Lawindi v Elkateb [1999] NSWSC 806

New South Wales Supreme Court CITATION : Lawindi v Elkateb [1999] NSWSC 806 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 3672/96; 3070/98 HEARING DATE(S) : 5 August 1999 JUDGMENT DATE : 5 August 1999

PARTIES : Wasfy Lawindi (P) Mohamed Safwat Elkateb (D) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. N. A. Nicholls (P) Defendant in Person SOLICITORS : Turner Freeman (P) CATCHWORDS : ACTS CITED : Building Services Corporation Act 1989 Real Property Act 1900 DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Thursday, 5 August 1999

3672/96 WASFY LAWINDI -v- MOHAMED SAFWAT ELKATEB 3070/98 WASFY LAWINDI -v- MOHAMED SAFWAT ELKATEB JUDGMENT

1 MASTER: There are presently before me two notices of motion. The first in point of time is the notice of motion filed in proceedings 3672 of 1996 by the defendant to those proceedings Mohamed Safwat Elkateb. The other notice of motion is that filed in proceedings 3070 of 1998 by the plaintiff in those proceedings Wasfy Lawindi. Dr Elkateb's notice of motion was filed on 27 July 1999, Mr Lawindi's notice of motion was filed on 5 August 1999. Each notice of motion seeks relief concerning a caveat, being identified as caveat number 255633. 2 Dr Elkateb seeks, substantively, an order that the plaintiff withdraw that caveat, whilst the plaintiff seeks, substantively, an order that the operation of that caveat 'be extended indefinitely'. At the hearing Counsel for the plaintiff recognised that the wording of an order sought in those terms was somewhat inappropriate, and the hearing of the application has proceeded upon the basis that what the plaintiff is seeking is an order that the operation of the caveat be extended until further order of the Court. 3 There is presently in force an order made by Justice Hodgson on 10 July 1998 that the operation of the caveat be extended to a date being 14 days after the date of publication of an award in arbitration proceedings between the parties. 4 The dispute between the parties in which the caveat and its operation have become of relevance has a considerable history. That history was referred to by Mr Justice Rolfe in the introduction to the judgment which his Honour published on 20 July 1999. For the purposes of the applications presently before me, however, it is unnecessary that I should rehearse all the details of the procedural history of the dispute between the parties. It is appropriate that I should refer to only some of those details. 5 The defendant was the proprietor of certain land upon which a building development was to be constructed. A written building contract was signed, in which the defendant was named as the proprietor. There is a dispute, to which I shall shortly refer, as to the identity of the builder in that contract. There have been referred to arbitration matters in dispute between the builder and the proprietor. The arbitrator on 20 February 1999 after a contested hearing published an interim award. The present defendant then made application, pursuant to the provisions of the Commercial Arbitration Act 1984 challenging that interim award. That challenge was heard by Mr Justice Rolfe who, in the judgment published on 20 July 1999 to which I have already referred, ordered that the defendant's summons be dismissed and also ordered that the summons of the plaintiff, which was also before his Honour, be dismissed. 6 However, his Honour said at page 51 of his judgment that by far the greater part of the hearing time was taken up with Dr Elkateb's summons, and his Honour reflected that conclusion in the costs orders which his Honour made. 7 The caveat which is the subject of the present applications was lodged on 23 October 1996. The caveator named in the caveat is Wasfy Lawindi, the plaintiff. The registered proprietor named therein is Mohamed Safwat Elkateb, the defendant. The estate or interest claimed is set forth in schedule 1 to the caveat as follows: An equitable interest pursuant to a charge created by clause 28 of the instrument referred to below. 8 There are in fact two instruments then referred to, one being the building contract and the other being an order of the Court made on 21 October 1996 in proceedings 3672 of 1996. It would appear that the reference to 'the instrument referred to below' is a reference to the building contract. Clause 28 of the building contract is in the following terms: The proprietor hereby charges the parcel of land on which or on part of which the works are to be erected with the due payment to the builder of all moneys that may become payable to the builder by virtue of this contract or otherwise arising from the carrying out of the works. 9 It is appropriate that I should deal firstly with the application by the defendant for an order that the plaintiff withdraw that caveat before I deal with the application by the plaintiff for the extension of the operation of the caveat. It will be appreciated that if the defendant be successful in obtaining an order for the withdrawal of the caveat, then it will be unnecessary for me to consider the application of the plaintiff that the operation of the caveat be extended until further order. 10 The defendant has appeared before me in person upon the hearing of the present application and has provided me with written submissions in support of his application. Those submissions will be retained in the Court file. Essentially, those submissions of the defendant and the present application of the defendant for the withdrawal of the caveat are grounded upon the provisions of sections 4 and 10 of the Building Services Corporation Act 1989. 