DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   The plaintiff seeks leave to lodge a further caveat in respect of land owned by the defendant and situated at 10 Osmanthus Close, Brightwater, and more particularly described as Lot 424 on SP213874, County of Canning, Parish of Mooloola, bearing title reference 50765068 (“the Brightwater property”). The additional complication is that for reasons outlined subsequently the application has been brought on an ex parte basis and accordingly the applicant also requires leave to dispense with the requirements of Uniform Civil Procedure Rules 1999 s 31(5) in respect of the service of this application on the respondent. 

2. [2]
   The application filed in this regard on 24 January 2014, alternatively sought any other appropriate order and also that costs be reserved. Accordingly the reasons that follow are in respect of the following orders made on 6 January 2014:

Jurisdiction

3. [3]
   This application is made in the proceedings commenced by way of claim filed on 17 December 2013. In that claim the following relief is sought:

“1. A declaration that the defendant holds the property at 10 Osmanthus Close, Brightwater, more particularly described as Lot 424 on SP213874, County of Canning, Parish of Mooloola, bearing title reference 50765708 [sic] (“the Brightwater property”) on constructive trust for the plaintiff and the defendant, in proportions to be determined by this honourable court.

2. If this honourable court sees fit, orders for the taking of an account of the monies utilised by the defendant to purchase the Brightwater property.

3. An order charging the defendant’s interest in the Brightwater property in favour of the plaintiff.

4. Consequential orders for the transfer of such share in the Brightwater property by the defendant to the plaintiff as this honourable court sees fit.

5. In the alternative to order 4 hereof, an order that the defendant pay to the plaintiff such sum as represents the value of the plaintiff’s interest in the Brightwater property.

6. In the further alternative, equitable compensation in an amount to be determined by this honourable court.

7. Interest pursuant to s 58 of the Civil Proceedings Act 2011. 

8. Costs.”

4. [4]
   First it can be noted that this court has jurisdiction in respect of the claim which has been filed pursuant to subsection 68(1)(b)(viii), at least as far as it relates to a claim for a declaration that a trust subsists.  Further and on that basis, this court has, pursuant to s 69 of the District Court of Queensland Act 1967, the full powers and authorities of the Supreme Court.  Further and to the extent that the jurisdiction to entertain this application or power to make the order sought is not granted under s 129 of the Land Title Act 1994, s 69 of the District Court of Queensland Act 1967 provides this court with the full powers and authorities of the Supreme Court for the purposes of exercising its jurisdiction under s 68.

The Application

5. [5]
   Leave to lodge a further caveat is required pursuant to s 129 of the Land Title Act 1994 (“LTA”).  This is because on 3 July 2013 the plaintiff, without the benefit of legal assistance, lodged a caveat in respect of the Brightwater property.  In that caveat the interest being claimed was described as “an equitable interest as purchaser of an estate in fee simple” and the grounds of the claim were described as:

“a constructive trust has arisen from funds outstanding to the caveator from Family Law Court order BRC8621/2011 and the caveator is protecting their financial interest.  Further matters are on foot under appeal NA15/2013 in the Full Appellate Court.” 

However the plaintiff received a requisition dated 11 July 2013 and which required response by 8 August 2013.  That indicated that “examination of the … document has revealed that it does not meet Land Registry requirements for registration” and that, leaving aside some issues only going to form, the requisition notice indicated that lodgement fees were required to be paid^[2] and that a copy of “court order BRC8621/2011 should be deposited in support of the grounds of claim.”  Those matters were not attended to and the caveat was rejected on 23 August 2013.

6. [6]
   Before dealing with the reasons for that and the basis upon which leave for a further caveat is sought, it is convenient to set out some context. It can also be noted that although misdescribed as to the basis upon which an equitable interest was claimed in the lodged caveat, it is accepted that the applicant is now seeking to protect substantially the same interest and more importantly for the application of s 129 of the LTA, seeking to do so on substantially the same grounds.

