New South Wales Supreme Court CITATION : Bull v Wimble [2004] NSWSC 528 HEARING DATE(S) : 08/06/04 JUDGMENT DATE : 22 June 2004 JURISDICTION: Equity Division JUDGMENT OF : Barrett J DECISION : Order for payment of balance of purchase moneys into court; order for replacement of folio of register and issue of new certificate of title; orders allowing purchasers to recoup costs of proceedings out of moneys in court CATCHWORDS : CONVEYANCING - land titles under the Torrens system - defaulting vendor not complying with order for specific performance - transfer executed by Deputy Registrar in Equity - whether vesting order should be made - order for replacement of folio of register and issue of new certificate of title - order for payment of balance of purchase moneys into court - orders allowing purchasers to recoup costs of proceedings out of moneys paid into court LEGISLATION CITED : Real Property Act 1900, s.138 Trustee Act 1925, s.77(1) AJDJ Pty Ltd v Pacificwest Developments Pty Ltd [2002] NSWSC 842 Botterill v Botterill (2000) 10 BPR 18,787 Brice v Mackay [1983] Qd R 543 CASES CITED : Dotter v Evans [1969] VR 41 Green v Sevin (1879) 13 Ch D 589 Lank v Lank (1973) 21 FLR 384 Wilde & Harris v Byrne [1987] 2 QdR 822 Murray Leslie Bull - First Plaintiff PARTIES : Glenn Robert Stewart - Second Plaintiff Julie Anne Ann Stewart - Third Plaintiff James Alfred Wimble - Defendant FILE NUMBER(S) : SC 4259/02 COUNSEL : Mr D G Charles - Plaintiffs No appearance - Defendant SOLICITORS : North Shore Lawyers - Plaintiffs No appearance - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J TUESDAY, 22 JUNE 2004 4259/02 – MURRAY LESLIE BULL & 2 ORS v JAMES ALFRED WIMBLE JUDGMENT 1 By a notice of motion filed on 14 May 2004 and heard by me as Duty Judge on 8 June 2004, the plaintiffs sought orders intended to carry into effect earlier orders requiring the defendant to perform a contract for the sale of land between the defendant as vendor and the plaintiffs as purchasers. 2 On 7 August 2003, the court made certain orders against the defendant, including an order for specific performance. By orders made on 19 December 2003, a time and place for completion were appointed by the court and the defendant was required to attend at that time and place and to do everything necessary to transfer the property in return for the balance of the purchase moneys. The defendant did not attend. On 10 May 2004, the Deputy Registrar in Equity, acting in pursuance of one of the orders made on 7 August 2003, executed in the defendant's name and on his behalf a transfer of the property. The plaintiffs wish to pay the balance of the purchase moneys into court, to receive the transfer executed by the Deputy Registrar and to obtain registration of it under the Real Property Act 1900. An obstacle to this last step is the absence of the certificate of title which is assumed to be in the possession of the defendant or under his control. No mortgage is recorded on the relevant folio of the register. 3 The orders sought in the notice of motion filed on 14 May 2004 were: (a) an order that the plaintiffs pay into court the sum of $198,966.31 (Order 1); (b) an order that, upon such payment, the relevant land is vested in the plaintiffs for an estate in fee simple free from encumbrances (Order 2); (c) an order directing the Registrar General to cancel the existing certificate of title for the property, to record in the relevant folio of the register the transfer executed by the Deputy Registrar on 10 May 2004, to create a new folio of the register for the property and to issue a new certificate of title recording the plaintiffs as registered proprietors (Order 3); (d) an order that the payment of or any dealing with the money paid into court (except in accordance with the following orders) be prohibited without notice to the plaintiffs (Order 4); (e) an order that the plaintiffs' assessed costs of $25,789.28 (being costs to 11 March 2004) together with interest be set off against and paid out of the moneys in court (Order 5); and (f) an order that the plaintiffs' further costs up to and including the taking out of the orders and lodgment with the Registrar General be assessed on the indemnity basis and, when so assessed, be set off against and paid out of the moneys in court, this to be without prejudice to the right to recover those costs in any other way (Order 6). 4 The evidence shows that the plaintiffs have made continuing attempts to obtain the co-operation of the defendant in giving effect to the earlier orders and conveying the property to them in return for the balance of the purchase price, including by delivery of the certificate of title. There has been no co-operation. A letter from the defendant to the plaintiffs' solicitors dated 24 December 2003 cast in belligerent terms makes it clear that he will not do anything to vest the property in the purchasers. 5 In seeking Order 2, the plaintiffs invoke s.77(1) of the Trustee Act 1925: "The Court may make a vesting order where an order is made by the Court for the specific performance of a contract concerning any land, or for the partition or sale in lieu of partition of any land, or for the exchange of any land, or for the conveyance of any land, either in cases arising out of the doctrine of election or otherwise." 