Despot v Registrar General of NSW

Supreme Court of NSW|2014-07-09|Before: Ball J

v Prendergast [2005] NSWSC 281 Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444 Registrar of Titles (WA) v Franzon [1975] HCA 41; (1975) 132 CLR 611 Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 Simmons v Henwood [2013] NSWCA 184 State of New South Wales v Hamod [2011] NSWCA 376 Stokes (by her tutor) v McCourt [2013] NSWSC 1014 Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245 White v Tomasel [2004] QCA 89; [2004] 2 Qd R 438 Texts Cited: RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, (4th ed, 2002, LexisNexis) Category: Procedural and other rulings Parties: Ranko Despot (Plaintiff) Stelli Pty Ltd (Third Defendant) Westpac Banking Corporation (Fourth Defendant) Joyce Azzi (Sixth Defendant) Representation: Counsel: J Hewitt (Plaintiff) D Williams (Third and Sixth Defendants) A Leopold SC with P Dowdy (Fourth Defendant) Solicitors: Pamela J Enright (Plaintiff) Kheir & Associates (Third and Sixth Defendants) Henry Davis York (Fourth Defendant) File Number(s): 2009/298869 Publication restriction: Nil

Introduction 1Before the Court are five notices of motion. The principal motion, filed on 6 May 2014 by the plaintiff, Mr Despot, seeks declarations to the effect that Mr Despot validly terminated a contract for the sale of a strata unit in Double Bay to the third defendant, Stelli Pty Ltd (Stelli). The contract is the subject of an order for specific performance in favour of Stelli made in these proceedings by Macready AsJ on 15 April 2011. Mr Despot gave notice terminating the contract on 6 May 2014 on the ground that Stelli had not, at the time the right of termination was purportedly exercised (or since), been paid the sum of $91,086, which was part of the purchase price for the unit. Mr Despot also seeks orders vacating the order for specific performance and other ancillary orders on the same basis. 2The second motion was filed on 1 July 2014 by the fourth defendant, Westpac Banking Corporation, as successor to St.George Bank Ltd (Westpac), which lent Stelli part of the purchase price of the unit. That motion seeks an order that an interlocutory injunction granted by Barrett J on 15 August 2008 be dissolved. That injunction, which was obtained by Mr Despot, restrained the Registrar-General from registering the transfer of the unit to Stelli and the mortgage granted by Stelli to Westpac. Westpac maintains that, to the extent that the injunction remains on foot, it was an oversight that Macready AsJ did not dissolve it at the time he made final orders in relation to Stelli's application for specific performance and that that oversight should be corrected under the slip rule. 3Third, by a motion filed on 30 June 2014, Stelli and the seventh defendant (sometimes now referred to as the sixth defendant), Mrs Azzi, the sole director and shareholder of Stelli, who guaranteed Stelli's obligations under the sale agreement, seek an order to operate retrospectively that Stelli be entitled to set-off the costs orders in its favour in these proceedings against the balance of the purchase price said to be owing by it. If the order is made with retrospective effect, it would have the consequence of removing the ground of termination on which Mr Despot relied. Stelli and Mrs Azzi also seek an order that Stelli's obligation to pay Mr Despot the sum of $91,086 (plus interest) be stayed until Stelli's costs have been assessed. 4The last two motions concern strata fees. The owners corporation in respect of the unit has sought, in proceedings commenced in the Local Court, to recover strata fees from Mr Despot as registered proprietor during the period when he had handed over possession of the unit to Westpac and before the transfer to Stelli was registered. In one motion, filed on 26 September 2012, Mr Despot seeks to transfer those proceedings to this Court. In another, filed on the same day, Mr Despot seeks an order that Westpac reimburse him for the fees for which he is liable. During the course of the hearing of the motions, I indicated that I would deal with the issues concerning the strata fees after I had delivered judgment in relation to the other motions. For that reason, I need to say nothing further in this judgment concerning those motions.