7. [7]
   The plaintiff and Mr David Latemore, the son of the respondent, were married in 1998.  On 4 January 2002 Mr David Latemore became the registered proprietor of a property at 2 Silveroak Court, Mountain Creek (“the Mountain Creek property”).  The marriage failed and Mr David Latemore commenced proceedings in the Federal Magistrates Court on 12 September 2011.  It is the applicant’s contention that the Mountain Creek property formed part of the pool of matrimonial assets.  A mortgage had been registered against the Mountain Creek property in favour of Perpetual Trustees Victoria Ltd.  However, as at 30 April 2012, the balance owing on the loan account which was secured by that mortgage, was nil.  On 2 May 2012 and 24 July 2012 Mr David Latemore withdrew a total of $300,465.40 from the loan account.^[3]  The evidence of the plaintiff is that this was not disclosed to her and remained undisclosed prior to the making of property settlement orders, by consent and after negotiation of the parties, on 30 August 2012 (that is the order referred to as BRC8621/2011).^[4]

8. [8]
   A particular focus is upon the way in which the Mountain Creek property was incorporated in the property settlement orders and in particular the following clauses:

“18. On or before 1 October 2012, the husband will pay to the wife, or as she may direct, the sum of two hundred and fifty thousand dollars ($250,000).

19. In the event that the husband fails to comply with his obligations in accordance with paragraph 2 of this order, the husband will, within a further fourteen (14) days do all such acts and things and sign all such documents as are necessary to transfer to the wife a fifty percent (50%) interest in the property situated at and known as 2 Silveroak Court, Mountain Creek, in the State of Queensland (the “Mountain Creek property”) and upon such transfer, the wife will be entitled to and will receive fifty percent (50%) of the rental income for the Mountain Creek property on a monthly basis at all times that the Mountain Creek property is rented…

26. Within fourteen (14) days of the date of this order, the husband, and if necessary, the wife, will do all such acts and things and sign all such documents as are necessary to pay out and discharge the current indebtedness to Perpetual Trustees Victoria Ltd pursuant to mortgage no 705304878 registered on the title of the Mountain Creek property and shall not again encumber the property during the life tenancy period PROVIDED THAT the husband be solely liable for meeting any such indebtedness.” 

9. [9]
   It appears that the reference in clause 19 to “paragraph 2 of this order” is an erroneous reference to paragraph 18 of the orders that were made. The sum of $250,000 referred to in paragraph 18 of the property settlement orders was not paid by 1 October 2012, or at all.  The plaintiff however did receive a 50% interest in the Mountain Creek property but that came with the encumbrance securing the loan of $300,465.40, which indebtedness and encumbrance has not been resolved in accordance with paragraph 26 of the property settlement orders.^[5]

10. [10]
    It may be accepted that an underlying rationale of the property settlement orders was to provide the applicant with approximately a 48% share of the matrimonial asset pool^[6], and that a 50% interest in the Mountain Creek property was to be a substitute for and security in lieu of the payment of the sum of $250,000.00, and have beneficial effect of some equivalence. On the face of it that is not what has occurred. A valuation performed for Mr David Latemore in the course of the proceedings in the Federal Magistrates Court, valued the Mountain Creek property at $400,000.00 as at 12 December 2011.^[7] Whilst the applicant now has a 50% legal and beneficial interest in that property, it is otherwise encumbered to the extent of at least $300,465.40 and notwithstanding that it may be contended that David Latemore remains solely responsible for the repayment of that indebtedness, he entered bankruptcy on 17 October 2012 and has acknowledged to the applicant a lack of capacity to do so.^[8] The plaintiff deposes to the Mountain Creek property being sold at auction on or about 26 October 2013 for $433,000.00 and that she is yet to receive any of the proceeds.^[9]

11. [11]
    It is the plaintiff’s understanding that the settlement in respect of the purchase of the Brightwater property occurred on or about 25 September 2012, consistently with the Queensland Land Registry settlement notice executed on that date and which indicates that the transferee in respect of the property is the respondent and that the respondent has granted a mortgage over the property to AFSH Nominees Pty Ltd.^[10]

12. [12]
    The plaintiff says that it was not until 17 October 2012 that she learned of the redraws under the mortgage on the Mountain Creek property.^[11]  She also deposes that Mr David Latemore told her that he had moved into the Brightwater property and it is the plaintiff’s understanding, that when her daughter is with her father, she stays at that property.^[12]

13. [13]
    On 4 January 2013 the applicant filed an application for contravention of the orders made in the Federal Magistrates Court and on 21 January 2013, the applicant had subpoenae issued to a bank seeking the bank account records of both Mr David Latemore and the respondent from 1 June 2012.  In the result and by correspondence dated 25 January 2013 each of Mr David Latemore and the respondent sought to raise objections to the subpoenae.  In the respondent’s case he asserted:^[13]

“I object on the basis that the applicant has no grounds to request such items or documents as the matter has nothing to do with myself.  Further, the Federal Magistrate has yet to hear the matter to determine any possible contravention.”

