Court of Appeal Supreme Court New South Wales Medium Neutral Citation: New Galaxy Investments Pty Ltd v Thomson & Ors [2017] NSWCA 153 Hearing dates: 12 and 13 December 2016 Decision date: 23 June 2017 Before: Basten JA at [1] Gleeson JA at [104] Sackville AJA at [126] Decision: 2015/370773 – New Galaxy Investments Pty Ltd (1) To the extent that New Galaxy Investments Pty Ltd requires leave to appeal from the decision of the primary judge, grant leave to appeal. (2) Appeal allowed in part. (3) Set aside orders 2, 3, 5 and 7 made on 20 November 2015. (4) Set aside orders 1, 5 and 6 made on 21 April 2016. (5) Dismiss the claims of the first to tenth plaintiffs against the third defendant (NGI) for compensation pursuant to s 74P of the Real Property Act 1900 (NSW). (6) Dismiss the claim of the second cross-claimant (GDI) against the thirteenth cross-defendant (NGI) for compensation pursuant to s 74P of the Real Property Act 1900 (NSW). (7) In the event that the parties fail to agree on the appropriate costs at first instance and on appeal, direct: (a) any application with respect to costs be made by notice of motion filed and served, together with any supporting affidavits and written submissions (not exceeding 5 pages) within 28 days of the date of this judgment; (b) the respondent to any such application file and serve any affidavits, together with written submissions (not exceeding 5 pages), in reply within 7 days thereafter; (c) any such application will be dealt with on the papers. 2016/10107 – Francisco Gutierrez trading as Avondale Lawyers (1) Application for leave to appeal dismissed. (2) The applicant (Avondale) to pay the costs of the application of the First to Tenth Respondents (the Vendors), the Eleventh Respondent (GDI), the Twelfth Respondent (MVGDD) and the Thirteenth Respondent (NGI). Catchwords: REAL PROPERTY – Torrens title – caveats against dealings – claim for compensation pursuant to Real Property Act 1900, s 74P – whether appellant had a caveatable interest in land – vendors of land entered into contracts of sale – contracts of sale allowed for novation of contracts to a new purchaser – appellant paid $6 million to vendors' agent in expectation that contracts would be novated to it – whether payment made at express or implied request of vendors – no loan agreement between caveator and purchaser – money not paid to or on behalf of the purchaser – purchaser subsequently novated the contracts of sale to third party –completion of sale delayed by reason of the caveats lodged and maintained by the appellant. REAL PROPERTY – Torrens title – caveats against dealings – claim for compensation pursuant to Real Property Act 1900, s 74P – whether appellants lodged caveats over land without reasonable cause – appellant advised to lodge caveats by its solicitor – whether claimants had established that caveator did not have an honest belief on reasonable grounds that the caveator had a caveatable interest in the land. APPEALS – leave to appeal – competing claims to fund held in court – where applicant claims immediate entitlement to funds prior to determination of all competing claims – where applicant's claim based on deed of charge securing legal costs owing by former client – whether charge extended to any entitlement to fund in court – where applicant conceded that their claim to priority was co-extensive with any interest of former client in the Court fund – where former client found not to have any charge or lien over the Court fund. Legislation Cited: Real Property Act 1900 (NSW), ss 72, 74F, 74MA, 74P, 98 Real Property Amendment Act 1996 (NSW), Sch 1[19] Real Property (Caveats) Amendment Act 1986 (NSW), Pt 7A Trustee Act 1925 (NSW), s 59(4) Transfer of Land Act 1958 (Vic), s 118 Transfer of Land Act 1893 (WA), s 137 Cases Cited: Aberaman Ironworks v Wickens (1868) LR 4 Ch App 101 Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26; 16 BPR 30,397 ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) (2012) 245 CLR 338; [2012] HCA 6 Arinson Pty Ltd v City of Canada Bay Council [2015] NSWCA 199; 208 LGERA 418 Arkbay Investments Pty Ltd (In Liq) v Echelon Property Management Pty Ltd (No 2) [2014] NSWSC 572 Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 Bolton v Excell (Supreme Court (WA), 22 February 1993, unrep) Boodle Hatfield & Co v British Films Ltd (1986) NLJ 117 Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27; [2007] WASCA 179 Chattey v Farndale Holdings Inc (1998) 75 P & CR 298 Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; [1998] HCA 4 Cid v Cortes (1987) 4 BPR 97,276 Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Comcare v PVYW (2013) 250 CLR 246; [2013] HCA 41 Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 David Alan Thomson v Golden Destiny Investments Pty Limited [2015] NSWSC 1176 Davies v Littlejohn (1923) 34 CLR 174; [1923] HCA 64 Evandale Estates Pty Ltd v Keck [1963] VR 647 at 652 Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; [1999] NSWCA 323 Halifax plc v Omar [2002] EWCA Civ 121; [2002] P. & C. R. 26,377 Hewett v Court (1983) 149 CLR 639; [1983] HCA 7 Hill v Ziymack (1908) 7 CLR 352; [1908] HCA 13 Lavery v R & I Bank of Western Australia Ltd [1995] WASC 484 J&H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 Jones v Dunkel (1959) 101 CLR 298 Lee v Ross (No 2) [2003] NSWSC 507; 11 BPR 20,991 Leveraged Equities Ltd v Goodridge (2011) 191 FCR 71; [2011] FCAFC 3 Levy v Stogdon [1898] 1 Ch 478 Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635; [2008] HCA 27 Mahendran v Chase Enterprises Pty Ltd [2013] NSWCA 280; 17 BPR 32,733 Middleton v Magnay (1864) 2 Hem & M 233; 71 ER 452 Morgan v John Fairfax & Sons Ltd (1991) 23 NSWLR 374 Naismith v Smith [1954] VLR 567 Natuna Pty Ltd v Cook [2007] NSWSC 121 Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 Nottingham Permanent Benefit Building Society v Thurstan [1903] AC 6 O3 Capital Pty Ltd v WY Properties Pty Ltd (2016) 49 WAR 517; [2016] WASCA 82 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3 Pacific Brands Sport and Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395; [2006] FCAFC 40 Paul v Speirway Ltd [1976] Ch 220 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5 Quinn v Leathem [1901] AC 495 Re Bond Worth Ltd [1980] Ch 228 Re Kimberley NZI Finance Ltd v AR Barr Investments Pty Ltd [1990] FCA 54 Rose v Watson (1864) 10 HLC 672; 11 ER 1187 Ryu v Lee (1996) 7 BPR 97,588 Shaw v Foster (1872) LR 5 HL 321 State of New South Wales v Taylor (2001) 204 CLR 461; [2001] HCA 15 Stewart v Atco Controls Pty Ltd (In Liq) (2014) 252 CLR 307; [2014] HCA 15 Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176 Thomson v Golden Destiny Investments Pty Ltd (No 2) [2015] NSWSC 1929 Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1 Vickery v Woods (1952) 85 CLR 336; [1952] HCA 7 Whitbread & Co Ltd v Watt (1902) 1 Ch 835 Wilkinson v Clements (1872) LR 8 Ch App 96 Wythes v Lee (1855) 3 Drewry 396; 61 ER 954 Texts Cited: K Mason, JW Carter and GJ Tolhurst, Mason & Carter's Restitution Law in Australia, (3rd ed 2016, LexisNexis Butterworths) ICF Spry, The Principles of Equitable Remedies, (3rd ed 1984, Lawbook Co) ICF Spry, The Principles of Equitable Remedies, (9th ed 2014, Lawbook Co) J Edelman and E Bant, Unjust Enrichment, (2nd ed 2016, Hart Publishing) Meagher, Gummow & Lehane, Equity Doctrines & Remedies (5th ed, (2015), LexisNexis Butterworths, at [9-075]-[9-115]) Woodman & Nettle: The Torrens System in New South Wales (Loose Leaf) Category: Principal judgment Parties: Matter No. 2015/370773: New Galaxy Investments Pty Ltd (Appellant) David Alan Thomson (First Respondent) Tracy Spencer (Second Respondent) Joseph Alonso (Third Respondent) Kaye Alonso (Fourth Respondent) John Wolfe (Fifth Respondent) Janyce Wolfe (Sixth Respondent) Malcolm Smith (Seventh Respondent) Katherine Smith (Eight Respondent) Pera Webb (Ninth Respondent) Maureen Theobald (Tenth Respondent) Golden Destiny Investments Pty Ltd (Eleventh Respondent) MV Golden Destiny Development (Turramurra) Pty Ltd (Twelfth Respondent) Yun "Louise" Lin (Thirteenth Respondent) Kristjan Geering (Fourteenth Respondent) Francisco Gutierrez trading as Avondale Lawyers (Fifteenth Respondent) Matter No. 2016/10107: Francisco Gutierrez trading as Avondale Lawyers (Appellant) David Alan Thomson (First Respondent) Tracy Spencer (Second Respondent) Joseph Alonso (Third Respondent) Kaye Alonso (Fourth Respondent) John Wolfe (Fifth Respondent) Janyce Wolfe (Sixth Respondent) Malcolm Smith (Seventh Respondent) Katherine Smith (Eight Respondent) Pera Webb (Ninth Respondent) Maureen Theobald (Tenth Respondent) Golden Destiny Investments Pty Ltd (Eleventh Respondent) MV Golden Destiny Development (Turramurra) Pty Ltd (Twelfth Respondent) New Galaxy Investments Pty Ltd (Thirteenth Respondent) Representation: Counsel: Mr M Einfeld QC / Mr D Krochmalik (New Galaxy) Mr F Corsaro SC / Mr M Auld (Avondale Lawyers) Mr G Sirtes SC / Mr M Fernandes (First to Tenth Respondents) Mr J Darke SC / Mr J Lee (Eleventh and Thirteenth Respondents) Mr D Allen (Twelfth Respondent) Solicitors: Websters Lawyers (New Galaxy) Fox & Staniland Lawyers (First to Tenth Respondents) Ren Zhou Lawyers (Golden Destiny) Kekatos Legal (MV Golden Destiny) Birchgrove Legal (Francisco Gutierrez) File Number(s): 2015/370773; 2016/10107 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2015] NSWSC 1176 and [2015] NSWSC 1929 Date of Decision: 21 August 2015 and 17 December 2015 Before: Sackar J File Number(s): 2014/228930 [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.] HEADNOTE [This headnote is not to be read as part of the judgment] The appellant, New Galaxy Investments Pty Ltd (NGI) lodged caveats over the titles of six properties at Turramurra (Properties), claiming an equitable interest in the Properties arising by reason of NGI's payment of $6 million to the registered proprietors (first to tenth respondents) (Vendors). On its case, NGI made a voluntary payment to the Vendors' agent because it expected to acquire title to the Properties by novation to it of the contracts of sale between the Vendors and the eleventh respondent, Golden Destiny Investments Pty Ltd (GDI). NGI's $6 million payment was not made at the request of the Vendors. There was no loan agreement between NGI and GDI, and NGI did not contend that the $6 million payment was a loan, or that the money was paid to or on behalf of GDI. The Vendors had entered into six contracts for sale with GDI on 17 December 2013 for a total purchase price of $15.1 million, with a deposit of $1.51 million and a completion date of 17 March 2014. Those contracts allowed for their novation to another purchaser. GDI subsequently entered into a deed with NGI (Short Form Deed) granting NGI a conditional right to have the contracts of sale novated to it simultaneously with their completion. The condition of the novation was that NGI obtain funding necessary to complete the contracts. NGI did not obtain the necessary funding. Further negotiations between the Vendors and GDI led to "new contracts" between the Vendors and GDI on 23 April 2014, which extended the date for completion, in return for an increase in the purchase price by $200,000, a part payment by GDI of the increased purchase price in the amount of $6.49 million and the release to the Vendors of the deposit of $1.51 million. The new contracts also allowed for their novation to another purchaser. Of the $6.49 million paid to the Vendors' agent, $6 million was paid by NGI and $490,000 was paid by GDI. The Vendors were unaware that NGI had paid the $6 million to their agent. After the new contracts were entered into, a dispute arose between NGI and GDI about the Short Form Deed, with each asserting that the other had breached or repudiated that agreement. GDI then nominated the thirteenth respondent, MV Golden Destiny Development (Turramurra) Pty Ltd (MVGDD) as the purchaser by novation under the new contracts, and the Vendors entered into contracts with MVGDD on 7 July 2014. The completion of the contracts between the Vendors and MVGDD was delayed by reason of the caveats lodged by NGI's solicitors on 21 July 2014. In proceedings in the Equity Division, the Vendors and GDI both sought compensation against NGI pursuant to s 74P of the Real Property Act 1900 (NSW) for pecuniary losses sustained by them by NGI's lodgment of the caveats, and NGI's subsequent refusal to remove the caveats when requested to do so. On the third day of the trial in the Equity Division proceedings, NGI agreed to withdraw its caveats and allow the completion of the contracts of sale between the Vendors and MVGDD. Following the completion of the contracts between the Vendors and MVGDD, the primary judge ordered that the $6 million received by the Vendors from NGI be paid into Court. The primary judge made a declaration that the caveats had been lodged and maintained by NGI without reasonable cause and ordered compensation be paid by NGI to the Vendors in the amount of $796,026.41. Assessment of compensation payable by NGI to GDI was deferred pending the determination of other claims the subject of GDI's cross claim against NGI. The primary judge found that NGI had no equitable interest in the Properties and therefore did not have a caveatable interest. His Honour concluded that GDI did not make payment to the Vendors as agent of NGI or in any manner that made NGI a sub-purchaser of GDI. The primary judge further found that NGI gave no thought at all to the validity of the caveats it had lodged, and that the objective evidence pointed overwhelmingly to there being no reasonable basis for their lodgment. The primary judge ordered NGI to pay the costs of GDI and MVGDD on an indemnity basis. NGI, by its appeal, sought to set aside the orders for compensation made by the primary judge, and the declaration that it had lodged and maintained its caveats without reasonable cause. NGI also challenged the order of the primary judge that NGI pay the costs of GDI and MVGDD on an indemnity basis. NGI's appeal was heard concurrently with an application for leave to appeal by Francisco Gutierrez trading as Avondale Lawyers (Avondale). Avondale were NGI's former solicitors and sought leave to appeal against the dismissal by the primary judge of their notice of motion seeking orders that amounts due to it for its costs of acting for NGI be paid in priority from the Court Fund. Competing claims were made against the Court Fund by NGI, GDI, the Vendors, MVGDD and Avondale. NGI claimed that it had a charge or lien over the Court Fund by reason of having paid the $6 million to the Vendors' agent. Avondale claimed that it had a security interest over any rights of NGI in respect of the Court Fund. The Vendors and GDI relied on money judgments in their favour against NGI in the Equity Division proceedings. MVGDD relied on an undertaking as to damages given by NGI as the price for maintaining its caveats. The NGI appeal Issues on NGI's appeal 1. Whether NGI had a caveatable interest in the Properties by reason of its payment of $6 million to the Vendors' agent; 2: Whether NGI had an honest belief on reasonable grounds that it had a caveatable interest over the Properties; 3: If the caveats were lodged without reasonable cause, whether the Vendors and GDI suffered losses attributable to NGI's wrongful lodgement of the caveats; 4: Whether any immediate disposition should be made from the Court Fund; 5: Whether the primary judge erred in ordering that NGI pay GDI and MVGDD's costs on an indemnity basis. In respect of (1); held per Sackville AJA, Gleeson JA agreeing, Basten JA dissenting: 1: The $6 million paid by NGI to the Vendors' agent was a voluntary payment made by NGI without the request (express or implied) or the knowledge of the Vendors. It was not contended by NGI that the payment was a loan to GDI or made at the request of GDI, and NGI was not in the position of sub-purchaser from GDI. No case was advanced by NGI against GDI founded on estoppel or subrogation. 2: NGI had no equitable lien over the Properties as against the Vendors arising from the voluntary payment which was made without the Vendors' knowledge or request (express or implied). Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234; Hill v Ziymack (1908) 7 CLR 352; [1908] HCA 13; Lavery v R&I Bank of Western Australia Ltd [1995] WASC 484; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15 considered 3: NGI had no equitable lien over the Properties as against GDI arising from a voluntary payment made directly to the Vendors' agent, not to or on behalf of GDI.Aberaman Ironworks v Wickens (1868) LR 4 Ch App 101; [2008] HCA 27; Naismith v Smith [1954] VLR 567; Shaw v Foster (1872) LR 5 HL 321 considered. In respect of (2); held per Basten JA, Gleeson JA agreeing, Sackville AJA dissenting; 4: The Vendors and GDI had failed to establish that NGI did not believe that it had a caveatable interest in the land at the time it lodged the caveats. The Vendors and GDI therefore failed to establish that NGI had lodged or maintained the caveats without reasonable cause. Mahendran v Chase Enterprises Pty Ltd [2013] NSWCA 280; 17 BPR 32,733 cited. In respect of (3); held per Basten JA, Gleeson JA agreeing, Sackville AJA dissenting; 5: In view of the conclusion of the Court (by majority) in respect of (2) above, the Vendors and GDI were not entitled to compensation pursuant to s 74P of the Real Property Act 1900 (NSW). In respect of (4); held per Sackville AJA, Basten and Gleeson JJA not deciding; 6: No claimant to the Court Fund had established a right to immediate payment. There was no error in the primary judge's decision to order that the sum comprising the Court Fund be frozen until further order. In respect of (5); held per Basten JA, Gleeson JA agreeing, Sackville AJA dissenting; 7: The appellant's success on appeal means that the indemnity costs order at first instance should be set aside. The parties were invited to reach agreement as to the appropriate costs order at first instance and on appeal, failing which the issue of costs would be determined by the Court upon further application by the parties. The Avondale appeal Issues on Avondale's application for leave to appeal 1: Whether Avondale was entitled to an immediate payment out of the Court Fund as a result of its charge over NGI's assets to secure its costs. In respect of (1); held per Sackville AJA, Basten and Gleeson JJA agreeing 1: Since NGI did not have a charge or lien over the Court Fund, Avondale has no claim to priority over other claimants to the Court Fund based on the Deed of Charge granted to Avondale by NGI. Avondale was not entitled to any immediate payment from the Court Fund. Judgment 1. BASTEN JA: This judgment concerns two sets of proceedings, each relating to the purchase for development of six properties on the Pacific Highway at Turramurra. It will not finally determine the disputes, as there remain outstanding issues in the original proceedings in the Equity Division. After a lengthy trial, on 21 August 2015 Sackar J delivered the principal judgment in this matter, David Alan Thomson v Golden Destiny Investments Pty Ltd. [1] In practical financial terms, the proceedings concerned claims against a fund of $6 million which had been paid into court pursuant to an order made on 22 May 2015. 2. Briefly stated the background was as follows. On 17 December 2013, the eleventh respondent to the principal appeal, Golden Destiny Investments Pty Ltd ("Golden Destiny", also referred to as "GDI") entered into a contract for the sale of land, by which it was to purchase all six properties for a total payment of $15.1 million. It paid a deposit of $1.5 million. It was envisaged that the development would be undertaken as a joint venture with the appellant, New Galaxy Investments Pty Ltd ("New Galaxy", also referred to as "NGI"). Both parties encountered difficulty in raising the funds to settle on the agreed date, namely 17 March 2014. In order to keep the sale contract on foot, Golden Destiny paid a further amount of some $500,000 and New Galaxy made a payment to the vendors of $6 million. However, it was not able by the revised settlement date to raise the balance of the moneys required and Golden Destiny agreed to a novation of the sale contracts in favour of a third party. On 21 July 2014, a day before the settlement date, New Galaxy lodged caveats on each of the six titles. The central issue in its appeal was whether, as the trial judge held, the caveats were lodged without reasonable cause, with the result that the vendors were entitled to be paid compensation resulting from the delay in settlement. By orders made on 21 April 2016, judgment was entered in favour of the vendors in the sum of $796,026.41. 3. The second appeal concerned a claim by the solicitors for New Galaxy that any interest held by New Galaxy in the fund was subject to a charge securing the solicitors' legal fees. I agree with the reasons of, and orders proposed by, Sackville AJA in relation to those proceedings. 4. With respect to New Galaxy's appeal, in my view, the trial judge was in error in awarding compensation to the vendors under s 74P(1) of the Real Property Act 1900 (NSW), on the basis that New Galaxy had lodged the caveats without reasonable cause. To that extent, New Galaxy's appeal must be upheld. Legal principles - absence of reasonable cause 1. The importance of maintaining the integrity of the register of land ownership requires that the terms of s 74P of the Real Property Act be conscientiously applied so as to provide a realistic deterrent against the lodgement of inappropriate caveats, preventing dealings in land by the owners. 2. The appropriate starting point is the relevant provisions of the Real Property Act. First, s 74F permits a person claiming to be entitled to an unregistered legal or equitable interest in land to lodge a caveat prohibiting the recording of any dealing affecting the claimed interest. As explained by Buss JA in Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd: [2] "The power to lodge a caveat is not conditional upon the caveator actually having the estate or interest in question. Rather, the caveator must 'claim' the relevant estate or interest." However, a person who, "without reasonable cause", lodges such a caveat is liable to pay compensation to any person who sustains pecuniary loss that is attributable to the lodgement. [3] 1. With a possible qualification in relation to improper purpose, discussed below, a person who has an equitable interest in land is entitled to lodge a caveat to protect that interest. Whether New Galaxy had such an interest will be addressed later; the initial question is what must be shown to be lacking, assuming it did not have such an interest. 2. As enacted in 1900, the Real Property Act contained similar provisions in ss 72 and 98. When the provisions with respect to caveats were drawn together in a new Pt 7A in 1986, [4] the condition precedent to a claim for compensation was varied to require that the defendant had "wrongfully and without reasonable cause" lodged the offending caveat. The additional words ("wrongfully and") in the amendments which commenced on 1 August 1988 were given extensive consideration by this Court in Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd. [5] They were removed on 1 February 1997 and are not relevant in these proceedings. However, their insertion gave rise to judicial analysis of the change made by their inclusion. 3. The term "reasonable cause" has been accepted in a number of cases (albeit with occasional qualifications) as referring to a belief on the part of the caveator, which belief should be based on "reasonable grounds", that the caveator had an unregistered legal or equitable estate or interest in the land. Cases suggesting that something more might be necessary were relevant in 1988 because, at that stage, it became necessary to identify what might be meant by the additional requirement that the caveator act "wrongfully". 4. In 1963, in considering the unadorned phrase "without reasonable cause", Macfarlan J held in Young v Rydalmere Credits Pty Ltd [6] that a caveator had acted "not for the protection of his interest in the land [which was not in dispute] but for an ulterior motive and without regard to its effect on transactions to which the caveator had agreed." That amounted to saying that a caveator who exercised the power to lodge a caveat "in order to effect an improper purpose" [7] acted without reasonable cause. Yet the result in Young v Rydalmere Credits might have been justified on the basis that the caveator had entered into an agreement which conferred on the registered owner an entitlement to deal with the land in a way inconsistent with the caveat. 5. In 1981, in Bedford Properties Pty Ltd v Surgo Pty Ltd [8] Wootten J stated: [9] "I think the foundation for reasonable cause must be, not the actual possession of a caveatable interest, but an honest belief based on reasonable grounds that the caveator has such an interest. That, of course, may not be enough. In Young v Rydalmere Credits … a caveator was held to have acted without reasonable cause when he lodged a caveat not for the protection of his interest but for an ulterior motive and without regard to its effect on transactions to which the caveator had agreed." The first sentence of that statement is unimpeachable; the rest clearly adds something to the statutory language. 1. In Beca Developments, in considering whether the word "wrongfully" meant merely that the plaintiff must demonstrate that the caveator had no caveatable interest, Clarke JA stated: [10] "It cannot be said, in my view, that a person who has a caveatable interest has no reasonable cause for lodging a caveat simply because he has some ulterior motive for lodging the caveat. The existence of the interest provides the reasonable cause. In this respect I am unable to agree with the reasoning of Macfarlan J in Young." 1. The different opinions which have been expressed on this issue in a number of cases were reviewed in 2007 by Buss JA in Brogue Tableau. [11] 2. An alternative approach, which does not seek to place a gloss on the language of "without reasonable cause", is to ask whether the purpose of lodging the caveat is to pursue a claim to be entitled to a legal or equitable estate or interest in the land, being the purpose implicit in the conferral of power under s 74F(1). If that is not the, or at least a, purpose of the caveator, the power is not engaged. That is consistent with the purpose of a caveat identified by Barwick CJ in J&H Just (Holdings) Pty Ltd v Bank of New South Wales: [12] "Its purpose is to act as an injunction to the Registrar-General to prevent registration of dealings with the land until notice has been given to the caveator. This enables the caveator to pursue such remedies as he may have against the person lodging the dealing for registration." 1. The words "wrongfully and" were removed in 1997. [13] The language to be construed is therefore the phrase "without reasonable cause". That expression, in different forms and in different contexts, is not uncommon in statutory instruments. The difficulties it creates were succinctly explained by Callinan J in State of New South Wales v Taylor: [14] "'Reasonable' is an adjective apt to qualify … a state of mind, a person, or a reasoning creature, rather than an abstraction such as a cause. The way in which the test is expressed is an example of an hypallage, the transfer of the descriptive word to a different expression noun, or pronoun, from the one which it really qualifies." 1. In the present case, the phrase applies to the conduct of the caveator. It is possible that conduct could give rise to liability regardless of the presence or absence of any mental element on the part of the actor. However, that would not usually be the case. It has long been accepted (apparently without ever being the subject of a contrary suggestion) that the phrase engages both a subjective element (a belief on the part of the caveator) and an objective element (the existence of reasonable grounds for the belief). 2. Accordingly, with one qualification, the correct understanding of the phrase "without reasonable cause" is that accepted in Mahendran v Chase Enterprises Pty Ltd, [15] adopting the reasoning of Biscoe AJ in Natuna Pty Ltd v Cook: [16] "'Reasonable cause' for the lodgement of a caveat exists where the caveator has an honest belief, based upon reasonable grounds, that the caveator has a caveatable interest." In the same passage, Biscoe AJ identified the "subjective" element as involving the caveator's "actual belief and whether it was honestly held." 1. The epithets are unhelpful, if not misleading. What is required is a belief as to a particular matter, held by the caveator at the relevant time, namely when the caveat was lodged. Nothing is added by calling it an "actual" belief; nor does the word "honest" carry the matter any further. [17] The belief exists or it does not. Of course, evidence as to a belief may not be honest, and the belief itself may not be reasonable. Further, as is clear from Beca Developments, any question of improper motive (properly rejected by Clarke JA) is not to be equated to a "dishonest belief". 2. There is one further point to be noted with respect to the formulation of the correct test. Whilst acknowledging that the test involved both subjective and objective elements, in his final conclusion, as will be observed below, the trial judge elided the concepts of, on the one hand, the caveator having reasonable grounds to believe it had a caveatable interest, and, on the other, that it had "a reasonable basis to lodge the caveats". The latter approach, by removing the mental state of the caveator from the test to be applied, focuses on the opinion of the court as to whether there was a caveatable interest or a reasonable basis in law for concluding that such an interest existed. That test will reflect the view of the trial judge, formed on the basis of the evidence in the case; it will not be limited to the circumstances known, or which should have been known, to the caveator at the time the caveat was lodged. It will also ignore any legal advice given to the caveator at that time. 3. Thus, the result may be to impose liability on the party for the conduct of its solicitor, in circumstances where it was entirely reasonable for the party to obtain and rely upon legal advice and where the solicitor had been given adequate instructions. Despite the use of the elided language ("a reasonable basis to lodge the caveats"), that was not the test expressly adopted by the trial judge, nor by the parties in this case. The Court should approach this matter on the basis that there must be an objective assessment of the reasonableness of the belief held by New Galaxy at the time the caveats were lodged. Summary of the evidence 1. The two principal corporate entities at the heart of this dispute were Golden Destiny and New Galaxy. The active principal of Golden Destiny was Ms Yun (Louise) Lin; the active principal of New Galaxy was Ms Ling (Katherine) Gai. (They were not the sole individual protagonists.) 2. In December 2013, Golden Destiny contracted to purchase six parcels of land on the Pacific Highway at Turramurra. As noted above, the overall purchase price was $15.1 million; settlement was to occur by 17 March 2014. The contract included a provision allowing Golden Destiny as purchaser to novate the contract in favour of a new purchaser; however, novation required that there be a simultaneous exchange and completion of the new contracts. The solicitor for Golden Destiny, as noted on the contract, was Kristjan Geering. 3. These three individuals had close relationships at the time. The trial judge recorded that Ms Gai and Mr Geering were de facto partners during most of the relevant period, [18] that Mr Geering and Ms Lin were both shareholders in Mr Geering's legal firm, [19] and that the three together had established Gold Stone Venture Capital Pty Ltd ("Gold Stone") in 2012. [20] Gold Stone was the Trustee for a fund which was expected to attract prospective property investors. The three had also established New Galaxy as a wholly owned subsidiary of Gold Stone in early 2013. Ms Lin's husband, Haizhon (John) Cai, was actively involved in the property business and was a director of Golden Destiny. 