the caveat is brought under s 74MA of the Real Property Act 1900. Ms Mahmud appears on behalf of the defendant on a pro bono basis today as a result of my judgment last Friday, in which I referred this matter to the New South Wales Bar Association for consideration as part of its pro bono representation scheme. The Court thanks her and the Bar Association for their assistance. It has enabled argument to be advanced on behalf of the defendant today. It has assisted the Court in identifying and dealing with the real issues in question between the parties.

6 The submission Ms Mahmud puts is that the plaintiff does not have a caveatable interest in the Riverstone property. The caveat claims in Schedule 1 an estate or interest in the Riverstone property in the following terms:

"Caveator has an interest in the property pursuant to s 20 of the Property (Relationships) Act 1984."

7 The claim is stated to be justified by virtue of the following facts:

"The caveator has been in a de facto relationship with the registered proprietor for 10 years, has made substantial contributions to the property and claims an interest pursuant to s20 of the Property (Relationships) Act 1984."

8 Ms Mahmud’s submission that the interest described in the caveat does not amount to a caveatable interest is in the following terms:

5. In my submission the plaintiff has no caveatable interest in Riverstone Property. A caveat must be supported by an equitable interest in land present at the time the caveator lodges the caveat. It is insufficient that it has some potentially enforceable right against the registered proprietor, which has not yet ripened into an interest: Re Pile’s Caveats [1981] Qd R 81, at 83; Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672. In Porte v Couso [1984] ACL Rep [355 NSW 19] McLelland J in the NSW Supreme Court held that the provisions of the De Facto Relationships Act 1984 did not give rise to any interest in property until such time as an order was made under that Act conferring such an interest. Similarly, it is submitted that, until a declaration under the Property (Relationships) Act 1984 is made, the plaintiff has no equitable and caveatable interest in the Riverstone Property as his interest in merely a potential one.

6. No caveatable interest arises from mere cohabitation as the right. In Morling v Morling (1992) 16 Fam LR 161, it was held that a caveat lodged claiming an interest under the De Facto Relationships Act 1984 (the precursor to the Property (Relationships) Act 1984) could not be supported “for such a “claim” is merely a claim to exercise a mere right of action, and does not give rise to an equitable interest in the subject property” (at 163).

9 The Court was referred to the authorities that support the conclusion, that where a caveat merely claims an interest in property which will be declared or ordered as a result of a fully adjudicated claim under the Property (Relationships) Act 1984 or under the Family Law Act 1975, the courts have consistently found that a caveatable interest is not established. Recent examples of this may be found in: Bell v Graham [2000] VSC 142, and Hayes v O'Sullivan (2001) WASC 55; (2001) 24 WAR at 40.

10 In answer to these submissions Ms McIntosh, who appears for the plaintiff, has effectively conceded the underlying legal merits of Ms Mahmud's submissions on this point. She takes a different tack and submits that the balance of convenience requires the caveat to remain in place because there is now only a short time before trial. She refers to the decision of Young J in Beneficial Finance Corporation v Multiplex Construction Pty Ltd [1995] 36 NSWLR 510, and in particular to page 532 where his Honour said:

Again the Court will decline to remove a caveat for a short period of time even if doubtful about the existence of a proprietary interest: see Martyn v Glennan [1979] 2 NSWLR 234 and Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR ¶11,987 at 11,991. Thus a proprietary interest in land in the common or garden sense of that term is not always required though at least some of these cases may be explained by the practice of this Court not to determine borderline cases at an interlocutory stage so that if there is an arguable case that the caveator has an interest in land the court allows the caveat to remain until the trial exacting an undertaking as to damages because of the inadequacies of s 74P of the Real Property Act 1900.

11 The two cases referred to by Young J in Beneficial Finance Corporation v Multiplex Construction Pty Ltd provide substantial support for Ms McIntosh’s submission. In Martin v Glennan & Anor (1979) 2 NSWLR 234 the Court held in relation to the former s 97(5) of the Real Property Act that where proceedings are on foot by the caveator to enforce the interest which the caveat has been lodged to protect, there is no bar to the exercise of the Court's discretion to remove the caveat. The principles applicable to a case where a caveator has commenced proceedings are similar to those where the caveator has not commenced proceedings. Justice Waddell in Martin v Glennan says that:

"The correct principles to apply are those appropriate to an interim injunction, that is to say that the caveat should be removed unless the caveator can establish that he would be entitled to an injunction restraining the proprietor from dealing with the land until the determination of the proceedings brought by the caveator"

12 Ms McIntosh says that here the caveator would be entitled to an interim injunction restraining the registered proprietor from dealing with the land until the determination of the proceedings and therefore the caveat should not be removed now. However both Glennan v Martin and Beneficial Finance are both authority for the proposition that the Court looks at the question as a matter of the balance of convenience.

13 There are special issues in this case concerning the balance of convenience. It is now Monday 10 August 2009. This hearing is listed to commence before me in three days time, on Thursday 13 August 2009 for a two day hearing. The former solicitors for the defendant have sought to withdraw from acting for the defendant. I have not yet given them leave to withdraw. She may have to find new solicitors before Thursday.

14 If it can be achieved fairly, it is highly desirable that the hearing of this matter proceed on Thursday and Friday of this week. The Court only has limited public hearing time available for the determination of listed cases. This matter has been set down for hearing for five months. It is important that the defendant have as much flexibility as possible in being able to borrow money or take whatever other steps she must in order appropriately to resource the retainer of lawyers for her defence at a hearing later this week.

15 Given the short time that is now available before the hearing and her probable need to approach banks or other financiers for funds, the balance of convenience suggests that the caveat should be removed under s 74MA of the Real Property Act. This is the course that I will take and I so order.

16 This may be a case, however, where on material that is yet to be put before me, the plaintiff may be able to justify a claim for an interlocutory injunction to effect some restraint against the defendant dealing with the subject property pending resolution of these proceedings.

17 Some interlocutory restraint over property pending determination of proceedings may well be appropriate where a plaintiff seeks a declaration that the plaintiff has an interest in the property, when such a restraint is necessary to preserve the property pending resolution of the proceedings. There is as yet no evidence before me that demonstrates a risk of the defendant dealing with the subject property before the trial, so as to prejudice the plaintiff’s claim to an interest in it. The only likely dealing with the property if the caveat is removed is the creation of a charge to secure the payment of legal fees to solicitors for the defendant. The plaintiff properly concedes the defendant should be able to create such a change.

18 This caveat is not a proper substitute for an injunction. This is especially so because the caveat is one that would normally be removed upon Morling v Morling principles.

19 Accordingly, I order the removal of the caveat. I will proceed shortly to hear such application as Ms McIntosh may wish to bring in relation to injunctive relief over the property pending hearing and/or to receive such undertaking in appropriate terms as Ms Mahmud is instructed to give to the Court in relation to that matter.

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LAST UPDATED:
25 September 2009