14. [14]
    By letter dated 4 February 2013, the parties in the Federal Magistrates Court were advised that the objection to the subpoenae would be heard when the matter came before the Federal Magistrate on 25 February 2013.^[14]  However, that did not occur because on that day the Federal Magistrate dealt with the application for contravention of orders and on 28 February 2013, orders were made that Mr David Latemore be sentenced to:

15. [15]
    However, on appeal to the Full Court of the Family Court of Australia and on 29 April 2013, those orders were set aside and the application for contravention made by the applicant was dismissed.^[16]  Primarily, that was because it was uncontentious that on 17 October 2013 the husband entered into bankruptcy and a trustee was appointed to his estate and because of the effect of s 58(3) of the Bankruptcy Act 1966 (Cth), which precluded a creditor seeking to enforce any remedy against a bankrupt debtor or the property of the bankrupt in respect of a provable debt or, except with the leave of a court, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding. That was further because of a determination that the contravention proceedings, although leading to a sanction of imprisonment specifically having regard to the position of the bankruptcy, were considered to be proceedings in respect of a provable debt, in the sense of the refusal to or failure to comply with the order to discharge the mortgage on the Mountain Creek property.^[17]  This was further considered to follow because, by her contravention application, the applicant in fact sought that the mortgage debt be discharged pursuant to the orders and reference was made to her affidavit in support of the contravention application, where she said:

16. [16]
    Although there is no clear account as to the dealings of Mr David Latemore, with these funds, which emerges from the contravention proceedings, he did tell the court:

“The money was drawn down prior to their signing of the orders, because it was known full well by myself and the applicant’s lawyer and the applicant herself was notified that because – because I needed somewhere obviously I can take our child to, and in the end I end up with nothing apart from paying board to my parents. There is no other – I don’t have – every asset I have has been seized by the trustee.”^[18]

17. [17]
    The applicant has also deposed to her understanding of the limited financial means of the respondent, in order to have independently purchased the Brightwater property and to her past observations of a closeness of collaboration in or at least knowledge of the respondent as to the financial affairs of Mr David Latemore.^[19] She has provided evidence of the respondent’s unsuccessful application to intervene in the proceedings in the Federal Magistrates Court, on the purported basis of seeking the repayment of $650,250.00 from the total amount of $876,000.00 paid to Mr David Latemore by way of loan and in cash payments and taken from funds originally passed to the respondent in cash, by his late father. This, at the very least, seems to demonstrate that the Respondent had some knowledge of and was interested as to the proceedings in the Federal Magistrates Court.

Discussion

18. [18]
    As to the principles to be applied to applications brought under s 129 of the Land Title Act 1994, the applicant relied particularly on the observations of Chesterman J in Oversea-Chinese Banking Corporation Ltd v Becker [2004] 1 Qd R 409 at [17]-[20], as follows:

19. [19]
    To similar effect are the observations of Wilson J in Landlush Pty Ltd v Rutherford [2003] 1 Qd R 236 at [18]:

“The Court has discretion whether to grant leave to lodge a second caveat on the same grounds as a lapsed caveat. The principles on which the Court will order a current caveat to be removed are a relevant consideration. It is well established that a current caveat should be removed unless the caveator shows that there is a serious question to be tried which would justify leaving it undisturbed (Re McKean's Caveat [1988] 1 Qd R 524) and the balance of convenience favours the maintenance of the status quo. A fortiori, where leave is sought to lodge a second caveat on the same grounds as one that has lapsed, the applicant should at least satisfy those criteria. The Court should consider also whether there is a satisfactory explanation for the lapse of the first caveat, whether there is a satisfactory explanation for any delay in making the application for leave, and whether the respondent would be unduly prejudiced by the lodging of a second caveat.”

20. [20]
    The difference in emphasis and outcome in these cases is largely reflective of the different circumstances as to the extent to which there was evidence of a caveatable interest, or at least a serious question to be tried in respect of the claimed interest in the property and therefore, the extent to which the considerations as to the balance of convenience and prejudice became germane.

