New South Wales Supreme Court CITATION : Neoform Developments & Interiors Pty Ltd v Town & Country Marketing Pty Ltd [2002] NSWSC 344 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 2247/02 HEARING DATE(S) : 17/04/02 JUDGMENT DATE : 17 April 2002 PARTIES : Neoform Developments & Interiors Pty Ltd (P) Town & Country Marketing Pty Ltd (D) JUDGMENT OF : Young CJ in Eq COUNSEL : L J Aitken (P) M J Walsh (D) SOLICITORS : Hunter Lawyers (P) CATCHWORDS : CONVEYANCING [88]- Rescission- Condition giving liberty for either party to rescind if plan not registered by a certain date- Condition not fulfilled- Rescission possible after plan registered. CONVEYANCING [139]- Caveat- Second caveat- Some new facts arising after lapse of first caveat- Same interest claimed- Second caveat held to be of no effect. TAXES & DUTIES [340]- Stamp duty- Mortgage duty- Alleged charge arising out of agreement to lodge caveat on certain events- Unstamped instrument- Effect. LEGISLATION CITED : Duties Act 1997, ss 211, 304 Real Property Act 1900 s 74 O Gilbert v Healey Investment Pty Ltd [1975] 1 NSWLR 650 CASES CITED : McCulloch v Fern [2000] NSWSC 729 Treloar Nominees Pty Ltd v Buttrey (1977) 1 BPR 9672 Troncone v Aliperti (1994) 6 BPR 13,291 DECISION : Orders made. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Wednesday 17 April 2002 2247/02 – NEOFORM DEVELOPMENTS & INTERIORS PTY LTD v TOWN & COUNTRY MARKETING PTY LTD JUDGMENT 1 YOUNG CJ in EQ: This is a fairly simple case involving a caveat which nonetheless raises a considerable number of issues. 2 The plaintiff is a developer and the defendant might be called an estate agent. A so-called marketing agreement was entered into by deed between the parties, which purported to appoint the defendant as the sole and exclusive party responsible for marketing the development until registration of the strata plan. 3 The defendant appears to have been responsible for selling, or at least causing contracts for sale to be exchanged, on seven of the fifteen lots in the development off the plan before the strata plan was registered. The contracts contained a clause 33 which was headed "Completion Subject to Registration of the Draft Plan" and which in the ordinary case read as follows, though there was some difference in the date in 33.2 in some of the contracts: "33.1 Completion is subject to and conditional on the registration of the draft plan. 33.2 If the draft plan is not registered on or before 31 December 2001 then either part may rescind by written notice to the other. 33.3 The vendor must use all reasonable endeavours to have the draft plan registered in accordance with 33.2." 4 The evidence suggests that the draft plan was approved by the local council on 21 November 2001. It was approved subject to a series of conditions. It would appear that the plaintiff did not apply itself to complying with these conditions until 16 January 2002, and two of the three conditions that are stated in the evidence were fulfilled very shortly thereafter, but the third took thirty-seven days to fulfil. 5 The plan was lodged with the Registrar General on 5 March and registered on 6 March 2002. The plaintiff rescinded each of the contracts on various dates between 7 December 2001 and 7 March 2002, purportedly in accordance with clause 33. 6 The seventh contract was one where the purchaser had said that his wife had died and asked if he could get out of the contract, and the developer agreed, rescinding on 25 February 2002. 7 There is material which, if accepted at the trial, the trial judge could infer that the predominant reason for rescinding was that the plaintiff had, through the intermediary of another estate agent, negotiated new contracts with other purchasers at a higher price. 8 The vital clause of the marketing agreement is 4.1.1 which reads: "The Vendor covenants to the Marketing Agent that the Marketing Agent shall have a caveatable interest in the land and shall be entitled, in the event of Vendor's default under the contract of sale, to lodge a caveat in accordance with this Clause in order to secure the payment of the Marketing Agents fee." 9 The marketing agent's fee is principally considered in cl 3.3 of the marketing agreement, which reads, so far as is relevant: "Subject to the Purchaser's Contract for Sale being unconditional ... the Vendor acknowledges that the Marketing Agent has completed its obligations under the Deed in respect of the unit and the Vendor covenants to the Marketing Agent that the Marketing Agent's Fee is then due to the Marketing Agent ... ". 