Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd [2015] NSWCA 100 Hearing dates: 19 February 2015 Date of orders: 16 April 2015 Decision date: 16 April 2015 Before: Macfarlan JA at [1]; Emmett JA at [2]; Gleeson JA at [122] Decision: (1) Leave to appeal be granted; (2) The applicant file a notice of appeal in the form of the draft notice of appeal contained in the application book; (3) The appeal be allowed; (4) Orders made by the Land and Environment Court on 13 March 2014 be set aside; (5) The matter be remitted to the Land and Environment Court for the purpose of hearing and determining, according to law, the question of the respective interests that the applicant and the first respondent had in the Resumed Land as at 21 September 2012; (6) The first respondent pay the applicant's costs of the application for leave to appeal and of the appeal; (7) Orders (1)-(6) be conditional on the applicant's giving an undertaking to the Court that, if it be determined that Stacks Managed Investments Pty Ltd acted in breach of its duty to the applicant in the exercise of the power of sale in entering into the Second Contract, the applicant will not seek any further remedy for breach of duty against either Stacks Managed Investments Ltd or the second respondent; (8) If no undertaking in the terms of order (7) is proffered within 14 days, the application for leave to appeal be refused with costs. Catchwords: CORPORATIONS – winding up – deregistration and reinstatement – vesting of a deregistered company's property in the Australian Securities and Investments Commission – whether, during the period of a mortgagor company's deregistration, the mortgagee continues to owe relevant duties to it – Corporations Act 2001 (Cth), s 601AD EQUITY – general principles – equitable estates and interests – interest of a purchaser under an uncompleted contract for the sale of land – whether specific performance would have been ordered – whether other equitable remedies would have been available EQUITY – general principles – priority and notice – competition between a mortgagor's equity of redemption and the interest of a purchaser under an uncompleted contract for the sale of land – whether the equity of redemption is subject to a properly exercised power of sale by the mortgagee MORTGAGES – mortgages and charges generally – remedies of the mortgagor – improper exercise of the power of sale – whether the mortgagee failed to take reasonable care in relation to obtaining market value for land sold in the exercise of the power of sale – Corporations Act 2001 (Cth), s 420A REAL PROPERTY – compulsory acquisition of land – compensation – whether the first respondent has an "interest" in the relevant land – Land Acquisition (Just Terms Compensation) Act 1991 (NSW), s 4 Legislation Cited: Civil Procedure Act 2005 (NSW), s 94 Conveyancing Act 1919 (NSW), s 111A Corporations Act 2001 (Cth), ss 420A, 601AB, 601AD, 601AH Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 4, 5, 11, 12, 13, 15, 19, 20, 34, 37, 39, 40, 41, 42, 43, 44, 46, 47, 48, 49, 51, 54, 55, 65, 66, 67 Land and Environment Court Act 1979 (NSW), ss 24, 25, 57 Real Property Act 1900 (NSW), ss 57, 58 Transport Administration Act 1988 (NSW), Sch 1 cl 11 Cases Cited: Artistic Builders Pty Ltd v Elliott & Tuthill (Mortgages) Pty Ltd [2002] NSWSC 16 Austin v Sheldon (1974) 2 NSWLR 661 Chang v The Registrar of Titles [1976] HCA 1; 137 CLR 177 Forsyth v Blundell [1973] HCA 20; 129 CLR 477 Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; 229 CLR 545 Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151 Jerome v Kelly (Inspector of Taxes) [2004] 1 WLR 1409 Kern Corporation Ltd v Walter Reid Trading Pty Ltd [1987] HCA 20; 163 CLR 164 Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; 113 CLR 265 Lysaght v Edwards (1876) 2 Ch D 499 McMahon v Sydney County Council (1940) 40 SR (NSW) 427 Morrow v Tucker (No 2) [2006] NSWSC 1358 Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 217 CLR 315 Texts Cited: JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed 2015, LexisNexis) E Tyler, P Young and C Croft, Fisher and Lightwood's Law of Mortgage (3rd Australian ed 2014, LexisNexis) Category: Principal judgment Parties: Golden Mile Property Investments Pty Ltd (in liq) (Applicant) Cudgegong Australia Pty Ltd (First Respondent) Transport for NSW (Second Respondent) Representation: Counsel: Mr M Hall with Mr G Stapleton (Applicant) Mr R Dick SC with Mr NM Eastman (First Respondent) Ms M Peatman (Second Respondent) Solicitors: ERA Legal (Applicant) PC Law (First Respondent) Hunt & Hunt Lawyers (Second Respondent) File Number(s): 2014/109574 Publication restriction: Nil Decision under appeal Court or tribunal: Land and Environment Court of NSW Citation: Cudgegong Australia Pty Ltd v Transport for NSW [2014] LEC 19 Date of Decision: 13 March 2014 Before: Pain J File Number(s): 2013/30171 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. MACFARLAN JA: I agree with Emmett JA. 2. EMMETT JA: This proceeding concerns entitlement to compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (the Just Terms Act) in respect of the resumption of land situated in Cudgegong Road, Rouse Hill (the Resumed Land). On 21 September 2012, the Resumed Land was acquired under the Just Terms Act by the second respondent, Transport for NSW (Transport NSW). At the time of the acquisition, the present applicant, Golden Mile Property Investments Pty Ltd (Golden Mile), was the registered proprietor of the Resumed Land under the Real Property Act 1900 (NSW) (the Real Property Act), although as at that date, it had been deregistered under s 601AB(2) of the Corporations Act 2001 (Cth) (the Corporations Act). 3. However, prior to the date of acquisition by Transport NSW, the first respondent, Cudgegong Australia Pty Ltd (Cudgegong), had, on 21 June 2012, entered into a contract to buy the Resumed Land from Stacks Managed Investments Ltd (Stacks), which was exercising power of sale under a registered mortgage over the Resumed Land granted to it by Golden Mile (the First Mortgage). There is now a dispute between Golden Mile and Cudgegong about which of them is entitled to compensation under the Just Terms Act as a result of the acquisition of the Resumed Land by Transport NSW. 4. The Valuer-General determined that the compensation payable under the Just Terms Act was $4,223,400. The sum of $3,043,760, being part of the compensation so determined, has been paid by Transport NSW to Stacks and to RTS Super Pty Ltd (RTS), the mortgagee under a second registered mortgage over the Resumed Land granted to it by Golden Mile (the Second Mortgage). The dispute between Cudgegong and Golden Mile concerns the balance of the compensation payable by Transport NSW. 5. On 11 March 2013, Cudgegong commenced proceedings against Transport NSW in the Land and Environment Court of New South Wales (the Cudgegong Appeal). In the Cudgegong Appeal, Cudgegong claims an order that the compensation payable in relation to Cudgegong's interest in the Resumed Land be determined at $16,273,522, plus disturbance costs. Cudgegong would be required to pay to Stacks the balance of the purchase price payable under its contract with Stacks. By notice of motion filed on 10 July 2013, Cudgegong asked for an order that Transport NSW pay to it the sum of $1,061,676 by way of advance payment of compensation under the Just Terms Act. 6. By amended notice of motion filed on 9 August 2013, Golden Mile claimed an order that it be joined as a party to the Cudgegong Appeal for the purpose of determining the nature of the estate or interest of Golden Mile and of Cudgegong in the Resumed Land at the acquisition date and the amount of compensation to which Golden Mile is entitled. On 29 August 2013, an order was made by the Land and Environment Court that Golden Mile be joined as the second respondent in the Cudgegong Appeal. 7. On 13 March 2014, for reasons published on that day, a judge of the Land and Environment Court (the trial judge) ordered Transport NSW to make an advance payment to Cudgegong of $757,300. In doing so, the trial judge concluded that Cudgegong had a relevant interest in the Resumed Land under its arrangements with Stacks that took priority over any residual interest that Golden Mile may have had in the Resumed Land. 8. By summons filed on 10 April 2014, Golden Mile applied for leave to appeal to this Court from the order made on 13 March 2014. Leave is required because that order was interlocutory: Land and Environment Court Act 1979 (NSW) (the Court Act), s 57(4)(d). If leave is granted, the appeal would be limited to a question of law: s 57(1). The President directed that the application for leave and argument on the appeal, if leave were to be granted, be heard concurrently. Scheme of the relevant legislation Just Terms Act 1. The Just Terms Act applies, relevantly for present purposes, to the acquisition of land, by compulsory process, by an authority of the State that is authorised to acquire the land by compulsory process: s 5. Transport NSW is such an authority: s 4(1) and Transport Administration Act 1988 (NSW), Sch 1 cl 11(1). Under s 11 of the Just Terms Act, an authority of the State may not acquire land by compulsory process unless the authority has given the owners of the land written notice of its intention to do so (by means of a proposed acquisition notice). Under s 4(1), owner of land means any person who has an interest in the land. Land includes any interest in the land. The term interest is also defined: interest in land means: (a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land. 1. Section 12 relevantly provides that a proposed acquisition notice need be given only to all the owners of the land who have a registered interest in the land, are in lawful occupation of the land, or, to the actual knowledge of the relevant authority, have an interest in the land. In addition, the authority must give a copy of the notice to any person who has lodged a caveat which is recorded in respect of the land in the register kept under the Real Property Act. Section 13 requires that a proposed acquisition notice be given at least 90 days before the land is compulsorily acquired. Under s 15, a proposed acquisition notice must request any owner who wishes to claim compensation for the acquisition to lodge a claim for compensation with the authority. 2. Section 19 provides that an authority may declare, by notice published in the Gazette, that any land described in the notice is acquired by compulsory process. A notice under s 19 that declares that land has been acquired by compulsory process is an acquisition notice. Under s 20, on the date of publication of such an acquisition notice in the Gazette, the land described in the notice is, by force of the Just Terms Act, vested in the relevant authority and is freed and discharged from all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with, the land. Under s 37, an owner of an interest in land that is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with Pt 3 of the Just Terms Act by the authority of the State that acquired the land. 3. Under s 34, a person who was in lawful occupation of land immediately before it was compulsorily acquired and to whom compensation is payable under the Act is entitled to remain in occupation until the compensation is duly paid to the person, the relevant authority makes an advance payment of not less than 90 per cent of the amount of compensation offered by the authority, or the relevant authority makes a payment into the trust account kept under Pt 3 of the Just Terms Act of not less than 90 per cent of the amount of compensation offered by the authority, whichever first occurs. Under s 51, which is in Pt 3, an authority is required to keep a trust account in connection with compensation payable under Pt 3. The authority must pay into the trust account any amount of compensation that is required by the Act to be paid into the trust account. 4. Part 3 of the Just Terms Act, which deals with compensation for acquisition of land, consists of ss 37 to 68. Section 39 provides that a person who wishes to claim compensation under Pt 3 must lodge a claim with the authority that is acquiring the land concerned. Under s 40, a person who claims compensation must state, in the claim form, whether the person is aware of any other person who has an interest in the land and who may be entitled to compensation. If the person is aware of such an interest, the claim must contain particulars of the interest. 