Bellissimo v JCL Investments Pty Ltd

Bellissimo v JCL Investments Pty Ltd - [2009] NSWSC 1260 - NSWSC 2009 case summary — Zoe

[10]

4130/09 Francesco Bellissimo v JCL Investments Pty Ltd & 1 Or JUDGMENT 1 HIS HONOUR: The plaintiff commenced these proceedings by summons on 14 August 2009. The whole of the relief sought in the summons is: " 1. An order that the operation of caveat No AD528XXX be extended until further order of the court. 2. A direction [that] the Registrar settle and sign a minute of this order forthwith. 3. Such further or other order as the court may deem fit. " 2 On 17 August 2009 Rein J directed that the summons be returnable on 25 August 2009. On that day His Honour made certain orders which, as they appear on the associate's record of proceedings and on the formal orders entered and sealed by the Deputy Registrar, included orders that the operation of the caveat be extended until further order of the court; that the matter be listed before the duty judge on 2 November 2009; that the solicitors for the plaintiff notify the first defendant of the orders and provide a statement to the first defendant that if it wished to be heard regarding the continuation of the caveat, it must appear on the next occasion. The court noted that the plaintiff's application is for final relief and that in the event that there was no appearance by the first defendant on the further occasion, the matter was to be dealt with without reference to the first defendant. 3 When the matter was called today there was no appearance for the first defendant. 4 The plaintiff is a solicitor. The caveat describes the nature of the estate or interest in the land of the first defendant in which the plaintiff asserts a caveatable interest as follows: " An equitable interest pursuant to a Deed of Guarantees dated 17 February 2006 between the caveator and registered proprietor ". The caveat states that the interest arises by virtue of the facts stated below, namely: " An equitable interest in property as a result of unpaid costs and disbursements from tax invoice dated 19 January 2007 to Louise Lewis for legal services provided by the caveator in accordance with deed of guarantee dated 17 February 2006 where the guarantor gives consent to the caveator to lodge a caveat over the subject property. "

[13]

7 In Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880; (2005) 12 BPR 23,355, Campbell J (as his Honour then was), observed (at [28]) that whether a caveat adequately describes the estate or interest is to be decided from the point of view of a person examining the caveat, who need not necessarily be the registered proprietor. The caveat in that case identified the nature of the estate or interest in the land claimed by the caveator as "an equitable interest". His Honour observed that an equitable interest in land "could relate to a multiplicity of types of interest", and the caveat failed to comply with fundamental requirements for a caveator fully and properly to describe the interest claimed. His Honour observed that the defect could not be ignored in reliance on s 74L. That decision has, so far as I am aware, been consistently followed. Thus, in Warden v Mortgage House No 1 Pty Ltd [2006] NSWSC 1462; (2006) 13 BPR 24,375, Brereton J said (at [15]): " ... As Campbell J explained in Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880, a caveat that merely claims 'an equitable interest' is inadequate to specify the interest claimed by the caveator, as required by Real Property Regulation 2003 (NSW), reg 47; Sch 3, Item 1 [see also Circuit Finance Pty Ltd v Crown & Gleeson Securities Pty Ltd (2006) NSW ConvR 56-143]. Mr Warden's caveat provides, as the particulars of the nature of the estate or interest in land claimed, only 'equitable interest', and for the reasons explained in those two cases, that is insufficient. This is not a mere formal requirement; it goes to the heart of the operation of the caveat provisions of the Real Property Act 1900 (NSW), and is not susceptible of being cured under s 74L. Nor is the defect overcome by the statement of the facts said to support the claim, because at the very least, those facts admit of the possibility of a range of different types of 'equitable interest'... "

[15]

9 In my view, the question of the validity and the continued operation of the caveat remains under the purview of the court. There is no appearance for the first defendant. Nonetheless, the proceeding having come under the court's attention, it behoves the plaintiff to demonstrate how the continuation of the caveat could be justified having regard to the description of the interest claimed. 10 Counsel for the plaintiff submitted that in this case, the nature of the equitable interest claimed could be gleaned from the description of facts by virtue of which it is said to arise, and the reference to a term of the deed of guarantee where the guarantor gave consent to the caveator to lodge a caveat over the subject property. It is said that that, coupled with the description of the relevant facts, including that the equitable interest is a result of the unpaid costs and disbursements, makes it tolerably clear that the nature of the interest claimed is by way of equitable charge. 11 That submission directs attention to the deed of guarantee and to the provisions relied upon by the plaintiff. That deed recites that the plaintiff had been retained to act on a "deferred basis" for a particular company and for Ms Lewis in respect of proceedings in this division and in respect of proceedings in the Full Court of the Family Court of Australia. The deed recites the entry by the other company and by Ms Lewis into two separate fee agreements with the plaintiff. The operative provision in clause 2 provides for the first defendant and Ms Lewis (the second defendant) to guarantee the payment of all costs and disbursements and tax invoices issued by the plaintiff which become due and payable pursuant to the cost agreements. Clause 2(iii) provides: " That the company J C L INVESTMENTS PTY LTD hereby consents to Francesco Bellissimo t/as Bellissimo & Associates Solicitors to lodge a caveat at the Property Information Service division of the Department of Lands, over the property known as folio identifier lot X section Y in deposited plan Z situated at AA Ellis Street Condell Park 2200 in the State of New South Wales whereby it is hereby agreed that Frank Bellissimo has a caveatable interest in the property and that Francesco Bellissimo will withdraw the caveat only upon payment of costs and disbursements referred to in (i) and (ii) immediately above and any interest payable in accordance with the fees agreements annexed to this Deed. "

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13 As Bryson J (as his Honour then was) said in Express Loans & Finance Pty Ltd v Hunter [2004] NSWSC 142; (2004) 11 BPR 21,451 the question is always a matter of construction of the particular document under consideration. There, the defendant signed an authority and agreement authorising the caveator "to lodge a caveat on the above security property if the fees as agreed are not paid on demand and will sign all documents as required by [the plaintiff] to facilitate same". His Honour construed that agreement as an authority for the lodgment of a caveat and nothing else, and not as having created a charge over the land or any other means of enforcement. His Honour recorded the plaintiff's contention that "the agreement would be futile and ineffective if it did no more than it literally provides for". His Honour said (at [13]): " In my mind, this is incorrect. An impediment is placed in the way of a registered proprietor if a caveat is lodged, whether or not the caveat is effective, as its lodgement confronts the registered proprietor with problems and difficulties, whether or not it can be removed." The purpose of the clause, his Honour said, was "to enable the plaintiff to impede and obstruct the defendant's path as registered proprietor, without going any further. " 14 Counsel for the plaintiff gave various descriptions of the nature of the interest created, it was said, by clause 2(iii). Without resiling from his submission that the clause created an interest in the nature of a charge, he also submitted that the clause was designed to provide security to ensure that the guarantor's property was not sold, and that there be no dealing with the property without the plaintiff's consent. Counsel also submitted that the effect of the clause was to give the plaintiff an "equitable priority" in the proceeds of sale if the property were sold. This latter is another way of restating the contention that the instrument is a charge. However, the former submission that the clause was designed to ensure that the property not be sold, and there would be no dealing with the property without the plaintiff's consent, I think more accurately identifies the intended purpose of clause 2(iii). That is so, because, the caveat is to operate as an injunction, for so long as it remains on the title, precluding the registration of dealings prohibited by the caveat.

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