Cudgegong Australia Pty Limited v Transport for NSW

Compensable interest in land 6A number of issues arise in the determination of who has a compensable interest, requiring reference to the Just Terms Act, the Real Property Act 1900 (RP Act), the Conveyancing Act 1919 and the Corporations Act 2001 (Cth). Relevant sections are therefore set out below.

Just Terms Act 7Section 4 defines interest and owner is as follows: interest in land means: (a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land. owner of land means any person who has an interest in the land. 8Section 42 of the Just Terms Act provides: 42 Notice of compensation entitlement and offer of compensation (1) An authority of the State which has compulsorily acquired land under this Act must, within 30 days after the publication of the acquisition notice, give the former owners of the land written notice of the compulsory acquisition, their entitlement to compensation and the amount of compensation offered (as determined by the Valuer-General). (2) The compensation notice must be given to all former owners of the land who, immediately before the acquisition: (a) had a registered interest in the land, or (b) were in lawful occupation of the land (but only if the authority of the State considers they are entitled to compensation), or (c) had, to the actual knowledge of the authority of the State, an interest in the land which entitles them to compensation. (3) If the acquisition relates only to a particular interest in land, the notice need only be given to all such former owners of that interest. (4) The Minister responsible for an authority of the State may extend the period of 30 days within which the compensation notice is required to be given (but not by more than 60 days) if the Minister is satisfied that it is necessary to do so to enable a valuation to be made of any interest in the land concerned. (5) An authority of the State is not excused from the requirement to give a compensation notice because the period during which the notice is required to be given has expired or because the former owner has not lodged a claim for compensation. (6) However, the authority of the State may delay giving a compensation notice if a number of persons claim competing interests in the land concerned. (7) Despite any such delay, the compensation may be paid into the trust account under this Part and advance payments of compensation may be made under this Part. (8) If a former owner of land has not been given a compensation notice as required by this section, the Valuer-General must, as soon as practicable after being requested to do so, give the former owner written notice of the amount of compensation to be offered to the former owner as determined by the Valuer-General. This subsection extends to a compulsory acquisition of land before the commencement of this subsection. 9Section 65 provides: 65 Effect of acquisition of mortgage interest (1) If: (a) land is compulsorily acquired under this Act, and (b) the land is subject to one or more mortgages, then, as a general rule, the compensation to which the owner of the land will be entitled in respect of the acquisition is to be determined as if the land had not been subject to the mortgage. (2) However, if compensation is payable under this Part to a mortgagee in respect of a mortgage interest, the compensation payable to the owner of the land acquired is to be reduced by so much of the compensation as is payable to the mortgagee.

Land and Environment Court Act 1979 10The Court's jurisdiction in proceedings of this type is conferred by s 19(e) of the Court Act. Division 2 includes: Division 2 Claims for compensation 24 Claim for compensation in compulsory acquisition cases (1) If: (a) a claim is made for compensation because of the compulsory acquisition of land in accordance with the Land Acquisition (Just Terms Compensation) Act 1991, Division 2 of Part 12 of the Roads Act 1993 or any other Act, and (b) no agreement is reached between the claimant and the authority required to pay the compensation, the claim is (subject to any such Act) to be heard and disposed of by the Court and not otherwise. (2) The Court shall, for the purpose of determining any such claim, give effect to any relevant provisions of any Acts that prescribe a basis for, or matters to be considered in, the assessment of compensation. (3) (Repealed) 25 Determination of estate, interest and amount (1) In hearing and disposing of any claim referred to in section 24, the Court shall have jurisdiction to determine the nature of the estate or interest of the claimant in the subject land and the amount of compensation (if any) to which the claimant is entitled. (2) In the exercise of its jurisdiction under subsection (1), the Court may order that any other person who claims to have had or who may have had an interest in the subject land at the date of acquisition or taking be joined as a party to the proceedings and may then proceed to determine the nature of the estate or interest of that person and the amount of compensation (if any) to which the person is entitled. (3) (Repealed) 11In relation to statutory powers and duties of a mortgagee exercising a power of sale the following statutes are relevant.

Real Property Act 1900 12Division 3 of the RP Act is titled Mortgages, Charges and Covenant Charges. Section 57(2) states: 57 Procedure on default ... (2) A registered mortgagee, chargee or covenant chargee may, subject to this Act, exercise the powers conferred by section 58 if: (a) in the case of a mortgage or charge, default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage or charge or in the payment, in accordance with the terms of the mortgage or charge, of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or charge or of any part of that principal, interest, annuity, rent-charge or other money, ... 13Section 58 states: 58 Power to sell (1) Where a mortgagee, chargee or covenant chargee is authorised by section 57 (2) to exercise the powers conferred by this section, the mortgagee, chargee or covenant chargee may sell the land mortgaged or charged, or any part thereof, and all the estate and interest therein of the mortgagor, charger or covenant charger, and either altogether or in lots by public auction or by private contract, or both such modes of sale, and subject to such conditions as the mortgagee, chargee or covenant chargee may think fit, and to buy in and resell the same without being liable for any loss occasioned thereby, and to make and execute all such instruments as shall be necessary for effecting the sale thereof, all which sales, contracts, matters, and things hereby authorised shall be as valid and effectual as if the mortgagor, charger or covenant charger had made, done, or executed the same, and the receipt or receipts in writing of the mortgagee, chargee or covenant chargee shall be a sufficient discharge to the purchaser of such land, estate, or interest, or of any portion thereof, for so much of the purchaser's purchase money as may be thereby expressed to be received. (2) No such purchaser shall be answerable for the loss, misapplication, or non-application, or be obliged to see to the application of the purchase money by the purchaser paid, nor shall the purchaser be concerned to inquire as to the fact of any default or notice having been made or served as referred to in section 57 (2). (3) The purchase money to arise from the sale of any such land, estate, or interest, shall be applied, first, in payment of the expenses occasioned by such sale; secondly, in payment of the monies which may then be due or owing to the mortgagee, chargee or covenant chargee; thirdly, in payment of subsequent mortgages, charges or covenant charges (if any) in the order of their priority; and the surplus (if any) shall be paid to the mortgagor, charger or covenant charger, as the case may be. (4) (Repealed)

Conveyancing Act 1919 14Division 2 of the Conveyancing Act is titled powers of mortgagees and persons having the benefit of certain charges. Section 111A (commenced on 1 November 2011) states: 111A Duties of mortgagees and chargees in respect of sale price of land (1) A mortgagee or chargee, in exercising a power of sale in respect of mortgaged or charged land, must take reasonable care to ensure that the land is sold for: (a) if the land has an ascertainable market value when it is sold-not less than its market value, or (b) in any other case-the best price that may reasonably be obtained in the circumstances. (2) Subsection (1) applies to an agent appointed by a mortgagee or chargee to sell the mortgaged or charged land in the same way as it applies to a mortgagee or chargee exercising a power of sale in respect of mortgaged or charged land. (3) Nothing in section 112 (7) or 115 (2) of this Act, or in section 58 (1) of the Real Property Act 1900, affects the duty imposed by this section. (4) The title of the purchaser cannot be challenged on the ground that the mortgagee or chargee has committed a breach of any duty imposed by this section, but a person who suffers loss or damage as a result of the breach of the duty has a remedy in damages against the mortgagee or chargee exercising the power of sale or selling the land. (5) This section has effect despite any stipulation to the contrary. (6) Nothing in this section affects the operation of any rule of law relating to the duty of the mortgagee or chargee to account to the mortgagor or chargor. (7) This section applies to mortgages and charges whether made before or after the commencement of this section but only in relation to a sale arising as a consequence of a default occurring after the commencement of this section. (8) This section extends to mortgages and charges under the Real Property Act 1900.

Corporations Act 2001 (Cth) 15Part 5 of the Corporations Act is headed Receivers, and other controllers, of property of corporations. Section 420A states: 420A Controller's duty of care in exercising power of sale (1) In exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the resumed land for: (a) if, when it is sold, it has a market value-not less than that market value; or (b) otherwise-the best price that is reasonably obtainable, having regard to the circumstances existing when the resumed land is sold. (2) Nothing in subsection (1) limits the generality of anything in section 180, 181, 182, 183 or 184. 16Controller is defined in s 9: controller, in relation to property of a corporation, means: (a) a receiver, or receiver and manager, of that property; or (b) anyone else who (whether or not as agent for the corporation) is in possession, or has control, of that property for the purpose of enforcing a security interest; and has a meaning affected by paragraph 434F(b) (which deals with 2 or more persons appointed as controllers). 17Section 601AD relevantly provides: 601AD Effect of deregistration Company ceases to exist (1) A company ceases to exist on deregistration. Note: Despite the deregistration, officers of the company may still be liable for things done before the company was deregistered. Trust property vests in the Commonwealth (1A) On deregistration, all property that the company held on trust immediately before deregistration vests in the Commonwealth. If property is vested in a liquidator on trust immediately before deregistration, that property vests in the Commonwealth. This subsection extends to property situated outside this jurisdiction. Other company property vests in ASIC (2) On deregistration, all the company's property (other than any property held by the company on trust) vests in ASIC. If company property is vested in a liquidator (other than any company property vested in a liquidator on trust) immediately before deregistration, that property vests in ASIC. This subsection extends to property situated outside this jurisdiction. Rights and powers in respect of property ... (4) ASIC has all the powers of an owner over property vested in it under subsection (2). Note: Section 601AF confers additional powers on ASIC to fulfil outstanding obligations of the deregistered company 18Section 601AH relevantly provides: 601AH Reinstatement ... Reinstatement by Court (2) The Court may make an order that ASIC reinstate the registration of a company if: (a) an application for reinstatement is made to the Court by: (i) a person aggrieved by the deregistration; or (ii) a former liquidator of the company; and (b) the Court is satisfied that it is just that the company's registration be reinstated.