5. Under s 41, an authority must, as soon as practicable after receiving a claim for compensation in respect of a compulsory acquisition, give the Valuer-General a copy of the claim. Under s 42, an authority that has compulsorily acquired land must, within 30 days after the publication of the acquisition notice, give the former owners of the land written notice of the compulsory acquisition, their entitlement to compensation and the amount of compensation offered, as determined by the Valuer-General. Such a notice (a compensation notice) must be given to all former owners of the land who, immediately before the acquisition, had a registered interest in the land or were in lawful occupation of the land or had, to the actual knowledge of the authority, an interest in the land that entitles them to compensation. Section 47 requires the Valuer-General to determine the amount of compensation to be offered to a person. 6. Under s 43, a compensation notice given to a former owner of land must be in a prescribed form, must notify the owner that the land has been compulsorily acquired, must state that the owner is entitled to compensation, must offer to pay a specified amount of compensation as determined by the Valuer-General and be accompanied by a form of deed of release and indemnity and must inform the owner of the right to object to the amount offered. Under s 44, a person entitled to compensation under Pt 3 may accept the amount of compensation offered by the authority in the compensation notice. 7. Under s 46, a person who has not been given a compensation notice may, nevertheless, lodge with an authority a claim for compensation under Pt 3. If the authority considers that the person is entitled to compensation, the authority is to give the person a compensation notice. Otherwise, the authority is to reject the claim by notice in writing given to the person. 8. Section 48 provides that an authority may, at any time after land is acquired, make an advance payment of compensation to any person who the authority considers is entitled to the compensation. The acceptance by a person of an advance payment of compensation does not constitute an acceptance of any offer of compensation made by the authority. Under s 49, interest is payable on any amount of compensation under Pt 3 from the date the land is acquired until the date the payment is made, and any such interest becomes part of the amount of compensation payable. 9. Under s 54, the amount of compensation to which a person is entitled under Pt 3 is such amount as, having regard to all relevant matters under Pt 3, will justly compensate the person for the acquisition of the land. Section 55 specifies matters to which regard must be had in determining the amount of compensation to which the person is entitled. Those matters are dealt with more explicitly in ss 56 to 62 inclusive. 10. Section 65 deals with the effect of an acquisition of a mortgage interest. If land that is subject to one or more mortgages is compulsorily acquired under the Just Terms Act, then, as a general rule, the compensation to which the owner of the land will be entitled in respect of the acquisition is to be determined as if the land had not been the subject of the mortgage. However, if compensation is payable to a mortgagee in respect of a mortgage interest, the compensation payable to the owner of the land acquired is to be reduced by so much of the compensation as is payable to the mortgagee. 11. A person who has claimed compensation under Pt 3 may, pursuant to s 66, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority. If any such objection is duly lodged, the Land and Environment Court must hear and dispose of the person's claim for compensation. Under s 67, a person who has not been given a compensation notice and whose claim for compensation under Pt 3 is rejected, or is taken to be rejected, may appeal to the Land and Environment Court against the rejection of the claim. That was the basis on which Cudgegong brought the Cudgegong Appeal. The Court Act 1. Jurisdiction is conferred on the Land and Environment Court to deal with relevant proceedings by the Court Act. Under s 24 of the Court Act, if a claim is made for compensation because of the compulsory acquisition of land in accordance with the Just Terms Act and no agreement is reached between the claimant and the authority required to pay the compensation, the claim is to be heard and disposed of by the Land and Environment Court and not otherwise. The Court must give effect to any relevant provisions of any Act that prescribe a basis for, or matters to be considered in, the assessment of compensation. 2. Relevantly for present purposes, s 25 of the Court Act provides that, in hearing and disposing of any claim referred to in s 24, the Land and Environment Court is to have jurisdiction to determine the nature of the estate or interest of the claimant in the subject land and the amount of compensation, if any, to which the claimant is entitled. In the exercise of that jurisdiction, the Court may order any other person who claims to have had, or may have had, an interest in the subject land at the date of acquisition to be joined as a party to the proceedings and may then proceed to determine the nature of the estate or interest of that person and the amount of compensation, if any, to which that person is entitled. The sale and the resumption The incorporation of Golden Mile and Cudgegong and the First Contract 1. Golden Mile was incorporated on 12 August 2003. Its directors were Mr Dilbragh Singh Billing, Mr Pritam Singh Benipal and Mr Sukhdev Singh. Each of the directors held one share in the capital of Golden Mile. 2. On 14 August 2003, Golden Mile entered into a contract to purchase the Resumed Land for the sum of $3,900,000. That contract was settled on 12 October 2004, when Golden Mile paid the purchase price, received a transfer from the then owners, and was registered as proprietor of the Resumed Land. The purchase price was funded as to the sum of $2,340,000 by a loan from Stacks, which was secured by the First Mortgage. A further $400,000 of the purchase price was funded by a loan from Taree Lands Pty Ltd, which was secured by the Second Mortgage. The balance of the purchase price was provided by Golden Mile from its own resources. On the same day, 12 October 2004, the Second Mortgage was transferred to RTS and, on 28 November 2005, the amount of the loan secured by the Second Mortgage was varied to $503,000. 3. Golden Mile subsequently became indebted to the Commissioner of Stamp Duties for non-payment of land tax and, on 14 September 2007, on the application of the Commissioner, an order was made for the winding up of Golden Mile. Mr Bruce Gleeson (the Liquidator) was appointed as liquidator of Golden Mile. On the same day, the Liquidator lodged a caveat under the Real Property Act in respect of the Resumed Land restraining any dealing with the Resumed Land. 4. Shortly after his appointment, the Liquidator was provided with a report as to the affairs of Golden Mile. Attached to the report was a schedule of creditors, which disclosed the following creditors: * Stacks, for moneys advanced - $2,340,000 * RTS, for moneys advanced - $503,000 * Commissioner of Stamp Duties, for land tax - $103,000. The schedule also disclosed debts due to directors and shareholders of Golden Mile in amounts aggregating $2,780,297.59. Notwithstanding that disclosure, the Liquidator has received only one proof of debt and no dividend has been paid to any creditor of Golden Mile. 1. On 20 December 2007, Stacks obtained a valuation of the Resumed Land by Carritt Taylor Valuations Pty Ltd showing a market value of the fee simple in possession as at 3 December 2007 of $1,400,000 (the 2007 Valuation Report). The 2007 Valuation Report was the only formal valuation commissioned by Stacks in respect of the Resumed Land, apart from a valuation conducted at the time of entry into the First Mortgage. The 2007 Valuation Report stated that the Resumed Land falls within the "North West Growth Centre", which is an area nominated by the NSW Government for progressive release, planning and rezoning for subdivision. The report also said that when the Resumed Land was purchased in 2004, information available at the time had indicated that it fell within the "Area 20 precinct" of the North West Growth Centre, which precinct was designated to be rezoned imminently. However, it was subsequently discovered that the Resumed Land in fact fell within a different precinct, the release of which was not anticipated for 25 to 30 years. As Mr Raymond Stack, a director of both Stacks and RTS, agreed in cross-examination, the value of land and its marketability could change significantly according to the status of the land in the planning and rezoning process. Later, the North West Rail Link was announced by the NSW Government, and its route fell within the area of the Resumed Land. That was the ultimate reason for the compulsory acquisition by Transport NSW. 2. In January 2008, Golden Mile defaulted in the payment of amounts secured under the First Mortgage and, on 5 February 2008, Stacks served notice under s 57(2)(b) of the Real Property Act on Golden Mile requiring payment of the outstanding amount and giving notice of its intention to exercise power of sale under the First Mortgage. Golden Mile failed to comply with the notice. 3. On 13 August 2008, Cudgegong was incorporated. Messrs Pritam Singh Benipal and Sukhdev Singh, two of the three individuals who were directors of Golden Mile, became directors of Cudgegong. The other director was Mr Pardeep Singh Gill. Each of the three directors of Cudgegong holds one third of the share capital of Cudgegong. 4. On 22 September 2008, Stacks, in the exercise of power of sale under the First Mortgage, entered into a contract for the sale of the Resumed Land to Cudgegong for a total purchase price of $2,250,000 (the First Contract). A deposit of $2,000 was payable under the First Contract, which provided that completion was to take place on 1 June 2012. That was subsequently amended to 1 July 2012. Special condition 46 of the First Contract provided that it was a "terms contract" and that, in consideration of the delay in settlement, Cudgegong agreed to pay monthly interest at the rates specified. The balance of the purchase price of $2,248,000 was to be paid on completion of the First Contract. Messrs Dilbragh Singh Billing, Sukhdev Singh and Pritam Singh Benipal (the Guarantors) also signed the First Contract as guarantors of the obligations of Cudgegong. The aftermath of the First Contract and the entry into the Second Contract 1. On 1 March 2010, the Liquidator wrote to Stacks, referring to correspondence in which Stacks had advised him that the Resumed Land had been sold by Stacks exercising power of sale under the First Mortgage. The Liquidator pointed out that that information appeared to be incorrect because Golden Mile was still the registered proprietor of the Resumed Land. The Liquidator said that his enquiries had revealed that the Resumed Land could be worth in the vicinity of $3,000,000 and that, therefore, it would seem that there may be equity in the Resumed Land for the benefit of unsecured creditors. He asked Stacks for comprehensive details of the marketing campaign undertaken to sell the Resumed Land so that it could be determined that a fair price had been obtained. In particular, the Liquidator asked for copies of appraisals or other information that Stacks relied on to support the sale to Cudgegong. 2. Stacks responded on 5 March 2010, enclosing a copy of the First Contract, including the special conditions. Stacks also enclosed a copy of the 2007 Valuation Report, showing a valuation of $1,400,000. Stacks said in its letter that, even if the Resumed Land was worth $3,000,000 at the date of the letter, and was sold for that figure, the Liquidator would still not receive any funds as the principal owing under the First Mortgage was $2,340,000 and the principal owing under the Second Mortgage was $503,000. Stacks said that, with the land tax and other outgoings payable in respect of the Resumed Land, together with the accruing interest, the amount secured would be well in excess of $3,000,000. 