6 An order for the specific performance of the relevant contract having been made on 7 August 2003, s.77(1) is applicable. There is no reason why such an order should not be made, if it will be of utility. When I considered the matter in chambers after I had reserved judgment, I came to wonder whether such an order would be of utility when the court had made an order for the execution of a transfer by the Deputy Registrar in the name of the defendant, which transfer had already been created and executed. This and other concerns caused me to have my Associate write on 15 June 2004 to Mr Charles of counsel, who appeared for the plaintiffs, as follows: "Justice Barrett has asked me to convey several questions to you about the application made on 8 June 2004. First, his Honour wonders why the plaintiffs need Order 2 (a vesting order) if they already hold a fully executed transfer. If an office copy of the vesting order and the executed transfer are both lodged, how will the Registrar General choose between action under s.86 and action under s.36? Second, to the extent that Order 3 contemplates a directive by the court that the Registrar General register the specified transfer, is it contemplated that the court should make all judgments going to the registrability of the transfer (including, for example, its being duly stamped) and, if so, what evidence is to be produced in that respect? Third and having regard to Botterill v Boterill [(2000) 10 BPR 18,787], would an approach more consistent with s.138 be to order that, upon lodgment of an office copy of the orders, a copy (verified by a statutory declaration) of the court's receipt for the money paid into court and the executed transfer, the Registrar General must, if and when the transfer is registered, cancel the existing folio of the register and issue a new folio and a new certificate of title? Fourth, is there anything about the practice of the Registrar General in such matters that should be put before the court? Fifth, if an order is being sought against the Registrar General, should the Registrar General be added as a party and given notice of the order sought and an opportunity to appear? His Honour is happy to receive written submissions on these matters but will arrange for the matter to be re-listed if you think it desirable." 7 In response to that letter, the plaintiffs tendered a letter from their solicitors to the Registrar General dated 15 June 2004 and the Registrar General's reply also dated 15 June 2004. The plaintiffs also abandoned their claim for the vesting order (Order 2) and sought a revised form of Order 3 as follows: "Upon lodgment of: 2.1 an office copy of these orders; 2.2 an office copy of the orders made in these proceedings on 7 August 2003; 2.3 a copy (verified by statutory declaration) of the court's receipt for money paid into court in accordance with Order 1 ; and 2.4 the memorandum of transfer ('Transfer') bearing date 10 May 2004, in the names of the plaintiffs as transferees, and signed in the name of, and on behalf of, the defendant as transferor by the Deputy Registrar in Equity pursuant to orders made in these proceedings on 7 August 2003 under section 100 of the Supreme Court Act 1970, the Registrar General must, if and when the transfer is recorded in the folio of the register relating to the whole of the land contained in Folio Identifier 81/578188 ('Property'), pursuant to section 138 of the Real Property Act 1900: 2.5 cancel the folio of the register for the Property; 2.6 create a new folio of the register for the Property; and 2.7 issue a new certificate of title for the Property, recording the plaintiffs as registered proprietors. 8 The Registrar General made it clear in the letter of 15 June 2004 that the Registrar General did not wish to be joined as a party. 9 The plaintiffs are now settled upon a course directed towards registration of the executed transfer already in existence. They no longer seek a vesting order. Moreover, the proposed new order replacing Order 3 leaves to the ordinary processes of the Registrar General the actual registration of the transfer, there being no longer any element of that order directing such registration. All that is now contemplated, by way of compulsion arising from that order, is that the Registrar General will cancel the existing folio and create a new one (as well as issuing a new certificate of title), "if and when" the transfer the plaintiffs hold is recorded in the existing folio of the register following lodgment of that transfer and the other items specified in the order. This is, I think, important since, unless the statute otherwise indicates, the court has no authority to intrude into the performance of the Registrar General's functions: see generally Wilde & Harris v Byrne [1987] 2 QdR 822. 10 The proposed order just outlined order is based on s.138 of the Real Property Act: " Court may direct cancellation of folios and other actions related to folios (1) A court may, in proceedings for the recovery of any land, estate or interest from the person registered as proprietor of the land, make ancillary orders of the kind set out in subsection (3), if the court is of the opinion that the circumstances of the case require any such order to be made. (2) A court may, in proceedings for the possession or production of a certificate of title or in proceedings in which the court makes a determination as to an estate or interest in land, make ancillary orders of the kind set out in subsection (3), if the court is of the opinion that the certificate of title has not been, or is not likely to be, produced by a person for the purposes of the registration of a dealing affecting the land concerned. (3) A court may order the Registrar-General to do one or more of the following: (a) cancel or amend a folio of the Register, (b) cancel, amend or make a recording in a folio of the Register, (c) create a new folio of the Register, (d) issue a new certificate of title. (4) The Registrar-General must give effect to any such order. (5) A court that makes an order under this section may order that a person deliver a certificate of title or other instrument to the Registrar-General for the purpose of giving effect to any such order. (6) An action does not lie against the Registrar-General for recovery of damages sustained through deprivation of land, or any estate or interest in land, because of compliance by the Registrar-General with an order under this section. (7) In this section: court does not include a Local Court or a tribunal." 