Hooper v Parwan Investments Pty Ltd

1 By summons dated 10 December 2021, the defendant and first plaintiff by counterclaim ('Parwan') made an application for summary judgment ('Application') in this proceeding pursuant to ss 61, 62 and 63 of the Civil Procedure Act 2010 (Vic) ('CPA').

2 The Application was made in respect of the plaintiff and defendant by counterclaim's ('Hooper') claim for specific performance of a contract of sale and declarations in respect of that contract and certain caveats on the title of the subject property. The Application also seeks summary judgment on certain aspects of Parwan's Defence and Counterclaim, which effectively mirror the relief sought by Hooper and additionally seek a declaration in respect of a lease, and alternative relief in the form of the removal of the caveats.

(a) affidavit of Ross Andrew Blakeley sworn 10 December 2021 and the exhibits thereto ('Blakeley Affidavit');

(b) affidavit of Sarah Jane Rogers sworn 15 March 2022 and the exhibits thereto ('First Rogers Affidavit');

(c) affidavit of Sarah Jane Rogers sworn 21 March 2022 and the exhibits thereto ('Second Rogers Affidavit'); and

(d) written outlines of submissions dated 4 March, 21 March and 6 April 2022.

4 In opposition to the Application, Hooper has filed affidavit of Benjamin Harold Hooper sworn 19 February 2022 ('Hooper Affidavit') and his written outlines of submissions dated 15 March and 28 March 2022.

5 The parties' written submissions were supplemented by the oral submissions of their respective Counsel at the hearing on 17 March 2022. I have taken into account all of the parties' material, whether specifically referred to in these reasons or not.

6 The Registrar of Titles, being the second defendant by counterclaim, has not played an active role in the proceeding.[1]

7 For the reasons described below, with some exceptions the Application for summary judgment will be granted and orders will be made for the removal of the caveats.

8 The essential facts are as follows. Parwan has been the registered proprietor of the property at Browns Road, Parwan, Victoria 3340 and more particularly described in certificate of title volume 08614 folio 990 ('Property') since 16 December 2015.

9 Several days prior, on 30 November 2015, Parwan entered into a loan agreement ('Loan') with the Commonwealth Bank of Australia ('CBA'). The terms of the Loan provide (amongst other things) that the purpose of the Loan was to purchase a new dwelling, a facility amount of $850,000.00 and security for the Loan, which include a mortgage dated 3 December 2015 in dealing number AM410806R given by Parwan to CBA ('Mortgage') over the Property.[2]

10 CBA became the registered mortgagee on the title of the Property on 16 December 2015.

11 On 21 October 2016, Parwan and Hooper entered into a contract of sale ('Contract of Sale') in respect of part of the Property ('Purchased Area'). The terms of the Contract of Sale provide, amongst other things:

(a) the purchase price for part of the Property was $900,001.00;

(b) a deposit of $1.00 is payable by Hooper;

(c) settlement for the Purchased Area is due on 21 March 2018 unless the Purchased Area is a lot on an unregistered plan, in which case settlement is due on the later of 21 March 2018 or 14 days after Parwan gives notice in writing to Hooper of registration of the plan; and

(d) the Contract of Sale is subject to a lease between Parwan and Hooper.

12 On the same day, the parties entered into a lease agreement for a period of 24 months from 21 October 2016 ('Lease Agreement'). The Lease Agreement also provides that, unless terminated in accordance with the Residential Tenancies Act 1997 ('RTA'), the Lease Agreement will continue as a periodic tenancy and that each party must comply with the RTA.[3] The leased premises constitutes the Purchased Area.

13 Hooper lodged a caveat with dealing number AN846531P over the Property claiming an interest as purchaser under the Contract on 18 May 2017 ('Purchaser's Caveat').

14 On 1 June 2018, Parwan executed a deed of charge in favour of Hooper to be secured by way of equitable charge over the Property ('Charge Deed'). The Charge Deed charges to the Property the sum of $350,000.00, which amount is said to reflect the value of improvements to the Property made to the Property by Hooper.