3. As a result of the letter of 5 March 2010, the Liquidator became concerned as to whether Stacks had complied with its obligations to Golden Mile when exercising its power of sale in entering into the First Contract. However, although the Liquidator believed that the Resumed Land could be worth as much as $3,000,000, the amount of the outstanding liabilities to Stacks and to RTS, as well as statutory costs, caused him to believe that he would be unlikely to extract any value for the unsecured creditors of Golden Mile. 4. On 14 February 2012, the Liquidator initiated the deregistration process of Golden Mile under s 601AB(2) of the Corporations Act. Section 601AB(2) relevantly provides that the Australian Securities and Investments Commission (ASIC) may decide to deregister a company if the company is being wound up and ASIC has reason to believe that the company's affairs have been fully wound up and the company has not enough property to cover the costs of obtaining a court order for the company's deregistration. The Liquidator formed the view that the affairs of Golden Mile had been fully wound up for the following reasons: * based on the letter of 5 March 2010, there were limited prospects, if any, for recovery of any funds for creditors; * there were no other assets or recoveries available for creditors; * the Liquidator was continuing to incur costs in complying with his statutory obligations; and * no offers had been received from creditors to fund further investigations. On 21 April 2012, Golden Mile was deregistered by ASIC as a result of the Liquidator's actions. 1. Earlier, on 29 January 2012, the solicitors who were then acting for Cudgegong had emailed the solicitors for Transport NSW seeking an offer for the purchase of the Resumed Land. Presumably, by this time, Cudgegong had anticipated that the Resumed Land would be compulsorily acquired for the purpose of the North West Rail Link. On 21 February 2012, the solicitors for Transport NSW wrote to Cudgegong's solicitors in reply. The letter said that Transport NSW had received an independent valuation of the Resumed Land and that, following its consideration of advice from the valuer, and subject to certain conditions, Transport NSW offered to pay Cudgegong an amount of $4,285,000 "in respect of the current market value" of the Resumed Land for its acquisition by agreement. The offer was made subject to Cudgegong's becoming the registered proprietor of the Resumed Land, the removal of all caveats currently registered, and any acceptance of the offer by Cudgegong being binding on every person who may have an interest in the Resumed Land within the meaning of the Just Terms Act. The offer was to remain open for acceptance for a period of 21 days. The letter also invited communication to discuss any disturbance entitlements additional to the market value of the Resumed Land. Cudgegong was requested to propose a counter-offer, based on its own independent valuation advice, if it did not accept the offer from Transport NSW. The offer of 21 February 2012 does not appear to have elicited any response from Cudgegong. 2. On 31 May 2012, Transport NSW wrote to Stacks, saying that it was the intention of the NSW Government to acquire, by negotiation, the freehold interest in the Resumed Land for the construction of the North West Rail Link. The letter enclosed a proposed acquisition notice under s 11 of the Just Terms Act. The proposed acquisition notice requested Stacks to complete the attached claim for compensation form. On the same day, Transport NSW wrote to each of Golden Mile (care of the Liquidator) and Cudgegong (as well as Stacks and RTS), attaching a copy of the proposed acquisition notice. 3. The proposed acquisition notices appear to have prompted activity on the part of Stacks and Cudgegong. On 21 June 2012, Stacks, Cudgegong and the Guarantors entered into an agreement (the Rescission Agreement), which recited that Stacks and Cudgegong had entered into the First Contract, that they had mutually agreed to rescind the First Contract and that the Guarantors had agreed and consented to such rescission. The Rescission Agreement then provided that the First Contract was rescinded as at 21 June 2012 and that Cudgegong surrendered any interest that it had in the Resumed Land. In addition, Stacks and Cudgegong released each other from any damages, costs or expenses, claims, demands or suits arising out of the First Contract and each party agreed to bear its own legal and other costs and expenses in relation to the First Contract and its rescission. The Rescission Agreement also provided that the deposit and all other payments made by Cudgegong under the First Contract were to be forfeited to Stacks. Cudgegong and the Guarantors agreed to be responsible for stamp duty, if any, that was payable in respect of the Rescission Agreement. 4. On the same day, 21 June 2012, Stacks and Cudgegong, together with the Guarantors, entered into a further contract for the sale of the Resumed Land (the Second Contract). The purchase price provided for in the Second Contract was $2,888,648, with a deposit of $100, leaving a balance of $2,888,548 payable on completion. The completion date was specified to be 1 July 2013, with time being of the essence. The terms of the Second Contract were otherwise identical to the terms of the First Contract, save for some differences in the provision relating to the payment of interest on the balance of the purchase price and the additional special conditions referred to below. Special condition 46 provided that the Second Contract was a "terms contract" and that, in consideration of the delay in settlement, Cudgegong agreed to make monthly interest payments at the rates specified, with the balance of the purchase price and accumulated interest to be payable on completion. 5. Apparently by way of recognition of the fact that Transport NSW had proposed to acquire the Resumed Land, the Second Contract contained additional special conditions, which may be summarised as follows: 49. Cudgegong agreed to use its best endeavours to ensure that "the sale" to Transport NSW was negotiated and finalised as soon as possible. 50. The parties acknowledged that the Resumed Land was in the process of being compulsorily acquired by Transport NSW and Stacks agreed to provide all necessary consents and authorities to enable Cudgegong to pursue its rights in respect of the compulsory acquisition as if it were the registered proprietor, but on the basis that Cudgegong would not accept any price that would not be sufficient to pay out the amount owing under the Second Contract. If Cudgegong and Transport NSW agreed on a price, Stacks would consent to be the vendor in the sale to Transport NSW on the basis that Stacks would account to itself for the amount owing under the Second Contract and account for the balance to Cudgegong. 52. To the extent that any condition provided an intended right for Cudgegong to proceed to negotiate and obtain the compensation amount payable under the compulsory acquisition of the Resumed Land, those rights were to survive the Second Contract and form the basis of an ongoing agreement between Cudgegong and Stacks. The intention of that provision was said to be to permit Cudgegong to complete all matters necessary to obtain compensation due under the acquisition and to retain it, subject to Cudgegong's compliance with the payment to Stacks of the purchase price by the time permitted under the Second Contract. This condition was said to be "without question of the operation of this contract for sale which will frustrate upon notice of the acquisition and gazettal". 1. Those additional special conditions of the Second Contract demonstrate a certain confusion of thought. Special condition 49 refers to "the sale" to Transport NSW, although there does not appear to have been a sale proposal on foot at that stage. Rather, compulsory acquisition had been foreshadowed. Thus, there is some tension between special condition 49 and special condition 50, the latter of which acknowledged that the Resumed Land was in the process of compulsory acquisition by Transport NSW. However, special condition 50 then referred to the possibility of Cudgegong and Transport NSW agreeing on a price at which Stacks would agree to sell the Resumed Land to Transport NSW. Special condition 52 appears to have been intended to indicate what was in the mind of the author of the provisions. It again refers to compulsory acquisition, but contemplates that the Second Contract would remain on foot at least insofar as may be necessary to ensure that Stacks and Cudgegong receive appropriate shares of any compensation. 2. There is some dispute about whether the Second Contract constituted, in effect, a variation of the First Contract by way of extension, or whether it represented an entirely new contract between the parties. I will address that question later in these reasons. 3. At the time of his negotiations with Cudgegong in relation to the Second Contract, Mr Stack was aware of the offer made by Transport NSW on 21 February 2012. Mr Stack said that that offer did not influence his decision with respect to the purchase price for the Second Contract because Stacks was bound by the First Contract and subsequently by the extension of the First Contract, in the form of the Second Contract. Mr Stack's recollection was that the negotiations were only for "an extension" of the First Contract and that it was only towards the end of the negotiations that Cudgegong's then solicitor suggested that it be done by way of a new contract. 4. Mr Stack did not obtain a further valuation of the Resumed Land between the time of the 2007 Valuation Report and the entry into the Second Contract, because he was of the view that it was not required. He considered that any upward market movement would not assist Stacks in recovering further moneys because the price under the Second Contract enabled the original principal sums secured by the First Mortgage and the Second Mortgage to be repaid. That may be of some significance, in that Mr Stack's attitude appears to have been that his only concern was to obtain a price that would ensure repayment, to the two mortgagee companies of which he was a director, of the amounts secured. That attitude appears to ignore the interest of Golden Mile as the mortgagor (as well as its unpaid creditors). The acquisition of the Resumed Land and the payment of compensation 1. Having received the proposed acquisition notice on 31 May 2012, on 12 July 2012, Cudgegong submitted a claim for compensation notice to Transport NSW. On 13 August 2012, a similar claim was submitted by Stacks and RTS. 2. On 21 September 2012, an acquisition notice was published in the Gazette by Transport NSW (the Acquisition Notice). By the Acquisition Notice, Transport NSW declared that the Resumed Land was acquired by compulsory process under the Just Terms Act. The Acquisition Notice stated that the Resumed Land was "said to be in the ownership of [Golden Mile]". The Acquisition Notice also related to other parcels of land that are not relevant to these proceedings. 