Background 5The history of the proceedings is a long and unfortunate one. Many of the facts are now no longer in dispute. 6In 2007, Mr Despot engaged the eighth defendant, Sky Constructions Pty Ltd (Sky Constructions), to undertake renovation work on his unit. Sky Constructions did not have a builder's licence under the Home Building Act 1989 (NSW), and there was no contract of insurance in relation to the building work as required by s 92 of that Act. 7On 5 September 2007, Mr Despot executed a general power of attorney, which was registered on 6 May 2008, to the second defendant, Mr Maalouf, a director and controller of Sky Constructions. On 16 May 2008, Mr Maalouf, purportedly in exercise of the power of attorney granted to him, entered into a contract of sale for the unit for a price of $1.6 million to Stelli. By then, Sky Constructions claimed that Mr Despot owed it the sum of $944,932 in respect of the renovation work it had undertaken. 8The contract of sale was in the Law Society's standard form. Clause 9 relevantly provides: If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice. 9Clause 15 of the contract provides: The parties must complete by the completion date and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so. The completion date was stated to be the 42nd day after the date of the contract. 10Clause 16 of the contract relevantly provides: ● Vendor 16.1 On completion the vendor must give the purchaser any document of title that relates only to the property. 16.2 ... 16.3 Normally, on completion the vendor must cause the legal title to the property (being an estate in fee simple) to pass to the purchaser free of any mortgage or other interest, subject to any necessary registration. 16.4 The legal title to the property does not pass before completion. 16.5 If the vendor gives the purchaser a document (other than the transfer) that needs to be lodged for registration, the vendor must pay the lodgment fee to the purchaser, plus another 20% of that fee. 16.6 ... ● Purchaser 16.7 On completion the purchaser must pay to the vendor, by cash (up to $2,000) or settlement cheque, the price (less any deposit paid) and any other amount payable by the purchaser under this contract (less any amount payable by the vendor to the purchaser under this contract) 16.8 ... 11Special Condition 2 provides: Should completion not take place by the completion date then either party shall be entitled to forward a Notice to Complete to the other party requiring completion of the Contract within fourteen (14) days from the date of receipt of such Notice and in this respect time shall be deemed to be of the essence of the Contract. Service of the Notice to Complete by facsimile transmission shall be deemed to have been received on the day of transmission. 12Settlement occurred in respect of the sale on 3 July 2008. At the time of settlement, Westpac advanced to Stelli the sum of $1,120,000, and Stelli paid a total of $1,028,914, of which $502,540 went to discharge a mortgage Mr Despot had granted to Westpac, $464,932 went to Sky Constructions and the balance went to pay outstanding rates, leaving $480,000 owing as vendor finance and a shortfall of $91,086. That shortfall arose because Stelli had overlooked the fact that, at settlement, it would be required from the money advanced by Westpac to pay Westpac's mortgage costs ($15,319), stamp duty ($73,490) and legal costs on the conveyance to Stelli's solicitors, Kheir & Associates ($2,186). Also at the time of settlement, Westpac obtained a transfer to Stelli executed by Mr Maalouf, a discharge of mortgage in respect of the mortgage granted by Mr Despot to Westpac and the mortgage executed by Stelli in favour of Westpac. 13The sale and settlement occurred while Mr Despot was overseas and without his knowledge. 14On or shortly after 3 July 2008, Westpac lodged the various instruments it obtained with the New South Wales Department of Lands for registration. They were given unregistered dealing numbers. 15On 21 July 2008, Mr Despot discovered that the contract for the sale of his property had been entered into. His solicitors at the time, Johnston Vaughan, wrote immediately to the solicitors for Stelli and Mrs Azzi alleging that Mr Maalouf had sold the property fraudulently. On the same day, Mr Despot executed a revocation of the power of attorney in favour of Mr Maalouf and lodged a caveat. The following day, Mr Despot commenced these proceedings, and, on the same day, the Court made orders to the effect that the Registrar-General be restrained from registering any dealing in respect of the unit until further order of the Court and that Mr Maalouf be restrained from acting pursuant to the power of attorney. 16Pursuant to directions given on settlement by Mr Carbone, who was the solicitor instructed by Mr Maalouf in relation to the sale of the unit, Stelli made five payments between 6 August and 16 October 2008 totalling $480,000 directly to Sky Constructions. 17Some time following the initial orders made by the Court, Mr Despot agreed to vacate the unit, and it was agreed that Ray White & Co would be appointed as managing and letting agent. Orders to give effect to those arrangements were made by Barrett J on 15 August 2008. Those orders included the following orders that were made until further order of the Court: 5. Upon the Plaintiff giving to the Court through Counsel the usual undertaking as to damages the Court makes orders 6, 7 and 8 below. 6. The First Defendant is restrained from registering any dealing and / or instrument and / or document of whatsoever nature over [the unit]. 7. An order that the Second Defendant is restrained from acting pursuant to the power of attorney alleged to have been executed by the Plaintiff on 5 September 2007 .... 8. An order that the Second Defendant be restrained from representing that he is the holder of a power of attorney granted by the Plaintiff and acting pursuant to any power of attorney listing the Plaintiff as the principal. 18The proceedings came on for final hearing before Macready AsJ on 30 August 2010. As finally constituted, they raised a large number of issues. Relevantly, they included claims by Mr Despot to set aside the sale of his unit, claims by Sky Constructions to recover payment for the building work it had undertaken and claims by Mr Despot against Westpac that it had breached a duty of care it owed to Mr Despot as a customer causing him loss and damage. Stelli and Mrs Azzi also sought an order for specific performance of the contract for sale. 19The proceedings, so far as they concerned Westpac, were settled on the first day of the hearing. Relevantly, order 4 of the consent orders as between Mr Despot and Westpac provided: Otherwise dismiss [Mr Despot's] claim against [Westpac] comprised in the First Amended Statement of Claim filed 10 February 2010 as if on the merits with no order as to costs to the intent that those parties bear their own costs ... As a result of those orders, Westpac did not participate in the hearing. 20Macready AsJ delivered his reasons for judgment on 31 March 2011: Despot v Registrar General of NSW [2011] NSWSC 273. His Honour found that Mr Despot was bound by the contract for sale, that the power of attorney he had granted to Mr Maalouf was irrevocable and that Sky Constructions was only entitled to be paid the sum of $316,874.87 in respect of its construction work (on a quantum meruit basis) and that, accordingly, Mr Maalouf had to account to Mr Despot for the sum of $628,057.13. His Honour also found (at [295]) that Mr Despot should have the benefit of a direct payment from Stelli of $91,086, "being the outstanding part of the purchase price". 21On 15 April 2011, Macready AsJ made orders to give effect to his judgment save as to costs. Relevantly, those orders were in the following terms: 1. Judgment for the Plaintiff against the Second Defendant in the sum of $788,375.35, including interest. ... 6. Order that the Injunction granted on 22 July 2008 to the Plaintiff against the First Defendant, the Third Defendant and Fourth Defendant be dissolved. 7 Declaration that the Contract for Sale dated 16 May 2008 between the Plaintiff as Vendor and the Third Defendant as Purchaser ('the Contract') is valid and binding and ought to be specifically performed and carried into effect. 8. Upon the payment by the Third Defendant to the Plaintiff or as he may direct of the sum of $91,086, the Contract be specifically performed and carried into execution by the Plaintiff and the Third Defendant so far as it remains to be performed. 9. Order that the Second Defendant is to have credit for the sum of $91,086 upon payment of that sum by the Third Defendant. 10. A declaration that the Second Defendant is liable to account to the Plaintiff for the sum of $628,057.13 plus interest of $160,318.22, calculated to 8 April 2011. 11. An order that the Second Defendant account for and pay to the Plaintiff the sum of $788,375.35 within 28 days of the date of this order. 22Macready AsJ also ordered that Mr Despot withdraw the caveat he had lodged and stayed the orders he made until 28 days after delivery of the Court's judgment on costs. That judgment was delivered on 29 April 2011. Consequently, the orders took effect on 27 May 2011. 23Also on 27 May 2011, Macready AsJ made the following order: All parties have liberty to apply on 7 days notice in the event of any need to deal with any matters involved in or arising out of the implementation and carrying through into effect of the final orders of the Court made on 15 April 2011. At that time, Mr Dowdy, who appeared for Westpac, informed the Court that Westpac intended to take steps to have the transfer to Stelli and its mortgage registered. The evidence is that Macready AsJ acknowledged that Westpac's right to do so was a consequence of the expiration of the stay. On the same day, Mr Despot filed a notice of intention to appeal. 24On 30 May 2011, the solicitors for Westpac wrote to the Registrar-General enclosing sealed copies of the orders made by Macready AsJ. The letter went on to say: The orders dissolve all injunctions concerning the properties. That is, the injunctions which were the basis of the departmental dealings are now dissolved. The orders also require caveats identified in the orders to be removed forthwith. Withdrawals of those caveats have not yet been lodged with the Registrar General. The orders enclosed are lodged pursuant to section 74MA(3) Real Property Act 1900 (NSW), which states: If an order for the withdrawal of a caveat is made under subsection (2) and a withdrawal of the caveat is not, within the time limited by the order, lodged with the Registrar-General, the caveat lapses when an office copy of the order is lodged with the Registrar-General after that time expires. To give effect to that section, we respectfully request that the Registrar-General now withdraw the caveats identified in the attached orders and register forthwith the unregistered dealings [in respect of the unit]. 