History of Golden Miles's and Cudgegong's interest in the resumed land 19The following facts are not in dispute as I understand the parties' evidence, including the agreed chronology. 20On 12 August 2003 Golden Mile Property Investments Pty Ltd (ACN 105 888 024) was registered. Directors (shareholders): (a)Dilbragh Singh Billing (1 ordinary beneficially held share) (b)Pritam Singh Benipal (1 ordinary beneficially held share) (c)Sukhdev Singh (1 ordinary beneficially held share) 21On 14 August 2003, Golden Mile entered into a Contract for the Sale of Land with Michael and Charlotte Bards to purchase the resumed land for $3.9 million. 22On 12 October 2004 Golden Mile was registered as proprietor of the resumed land pursuant to a transfer (AB45509E). 23On 12 October 2004, Stacks Managed Investments Ltd provided finance to Golden Mile via Mortgage AB45510 in the amount of $2,340,000 (first mortgage). 24On 12 October 2004, Taree Lands Pty Limited (Taree Lands) provided finance to Golden Mile via Mortgage AB75426P in the amount of $400,000 (second mortgage). The balance of the purchase monies was provided by Golden Mile. 25On 12 October 2004 the second mortgage was transferred from Taree Lands to RTS Super Pty Limited (RTS Super) by dealing AB415708M. (executed by the same secretary and director for both Taree Lands and RTS Super: P A Stack and R T Stack). The mortgagees of the first and second mortgages will be known collectively as Stacks. 26On 28 November 2005 a variation of the second mortgage (AB951309K) increased the principal sum to $503,000.00 and changed the term to 1 November 2006. 27On 14 September 2007, Golden Mile was placed into liquidation, the petitioning creditor being the Commissioner of Stamp Duties for non payment of land tax. 28From 14 September 2007 to 21 April 2012 Mr Gleeson was appointed liquidator of Golden Mile by the Supreme Court, Equity Division, no 004200/07. 29On 14 September 2007 caveat AD431062U was entered by Mr Gleeson in his capacity as Official Liquidator of Golden Mile. 30From about January 2008 Golden Mile was unable to repay amounts owing under the first and second mortgages. 31On 5 and 6 February 2008 Stacks sent s 57(2)(b) notices under the RP Act to: (a)Golden Mile c/ Mr Gleeson (Principal: $2,340,000.00, Amount Due: $26,812.50) (b)Golden Mile c/ Mr Gleeson (Principal: $503,000.00, Amount Due: $10,479.17) 32On 13 August 2008 Cudgegong Australia Pty Ltd (ACN 132 709 543) (Cudgegong) was registered. Cudgegong is a corporation controlled by the persons who formerly controlled Golden Mile. Cudgegong directors (shareholding): (a)Pritam Singh Benipal (25 ordinary beneficially held shares) (b)Pardeep Singh Gill (25 ordinary beneficially held shares) (secretary) (c)Sukhdev Singh (25 ordinary beneficially held shares) 33Stacks exercised its power of sale pursuant to Mortgage AB45510 entered into contract for sale with Cudgegong as Trustee for the Cudgegong Farming Unit Trust for consideration of $2,250,000 (first contract). Completion date was 1 June 2012 and notice to complete was 14 days, reasonable time (special condition 32), 1 July 2012 (special condition 40). 34An extract from the Department of Planning and Infrastructure website concerning area 20 dated 19 August 2013 (part of exhibit 1C) shows that the resumed land was included in area 20 in October 2011. 35On 21 June 2012 there was agreement to rescind the contract for sale dated 22 September 2008 between Stacks and Cudgegong as Trustee for the Cudgegong Farming Unit Trust and Dilbagh Singh Billing, Sukhdev Singh and Pritam Singh Benipal (as guarantors). 36On 21 June 2012 Stacks entered into a second contract for sale as mortgagee exercising the power of sale, with Cudgegong as Trustee for the Cudgegong Farming Unit Trust for a consideration of $2,888,648.00. Completion date was 1 July 2013 with time of the essence (second contract).

Acquisition of Property by Transport 37On 31 May 2012, Cudgegong was issued with a Proposed Acquisition Notice (PAN) (s 11 Just Terms Act). Transport also issued a PAN to: (a)Golden Mile (Mr Gleeson as Official Liquidator) (b)Stacks Managed Investments Pty Limited (c)RTS Super Pty Limited (d)Jasjit Singh (as a result of his caveat) (e)Mr Gleeson (as a result of a caveat) 38On 12 July 2012, Cudgegong submitted to Transport a claim for compensation notice (form 2) claiming $19,300,000 market value of the resumed land (s 39 Just Terms Act). A further revised claim for compensation notice dated 7 March 2013 for $16,382,108 was sent. On 13 August 2012 a form 2 was submitted by Stacks and RTS Super. 39On 21 September 2012, the resumed land was compulsorily acquired by Transport by gazetted notice of acquisition (s 20 Just Terms Act). 40At the date of acquisition, Golden Mile was the registered proprietor of the resumed land, being listed in the first schedule on the certificate of title for the resumed land. Golden Mile was a deregistered company at the date of acquisition. The registration of Golden Mile was reinstated under s 601AH(2) of the Corporations Act by order of the Supreme Court dated 21 March 2013. 41On 5 December 2012, a determination of compensation notice was issued to Stacks and Golden Mile in the amount of $4,223,400 that is market value of $4,205,000 and disturbance of $18,400 (Valuer-General Determination). 42On 12 December 2012 a form 2 compensation notice pursuant to s 42(2) of the Just Terms Act was issued to Stacks in the amount of $3,026,478. 43On 12 December 2012, Cudgegong's solicitors, PC Law, were provided with the Valuer-General Determination by Hunt and Hunt, the solicitors for Transport.

Acceptance of compensation by Stacks 44On 19 December 2012, Stacks and RTS Super accepted the amount as determined by the Valuer-General and entered into a deed of release and indemnity with Transport to discharge Stacks' interest in the resumed land in full and final settlement in the sum of $3,043,760 (settlement deed). 45Compensation monies pursuant to that settlement deed ($3,043,760) varies from that as determined in the compensation notice ($3,026,478) because the figure in the compensation notice anticipated a settlement prior to Christmas 2012, however, as settlement was delayed until January 2013, that figure was increased to reflect the additional interest accrued by that time. 46On 17 January 2013, a form 3 compensation notice was sent to Golden Mile c/- ASIC advising $1,179,640 was held in trust. The balance of compensation monies as determined by the Valuer-General are held in Transport's instructing solicitor's trust account.

LEC Proceedings and other matters 47Cudgegong commenced these Class 3 proceedings on 11 March 2013 pursuant to s 67 of the Just Terms Act. Cudgegong has a right of appeal because of s 39 (provision of claim for compensation) and s 67 (appeal against failure to entertain claim for compensation by person who did not receive a compensation notice under s 42) of the Just Terms Act. Cudgegong was not issued with a notice of determination of compensation pursuant to s 42 of the Just Terms Act. Section 39 makes provision for persons with interests in the land, who were not given a compensation notice, to lodge a claim for compensation. If not responded to within 60 days that claim is taken to have been rejected thereby triggering appeal rights under s 67. 48On 16 May 2013, Cudgegong's solicitor wrote to Transport's solicitor enclosing a Direction as to Payment in relation to the 90 per cent advance payment. 49On 26 June 2013, Transport's solicitor responded to the letter stating that they take a neutral position in relation to the advance payment (but did not make it).

Liquidator's involvement 50On 21 April 2012, Golden Mile was deregistered. Golden Mile's only asset was the resumed land. 51On 17 January 2013, Transport notified the Australian Securities and Investments Commission (ASIC) that Golden Mile, as former owner of the resumed land, has a compensable interest in the resumed land, while Cudgegong as a potential purchaser, had a beneficial interest in the resumed land pursuant to the Just Terms Act and that there were surplus compensation monies payable. 52On 4 February 2013, the directors of Golden Mile received letters from ASIC advising of its communications with Transport and that it had no objection to Transport paying the balance of monies to the party it determines is entitled to it. 53On 28 February 2013, Mr Gleeson sought an order from the Supreme Court of NSW to have Golden Mile's registration as a company reinstated. 54On 21 March 2013, the Supreme Court made an order to reinstate Golden Mile. ASIC considered that Golden Mile should be reinstated to assert any claim to the surplus compensation.

