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[2003] NSWCA 296
respondent. Appeal dismissed with costs; leave to file notice of contention granted (para 51).
The Court of Appeal held that a contractual clause allowing rescission where 'the caveats' are not discharged had no operation after the clause that identified those caveats was deleted; the court refused to construe the words as referring to any future caveat. The vendor was also precluded from rescinding because it failed to take reasonable steps (such as seeking court orders) to prevent successive, vexatious caveats. The appeal was dismissed and the vendor could not rescind on that basis.
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This appeal concerns a contract for the sale of land in Surry Hills and the vendor's attempted rescission of that contract on the ground that caveats remained outstanding after a specified period. The vendor, Ginger Development Enterprises Pty Ltd, contracted to sell the property to Crown Developments Australia Pty Ltd on 15 February 2002. The contract originally included a condition (special condition 55) by which the purchaser acknowledged "the caveats in the property of this Contract as disclosed by the vendor" (para 6). Prior to contract, ACE Project Group and Ms Shan Ruan had lodged caveats which had lapsed; there were no subsisting caveats when the contract was executed (para 5).
No linked legislation citations have been extracted yet.
Before settlement, ACE and Ms Ruan lodged successive caveats. The contract contained special condition 30(c), giving either party a right to rescind if "the caveats are not discharged one hundred and eighty (180) days after the completion date is due" (para 6). However, special condition 55 had been struck out before signing (paras 9-11). Dispute arose over whether "the caveats" in SC30 referred only to caveats identified by SC55 (i.e. caveats acknowledged at contract date) or to any caveats that might be lodged subsequently (paras 13-21).
On 23 October 2002 a caveat was lodged by ACE (number 9062650) which, because of the operation of Real Property Act s 74O, was of no legal effect, but LPI practice allotted it a bar code and displayed it as an "unregistered dealing" on title searches (paras 27-36). The vendor served a notice of rescission on 27 November 2002 claiming entitlement under SC30(c) (paras 38-41). Palmer J in the Supreme Court (first instance) rejected the rescission and ordered specific performance. The vendor appealed; the Court of Appeal (Davies AJA, Mason P and Sheller JA agreeing) dismissed the appeal (paras 1-4, 51).
Two principal strands of reasoning underpin the decision.
Contract interpretation: The Court read the definite article "the" in "the caveats" as a particularising term. Special condition 55 had originally identified which caveat(s) the parties had in mind (para 18). Once SC55 was deleted, the remaining references to "the caveats" in SC30 lacked an identified subject. The court held it was a strained construction to read "the caveats" as "any caveats" or to treat SC30(c) as applying to caveats lodged after contract in the absence of textual or evidential support that the parties so intended (paras 18-24, 41). The Court relied on established principles that deleted words in a contract may be used to resolve ambiguity, but only to the extent they evidence the surrounding circumstances and the parties' intentions (para 20).
Vendor's implied duty and failure to act: Even assuming arguendo a broader interpretation of SC30(c), the vendor had an implied obligation to take all reasonable steps on its part to ensure completion, this includes bringing appropriate proceedings to restrain vexatious or repeated caveat lodgments (paras 46-49). The Court (Davies AJA) concluded the vendor had sought some lapsing notices (s 74J) but did not seek an order under s 74MA RPA to prevent further lodgments; that omission meant the vendor did not take all reasonable steps and was precluded from relying on rescission (paras 48-49). The Court also observed that caveats rendered of no effect by s 74O cannot properly be used as a basis for rescission; administrative practice that displays such caveats on searches does not alter their legal ineffectiveness (paras 31-36, 41-42).
Additionally, the Court considered a letter from the vendor's solicitors on 24 October 2002 requesting settlement and found that such a communication amounted to an election to proceed, further undermining the vendor's claimed right to rescind (paras 43-46).
Before this decision the established principles applied were:
What the Court of Appeal clarified or emphasised:
The decision thus reinforces careful drafting and attention to the presence or deletion of identifying clauses in sale contracts, and underscores the vendor's active obligations in the face of vexatious caveat strategies.
Para 18: "The definite article 'the' ... directs attention to caveats which have been pointed out or identified." Plain English: When the contract says "the caveats," it normally means specific caveat(s) the parties have identified, not just any future caveat.