25Mr Sullivan, the solicitor acting for the Bank and who prepared the letter, did not know at the time the letter was written that Stelli had not paid the outstanding purchase price of $91,086. Mr Sullivan gave the following evidence concerning why he wrote the letter when he did: Q. ... So, is it your evidence that you didn't think it was necessary to wait and see whether the $91,086 had been paid before you took steps to register the transfer in favour of Stelli? A. I thought I was able to just write to the Registrar General as we did, requesting registration of the dealings because the injunction by his Honour had been dissolved. Q. And you thought that was the case irrespective of whether the $91,086 had been paid, is that right? A. I wasn't turning my mind to whether the $91,000 was paid or not, no. Q. So you weren't focusing at all on whether the $91,086 had been paid when you sought to have the transfer to Stelli registered together with the mortgage in favour of Westpac, is that right? A. That's right, and that's also because from what Mr Williams [counsel for Stelli] had said in court I thought that it was to be paid right away. Q. I see. So, your evidence is that what Mr Williams said in court on 27 May 2011 was that Stelli was ready, willing and able to immediately pay the outstanding amount of $91,086, isn't it? A. Yes. Q. And what you thought would happen on the basis of that statement was that Stelli would immediately pay the amount of $91,086, didn't you? A. Yes. Q. That's what they said they would do; that's your evidence, isn't it? A. That's what Mr Williams said. He said they were ready, willing and able to immediately pay the outstanding balance of $91,086. Q. And you expected that they would do what they had told his Honour that they would do, didn't you? A. Yes. 26Following registration of the transfer, there was extensive correspondence between the solicitors for Mr Despot and the solicitors for Stelli concerning the payment of the $91,086. In effect, Mr Despot asserted an entitlement to be paid the $91,086. Stelli took the position that, although it accepted that the $91,086 was owing, it wanted to discuss its payment in circumstances where Stelli had obtained a costs judgment against Mr Despot in respect of the hearing before Macready AsJ. In a letter dated 12 August 2011 from Kheir & Associates to Johnston Vaughan, Stelli claimed that its legal costs up until that time were $725,237.98. Stelli also wanted the question of any appeal to be resolved before it paid the $91,086. 27On 30 August 2011, Mr Despot lodged a caveat claiming an unpaid vendor's lien in respect of the $91,086. 28On 20 February 2012, Mr Despot filed a notice of appeal from the decision of Macready AsJ. An application for an extension of time in which to file the notice of appeal was heard by Meagher JA on 4 June 2012: Despot v Registrar General of NSW [2012] NSWCA 160. In seeking that extension, Mr Despot was faced with a choice. He could have sought to appeal against the order for specific performance, with the intention of setting aside the transfer, in which case the respondents to the application for an extension of time would have had a stronger argument that they had or would suffer prejudice by reason of the delay in filing the notice of appeal, with a consequent reduction in the prospects of obtaining an extension. Alternatively, Mr Despot could have accepted the order for specific performance and challenged Macready AsJ's judgment on other grounds. Mr Despot chose the latter course. 29The principal cause of the delay in filing a notice of appeal was Mr Despot's inability to obtain legal representation to pursue the appeal arising from his financial position and inability to raise sufficient moneys to pay outstanding fees owed to his former solicitors and to retain new solicitors and counsel. That financial position was exacerbated by Mr Maalouf's failure to pay the judgment sum of $628,057, and the non-payment by Stelli of the sum of $91,086. Meagher JA accepted that Mr Despot's explanation for the delays were sufficient to justify an extension of time "in the absence of prejudice to the respondents and any other countervailing considerations": [2012] NSWCA 160 at [19]. 30The appeal was heard on 19 and 20 March 2013, and judgment was delivered on 20 September 2013: Despot v Registrar General of NSW [2013] NSWCA 313. Relevantly, the Court of Appeal made the following orders: (1) ... (2) Appeal allowed in part. (3) Set aside order 2 of the Court below made on 15 April 2011, but only to the extent that it applies to the eighth defendant (Sky Constructions). (4) Judgment for the appellant against Sky Constructions in the sum of $788,375.35, including pre-judgment interest, that judgment to take effect on 15 April 2011. (5) Judgment for the appellant against Stelli for the sum of $91,086 plus pre-judgment interest of $21,746, that judgment to take effect on 15 April 2011. (6) Appeal otherwise dismissed. ... (8) The appellant pay the costs of the third, fifth and sixth respondents of the appeal. (9) The appellant pay the costs of the fourth respondent (St George) of the appeal including its costs of his application to amend the Notice of Appeal to seek relief against it. 31Meagher JA (with whom Ward JA and Bergin CJ in Eq agreed) delivered the leading judgment. His Honour concluded that the primary judge erred in holding that the power of attorney was given to Mr Maalouf for the purpose of securing the repayment of moneys owing by Sky Constructions: [2013] NSWCA 313 at [64]. It followed that the agency relationship created by the power of attorney gave rise to fiduciary obligations and that the power of attorney itself was revocable. In addition, Sky Constructions was liable to repay the amount received by it in excess of the amount to which it was entitled on its quantum meruit claim. That amount was recoverable "either as moneys paid for no consideration or pursuant to an equitable obligation to account for the knowing receipt of moneys paid in breach of fiduciary duty": at [75]. 32However, Meagher JA rejected a submission that the primary Judge erred in failing to make it a condition of the order for specific performance that Stelli pay $1,097,460. In rejecting that argument, Meagher JA said: [77] It is also submitted that the primary judge erred in failing to make, as a term of the order for specific performance, an order that Stelli pay $1,097,460 as the amount remaining due under the contract for sale (grounds 7-11). The order which Mr Despot seeks to have made would require that Stelli and Mrs Azzi, as guarantor of Stelli's obligations, pay that amount. As will become apparent, acceptance of this argument would require the making of findings which are inconsistent with the findings on which the order for specific performance which is not challenged, was based. Those findings were that Stelli was ready, willing and able to perform a contract which only required that it make a further payment of $91,086. [78] Again, it is convenient to start with this second submission. The argument that $1,097,460 was the amount of the purchase price which remained outstanding proceeds as follows. Under the contract for sale, Stelli was to pay the purchase price to Mr Despot. The Power of Attorney did not authorise Mr Maalouf to confer a benefit on himself or on a third party. By directing that $464,932 be paid to Sky Constructions and that the vendor finance be repaid to Sky Constructions, Mr Maalouf sought to confer benefits on himself and Sky Constructions. He did not have actual authority to direct that those payments be made. Stelli could not rely upon his having had apparent authority to do so because on their face the payments involved the conferring of benefits. Accordingly, the payments did not discharge Stelli's obligation to pay Mr Despot. The same argument is put in relation to the other payments made on settlement on the basis that any payment made to a third party necessarily conferred a benefit on that party. [79] Stelli and Mrs Azzi submit, and I agree, that this argument cannot be made by Mr Despot on appeal, particularly in circumstances where, notwithstanding that the grounds of appeal relied upon suggest otherwise, he does not seek to set aside the order for specific performance made by the primary judge. Indeed, his argument depends on that order being maintained because the only justification for the order sought on appeal is as a condition of the order for specific performance. [80] Mr Despot made no freestanding claim against Stelli or Mrs Azzi for payment of the balance of the purchase price in the event that his claims that the contract should be set aside were rejected. In relation to Stelli's cross-claim for specific performance, the only condition Mr Despot sought was that the amount of $91,086 be paid. He did not seek an order that Mrs Azzi pay that amount. [81] The claim which Mr Despot now seeks to make as to the amount of unpaid purchase moneys is inconsistent with his case as pleaded and conducted. That case was that $91,086 remained unpaid under the contract for sale and that $480,000 was advanced to Stelli by way of vendor finance. The result was that the amount notionally advanced was "paid" in partial satisfaction of the purchase price. That amount became due under a loan agreement and, for that reason, could not have been the subject of an unpaid vendor's lien: Wossidlo v Catt [1934] HCA 52 ; 52 CLR 301 at 308, 310-311; Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 at 478. The primary judge made findings that vendor finance had been provided to enable Stelli to complete the purchase: [104], [116]. Those findings are not challenged on appeal. When making them, the primary judge did not refer to the mortgage executed in July 2008 by Stelli and Mr Maalouf, on behalf of Mr Despot, for the purpose of securing the repayment of that loan. The existence of that mortgage further confirms the correctness of the finding made. [82] The primary judge's conclusion that Stelli was ready, willing and able to perform was based upon his finding that it was prepared to pay the shortfall of $91,086, the balance of the purchase price having been paid by the vendor finance arrangement: [180], [183], [197]. To permit Mr Despot to maintain that order and, at the same time, to argue that the primary judge erred in the condition imposed when making it, would allow an argument to be made on appeal which could not have been made at the trial without also considering its consequences for Stelli's being ready, willing and able to complete. If Mr Despot's argument on appeal had been put and accepted at trial, the relevant question would have been whether Stelli was ready, willing and able to pay a further $924,932 to secure an order for specific performance, when it had already paid in excess of $1.5m and had questionable prospects of recovering the moneys paid to Sky Constructions. It is most unlikely that Stelli would have contended that it was ready, willing and able to complete on that basis. It would plainly suffer prejudice if Mr Despot was permitted to make this argument for the first time on appeal. ... [86] Except in one respect, Mr Despot's appeal, in so far as it concerns Stelli and Mrs Azzi, should be dismissed. That respect concerns whether an order should be made that Stelli pay $91,086 to Mr Despot. The primary judge did not make an order in those terms. He appears to have assumed, wrongly, that if that amount was not paid, the registration of the dealings necessary to give effect to the contract could not proceed. Mr Despot seeks to set aside the condition as to payment and to obtain an order for payment of the unpaid purchase price. In my view Mr Despot is entitled to an order that Stelli pay $91,086 to him. The making of that order is consistent with the relief he sought in the court below. I do not think that order should extend to Mrs Azzi because no claim was made against her as guarantor of Stelli's obligations under the contract for sale. 33On 10 October 2013, the Court of Appeal made an order amending order 5 of the orders it made on 20 September 2013 to read: Judgment for the appellant against Stelli for the sum of $91,086 plus pre-judgment interest of $23,148, that judgment to take effect on 15 April 2011. 34Mr Despot filed an application for special leave to appeal to the High Court against the decision of the Court of Appeal. That application was dismissed with costs on 11 April 2014. 35On 6 May 2014, Mr Despot purported to serve on Stelli and its solicitors, Kheir & Associates, a notice of termination "in accordance with cl 9 of the Contract".