4. As the trial judge further noted, there were discussions between 9 December 2013 and late January 2014 between Ms Lin, Ms Gai and Mr Geering in relation to the funding of the purchase and development of the Turramurra properties. At one stage it was proposed that New Galaxy would raise $9 million and that Golden Destiny would provide $7 million to cover the purchase price and additional expenses, including stamp duty. [21] The figure to be provided by New Galaxy was increased, in the course of a discussion in February 2014, to $10.5 million, on the understanding that Golden Destiny would provide a further $4 million, in addition to the deposit of $1.5 million already paid. [22] 5. On 24 February 2014, Golden Destiny, New Galaxy and Gold Stone (and another corporate entity associated with Ms Lin) entered into a "short form deed". The deed was prepared by Mr Geering, acting, it appears, for all parties. The recitals identified the contracts entered into by Golden Destiny, the scheduled date for completion (17 March 2014 [23] ), the purchase price and the payment by Golden Destiny of a 10% deposit. The recitals also noted that "Golden Destiny does not wish to develop the Project" but that New Galaxy did wish to develop the project, "provided certain terms and conditions are met." The "Project" was described as the construction of 99 residential units in accordance with a conditional development approval, with which the site was to be purchased. The recitals further noted that Gold Stone Capital, as trustee of a mortgage fund, "or Golden Destiny", wished to provide New Galaxy with "debt funding to pay the Purchase Price." 6. The critical terms in the deed were as follows: "2.1 Special Condition 48 (SC48) of the Purchase Contracts allows for novation thereof. As soon as practical after NGI has secured funding arrangements for the Purchase Price (including the assignment of the Deposit, clause 2.3 below), NGI will pursuant to SC 48 seek to novate the Purchase Contracts ("Novation"). 2.2 Should the Novation be successful then NGI in its capacity as trustee of the [Gold Stone property fund] will own the Project and therefore be entitled to the profit thereof and liable for the loss. Deposit 2.3 Pursuant to SC48 the Deposit is assigned to NGI should the Novation be successful. 2.4 Contemporaneously with any successful Novation NGI will reimburse Golden Destiny the Deposit. … 2.6 Contemporaneously with any successful Novation NGI will reimburse Golden Destiny the Golden Destiny Costs. [Being costs incurred of and incidental to the acquisition of the site.] Funding of the Purchase Price 2.7 It is an essential term of this Deed that in the event that the Novation is successful, the following will be provided to NGI to assist with the completion of the Purchase Contracts and payment of the Purchase Price: (i) Golden Destiny assigns the Deposit; And (ii) Gold Stone Capital in its capacity of trustee and manager of the Mortgage Fund or Golden Destiny will loan to NGI a loan amount up to and including $5,500,000 with the salient terms being …." 1. The deed was executed by the various parties, the signatories for Golden Destiny including Mr Cai who also signed on behalf of Gold Stone Capital and the proposed manager of the project, which was also a party to the deed, Ergo Investment Management Pty Ltd. 2. On 26 February 2014, Ms Lin notified the vendors' agent of the proposed novation in favour of New Galaxy. She also noted the need to amend the sale contracts to include reference to the development consent. 3. On 12 March 2014, Mr Geering emailed Ms Lin and Ms Gai noting that he had sent a notice of novation to the vendors' solicitor and suggesting that "we should firm up a strategy to stage the completion, ie the amounts to pay to the vendors and when." He also included the following paragraph: "3. Caveats. As per Louise's suggestion, we should lodge caveats over title of the six properties, the caveats can be lodged by both Golden Destiny and NGI. Before we do so, I would like to discuss the different legal distinction as it relates to caveatable interests between a 'nominee' and an 'assignee'. It may be the case, our side, (ie the purchasers) – Golden Destiny formally assigns its rights under the contract to NGI without gaining the vendors [sic] approval. I note the issue of the deposit is likely to be important when deciding whether NGI 'as a nominee' has a caveatable interest." 1. It may be inferred from the somewhat cryptic final sentence of the part of the email set out above that Mr Geering was satisfied that Golden Destiny, as the purchaser, had a caveatable interest, but that New Galaxy, which was merely to be the novatee under an agreement between it and Golden Destiny, did not. (That reading was to be confirmed by subsequent events.) 2. On 12 March 2014 Ms Lin emailed Mr Geering, with a copy to Ms Gai, in the following terms: "Gold Destiny is not in position to complete the Contracts. NGI will complete the contract and Gold Destiny will provide fund up to 5.5M as per Agreement signed on 24th Feb 2014. Gold Destiny has formally assigned its right to NGI under the Agreement. … The deposit paid under the Contracts by Gold Destiny will be dealt in accordance with the Agreement and therefore NGI has the covetable [sic] interest to the Development site. I understand the NGI fund has been transferred yesterday and is available now." 1. Settlement did not take place on 17 March 2014 but, as appeared from the subsequent correspondence between the vendors' solicitor and Mr Geering, Golden Destiny in fact lodged caveats, which led the vendors' solicitor to require a further condition in redrafted contracts which appointed him as the attorney for Golden Destiny, with power to withdraw the caveats in the event that Golden Destiny did not complete by the new completion date of 22 July 2014. (No caveats were then lodged by New Galaxy.) 2. On 23 April 2014 the contracts of December 2013 were rescinded and fresh contracts of sale were entered into, again in the name of Golden Destiny as purchaser. 3. As the trial judge noted: [24] "Several meetings took place between 11 April and 15 April 2014 between Ms Lin, Ms Gai, Mr Cai and Mr Geering regarding the proposal made by Mr Yahl [solicitor for the vendors] that the $8 million be released to the Vendors as a condition of any new contractual arrangement between the parties." 1. When Golden Destiny entered into the new contracts on 23 April 2014, it made an additional payment of $490,000 and New Galaxy made a payment of $6 million directly to the vendors' agent. That money was a part payment of the purchase price and was to be released immediately to the individual vendors. When the contract finally settled, $6 million was refunded to Golden Destiny and paid into court. 2. There was a large issue in the course of the trial, reagitated on appeal, as to the circumstances in which New Galaxy made the payment and the nature of any interest it may have acquired as a result of making the payment. Those issues are material when considering whether New Galaxy had reasonable cause to lodge the caveats on 21 July 2014. 3. It is clear, as will shortly appear, that Ms Lin, on behalf of Golden Destiny, (a) did not wish to develop the land the subject of the contracts, (b) doubted the ability of New Galaxy to raise the necessary funds, and (c) was not prepared to abandon the project and the money already invested by Golden Destiny (which, with the additional payment, was in the order of $2 million). There was also a risk of a claim by the vendors for damages. Apart from her own evidence at the trial, her concerns in relation to New Galaxy and her unwillingness to increase significantly Golden Destiny's investment in the project, can be seen from the fact that during March 2014 she had investigated other potential joint venture partners, including Mr Victor Fong. A company associated with Mr Fong (MV Golden Destiny Development (Turramurra) Pty Ltd, which may be conveniently referred to as Mr Fong's company) was later to be the substituted purchaser under a novation of the new contracts. Further, Ms Lin's mother, Ms Zhu, who had been a shareholder and director of New Galaxy and Gold Stone, resigned on 22 April 2014 her directorships of both companies. Mr Geering and Ms Gai acquired her interests. [25] 4. In December 2013 Ms Gai and Ms Lin had obtained the agreement of a Ms Zhang to invest $5 million in the property fund. That money appears to have formed the major part of the funds used by New Galaxy to make the $6 million payment to the vendors, a course of which it may be inferred Ms Lin and Ms Zhang knew and approved at the time. On 2 May 2014, a Mr David Darmali, who described himself as the fund manager for Gold Stone Capital and appears to have been an agent for Ms Zhang, sent an email to Mr Geering referring to the discussions between Ms Lin and her husband John Cai (both directors of Golden Destiny) and Mr Fong. Mr Darmali took the view that it was a matter for the directors of Golden Destiny to determine who should be a joint venture partner. He identified his concern (raised in an earlier email) as to the basis upon which New Galaxy had taken money from a client's trust account for the payment to the vendors. Mr Geering responded to Mr Darmali: "With greatest respect David, this has to be made clear, its [sic] not Golden Destiny that controls the site. To be sure Golden Destiny is the named purchaser in the sale contracts, but it is there only, pending novation of the contracts, to NGI on settlement." 1. The following day, 3 May 2014, Mr Cai sent an email to Mr Geering confirming that Golden Destiny held $6 million in trust for New Galaxy as trustee for "Gold Stone Future Property Investment Fund in the Development Site at 1444-1454 Pacific Highway, Turramurra." 2. The inference to be drawn from Mr Geering's email to Mr Darmali is that he relied upon the agreement set out in the short form deed, pursuant to which the proposed purchase contracts with the vendors would be novated to New Galaxy. What precisely Mr Cai intended, given that the funds had been paid to the vendors, is not clear. It may have been an attempt to claim that Golden Destiny had some control over the funds paid by New Galaxy. However, it is clear that all the principals of Golden Destiny and New Galaxy understood that New Galaxy had paid money directly to the vendors' agent to keep the contracts on foot. 3. Discussions as to the fate of Ms Zhang's investment continued through May, until a meeting involving all of the parties occurred on 21 May 2014. The emails continued throughout 22 May, ending with an email from Mr Geering to Ms Lin, Ms Gai and Mr Darmali considering how the investment should be shown in New Galaxy's balance sheet, noting that it would not appear in Golden Destiny's balance sheet as it was an amount held on trust for New Galaxy. 4. The following morning, 23 May 2014, Ms Gai, writing as director of Gold Stone, to Ms Lin and Mr Darmali, stated: "It's clear that your side has repudiated the Agreement with NGI and accordingly it is terminated. NGI wishes that the process of the Fund's divestment be completed without delay." Ms Lin replied within the hour, stating: "I reject your statement that our side has repudiated the Agreement with NGI. There was no contractual agreement between our side and NGI." Ms Lin also noted that Mr Geering had a conflict of interest and that he should no longer act for Golden Destiny or New Galaxy. 1. There was a dispute at the trial as to the status of the short form deed, whether it was repudiated, and if so when and by which side. The resolution of that dispute, however, is not presently relevant. 2. Before turning to the next events, it is necessary to note the changes in legal representation which occurred after Golden Destiny terminated Mr Geering's retainer on 23 May 2014. New Galaxy also ceased using Mr Geering's firm as its solicitor. For a period in early July, New Galaxy retained Minter Ellison as its solicitors. However, by 18 July 2014 New Galaxy had retained Avondale Lawyers. 3. Exchanges of email between the parties continued, as the fate of Ms Zhang's investment in the Gold Stone fund remained unresolved. It was clear that the fund was illiquid and did not have the capacity to repay Ms Zhang. Accordingly the redemption was not to be made by way of cash, but a transfer of assets, the purpose no doubt being to give Golden Destiny the right to deal with Ms Zhang in relation to $5 million of the payment made by New Galaxy. Further, Ms Gai appears to have continued to obtain deposits on sales "off the plan" of the proposed development at Turramurra. She continued to correspond with Mr Cai in relation to those matters. However, Ms Lin raised an issue relating to the named vendor under the sale notes, being New Galaxy. 4. In the course of July 2014, New Galaxy continued to press its claim to be the new purchaser under the novated agreements. [26] However, in early July Golden Destiny had entered into a joint venture agreement with Mr Fong's company and, on 7 July, sent copies of proposed new contracts to the vendors, naming Mr Fong's company as the new purchaser. [27] 5. On 18 July, Mr Gutierrez of Avondale wrote to the solicitors for Golden Destiny in terms which are of some importance to the question whether New Galaxy believed on reasonable grounds that it had a caveatable interest in the land on 21 July 2014. (The letter stated in part that caveats "have now been lodged" over the six properties, but that did not in fact happen until three days later.) 6. Referring to Golden Destiny as "Destiny" and the properties as the "Turramurra Development", the letter, so far as relevant, read as follows: "By reason of an agreement (the 'Agreement') between NGI and Destiny (the purchaser of the land pursuant to six (6) Contracts for the Sale of Land, between Destiny and the vendors of the Turramurra Development … dated 23 April 2014) (the 'Contracts'), the Turramurra Development is held on trust by Destiny for the benefit of NGI. … We advise that any third party that may replace Destiny by way of any purported novation of the Contracts on completion, such as [Mr Fong's company], would also hold the Turramurra Development on trust for the benefit of NGI. By reason of the Agreement, Destiny paid the sum of $6 [million] with respect to the purchase of the Turramurra Development, such sum having been paid to the vendors prior to completion, which we understand is due to take place on 22 July 2014. NGI further asserts that the sum of $6 [million] is held on trust for the benefit of NGI and/or alternatively NGI holds a first ranking charge over the Land the subject of the Contracts. Given that Destiny has now proceeded without having any regard to our client's rights or interests in the Turramurra Development, our client has been left with no option but lodge caveats over each of the six (6) properties to protect its interest over those properties." 1. On 21 July, New Galaxy lodged caveats over the titles of the Turramurra properties, that being the day before the scheduled completion date of the sale contracts. 2. In her affidavit of 24 September 2014, after referring to the correspondence between Minter Ellison and the solicitors for Golden Destiny, Ms Gai stated: "61. As a consequence, it became apparent to me, by virtue of the conduct of GDI, that it had no intention whatsoever to honour the short form deed, (which was the basis in which NGI advanced $6 million to the vendors) and novate the contracts [to] NGI. Accordingly, I instructed my solicitors to take steps to ensure that NGI's interest is protected. 62. On 18 July 2014, I caused Francisco Gutierrez of Avondale Lawyers to forward correspondence to the solicitors for the vendors, GDI, and [Mr Fong's company] in relation to the steps that we were taking to secure our interest." 1. It should be inferred that Minter Ellison had instructions from Ms Gai and had the key documents upon which she relied in asserting New Galaxy's claims. The same inference should be drawn with respect to Mr Gutierrez, namely that he had the same instructions and material. His letter contained one error, namely that the $6 million had been paid by Golden Destiny to the vendors, without explaining why New Galaxy claimed an interest based on the payment. The payment was in fact made by New Galaxy itself. Reasoning of trial judge 1. The trial judge gave careful consideration to the evidence given by the parties as to the events of March-June 2014. Broadly speaking, he accepted Ms Lin's evidence as to what occurred at particular events in preference to that of Ms Gai and Mr Geering. Although the email correspondence was in large part self-explanatory, the trial judge did not accept all of the documentary material, and in particular gave no weight to a lengthy memorandum prepared by Mr Geering dated 27 April 2014, which contained an account of what had been agreed at that time between Ms Lin and Ms Gai. 2. Of present importance are the findings of the trial judge that, at least by April, (i) Ms Lin had lost confidence in New Galaxy's ability to obtain funds to allow settlement to proceed, leaving Golden Destiny at risk of losing both an opportunity to profit from the development project and its deposit, as well as exposing it to liability to the vendors in damages; (ii) Ms Gai and Mr Geering had at all times been aware of the meetings between Ms Lin and Mr Fong; (iii) Ms Gai and Mr Geering had prior notice that Ms Zhang wished to withdraw her funds from Gold Stone, and (iv) Ms Gai and Mr Geering, knew that New Galaxy could not fill the role of the new purchasers under novated contracts, either by using its own funds or with loan moneys. The trial judge accepted that on 2 May 2014, "Ms Lin was again seeking to persuade Ms Gai and Mr Geering of the benefit of Mr Fong being part of the joint development." [28] That possibility was resolved by Mr Fong declining to enter a joint venture with New Galaxy. [29] 3. The trial judge dealt with the question of "reasonable cause" under s 74P by outlining the submissions of both parties, at [369]-[393]. The extensive summary of submissions resulted in the following conclusion at [394]: "I agree with the plaintiffs. I do not consider that NGI had a reasonable basis to lodge the caveats or to maintain them. It had no caveatable interest but, more to the point, it lodged them, in my view, without giving any thought at all to their validity. It defiantly maintained them until final submissions and then withdrew them. NGI, in my view, is liable to a claim for compensation under s 74P(1) of the [Real Property Act]." 1. The judge included three further comments in the course of setting out the submissions. One comment related to the question of causation of loss and may be put to one side for present purposes. [30] A second observation occurred in a paragraph dealing with the vendors' submission that Mr Geering had not set out the basis on which he was instructed to lodge the caveats and that his silence "hardly assists NGI." [31] There followed reference to a submission that the judge "should draw the inference that nothing meaningful could be said about it." (That, presumably, was a reference to the principle in Jones v Dunkel. [32] ) The reasons of the judge then continued: "I do not consider the onus could be discharged by the mere lodgement of the caveat. That, in my mind, does not carry with it any greater significance than that the solicitor was instructed to lodge a caveat or perhaps advise that it be done. It says nothing about the belief of anybody from NGI. And it certainly does not permit the court to examine whether or not the belief asserted by anyone from NGI was one based upon reasonable grounds." 1. This passage is troubling for three reasons. First, it implied an obligation or onus on New Galaxy, in response to a claim under s 74P, to justify its conduct. Secondly, the caveats were not to be disregarded as merely formal documents; their contents will be noted below. Thirdly, if the comments related to Mr Geering, at the time at which he advised the lodging of a caveat by Golden Destiny, then they were not applicable to the conduct of Mr Gutierrez in lodging caveats for New Galaxy, some months later and after Mr Geering had ceased to act for New Galaxy. 2. The third matter of comment concerned the onus of proof. Although the judge correctly recorded that the vendors (the plaintiffs before him) bore the onus of establishing that New Galaxy lodged the caveats without reasonable cause, [33] the vendors nevertheless asserted that their case was established by way of inference from the known facts, being primarily that New Galaxy had no caveatable interest, together with the absence of any affirmative evidence from officers of New Galaxy as to their beliefs and the basis for them. Accepting that submission, the judge said: [34] "As the plaintiffs point out, silence can hardly discharge even a low onus of proof. In addition, the plaintiffs submit that they have established sufficient evidence from which a negative proposition may be inferred, in which case NGI then carries an evidential burden to advance in evidence those particular matters available to it." 1. There may undoubtedly be cases in which, without any evidence one way or the other as to the belief of the caveator, the circumstances demonstrate either that whatever belief the caveator held, there were no reasonable grounds for holding the belief, or that, in an extreme case, the caveator did not hold such a belief. For reasons explained below, this was not such a case. If it were necessary for the vendors to establish that New Galaxy did not hold such a belief, a forensic decision was required as to whether or not to cross-examine Ms Gai on that topic. They did not do so. The submission that there was "no obligation to cross-examine a witness on a topic the witness fails to address", [35] did not address the fact that an opportunity to obtain evidence in discharge of the vendors' burden of proof was eschewed. 2. In summarising New Galaxy's submissions, the judge noted a reference to Ms Gai's statement in her affidavit, set out at [50] above. The judgment continued: [36] "It is further submitted that it should be inferred that this was entirely reflective of Mr Geering's advice. If I may say so, so what. Given his utter lack of independence, even if it could be implied he gave advice I would not give that factor any weight. Indeed, given his failure to give advice on any number of topics I am not satisfied such an interpretation is reasonably open here. That does not really fill any gaps when it was always open to Ms Gai and/or Mr Geering to say something about the topic and yet they chose not to." 1. It is hard to be sure to what precise matters the judge was referring. If he had been referring to the question of lodging caveats which arose when Mr Geering was acting for both New Galaxy and Golden Destiny, the advice he gave has been noted. Nor was it clear why that advice should not have been given any weight. Although obscurely expressed, it was correct: it envisaged that Golden Destiny, as the purchaser under a contract of sale, had a caveatable interest and that New Galaxy, which at that stage had contributed nothing and was merely a prospective assignee, had none. As noted above, caveats were lodged on behalf of Golden Destiny alone at that stage. The advice was not flawed because of any "lack of independence". Further, while there may have been issues on which Mr Geering's work was deficient, particularly in protecting the interests of one of his clients, namely Golden Destiny, when drawing up the short form deed, that consideration is not relevant to the present issue. 2. Finally, it is necessary to consider the finding in the judge's conclusion that New Galaxy lodged the caveats "without giving any thought at all to their validity." [37] If Ms Gai had lodged caveats herself, there might have been much to be said for such a finding. However, she did not take that course; rather, she retained Avondale Lawyers. Her affidavit indicated that she asked Mr Gutierrez to "take steps to ensure that [New Galaxy's] interest is protected." She did not say that she simply told him to lodge caveats on the titles, nor was that suggested to her in cross-examination. 3. To conclude that a solicitor, whose competence in this regard was not challenged, simply lodged caveats without having any regard to whether or not the caveator had a relevant interest to protect, is to make a finding seriously adverse to the competence and professional behaviour of the solicitor. That finding should not have been made unless it had been put in express terms to Mr Gutierrez. That was not done. Mr Gutierrez' views may have been wrong in law, but, as the judge implicitly acknowledged in the next sentence, referring to the caveats being "defiantly maintained … until final submissions", that view was supported by counsel appearing at the trial. In my view, that finding, somewhat dismissively expressed, was not open on the evidence. Conclusions as to absence of reasonable cause 1. In considering the correct approach to such a case two factors must be taken into account. First, the relevant state of mind was that of a corporation and it was necessary, therefore, to identify whose state of mind was relevant. The active participants in the affairs of the company for most of the period under consideration were Ms Gai (as director) and Mr Geering (as solicitor). However, at the time that the caveats in question were lodged, the only active officer was Ms Gai. At least, there was no finding to the contrary and she was, from 22 April 2014 when her co-director Lingzhu Zhu (Ms Lin's mother) resigned, the sole director of New Galaxy. 2. Secondly, in circumstances where the caveator is represented by lawyers who effect the lodgement of the caveats, it should usually be inferred that they received instructions, gave advice and then received instructions to do what they in fact did. To negative those inferences will require specific evidence demonstrating departure from what may be expected. 3. It is necessary then to consider the circumstances which were relevant to the two critical issues, namely whether in July 2014 Ms Gai believed that New Galaxy had a caveatable interest in the land and, secondly, whether that belief was held on reasonable grounds. 4. So far as the so-called "subjective" element is concerned, the available evidence fails to demonstrate that she held no such belief. For this purpose, it is appropriate to put aside those parts of her affidavits on which she was challenged, or about which she gave oral evidence in chief, where the evidence was not accepted by the trial judge. 5. As a matter of history, the question of protecting the interests of the purchaser first arose in circumstances where it became clear that neither Golden Destiny nor New Galaxy would be in a position to complete the contracts either on 17 March 2014 or on the second proposed settlement date under the old contracts, 22 April 2014. There is no doubt that Ms Gai, Ms Lin and Mr Geering gave consideration to the steps which could be taken to protect Golden Destiny's interest as purchaser, including that of lodging caveats. Mr Geering's advice, which, being provided to its director, Ms Gai, may be taken as the knowledge of New Galaxy, was, in effect, that the purchaser named in the contracts had a caveatable interest but that New Galaxy, which was merely a prospective "assignee", did not have such an interest. 6. In the absence of any relevant cross-examination of Ms Gai, there is no basis to infer that she was not aware, from that time, of there being limitations as to the circumstances in which a caveat might be lodged, knowledge which would be relevant when the issue arose some three months later. What had changed in the meantime was that New Galaxy had provided the funding for part of the purchase price of the properties, which it had paid to the vendors. It may be accepted that the solicitor acting for New Galaxy at that time, Mr Geering, was seriously remiss in his failure to document the payment in such a way as to ensure that New Galaxy obtained a caveatable interest in the land as a result of its part payment of the purchase price. Nevertheless, whilst Golden Destiny and New Galaxy were in effect joint venturers in a common cause, Golden Destiny's caveats might have been considered sufficient to protect the interests of New Galaxy. That protection became insecure as a result of two circumstances. The first, which was no doubt foreseeable in April 2014, if not before, was that the parties could fall out, possibly over the inability of either to obtain the necessary finance to complete the contracts. The second was the inclusion in the sale contracts of a power of attorney granted to the vendors' solicitor, permitting withdrawal of Golden Destiny's caveats in the event of failure to settle on 22 July 2014. 7. Much of the evidence recited above concerned the falling out of New Galaxy and Golden Destiny. However, the attempts by Golden Destiny (and Ms Zhang) to separate their interests did not necessarily cast doubt on any pre-existing belief of a director of New Galaxy that the company had an interest in the land on which the development was intended to take place. The provision by Mr Cai of an acknowledgement that the contribution to the purchase price was "held in trust" by Golden Destiny appeared to acknowledge the existence of an equitable interest of some kind. The demand, on 30 June 2014, that New Galaxy execute a deed of release with respect to the short form deed, and do so in order to allow a joint venture between Golden Destiny and Mr Fong's company to proceed, provided support for a belief that New Galaxy had an interest in accordance with the short form deed, whether Golden Destiny had sought to repudiate it (as Ms Gai believed) or not. 8. There is no doubt that Ms Gai sought advice from Minter Ellison as to how to protect New Galaxy's "interest" in the proposed development. It should be inferred from their letter that Minter Ellison were given the short form deed and instructions as to the payments which had been made to the vendors, in accordance with the sale contracts of 23 April 2014. 9. The circumstance in which New Galaxy transferred its instruction from Minter Ellison to Avondale Lawyers is not in evidence, but the funding agreement which Avondale later obtained suggests that there may have been difficulties with respect to the payment by New Galaxy of its solicitors' fees. No finding is required. 10. The letter by Mr Gutierrez set out above [38] revealed the instructions he had been given which, with the exception of the party paying the $6 million to the vendors, were in accord with the evidence at the trial. The letter included reference to New Galaxy's assertion that it held "a first ranking charge over the land the subject of the contracts." The reference to New Galaxy having been left with "no option but [to] lodge caveats" is consistent with Mr Gutierrez having advised Ms Gai that New Galaxy had a caveatable interest in the land. That inference should be drawn in circumstances where there was no challenge to Mr Gutierrez' independence, and it was not put to him that he would have taken such a step without regard to whether the company had a caveatable interest. 11. In an unchallenged part of her affidavit of 24 September 2014, Ms Gai stated that following the response of Golden Destiny's solicitors in July 2014, she instructed solicitors "to take steps to ensure that NGI's interest is protected." She did not specify that she instructed the lodgement of caveats, which was what happened. It was not established that she probably did not give adequate instructions as to the circumstances of the project, the entry into the short form deed, the contracts to purchase land (which are accurately identified by Mr Gutierrez), and as to the fact that New Galaxy had made a payment on account of the purchase price in an amount of $6 million. It is more probable than not in those circumstances that Mr Gutierrez advised her that New Galaxy had a caveatable interest and received instructions to lodge the caveats which were in fact lodged. At least, the contrary was not established. 12. In considering those inferences, it is appropriate to have regard to the terms of the caveats. Annexures A and B were undoubtedly drafted by Mr Gutierrez on the basis of information supplied to him. [39] He may have been wrong in law in concluding that the facts set out gave rise to an equitable interest justifying the lodging of caveats. However, it was not established that he probably did not advise Ms Gai in accordance with his understanding of the law, or that he acted without instructions, or that he acted in defiance of his own (assumed) advice that New Galaxy did not have a caveatable interest. The probabilities are the reverse. 