21. [21]
    More like the situation in Landlush and where the application was unsuccessful, notwithstanding the finding of a serious question to be tried in respect of the claimed interest in relation to the beneficial title of the property; the caveatable interest claimed here depends upon the applicant’s ability to obtain a remedy of declaration of a trust in the subject property. However, and unlike the position in the both cited decisions, this application is made on an ex parte basis. 

22. [22]
    On the initial hearing of that application, on 31 January 2014, the applicant was granted leave to read and file an amended statement of claim. In that statement of claim and in reference to the pleaded facts as to the existence and then breakdown of the marriage of the applicant and Mr David Latemore and the property settlement proceedings in respect of that marriage, the basis upon which the constructive trust is alleged to have arisen in respect of the Brightwater property is pleaded as follows:

23. [23]
    The applicant relies particularly on the circumstances that:

1. (a)
   a starting point is that the applicant has been deprived of the benefit which the property settlement orders contemplated;

2. (b)
   the reason the applicant has been so deprived and placed in a poor financial situation, is that Mr David Latemore had taken the benefit of the funds redrawn from the loan account but and apparently in contravention of the property settlement orders, that debt remains unpaid and secured against the Mountain Creek property and as Mr David Latemore is now a bankrupt and whilst he remains so, there is no realistic prospect of repayment by or recovery from him personally; and

3. (c)
   although it is conceded that it is not known whether (in a direct sense) and when any such transfer occurred and that the timing may be of importance to which of the claimed bases of existence of a constructive trust needs to be pursued by the applicant, an inference arises from these circumstances, including the timing of the known transactions, particularly in the context of the property settlement proceedings and orders and the residence of Mr David Latemore in the Brightwater Property and the actions of he and the respondent in seeking to resist the subpoena and the lack of explanation provided on the enforcement proceedings in the Federal Magistrates Court and what is deposed to as the respondent’s known financial circumstances and capacity to have otherwise purchased this property, that a transfer of at least a substantial proportion of the loan redraws must have occurred. 

24. [24]
    Further, and in the context of what the applicant has deposed as to the past closeness of consultation and collaboration between Mr David Latemore and his father (the respondent) as to financial matters and the respondent’s interest in the property settlement proceedings, as evidenced by his application to intervene, an inference also arises as to the knowledge of the respondent as to the source of and circumstances under which any such transfer was made to him to enable the purchase of the Brightwater Property.

25. [25]
    On this application reference was made to the statement of general principle in Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148, as to the finding of a constructive trust.  There and after referring to an earlier statement in Muschinski v Dodds (1985) 160 CLR 583 at 618-620, it was observed:

“His Honour pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention ‘to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle’.  In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust.”

26. [26]
    However and as may be noted from the pleading extracted above from the amended statement of claim, the contention as to the circumstances giving rise to the constructive trust claimed as a remedy here, is not without complication. Also it potentially remains to be seen whether there is any suggestion of any equitable interest of Mr David Latemore in the Brightwater Property.^[20]  Further, and in specific recognition of authorities to the effect that a claim for settlement of property, or the possibility or expectation of that occurring, under the Family Law Act 1975, does not amount to an interest in land and therefore a caveatable interest,^[21] the applicant recognises that there is a need to otherwise establish an equity in the nature of a constructive trust in property which has been transferred in breach of that trust and become part of the funds used to purchase the Brightwater Property.  There is therefore an element of tracing towards the establishment of an equity in the nature of a constructive trust and therefore a caveatable interest in the Brightwater Property.  However the applicant rightly concedes that her case will necessarily be stronger in that regard if, as presently appears to be more likely, any transfer of funds for that purpose occurred after the making of the property settlement orders.

27. [27]
    The applicant sought to explain that her earlier attempt at lodgement of a caveat should be viewed in the context of her then absence of legal representation and her ongoing predicament in respect of the property settlement orders and the distraction of the appeal in respect of the contravention proceedings. She otherwise pointed to the facts that since the lapsing of the caveat there was only a period of about four months to the issue of the claim and that this occurred after she engaged her current solicitors within weeks of the lapsing of that caveat and also that this application has been brought within a further period of about one month.

