PARTIES: CONNECTOR PARK PTY LIMITED (ACN 074 480 023)

Conveyancing - Land tiles under the Torrens system - Caveats against dealings - Lapse, removal and withdrawal - Removal - Application for cause to be shown why caveat should not be removed - Power to make order requiring consent to registration of dealing not adversely affecting the caveatable interest - Disapproval of technical objections to caveat.

Symmons Plains Pastoral Holdings Pty Ltd v Youl [2005] TASSC 35; Four Oaks Enterprises Pty Ltd v Clark [2002] TASSC 39; Hooper v ANZ Banking Group Ltd (1996) 5 Tas R 398, applied.

Judgment Number: [2006] TASSC 9

CONNECTOR PARK PTY LIMITED (ACN 074 480 023) v RV PTY LIMITED

RV PTY LIMITED (ACN 009 536 378) v CONNECTOR PARK PTY LIMITED

1 Connector Park Pty Ltd will be referred to as "the applicant" and RV Pty Ltd as "the respondent". The applicant is the registered proprietor of land comprised in five titles, namely Certificates of Title volume 133082 folio 1, volume 133082 folio 2, volume 133081 folio 4, volume 133081 folio 101 and volume 133081 folio 107, which are known collectively as Connector Park, a large area of commercial land in the course of being developed.

2 By cl 5.4 of a deed ("the Connector Park agreement") made on 26 August 2004 between the applicant, the respondent and others, it was agreed that the applicant would grant to the respondent a right of carriageway over a roadway leading through Connector Park from the south where it bounds a public road, known as the Kings Meadows Connector, to the boundary of the respondent's land to the north of Connector Park. It was agreed that the right of carriageway would continue until the roadway in question was taken over as a public road maintainable by the Launceston City Council ("the Council"). By cl 5.5 the parties acknowledged that it was not intended to register the right of carriageway as a right of way but that the respondent would maintain an equitable interest pending dedication of the roadway to the public pursuant to the Local Government (Building and Miscellaneous Provisions) Act 1993, s95(1). By cl 5.6 the applicant agreed (inter alia) to complete construction of the roadway by 6 January 2005 with appropriate sealed pavements, power and street lighting as specified by the Council and to do all things necessary to ensure that the roadway was taken over as a road maintainable by the Council by 6 July 2005. There is unchallenged evidence that the applicant has breached those requirements by not completing construction of the roadway and by not ensuring that it was taken over by the Council.

3 By the Connector Park agreement the respondent was to pay the applicant $800,000 (plus GST) in three stages. Of that sum, $400,000 was to be paid on settlement and was in fact paid at that time. By cl 5.8, it was agreed that in consideration of the applicant completing its obligations with respect to the roadway, the respondent would pay a further $200,000 to the applicant, upon the Council taking over the road, and the balance of $200,000 would be paid upon the respondent succeeding in having a rural zoned area of its property, to be served by the road, rezoned to a residential zone under the planning scheme applying to it.

4 Assignment by either party of its rights and obligations under the Connector Park agreement was contemplated by cl 6.2 in the following terms (the reference to JAC is a reference to the respondent):

Connector Park and JAC must both ensure that the provisions of this document are passed on to, or agreed to by, any subsequent purchasers of the Connector Park Land or the Freehold Property, as the case may be, by assignment of this document or by the relevant parties and the purchaser entering into a new agreement to adopt on the same terms and conditions all of the obligations yet to be performed by the respective parties under this document."

5 To protect its right of carriageway over Connector Park, which cl 5.5 declared to be an equitable interest, the respondent lodged a caveat on 15 June 2005 by which it forbade the registration of any dealing affecting that part of the applicant's land on which the right of carriageway exists. The operative parts of the caveat were as follows:

Being the roadways shown crosshatched on the plan annexed and marked 'A'

Take notice that I/we RV PTY LTD ( ACN 009 536 378)

by virtue of an Agreement known as the 'Connector Park Agreement' dated the 26th day of August 2004 made between Connector Park Pty Ltd, RV Pty Ltd and others

in all the land above described forbid the registration of any dealing affecting the land until this caveat be withdrawn by me, or removed by order of the Supreme Court or until after the expiration of a period of 28 days from the date of the service of notice of such an intended registration."