Mr Despot's motion 36Mr Despot says that he is entitled to have the transfer of his unit to Stelli set aside on three bases. 37First, he relies on the notice given on 6 May 2014 terminating the contract for the sale of the unit. In written submissions, Mr Despot suggested that that notice could be supported not only by the failure to pay the $91,086, but also by the failure to pay the $480,000 and $464,932, on the ground that Mr Maalouf had no authority to direct the payment of those amounts to Sky Constructions. 38Second, Mr Despot relies on Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 39.50, which provides: If a person is entitled under a judgment or order subject to the fulfilment of a condition, but the condition is not fulfilled, then, unless the court orders otherwise: (a) the person loses the benefit of the judgment or order, and (b) any other person interested may take any steps: (i) that are warranted by the judgment or order, or (ii) that might have been taken had the judgment not been given or entered or the order not been made. Mr Despot claims that the order for specific performance was conditional on the payment of $91,086, that that payment has never been made and that, consequently, Stelli has lost the benefit of the order. 39Third, Mr Despot submits that the transfer of the unit was obtained contrary to the orders made by Macready AsJ and that the transfer ought to be set aside for that reason. Mr Hewitt, who appeared for Mr Despot, called in aid various principles and rules which he submitted had that result. He submitted that registration of the transfer of the unit without the payment of the $91,086 involved a contempt of court by both Westpac and Stelli because their conduct in procuring registration was both a breach of the orders made by Macready AsJ and a breach of the injuction granted by Barrett J on 15 August 2008 (which had not been dissolved). To the extent that Westpac sought to correct this second breach by the order it sought, it was prevented from doing so by the principle that the court will not assist a person in contempt until that contempt is first purged - in this case, by a retransfer of the unit to Mr Despot. For this proposition, Mr Hewitt referred to a number of cases, including the decision of Lindsay J in Stokes (by her tutor) v McCourt [2013] NSWSC 1014. Mr Hewitt also drew on the analogy of orders made by a court following a successful appeal requiring money that had been paid or property that had been transferred pursuant to a judgment reversed on appeal to be repaid or retransferred: see, eg, White v Tomasel [2004] QCA 89; [2004] 2 Qd R 438. 40In addition, Mr Hewitt relied on s 138 of the Real Property Act 1900 (NSW) and s 135 of the Civil Procedure Act 2005 (NSW). Section 138(1) provides: A court may, in proceedings for the recovery of any land, estate or interest from the person registered as proprietor of the land, make ancillary orders of the kind set out in subsection (3), if the court is of the opinion that the circumstances of the case require any such order to be made. Included in the orders permitted by subsection (3) is an order that the Registrar-General "cancel, amend or make a recording in a folio of the Register". Section 135(1) provides that "[t]he court may, by order, give directions with respect to the enforcement of its judgments and orders". At the heart of these submissions is the contention that, as a consequence of what happened, some personal equity arose in Stelli and Westpac to cause the property to be retransferred to Mr Despot. 41In relation to Mr Despot's claim that he was entitled to terminate the contract, Mr Hewitt points out that termination is not the equivalent of rescission. Termination only affects future rights. As a result, he submitted that Mr Despot is entitled to a reconveyance of the unit, but he is not liable to repay any part of the purchase price. In relation to the claim based on UCPR r 39.50, Mr Hewitt pointed out that the rule provides its own remedy. Stelli is not entitled to specific performance, but the other orders made by the Court remain in place. In relation to Mr Despot's claim that he had some type of personal equity that the property be retransferred to him, Mr Hewitt accepted that Mr Despot must himself do equity. However, in Mr Hewitt's submission, that involved reinstating the mortgage that Westpac had over the property at the time that it was sold. As I have said, the amount owing under that mortgage was $502,540. The result would be that Stelli would have to reconvey the unit to Mr Despot without an entitlement to recover any part of the purchase price it paid or any part of the debt that it now owes Westpac. 42Before addressing Mr Despot's contentions directly, it is desirable to say something about orders for specific performance generally and the order for specific performance in this case.

