New South Wales Supreme Court CITATION : Hill v Hill [2004] NSWSC 1205 HEARING DATE(S) : 29 November, 2004 JUDGMENT DATE : 29 November 2004 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Order for removal of caveat made. CATCHWORDS : CAVEATS - REMOVAL - DISCRETION - Registered proprietor seeks order for removal of caveat under s.74MA Real Property Act 1900 - Defendant claims equitable interest - caveat bad in form but Defendant demonstrate equitable interest in property or in proceeds of sale - Plaintiff offers undertaking to protect Defendant's claim to part of proceeds of sale - whether discretion under s.74MA should be exercised in favour of removal of caveat. LEGISLATION CITED : Real Property Act 1900 (NSW) - s.74MA - Martyn v Glennan (1979) 2 NSWLR 234 CASES CITED : - Muschinski v Dodds (1985) 160 CLR 583 - Wildschut v Borg Warner Acceptance Corp (Aust) Ltd (1987) 4 BPR 9453 PARTIES : June Dorothy Hill - Plaintiff Peter Russell Hill - Defendant FILE NUMBER(S) : SC 5678/04 COUNSEL : G. Coleman - Plaintiff In person - Defendant SOLICITORS : Geoffrey Edwards & Co - Plaintiff In person - Defendant JUDGMENT – Ex tempore 1 The Plaintiff, Mrs Hill, seeks a final hearing today of that part of her amended Summons which claims an order under s.74MA of the Real Property Act 1900 (NSW) for the withdrawal of a caveat registered by the Defendant, Mr Hill, against the title to a property of which Mrs Hill is the registered proprietor. Mr Hill occupies part of the property and Mrs Hill also seeks an order for vacant possession. Mr Hill is Mrs Hill's son. 2 Mr Hill seeks an adjournment of the application for an unstated time. 3 The contest between the parties is whether, and to what extent, if any, the Defendant, Mr Hill, has an interest in the subject property. The Plaintiff, Mrs Hill, has entered into a contract for sale of the property. The contract was entered into on 26 August 2004. The purchaser has served a notice to complete which expired on 3 November 2004. The purchaser apparently is waiting to see what the outcome of today's application is before deciding what to do about the contract and the notice to complete. The notice to complete is one of the reasons advanced in support of the urgency of the application and the need for it to be dealt with in the Duty Judge List. 4 Mrs Hill filed her Summons for relief on 19 October 2004, having been granted leave to serve on short notice. The matter came before the Duty Judge on 22 October 2004. On that occasion there was no appearance for Mr Hill. Leave to file an amended Summons was granted and the matter was stood over to the Duty Judge's list on 26 October. On that day Mr Hill appeared in person and was directed to file his evidence by 15 November. The matter was then stood over to the Duty Judge's list today. 5 The Plaintiff, Mrs Hill, now appears by Mr Coleman of counsel and Mr Hill appears in person. 6 Mr Coleman seeks to proceed today for two reasons. First, if the matter is not resolved in some way today, the purchaser under the contract may terminate the contract. Mrs Hill would not only then lose the sale but she could be exposed to an action for damages for breach of contract. 7 Second, as the evidence and Mr Hill's own assertions demonstrate, the relationship between Mr Hill and Mrs Hill has reached such a degree of hostility that Mr Hill has sought an apprehended violence order against his mother. I say nothing of the merits of that application or of that course. However, I note that Mrs Hill is seventy-eight years of age. It is quite clear that the continued occupation of the subject property by both Mr Hill and Mrs Hill is causing considerable stress to both of them. 8 Mr Hill's caveat claims an interest as "part owner" of the subject property by reason of an agreement in writing dated 25 May 1992 between himself, his late wife and his mother, Mrs Hill, and by reason of his expenditure of money on improvements to the property. I will return to the form of the caveat in a moment. 9 Mr Hill seeks an adjournment of the matter today on three grounds. First, so that he can obtain more evidence as to the amounts which he has spent on improvements to the property, second so that he can obtain legal advice generally and third, so that he has time to find other accommodation. 10 I have earlier announced that I would refuse the adjournment application. The reasons I outlined in brief and are as follows. First, as Mrs Hill concedes that Mr Hill has some claim to a proportion of the proceeds of sale and proffers some protection for that claim, as I will explain in a moment, it seems to me that further evidence to quantify the amount of that claim may be adduced later when the extent and quantum of Mr Hill's claim is finally adjudicated. The possibility of further evidence directed to quantum is no reason to delay the determination of the questions now before the Court. 