6 The Lands Titles Act 1980 ("the Act"), s133(1), permits a person who claims an estate or interest in registered land under an unregistered dealing to caveat, in an approved form, to "forbid the registration of any dealing affecting that land, estate, or interest". The respondent's caveat forbids "the registration of any dealing affecting the land" on which the right of carriageway exists and not merely any dealing affecting the respondent's interest in the land. In part response to a submission by the applicant's counsel that the caveat is defective because it is uncertain, not identifying sufficiently the interest being claimed by the respondent or the provision in the Connector Park agreement under which it is claimed, and because it is too wide by forbidding the registration of any dealing affecting the land rather than the interest in the land that is claimed by the respondent, counsel for the respondent applied to amend the caveat in two regards: first, by inserting "being a right of carriageway" after "equity"; and second, by omitting "in all" and inserting in place thereof "in that part of". The amendments, if allowed, would better identify the nature of the interest being claimed, although not perfectly, and more clearly limit the dealings forbidden to those affecting that part of the land on which the carriageway exists. I am yet to rule on the amendment.

7 By a contract of sale ("the sale contract"), the date of which does not appear from the evidence, the applicant agreed to sell Connector Park to Hallwill Pty Ltd. The land described as being sold was the land contained in the first three of the folios listed at the outset of these reasons, but in the event of the land contained in the other two folios not having been transferred to the Council by the date of completion, the description included the land in those two folios as well. The price was $3,000,000, payable by a deposit of $1,000,000 and the balance on completion. The sale contract provided for 10 February 2006 as the completion date, which has now passed without completion taking place. By cl 9.1 the purchaser was permitted to nominate, in writing, other persons or corporations to complete the contract.

8 By cl 5 it was agreed that the property was sold subject to all easements which are registered or apparent from an inspection of the property and to all easements disclosed in the contract. The evidence does not establish the extent to which the easement with which I am concerned is apparent from an inspection of the property. It was not disclosed in the contract. Oblique references to it were made in cll 16 and 17(b). By cl 16 it was provided that if at completion the applicant had not transferred Certificates of Title volume 133081 folio 101 and volume 133081 folio 107 to the Council the applicant would transfer those titles to the purchaser. By cl 17(b) it was agreed by the parties: "The Purchaser purchases the land subject to the obligations of the Vendor to JAC" [the respondent] "with respect to construction of access to the residential subdivision of JAC and the Purchaser must indemnify the Vendor in respect of those obligations. All rights to road funding from JAC is to pass to the Purchaser." There is a prima facie case for the respondent that the applicant has failed to comply with cl 6.2 of the Connector Park agreement by ensuring that (all of) its provisions are passed on to, or agreed to by, Hallwill Pty Ltd or its nominee by assignment of the Connector Park agreement or by the relevant parties and Hallwill Pty Ltd or its nominee entering into a new agreement to adopt on the same terms and conditions all of the obligations yet to be performed by the applicant under it.

9 The applicant seeks to have the respondent show cause why the caveat should not be removed. Under the Act, s135(2), I have power to make such order as I think necessary. By an affidavit of Joseph Pintarich, the applicant's director, it is complained that the applicant is unable to complete the sale of the land, pursuant to the sale contract, because of the presence of the caveat. It was his evidence that Hallwill Pty Ltd sought the respondent's consent to the transfer of the land to it and the assignment of the obligations created by the Connector Park agreement, but the respondent specified that its consent was conditional upon the applicant paying $30,000 to the respondent for certain rockworks not carried out pursuant to cl 4.5 of the Connector Park agreement. The obligation imposed on the applicant by cl 5.6 to construct the roadway was an altogether different one than the obligation imposed by cl 4.5, which required certain development work to be carried out within three months after completion. In the course of the hearing, the respondent abandoned its demand in that regard as a condition to allowing the transfer pursuant to the sale contract to proceed. However, the respondent maintained another demand that the purchaser enter into a deed with the respondent which assigns all of the applicant's outstanding obligations under the Connector Park agreement to the purchaser.