3. On 3 December 2012, the solicitors for Transport NSW wrote to the Liquidator, saying that, although Golden Mile had been deregistered, Golden Mile remained the registered proprietor of the Resumed Land. The solicitors' letter said that they were endeavouring to ensure that the compensation moneys in respect of the acquisition by Transport NSW were paid to the correct entities. The letter said that Stacks, as first mortgagee, had entered into two contracts for the sale of the Resumed Land with Cudgegong and copies of the First Contract and the Second Contract were enclosed. The solicitors said that the Resumed Land had been compulsorily acquired on 21 September 2012 and asked whether the Liquidator had any interest in the compulsory acquisition and, if not, whether the Liquidator was prepared to give a release to Transport NSW. 4. After he had reviewed the Second Contract, the Liquidator became concerned about whether Stacks had complied with its legal obligations as mortgagee when exercising its power of sale in entering into the Second Contract. He had that concern because there did not appear to be any support for the contract price provided for in the Second Contract being the market value or the best price reasonably obtainable. The Liquidator based that opinion on the fact that, since the date of the First Contract: 1. the Resumed Land had been incorporated back into the "Area 20 precinct" of the North West Growth Centre; 2. the NSW Government had announced the North West Rail Link; 3. Transport NSW had confirmed its intention to compulsorily acquire the Resumed Land (because the route of the North West Rail Link was to pass through it); and 4. the Second Contract contained special conditions that indicated that Stacks and Cudgegong had changed the terms, between the First Contract to the Second Contract, to reflect the probable compulsory acquisition of the Resumed Land by Transport NSW. The Liquidator therefore became interested as to whether it was possible that the Second Contract could be set aside and whether Golden Mile had in fact retained an interest in the Resumed Land (for the purposes of the Just Terms Act), as well as remaining registered proprietor. 1. On 5 December 2012, the Valuer-General issued a determination of compensation payable in respect of a claim for compensation under the Just Terms Act made by Golden Mile, as registered proprietor, and Stacks and RTS as mortgagees. The Valuer-General determined the compensation at $4,223,400, made up of market value of $4,205,000 and disturbance of $18,400. The determination did not draw any distinction between the values of the respective interests in the Resumed Land of Golden Mile, Stacks and RTS. No mention was made of Cudgegong, and Cudgegong was not given a notice of determination of compensation. 2. On 12 December 2012, Transport NSW gave Stacks and RTS a compensation notice under s 42 of the Just Terms Act (the Compensation Notice). The Compensation Notice stated that the Valuer-General had determined the amount of compensation to be offered to the owners of an interest in the Resumed Land at $4,223,400. A copy of the determination of 5 December 2012 was attached. The Compensation Notice stated that, as first and second mortgagees, Stacks and RTS had claimed the sum of $3,026,478 as their interest in the Resumed Land. The Compensation Notice invited Stacks and RTS to sign a form of acceptance of offer of compensation and a form of deed of release and indemnity that were attached. On the same day, the solicitors for Transport NSW forwarded a copy of the notice of determination of compensation and of the Compensation Notice to the solicitors for Cudgegong. 3. On 19 December 2012, Stacks and RTS executed a deed of release and indemnity in favour of Transport NSW (the Deed of Release). The Deed of Release recited that Stacks and RTS were "the owner" of the Resumed Land; that, by virtue of gazettal on 21 September 2012, the Resumed Land was transferred to Transport NSW; and that Stacks and RTS had agreed to accept the Compensation Moneys (as defined) and to enter into the Deed of Release pursuant to the provisions of the Just Terms Act. By the Deed of Release, Stacks and RTS accepted the Compensation Moneys as compensation for the acquisition by Transport NSW of the Resumed Land and, in consideration of the payment of the Compensation Moneys, released all claims that they had or asserted to have or could, would or might, but for the Deed of Release, have against Transport NSW for or in respect of the Resumed Land. 4. "Compensation Moneys" was defined as the sum of $3,043,760, being part of the compensation determined by the Valuer-General as compensation in accordance with s 47 of the Just Terms Act and offered by Transport NSW under s 37 to Stacks and RTS, as claimed by them "as first and second registered mortgagees on title". That characterisation of Stacks and RTS was the only apparent basis on which they had been earlier identified as "the owner" of the Resumed Land. The reason for the difference in value between the Compensation Moneys and the amount referred to in the Compensation Notice as having been claimed by Stacks and RTS is that settlement of the Deed of Release was delayed until January 2013, thus requiring the payment of additional interest accrued by that time. 5. It may be of significance that the amount of the Compensation Moneys represented only part of the compensation determined by the Valuer-General as being payable under the Just Terms Act. On the other hand, the total amount secured by the First Mortgage and the Second Mortgage exceeded the amount of $4,223,400 determined by the Valuer-General as compensation. The evidence indicated that, as at 1 July 2012, the amount owing to Stacks was $3,327,549.74 and the amount owing to RTS was $1,530,865.63, a total of $4,858,415.37. 6. In those circumstances, it is not clear why Stacks and RTS accepted the Compensation Moneys instead of claiming the entirety of the compensation determined by the Valuer-General. It is true that Cudgegong had paid over $900,000 in interest to Stacks under the First Contract and the Second Contract, in addition to small deposits under both contracts ($2,000 and $100 respectively). However, there is still clearly a shortfall between the Compensation Moneys and the amounts owing under the two mortgages. The explanation may be that the sum of $3,043,760 was treated as being the balance payable by Cudgegong under the Second Contract. 7. As I have said, while the determination of the Valuer-General on 5 December 2012 recorded that the claimants were Golden Mile, as registered proprietor, and Stacks and RTS, as mortgagees, no reference was made to the possible interest of Cudgegong under the Second Contract or otherwise. Insofar as Stacks and RTS accepted something less than the full amount of compensation determined by the Valuer-General, the balance of the compensation might be thought to have been for the benefit of the other claimant, namely, Golden Mile. However, it is apparent that Golden Mile received no compensation and has not released any claim that it may have under the Just Terms Act as an owner of an interest in land. 8. On 4 February 2013, ASIC wrote to the Liquidator, informing him that the Resumed Land had been the subject of compulsory acquisition by Transport NSW for $4,223,400, that Transport NSW had paid $3,043,760 in compensation to Stacks and RTS, that $1,179,640 (plus statutory interest) in compensation remained payable and that Golden Mile was the registered proprietor of the Resumed Land at the date of the compulsory acquisition. ASIC said that it had been advised about the First Contract and the Second Contract, that the First Contract had been determined and that the Second Contract had not yet been completed. ASIC further said that it had been advised by the solicitors for Transport NSW that Golden Mile, as a former owner of the Resumed Land, had a compensable interest, while Cudgegong, as a potential purchaser, also had a beneficial interest under the Just Terms Act. Transport NSW had sought ASIC's direction as to whether the surplus should be paid to ASIC (as a result of Golden Mile's deregistered status) or to Cudgegong. ASIC expressed the view that Golden Mile must be reinstated to assert any claim to the surplus. ASIC also expressed the view that it had no objection to the surplus being paid, for the time being, into the trust account that is maintained by NSW Transport pursuant to s 51 of the Just Terms Act. 9. Upon receipt of the letter from ASIC, the Liquidator's concerns as to the exercise of the power of sale by Stacks were confirmed. As a result of those concerns, he applied for the reinstatement of Golden Mile and, on 21 March 2013, a judge of the Equity Division made an order, pursuant to s 601AH(2) of the Corporations Act, that ASIC reinstate the registration of Golden Mile. The order directed that the Liquidator continue as the liquidator of Golden Mile upon its reinstatement. The Court noted that Golden Mile would continue to be in liquidation following its registration being reinstated. 10. In the meantime, on 7 March 2013, Cudgegong lodged a claim for compensation with Transport NSW, claiming an equitable interest pursuant to the Second Contract. In its claim, Cudgegong stated that it was aware of the interests of Stacks and RTS under their respective mortgages. No mention was made of the interest that Golden Mile may have in the Resumed Land. The total compensation claimed by Cudgegong was $16,382,108.80, being market value of $16,273,522 and loss attributable to disturbance of $108,586.75. Presumably, that claim was either rejected by Transport NSW or not dealt with within 60 days after receipt (see s 46 of the Just Terms Act). A copy of that claim for compensation was part of Cudgegong's application to the Land and Environment Court filed on 11 March 2013 in the Cudgegong Appeal. Reasons of the trial judge 1. The reasons of the trial judge were given in relation to Cudgegong's application for the payment of an advance of compensation under s 48 of the Just Terms Act. In order to determine whether such a payment should be made to Cudgegong, it was necessary for the trial judge to determine whether or not Cudgegong had a relevant interest in the Resumed Land. As indicated above, the motion itself was filed in the Cudgegong Appeal by way of appeal under s 67 of the Just Terms Act, on the basis that Cudgegong's claim for compensation under Pt 3 had been rejected by Transport NSW. 2. The trial judge formulated two issues for determination. The first was which of Cudgegong and Golden Mile had a relevant compensable interest in the Resumed Land for the purpose of the Just Terms Act. The second was whether, if Cudgegong had the relevant interest, an advance payment should be ordered under the Just Terms Act. Golden Mile did not seek an advance payment, but opposed the making of an advance payment to Cudgegong. 3. In addition to documentary evidence, the trial judge had evidence from Mr Stack. His evidence was adduced by Cudgegong to rebut the assertion by Golden Mile that Stacks had acted in breach of its duty to Golden Mile in exercising its power of sale under the First Mortgage. In addition to formal evidence, Mr Stack also gave oral evidence about his thought processes in relation to the exercise of the power of sale by Stacks, on the basis that he was, in effect, the guiding mind of Stacks and, to the extent relevant, the guiding mind of RTS. 4. The trial judge observed that it was agreed that Golden Mile had a bare legal interest in the Resumed Land and was an "owner", as that term is defined in the Just Terms Act. Golden Mile disputed that Cudgegong had any relevant interest. Her Honour observed that each of Golden Mile and Cudgegong claimed that it had an equitable interest that trumps the other in order of priority after the interests of Stacks and RTS. Each therefore claimed to be entitled to the balance of the compensation held in Transport NSW's trust account. Her Honour said that identification of the holder of the equitable interest required determination of whether Golden Mile or Cudgegong was an "owner", once the First Mortgage and the Second Mortgage had been discharged. 5. Golden Mile claimed that it was the legal owner at all relevant times and also had the equitable right of redemption, as mortgagor, to have the Resumed Land reconveyed to it after the First Mortgage and the Second Mortgage had been paid out. There was, of course, no need for any re-conveyance, merely discharge of the mortgages, since, under the Real Property Act, the legal fee simple remained vested in Golden Mile at all times. 6. Golden Mile said that Cudgegong had never become equitable owner because the completion date under the Second Contract had not arrived before the acquisition by Transport NSW. Further, it said, specific performance would not have been ordered in respect of the Second Contract immediately before the date of acquisition, because Stacks had breached its duty as mortgagee in exercising the power of sale conferred by the First Mortgage. The breach was said to consist in the failure by Stacks to obtain a price for the Resumed Land that was not less than market value or the best price reasonably obtainable in the circumstances. 