Giddings v Sharp

Supreme Court of NSW|2024-03-11|Before: Peden J

Ex TEMPORE JUDGMENT

The plaintiffs in these proceedings seek an order to finalise their purchases of six lots of rural land in Mirrool, New South Wales.
Phillip and Julie Giddings and their daughter Selena Riley are the purchasers under the contracts of sale, and the plaintiffs in two separate proceedings, which have been listed for hearing together. The defendant in both proceedings, Christopher Sharp, is the vendor under the contracts of sale entered with the plaintiffs.
The plaintiffs sought and obtained orders for substituted service of the summons and evidence. I am satisfied that Mr Sharp was served. However, Mr Sharp has not filed a defence and has otherwise not participated in the proceedings.
A hearing was listed on Monday 11 March 2024. However, on that occasion the plaintiffs sought to rely on an amended summons that joined the Registrar General and sought relief against him. That proposed amended summons was first provided to the Registrar General on Friday 8 March 2024. It had not been served on the defendant. In those circumstances the plaintiffs sought an adjournment of the hearing in order to put their house in order.
The adjourned hearing was listed for today. The plaintiffs no longer sought to rely on an amended summons. They had sought telephone and email advice from the Registrar General as to how to complete the transfers of the lots into their names. They were directed to using s 94 Civil Procedure Act 2005 (NSW) (CPA) and seeking a PEXA exemption 50.3 of the exceptions list under the Lodgement Rules, Section 12F Real Property Act 1900, which was effective from 11 October 2021.
Because of that advice, the plaintiffs have resorted to only seeking a prayer for relief in the original summons filed on 27 November 2022, namely an order pursuant to s 94 CPA, that the Registrar in Equity execute the relevant documents on behalf of the defendant to affect the transfers of the various lots of land.
No relief in the form of orders for specific performance of the contracts for sale of land were sought.

Background

By way of background, on about 26 May 2021, Selena Riley and Mr Sharp executed a contract for the sale of lots 8 and 9 in folio identifier 758684 for the amount of $50,000.00. The date for completion was left blank. By electronic bank transfer, on 28 May 2021 Ms Riley paid Mr Sharp the purchase price in full.
On about 27 May 2021, Phillip and Julie Giddings and Mr Sharp executed a contract for the sale of lot 13 in folio identifier 758684 for a purchase price of $25,000.00. The date for completion was also left blank. On 2 June 2021 the purchase price was paid in full by Mr Giddings to Mr Sharp in the form of a bank cheque and cash.
On 7 June 2021, Phillip and Julie Giddings and Mr Sharp executed a contract for the sale of Lots 5, 6 and 7 in folio identifier 758684 for $66,000.00. The date for completion was also stated to be 7 June 2021. On 7 and 8 June 2021 the purchase price was paid in full by Mr Giddings to Mr Sharp by bank cheque and electronic bank transfer.
Transfer forms for each of the lots were executed at about the same time as each of the contracts of sale. However: 1. The transfers for Lots 8, 9 and 13 are undated; and 2. Mr Sharp's signature on the transfers for Lots 5, 6 and 7 are unwitnessed and undated.
In June 2021, Mr Giddings attempted to affect settlement of all of the sales through agent, SAI Global, as instructed by Mr Sharp. Those attempts were ineffective. In around January 2021, the plaintiffs sought the assistance of their solicitors on the record. The plaintiffs understood that the transfers would need to take place electronically via PEXA. On 11 February 2022 stamp duty on the transfers of all lots was paid by Mr Giddings.
Stated as pursuant to special condition 8 of the contracts, notices to complete were served on Mr Sharp on 16 February 2022, inviting him to PEXA settlements for each of the lots which was to take place on 3 March 2022. Mr Sharp did not attend, and settlement failed.
There is no evidence of any correspondence having been received by the plaintiffs from Mr Sharp since 3 March 2022, and no further steps have been taken to transfer the properties. Various attempts to contact and locate Mr Sharp failed. As noted, substituted service was affected and the plaintiffs have lodged caveats on title to the various lots.

What orders ought to be made?