10 3.4.1 provides that the Vendor agrees that the Marketing Agent's fee shall be paid on settlement. There are then provisions for the marketing agent to be notified as to settlement, and for the purchaser to be directed to pay the fee from the balance of purchase price due under the contract for sale. 11 The caveat which the plaintiff wishes to have removed from its title was lodged on 25 March 2002. It has been given number 8457400F and covers all seven lots. The interest claimed is said to be: "The Registered Proprietor has charged the land as security for payment of moneys due and/or to become due by the Registered Proprietor to the Caveator." 12 The caveat then refers to the marketing agreement, which it says is undated but entered into about May 1999, and then states the following alleged facts: "The Caveator has now become entitled to lodge this caveat pursuant to the provisions of clause 4.1.1 of the above agreement by virtue of the Registered Proprietor having become in default under the contracts for sale of the land entered into by the Registered Proprietor including breach of condition 33.3 thereof". 13 The defendant had previously lodged a caveat over five of the lots, again based on the same written agreement where the facts were stated: "On May 1999 the Registered Proprietor and the Caveator entered into an agreement where the Caveator performed the services for and on behalf of the Registered Proprietor and the Registered Proprietor gave to the Caveator a caveatable interest in the land." 14 The solicitors for the plaintiff initiated action to have the Registrar General issue a lapsing notice in respect of the prior caveat. 15 Mr Robinson, the managing director of the defendant, swore that he let that caveat lapse because of certain undertakings he thought he had been given by people on behalf of the plaintiff. He felt rather sore about these undertakings not being honoured, consulted new solicitors and counsel and, after taking advice, thought that because of the facts and events which had taken place after the previous caveat, which had been lodged on 8 October 2001, he could lodge a caveat without being in breach of section 74 O of the Real Property Act. 16 That section provides that if a caveat lapses any further caveat lodged: " … in respect of the same estate or interest and purporting to be based on the same facts as the first caveat" shall be of no effect unless the Supreme Court has given permission and that permission is lodged with the caveat. No such permission was given in the instant case. 17 The second caveat clearly deals with the same interest in land, though differently expressed, and the question is whether it is based on "the same facts". 18 The facts are different in that if there was an inchoate right in October that right crystallised after October and before the lodging of the caveat on 25 March. The reason for that is that the alleged default in not securing the registration of the plan is said to have occurred after the council approved the plan in November and the expiry of the sunset clause. 19 In McCulloch v Fern [2000] NSWSC 729, Hamilton J considered the words "the same facts" in s 74 O and said that one must construe those words widely in view of the mischief that the section was designed to remedy. 20 Mr Aitken, for the plaintiff in the instant case, says that I should follow that authority and as the basal facts on which the defendant relies in both caveats are the same it was necessary for the defendant to have obtained the leave of the court before lodging the new caveat. I think that that argument is correct and, accordingly, the caveat is of no effect. However, there are various other reasons why the same result is almost inevitable. 21 If there is an agreement between two persons that one of those persons may lodge a caveat over the land of the other, then it is often loosely said that that gives an interest in the land to the person who has the right to lodge the caveat. That view comes about because of the decision of the Court of Appeal in Troncone v Aliperti (1994) 6 BPR 13,291. However, a careful reading of that case shows that the case does not go that far. What it appears to me to say is that in such a situation the court may infer that there is an equitable charge because if that inference is not made then the provision will be just so many empty words. Whether the court should in any particular case infer an equitable charge and what the nature of that equitable charge is depends on all the facts and circumstances of the agreement in question. 