De Meyrick v Dimitriou

JUDGMENT (ex tempore) 1HIS HONOUR: On 17 July 2007 the plaintiff John Julian De Meyrick, a barrister, issued a disclosure statement to Georgina Dimitriou, a client, in respect of the fees to be charged by him and in compliance with (NSW) Legal Profession Act, 2004 and (NSW) Legal Profession Regulations, 2005, in respect of proposed proceedings in the Industrial Relations Commission of New South Wales. Between 5 February 2008 and 6 June 2011, Mr De Meyrick issued to Ms Dimitriou tax invoices which, inclusive of GST, were as follows: 5 February 2008, $10,703; 20 June 2008, $7,062; 30 September 2008, $9,542.50; 23 October 2009, $3,954.50; 26 October 2009, $4,851; 27 October 2009, $9,399.50; 28 October 2009, $8,657; 29 October 2009, $6,798; 30 October 2009, $4,570.50; 10 December 2009, $10,521.50; 28 January 2010, $9,300.50; 18 May 2010, $4,587; 20 May 2010, $3,349.50; 6 September 2010, $10,642.50; 2 June 2011, $4,823.50 and 6 June 2011, $1,375. These amounts total $110,138. 2On 8 March 2009 - which it will be noted was after the first three of those invoices but before all the others - Ms Dimitriou executed in favour of Mr De Meyrick a mortgage over land comprised in folio identifiers 12/217546 and 13/SP36131, covenanting that the provisions set out in the annexure and in filed memorandum Q860000, were incorporated in the mortgage. The annexure was as follows: That the moneys secured by this mortgage are all moneys now or at any time hereafter owing by the Mortgagor to the Mortgagee pursuant to a Disclosure Statement and agreement dated 17 July, 2007 made under the Legal Profession Act 2004 by and between the Mortgagee to and with the Mortgagor in relation to legal work to be carried out on behalf of the Mortgagor by the Mortgagee in relation to the Mortgagor's proceedings instituted by her in the Industrial court of New south Wales in matter number IRC 6337 of 2005 and known as "Dimitriou v Jawero Pty Ltd & Anor" and default by the Mortgagor hereunder and vice versa. The provisions of such agreement and arrangement shall be deemed to be collateral to and incorporated in this mortgage. 3On 21 July 2009, Mr De Meyrick lodged a caveat in respect of the two subject lots, which was registered as number AE843316R, claiming an interest as "mortgagee" by virtue of the "unregistered mortgage" dated 9 March 2009. On 29 March 2010, Ms Dimitriou requested Mr De Meyrick to withdraw the caveat. He declined. Subsequently, on 11 July 2011, he discovered that the caveat had lapsed. There is heated dispute as to whether the lapsing notice was duly served - such that Mr De Meyrick had notice of it. To the extent that it is relevant - but ultimately it seems to me that it will be of slight relevance -that dispute will be resolved at the final hearing. Having discovered that the caveat had lapsed, Mr De Meyrick lodged a further caveat, registered No AG 371076 on 15 July 2011. That caveat, insofar as it claims an interest in the land, is in identical form to the earlier caveat. Pursuant to (NSW) Real Property Act, 1901, s 74O, such a caveat could not be lodged without the leave of the Court, and pursuant to s 74O(2), such caveat has no effect without the Court granting leave for lodgement of fresh caveat. 4On 8 August 2011, Mr De Meyrick received a letter from the Registrar General giving notice that the Registrar General proposed to remove caveat AG 371076, unless restrained from doing so, on 19 September 2011. On 15 September 2011, upon Mr De Meyrick's undertaking as to damages, the Court ordered pursuant to Real Property Act, s 12A, that the Registrar General be restrained until 19 October 2011 from taking the action referred to in that letter, namely removing caveat AG371076 from the folio identifiers in question. 5Pursuant to a notice of motion filed on 30 September 2011, the plaintiff now moves primarily for leave pursuant to s 74O to lodge a further caveat, in substantially the same form as the lapsed caveat. On such an application, considerations similar to those relevant to applications for interlocutory injunctions apply [ Fitzgibbons v Shaftsbury [2011] NSWSC 525, (at [3])]. Primarily, they are whether the proposed further caveat has or may have substance; and considerations pertaining to the balance of convenience [ Warner v Andrews [2011] NSWSC 956 (at [5] and [10])]. A determination that the caveat has or may have substance is a necessary but not sufficient condition for the caveat to be extended (s 74K), or for leave to be granted to lodge a fresh caveat (s 74O): the Court retains a discretion to order that the caveat not be extended, be withdrawn, or to refuse leave to lodge a fresh caveat if the balance of convenience favours such a course. 6In addition, on an application under s 74O, it will be relevant to understand the circumstances in which the earlier caveat lapsed, including whether permitting a new caveat to be lodged would cause detriment in those circumstances. This overlaps with the balance of convenience. 7So far as concerns whether the caveat has or may have substance, the proposed further caveat will, as to the interest that it claims, be identical to the two caveats lodged to date. The mortgage to which they refer prima facie creates a security interest in the subject land in favour of the plaintiff. The combination of the fee notes to which I have referred, and Mr De Meyrick's evidence that since the date of the mortgage no payments of any kind have been made to him by the first defendant, amply establishes a sufficiently arguable case that a substantial debt is secured by the mortgage. There may be any number of reasons, related to compliance with the Legal Profession Act and otherwise, why at a final hearing it may eventuate that those amounts are not recoverable: but as things stand, there is prima facie plainly a security interest in the land sufficient to support a caveat by the plaintiff. 8So far as concerns the circumstances that this is a s 74O application, there are two notable features. First, it is at least warmly in dispute whether the plaintiff in fact received notice of the proposed lapsing. It is difficult to imagine that had such notice come to his actual attention, he would have allowed the caveat to lapse, especially in light of his previous refusal to agree to withdraw it. Secondly, there is no suggestion in the evidence at this stage that the defendant has taken any action in reliance on the caveat not being in place, or will be frustrated from taking any steps that she wishes to take, by the grant of leave to lodge a fresh caveat. There is nothing in these circumstances that suggests that the plaintiff's claim for final relief must fail. 9As to the balance of convenience, it is important to understand that what is involved is a comparison of the position between the potential detriment to the plaintiff if the order is incorrectly not made, and the potential harm to the defendant if the order is incorrectly made. So far as the first is concerned, if leave to lodge a further caveat is not granted, then - while it is not yet clear what if any transactions adverse to the plaintiff's priority may have already taken place while no caveat was in place - it is possible that further transactions adverse to the priority of his claim to an interest in the land would be registered. There is no evidence at all of any detriment that would be occasioned to the defendant by the caveat remaining in place. Indeed, if the defendant does wish to refinance or take other steps not adverse to the plaintiff's priority, it would be open to her first to seek consent for that purpose, and if consent was not forthcoming, to make application to the Court. The balance of convenience is, on the evidence before the Court, all one way in favour of the plaintiff. 10In those circumstances, the plaintiff should have the leave sought. 11Upon the plaintiff, by his counsel, giving to the Court the usual undertaking as to damages, I grant leave to the plaintiff pursuant to Real Property Act, s 74O(2)(a), to lodge a further caveat in respect of the same estate interest or right and purporting to be based on the same facts as caveat AE843316 and caveat AG371076. I order that the proceedings continue on pleadings. I direct that the plaintiff file and serve its statement of claim (in accordance with the draft leave to file which was granted this morning) within seven days and that pleading thereafter continue in accordance with the rules. I order that save insofar as any special costs order otherwise provides, costs of the interlocutory proceedings be plaintiff's costs in the proceedings.