IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

No. 8614 of 2007

PERPETUAL TRUSTEES VICTORIA LIMITED Plaintiff

GABRIELA GHEORGHUI and THE REGISTRAR Defendants

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JUDGE: HARPER J
WHERE HELD: MELBOURNE
DATE OF HEARING: 17 OCTOBER 2007
DATE OF JUDGMENT: 17 OCTOBER 2007
CASE MAY BE CITED AS: PERPETUAL TRUSTEES VICTORIA LTD v G GHEORGHUI
MEDIUM NEUTRAL CITATION: [2007] VSC 412

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CAVEAT – Application to remove caveat – Whether a caveatable interest –

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APPEARANCES: Counsel Solicitors

For the Plaintiff Ms C. Gobbo Russell Kennedy

For the First Defendant Mr J. Gray Just Law

No appearance for the

1 The plaintiff is the mortgagee in possession of the land described in Certificate

of Title Volume 10506, Folio 284 and known as Unit 2, 7 Karrakatta Street,

Black Rock. The mortgage is in writing and is dated 1 September 2005. It

was registered at the Land Titles Office on 29 September that year and

given the number AD907600W.

2 The mortgagor, who is also the present registered proprietor of the land,

defaulted under the mortgage. As a result, the mortgagee (the present

plaintiff) on 1 February 2007 obtained from this court judgment for

possession of the land and for the sum of $875,348.01 as moneys owing by

the then defendant, Mr Cristian Gheorghiu to the plaintiff. Successive

appeals from that judgment have been unsuccessful.

3 On 23 February 2007 the first defendant, who is or was the wife of the

mortgagor, Cristian Gheorghiu, lodged a Caveat No.AE917049A over the

property. By it she claims an estate in fee simple over the land pursuant to

a constructive trust.

4 The plaintiff now seeks an order for the removal of the caveat. It issued the

present proceeding by way of originating motion in the form of Form 5C in

the Rules of the Supreme Court. By summons issued on 28 September

2007 the plaintiff seeks the relief claimed in the originating motion and an

order that the requirements of Rules 5.03(1) and 8.02 be dispensed with. I

make those latter orders.

5 The plaintiff is clearly a person affected by the caveat. It therefore has the

right to bring a proceeding pursuant to s.90(3) of the Transfer of Land Act

for the caveat's removal. Section 90 of the Act provides, in effect, that

every caveat lodged pursuant to Division 1 of Part V of the Act shall lapse

as to any land affected by any transfer or dealing (other than those set out

by way of exception) upon the expiration of 30 days after notice given by

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 the Registrar to the caveator that a transfer or dealing had been lodged for

registration.

6 By s.90(3), any person who is adversely affected by any such caveat may

bring proceedings in the court against the caveator for the removal of the

caveat and the court may make such order as the court thinks fit.

7 In my opinion, the plaintiff is entitled to the principal relief which it seeks by its

originating motion. The first question is whether there is a serious issue to

be tried on the question of whether the caveator has a caveatable interest.

Here it seems to me that the "indefeasibility" provisions of the Transfer of

Land Act which establish in Victoria the Torrens System of title by

registration to land must be given effect. The relevant provisions of the

Transfer of Land Act of course bind this court as they bind all courts and

indeed all relevant persons in this jurisdiction.

8 The provisions of the Transfer of Land Act most directly relevant to the

situation that obtains here are to be found in Part III of the Act under the

heading, "The Register" and in particular under the heading, "Effect of

Registration" which appears above s.40 of the Act. The effect of s.40 is

that no instrument until registered shall be effectual to create, vary,

extinguish or pass any estate or interest in or over any land under the

operation of the Act; but upon registration, the estate or interest shall be

created, varied, extinguished or pass in the manner and subject to the

conditions specified in the relevant instrument or in the Act.

9 Section 41 then proceeds to give effect to the proposition that a certificate

issued by the Registrar of Titles pursuant to the Act shall be conclusive

evidence of the title to which that certificate refers.