22 In the instant case, any charge resulting from cl 4.1.1 is clearly limited not to any money that may be due to the defendant under the marketing agreement, but solely to its fee. Its fee is only to be due when the contract becomes unconditional and it never became unconditional because the plan was never registered before it was rescinded. 23 Moreover, the contract clearly defined when the fee was to be payable, and how it was to be payable, and that was out of the settlement proceeds, so that if there were no settlement proceeds, because there had been a rescission, which the purchaser accepted, the fee could never be collected. That does not mean to say that the defendant was without remedy because, under cl 3.6.3 of the marketing agreement, there was a covenant by the vendor not to cause to frustrate the purchaser in the purchaser's attempt to make the contract for sale unconditional, and for its completion. It may be that there is an action for damages under that, or some other provision of the marketing agreement. Whether this be so or not, that is not what is secured under 4.1.1, which is only the fee. 24 It is alleged that cl 33.3 is a default, in that the vendor did not use all reasonable endeavours to have the draft plan registered. 25 It is questionable whether cl 33.3 is a covenant which is the basis of an action for damages, or whether it merely restricts the vendor's right to rescind under 33.2, and if it is the latter, as I suspect it is, though there has not been sufficient argument presented on the point for me to decide it, then non-compliance would not be a default within the meaning of that term. 26 However, what the point being made by Mr Michael J Walsh for the defendant appears to be is that the sunset clause expired in December; the vendor then waited until March before rescinding, after it was quite sure it had a subsequent purchaser, and it must have waived the right to rescind; and knowing that the plan was about to be registered committed a default in rescinding. That submission, with great respect, seems contrary to authority. In Treloar Nominees Pty Ltd v Buttrey (1977) 1 BPR 9672, Helsham CJ in Eq said that one did not readily infer waiver in this sort of situation. Further his Honour said that the principle in New South Wales was that laid down by Needham J in Gilbert v Healey Investment Pty Ltd [1975] 1 NSWLR 650, that once there has been a non-registration of the plan by the date referred to in the sunset clause, the vendor still remains entitled to terminate the contract, even after the strata plan has since been registered. 27 Accordingly, in my view, on the material before me no default has been made out under cl 4.1.1. 28 There is then the problem of s 211 of the Duties Act. If a charge was created under this instrument it would appear to me that it attracted mortgage duty under Chapter 7 of the Duties Act 1997. 29 I say "appears" because the point has not been fully argued. This meant that within three months of the charge being activated it was necessary for mortgage duty to be paid on the marketing agreement. The marketing agreement has been stamped with $10 as a deed, but has never been stamped with any mortgage duty. 30 Section 211 of the Duties Act provides: "A mortgage on which duty is required by this Chapter to be paid is, while any duty remains unpaid on it, enforceable only to the extent of the amount secured by the mortgage on which duty has been paid under this Act." 31 No duty has been paid under the Act, therefore, the mortgage is not enforceable. I agree with the writers of the current edition of Hill on the Duties Legislation (LBC, Sydney, 2001) at [14.0390] that when one is dealing with mortgages it is s 211 that one applies rather than the general provisions of s 304, which gives way in the case of mortgages. 32 As the mortgage duty had not been paid at the date the caveat was lodged, it would seem to me that in any event the caveat could not be supported. 33 For all those reasons, whichever way one looks at the case, the caveat must fail and, accordingly, the plaintiff is entitled to some relief. 34 There is a cross-claim which seeks that the court give leave to the defendant to lodge a further caveat under s 74 O to protect the interests sought to be protected by the caveat. For the reasons that I have given, that would be a waste of time. 35 Accordingly, the court makes order 1 in the summons. I think that is the tidiest way to do it, rather than order 2. 36 The caveat is to be withdrawn by 10 am on 18 April 2002. The cross-claim is dismissed. The defendant is to pay the plaintiff's costs of the proceedings and the exhibits may be returned. ******************** Last Modified: 04/24/2002 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.