New South Wales Supreme Court CITATION : Commonwealth Development Bank v Windermere [2000] NSWSC 421 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50074/1999 HEARING DATE(S) : 19/05/00 JUDGMENT DATE : 23 May 2000 Commonwealth Development Bank of Australia Limited - Plaintiff PARTIES : Windermere Pastoral Co Pty Limited - Defendant Tiocliff Pty Limited - Applicant JUDGMENT OF : Rolfe J COUNSEL : Mr A.G. Bell - Plaintiff Mr J. Stoljar - Applicant L.E. Taylor - Plaintiff SOLICITORS : Johnson & Sendall - Defendant Mallesons Stephen Jaques - Applicant CATCHWORDS : Application by a party which alleges that it is an occupier to be joined in proceedings for possession - Application refused on the bases that:- - (a) the orders sought by the plaintiff adequately protect the position of the applicant - and - (b) there is no pending issue that the applicant will not, even if the plaintiff is successful, be able to exercise such rights as it has in relation to the land. Kerr v Sheriff of New South Wales (1996) 9 BPR 16215 at 16216 CASES CITED : Australia and New Zealand Banking Group Limited v P.A. Wright & Sons Pty Limited & Ors (Giles CJCommD - 3 July 1997 - unreported) Commonwealth of Australia v Verwayen (1990) 170 CLR 394 DECISION : Notice of Motion filed by Tiocliff Pty Limited on 13 April 2000 dismissed with costs. 13 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST ROLFE J TUESDAY, 23 MAY 2000 50074/1999 - COMMONWEALTH DEVELOPMENT BANK OF AUSTRALIA LIMITED v WINDERMERE PASTORAL CO PTY LIMITED JUDGMENT HIS HONOUR: Introduction 1 By a Statement of Claim issued in the Common Law Division on 30 November 1998 the plaintiff, Commonwealth Development Bank of Australia Limited, ("the Bank"), for which Mr A.G. Bell of Counsel appeared, sought orders, as mortgagee, against the defendant, Windermere Pastoral Co Pty Limited, for judgment in the sum of approximately $1.9m and interest; for possession of the whole of the land contained in Certificates of Title Folio Identifiers 1/126006 and 1/126009 known as "Windermere" near Collector in the State of New South Wales; and for leave to issue forthwith a Writ of Possession in respect of that land. 2 It is unnecessary, for present purposes, to trace the history of the proceedings as between the Bank and the defendant, which have been set down for hearing on Monday, 29 May 2000. 3 On 3 April 2000 the Bank served a Notice to Occupier on Tiocliff Pty Limited, ("Tiocliff"), for which Mr J. Stoljar of Counsel appeared, pursuant to Part 7 rule 8, which provides:- "(1) Where, on the date on which proceedings for possession of land are commenced, a person (in this rule called the occupier) not joined as a defendant is in occupation of the whole or any part of the land, the plaintiff shall either:- (a) state in the originating process that he does not seek to disturb the occupation of the occupier; or (b) serve the originating process on the occupier together with a notice that the occupier may apply to the court for an order that the occupier be added as a defendant and that, if the occupier does not so apply within ten days after service, the occupier may be evicted pursuant to a judgment entered in the occupier's absence." 4 The notice was addressed to "The Occupier", asserted that Tiocliff was served as a person in occupation of the land or part of it, that it may apply to the Court for an order that it be added as a defendant, and that if it did not so apply within ten days after service it may be evicted pursuant to a judgment entered in its absence. 5 Part 42 rule 4(4) provides:- "Where a person is , on the date of commencement of proceedings for possession of land, in occupation of the whole or any part of the land and he is not a party to the proceedings and notice under Part 7 rule 8 is not served on him, the court shall, when giving leave for the issue of a writ of possession, direct that the writ be restricted so as not to authorise disturbance of the occupation of that person." The Present Notice Of Motion 6 By a Notice of Motion filed on 13 April 2000 Tiocliff sought an order that it be joined as a defendant in the proceedings pursuant to Part 8 rule 8, which provides that where a person who is not a party either ought to be joined as such, or is one whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon, the Court may, on application, order that the party be joined and make orders for the further conduct of the proceedings. 7 Sub-rule (3) is directed to proceedings for possession of land and provides that where a person, who is not a party to such proceedings, is in possession either by himself or by a tenant of the whole or any part of the land, the Court, on application, may order that he be added as a defendant and make ancillary orders. 