13. If Ms Gai (and hence New Galaxy) obtained and acted on legal advice, it was not explained why the court should conclude that such conduct was "without reasonable cause". The circumstances resemble those described by Barrett JA in Mahendran v Chase Enterprises: [40] "Relevant evidence before the primary judge was confined to a copy of the caveat and a copy of the mortgage of 18 July 2008. That evidence might well have warranted an inference that there were, in an objective sense, no reasonable grounds for a belief that Chase had in respect of the Baulkham Hills property the interest claimed in the caveat; and that inference might well have been more readily drawn because of absence of evidence from Chase as to the existence of the interest asserted by it in the caveat. But the evidence at the judge's disposal did not permit any examination of the actual belief of the caveator. That may have made problematic establishment of the matters that must be established to activate s 74P(1)(a) according to the 'honest belief based upon reasonable grounds' test." 1. In these circumstances, the vendors failed to establish that New Galaxy did not believe that it had a caveatable interest in the land at the time that the caveats were lodged on 21 July 2014. There was no finding by the trial judge that any steps taken thereafter affected any beliefs then held. 2. If the vendors had established a prima facie case that Ms Gai, and hence New Galaxy, did not hold such a belief, then it would have been necessary for Ms Gai to make a forensic decision on behalf of New Galaxy to waive privilege in her communications with Mr Gutierrez. However, as that stage was not reached, on the reasoning set out above, it is not to the point that Mr Gutierrez and Ms Gai were silent as to their professional communications. 3. The next question is whether the belief held by Ms Gai was supported by reasonable grounds. 4. There may be circumstances in which a party, believing that it is entitled to lodge a caveat, cannot establish reasonable cause merely on the basis that it had legal advice to that effect. For example, it may not be able to rely upon such advice if it failed to disclose to its lawyers a material fact which might have led to different advice being given. However, there was no submission in this case that the circumstances outlined in annexure B to the caveats were wrong in any material respect, or that some known fact, or fact which should reasonably have been revealed to Mr Gutierrez, had been omitted. The vendors' case was that the facts did not support New Galaxy having any equitable interest in the land in the circumstances revealed, so that any advice that it had such an interest was legally erroneous. For reasons given below, in my view that submission should not be accepted. However, even if that were so, it does not establish that Ms Gai acted unreasonably in relying on her legal advice. 5. There may be other circumstances in which a party cannot rely upon legal advice that it holds a caveatable interest in land, but none was relied upon either before the trial judge or in this Court. Did New Galaxy have a caveatable interest? 1. The critical elements in New Galaxy's case in favour of the existence of a caveatable interest may be briefly stated. 2. The first was the power contained in cl 48 of the first contracts allowing the purchaser, Golden Destiny, to novate the contracts in favour of a third party. The second was the existence of the "short form deed" of 24 February 2014, to which the primary parties were Golden Destiny and New Galaxy. The third element was the payment of $6 million to the vendors. 3. The payment arose in the context of the replacement of the first contracts of sale with the second contracts on 23 April 2014, that is, two months after execution of the short form deed. As has been explained, the total amounts required to be paid by the purchasers for the replacement of the earlier contracts with the new contracts included an amount of $6.5 million in addition to the transfer of the deposit. Of that amount, $6 million was paid by New Galaxy. It was a term of the new contracts that that amount would be released immediately to the vendors as a part payment of the purchase price. 4. There was no dispute that Golden Destiny had an equitable interest in the properties entitling it to lodge its caveats. The question was whether New Galaxy obtained such an interest as a result of paying a significant part of the purchase price, albeit in circumstances where it was not named on the contract for the sale of land as the purchaser. 5. New Galaxy submitted that its payment of part of the purchase price directly to the vendors gave it an equitable interest in the land to the extent of that payment. It further submitted that it was beside the point that it had no contractual relationship with the vendors; it was sufficient that it had a contractual relationship with the purchaser entitling it to have the contracts novated in its favour at settlement. Whether or not the vendors knew of its relationship with Golden Destiny (the purchaser under the contract of sale) was beside the point; the interest relied upon arose in equity, not as a result of any contractual relationship with the vendors, but as a result of the payment of part of the purchase price under the contract of sale. The payment was made, it submitted, with the knowledge of and at the implied request of Golden Destiny, which could not otherwise effect the exchange of the new contracts, thus protecting its deposit and liabilities under the first contracts. 6. New Galaxy contended that this interest in the land was not only supportable as a matter of principle, but as a matter of authority, referring to the judgment of Lord Cairns in Aberaman Ironworks v Wickens. [41] That case involved an estate in Wales owned by a Mr Bailey, allegedly comprising 1530 acres, on which Mr Bailey carried on an ironworks and colliery. He agreed to sell the estate, plant and business to a Mr Wickens for £250,000. Mr Wickens entered into a contract to sell the estate to a new company established by himself and others, Aberaman Ironworks Ltd, for £350,000, of which £75,000 was paid immediately to Wickens in cash and £75,000 by way of bonds. From the cash, Wickens was able to pay the sum of £50,000 as part of the purchase money to the vendor, Bailey. 7. The area of the land was far smaller than represented and the company rescinded the contract with Wickens. Wickens then brought proceedings against Bailey seeking repayment of the £50,000 deposit. The proceedings were settled. The company then brought proceedings against Wickens claiming an equitable lien over the £50,000 recovered from the vendor. Lord Cairns LC held that, in the event of the purchase going off, Mr Wickens had a lien for that amount upon the Aberaman estate belonging to Bailey. [42] However, the Lord Chancellor went further, stating: [43] "In like manner the company, in their turn, for the purchase money which they paid Wickens would, in the event of their contract going off, have a lien upon any interest which Wickens might possess in the Aberaman estate; and, according to the decisions to which I have referred, [44] Wickens, to the extent of the £50,000 he paid, had become in equity the owner, by way of incumbrance, of a corresponding amount in value on the Aberaman estate. It appears to me, therefore, upon the authority of those decisions, to be clear that the company, supposing the £50,000 had not been repaid by Bailey to Wickens, would have been entitled to maintain a bill against Wickens and Bailey to prevent the money getting back into the hands of Wickens." 1. The trial judge noted the reliance placed on Aberaman by New Galaxy and set out the passage set out above. [45] He disposed of the authority in the following passage: "[363] Aberaman Ironworks v Wickens is not, it seems to me, authority for that which NGI contends. First, Lord Cairns did not find that the lender procured a lien over the vendor's land. The vendor was not a party to the suit. [364] I do not consider either Aberaman Ironworks or Shaw v Foster establishes that part payment of a purchase price charged the relevant defendant's interest as if they were a purchaser of the land. There is nothing in either authority to support a proposition that an equitable interest was created in the vendor's land." 1. Neither of the two points of distinction is persuasive. As to the first, the company was not a lender; nor was New Galaxy in the present case. As to the second, the question whether a party which pays some of the purchase price has a caveatable interest in the land at the time of the payment can hardly depend on whether the vendor is a party to the proceedings. On the contrary, it is significant that in Aberaman (as here) there was no contractual relationship between the vendor and the plaintiff company. The absence of such a contractual link was immaterial in Aberaman, as it is here, because the equitable interest arises by operation of law, and not by operation of any contract, as explained by the Court of Appeal in Whitbread & Co Ltd v Watt. [46] 2. Shaw v Foster [47] involved a contract for the sale by Sir William Foster of leasehold interests in land to one Pooley. Mr Pooley, who was indebted to his bank, agreed to execute an assignment to the bank, upon request, of his contract with Foster, as security for the debts. Foster was given notice of the agreement by the bank, but ultimately, upon settlement, conveyed the leasehold property to the purchaser, Pooley. The question was whether the vendor, Sir William Foster, was answerable to the bank for the loss suffered by the bank in not obtaining the property. The House of Lords held that he was not so liable. The bank had failed to take the necessary steps to protect its interests. As Lord Cairns explained, [48] Mr Pooley had an interest in the property which he could devise, alienate or charge. The various ways in which the property could have been charged or assigned were noted. A charge could have been created merely by depositing the contract of sale with the bank. The agreement in fact entered into with the bank was identified as one of the modes of dealing with the property, namely an agreement to assign the contract, but only upon request. There was no request, and no notice given to Foster. The problem was, thus, not that the purchaser had no interest in the land which could be dealt with by way of charge or assignment, but that the third party and putative assignee took no steps to protect its position. 3. As stated by Lord Hatherley LC (sitting on an appeal from his own judgment at first instance): [49] "It seems to me that this case comes clearly within the principle laid down in the case cited, of Rose v Watson, [50] namely, that it is one in which the persons claiming the benefit of the charge allowed … the contract to go on between the original parties, and did not interfere with the execution of the contract, and apparently did not so interfere for the very express reason that they were unwilling themselves to take any steps to complete it, and sought, in fact, to obtain the benefit of the charge without performing the burdens still remaining to be discharged, burdens affecting the contract before it could be held to be fully completed." 1. It is therefore true that the issue in point in Shaw v Foster differed from that which arose in the present case; on the other hand, it is also clear that the reasoning was consistent with the proposition that a third party having a contractual entitlement to take an assignment of the purchaser's interest had an equitable interest which, in the current statutory scheme, could be protected by a caveat. 2. There was reference in the reasoning of the primary judge to the motives of the individual parties in making payments. Thus it was said that New Galaxy paid the $6 million "to assist" Golden Destiny to purchase the land or "to allow" Golden Destiny to comply with the contract [51] and "as a matter of sheer pragmatism in order to preserve the possibility of participating in the Turramurra project and avoid GDI suffering loss for which NGI might be liable." [52] Those statements were no doubt accurate as to motivation, but they did not qualify the legal analysis which must be that New Galaxy paid part of the purchase price to protect its (conditional) entitlement to have the contracts novated in its favour at settlement, pursuant to the short form deed. Further, while it is true that the deed, at the date of execution, referred to the first contracts, the parties treated the deed as continuing upon rescission of the first contracts and their replacement by the second contracts. 3. On this reasoning, New Galaxy had a caveatable interest upon payment of part of the purchase price, based on its contractual entitlement to novation in accordance with the terms of the short form deed. It did not then lodge caveats, but Golden Destiny did. Under the terms of the contracts, novation would be available only on settlement. Accordingly, the caveats lodged by Golden Destiny were no doubt seen to be effective to protect New Galaxy's interests against the vendors, until the relationship between New Galaxy and Golden Destiny fell apart. The next question is, therefore, whether New Galaxy lost its equitable interest in the land prior to lodgement of the caveats on 21 July 2014. 4. The argument that a change took place depended upon the termination of the short form deed, accepting that that took place in late May 2014. The effect of that event was to terminate New Galaxy's right to have the contracts novated in its favour. That removed the basis on which the payment of part of the purchase price had been made. However, it did not undo the legal consequences of the payment, nor destroy the equitable interest created by the payment. Accordingly, termination of the deed did not give rise to the loss by New Galaxy of its interest in the land. 5. As the contentions of the other parties were focused upon the failure of New Galaxy to obtain an equitable interest at any stage, they did not submit that an equitable interest was acquired but later lost. Conclusions 1. It follows from the foregoing reasoning that the caveats lodged on 21 July 2014 were not lodged "without reasonable cause". On one view, it was sufficient that New Galaxy in fact had a relevant caveatable interest. In the alternative, it was sufficient that it was not shown that the only officer of New Galaxy, Ms Gai, did not believe on reasonable grounds that it had a caveatable interest. It was sufficient that the belief she held was based upon legal advice, in circumstances where advice may readily be inferred and it was not shown that advice was not given. Further, it was not demonstrated that any advice which had been given was clearly wrong. Rather, on the analysis set out above, the advice would have been correct. 2. It follows that the vendors failed to establish that New Galaxy lodged and maintained its caveats without reasonable cause. They were not, in those circumstances, entitled to compensation under s 74P of the Real Property Act. New Galaxy's appeal should be upheld in this respect; orders that it pay damages and costs to the vendors and Golden Destiny should be set aside and claims by the vendors' and Golden Destiny against New Galaxy for compensation should be dismissed. However, the parties should have an opportunity to agree on appropriate costs orders; failing agreement, they should have leave to file any application seeking costs, with written submissions in support within 28 days. The respondent to the application should have 7 days to reply. Any such application will be dealt with on the papers. 3. In its further amended notice of appeal, New Galaxy sought orders setting aside orders 1-3, 5, 7 and 11 made in the Equity Division on 20 November 2015. Further, it sought to have orders 1, 5 and 6 made on 21 April 2016 (entered 22 April 2016) set aside and the proceedings brought against it dismissed. 4. Of the 20 November 2015 orders, order 1 declared that New Galaxy had no caveatable interest in the properties. For the reasons given above, that order should be set aside; however, a majority of the Court is of a different view. Order 2 was a declaration that New Galaxy had lodged the caveats without reasonable cause; that order should be set aside. Order 3 involved a required that New Galaxy pay damages pursuant to s 74P of the Real Property Act; that order should be set aside, as should order 5, required new Galaxy to make an interim payment to Golden Destiny. 5. Order 7 dismissed New Galaxy's own cross-claim and may be set aside. Order 11 stood over the cross-claims by Golden Destiny until this appeal was disposed of. It may be that those cross-claims will ultimately be dismissed, but the material does not allow this Court to dispose of those claims. 6. Of the orders made on 21 April 2016, order 1 required entry of the judgment in favour of the vendors for the s 74P damages. It should be set aside. Order 5 required New Galaxy to pay the costs of the vendors and Golden Destiny of the trial. Order 6 stayed enforcement of order 5. Order 5 should be set aside, with the result that order 6 falls away, but for avoidance of doubt should be set aside. 7. For the reasons explained by Sackville AJA, there is some doubt as to whether leave is required with respect to orders which are in their terms final orders, but which do not dispose of the whole of the proceedings. I agree that the preferable course is to grant leave to appeal, so far as that is necessary. It follows that the orders proposed by Gleeson JA should be made. 8. GLEESON JA: I have had the advantage of reading in draft the judgments of Basten JA and Sackville AJA. Avondale's appeal 1. As to the appeal by Mr Gutierrez trading as Avondale Lawyers, I agree with the orders proposed by Sackville AJA, for the reasons given by his Honour. NGI's appeal 1. The principal issues raised by the appeal by New Galaxy Investments Pty Ltd (NGI) are twofold. First, whether NGI had a caveatable interest in land at Turramurra (the Properties) owned by the first to tenth respondents (the Vendors), the subject of six contracts for sale with the eleventh respondent, Golden Destiny Investments Pty Ltd (GDI), which were later novated to the twelfth respondent, MV Golden Destiny Development (Turramurra) Pty Ltd (MVGDD). Second, whether NGI did not have "reasonable cause" within the meaning of s 74P of the Real Property Act 1900 (NSW), to lodge or maintain caveats against the Properties, and is therefore liable to pay compensation to the Vendors and GDI. 2. The facts are set out in detail in the judgment of Sackville AJA, however it is convenient to briefly outline the following. The Vendors initially entered into six contracts for sale with GDI on 17 December 2013 for a total purchase price of $15.1 million. The contracts provided for deposits (in total) of $1.51 million (which were paid by GDI), and a completion date of 17 March 2014. By special condition 48, the contracts allowed for a novation to another purchaser. 3. On 24 February 2014, GDI entered into a deed with NGI, styled the Short Form Deed. The Short Form Deed granted NGI the conditional right, if NGI obtained funding necessary to complete the contracts, that GDI would novate the contracts at the time of, and simultaneously with, completion of the contracts in accordance with special condition 48. 4. NGI failed to obtain the necessary funding to complete the contracts. After further negotiations, the Vendors entered into six "new contracts" with GDI on 23 April 2014 contemporaneously with the payment of $6.49 million to the Vendors' agent. Of this sum, $490,000 was paid by GDI and $6 million was paid by NGI. The Vendors were unaware that NGI had provided a cheque for $6 million. The new contracts provided for an increase in the total purchase price by $200,000, the payment of part of the purchase price being $6.49 million to the Vendors, the release to the Vendors of the deposit of $1.51 million and also the part payment of $6.49 million, and special condition 48 also allowed for a novation of the contracts to another purchaser. 5. Importantly, on the preceding day (22 April 2014), Mr Geering, NGI's solicitor, had advised Mrs Gai, the relevant director of NGI, that the $6 million could not be protected [53] . Senior counsel for NGI expressly disavowed that the $6 million payment by NGI was a loan to GDI, or was paid to or on behalf of GDI. 6. After the $6 million was paid by NGI, a dispute arose between NGI and GDI as to whether the other had breached or repudiated the Short Form Deed. Ultimately, GDI nominated MVGDD as the purchaser by novation under the "new contracts", and the Vendors entered into contracts with MVGDD dated (it seems) 7 July 2014 for a total purchase price of $15.3M. Completion of these contracts was delayed by reason of the caveats lodged by NGI's solicitors on 21 July 2014. 7. The caveats lodged by NGI prohibited the recording in the Register of any dealing, other than a plan, affecting the estate or interest claimed by the caveator as set out in Sch 1 of each caveat. In short, each caveat [54] claimed an equitable charge; a resulting trust; and/or a constructive trust, arising pursuant either to the Short Form Deed; breach of fiduciary duties owed by GDI to NGI; and/or "the payment by the caveator, whether pursuant to the [Short Form Deed] or otherwise, of part of the purchase price to the total sum of $6 million apportioned between the … vendors". 8. The caveats were later withdrawn by NGI on the third day of the trial below, when NGI conceded that it no longer opposed the Vendors' claim for specific performance of the contracts in favour of MVGDD. The contracts in favour of MVGDD completed on 3 July 2015. (a) Caveatable interest 1. On the first issue, I agree with the reasons and conclusion of Sackville AJA that NGI did not have an equitable interest in the land and accordingly, NGI did not have a caveatable interest in the Properties. On that issue I would emphasise two matters. 2. First, having regard to the way in which NGI advanced its case at trial and on appeal, it is not open to characterise the $6 million paid by NGI to the Vendors' agent as having been paid at the implied request of GDI. 3. Second, as mentioned by Sackville AJA [55] , NGI did not seek to rely upon the principles of subrogation, in particular, subrogation to security. NGI did not claim to be subrogated to the security rights of the Vendors, that is to say, the unpaid vendor's lien, to the extent it had been discharged by NGI's $6 million payment. 4. It should be mentioned that one well-recognised area of subrogation [56] is where a lender advances money to a purchaser to be applied in payment or part-payment of the purchase price, and the advance is so applied but the lender does not receive the security for which it stipulated - for example, if the lender obtains only a voidable security. In that situation the lender is deemed to keep the unpaid vendor's lien alive [57] . Although the lender is not the vendor, having paid off the vendor, the lender, as against the purchaser, stands in the place of the vendor because it would be inequitable to deny the lender the security for which it stipulated [58] . An express and formal agreement that the lender is to have security over the property is not necessary. It is sufficient that it "appear from the whole of the circumstances of the transaction that it was the intention of the parties that the lender have security over the property for his loan" [59] . A claimant who is subrogated to a security right is treated in equity as if it had that security [60] ; and in the case where the security takes the form of an unpaid vendor's lien, it is an equitable chargee to the extent that its money was used to pay the purchase price for the property [61] . 5. By contrast, if the lender's advance is intended to be simply an unsecured loan to the purchaser, the lender will not be subrogated to the security which has been discharged by the application of the advance because in such a case, the lender has obtained all that it bargained for [62] . 6. One further matter should be mentioned. There is authority in England [63] that if money is advanced to pay a vendor without any agreement or even discussion regarding security, the third party paying the money may be subrogated to the unpaid vendor's lien if there are no circumstances which show that a lien should not arise. This decision has not been followed in Australia [64] . No reliance was placed by NGI on this line of reasoning. 7. In the present case, as mentioned, NGI expressly disavowed that the $6 million payment was a loan to GDI, or was paid to or on behalf of GDI. Nor did NGI seek any finding at trial that it was the intention of the parties (NGI and GDI) that NGI should have security over the Properties for the $6 million it paid to the Vendors' agent. In these circumstances, it is unsurprising that no reliance was placed by NGI on the principles of subrogation. (b) "Without reasonable cause" 1. On the second issue, I agree with the analysis of the relevant legal principles by Sackville AJA, but respectfully disagree with his Honour's conclusion that the primary judge did not err in finding that NGI did not have an honest belief on reasonable grounds that it had a caveatable interest over the land. On that issue, I agree with the conclusion of Basten JA, generally for the reasons given by his Honour. However, one qualification should be mentioned. 2. Consistently with the conclusion that the facts do not support NGI having an equitable interest in the Properties in the circumstances revealed, any advice that NGI had an equitable interest in the land was legally erroneous. Nonetheless, I agree with Basten JA that such a conclusion does not establish that Mrs Gai (on behalf of NGI) acted unreasonably in relying upon her legal advice. In this regard it should be emphasised that the primary judge found that Mrs Gai was advised that caveats should be lodged, [65] and that finding was not challenged on appeal. 3. It follows that in the result, I agree with Basten JA that the Vendors and GDI are not entitled to compensation under s 74P of the Real Property Act and that NGI's appeal should be upheld in that respect. Orders 1. To the extent necessary, there should be a grant of leave to appeal. In addition to setting aside Orders 1, 5 and 6 made on 21 April 2016 and dismissing the Vendors' and GDI's claims against NGI for compensation, Orders 2, 3, 5 and 7 made on 20 November 2015 should also be set aside. As to costs, I agree with Basten JA that the parties should be afforded an opportunity to agree upon costs, at first instance and on appeal failing which directions should be made with respect to any application for costs. 2. I propose the following orders in NGI's appeal: 1. To the extent that New Galaxy Investments Pty Ltd requires leave to appeal from the decision of the primary judge, grant leave to appeal. 2. Appeal allowed in part. 3. Set aside orders 2, 3, 5 and 7 made on 20 November 2015. 4. Set aside orders 1, 5 and 6 made on 21 April 2016. 5. Dismiss the claims of the first to tenth plaintiffs against the third defendant (NGI) for compensation pursuant to s 74P of the Real Property Act 1900 (NSW). 6. Dismiss the claim of the second cross-claimant (GDI) against the thirteenth cross-defendant (NGI) for compensation pursuant to s 74P of the Real Property Act 1900 (NSW). 7. In the event that the parties fail to agree on the appropriate costs at first instance and on appeal, direct: 1. any application with respect to costs be made by notice of motion filed and served, together with any supporting affidavits and written submissions (not exceeding 5 pages) within 28 days of the date of this judgment; 2. the respondent to any such application file and serve any affidavits, together with written submissions (not exceeding 5 pages), in reply within 7 days thereafter; 3. any such application will be dealt with on the papers. 1. SACKVILLE AJA: An appeal and an application for leave to appeal from decisions of a Judge of the Equity Division (Sackar J) have been heard together. The appeal arises out of the lodgement by the Appellant, New Galaxy Investments Pty Ltd (NGI), of caveats over the titles to six properties located in Turramurra (Properties). [66] When NGI lodged its caveats the Properties were the subject of six incomplete contracts of sale between the registered proprietors (to whom I refer as the Vendors) and a single purchaser, the Eleventh Respondent, Golden Destiny Investments Pty Ltd (GDI). The Vendors were the Plaintiffs in the Equity Division proceedings and are the First to Tenth Respondents to the appeal by NGI. 2. NGI was the trustee of the Gold Stone Future Investments Property Fund (Property Fund). NGI's caveats claimed an equitable interest in the Properties by reason of its payment of $6 million to the Vendors prior to completion of the contracts of sale between the Vendors and GDI. The unusual feature of the case is that when NGI made the payment (and lodged the caveats) it was neither the purchaser of the Properties nor the lender of the funds to GDI. On its case, NGI made the payment because it expected to acquire title to the Properties by novation to it of the contracts of sale between the Vendors and GDI. 3. The primary Judge found that NGI lodged the caveats without reasonable cause and refused to withdraw them when requested to do so. On this basis, his Honour held that NGI was liable, pursuant to s 74P of the Real Property Act 1900 (NSW) (RP Act), to pay compensation both to the Vendors of the Properties and to GDI for the pecuniary losses sustained by them in consequence of the lodgement and maintenance of the caveats. [67] 4. NGI challenges the primary Judge's decision on a number of grounds. It asks this Court to set aside the orders for compensation made by the primary Judge and to dismiss the claims for compensation made by the Vendors and GDI. 5. A second aspect of NGI's appeal concerns the sum of $6 million paid by NGI to the Vendors. GDI novated the contracts of sale of the Properties to a third party, the Twelfth Respondent (MVGDD) and (so it appears) the contracts of sale between the Vendors and GDI were rescinded. During the course of the trial, the primary Judge made orders that upon completion of the novated contracts of sale between the Vendors and MVGDD, the Vendors pay the sum of $6 million into Court. This was duly done and competing claims have been made to that sum. NGI claims that it is entitled to the moneys paid into Court (Court Fund) in priority to the other claimants. The other claimants are: * the Vendors (who rely on the money judgment in their favour); * GDI (likewise); * MVGDD (which relies on an undertaking as to damages given by NGI as the price for maintaining its caveats); and * The Fifteenth Respondent, Avondale Lawyers (Avondale), NGI's former solicitors (who rely on a Deed of Charge securing their costs). 1. A third aspect of NGI's appeal involves its challenge to an order requiring it to pay the costs of GDI and MVGDD on an indemnity basis. [68] NGI says that the primary Judge erred in principle in making the costs order. 2. The applicant for leave to appeal is Francisco Gutierrez trading as Avondale. Avondale seeks to challenge the primary Judge's dismissal of a motion it filed in the Equity Division proceedings. Avondale unsuccessfully sought orders establishing its priority over other claimants to the Court Fund by reason of the Deed of Charge executed by NGI. Parties and relief sought 1. Since there are numerous parties to the proceedings, it is convenient to identify the parties to the various claims in the Equity Division and to the appeal and application for leave to appeal in this Court. It is also convenient to refer briefly to the relief sought in the Equity Division and to the orders sought by NGI and Avondale in this Court. 2. The ten Vendors were the Plaintiffs in the Equity Division proceedings. The Defendants were: * GDI (First Defendant); * MVGDD (Second Defendant); and * NGI (Third Defendant). 1. The Vendors sought orders requiring NGI to remove its caveats and to compensate the Vendors for losses said to be caused by NGI having lodged caveats over the titles to the Properties without reasonable cause. The Vendors also sought a declaration that MVGDD was the proper purchaser of the Properties under the novated contracts of sale and an order for specific performance of the novated contracts. 2. GDI filed a Cross-Claim (GDI's Cross-Claim). GDI's Amended Statement of Cross-Claim named Sixteen Cross-Defendants as follows: * the ten Vendors (First to Tenth Cross-Defendants); * MVGDD (Eleventh Cross-Defendant); * NGI (Twelfth Cross-Defendant); * New Galaxy Developments Pty Ltd (Thirteenth Cross-Defendant, not a party to the appeal); * Mr Geering (Fourteenth Cross-Defendant, a solicitor who acted for both GDI and NGI and who also had an indirect financial interest in NGI); * Gold Stone Capital Pty Ltd (Fifteenth Cross-Defendant, an entity related to GDI); and * Ergo Investment Management Pty Ltd (Sixteenth Cross-Defendant, not a party to the appeal). 