Principles relating to orders for specific performance 43An order for specific performance of a contract is an order that each party to the contract do what is required of that party by the contract. What the order involves in any particular case will depend on the terms of the contract and the circumstances as they exist at the time the order is made, and, in particular, what acts of performance required by the contract have not yet occurred: JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600 at 607 per Mahoney JA. 44Contractual rights do not merge in an order for specific performance. Rather, the order takes as its starting point the existence of an enforceable contract and requires the parties to act in accordance with its terms: Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444 at 460 per Gibbs, Mason and Jacobs JJ; Johnson v Agnew [1980] AC 367 at 393 per Lord Wilberforce; Buckman v Rose (1980) 1 BPR 9558 at 9559 per McLelland J; JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600 at 603 per Hope JA (with whom Glass and Mahoney JJA agreed); Dunworth v Mirvac Queensland Pty Ltd [2011] QCA 200; [2012] 1 Qd R 207 at [21]. 45These features of an order for specific performance mean that the order itself is not final until the contract is discharged by performance or, in the case of a contract for the sale of land, the contractual rights merge on completion: for discussion, see Fu v Bucasia Pty Ltd [2014] NSWSC 325 at [52]ff per Stevenson J. Before that time, there are two circumstances in which it may be necessary for the court to reconsider an order for specific performance. One is where there is an issue concerning what is required by the contract and the order for specific performance does not address that issue. Usually, orders for specific performance are expressed in general terms (such as an order that the contract be specifically performed and carried into effect), leaving it to the parties to work out the mechanics by which the order is to be implemented - that is, the mechanics by which the contract is to be performed. However, if the parties cannot agree on the mechanics, or if there is a dispute between them concerning what the contract requires, it will be necessary for the court to make supplementary orders to give effect to the order for specific performance that it has made. That is so whether or not liberty to apply has been specifically reserved: JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600 at 607. In those circumstances, the principle in favour of the finality of litigation still has some role to play, since it is not open to a party to seek to vary the order on grounds that were relevant to the question whether and on what terms the order should have been made in the first place. As Campbell JA (with whom Tobias JA agreed) explained in Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 at [72]-[74]: [72] If the orders in a suit also reserve further consideration, that enables matters not disposed of by the orders made thus far in the suit to be dealt with on a later occasion. [73] As Young J held in Rosser v Maritime Services Board of New South Wales (1996) 14 Building and Construction Law 375, at 382: Reservation of further consideration does not permit the judge to review and reconsider what has been decided by him at an earlier hearing. I so held in NSW Egg Corp v Peek (No 3) (unreported, 13 June 1986) which was based on what Lord Gifford MR said in Le Grand v Whitehead (1826) 1 Russ 309 at 311; 38 ER 120 at 121, supported by Pritchard v Draper (1830) 1 Russ & M at 191 at 198; 39 ER 74 at 77; Lyne v Lyne (1856) 8 De G M & G 553 at 559; 44 ER 503 at 506 and Haviland v McLeary (1894) 15 LR (NSW) (Eq) 22. [74] Further, neither liberty to apply nor reservation of further consideration can be used to obtain an order outside the scope of those sought in the initiating process: Haviland v McLeary (1894) 15 LR (NSW) (Eq) 22. 46The principle that the court may determine further questions concerning what the contract requires where that issue has not been previously considered has a wide application. For example, in Muriti v Prendergast [2005] NSWSC 281, the Court, by consent, ordered specific performance of a heads of agreement by which Mr Muriti and Mr Prendergast separated their interests in various partnerships and companies, which owned land and carried on the business of selling and repairing motor vehicles. Subsequently, a dispute arose concerning the amount payable under the agreement, and Mr Muriti sought rectification of the agreement in the connection with that dispute. White J concluded that he was not precluded by the order for specific performance from ordering rectification of the agreement. The amount payable under the heads of agreement had not been determined as part of the proceedings that resulted in the consent orders. Moreover, there was no inconsistency between an order for specific performance and an order that the contract to be speciically performed be rectified. As White J explained (at [152]): The defendants submitted that a necessary ingredient of the plaintiffs' cause of action for specific performance of the agreement was that its terms were properly recorded in the Heads of Agreement. ... I do not consider that to be so. It is a necessary ingredient of the order for specific performance that there be a valid and binding contract. But it is not a necessary ingredient of the cause of action that the true agreement conform with the instrument. ... [T]he Court can rectify the instrument to make it conform with the true agreement between the parties which it has ordered to be specifically performed. Upon the making of the order for rectification, the earlier order for specific performance will operate to compel the parties to perform their agreement in accordance with the instrument as rectified. That is achieved without any amendment or variation to the order of specific performance. 47It has been suggested that the court may refuse to make further orders to give effect to an order for specific performance if a party has been guilty of delay or other misconduct. In McKenna v Richey [1950] VLR 360 at 368, O'Bryan J said: The contract may, of course, still be afoot, and the plaintiff purchaser may be still entitled to her common law remedy of damages in respect of the defendant's breach - but her conduct and delay have made it inequitable to enforce specific performance against the defendant. It is not a question whether the plaintiff has abandoned the contract or even the equitable relief contained in the judgment - but whether she has so conducted herself since judgment as to make it inequitable for the Court to make further ancillary orders to enforce the judgment in her favour. In determining that question the Court will, in my opinion, apply like principles to those which it would apply in the original action for specific performance. The matter remains under the jurisdiction of the Court and is still subject to equitable considerations, and if in fact the plaintiff was guilty of delays or misconduct which would make it inequitable to enforce the decree, a Court of equity will withhold its assistance to the plaintiff further to enforce the decree in the same way as it would originally have refused the decree if the delays had occurred before judgment. 48However, in my opinion, there are difficulties with this statement of the law. Once an order for specific performance is made, it is binding on the parties, and the parties are in contempt if they do not comply with it. It would seem odd, in those circumstances, if the court were to refuse to make further orders to give effect to the order that it has made, but to treat a party as being in contempt by refusing to comply with that order. Of course, as will become apparent, the court may vacate an order for specific performance. But whether it should do so will depend on the terms of the contract, not on the exercise of a discretion to refuse to give effect to an order the court has already made. The position before the order for specific performance was made is not analogous. In that case, the court may refuse relief because of the delay in seeking relief. Once an order for specific performance is made, any relevant delay will be delay in performing the contract which gives rise to contractual rights. 49The second circumstance in which it may be necessary for the court to reconsider an order for specific performance is where some act has occurred (or not occurred) which gives rise to new contractual rights. Most often, the act is a failure by one party to perform the contract, and the contractual right is a right to terminate the contract because of that failure. 50There is an issue whether a contractual right of termination can only be exercised with leave of the court. Various editions of Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, including the most recent edition, have criticised decisions holding that the contractual right can only be exercised with leave: see RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, (4th ed, 2002, LexisNexis at [20-265]). Those cricitcisms were repeated by Meagher JA in Aarons v Advance Commercial Finance Ltd (1995) 6 BPR 13,911; (1995) NSW ConvR 55-746. However, in my opinion, the issue has been resolved by the decisions of the Court of Appeal in JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600 and the High Court in Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245. In the earlier case, Hope JA (with whom Glass and Mahoney JJA agreed) stated (at 603): It is not necessary to trace the history of the rule which requires the order or approval of the court in these circumstances. Its existence was accepted without question by the High Court in Facey v Rawsthorne (1925) 35 CLR 566; it was discussed in some detail by Helsham J, in Stevter Holdings Ltd v Katra Constructions Pty Ltd [1975] 1 NSWLR 459; it was again discussed, and a great number of the reported decisions dealing with it were cited, by McLelland J, in Buckman v Rose (12th November, 1980, unreported); and it was affirmed by the House of Lords in Johnson v Agnew [1980] AC 367. The precise nature of the jurisdiction which the court exercises is not entirely clear. It is well established that the contractual rights of the parties do not merge in the decree, and there seems to be no suggestion that the rule is based upon any principle of the law of contempt. If there be no merger, it might be thought more consonant with principle that what the court does is to give leave to the party seeking the relief to exercise the right he has under the contract to determine it. However the language used in many of the judgments assumes or asserts that it is the court that discharges the contract: see, for example, Johnson v Agnew [1980] AC 367, at p 394. It is not necessary for present purposes to resolve this question for it is clear that the contract cannot be determined until the approval or order of the court has been obtained, and that it is the order, or something done by authority of the order, that operates to terminate the contract. 51Commenting on that decision and the decisions to which it refers, Mason CJ (with whom Deane, Dawson and Toohey JJ agreed) stated in Sunbird Plaza at 260: In the light of the existing authorities, particularly Facey v Rawsthorne, there being no argument challenging their correctness, we should continue to apply the proposition that recission after an order for specific performance requires the leave of the court or, more appropriately, the vacation of the order. 52In Dunworth v Mirvac Queensland Pty Ltd [2011] QCA 200; [2012] 1 Qd R 207, the Queensland Court of Appeal nonetheless permitted a plaintiff to exercise a right of rescission following an order for specific performance without obtaining prior leave of the court. In that case, the plaintiff had obtained an order for specific performance of a contract for the sale of an apartment. After the order was obtained, the apartment was rendered uninhabitable by the Brisbane floods. The plaintiff exercised a statutory right to rescind in the event that the property was so destroyed or damaged as to be unfit for occupation. The Queensland Court of Appeal held that she was entitled to do so notwithstanding that she had not obtained leave of the court. Only McMurdo J dealt expressly with the apparent difficulty in this approach caused by the High Court's decision in Sunbird Plaza: That criticism [of the requirement of leave] has particular force, but it remains necessary to proceed according to Sunbird Plaza Pty Ltd v Maloney, from which it is clear that in this context, there must be some order which puts paid to the order for specific performance. Mason CJ was careful to point out that this was appropriately described as a vacation of the order for specific performance rather than the grant of the Court's permission for the termination of the contract. Here, although specific performance had been ordered, the contract retained in all respects its effect according to its terms. An order of the Court was unnecessary for the appellant to terminate this contract, as she did on 28 January. But the order for specific performance could not be left unattended, and the Court's record had to be amended to correspond with what had become the contractual position. Accordingly, the appropriate orders are those proposed by the Chief Justice (at [57]). 53In my opinion, however, the statement by Mason CJ cannot be interpreted as a statement that a party seeking to be relieved of an order for specific performance can apply for vacation of the order after a right of termination has been exercised. His Honour must be understood as stating that courts should continue to apply the accepted rule. The accepted rule requires an order of the court before the contract can be determined. All Mason CJ was saying was that the relevant order was, strictly speaking, an order vacating the order for specific performance rather than an order giving leave to terminate. 54If a court vacates an order for specific performance, a further question arises concerning what should then be done; in particular, whether the party in whose favour the order for specific performance was made is free to pursue any other rights that party may have had absent an order for specific performance. It is clear that, notwithstanding early English authority to the contrary, such a party retains a right to claim damages for breach of contract: see McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 at 476-7 per Dixon J; Johnson v Agnew [1980] AC 367 at 396 per Lord Wilberforce. Depending on how the case was conducted and the application of principles of election and estoppel, the party may also be able to pursue other rights: see, eg, Georges v Wieland [2010] NSWSC 1378, where Brereton J permitted the plaintiff to pursue personal claims against the directors of a company following vacation of an order for specific performance of a contract for the sale of shares in the company.