Para 21: "What special condition 55 did was to identify the caveat or caveats upon which the terms of special conditions 30(a)(iv) and 30(c) could operate." Plain English: Condition 55 named the caveat(s) to which the 180-day rule applied. Without condition 55 there was nothing in the contract to tell you which caveat(s) SC30 was about.
Para 22: "There is no reason for giving a strained interpretation ... The conditions remained in the contract but they had no operation for no caveat had been pointed out or identified..." Plain English: The remaining clauses stayed in the contract, but since no caveat had been specified, those clauses were effectively dormant, they could not be used to rescind.
Para 35: "It is inconsistent ... that a caveat can be taken over the counter, be given a distinctive number or barcode ... and it had been recorded." Plain English: LPI's practice of stamping and showing caveats on searches makes them look recorded, but that does not make them legally effective where the statute says they are of no effect.
Para 48: "The vendor failed to take all the steps that were reasonable on its part ... to ensure that the contract proceeded to completion." Plain English: The vendor did not do everything reasonable, such as asking a court to stop further caveats, and so cannot rely on rescinding the contract.
Sale contracts where a clause refers to "the caveats" but an identifying clause has been deleted or not included: courts will scrutinise whether there is an identified subject; absent identification, rescission rights tied to "the caveats" will likely be inoperative (paras 18-24).
Situations of successive caveat lodgments after contract execution by the same caveator where s 74O might render further caveats of no effect: parties should not assume an administrative notation on title constitutes legal effect; reliance on such caveats for rescission is risky (paras 27-36, 41-42).
Vendors who face repetitive caveat filings and do not seek available court orders (for example under s 74MA) to restrain further lodgments: a court may find the vendor failed to take reasonable steps and is barred from rescinding the contract (paras 46-49).
Cases where a vendor communicates unequivocal intention to complete (for example via a notice or settlement request): the vendor may be taken to have elected to affirm the contract, affecting later rescission attempts (paras 43-46).
This judgment emphasises textual particularity and the vendor's active duty. Practitioners should expect subsequent courts to apply its core holdings:
Any subsequent cases dealing with similar fact patterns are likely to examine vendor conduct, statutory caveat provisions (including s 74O, s 74MA), and the precise contract wording with the approach applied here.
Limits of "no operation": Where a contract contains general protective clauses but an identifying clause is deleted, courts here treated the residual clause as inoperative. A query remains about borderline cases where other surrounding circumstances might identify or point to a class of caveats, how strong must such surrounding evidence be to revive the clause?
Vendor's constructive steps: The Court identified that the vendor could have sought a s 74MA order. How far does the vendor's obligation extend in practice? Timing, cost and prospects of success are relevant; the threshold of 'all reasonable steps' may produce fact-sensitive disputes.
Registry practice vs statutory effect: The Court criticised LPI practice. It remains an open administrative law and practice question as to whether registry procedures should be reformed and how courts will handle cases where parties reasonably rely on registry impressions created by practice.
Election after subsequent events: The Court found the vendor's 24 October letter amounted to an election to proceed; but it also considered a later event might permit re-consideration. The interaction between an election to proceed and genuinely new events (e.g. new operative caveats issued after election) will continue to require careful timing analysis.
Practitioners should draft with precision: specify whether suspensive conditions relate only to caveats acknowledged at contract date, provide express treatment of future caveats, and plan proactive litigation steps to prevent or remove vexatious caveats where necessary.
CITATION : Ginger Development Enterprises Pty Ltd v Crown Developments Australia Pty Ltd [2003] NSWCA 296 HEARING DATE(S) : 16/09/03 JUDGMENT DATE : 16 October 2003
JUDGMENT OF : Mason P at 1; Sheller JA at 2; Davies AJA at 3 DECISION : Appeal dismissed with costs. Para 51.
