Harvie v. Stevens [2004] NSWSC 1217

New South Wales Supreme Court

CITATION : Harvie v. Stevens [2004] NSWSC 1217 HEARING DATE(S) : 26 November, 2004 JUDGMENT DATE : 26 November 2004 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Order made for removal of caveat.

CATCHWORDS : CAVEAT - REMOVAL - ONUS OF PROOF - DISCRETION - Plaintiff sought order under s.74MA Real Property Act 1900 for removal of caveat - Defendant claimed property held on resulting trust for him - disputed facts - Plaintiff had entered contract for sale - Plaintiff proffered undertaking to hold proceeds of sale in trust pending determination of proceedings - who bears onus of proof in application under s.74MA - discretionary factors. LEGISLATION CITED : Real Property Act 1900 - s.74J, s.74K, s.74MA CASES CITED : - Annotated Conveyancing and Real Property Legislation, Young CJ in Eq. (Butterworths) PARTIES : Gillian April Harvie - Plaintiff Gary John Stevens - Defendant FILE NUMBER(S) : SC 6197/04 COUNSEL : K.G. Odgers - Plaintiff J.M. White - Defendant SOLICITORS : Garry Pickering - Plaintiff Maurice Marshan - Defendant

JUDGMENT – Ex tempore Application to Withdraw Caveat

1 By Summons filed 18 November 2004 the Plaintiff seeks an order under s.74MA of the Real Property Act compelling the Defendant to withdraw a caveat placed upon the title to certain property, which I understand is a home unit in Elizabeth Bay. 2 The Defendant and the Plaintiff were formerly married but are now divorced. They had a child of the marriage. The Plaintiff says that the subject unit was bought with the money provided by the Defendant pursuant to an agreement between herself and the Defendant whereby the Defendant would provide the money for the purchase and would provide the mortgage payments on the mortgage to be taken out and the unit would be placed in the name of the Plaintiff for the benefit of their son, Jake. 3 The Plaintiff says that while she admits that all of the purchase price and mortgage payments in respect of the property were provided by the Defendant, there was an express agreement between the parties that she would hold the property as trustee for the son. 4 The Defendant, on the other hand, says that there was no such agreement. He says that although the property was placed in the Plaintiff's name, he paid all the mortgage payments and the balance of purchase money, so that there is a resulting trust in his favour. He claims an interest pursuant to such a trust in the caveat which he has lodged. 5 There is a clear contest between the parties on the facts. It is a contest that can only be resolved on issues of credit. Clearly, an application of this interlocutory character is not the appropriate occasion to resolve that contest. 6 The Plaintiff has entered into a contract for sale of the unit. The contract is due to be completed shortly. In my opinion the Defendant has made out an arguable case that he has an equitable interest in the property sufficient to support a caveat. There is no real dispute that he has done so. The dispute is whether the balance of convenience favours the withdrawal of the caveat, for the same considerations as would arise, for example, if the Defendant were seeking an injunction restraining the disposition of the unit. 7 The circumstances favouring the withdrawal of the caveat are said to be that the Plaintiff offers to the Court an undertaking that she will deposit the proceeds of sale of the unit in a trust account to await the determination of the Court as to their ownership. 8 Mr White, who appears for the Defendant, says that that undertaking should not be accepted. His sole submission is that there is evidence that the property has been sold at an undervalue. He says that the sale should not be permitted to proceed because the Defendant will thereby lose the true market value of property which beneficially belongs to him. 9 The Defendant has tendered the valuation of a valuer, who says that the market price of the unit is currently $535,000. The sale price of the unit in the contract which has been exchanged is $490,000. The Plaintiff has tendered the evidence of a valuer, who says that $490,000 represents a fair market price in current conditions. He deposes as to the advertising campaign for the sale of the unit and to the number of prospective purchasers who made enquiries. He deposes also that property values have fallen over the last twelve months or so in that area, and that, by reference to comparable local sales, he is able to say that $490,000 represents the current market value. 10 Clearly, there is a factual dispute as to the current market value of the property. Again, it is not the sort of dispute that can be resolved on this type of application. 11 It seems to me that the balance of convenience favours the withdrawal of the caveat. There is no suggestion that there is any collusion between the Plaintiff as vendor and the purchaser of the property. All that is said is that the property might fetch more if, perhaps, the sale were deferred. There is no suggestion that the sale would be in breach of the terms of the trust under which the Plaintiff says she holds the property for the benefit of her son. The real dispute between the parties is as to the ownership of the proceeds of sale. 12 It seems to me that if the caveat were maintained, there is a real risk that the present purchaser would rescind the contract for sale and pursue the Plaintiff as vendor for damages for breach of contract. That is not a risk which in the present circumstances I think the Plaintiff should be exposed to. 13 It seems to me that the retention of the proceeds of sale will be a sufficient protection to the Defendant if he is ultimately found to be entitled to the benefit of the property. If it be found that the property has been sold by the Plaintiff for an undervalue, then the Defendant can pursue the Plaintiff in damages. 14 I note that the amount of the difference between the market value propounded by the Defendant's expert and that propounded by the Plaintiff's expert is not vast. In those circumstances it seems to me that the balance of convenience favours an order under section 74MA for the withdrawal of the caveat.