1. GDI sought declarations that it was entitled to novate the contracts of sale to MVGDD. (The Vendors and MVGDD consented to the grant of this relief, but NGI resisted the claim.) GDI also sought declarations against NGI that a document described in the proceedings as the "Short Form Deed" had been discharged, terminated or abandoned or, in the alternative, an order that the Short Form Deed be rescinded by reason of NGI's misleading or deceptive conduct. GDI claimed compensation against NGI under s 74P(1) of the RP Act on the ground that NGI lodged the caveats without reasonable cause. As against Mr Geering, GDI claimed equitable compensation for breach of fiduciary duties and damages founded on Mr Geering's alleged negligence. 2. NGI filed a Cross-Claim (NGI's Cross-Claim). NGI's Amended Statement of Cross-Claim named thirteen Cross-Defendants, as follows: * the ten Vendors (First to Tenth Cross-Defendants); * GDI (Eleventh Cross-Defendant); * MVGDD (Twelfth Cross-Defendant); and * Ms Lin (Thirteenth Cross-Defendant, a principal of GDI). 1. The relief sought by NGI included declarations that it acquired an interest in the Properties by virtue of its payment of $6 million to the Vendors and an order for the return of that sum to it. NGI sought specific performance of several agreements allegedly entered into between NGI and GDI (including the Short Form Deed). It also claimed that the Vendors and GDI were estopped from novating the contracts of sale to any person other than NGI. 2. MVGDD's Cross-Claim sought orders enforcing an undertaking as to damages given by NGI in the course of an interlocutory application by MVGDD for the removal of NGI's caveats. (The primary Judge, with the consent of the parties, deferred resolution of this claim until the determination of the present appeals.) MVGDD also sought an order enforcing an indemnity provided to it by GDI in a Deed of Novation executed by MVGDD and GDI in July 2014. 3. In addition, Avondale filed a notice of motion [69] in the Equity Division proceedings seeking orders based on a Deed of Charge executed by NGI to secure the payment of legal costs incurred by it. Avondale sought orders that amounts due to it for costs be paid out of the Court Fund. 4. NGI's Further Amended Notice of Appeal named fifteen Respondents as follows: * the ten Vendors (First to Tenth Respondents); * GDI (Eleventh Respondent); * MVGDD (Twelfth Respondent); * Ms Lin (Thirteenth Respondent); * Mr Geering (Fourteenth Respondent); and * Avondale (Fifteenth Respondent). 1. NGI asks this Court to set aside the orders made against it by the primary Judge. In addition, NGI seeks a declaration that its caveats were not lodged or maintained without reasonable cause and that the purported novation by GDI of the contracts of sale to MVGDD was void. NGI also seeks orders that GDI pay damages or equitable compensation and that the Court Fund be paid out to it. 2. Avondale's Amended Notice of Appeal [70] named thirteen Respondents as follows: * the ten Vendors (First to Tenth Respondents); * GDI (Eleventh Respondent); * MVGDD (Twelfth Respondent); and * NGI (Thirteenth Respondent). 1. Avondale's Amended Notice of Appeal seeks an order setting aside the primary Judge's dismissal of its Notice of Motion. Avondale seeks additional relief from this Court, giving effect to what it claims to be its priority over NGI to the Court Fund. It did not seek this relief in the Equity Division proceedings. Preliminary 1. In order to follow the course of events and the issues in the proceedings, three points should be made. The first is to identify the provisions of the RP Act that are particularly important. They are as follows: "74F (1) Any person who, by virtue of any unregistered dealing or by devolution of law or otherwise, claims to be entitled to a legal or equitable estate or interest in land under the provisions of this Act may lodge with the Registrar-General a caveat prohibiting the recording of any dealing affecting the estate or interest to which the person claims to be entitled. "74P (1) Any person who, without reasonable cause: (a) lodges a caveat with the Registrar-General under a provision of this Part, (b) procures the lapsing of such a caveat, or (c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so, is liable to pay to any person who sustains pecuniary loss that is attributable to an act, refusal or failure referred to in paragraph (a), (b) or (c) compensation with respect to that loss. (2) Compensation referred to in subsection (1) is recoverable in proceedings taken in a court of competent jurisdiction by the person who claims to have sustained the pecuniary loss." 1. The second is to explain the concept of novation. Novation is a transaction by which all parties to a contract agree that a new contract is substituted for an existing contract. [71] The rescission or discharge of the existing contract is essential to novation. [72] To confer enforceable rights and obligations on a third person, that person must be a party to the novated contract. [73] Novation is different from assignment which does not require, for example, a debtor to be party to a transaction between creditor and assignee. [74] The effect of novation is to extinguish one set of obligations and create another in its place. Relevantly for present purposes, the original contract, on its proper construction, may authorise a party to substitute another contracting party in its place without the need for a further tripartite agreement. [75] 2. The third point is that the primary Judge had to deal with a very large number of issues raised by the Vendors' claims and the various Cross-Claims. His Honour's task was rendered more complicated by changes in representation of some parties in the course of proceedings and, in some cases, by changes in the positions adopted by various parties. Moreover, Avondale emerged as a claimant only after the Primary Judgment had been delivered. It is not surprising, therefore, that his Honour's detailed and careful reasons occupy, in all, over 190 pages. 3. Many of his Honour's findings and orders are not challenged in the appeals. However, many are and it is not an easy task to sort out which of the findings and which parts of the evidence are relevant to the issues in dispute in this Court. That task would have been made easier had the Vendors' chronology been more complete and less selective and had the other parties prepared chronologies identifying the events or documents significant for their respective cases. Course of events 1. In December 2013, the Vendors were the registered proprietors of the six adjoining Properties, located on the Pacific Highway, Turramurra. None of the Vendors was registered as the proprietor of any more than one of the Properties, but between them they owned all six. 2. On 17 December 2013, the Vendors entered into six separate contracts for the sale of the Properties to GDI (Initial Contracts). The purchase price to be paid for all six Properties totalled $15.1 million. 3. The directors of GDI included Mr Cai, the husband of the Thirteenth Respondent (Ms Lin). Ms Lin represented GDI in the discussions that subsequently took place concerning the proposed development of the Properties. GDI was the trustee of a Property Fund. 4. The Initial Contracts provided for a completion date of 17 March 2014. Each Initial Contract included Special Condition 48 (SC 48), which entitled GDI to require the particular Vendor to novate the Initial Contract by a new contract with a different purchaser and to rescind the Initial Contract. SC 48 provided as follows: "48. NOVATION (i) Subject to this clause if so requested by the Purchaser the Vendor agrees to novate this contract by a new contract with a New Purchaser ('Substituted Purchaser') and to rescind this Contract. (ii) The Purchaser must serve the request for novation in writing ('the Novation Notice'). (iii) The Purchaser must with the Novation Notice deliver a contract (the 'New Contract') in identical terms to this contract except for the name of the Substituted Purchaser being substituted for the Purchaser and the directors of the Substituted Purchaser if a company being substituted as the guarantors in the New Contract (the 'New Guarantors'). (iv) The Vendor shall only be required to novate this contract providing there is a simultaneous exchange and completion of the New Contract (duly executed by the Substituted Purchaser and the New Guarantors) and rescission of this Contract. (v) The Purchaser otherwise remains liable to complete this Contract in accordance with its terms. (vi) If the Purchaser serves a Novation Notice the Vendor shall not be required to prepare for completion of this Contract and if the novation and completion of the New Contract do not occur by the Completion date in this contract the Purchaser shall be in default of this Contract as if the Purchaser was unable or unwilling to complete this Contract by the Completion date. (vii) If this Contract is novated the Purchaser agrees that the deposit paid pursuant to this Contract shall become part of the purchase price under the New Contract." 1. Between mid-December 2013 and mid-February 2014, Ms Lin had discussions with Ms Gai, one of NGI's two directors at the time. The discussions related to NGI's possible involvement in a joint venture for the development of the Properties. 2. The discussions between Ms Lin and Ms Gai also involved the Fourteenth Respondent (Mr Geering), a solicitor who was also Ms Gai's de facto partner. Mr Geering, who had an indirect financial interest in NGI, subsequently acted for both GDI and NGI, thereby placing himself in a position of obvious conflict between interest and duty. 3. In about mid-February 2014, Ms Gai represented to Ms Lin that NGI would be able to fund $10.5 million of the total purchase price by the date of completion, provided that GDI financed the balance of the funds required. The primary Judge found that there was no realistic chance of NGI completing the purchase and that the representation was therefore misleading. [76] 4. In mid-February 2014, Ms Lin told Mr Geering and Ms Gai that she no longer wished to develop the Properties because of the commercial risk. However, on the basis of Ms Gai's representation, she considered that NGI had the capacity to complete the purchase and proceed with the project. 5. On 24 February 2014, GDI and NGI executed a document entitled "Short Form Deed – As Between Shareholders – Turramurra Development" (Short Form Deed), which was largely drafted by Mr Geering. The other parties to the Short Form Deed were Gold Stone Capital Pty Ltd (Gold Stone Capital), as trustee for a named Mortgage Fund, and Ergo Investment Management Pty Ltd, a marketing company. Gold Stone Capital was an entity related to GDI. 6. The Short Form Deed contained the following Recitals: "A. On or about 17 December 2013, [GDI] exchanged contracts to purchase the Site with conditional approved [sic] for the development of 99 residential units ('Project') with completion of the said contracts scheduled for 17 March 201[4] with the aggregated purchase price of $15,100,000.00 ('Purchase Contracts'). … C. The deposit under the Purchase Contracts (10%) has been provided by [GDI] ('Deposit'). … E. [GDI] does not wish to develop the Project. F. NGI in its capacity of trustee and manager of the [Gold Stone Future Investments Property Fund [GSFIPF]] wishes to develop the Project provided certain terms and conditions are met. G. Gold Stone Capital in its capacity of the trustee and manger [sic] of the Mortgage Fund or [GDI] wish to provide to NGI debt funding to pay the Purchase Price." 1. Clause 1.2 of the Short Form Deed included the following definition: "(g) A reference to any agreement or document is to that agreement or document as amended, novated, supplemented, varied or replaced from time to time." 1. Clause 2 of the Short Form Deed provided as follows: "Site and Project Ownership 2.1 [SC 48] of the Purchase Contracts allows for novation thereof. As soon as practical after NGI has secured funding arrangements for the Purchase Price (Including the assignment of the Deposit, clause 2.3 below), NGI will pursuant to SC 48 seek to novate the Purchase Contracts ('Novation'). 2.2 Should the Novation be successful then NGI in its capacity as trustee of the GSFIPF will own the Project and therefore be entitled to the profit thereof and liable for the loss. Deposit 2.3 Pursuant to SC 48 the Deposit is assigned to NGI should the Novation be successful. 2.4 Contemporaneously with any successful Novation NGI will reimburse [GDI] the Deposit. 2.5 In consideration for clause 2.3 and in addition to clause 2.4, [GDI] (or its nominee) will receive 750,000 units in the GSFIPF ('GD Units'). Golden Destiny Costs 2.6 Contemporaneously with any successful Novation NGI will reimburse [GDI] the [costs incurred by GDI to acquire the Site.] Funding of the Purchase Price 2.7 It is an essential term of this Deed that in the event that the Novation is successful, the following will be provided to NGI to assist with the completion of the Purchase Contracts and payment of the Purchase Price: (i) [GDI] assigns the Deposit; And (ii) Golden Stone Capital in its capacity of trustee and manager of the Mortgage Fund or [GDI] will loan to NGI a loan amount up to and including $5,500,000 [on specified terms]." 1. The primary Judge found that Mr Geering did not advise either GDI or NGI that the time for performance of NGI's obligation to secure funding under cl 2.1 of the Short Form Deed was uncertain. [77] He also failed to include provisions that would have protected GDI, such as conferring a right to terminate if NGI did not secure funding within a specified time. [78] 2. On 26 February 2014, Ms Lin sent an email to the Vendors' agent pointing out that the Initial Contracts omitted reference to the Development Approval for the Properties. The email also stated that NGI would be nominated under the Initial Contracts as the party to complete the Contracts. Ms Lin proposed that the Initial Contracts be rescinded and replaced by new contracts with NGI as the purchaser but solicitors for the Vendors rejected this proposal. 3. On 12 March 2014, Mr Geering sent an email to Ms Gai and Ms Lin as follows: "1. Novation. I've sent notice to the vendor's [sic] solicitor viz. the novating of the sale contracts from [GDI] to NGI. I will let you know their response. I think we should firm up a strategy to stage the completion, i.e. the amounts to pay to the vendors and when. … 3. Caveats. As per [Ms Lin's] suggestion, we should lodge caveats over title of the six properties, the caveats can be lodged by both [GDI] and NGI" 1. The novation notices referred to in Mr Geering's letter were not in evidence. However, his Honour found that on 12 March 2014 Mr Geering sent novation notices to the Vendors which had the effect of nominating NGI as the novated party to replace GDI on completion. [79] 2. Ms Lin responded to Mr Geering's email as follows: "[GDI] is not in position [sic] to complete the Contracts. NGI will complete the contract and [GDI] will provide fund up to 5.5M as per Agreement signed on 24th Feb 2014 [viz: the Short Form Deed]. [GDI] has formally assigned its right to NGI under the Agreement. The reason we did not notify the vendor is because we are under the impression by the Agent that the Vendors are preparing to negotiate the commercial terms for us to rescind the original Contract and by the same time exchange the same Contracts with NGI. The deposit paid under the Contracts by [GDI] will be dealt in accordance with the Agreement and therefore NGI has the covetable [sic] interest to the Development site." The email did not provide any explanation for the claim that GDI had assigned its right to NGI. 1. On 13 March 2014, the Vendors' solicitors responded to the notice sent by Mr Geering. The solicitors asserted that the notice did not comply with SC 48 of the Initial Contracts. Accordingly, they had advised the Vendors that no action was required on their part. The letter reiterated that completion was due on 17 March 2014. 2. Completion of the Initial Contracts did not take place on 17 March 2014. The Vendors subsequently issued notices to complete requiring completion of the Initial Contracts by 22 April 2014. 3. On 5 April 2014, Mr Geering informed Ms Gai and Ms Lin that if completion of the Initial Contracts did not take place on 22 April 2014, the Vendors could terminate the Contracts, forfeit the deposit and sue for damages or alternatively seek specific performance. 4. From 7 April 2014, so the primary Judge found, Ms Gai and Mr Geering were aware that the financier approached by NGI could not provide funding until around 28 April 2014 (after the date for completion). [80] 5. On 8 April 2014, the Vendors' solicitors informed Mr Geering that if the Vendors were to grant an extension of time for completion, they would expect a significant sum to be released to them. Around this time, both GDI and NGI were exploring a range of options, including extending the time for completion. On 9 April 2014, Ms Lin told Mr Geering that Mr Fong was "committed" to taking over the development. 6. The primary Judge found that at a meeting held on 11 April 2011, Ms Lin complained to Ms Gai about NGI's failure to arrange the funding necessary to complete the purchases under the Initial Contracts. [81] Ms Lin expressed concern about losing the deposit and said she wanted to proceed with Mr Fong. Thereafter Mr Geering attempted to negotiate for a rescission of the Initial Contracts and the exchange of new contracts with an extended completion date. [82] 7. On 17 April 2014, the Vendors' solicitors informed Mr Geering that the Vendors were prepared to rescind the Initial Contracts and enter into six replacement contracts with GDI. However, the Vendors required, among other things, that GDI pay the sum of $8 million, inclusive of the deposits already paid, on exchange of the replacement contracts. The amount over and above the deposits was to be in part payment of the balance of the purchase price. 8. On the same day, two meetings took place between Ms Lin, Ms Gai and Mr Geering to discuss the Vendors' proposal. The primary Judge accepted the substance of Ms Lin's account of the meetings. [83] She expressed the view that the Vendors were getting "everything" and that she wanted to get out of the deal. Ms Lin told Ms Gai and Mr Geering that she wanted to novate the Initial Contracts to Mr Fong because he could put more money into the project than NGI or GDI. 9. A further meeting took place between the same parties on 22 April 2014, the dated fixed for completion. By this time, so the primary Judge found, it was plain that the Initial Contracts would not be completed because NGI had failed to secure funding. [84] His Honour accepted Ms Lin's account over that of Mr Geering and Ms Gai as to what transpired at the meeting. [85] Ms Lin's account was as follows: "Mr Geering: The Vendor agree to extend the completion till late 22nd July 2014, time is of essence. Any novation need take place 14 days before settlement and we release $8 million to the Vendors now. John [Cai] needs to sign the personal guarantee as [GDI] director. [GDI] need bring another half a million and NGI will give you $6 million. I said: I think we need to renegotiate the release of the $6.5 million – it must go into a trust account? Ms Gai: I agree with Louise, how do we protect NGI's $6 million? Mr Geering: I cannot protect you, that is what vendor [sic] wants and it is not an uncommon practise [sic]. The fund money just sits in the bank and does nothing. I said: We have already given them $200,000 extra … Why [do] we need to give further $8 million benefit to the Vendors? Mr Geering: There is nothing I can do. The site has increased in value since we bought because of the s.96 proposal and because the market has been moving up, you do not want to lose it. Ms Gai: Why can't NGI take a novation and settle now? I said: You can't settle now because Eclipse [NGI's financier] is not ready for settlement. Mr Geering: We need more time for the finance. If [GDI] enters into the new contracts, then there are 2 options once Eclipse approves the facility, namely NGI settles in May or in 3 month's [sic] time using Eclipse money and [GDI] money. I said: No. because then there is no [GDI] money. Once [GDI] has a new contract then [GDI] wants out and wants its deposit back. Mr Fong can do this for me. Can you? Mr Geering: Look – we need to exchange contract this afternoon. Let's just get this done with. Whether after exchange you do a joint venture with Victor [Fong] or with NGI … because we offer you the same deal as Victor [Fong], or whether you just on-sell for a higher price, they are all matters we can look at later. Can you ask John [Cai] to get the further deposit cheque and come to sign the contract? We agreed to exchange the new contract this afternoon. I said: I can arrange the signature but too late to get cheque, bank close at 4pm, you can ask Bruce Yahl [the Vendors' solicitor] change it tomorrow. Mr Geering: I can ask, but they can terminate the Contract after 5pm. I said: Go away, I am sick of you and them. Let them do it." 1. On 23 April 2014, the Vendors entered into six new contracts for the sale of the Properties (Second Contracts). The purchaser in each case was GDI. 2. Each of the Second Contracts contained Special Condition 41 (SC 41), which provided as follows (the reference to "Turramurra Contracts" is to the Second Contracts): "41. DEPOSIT AND OTHER MONIES 41.1 The Purchaser agrees that the deposit, and the sum of money referred to in Special Condition 41.2(ii) shall be released to the Vendor forthwith. 41.2 The Purchaser acknowledges and agrees that the following sums of money have been paid to the Vendors of the Turramurra Contracts as a condition of the Vendors of the Turramurra Contracts agreeing to exchange the Turramurra Contracts with the Purchaser. (i) $1,510,000.00 being the sum of 10% of the total of the sales prices disclosed in the Turramurra Contracts; (ii) $6,490,000.00 being a further sum in part payment of the balance of sale price under the Turramurra Contracts. 41.3 The Purchaser acknowledges and agrees that the further sum of $6,490,000.00 referred to in Special Condition 41.2(ii) shall be released to the Vendors of the Turramurra Contracts in whatever proportion the Vendors of the Turramurra Contracts deem appropriate. If the cheque for $6,490,000.00 is not honoured on presentation, the Vendor can terminate this contract. 41.4 The Vendor and Purchaser agree that the total consideration payable by the Purchaser for the properties comprised in the Turramurra Contracts is divided as to the sum of $15,100,000.00 for the said properties and as to the sum of $200,000.00 for the Vendors of the Turramurra Contracts agreeing to a completion date of 22 July 2014 and that the said sum of $200,000.00 is a genuine pre-estimate of the Vendors' loss of interest for the purchase money payable under the Turramurra Contracts and liability for rates and outgoings." 1. SC 48 of the Second Contracts dealt with "Novation" as follows: "(i) Subject to this clause if so requested by the Purchaser the Vendor agrees to novate this contract by a new contract with a New Purchaser ('Substituted Purchaser') and to rescind this Contract. (ii) The Purchaser must serve the request for novation in writing ('the Novation Notice') at any time prior to 14 days before the completion date but if not served prior to such date then the right to serve a Novation Notice is lost. (iii) The Purchaser must with the Novation Notice deliver a contract (the 'New Contract') in identical terms to this contract except for the name of the Substituted Purchaser being substituted for the Purchaser and the directors of the Substituted Purchaser if a company being substituted as the guarantors in the New Contract (the 'New Guarantors'). (iv) The Vendor shall only be required to novate this contract providing there is a simultaneous exchange and completion of the New Contract (duly executed by the Substituted Purchaser and the New Guarantors) and rescission of this Contract. (v) The Purchaser otherwise remains liable to complete this Contract in accordance with its terms. (vi) If the Purchaser serves a Novation Notice the Vendor shall not be required to prepare for completion of this Contract and if the novation and completion of the New Contract do not occur by the Completion date in this contract the Purchaser shall be in default of this Contract as if the Purchaser was unable or unwilling to complete this Contract by the Completion date. (vii) If this Contract is novated the Purchaser agrees that the deposit paid pursuant to this Contract shall become part of the purchase price under the New Contact [sic]. 1. On 23 April 2014, concurrently with the exchange of the Second Contracts, the deposits of $1.51 million previously paid by GDI were released to the Vendors' agent. A total of $6.49 million was paid to the Vendors' agent. Of this sum, $490,000 was paid by GDI and $6 million by NGI. The latter sum was withdrawn by NGI from the Property Fund and paid by bank cheque to the Vendors' agent (the agent being the payee). A file note prepared by Mr Geering shows that the bank cheque was given to the solicitors acting for GDI to be handed over at settlement to the Vendors. The two amounts paid by GDI and NGI were subsequently released to the Vendors in conformity with SC 41.1 and 41.2 of the Second Contracts. [86] 2. The primary Judge found that the $6 million taken from the Property Fund comprised $5 million invested by a Ms Zhang, and a further $1 million obtained from four other investors. [87] Neither Ms Zhang nor the other investors were parties to the proceedings, although Ms Zhang gave evidence. 3. In the period after 23 April 2014, Mr Geering had discussions with Mr Fong with a view to establishing a joint venture. The primary Judge found that in doing so Mr Geering, although still acting for both GDI and NGI, was pursuing his own financial interests. [88] 4. On 5 May 2014, GDI terminated Mr Geering's retainer. 5. Concurrently with the exchange of the Second Contracts, the Vendors and GDI executed a Deed of Release containing mutual releases from any liabilities or claims under the Initial Contracts. 6. On 13 May 2014, Ms Lin sent an email to Ms Gai and Mr Geering stating that it was in the best interests of investors in the Fund of which GDI was trustee that the Second Contracts not be novated to NGI, but to a more suitable company. Ms Lin sent another email to Ms Gai the following day, complaining about Ms Gai's conduct towards an investor in the Property Fund (apparently Ms Lin's mother). 7. Ms Gai responded the following day denying the allegation. Ms Gai stated that NGI had made the "investment" of $6 million in the expectation that the Second Contracts would be novated to NGI and that funds would be provided to allow NGI to complete. Ms Gai further stated that if GDI refused to honour the agreement, NGI would be forced to take legal action. 8. On 20 May 2014, MVGDD was incorporated as a special purpose vehicle to enable Mr Fong to develop the Properties. 9. On 23 May 2014, Ms Gai sent an email on behalf of NGI to Ms Lin. The email asserted that GDI had repudiated the Short Form Deed and purported to terminate the Deed. The email also stated that "NGI wishes that the process of the Fund's divestment be completed without delay". The primary Judge interpreted this as foreshadowing NGI's desire to divest itself of its position in the Turramurra development. [89] 10. Ms Lin in her reply to Ms Gai's email denied that GDI had repudiated the Agreement with NGI and asserted that "[t]here was no contractual agreement between our side and NGI". (The primary Judge found that Ms Gai's email evinced a clear intention that NGI would no longer be bound by the Short Form Deed. His Honour also found that Ms Lin's reply amounted to an election by GDI to accept NGI's repudiation. [90] His Honour accepted GDI's submission that the conduct of the parties was inconsistent with the continued performance of the Short Form Deed and that they did not intend that it should be further performed. Accordingly, the Short Form Deed had either been abandoned or the parties "had abrogated their agreement". [91] There is no challenge to these findings.) 11. On 3 July 2014, NGI's solicitors (who had replaced Mr Geering) wrote to GDI's solicitors stating that NGI had secured funding for the purchase of the Properties. The letter asserted that NGI intended to exercise its rights under the Short Form Deed. NGI's solicitors again wrote to GDI's solicitors on 7 July 2014 requesting that GDI novate the Second Contracts to NGI's nominee and do so by serving the required notices on the Vendors. 12. On the same day, GDI's solicitors wrote to the Vendors. The letter stated that GDI wished to novate each of the Second Contracts to MVGDD. The letter enclosed novation notices and fresh contracts which were said to conform to the requirements of SC 48(iii) of the Second Contracts. The novation notices enclosed with the letter were in standard form and relevantly stated as follows: "We hereby advise that in accordance with Special Condition 48 of the Contract for Sale of Land ('the Contract') our client hereby notifies you of its intention to novate the Contract to [MVGDD] ('the Substituted Purchaser'). In accordance with Special Condition 48(iii) of the Contract we enclose a New Contract executed by the Substituted Purchaser and the guarantor." 1. On a date in July 2014 not established by the evidence, GDI and MVGDD executed a Deed of Novation. The Recitals to the Deed were as follows: "A. On 23 April 2014 GDI exchanged six Contracts for the Sale of Land with respect to certain lands situated in Turramurra … ('the Contracts'). B. The completion date on each of the Contracts is 22 July 2014 ('the Completion Date'). C. By virtue of special condition 48 in each of the Contracts GDI is entitled to novate its interest in each of the Contracts to a third party. The Contracts provide that any such novation must occur at least 14 days before the Completion Date. D. GDI and [MVGDD] have agreed that GDI will novate its interest in each of the Contracts to [MVGDD] on the terms and conditions set out in this Deed." 1. Clause 2 of the Deed provided that GDI would novate the Second Contracts in accordance with their terms on or before 4 July 2014, upon MVGDD paying certain amounts to GDI. MVGDD agreed that upon novation it would be bound by the terms of the Second Contracts "in every way as if [MVGDD] were a party to the Contracts instead of GDI" (cl 2(c)). 2. Clause 2 also included the following provision: "(e) In the event that any third party (including those parties to the Short Form Deed) commences legal action or seeks such interlocutory relief so as to preclude [MVGDD] from commencing the project, GDI will indemnify [MVGDD] for all costs and losses due to the third party legal action being commenced and such indemnity shall continue for as long as [MVGDD] is a party to any such proceedings or those proceedings preclude the commencement or continued development of the project." 1. MVGDD lodged caveats on the titles to the Properties on 7 July 2014. The caveats claimed that MVGDD had an interest in each of the Properties as a purchaser under a contract for sale dated 7 July 2014. 2. By 9 July 2014, NGI had retained new solicitors, Minter Ellison, to act on its behalf. On that date, Minter Ellison wrote to GDI's new solicitors, MBP Legal. Minter Ellison asserted (wrongly in view of the primary Judge's unchallenged finding) that NGI was entitled, pursuant to the Short Form Deed, to novate the Second Contracts to its nominee. The letter demanded that GDI do nothing to prejudice NGI's rights. A copy of the letter was sent to the Vendors' solicitors. 3. Minter Ellison's letter of 9 July 2014 recorded its instructions that NGI had made the payment of $6 million from "the Fund's own funds" to the Vendors "strictly in reliance on the terms of the Short Form Deed and in reliance on the Assumption". The "Assumption" was said to be that: "the Short Form Deed continued to apply to the [Second] Contracts and that the [Second] Contracts would be novated to NGI in accordance with the Short Form Deed". 1. MBP Legal responded to Minter Ellison's letter on 10 July 2014. In its detailed response, MBP Legal stated that on the assumption (denied by GDI) that the Short Form Deed entitled NGI to novate the Second Contracts, NGI had failed to comply with the provisions of the Deed and thus had forfeited any such entitlement. 