CATCHWORDS : Sale of land - whether vendor had right to rescind - whether reference to "caveats" included caveats which were not valid - whether vendor took all reasonable steps to remove caveats - discussion of the practice of the Registrar - General with respect to caveats which were of no effect - Contract - Interpretation - use of the definite article "the" - whether deletion of one condition changes meaning of other conditions apparently dependent on it LEGISLATION CITED : Real Property Act 1900 s 36 (1B), 74 J, 74 O Conveyancing Act 1919 s 57 (1)(d) Coulton v Holcombe (1986) 162 CLR 1 Burger King v Hungry Jacks Pty Ltd [2001] NSWCA 187 Butts v O'Dwyer (1952) 87 CLR 267 CASES CITED : Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 Thomson v Richardson (1929) 29 SR (NSW) 221 Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529 National Australia Bank Ltd v Bridge Wholesale Acceptance Corporation (Australia) Ltd (1990) 21 NSWLR 96 PARTIES : Appellant: Ginger Development Entreprises Pty Ltd Respondent: Crown Developments Australia Pty Ltd FILE NUMBER(S) : CA 40638/03 COUNSEL : Appellant: Mr D E Grieve QC, Mr L Ma Respondent: Mr J B Whittle SC, Ms J E Stuckey-Clarke SOLICITORS : Appellant: Dennis Wong & Co Solicitors Respondent: Hancock Alldis Solicitors
LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT 5877/02 FILE NUMBER(S) : LOWER COURT Palmer J JUDICIAL OFFICER :
MASON P SHELLER JA DAVIES AJA
Thursday 16 OCTOBER 2003 GINGER DEVELOPMENT ENTERPRISES PTY LTD v CROWN DEVELOPMENTS AUSTRALIA PTY LTD JUDGMENT
1 MASON P: I agree with Davies AJA. 2 SHELLER JA: I agree with Davies AJA. 3 DAVIES AJA: This is an appeal from a judgment of his Honour, Palmer J. In proceedings for the specific performance of a contract for the sale of land in Crown Street, Surry Hills, dated 15 February 2002, his Honour rejected the contention that the contract had been validly rescinded by a notice of determination dated 27 November 2002. His Honour ordered that there be specific performance of the contract. 4 In the appeal, Mr D E Grieve QC and Mr L Ma of counsel appeared for Ginger Development Enterprises Pty Ltd, the appellant, which was the vendor of the property. Mr J B Whittle SC and Ms J E Stuckey-Clarke of counsel, appeared for Crown Developments Australia Pty Ltd, the purchaser. 5 Prior to the making of the contract, the vendor had plans drawn up for the development of the property. The architect was ACE Project Group Pty Ltd ("ACE"), the principal of which was Ms Shan Ruan. Ms Ruan regarded Yuk Mui Kam, a director of the vendor, as her aunt, although apparently there was no strict relationship between them. A dispute arose about the fees which were payable to ACE and about the failure by the vendor to proceed with the development, in the profits of which ACE had expected to have an interest. On 2 August 2001, ACE lodged a caveat against the title to the property. The vendor sought the issue of a lapsing notice under s 74J of the Real Property Act 1900 ("the RPA"). That notice was issued and the caveat lapsed on 31 October 2001. On 2 October 2001, Ms Ruan herself lodged a caveat against the property. That caveat lapsed on 5 December 2001 for similar cause. There was no subsisting caveat on the property when the contract was entered into on 15 February 2002. 6 The contract, as originally drawn, contained, inter alia, these special conditions:- " 30. COMPLETION (a) Completion of this Agreement shall take place on whichever shall be the later of: (i) as specified at front page hereof; (ii) the date being fourteen (14) days from the date on which FIRB Approval shall have been obtained pursuant to special condition 32; (iii) the day that is the 42nd day after the date of this Contract; (iv) the day that is the 21st day after the vendor has informed the purchaser in writing that the caveats are ready to be discharged or the caveator(s) is/are willing to withdraw the caveats in due course.
(b) In the event that FIRB Approval has not been obtained pursuant to Special Condition 32 within 2 (two) months from the date of this Agreement then the Vendor may rescind this Agreement by not less than fourteen (14) days notice in writing served on the Purchaser whereupon the provisions of clause 19 herein shall apply.