7. Cudgegong, on the other hand, contended that it had an equitable interest in the Resumed Land by reason of its ability to become the registered proprietor on completion of the Second Contract. It asserted that that was an enforceable right and that it constituted an equitable interest in the Resumed Land. Cudgegong claimed that, by reason of the Second Contract's having been entered into in the exercise of the power of sale conferred by the First Mortgage, any interest of Golden Mile in the Resumed Land was defeated by Cudgegong's interest as purchaser. Cudgegong contended that Golden Mile was bound by the Second Contract and has never been in a position to pay out either the First Mortgage or the Second Mortgage, such that there was no basis for its interest having priority over Cudgegong's. 8. Further, Cudgegong contended, there was no breach of duty by Stacks that vitiated the Second Contract. Cudgegong asserted that, because Golden Mile had been deregistered on 21 April 2012 and did not exist in June 2012, no relevant duty was owed to it at the time of the Second Contract. It said that it was reasonable for Stacks to take that fact into account. It asserted that the fact that the Liquidator did not anticipate the First Contract being renegotiated or a further contract being entered into did not retrospectively create a duty where none existed. It contended that, in September 2012, Golden Mile could not perform its obligations as mortgagor and did not exist as a company. Therefore, no relevant property was vested in ASIC at the time of reinstatement. 9. Cudgegong also contended that the Second Contract should be viewed as an extension of the First Contract. Cudgegong asserted that the Second Contract favoured Stacks and Golden Mile at the expense of Cudgegong. That was because, since the time for completion of the First Contract had been varied to 1 July 2012, at the time of entry into the Second Contract, on 21 June 2012, Cudgegong retained its right to have the First Contract performed. 10. The trial judge said that she generally agreed with Cudgegong's submissions. The starting point, her Honour said, was the right of Stacks to sell the Resumed Land under the First Mortgage. She considered that the Second Contract was binding on Golden Mile, absent any failure by Stacks in the exercise of the power of sale. 11. The trial judge rejected the contention advanced by Golden Mile that an equitable interest in land could not pass under a contract for sale until payment of the purchase price. Her Honour found that Cudgegong potentially had a compensable interest as an incoming purchaser, subject to whether Stacks was in breach of its duty to Golden Mile in exercising its power of sale. 12. The trial judge observed that Golden Mile had not sought to restrain the sale to Cudgegong before the date of acquisition by Transport NSW. It could not do so because, at that date, it was deregistered and did not exist. Her Honour held that, upon the acquisition of the Resumed Land by Transport NSW, the Second Contract "dissolved" and any interests in the Resumed Land became compensable interests under the Just Terms Act. Her Honour held that the acquisition by Transport NSW was "fatal" to Golden Mile's having an equitable interest in the form of an equity of redemption. Golden Mile could not prevent the completion of the sale under the Second Contract, since the Second Contract was dissolved by the acquisition. Her Honour confirmed that Stacks, as mortgagee, could not have a duty to Golden Mile because it was deregistered at the time when the Second Contract was made and continued to be deregistered until after acquisition. 13. The trial judge described as a "secondary issue" the question of whether Golden Mile had a compensable interest in the Resumed Land. Her Honour observed that the remedy where there is a breach of a mortgagee's duty in the exercise of a power of sale is the taking of accounts, under which the mortgagee would be accountable for the price that it would have been paid if it had not been guilty of breach of duty. Her Honour considered the possibility that Golden Mile would have a remedy in damages against Stacks under s 111A(4) of the Conveyancing Act 1919 (NSW) (the Conveyancing Act) in respect of an improper exercise of the power of sale. That subsection provides that a person who suffers loss or damage as a result of the breach of duty of a mortgagee (defined in s 111A(1)) has a remedy in damages against the mortgagee exercising the power of sale. Section 111A came into force on 1 November 2011, but only applies in relation to sales arising as a consequence of a default occurring after that date (see s 111A(7)); thus, the section has no application to the present case. However, even if (hypothetically) Golden Mile did have such a personal right against Stacks for breach of its duty in exercising the power of sale, the trial judge said that that would not be an interest in land for the purpose of the Just Terms Act. The trial judge therefore concluded that Cudgegong had the relevant equitable interest in the Resumed Land, because specific performance of the Second Contract would have been ordered at the time of the acquisition. 14. Although the trial judge considered it "strictly unnecessary", her Honour went on to consider whether there was a breach of duty by Stacks in the exercise of its power of sale under the First Mortgage. Her Honour considered that s 420A of the Corporations Act imposed a duty on Stacks to sell the Resumed Land, if it had a market value, for not less than that market value. Her Honour also referred to the duty of a mortgagee under the general law. A mortgagee must act in good faith, which involves an obligation to deal fairly with the interests of the mortgagor, which in turn involves an obligation to refrain from acting in wilful or reckless disregard of those interests. The mortgagee is not answerable for mere negligence or carelessness in carrying out a sale. A departure from reasonable standards must be so serious as to be properly characterised as unconscionable, before the mortgagee will be accountable. [1] 15. The trial judge concluded that, for the reasons submitted by Cudgegong, as grounded in the evidence of Mr Stack, no breach of the relevant duty by Stacks had occurred. Her Honour considered that all of the circumstances surrounding the entry into the Second Contract must be considered, including the evidence of the continuing existence of the First Contract at the time of entry into the Second Contract. Her Honour considered that, whilst the Second Contract was separate from the First Contract, the actions of Stacks in entering into the Second Contract in light of the First Contract were relevant. In addition, Golden Mile's default under the First Mortgage as at September 2012, immediately before the acquisition by Transport NSW, was relevant for consideration. Further, her Honour held, the fact that Golden Mile did not exist at the time of the Second Mortgage, something that Stacks knew, had the result that there was nothing unconscionable in the action of Stacks in entering into the Second Contract. 16. It was not apparent to the trial judge that there was a failure by Stacks to take reasonable care in relation to obtaining market value for the Resumed Land, as required by s 420A of the Corporations Act. Her Honour referred to reliance by Golden Mile on an offer made by Transport NSW in February 2012 to pay $4,200,000 to Cudgegong. There was, however, as her Honour observed, no other evidence of value adduced by Golden Mile. Her Honour found that Cudgegong had the relevant compensable interest under the Just Terms Act by reason of its interest under the Second Contract. 17. As I have said, the Valuer-General assessed compensation at the sum of $4,223,400. Ninety per cent of that amount is $3,801,060. Since a payment had already been made under the Deed of Release of $3,043,760, the difference of $757,300 was the appropriate advance payment. Hence, her Honour ordered that that amount be paid to Cudgegong. Issues on the appeal 1. In its draft notice of appeal, Golden Mile asserts that the trial judge erred in three respects as follows: 1. holding that Cudgegong was the equitable owner of the Resumed Land, to the exclusion of Golden Mile, at the date of compulsory acquisition by Transport NSW; 2. holding that the Second Contract: 1. was a valid exercise of the power of sale by Stacks, 2. entitled Cudgegong, on or immediately prior to the acquisition date, to obtain a decree of specific performance, and 3. was effective to transfer equitable title to the Resumed Land to Cudgegong; and 1. holding that, in exercising or purporting to exercise the power of sale on and immediately prior to 21 June 2012, Stacks owed no duty to Golden Mile under s 420A of the Corporations Act or otherwise, to have regard to its interests as mortgagor. 1. Golden Mile says that, if the appeal is allowed on the basis that Cudgegong never acquired a relevant interest in the Resumed Land, there should be a declaration that Golden Mile had the legal and equitable interest in the Resumed Land to the exclusion of Cudgegong at the date of acquisition of the Resumed Land by Transport NSW and that Golden Mile is entitled to have its compensation assessed. It says that, if the appeal is allowed only on the basis that the trial judge erred in law in dealing with the question of breach of duty by Stacks in entering into the Second Contract, the matter should be remitted to the Land and Environment Court for further determination of that question. 2. There are four questions that arise in this appeal: 1. Was the Second Contract effectively an extension, by way of variation, of the First Contract, such that Stacks could not be found to have breached its duty as mortgagee exercising power of sale (since Golden Mile does not impugn the First Contract)? 2. If not, did Stacks breach its duty in entering into the Second Contract? 3. If not, does Cudgegong have an "interest" in the Resumed Land for the purpose of the Just Terms Act? 4. If so, does Cudgegong's interest trump any such interest of Golden Mile? It is convenient to deal with those questions separately. Issue 1: whether the Second Contract was an extension of the First Contract 1. Golden Mile does not impugn the First Contract. The effect of the First Contract was to extinguish, or at least suspend, the equity of redemption of the First Mortgage that was vested in Golden Mile at that time. If the Rescission Agreement was interdependent with, or otherwise conditional upon the entry into of, the Second Contract, then Golden Mile's equity of redemption may not have revived. It would follow that, as from 22 September 2008 (the date of the First Contract), Golden Mile no longer had an interest of any value in the Resumed Land. While Golden Mile continued to be registered as the proprietor of a legal fee simple in the Resumed Land, that fee simple was subject to the First Mortgage, in favour of Stacks, and the Second Mortgage, in favour of RTS. 2. Evidence was given before the Land and Environment Court as to the circumstances in which the Rescission Agreement and the Second Contract were entered into by Stacks, Cudgegong and the Guarantors. Those circumstances are critical in relation to allegations by Golden Mile that, in entering into the Second Contract, Stacks breached its duty to Golden Mile as mortgagor of the Resumed Land. Cudgegong contends, in effect, that the Rescission Agreement was entered into only on the basis that, at the same time, the Second Contract would be entered into. That is to say, it submits that Stacks was not in a position to enter into the Second Contract unless Cudgegong and the Guarantors first agreed to rescind the First Contract and that the Rescission Agreement was interdependent with the Second Contract. 3. Although the trial judge agreed (at [132]) with the submissions by Cudgegong (at [102]) that the Second Contract should be viewed as an extension of the First Contract (relying on the evidence of Mr Stack), it is not clear either that her Honour accepted the specific contention by Cudgegong referred to above or, if so, what the reasoning was that led to that conclusion. The contention depends, in effect, on whether Cudgegong would have been in a position to complete the First Contract. The Rescission Agreement and the Second Contract appear to have been for the benefit of Cudgegong, in so far as they represented an indulgence for a purchaser who could not complete in the time frame fixed by the First Contract. 