11 I am satisfied that the existing certificate of title is not likely to be produced for the purposes of registration of the transfer in favour of the plaintiffs as transferees executed by the Deputy Registrar in Equity for the defendant as transferor. The condition precedent referred to in s.138(3) is therefore satisfied but there is one aspect of the proposed s.138 order that merits particular comment. If the order is made and implemented (in the sense that the enumerated items are lodged and the Registrar General registers the transfer and then cancels the existing folio, creates a new one and issues a new certificate of title), there will be in circulation two certificates of title for the one parcel of land. That presents some prospect of the kind of undesirable consequence that the court was astute to point out in Lank v Lank (1973) 21 FLR 384. But the process the order envisages curtails very significantly the risk of that consequence rebounding to the detriment of any innocent party. This is because the creation of a new folio of the register in place of the existing folio (which will be cancelled) and issue of a new certificate of title in respect of that new folio in the names of the plaintiffs means that anyone tempted to proceed on the faith of the old certificate in the name of the defendant will, merely by conducting the simple search routinely undertaken as the first step in any conveyancing transaction, discover immediately that that certificate of title no longer represents land in any folio of the register. There is also the point, to which I am about to come, that there will be a requirement for surrender of the existing certificate. In this case, I am willing – as Hamilton J was in Botterill v Botterill (2000) 10 BPR 18,787 – to make an order under s.138 directing replacement of the folio of the register and the issue of a new certificate of title. 12 Another order now sought by the plaintiffs (indeed, sought at the suggestion of the Registrar General made in the letter of 15 June 2004) is an order that the defendant deliver up the existing certificate of title. The plaintiffs have construed the Registrar General's suggestion as referring to an order that the certificate be delivered up to the court. I do not think that that is what the Registrar General has in contemplation. I also doubt the utility and desirability of such an order if only because, if it were complied with, there would be an unresolved question as to what was then to be done with the surrendered certificate. Section 138 itself contemplates, in sub-s(5), an order for delivery up of a certificate of title to the Registrar General for the purpose of giving effect to any order made under that section. It will be appropriate to make an order to that effect as a means of laying a basis for redressing the situation under which two certificates are in circulation. 13 The next matter requiring attention concerns Orders 5 and 6 and the proposition that the plaintiffs' costs of the specific performance suit and the continuation of the proceedings to secure registration as proprietors should not only be borne by the defendant but also defrayed out of the purchase moneys paid into court. In that connection, Mr Charles took me to the decision in Dotter v Evans [1969] VR 41. Gillard J there said: "It seems to me that the plaintiff has been put to unnecessary expense by the defendant in this case and, therefore, I intend to adopt the practice which commended itself to Molesworth, J., in Weigall v Barber , (1884), 10 VLR (E) 90. I therefore order that the plaintiff's costs of this motion and of the service on the defendant of the said documents be taxed and when taxed be paid to the plaintiff's solicitors for and on behalf of the plaintiff out of the moneys paid into court for the benefit of the defendant under this order. I also order that the plaintiff's taxed costs of all prior proceedings herein be paid to the plaintiff's solicitors for and on behalf of the plaintiff out of the moneys paid into court as aforesaid." 14 The same comment as to unnecessary expense holds good here and I consider like relief to be appropriate, noting, however, that the plaintiffs' costs have, as to part, already been assessed. The course that commended itself to Gillard J in Dotter v Evans (above) is consistent with the approach taken by Fry J in Green v Sevin (1879) 13 Ch D 589 at 602. It is also reflected in the orders made in Brice v Mackay [1983] Qd R 543 and was adopted by Young CJ in Eq in AJDJ Pty Ltd v Pacificwest Developments Pty Ltd [2002] NSWSC 842. I am therefore content, as a matter of principle, to make orders accordingly. 15 There are, however, some aspects of the orders sought in that respect that require attention and revision. 