The orders in this case 55Several points may be made about the orders of Macready AsJ in this case. 56The order for specific performance was an order that "the Contract be specifically performed and carried into execution by the Plaintiff and the Third Defendant so far as it remains to be performed". However, it is not clear what further acts of performance were required by Mr Despot. It is apparent from cl 16.3 of the contract of sale that the obligation of Mr Despot was to "cause the legal title to the property (being an estate in fee simple) to pass to the purchaser free of any mortgage or other interest, subject to any necessary registration". This obligation must be understood in the context of conveyancing law and practice. The clause recognises that Mr Despot himself was not capable of registering the transfer. That is an act of the Registrar-General. Consequently, the obligation to cause the legal title of the property to pass is expressed to be one "subject to any necessary registration". Section 43A(1) of the Real Property Act provides: For the purpose only of protection against notice, the estate or interest in land under the provisions of this Act, taken by a person under a dealing registrable, or which when appropriately signed by or on behalf of that person would be registrable under this Act shall, before registration of that dealing, be deemed to be a legal estate. Against that background, what cl 16.3 of the contract required Mr Despot to do was to provide a signed transfer in registrable form and signed discharges of any mortgage or other interest in registrable form, and do anything else required of him, to enable Stelli on registration of the transfer to obtain an unencumbered estate in fee simple. That is what Mr Despot (or, more accurately, Mr Maalouf purportedly as his agent) had already done. The only other act required of Mr Despot was withdrawal of the caveat that he had lodged, which was the subject of a separate order. 57The order for specific performance was expressed to be conditional on the payment by Stelli of the sum of $91,086. Read literally, there is a degree of circularity in the order. The order for specific performance is conditional on the payment of $91,086. But there were no acts of performance required by Mr Despot, and the only act of performance of Stelli was to pay the balance of the purchase price. It is clear on the findings of Macready AsJ that that amount was the sum of $91,086. Two things, however, are apparent from the order. 58First, the order results from a clear finding by Macready AsJ that the only amount outstanding in respect of the purchase price was the sum of $91,086. As Meagher JA explained in the passage quoted above in para 32 of this judgment, since the order for specific performance was not challenged on appeal, it was not open to Mr Despot to challenge the finding on which that order was based - namely, that the outstanding purchase price was the sum of $91,086. It follows that, contrary to Mr Despot's written submissions, it is not now open to Mr Despot to argue that Stelli failed to comply with its contractual obligations by failing to pay amounts other than the $91,086. That issue was determined by Macready AsJ, and the determination of that issue was an essential component of the order that he granted. His Honour's determination of that issue was not overturned on appeal. 59Second, it seems clear that the intention behind the condition of the order was that Mr Despot should receive the sum of $91,086 before Stelli received by registration title to the property. It is true that the only things preventing registration were the caveat and the injunction, and (leaving aside the injunction granted by Barrett J for the moment) the orders that Mr Despot withdraw the caveat and that the injunction be dissolved were not conditional on the payment of $91,086. However, the condition of the order for specific performance could serve no function unless it was intended that Mr Despot would be paid the balance of the purchase price before Stelli became the registered proprietor of the property. 60Against that background, it is now possible to turn to Mr Despot's arguments concerning his entitlement to have the unit reconveyed to him.

