Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Almona Pty Ltd v Parklea Corporation Pty Ltd (No 2) [2021] NSWCA 202 Hearing dates: 1 September 2021 Date of orders: 1 September 2021 Decision date: 02 September 2021 Before: Basten JA Decision: Upon the appellant, by its counsel, giving the usual undertaking as to damages, the Court: (1) extends the operation of caveat AN567966 affecting the land with folio identifiers 97/861300 and 11/1204116 until the determination of an application for special leave to appeal filed as envisaged by (2) below and, if special leave be granted until the determination of the appeal, if unsuccessful, or until 21 days after a successful determination of the appeal. (2) If the appellant does not cause to be filed in the Sydney Registry of the High Court of Australia by 8 September 2021 an application for special leave to appeal from the principal judgment given in this proceeding on 11 August 2021, order 1 is dissolved. Catchwords: CIVIL PROCEDURE – interim order pending special leave application – appeal dismissed – caveat protecting interest of dispossessed due to expire – application to extend caveat Cases Cited: Almona Pty Ltd v Parklea Corporation Pty Ltd [2021] NSWCA 171 Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] (1986) 161 CLR 681; [1986] HCA 84 Category: Procedural rulings Parties: Almona Pty Ltd (Applicant) Parklea Corporation Pty Ltd (First Respondent) P T Ltd (Second Respondent) Secured Asset Portfolio III Ltd (In liq) (Third Respondent) Representation: Counsel: D Williams SC / N Riordan (Applicant) K Andronos SC / S Keizer (First Respondent) J Burnett (Second Respondent) E Hyde (Third Respondent) Solicitors: Bartier Perry (Applicant) Norton Rose Fulbright Australia (First Respondent) Corrs Chambers Westgarth (Second Respondent) King & Wood Mallesons (Third Respondent) File Number(s): 2020/197106 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2019] NSWSC 1868 Date of Decision: 20 December 2019 Before: Robb J File Number(s): 2018/317496 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. BASTEN JA: On 11 August 2021 the Court dismissed an appeal by Almona Pty Ltd with respect to a judgment in the Equity Division: [1] Almona Pty Ltd v Parklea Corporation Pty Ltd. [2] 2. During the course of the appeal there had been in place a caveat on the land the subject of the proceedings, protecting Almona's interest as the prior registered proprietor of the land challenging the validity of the sale by its then mortgagee, the present third respondent (Secured Asset Portfolio III Ltd ("SAP")). The caveat was due to expire 21 days after delivery of the judgment in this Court, namely at 5pm on 1 September 2021. After the close of business on Tuesday, 31 August 2021, with less than 24 hours before the caveat expired, the Court was advised that Almona sought an extension of the caveat pending determination of a proposed application to the High Court for special leave to appeal. The extension application was listed for hearing at 2.30pm on Wednesday, 1 September. At the conclusion of the hearing, at 3.50pm, the Court made an order extending the operation of the caveat. The costs of the application and reasons were reserved. 3. The motion came on for hearing on the basis of a document which provided draft grounds of appeal, special leave questions and orders sought in the proposed appeal to the High Court. No application for special leave had then been filed, although the period for filing such an application had not expired. It was agreed that if an application for special leave to appeal were not filed in the Sydney Registry of the High Court by 8 September 2021, the order extending the operation of the caveat would be dissolved. 4. In addition to the order extending the operation of the caveat, Almona sought two further orders. The second proposed order required that the first respondent (Parklea Corporation) inform it within 24 hours of receipt of any demand or notice of default which might, if not satisfied or cured, enliven any right on the part of the second respondent (PT Ltd) to exercise its rights as mortgagee over the land. The third proposed order required that Parklea Corporation not take a number of steps without giving Almona 48 hours' notice of its intention in that regard. The steps included any further drawing down on any existing loan facility secured by the mortgages, the assignment, or novation of credit or loan facilities secured by the mortgages, or the entry into any agreement or arrangement for finance to be secured by one or more of the mortgages. Those orders were not made. 5. With respect to the orders that were not made, although similar orders had been in place for at least a year, their continuation was secondary to the protection granted by the caveat and involved an element at least of administrative inconvenience which was not warranted in light of the dismissal of the appeal to this Court. Furthermore, if Almona's position were to be upheld, it would obtain a right to account; in the course of any such accounting, variations in the financial arrangements for which it was not responsible would be revealed. Furthermore, given the belated application, neither Parklea Corporation nor PT Ltd had been in a position to provide evidence as to the underlying circumstances which might have been relevant to the operation of those further conditions. 