Evidence 55Cudgegong tendered a mortgage dated 12 October 2004 in which Golden Mile is the mortgagor and Stacks is the mortgagee (exhibit A). Cudgegong also tendered three other dealings, a mortgage dated 12 October 2004 in which Golden Mile is the mortgagor and Taree Lands is the mortgagee, a transfer of mortgage dated 12 October 2004 in which Taree Lands is the transferor and RTS Super is the transferee and a variation of mortgage dated 28 November 2005 (exhibit B). Golden Mile tendered a letter from Mr Aquilina MP to Mr Singh dated 10 March 2008 (exhibit 1A), the response from Castlehaven Realtors concerning the resumed land dated 1 March 2010 (exhibit 1B), the NSW Government Area 20 Precinct planning report November 2010, an extract from the Department of Planning and Infrastructure website concerning Area 20 dated 19 August 2013 and an extract from the Transport for NSW website titled North West Rail Link first Environmental Impact Statement on public exhibition dated 8 June 2013 (exhibit 1C), a letter from Clayton Utz to Mr Vassili dated 21 February 2012 (exhibit 1D) and the exhibit to Mr Gleeson's affidavit (exhibit 1E). 56Mr Stack swore three affidavits in these proceedings read by Cudgegong. The first is dated 5 July 2013, which sets out steps identified in the chronology above and does not need to be further summarised. The second dated 16 August 2013 responds to Mr Gleeson's affidavit par 60, about Mr Gleeson's concerns about the second contract. The first and second contracts are very similar with the only differences being a new commencement and finishing date, a small difference in payment of interest clauses, additional clauses relating to acquisition of land and a changed purchase price. When Golden Mile went into liquidation in 2007, Mr Stack requested an up to date valuation of the resumed land which valued the resumed land at $1.4 million. Mr Stack became concerned because the principal sum under the first and second mortgages was approximately $2.9 million. The resumed land value had dropped considerably because the resumed land was no longer being considered for inclusion within the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (no longer in area 20). Mr Stack decided not to market the resumed land because of the drop in value. 57The first contract with Cudgegong for $2.250 million was then negotiated and entered into in September 2008. This was explained to Mr Gleeson at the time. This seemed to be the best option as Stacks would have a chance to get back most of the principal sum and it was approximately double what they would get on the open market. 58At the time of negotiating the second contract Cudgegong advised that it required additional time to raise finance in order to be able to complete the purchase. Accordingly Mr Stack negotiated with Cudgegong terms that resulted in the second contract, which was a method of extending the first contract for a further 12 months. Mr Stack believes that both parties benefitted by entering the second contract. For Mr Stack, if Cudgegong had obtained the finance and completed the first contract he would have received his entitlement under the first contract but if Cudgegong could not obtain the finance he would have had the right to terminate the first contract. For Cudgegong it was beneficial because even though the purchase price was higher they did not have to put in any more money as the interest was being capitalised. 59To the best of Mr Stack's recollection the negotiations were only for an extension of the first contract and it was only towards the end of negotiations that Cudgegong's then solicitor suggested that be done by way of a new contract. Mr Stack was happy with this as it would achieve the same result for both parties. Mr Stack did not obtain a further valuation in the period leading up the second contract because he did not think it was required. Mr Stack was aware of Transport's offer to Cudgegong in early 2012 of approximately $4.2 million. Transport's offer of $4.2 million did not influence Mr Stack's decision concerning the purchase price in the second contract as he was initially bound by the first contract and subsequently by the extension of the first contract being the second contract. 60Any upward market movement would not assist Stacks as the price in the second contract enabled the original principal sums to be repaid. Clauses 50 and 52 were included in the second contract to provide protection to and enforce obligations on Cudgegong regarding the compensation to be paid by Transport in the event of compulsory acquisition. Mr Stack does not consider that he breached any obligation to Golden Mile as mortgagee or to ASIC. 61Mr Stack's third affidavit is dated 28 August 2013. It states: 5. With respect to paragraph 7(d) of the Intervenor's Submission which states that the First Contract required completion on 1 June 2012 I note that this was initially agreed to however subsequent to the signing of the First Contract this date was extended by agreement between the parties to 1 July 2012 on or about mid April 2012. Annexed to the affidavit and marked "B" is a copy of an email to the directors of the applicant dated 30 April 2012 confirming that the First Contract is due for completion on 1 July 2012. In this regard, I correct paragraph 9 of my affidavit sworn 5 July 2013, filed 10 July 2013 which incorrectly deposes that "The First contract required completion on or before 1 June 2012". This should read that the First Contract originally required completion on or before 1 June 2012, which this was later extended to 1 July 2012. 7. Further I note that I was informed by the applicant during negotiations to extend the First Contract that the applicant could have completed the First Contract by 1 July 2012 and would obtain alternative sources of finance to do so. 8. In addition I note that the amount owing under the relevant mortgages as at 1 July 2012 was $4,858,415.37. Annexed to this affidavit and marked "C" is a copy of an email dated 19 April 2012 setting out the amount owing under the relevant legislation. 62Mr Stack was cross-examined. Mr Stack's staff have cooperated with Cudgegong concerning the zoning and planning matters relating to the resumed land (TS 79/45) He was aware that efforts were being undertaken regarding rezoning that would change valuation of the resumed land (TS 81/10). Mr Stack kept his finger on the pulse of what happening regarding release and rezoning of land as that affected the value and marketability of the resumed land (TS 81/82). A valuation was conducted in December 2007 and in 2004 when he first made the loan (TS 82). No other valuations were conducted before or since those dates (TS 82). He received a letter in 2012 from the solicitors for Transport with an offer based on a valuation of $4.3 million. In 2007 the resumed land was not going to be within the release area (area 20) (TS 83). 63Mr Stack was familiar with the effect of the global financial crisis on property prices. Property prices in Sydney did not drop significantly (TS 84). The valuation in 2007 was $1.4 million because there was no anticipation of rezoning in less than 25 to 30 years, and no value was being assessed in that valuation for potential subdivision and sale for residential lots (TS 85). He was later told of the change in situation in approximately 2010 (TS 86). Mr Stack learnt that the resumed land was rezoned for residential use in October 2011 (TS 87). Mr Stack was aware of each step in the rezoning process because he was told by members of his staff (TS 89). 64Mr Stack's second affidavit par 18 and 19 refer to negotiations between him and Cudgegong concerning the second contract. No other parties were negotiated with (TS 98). Mr Stack was aware in April 2012 of an offer to be made to Cudgegong by Transport of approximately $4.2 million to purchase the resumed land outside the compulsory acquisition process (TS 98). Mr Stack was then aware that the resumed land was unlikely to realise less than $4.2 million if sold on the open market, similarly if Cudgegong resold the resumed land (TS 99). Mr Stack was shown the second contract and he identified the new conditions 49 to 52 which were not in the first contract (TS 99 -100). The first and second contract were otherwise in similar terms with an extra $500,000 in the second contract plus capitalised interest (TS 100). 65No sale of the resumed land was advertised at any time when Mr Stack was acting as mortgagee in possession. There was no point advertising regarding the first contract because the sale price was going to be approximately $1 million and there was $3 million owing under the mortgages. Mr Stack later negotiated with the former directors of Golden Mile over six months in which they indicated they would pay a higher price. The second contract was not an independent contract but an extension of the first contract. Golden Mile was then in liquidation and had been removed from the register. In these circumstances there is no need to re-advertise a property when you are extending a contract for sale as a mortgagee (TS 101 -102). 66In an email dated 30 April 2012 Mr Stack made the first contract time of the essence (TS 103). Mr Stack said it was not the case that one of the reasons why the second contract was negotiated was because Cudgegong had indicated that they needed more time to pay than provided by the first contract (TS 103). Mr Stack stated that Cudgegong had indicated that they may get outside finance and they had approached other people. If they had gotten the outside finance the matter would have been settled but in his view the contract was extended and there was consideration for doing so (TS 103). Mr Stack disagreed with the proposition that he was not told by Cudgegong that they were in a position to complete the first contract (TS 106). 67Mr Stack denied that the only consideration when entering the second contract was to recover the debt that was payable to his firm. At that stage the debt owing to the mortgagees was $4.8 million, the contract would have come to an end and the mortgagees would have gotten the majority of that back from Transport. That was in Stacks' interests if Cudgegong could not obtain their finance. If Cudgegong obtained the finance then the matter got completed and Stacks got less money. The agreement to extend the contract was probably entered into in about May and Cudgegong still had six weeks to complete the first contract which was a win-win situation in Mr Stack's view. Stacks would get more money for the resumed land, Cudgegong did not have to take the risk that perhaps they would not get finance. Mr Stack felt that Cudgegong would get the finance because the resumed land was worth $4.2 million and the finance they needed was approximately $2.3 to 2.4 million (TS 106). 68Mr Stack agreed that the two considerations were to recover his own debt and enable Cudgegong to achieve any upside in the changing value of the resumed land. Cudgegong had spent about $900,000 in interest payments during the period of the contracts and he would have liked them to achieve what he felt they were entitled to (TS 106). 69Golden Mile was in liquidation and the debt owed to Stacks was $4.8 million. If Golden Mile had been involved they would not have gotten anything as the compensation offered was $4.2 million. In Mr Stack's view Golden Mile was not legal and not relevant (TS 107). Mr Stack agreed that the extent of the answer he gave was reasoning in hindsight about the contract that he made. Mr Stack did not consider taking any additional steps beyond negotiating with Cudgegong to realise a higher price for the resumed land. However Mr Stack disagreed with the proposition that these thoughts only occurred to him in the course of these proceedings 70Mr Singh swore an affidavit dated 8 July 2013 read by Cudgegong. In par 10 he states that the first contract was rescinded because Cudgegong required an additional 12 months to raise finance for the purchase of the resumed land. In examination in chief, Mr Singh stated that he informed Mr Stack that Cudgegong would be in a position to complete the first contract by 1 July 2012 as Cudgegong would have obtained alternative sources of finance to enable this to occur, at some stage in a series of meetings in April or May 2012 (TS 115). 71Mr Singh was cross-examined. He was a director of Golden Mile in 2007 and at the time Golden Mile went into liquidation (TS 116). Mr Singh completed the report as to affairs valuing the resumed land at $3.9 million (TS 117) with an amount owing on the mortgages of $2.84 million (TS 118). He participated in the negotiations for the first contract on behalf of Cudgegong with Stacks in 2008 (TS 118). Under the first contract he obtained a deal under which he was able to obtain the right to buy the resumed land, pay a very low deposit and did not have to pay the purchase price for a long time but pay interest every month (TS 118). He could pay the purchase price earlier if he chose to (TS 119). Mr Singh was waiting to see whether he would be successful in having the resumed land released and rezoned so that he could determine if he should complete the contract or not. The main goal was to save themselves from bankruptcy (TS 119). In 2003 there was no growth centre commission and under the Rouse Hill Infrastructure Consortium the area was included for future rezoning. Sometime in 2007 the area was cut in half from Second Ponds Creek so only half of the area was going to be rezoned into area 20 (TS 120) so the resumed land was excluded from area 20. Mr Singh along with many others took steps between 2008 and 2011 to ensure the resumed land was rezoned (TS 119-120). The campaign was successful and the resumed land was rezoned in October 2011. 72Mr Singh had meetings in April and May 2012 with Mr Stack and was aware of an offer of $4.3 million from Transport to purchase which offer was not accepted (TS 122-123). The purpose of entering the second contract was the hope of receiving more than $4.3 million for the resumed land (TS 123). In the first half of 2012 Mr Singh and others would have raised the money required to settle the first contract (TS 123). Mr Singh was fully ready to settle the first contract (TS 124). Mr Singh did ask Mr Stack for more time as part of the negotiations as early as March 2012 (TS 124). The reasons Mr Singh gave Mr Stack for asking for the extension was to have the company's financial situation settled and to act in the best interests of the company (TS 125). 73Mr Gleeson, the liquidator of Golden Mile, swore an affidavit dated 7 August 2013 read by Golden Mile. He is a registered liquidator of long experience including experience in the sale of property. He became the liquidator of Golden Mile on 14 September 2007 and received a report as to affairs which identified the creditors of the company. A copy of the report as to affairs is attached to his affidavit. He has received one proof of debt from one of Golden Mile's creditors. There are a further 16 creditors from whom formal proofs of debt might be received (par 20). The total value of Golden Mile's creditors in the report as to affairs excluding mortgages and taxes was $2,780,297.59 (par 21). No dividend has been paid to any class of Golden Mile's creditors (par 22). He refers to the making of the first contract and gives evidence of his attempts on 11 April 2008 and 1 March 2010 to obtain from Mr Stack a copy of the 2007 valuation Mr Stack had relied upon. In evidence is the correspondence with Stacks rebuffing his initial attempt on 15 April 2008 before he obtains it on 5 March 2010. 74Mr Gleeson made attempts to keep up his enquiries with Mr Stack about the progress of the resumed land and of the concerns that he had that he was receiving further demands for land tax from the Office of State Revenue. He had concerns regarding the value likely to be realised for the resumed land if it was sold in accordance with the first contract. In evidence is an exchange of correspondence between him and Mr Stack in which he is expresses his concerns about the danger that the resumed land was being sold at an undervalue. 75Mr Gleeson initiated the temporary deregistration of Golden Mile and its re-registration. When Mr Gleeson reviewed the second contract he became concerned about whether Stacks had complied with its legal obligations when exercising its power of sale under the second contract. There did not appear to be any support for the contract price in the second contract being either market value or the best price reasonably obtainable considering that since the first contract the resumed land had been incorporated back into the area 20 precinct, the NSW Government had announced the North West rail link, Transport had confirmed its intention to compulsorily acquire the resumed land and the second contract contained provisions that indicated Stacks and Cudgegong had changed the conditions between the first and second contract to reflect the probable compulsory acquisition. 76Mr Gleeson received a letter for ASIC dated 4 February 2013 stating that the resumed land was acquired by Transport for $4,223,400, an amount of $3,043,760 was paid to Stacks and an amount of $1,179,340 remained payable. 77Mr Gleeson stated in examination in chief that he had made inquiries of a real estate agency Castle Haven Realtors and received a written report in 2010 (exhibit 1B). The NSW Government Planning Area 20 Precinct shows the resumed land inside the boundary of area 20, Sydney's Growth Centres showing the North West Rail Link Corridor and the North West rail link report all from the NSW Government website were tendered (exhibit 1C) (TS 135). Mr Gleeson stated that he has experience in selling properties as a liquidator and controller of a company for the purposes of the Corporations Act. As an insolvency practitioner the method of sale adopted for this property typically would be to have a current valuation at least when the initial contract is done and external marketing may have been undertaken. Mr Gleeson's concerns about the exercise of the power of sale were that there was no current valuation at the time and the lack of external marketing undertaken (TS 139). 78Mr Gleeson was cross-examined. Mr Gleeson stated that based on the information provided by Mr Dick, counsel for Cudgegong, he accepted that the secured debt owed by Golden Mile to Stacks as at 1 July 2012 was approximately $4.8 million (TS 152). Mr Gleeson stated that Golden Mile has not paid any part of the secured debt back to Stacks (TS 153). On the available facts it would appear reasonable that if Mr Stack could break contractual relations with Cudgegong the best amount he could have gotten was $4.2 or $4.3 million. Mr Gleeson accepted that based on what Mr Dick had presented in Court, on the best case there still would have been no return to Golden Mile based on the amount of the secured debt with a shortfall of approximately $600,000 (TS 156). Mr Gleeson stated that based on the facts put to him by Mr Dick, it was difficult to see how Golden Mile's interest was sacrificed by Stacks (TS 158). Mr Gleeson agreed with the proposition that if there had been any sacrificing of interests it was Stacks' interests that were sacrificed because he agreed to take less from Transport than he was owed under the mortgage (TS 158). Mr Hall, counsel for Golden Mile objected on the basis that Mr Gleeson's acceptance of these propositions is only as good as the assumptions he has accepted (TS 158-159). Mr Gleeson stated that but for Mr Stack's affidavit dated 28 August 2013 outlining that there was still an amount outstanding under the mortgage, Mr Gleeson would have gone forward on the premise that there was a letter from ASIC outlining there were surplus funds (TS 159). 79It is agreed that Golden Mile has a bare legal interest in the resumed land and is an owner as defined in s 4 of the Just Terms Act. Golden Mile disputes that Cudgegong has any relevant interest. Each says it has an equitable interest which trumps the other in order of priority after Stacks' interests and is therefore the entity which is entitled to the balance of the compensation held in the trust account and the right of appeal presently being exercised by Cudgegong. Identification of the holder of the equitable interest in the resumed land requires determination of whether Golden Mile or Cudgegong was an owner once the mortgages were discharged.