Termination of the contract 61It is apparent from what I have already said that there are insuperable difficulties with Mr Despot's claim that he is entitled to terminate the contract of sale of the unit for non-payment of the balance of the purchase price. 62For the reasons I have given, I do not accept that Mr Despot had a right to terminate the contract without first seeking an order that the order for specific performance be vacated. Consequently, the notice of termination he gave was invalid. 63Nor do I accept that Mr Despot was entitled to give a notice of termination of the contract in any event. I say that for several reasons. 64First, even before the order for specific performance had been made, Mr Despot had done everything required of him by the contract. So far as the contract was concerned, the critical act of performance by Mr Despot was the provision of a signed transfer in registrable form and a signed discharge of Mr Despot's mortgage to Westpac. When the solicitor who had been retained to act for him handed over those documents, notwithstanding that Mr Despot had not been paid the full purchase price, the solicitor on his behalf performed the contract and, in place of obtaining payment of the full purchase price, put Mr Despot in the position where he was entitled to a vendor's lien in respect of the unpaid balance of the purchase price: see, eg, Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 at 477ff per Hope JA (with whom Glass and Mahoney JJA agreed). Termination at any subsequent time could not alter that fact. 65Second, even if the conclusion of the previous paragraph is wrong, the transfer was subsequently registered, and Mr Despot lodged a caveat claiming a vendor's lien. On registration, Mr Despot's contractual rights merged in his right to claim a vendor's lien. It may be that the circumstances in which that happened gave rise to other rights - such as a right to have the property reconveyed to him. But those circumstances cannot affect the fact that the contract had been performed and that whatever rights arose under it had been lost by merger or been discharged by performance. 66Third, even if the conclusion of the previous two paragraphs is wrong, I do not accept that Mr Despot was entitled to terminate the contract without giving a notice in accordance with Special Condition 2. Mr Hewitt submitted that Stelli delayed for so long in paying the balance of the purchase price that its conduct should be treated as repudiatory conduct entitling Mr Despot to terminate the contract without notice. In some cases, delay may be such as to evince an unwillingness or an inability to render substantial performance of the contract so as to amount to a repudiation, in which case no notice to complete is necessary: Galafassi v Kelly [2014] NSWCA 190 at [96]-[97] per Gleeson JA (with whom Bathurst CJ and Ward JA agreed). However, in my opinion, the delay by Stelli in this case did not evince an intention not to be bound by the contract. Stelli accepted that it owed Mr Despot the sum of $91,086 plus interest. It sought, over a period of time, to reach an agreement by which that amount could be set-off against the costs orders it had obtained. Moreover, it wanted to wait for the outcome of the appeal before paying the sum of $91,086. Whether or not it was entitled to adopt that position is not to the point. The position it took was not evidence that it could not or would not perform its contractual obligations.