(c) In the event that the caveats are not discharged one hundred and eighty (180) days after the completion date is due, either the vendor or the purchaser is entitle[d] to rescind the Contract by providing not less than fourteen (14) days notice in writing to the other party whereupon the provisions of clause 19 herein shall apply." " 55. Notice of caveat The purchaser acknowledges that there are caveats in the property of this Contract as disclosed by the vendor. The purchaser shall not make any claim, objection or requisition or rescind in respect of the caveats ." [Emphasis added] 7 Had special condition 55 remained in the contract, it would have been clear that the words "the caveats" in special conditions 30(a)(iv) and 30(c) referred to caveats which had been lodged against the title and were subsisting as at the date of the contract and were acknowledged by the purchaser. 8 However, special condition 55 was struck out and much of the debate in the hearing below and in this appeal concerned the meaning and effect of special condition 30(c), in the circumstance that there were no caveats subsisting against the title as at the date of the contract but caveats were subsequently lodged by ACE and by Ms Ruan. 9 The evidence as to the circumstances in which special condition 55 was removed was brief. Mr Victor Mong, who was an attorney under power for Yau Fong Yuen, a director of the vendor, gave this evidence:- "12. Upon arrival at the solicitor's office, while the solicitor was finalising the contract document, [ Tony Taouk, a director of the purchaser] said: 'We would like to cross out special condition 55, 'Notice of Caveat', as the caveat issued by your architect has lapsed.'. After consulting with uncle Yuen and Angela Lee, I said: 'O.K.' " 10 Angela Lee, who was a clerk in the employment of the solicitors for the vendor and who was in charge of the conveyancing aspects of the transaction, gave this evidence of the conversation with Mr Mong:- "Mr. Mong also said to me: 'The purchaser would like to cross out special condition 55 as they said that the caveat has been removed at the moment.' I said: 'That's fine.' " 11 Tony Taouk denied the statement attributed to him by Mr Mong. However, there cannot be any doubt that special condition 55 was removed because, at the time, there was no caveat subsisting on the title. Counsel for the vendor has not contended that the purchaser had any other evidence which it could have called on that issue. 12 It is worth noting that there was a discussion between the parties which resulted in the insertion of special condition 60, which required the vendor to hand over, on settlement, all plans and specifications in regard to the building approval. However, there was no evidence of any discussion supporting the interpretation of special condition 30 which was adopted below by counsel and by the trial Judge. 13 The case as put to the trial Judge by counsel and as accepted by him was that, as special condition 55 had been deleted, special conditions 30(a)(iv) and 30(c) must have been intended to refer to caveats not yet lodged. The trial Judge said:- "Special Condition 30, however, was not deleted so that it must have been intended to refer to caveats not yet lodged. The words 'the caveats' must therefore mean 'any caveats' ." 14 The issue debated before the trial Judge was whether, on this interpretation, "any caveats" meant caveats which had been lodged and were subsisting and effective as at the expiration of the period of 180 days referred to in special condition 30(c), or whether it related to any caveats which might be subsisting, whether or not the caveats were fully effective in law or were merely a block on the commercial completion of the dealing. 15 Shortly before the hearing of the appeal commenced, the Bench advised counsel that a possible interpretation of special condition 30(c) was that it referred to the caveat or caveats identified in special condition 55 and that, once that condition had been removed, special condition 30(c) was a provision which had no operation as no caveat or caveats had been identified on which it could take effect. 16 As a result of this indication from the Bench, counsel for the purchaser sought to file a notice of contention. Argument on the contention proceeded at the hearing of the appeal but consideration of leave to file the notice of contention was adjourned pending advice from counsel for the vendor as to whether or not, had the issue been argued below, he would have wished to call other evidence on the point. The Court was subsequently informed by counsel for the vendor that the vendor had no additional evidence which it would have wished to call. It follows, in my opinion, that leave should be granted to file the notice of contention. 17 The correct interpretation of a contract is an issue of law and it is appropriate for the Court to enunciate the correct meaning of the contract, absent a problem such as that adverted to in Coulton v Holcombe (1986) 162 CLR 1 at 7-8. Counsel disagree as to the interpretation of special condition 30(c). It is the duty of the Court to form its own view on that issue. 18 The approach taken by the trial Judge raises problems for, on his interpretation, the words "the caveats" appearing in both special conditions 30(a)(iv) and 30(c) are ambiguous. The definite article "the" is appropriately used with a specifying or particularising effect (see The Macquarie Dictionary). Therefore, the term "the caveats" directs attention to caveats which have been pointed out or identified. On his Honour's construction, the words "the caveats" refer to any caveats, whether subsisting at the date of the contract or lodged at any time thereafter prior to settlement or perhaps to any caveats subsisting at the end of the 180 day period. But neither special condition 30(a)(iv) nor special condition 30(c) was drafted appropriately to convey that meaning. 