Equitable interest 80The determination sought is that Golden Mile was the legal and equitable owner of the resumed land at the date of acquisition of 21 September 2012 and therefore has the statutory right to any remaining compensation and to conduct any appeal against the Valuer-General's assessment. Golden Mile was the legal owner at all relevant times and also had the equitable right of redemption as mortgagor to get the resumed land reconveyed to it after the mortgage was paid out. Cudgegong never became the equitable owner of the resumed land. Firstly, the completion date did not arrive before acquisition. Secondly, Stacks breached its duty as mortgagee in possession to Golden Mile to take all reasonable care to sell the resumed land at not less than market value or the best price reasonably obtainable when exercising its power of sale of the resumed land. Specific performance would not have been ordered by a court of equity just before acquisition had such an action been taken by Golden Mile. Golden Mile retains the equity of redemption in these circumstances. It can only be lost where there is a validly exercised power of sale by a mortgagee after contracts are exchanged. Forsyth v Blundell (1973) 129 CLR 477 identifies the relevant principles. 81At some stage of the sale process in some circumstances before a final deed of conveyance, equitable or beneficial title can pass to the purchaser. That doctrine does not apply if the contract for sale made by a mortgagee in possession is invalid. A purchaser must be entitled to a decree of specific performance of the contract and Cudgegong was not so entitled. 82For Cudgegong to have a relevant interest in the resumed land equitable ownership had to have passed to Cudgegong at the date of acquisition. The issue of when equitable ownership passes before a contract is completed has not been definitively determined in Australia. The clear weight of authority is that it does not arise until the purchase price is paid; Chang v Registrar of Titles (1976) 137 CLR 177 at 181, 183.