15 Hooper lodged a caveat with dealing number AR265272Q over the Property claiming an interest as chargee based on the Charge Deed with an absolute prohibition on dealings on 20 July 2018 ('Charge Caveat').

16 Some time later, Parwan fell into default of the Loan and on 13 March 2020, Mr Ross Andrew Blakeley and Ms Kathryn Warwick were appointed by CBA as receivers of the Property ('the Receivers').

17 On 16 February 2021, the Receivers made an application to the Registrar of Titles under s 89A of the Transfer of Land Act 1958 (Vic) ('TLA') for a lapsing notice to remove the Purchaser's Caveat and the Charge Caveat (together, 'the Caveats') on the basis that Hooper did not have the interests claimed in the Caveats.

18 By notice dated 7 July 2021, Parwan gave Hooper a notice to vacate ('Notice') the Land pursuant to s 91ZZB of the RTA. The 'reasons for notice' section of the Notice states:[4]

On or about 13 March 2020, [the Receivers] were appointed as receivers of [the Property] pursuant to the powers contained in [the Mortgage] which is registered over the Property.

The premises are to be offered by the Receivers for sale with vacant possession immediately after the termination date specified in section 4 of this notice.

19 Section 4 of the Notice stipulates a termination date of 13 September 2021.[5] However, the evidence before the Court indicates that Hooper did not vacate the Property in accordance with the Notice and that is the basis on which the Application was heard.[6]

The issue raised at the hearing on 17 March 2022

20 In the early stages of the hearing on 17 March 2022, an issue arose as to the Receivers' standing to conduct the proceeding. The issue concerned the question of whether the Receivers' appointment, which extended only to the Property and not in respect of the whole of the company, affected their ability to defend the proceedings and bring the counterclaim and the Application. As neither party had previously addressed this question in their pleadings or submissions, I afforded them an opportunity to make submissions in respect of the question of the Receivers' capacity or standing at a later date.

21 Following the completion of the hearing I made orders requiring, inter alia, Parwan to file and serve any further affidavit material and submissions on the issue of the appointment of the Receivers and standing by 21 March 2022; and Hooper to file and serve submissions in response to Parwan's material by 28 March 2022 ('17 March Orders'). The 17 March Orders also required Hooper to file and serve a proposed form of undertaking ('Proposed Undertaking'), which I return to later in these reasons.

The parties' submissions on the issue of the Receivers' standing

22 By its written submissions filed on 21 March 2022 in accordance with the 17 March Orders, Parwan asserts that the evidence demonstrates that the Receivers do in fact have power to bring their counterclaim and press the Application.

23 In this respect, Parwan submits that the Mortgage gives CBA the power to appoint a receiver or receivers with the power to take possession of, manage, and sell the Property. Parwan points to ASIC's records and the documents submitted to ASIC to show that the Receivers were validly appointed in accordance with the terms of the Mortgage.[7]

24 Parwan says that the Deed of Appointment of Receivers dated 13 March 2020 ('Appointment Deed') appoints the Receivers in the following capacity:[8]

In exercise of the powers given to the Mortgagee under the Mortgage and by law, the Mortgagee appoints the Receivers to be the receivers of all the Property and of the income derived from it, with all powers, authorities and discretions conferred upon and vested in receivers under and by virtue of the Mortgage or at law.

25 In addition to the Mortgage and the Appointment Deed, Parwan also relies on s 420 of the Corporations Act 2001 (Cth) ('Corporations Act') which, it contends, reinforces its position that the Receivers possess the power to bring the counterclaim and the Application. Relevantly, that provision provides:

(1) Subject to this section, a receiver of property of a corporation has power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed.

(2) Without limiting the generality of subsection (1), but subject to any provision of the court order by which, or the instrument under which, the receiver was appointed, being a provision that limits the receiver's powers in any way, a receiver of property of a corporation has, in addition to any powers conferred by that order or instrument, as the case may be, or by any other law, power, for the purpose of attaining the objectives for which the receiver was appointed:

(a) to enter into possession and take control of property of the corporation in accordance with the terms of that order or instrument; and

(b) to lease, let on hire or dispose of property of the corporation; and

...

