New South Wales Supreme Court CITATION : AJDJ Pty Limited & ors v PacificWest Developments Pty Limited [2002] NSWSC 203 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4811/00 HEARING DATE(S) : 22, 25 February 2002 JUDGMENT DATE : 25 February 2002 AJDJ Pty Limited (First Plaintiff) David Bruce Cameron (Second Plaintiff) Lachlan Paul Danckert (Third Plaintiff) Terrance Paul Murphy (Fourth Plaintiff) PARTIES : John Joseph Hopkins (Fifth Plaintiff) Reginald Seva Moodley (Sixth Plaintiff) William Geoffrey Ennis (Seventh Plaintiff) Neville Pradeepkumar Emerson (Eighth Plaintiff) Pacificwest Developments Pty Limited (Defendant) JUDGMENT OF : Master McLaughlin COUNSEL : SOLICITORS : Thurai Raja Lawyers (Plaintiffs) Macquarie Lawyers (Defendant) LEGISLATION CITED : Real Property Act 1900 DECISION : 1. Order that the notice of motion filed by the Defendant on 13 February 2002 be dismissed.; 2. Order that the Defendant pay the costs of the Plaintiffs of the aforesaid notice of motion, such costs to be on the indemnity basis. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER McLAUGHLIN Monday, 25 February 2002 4811/00 AJDJ LIMITED -V- PACIFIC WEST DEVELOPMENTS PTY LIMITED JUDGMENT 1 MASTER: There is presently before the Court a notice of motion filed by the defendant, Pacific West Developments Pty Ltd, on 13 February 2002. By that notice of motion the defendant seeks, firstly, that seven separate caveats lodged by the plaintiff be withdrawn. Order 2 sought in that notice of motion is in the following terms: "In the event that the plaintiffs fail to withdraw all the above-mentioned caveats within seven days that order 2 of the short minutes of order made on 14 December 2001 by his Honour Acting Justice Davies be discharged". 2 I shall deal firstly with the application by the defendant for the withdrawal of the caveats. The defendant, somewhat curiously, did not see fit to place before the Court the caveats which are the subject of this application. It might be regarded as fundamental for an application for withdrawal of the caveats that the Court should be aware of the nature of the caveats the withdrawal of which it is being asked to order. 3 It was only in consequence of a request by me in that regard that copies of the subject caveats were placed in evidence, an adjournment for such purpose being made necessary. 4 There is no evidence of the dates upon which each of the subject caveats was lodged, although each is supported by a statutory declaration of the respective caveator dated 22 November 2000. 5 Each of the caveats is in respect of a lot in an unregistered plan of subdivision which is part Lot 102 Deposited Plan 738481. The seven lots in respect of which the caveats have been lodged are seven of the eight units in a residential development situate at and known as 14 Chapman Street, Werrington. The plaintiffs are the purchasers, either severally or conjointly, of those seven units under seven contracts of sale, each dated 12 November 1999. The vendor named in each of those contracts is Pacific West Developments Pty Ltd, the present defendant. 6 Each of the contracts is in identical form (except, of course, for the identity of the lot number and the identify of the purchaser). Each of the caveats is in identical terms (except, of course, for the identity of the lot number and the identify of the purchaser). Each caveat names the defendant as the registered proprietor of the relevant lot. The land in each caveat is described as: "Lot --- in an unregistered plan which is annexed herewith and marked "A" which is part Lot 102 Deposited Plan 738481". 7 By each caveat, the caveator claims to be entitled to "the estate or interest specified in schedule 1 in the land/registered dealing referred to above by virtue of the instrument/facts set out in that schedule and prohibits the Registrar General from taking, with respect to the land/registered dealing, the action specified in item numbers 1 to 4 of schedule 2, unless the caveator has consented in writing or this caveat has lapsed or been withdrawn." 8 Schedule 1 is headed: "Estate or Interest Claimed" and is in the following terms: "Nature of the estate or interest in the land/registered dealing: Legal and equitable interest by virtue of the instrument referred to below/facts as stated below". 9 There is then set forth under the designations, "Nature of instrument", "Date", "Parties", the following information: "Contract for sale of land, 12.11.1999, AJDJ Pty Ltd as trustee for PM Family Trust from Pacific West Developments Pty Ltd ACN 087 701 237" 10 (It will be appreciated that under the heading "Parties" the name or names of the various plaintiffs are respectively set forth in relation to the various lots.) 11 Schedule 2 is headed, "Action prohibited by this caveat". Item 1 is in the following terms: "The recording in the register of any dealing other than a plan affecting the estate or interest claimed by the caveator and set out in schedule 1". 12 It would appear that no notice of lapsing has been given by the Registrar General in respect of any of the caveats. 