10 The section provides amongst other things, in effect, that the register shall be

received in all courts as evidence of the particulars recorded in it and shall

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 be conclusive evidence that the person named in the relevant folio as the

proprietor or as having any estate or interest in the land is possessed of

that estate or interest as described in the register.

11 Consistently with the scheme of the Act s.42 then provides, in effect, that -

notwithstanding the existence in any other person of any estate or interest

which but for the Act might be held to be paramount or have priority - the

registered proprietor of land shall, except in the case of fraud and other

specified instances, hold such land subject only to such encumbrances as

are recorded on the relevant folio of the register and absolutely free from

all other encumbrances.

12 In this case the first defendant seeks to put before the court what can fairly be

described as another encumbrance. She asserts that by an arrangement

between her then husband, the registered proprietor, and a company over

which her husband and perhaps the first defendant herself had some

control, she was made a beneficiary of an interest in the land in question.

13 She claims that her interest was made known to a Mr Claudio Zanelli who,

again as she claims, was an agent of the plaintiff and whose knowledge can

be, for that reason, attributed to the plaintiff. She claims that Mr Zanelli

was aware of the arrangements pursuant to which she became beneficially

entitled to an interest in fee simple in the land in question and that, as I

have indicated, his knowledge is to be deemed to be that of the plaintiff.

14 Even accepting that the facts as put forward by the first defendant will to be

proved in accordance with the appropriate burden of proof and to the

appropriate standard (the balance of probabilities) it seems to me that the

first defendant's position would not be materially and relevantly improved.

15 That, it seems to me, is the effect of s.43 of the Transfer of Land Act. By that

section it is provided, in effect, that no person taking or proposing to take a

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 transfer from or proposing to deal with the registered proprietor of any land

shall be required or in any manner concerned to enquire or to ascertain the

circumstances or the consideration for which the proprietor was registered.

16 More particularly the section also provides, in effect, that no person dealing

with the registered proprietor shall be affected by notice, actual or

constructive, of any trust or unregistered interest, any rule of law or equity

to the contrary notwithstanding; and the knowledge that any such trust or

unregistered interest is in existence shall not, of itself, be imputed as fraud.

17 As I understand the first defendant's position the only fraud alleged against

the plaintiff is the knowledge of the person alleged to be the plaintiff's

agent. It is knowledge of that kind (that is, that the first defendant asserts

a beneficial but unregistered interest in the land) which, it seems to me,

falls squarely within the terms of s.43 as I have paraphrased those terms.

That being the case, it seems to me that I have no option but in obedience

to the law to hold that the interest of the plaintiff as registered mortgagee

must prevail over any interest which the first defendant might have in the

land in question.

18 It was urged upon me by Mr Gray for the first defendant, who I think said as

much on her behalf as could be said, that a ruling of the kind which I have

indicated I propose to make would offend against those principles which

have been developed by the court (and in particular by the High Court) in

such cases as Garcia v National Australia Bank1, and the Commercial Bank

of Australia v Amadio2 and a third case, Yerkey v Jones3.

19 None of those cases, however, were, as is this case, one which involved a

dealing between the money lender/mortgagee and the registered

1
(1998) 194 CLR 395.
2
(1983) 151 CLR 447.
3
(1939) 63 CLR 649.

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 proprietor of the land as mortgagor where the party who sought to upset

the dealing had a mere unregistered interest in the land.

20 Those cases can, in my opinion, be distinguished. That being the case, and for

the reasons I have otherwise expressed, it is in my opinion sufficiently clear

as to be said to be not now a serious issue to be tried that the plaintiff is

entitled to exercise its rights as mortgagee. Those rights include the right

to have an interest such as that put forward by the first defendant, and

sought to be protected by her caveat, being held to defer to the interest of

the plaintiff which, pursuant to the scheme of the Torrens System, has, in

my opinion, priority. I will therefore grant the relief which the plaintiff seeks

by its originating motion and order that the second defendant, the

Registrar of Titles, remove Caveat No.AE917049A from Certificate of Title

Volume 10506 Folio 284.

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