19 The terms of special conditions 30(a)(iv) and 30(c) imply a reference to an existing caveat. The content of special condition 30(a)(iv) infers this construction. Special condition 30(c) specifies "the caveats [which] are not discharged one hundred and eighty (180) days after the completion date is due". 20 There being an ambiguity, it is permissible to have regard to the deleted special condition 55. In Burger King v Hungry Jacks Pty Ltd [2001] NSWCA 187, Sheller, Beazley and Stein JJA said:- "137 It is an accepted principle of construction that deleted words in a standard form contract can be referred to as an aid to the meaning of ambiguous words in a term which remains: see Postle v Sengstock [1994] 2 QdR 290; Louis Dreyfus & Co v Parnaso cia. Naviera S.A. [1959] 1 QB 498; and London & Overseas Freighters Ltd v Timber Shipping Co S.A. [1972] AC 1. In Punjab National Bank v de Boinville [1992] 1 WLR 1138, Staughton LJ (Mann and Dillon LLJ agreeing) also considered (at 1148) that the fact of deletion could be used as an aid to construction. See also Mottram Consultants Ltd v Bernard Sunley & Sons Ltd [1975] 2 Lloyd's Rep. 197. 138 This case is not a case of deletion within the terms of a standard form contract. However, in South Sydney Council v Royal Botanic Gardens [1999] NSWCA 478 Spigelman CJ said at 35: "It is permissible to look at surrounding circumstances for purposes of interpretation of a contract 'if the language is ambiguous or susceptible of more than one meaning'. (Codelfa supra at 352 per Mason J). As this passage indicates, in this context the word 'ambiguity' - ironically a word not without its own difficulties - does not refer only to a situation in which the words used have more than one meaning. A broader concept of ambiguity is involved: reference to surrounding circumstances is permissible whenever the intention of the parties is, for whatever reason, doubtful." 139 We have found that, having regard to the provisions of the Development Agreement as a whole, the parties could not have intended that the development schedule in cl 2.1 called for strict compliance. However, if there was any ambiguity about the parties' intention, then it would be proper to resort to surrounding circumstances, including consideration of the terms of the Development Agreement, which was entered into as a settlement of disputes arising under the 1986 and 1989 Agreements, as compared to the terms of those Agreements. The omission of the express provision of essentiality and the inclusion of terms inconsistent with cl 2.1 supports the conclusion to which we have come." 21 There is nothing in the evidence before the Court which shows that there was any context upon which the words "the caveats" in special conditions 30(a)(iv) and 30(c) could operate sensibly other than in relation to special condition 55. What special condition 55 did was to identify the caveat or caveats upon which the terms of special conditions 30(a)(iv) and 30(c) could operate. There is no doubt that, when special condition 55 was in the contract, the terms of special condition 30 would have been read as referring to the caveat which was or the caveats which were subsisting at the date of the contract and which the purchaser acknowledged. On that interpretation, special condition 30(a)(iv) and special condition 30(c) had a clear and explicable operation. 22 In my opinion, there is no reason for giving a strained interpretation to special conditions 30(a)(iv) and 30(c). The conditions remained in the contract but they had no operation for no caveat had been pointed out or identified as the caveat to which they would apply. Likewise, special condition 30(b) remained in the contract, notwithstanding that this was not a case where FIRB approval was required or obtained. Special conditions of this type are often found in contracts but have application only when there are circumstances activating their terms.
23 In my opinion, the trial Judge erred by giving a content to special condition 30(c) which was not a content upon which the parties had negotiated or agreed and which strained the ordinary meaning of the words used. 24 It follows, in my opinion, that once special condition 55 was deleted from the contract, special condition 30(c) had no operation and neither party had any right of rescission under its provisions. 25 It is not strictly necessary to deal with the other matters which were considered in his Honour's judgment and were debated in this appeal. However, out of courtesy to counsel and his Honour, I should make some observations thereon. 26 The 180 day period, after the completion date, expired on 23 October 2002. The parties are agreed on that and his Honour so found. 27 On 23 October 2002, a further caveat, which Ms Ruan had lodged on 5 September 2002, lapsed. On the same day, ACE lodged a further caveat against the title. In law, this caveat had no effect by reason of the provisions of s 74O of the Real Property Act 1900 ("the RPA"). That section reads, inter alia:- 74O Restrictions on lodgement 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
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. 28 The caveat which ACE lodged on 23 October 2002 was in the same form as a caveat which ACE had lodged on 2 August 2002 but which lapsed on 13 September 2002. 29 Notwithstanding s 74O of the RPA, the practice of the Land and Property Information service ("LPI") is not to reject such a caveat at the counter but to allow it to proceed through the process of lodgment. A caveat has effect as and from the time of lodgment, not at the time of registration or endorsement on the title. Section 36 of the RPA provides, inter alia:- (1A) When the Registrar-General accepts a dealing, memorandum or caveat presented for lodgment, the Registrar-General shall allot thereto a distinctive reference.