The argument based on UCPR r 39.50 67It is also apparent from what I have already said concerning the order for specific performance that the claim based on UCPR r 39.50 must fail. 68I accept the submission of Mr Leopold SC, who appeared for Westpac, that UCPR r 39.50 can only operate where the order provides that the condition must be fulfilled by a specified time. If it were otherwise, it would not be possible to know at any particular time whether the condition had been satisfied or not; and consequently, it would not be possible to know whether the benefit of the order has been lost or not. 69In any event, if Stelli has lost the benefit of the order for specific performance, it has lost the ability by an action for contempt or by an application for ancilliary orders to compel Mr Despot to perform the contract. However, as I have explained, even at the time the order was made, and certainly subsequently, there was nothing further for Mr Despot to do. Stelli had already obtained the benefit of the contract. In my opinion, UCPR r 39.50 cannot be read as undoing anything that was done pursuant to the order before the non-fulfillment of the condition. It certainly cannot be read as undoing anything that was done before the order was made.

The argument based on breach of the Court's orders 70There are two relevant orders. The first is the injunction that was granted by Barrett J on 15 August 2008 that was not specifically dissolved by the orders made by Macready AsJ on 15 April 2011. The second is the order for specific performance made by Macready AsJ on 15 April 2011. 71Although the injunction granted by Barrett J was not expressed to operate until the conclusion of the hearing, it was expressed to be an injunction until further order of the Court. As the Court of Appeal pointed out in Klewer v Official Trustee in Bankruptcy (No 2) [2010] NSWCA 258 at [6], "[a]n interlocutory injunction that is granted 'until further order' is frequently construed as operating until the determination of the proceedings or further order, which ever happens first". In my opinion, that is the construction that should be given to the order made by Barrett J. There can be no doubt that that order was intended to operate as an interlocutory injunction. That is apparent from the circumstances in which the order was made and the fact that it was made upon Mr Despot giving the usual undertaking as to damages. Consequently, it must have been intended to cease to operate when final orders were made. That happened on 15 April 2011, although those orders were stayed until 27 May 2011. It follows that, by its own terms, the order made by Barrett J ceased to have any operation no later than 27 May 2011. Interpreted in that way, it is not suggested that Stelli or Westpac did anything contrary to that order. 72As I have said, Mr Despot puts his claim in relation to a breach of the order for specific performance in various ways. In his Points of Claim, he alleges that registration of the transfer of his unit was obtained by fraud. In submissions, I did not understand Mr Hewitt to go so far. However, Mr Hewitt did submit that Stelli misled Westpac into belieivng that it would pay the balance of the purchase price immediately and that Westpac, through its solicitors, misled the Registrar-General by writing the letter dated 30 May 2011. Mr Hewitt also submitted that the transfer had been obtained in breach of the order and that itself gave rise to a right to have the transfer reversed. 73It is not necessary to resolve the precise circumstances in which a court will order the reconveyance of property that has been registered in contravention of a court order. Certainly, s 42 of the Real Property Act 1900 (NSW) provides an exception to the indefeasibly of the title it confers on the registered proprietor in the case of fraud. The fraud must be fraud by the registered proprietor: Registrar of Titles (WA) v Franzon [1975] HCA 41; (1975) 132 CLR 611 at 618 per Mason J (with whom Barwick CJ and Jacobs J agreed); Gerard Cassegrain & Co Pty Ltd v Cassegrain [2013] NSWCA 453; (2013) 305 ALR 612 at [14], [97] per Beazley P and [155] per Macfarlan JA. Fraud involves "some moral turpitude": Simmons v Henwood [2013] NSWCA 184 at [86] per Emmett JA. 74I am prepared to assume that there may be other cases where a court will order that property that has been obtained in breach of a court order should be retransferred on the basis that the breach gives rise to a personal equity on the part of the person who obtained the interest in breach of the order. It is well recognised that the provisions of the Real Property Act do not relieve a registered proprietor or mortgagee of land under the Act from their own personal obligations: Balani Pty Ltd v Gunns Ltd [2011] FCAFC 153 at [27] citing Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491 at 504-5; Breskvar v Wall [1971] HCA 70; (1971) 126 CLR 376 at 384-5; Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604 at 613, 638 and 653-4; and it may be that breach of a court order, at least in some circumstances, gives rise to relevant personal obligations, just as failure to maintain a judgment on appeal does. 75However, in this case, no order was breached by the conduct that led to registration of the transfer. Even assuming that the order for specific performance contained an implied prohibition on seeking to obtain the benefits of the order without first satisfying the condition of the order, the order conferred no benefit on Stelli. That is because, as I have explained, at the time the order was made, Stelli had already obtained all the benefits an order for specific performance conferred on it. The true benefit of the orders to Stelli and Westpac was the vacation of the injunction and the order that Mr Despot withdraw the caveat. Neither of those orders was conditional on the payment of the $91,086. Given that, it is difficult to see why Westpac's solicitors were not entitled to write to the Registrar-General in the terms that they did. 76The condition on the order for specific performance assumed that Mr Despot would be paid the outstanding purchase price immediately and assumed that Stelli would not become the registered proprietor of the unit until the outstanding amount had been paid. For the reasons I have explained, that assumption was mistaken. In my opinion, that mistaken assumption cannot give rise to an obligation on the part of Westpac not to do what it did, much less an obligation on the part of Westpac or Stelli to prevent registration of the transfer and mortgage in circumstances where the orders preventing those acts had been dissolved. However, as I will explain, what happened is very relevant to the question of set-off.

Stelli's motion in relation to set-off 77The parties accept that the court has a discretion to permit a party to set-off costs against some other order for the payment of money and that any right of set-off in this case depends on the Court exercising that discretion in Stelli's favour: see State of New South Wales v Hamod [2011] NSWCA 376. 78Stelli submits that this is an appropriate case in which to exercise the discretion in its favour. In making that submission, it points to the fact that it has taken reasonable steps to have its costs assessed. In particular, it submits that it was reasonable to delay having its costs assessed until Mr Despot's appeal was finally determined by dismissal of his application for special leave to appeal to the High Court. Since then, substantial progress has been made in the assessment process, which, by its nature, is likely to take a number of months. Stelli also points to the fact that its costs on assessment will be far greater than the amount that it owes Mr Despot and that, on the evidence, there is little prospect of Mr Despot being able to satisfy the costs orders against him. 79All that may be accepted. However, the difficulty with Stelli's submission is that it is plain that the orders made by Macready AsJ assumed that, if Stelli were to obtain the benefit of becoming registered proprietor of the unit, then it should pay the outstanding purchase price immediately. The conditional order was meaningless if it did not at least mean that. In my opinion, Stelli cannot both take the benefits of the orders made by Macready AsJ, which is what it has done, and, at the same time, not make the payment that the orders contemplated would be made. Stelli has had the benefit of the orders since May or early June 2011, when the transfer was actually registered. From that time, it must be taken as having accepted that it should pay the remaining purchase price. It should not be permitted to rely on a set-off that is contrary to the basis on which the orders made by Macready AsJ were made. 80The conclusion of the previous paragraph is reinforced by the orders made by the Court of Appeal. One order the Court of Appeal made was that there be judgment in favour of Mr Despot against Stelli for the $91,086. That judgment reflects the fact that, having obtained registration, Stelli should pay the $91,086. In my opinion, to permit Stelli now to set-off that amount against costs orders in its favour would be to permit it to obtain a benefit from its failure to do what it ought to have done at the time it became registered proprietor of the unit.

Orders 81Mr Despot's motion filed on 6 May 2014 should be dismissed. 82It is not necessary in those circumstances to deal with Westpac's motion filed on 1 July 2014. That motion should be also dismissed. 83Finally, for the reasons I have given, Stelli's motion filed on 30 June 2014 should also be dismissed. 84If the parties can agree on the orders that should be made in relation to costs of the motions filed on 6 May 2014 and 30 June 2014 and 1 July 2014, I will make those orders in chambers. If not, I will hear submissions on the question of costs at a time to be fixed with my Associate. 85I also stand the remaining motions over until a date to be fixed with my Associate.

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: 28 July 2014

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (12 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (32)

Cited By (4)