13 It is appropriate that I should set forth, at least in summary, the circumstances which have given rise to the present application by the defendant for the withdrawal of the caveats. 14 At the time of the exchange of the contracts on 12 November 1999, each purchaser paid to the defendant the sum of $19,500, being 10 per cent of each purchase price of $195,000. Each of the subject lots is a lot in an unregistered plan of subdivision. 15 Clause 28.2 of the contract between each purchaser and the defendant imposed upon the defendant as vendor an obligation in respect to having the plan registered within six months of the date of the contract. Clause 28 made further provision enabling the vendor to rescind if the plan had not been registered within that period, but only if the vendor had complied with its obligation under that clause to "do everything reasonable" to have the plan registered within the six month period. 16 The plan was not registered within six months of the date of the contract. The defendant as vendor purported to avail itself of the right of rescission contained in clause 28.3.2. The plaintiffs thereupon instituted the present proceedings, by which they sought specific performance of the contract. 17 The suit came on for hearing before Acting Justice Davies on 12 December 2001. The hearing occupied until 14 December 2001. His Honour delivered his judgment on the lastmentioned date. His Honour found in favour of the plaintiffs and made the following orders and declarations: "1. A declaration that the purported rescission of the contracts of sale particularised in the schedule to the amended statement of claim by the defendant on 14 November 2000 is invalid and of no effect; 2. An order that the defendants specifically perform the contracts for sale in the schedule to the amended statement of claim and carry them into execution; 3. An order that the defendant pay the plaintiffs costs of these proceedings; 4. Reserved question of damages; 5. Further consideration reserved." 18 In support of his judgment his Honour said, in paragraph 35: "The defendant gave the notices to rescind for its own purposes. Mrs Anastasiadis was reluctant to concede that the notices were given for the purposes of enabling the defendant to resell the units at a higher price. However, she did concede that that was one of the matters in her mind at the time. I shall here after refer to Mrs Anastasiadis' unreliability as a witness. In my opinion, it is likely that the prospect of reselling at a higher price was the predominant factor actuating the giving of the notices of rescission". 19 His Honour also said at paragraphs 37 and 38: "I should mention, specifically, that I reject a good deal of the evidence of both Mrs Anastasiadis and Ellena Anastasiadis. It seems to me that the case, which they put in their affidavits and which they propounded orally to the Court, that there was a building agreement with Denysenko & Associates and that the actual builder was Denysenko & Associates, was a deliberately false picture. It appears to me that the evidence was close to being a fraud on the Court". 20 Since the date of his Honour's judgment and orders, considerable correspondence has passed between the respective solicitors for the parties. The stand adopted by the defendant appears to be that it cannot complete the contracts whilst the caveats remain against the title to the various lots since, the defendant asserts, the existence of the caveats prevents the registration of the plan of subdivision. 21 The plaintiffs, on the other hand, express concern about the false statements in the application by the defendant to the Penrith City Council for approval of registration of the strata plan and in the Home Owners Warranty Insurance that the construction work was carried out by a builder, Denysenko & Associates. 22 That assertion on the part of the defendant and the evidence presented by the defendant in support of that assertion at the hearing of the suit before Acting Justice Davies attracted the strong disapprobation of his Honour which I have already quoted, where his Honour described that evidence and the case that the defendant sought to sustain upon that evidence as being, "close to being a fraud on the Court". 23 The concern of the plaintiffs is that those false statements will have the consequence that they will not receive good title to the lots which respectively they have purchased. 24 The plaintiffs have, in the course of the correspondence to which I have referred between the parties since the date of his Honour's decision, offered to withdraw the caveats if the foregoing false statements are corrected. 25 It will be appreciated that there is now in force an order of the Court that the defendants specifically perform and carry into execution the several contracts. That order is in no way provisional or conditional. It is a final and binding order of this Court. 