8 The Notice of Motion was supported by the affidavit of Mr Graham Morcom, the General Manager of Tiocliff, sworn 13 April 2000. He deposed to the facts that on 18 August 1997 Tiocliff executed an Extraction Agreement with the defendant granting Tiocliff an exclusive licence to extract sand and gravel products from the land the subject of the proceedings, and that on 20 October 1997 Tiocliff lodged a caveat to protect its interests under the licence. The caveat, a copy of which was annexed to the affidavit, claimed an entitlement to an estate or interest in the land by virtue of the Extraction Licence in the following terms:- "Equitable interest in the Land as licensee under an extraction licence for the extraction and haulage of sand and gravel from the Land." 9 The Extraction Licence, which was also annexed to the affidavit, stated in clause 2.1 that the defendant had granted to Tiocliff an "exclusive licence to extract and haul sand and gravel products from the Land" and, by clause 2.2, the licence is to terminate on 12 October 2004 "or the date on which all of the sand and gravel resource within the Land as defined in all applications lodged with the Gunning Shire Council has been removed whichever is appropriate". 10 Clause 3 provided for the payment of a royalty, and clauses 4.2 and 4.3 provided:- "4.2 The Licensee must permit the Owner and its agent at all reasonable times and for all purposes (other than for the purpose of extracting sand and gravel products) to enter the Land under the direction of the Licensee. 4.3 The Owner may seek the consent of the Licensee to permit the Owner to graze stock on the Land. If the Licensee consents to the Owner the grazing of stock on the Land is at the Owner's sole risk." 11 Clause 5.1 provided for Tiocliff's surrendering and yielding up to the defendant the Land and the right of access granted under "this licence" on the expiration of the licence. 12 Clauses 8.1, 8.2 and 8.3 provided:- "8.1 This agreement may be assigned by the Licensee to any party who elects to assume the obligations and responsibilities under this agreement only with the consent of the Owner, such consent not to be unreasonably withheld. 8.2 The Owner agrees that it will not sell, transfer or otherwise assign the Land or the land comprising the right of access granted to the Licensee without ensuring that any such contract of sale is subject to this Licence. 8.3 The Owner acknowledges and agrees that the rights conferred on the Licensee by this agreement entitle the Licensee to lodge a caveat against the title to the Land to protect those interests." 13 The Notice of Motion was returnable on 28 April 2000 and, on 27 April 2000, the solicitor for the Bank wrote to the solicitors for Tiocliff stating, inter alia:- "In order for the Bank to assess your client's application tomorrow morning, the Bank needs to understand whether your client asserts that its interest in the relevant land under the extraction agreement dated 18 August 1997 takes priority over the Bank's rights as mortgagee. In other words, the Bank needs to understand whether your client asserts that the Bank is not entitled to possession of the relevant land as against your client. If your client does not make any such assertion then there does not seem to be any reason why your client should be joined as a party to the proceedings." 14 On 28 April 2000 the matter came before Hunter J. A draft of his Honour's ex tempore reasons is available, it not having been checked by him as he is on vacation until 29 May 2000. However, there is no reason to think that relevantly for present purposes the draft does not set forth what his Honour said. 15 He noted the nature of the application and that it had been brought:- ".. essentially on the basis that it" (Tiocliff) "apprehended that the bank's action against the defendant would imperil its interests under the extraction agreement". 16 He continued:- "It has been stated on behalf of the bank that that is not its present intention and that in order to make the legal position of Tiocliff clear it proposes to file, with the leave of the Court, an amended statement of claim which, in substance, would preserve Tiocliff's interest under the extraction agreement. If that be so, then on the face of it there would be no justification in the joinder of Tiocliff in the proceedings and this application I think would need to be dismissed." 