10 The evidence of Dean Cocker, who I understand to be the managing director of the respondent, establishes the importance to the financial interests of the respondent of the right of carriageway, the construction of the roadway along it and the Council taking it over. The respondent wishes to subdivide, for residential purposes, its land which is to be served by the roadway, and it appears likely that without the roadway there will be a substantial limitation on the number of blocks that will be allowed. The access issue was one of the principal reasons for entering into the Connector Park agreement. Currently, because the applicant has breached the Connector Park agreement by not completing construction of the roadway, it is not trafficable by vehicles near the respondent's land and as a consequence, it does not provide access by vehicles to that land.

11 On 12 December 2005 Mr Cocker gave to the applicant notice requiring completion of the construction of the roadway by 24 April 2006, making time of the essence. The notice also required the applicant to do all things necessary to ensure that the roadway is taken over as a road maintainable by the Council by 24 October 2006, once again making time of the essence. It was Mr Cocker's evidence that one of the responses of Mr Pintarich was to say that if the notice to construct the roadway was not withdrawn he would see to it that the respondent never gains access by ensuring that the roadway is never finished. Mr Cocker estimates $600,000 as the likely cost of constructing the roadway as at the date of the Connector Park agreement. That agreement requires the respondent to contribute $200,000 of that cost.

12 It was also Mr Cocker's evidence that the respondent has suffered, and will continue to suffer, substantial financial loss because of the applicant's failure to construct the roadway and otherwise comply with its obligations under the Connector Park agreement. He estimates that the applicant's delay in complying with its obligations under that agreement has caused the respondent to suffer in excess of $290,000 in costs and expenses.

13 Since the application concerning the caveat was filed, the respondent has commenced an action against the applicant. In the relief sought in the statement of claim, the respondent seeks an order requiring the applicant to specifically perform each of its contractual obligations in the Connector Park agreement in respect of the roadway; damages for breach of contract; and an injunction restraining the applicant, its servants or agents, from transferring the land unless and until it has complied with each of its construction obligations pursuant to the Connector Park agreement, or it has ensured that the provisions of the agreement are passed on to or agreed to by Hallwill Pty Ltd or any other purchaser of the applicant's land, by assignment of the agreement or by the applicant, the respondent and any such purchaser entering into a new agreement to adopt on the same terms and conditions all of the obligations yet to be performed by the respective parties pursuant to the Connector Park agreement including any liability of the applicant to the respondent to pay damages for breach of contract, and the applicant, the respondent and Hallwill Pty Ltd, and any subsequent purchaser of the land, are each made parties to a deed or instrument of assignment or adoption to ensure that privity of contract exists between the respondent and any subsequent purchaser of the land. By an interlocutory application filed at the same time as the writ, the respondent seeks an order that until further order the applicant, its servants or agents, be restrained from transferring title to any other person of the land comprised in the titles referred to in the caveat.

14 It was submitted by counsel for the applicant that the caveat is defective and that it will remain defective even if there are made the amendments that have been sought by the respondent. I find the submission unimpressive. No argument was advanced that the respondent does not have a caveatable interest by virtue of the right of carriageway provided to it by the Connector Park agreement and the submission of the applicant's counsel seeks merely to raise technical objections to the caveat and not to the claim to a caveatable interest. There is ample authority for the proposition that technical deficiencies in the form and content of a caveat should not be allowed to deprive a bona fide claimant from obtaining the benefits of the caveat. Symmons Plains Pastoral Holdings Pty Ltd v Youl [2005] TASSC 35 at [7]; Four Oaks Enterprises Pty Ltd v Clark [2002] TASSC 39 at [7]; Hooper v ANZ Banking Group Ltd (1996) 5 Tas R 398 at 404. I find this to be a clear case for providing the respondent with whatever protection is necessary for the preservation for the time being of the equitable interest it claims.

