Introduction

In the recent Supreme Court of Victoria decision, Marinos v Mellissinos & Ors [2024] VSC 642, the plaintiff, Kalliopi Marinos, successfully obtained an order for the removal of a caveat lodged on her residential property by her mother, the first defendant, Despina Mellissinos. Marinos, represented by Pentana Stanton Lawyers, argued that the caveat, which Mellissinos claimed was necessary to protect her alleged equitable interest under a constructive trust, was without merit and obstructed the lawful sale of the property.

This case presented complex legal issues concerning family property disputes, informal agreements regarding ownership, and the evidentiary burden for establishing constructive trusts under Australian property law. The court’s findings underscore the necessity of substantial and credible evidence in asserting equitable claims over registered property.

Background

The property in dispute, located in Reservoir, Victoria, was purchased by Marinos in 2008 from her parents, including Mellissinos and her late husband. The transfer was, in part, intended to protect the property from financial complications involving Marinos’ brother, the second defendant, who had allegedly entangled his finances with those of their parents. Following the transfer, Marinos became the registered proprietor, while the family continued to reside on the premises under informal arrangements.

In 2018, a refinancing agreement with Pepper Finance generated $220,000 in cash, purportedly for the benefit of the family. Marinos later contested the refinancing, asserting that she was unaware of it and did not personally benefit from the loan. Dissatisfied with the refinancing terms, she lodged a complaint with the Australian Financial Complaints Authority (AFCA), which found that procedural errors by Pepper Finance had increased her debt. Following AFCA’s intervention, the debt was reduced. This financial dispute exacerbated tensions within the family and further complicated property-related matters.

In 2024, Marinos listed the property for sale. Shortly thereafter, Mellissinos lodged a caveat, claiming an equitable interest based on an alleged “common intention constructive trust.” Marinos subsequently initiated legal proceedings seeking the caveat’s removal.

Key Legal Issues Considered by the Court

The Supreme Court examined several fundamental legal questions concerning property ownership, the validity of constructive trusts, and the operation of caveats under the Transfer of Land Act 1958 (Vic), including:

1. Whether an implied, resulting, or constructive trust existed in favour of Mellissinos, as claimed in the caveat.
2. Whether the evidence provided sufficiently established a “common intention constructive trust,” particularly regarding family financial contributions and mortgage payments.
3. Whether the balance of convenience favoured maintaining or removing the caveat, considering potential harm to Marinos against any asserted equitable interest of Mellissinos.
4. The application of section 90(3) of the Transfer of Land Act 1958 (Vic) and the relevant legal principles guiding caveat removal.

Case Authorities and Legal Precedents

The court relied on several key legal authorities in determining the validity of the caveat and the requirements for establishing an equitable interest under a constructive trust:

• Piroshenko v Grojsman (2010) 27 VR 489 – Warren CJ in this case outlined the two-stage test for the court’s approach under section 90(3) of the Transfer of Land Act 1958 to assess prima facie rights and balance of convenience when deciding whether to remove a caveat. This precedent shaped the court’s approach to evaluating Mellissinos’ claim of an equitable interest in the property.
• Hatziminas v Hatziminas [2024] VSC 513 – Justice Quigley recently considered common intention constructive trusts and the elements required to prove such a trust, including evidence of a shared intent, detrimental reliance, and potential equitable fraud if the claim were denied. This case provided the criteria for determining if a common intention constructive trust existed.
• Blatch v Archer (1774) 98 ER 969 – This early but frequently referenced case set forth principles concerning the evidentiary burden in cases where a party asserts a claim based on undocumented agreements or understandings.
• Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413 – This case established essential elements for constructive trusts, including inferred common intention, detrimental reliance, and the necessity of protecting against equitable fraud.

Court’s Findings

Justice O’Meara ruled in favour of Marinos, finding that Mellissinos failed to present sufficient evidence to establish a constructive trust. Key findings included:

• Insufficient Evidence of Constructive Trust Elements: The court held that Mellissinos’ claim was unsubstantiated due to a lack of documentary evidence or corroborative testimony. Even if an agreement existed, it lacked the necessary clarity to support a constructive trust.
• Absence of Key Witness Testimony: The second defendant, who allegedly made mortgage payments on behalf of Mellissinos, did not provide supporting testimony. The court found that Mellissinos’ assertions were largely unverified and did not withstand legal scrutiny.
• Balance of Convenience Favoured Caveat Removal: The court determined that maintaining the caveat would unjustly erode the property’s equity and unduly prejudice Marinos, particularly given that the defendants no longer resided at the property and lacked a demonstrable equitable interest.

Ultimately, the court upheld Marinos’ registered ownership rights and ordered the removal of the caveat, thereby allowing the property sale to proceed.

Legal Implications and Precedent Significance

This decision reinforces the principle that constructive trust claims must be substantiated with clear, convincing evidence. As established in Piroshenko v Grojsman, a party seeking to maintain a caveat must demonstrate both a prima facie equitable interest and that the balance of convenience supports caveat retention. The ruling also highlights that informal family arrangements, without contemporaneous documentation, are unlikely to meet the evidentiary burden necessary to establish an equitable claim.

Furthermore, the case clarifies that judicial discretion under section 90(3) of the Transfer of Land Act necessitates a careful balancing of the rights of registered proprietors against equitable claims. Where the balance strongly favors the registered owner, as in this case, caveat removal is legally justified.

Conclusion & Legal Assistance

The outcome of Marinos v Mellissinos & Ors [2024] VSC 642 highlights the legal complexities surrounding family-related property disputes and the stringent evidentiary requirements for asserting constructive trusts. This case underscores the importance of well-documented agreements and objective evidence in property ownership claims.

At Pentana Stanton Lawyers, we are committed to protecting property rights and ensuring our clients receive expert legal representation in disputes involving caveats, property ownership, and constructive trusts. If you require legal assistance in property-related matters, contact us today for professional advice tailored to your needs.