4. The trial judge did not examine the question of whether or not the Rescission Agreement and the Second Contract were, as a matter of law, interdependent, such that, after the Rescission Agreement was entered into, it would have been open to Stacks to explore further the question of what was the market value of the Resumed Land or what was the best price that was reasonably obtainable, having regard to the circumstances existing at the time when the Second Contract was entered into. That is to say, her Honour did not enquire as to whether Cudgegong was not in a position to complete the First Contract, such that Stacks, as vendor, was in a position to bargain for much more favourable terms as a condition of granting an indulgence, or alternatively to decline to enter into the Rescission Agreement in the first place. If Cudgegong was not able to complete the First Contract, default by it may have given Stacks the opportunity to terminate it and then resell the Resumed Land on more favourable terms. The evidence indicates that Stacks simply did not turn its mind to the possibility of obtaining a higher price in the light of the significant changes that would affect the market value of the Resumed Land. That may well be a breach of duty by Stacks in the exercise of its power of sale. Nonetheless, the failure to explore those matters was an error of law. Issue 2: whether Stacks breached its duty in entering into the Second Contract 1. Where a mortgagee in improper exercise of the power of sale enters into a contract for sale of land under the Real Property Act, the mortgagor can, before completion (and whether or not the purchaser had knowledge of the facts establishing the impropriety) restrain the mortgagee and the purchaser under the contract from completing the sale. [2] In such circumstances, and putting to one side the mortgagor's registered legal interest, the competition would be between the mortgagor's interest (the equity of redemption) on the one hand, and the purchaser's interest under the contract, on the other hand. On the ordinary rules as to priority (qui prior est tempore potior est iure), the mortgagor's interest would prevail, subject to any postponing conduct on the part of the mortgagor. The position may be different where completion has already taken place: in that situation, the mortgagor's interest may be a "mere equity" and may not prevail over the equitable interest of the purchaser. [3] 2. For those reasons, if the Second Contract was entered into by Stacks in breach of a duty owed by it to Golden Mile as mortgagor, then the interest acquired by Cudgegong under the Second Contract would not prevail over the interest of Golden Mile, namely, Golden Mile's right, as mortgagor, to redeem the First Mortgage and the Second Mortgage by tendering the amounts secured by them. While that right may have been suspended by the First Contract, it revived when the Rescission Agreement came into force or would have revived on termination of the First Contract by reason of default by Cudgegong. The Second Contract did not suspend that right and interest of Golden Mile to redeem, much less extinguish it, if it was not a valid exercise of the power of sale conferred by the First Mortgage. 3. Thus, it was incumbent upon the trial judge to enquire into the circumstances surrounding the entry into the Second Contract by Stacks in order to determine whether or not it was a valid exercise of the power of sale by Stacks. If it was not a valid exercise, then whether or not Cudgegong was aware of the breach, the interest of Golden Mile, being the right to redeem, continued and would prevail over any interest acquired by Cudgegong under the Second Contract. Cudgegong, if unaware of a breach of duty by Stacks, would be entitled to assume that Stacks was not acting in breach of duty. [4] There has been no suggestion that that assumption was not one that any conduct of Golden Mile would have caused Cudgegong to make. Statutory provisions and reasons of the trial judge 1. Under s 420A of the Corporations Act, in exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property, if it has a market value, for not less than the market value and otherwise for the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold. Stacks was a controller within the meaning of the Corporations Act (see s 9). While, under s 601AD(1), a company ceases to exist on deregistration, all the company's property vests in ASIC on deregistration under s 601AD(2). Under s 601AD(4), ASIC has all the powers of an owner of a property vested in it under s 601AD(2). 2. Under s 601AH(3), if ASIC reinstates the registration of a company or a court makes an order reinstating registration, the court may validate anything done during the period beginning when the company was deregistered and ending when the company's registration was reinstated. Under s 601AH(5), if a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. Any property of the company that is still vested in ASIC re-vests in the company. Thus, during the period of deregistration of Golden Mile, ASIC could have enforced the rights of Golden Mile. 3. The trial judge held, in effect, that, because Golden Mile was deregistered and did not exist when the Second Contract was made, no relevant duty was owed to it by Stacks at that time, and it was reasonable for Stacks to take that fact into account. Her Honour held further that, at the date of acquisition by Transport NSW, Golden Mile did not exist as a legal entity and therefore could not perform its obligations as mortgagor. Her Honour held that s 601AH(5) did not allow Golden Mile, a deregistered entity, to say, after reinstatement, that the matter should be considered as if Golden Mile had come to court to restrain the sale of land at a time when it was deregistered. Her Honour therefore held (at [132]) that there was no breach of duty by Stacks that vitiated the Second Contract and the interests of Golden Mile as mortgagor were not sacrificed. The effect of the conclusion reached by her Honour is that, upon deregistration, Golden Mile's equity of redemption was foreclosed. 4. However, putting aside any question of laches or delay, the fact that a mortgagor does not know about a breach of duty by a mortgagee in the exercise of a power of sale does not have the consequence that there is no breach of duty. In particular, the fact that a mortgagor, being a corporation, has been deregistered, and cannot itself bring proceedings to restrain (for example) the mortgagee's exercise of its power of sale, does not of itself mean that there is no duty owed by the mortgagee. 5. The trial judge generally agreed with Cudgegong's submissions to the effect that there was no breach of duty by Stacks in the exercise of the power of sale. Her Honour considered that the starting point for the analysis was the right of Stacks to possess and sell the Resumed Land under the First Mortgage and that, absent any breach by Stacks in the exercise of the power of sale, the Second Contract was binding on Golden Mile (at [110]). Her Honour held that, for the reasons given by Cudgegong, as grounded in the evidence given by Mr Stack, no breach of the relevant duty by Stacks had occurred. Her Honour said, in particular, that Golden Mile did not exist at the time the Second Contract was entered into. Her Honour referred to the evidence that Mr Stack considered Golden Mile at the time of entering into the Second Contract and knew that Golden Mile was deregistered and had not paid any interest or capital under the First Mortgage for many years. Her Honour therefore concluded that there was nothing unconscionable in the action of Stacks in relation to the Second Contract (at [132]). Consideration 1. It is tolerably clear that the trial judge based her decision that there was no breach of duty by Stacks in the exercise of the power of sale on the fact that, at the relevant time, Golden Mile did not exist and, therefore, there was no mortgagor to whom a relevant duty could be owed. It is also tolerably clear that her Honour concluded that, because Golden Mile did not exist at the time of the Second Contract, there was no entity with the capacity to seek to intervene in the exercise by Stacks of the power of sale by taking proceedings to restrain an improper exercise. That reasoning was erroneous, as a matter of law, since, for the reasons indicated above, ASIC had that capacity. 2. The trial judge appears to have failed to take into account the fact that, whether the right to complain was vested in Golden Mile or ASIC, Stacks, in exercising the power of sale, ignored the possible consequences of failing to ensure that the Resumed Land was sold, under the Second Contract, either for not less than the market value or for the best price that was reasonably obtainable, having regard to the circumstances existing at the time of the Second Contract. Her Honour did not explore the extent to which it might have been possible for Stacks to take further steps to ensure that, once the Rescission Agreement was effective, the price obtained under the Second Contract was not less than the market value or the best price that was reasonably obtainable. That was an error of law. Issue 3: whether Cudgegong has an "interest" in the Resumed Land under the Just Terms Act 1. If Stacks did not breach its duty as mortgagee exercising power of sale, the question would arise as to whether Cudgegong had, immediately before the acquisition of the Resumed Land, an interest in that land sufficient to entitle it to compensation under the Just Terms Act. 2. The Just Terms Act requires an enquiry as to, first, whether Cudgegong or Golden Mile, or both, had an interest in the Resumed Land within the meaning of the Just Terms Act and, second, the value of any such interest. As will appear, Golden Mile had an interest, although, depending upon the ultimate conclusion as to whether the Second Contract was a valid exercise by Stacks of its power of sale, Golden Mile's interest may have been of no value, since it was no more than a bare legal estate that would be divested on the completion of the Second Contract. 3. The effect of s 37 of the Just Terms Act is that Cudgegong must be shown to have been an owner of an interest in the Resumed Land as at the date of acquisition and that that interest was divested, extinguished or diminished by the Acquisition Notice. Cudgegong claims that it acquired an equitable interest in the Resumed Land by virtue of the Second Contract. That requires consideration of the nature of the interest, if any, that is acquired by a purchaser under a contract for the sale and purchase of land. As will appear, that may depend, for some purposes, upon whether the relevant contract was capable of specific performance. 4. The effect of the acquisition of the Resumed Land by Transport NSW was to frustrate the performance of the Second Contract according to its terms, in that Stacks could no longer give a legal fee simple to Cudgegong in exchange for the payment of the purchase price. However, there may be a basis for treating the Second Contract as continuing to remain on foot, at least to some extent, having regard to the special conditions referred to above, whereby, subject to the payment of the purchase price by Cudgegong, Stacks was to take whatever steps were necessary to ensure that Cudgegong would receive the compensation payable by Transport NSW as a consequence of the acquisition. To that extent, it may be that the Second Contract remained on foot after the date of acquisition (at least to a limited extent) and was capable of being the subject of an order for specific performance. That, however, is not the question that arises in these proceedings and it is not appropriate to express any view on that question. 