11 Section 4 of the Act prohibits the contracting by a person to do any residential building work unless the builder is the holder of a licence. Section 10 provides that a person who enters into a contract in contravention of section 4 is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract. 12 It has been submitted by the defendant that the builder, the other party to the building contract, was an entity known as Lotus Constructions; that that entity was a partnership consisting of the plaintiff and George Hadidi; that, although each of those persons individually held a builder's licence, the partnership Lotus Constructions did not hold such a licence. Therefore, so it has been submitted by the defendant, there has been a contravention of section 4 of the Building Services Corporation Act, the consequence of which contravention is to preclude the builder from enforcing its right to claim what it asserts to be its monetary entitlement outstanding under the building contract. 13 The question of the identity of the builder as a party to the building contract was adverted to in the interim award published by the arbitrator on 20 February 1999. Under the heading 'The Issues' the arbitrator dealt with the question of the proper parties to the contract. The arbitrator expressed his conclusion on that question as follows: In all the above circumstances I find that the contracting parties were Lawindi as builder and agent for Lotus Constructions, a partnership between Lawindi and George Hadidi. 14 It must be appreciated that a caveat does not create or give rise to a cause of action. The purpose of a caveat is to act as a statutory bar to dealings with land under the Real Property Act 1900. Section 74K makes provision for the Supreme Court to extend the operation of a caveat which has been lodged by a caveator. Subsection (1) of that section contemplates the situation where a caveator is served with a lapsing notice and then makes an application to the Supreme Court for an order extending the operation of the caveat. 15 Subsection (2) is in the following terms: Subject to subsection (3), on the hearing of an application made under subsection (1), the Supreme Court may, if satisfied that the caveator's claim has or may have substance, make an order extending the operation of the caveat concerned for such period as is specified in the order or until the further order of that Court, or may make such other orders as it thinks fit, but if that Court is not so satisfied, it shall dismiss the application. 16 The defendant submits that no caveatable interest is disclosed which would justify the present caveat remaining upon the title and that in consequence the plaintiff should be ordered to withdraw the caveat. 17 It is not necessary for me in the present application to arrive at an ultimate conclusion as to whether the submissions made by the defendant concerning the effect of the asserted non-compliance by the plaintiff with the requirements of section 4, and the consequences contained in section 10, of the Building Services Corporation Act can ultimately be established. I would however point to the fact that the submissions concerning the identity of the builder which are presently made by the defendant have already been the subject of the decision of the arbitrator in the interim award and of the decision of Mr Justice Rolfe in the challenge by the defendant to that award. 18 It is only if I am satisfied that there is no basis whatsoever for the claim of the plaintiff that an equitable interest arises pursuant to the provisions of clause 28 of the building contract that I would be justified in ordering the plaintiff to withdraw the caveat. 19 I observe that in his judgment of 10 July 1998 Justice Hodgson, in making the order which presently extends the operation of the caveat to a date being fourteen days after the date of the publication of an award in the arbitration proceedings between the parties adverted at page 4 of his Honour's judgment, to this matter which is now relied upon by the defendant to challenge the entitlement of the plaintiff to maintain the caveat. His Honour said: I must say also that it is not entirely clear that section 4 is breached where two individuals each with his own builder's licence enter into a contract merely by reason of the fact that they happen also to be in partnership and that there is not a builder's licence associated with the partnership. It seems to me that that is another arguable question. 20 With respect, I agree with the observations there made by his Honour. It follows therefore that, not being satisfied that the caveat is incapable of being supported, I do not propose to make the order presently sought by the defendant for the withdrawal of the caveat. 