Plaintiff's Application for Removal of Caveat Disputed by Defendant

Sokolovska v Galea [2021] VSC 435 (23 July 2021)

The plaintiff applied for an order directing the Registrar to remove caveat lodged by the first defendant on title to land owned by the plaintiff.  The first defendant asserts that he has an equitable interest in the property.  The Court, in determining whether or not there is a caveatable interest, is guided by the Transfer of Land Act 1958 (Vic).

Facts:

Ms Sokolovska and Mr Galea formed a friendship some years ago which ended in 2011.  Mr Galea began to use illicit drugs, went bankrupt, lost his property and his business, and became homeless.  At one stage, he was imprisoned for six months.  Between October 2016 and February 2017, Ms Sokolovska allowed Mr Galea to rent her property but had to evict him eventually due to property damage and nonpayment.

The plaintiff applied for an order directing the Registrar of Titles to remove a caveat lodged on Ms Sokolovska’s title to land by solicitors Beswick Foulkes Family Law (“Beswick Foulkes”) on behalf of Paul Galea (the first defendant).  Since 2008, Ms Sokolovska has been the sole registered proprietor of premises at 19 Bena Street in Yarraville which is the property on which Mr Galea lodged the caveat through Beswick Foulkes.  Ms Sokolovska entered into a contract of sale of the property on 25 May 2021 for a price of $1,150,000.  Settlement is scheduled for Friday 23 July 2021.  Ms Sokolovska received notice of the caveat on 26 May 2021.  The caveat that the grounds of the claim are an “implied, resulting or constructive trust” and of a “freehold estate” and that there is an absolute prohibition on dealing.

Issues:

I. Whether or not there is caveatable interest. 

II. Whether or not the first defendant is taken to be served. 

III. Whether or not balance of convenience favors removal or retention of caveat.

Applicable law:

Transfer of Land Act 1958 (Vic) (“the TLA”) s 90(3) - provides that any person who is adversely affected by any such caveat may bring proceedings in a court against the caveator for the removal of the caveat and the court may make such order as the court thinks fit.

Transfer of Land Act 1958 (Vic) (“the TLA”) s 89(4) - provides that every notice relating to any such caveat and any proceedings in respect thereof if served at the address specified in the caveat shall be deemed to be duly served.

Analysis:

Despite an agreement between them, while at the Yarraville property, Mr Galea did not contribute anything towards their living expenses, such as food, drink, dog food (for his dogs), clothing, utilities, home insurance and rates. Mr Galea did start some renovation work on the house in the first six weeks of his occupancy, but swore that he then stopped and left the work unfinished. He would leave nails in the walls, drug paraphernalia in nooks and crannies and rubbish about the place, as well as damaged plaster. As annexed from real estate agent Tristan Tomasino's assessment, the property was in severe and worse condition and was severely devalued due [to] the kitchen, cupboards, and several other items missing from the home. Furthermore, Mr Galea’s failure to leave, when directed to do so, caused Ms Sokolovska to lose rental income. 

Conclusion:

The Court held that Mr Galea has not established a prima facie case giving rise to a serious question to be tried that he has any equitable interest in Ms Sokolovska’s property. The balance of convenience favours the removal of the caveat given the foregoing, and that Ms Sokolovska has sold her property. No order is made as to costs in Ms Sokolovska’s favour against Mr Galea as she has not engaged lawyers for this application. Mr Galea is taken to have been served with Ms Sokolovska’s originating motion, affidavit and other documents, and in a timely fashion. Since Ms Sokolovska has sold her property that it is due to settle in only three days, the Court found that there is no justification for putting Ms Sokolovska to the inconvenience and potential cost involved in delaying settlement in any way whatsoever.