Gilles v Penson

Supreme Court of NSW|2014-11-07|Before: Slattery J, Ms P

EX TEMPORE Judgment 1Shirley Penson, the defendant and her company Aquaqueen Pty Limited are alleged former clients of the plaintiffs, solicitors practising in the Sydney suburb of Matraville, as "Giles Payne & Co" ("the firm"). 2Extensive disputes exist about Aquaqueen and Mrs Penson's liability for the payment of costs to the firm. The firm claims that Mrs Penson gave an equitable charge over certain real property she owns in order to secure Aquaqueen's and her obligations to the firm. Mrs Penson says that Aquaqueen was the firm's client and she did not charge her property to the firm. 3In the present dispute in the equity duty list the firm seeks to extend a caveat over Mrs Penson's Alexandria property (hereafter referred to as "the Alexandria property") or to have leave to file a fresh caveat. Mrs Penson opposes any extension of the caveat, or the filing of a fresh caveat. 4The matter first came into the duty list on 4 November. Ms Becker appeared for the firm and Mrs Penson appeared in person. The Court permitted the filing of a summons which claimed an order extending the operation of caveat AH14780 over the Alexandria property until further order, or until determination of the substantive proceedings. The Court extended the caveat until 5.00pm on 6 November 2014 and ordered Mrs Penson to serve on the firm any affidavit on which she sought to rely by 5.00pm on the following day, 5 November. Consequent upon the service of a notice under the Real Property Act, s 74J, the caveat AH14780 was due to expire at midnight on 4 November, the same day on which Ms Becker made her application. 5This case is an illustration of the dangers of lawyers coming up to Court on the last day of the life of a caveat. After Ms Becker left the Court, having obtained the orders just mentioned, she was not able to lodge them with the Land Titles Office. So caveat number AH14780 was shown on the Register as having lapsed from midnight on 4 November. 6The matter came before the Court again yesterday, 6 November. Ms Becker informed the Court of the lapse of the caveat. She filed an amended summons seeking orders that the firm be granted leave to file a further caveat over the Alexandria property (in the form of what became Exhibit 1) and for that caveat to remain in force until the determination of the substantive proceedings, notwithstanding the lapse of the earlier caveat. 7As is required, the firm's amended summons not only sought relief in relation to the caveat but also sought final relief: a declaration that the firm has an equitable interest by way of a charge over the Alexandria property pursuant to three costs agreements dated respectively 4 November 2009, 22 April 2010, and 26 April 2010. These costs agreements were said in the relief sought to be "executed by the respondent in favour of the plaintiffs". 8Notwithstanding the terms of the declarations sought in the amended summons, it emerged during this application that Mrs Penson has never executed these costs agreements. 9Several issues now arise for determination. The first issue is whether the firm arguably has an equitable interest by way of charge in the Alexandria property. The second issue is whether, in light of the lapsing of the caveat and the filing of an amended summons, the Court should make an order under Real Property Act, s 74O permitting a further caveat to be filed. Thirdly, the Court must consider what further directions should be made in relation to the final relief claimed in the proceedings. I will deal with each of those issues in turn. 10But one procedural matter arises. When Ms Becker sought to file the amended summons yesterday, Mrs Penson objected to it on the basis that she was unrepresented and needed time to consider the amended summons and to get legal advice in relation to it. The Court was reluctant to adjourn the proceedings yesterday. But upon Mrs Penson's application I ultimately allowed an adjournment until 2.00pm today. Mrs Penson wanted an adjournment to next week. I declined that request. If the firm has an arguable claim for an equitable interest by way of charge, and if it is appropriate for leave to be given for a fresh caveat to be filed, then it is undesirable to allow a situation to subsist for very long in which the arguable claim is not recorded on the Register. The capacity for third parties to be misled by the state of the Register and for the firm to be disadvantaged, in these circumstances, counsels against too long an adjournment. So, I have indicated to the parties that I will determine the matter this afternoon.