28. [28]
    Further and in express acknowledgement of her obligations as an ex parte applicant and as to disclosure and candour, the applicant specifically drew attention to the following considerations:

1. (a)
   She does not yet have admissible direct evidence of the transfer and provision of funds to the respondent to purchase the Brightwater Property, although, as is correctly pointed out, disclosure in respect of the proceedings on her claim may be expected to do so in support of the inference which is otherwise open, on the presently known circumstances;

2. (b)
   There may be an issue as to the efficacy of the terms of the property settlement orders in protection of the applicant’s interests and therefore as to the quality of her legal advice in that regard.  In particular, there is the issue as to precisely what was known about the position of the loan secured by the mortgage over the Mountain Creek property at the time of the making of those orders; and

3. (c)
   On this application the applicant’s evidence does not descend into detail as to any precise contributions which she made during the course of the marriage, to render it unconscionable for Mr David Latemore to assert sole ownership of the Mountain Creek property to the exclusion of the plaintiff.

29. [29]
    Such considerations potentially relate not only to the issue as to whether there is a plain or only arguable caveatable interest in this case but also to the question of balance of convenience. As the applicant also conceded, on this latter question, there may also be an issue as to the potential efficacy of the alternative relief that is claimed, such as for equitable damages. Further there may be a need to consider and balance any relevant prejudice to the respondent.

30. [30]
    However there is a limit to the extent to which all of these considerations may be appropriately considered on an ex parte application and in the absence of the opportunity of evidence and submissions from the respondent. 

Conclusion

31. [31]
    In support of the making of this application, on an ex parte basis, the applicant points to the available inferences as to the respondent’s involvement in what are capable of being characterised as Mr David Latemore’s breaches of trust and the prospect that upon notice of this application and/or the applicant’s claim there may be some step taken to further alienate any proceeds of any such breach of trust from the reach of the applicant.  I accept in the circumstances, these are legitimate and real concerns and that it is appropriate to maintain the status quo, at least until the applicant’s claims in respect of a caveatable interest in the Brightwater Property and the wider considerations, including as to the balance of convenience, may be more fully assessed.

32. [32]
    Cognisant of the difficulties confronting the making of an ex parte application, in these circumstances, the applicant contended that a caveat should be viewed as a form of statutory injunction, which in the first instance, may be lodged without obtaining any leave of a court, subject only to the right of a caveatee to apply under s 127 of the LTA for removal of that caveat and that upon such an application the caveator would bear the onus of justifying the continuation of the caveat.  It was contended that the purpose of s 129 of the LTA was to effectively prevent vexatious or oppressive lodgements and it was suggested that any order made under s 129 of the LTA on an ex parte basis, could be coupled with further directions to allow for the return of the matter to this court, for any application for removal of the caveat by the respondent and in that way imbue the order with an interim characteristic. 

33. [33]
    Whilst it may be accepted that an effect of s 129 of the LTA is in prevention of vexatious and/or oppressive caveats, the difficulty with the applicant’s approach is that s 129 of the LTA in context, is concerned with the obtaining of the imprimatur of the court to lodgement of the further caveat and even though such an order may be subsequently set aside, there is a potentially important consideration, as was conceded on the hearing by the applicant.  That is, that a caveat when lodged pursuant to s 124 of the LTA, has the effect of preventing registration of any instrument affecting the lot over which it is lodged from the date and time of lodgement and whilst s 130(1) of the LTA stands as protection for the interests of any person who suffers loss or damage as a result of a caveat lodged without reasonable cause, application of that provision to a lodgement authorised under s 129 by the court, would appear at best as unlikely. 

34. [34]
    Accordingly, the alternative upon an adjournment of this application to enable service of it and the applicant’s claim and amended statement of claim and so that the respondent has an opportunity to be heard in respect of the application and in order to protect the status quo, are orders in the nature of an interlocutory injunction of a kind that might be made under UCPR 260A, together with appropriate undertakings of the usual kind.

35. [35]
    Like the power in s 129 LTA, a discretion is exercised as to the grant of an interim injunction and such remedy may be allowed, on the basis, as I have found appears on the presently known circumstances, of a prima facie cause of action, or an arguable case, in the sense of raising a serious question to be tried.^[22] Further, the determination on an ex-parte basis, as to whether it is just and convenient to make an interim order and until any party to be affected by the application has an opportunity to be heard, is necessarily of a different character to determining that application in light of that opportunity.