Gilles v Penson

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