11 Second, I am not satisfied that Mr Hill has made substantial and continuing efforts to obtain legal assistance since these proceedings were commenced on 19 October. Mr Hill has told me that on or about that date he spoke to the Legal Aid office in Dubbo and sought advice. He made an application for Legal Aid which he tells me was declined on or about 25 or 26 October. Since that time Mr Hill has not made any further application for legal assistance from any pro bono scheme. He says that he has discussed with "legal colleagues" the matter generally and he has been given advice simply to produce documents in Court and to see what happened. It does not seem to me from this evidence that since Mr Hill's application for Legal Aid was declined on 26 October, he has demonstrated any earnest desire to obtain legal assistance to deal with this matter. 12 Third, the question of a reasonable time for Mr Hill to find alternative accommodation, if vacant possession is ordered, is a question which arises only if it is found that Mrs Hill is entitled to the relief which she seeks. 13 For those reasons, I have concluded that the application by Mrs Hill should be determined today, without adjournment. 14 I return now to consideration of the questions for decision. Mrs Hill denies that Mr Hill has any claim to an interest in the property, expressly or by way of constructive trust. She concedes that Mr Hill may have a charge in equity over the proceeds of sale of the property in a proportion to be determined by further inquiry: see, for example, Muschinski v Dodds (1985) 160 CLR 583, at 618. I think that that concession is rightly made. 15 The agreement between Mrs Hill, Mr Hill and his late wife dated 25 May 1992 expressly acknowledged that Mr Hill and his late wife would make contributions to the improvement of the property not exceeding a stated sum. After completion of those improvements, so the agreement provided, Mr Hill and his late wife would have the exclusive use of one part of the property and Mrs Hill would have the exclusive use of another part. The parties were given the right to joint use of the garden and future pool area. 16 The agreement also expressly provided that Mrs Hill would leave the property to Mr Hill and his wife in her will, subject to the property being charged with payment to Mrs Hill's other three sons of legacies in the sum of $30,000. $30,000 was expressed to be one-fourth of the then-current value of the property. Mrs Hill says that Mr Hill's interest, as provided by this agreement, does not give him a proprietary right in equity to the property itself, nor does it give him a right to remain in occupation of the property indefinitely. 17 I think that there is much force in that submission. It is clear that during the term of the relationship contemplated by the parties in the agreement, each party would have the right of exclusive occupation of one part of the property. However, nothing is said in the agreement which would restrict the right of Mrs Hill, as registered proprietor, to sell the property at any particular time or, indeed, at all. Nothing is said in the agreement as to what is to happen when and if Mrs Hill sells the property. Clearly enough, the agreement is predicated on the continued existence of a harmonious relationship between the parties to the agreement. 18 In those circumstances, it seems to me that because Mr Hill has expended considerable sums on the improvement of the property – he tells me at least $65,000, if not more – equity would regard Mr Hill as having some claim, at the very least, against the proceeds of the sale of the property if Mrs Hill should choose to exercise her right as proprietor to dispose of it during the lifetime of herself and Mr Hill. As I have said, this sort of interest or claim is recognised by equity, as explained in Muschinski v Dodds . 19 In the present case, it seems to me that Mr Hill's equity may well be given expression by the imposition of a charge upon the proceeds of the sale of the property. The charge may be for such proportion of the proceeds of the sale as represents the proportion which Mr Hill's contribution to the improvement of the property bears to the value of the property at a time immediately prior to the commencement of the improvement. I do not need to decide those questions today. It is clear that there will be other proceedings necessary to ascertain the precise nature and amount of the interest which Mr Hill has in the property or in its proceeds. 20 I have to consider the question of removal of the caveat in light of the fact that Mrs Hill now offers, as a condition of an order for the withdrawal of the caveat, an undertaking that she will hold the balance of proceeds of sale of the property, after discharging any encumbrances and paying all costs and expenses properly incurred in effecting the sale, in a solicitor's trust account, or some other trust account, pending resolution of the question of the nature and extent of Mr Hill's interest. In those circumstances, I must consider whether Mr Hill's caveat should be ordered to be withdrawn. 