(k) to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation; and

...

(p) to appoint a solicitor, accountant or other professionally qualified person to assist the receiver; ...

26 Finally, in support of its position Parwan relies on the following excerpt of Keay's Insolvency and Corporate Law and Practice:[9]

A receiver must collect the assets covered by the appointor's charge as soon as possible after the appointment. Usually, the debenture will provide the receiver with power to do this immediately after appointment, and in any event, s 420(2)(a) [of the Corporations Act] grants to the receiver the power to take possession and control in accordance with the debenture's terms.

The receiver's prompt action is designed to protect the assets, assert the appointor's rights and ensure that assets are not removed or concealed. The receiver will move to take possession of the property subject to the debenture, whether it be a factory, or commercial premises at which the company has been conducting its business. The receiver will need to take charge of the title deeds or other evidence of title in respect of the property subject to the charge under which the receiver is appointed.

...

To obtain possession of assets, or books, the receiver may have to resort to initiating legal proceedings which are brought in the name of the company. ...

27 In his reply submissions, Hooper submits that paragraph 4 of the Appointment Deed makes it clear that the Receivers are agents of Parwan, not agents of CBA. That paragraph provides, '[t]o the extent allowed by law, the Receivers are the agents of the Mortgagor and the Mortgagor alone is responsible for the Receivers' acts and defaults'.[10]

28 Hooper further contends that the Receivers are not mortgagees in possession, and thus are not entitled to exercise the powers of a mortgagee in possession. By failing to itself become a mortgagee in possession, Hooper submits, CBA has sought to avoid the duties ordinarily owed to interested parties by mortgagees in possession.

29 Hooper submits that a receiver receives a company's property as it is at the time of the receiver's appointment. Applying that general principle to the present case, it is argued that the Receivers cannot now turn around and ignore the Contract of Sale entered into by their principal.

30 With respect to Parwan's submissions, Hooper says that it does not follow from the Mortgage, the Appointment Deed or even s 420 of the Corporations Act that the Receivers have the power to bring their counterclaim and press the Application. This is so, it is said, because the Receivers are not acting in the capacity of a mortgagee in the possession.

31 Having considered the arguments and material put forward by the parties, I consider that the Receivers do in fact have standing to defend the proceeding brought against Parwan, pursue the counterclaim and press the Application.

32 This is so for the following reasons. The scope of the authority conferred on the Receivers by the Mortgage, upon their appointment by CBA, is broad and empowers the receivers to deal with the Property in various ways. That is, the Receivers' powers extend to assuming possession of the Property, managing the Property and selling, leasing, subdividing or, where it is reasonable to do so, improving the Property.[11] That the Receivers are entitled to act within the authority conferred upon them by the terms of the Mortgage is confirmed by the Appointment Deed.

33 Further, there appears to be no question as to the validity of the Receivers' appointment, which in any event I do not understand to be in contest.

34 I also accept Parwan's submission that s 420 of the Corporations Act empowers the Receivers, both subject to and in addition to the powers conferred by the Appointment Deed, to enter into possession and take control of the Property in accordance with the terms of the Appointment Deed, lease the Property, and appoint a solicitor to assist the Receivers.[12] Relevant in this regard is s 420(k), which empowers the Receivers to 'bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation'. For completeness, I observe that the Appointment Deed imposes no limitations on the Receivers' ability to bring or defend proceedings.

35 Whether or not the Receivers were appointed as agents of CBA in accordance with clause 4 of the Appointment Deed, as Hooper submits, is not to the point. Rather, if the Receivers are agents of Parwan then that reinforces their standing in this proceeding. Nor do I consider it relevant, in light of the matters and material referred to above, that the Receivers are not mortgagees in possession and, as a result, not entitled to exercise the powers of a mortgagee in possession. This submission represents something of a strawman argument and is entirely inapposite in circumstances where the Receivers are exercising their powers conferred as receivers by virtue of the terms of the Mortgage and the Appointment Deed, not to mention s 420 of the Corporations Act. As to Hooper's submission that the Receivers cannot simply ignore the Contract of Sale entered into by their principal, I consider that this question goes to the substantive matters raised in this proceeding, and I will deal with this issue when determining the prospects of Hooper's claim for specific performance.

