Dventures Pty. Ltd. v. Columbus Property Developments Pty. Ltd. [2001] NSWSC 87

New South Wales Supreme Court

CITATION : Dventures Pty. Ltd. v. Columbus Property Developments Pty. Ltd. [2001] NSWSC 87 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1448/01 HEARING DATE(S) : 21 February 2001 JUDGMENT DATE : 23 February 2001

PARTIES : Dventures Pty. Limited - plaintiff Columbus Property Developments Pty. Limited - defendant JUDGMENT OF : Hodgson CJinEq at 1

COUNSEL : Mr. J. Chippindall for plaintiff Mr. M. Baker, solicitor, for defendant SOLICITORS : M.D. Nikolaidis & Co., Sydney, for plaintiff Velik Solicitors, Sydney for defendant CATCHWORDS : PROCEDURE - Ex parte applications - Duty of candour - PROPERTY - Real property - Torrens system - Caveats - Application to extend caveat - Need for candour and prompt service - Balance of convenience DECISION : See end of judgment

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Wednesday 21st February 2001

NO. 1448 OF 2001 DVENTURES PTY. LIMITED V. COLUMBUS PROPERTY DEVELOPMENTS PTY. LIMITED

JUDGMENT

1 On 14 February 2001, I heard an ex parte application to extend a caveat which was due to expire on or about that date. The application was apparently based on a contract for sale of the relevant property bearing date 17 October 2000, apparently executed by the defendant, and also a joint venture agreement bearing date 22 October 2000, executed on behalf of the plaintiff and the defendant, entitling the plaintiff among other things to certain proceeds of sale of the subject property. 2 I was told of an advertisement in a newspaper, apparently on 3 February 2001, being a pre-auction notice foreshadowing sale of the subject property. I was provided with letters from the plaintiff's solicitors to the defendant's solicitors, namely one latter dated 31 January 2001, referring to the two agreements relied on and asserting that the plaintiff intended to proceed under the contract for sale, and another letter dated 1 February 2001, advising that the plaintiff consented to registration of the strata plan. 3 On that material I made an order extending the caveat until further order; I directed service on the defendant by 12 noon on 15 February; I made the summons returnable today, that is 21 February; and I reserved liberty to the defendant to apply on two hours' notice in the meantime for an order for the withdrawal of the caveat. 4 It has become apparent today that in the two or three weeks before the application was made, there were extensive dealings between the solicitors acting for the plaintiff and the solicitors acting for the defendant. It appears that no notice was given by the solicitors acting for the plaintiff to the solicitors acting for the defendant of the ex parte application, either before the application or shortly after it. It appears that no service was effected on those solicitors or on the defendant at the defendant's registered office, but service was effected on the defendant at another address which appeared in some document. 5 It appears that the matter came to the attention of the defendant only on 19 February, and the defendant's solicitors only late yesterday. It goes without saying that that rendered virtually nugatory the liberty which I gave for an application to be made on two hours' notice to set aside or vary the order. 6 It has also appeared today that the contract for sale relied on is unstamped, and there is no offer of satisfactory arrangements for the stamping of that contract. It has become apparent that that contract refers to a purchaser other than the plaintiff, or that purchaser's nominee, and there is no evidence that the plaintiff has been nominated as purchaser. There is no evidence of readiness, willingness and ability to proceed with that contract. 7 There is now evidence of correspondence between the two solicitors including the following: firstly, a letter dated 18 January 2001, being a request by the defendant's solicitors for permission of the caveator to register two unregistered mortgages; next, a reply dated 19 January 2001, advising that such consent would be forthcoming only if the mortgagees recognised the contract to which I have referred, and recognised an obligation to settle that contract on the agreed date; next, a letter dated 28 January 2001 from the defendant's solicitors to the plaintiff's solicitors, enclosing the lapsing notice; next, a letter dated 7 February 2001 from the defendant's solicitors, alleging that registration of the second and third mortgages was necessary if the strata plan was to be registered, and a response to that letter dated 8 February 2001 from the plaintiff's solicitors. 8 It has also been pointed out on behalf of the defendant that the orders which I made on 14 February were defective, in that there was no order dispensing with service as required by the relevant provision of the Real Property Act. I accept that appears to mean that the orders that I made were erroneous, because they omitted that dispensation. However, I have been prepared to deal with the matter today on the basis that I should make the orders that appear appropriate today in relation to the continuation or otherwise of the subject caveat. 9 It was submitted also for the defendant that in the circumstances I have outlined, the alleged contract could not be relied on, and also that the joint venture agreement gave at most some entitlement to the proceeds of sale on settlement, and therefore could not support an interest in land, at least at this stage. There is some force in that submission, but I have proceeded on the basis that there would be a question to be tried as to whether that joint venture agreement gave an interest in land sufficient to support the caveat. 10 However, I have decided that I should make an order that the caveat be withdrawn forthwith. The first ground for this is what appears to me to have been a very significant failure to comply with the duty of disclosure which falls upon a person making an application for ex parte relief. In my opinion, the relevant correspondence between the solicitors was plainly material which should have been frankly disclosed and to which my attention should have been drawn on the ex parte application. 11 That matter alone would probably not have led me to order that the caveat be withdrawn. However, what it throws up is that the maintenance of the caveat appears to be preventing the registration of two mortgages, and according to the defendant, it is also thereby preventing the registration of a strata plan. 12 I am not in any position to reach any view as to whether the interest claimed by the plaintiff is such as to entitle the plaintiff to prevent the registration of those two mortgages. The reason I am not in that position is the non-disclosure on the original ex parte application, and the failure of the plaintiff to bring the application to the attention of the defendant and its solicitors until very shortly before the return date. 13 Had the dispute about these mortgages been disclosed on the interlocutory application, and had the defendant's solicitor been given proper notice of the return date for the summons, then the solicitor could have made some preparation for bringing before the Court the claims of these mortgagees and put the Court in a position where it could made some assessment as to whether those claims could, at least on a prima facie basis, be postponed to the plaintiff's claimed interest which the caveat was lodged to protect. 14 As is clear from the narration it is wholly because of these various defaults on behalf of the plaintiff that I am not in a position to do that. An associated point is that it is wholly impossible for me to make any realistic assessment of the balance of convenience, when the position from the defendant's point of view could not be adequately presented today because of the failures by the plaintiff. 15 The only relief sought in the summons is an order that the caveat be extended. I now propose, for the reasons I have given, to order that the caveat be withdrawn. It seems therefore that there is no further work for the summons to do, and unless there is some submission to the contrary I would propose also to dismiss the summons. 16 I order that caveat 7322319 be withdrawn. 17 I dismiss the summons. 18 I order that the plaintiff pay the defendant's costs of the proceedings. 19 The defendant has applied for an order that the costs be assessed on an indemnity basis. In the course of the hearing, I asked for an explanation for what appeared to me to be the lack of candour in the initial application. The explanation given was the initial expectation that the principal of the plaintiff would return from overseas in time to give satisfactory instructions, and the very great urgency that ultimately attended the bringing of the application when this did not happen. That, of course, does not excuse the lack of candour, but having regard to that explanation, I am not prepared to find, on the material before me, that the lack of candour was calculated or deliberate. Similarly, the failure to notify the defendant's solicitor, and the service at the wrong address, appears also to have been oversight, and associated with the perceived urgency of getting matters done, rather than deliberate. 20 Although the deficiencies in the conduct of this matter on behalf of the plaintiff are serious, I think they are sufficiently reflected in the outright dismissal of the proceedings with costs, and I will not make an order for indemnity costs. ********