Breach of mortgagee's duty 83A mortgagee's duties on the sale of land were identified by the High Court in Forsyth v Blundell. Statutory mortgagee duties are identified in s 111A of the Conveyancing Act and s 420A of the Corporations Act. The test of whether a mortgagee has breached its duty to properly exercise the power of sale under the RP Act is an objective one and the legal status of the mortgagor, here Golden Mile as a deregistered company in July 2012, is irrelevant. The focus of the Court's inquiry must be solely on Stacks' actions. 84Only the second contract is relevant. The first contract was discharged by deed signed by Stacks, Cudgegong and the guarantors in June 2012. The second contract was executed by deed signed by Stacks, Cudgegong and all the guarantors immediately after the first was rescinded (Mr Stack affidavit 28 August 2013). The second contract was independent, contrary to Mr Stack's oral evidence that it merely formalised an extension of the first contract. His evidence in the 16 August affidavit par 5 was that the second contract had new start and finish dates, different clauses regarding payment of interest, the addition of clauses specifying rights and obligations in the event of an acquisition of the resumed land, and a changed purchase price of $500,000. The second contract was unequivocally a second sale. 85The purchase price of the second contract is built on the purchase price of the first, the difference being represented by additional capitalised interest plus $500,000. The purchase price of the first contract was based at least in part on a valuation obtained by Mr Stack in December 2007. That valuation makes clear, and Mr Stack readily agreed in cross-examination, that it was based only on the value of the resumed land for rural residential use. It took no account of its future potential for residential subdivision and development. That was because the view then formed was that it would be 25 to 30 years until the precinct was released and rezoned for such development: exhibit 1E at 181 and 184. Mr Stack agreed that he noted these matters when he read the valuation at the time. He agreed that he knew there were matters that significantly affected the value of the resumed land. The 2007 valuation was performed at the depth of the global financial crisis: exhibit 1B (Castlehaven report). 86Mr Stack or one of his staff agreed the purchase price in the second contract without obtaining a fresh valuation. Mr Stack was fully aware at the time the second contract was made that the land had been included in a precinct known as area 20 which was on a much faster track for release and rezoning. He was aware that the release of that precinct for detailed precinct planning had occurred by at least the end of 2010. He was aware that the rezoning had occurred by the end of 2011 although somewhat unsure of the precise date. He is an experienced property industry professional familiar with the cycles of rise and fall in the market and was aware that there had been a general improvement in property values between 2008 and 2012. 87The combination of those factors means that Mr Stack or the executives of his companies who negotiated the second contract must have known that the 2007 valuation was not a reliable guide to the market value of the resumed land. They had a clear obligation to obtain up to date information regarding that value in order to ensure that they realised the best price for it. They took no such steps. He agreed he had not. 88Worse, they had positive evidence by the time they made the second contract that the resumed land was sure to realise at least $4.285 million in an open market sale. Stacks had received a binding offer for approximately that amount from Transport on 21 February 2012 (exhibit 1D). They were aware that the view of Cudgegong was that it might be able to obtain even more than that as compensation if the resumed land were purchased by Transport or compulsorily acquired. In those circumstances, even without all the defects of the five year old valuation, Mr Stack and his team were on notice that the $2.8 million specified as the purchase price in the second contract was very likely to be at a significant undervalue. They were well aware that the 2007 valuation had been superseded. 89Mr Stack gave oral evidence to that effect when he said that he was aware that the land value and its marketability could change significantly according to which stage of the planning process the resumed land was up to, and that he was well informed and up to date with the planning and zoning developments taking place with the resumed land and accepted that the resumed land was unlikely to realise less than $4.2 million if sold on the open market. The 2007 valuation had assumed rezoning in 25-30 years but it had in fact occurred within four years. 90Mr Stack's oral evidence is that he considered a win-win position for his companies and also Cudgegong, not Golden Mile. He did not consider taking additional steps at the time of negotiating the second contract, despite knowledge of Transport's offer of $4.285 million in February 2012. He arranged a new contract for a further 12 months with Cudgegong with no attempt to realise any improved value for the improved market conditions or significant rezoning of the resumed land. A value greater than $2.8 million is not in doubt. 91If the Court finds a breach of duty by Stacks in the exercise of sale powers up to the date of completion of sale, Golden Mile has an equity of redemption which defeats Cudgegong's interest if any. 92Cudgegong says there was no breach because there was no second contract just an extension of the first, Golden Mile did not exist at the time the second contract was entered into, and there is no utility in these proceedings because more was owed under the two mortgages than was offered by Transport so nothing would be left. Firstly, the second contract was new. Alternatively (secondly), Golden Mile did exist as provided under the Corporations Act s 601AH(5) so that the Court must assume that if Golden Mile had litigated to challenge the sale by Stacks it would have been successful in obtaining an injunction to restrain the sale and an order for rescission of the contract. Any property vested in ASIC (ss 601AD(1A)). Golden Mile was the legal owner of the resumed land and had an equity in redemption, a latent right to appeal under the Just Terms Act if an acquisition occurred, and a proposed acquisition being known when the second contract was entered into. Mr Stack's evidence is that he did not consider Golden Mile's interest. 93Thirdly this action is not futile where mortgage repayments were greater than as paid out by Transport. The explicit assumptions put to Mr Gleeson were that the debt owing under the mortgages was $4.8 million and the best that could be achieved was $4.2 and 4.3 million (accepting that the debt owed is $4.8 million given the late evidence admitted by me which Golden Mile was unable to challenge given the timeframe of the hearing). Cudgegong is contending for a valuation of $16 million as market value in these proceedings. Further if Stacks had sought a price of $4.2 million then Golden Mile's unsecured creditors would have been better off because some distribution of assets would have been available through the balance of the purchase price (here the balance of compensation payable by Transport) albeit for less than 100 cents in the dollar. 94The reasoning in McMahon v Sydney County Council (1940) 40 SR (NSW) 427 and Austin v Sheldon [1974] 2 NSWLR 661; (1974) 31 LGRA 274 relied on by Cudgegong was predicated on the understanding the parties were able and ready to complete the contract for sale (an explicit finding in McMahon, an implicit finding in Austin given that the reasoning of McMahon is adopted). Further, the authorities in Roderick Pitt Meagher, John Dyson Heydon and Mark James Leeming, Meagher, Gummow and Lehane's equity: doctrines and remedies (4th ed 2002 Butterworths LexisNexis) confirm that it is not settled when and whether any equitable interest transfers prior to the payment of a purchase price.

Equitable interest 95The Court should be satisfied that Cudgegong has an equitable interest in the resumed land at the date of acquisition within the meaning of that expression in s 4 of the Just Terms Act, where it is defined as "(a) a legal or equitable estate or interest in the land". Cudgegong's interest was the ability to become the registered proprietor of the land on the completion of the contract for the sale of the resumed land. That was an enforceable right in the manner discussed by the High Court, inter alia, in Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315. In Tanwar at [53] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ, citing Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 it was said "consistently with authority in this Court, that the interest of the purchaser is commensurate with the availability of specific performance". The interest of the purchaser is an equitable interest in the land: see Stern at (1988) 165 CLR 489 at 537 and Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 at 456-457. 96In effecting a sale of the property, the extent of the liabilities to the mortgagees would be paid out and the balance of any surplus funds would then go to the mortgagor/registered proprietor. The "interest" of Golden Mile is as mortgagor. Because of the existence of the second contract, Golden Mile was not going to be entitled to any further monies, because the contract price is an amount less than the amount otherwise owed to Stacks. Therefore there were no surplus funds and therefore no money would be owing to Golden Mile in the future on the completion of the second contract. The interest of Golden Mile relates only to monies available following completion of the second contract after Stacks had been paid out. 97By reason of the second contract having been entered into pursuant to Stacks' power of sale, any interest of Golden Mile in the resumed land is defeated by the interest of Cudgegong as purchaser. The interest of Cudgegong was commensurate with the availability of specific performance. 98Firstly, the authorities of McMahon and Austin are directly on point and support Cudgegong's approach that it had an equitable interest in the resumed land at acquisition. They are contrary to Golden Mile's assertion that Cudgegong has no equitable interest. These cases confirm that Cudgegong had an equitable interest in the resumed land which entitled it to specific performance of the second contract, which is an interest in land as an owner as defined in s 4 of the Just Terms Act. The value of the interest is essentially the difference between what Cudgegong had agreed to pay Stacks and what would otherwise be the market value of the resumed land. Any difference between those sums would be to the benefit (or indeed the liability, if it were lower) of Cudgegong. 99Secondly, there was no loss suffered by Golden Mile that is compensable under the Just Terms Act. Golden Mile was not the vendor under the second contract so it could not even be said that it lost the benefit of the purchase price under the second contract (McMahon at 436, and Austin at 674). Golden Mile was bound by the second contract. Golden Mile has never been in a position to redeem the mortgages and there is no basis for its interest having priority over Cudgegong's. The vendor was Stacks exercising its power of sale under the mortgages. Stacks was compensated in accordance with its entitlement as owner under the Just Terms Act. Stacks received approximately $3 million from Transport which compensated it for the loss of the purchase price under the second contract ($2.88 million) plus an amount it considered appropriate to address its exposure under the mortgages. As mortgagor, Golden Mile had no entitlement to any excess of market value of the resumed land over the purchase price (McMahon at 436, and Austin at 674-5). Golden Mile did not even exist at the time of the second contract, it having been deregistered on 21 April 2012. As at the effective date of compulsory acquisition on 21 September 2012 (s 19, Just Terms Act) Golden Mile was indebted to Stacks in an amount in excess of $4.86 million (Mr Stack affidavit 28 August 2013 at par 8), well in excess of the $4.2 million which Transport agreed to pay in compensation. 100Golden Mile has never offered to pay out the mortgages which is a necessary precondition to the exercise by it of its residual right to redeem. It has never had funds enabling it to pay out a mortgage debt in excess of $4.8 million. Only if the mortgage debt is able to be paid out is there an equity in redemption.

No breach of mortgagee's duty when exercising power of sale 101There was no breach of duty by Stacks which vitiated the second contract. The interests of the mortgagor were not sacrificed. The principles relating to a breach of duty by a mortgagee are summarised in Artistic Builders v Elliott & Tuthill Mortgages Pty Ltd [2002] NSWSC 16. Golden Mile was deregistered on 21 April 2012 and did not exist in June 2012 per s 601AD(1) of the Corporations Act. No relevant duty was therefore owed to it at the time of the second contract. It was reasonable of Mr Stack to take into account this fact. That the liquidator did not anticipate the first contract being renegotiated or a further contract being entered into does not retrospectively create a duty where none existed. Section 601AH(5) does not have that effect as supported by the reasoning in Joro Pty Ltd v State Bank of New South Wales Ltd (Supreme Court (NSW), Young J, 8 December 1992, unreported) and Diamond Hill International Pty Ltd v Xu [2001] FCA 531. In September 2012 Golden Mile could not perform its obligation as mortgagor and did not exist as a company. Section 601AH(5) does not allow a deregistered mortgagor to say later after reregistration that a matter should be considered as if it had come to court to restrain the sale of the land at the time the mortgagor was deregistered. No relevant property was vested in ASIC at the time of registration and s 601AD does not make provision for future property. 102The second contract should be viewed as an extension of the first contract, a transaction which favoured Stacks and Golden Mile at the expense of Cudgegong. That was Mr Stack's understanding according to his affidavit sworn 16 August 2013 par 22. The time for completion of the first contract was varied to 1 July 2012 so that at the time of entry into the second contract on 21 June 2012 Cudgegong retained its right to have the first contract performed. Mr Singh gave evidence that it could do so in his 28 August 2013 affidavit and in his oral evidence. 103Under the second contract Cudgegong paid an additional $500,000. There was no point in advertising to find another purchaser as Cudgegong could complete the first contract. Golden Mile relied on the absence of advertising and obtaining a further valuation in June 2012. Mr Stacks gave reasons for why he did not. The second contract was an extension of the first, the purchase price increased by $500,000 assisting Stacks to recover its debt from Golden Mile as mortgagor. If Cudgegong was unable to complete Mr Stack was confident that $4.2 million could be recovered from Transport (TS 106-107). 104There was no prejudice to Golden Mile's interests given the amount of the mortgage debt was $4.8 million as at July 2012. Mr Stack so stated at TS 197.10 and as explained in his affidavit dated 28 August 2013, annexure C. Mr Gleeson accepted that figure in cross-examination. 105Mr Stack was entitled to consider that the market value of the resumed land was $4.2 million being Transport's offer. While Cudgegong wishes to argue in these proceedings that the resumed land is worth more, that does not impose a duty on Mr Stack to go beyond the statutory valuation underpinning Transport's offer. 106There has been no departure from reasonable standards so serious as to be properly characterised as unconscionable such that the mortgagee could be accountable on the basis of wilful default for the price which would have been obtained if the mortgagee had not been guilty of unconscionable conduct per Artistic Builders Campbell J at [87].