36 It necessarily follows for the reasons outlined above that the Receivers have the power and standing to defend the proceeding, bring the counterclaim and press the Application in the name of Parwan.

Applicable legislative provisions and principles

61 Plaintiff may apply for summary judgment in proceeding

A plaintiff in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a defendant's defence or part of that defence has no real prospect of success.

62 Defendant may apply for summary judgment in proceeding

A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.

63 Summary judgment if no real prospect of success

(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

(2) A court may give summary judgment in any civil proceeding under subsection (1) -

(a) on the application of a plaintiff in a civil proceeding;

(b) on the application of a defendant in a civil proceeding;

(c) on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.

38 The parties were broadly in agreement regarding the principles that apply to applications for summary judgment. It is the application of these principles about which the parties differ. Hooper and Parwan each referred to and relied on the principles concerning summary judgment set out by the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd.[13] Parwan also referred to the principles expounded by John Dixon J in Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd,[14] which principles are consonant with the Court of Appeal's approach in Lysaght. I have also previously summarised the principles the principles applicable to summary judgment in Padella Pty Ltd v Elliott.[15] There is no need for me to set the principles out here in detail: suffice to say, the approach in these cases is that which I have followed.

39 Section 90(3) of the TLA provides:

(3) Any person who is adversely affected by any such caveat may bring proceedings in a court against the caveator for the removal of the caveat and the court may make such order as the court thinks fit

40 Again, the parties did not disagree insofar as the applicable principles are concerned. The principles that apply to applications under s 90(3) of the TLA have been recently summarised by Osborne J in Wright v Insert Pty Ltd,[16] and by Ierodiaconou AsJ in Maverick Signs Pty Ltd v Cetinkaya.[17] I am grateful to their Honours, and adopt the approaches taken in those judgments.

41 The Application also engages ss 13 and 91ZZB of the RTA, which state:

This Act does not apply to a residential rental agreement created or arising between the parties to a contract of sale or mortgage of the premises in accordance with a term of the contract or mortgage.

(1) A residential rental provider may give a renter a notice to vacate rented premises if the premises are immediately after the termination date to be sold or offered for sale with vacant possession.

...

(4) A notice under this section must specify a termination date that is not less than 60 days after the date on which the notice is given.

42 Parwan says that it seeks orders enabling it to sell the Property with vacant possession and, upon doing so, apply the proceeds of sale in accordance with s 105 of the Property Law Act 1958 (Vic) ('PLA'). Parwan submits that it intends to pay any surplus funds into Court or to an appropriate solicitor's trust account pending determination of Hooper's claim over any surplus funds.

43 With regard to the Lease Agreement, Parwan seeks a declaration to the effect that the Lease Agreement has been terminated. In support of this position, Parwan says that the Lease Agreement is not a residential tenancies agreement and, consequently, the Court has jurisdiction to hear a claim in connection with the Lease Agreement, including any claim for possession of the Purchased Area. Parwan submits that the Notice provided to Hooper on 7 July 2021 validly determined the Lease Agreement.