21 I now turn to the application of the plaintiff. I have already recorded that as a consequence of the order of Justice Hodgson of 10 July 1998 the operation of the caveat will continue to a date which will be fourteen days after the date of the publication of the award by the arbitrator. There has already been published the interim award on 20 February 1999. The challenges to that interim award were dismissed by Justice Rolfe on 20 July 1999. It is, as I am informed, expected that the final award will be published by the arbitrator in a relatively short time. Upon the making of the final award the caveat will remain in force for a further period of fourteen days. 22 What the plaintiff now seeks is that the caveat should remain in force, not merely for a period of fourteen days after the making of the final award by the arbitrator, but until further order of the Court. It has been stated on behalf of the plaintiff that, upon the making of the final award, the plaintiff proposes to avail himself of the provisions of section 33 of the Commercial Arbitration Act by seeking the leave of the Court to enforce the award in the same manner as a judgment or order of the Court to the same effect and by entering the terms of the award as a judgment of the Court. Once that is done the cause of action which has given rise to the arbitration will merge in any such judgment. 23 It has, however, been submitted on behalf of the plaintiff that the interest in land created by clause 28 of the building contract which is capable of supporting the caveat will not be defeated or otherwise affected by the merger of the contractual cause of action in the judgment. That submissions seems to me to be correct. I have already observed that the caveat itself does not create any cause of action, the caveat merely acts as a statutory bar to prevent the registration of dealings which are inconsistent with the rights of the caveator, and acts as a notice to persons searching the title to the land of the rights claimed by the caveator. It would be strange if, upon acquiring a judgment of the Court, a protection of rights arising out of the cause of action ultimately resulting to that judgment were to be defeated. 24 The question that I have to consider, however, is whether there has been any alteration to the circumstances surrounding the relationship between the parties or the enforcement or protection of the rights of the plaintiff since the orders made by Justice Hodgson on 10 July 1998 which would justify the Court in now extending until further order of the Court the operation of the caveat limited to a period of fourteen days after the making of the final award. 25 It has been submitted on behalf of the plaintiff that there has been such a change and alteration in the circumstances which would justify the making of the order now sought. That change, so it is submitted, is that there has been published an interim award on 20 February 1999 which found in favour of the plaintiff, that the challenge to that interim award mounted by the defendant has been unsuccessful. It is the decision of Mr Justice Rolfe in deciding that challenge which has brought about the present application made by the plaintiff. It will be appreciated that his Honour's judgment was published on 20 July 1999, and that the present application of the plaintiff was made by notice of motion filed two weeks later, on 5 August 1999. 26 It seems to me in all the circumstances that the plaintiff is entitled to an order extending the operation of the caveat beyond the period of fourteen days after the making of the final award. The plaintiff will be entitled to avail himself of the provisions of the Commercial Arbitration Act to which I have referred, in particular section 33, for the enforcement of the award. It will, however, be open to the defendant, in the light of any further change in circumstances or in the light of the way in which the plaintiff might go about executing upon the judgment which he proposes to enter in the terms of the award, to make an application for limiting the future operation of the caveat. But it seems to me at the present time that the plaintiff has established an entitlement to have the operation of the caveat continued until further order of the Court. 27 It will be appreciated by all the parties to the present applications that my decision concerning each of these two applications is in no way to be regarded as a final or binding determination between the parties of the question which has been raised by the defendant concerning the effect of the asserted contravention by the plaintiff of the provisions of section 4 of the Building Services Corporation Act and the consequences under section 10 of that Act. My decision relates only to the question of whether it can be said that there is no possibility whatsoever that the claim of the plaintiff to an interest in land under clause 28 of the building contract can be substantiated. As Mr Justice Hodgson said in his decision, that matter is arguable. 28 Accordingly, I propose to make an order of the nature sought in the notice of motion filed by the plaintiff on 5 August 1999. I will however alter the terms of the order sought in paragraph 1 of that notice of motion. 29 In proceedings 3672 of 1996 I make the following orders: 1. I order that the notice of motion filed by the defendant on 27 July 1999 be dismissed; 2. I order that the defendant pay the costs of the plaintiff of that notice of motion; 3. I grant leave to the plaintiff to proceed forthwith to assessment of those costs. 30 In proceedings 3070 of 1998 I make the following orders: 1. I order that the operation of caveat number 255633 be extended until further order of the Court; 2. I order that the defendant pay the costs of the plaintiff of the notice of motion filed by the plaintiff on 5 August 1999; 3. I grant leave to the plaintiff to proceed forthwith to assessment of those costs. **********