Supreme Court New South Wales Medium Neutral Citation: Ranieri v Johnson [2012] NSWSC 428 Hearing dates: 11/04/12 Decision date: 11 April 2012 Jurisdiction: Equity Division Before: McDougall J Decision: Order for withdrawal of caveat, with costs on the indemnity basis. Catchwords: REAL PROPERTY - Torrens title - caveat - whether caveat discloses a caveatable interest - whether plaintiff entitled to an order pursuant to s 74MA of the Real Property Act 1900 (NSW) to have caveat withdrawn - [PROCEDURE] - documents - affidavits - application to read affidavit in court - whether defendant should have leave to rely on affidavit not served in accordance with directions. Legislation Cited: Civil Procedure Act 2005 (NSW) Real Property Act 1900 (NSW) Category: Procedural and other rulings Parties: Lidia Ranieri (Plaintiff) Peter Lindsay Johnson (Defendant) Representation: Counsel: D L Cook (Plaintiff) Solicitors: Boyd-Boland Law (Plaintiff) J Johnson (Son of Defendant) File Number(s): 2012/91764 Judgment - ex tempore (revised 11 april 2012) 1HIS HONOUR: The plaintiff is the proprietor of a property at Surry Hills. The property is occupied by the defendant pursuant to a lease which commenced originally on 13 August 2003. That lease has been renewed from time to time but will expire at the latest on 12 August 2012. 2The defendant conducts some sort of business from the premises. He has attempted to sell his business. Clearly enough, for the business to be saleable, any purchaser would require a term of more than five or six months. It is apparent that at one stage the plaintiff contemplated granting a further lease to a proposed purchaser known as XL Australia Pty Limited. 3The matter is before the court for an urgent final hearing because the plaintiff has contracted to sell the property and the sale either is, or soon will be, due for completion. Completion is being impeded because the defendant has caused a caveat to be lodged against the title to the property. The plaintiff seeks an order pursuant to s 74MA of the Real Property Act 1900 (NSW) that the caveat be withdrawn. The real issue 4The fundamental issue in the case is whether the caveat discloses a caveatable interest. If it does not then there is no reason why the order should not be made. If it does then questions of balance of convenience might arise. Procedural history 5The caveat was not lodged until after the defendant became aware that the plaintiff had contracted to sell the property. The plaintiff has, through her solicitors, requested the defendant to withdraw the caveat. The defendant has declined to do so. Accordingly, these proceedings were commenced on 22 March 2012. They were back before the court on 27 March 2012, when Ball J gave directions for the defendant to serve his evidence, for the plaintiff to serve evidence in reply, and for the matter to come back before the duty judge on 4 April 2012. 6The defendant did not comply with those directions. The matter came back before me, as duty judge, on 4 April 2012. I extended the time for the defendant's evidence to be served until 2pm on 5 April 2012 and stood the matter over for hearing to today. 7The defendant did not comply with my direction. Indeed, he did not "serve" any evidence until, at about 10 to 10 today, the plaintiff's counsel was given a 33 page affidavit which apparently involved as well an exhibit comprising a substantial number of documents. It is apparent that the affidavit had been sworn yesterday. Quite why it took 24 hours or so to serve it was never explained. It is, in my view, consistent with a desire on the part of the defendant to drag these proceedings out for as long as possible in the hope of gaining some advantage thereby. Refusal of leave to rely on affidavit 8Having regard to the background that I have narrated, and to the urgency of the matter, I refused the defendant leave to rely on the affidavit. I did so because there was no satisfactory explanation given as to why the defendant had failed repeatedly to comply with the court's directions. There was reference made to his having had a cancer removed from his head, which for some reason that I do not follow, made it difficult for him to sit down. There was no medical evidence in support of that proposition; and in any event, it does not seem to me to have been an inconvenience that was likely to have prevented the directions being complied with. 9I took into account also that, for reasons which I shall explain in a moment, there are really significant problems attending the caveatable interest that is asserted in the caveat. Having those matters in mind, and bearing in mind the requirements of s 56 of the Civil Procedure Act 2005 (NSW), I concluded that the defendant should not be given leave to rely on the affidavit. In substance I did so because, as I explained, the fundamental issue for decision was whether the caveat disclosed a caveatable interest. That can be dealt with by assuming the truth of the facts asserted, and seeing whether, if proved, those facts would give rise to an interest that could support a caveat. The interest claimed 10I turn to that question. By the caveat the defendant sought to prohibit among other things the recording of any dealing affecting the estate or interest claimed by him. The caveat would thus prevent the registration of the transfer from the plaintiff to her purchaser. 11The nature of the estate or interest claimed is stated as follows: The current lessee, Peter Johnson, has an existing agreement with registered proprietor re: provision of new lease for business, existing tenancy until 12 August 2012. He operates a business in premises [described]. The property he wishes to place a caveat on is [one of those properties]. He is currently in process of selling the business, whereby the registered proprietor has agreed with the purchaser to a new lease. The agreement states that upon payment of outstanding rent, the purchaser will be allowed to sign the new 10 year lease by the registered proprietor. Upon the lessee obtaining moneys from the deposit by the purchaser of the business, so as to give effect to the agreement, he was informed the property is being sold and there will be no new lease. The lessee stands to lose $275,000 from the collapse of sale. He has just been told that the property has been sold and no lease granted. Thus the sale of business will collapse. 