New South Wales Supreme Court CITATION : Pacific Blue Australia Pty Ltd v Somalis [2008] NSWSC 16 HEARING DATE(S) : 22 January 2008 JUDGMENT DATE : 22 January 2008 JURISDICTION : Equity JUDGMENT OF : Campbell JA EX TEMPORE JUDGMENT DATE : 22 January 2008 DECISION : Order made for withdrawal of caveats. CATCHWORDS : REAL PROPERTY - caveats - application for withdrawal of caveats - application to restrain lodgement of further caveats - contracts for sale of land exchanged - whether appropriate to order removal of caveat when caveator not served - whether appropriate to make declaration that defendant has no caveatable interest in the land LEGISLATION CITED : Real Property Act 1900 PARTIES : Pacific Blue Australia Pty Ltd - Plaintiff John Somalis - Defendant FILE NUMBER(S) : SC 1192/08 COUNSEL : R Harper SC; D Jenkins - Plaintiff No Appearance - Defendant SOLICITORS : John Edmunds - Plaintiff Hall Partners - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST CAMPBELL JA TUESDAY 22 JANUARY 2008 1192/08 PACIFIC BLUE AUSTRALIA PTY LIMITED v JOHN SOMALIS JUDGMENT – Ex Tempore 1 HIS HONOUR: This is an ex parte application for some of the orders contained in a summons that was filed in court today. The applicant is the registered proprietor of various lots in a strata plan. It appears as though the applicant is either the developer, or someone associated with the developer. 2 The orders that the plaintiff seeks today are orders that the defendant withdraw certain caveats over those lots, and that the defendant be restrained from lodging any further caveats over those lots. A claim is also made for a declaration that the defendant has no caveatable interest in the land. 3 It appears that the defendant is associated, in some fashion not particularly clear on the evidence, with a company called Vida Group Holdings Pty Limited. On or about 29 November 2007 Vida Group Holdings Pty Limited lodged caveats on the lots in question. It asserted that the estate or interest it held was "exchanged contract of sale for the specified unit in section 'A' in this document labelled 'land'. Equitable interest." 4 The facts said to give rise to the interest were: "current, exchanged and unconditional contract of sale in place and vendor has on-sold without notice or rescission." 5 The statutory declaration that is a necessary part of the caveat was made by the present defendant, and a Mr Mark Hill. The address for service of the caveator was stated to be the address of the present defendant and Mr Mark Hill. 6 There are proceedings on foot, number 1087 of 2008 in the Equity Division, in which the present defendant and Mr Hill sue the plaintiff. They claim entitlements under an agreement they refer to as the "Symphony Commission Agreement". They assert that they are entitled to what amounts to a commission arising from a contract for the sale by the plaintiff to a company called Symphony Hedge Fund Pty Limited of 15 particular strata title units, including those that are the subject of the present application. They claim, in addition, an entitlement to the transfer of two identified units in the development (not being ones that are the subject of the present application), pursuant to that same Symphony Commission Agreement. They claim specific performance of the Symphony Commission Agreement by transfer of those two units to them, and also damages in the sum of $3,642,375. 7 The caveats to which I have earlier referred expired after the service of lapsing notices. The caveats that are the subject of the present application were then put on. All of the new caveats are in the same form. In each of them, the caveator is the present defendant. The estate or interest that he claims is: "Equitable interest in the proceeds of sale to the value of $3,642,375 pursuant to the Symphony Commission Agreement between the registered proprietor and the caveator, in which the caveator is to receive from the sale of the property (IES) subject of the caveat (S) the said sum from the proprietor." 8 The defendant and Mr Hill have been represented by Mr Trevor Hall, solicitor. He has been in communication, in the course of the present month, with the solicitor for the plaintiff. On the day that the caveats the subject of the present application were filed, Mr Hall wrote to the solicitors for the plaintiff, referring to the caveats that had previously been filed by Vida Group Holdings Pty Limited, saying: "We note that our clients (although previously the party lodging on behalf of Vida) are a separate entity to Vida for the purposes of section 74O of the Real Property Act 1900 (NSW) and that our clients allege a different interest to the former caveator, Vida." 9 The orders for which the plaintiff presses most strongly today are that the defendant withdraw the caveats in question forthwith, and that he be restrained from lodging any further caveats over the land in question. 