15 Counsel for the applicant submitted that I can safely order the removal of the caveat because the Act, s40(3)(e)(ii), provides that the title of a registered proprietor of land is not indefeasible so far as regards an equitable easement, except as against a bona fide purchaser for value without notice of the easement who has lodged a transfer for registration. As it is beyond doubt that Hallwill Pty Ltd knows of the equitable easement that is claimed by the respondent, it was submitted that a transfer of the land to Hallwill Pty Ltd will not wipe the slate clean and that the company's title will be subject to the easement. In response to the apparent merit of that submission, counsel for the applicant pointed out that cl 9.1 of the sale agreement permits the purchaser, Hallwill Pty Ltd, to nominate in writing other persons or corporations to complete the contract, and that it is possible that if I order the caveat to be removed, Hallwill Pty Ltd will nominate another to complete the contract as purchaser and that the nominee might not have notice of the equitable easement, so that the title of the new registered proprietor would indeed be indefeasible vis-à-vis the easement.

16 The conclusion I have reached to resolve these arguments and overcome the apparent determination of at least one of the parties to be uncooperative and not to negotiate a sensible outcome, is that an order should be made requiring the respondent, or its solicitors, to provide a consent to the registration of the relevant transfer from the applicant to whoever takes as transferee. In that way, the respondent will be able to satisfy itself that the transferee will have had notice of the equitable easement. The caveat will remain on the title and will be discoverable upon search being made and in any event, the respondent will be able to give the transferee direct notice of the equitable easement. On an application under the Act, s135, for removal of a caveat, the Court has power to make such order as it considers necessary and an order requiring the necessary consent by the caveator to the registration of the transfer will suffice.

17 I turn to the interlocutory application of the respondent to restrain the applicant, until further order, from transferring title to any other person of the land contained in the certificates of title to which the caveat refers. I mentioned earlier in these reasons that there is a prima facie case for the respondent that despite cl 17(b) of the sale contract, the applicant has failed to comply with cl 6.2 of the Connector Park agreement by ensuring that its provisions are passed on to, or agreed to by, Hallwill Pty Ltd or its nominee by assignment of the Connector Park agreement or by the relevant parties, including Hallwill Pty Ltd or its nominee, entering into a new agreement to adopt on the same terms and conditions all of the obligations yet to be performed by the applicant under the Connector Park agreement.

18 Counsel for the respondent said that his client seeks an interim injunction only until further order and that effectively means until all necessary parties have executed the necessary assignment or new agreement as contemplated by cl 6.2 of the Connector Park agreement. Counsel for the applicant indicated that he expected that if asked the applicant would agree to enter into an assignment that complied with cl 6.2. There appears to be no good reason why it would not be prepared to enter into a completely new agreement, if necessary, instead of merely an assignment.

19 It is obvious what must be done. One of the parties must draft a deed or agreement that conforms with what is expected and required by cl 6.2 and present it to the other party for settlement and eventual execution. For the time being there will be an order, upon the usual undertaking as to damages being given by the respondent, that until further order the applicant, Connector Park Pty Ltd, be restrained from transferring title to any other person of the land comprised in Certificates of Title volume 133082 folio 2, 133081 folio 101 and 133081 folio 107. If there is a failure to provide necessary cooperation by one of the parties then it may become necessary for me to make more specific orders. For the time being the further hearing of the applications will be adjourned sine die.

20 I mention that Hallwill Pty Ltd is not before the Court and the Court should not adversely affect its interests unless it is given an opportunity to be heard. If the matter cannot be resolved through cooperation, it may be necessary for that company to be made a party to the proceedings.