16 One order proposed (Order 5) is to the effect that the plaintiffs' costs already assessed ($25,789.28) be paid out of the moneys in court, together with interest. The first part of this is within the principles outlined but the interest element requires some examination. The relevant order for costs was the fifth of the orders made on 7 August 2003. There was no order under s.95(4) of the Supreme Court Act 1970 or otherwise for the payment of interest on costs. Following the assessment of the costs the subject of that order, the costs assessor's certificate of determination was lodged in the registry and judgment was, pursuant to s.298JA of the Legal Profession Act 1987, entered on 10 May 2003 for the sum assessed. That judgment, like any other, carries interest pursuant to s.95(1) of the Supreme Court Act. Resort to the moneys in court should therefore be limited to the judgment debt of $25,789.28 plus interest thereon at court rates from 10 May 2004. The applicable order should be framed accordingly. 17 The plaintiffs also seek an order (Order 6) that their further costs, as assessed, be paid out of the moneys in court, coupled with an order that nothing be paid out to the defendant without notice to the plaintiffs (Order 4). There are two problems here. First, it is not appropriate that the whole of the balance of the moneys in court after allowing for the costs of $25,789.28 and interest to which I have already referred should be tied up pending assessment of the plaintiffs' further costs. Second, no grounds are shown for what amounts, in a practical sense, to an ability for the plaintiffs to superintend the payment out of the whole of the moneys in court. 18 It is proper to order that the defendant pay the plaintiffs' additional costs and that these costs be assessed on the indemnity basis. The defendant's recalcitrance justifies such an order. Beyond that, it will be appropriate to order that a further $20,000.00 be retained in court (over and above the $25,789.28 plus interest) pending filing of a certificate of assessment of the additional costs, subject to a proviso that the retention requirement shall cease to operate at the expiration of six months if the certificate has not then be filed. This will be on the basis that the $20,000.00 will be applied in or towards satisfaction of the further costs if the certificate is so filed and, subject to that, will be payable to the defendant. 19 I should add, in conclusion, that I am satisfied that the sum mentioned in Order 1 is the appropriate sum to be paid into court by way of balance of purchase moneys. Ongoing adjustment for rates has caused the figure to change slightly since that amount was calculated, but the adjustment is against the plaintiffs and they make no complaint. In relation to rates, I note the undertaking of the plaintiffs, given to the court by their counsel, to pay $186.00 to Gosford City Council within seven days after these orders are made. 20 In the result, the orders of the court are as follows: 1. The plaintiffs pay into court the sum of $198,966.31 within seven days after the making of this order, such sum to be held for the defendant subject to Orders 4 and 6. 2. Upon lodgment of: 2.1 an office copy of these orders; 2.2 an office copy of the orders made in these proceedings on 7 August 2003; 2.3 a copy (verified by statutory declaration) of the court's receipt for money paid into court in accordance with Order 1; and 2.4 the memorandum of transfer ("Transfer") bearing date 10 May 2004, in the names of the plaintiffs as transferees, and signed in the name of, and on behalf of, the defendant as transferor by the Deputy Registrar in Equity pursuant to orders made in these proceedings on 7 August 2003 under section 100 of the Supreme Court Act 1970, the Registrar General must, if and when the Transfer is recorded in the folio of the register relating to the whole of the land contained in Folio Identifier 81/578188 ("Property"), pursuant to section 138 of the Real Property Act 1900: 2.5 cancel the existing folio of the register for the Property; 2.6 create a new folio of the register for the Property; and 2.7 issue a new certificate of title for the Property, recording the plaintiffs as registered proprietors. 3. The defendant forthwith deliver to the Registrar General certificate of title Folio Identifier 81/578188 . 4. The judgment debt for the plaintiffs' costs in the sum of $25,789.28, together with interest thereon from the date of judgment (10 May 2004) pursuant to s.95(1) of the Supreme Court Act 1970 be set off against and paid to the plaintiffs' solicitors for and on behalf of the plaintiffs out of the funds paid into court pursuant to Order 1. 5. The plaintiffs' further costs of these proceedings up to and including the taking out of these orders and having a minute of these orders lodged with the Registrar General be paid by the defendant, such costs to be assessed on the indemnity basis. 6. A sum of $20,000.00 out of the funds paid into court pursuant to Order 1 remain in court on the basis that: (a) if, within six months after the making of these orders, a certificate of determination of assessment of the costs the subject of Order 5 is filed in the registry (i) that sum of $20,000.00 shall be applied in or towards satisfying the resultant judgment for the amount of unpaid costs; (ii) any balance of that sum of $20,000.00 shall be held for the defendant; and (b) if, within that period of six months, no such certificate of determination is so filed, that sum of $20,000.00 shall be held for the defendant; and (c) nothing in this order restricts the ability of the plaintiffs to recover the costs the subject of Order 5. 7. Grant liberty to apply. ********** Last Modified: 06/23/2004 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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