2. By 18 July 2014, NGI had apparently instructed Avondale to act on its behalf. On that date, Mr Gutierrez of Avondale wrote to MBP legal as follows: "By reason of an agreement (the 'Agreement') between NGI and [GDI] (the purchaser of the land pursuant to six (6) Contracts for the Sale of Land, between [GDI] and the vendors of the Turramurra Development … dated 23 April 2014 (the 'Contracts'), the Turramurra Development is held on trust by [GDI] for the benefit of NGI. … We advise that any third party that may replace [GDI] by way of any purported novation of the Contracts on completion, such as [MVGDD], would also hold the Turramurra Development on trust for the benefit of NGI. By reason of the Agreement, [GDI] paid the sum of $6,000,000 with respect to the purchase of the Turramurra Development, such sum having been paid to the vendors prior to completion, which we understand is due to take place on 22 July 2014. NGI further asserts that the sum of $6,000,000.00 is held on trust for the benefit of NGI and or alternatively NGI holds a first ranking charge over the Land the subject of the Contracts. Given that [GDI] has now proceeded without having any regard to our client's rights or interests in the Turramurra Development, our client has been left with no option but lodge [sic] caveats over each of the six (6) properties to protect its interest over those properties. We also confirm that caveats have now been lodged with the Land & Property Information Office over the six (6) properties in the Turramurra Development. We attach the annexures to the caveats which set out our client's interest over those properties. As a matter of courtesy, this correspondence will be carbon copied to Lane & Lane Solicitors acting for the vendors, and Dib Lawyers acting for [MVGDD]." (Emphasis in original.) 1. In fact, NGI's solicitors lodged the caveats on 21 July 2014. Each caveat prohibited the recording in the Register of any dealing, other than a plan, affecting the estate or interest claimed by the caveator as set out in Schedule 1. Schedule 1 incorporated Annexures A and B. Annexure A gave particulars of the estate or interest in the Properties claimed by the caveator, while Annexure B set out the facts by virtue of which the caveator claimed its estate or interest in the Properties. Schedule 1 identified the instrument by which NGI acquired its estate or interest as an agreement to which the parties were NGI, GDI, Golden Stone Capital and Ergo (that is, the Short Form Deed). 2. Annexure A provided the following particulars of the estate or interest in the Properties claimed by NGI as the caveator: "1. Equitable charge; and 2. Resulting trust; and/or 3. Constructive trust, (a) pursuant to an agreement (the 'Agreement') between the Caveator and [GDI], the purchaser of the land under a Contract for the Sale of the Land, between [GDI] and the Registered Proprietor, as vendor dated 23 April 2014 (the 'Contract'); (b) breach by [GDI] of fiduciary duties owed by [GDI] to the Caveator in respect of [GDI's] interest in the Land arising from the Contract; and/or (c) the payment by the Caveator, whether pursuant to the Agreement or otherwise, of part of the purchase price to the total sum $6,000,000.00 apportioned between the … vendors." 1. Annexure B set out the facts by virtue of which NGI claimed its estate or interest in the Properties: "1. Pursuant to an agreement (the 'Agreement') between the Caveator and [GDI], the purchaser of the land under a Contract for the Sale of the Land, between [GDI] and the Registered Proprietor, as vendor dated 23 April 2014 (the 'Contract'); 2. The payment by the Caveator, whether pursuant to the Agreement or otherwise, of part of the purchase price to the total sum $6,000,000.00 apportioned between the … vendors: … 3. On 23 April 2014 in part performance of the Agreement the Caveator paid to the Turramurra Vendors through [GDI] the sum of $6,000,000.00 being part payment of part of the purchase price pursuant to the Contract." (Emphasis added.) 1. Ms Gai completed the statutory declaration incorporated in each of the caveats. She declared that to the best of her knowledge, information and belief, NGI had a good and valid claim to the estate or interest set out in Schedule 1. The statutory declaration was witnessed by Mr Khanji of Avondale. 2. The primary Judge found that Mr Fong attended for the purpose of settling the Second Contracts on 22 July 2014 and that he was ready, willing and able to complete the purchases. However, that settlement could not proceed by reason of NGI's caveats. [92] The proceedings 1. On 4 August 2014, the Vendors commenced the Equity Division proceedings by summons. The summons named the defendants as: * GDI (first defendant); * MVGDD (second defendant); and * NGI (third defendant). 1. The Vendors sought declarations that: * GDI was and remained the purchaser under the Second Contracts; * MVGDD had no caveatable interest in the Properties; and * NGI had no caveatable interest in the Properties. The Vendors also sought orders for the removal of the caveats lodged by MVGDD and NGI and claimed damages from MVGDD and/or NGI pursuant to s 74P of the RP Act. 1. On 29 August 2014, MVGDD filed a notice of motion in the Equity Division proceedings seeking orders pursuant to s 74MA of the RP Act for the removal of the caveats lodged by NGI. 2. On 4 September 2014, GDI filed its own notice of motion seeking orders for the removal of NGI's caveats. 3. At a hearing on 8 October 2014, counsel for MVGDD and GDI (which were separately represented) informed the primary Judge that they did not press their respective motions. In return for MVGDD agreeing to the dismissal of its motion and NGI retaining the caveat, NGI gave an undertaking as to damages in respect of any loss suffered by MVGDD. 4. The primary Judge heard the Equity Division proceedings over 12 hearing days in March and May 2015. In addition, the parties filed extensive written submissions. 5. In the Primary Judgment, his Honour recorded that a number of claims had to be determined, as follows: [93] * The Vendors claimed the relief identified in their Summons, but also sought orders against GDI for specific performance of the Second Contracts. * NGI's Cross-Claim sought, among other things, an order for specific performance of agreements alleged to exist between it and GDI and declarations that GDI and the Vendors were estopped from novating the Second Contracts to any party other than NGI or its nominees. NGI also claimed that it had an equitable charge or lien over the Properties to the extent of $6 million, being the amount paid by it to the Vendors on 23 April 2014. * GDI's Cross-Claim sought a declaration that the Short Form Deed had been terminated on the basis of GDI's acceptance of NGI's repudiation. GDI also sought damages from NGI and equitable compensation from Mr Geering for breach of fiduciary and other duties. * MVGDD's Cross-Claim sought an order referring out its claim based on NGI's undertaking as to damages given on 8 October 2014. MVGDD also sought referral out of a claim against GDI pursuant to an indemnity given by GDI in a Deed dated July 2014. 1. On the third day of the final oral submissions (15 May 2015), counsel for NGI informed the Court that NGI conceded that it was not at that time ready, willing and able to complete the Second Contracts. NGI's counsel also conceded that there was no legal basis on which NGI could maintain its caveats. It appears that NGI's caveats were then withdrawn. A number of claims for relief thereby fell by the wayside. 2. On 22 May 2015, prior to delivering judgment on the various claims, the primary Judge made orders, including the following: "1. ORDER that the date for completion of the contracts for sale between the [Vendors] and [MVGDD], … be fixed for 19 June 2015 [a date later varied to 3 July 2015]. 2. ORDER that upon completion of the sale of the [Properties] between the [Vendors] and [MVGDD], the [Vendors] make the following payments forthwith: (a) $6 million to be paid into Court; and (b) $2 million to be paid to [GDI]. … 4. ORDER that, in the event that judgment postdates the completion of the sale, the $6 million payable by the plaintiff into Court be frozen pending judgment and further order of the Court." The two amounts covered by these Orders amounted to $8 million, equal to the deposits previously paid of $1.51 million and the further payments of $490,000 by GDI and $6 million by NGI. 1. In the course of oral submissions in this Court, it was pointed out that Order 2 seems to have incorrectly referred to the sum of $2 million, rather than $490,000. According to Mr Darke SC, who appeared with Mr Lee for GDI, all parties accepted that the deposit of $1.51 million was retained by the Vendors and credited to the price to be paid by MVGDD under its novated contracts with the Vendors. 2. In June 2015, receivers were appointed to NGI. 3. The sale by the Vendors to MVGDD was completed on 3 July 2015. On that date, the Vendors paid the sum of $6 million into Court. The effect of the Court's orders, as the parties to the appeal accepted, was that MVGDD paid the full purchase price of $15.3 million to the Vendors, who then paid $6 million of that sum into Court. It appears that the Vendors refunded $490,000 to GDI. 4. The primary Judge delivered the Primary Judgment on 21 August 2015. Relevantly for present purposes, his Honour held that NGI's payment of $6 million towards the purchase price of the Properties did not create a charge or lien in its favour over the Properties, in the absence of evidence that the Vendors in some way procured the payment. [94] Thus NGI did not have a caveatable interest in the Properties and had not been entitled to lodge its caveats in July 2014. 5. The primary Judge also found that NGI did not have an honest belief on reasonable grounds that it had a caveatable interest in the Properties. It followed that NGI was liable to compensate the Vendors pursuant to s 74P(1) of the RP Act for any pecuniary loss attributable to the lodgement of the caveats or NGI's refusal to withdraw the caveats. [95] 6. The primary Judge accepted GDI's contention that Ms Gai's email of 23 May 2014 terminated the Short Form Deed. [96] As previously noted, there is no challenge to that finding. 7. On 20 November 2015, the primary Judge made a number of declarations and orders. They included the following (the original numbering has been retained): 1. A declaration that NGI had no caveatable interest in the Properties. 2. A declaration that NGI had lodged caveats over the Properties and had refused or failed to withdraw them without reasonable cause. 3. An order that NGI make an interim payment of damages to the Vendors pursuant to s 74P of the RP Act of $796,026.41. 4. A declaration that the Short Form Deed had been terminated on 23 May 2014. 5. An order that NGI make an interim payment of damages to GDI of $80,980. 7. An order dismissing NGI's Cross-Claim. 8. A notation that the dismissal of NGI's Cross-Claim was without prejudice to the rights of any party in respect of the $6 million paid into Court pursuant to the orders made on 22 May 2015 and the costs of the proceedings. … 11. An order that GDI's Cross-Claim and MVGDD'S Cross-Claim be stood over until the hearing of any appeal from the Orders. GDI succeeded in its claims against Mr Geering [97] and the orders are not challenged on the appeals. 1. The primary Judge delivered the Second Judgment on 17 December 2015. His Honour held that: 1. The Vendors did not have a charge over the Court Fund notwithstanding that they had paid the moneys into Court and had obtained a judgment in their favour. [98] 2. When NGI paid the sum of $6 million to the Vendors, the moneys no longer belonged to NGI or the beneficiaries of the Property Trust. NGI would have received any moneys refunded to it by GDI on trust for the beneficiaries of the Property Trust. However, the Court Fund was no longer impressed with a trust in favour of NGI or the beneficiaries. [99] 3. As a matter of construction of the Deed of Charge, Avondale's charge over the assets of NGI applied only to NGI's assets in its own right and did not extend to the assets of the Property Fund. [100] 4. NGI should pay the costs of the Vendors, GDI and MVGDD on an indemnity basis because it had unreasonably persisted in its claim to have a caveatable interest in the Properties and had advanced other untenable arguments. [101] 5. The final orders should be stayed pending the determination of NGI's appeal in Court and no orders should be made for the payment out of the moneys in Court. [102] 1. On 21 April 2016, the primary Judge made orders by consent entering judgment in favour of the Vendors in the sum of $796,026.41 to be paid in the proportions identified in a Schedule to the orders. Issues on NGI's appeal 1. NGI's Amended Notice of Appeal challenges the primary Judge's decision that NGI was liable to pay damages to the Vendors and to GDI pursuant to s 74P of the RP Act. NGI says that the primary Judge erred in holding that: (i) NGI did not have a caveatable interest in the Properties by reason of its payment of $6 million to the Vendors; (ii) NGI did not have an honest belief on reasonable grounds that it had a caveatable interest over the Properties; and (iii) the Vendors and GDI suffered losses attributable to NGI's wrongful lodgement of the caveats. 1. NGI also challenges the primary Judge's order that, upon completion of the sale of the Properties to MVGDD, the Vendors pay the sum of $6 million into Court. It contends that his Honour should have given effect to NGI's charge or lien over the Properties by ordering the Vendors to pay the sum to NGI. Alternatively, so NGI contends, the primary Judge should have held that NGI was entitled to recover the sum of $6 million from the Vendors on restitutionary grounds or as moneys had and received by the Vendors to the use of NGI. 2. If none of the above arguments succeeds, NGI contends that it is nonetheless entitled to priority over the other claimants to the Court Fund. NGI says that it has a security interest over the Property Fund to secure its right of indemnity against trust assets. Accordingly, NGI is entitled to enforce its interest against the chose in action constituted by the right to recover the sum of $6 million from the Vendors. The payment of that sum into Court did not affect the existing charge in favour of NGI. 3. Finally, NGI challenges the order that it pay costs on an indemnity basis. The primary Judge erred, so NGI argues, by holding that the lodgement of a caveat without reasonable cause suffices to justify an order for indemnity costs. A caveatable interest? Primary Judgment 1. The primary Judge made important findings as to the credit of the principal witnesses. He considered Ms Gai to be an unsatisfactory witness whose evidence of significant meetings was inconsistent and implausible. [103] Mr Geering was from time to time in "a position of hopeless conflict", in part because he had an indirect financial interest in NGI yet acted also for GDI. [104] His evidence was at times "breathtakingly disingenuous" and deliberately false. [105] 2. Although Ms Lin sometimes "embellished" conversations, his Honour considered that she substantially told the truth. Ms Lin: [106] "saw risks early in 2014 with the project, which caused a change of heart on her part as to GDI's involvement in the joint venture. She lost confidence, quite rightly, in Mr Geering and Ms Gai's ability to consummate the purchase, let alone the development. She saw they were out of their depth, and with some justification." 1. After considering the evidence in detail and making findings, some of which have been referred to earlier, the primary Judge summarised the position as at 22 April 2014: [107] "[234] Neither Ms Gai nor Mr Geering's enthusiasm for the Turramurra project had waned by this date. They thought it was a good development site and a good one for NGI to be involved in. … [235] NGI clearly had a role to play in ensuring that the Vendors' demands were met. It had to agree to release $6 million to them, otherwise the project would likely be lost and GDI would suffer damage. Ms Gai understood that that would be the consequence of NGI failing to meet its obligations under the Short Form Deed. Ms Gai understood that in these circumstances NGI might be liable to GDI for the loss this caused it … . [236] It seems to me that Ms Gai and Mr Geering caused NGI to pay over the $6 million to the Vendors' agent as a matter of sheer pragmatism in order to preserve the possibility of participating in the Turramurra project and avoid GDI suffering loss for which NGI might be liable. It kept alive a profit making opportunity. [237] The arrangements between the parties at the time, in particular how the Turramurra project would proceed and precisely what role NGI would play, I think were in a state of flux. There had been no agreement on these matters at the time because it was intended that the extension of the three months would be used to settle the arrangements between the parties and for other opportunities to be pursued, including perhaps, more importantly, a possible joint venture or sale to Mr Fong or someone else. …" 1. The primary Judge accepted that for NGI to have a caveatable interest in the Properties, the interest had to be "grounded either in some agreement entered into by the registered proprietor or by an interest binding upon the registered proprietor". [108] As NGI did not allege any agreement, it had to establish an interest otherwise binding on the Vendors. [109] 2. After dealing with arguments not advanced on the appeal, his Honour addressed NGI's contention that it had acquired an equitable lien over the Properties and thus had a caveatable interest. NGI's submission was that a third party who contributes money to the acquisition of property, even in the absence of dealings between the vendor and the third party, acquires rights in rem against the vendor's property, analogous to those enjoyed by an assignee or sub-assignee. [110] NGI also relied on the fact that at least by 9 July 2014, the Vendors were aware that NGI had contributed $6 million to the purchase price under the Second Contracts. 3. The primary Judge rejected these submissions. In his Honour's view, a person who lends money to a purchaser of land, without more, does not thereby acquire an interest in the land. [111] NGI had failed to explain with any clarity why it was to be characterised as, in effect, a sub-purchaser of the Properties. NGI had not distinguished its position from that of any other money lender or party contractually bound to GDI. [112] 4. The primary Judge stated his conclusion as follows: "[361] … The payment of the monies by NGI on exchange of contracts on 23 April 2014 does not constitute payment to the [Vendors]. The money was clearly not paid by GDI to the Vendors as the agent of NGI. The money was paid to allow GDI to comply with the contractual arrangements. I agree that such a payment cannot as such make NGI a sub-purchaser, whatever that term is intended to mean. [362] It may be accepted that the vendor upon exchange of contracts becomes a trustee of an estate in land for the purchaser. But that does not confer a secondary interest in the land to any person contributing money to the purchaser or the purchase price, nor can it give rise to a charge in favour of the person advancing the money towards the purchase price." 1. This conclusion appears to relate to NGI's claim to an equitable lien or charge over the Properties enforceable against the Vendors. The primary Judge noted that GDI supported the Vendors' contentions and relied on the fact that NGI was never the purchaser of the Properties. [113] Since NGI did not pay the $6 million as a purchaser of the Properties, it never acquired a lien over the Properties. [114] Moreover, GDI had never charged its own purchaser's lien over the Properties in favour of NGI, nor had GDI assigned its rights as a purchaser to NGI. [115] Submissions NGI's submissions 1. Mr Einfeld submitted that NGI acquired a caveatable interest in the Properties by virtue of its payment of the sum of $6 million. According to Mr Einfeld, the payment by NGI was made to the Vendors as part payment of the purchase price payable under the Second Contracts. Contrary to his Honour's findings, the payment was not made to assist GDI to discharge its obligations to the Vendors. Nor was the money advanced to GDI or the payment made on its behalf. 2. The consequence of NGI's part payment of the purchase price, albeit at the request neither of the Vendors nor GDI, was that NGI acquired an equitable interest in the Properties by way of charge in the nature of a purchaser's lien. Mr Einfeld acknowledged that there was no authority directly on point that supported this submission. He submitted, however, that NGI's position was analogous to that of a purchaser or sub-purchaser of an interest in land who, upon payment of part of the purchase price, acquires an equitable lien over the land. 3. NGI's written submissions contended that at the time it made the payment to the Vendors, NGI had a right under the Short Form Deed to have the Initial Contracts novated to it. NGI's position was therefore similar to that of an optionee, who is entitled to call for a contract of sale and has a caveatable interest in the land subject to the option. 4. In his oral submissions, Mr Einfeld accepted that the Short Form Deed did not confer on NGI an immediate right to novate the Initial Contracts. That conclusion followed from cl 2.1 of the Short Form Deed, which required NGI to secure funding for the purchase of the Properties before it could "seek to novate the [Initial] Contracts". When NGI made the payment it had not fulfilled the requirements of cl 2.1 and indeed conceded during the trial that it was unable to complete the Second Contracts. 5. NGI's contention, as reformulated by Mr Einfeld, was that the equitable lien arose because at the time NGI made the payment: * NGI anticipated that it would purchase the fee simple estates in the Properties under the contracts that would come into existence as the result of the novation of the Second Contracts; and * the Vendors were aware, at the date that NGI made its payment, that NGI intended to acquire the Properties. 1. Mr Einfeld acknowledged that the primary Judge did not make a finding that NGI, when it paid the $6 million, had an expectation and intention that it would acquire the fee simple estates in the Properties under novated contracts. He submitted, however, that in conformity with Ground 6 of the Further Amended Notice of Appeal, this Court should make such a finding. 2. Later in his oral submissions, Mr Einfeld characterised NGI as having a conditional right under the Short Form Deed to novate the Initial Contracts. However, he maintained that it was sufficient for NGI to have an expectation and intention that it would acquire the fee simple estates in the Properties when it contributed to the purchase price. 3. Mr Einfeld submitted that it was not to the point that there was no contractual arrangement between the Vendors and NGI at the time of payment. Nor was it to the point that NGI had never dealt directly with the Vendors (other than by making the payment to the Vendors' agent without the Vendors being aware of the source of the payment). Insofar as NGI's interest was "future and conditional", the authorities suggested that this was no barrier to the recognition of an equitable lien. Vendors' submissions 1. The Vendors submitted that NGI was inviting the Court, in effect, to recognise a novel equitable interest in the Properties, in circumstances where there had never been any contractual relationship between NGI and the Vendors. Mr Sirtes SC, who appeared for the Vendors with Mr Bilinsky and Mr Fernandes, pointed out that the Short Form Deed did not assign or charge GDI's interest in the Initial Contracts in favour of NGI. GDI had simply granted a right to NGI contingent on obtaining funding to complete the Initial Contracts. This had never happened and therefore the Initial Contracts could not be completed. 2. Mr Sirtes accepted that the Short Form Deed was still on foot when the payment was made. He also accepted that the Second Contracts "replaced" the Initial Contracts for the purposes of the Short Form Deed and were therefore subject to the terms of the Short Form Deed. However, at no time were the conditions necessary to compel GDI to novate the Second Contracts to NGI satisfied and at no time could NGI have obtained a decree of specific performance of the Short Form Deed. Thus NGI was not in the position of a purchaser or sub-purchaser of the Properties. 3. According to Mr Sirtes, NGI was in the position of an unsecured moneylender who obtains no security from either the vendor or purchaser of the property for funds paid directly to the vendor. Such a person has no equitable right entitling him or her to lodge a caveat over the land. Indeed, so Mr Sirtes contended, in the absence of any contractual entitlement in NGI to recover the sum of $6 million from GDI, its only remedy was an action against GDI for money had and received. 4. Mr Sirtes contended that the authorities relied on by NGI were of little assistance because they dealt with quite different situations. NGI was merely a "hopeful novatee whose right to novation was inchoate". The fact that NGI hoped to obtain a right to novation in the future was insufficient to create equitable interests in the Properties enforceable against the Vendors. 5. Mr Sirtes further submitted that NGI's hope or expectation that it would acquire a right to novation could not confer an equitable lien over GDI's interest in the Properties. There was no reason in principle or justice why NGI should have the benefit of an equitable lien as against GDI. In any event, even if NGI had such a lien, it could attach only to GDI's limited interest as the purchaser and could not prevail against the Vendors' interest. 6. Mr Sirtes submitted that the effect of SC 41 of the Second Contracts was that the payment of $6 million by NGI and its subsequent release to the Vendors discharged GDI's obligation to pay that amount to the Vendors. It was of no concern to the Vendors who actually provided the funds. When the Second Contracts were rescinded, the standard contractual provision (cl 19.2) required moneys paid by the purchaser (GDI) to be refunded. When that happened GDI would be obliged to pay the amount refunded to NGI as moneys had and received to NGI's use. GDI's submissions 1. GDI's written submissions traversed some of the ground covered by the Vendors' submissions. Mr Darke SC, who appeared with Mr Lee for GDI, supported the Vendors' contention that NGI's payment of $6 million to the Vendors discharged GDI's obligation to pay that sum to the Vendors on exchange of the Second Contracts. It followed, so he argued, that upon rescission of the Second Contracts, the Vendors were obliged to refund that amount to GDI. Mr Darke accepted, as GDI had expressly conceded before the primary Judge, that it was not entitled to retain the $6 million (should it be paid to GDI by the Vendors), but was obliged to disgorge that sum to NGI. 2. Mr Darke submitted that this Court should reject NGI's invitation to make a finding that when NGI contributed to the purchase price of the Properties it had an expectation or understanding that the Second Contracts would be novated to it. Mr Darke contended that the primary Judge had made credit-based findings inconsistent with NGI having any such expectation or understanding and no grounds had been established for this Court to interfere with the findings. 3. Mr Darke acknowledged that the evidence was incomplete as to the circumstances in which the Second Contracts were rescinded or in which the Vendors and MVGDD entered into fresh contracts for the sale of the Properties (in consequence of the novation of the Second Contracts to MVGDD). However, Mr Darke invited the Court to proceed on the basis that fresh contracts had been exchanged and the Second Contracts rescinded. He submitted that this was the basis on which the primary Judge made the orders providing a date for completion of the contracts between the Vendors and MVGDD. Reasoning The gap in the evidence 1. The letter from GDI's solicitors of 7 July 2014 to the Vendors' solicitors enclosed novation notices and contracts of sale signed on behalf of MVGDD as the purchaser. At about the same time, GDI and MVGDD executed the Deed of Novation. But the Court was not taken to evidence establishing when (if at all) the contracts signed on behalf of MVGDD were exchanged and, if so, whether any amendments were made to the contracts prior to the exchange. MVGDD lodged caveats on 8 July 2014 claiming an interest as the purchaser of each of the Properties under contracts of sale of the same date. However, some of the correspondence between the solicitors suggests that, despite lodgement of MVGDD's caveats, the contracts of sale between the Vendors and MVGDD still had not been exchanged some days after 7 July 2014. 2. The primary Judge found that Mr Fong attended settlement on 22 July 2014 and that "he" was ready, willing and able to complete the Second Contracts on that date. [116] Presumably this finding was intended to refer to MVGDD being ready, willing and able to complete. But MVGDD was not a party to the Second Contracts and, in the absence of an assignment to it of the benefit of the Second Contracts, any rights it acquired to purchase the Properties must have derived from an exchange of the contracts enclosed with GDI's solicitors' letter of 7 July 2014 (whether or not the contracts were amended prior to exchange). 3. That contracts were, in fact, exchanged between the Vendors and MVGDD is indicated by the form of the orders made by the Primary Judge on 22 May 2015. [117] The orders assume the existence of contracts between the Vendors and MVGDD and provide for a date for completion of the contracts. While the Schedule to the Orders is unhelpful in identifying the contracts, MVGDD could only have had the Second Contracts novated to it by entering into fresh contracts with the Vendors. 4. The primary Judge adverted to the issue in the Second Judgment when he observed that: [118] "The $6 million was required to be paid to GDI by the [Vendors] upon the rescission of the contracts for sale between those parties (see cl 19.2.1 of the [Second] Contracts)." This observation also suggests that his Honour accepted that the Vendors and MVGDD exchanged contracts pursuant to GDI's novation of the Second Contracts and that, as a consequence, the Second Contracts had been rescinded. 1. There was no opposition to Mr Darke's invitation to this Court to proceed on the basis that the Vendors and MVGDD exchanged contracts for the sale of the Properties and that the Second Contracts were thereby rescinded. The invitation should therefore be accepted. Matters not in dispute 1. Mr Einfeld on behalf of NGI either embraced or did not dispute several factual matters: * NGI made the payment of $6 million directly to the Vendors' agent, not to or on behalf of GDI; * the Vendors did not request NGI to make the payment, either explicitly or implicitly, and had no knowledge at the time that the payment had been made by NGI; and * there was no loan agreement between NGI and GDI; and * NGI did not lend the moneys to GDI. 1. Mr Einfeld also accepted that: * on NGI's argument its equitable lien arose immediately upon payment of the $6 million and not by reason of any subsequent events; * in order to succeed against the Vendors, NGI had to show that it had an equitable lien that was enforceable against the Vendors' interest in the Properties, not merely against GDI's interest as the purchaser under the Second Contracts; * NGI placed no reliance upon the principles of subrogation or proprietary estoppel; and * NGI could not claim to be a sub-purchaser of the Properties. The concept of "expectation" 1. The submissions advanced by NGI on the appeal differed, at least in emphasis, from those relied on at the trial. In particular, NGI relied on what Mr Einfeld said was its expectation and intention at the time it paid $6 million to the Vendors, namely that it would acquire the fee simple estates in the Properties by virtue of the novation of the Second Contracts. It was in this context that Mr Einfeld asked the Court to make a finding that NGI paid $6 million as part payment of the purchase price of the Properties in the "expectation" that the Second Contracts would be novated to NGI. 2. One difficulty with NGI's reliance on its "expectation" at the time it paid $6 million to the Vendors is that the submissions seemed to use the expression in different senses at different points. At one stage, NGI's expectation was said to flow from its conditional entitlement under the Short Form Deed to novate the Initial Contracts (and any replacement agreements such as the Second Contracts). [119] This entitlement was subject to the requirement that NGI secure the funding arrangements necessary to complete the purchase. [120] In this context, NGI's "expectation" seems to be linked to its intention to enforce the terms of the Short Form Deed, subject to securing the necessary finance (which was a matter of uncertainty at the date of payment). 