17 However, his Honour appreciated the desirability of Tiocliff's considering the proposed Amended Statement of Claim:- ".. in order to satisfy itself that its position is adequately protected whatever its interests might be under the extraction agreement with the defendant". 18 His Honour granted leave to the Bank to file an Amended Statement of Claim by 4 pm on Tuesday, 2 May 2000 and gave consequential directions. 19 The Amended Statement of Claim identified an additional parcel of land, namely that in Certificate of Title Volume 5698 Folio 233, which is part of the land referred to in the Extraction Agreement. Other amendments were made consistently with that in paragraph 7. The substantial amendments were made to the second and third orders sought by the Bank. They now read:- "2. Judgment against the defendant for possession of the land described in the schedule hereto, such possession not to disturb the rights of Tiocliff Pty Limited ACN003571248 ('Tiocliff') under a document entitled 'Extraction Agreement' dated 18 August 1997 between Tiocliff and the defendant being the document a copy of which is Annexure 'A' to the affidavit of Graham Morcom sworn on 13 April 2000 in these proceedings ('Extraction Agreement'). 3. Leave to issue forthwith a writ of possession in respect of the land described in the schedule hereto, such writ being restricted so as not to authorise disturbance of the rights of Tiocliff under the Extraction Agreement." 20 There then commenced a series of correspondence between the solicitors for the Bank and Tiocliff, it being asserted on behalf of Tiocliff that as the Notice to Occupier had been withdrawn, the Bank was required by Part 7 rule 8 to state in the Amended Statement of Claim that it did not seek to disturb the occupation of Tiocliff "as occupier", and that Tiocliff reserved the right to pursue its application for joinder should the Bank seek to amend the Statement of Claim in terms other than those so described. 21 On 2 May 2000 the Bank furnished a copy of its Amended Statement of Claim in the terms to which I have referred and, on 3 May 2000, the solicitors for Tiocliff asserted that it was in occupation of the land pursuant to the Extraction Agreement, which fact was said to be acknowledged by the service of the Notice to Occupier, and that Tiocliff would be satisfied with orders as sought in the Amended Statement of Claim provided there was added after the words "Tiocliff" in orders 2 and 3 the words "as occupier". 22 There was further argumentative correspondence between the solicitors, which is annexed to the affidavit of Ms Collingwood sworn 18 May 2000, and, in his letter of 15 May 2000, the solicitor for the Bank stated:- "The fact that the Bank served on your client a Notice to Occupier does not constitute and is not an admission by the Bank that your client is in fact an occupier. Your client's rights (whatever they may be) derive from the extraction agreement dated 18 August 1997 between Windermere Pastoral Co Pty Limited and your client. The Bank has agreed that it will not seek to disturb Tiocliff's rights under that agreement." 23 The solicitors for Tiocliff continued to insist that the Bank accept that it was "an occupier" and, on 16 May 2000, the Bank refused to make such concession, saying that the notice had been served "for more abundant caution" consistently with the practice of the profession in this State. Reference was made to the decision of Young J in Kerr v Sheriff of New South Wales (1996) 9 BPR 16215 at 16216, where his Honour said:- "The Supreme Court Rules 1970 (NSW), Part 7 rule 8, require that notice be given to occupiers. The legal profession has generally taken the view that what is an 'occupier' under this rule is too vague and the practice has been to give notices to all persons who could conceivably be occupiers, rather than take the risk." 24 Shortly after his Honour stated that the purpose of notifying the occupier was to make sure that notice was received by persons who had the right to defend their possession of the property, so that any such person could intervene in the proceedings. 25 In Australia and New Zealand Banking Group Limited v P.A. Wright & Sons Pty Limited & Ors (50198 of 1996 - 3 July 1997 - unreported) Giles CJCommD referred to the purpose of the rules as protective of the occupier of land of which a plaintiff claims possession from a defendant. His Honour said:- "The occupier may have rights good against the plaintiff which the defendant is not concerned to uphold, and if the plaintiff seeks to disturb his occupation is given the opportunity to assert his rights." 