An Equitable Interest by Way of Charge in the Alexandria Property? 11The firm claims the equitable interest by way of charge over the Alexandria property arising out of charging clauses in three costs agreements. These were said to have been made between the firm and Mrs Penson and dated on the three dates earlier indicated, 4 November 2009, 22 April 2010 and 26 April 2010. Each of these costs agreements is in a similar form. On the front page each is dated and is addressed to "Ms Shirley Penson" and under that in a box marked "address" the words appear "(Aquaqueen International Pty Limited) PO Box 0556 Mascot NSW 2020". 12The charge in the clause in question, clause (s), provides as follows: "Security for costs and disbursements: We shall have the right of security for our costs and disbursements for work performed pursuant to this agreement, including the right to lodge a caveat over your real and personal property to secure such payment." 13On the face of each of the three agreements the question arises as to the identity of the client, whether it is Mrs Penson, or Aquaqueen the company, or both of them. Clause (t) of these costs agreements deals with that, as Mrs Penson seems to be an officer of the company. Clause (t) says: "The person who accepts this agreement in writing, orally, or by conduct, or for or on behalf of any company, hereby guarantees personally the payment of the company's costs and disbursements due hereunder." 14As indicated, each of the agreements is unsigned. The form of the caveat AH14780 in Schedule 1 describes the "nature of the estate or interest in the above mentioned land" being claimed as an "equitable interest pursuant to instruments set out below". The instruments that are then set out in the caveat are the three costs agreements of the three dates identified. The caveat then claims that the parties to the agreements are the firm and "Shirley Penson and Aquaqueen International Pty Limited". The caveat then put references to clauses (s) and (t) of those costs agreements as facts in further support of the claim. 15The firm conceded in the course of argument that it was relying not only upon the costs agreements but upon conduct outside the agreements to formulate the claim to the equitable charge. In those circumstances, those form of caveat AH14780 is barely adequate to describe the interest claimed and was potentially liable to be struck out had it not lapsed. 16But in my view, on the available facts and subject to Mrs Penson's arguments to which I will shortly come, the firm does have an arguable claim to an equitable charge over the Alexandria property. The evidence suggests that Mrs Penson accepted the legal services of the firm contemplated by these agreements after the execution of these agreements. Her acceptance of those legal services, has resulted in protracted arguments about the costs of those services. The firm's contention that those services were accepted is strengthened merely by looking at the costs dispute which has now broken out. 17Notwithstanding that the agreements are not signed, the contention is available that the agreements have been accepted by conduct on behalf of the firm. Depending upon how the agreements are construed two legal results may follow from these agreements. Under clause (t), the agreements may be made with the company, with Mrs Penson being the guarantor of the company's primary obligation. Alternatively, the fact that the agreements are addressed to Mrs Penson founds an argument that she is a party to the agreement and she has a primary rather than derivative personal obligation to pay the costs, and is therefore directly caught by the expression "your real property" in clause (s). But these are all matters for final hearing. I do not offer a view about any of them now as I do not need to in an interlocutory hearing. 18Conveyancing Act, s 54A may be put as an answer to the firm's claim on these unsigned agreements. But the doctrine of part performance based on Mrs Penson's acceptance of the firm's legal services may nevertheless allow the firm to maintain its charge: JC Williamson Ltd v Lukey (1931) 45 CLR 282. Although the current form of caveat is not adequate to describe the true conduct-based foundation of the claim. 19Conscious of the problems about the unsigned agreements that emerged in the course of argument, the firm proffered a further form of caveat which would address those deficiencies and which became Exhibit 1 in the proceedings. Exhibit 1 claimed an "equitable charge granted by Shirley Penson pursuant to, (a) the instruments set out below, and (b) part performance of said instruments by Shirley Penson". 20The proposed further caveat, Exhibit 1, claims a recognisable equitable interest, notwithstanding four arguments Mrs Penson advanced to challenge it. These four arguments are not persuasive to the conclusion that there can be no caveatable interest. Mrs Penson actually advanced five arguments. But her arguments four and five seem to be essentially the same argument. 21Mrs Penson's first argument is that the costs agreements on which the firm relies are not signed by her and are not clearly the same costs agreements to which she was actually subject. She admits Aquaqueen was a client of the firm, but she says that this form of in exact proof is not good enough for a caveat such as this. She submits that it should be clear that there is a genuine costs agreement advanced in support of the caveat. 22In my view, the answer to that argument is that Ms Becker has deposed to these as being the actual costs agreements. Any issue about the correct form of costs agreements can be determined at final hearing. An interlocutory hearing is not the place for that to occur. 23Mrs Penson's second argument is that there are irregularities in caveat AH14780. But these irregularities seem to me to be minor, and they are only in relation to the lapsed caveat. She points to the lapsed caveat: (1) having the incorrect postcode for the Alexandria property; (2) not including a number of justice of the peace witnessing signatures; (3) not proving that the costs agreements attached to the caveat are genuine costs agreements; and (4) being ambiguous in the dating of the costs agreements. 24All these are minor matters that can be debated at final hearing. Moreover they may be curable by permitting a further caveat to be filed in the form of Exhibit 1. And it is not necessary to attach costs agreements to caveats, so any criticism of the results of their attachment is not a decisive issue against the firm. 25Mrs Penson's third argument is that the caveats have no merit. This really canvasses the contest at final hearing as to whether Aquaqueen and not herself were the parties to the agreement, and the consequences of the agreements not being signed by her. But these are issues for later. She incidentally points out that no proceedings are pending against her. This Court will cure that by requiring the plaintiff to plead its case against her in support of its summons. 26Mrs Penson's fourth argument is that there are counter cost assessments underway in her favour. She has other costs orders against the firm in her name, or Aquaqueen's name as a result of other judgments of this Court. Mrs Penson says that proceedings should be adjourned for three weeks to allow some clarity to be obtained to see what costs may be set off against the firm's claim, and to see whether any money is owed to the firm at all by Aquaqueen or by herself. Only then she says should the issue of the caveat be addressed. 27She has not offered any undertakings to support the adjournment she seeks. But even if she did, whether there is money due and payable under any charge that is established is a matter for final hearing. I am not prepared to adjourn the matter for three weeks.