12It may be that I have not read in their intended sequence the words written in schedule 1. That is because, in two places, words have apparently been inserted, as indicated by arrows. Nonetheless, I think I have read out everything that is written as the description of the nature of the estate or interest claimed. 13The nature of the instrument is said to be "agreement in writing". Its date is said to be "approx Nov 2011". The parties are said to be "XL Australia Pty Ltd, Lidia Ranieri and Peter Johnson". Is there evidence of any agreement for lease? 14There is no evidence of any executed agreement for lease, either bipartite (between the plaintiff and XL, as I shall call it) or tripartite (between the plaintiff, XL and the defendant). The evidence is that on 22 December 2011 the plaintiff's then solicitor sent a letter to the solicitors for XL enclosing a draft lease and other documents. The instructions to prepare that came, apparently, from the letting agent. The letter stated among other things: Please note that the granting of the lease is subject to the lessee's final approval. The lease is also conditional on receipt of all arrears of rental and outgoings from the current lessee. ... My client requires the following prior to the commencement of the lease: [Matters such as rental, deposit and the like are then specified.]" 15There is no evidence that the lessee ever gave its final approval to the terms of the lease. Equally, if the word "lessee's" is a typographical error for "lessors", there is no evidence that the plaintiff ever gave her final (or indeed, any) approval. 16The reference to receipt of arrears of rent and outgoings was necessary because the defendant had, apparently habitually, been in default under the lease. Not surprisingly, the plaintiff wished all those arrears to be brought up-to-date before she would agree to the grant of a new lease. There is no evidence that the arrears of rental and outgoings were paid, although it was submitted for the defendant that he had made three payments on account of those arrears. The payments were characterised as having been made on account of the agreement for lease apparently said to have been evidenced in the letter, but given that they were due and payable under the lease, they could not amount to consideration sufficient to support some separate agreement. Nor, contrary to the defendant's submission, could they amount to acts of part performance of any such agreement for lease. 17There is no evidence that XL ever accepted the terms of the lease. There is thus no evidence of any agreement for lease. At most there was a proposal for lease which was subject to conditions precedent that were never met and which was never taken up by the proposed lessee, XL. 18On that basis, as a matter of fact, the interest claimed by the defendant in the land has not been made out. No caveatable interest 19It is not however necessary to rest the decision on that basis. At most the caveat discloses that the lessee, the defendant, has a tenancy until 12 August 2012. However, the interest sought to be protected is not that tenancy, but some interest said to arise under an alleged agreement for lease. Even if an agreement for lease had been made (contrary to the conclusion that I have just expressed), and even if it had become unconditional (again, contrary to that conclusion), the only interest in land created thereby would be an interest in the proposed lessee XL. Such an agreement could create no interest in the vendor of the business, for the purposes of which sale the new lease was (hypothetically) agreed to be given. No doubt, the grant of the new lease would facilitate the sale of the business. But that does not convert the interest in land that might be created by any hypothetical agreement for lease, being an interest of the hypothetical lessee, to an interest in land in the vendor of the business 20In short, in my view, even if the interest asserted could be supported as a matter of fact (and it cannot) the caveat does not on its face disclose any interest capable of being protected. 21Accordingly, it is clear that the plaintiff is entitled to the relief sought by the summons. Orders 22I order: (1)Pursuant to s 74MA of the Real Property Act 1900 (NSW), that the defendant or some person authorised by him forthwith withdraw caveat AG824610Y lodged by him against the title to the land identified in folio identifier 1/222332. (2) That these orders be entered forthwith. (3)The defendant to pay the plaintiff's costs. Indemnity costs 23The plaintiff seeks costs on an indemnity basis. Although the defendant did not wish to be heard, it is appropriate that I set out my reasons briefly. 24There is no reason why costs should not follow the event. The only question is whether those costs should be assessed on the ordinary or on the indemnity basis. For the reasons that I have given, I am of the view that the caveat was bad in law and hopeless as a matter of fact. The defects in the caveat were pointed out by letter of 6 March 2012. If there were a response to that letter, it did not lead to the caveat being withdrawn. 25On 28 March 2012 - that is to say shortly after these proceedings were commenced - the plaintiff's solicitors made an offer to the defendant that the plaintiff would meet her own costs in the event that the defendant agreed to withdraw the caveat. Although the time limited for acceptance of that offer was brief, the prospect of further time was held out. The offer was not accepted, nor was there any request for further time to consider it. 26In my view, the caveat was always hopeless and the defendant should have complied with the requirements made of him to withdraw it. The failure to do so is in my view a sufficient basis for ordering indemnity costs. (1)I order that costs be assessed on the indemnity basis. (2)These orders are to be taken out forthwith. (3)I direct that the exhibits be returned. ********** 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. Decision last updated: 09 May 2012