3. On Mr Einfeld's preferred formulation, as I understood it, NGI acquired an equitable lien or charge over the Vendors' interest in the Properties by contributing to the purchase price payable under the Second Contracts with the intention of ensuring that NGI would have the Second Contracts novated to it and in the belief that this was likely to happen some time in the future. On this formulation, "expectation" seems to connote a subjective intention and belief, not necessarily dependent on the terms of the Short Form Deed, that in due course NGI would become the purchaser of the Properties pursuant to fresh contracts containing substantially the same terms as the Second Contracts. 4. The nature of any "expectation" held by NGI at the time it paid the $6 million must depend on the findings of fact made by the primary Judge. Mr Einfeld, although inviting this Court to find that NGI had an expectation that it would purchase the Properties under the novated Second Contracts, did not seriously challenge his Honour's credibility-based findings of primary fact. Some of these findings dealt with the understanding of Ms Gai and Mr Geering, NGI's decision-makers at the time NGI agreed to meet the Vendors' demand that a total of $8 million should be paid on exchange of the Second Contracts. As Mr Einfeld acknowledged, their decision, in the absence of any agreement with either the Vendors or GDI, was "a very odd and unwise thing to do". 5. The primary Judge found that Ms Gai and Mr Geering appreciated on 22 April 2014 (the date for completion of the Initial Contracts) that unless NGI contributed $6 million to the purchase price on exchange of the Second Contracts (to be exchanged in substitution for the Initial Contracts) the Vendors could terminate the Initial Contracts. Ms Gai and Mr Geering also understood that if the Initial Contracts were terminated, GDI would forfeit its deposit and might be exposed to a claim for damages by the Vendors. 6. Despite the difficulties experienced by NGI in raising finance, both Ms Gai and Mr Geering were enthusiastic about the project to develop the Properties and wanted NGI to be involved. They made the decision to contribute $6 million: "as a matter of sheer pragmatism in order to preserve the possibility of participating in the Turramurra project and avoid GDI suffering loss for which NGI might be liable. It kept alive a profit making opportunity". [121] (The finding that Ms Gai thought that NGI might be liable for any losses sustained by GDI if the Initial Contracts were terminated rested on concessions made in her cross-examination. It is by no means clear that cl 2.1 of the Short Form Deed, on its proper construction, obliged NGI to secure funding for the purchase of the Properties, as distinct from conferring a right on NGI to novate conditional on it securing funding. Indeed on one view, NGI might have had a claim against GDI for failure to procure a loan for $5.5 million.) 1. The primary Judge also found that when NGI made the payment, the arrangements for the furtherance of the project were "in a state of flux". [122] There was uncertainty as to the role NGI might play and the arrangements in contemplation included the possibility of a joint venture with Mr Fong or some other party. Clearly Ms Gai and Mr Geering hoped that the payment of $6 million to the Vendors would preserve the project and ultimately produce benefits for NGI. But how that might occur would be worked out in due course, using the additional time gained as a consequence of the Vendors and GDI exchanging the Second Contracts and rescinding the Initial Contracts. 2. These findings indicate that NGI's decision to contribute $6 million to the purchase price of the Properties payable under the Second Contracts was not done in order to comply with NGI's obligations under the Short Form Deed, but to keep alive the prospects of NGI participating in the development of the Properties. Mr Gai and Mr Geering clearly desired and intended that NGI should participate in the project. One path to that participation was the novation of the Second Contracts to NGI, although that was dependent on NGI securing funding as contemplated by the (rather confused) terms of the Short Form Deed. However, other options were available to be explored, including possible joint ventures with other parties. 3. Neither Ms Gai nor Mr Geering sought security from GDI or any other party to guarantee repayment of the sum of $6 million, should NGI not retain its involvement in the project. In the tripartite conversation of 22 April 2014, [123] Ms Gai asked whether NGI's $6 million could be protected, but was told by Mr Geering that nothing could be done. Ms Gai and Mr Geering nonetheless decided to make the payment. 4. The findings made by the primary Judge do not establish that Ms Gai and Mr Geering had a firm intention at the time they made the payment to have the Second Contracts novated to NGI. Whether the novation happened would depend on a number of matters, including whether NGI could obtain the finance necessary to comply with the terms of the Short Form Deed and whether a joint venture proved to be a more attractive option. The payment of $6 million was not made by NGI to satisfy a precondition to a contractual entitlement to acquire the freehold estates in the Properties. The principal authorities 1. The origins and development of the vendor's lien and the purchaser's lien were outlined by French J in Re Kimberley NZI Finance Ltd v AR Barr Investments Pty Ltd. [124] His Honour explained that: "13. It has been settled doctrine for more than 300 years that upon the formation of a valid contract of sale, the vendor becomes in equity a trustee for the purchaser of the estate sold but retains a charge or lien on the estate as security for the unpaid balance of the purchase price – Mackreth v Symmons (1808) 15 Ves Jun 336 at 337 (Lord Eldon), 33 ER 778. The concept of the vendor's lien so called has its origin in Roman Law. … 14 The existence of an equitable lien in favour of a purchaser was foreshadowed by Sir Thomas Clarke M.R. in Burgess v Wheate 1 Blacks 123 as a corollary of the vendor's lien. That judgment, its apparent approval by Lord Eldon in Mackreth v Symmons and considerations of 'natural justice' and 'general law and principle' led Kindersley V.C. to conclude in Wythes v Lee (1855) 3 Drewry 396 at 403; 61 ER 954: "when a contract is made, and then goes off, … in principle and justice, the equity of the purchaser to a lien on the estate ought to stand on as good a footing as the lien of the vendor after conveyance." Conceived in Burgess v Wheate … and quickened in Wythes v Lee … the infant equity was delivered to full life by the House of Lords in Rose v Watson; (1864) 10 HLC 672; 11 ER 1187 … Lord Westbury L.C. saw the part payment of the purchase price as conferring in equity ownership of a corresponding proportion of the estate and the lien so arising, as a species of 'partial ownership'. … The metaphors of 'partial ownership' and 'mortgage' generated by their Lordships' creative exuberance were later to be played down by the Court of Appeal which saw them as 'merely verbal vehicles to carry the rights which justice demands that the purchaser should have' – Whitbread & Co Ltd v Watt (1902) 1 Ch 835 at 838 (Vaughan Williams L.J., Stirling L.J. agreeing)." (Some citations omitted.) 1. French J also observed that the purchaser's lien had been recognised as an interest in land capable of protection by a caveat. [125] His Honour held that a purchaser's lien did not arise upon payment of a deposit to an agent as stakeholder, but did arise when the moneys were released to the vendor in accordance with the contract of sale. [126] (No issue has been raised in the present case about the authority of the agent who received the bank cheque provided by NGI to release the funds to the Vendors.) 2. After setting out the origins of the equitable lien, French J referred to what he described as the authoritative discussion of the High Court in Hewett v Court. [127] As Mr Einfeld placed considerable reliance on this decision, it is necessary to consider it closely. 3. The issue in Hewett v Court was whether a purchaser of an unfinished prefabricated house had a purchaser's lien over the house. The contract provided that the house, which had not left the builder's premises, remained the builder's property until payment had been made in full. The purchaser sought to enforce a lien against the liquidators of the builder, which had become insolvent. The principal difficulty confronting the purchaser was that the building contract was not a contract for the sale of goods, but a contract for work and labour. [128] 4. In this context, Gibbs CJ observed that: [129] "Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity 'as part of a scheme of equitable adjustment of mutual rights and obligations'; those words of Isaacs J. were used in Davies v Littlejohn, [130] in relation to the doctrine of vendor's lien, but they have a general application. It would be difficult, if not impossible, to state a general principle which would cover the diversity of cases in which an equitable lien has been held to be created. A vendor's lien for unpaid purchase money has been said to be founded on the principle that 'a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration': Mackreth v Symmons. [131] The lien of a purchaser for the purchase money that he has paid to the vendor on a sale that has gone off through no fault of the purchaser may perhaps rest on the converse principle that he who has agreed to convey property in return for a purchase price will not be allowed to keep the price if he fails to make the conveyance. At all events, the rule has been said to be founded on 'solid and substantial justice': Rose v Watson. [132] In each of these cases the vendor or the purchaser, as the case may be, is treated as a secured creditor … - the lien is the security for the money which is justly due. In other circumstances an equitable lien may arise because of the relationship that exists between the parties (e.g., that of partnership, or trustee and beneficiary or solicitor and client) or by reason of subrogation or estoppel. Cases of this kind … do not closely resemble the present, but their existence shows that the rules governing the circumstances in which equity has considered that justice requires the recognition of the existence of a lien are not confined to one narrow category. Indeed … the list may not be a closed one." (Some citations omitted.) 1. Gibbs CJ held that the absence of authority to support the existence of a lien in the circumstances before the Court did not prevent the Court from recognising a lien. The rules of equity were not so "rigid and inflexible". [133] This did not mean that courts could proceed on general principles of justice, but his Honour thought that the circumstances of the case fell within the principles governing the creation of a purchaser's lien. 2. Gibbs CJ also rejected a submission that a purchaser's lien could only arise under a specifically enforceable contract. While a vendor's lien required a specifically enforceable contract, this was not true of the purchaser's lien. [134] 3. Deane J described an equitable lien as "a right against property which arises automatically by implication of equity to secure the discharge of an actual or potential indebtedness". [135] His Honour noted that: [136] "Generally speaking, the established examples of equitable lien are between parties in a contractual or quasi-contractual relationship." However, Deane J declined to attempt a statement of comprehensive principle covering the creation of any type of equitable lien. In his Honour's view, it is difficult if not impossible to formulate any satisfactory statement of the necessary or sufficient circumstances for the implication of an equitable lien "applicable to any relationship at all". [137] 1. Deane J said that it was enough for the purposes of the case before him to identify the circumstances which are sufficient for the implication, independently of agreement, to imply the existence of an equitable lien between parties in a contractual relationship. His Honour identified the circumstances as follows: [138] "… (i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of the property or of an expense incurred in relation to it …; (ii) that that property … be specifically identified and appropriated to the performance of the contract …; and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged." (Citations omitted.) 1. Mr Einfeld relied on Deane J's analysis to support the contention that despite the absence of authority precisely in point equitable principles are broad and flexible enough to apply in the circumstances of the present case. 2. Hewett v Court was considered by the High Court in Stewart v Atco Controls Pty Ltd (In Liq) [139] (Atco Controls). That case involved a particular species of equitable lien described by the High Court as follows: [140] "… a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up without the liquidator's costs and expenses, including remuneration, of creating that fund being first met. To that end, equity will create a charge over the fund in priority to that of the secured creditor." 1. The Court quoted with approval Deane J's reference to an equitable lien as a form of equitable charge over the subject property. [141] The Court also endorsed Gibbs CJ's reference to the observations of Isaacs J in Davies v Littlejohn. [142] However, their Honours warned against interpreting the criteria stated by Deane J in Hewett v Court as opening the way to a broad ranging inquiry into whether a party has acted unconscientiously. To that end the Court repeated the caution expressed by Gibbs CJ that although the rules of equity are not rigid or inflexible when confronted with novel situations, a court should not proceed on general notions of justice without regard to settled principles. [143] An equitable lien in this case? 1. The Court in Atco Controls repeated a warning often given that the words stating a principle in a judge's reasons require consideration of what those reasons convey about the principle and are not to be construed literally. [144] It is also fundamental that all judicial statements of principle must be read and understood having regard to the factual context to which they were directed. [145] The facts 1. The facts of the present case are far removed from those in Hewett v Court and in Atco Controls. In Hewett v Court, the party claiming a lien had paid moneys directly to the builder pursuant to a contract for the construction and supply of a prefabricated house. The question was whether the claimed lien existed notwithstanding that the contract was for work and labour. The High Court applied a well-established principle of equity that a liquidator whose efforts lead to the creation of a fund for the benefit of creditors is entitled to a lien over the fund to recoup costs. The Court held that the equitable principle applied directly to the facts of the case and that there was no need to consider whether existing principles should be expanded. 2. In the present case, unlike Hewett v Court, there was no contractual relationship between the Vendors and NGI at the time NGI paid the sum of $6 million. It is true, as Mr Einfeld submitted, that the Vendors must have been aware prior to 22 April 2014 that NGI was interested in acquiring the Properties through novation of contracts between the Vendors and GDI. [146] But the Vendors did not request NGI to make the payment. Indeed, the Vendors were unaware that NGI had contributed any portion of the sum of $6.49 million, payment of which was required on exchange of the Second Contracts. 3. Furthermore, NGI did not make the payment to the Vendors pursuant to the terms of the Short Form Deed or under any existing contractual arrangements with GDI. NGI made the payment voluntarily and, as the primary Judge found, in order to preserve what Ms Gai and Mr Geering saw as a potentially rewarding commercial opportunity. That opportunity might have been realised by novation of the Second Contracts to NGI, but that was not the only possibility under consideration by NGI when it made the payment. As Mr Einfeld accepted, in these circumstances, in contrast to Atco Controls, there is no authority directly in point establishing that NGI, by reason of the payment to the Vendors, acquired an equitable lien in the Properties. 4. It is difficult as a matter of principle to see why, in the absence of authority, equitable principles should be extended to recognise a lien over the Properties in favour of NGI enforceable against the Vendors. The recognition of such a lien, far from ensuring "solid and substantial justice", [147] could well produce inequitable consequences. 5. The point can be illustrated by an example raised in argument. Assume that the Vendors and GDI agreed to rescind the Second Contracts shortly after exchange. Assume also that the Vendors, not knowing of NGI's contribution to the purchase price payable under the Second Contracts, refunded to GDI all amounts paid under those Contracts (including the $6 million). On NGI's argument, if GDI did not or could not reimburse NGI, NGI could enforce its lien against the Vendors. They, therefore, would have to pay twice, despite not having requested NGI to make any payment nor having any knowledge of NGI's contribution to the amounts paid under the Second Contracts. Authorities in point 1. There is authority supporting this analysis. In the much discussed case of Falcke v Scottish Imperial Insurance Company, [148] E mortgaged a life insurance policy to F. E paid two premiums to the insurance company without the knowledge of F. The contest, relevantly, was between E and F's representative, E claiming a lien over the proceeds of the policy to secure the premiums paid by him. 2. Cotton LJ stated the "general law" as follows: [149] "It is not disputed that if a stranger pays a premium on a policy that payment gives him no lien on the policy. A man by making a payment in respect of property belonging to another, if he does so without request, is not entitled to any lien or charge on that property for such payment. If he does work upon a house without request he gets no lien on the house for the work done. If the money has been paid or the work done at the request of the person entitled to the property, the person paying the money or doing the work has a right of action against the owner for the money paid or for the work done at his request." Since F had made no request, express or implied, to E to pay the premiums, no lien came into existence. In the absence of knowledge or authority by F, it made no difference that E paid the premiums to keep the policy alive. 1. Bowen LJ, who reached the same conclusion, stated the principle in more forceful terms: [150] "The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will." 1. In Hill v Ziymack, Griffith CJ regarded the decision in Falcke as a "complete answer" to a contention that a person who voluntarily paid off a mortgage over property belonging to a third party acquired a lien over the property. [151] In that case, the person making the payment had done so under a mistake of fact, but the mortgagor had not caused or contributed to the mistake. 2. Falcke was referred to by the Full Court of Western Australia in Lavery v R and I Bank of Western Australia. [152] Two brothers, who owned adjoining lots, entered into a costs sharing agreement for a development involving both lots. The brothers were not partners and each was to bear the cost of developing his own land. The funds advanced by the Bank to one brother (A) on the security of a mortgage had been exhausted. A's land could not be released for sale until a large sum was paid to the Water Authority. The other brother (B) paid the sum in order to enable the land to be released for sale. B then lodged caveats over A's land, claiming an equitable lien by virtue of the payment. The Court found that B's payment was not made at the Bank's request. 3. Malcolm CJ, with whom Franklyn and Owen JJ agreed, accepted on the authority of Hewett v Court that the category of relationships giving rise to an equitable lien is not closed. However, his Honour cited Falcke for the proposition that there is no general principle of equity to the effect that a person expending money to preserve the property of another has the benefit of a lien over the property. In the absence of an estoppel binding the Bank, whatever the position as between the two brothers, A's payment could not create a lien enforceable against the Bank's interest as mortgagee. 4. Falcke has been discussed by the High Court on two occasions within the last decade. In Lumbers v W Cook Builders Pty Ltd (In liq) (Lumbers), [153] the question was whether a building company, which performed work on land owned by the appellants, had a claim against the appellants for work and labour done. The appellants had contracted with another company to perform the work and that company, unknown to the appellants, subcontracted the work to the building company. There had been no assignment or novation of the original building contract. 5. The High Court held that the building company's claim had to fail. The plurality cited the observations of Bowen LJ in Falcke for the proposition that, subject to very limited exceptions, the fact of conferral of a benefit on another party does not of itself establish an entitlement to recovery. [154] Their Honours held that acceptance of a benefit, absent a request, does not suffice to found an action for work and labour done or money paid on the restitutionary principles stated in Pavey & Matthews Pty Ltd v Paul. [155] 6. In Atco Controls, the High Court described the principle stated in Lumbers by reference to Falcke as "uncontroversial". [156] However, the Court distinguished the principle as having no application to work undertaken by a liquidator on the realisation of assets. Nonetheless the reasoning in Falcke and the cases that have applied it strongly supports the conclusion that the payment of the sum of $6 million by NGI to the Vendors, in the circumstances found by the primary Judge, did not create an equitable lien over the Properties enforceable by NGI against the Vendors. Authorities cited by NGI 1. In my opinion, none of the authorities relied upon by Mr Einfeld leads to a different conclusion. Indeed, to be fair to Mr Einfeld, he did not suggest that any of the decided cases upholding the existence of an equitable lien by reason of the payment of money to another party directly applied to the circumstances of the present case. 2. It can be accepted, as Mr Einfeld submitted, that a purchaser's lien arises where the purchaser pays part of the price under a contract even though the contract is subject to a condition not yet fulfilled, such as planning consent. [157] The reason the purchaser has a lien in that situation is that the payments are made on the faith of the contract and as part of the purchase price payable under the contract. [158] If a lien could not be created in favour of a purchaser under a conditional contract of sale, it would not be available precisely when it is most required. [159] 3. Mr Einfeld did not suggest that NGI was a sub-purchaser of the Properties, but he submitted that NGI's position was analogous to that of a sub-purchaser. The significance of the analogy was said to be that a sub-purchaser of land has an equitable interest in the land and may have a lien enforceable against the head vendor if the sub-purchaser has paid a deposit or part of the purchase price under the sub-purchase contract. 4. A number of cases have applied the statement of Lord O'Hagan in Shaw v Foster, [160] as follows: "And it is farther very clear that the interest so vested in the purchaser may be the subject of charge or assignment, and that the sub-assignee or incumbrancer may enforce his rights against the vendor, at all events if he assumes the position of the vendee, and fulfils the duties and sustains the liabilities created by the contract." Thus in Naismith v Smith, [161] a purchaser of land (W) contracted to sell part of the land to a sub-purchaser (N). N paid the full purchase price to W, who disappeared, having paid only part of the purchase price to the head vendor (S). Hudson J of the Supreme Court of Victoria applied the principle stated by Lord O'Hagan and held that N was entitled to demand a transfer of the lots from S, upon discharging W's liabilities under the head contract. [162] 1. The rationale underlying these cases is that the head purchaser is regarded as having assigned his or her rights under the head contract to the sub-purchaser. If the sub-contract is specifically enforceable, the sub-purchaser (whose rights are derivative) may in effect stand in the shoes of the purchaser. [163] The vendor is protected, since the sub-purchaser must comply with the purchaser's obligations under the head contract. 2. None of these cases assists NGI. They depend on the existence of specifically enforceable sub-purchase contracts operating to assign, in whole or in part, the interest of the purchaser under the head contract. NGI did not pay the $6 million pursuant to any contractual arrangement, whether with the Vendors, GDI or anyone else. 3. Mr Einfeld also relied on Aberaman Ironworks v Wickens. [164] In that case, B agreed to sell an estate to W. W agreed to sell the estate to A and A paid £50,000 to W as a deposit. W paid that amount to B. Both contracts were ultimately rescinded and abandoned and B refunded £50,000 to W. Lord Cairns LC held that A was entitled to a lien over "any interest which [W] might possess in the … estate". [165] Since W had "to the extent of the £50,000 he paid … become in equity the owner, by way of incumbrance, of a corresponding amount in value on the Aberaman estate", A was entitled to a lien over that sum in the hands of W. As the primary Judge in the present case observed, [166] this aspect of the decision was concerned only with the rights as between W (the head purchaser) and A (the sub-purchaser). The decision does not address the position between A (the sub-purchaser) and B (the head vendor). Nor does it support the proposition that a voluntary payment by a stranger to a contract, that discharges an obligation that is owed by one party to the contract, creates a lien or charge in favour of the stranger over that party's interest. NGI's claim against the Vendors 1. The argument in this Court did not always distinguish between NGI's claim to an equitable lien or charge enforceable against the Vendors and its claim to an interest enforceable against GDI as the purchaser under the Second Contracts of Sale. It is, however, necessary to distinguish between the two. Some interests in land are capable of supporting caveats because they are enforceable against someone having an interest in the land (such as a lessee or mortgagee), yet are not necessarily enforceable against the holder of the fee simple estate. [167] 2. In my view, NGI's payment of $6 million to the Vendors on 23 April 2014 did not create in NGI an equitable lien or charge over the Properties enforceable against the Vendors. NGI was, therefore, not entitled to lodge caveats forbidding any dealings with the Properties, since caveats in that form prevented the Vendors dealing with their interests in the Properties. 3. On the primary Judge's findings, NGI made the payment neither at the request of the Vendors nor with their knowledge. The Vendors simply wished to receive the moneys payable by the purchaser on exchange of the Second Contracts. The nature of the arrangement (if any) between GDI and a third party funder that enabled payment of the full amount of $6.49 million was of no concern to the Vendors. 4. So far as the Vendors were concerned, NGI was in the position of a stranger who, for his or her own commercial reasons, voluntarily makes a payment that a party to a contract otherwise would have to make. NGI's payment did not create an equitable lien over the Properties enforceable against the Vendors regardless of whether NGI's payment effectively discharged GDI's obligation to pay $6.49 million to the Vendors on exchange of the Second Contracts. It follows that if the Second Contracts were rescinded (as they were later), NGI had no claim founded on an equitable lien against the Vendors to recover the $6 million. Indeed, on the basis of the authorities to which I have referred, NGI does not have a personal claim against the Vendors to recover the $6 million, whether on restitutionary grounds or otherwise. NGI's claim against GDI 1. GDI's position is not identical to that of the Vendors. The primary Judge made no finding that NGI paid the $6 million to the Vendors at the express or implied request of GDI. In view of the findings of fact made by his Honour, it is not open to this Court to find that GDI requested NGI to make the payment. However, GDI did know, at the time the Second Contracts were exchanged, that NGI had provided the sum of $6 million that was paid to the Vendors. But, as has been noted, NGI does not make any claim against GDI founded on estoppel or by way of subrogation to any interest held by GDI in the Properties (whether arising under the Second Contracts or otherwise). 2. NGI's payment of $6 million to the Vendors, although not made at GDI's request, in my opinion discharged in part GDI's obligation to pay $6.49 million to the Vendors on exchange of the Second Contracts. When the matter is viewed objectively, NGI could only have made the payment in order to ensure that the Second Contracts were exchanged and the Initial Contracts were rescinded. NGI made the payment by providing a bank cheque to GDI's solicitor which was then provided to the Vendors on exchange of the Second Contracts. From NGI's perspective, its payment, together with GDI's contribution of $490,000, preserved the possibility that GDI would novate the Second Contracts to NGI. That possibility and indeed other commercial possibilities were dependent on GDI being able to enforce the Second Contracts against the Vendors, including GDI's right to novate the contracts. 3. NGI was a stranger to the Second Contracts, but the money it provided was tendered to and accepted by the Vendors in partial satisfaction of GDI's obligations to pay $6.49 million to the Vendors. Plainly the Vendors, who knew nothing of NGI's intervention, would never have exchanged the Second Contracts unless they received $6.49 million simultaneously with the exchange. NGI could hardly have been entitled to demand that the Vendors repay the $6 million to it while the Second Contracts remained on foot. The Vendors were entitled to retain the moneys in accordance with the terms of the Second Contracts. 4. In summary, the position is that NGI voluntarily provided the sum of $6 million to be paid to the Vendors on exchange of the Second Contracts. NGI was under no contractual obligation to make the payment and neither the Vendors nor GDI requested it to do so. The effect of NGI's payment, however, was to discharge in large part GDI's obligation to pay $6.49 million to the Vendors on exchange of the Second Contracts. To this extent, NGI's voluntary actions conferred a benefit on GDI. Although GDI did not request NGI to make the payment, it (GDI) was aware when the Second Contracts were exchanged that NGI had contributed $6 million to the amount paid to the Vendors. 5. The primary Judge held that upon rescission of the Second Contracts (which ultimately occurred when GDI novated the Second Contracts to MVGDD), the Vendors were obliged to refund to GDI all moneys paid to the Vendors under the Second Contracts (other than the deposit). [168] In his Honour's view, this followed from cl 19.2.1 of the Second Contracts, which provided that if a party exercised the right to rescind any money paid by the purchaser had to be refunded. [169] An alternative analysis leading to the same result is that GDI, by discharging its contractual obligation to pay $6.49 million to the Vendors, acquired a purchaser's lien over the Properties, enforceable on rescission of the Second Contracts. 6. Mr Darke conceded, on behalf of GDI, that if the Vendors refunded $6 million to GDI following the rescission of the Second Contracts, GDI would be under a personal obligation to pay that sum to NGI (subject to any claims by third parties enjoying priority and to any set-off between GDI and NGI). Because of the concession, the parties' submissions did not examine the doctrinal basis on which GDI became subject to such an obligation (assuming it did). It may be that the fact that GDI was aware of NGI's payment of $6 million and the benefit that accrued to GDI by reason of the payment would entitle NGI to claim that sum from GDI on restitutionary principles even in the absence of a request by GDI to NGI to make the payment and even though NGI acted in its own interests. It is not necessary to resolve that question. 