No submissions were made as to the validity of the notices to complete in circumstances where there is no completion date on any contract and it appears the entry of 7 June 2021 on the contract for sale of lots 5, 6 and 7 must have been an error. I assume the plaintiffs intended to submit that where no time is specified, then performance is required within a reasonable time, and such time had elapsed by February 2022, being more than 6 months after the contracts were executed.
However, there is a real question as to the relief that ought to be granted. The plaintiffs have only sought an order pursuant to s 94 CPA, seeking an order that the Registrar effect what Mr Sharp ought to have done, namely sign the transfers, so that the transfers can be registered in a manner approved by the Registrar General.
Whilst it is apparent that there are no witness transfers for lots 5, 6 and 7, it is not apparent why the transfers of Lots 8, 9 and 13 are defective, other than they were not dated. There is no evidence why the plaintiffs did not insert a date when they signed the documents, which was said to be at the time of the contracts for sale. Ms Chan, counsel for the plaintiffs, made a vague submission that she and her instructor had formed the view that the transfers were invalid because the signatures were not witnessed by a legal practitioner. I was not taken to any legal requirement that the transfers be witnessed by a legal practitioner.
Instead, the opposite would seem correct. The transfer Form 01T provides a reference to s 117 of the Real Property Act 1900 (NSW) (RPA) which in turn directs attention to the Conveyancing Rules 2001 (NSW), which set out the requirements for a witness, namely in r 6.1.3 that: An eligible witness is a person who is at least 18 years of age and is not a party to the application dealing or caveat and has known the person for more than 12 months or has taken reasonable steps to ensure the identity of that person.
Had the paper transfers been taken and registered before PEXA came into operation, no assistance of the Court may have been necessary.
There was no evidence from the plaintiffs as to what is required in the current situation where the transfer has not been lodged and PEXA is now the general conveyancing platform. I was not asked to take judicial notice of any fact or matter concerning PEXA pursuant to s 144 of the Evidence Act 1995 (NSW).
Instead, the only substantive order the plaintiffs seek is one empowering the Equity Registrar to sign transfers for all of the Lots.
Section s 94(1) of the CPA provides: If any person does not comply with a judgment or order directing the person - (a) to execute any conveyance, contract or other document, or (b) to endorse any negotiable instrument, the court may order that the conveyance, contract or other document be executed, or the negotiable instrument endorsed, by such person as the court may nominate for that purpose.
As the plaintiffs expressly disavow any prayer for relief to order Mr Sharp to finalise his obligations under the contracts for sale, the plaintiffs ought to fail, because s 94 will not operate until the defendant has failed to comply with an order to do something. An order under s 94(1) should not be made in circumstances where there is merely an anticipated refusal to execute a document. No submission was made that an order ought nevertheless be made because of the futility of an order against Mr Sharp: Savage v Norton [1908] 1 Ch 290; Commonwealth Bank of Australia v Dariusz Adam Gaszewski [2006] NSWSC 77 at [13].
However, I do not consider it would be just, quick and cheap to require the plaintiffs to return and seek the relief that is necessary for them in the circumstances where their legal practitioners have chosen to adopt a particular course, which is not favourable to them. If specific performance was to be ordered, that provides a way for a s 94 CPA order to be made.
Further, if specific performance is ordered, then s 138 RPA provides a broad discretion to the Court to make orders that have the effect of amending the Register concerning certain property. However, s 138 RPA was expressly disavowed by the plaintiffs.
On the evidence before me, and undertaking the analysis that I have done, I am satisfied that the notices to complete were issued at a time when a reasonable time for completion had expired, and therefore based on the notices to complete Mr Sharp was compelled to complete by the date specified in those notices. He has failed to do so. I am also satisfied that the plaintiffs have paid the full purchase price in relation to the properties, and the full stamp duty.
In those circumstances, I consider it is appropriate to make an order compelling Mr Sharp to specifically perform all of the contracts, including to complete the transfers. In circumstances where the parties originally contemplated that the transfers would occur in paper rather than on the PEXA platform, I consider it appropriate to order Mr Sharp to, in the current circumstances, specifically perform in the only practicable way that exists now, which is namely via PEXA. However, if Mr Sharp does not comply with his obligations in the time that will be ordered, then I am prepared to make an order pursuant to s 94 CPA.