(1B) A dealing, memorandum or caveat is lodged, within the meaning of this Act, only when the Registrar-General has, under subsection (1A), allotted thereto a distinctive reference. 30 The caveat lodged by ACE on 23 October 2002 was lodged and given the number 9062650. Thereafter, any search of the title brought up the notation "unregistered dealings: x9062650". This notation indicated to practitioners that caveat 9062650 had been lodged and endorsed but not registered. 31 On the following day, 24 October 2002, LPI sent a letter to ACE giving notice that, pursuant to s 74O of the RPA, it was intended to remove the caveat from the registered folios on the expiration of 21 days from the date of the notice unless LPI was furnished with an order of the Supreme Court authorising the recording of the caveat or with the written consent of the registered proprietor. 32 The difficulty with this approach was that the caveat was treated by LPI as taking effect when lodged and it was disclosed by any search. Section 74O did not provide that a caveator had 21 days in which to obtain an order of the Supreme Court or the consent of the registered proprietor. It provided that, if its provisions were not satisfied at the time of lodgment, the caveat was of no effect. 33 Mr J Fitzgerald, an officer of the LPI, gave evidence of what appeared to be unresolved conflicts in the practice of the LPI. The basic evidence was clear enough. Mr Fitzgerald said:- "Q. A caveat, you would describe another document as being registered on the title, a caveat is said to be entered on the title? A. Recorded or entered, that is fine. A caveat is effective from the time it is lodged and given a bar code, whereas other documents or dealings become effective when it is registered, and the caveat become effective when it is given the bar code. Q. It is given a bar code at the counter? A. No, it is given a bar code by one of the dealing examining officers that have had a caveat referred to them from the counter. Q. At that stage, has money been taken at the counter? A. No. Q. So the caveat comes, the filing clerk thinks, 'caveat' and automatic referral to the examining officer? A. All dealings are referred to the examining officer. Q. And then the examining officer looks at it and makes some determination that it is not registrable on its face, that is going to contents and form rather than to the substance of it? A. Yes. Q. If it is OK by him then money is collected and the document is given a bar code? A. No, the document is given a bar code, a formal invoice is printed which goes to the cashier and the lodging party would pay the cashier within minutes or a little time later. Q. It is at that point that the caveat, if it is given a bar code, is immediately effective? A. That is what the Act says. Q. That is tantamount to entry on the title? A. That is correct." 34 That evidence spoke of an examining officer. However, it appears that, where there is a problem with a caveat, that caveat is referred to a legal officer. If there is a problem with a caveat, it is received, held up and treated as unregistered pending clarification of the problem. Mr Fitzgerald gave this evidence:- "Q. When in that process, in your experience, does it become shown on the title as unregistered? A. When it is delayed for some reason. Q. One of those reasons could be investigation? A. Yes, that is true, it could be because there are other delayed dealings that have been lodged before it and it has to be connected up to that particular matter or case. Q. Would it be shown as unregistered if it were held up subject to requisitioning being answered, or don't you have requisitions anymore? A. We do have requisitions. Q. And that would be the nub of the case? A. Yes. Q. On such an occasion, that is when the document is held up from registration for some reason, be it requisitioning, be it investigation or for some other reason, it is not automatic that the document is handed back to the lodging party, is it? A. No, there is an advance lodgment system in the office for the major clients who used the office, banks and major firms of solicitors and then there is the face to face but it is - and often when people lodge documents face to face and they are deficient they are handed back at that point. If they are handed back at the advance lodgment position they are handed back but the dealing has not been formally accepted into the system as our practice stands. Q. It is given a bar code but not registered? A. That is correct." 35 One can see that this practice is not in accordance with the RPA for s 36(1B) provides that a caveat is lodged when the Registrar-General has allotted thereto a distinctive reference. It is inconsistent with this provision that a caveat can be taken over the counter, be given a distinctive number or barcode and endorsed on the title, yet be treated as not having been registered. So far as caveats are concerned, there is no distinction between caveats which are unregistered and caveats which are registered. The subject caveat had been passed over the counter, presumably the appropriate fee had been paid, it had been given a distinctive number or barcode, which was disclosed by any search made of the title and it had been recorded. 36 Mr Fitzgerald referred to acceptance and registration of a caveat. Mr Fitzgerald said:- "Q. Up to that time is it correct to say it is not treated as having been on the record? A. Well, it has been lodged so up until that point of time it still, for all intents and purposes, has to be considered as being bona fide. Q. But it is recorded only as a[n] unregistered dealing? A. That is right."