5. As at the date of acquisition by Transport NSW, the date for completion of the Second Contract had not arrived. Accordingly, whether or not the Second Contract could, in the fullness of time, have been the subject of an order for specific performance, Cudgegong had no right, as at the date of acquisition, to call for a transfer of the legal fee simple by way of performance, even if it tendered the purchase price. However, the fact that the time for completion had not arrived did not, of itself, have the consequence that Cudgegong did not have an interest in the Resumed Land for the purposes of the Just Terms Act. That is to say, Cudgegong could still have an interest in the Resumed Land, within the meaning of the Just Terms Act, even though, as at the date of acquisition of the Resumed Land by Transport NSW, an order would not have been made (had it been sought by Cudgegong) requiring Stacks to transfer legal title at that time, even if the total purchase price were tendered by Cudgegong. 6. Notwithstanding that the date for completion of the Second Contract had not arrived, if, prior to the acquisition of the Resumed Land by Transport NSW, Stacks had engaged in conduct that constituted anticipatory repudiation of the Second Contract, it may have been open to Cudgegong to take proceedings for specific performance of the Second Contract. For example, special condition 50 imposed upon Stacks a contractual obligation to provide all necessary consents and authorities to enable Cudgegong to pursue its rights in respect of the compulsory acquisition as though it were the registered proprietor of the Resumed Land. In addition, Stacks agreed that it would, at the request of Cudgegong, consent to be the vendor in the sale to Transport NSW. Although, as at the date of acquisition, Cudgegong could not call on Stacks to transfer legal title to it, if Stacks had evinced an intention no longer to be bound by and not to perform those obligations, Cudgegong may have been entitled, upon its demonstrating a readiness, willingness and ability to perform all of its obligations under the Second Contract, including payment of the purchase price, to an order requiring Stacks to perform its obligations. In such a case, if necessary, the Court would appoint a person to perform the obligations of Stacks to the extent that Stacks failed to perform them in accordance with the order of the Court. [5] However, again, that is not the question. General principles 1. The relationship between the vendor and purchaser at the moment of entry into a valid contract for sale of land has in the past been described in the terms of a trust. Thus, it has been said that, at that moment, "the vendor becomes in equity a trustee for the purchaser of the estate sold … [i]n other words, the position of the vendor is something between what has been called a naked or bare trustee, or a mere trustee (that is, a person without beneficial interest), and a mortgagee who is not, in equity (any more than a vendor), the owner of the estate". [6] 2. Clearly enough, where one person holds land on trust for another, that other person would be regarded as having an equitable interest in that land. While a vendor of real property under a valid contract of sale may become a trustee of the property for the purchaser, there is a question as to the time when such a trust relationship arises and as to the precise character of that relationship. Until it is known whether the contract will be performed, the vendor is not in the position of a constructive trustee, although the vendor may be described as a trustee sub modo. That is to say, the vendor under an unconditional contract may be regarded as a trustee, conditionally upon nothing happening to prevent performance of the contract. The vendor may be regarded unconditionally as a trustee for the purchaser when the contract is performed by the purchaser by payment of the purchase price. When title is made out and the purchaser has paid the purchase price under a contract in respect of which the remedy of specific performance is available, the vendor becomes a constructive trustee of the property sold. [7] 3. However, the use of the language of trust to describe the respective positions of the vendor and purchaser has fallen out of favour. Where there are rights outstanding on both sides of a contract for the sale of land, the description of the vendor as a trustee tends to conceal the essentially contractual relationship that governs the rights and duties of the respective parties. While, in some sense, the equitable estate in the land passes to the purchaser, the vendor has a right to payment of the purchase price and has a charge or lien on that estate as security for payment of the purchase price, together with the right to retain possession of the land until the price is paid. The purchaser must either pay the purchase price or lose the equitable interest acquired on making the contract. [8] 4. Before completion, the principles developed in equity for relief against forfeiture would protect the equitable interest that the purchaser has in the land against loss consequent upon termination of the contract. In the same way as failure to redeem a mortgage upon the promised date for repayment did not destroy the equity of redemption, without the proper exercise of a power of sale or a foreclosure order, failure to complete a contract for purchase on the date fixed for completion did not bar the intervention of equity to order specific performance of the contract. [9] 5. That is to say, at the time when the purchase price is paid under an unconditional contract for sale, a change in the relationship between vendor and purchaser takes place, although the change may take place earlier in some circumstances. The change is that an interest in the subject matter of the contract vests in the purchaser and that interest will be protected by a court of equity. Certainly, when nothing remains to be done in order to define the respective rights of the parties with respect to the equitable interest, a court of equity will protect the rights of the provider of the purchase price, on the basis that the seller is in the position of a trustee under a bare trust, although the intrusion of the notion of a trust may be superfluous. [10] In other words, whether or not the relationship of the vendor to the purchaser is that of trustee to cestui que trust, a court of equity will treat the purchaser as having an interest that it will protect. That interest may fairly be characterised as an equitable interest. Time at which the purchaser may be entitled to equitable remedies 1. Once a contract for sale of land has been entered into, beneficial ownership is, in a sense, split between the seller and buyer on the provisional assumption that specific performance is available and that the contract will in due course be completed, if necessary by a court ordering specific performance. [11] As the contract proceeds to completion, the equitable interests can be viewed as passing to the buyer in stages, as title is made and accepted and as the purchase price is paid in full. [12] In order to consider whether specific performance, or any other equitable remedy, would be ordered at a time prior to completion of such a contract, it is necessary to understand the respective rights of the vendor and the purchaser. 2. The purchaser's interest comprises four separate rights or "equities". [13] First, the purchaser has an interest in the land that is enforceable against third parties and that can take priority over holders of competing interests. Second, the purchaser has an equitable right that the vendor exercise due care to preserve and maintain the land pending completion. Third, the purchaser has an equitable right to the rents and profits received by the vendor between the agreed date for completion and the actual date of completion (but the vendor has that right during the period between the date of contract and the agreed date for completion). Fourth, the purchaser has an equitable lien for repayment of the purchase price in the event of non-conveyance by the vendor. Of those four rights, the first and last are in rem rights over the land the subject of the contract. The vendor also has four such rights: to receive rents before completion, to retain damages recoverable against others for wrongs to the vendor's land before completion, to receive the purchase money on completion, and, in default, to enforce a lien for the purchase money. [14] 3. Importantly, whether or not these "equities" arise, and the extent to which they may be enforced, depends on the time at which the enquiry is made, that is, for example, immediately after formation of the contract, or at a later point when the purchaser is ready, willing and able to tender the purchase price, or at a point after payment of the purchase price. [15] Before completion, the purchaser has an equitable interest in the land that reflects the extent to which equitable remedies are available to protect the purchaser's contractual rights. [16] The fact that the point may not yet have arrived that the purchaser can obtain a decree of specific performance does not mean that the purchaser is not entitled to other equitable remedies: the purchaser could, for example, obtain negative injunctions to enforce any of the four "equities" referred to above. [17] 4. Both parties devoted considerable time to the question of whether specific performance of the Second Contract would have been ordered immediately before the time of the acquisition, with reference to two cases decided prior to the Just Terms Act that considered the question: McMahon v Sydney County Council (1940) 40 SR (NSW) 427 and Austin v Sheldon (1974) 2 NSWLR 661. However, as the foregoing analysis demonstrates, a right to a decree of specific performance is only one kind of equitable interest to which a purchaser under an uncompleted contract for the sale of land may be entitled. 5. The term "interest" in the Just Terms Act is defined in expansive terms, as meaning not only "(a) a legal or equitable estate or interest" in land but also "(b) an easement, right, charge, power or privilege over, or in connection with, the land". That is not to say, however, that the word "right", in paragraph (b) of the definition of "interest", is limitless in scope. For example, in relation to a park controlled by a local council, every member of the public had, in one sense, a "right" over the land in question, because he or she could go on it and have a picnic. [18] But it could not have been the intention of the legislature to allow any member of the public, in that situation, to claim compensation from the acquiring authority. Although the rights that fall within that paragraph must be wider than those that fall within paragraph (a), they must be limited iura in re aliena, proprietary or quasi-proprietary rights less than a fully-fledged estate, that is, easements, charges, profits à prendre, profits à rendre, licences coupled with interests, etc. [19] Nonetheless, the breadth of the definition of "interest" is such as to cover the rights of a purchaser in an uncompleted contract for the sale of land, even if it cannot yet be said that the purchaser would be entitled to a decree of specific performance. Issue 4: whether Cudgegong's interest trumps Golden Mile's interest 1. Upon the valid exercise of a power of sale by a mortgagee, the equitable right of the mortgagor to redeem is extinguished, or at least suspended. It is suspended for so long as the contract entered into in exercise of the power of sale remains on foot. It is extinguished upon completion of a contract for sale that is entered into in the exercise of the power of sale arising under the mortgage. [20] 2. If the Second Contract was not affected by any impropriety, such as breach of duty or bad faith on the part of Stacks, it would not have been open to Golden Mile to claim, prior to completion, that its right to redeem continued so as to be superior to the equitable interest of Cudgegong. Although Golden Mile retained legal title to the Resumed Land, that title was subject to the power of sale arising under the First Mortgage. A contract of sale properly made in the course of the exercise of such a power of sale would be binding on Golden Mile as mortgagor because, by entering into the First Mortgage, Golden Mile made its rights subject to the provisions of the First Mortgage, the Real Property Act and the Conveyancing Act that confer and regulate the power of sale. The right of Golden Mile, therefore, was subject to any action that was properly taken in good faith and without breach of duty by Stacks as mortgagee and was postponed to the rights of Cudgegong under the First Contract and the Second Contract. [21] 3. A mortgagor retains the right to be paid, from the proceeds of any sale by a mortgagee exercising power of sale, any surplus after the secured debt and the costs and expenses of the exercise of the power of sale have been paid in full (see Real Property Act, s 58(3)). While that may not constitute an equity of redemption, which would be an equitable interest, it may nevertheless be an interest within the meaning of the Just Terms Act. The value of that interest will depend upon the extent, if any, to which the proceeds received upon the valid exercise of the power of sale exceed the amount of the secured debt, costs and expenses. In this case, as I have said, the amount of compensation the subject of the Deed of Release between Stacks, RTS and Transport NSW was less than the amount owing (in the case of Stacks) under the First Mortgage. However, because that amount was also less than the total amount of compensation paid out by Transport NSW, there is a "surplus" that exists. 