Gross sum costs order

The plaintiffs also seek a gross sum costs order. The principles concerning a gross sum costs order pursuant to s 98(4)(c) CPA are well known. That section relevantly provides: (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to-- (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount.
An application for a gross sum costs order can be made as long as costs have not been referred for assessment. That has not occurred here. In Ahern v Aon Risk Services Australia Limited (No 2) [2022] NSWCA 39 at [14]-[18], the Court of Appeal, consisting of Meagher, White and Brereton JJA, summarised the operation of the discretion encapsulated in the section: The principles relevant to the Court's exercise of discretion under s 98 were set out in Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (Beazley JA) (Hamod). Her Honour noted at [813]: [813] The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]-[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]: "The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available." The principal purpose of a specified gross sum costs order under s 98(4)(c) is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process: Hamod at [816]-[817]. As Basten JA noted in James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3]: The power to make such an order is governed by the obligation of the court to give effect to the overriding purpose of the Act, as identified in Pt 6 of the Civil Procedure Act. The court is to ensure that the issues between the parties are resolved "in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute" (Civil Procedure Act, s 60); that obligation extends to the disposal of disputes as to costs. Although questions of costs undoubtedly play an important practical role in commercial litigation, disputes as to quantification are ancillary to the primary issues in dispute and consequential upon the resolution of the primary issues. Costs provide an opportunity for ongoing litigation about "non-essential issues" which should be resolved with as little technicality and expense as reasonably practicable. [footnotes omitted] Primary considerations relevant to the exercise of the s 98(4)(c) discretion include "the relative responsibility of the parties for the costs incurred; the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability": Hamod at [816]; see also Kostov v Zhang (No 2) [2016] NSWCA 279 at [22]; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [30]. The power to award a gross sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 734 at 743; [2002] NSWCA 213 at [22]. The power may be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod at [818].
If it considers it appropriate to make the order, the Court may adopt a "broad brush" approach to quantification, rather than undertaking a detailed examination of the kind carried out in a formal costs assessment. Such process would defeat the purpose of the order. The costs ordered should be "based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills)": Hamod v New South Wales [2011] NSWCA 375 (Hamod) at [820]. At [814], Beazley JA (as her Honour then was) stated that "Courts have typically applied a discount when assessing costs on a gross sum basis, though the aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court" (with Giles and Wehaly JJA agreeing).
A further consideration is the overriding purpose of the CPA which requires the just, quick and cheap resolution of proceedings, and also requires practitioners to ensure the costs incurred are proportionate to the nature and complexity of the matter.
The plaintiffs rely, for the purpose of the gross sum costs order, on an affidavit of Ms Wright, the solicitor on the record, in which she gives the opinion that this is an appropriate case in which to make a gross sum costs order. I accept that this is an appropriate case to make a gross sum costs order so that there can be finality brought to this matter and there can be the avoidance of further disputes and further costs being incurred by the plaintiffs.
The real issue here is what the appropriate quantum of those costs ought to be. Ms Wright provides evidence that the total costs claimed are $71,459.76. That sum is in the context of the total purchase price of the properties being $141,000.00. Therefore, costs of more than 50 per cent of the total purchase price are being sought from the defendant.
To substantiate those costs Ms Wright has attached not invoices, but what appear to be time entries in a software system, and what is entitled "Cost Recoveries" which appear to be disbursements. I have not been provided with Ms Wright's costs agreement. I have not been provided with her estimate or ongoing estimates in relation to the matter.
On a quick view of the time entries it appears that Ms Wright alone was responsible for preparing the summons in both matters and drafting the affidavits. There is no evidence as to who other persons listed in the time entries are. I was informed from the bar table that they are employees of Ms Wright, but I have no evidence of their experience and expertise. Ms Wright's evidence was that she carried out most of the legal work in this matter because of the "factual and legal complexity".
Ms Chan's only submission as to the "factual and legal complexity" in the matter was to the effect that Mr Sharp avoided service and substituted service orders were required, and there was some time involved in bringing the matter to hearing. No legal complexity was identified, which is consistent with the fact that the summons is in a standard form seeking specific performance and an alternative order under s 94 CPA. The affidavits provide a simple factual basis for the matters. I do not accept there was any factual or legal complexity involved.
Ms Chan correctly conceded that it was not possible to completely interrogate all of the time entries as some acronyms were unintelligible. Further, it was not clear for some line items as to whether there had been duplication.
I was also provided with invoices from two barristers. First, invoices from Mr Mark Stephens, who appears to charge at a rate of $600 per hour. There was no evidence as to why a barrister with Mr Stephens' years of experience was required to complete the tasks of attending to an uncontested notice of motion for substituted service and various directions hearings. I also am greatly concerned that the sum of $2,000.00 was charged for preparing and attending an uncontested directions hearing on 1 September 2023, that took no more than five minutes.
I have also been provided with the invoice of Ms Chan dated 13 March 2024 in the sum of $16,830.00. Ms Wright gives evidence that a further $6,050.00 will be payable by the plaintiffs to Ms Chan. On the material before me, it is not apparent why it would take so many days of work by an experienced barrister in preparing for an uncontested hearing of this nature, such as to warrant those fees.
As noted, it is open to the Court to discount where a gross sum costs order is sought. Ms Chan made submissions that a discount of 20 to 30 per cent might be appropriate. I do not consider that a significant enough discount in the circumstances, when the size of the value of the land is taken into account and the various other matters that I have identified. I consider an appropriate discount in the circumstances is that a gross sum costs order is made in the sum of $24,000.00. This sum is to be divided between the two proceedings, such that Mr Sharp pay the Giddings' costs in the sum of $16,000, and Mr Sharp pay Ms Riley's costs in the sum of $8,000.
I therefore make the following orders:

In the Giddings Proceedings, 2022/00357444 1. Declare that the agreement between the first and second plaintiffs as purchasers and the defendant as vendor dated 27 May 2021 in respect of the property known as Lot 13 Creek Street, Mirrool in the State of New South Wales being all of the land and improvements in folio identifier 13/1/758684 ("Lot 13 Agreement") should be specifically performed and carried into execution. 2. Declare that the agreement between the first and second plaintiffs as purchasers and the defendant as vendor dated 7 June 2021 in respect of the properties known as Lots 5, 6 and 7 Creek Street, Mirrool in the State of New South Wales being all of the land and improvements in folio identifier 5/1/758684, 6/1/758684 and 7/1/758684 ("Lots 5, 6 and 7 agreement") should be specifically performed and carried into execution. 3. Order that the defendant execute all such instruments and do all such things as are necessary in order to specifically perform the Lot 13 agreement and the Lots 5, 6 and 7 agreement and carry each agreement into execution within 14 days. 4. If the defendant fails to execute any necessary document or to take any necessary step to give effect to orders 1 and 2, the Registrar in Equity shall be empowered pursuant to s 94 of the Civil Procedure Act 2005 (NSW) to so act in their place. 5. Orders that the defendant is to pay the plaintiffs costs fixed in the sum of $16,000.00.

In the Riley Proceedings, 2022/00357447 1. Declare that the agreement between the plaintiff as purchaser and the defendant as vendor dated 26 May 2021 ("Lots 8 and 9 agreement") in respect if the properties known as Lots 8 and 9 Creek Street, Mirrool in the State of New South Wales being all of the land and improvements in folio identifier 8/1/758684 and 9/1/758684 should be specifically performed and carried into execution. 2. Order that the defendant execute all such instruments and do all such things as are necessary in order to specifically perform the Lots 8 and 9 agreement and carry it into execution within 14 days. 3. If the defendant fails to execute any necessary document or to take any necessary step to give effect to order 1, the Registrar in Equity shall be empowered pursuant to s 94 of the Civil Procedure Act 2005 (NSW) to so act in their place. 4. Order that the defendant is to pay the plaintiffs costs fixed in the sum of $8,000.00.

Amendments 23 April 2024 - 23 April 2024 - Amendment pursuant to slip rule. 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: 23 April 2024

Conveyancing Rules 2001(NSW)

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