However, so far as caveats are concerned, there is no distinction between lodgement and registration. 37 I do no more than bring to the attention of those who are responsible that this practice of the LPI does not give proper effect to the legislation. It certainly added to the problems of the parties in the present case. The actions of the LPI in permitting further successive caveats to be lodged by ACE and Ms Ruan was one of the reasons why settlement of the proceedings became prolonged. 38 The events which followed 23 October 2002 were described by the trial Judge as follows:- "38 On 6 November the Plaintiff's solicitors served a Notice to Complete requiring completion of the contract on or before 29 November.
39 By letter dated 26 November the Registrar General advised the Defendant's solicitors that the caveat form sought to be lodged by ACE on 23 October had been rejected. The letter continued: 'However, in the meantime the same caveator has lodged a new caveat numbered 9151281 which appears to be claiming the same interest as the previous caveat.
We can if you wish serve another notice under Section 74O, however we cannot prevent further caveats being lodged. If you wish to prevent this caveator lodging further caveats you will need to take Supreme Court Proceedings for an injunction against the caveator. The Registrar General will need to be made a party to the action and we will consent to such orders being made.
Please advise what action you intend to take.' 40 The 'new caveat numbered 9151281' cannot now be found. However, I infer that the nature of the interest in the subject land claimed therein by ACE was described in the same terms as in the 'previous caveat' , i.e. the document numbered 9062650, which had been rejected.
41 On the following day, 27 November, the Defendant's solicitors wrote to the Plaintiff's solicitors in the following terms: '1. We enclose a copy of a letter that we have received from the Registrar General dated 26th November 2002.
43 On 6 December the Defendant's solicitors were informed by the LPI that the caveat lodged by ACE had been uplifted. On 11 December the Plaintiff commenced these proceedings." 39 For the reasons I have already stated, I am of the view that the notice of rescission was invalid. Special condition 30(c) had no operation, for the contract did not point to or identify any caveat which was to be the subject of its operation. 40 There was debate by counsel as to whether, assuming the interpretation given by the trial Judge to special condition 30(c) was correct, namely that it referred to "any caveat", the provision referred to a valid caveat which had been lodged and was subsisting on 23 October 2002 or whether it referred to any caveats which were shown on a search of the title. The trial judge held that the conditions referred to valid caveats. 41 I cannot read special condition 30(c), or special condition 30(a)(iv) for that matter, as referring to unspecified future caveats, that is to say to caveats lodged after the execution of the contract. I have never read a provision in a contract of sale of land which was to the effect of the term for which either counsel contended. Had the parties intended to put in a special condition dealing with the future possibility that ACE or Ms Ruan might lodge a caveat, there would have been included in the contract a special condition appropriate to that end and there would have been evidence that that subject had been discussed and agreed. 42 I find it difficult to choose between the two interpretations as a matter of contract. Neither appeals to me. However, of the two, I prefer that adopted by the trial Judge. Moreover, I would not expect equity to permit a vendor to rescind a contract by reason of the lodging of a caveat which, under s 74O of the RPA, was of no effect. 43 A further issue debated was whether the vendor was estopped from rescinding by reason of a letter which its solicitors had written on 24 October 2002, which read as follows:- "We refer to the subject matter and enclose Title Search for your reference. Please send us settlement statement and book for settlement as soon as possible." 44 It was submitted that the vendor, by this letter, irrevocably elected to affirm the contract. His Honour held that, as at 24 October 2002, the letter unequivocally called for completion of the contract rather than electing for an exercise of the right to rescind afforded by special condition 30(c). However, his Honour held that the letter of 24 October 2002 did not amount to an election in respect of future caveats and he found that, when the vendor was informed of the lodgment of the new caveat by Ms Ruan on 26 November 2002, a fresh event had occurred which entitled the vendor to consider afresh whether or not to rescind. 