7. On the current state of the authorities, however, I do not consider that NGI's voluntary payment of $6 million in the circumstances found by the primary Judge, created an equitable lien or charge in favour of NGI over GDI's interest in the Properties. NGI's actions, in substance, involved a stranger to a contract (NGI) voluntarily conferring a benefit on one party (GDI) to preserve the contract in the interests of the stranger. NGI did not pay the $6 million as a philanthropic gesture to GDI; it did so in order to preserve the possibility of its participation in the development of the Properties. In the absence of a claim by NGI founded on estoppel or subrogation, the fact that GDI was aware of NGI's payment and received a benefit from it does not justify the creation of an equitable lien or charge over GDI's interest in the Properties. 8. For these reasons, NGI's voluntarily payment of $6 million to the Vendors did not entitle it to lodge caveats over the titles to the Properties forbidding dealings with GDI. Reasonable cause The Primary Judgment 1. The primary Judge noted that the Vendors, in order to obtain compensation under s 74P of the RP Act, had to show that NGI, at the relevant times, did not have an honest belief on reasonable grounds that it had a caveatable interest. [170] His Honour pointed out that Ms Gai did not give evidence that she had an honest belief, when she gave instructions to lodge the caveats, that NGI had a caveatable interest in the Properties. Nor did Mr Gutierrez give evidence as to the basis upon which he was instructed to lodge the caveats on NGI's behalf. [171] 2. The primary Judge accepted the Vendors' submission that the reasonableness of NGI's lodgement of the caveats had to be assessed objectively. [172] His Honour also accepted that the objective evidence pointed overwhelmingly to there being no reasonable basis for NGI believing it was entitled to lodge the caveats. [173] In his Honour's view, NGI: [174] "had no caveatable interest but, more to the point, it lodged [the caveats] … without giving any thought at all to their validity". NGI was therefore liable to pay compensation pursuant to s 74P of the RP Act. Submissions NGI's submissions 1. NGI submitted that it was not open to the primary Judge to make this finding, because the Vendors did not plead that NGI lacked an honest belief that it was entitled to lodge the caveats. There was, therefore, no occasion for Ms Gai or Mr Geering to give evidence of their belief at the time the caveats were lodged. Furthermore, so Mr Einfeld argued, the primary Judge overlooked evidence that in March 2014 Mr Geering advised Ms Gai that NGI should lodge caveats and that the caveats themselves had been lodged in July 2014 by NGI's new solicitors, Avondale. Vendors' submissions 1. The Vendors submitted that NGI's submissions overlooked that a claimant seeking compensation under s 74P of the RP Act establishes that the caveat was lodged without reasonable cause if he or she shows either that * the caveator did not have a genuine belief that it had a caveatable interest; or * there were no reasonable grounds for the lodgement of the caveat. 1. The Vendors submitted that the primary Judge found that NGI did not have any particular belief as to whether it had a caveatable interest at the time the caveats were lodged and that, in any event, there was no reasonable basis for a belief that NGI had a caveatable interest. Both findings, so it was argued, were justified. 2. The Vendors also submitted that the Amended Statement of Claim sufficiently pleaded the issue of whether NGI had an honest belief that it had a caveatable interest. It did so by pleading the very words of s 74P(1) of the RP Act. GDI's submissions 1. GDI reiterated the Vendors' submissions and pointed to evidence which it said supported the primary Judge's findings. It was improbable that NGI could have honestly believed that it had a caveatable interest when it was relying on: "(a) an agreement, namely the Short Form Deed, which it had intended to terminate and knew had been terminated; (b) a payment, namely its contribution of $6 million to the part payment of the purchase price for the Turramurra Properties, which it must have known had been voluntary and not pursuant to any contract with GDI or the Vendors; or (c) alleged breaches of fiduciary duties in respect of which no case was ultimately able to be made." Background 1. The Amended Statement of Claim pleaded the Vendors' claim for compensation as follows: "19. In the premises, [NGI's]: (a) lodgement of the caveats over the title of the Properties; and (b) failure and refusal to remove the caveats despite two requests from the [Vendors] was without reasonable cause in consequence of which the [Vendors], and each of them, have suffered pecuniary loss for which [NGI] is liable to compensate them pursuant to s.74P of the Real Property Act 1900 (NSW)." Particulars The [Vendors] have variously suffered, and continue to suffer, loss in the form of deprivation of the investment potential on $7.3m, being the sum they collectively would have received had settlement duly taken place on 22 July 2014. …" 1. In her affidavit of 24 September 2014, Ms Gai said that she first became aware on 22 May 2014 of GDI's intention to novate the Second Contracts to a party other than NGI. Between 3 July and 9 July 2014, Ms Gai received correspondence from Minter Ellison, whom she described as "my solicitors". Her affidavit continued as follows: "61. As a consequence, it became apparent to me, by virtue of the conduct of GDI, that it had no intention whatsoever to honour the short form deed, (which was the basis in which NGI advanced $6 million to the vendors) and novate the contracts NGI [sic]. Accordingly, I instructed my solicitors to take steps to ensure that NGI's interest is protected. 62. On 18 July 2014, I caused Francisco Gutierrez of Avondale Lawyers to forward correspondence to the solicitors for the vendors, GDI, and MVGDD in relation to the steps that we were taking to secure our interest." Reasoning Construction of s 74P(1) 1. Prior to its amendment in 1996, s 74P(1) of the RP Act conferred a right to compensation on a person who sustained pecuniary loss attributable to the actions of another person who (among other things) "wrongfully and without reasonable cause" lodged a caveat. Some of the authorities interpreting this provision considered that the word "wrongfully" imported a requirement that the caveator lodged the caveat deliberately knowing that it was not justified or otherwise for an improper purpose. [175] 2. The 1996 amendments removed the word "wrongfully" from s 74P(1) of the RP Act. In Mahendran v Chase Enterprises Pty Ltd, [176] Barrett JA approved the following passage from the judgment of Biscoe AJ in Natuna Pty Ltd v Cook [177] interpreting the expression "reasonable cause" in s 74P(1): "'Reasonable cause' for the lodgement of a caveat exists where the caveator has an honest belief, based upon reasonable grounds, that the caveator has a caveatable interest. In order to establish liability under s 74P, the onus is on Mr Cook to prove, first, that Natuna had no caveatable interest and, secondly, that Natuna did not have an honest belief based on reasonable grounds that a caveatable interest existed. As to the second issue, the test is partly subjective and partly objective. It is subjective in that it requires an examination of the caveator's actual belief and whether it was honestly held. It is objective in that it requires that the belief be held on reasonable grounds: see Lee v Ross (No 2) (2003) 11 BPR 20,991; [2003] NSWSC 507 at [21]-[23]; Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 469-470 (CA); Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106; Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 at [61]. A caveator may have reasonable grounds on which to believe that it has a caveatable interest even though it is mistaken and it is ultimately held that it did not: Ceda Nominees Pty Ltd v Registrar of Title [1982] ANZ ConvR 524." 1. The Torrens legislation of other States has provisions similar to s 74P(1) of the RP Act in its current form. In Commonwealth Bank of Australia v Baranyay, [178] Hayne J said of the Victorian equivalent: [179] * the onus is on the claimant to show that the caveator acted without reasonable cause; [180] * it is not enough for the claimant to show that the caveator did not in fact have a caveatable interest; * the foundation for reasonable cause will often be, not the possession of a caveatable interest, but an honest belief on reasonable grounds that the caveator had such an interest; and * an ulterior motive may demonstrate a lack of reasonable cause even if the caveator had an honest belief based on reasonable grounds that a caveatable interest existed. 1. Hayne J found that the caveator, who had lodged a caveat on the faith of a written agreement for a lease, had an honest belief that he had an interest under the agreement (even though the purported lessor had no entitlement to grant a lease because of a prior mortgage). His Honour thought a question of reasonableness might ordinarily arise if a tenant claimed an interest against a mortgage without inquiring as to the mortgagee's consent. But the claimant (the mortgagee) had not shown that the caveat was lodged without legal advice. In the absence of further exploration of this issue, Hayne J was not prepared to find that the caveat had been lodged without reasonable cause. 2. Legal advice that the caveator was entitled to lodge a caveat may be of considerable significance in determining whether the claimant has established that the caveat was lodged without reasonable cause. [181] Even if the legal advice is incorrect, the fact that the caveator acted on the advice when lodging the caveat may preclude the claimant from establishing that the caveator lacked reasonable grounds for believing that he or she was entitled to lodge the caveat. 3. On the other hand, it has been said that a caveator does not necessarily absolve himself or herself of responsibility by taking legal advice. [182] It has been held in a New South Wales case, for example, that where a solicitor had no reasonable basis for advising the caveators to lodge a caveat, the caveators had no reasonable grounds for their belief that they were entitled to lodge a caveat. [183] 4. In Brogue Tableau, Buss JA of the Western Australian Court of Appeal cast doubt on the proposition that a client acts without reasonable cause in lodging a caveat if the solicitor giving advice to the client lacks reasonable grounds for the advice. [184] Buss JA expressed the view that the content and accuracy of legal advice must be evaluated with all other relevant facts and circumstances to determine the honesty and reasonableness of the caveator's asserted belief in the existence of a caveatable interest. [185] In my opinion, there is considerable force in this view. For present purposes, however, it is enough to say that the significance of the legal advice received by a caveator will depend on such matters as the completeness of instructions given to the lawyer, whether the advice has an arguable basis and the commercial or legal sophistication of the particular client. The issue of reasonable grounds for belief 1. The primary Judge found that NGI neither had a reasonable basis for lodging the caveats nor an honest belief that it had a caveatable interest in the Properties. It is convenient to begin with the first of these findings. 2. The fact that NGI did not have a caveatable interest in the Properties when it lodged the caveats on 21 July 2014 does not establish that it did not have a reasonable basis for a belief that it was entitled to lodge a caveat. The question is whether there was sufficient evidence to justify the primary Judge's finding, bearing in mind that the Vendors and GDI bore the burden of proving the absence of a reasonable basis for any belief held by Ms Gai and Mr Geering on behalf of NGI. 3. It is important to appreciate that the caveats claimed an interest in the Properties by virtue of the payment of part of the purchase price payable under the Second Contracts. The interest, variously described as an equitable charge, lien and a resulting trust, was said to arise pursuant to the Short Form Deed. The caveats also stated that the sum of $6 million was paid in part performance of the Short Form Deed. The caveats purported to prohibit any dealing affecting the estate or interest claimed by the caveator, including any dealings by the Vendors. 4. Ms Gai's affidavit [186] indicates that by the second week of July 2014, in consequence of correspondence that had taken place, she formed the view that GDI had "no intention whatsoever" of honouring the Short Form Deed which was the basis on which NGI had "advanced" $6 million to the Vendors. Accordingly, so Ms Gai stated, she instructed her solicitors to take steps to ensure that NGI's interest was protected. Ms Gai's affidavit does not say whether she specifically instructed Mr Gutierrez to lodge a caveat as the means of protecting NGI's "interest". Mr Gutierrez did not give evidence as to why he considered it appropriate to lodge a caveat on NGI's behalf and what steps, if any, he took to satisfy himself that there was a reasonable basis for NGI claiming a caveatable interest in the Properties on 23 July 2014. Thus there was no evidence as to whether Mr Gutierrez formed the opinion that the payment by NGI gave it an interest in the Properties enforceable against the Vendors and, if so, whether he communicated that opinion to NGI. Similarly, there is no evidence as to whether Mr Gutierrez took any steps to ascertain whether the $6 million was paid pursuant to the Short Form Deed and whether the circumstances in which the payment was made gave NGI an interest in the Properties enforceable against GDI. 5. Ms Gai did not give evidence that she sought or received legal advice from Minter Ellison, Mr Gutierrez of Avondale or even Mr Geering before instructing Mr Gutierrez to protect NGI's "interest". Indeed her affidavit evidence rather suggests, if anything, that she gave those instructions without receiving any advice that there were grounds for NGI to lodge caveats. Mr Gutierrez did not give evidence as to the legal advice, if any, that he gave or the basis for any such advice. 6. There is nothing in the correspondence to suggest otherwise. The letters in evidence from Minter Ellison do not suggest that the firm was asked to advise as to whether NGI had interests in the Properties that would support the lodgement of caveats. Avondale's letter of 18 July 2014 informed GDI's solicitors that caveats had been (or were about to be) lodged. [187] The letter asserted that by virtue of the Short Form Deed, GDI held the Second Contracts on trust for NGI and claimed that the sum of $6 million was held in trust for NGI or, alternatively, that NGI held a first ranking charge over the Properties. But the letter did not state that Mr Gutierrez had given advice that NGI was entitled to the interests it claimed in the Properties. 7. In my view, the primary Judge was correct to conclude that NGI had no reasonable basis for any belief it may have had that it was entitled to lodge caveats prohibiting dealings by the Vendors. Ms Gai never claimed in her evidence that the Vendors knew that NGI was contributing $6 million (or any other sum) to the payment made on exchange of the Second Contracts. Nor is there evidence that NGI received advice that it was entitled to claim an interest in the Properties enforceable against the Vendors. In these circumstances, the primary Judge was right to be satisfied, on the balance of probabilities, that NGI did not have a reasonable basis for any belief that it was entitled to lodge a caveat claiming an interest over the Properties enforceable against the Vendors. 8. GDI's position in relation to the caveats is not identical with that of the Vendors. The primary Judge found that NGI did not pay the $6 million to the Vendors pursuant to the Short Form Deed but did so voluntarily in an attempt to preserve NGI's commercial involvement in what Ms Gai and Mr Geering still thought was a promising commercial project. The voluntary payment, from NGI's perspective, left open the possibility of the Second Contracts being novated to it by GDI. However at the time novation of the Second Contracts was not the only commercial possibility NGI had under consideration. 9. Ms Gai's evidence was that she instructed Mr Gutierrez to protect NGI's interest on the basis that NGI made the payment pursuant to the Short Form Deed. By the time the caveats were lodged, on the primary Judge's findings GDI had accepted NGI's repudiation of the Short Form Deed on 23 May 2014 and, in any event, neither NGI nor GDI wished to be bound by their contractual arrangements after that date. These findings would not necessarily prevent NGI's payment of $6 million to the Vendors in April 2014 having been made pursuant to the Short Form Deed (as the caveats claimed). Nor would they necessarily preclude a finding that Ms Gai, at the time the caveats were lodged, honestly believed on reasonable grounds that NGI was entitled to lodge the caveats. But it is not clear how NGI's claim to have reasonable grounds for believing that it had an interest in the Properties enforceable against GDI can be reconciled with the primary Judge's finding that by the time the caveats were lodged NGI had repudiated the Short Form Deed and that it no longer wished to be bound by the contractual arrangements. There was no evidence that either Ms Gai or Mr Gutierrez considered these questions. 10. The primary Judge found, without referring to Avondale's letter of 18 July 2014, that NGI lodged the caveats "without giving any thought at all to their validity". [188] This finding may have reflected his Honour's rejection of evidence given by Ms Gai and Mr Geering. However, Avondale's letter (upon which NGI's submissions placed no reliance) permits an inference to be drawn that Mr Gutierrez at least directed attention to whether NGI could lodge caveats and, if so, to the form the caveats should take. But in the absence of evidence from Ms Gai or Mr Gutierrez on the point, no inference can be drawn as to the content of any advice that may have been given. [189] 11. There is a more fundamental difficulty confronting NGI. The most that can be inferred from Ms Gai's affidavit and the terms of Avondale's letter is that she instructed Mr Gutierrez that NGI paid $6 million to the Vendors pursuant to the terms of the Short Form Deed. In fact, as the primary Judge found, the payment was not made pursuant to the Short Form Deed. As Ms Gai must have known, NGI made the payment voluntarily in order to avoid the Vendors terminating the Initial Contracts and to preserve NGI's commercial options with respect to the Turramurra Project. 12. As the decided cases show, the fact that a solicitor has given advice to a caveator does not necessarily absolve the caveator from responsibility or rebut an inference that the caveat was lodged without reasonable cause. In the present case the evidence supports a finding that Ms Gai did not give Mr Gutierrez full or accurate instructions as to the reasons NGI paid $6 million to the Vendors. Accordingly, even if Mr Gutierrez gave advice about NGI'S entitlement to lodge caveats forbidding dealings by GDI, he could not have done so on the basis of accurate instructions as to the circumstances in which the payment was made. Accordingly, the evidence establishes that NGI had no reasonable basis for any belief that it was entitled to lodge caveats claiming an interest in the Properties enforceable against GDI. 13. I should record that Mr Einfeld relied on the fact that on 12 March 2014 NGI's then solicitor, Mr Geering, advised both Ms Gai and Ms Lin that caveats should be lodged over the titles to the Properties. [190] The basis for Mr Geering's suggestion was not explained in the evidence. While the suggestion may, perhaps, have some bearing on whether Ms Gai believed several months later that NGI was entitled to lodge a caveat, it can have no bearing on whether NGI had reasonable grounds for lodging the caveats in July 2014. 14. The interests claimed in the caveats arose by reason of events occurring after March 2014, notably the rescission of the Initial Contracts, the entry into the Second Contracts and NGI's payment of $6 million to the Vendors. Whatever motivated Mr Geering to make his suggestion, it could not have been an analysis of NGI's rights in consequence of its payment of $6 million to the Vendors. Honest belief 1. Since I have concluded that the primary Judge was correct to find that NGI did not have reasonable grounds for lodging the caveats, it is not necessary to consider his Honour's finding that NGI, through Ms Gai and Mr Geering, did not have an honest belief that it was entitled to lodge a caveat. Had it been necessary to address the issue, I would have rejected NGI's argument that the primary Judge denied it procedural fairness in making the finding and I would have been inclined to uphold the primary Judge's finding that the Vendors and GDI had established on the balance of probabilities that NGI did not have an honest belief that it was entitled to lodge a caveat. 2. The Vendors' pleadings, although incomplete, put in issue whether NGI had lodged the caveats without reasonable cause within the meaning of s 74P(1) of the RP Act. The meaning of the expression "without reasonable cause" is (and at the time of the pleading was) well understood to incorporate both subjective and objective elements. It would be an optimistic reading of the pleading, without the benefit of particulars, to confine it to an allegation that NGI lacked an objectively reasonable basis for lodging the caveats. 3. It is fair to say that the Vendors' final written submissions (which were adopted by GDI) lacked clarity on the issue of honest belief. Nonetheless, NGI's written submissions, although very brief, demonstrate that it understood it had to meet an argument that neither Ms Gai nor Mr Geering had an honest belief that NGI was entitled to lodge the caveats. In these circumstances, I think it was open to the primary Judge to consider and make findings on the issue of honest belief. 4. The intervention of Mr Gutierrez, whose independence was not in doubt, makes rather problematic the primary Judge's finding that the caveats were lodged without NGI "giving any thought at all to their validity". While there is no evidence as to the advice given by Mr Gutierrez, it perhaps overstates the position to conclude that NGI gave no thought at all to the validity of the caveats. However, in the absence of evidence from Ms Gai as to the basis of any belief she may have had, or from Mr Gutierrez as to the basis of any advice he may have given, I think the primary Judge's finding was right. Mr Einfeld did not submit that Ms Gai mistakenly believed, contrary to the facts, that NGI paid the $6 million pursuant to the terms of the Short Form Deed or that GDI authorised NGI to make the payment on its behalf. The primary Judge made no such finding. On his Honour's findings, there were discussions at various times between NGI and GDI as to whether the payment should be made to the Vendors as they were demanding. But at the conclusion of the critical meeting on 22 April 2014, Ms Lin told Ms Gai and Mr Geering to go away and if the Vendors wished to terminate the Initial Contracts "let them do it". Causation The Primary Judgment 1. NGI submitted to the primary Judge that even if NGI had no caveatable interest in the Properties, GDI was unable to complete the sale to MVGDD unless and until it discharged NGI's charge over GDI's equitable interest in the Properties. Thus, so NGI argued, the time impediment to the settlement taking place on 22 July 2014 was not the caveats lodged by NGI, but GDI's failure to discharge NGI's equitable charge. 2. The primary Judge pointed out that if the true impediment to the settlement of the sale of the Properties to MVGDD was NGI's equitable charge over GDI's interest (rather than the caveats), no-one appreciated the fact at the time. [191] His Honour found that as a "matter of practical reality" it was NGI's caveats which, at all relevant times, prevented completion of the sale taking place. Indeed, the "moment the caveats were withdrawn, immediate steps were taken to organise a settlement". [192] In any event, upon completion, the Vendors would have repaid the $6 million and any charge in favour of NGI would have been discharged. [193] Reasoning 1. Mr Einfeld repeated in this Court the submissions put to the primary Judge. In the course of submissions, he accepted that the Vendors and GDI would establish causation for the purposes of s 74P(1) of the RP Act if the lodgement of the caveats was a cause of the losses they sustained, as distinct from the only cause. 2. As GDI's written submissions succinctly contended, there are two answers to NGI's submissions. First, NGI did not in fact have a charge or lien over GDI's interest by reason of the payment of $6 million to the Vendors. Secondly, even if NGI had such a charge and asserted it prior to completion of the sale to MVGDD, completion in all likelihood would still have taken place. On completion, the Vendors would have repaid the $6 million (there is nothing to suggest that they would have sought to retain that sum on rescission of the Second Contracts). If NGI had a charge over GDI's interest, the moneys would have been paid to GDI. Even in the absence of a charge, GDI has made no claim to retain the $6 million (except by way of set off). The Court Fund Second Judgment 1. The primary Judge was faced with a series of claims to the Court Fund. His Honour addressed these claims in the Second Judgment. The Vendors claimed to have an equitable charge over the Court Fund enabling them to enforce a judgment or order in their favour. [194] Accordingly, they sought payment from the Court Fund for the damages awarded in their favour against NGI. 2. GDI accepted that it was bound to pay $6 million to NGI, but maintained that it was entitled to set off against that liability its claims against NGI. [195] These claims included the damages and costs awarded against NGI. GDI also submitted that it was necessary to take into account MVGDD's unresolved Cross-Claim against NGI. If MVGDD's Cross-Claim succeeded, NGI might be liable to MVGDD for more than $9 million. [196] In that situation, GDI would be liable to indemnify MVGDD pursuant to cl 2(e) of the Novation Deed. [197] 3. NGI submitted that it was entitled to the whole of the Court Fund because it had paid $6 million to secure the Properties. Since that purpose had failed, it was entitled to be repaid that amount as moneys had and received. [198] Alternatively, NGI contended that it was entitled to a right of indemnity enforceable as a charge over the Court Fund. However, at the hearing on 22 May 2015, NGI did not object to the primary Judge making the order that the Court Fund be frozen pending further order of the Court. 4. Avondale filed a motion on 4 November 2015 seeking orders for payment out of the Court Fund, in priority to any other party to the proceedings of various amounts said to be due to Avondale by NGI on account of costs. This claim was based on a Deed of Charge between NGI as Chargor and Avondale as Chargee dated 6 February 2015 (Deed of Charge). 5. The primary Judge held that it was premature to order the disbursement of the moneys paid into the Court Fund. [199] His Honour accepted that the Vendors had succeeded in their claims, as had GDI and MVGDD. But success in the litigation did not convert them into secured creditors having a charge over the Fund. They were, therefore, unsecured creditors. [200] 6. The primary Judge considered that since the sum of $6 million paid by NGI to the Vendors had come from the Property Fund of which NGI was the trustee, that sum was trust property. However, that conclusion did not assist Avondale. The Deed of Charge between NGI and Avondale made it tolerably clear that any charge in favour of Avondale applied only to assets held by NGI in its own right and did not extend to trust assets. [201] Thus Avondale had a charge over NGI's own assets, but not over the Property Fund. Even if the $6 million had been impressed with a trust, Avondale's charge did not apply to the moneys. 7. In the alternative, Avondale's recourse to the assets of the trust was merely by way of subrogation to the trustee's right of indemnity and of exoneration from liability. It was arguable that Avondale, as a sub-chargee, had priority over other unsecured creditors of NGI such as the Vendors, but it was not necessary to decide that issue. [202] 8. In his Honour's view, the critical issue was what constituted the assets of the Property Fund at the date of the hearing. When NGI paid the $6 million to the Vendors, there was no mutual intention that the Vendors should become trustees of the moneys so paid. Nor did the Vendors ever constitute themselves trustees of those moneys. [203] Equally, GDI could not be regarded as a trustee of the moneys as it had never owed fiduciary duties to NGI and, even if such duties existed, GDI had not breached them. [204] 9. The primary Judge reached the following conclusions: [205] "[148] Once the monies were paid away to the [Vendors], without it [sic] being impressed with a trust, it became the [Vendors']. It was no longer NGI's money or the beneficiaries'. Upon rescission of the original contracts, of course, the [Vendors] were obliged to repay the $6 million to GDI. At this point there existed a chose in action. GDI was indebted to NGI, subject to its right of set-off. [149] GDI accepts that but for the order directing the monies be paid into Court it would otherwise have had an obligation to pay the monies to NGI. It may also be accepted that had that repayment occurred NGI would hold those monies afresh on trust for the beneficiaries subject to its right of indemnity under the terms of the deed. The monies in Court, however, cannot be characterised as an asset of NGI, nor are they any longer impressed with a trust. Avondale is left to enforce its charge according to its terms against other assets etc of NGI. On the other hand, once repatriated to NGI, had that occurred, the monies would, in my view, have in any event been beyond the reach of Avondale for the reasons stated. … [151] In my view the Court as custodian of the funds has a very wide discretion ultimately as to how the funds should be dealt with. It will no doubt take into account a number of factors so as to ensure the funds are properly administered. [152] Those factors include, but are not limited to: the extent to which NGI has a right to indemnity under the deed and/or the general law; whether NGI has any other assets; whether for any reason Avondale should rank ahead of other parties; and whether, if not, all claimants should be dealt with pari passu or on some other basis, to identify just a few. … [155] [B]ecause of the outstanding claims (in particular the cross claim), and set-off yet to be determined, it is clear that the time for payment out has not yet arrived. There are a number of steps to be taken including the appeal in the main proceedings which will or may have an impact on the potential demands on the funds. The competing claims have not yet fully crystallised and hence quantified. [156] The funds in Court should not, indeed cannot, be paid to anyone at present given the various extant issues. When all issues are determined the Court as custodian of the funds will be in a position to ensure they are properly administered, and all issues can be fully and finally determined. [157] For the time being, then, I am of the view no order can or should be made for the payment out of any funds to any party before the Court." 1. His Honour considered that a further reason for not ordering disbursement of the Court Fund was that any order should be stayed pending determination of the appeals. 2. Orders were made by the primary Judge on 21 April 2016. One of the orders made on that date dismissed Avondale's motion. Submissions in this Court NGI 1. NGI submitted that the primary Judge should not have ordered the Vendors to pay $6 million into Court. Instead, his Honour should have given effect to NGI's charge or lien by directing the Vendors to pay that sum directly to it. Alternatively, given that NGI paid the sum to the Vendors "upon the premise that NGI would become the purchaser of the Properties", once that purpose failed, the $6 million should have been repaid to NGI on restitutionary principles. 