4. Assuming that the Second Contract was a valid exercise of the power of sale by Stacks, it follows that Cudgegong acquired an equitable interest in the Resumed Land. That interest was a right, recognised in equity, to have the Second Contract performed by Stacks according to its terms, subject, of course, to Cudgegong's performing its own obligations under the Second Contract as and when those obligations fell due for performance. The interest in the Resumed Land that Cudgegong acquired would take priority over any other interest in the Resumed Land created after the date of the Second Contract. That interest would also take priority over the interest of Golden Mile, again assuming that the exercise of the power of sale by Stacks was a valid exercise of power. That is because, although Golden Mile's interest preceded Cudgegong's interest in time, it was, as I have said, subject to the power of sale arising under the First Mortgage. 5. To the extent that the purchase price payable under the Second Contract exceeded the amount secured by the First Mortgage, including costs and expenses, RTS had a right to receive, from the proceeds of sale, the amount secured by the Second Mortgage. To the extent that the purchase price exceeded the total of the amounts secured by the First Mortgage and the Second Mortgage, Golden Mile was entitled to receive that excess (under s 58(3) of the Real Property Act). 6. In one sense, each of Golden Mile as mortgagor, Stacks as mortgagee under the First Mortgage, RTS as mortgagee under the Second Mortgage, and Cudgegong as purchaser under the Second Contract entered into by Stacks exercising power of sale under the First Mortgage, was an "owner" of an "interest" in the Resumed Land as at the date of the acquisition by Transport NSW. The value of the interests of Golden Mile, Stacks and RTS is determined by the purchase price payable by Cudgegong. The value of the mortgagees' interests would depend on the amounts secured by their respective mortgages, up to the purchase price payable under a valid contract of sale. The value of Golden Mile's interest would depend on whether there was a surplus after the amounts secured, up to the amount of the purchase price, have been paid in full. The value of Cudgegong's interest would be a matter for determination by the Land and Environment Court in resolving the Cudgegong Appeal. 7. The Compensation Moneys provided under the Deed of Release were accepted by Stacks and RTS on the basis that the Second Contract was a valid exercise of the power of sale by Stacks and that they were not entitled to any more than they would have received on completion of the Second Contract. To the extent of the shortfall, however, Golden Mile would continue to be liable on its personal covenant to repay the loans together with interest. Whether or not the Second Contract is rescinded on the basis that it was not a valid exercise of the power of sale, Golden Mile would still be liable to Stacks and RTS under its personal covenant pursuant to the First Mortgage and the Second Mortgage. That will be so even if the result of the Cudgegong Appeal is that the value of the Resumed Land ought to have been determined in the higher amount contended for by Cudgegong. 8. For present purposes, the only question is whether Cudgegong had an interest in the Resumed Land. The effect of the acquisition of the Resumed Land by Transport NSW was to convert the interest and rights of Golden Mile, as mortgagor (and of Cudgegong, as purchaser), into a right to receive compensation. To the extent, if at all, that the value of the Resumed Land, as determined by the Valuer-General, or by the Land and Environment Court in the Cudgegong Appeal, exceeded the amounts secured by the First Mortgage and the Second Mortgage, that excess represents the value of the interest of Cudgegong. On the other hand, of course, if the exercise of the power of sale by Stacks was not valid and effective, that excess represents the value of the interest of Golden Mile in the Resumed Land. Deficiency in parties 1. Neither Stacks nor RTS is a party to the present application and neither was a party to the proceedings in the Land and Environment Court. Nevertheless, the argument in the Land and Environment Court, and the argument advanced in this Court by Golden Mile, is that Stacks acted in breach of its duty to Golden Mile in the exercise of its power of sale by entering into the Second Contract, and possibly by entering into the Rescission Agreement. While Mr Stack gave evidence in the Land and Environment Court, the question of whether Stacks had acted in breach of its duty to Golden Mile was argued without the joinder of Stacks. One of the proposed grounds of appeal is that the Land and Environment Court erred in concluding that it was unnecessary to consider whether there was a breach by Stacks of its duty to Golden Mile. 2. Senior counsel for Golden Mile contended before this Court that, since Stacks was not a party to the proceedings in the Land and Environment Court, is not a party to the present application, and would not be a party to the appeal if leave were granted, Stacks would not be bound by any determination of this Court or of the Land and Environment Court, if there were a remitter, that it acted in breach of duty. It follows that there would be a possibility of inconsistent judgments in relation to the question of whether or not Stacks acted in breach of a duty to Golden Mile as mortgagor. That is to say, if a determination were made in the present proceedings, or on remitter to the Land and Environment Court, that Stacks had not acted in breach of its duty to Golden Mile, it would nevertheless be open to Golden Mile, at least theoretically, to take proceedings against Stacks for an account, on the basis that there had in fact been a breach of duty. If, in such subsequent proceedings, such a contention were upheld, there would be the spectre of inconsistent judgments, albeit between different parties. That is a result to be avoided in the interests of maintaining confidence in the administration of justice. 3. In response to an enquiry made during the hearing of the application for leave, senior counsel for Golden Mile stated that, if it is determined, either by this Court or on remitter, that, by reason of any breach of duty by Stacks, the Second Contract did not operate to make Cudgegong the equitable owner of the Resumed Land, then Golden Mile will not seek any further remedy for breach of duty against either Stacks or RTS. Conclusion 1. I consider that the trial judge erred, on a question of law, in dealing with the question of whether Stacks was in breach of its duty to Golden Mile in the exercise of the power of sale under the First Mortgage. Leave to appeal to this Court should be granted. Golden Mile should be directed to file a notice of appeal in the form of the draft notice of appeal contained in the application book. The appeal should be allowed. The orders made by the Land and Environment Court should be set aside. The matter should be remitted to the Land and Environment Court for the purpose of hearing and determining according to law the question of the respective interests that Golden Mile and Cudgegong had in the Resumed Land as at 12 September 2012. Cudgegong should pay Golden Mile's costs of the application for leave and of the appeal. 2. All of the above orders should be made conditional upon Golden Mile giving an undertaking to the Court that, if it be determined that Stacks acted in breach of its duty to Golden Mile in the exercise of the power of sale in entering into the Second Contract, Golden Mile will not seek any further remedy for breach of duty against either Stacks or RTS. If no such undertaking is proffered within 14 days, leave to appeal should be refused with costs. 3. I therefore propose the following orders: 1. Leave to appeal be granted; 2. The applicant file a notice of appeal in the form of the draft notice of appeal contained in the application book; 3. The appeal be allowed; 4. Orders made by the Land and Environment Court on 13 March 2014 be set aside; 5. The matter be remitted to the Land and Environment Court for the purpose of hearing and determining, according to law, the question of the respective interests that the applicant and the first respondent had in the Resumed Land as at 21 September 2012; 6. The first respondent pay the applicant's costs of the application for leave to appeal and of the appeal; 7. Orders (1)-(6) be conditional on the applicant's giving an undertaking to the Court that, if it be determined that Stacks Managed Investments Ltd acted in breach of its duty to the applicant in the exercise of the power of sale in entering into the Second Contract, the applicant will not seek any further remedy for breach of duty against either Stacks Managed Investments Ltd or the second respondent; 8. If no undertaking in the terms of order (7) is proffered within 14 days, the application for leave to appeal be refused with costs. 1. GLEESON JA: I agree with Emmett JA. ********** Endnotes 1. Artistic Builders Pty Ltd v Elliott & Tuthill (Mortgages) Pty Ltd [2002] NSWSC 16 at [87]. 2. Forsyth v Blundell [1973] HCA 20; 129 CLR 477 at 497-499. 3. See Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; 113 CLR 265; see also JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed 2015, LexisNexis) at [4-205]. 4. See Forsyth v Blundell at 499. 5. Civil Procedure Act 2005 (NSW), s 94; see, eg, Morrow v Tucker (No 2) [2006] NSWSC 1358. 6. Lysaght v Edwards (1876) 2 Ch D 499 at 506. 7. See Chang v The Registrar of Titles [1976] HCA 1; 137 CLR 177 at 184-185. 8. Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 217 CLR 315 at [47] and [53]. 9. Ibid at [48]. 10. Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; 229 CLR 545 at [72]. 11. Jerome v Kelly (Inspector of Taxes) [2004] 1 WLR 1409 at [32]. 12. Ibid. 13. Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [6-055] (and see citations therein). 14. Ibid. 15. Ibid. 16. Kern Corporation Ltd v Walter Reid Trading Pty Ltd [1987] HCA 20; 163 CLR 164 at 191. 17. Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [6-055]. 18. Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151 at 155. 19. Ibid. 20. See E Tyler, P Young and C Croft, Fisher and Lightwood's Law of Mortgage (3rd Australian ed 2014, LexisNexis) at [20.37]ff. 21. See Forsyth v Blundell at 499. Amendments 10 December 2015 - [7], last sentence: "land" changed to "Land" [12], first sentence: "compulsory" changed to "compulsorily" [50], first sentence: "the" before "RTS" removed; second and third sentences: "RTA" changed to "RTS" [51], first sentence: "RTA" changed to "RTS" [57], fourth sentence: "[sic]" inserted after "$108, 586.75" [96]: final sentence reworded (to remove a triple negative) to: "That is to say, Cudgegong could still have an interest in the Resumed Land, within the meaning of the Just Terms Act, even though, as at the date of acquisition of the Resumed Land by Transport NSW, an order would not have been made (had it been sought by Cudgegong) requiring Stacks to transfer legal title at that time, even if the total purchase price were tendered by Cudgegong." 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: 10 December 2015