Grant of Leave under Real Property Act, s 74O 28The next question is whether I should grant leave under Real Property Act, 74O. In my view, I should grant leave to file a caveat substantially in accordance with Exhibit 1. 29Section 74O of the Real Property Act applies in circumstances such as the present, where a caveat has lapsed and the same caveator lodges a further caveat or attempts to lodge a further caveat "in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat". The section provides as follows: "74O Restrictions on lodgment of further caveats if earlier caveat lapses or is withdrawn (1) This section applies if a caveat lodged under a provision of this Part in respect of any particular estate or interest in land or any particular right arising out of a restrictive covenant: (a) subsequently lapses, or (b) is, after an application is lodged with the Registrar-General for the preparation of a notice under section 74C (3), 74I (1) or (2), 74J (1) or 74JA (3), withdrawn under another provision of this Part, or (c) is withdrawn or lapses under section 74MA, and the same caveator lodges a further caveat with the Registrar-General in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat. (2) A further caveat to which this section refers has no effect unless: (a) the Supreme Court has made an order giving leave for the lodgment of the further caveat and the order or an office copy of the order accompanies the further caveat when it is lodged with the Registrar-General, or (b) the further caveat is endorsed with the consent of the primary applicant or possessory applicant for, or the registered proprietor of, the estate or interest affected by the further caveat." 30The question arises as to whether Exhibit 1 is "based on the same facts as the first caveat". Authority indicates that s 74O should be construed widely, not narrowly, to promote the purpose of the section, because were the phrase to be construed narrowly, it could allow interests defined in a legalistic and technical way to escape the section: See McCulloch v Fern (2000) 10 BPR 18,073 at [7]; and Sinn v National Westminster Finance Limited [1985] VR 363; Gurwitz v Gurwitz (1988) V ConvR 54-317; and Taylor v Commonwealth Development Bank of Australia (1992) ANZ ConvR 161. 31It is important to achieve as much finality as possible between the parties to these proceedings, who have been at litigious war for some time. Were I not to deal with the Real Property Act, s 74O issue now, then the real possibility arises that were a further caveat to be filed, Mrs Penson may well bring an application for its removal on the basis that leave has not been granted under s 74O. So much of what has been put forward now about the similarity of Exhibit 1 to the lapsed caveat would then have to be reargued. 32On the other hand, to grant leave under s 74O now must be done upon the jurisdictional assumption that Exhibit 1 purports to be based upon the "same facts" as the first caveat. The better course seems to me to reason along the lines that Exhibit 1 is based on the "same facts" as the lapsed caveat and to grant leave under s 74O: the costs agreements and charging clauses relied on in both caveats are substantially identical and only Exhibit 1 seeks to go a little way beyond the written form of the costs agreements. 33The grant of leave is based on the following factors. First, the firm's case seems not to be a weak one, but is based on sufficient documentary evidence and part performance to potentially establish an equitable interest. 34Secondly, the lapsing of the caveat was accidental. Although Ms Becker came fairly late to the Court, she was prevented by administrative action at the Land Titles Office from lodging the Court's order. But for this accident she would otherwise on Tuesday have obtained an extension of the caveat. 35Thirdly, it is difficult for Mrs Penson to complain of prejudice. Mrs Penson has not advanced any evidence of any imminent transaction she proposes which would be threatened by an order under s 74O. So I will therefore grant leave to file a caveat substantially in the form of Exhibit 1.

Directions for a Final Hearing 36The last matter for consideration is to prepare this case for final hearing. That process should be started with the firm being required to file a Statement of Claim to plead the firm's case, so that Mrs Penson can better understand it.

Orders 37It is now too late for the firm to try and file a caveat today. So I will grant the firm a temporary injunction against Mrs Penson dealing with the Alexandria property until Monday afternoon. 38The orders of the Court therefore are: (1)The plaintiffs be granted leave to file a further caveat on the Real Property known as unit 8, 4 Gillespie Avenue, Alexandria NSW 2015 ("the Alexandria property") being certificate title folio identifier 8/SP67113 the further caveat substantially in the form of Exhibit 1 in these proceedings, a copy of which is Annexure "A" to these orders. (2)I direct the plaintiff by 21 November 2014 to file a Statement of Claim pleading the case for final relief claimed in the Amended Summons. (3)Adjourn these proceedings to the Registrar's list at 9am on 4 December 2014. (4)Reserve costs. (5)These orders may be taken out forthwith. (6)Upon the plaintiff by their employed solicitor Ms Becker giving the usual undertaking as to damages I order the defendant Ms Shirley Penson not to dispose of, deal with or encumber the Alexandria property as defined in these orders at any time before 5pm on Monday, 10 November 2014.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 November 2014

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