45 I do not read special condition 30(c) as referring to caveats whenever they are lodged. The special condition refers to caveats which are not discharged 180 days after the completion date. In my view, the letter of 24 October 2002 did amount to an election to proceed and the vendor was bound thereby. 46 The next issue to consider is the purchaser's contention that the vendor was not entitled to give a notice of rescission on 27 November 2002 because it was then in breach of its contractual duty to do all things necessary to ensure that the purchaser was given the benefit of the contract. Counsel for the purchaser relied upon Butts v O'Dwyer (1952) 87 CLR 267 where Dixon CJ, Williams, Webb and Kitto JJ said at pp 279-280:- "In other words the parties may enter into a transfer subject to a condition that it is not to become effective unless the Minister's consent has been obtained. Prima facie this would import an obligation on the part of the person giving the transfer to do all that was reasonable on his part to the end that the Minister's consent might be obtained. Such a condition could be either express or implied. There is in the present case no express condition as in Roach v Bickle (1915) 20 CLR 663, but we think that such a condition should be implied. It has been held in cases too numerous to mention both before and after the classic statement of Bowen LJ in the case of The Moorcock (1889) 14 PD 64, at p 68 that the law raises an implication from the presumed intention of the parties where it is necessary to do so in order to give to the transaction such efficacy as both parties must have intended that it should have. Similar implications were raised under other sections of the Crown Lands Consolidation Act in Duncan v Mell (1914) 14 SR (NSW) 332, at p 339; 31 WN 113, at p 114, and Egan v Ross (1928) 29 SR (NSW) 382; 46 WN 90."
See also Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 at 34. 47 The condition relied upon is well known and frequently implied in contracts such as the present. The vendor was bound to do all things which on its part were necessary to be done to ensure that the sale could proceed to completion. Moreover, s 57(1)(d) of the Conveyancing Act 1919 also required the vendor to remove the caveats. See Thomson v Richardson (1929) 29 SR(NSW) 221; Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529 at 543-546, 553-554; National Australia Bank Ltd v Bridge Wholesale Acceptance Corporation (Australia) Ltd (1990) 21 NSWLR 96 at 104. In the last mentioned case, Young J said that, under s 57(1)(d) of the Conveyancing Act, "the vendor has the duty not only to remove good caveats, but also bad ones". 48 The vendor took no adequate steps between the date of the contract, 15 February 2002, and the expiration of the period of 180 days as specified in special condition 30(c), to ensure that the practice in which ACE and Ms Ruan engaged in lodging successive caveats was prohibited. The vendor certainly sought and obtained the issue of lapsing notices under s 74J of the RPA. However, the vendor was entitled to seek an order of the Supreme Court under s 74MA of the RPA prohibiting the lodgement of further caveats. The vendor did not seek any such order. In failing to take such action, the vendor failed to take all the steps that were reasonable on its part to be done to ensure that the contract proceeded to completion. 49 I agree with the learned trial Judge that, by reason of its failure to take the steps, which on its part were necessary and appropriate to take, the vendor was precluded from relying upon the right to rescission which it alleged was provided by special condition 30(c). 50 I should finally state that I regard the defence taken by the vendor as being without merit. The solicitors had served a notice to complete requiring completion of the contract on or before 29 November 2002. There was no justification for the vendor not to attend settlement on that date. The purchaser had not raised any objection by reason of the existence of the caveat lodged by ACE on or about 26 November 2002. If some objection was to be raised to settlement by reason of the existence of that caveat, it was an objection to be raised by the purchaser, not by the vendor. In any event, Ms Ruan attended the LPI on 28 November and uplifted the caveat stating that she did not wish it to be registered. On 29 November 2002, the date limited for settlement by the purchaser's notice to complete, there was no caveat which could have precluded completion. 51 I would grant leave to file the notice of contention and would dismiss the appeal with costs.
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Ginger Development Enterprises Pty Ltd
Crown Developments Australia Pty Ltd
(1986) 162 CLR 1
(1952) 87 CLR 267
(1996) 41 NSWLR 30
(1972) 128 CLR 529
(1990) 21 NSWLR 96
(1915) 20 CLR 663
Appeal dismissed with costs; leave to file notice of contention granted (para 51).