New South Wales Supreme Court CITATION : Icamp v Eykamp [2008] NSWSC 853 HEARING DATE(S) : 18/08/08 JUDGMENT DATE : 20 August 2008 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : Order extending operation of caveat until further order discharged to the intent that there is no order in force for extension of operation of caveat CATCHWORDS : CAVEATS - whether caveator had arguable case for interest claimed - interest under purported agreement creating security for debt - debt statute barred - morrtgage duty not paid on agreement - agreement unenforceable - extension of caveat refused Duties Act 1997, ss 203A, 205(a), 211 LEGISLATION CITED : Real Property Act 1900, s 74K Real Property Regulation 1998, clause 7 CATEGORY : Principal judgment CASES CITED : Neoform Developments and Interiors Pty Ltd Town and Country Marketing Pty Ltd [2002] NSWSC 344 Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560 PARTIES : Roy Douglas Icamp - Plaintiff Lynn Allen Eykamp - Defendant FILE NUMBER(S) : SC 4250/08 COUNSEL : Mr P M Jeffriess - Plaintiff Mr J T Johnson - Trustee for Defendant SOLICITORS : Everingham Solomons - Plaintiff Sally Nash & Co - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J WEDNESDAY 20 AUGUST 2008 4250/08 ROY DOUGLAS ICAMP v LYNN ALLEN EYKAMP JUDGMENT 1 The plaintiff makes application under s 74K of the Real Property Act 1900 for an order extending the operation of a caveat. 2 The caveat affects a rural property "Nibiru", Quirindi, of which the registered proprietors are a son of the plaintiff and the son's former wife. 3 It will be convenient to refer to the plaintiff (father) as "Roy", the defendant (son) as "Lynn" and the son's former wife as "Janet". 4 The certificate of title for the relevant land shows Lynn and Janet to be registered proprietors as tenants in common in equal shares. The caveat, by its terms, forbids the recording of any dealing in respect of the subject land (other than a plan) affecting the estate or interest claimed by the caveator and set out in Schedule 1 to the caveat. 5 Schedule 1 to the caveat is in these terms: " Nature of the estate or interest in the folio of the Register Repayment of the loan of four hundred thousand dollars ($400,000.00). By virtue of the instrument referred to below Nature of Instrument Date Parties LOAN AGREEMENT 29/01/1996 LYNN ALLEN EYKAMP AND ROY DOUGLAS ICAMP By virtue of the facts stated below " 6 The purported agreement of 29 January 1996 is in evidence. It is between Lynn and Roy, as the description in Schedule 1 implies. There is no basis on which the agreement could be the source of any estate or interest on the part of Roy in the undivided one-half share of Janet. The caveat is sustainable, if at all, only in respect of the undivided one-half share of Lynn. 7 The relevant operative part of the agreement is as follows: "NOW THIS AGREEMENT IN CONSIDERATION of the amount of $400,000 is hereby acknowledged and the premises is witnessed as follows: 1. Lynn Allen Eykamp will grant an unregistered interest over the property 'NIBIRU' for a sum of $400,000 to be repaid at call of Roy Icamp. 2. Lynn Allen Eykamp grants to Roy Icamp (Father) an unregistered interest over the property 'NIBIRU' in exchange for $400,000 cash. 3. Lynn Allen Eykamp agrees not ever to Mortgage the property 'NIBIRU' to any financial institution whilst this debt remains unpaid. 4. Should Lynn Allen Eykamp fall into dispute with any party the property 'NIBIRU' shall unconditionally revert forthwith to Roy Icamp in total discharge of the debt $400,000 interest free irrespective of any repayments." 8 It will be seen at once that, whatever uncertainties the drafting raises, the agreement relates to an alleged debt of $400,000 owed by Lynn to Roy. Clause 1 speaks of "a sum of $400,000 to be repaid at call of Roy Icamp". By clause 2, the so-called "unregistered interest over the property 'NIBIRU'" is expressed to be given "for" what clause 1 refers to as "a sum of $400,000 to be repaid at call of Roy Icamp". Clause 4 appears to provide for some alternative means of satisfaction of "the debt of $400,000" in a particular circumstance. Roy has given evidence that he advanced $400,000 to Lynn in January 1996. 9 It thus seems reasonably clear that a debt of $400,000 "to be paid at call of Roy Icamp" is at the centre of the transaction effected (or purportedly effected) by the agreement. 10 It must follow that the advance of $400,000 made by Roy to Lynn in 1996 on the basis of the agreement so as to be repayable by Lynn on demand ("at call of Roy Icamp"), the debt is now statute barred. In the case of an "on demand" loan, time starts to run, for limitation purposes, from the date the loan was made: Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560. I quote from the joint judgment of Dixon CJ, McTiernan J and Taylor J at CLR 566: "It is the same as the case of money lent payable upon request, with interest, where no demand is necessary before bringing the action. There is no obligation in law to give any notice at all; if you choose to make it part of the contract that notice shall be given, you may do so. The debt which constitutes the cause of action arises instantly on the loan. Where money is lent, simply, it is not denied that the statute begins to run from the time of lending" (at 464 [at 840])." 11 Roy has given evidence of a demand made upon Lynn on 15 August 2007 and that no payment was forthcoming. The debt was already statute barred at that time. That position had also pertained when the caveat was lodged on 1 August 2007. 12 This is sufficient to warrant the conclusion that, if and to the extent that the true effect of the agreement was to give Roy a security interest in Lynn's undivided one-half share, that interest is no longer recognisable since the debt cannot be recovered. 13 There is a further point. The agreement bears no evidence of its having been duly stamped. On the thesis Roy propounds, the agreement is a "mortgage" within s 205(a) of the Duties Act 1997 and accordingly is and remains liable to mortgage duty pursuant to s 203A. Because no such duty has been paid, s 211 produces the effect that the agreement is unenforceable: see Neoform Developments and Interiors Pty Ltd Town and Country Marketing Pty Ltd [2002] NSWSC 344. 14 Having regard to both the limitation point and the non-payment of mortgage duty, Roy is in no position to sue for the alleged debt of $400,000 or to enforce the security for that debt supposedly created by the agreement. 15 It must follow that Roy has no estate or interest in Lynn's undivided one-half share of the relevant land. 16 This is sufficient to dispose of the s 74K application. The plaintiff has not shown, as contemplated by that section, that the caveat has or may have substance. 17 This conclusion makes it unnecessary to address directly the defendant's objection based on the form of the caveat – in particular, that "Repayment of the loan of four hundred thousand dollars ($400,000.00)" is not, in any sense, a description of any known species of estate or interest in land. In a number of recent cases "equitable interest" has been held to be an inadequate description having regard to the requirements applying through clause 7 of the Real Property Regulation 1998. All the more inadequate is the description employed in this case. 18 I record the fact that the second defendant (the trustee of the bankrupt estate of Lynn) raised, by reference to transcripts of examinations under the Bankruptcy Act 1966, the possibility that the purported agreement is a false instrument created for dishonest purposes. In view of the position I have reached on the present application, that possibility does not need to be addressed at this stage. It will no doubt be relevant upon a final hearing. 19 Because the s 74K application was heard on the afternoon of the day on which the caveat was due to lapse (18 August 2008), I made an order extending the caveat until further order so as to allow time for this judgment to be prepared. The appropriate course now is to order that that order made on 18 August 2008 be discharged to the intent that there is no order in force for extension of the operation of the caveat. It will also be ordered that the plaintiff pay the defendants' costs of the application for the extension of the caveat. ********** 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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