21 The Court's discretion to order withdrawal of a caveat under s.74MA of the Real Property Act is a wide one. It is clear that the Court may order the removal even of a valid caveat if, for example, substitute security is proffered for the interest claimed by the caveator; see, for example, Martyn v Glennan (1979) 2 NSWLR 234; Wildschut v Borg Warner Acceptance Corp (Aust) Ltd (1987) 4 BPR 9453. 22 In the present case I have grave reservations that the caveat is valid in form. The nature of the so-called interest claimed is stated as follows: "Part owner of the house by way of the first floor [the following words are indecipherable] to granny flat. Built by the caveator for use of the registered proprietor-supported by written agreement [next word is indecipherable] ." It does not seem to me that the nature of the estate or interest in the land is adequately described. However, this is not a decisive factor. Under s.74L it is provided that: "If in any legal proceedings a question arises as to the validity of a caveat, the Court shall disregard any failure of the caveator to comply strictly with the requirements of the Real Property Act in relation to lodgment of caveats with respect to the form of the caveat." 23 I do not, therefore, base my decision on any defect in the form of Mr Hill's caveat. However, it seems to me that all of the protection which Mr Hill is justifiably entitled to receive in respect of the interest in the property which he claims is afforded by Mrs Hill's undertaking to the Court to retain the net balance of proceeds of sale in trust. It is not necessary for the protection of Mr Hill's interest that the caveat be retained, with the consequent risk that the present contract for sale will be lost. 24 It seems to me in the interests of all parties that the contract for sale should proceed, that the parties who are in such a state of disharmony should go their separate ways, and that their competing rights and interests should be determined in relation to a sum of money which is held in trust pending the outcome of the proceedings. For those reasons, in the exercise of the Court's discretion under s.74MA, I consider that an order for the removal of the caveat should be made. 25 I turn now to the question of whether vacant possession of the property should be given by Mr Hill and, if so, upon what terms. 26 I accept, as Mr Coleman says, that the written agreement between the parties gives Mr Hill no right of occupation of any part of the property in the nature of a leasehold interest; at the most, he has a revocable licence to occupy part of the property. It seems to me that that licence is determinable at the will of the Plaintiff, Mrs Hill, and that in the circumstances in which the parties have long ago fallen into disagreement, revocation of that licence is properly exercisable by her. 27 I do not think, therefore, that by virtue of the agreement or the nature of the interest which Mr Hill has in the property (whatever it may ultimately be found to be) Mr Hill has a right of residency in the property for an indefinite period or for the rest of his life. Indeed, Mr Hill has assured me that he has himself no deep-seated objection to the sale of the property. His concern is to be compensated properly for the amounts which he has invested in the property and to be allowed a reasonable time to give vacant possession. 28 In those circumstances, I cannot see any legal basis for Mr Hill to remain in the property indefinitely. I think that the licence contained in the agreement between the parties has properly been revoked by Mrs Hill and I will make an order for vacant possession of the property. 29 The question, then, is how long should Mr Hill be given to find alternative accommodation. Mr Hill says that it is very difficult to find accommodation in the Narromine area and he has lived in that property for some twelve years. On the other hand, Mrs Hill says that Mr Hill has had notice of her intention to sell the property for some considerable time, even before contracts were exchanged on 26 August this year. He certainly has had notice of her intention to seek vacant possession since the proceedings were commenced on 19 October. 30 It seems to me that Mr Hill has had a substantial period of time to make arrangements for alternative accommodation. However, the practical realities of the matter are that he cannot simply pack up and leave a property which he has occupied for some twelve years overnight, even if he is to go to alternative accommodation in the same town. In my opinion, a period of fourteen days is a reasonable period in the circumstances to allow Mr Hill to find alternative accommodation. 31 I will order that the order for possession shall not be executed for a period of fourteen days from the date of the order, that is fourteen days from today. ~ oOo ~ Last Modified: 12/17/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.