26 In these circumstances he was not prepared to dispense with the requirements of the Rules, which would mean that an occupier would be deprived of the intended protection. Submissions On Behalf Of The Parties 27 Mr Stoljar submitted that Tiocliff is an occupier of the land by being in possession of it pursuant to the Extraction Agreement. The submissions continued that the Bank had, by the service of a Notice to Occupier, recognised the status of Tiocliff and that it could not now change its position in that regard: Commonwealth of Australia v Verwayen (1990) 170 CLR 394. 28 Mr Stoljar then referred to the Rules and submitted that Tiocliff sought no more than the protection to which it is entitled by them. 29 Mr Bell submitted that it was far from clear whether the Extraction Agreement, and the rights it conferred, constituted Tiocliff "an occupier". He referred to the decision of Young J in relation to the potential difficulties of identifying an occupier. He submitted that in any event the Bank had agreed, as was reflected by the orders sought in the Amended Statement of Claim, not to disturb the rights of Tiocliff under the Extraction Agreement and that, accordingly, all such rights, to the extent that they continue to exist, are protected by the specific orders now sought and, further, that in the event of the Bank's wishing to sell the land any issue concerning Tiocliff's rights under the Agreement could be ventilated in an application to remove its caveat. 30 Mr Bell submitted further that I should not allow a joinder, which would necessitate a vacation of the hearing date, as the proceedings between the Bank and the defendant had been settled in principle. He continued that if I were minded to allow Tiocliff to be joined I should make an order pursuant to Part 31 rule 2 for a separate hearing of the issues between the Bank and the defendant, on the one hand, and the Bank and Tiocliff on the other. 31 In reply Mr Stoljar agreed that the description in the order of Tiocliff "as occupier" did not resolve the rights it had to be on the land. Conclusions 32 The purpose of the relevant Rules is to protect an occupier. In the present case Tiocliff has the protection afforded by the form of orders the Bank will seek and by its caveat. In these circumstances, and I make it clear that these reasons are proceeding on the basis that the Bank will seek only the orders to which reference is made in the Amended Statement of Claim, there can be no doubt that if any attempt is made to interfere with such rights as Tiocliff has under the Extraction Agreement, Tiocliff will have every opportunity to assert its entitlement to continue to exercise those rights. However, at the moment, there is no issue which, in my opinion, justifies Tiocliff's being joined. I expressly asked Mr Stoljar what relief Tiocliff would seek if it were joined. His reply was that it would seek the orders for which the Bank contends but adding after its name the words "as occupier". The utility of this became difficult to see once it was conceded that even if Tiocliff is an occupier that does not determine the rights it has to be on the land. 33 At the moment it is not suggested that there will be any interference with Tiocliff's rights. Rather, the Bank is seeking an order which will preclude it from disturbing those rights, and if the Bank seeks to sell an issue may, but not necessarily will, arise as to the rights. I say that because a purchaser may well be prepared to agree that Tiocliff should continue to enjoy the same rights and obligations as it has under the Extraction Agreement. 34 Accordingly, as matters presently stand, there is no issue to be determined between the Bank and Tiocliff and, for the reasons to which I have referred, I consider that Tiocliff's position is adequately protected. In these circumstances the best that Tiocliff could seek in the proceedings, as matters presently stand, is a declaration as to its status. Whether the Court would be disposed to make such a declaration in the absence of its resolving an issue, in the exercise of its discretion, must be a debatable point. It is one, however, I do not have to decide. 35 For these reasons I do not consider that this is an appropriate case to exercise the power to join Tiocliff as a defendant. If need be Tiocliff will have every opportunity to vindicate its rights. The necessity to do so has not arisen at this time. Orders 36 The parties agreed that the costs of the application should follow the event. I order that the Notice of Motion filed by Tiocliff Pty Limited on 13 April 2000 be dismissed with costs. ******** Last Modified: 09/25/2000 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.