10 Orders for the withdrawal of caveats are made under section 74MA of the Real Property Act. A precondition of the court ordering withdrawal of a caveat is stated in the opening words of section 74MA(2), namely: "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 order sought were made or after having made an order dispensing with service, the Supreme Court may..." 11 The communications between the solicitor for the plaintiff and Mr Hall have continued, to and including today. On Thursday, 17 January 2008, at a time when the solicitor for the plaintiff had foreshadowed an application to require the caveats to be removed, Mr Hall wrote saying "we hold instructions to accept service." 12 Today, around the time the court was sitting, Mr Hall sent a fax to my Associate that said: We refer the above matter that we understand will be filed before his Honour today as a duty matter. The proceedings include an application to remove a caveat. We oppose the proceedings being listed as a duty matter on the basis that undertakings have been given to remove caveats subject of the summons. We apologise that we are unable to attend Court today at 10 am and enclose the email string that we have asked our opponents to bring to your attention. We enclose a copy of our client's statement of claim in the related action 1087 of 2008." 13 Enclosed with that letter was an exchange of correspondence between Mr Hall and the solicitors for the plaintiffs. Mr Hall made an offer, in an email of 9.15am today, that was conditional upon the plaintiff taking certain procedural steps in the court. He sent the solicitor for the plaintiff a different email at 9.20 that said: "Our position stands as indicated below. Noting that you have not yet filed proceedings please advise as to the proposal which is an open offer. The caveats will be removed today. Our clients will plead their case by amending their current action against your client and your clients can plead its (alleged) damages as cross-claim in that action." 14 Another email, of 9.58am today, stated that Mr Hall could not attend court at 10am, and: "Our position is that the caveats will come off today. Your client has the protection of section 74O of the Real Property Act in this regard." 15 He also indicated that he would oppose the making of certain orders, which I have decided I will not in any event make today. 16 In these circumstances, it is clear that the substance of the application is already known to the solicitor for the caveator. Further, the caveator's position is that the caveats will be withdrawn today. 17 The plaintiff has settlements of contracts for sale of the land over which the caveats have been lodged coming up in the next few days. The first of them is tomorrow. 18 In my view, given the history that I have related in this judgment, the plaintiff would be justified in having the absolute assurance that a court order would give it that the caveats in question will be removed. When the substance of the practical effect thereby achieved is not something with which the caveator disagrees, and the caveator's solicitor is aware of the proceedings, in my view it is appropriate to make an order dispensing with service of the summons. 19 While Mr Harper of senior counsel did not actually abandon a claim that I make a declaration that the defendant has no caveatable interest in the land, he did not press it strongly, and it seems to me it is not appropriate to make such a declaration on an ex parte application. 20 The plaintiffs sought an order that the defendant be restrained from lodging any further caveats over the land in question. I am not persuaded that there is a sufficiently cogent threat that such caveats might be lodged in the immediate future as would justify an ex parte order. In those circumstances the only order of substance that I shall make is that the defendants withdraw the caveats in question. 21 It is appropriate for the costs of today's application to be reserved. That would give the defendant an opportunity to make such submissions as it wished about whether the bringing of the proceedings was necessary, and any other matters which might bear upon costs. 22 I appoint Friday, 8 February 2008 before the Registrar for the further hearing of the summons. 23 I direct the plaintiff to make available to Mr John Somalis, by delivery of a copy to the office of Mr Hall solicitor, a copy of all documents filed in court today, and of the orders made today, by 5pm 22 January 2008. 24 I make order 2 in the summons. The balance of the summons is stood over to Friday, 8 February 2008. 25 These orders may be entered forthwith. ********** 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.