26 Normally, a party in the position of the defendant as vendor which does not complete a contract for sale of land would be liable for damages. In the instant case, however, there is in force an order of the Court requiring the defendant to complete the contracts. Nothing remains to be done by the plaintiffs in the conduct of the conveyancing transaction of the nature of that obtaining between the plaintiffs and the defendant. The defendant must therefore, in accordance with the order of the Court, complete those contracts. If it does not then, presumably, the plaintiffs can enforce the order of the Court by proceedings for contempt for disobeying the order made on 14 December 2001. 27 The defendant, in making the present application, appears to be relying upon the provisions on Part 7A Division 3 of the Real Property Act 1900, and in particular upon the provisions of section 74MA of that statute. That section provides, in subsection (1): "Any person who is or claims to be entitled to an estate or interest in the land described in a caveat lodged under s 74B or 74F may apply to the Supreme Court for an order that the caveat be withdrawn by the caveator or another person who by virtue of section 74M is authorised to withdraw the caveat". 28 Subsection (2) provides: "After being satisfied that a copy of the application has been served on the person who would be required to withdraw the caveat if the orders sought were made or, after having made an order dispensing with service, the Supreme Court may (a) order the caveator or another person, who by virtue of section 74M is authorised to withdraw the caveat to which the proceedings relate, to withdraw the caveat within a specified time, and (b) make such other or further orders as it thinks fit." 29 The caveats themselves were lodged by the plaintiffs pursuant to the provisions of section 74F. Subsection (1) of that section enables the lodgement of such caveats in the following terms: "Any person who, by virtue of any unregistered dealing or by devolution of law or otherwise, claims to be entitled to a legal or equitable estate or interest in land under the provisions of this Act may lodge with the Registrar General a caveat prohibiting the recording of any dealing affecting the estate or interest to which the person claims to be entitled". 30 Section 74MA (in particular subsection (2) thereof) does not specify any criteria upon which the discretion thereby vested in the Court should be exercised in determining an application of the nature of that presently before the Court for an order that the caveats be withdrawn. 31 It seems to me, however, that a consideration of the provisions relating to the extension of the operation of a caveat pursuant to section 74K is instructive. That section provides, in subsection (2) thereof as follows: "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". 32 In the instant case, I am not satisfied that the evidence discloses that the existence of the subject caveat is obstructing the registration of the plan of subdivision of which approval has been given by the Penrith City Council, that plan of subdivision being grounded upon what the Penrith City Council was led to believe as accurate and true statements relating to the identity of the builder and the validity of the appropriate insurance. 33 It may be mentioned at this stage that there was admitted into evidence a document from the Insolvency and Trustee Service Australia, as evidence to the fact that one Marco Denysenko (who appears to have been at the relevant time be principal of Denysenko & Associates) was made bankrupt upon his own petition on 30 November 2000 and is still an undischarged bankrupt. That bankruptcy appears to have commenced during the course of the time when, according to the evidence of the principals of the defendant which attracted the strong disapprobation of Acting Justice Davies, the defendant was asserting that Denysenko & Associates was the builder of the subject development. 34 I have already observed that no lapsing notice has issued in respect of the caveats. Neither would it appear that the Registrar General has issued any requisitions to the caveators. 35 Moreover, I am far from being satisfied that the plaintiffs do not have an equitable interest in the subject land. Indeed, the material before me strongly supports the suggestion that the defendant holds each of the lots on trust for the respective purchaser thereof and thus, that the plaintiffs have an equitable interest in each lot of which they are respectively the purchaser. 36 Further, it would appear that two persons by the name of Anastasiadis, one being Mrs Gina Anastasiadis, are desirous of borrowing against the security of the totality of the residential development at 14 Chapman Street, Werrington, (with two companies, one being the present defendant, as guarantors of that borrowing) and that the proposed lender has required that the caveats be withdrawn before making any loan upon such security. 37 It is relevant in this regard to observe that one lot in the plan of subdivision, being Lot 6, is not the subject of the present proceedings. That lot is totally unencumbered. It is not in any way affected by the caveats. Presumably the defendant could deal with that lot in any way in which it chooses, unaffected by the existence of the caveats. I consider that there is no evidence that the existence of the caveats is obstructing the registration of the strata plan of subdivision. 