New South Wales Supreme Court CITATION : Darwiche & Anor v Kele Property Group Pty Ltd & Anor [2008] NSWSC 661 HEARING DATE(S) : 26 June 2008 JUDGMENT DATE : 26 June 2008 JURISDICTION : Equity Division JUDGMENT OF : Palmer J EX TEMPORE JUDGMENT DATE : 26 June 2008 DECISION : Caveat extended. CATCHWORDS : CAVEATS – Whether caveator has arguable case for interest claimed – whether application to extend caveat is appropriate vehicle to determine difficult questions of statutory illegality and whether contract unenforceable. LEGISLATION CITED : Property, Stock and Business Agents Act 2002 (NSW) – s 8 CATEGORY : Procedural and other rulings CASES CITED : Nelson v Nelson (1995) 184 CLR 538 Manel Darwiche (First Plaintiff) PARTIES : Bilal Ahmad Darwiche (Second Plaintiff) Kele Property Group (First Defendant) Q&A Properties Pty Ltd (Second Defendant) FILE NUMBER(S) : SC 2884/08 COUNSEL : D.W. Elliott (Plaintiffs) L. Katsinas (Defendants) SOLICITORS : Queen Street Chambers (Plaintiffs) Frank Low Yeung Solicitors (Defendants) 2884/08 Darwiche & Anor v Kele Property Group Pty Ltd & Anor JUDGMENT – Ex tempore 26 June, 2008 1 The Plaintiffs have commenced proceedings for specific performance of a contract for sale of land. The Defendants, the vendors, dispute that a deposit has been paid in accordance with the contract and have purported to terminate the contract. The Plaintiffs lodged a caveat, claiming an equitable interest in the land under the contract. The Defendants served a lapsing notice. 2 The Plaintiffs, by their Notice of Motion, seek the extension of the caveat. Mr Katsinas of Counsel, who appears for the Defendants, submits that the caveat should not be extended. He says that the Plaintiffs have no equitable interest in the land because it is unarguable that the contract was validly terminated. The evidence, so far, is to the following effect. 3 The Plaintiffs say that they agreed with the Defendants that, in consideration for introducing a number of purchasers for the purpose of buying units in the Defendants' development, the Plaintiffs would be entitled to a certain fee. They say that, shortly thereafter, having introduced a number of purchasers, they agreed with the Defendants that the fee payable for that introduction would be a sum of $80,000 and would be credited as a deposit on the purchase by the Plaintiffs of a certain unit in the Defendants' development. 4 The Defendants have disputed that such an agreement was made and have terminated the contract for sale, on the basis that the stipulated deposit has not been paid. 5 Of course, whether or not such an agreement was made between the parties so that the deposit stipulated in the contract has, in effect, been paid, is a question of fact which cannot be determined in an application such as this, as Mr Katsinas concedes. However, Mr Katsinas says that it is unarguable as a matter of law that the Plaintiffs have no interest in the land because, even if such an agreement were made, it is an illegal agreement. He says that the Plaintiffs, in introducing purchasers to the Defendants for a fee, were acting as real estate agents although they were not licensed as real estate agents. Section 8 of the Property, Stock and Business Agents Act 2002 (NSW) provides that a person shall not act as a real estate agent without a licence. A substantial penalty for doing may be imposed. By reason of that circumstance, Mr Katsinas says that the arrangement between the Plaintiffs and the Defendants for the crediting of a deposit, even if it was made, was illegal and unenforceable so that no deposit was validly paid under the contract and the Defendants have effectively terminated it. 6 I do not think the matter is nearly as simple as that. It is always a difficult question of interpretation to determine whether a statute which forbids the doing of an act also renders unenforceable for illegality a contract which requires, or somehow depends upon, the doing of that act: see e.g. Nelson v Nelson (1995) 184 CLR 538, at 551ff. 7 There is also a difficult question as to whether, even if an agreement between the Plaintiffs and the Defendants for the payment of an $80,000 introduction fee were unenforceable by the statute so that the Plaintiffs could not sue for and recover the fee, an agreement between the Plaintiffs and the Defendants to credit that fee as a deposit under a contract for purchase of land is also rendered unenforceable for illegality, with the result that the Plaintiffs have breached the contract by failing to make a payment which the Defendants have, by an unenforceable agreement, said that they do not have to pay. 8 There are manifold difficulties, both factual and legal, inherent in any pleading which alleges that a contract is rendered unenforceable by statutory illegality. The exploration and ascertainment of the factual issues are essential to a determination of the legal issues. An application such as this is certainly not the appropriate vehicle for such determination. All that the Plaintiffs have to demonstrate in an application to extend the caveat is that they have a prima facie or arguable case for an interest in the land. I think that has been demonstrated in the present case and the caveat should be extended. 9 The Plaintiffs' costs of the Motion will be paid by the Defendants on the indemnity basis, the Defendants having rejected a Calderbank offer made on reasonable terms and having allowed a reasonable time for acceptance. 10 In this matter, I make directions in accordance with paragraphs 1 to 6 of the Short Minutes of Order, initialled by me and placed with the papers. – oOo – 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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