6. In opposition to an extension of the caveat, Parklea Corporation submitted that the application to the High Court lacked sufficient prospects of success in obtaining relief relevant to the maintenance of the caveat, namely an order for the reconveyance of the land to Almona. Parklea Corporation submitted that, even if the reasoning of the dissenting member in this Court, White JA, were to be upheld, a reconveyance was unlikely. Reliance was placed on statements in his dissenting reasons that there were both an unresolved issue as to laches and that, upon the setting aside of the sale, Almona would have a liability to its former mortgagee, SAP. 7. Almona responded that laches would not run in relation to an undisclosed fraud and that it accepted that a reconveyance would be subject to the existing mortgages held by PT Ltd, though not the mortgage to SAP, which had been fully paid out. 8. In my view there was substance in Parklea's submissions with respect to the merits of the special leave application. Not only was there doubt as to the likely result of a successful appeal to the High Court, but there was doubt as to the strength of the application for special leave. Despite the language used in the formulation of questions warranting special leave, it is by no means clear that there was any major difference of principle between the majority and dissenting judgments in this Court, as opposed to a difference in the inferences to be drawn from the facts. A further substantial difference identified by Almona was the approach taken in relation to the pleading of particulars of fraud. Thus, although there may be some doubt as to whether the case was likely to attract a grant of special leave, as counsel for Parklea Corporation conceded, the matter was reasonably arguable given the division of opinion in this Court. So much should be accepted. Further, given the doubt as to the precise grounds upon which special leave might be granted, the possibility that Almona might obtain the relief by way of reconveyance could not be wholly discounted. 9. While there might be doubt as to whether there is "a substantial prospect that special leave to appeal will be granted", [3] I accepted that there was sufficient doubt attending my reasoning in dismissing the appeal to be satisfied as to that element. 10. The second question was whether the balance of convenience favoured an extension of the caveat. There was a dearth of evidence as to what might happen if the caveat were not continued. Both Parklea Corporation and PT Ltd asserted that inferences could be drawn to the effect that the outstanding debt under the mortgages exceeded $200 million and that the value of the land, assessed five years ago at less than half that amount, would remain below the outstanding debt. It was therefore submitted by the respondents that there was no utility in protecting any interest Almona might have in a reconveyance subject to the existing mortgages. However, that submission tended to prove too much: if Parklea Corporation were in effect insolvent, there might be a significant likelihood that, if not protected by a caveat, the land would be sold and even if Almona were only to obtain a right to an account, it would be unable to recover any financial entitlement from Parklea. 11. On the other hand, there was no evidence to suggest that any prejudice, beyond inconvenience, would attend an extension of the existing caveat for the period within which the special leave application was likely to be determined. Although the matter came on somewhat hurriedly, if the existing caveat (which has been in place for some two years) had caused significant inconvenience, it may be assumed that the respondents would have been in a position to demonstrate that fact. They did not, nor was an adjournment sought for that purpose. 12. In these circumstances, the balance of convenience favoured the continuation of the operation of the caveat. 13. The third question concerned the value of the undertaking as to damages proffered on behalf of Almona by its counsel. Parklea sought to demonstrate that, in the course of the trial, steps had been delayed on a number of occasions because Almona was not in a position to fund the ongoing litigation. 14. Almona submitted in response that it had obtained a judgment worth between $4.5 million and $5.3 million, the proceeds of which were paid into Court. Further, the respondents had been paid some or all of their costs of the trial. Although the costs of the four-day appeal remained outstanding, there was no basis to conclude that the sum paid into court would not be sufficient to cover those costs, leaving a significant balance to Almona's credit. On the other side of the balance, it was by no means clear what would be able to be claimed by way of damages in the event that Almona was ultimately unsuccessful. In the circumstances, I was not persuaded that the undertaking was worthless. Accordingly the extension of the caveat was granted. 15. There remained the question of the costs of the motion. Parklea Corporation claimed its costs on the basis that, even though Almona had been partly successful, it had not obtained the full set of orders sought. Furthermore, if the application had been made in the ordinary course, it would have been dealt with by a judge in the Equity Division on five days' notice and the parties might well have reached some agreement as to the appropriate outcome. 16. In response, Almona submitted that it had been largely successful and that Parklea could have conceded the extension, rather than opposing it. 17. The third respondent (SAP) did not oppose the application and played a minor part in the hearing, as it said, to assist the Court. It made no application for costs and there should be no order as to its costs. 18. The second respondent, PT Ltd, opposed the extension of the operation of the caveat, but on a limited basis; it made no submissions in respect of costs. There should be no order as to its costs. 19. Counsel for Almona suggested that if it were not to have its costs of the motion, they could be costs in the special leave application. However, there are potential difficulties in including costs in one court in a costs order to be made by another court. Furthermore, Almona was making a belated application for an indulgence and should not, in any event, have costs in its favour. 20. In the circumstances, there should be no order as to the costs of any party of the motion. ********** Endnotes 1. Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868. 2. [2021] NSWCA 171 (Bathurst CJ, Basten JA; White JA dissenting). 3. Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] (1986) 161 CLR 681 at 685 (Brennan J); [1986] HCA 84. 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. Decision last updated: 02 September 2021