Cudgegong has compensable interest in resumed land 107Under s 25 of the Court Act the Court has jurisdiction to determine the nature of any interest in land and the amount of compensation to which a claimant is entitled under the Just Terms Act. The definition of interest and hence owner of land in s 4 of the Just Terms Act is broad. Subsection (a) is the part of the definition relied on by the parties in this case. The interest crystallised on 21 September 2012 being the date of the gazettal notice for the compulsory acquisition by Transport. This is not a straightforward question on the facts of this case in that the compulsory acquisition was of land in the process of being sold by a mortgagee in possession. No case in which this precise circumstance has arisen was identified by the parties. 108Golden Mile through Mr Gleeson, liquidator, said that it has an equitable interest beyond the bare legal interest as the right of a mortgagor to get property back in full after the debt to a mortgagee has been paid out, the equity of redemption. That a liquidator is appointed is irrelevant to this right, that simply relates to how the company is represented in the proceedings. Generally, under law developed to distinguish interests in land, an earlier interest prevails over a later interest. If the beneficial interest stays with Golden Mile as mortgagor then it cannot move to Cudgegong. No interest has arisen in Cudgegong because based on the authorities this does not arise until payment of the purchase price which could not happen given the acquisition by Transport. 109Cudgegong asserted an interest as defined in s 4 of Just Terms Act as the incoming purchaser under the second contract for sale, an equitable interest that can seek specific performance of the second contract. At the date of acquisition Golden Mile held a legal interest subject to Stacks' power of sale. The second contract dated June 2012 was made in the course of the exercise of that power of sale and was binding on Golden Mile to complete so that Cudgegong's interest took priority prior to completion of the contract. This is confirmed by RP Act s 57(2), s 58 and s 59 and the principles in Forsyth v Blundell. Cudgegong takes priority over Golden Mile unless Stacks has acted improperly. Where there is a proper sale by a mortgagee according to Forsyth there is no interest in the land that could be asserted by the mortgagor in priority to the incoming purchaser. Unless a contract can be set aside for some reason the interest in the land in the uncompleted contract of sale is held by an incoming purchaser (TS 91-92). This principle was accepted by Young J in Chia v Rennie (Supreme Court (NSW)), Young J, 16 May 1997, unreported) in which his Honour stated that Waring, Lord v London & Manchester Assurance Company Ltd [1935] Ch 310 applies in the Torrens system. 110I generally agree with Cudgegong's submissions for the following reasons. The starting point for the analysis must be the right of Stacks to possess and sell the land under the mortgages with Golden Mile, which right is not in dispute. The second contract is binding on Golden Mile absent any failure by Stacks in the exercise of the power of sale. The power to do so is confirmed by sections 57(2), 58 and 59 of the RP Act. Forsyth confirms this approach at 499 per Walsh J: If a contract of sale had been made which was not affected by any impropriety, it would not have been open to the mortgagor to claim that until the contract had been completed his right to redeem the mortgage continued notwithstanding the contract and was superior to the right of the purchaser. Although he retained his title to the land this was subject to the power of sale as defined in the Ordinance and as incorporated into the mortgage instruments. In my opinion, a contract of sale properly made in the course of the exercise of that power is binding upon the mortgagor, not because the mortgagee contracts as agent for the mortgagor, but because by entering into a mortgage to which the Ordinance applies the mortgagor makes his own rights subject to its provisions, including those which confer and regulate the power of sale, and, therefore, subject to any action which is properly taken in good faith by the mortgagee. On this question, I regard as applicable and as correct the decision in Waring (Lord) v. London and Manchester Assurance Co. Ltd. (1935) 1 Ch 310 , approved in Property & Bloodstock Ltd. v. Emerton (1968) 1 Ch 94 , that a contract by the mortgagee to sell the resumed land is binding, before completion, upon the mortgagor unless it be proved that the mortgagee exercised his power of sale in bad faith. 111In relation to the nature of the interest of Cudgegong as the incoming purchaser in a contract for sale of resumed land, two decisions of single judges of the Supreme Court consider that matter, McMahon and Austin. McMahon concerned a compulsory acquisition under the Sydney Corporation Act 1932 as then in force and a provision, I was informed, similar to s 20 of the Just Terms Act. Austin concerned the exercise of compulsory acquisition powers under the Local Government Act 1919, as then in force. Compulsory acquisition brings a contract of sale of the acquired land to an end and all estates and interest are vested in the acquiring authority with any rights or interests under the contract turned into a claim for compensation per Jordan CJ in McMahon at 435, Austin per Mahoney J referring to various authorities at 667-673. 112In McMahon Jordan CJ held at 436 that the owner had the legal estate in the land and held it subject to the obligation and with the right to convey the resumed land to the purchaser for value. The owner's position was analogous to a mortgagee in possession (in this case). The purchaser had the equitable interest in the land, because he had agreed to purchase the land by a contract for which a decree of specific performance would be made in equity, a position analogous to a mortgagee (the purchaser in this matter). The purchaser lost the right to enjoy the land itself but was relieved from having to pay the purchase price. To the extent the land was worth more than the purchase price this was a loss to the purchaser. If the land was worth less than the purchase price no loss was suffered by the purchaser. 113In Austin Mahoney J in considering the effect of a resumption on parties' rights under an uncompleted contract for sale adopted the approach of Jordan CJ in McMahon, at 675A. In Austin the value of land at the date of resumption was greater than the purchase price and the benefit of that excess, it was held, accrued to the purchaser, at 675B. 114In Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219; (2009) 173 LGERA 155 a decision under the Just Terms Act, the incoming purchaser was seeking market value greater than the purchase price under an uncompleted contract for sale of land. No issue arose as to the nature of that interest or the ability of the incoming purchaser to seek compensation as presumably there was no dispute about it. There is no reference to McMahon or Austin in that case. This judgment follows earlier extensive litigation in this Court, the Court of Appeal and the High Court where this issue also did not arise. Had there been such an issue it is very likely to have been aired in that litigation. 115While Golden Mile's counsel sought to distinguish the facts of McMahon from this case on the basis that the resumption took place close to the planned settlement date so that the parties had completed most of the steps necessary to finalise the sale, that does not appear to be a relevant factual distinction. There is no suggestion before me that the second contract for sale could not be completed by its due date, it just happens that compulsory acquisition occurred earlier in the sale process than in McMahon. In that matter the acquisition took place very close to the planned settlement date. 116I am not bound by McMahon or Austin but as the reasoning reflects the statutory framework before me, it does not appear to be incorrect and such an approach has been adopted (without dispute) in other Just Terms Act acquisition cases in this Court, such as Walker, I consider I should also apply it in this matter. 117Given these authorities directed to the statutory framework of compulsory acquisition, the relevance of other cases referred to by the parties concerning when an equitable interest is transferred in the course of a contract for the sale of land has less relevance. To the extent I need to canvass this I note that it is uncontroversial that specific performance can be ordered once a contract price is paid. The issue is whether Cudgegong's right to specific performance arises earlier. According to Tanwar (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ) there is an equitable interest of a purchaser enforceable commensurate with the possibility of specific performance. Uncertainty about when there is a transfer of equitable ownership where consideration has yet to be paid under a contract is identified in Meagher, Gummow and Lehane's equity: doctrines and remedies at 226. That discussion is not grounded in the consideration of the statutory regime before me but is considering the question of equitable interest more generally. While McMahon and Austin are cited in Meagher, Gummow and Lehane's equity: doctrines and remedies, that is in the context of discussing various phrases used by judges to describe the vendor in such a situation. This does not impinge upon my analysis of the applicability of McMahon and Austin in this case. 118My finding that I should adopt the approach in McMahon and Austin means that the first argument raised by Golden Mile that the equitable interest could not pass until payment of the purchase price must fail. Cudgegong potentially has a compensable interest as an incoming purchaser as provided in McMahon and Austin subject to whether I need to resolve that Stacks was in breach of its mortgagee's duty to Golden Mile in order to determine whether specific performance would have been granted to Cudgegong. The next relevant inquiry is what kind of interest Golden Mile has.

