[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.]
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JUDGMENT
BASTEN AJ: This matter comes before the Court of Appeal on an interlocutory application where a summons for judicial review was filed on 6 February 2023. The summons was originally filed in the Common Law Division and has been transferred to this Court. That transfer was appropriate because the matter engaging the supervisory jurisdiction of the Court was a judgment of Judge Gibson in the District Court given on 9 December 2022. However, the interlocutory application could conveniently have been dealt with in the Division.
The notice of motion filed by the respondent to the summons seeks a number of orders of which only one is pursued today. The order sought is a grant of leave pursuant to s 74O of the Real Property Act 1900 (NSW), permitting the respondent to lodge a further caveat over premises owned by the applicants for relief in this Court. The need for leave arises because a caveat originally filed on 1 March 2021 lapsed pursuant to a lapsing notice given in October 2022, and taking effect on 2 November 2022.
The interest on which the caveat is sought derives from an entitlement under cl 27 of a home building contract entered into in 2017 between the applicant and the respondent, (then operating under a different name, but now Home Building Pty Ltd). Clause 27 provided:
"The owner charges the site with the due payment of the builder of all moneys that are or may become payable under this contract to the extent that a court or tribunal has made an order that the owner pays that amount to the builder."
Pursuant to cl 30, such moneys include costs which may be incurred by way of debt collection costs, including legal fees and costs associated with recovering or attempted recovery of an amount under the contract.
In the Equity Division the respondent claimed an amount payable under the contract. Judgment was given in favour of the respondent by Ball J. That judgment was the subject of an appeal to this Court, and was varied by a reduction in the total amount payable, but the appeal was otherwise dismissed. The builder obtained a judgment which included an entitlement to costs of the trial in the Equity Division and that the appellants in this Court pay 75 percent of the cost of the respondent to the appeal. Those costs were subsequently the subject of a costs assessment.
The costs assessments were in due course the subject of a review by the applicants, but the assessments were confirmed and the challenges to the original certificates were dismissed. The applicants then lodged an appeal to the District Court. On 9 December 2022 Gibson DCJ delivered judgment dismissing the appeal.
At some stage in the course of the matters leading up to the determination of the appeal, a stay was sought in the District Court on the payment of the costs the subject of assessment certificates which had been registered in that Court. Whether that stay remains on foot is unclear; it was presumably given in circumstances where there was an appeal challenging the reviews of the costs assessments which had not then been determined. The stay was given in November 2022, prior to judgment on the appeal.
One of the matters raised by Mr Cappello in resistance to the grant of leave to lodge a caveat is that the stay remains on foot and that the judgments are therefore not presently enforceable. I am not sure whether it is correct that the stay remains on foot but assuming that it is continuing that does not alter the fact that there is a caveatable interest under the contract, if there is otherwise such an interest.
The second matter which is raised by Mr Cappello in his response is that there is no caveatable interest because there has been no compliance with requirements of s 56 of the Real Property Act in respect of the imposition of a charge or mortgage over land. It is clear that, for the purposes of the Real Property Act the debt is not a charge, although of course it may be charged upon the property. The suggestion that there is a failure to comply with s 56 in so far as it deals with mortgages is simply immaterial in circumstances where the basis of the caveatable interest arises, not from any instrument under the Real Property Act, but from the combined effect of cll 27 and 30 of the home building contract, and s 7D of the Home Building Act 1989 (NSW). Section 7D relevantly provides
7D Interests in land under contract
(1) A contract does not give the holder of a contractor licence or any other person a legal or equitable estate or interest in any land, and a provision in a contract or other agreement is void to the extent that it purports to create such an estate or interest.
(2) Accordingly, the holder of a contractor licence or any other person may not lodge a caveat under the Real Property Act 1900 in respect of an estate or interest prohibited by subsection (1).
(3) However, subsection (1) does not apply to a provision in a contract that creates a charge over land if -
(a) the land the subject of the charge is land on which the contract work is, or is to be, carried out, and
(b) the charge is in favour of the holder of a contractor licence who is a party to the contract, and
(c) the charge is created to secure the payment to the holder of the contractor licence by another party to the contract of money due under the contract, but only if a court or tribunal has made an order or judgment that such payment be made, and
(d) in the case of a charge over land under the Real Property Act 1900 - the party to the contract against whom the judgment or order is made is the registered proprietor of the land.
There seems to be no dispute that s 7D(3) is engaged in the present case and was the basis upon which the caveat was originally lodged on 1 March 2021. The other circumstances which are relevant to consideration of a grant of leave concern the circumstances in which the earlier caveat was permitted to lapse. Mr Cappello objects that there has been no explanation as to how it came about that the caveat was allowed to lapse. That is a legitimate consideration. However, the caveat was on foot for the better part of a year and nine months, and a summons was filed on 1 November 2022 seeking to extend the caveat. In circumstances which are not otherwise known to the Court the summons was not heard before the lapsing notice took effect, so that there was no longer a caveat to be extended at the date that the summons was heard.
In those circumstances I infer that it was at all material times the intention of the respondent to continue to assert a right to maintain a caveat over the land. Further, there has been no significant delay in filing the notice of motion on 6 February 2023 seeking to renew the caveat. This was not a case where there has been significant delay between the lapse and the seeking of a grant of leave to renew the caveat, with possible prejudice to the landholder.
I am satisfied that there is a caveatable interest in the land maintainable by the respondent by the lodging of a further caveat. It is an interest which is the subject of the summons before the Court. The likelihood of success on the summons is a relevant consideration. There is no appeal from the judgment of Judge Gibson, and the only means by which the judgment below can be challenged is by way of a summons in the supervisory jurisdiction of the Court, under s 69 of the Supreme Court Act 1970 (NSW).
There are two grounds which are raised in the summons. Each of the grounds relates to an alleged failure on the part of the Court below in finding that the applicants were liable to pay the costs which Home Building has sought to recover. Each matter was addressed in the judgment of Gibson DCJ and it is not possible from the statement of grounds in the summons to identify a jurisdictional error, or error of law on the face of the record, which would provide a basis for this Court to set aside the judgment below. I do not, of course, have material (including submissions) which may be filed in support of the summons, but on the material I do have the chances of success must be considered limited. To the extent that the effect of the caveat will be analogous to an interlocutory injunction preventing sale or disposal of the property whilst the summons is undetermined, it is appropriate to maintain the existence of the property the subject of the dispute.
Accordingly, I propose to make the order sought in the notice of motion of 6 February 2023, so far as it is pursued. Otherwise, the respondent is content for the balance of the motion to be dismissed.
The respondent sought its costs of the motion, submitting that it was open to the applicants to acquiesce to the filing of the caveat at any time, and they chose to fight it. That was so, but they filed written submissions responding to all aspects of the notice of motion. I propose to leave the costs of the motion to follow the outcome of the summons proceeding,
I make orders in these terms:
1. Pursuant to s 74O(2a) of the Real Property Act 1900, grant leave to the respondents to lodge a further caveat on lot 10/1247934, land known as 39 Empire Street, Haberfield, New South Wales in the terms of the caveat which was lodged on 1 March 2021, subject to the amendment of the clause referring to the lack of requirement to seek leave being varied so as to refer to the fact that leave is required but has been granted by the Court today.
2. Otherwise dismiss the notice of motion filed 6 February 2023.
3. Order that the costs of the motion be costs in the proceedings in this Court.
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Decision last updated: 31 March 2023