2. NGI, in its written submissions, advanced a further argument based on its claim to have an equitable charge over trust assets to secure its right to be indemnified against expenses incurred in its capacity as trustee of the Property Fund. NGI said that the right of indemnity and the equitable charge that secured it arose as an incident of NGI's role as trustee, by virtue of s 59(4) of the Trustee Act 1925 (NSW) (Trustee Act), [206] equitable principles and the constitution of the Property Fund. NGI contended that while the assets of the Property Fund were diminished by the sum of $6 million paid to the Vendors, the Property Fund has the benefit of a chose in action, being the claim against the Vendors to recover that sum. NGI submits that the Court Fund remains subject to the charge. GDI 1. GDI submitted that the primary Judge's decision not to order any payment out of the Fund was a discretionary decision and that NGI had shown no basis for interfering with it. More fundamentally, GDI submitted that it is premature for this Court to order any part of the Fund to be paid out. It relied on the primary Judge's finding that NGI is liable to GDI on the latter's claim of misleading and deceptive conduct (not challenged on appeal), and for damages under s 74P(1) of the RP Act. [207] GDI also relied on the primary Judge's order requiring NGI to pay GDI's costs of the proceedings on an indemnity basis. GDI contended that it can set off its entitlement to damages and costs against its (conceded) obligation to repay $6 million to NGI. 2. In any event, so GDI argued, it is premature to order payment out of the Fund because NGI's liability to GDI has not yet been fully quantified. In particular, NGI is liable to GDI for any liability GDI has incurred to MVGDD by reason of the latter's Cross-Claim against GDI. As the primary Judge noted, MVGDD's claim for indemnity against GDI could be for as much as $9.3 million. [208] The quantum of the claim for indemnity therefore depends upon the outcome of MVGDD's unresolved Cross-Claim against NGI. 3. GDI further submitted that Avondale's claim to part of the Fund can only be maintained if NGI is entitled to some part of the Fund. Since it is not possible to determine whether NGI will have any entitlement to the Fund, no part of the Fund can as yet be paid out to Avondale. Avondale 1. Avondale, NGI's former solicitors, claimed to have a security interest in the Court Fund. Its claim was not precisely quantified, but the Court was told by Mr Corsaro SC, who appeared with Mr Auld for Avondale, that NGI now owed approximately $300,000 in respect of unpaid professional costs (some $700,000 having already been paid). 2. Mr Corsaro described Avondale's claims as depending entirely on whether NGI had a security interest in the Court Fund. For that reason, Mr Corsaro adopted NGI's submissions insofar as they related to NGI's claim to a lien or charge over the Court Fund. 3. On the assumption that NGI can establish such a lien or charge, Avondale challenged the primary Judge's holding that a Deed of Charge, entered into by NGI and Avondale, grants Avondale security only over assets held by NGI in its own right and not in its capacity as trustee. [209] Mr Corsaro submitted that the Deed of Charge, on its proper construction, conferred a charge over assets held by NGI in its own right and in its capacity as trustee of the Property Fund. 4. Mr Corsaro further submitted that Avondale was entitled to priority over any secured interest NGI had in the Court Fund. This was because the Deed of Charge bound NGI and necessarily postponed any interest it has in the Court Fund to Avondale's charge. MVGDD 1. MVGDD's counsel, Mr Allen, disclaimed any suggestion that MVGDD had a security interest in the Court Fund. He said that MVGDD wished to be heard on the appeals because NGI's Amended Notice of Appeal sought an order that MVGDD's Cross-Claim be dismissed. However, as was pointed out in argument, no submissions were advanced in support of that relief. 2. Mr Allen submitted that, assuming MVGDD's Cross-Claim remained on foot, MVGDD had an interest in supporting the primary Judge's order that the Court Fund should remain in Court because MVGDD had an order for indemnity costs in its favour. Reasoning 1. For the reasons I have given: * NGI's payment of $6 million to the Vendors discharged GDI's obligation to pay that amount to the Vendors on exchange of the Second Contracts; * the payment by NGI did not create an interest in it by way of a lien or charge over the interests of the Vendors or GDI in the Properties; * upon rescission of the Second Contracts, the Vendors were bound to repay the $6 million to GDI; and * upon receipt of the sum of $6 million from the Vendors, GDI came under a personal obligation to repay that amount to NGI. NGI's interest in the Court Fund 1. It follows from these conclusions that, in the absence of any other contention, NGI does not have a lien or charge over the Court Fund (comprising the $6 million paid into Court by the Vendors). NGI's written submissions contended that NGI had a lien or charge over the Court Fund by reason of its right of indemnity against liabilities incurred in the discharge of its functions as a trustee. Mr Einfeld did not develop the argument in oral submissions and, in any event, I do not think that it advances NGI's case. 2. It is well established that a trustee who in discharge of the trust duties incurs liabilities is entitled to be indemnified against those liabilities from trust assets. [210] For the purpose of enforcing the indemnity, the trustee has a charge or lien over the trust assets. The charge or lien amounts to a proprietary interest in the trust property [211] and, in the case of land, will support a caveat. [212] However, as the primary Judge pointed out, NGI's right of indemnity is enforceable only against the assets of the trust. [213] NGI did not have a lien or charge over the Properties and would not have had a charge over the $6 million had that sum been paid by the Vendors to GDI upon rescission of the Second Contracts. There is no basis for concluding that the Court Fund constitutes an asset of the trust of which NGI is the trustee. Thus NGI's right of indemnity is not secured by a charge or lien over the Court Fund. 3. As between NGI and GDI, the former may have the better claim to receive a payment out of the Court Fund. But this will depend on the extent of NGI's liabilities to GDI and whether they should be set off against GDI's liability to NGI to repay the $6 million. These matters have not yet been resolved because they require determination of MVGDD's claim against NGI (in respect of which GDI has provided the indemnity to MVGDD). Avondale's interest in the Court Fund 1. Since NGI does not have a charge or lien over the Court Fund, Avondale (as it conceded) has no claim to priority over other claimants to the Fund based on the Deed of Charge. This is subject to the qualification that, as between NGI and Avondale, the latter claims priority over any entitlement NGI may have to be paid moneys from the Court Fund. At this stage, it is unclear whether NGI, whether in its capacity as trustee of the Property Fund or otherwise, will be able to claim any moneys from the Court Fund. If, for example, GDI is entitled to offset claims worth more than $6 million against NGI's entitlement to be paid that sum by GDI, any claim that NGI has to moneys in the Court Fund will be of no practical value. 2. As has been seen, the primary Judge dismissed Avondale's motion seeking an order for immediate payment of costs due to it by NGI out of the Court Fund. His Honour did so on the ground that Avondale could not establish that it had any interest in the sum of $6 million, even assuming it was trust property of which NGI was the trustee. That conclusion followed from his Honour's construction of the Deed of Charge between NGI and Avondale, which limited the charge to property held by NGI in its own right. 3. The primary Judge does not seem to have given consideration to whether the assets held by NGI "in its own right" included NGI's right of indemnity against the Property Fund in respect of liabilities incurred in its capacity as trustee. In my view, the primary Judge was correct to construe the Deed of Charge as applying only to interests held by NGI "in its own right". However, those interests include its right of indemnity. 4. The Deed of Charge defines the "Chargor" as NGI both in its capacity as trustee and in its own capacity. Recital C to the Deed of Charge records that the Chargor has agreed to grant to the Chargee (Avondale) the charge for the purpose of securing to the Chargee any moneys owing or payable to the Chargee on any account whatsoever. 5. Clause 4 of the Deed of Charge obliges the Chargor to pay in full the "Moneys Secured". This expression is defined to mean all money for which the Chargor may become indebted on any account whatsoever. Since the "Chargor" is defined to include NGI in its capacity as trustee of the Property Fund, it is clear enough that the Deed contemplates that NGI will incur indebtedness to Avondale in NGI's capacity as trustee of the Property Fund. This is hardly surprising, given (as I infer) that both Avondale and NGI were aware when the Deed of Charge was executed that Avondale was providing legal services to NGI in its capacity as trustee of the Property Fund. 6. This conclusion does not mean, however, that if NGI incurs legal fees in its capacity as trustee of the Property Fund, Avondale can enforce its charge directly against the assets of the trust. Clause 2.1 of the Deed of Charge creates a fixed charge in Avondale's favour over "all of the Assets and Undertaking of the Chargor". The expression "Assets and Undertaking" is defined to mean "all assets and undertaking of the Chargor whatsoever". This language is apt to include NGI's right of indemnity from the Property Fund which arises by virtue of its role as trustee. I do not think, however, that the language extends to the trust assets. NGI holds the legal title to these assets, but they are beneficially held by third parties. Clearer language would be required if the Deed of Charge is to be read as entitling Avondale to a security interest directly enforceable against the assets of the trust. 7. For present purposes, I do not think that the correct construction of the Deed of Charge matters. The relief sought by Avondale in the notice of motion dismissed by the primary Judge was the immediate payment out of moneys from the Court Fund. As the primary Judge concluded, the Court Fund does not comprise moneys held in trust for the Property Fund. NGI may ultimately be entitled to claim moneys held in the Court Fund but, if so, its entitlement will rest on its personal claim against GDI. It is unclear as yet whether NGI will be able to obtain any moneys from the Court Fund, if only because of the set offs claimed by GDI. Even if Avondale's charge applies to any portion of the Court Fund ultimately found to be payable to NGI, the Deed of Charge does not entitle Avondale to an immediate payment out of the Court Fund. 8. Avondale's Notice of Appeal seeks, among other orders, what amounts to a declaration that if the Court orders moneys to be paid out of the Court Fund to NGI, those moneys are subject to Avondale's charge. This order was not sought in Avondale's motion and was not the subject of submissions. The order should not be made. 9. Avondale's appeal should therefore be dismissed. Conclusion 1. None of the claimants to the Court Fund has established that it or they are entitled to an order for the payment of moneys from that Fund. Nor has any party demonstrated any appellable error in his Honour's decision to order the sum of $6 million comprising the Court Fund to be frozen until further order. 2. There are a number of issues that remain to be resolved in the proceedings. In particular, MVGDD's Cross-Claim against NGI has not been determined. As has been noted, the outcome of MVGDD's Cross-Claim may have significant consequences for GDI because of the indemnity it provided to MVGDD. 3. Issues also arise as to the extent to which GDI is entitled against NGI to set off any entitlements it has under judgments in its favour and claims not yet determined. At present, it is not clear how these competing claims will be affected by the unresolved Cross-Claim and the quantification of costs orders made in the proceedings. These matters should be remitted to the primary Judge for determination in the light of this judgment and the outcome of the pending Cross-Claims. Costs Second Judgment 1. The primary Judge described his findings on NGI's claim to a caveatable interest and the abandonment of the Short Form Deed as "stringent". [214] The reference to the findings concerning the Short Form Deed is to his Honour's conclusions (not challenged on appeal) that NGI's contentions were "implausibl[e]", "farfetched" and "speculative". [215] His Honour further stated that these findings "were provoked by what [he] saw to be a detailed appreciation of the facts". [216] 2. The primary Judge continued as follows: [217] "[39] In my view, NGI did not have a reasonable basis for lodging and maintaining those caveats on the facts and the law as I saw it. Likewise, I do not consider, given my findings, that there was any reasonable argument available to NGI in relation to the Short Form Deed. NGI knew much more about its own case than its opponents and, for that matter, the Court. Any interlocutory process to have the caveats removed, although one was mooted by MVGDD, was in my view not a satisfactory way to proceed. That is why, in all the circumstances, given the plight of the [Vendors], I regarded an expedited final hearing as essential. That was not capable of being achieved in its most desirable form because the evidence took longer than expected and the court had to adjourn for submissions. Common sense generally in circumstances such as these points to a quick final hearing. Hence I was disinclined to encourage an interlocutory application. [40] There was in my view plenty of time for NGI to carefully and reasonably consider its position. Apart from the proceedings there were at least two mediations, and yet NGI steadfastly clung to its contractual arguments, its caveats, and its demand for specific performance. [41] In all the circumstances I am of the view that NGI unreasonably lodged and persisted in asserting it had a tenable argument concerning the caveats. In addition, its contractual claim was hopeless bearing in mind the express terms of Ms Gai's email of 23 May 2014. In addition, it never did provide in any form a reasonable argument in response to MVGDD's argument on special condition 48. In each of those respects it persisted in arguments which were without merit and in that sense behaved unreasonably. [42] To the extent it is necessary to do, I agree with Brereton J in Arkbay Investments at [32] that a party found to have breached s 74P of the Real Property Act would, perhaps, for the reasons above, attract an order against it for indemnity costs. [43] It follows that the [Vendors], GDI and MVGDD are, in my view, entitled to their costs of the entire proceedings on an indemnity basis." NGI's submissions 1. NGI challenged the primary Judge's indemnity costs order. Mr Einfeld submitted that his Honour should not have followed the decision of Brereton J in Arkbay Investments Pty Ltd (In Liq) v Echelon Property Management Pty Ltd (No 2) (Arkbay Investments). [218] In addition, Mr Einfeld challenged the primary Judge's assessment of the arguments advanced by NGI. Reasoning 1. Mr Einfeld interpreted Arkbay Investments as standing for the proposition that a caveator who lodges a caveat without reasonable cause inevitably will be required to pay costs on an indemnity basis. It is clear, however, that Brereton J did not apply any such principle. His Honour took into account the unusual circumstances in which the caveator took the "bold step" of lodging a caveat, including the failure of the caveator to take reasonable steps to ascertain that the critical document was a forgery. [219] In any event, the primary Judge's decision on costs was not dependent on Arkbay Investments, but rested on other grounds. 2. Mr Einfeld's challenge to the primary Judge's critique of NGI's conduct of the case is difficult if not impossible to evaluate because it relates primarily to findings that have not been the subject of NGI's appeal. His Honour's award of indemnity costs was based on his overall assessment of the conduct of NGI's case. There is no basis for this Court to overturn his Honour's assessment. Orders 1. It is not clear that NGI is entitled to appeal as of right against the orders made by the primary Judge. While his Honour entered judgment in favour of the Vendors against NGI in the sum of $796,026.41, the various claims (including NGI's) to the Court Fund have not been resolved. 2. The primary Judge dismissed NGI's Cross-Claim, but did so without prejudice to the claim of any party to the Court Fund. There are also unresolved issues to the extent that any claim that NGI may have to the Court Fund is offset by claims that other parties have against it. 3. In these circumstances, the appropriate orders on NGI's appeal are as follows: 1. To the extent that NGI requires leave to appeal from the decision of the primary Judge, grant such leave. 2. Dismiss the appeal. 3. Order NGI to pay the costs of the appeal of the First to Tenth Respondents (the Vendors), the Eleventh Respondent (GDI) and the Twelfth Respondent (MVGDD). 1. It is difficult to see how Avondale could have succeeded in its claim before the primary Judge to be entitled to an immediate payment from the Court Fund, even if its construction of the Deed of Charge was correct. Accordingly, I propose the following orders on Avondale's application for leave to appeal: 1. Application for leave to appeal dismissed. 2. The applicant (Avondale) to pay the costs of the application of the First to Tenth Respondents (the Vendors), the Eleventh Respondent (GDI), the Twelfth Respondent (MVGDD) and the Thirteenth Respondent (NGI). 1. As I have noted, there are issues concerning MVGDD's Cross-Claim, the competing claims to the Court Fund and set-offs that remain to be resolved. These issues will need to be disposed of in the Equity Division proceedings, no doubt in conformity with these reasons for judgment. The question of whether the stay orders currently in place should be lifted should also be a matter for the Equity Division. ********** Endnotes 1. [2015] NSWSC 1176 ("Thomson"). 2. (2007) 35 WAR 27; [2007] WASCA 179 at [69], discussing s 137(1) of the Transfer of Land Act 1893 (WA). 3. The provisions are set out by Sackville AJA at [146]. 4. Real Property (Caveats) Amendment Act 1986 (NSW), which commenced in 1988. 5. (1990) 21 NSWLR 459 (Kirby P, Clarke JA and Waddell AJA). 6. (1963) 80 WN (NSW) 1463. 7. Being the language of Clarke JA in Beca Developments at 470C-D. 8. [1981] 1 NSWLR 106. 9. Bedford Properties at 108C-D. 10. Beca Developments at 475A-B. 11. Brogue Tableau at [82]-[84]. 12. (1971) 125 CLR 546 at 552. 13. Real Property Amendment Act 1996 (NSW), Sch 1[19], commencing on 1 February 1997. 14. (2001) 204 CLR 461; [2001] HCA 15 at [99]. 15. [2013] NSWCA 280; 17 BPR 32,733 at [52] (Barrett JA, Emmett and Gleeson JJA agreeing). 16. [2007] NSWSC 121 at [195]. 17. See Morgan v John Fairfax & Sons Ltd (1991) 23 NSWLR 374 at 382G (Hunt AJA). 18. Thomson at [8]. 19. Thomson at [7]. 20. Thomson at [20]. 21. Thomson at [27]. 22. Thomson at [28]. 23. The deed refers to 17 March 2013, but this is clearly an error. 24. Thomson at [42]. 25. Thomson at [46]. 26. Thomson at [300]-[301]. 27. Thomson at [299] and [302]. 28. Thomson at [276]. 29. Thomson at [281]. 30. Thomson at [378]-[380]. 31. Thomson at [386]. 32. (1959) 101 CLR 298. 33. Thomson at [370]. 34. Thomson at [385]. 35. Thomson at [385]. 36. Thomson at [391]. 37. Thomson at [394]. 38. See [48] above. 39. The terms are set out at [200] and [201] below. 40. Mahendran at [54]. 41. (1868) LR 4 Ch App 101. 42. Aberaman at 109-110. 43. Aberaman at 110. 44. Wythes v Lee (1855) 3 Drew 396; 61 ER 954; Rose v Watson (1864) 10 HLC 672; 11 ER 1187. 45. Thomson at [349]. 46. [1902] 1 Ch 835 at 838 (Vaughan Williams LJ). 47. (1872) LR 5 HL 321. 48. Shaw at 338. 49. Shaw at 357-358. 50. (1864) 10 HLC 672; 11 ER 1187. 51. Thomson at [366] and [361] respectively. 52. Thomson at [236]. 53. The circumstances in which NGI paid the $6 million to the Vendors' agent are detailed in the judgment of Sackville AJA at [179]. 54. The full particulars of the estate or interest in the land claimed by the caveator, and the facts by which the caveator claimed its estate or interest in the land, are set out in the judgment of Sackville AJA at [200]-[201]. 55. Sackville AJA at [257]. 56. Meagher, Gummow & Lehane, Equity Doctrines & Remedies, 5th Ed, (2015), LexisNexis Butterworths, at [9-045]-[9-070]. 57. Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1 at 9-10 (Vaughan Williams LJ) and at 13 (Romer LJ): affirmed on appeal: Nottingham Permanent Benefit Building Society v Thurstan [1903] AC 6 at 10 (Earl of Halsbury and Lord Shand). 58. Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1 at 10 (Vaughan Williams LJ) 59. Evandale Estates Pty Ltd v Keck [1963] VR 647 at 652. 60. Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 at 236F (Lord Hoffmann); Halifax plc v Omar [2002] EWCA Civ 121; [2002] P. & C. R. 26,377 at [84] (Jonathan Parker LJ). 61. Halifax plc v Omar [2002] EWCA Civ 121; [2002] P. & C. R. 26,377 at [84] (Jonathan Parker LJ); Evandale Estates Pty Ltd v Keck [1963] VR 647 at 652 (Hudson J). 62. Paul v Speirway Ltd [1976] Ch 220 (Oliver LJ). 63. Boodle Hatfield & Co v British Films Ltd (1986) NLJ 117; [1986] PCC 176 (Nicholls J). 64. Cid v Cortes (1987) 4 BPR 97,276 (Young J). 65. [2015] NSWSC 1176 at [390]. 66. NGI has not applied for leave to appeal. On one view, it requires leave because the decision of the primary Judge was interlocutory: see at [395] below. 67. Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176 (Primary Judgment) at [394], [644]-[649]. As will be seen, the Vendors were the Plaintiffs in the Equity Division proceedings, while GDI filed a cross-claim seeking compensation orders against NGI. 68. Thomson v Golden Destiny Investments Pty Ltd (No 2) [2015] NSWSC 1929 (Second Judgment) at [43]. The Second Judgment also dealt with various claims to the Court Fund. 69. Neither the Appeal Books nor the Court file record that Avondale formally filed a notice of motion in the Equity Division proceedings. However, an affidavit read in support of Avondale's claim for relief set out the orders it sought in the proceedings. (The Court file includes an unstamped notice of motion to the same effect.) 70. Avondale does not appear to have filed an application for leave to appeal. However, the document styled "Amended Notice of Appeal" seeks an order that leave to appeal be granted. 71. Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3 at 388 (Windeyer J); ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) (2012) 245 CLR 338; [2012] HCA 6 (ALH Group) at [12]-[13] (French CJ, Crennan, Kiefel and Bell JJ); Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; [1999] NSWCA 323 at [78] per curiam; Leveraged Equities Ltd v Goodridge (2011) 191 FCR 71; [2011] FCAFC 3 at [300]-[301] (Jacobson J, Finkelstein and Stone JJ agreeing). 72. ALH Group at [27]-[29]. The rescission or discharge of obligations may be express or implied: ALH Group at [31]-[32]. 73. Hence the reference by Dixon J in Vickery v Woods (1952) 85 CLR 336; [1952] HCA 7 at 345 to novation requiring a "tripartite agreement involving a rescission of the [existing] contract". 74. Olsson v Dyson at 338. 75. Pacific Brands Sport and Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395; [2006] FCAFC 40 at [32] (Finn and Sundberg JJ), approved in Leveraged Equities Ltd v Goodridge at [303]-[312]. 76. Primary Judgment at [488]-[489]. 77. Primary Judgment at [133]. 78. Primary Judgment at [136]. 79. Primary Judgment at [34]. 80. Primary Judgment at [169]. 81. Primary Judgment at [199]. 82. Primary Judgment at [200]. 83. Primary Judgment at [206]. 84. Primary Judgment at [233]. 85. Primary Judgment at [238]. 86. Reproduced at [177] above. 87. Second Judgment at [5]. 88. Primary Judgment at [273]. 89. Primary Judgment at [294]-[295]. 90. Primary Judgment at [418], [436]. 91. Primary Judgment at [424]. 92. Primary Judgment at [304]. 93. Primary Judgment at [10]-[13]. 94. Primary Judgment at [336]. 95. Primary Judgment at [394]. 96. Primary Judgment at [409]. 97. Primary Judgment at [652]. 98. Second Judgment at [124]. 99. Second Judgment at [148]-[149]. 100. Second Judgment at [132]. 101. Second Judgment at [41]-[43]. 102. Second Judgment at [160]-[162]. 103. Primary Judgment at [103]-[104]. 104. Primary Judgment at [23], [108]. 105. Primary Judgment at [109]. 106. Primary Judgment at [112]. 107. Primary Judgment at [234]-[237]. 108. Primary Judgment at [323]. 109. Primary Judgment at [324]. 110. Primary Judgment at [351]. 111. Primary Judgment at [359]. 112. Primary Judgment at [360]. 113. Primary Judgment at [365]-[366]. 114. Primary Judgment at [367]. 115. Primary Judgment at [368]. 116. Primary Judgment at [304]. 117. See at [212] above. 118. Second Judgment at [6]. 119. See Short Form Deed cl 1.2(g), reproduced at [160] above. 120. Short Form Deed cl 2.1. 121. Primary Judgment at [236]. 122. Primary Judgment at [237]. 123. See at [175] above. 124. [1990] FCA 54 at [13]-[14]. 125. [1990] FCA 54 at [19], citing Ex parte Lord [1985] 2 Qd R 198 at 202 (Williams J). See also Woodman & Nettle: The Torrens System in New South Wales (Loose Leaf) at [74F 100 (26), (27)]. 126. [1990] FCA 54 at [17]. 127. (1983) 149 CLR 639; [1983] HCA 7. 128. Hewett v Court at 647 (Gibbs CJ). 129. Hewett v Court at 645-646. 130. (1923) 34 CLR 174; [1923] HCA 64 at 185. 131. (1808) 15 Ves 329 at 340; 33 ER 778 at 782. 132. (1864) 10 HLC 672 at 684; 11 ER 1187 at 1192. 133. Hewett v Court at 649. 134. Hewett v Court at 650. Deane J rejected the suggestion that an equitable lien can only arise under a contract of which specific performance would be granted: Hewett v Court at 664. Murphy J agreed: at 651. 135. Hewett v Court at 663. 136. Hewett v Court at 663. 137. Hewett v Court at 688. 138. Hewett v Court at 668. 139. (2014) 252 CLR 307; [2014] HCA 15. 140. Atco Controls at [22]. 141. Atco Controls at [13]. One difference between an equitable lien over land and a mortgage is that a mortgage is created by contract, whereas an equitable lien arises by operation of law: Re Bond Worth Ltd [1980] Ch 228 at 251 (Slade J). 142. Atco Controls at [14]. 143. Atco Controls at [31]. 144. Atco Controls at [32], referring to Comcare v PVYW (2013) 250 CLR 246; [2013] HCA 41 at [15]-[16] (French CJ, Hayne, Crennan and Kiefel JJ). 145. See Quinn v Leathem [1901] AC 495 at 506 (Earl of Halsbury LC); Arinson Pty Ltd v City of Canada Bay Council [2015] NSWCA 199; 208 LGERA 418 at [65] (Campbell AJA, Basten and Meagher JJA agreeing). 146. Mr Geering had sent novation notices to the Vendors' solicitors in March 2014, purportedly pursuant to the terms of the Initial Contracts. The Vendors disputed the validity of the notices and no novation of the Initial Contracts to NGI ever occurred. 147. Rose v Watson at 1192, cited by Gibbs CJ in Hewett v Court at 645. 148. (1886) 34 Ch D 234 (Falcke). See K Mason, JW Carter and GJ Tolhurst, Mason & Carter's Restitution Law in Australia, (3rd ed 2016, LexisNexis Butterworths) at 835-840; J Edelman and E Bant, Unjust Enrichment, (2nd ed 2016, Hart Publishing) at 72-73. 149. Falcke at 241. 150. Falcke at 248. See also at 253 (Fry LJ). 151. (1908) 7 CLR 352; [1908] HCA 13 at 364 (Barton and Isaacs JJ agreeing). 152. [1995] WASC 484 (Lavery). 153. (2008) 232 CLR 635; [2008] HCA 27. 154. Lumbers at [80] (Gummow, Hayne, Crennan and Kiefel JJ). The exceptions include salvage in maritime law and some cases of necessitous intervention. 155. (1987) 162 CLR 221; [1987] HCA 5; see Lumbers at [86], [91]. As to the need for a request, express or implied, see O3 Capital Pty Ltd v WY Properties Pty Ltd (2016) 49 WAR 517; [2016] WASCA 82 at [71]-[78] per curiam. 156. Atco Controls at [48]. 157. Chattey v Farndale Holdings Inc (1998) 75 P & CR 298. 158. Chattey v Farndale Holdings Inc at 304 (Morritt LJ, Kennedy and Potter LJJ agreeing). 159. Chattey v Farndale Holdings Inc at 305. For a similar case referred to by Mr Einfeld, see Middleton v Magnay (1864) 2 Hem & M 233; 71 ER 452 (Wood V-C); see also Levy v Stogdon [1898] 1 Ch 478 (Stirling J), affirmed [1899] 1 Ch 5 (CA), also relied on by Mr Einfeld, involved a lien created by the payment of a deposit in respect of the purchase of personalty. The party seeking to enforce the lien was the ultimate assignee of the purchaser's interest. 160. (1872) LR 5 HL 321 at 349-350. 161. [1954] VLR 567. 162. [1954] VLR 567 at 574-575. 163. McDonald v Isaac Construction Co Ltd [1995] 3 NZLR 612 at 616-618, citing ICF Spry, The Principles of Equitable Remedies, (3rd ed 1984, Lawbook Co,) at 80 (see now ICF Spry, Principles of Equitable Remedies, (9th ed 2014, Lawbook Co) at 89). See also Wilkinson v Clements (1872) LR 8 Ch App 96. 164. (1868) LR 4 Ch App 101. 165. Aberaman Ironworks v Wickens at 110. 166. Primary Judgment at [367]. 167. For example, the equitable lien claimed by the assignee of a lease, where the assignee pays a deposit and subsequently rescinds the assignment by reason of the assignor's misrepresentations: Ryu v Lee (1996) 7 BPR 97,588. 168. Second Judgment at [6]. 169. Clause 19.2.1 was subject to SC 48(vii), which stated that if the Second Contracts were novated, GDI agreed that the deposit of $1.51 million paid pursuant to the Second Contracts would become part of the purchase price under the novated contracts. The Second Contracts gave GDI as the purchaser the right to require the Vendors to novate the Contracts by new contracts with a "New Purchaser" and to rescind the Second Contracts (SC 48(i)). 170. Primary Judgment at [370]. 171. Primary Judgment at [389], [391]. 172. Primary Judgment at [392]. 173. Primary Judgment at [393]-[394]. 174. Primary Judgment at [394]. 175. See Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 462-463 (Kirby P), at 474 (Clarke JA). 176. [2013] NSWCA 280; 17 BPR 32,733 at [52]. 177. [2007] NSWSC 121 at [195]. 178. [1993] 1 VR 589. 179. [1993] 1 VR 589 at 600-601, referring to s 118 of the Transfer of Land Act 1958 (Vic). 180. See Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 at 107 (Wootten J). 181. Bolton v Excell (Supreme Court (WA), 22 February 1993, unrep) at 12-13 (Owen J, Ipp J agreeing), cited in Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27; [2007] WASCA 179 (Brogue Tableau) at [92] (Buss JA). 182. Bolton v Excell at 14 (Owen J). 183. Lee v Ross (No 2) [2003] NSWSC 507; 11 BPR 20,991 at [33]-[38] (Palmer J). 184. Brogue Tableau at [98]. 185. Brogue Tableau at [100]. 186. Extracted at [322] above. 187. See at [198] above. 188. Primary Judgment at [394]. 189. Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419 (Handley JA). 190. See at [164] above. 191. Primary Judgment at [377]. 192. Primary Judgment at [379]. 193. Primary Judgment at [381]. 194. Second Judgment at [47]. 195. Second Judgment at [118]. 196. Second Judgment at [55]-[56]. 197. Reproduced at [193]. 198. Second Judgment at [63]. 199. Second Judgment at [123]. 200. Second Judgment at [124]-[126]. 201. Second Judgment at [129]-[132]. 202. Second Judgment at [133]. 203. Second Judgment at [147]. 204. Second Judgment at [147]; Primary Judgment at [529]. 205. Second Judgment at [148]-[149], [155]-[157]. 206. Section 59(4) of the Trustee Act provides as follows: "A trustee may reimburse himself or herself, or pay or discharge out of the trust property all expenses incurred in or about execution of the trustee's trusts or powers." 207. Primary Judgment at [503]-[504]. The primary Judge said that on his understanding the damages in respect of each cause of action would be identical. 208. Second Judgment at [9]. 209. Second Judgment at [132]. 210. Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 at 367 (Stephen, Mason, Aickin, Williams JJ). 211. Octavo Investments Pty Ltd v Knight at 367, 369-370; Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; [1998] HCA 4 at 245-246 per curiam. 212. Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26; 16 BPR 30,397 at [101] (Sackville AJA, Campbell JA agreeing). 213. Second Judgment at [134]-[136]. 214. Second Judgment at [37]. 215. Primary Judgment at [427], [435]. 216. Second Judgment at [38]. 217. Second Judgment at [39]-[43]. 218. [2014] NSWSC 572. 219. Arkbay Investments at [16]-[17]. 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: 23 June 2017