Golden Mile does not have an interest in land as defined in the Just Terms Act 119Golden Mile asserted its equitable interest as being the equity of redemption. According to Clyde Croft and Robert Hay, The Mortgagee's Power of Sale (3rd ed 2013, LexisNexis Butterworths) at 11.4 the equity of redemption exists where a mortgagor tenders principal, interest and costs to the mortgagee or pays this into a court in proceedings citing Waring (Lord) v London and Manchester Assurance Co Ltd [1935] CH 310 at 317; see also Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164-165, 168-169. The right can found a court action to restrain a mortgagee exercising the power of sale under a mortgage. Once a contract has been entered into the mortgagor may only obtain an injunction to restrain completion when the mortgagee did not act in good faith in relation to the sale; Waring at 317. Whether Golden Mile has any residual right of an equity of redemption where a mortgagee has exercised its power of sale and the contract of sale at the date of acquisition is on foot is not obvious. 120Golden Mile, if an aggrieved mortgagor, did not seek to restrain the sale to Cudgegong, as occurred in Forsyth v Blundell inter alia, before the acquisition date. Indeed it could not because at the date of acquisition in September 2012 Golden Mile was a deregistered company which did not exist according to s 601AD(1) of the Corporations Act. It was unable to take court proceedings. At acquisition the contract for sale dissolved and any interests became compensable interests pursuant to the Just Terms Act. After the acquisition date an aggrieved reregistered mortgagor cannot undo those compensable interests. The acquisition was fatal to Golden Mile having an equitable interest in the form of an equity of redemption. The mortgagor could not prevent the completion of the sale, the contract having been dissolved by the statutory acquisition. 121As Cudgegong submitted, Forsyth v Blundell does not assist Golden Mile because the contract in that case remained executory when the mortgagor sought an injunction to restrain the sale. The present case is quite different. There has been an intervening compulsory acquisition which dissolved or discharged the contract, and no injunction was ever sought by Golden Mile. Golden Mile alleged that its interest continues but the land has now been compulsorily acquired, and immediately prior to that event there was an executory contract for sale which had not been challenged by the mortgagor who did not legally exist. By the time Golden Mile was reinstated, the land had been resumed. Golden Mile had no interest in the land prior to acquisition and neither s 601AH(5) of the Corporations Act nor Forsyth v Blundell can be deployed retrospectively to create one. This approach is supported by Joro and Diamond Hill. 122Golden Mile submitted that s 601AH(5), which states that if a deregistered company is reinstated it is taken to have continued in existence as if it has not been deregistered, enables the Court to treat Golden Mile as if it did exist in September 2012. As Cudgegong submitted s 601AH cannot deem Golden Mile to have taken steps that it did not take whilst deregistered citing Joro and Diamond Hill. In Diamond Hill a reinstated company complained of a lost opportunity to make submissions concerning a bill of costs that were the subject of a taxation process. Stone J at [8] held that whilst s 601AH(5) deems a company, once reregistered to have had a continuous existence, it cannot in any sensible way deem a company to have had the opportunity to make submissions in a proceeding that concluded before reregistration. In Joro a mortgagee was seeking to remedy certain defaults by the mortgagor identified in a notice in August 1992, the mortgagor being deregistered at the time of the notice. Young J, who was cited by Stone J in Diamond Hill, held in Joro: If the situation is that there is no person who owes the duty, then there can be no failure. ... even though the company was later resuscitated by the order of the court, that did not occur until October. Accordingly at the time when the notice was given, assuming that the notice was properly served, there could be no failure by the customer to remedy defaults because the customer did not exist and had no duty to do anything because it did not exist. Accordingly, there was no non-compliance with the notice of default ... 123As Cudgegong submitted, the corollary of the reasoning of Young J in Joro is that a mortgagee, here Stacks, could not have a duty to the deregistered mortgagor, here Golden Mile. Although I am not bound by Joro and Diamond Hill that reasoning appears correct. Stacks did not owe a duty to Golden Mile because it was deregistered at the time of the second contract and immediately before compulsory acquisition. 124A secondary issue which arises given the definition of interest in land in the Just Terms Act, is whether in these circumstances Golden Mile has a compensable interest. According to Artistic Builders at [87] referring in turn to Pendlebury v Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676 the remedy where there is a breach of a mortgagee's duty in the exercise of its power of sale is that a mortgagee will be accountable on the basis of wilful default for the price which would have been obtained if the mortgagee had not been guilty of unconscionable conduct. Unlike this case however, the contract was completed. If it applied to this matter, s 111A(4) of the Conveyancing Act states that a person who suffers loss or damage against the mortgagee has a remedy in damages against the mortgagee exercising the power of sale. Cudgegong submitted that theoretically Golden Mile may have a personal right as against Stacks to take an action to account at general law or an action for damages under s 111A(4) of the Conveyancing Act, if it applied, against Stacks if there was a breach of the mortgagee's duty. If available, that is not an interest in land in land as defined in s 4 (a) or (b) the Just Terms Act. 125As a result of my findings above, Cudgegong has the equitable interest in the resumed land because specific performance of the second contract would have been ordered. 126It is strictly unnecessary to consider whether there was a breach of Stacks' duty to Golden Mile in relation to the exercise of the power of sale but as I have heard extensive evidence and argument on this topic I will do so briefly.

Mortgagee's duty in exercising power of sale not breached 127Golden Mile argued that no specific performance of the contract was available because the second contract entered into by Stacks with Cudgegong was in breach of the mortgagee's duty to the mortgagor, The equitable duty is as identified in Forsyth v Blundell per Walsh J at 499. 128The statutory duties of a mortgagee are set out in s 420A of the Corporations Act and Golden Mile relied on subsection (1)(a), that a controller taking reasonable care to sell property must, if it has a market value, sell for not less than market value. The definition of controller in s 9 applied to Stacks as mortgagee. Both parties agreed that the duty in s 420A of the Corporations Act can inform the Court's consideration of a mortgagee's actions but disagree as to whether it is relevant. Cudgegong's primary submission which I have accepted above is that no duty was owed to Golden Mile in September 2012. 129Section 111A of the Conveyancing Act (commenced on 1 November 2011) has a similar but not identical duty to that in the Corporations Act. Golden Mile submitted that the Conveyancing Act does apply, Cudgegong to the contrary. I consider Cudgegong's construction of s 111A(7) is correct, namely that default in that section refers to a mortgagor's default not to a mortgagee's default as that makes more sense on the wording of the section. That default by Golden Mile was in 2008 in this case, s 111A operates from November 2011 and cannot therefore apply. 130In terms of the common law, both parties referred to Artistic Builders in which Campbell J states at [87]: The content and scope of the relevant equitable obligations were considered by the High Court in Pendlebury. That case is authority for the proposition that in exercising its power of sale, a mortgagee must act in good faith, which involves an obligation to deal fairly with the interests of the mortgagor, which in turn involves an obligation to refrain from acting in wilful or reckless disregard of those interests. Subsequent discussion of the question in the High Court (particularly in Forsyth v Blundell [1973] HCA 20; (1973) 129 CLR 477; 1 ALR 68, Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co [1978] HCA 21; (1978) 139 CLR 195 and Commercial and General Acceptance Ltd v Nixon [1981] HCA 70; (1981) 152 CLR 491; 38 ALR 225) has not displaced the authority of the decision in Pendlebury, although in Bangadilly a mortgagee was said by Aickin J (with whose judgment Stephen and Jacobs JJ agreed) to be in breach of its obligation to the mortgagor where there was "a serious departure from accepted standards in seeking to obtain the best price then available" (at 288). This is an area of the law where particular phrases used in judgments should not be construed and applied as if embodied in an Act of Parliament (cf Australian Apple & Pear Marketing Board v Tonking [1942] HCA 37; (1942) 66 CLR 77 at 110). What matters is the underlying equitable principle, which in the modem idiom usually finds expression in terms of unconscionability. The mortgagee in equity is not answerable for what Isaacs J in Pendlebury describes (at 700) as "mere negligence or carelessness in carrying out the sale". Any departure from reasonable standards must be so serious as to be properly characterised as unconscionable, in order to render the mortgagee accountable. If a failure by a mortgagee to take reasonable steps to obtain a proper price is sufficiently serious to be characterised as unconscionable as that expression is understood in equity, then in the taking of accounts between the mortgagee and the mortgagor, the mortgagee will be accountable on the basis of wilful default for the price which would have been obtained if the mortgagee had not been guilty of unconscionable conduct. 131As submitted by Golden Mile it is easier to establish a breach of the statutory test in s 420A of the Corporations Act by a mortgagee than the general law test identified in the passage cited above. 132For the reasons given by Cudgegong as grounded in the evidence of Mr Stack in particular I do not consider that any breach of the relevant duty has occurred. All of the circumstances outlined in the evidence surrounding the entry into the second contract must be considered, not that contract in isolation. This requires consideration of Mr Singh's and Mr Stack's evidence of the continuing existence of the first contract at the time of entry into the second contract. Whilst the second contract is separate to the first contract, Mr Stack's actions in entering into the second contract in light of the first contract is relevant to consider. Assuming I am answering the question as if a judge in equity, as Halloran and Sealark Pty Ltd v Minister Administering National Parks and Wildlife Act 1974 [1999] NSWLEC 268 I at [127] held this Court could do, in September 2012 immediately before acquisition occurred all relevant issues for all parties would be considered not just the mortgagee's actions, contrary to Golden Mile's submissions. In other words, the mortgagor's default on the mortgages held by Stacks since 2008 and that $4.8 million was owing under these would be relevant for a judge to consider. Further, and as I have already held above in par 120, Golden Mile did not exist at the time the second contract was entered into by virtue of s 601AD(1), having been deregistered in April 2012. Mr Stack's evidence is that he did consider Golden Mile at the time of entry into the second contract and knew that company was deregistered and had not paid any interest or capital under the mortgages for many years. There is nothing unconscionable in Stacks' actions in relation to the second contract. 133Nor is it apparent that there was a failure by Stacks to take reasonable care in relation to market value, as per s 420A(1)(a) of the Corporations Act. Golden Mile relied on the offer by Transport to Cudgegong in February 2012 of $4.2 million as representative of the market value. Golden Mile does not bring forward its own evidence about market value. The valuation of market value undertaken by the Valuer-General was not confirmed until the Notice of Determination of compensation sent in December 2012 after the date of acquisition. That Cudgegong is seeking to obtain a market valuation of over $16 million in these proceedings did not oblige Mr Stack to try to obtain a better price for the resumed land. 134It is unnecessary to consider the evidence of Mr Gleeson although this has been set out in some detail above. Nor do I need to consider Cudgegong's submissions criticising Mr Gleeson's decision to commence these proceedings to arrive at my conclusion. 135I find that Cudgegong has the relevant compensable interest under the Just Terms Act. The issue of whether an advance payment ought be made to it therefore arises for consideration.