38 It will be recalled that the precise terms of the caveats expressly refer to the unregistered plan which is annexed to each caveat and is marked A, and that by paragraph J of each caveat, which I have already quoted, the caveator prohibits the Registrar General from taking with respect to the land the action specified in items numbers 1 to 4 of schedule 2. Item 1 is in specific terms, being "the recording in the register of any dealings other than a plan affecting the estate or interest of the claim by the caveator and set out in schedule 1." 39 It seems to me that in its very terms the caveat allows the registration of the plan of subdivision which is annexed to the caveat itself. I do not see how, in the light of that express reference to the plan of subdivision and the terms of the caveats, the more general wording of item 2 would have the effect of precluding that registration. 40 Further, it seems to me that, since there has been no notice of lapsing and there has been no requisition, there is substance in the submission on behalf of the plaintiffs that the present application is premature. In any event, as I have already observed, the estate asserted in the caveats (which includes an equitable interest) is one in which the words of section 74K(2) "may have substance". In those circumstances, it seems to me that it would be quite inappropriate for me to make an order for the withdrawal of the caveats. 41 That conclusion disposes of the relief sought in paragraph 1 in the defendant's notice of motion. Paragraph 2 is framed in terms of an order ancillary to or consequential upon the order sought in paragraph 1. I would, however, observe that, even were the Court disposed (contrary to the conclusion which I have just expressed) to make an order for the withdrawal of the caveats, it would be totally inappropriate for the Court to make an order of the nature of that sought in paragraph 2. 42 The order made by Acting Justice Davies on 14 December 2001 is a final, unconditional and binding order of the Court. It is not one which can be set aside by another member of the Court in consequence of the placing of conditions upon his Honour's order and in consequence of the failure of one of the parties to fulfil those conditions. If any conditions are sought to be imposed upon the orders made on 14 December 2001, then the parties seeking those conditions must either approach his Honour under the reservation of further consideration or appeal against the decision to the Court of Appeal. It would be quite inappropriate for a Master of the Court to add to the orders conditions which were not in the contemplation of his Honour, and then to order that, in the absence of the fulfilment of those conditions within a specified period, his Honour's order not have effect. 43 Accordingly, in any event, I would not make an order of the nature sought in paragraph 2 in the notice of motion. 44 In consequence, therefore, I propose to dismiss the notice of motion. 45 The plaintiffs have made application that the costs to which they are entitled in respect of the notice of motion filed by the defendant on 13 February 2002 should be paid to them by the defendant on the indemnity basis. The defendant opposes the costs being on other than the more usual party and party basis. 46 It must, however, have been recognised by the defendant, in the light of the reasons for judgment of Acting Justice Davies of 14 December 2001, and of the statement made by his Honour concerning the evidence given by the witnesses for the defendant and concerning the falsity, verging on a fraud upon the Court, of the case mounted by the defendant that the builder was Denysenko & Associates (an entity of which the principal appears, for at least part of the relevant period, to have been an undischarged bankrupt), that the concern of the plaintiffs expressly set forth in the considerable quantity of correspondence which passed between the respective solicitors for the parties in the few days before the filing of the notice of motion, was such as to have made the relief sought by the defendant in the notice of motion inappropriate and doomed to failure. 47 In those circumstances I consider that the plaintiffs are entitled to have their costs paid on the indemnity basis. 48 I make the following orders: (1). I order that the notice of motion filed by the defendant on 13 February 2002 be dismissed. (2). I order that the defendant pay the costs of the plaintiffs of the aforesaid notice of motion, such costs to be on the indemnity basis. 49 I will retain in the Court file the caveats which are Ex 1. The other exhibits may be returned. 50 MRS THURAIRAJAH: I did indicate earlier that there were some alternative orders that we sought, that the vendor be compelled to obtain a valid-- 51 MASTER: Mr Saab, are you in a position to deal with an application such as has just been foreshadowed by Mrs Thurairajah? 52 SAAB: I am not in a position to deal with the application now. 53 MASTER: I will reserve liberty to the plaintiffs to apply on two days' notice. ********** Last Modified: 12/17/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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