Advance payment sought by Cudgegong 136Cudgegong contended that the Court is empowered to make an order in the amount sought as an advance payment pursuant to s 68(2)(b) of the Just Terms Act. Transport did not dispute that the Court has such power in the exercise of its discretion but argued it should not be exercised in this case to require such a payment. 137Section 48 of the Just Terms Act provides: 48 Advance payments of compensation etc (1) An authority of the State may, at any time after land is acquired, make an advance payment of compensation to any person who the authority considers is entitled to the compensation. (2) An advance payment may be made on application by the person or without any such application if the person agrees to accept the advance payment. (3) The acceptance by a person of an advance payment of compensation does not constitute an acceptance of any offer of compensation made by the authority of the State. (4) A person who receives an advance payment of compensation which exceeds the amount of compensation to which the person is entitled must repay to the authority of the State the amount of the excess. (5) Any advance or other payment of compensation to a person not entitled to the compensation must be repaid to the authority of the State that made the payment. (6) Any amount due to an authority of the State under this section may be recovered as a debt in any court of competent jurisdiction. 138Section 68 then provides: 68 Payment of compensation arising from court proceedings (1) Payment of compensation in respect of matters before the Land and Environment Court is to be made in accordance with any agreement reached during the proceedings or, if no such agreement is reached, in accordance with the decision of the Court. (2) Subject to any such agreement or decision: (a) if the authority of the State gave the owner concerned a compensation notice-the authority is required to pay 90 per cent of the amount of compensation offered in the notice (as an advance payment) within 28 days after the authority is given notice of the institution of the proceedings or (if the owner does not accept that advance payment) the authority is required to pay 90 per cent of that amount into the trust account kept under this Part, or (b) if the authority of the State did not give the owner concerned a compensation notice-the authority may (but is not required to) make an advance payment under this Part or pay an amount into the trust account kept under this Part. 139Mr Singh swore an affidavit dated 16 August 2013. Mr Singh states that he instructed a number of consultants to give their expert opinion and to carry out work on behalf of Cudgegong in these proceedings (at par 4). Cudgegong has incurred outstanding legal and consultant costs of $200,000 (at par 5). He states that his solicitor has advised that the estimate of the likely costs of running the proceedings is approximately $360,000 (at par 6). Cudgegong is required to pay those costs as they have been incurred and to put an amount of money in trust prior to the hearing (at par 7). Cudgegong's only asset was the resumed land ([8]). For these reasons Cudgegong requires the advance payment in order to be able to fund the proceedings (at par 9). 140Mr Singh was cross-examined by Mr Hemmings, counsel for Transport. Mr Singh stated that he was aware that there was an assessment of compensation by the Valuer-General of $4.2 million for the resumed land (TS 125). Mr Singh commenced these proceedings because he believes that $4.2 million is not enough. Mr Singh is aware that so far a little over $3 million has been paid to Stacks to pay out the debts that were owing, which debts involved some personal guarantees by Mr Singh. Mr Singh agreed that the payment of that $3 million has relieved him at least personally of part of that obligation. Mr Singh is aware that Transport contends in these proceedings that the resumed land is not worth $4.2 million and that as part of the court process, if the Court determines that the amount of compensation is less than the amount that has already been paid, the difference has to be paid back. Mr Singh stated that if the Court finds that the value of the resumed land is less than $3 million the seven of them would find the money to pay back what is required to be paid back (TS 126). 141Mr Singh has not paid the $200,000 in legal and consultant fees he has incurred thus far. Cudgegong needs the advance payment for this purpose (TS 127). If an advance payment is not granted it would be a burden on their families as it has been for ten years (TS 128). The $360,000 referred to at par 6 of Mr Singh's affidavit is inclusive of the $200,000 also referred to. If an advance payment is not granted Mr Singh would also call on the group to pay the legal costs but they would then decide whether to proceed with the proceedings (TS 129). 142Mr Singh agreed that if the Court decided not to give the advance payment, that in order to try and get the $16 million sought he would speak to the seven members of the group and raise the money in order to run the proceedings. The members do not want to put that burden back onto their families. Mr Singh agreed that it is not something he wants to do but it is something that he could do (TS 130).

Cudgegong's submissions 143The amount sought is 90 per cent of the balance of the Valuer-General's offer of compensation which has not already been paid out to Stacks. In the ordinary course, if either Cudgegong was in occupation (pursuant to s 34) or had received a compensation notice and then appealed (pursuant to s 66 and s 68(2)(a)) it would have received 90 per cent of the whole of the compensation offered (that is, $3,801,060) and then would have discharged its mortgages, retaining the balance to fund the litigation. 144The current circumstances are expressly envisaged by s 68(2)(b) but the quantum of the advance payment is not prescribed. It may be that it takes account of unusual interests in land, such as the present. Where others have interests in land and are paid out, and there is still money offered for compensation which is not yet paid out because of competition between remaining interests, then an amount different to the 90 per cent might be paid. The amount sought of $1,061,676 represents less than 25 per cent of the whole of the amount determined by the Valuer-General. The flexibility in s 68(2)(b) allows for an appropriate amount to be paid. The amount sought can easily be characterised as an advance payment for the purpose of s 68(2)(b), which can be paid out subject to the proper exercise of the discretion under the provision. 145In the absence of specific statutory indicia that are directed towards the exercise of the discretion, and where the second reading speech of the Bill does not further elucidate the matter, Cudgegong contended that the following matters are relevant to the exercise of the discretion: (a)Firstly, the nature of the interest. As a mandatory advance payment must be made where the acquiring authority has accepted the existence of an interest (in s 68(2)(a)), there must be a reason why it is not mandatory in s 68(2)(b). The nature and extent of the interest must be a factor in that. Cudgegong's interest has been accepted. (b)Secondly, the purpose of the concept of the advance payment is relevant to the exercise of the discretion. The logical context for the payment of advance compensation is to allow, inter alia, for the discharge of any mortgages over the land and, particularly in the s 68(2)(a) context, the ability to have a "fighting-fund" in terms of running the litigation; (c)Thirdly, the amount sought, and how that sits with other competing interests (such as mortgagees who have been paid out) and the amount offered by the Valuer-General, is relevant. 146Cudgegong has paid approximately $900,000 in interest to Stacks so that while it has paid a $100 deposit under the second contract that does not truly reflect the amount invested in the resumed land by Cudgegong.

Transport's submissions 147The Court should not exercise its discretion to make an advance payment of additional funds as these are not necessary in order to prosecute the proceedings. Mr Singh stated in his oral evidence that if Cudgegong does not receive the additional advance payment the funds to litigate would be raised. A payment is not therefore required in order to pursue these proceedings. Cudgegong has only paid $100 as a deposit under the second contract unlike the usual owner seeking compensation who has already invested in buying a property and seeks compensation for that embedded value. 148Even if the Court finds that the exercise of discretion was in favour of an advance payment, the Court would not order the amount sought of $1,061,676. The "normal" advance payment pursuant to s 68(2)(a) is 90 per cent of the compensation assessed by the Valuer-General which is $4,223,400. Ninety per cent of that is $3,801,060. From that, a payment has already been made under the Settlement Deed of $3,043,760. If there was to be a discretionary advance payment, up to 90 per cent of the Valuer-General's determination, that would be a payment of $757,300.

Advance payment should be made to Cudgegong 149The term advance payment is not defined in s 4 of the Just Terms Act. As Cudgegong submitted, four provisions within the Just Terms Act deal with it, being s 34, s 42, s 48 and s 68. The substantive power arises from s 48 of the Just Terms Act. The concept of a 90 per cent partial payment does not expressly arise in s 48. That concept is noted in s 34, a provision which allows a person in occupation of the acquired land to remain in occupation until they have received an advance payment in the amount of 90 per cent of that offered by the Valuer-General. Section 68(2)(a) also mentions the amount of 90 per cent. As Cudgegong was not named on the compensation notice the specific power Cudgegong invoked is s 68(2)(b). In that subsection, the power is entirely discretionary and there is no prescribed amount of 90 per cent, unlike s 68(2)(a). It is agreed that the Court has discretion whether to make an advance payment. That discretion is wide given that there are no statutory criteria identified for the exercise of that discretion. As Cudgegong submitted, where relevant considerations to the Court exercising its discretion are not enumerated in the statute, they may be gleaned from the scope, subject matter and purpose of the statutory scheme (Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 29-40). As the title of the Just Terms Act suggests, where the Crown or one of its instrumentalities compulsorily acquires private land imposing a potentially onerous burden on a land owner with consequent infringement of usual private property rights, just compensation is payable. Cudgegong was the owner of an interest in land as defined in the Just Terms Act of the resumed land at acquisition. 150My finding in the previous section of the judgment is that Cudgegong had a compensable interest at the time of acquisition and would ordinarily have received a notice of compensation to which s 68(2)(a) would have applied. This is highly relevant to the exercise of my discretion in this case given that Cudgegong would have then been entitled as of statutory right to 90 per cent of the amount of compensation payable. That the members of Cudgegong could conceivably continue the litigation in the absence of an advance payment does not weigh against the making of an advance payment in my view. That it had paid a deposit of $100 under the second contract, and interest of $900,000 to Stacks does not weigh against the exercise of my discretion in Cudgegong's favour. I agree however with Transport's submission that the amount of the payment should be $757,300 for the reasons given by Transport. I will require payment within 14 days.

Orders 151The Court makes the following orders in relation to Cudgegong's Notice of Motion: (1)Pursuant to s 68(2)(b) of the Land Acquisition (Just Terms Compensation) Act 1991 Transport for NSW, the First Respondent, is to make an advance payment of $757,300 to Cudgegong Australia Pty Limited, the Applicant, within 14 days. (2)Costs are reserved.

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: 19 March 2014