44 Parwan submits that the Contract of Sale is not susceptible to specific performance for the following reasons:

(a) in accordance with s 42(1) of the TLA, CBA's registered interest as mortgagee is first in time and, in the absence of CBA's consent for the sale of the Purchased Area, is not subject to Hooper's subsequent interest as purchaser. On this basis, Parwan contends, the Contract of Sale is not amenable to specific performance and any breach of it by Parwan sounds in damages, be it at common law or in lieu of the remedy of specific performance;

(b) in response to Hooper's pleading that consent of the mortgagee is not a condition precedent to the Contract of Sale and, separately, Hooper was under no obligation to give notice to CBA, Parwan says that these matters do not answer the proposition that the mortgagee's title is indefeasible;

(c) the Property has not been subdivided;

(d) CBA does not consent to the sale of part of the Property; and

(e) the Contract of Sale cannot be specifically performed if CBA does not agree to the sale and to discharge the Mortgage, which it has not done. Importantly, the amount due at settlement under the Contract of Sale is insufficient to discharge the Mortgage. As at 3 December 2021, the amount due under the Mortgage was $1,165,058.24.[18]

45 Parwan further submits that Hooper's charge, if valid, cannot prevent Parwan's sale of the Property because the Mortgage predates both the Charge Deed and the registration of the Charge Caveat on the title to the Property. In this regard, Parwan echoes its submissions concerning Hooper's interest as purchaser under the Contract of Sale, submitting that CBA has not consented to Hooper's charge and, as a result, any charge is subject to the Mortgage. The charge, it is said, cannot preclude Parwan from selling the Property, given Hooper retains the right to make a claim in respect of the net sale proceeds from the future sale of the Property. Further, Parwan submits that it is impermissible for a caveat to be used as a means of improving a security that has already been granted.

46 In respect of the relief sought by Parwan in respect of the Caveats, Parwan says that Hooper has no real defence to Parwan's claims in paragraphs G.i and G.ii of its prayer for relief, which seek orders for the removal of the Caveats and a declaration that the Property may be sold by the Receivers unencumbered by Hooper's claims, for the following reasons:

(a) firstly, Parwan contends that the Contract of Sale is not amenable to specific performance for the reasons set out in paragraph 44 above;

(b) secondly, Parwan, in relying on the principle that a caveat cannot be maintained where the registered proprietor is contractually bound to transfer the land to a bona fide purchaser for value without notice,[19] says that CBA's interest as mortgagee defeats Hooper's subsequent interest. In any event, Parwan says, the Contract of Sale is not specifically performable because Property has not been subdivided and CBA has not consented to the sale of the Purchased Area;

(c) thirdly, Parwan relies on the fact that it has offered to pay the net sale proceeds into Court or an appropriate solicitor's trust account, in respect of which Hooper may make a claim for any entitlement that he has over those funds;

(d) fourthly, Parwan submits that in circumstances where, despite negotiations taking place between the parties for an assignment to Hooper of the Mortgage, Hooper has failed to tender any payment to discharge the Mortgage and has otherwise failed to vacate the Property, the Caveats are being used as bargaining chips to delay or prevent Parwan's sale of the Property;

(e) fifthly, in order to prevent unnecessary further litigation, the Court can make the orders sought by Parwan conditional on a sale of the Property by the Receivers, which can take effect at settlement of that sale; and

(f) finally, in response to Hooper's submission that Parwan is not a party that is adversely affected by the Caveats, Parwan states that the submission is without merit on the basis that the Caveats are preventing the Receivers from selling the Property to a third party.

47 Relying on Lysaght, Hooper submits that he has a real chance of success in this proceeding and it necessarily follows that Parwan's application must fail.

48 Hooper submits that in seeking to make good its claims in the Application, Parwan is relying on its own default under the Mortgage. Further, Hooper argues that Parwan, in making this application, is seeking relief as if it were the mortgagee seeking to exercise the powers of a mortgagee in possession rather than those available to the registered proprietor of the Property. In this respect, Hooper emphasises the point that the Receivers are not mortgagees in possession.

49 Regarding the Contract of Sale, Hooper seeks to draw a distinction between the Contract of Sale being 'amenable' to specific performance and it being 'capable' of specific performance, given that performance of the Contract of Sale is predicated on the subdivision of the Property and a discharge of the Mortgage. At this point, I will simply note that I think this is a distinction without a difference.

50 Hooper further submits that the subdivision required under the Contract of Sale can be achieved under the planning scheme affecting the Property, and that the Receivers ought to proceed to obtain subdivision in order to comply with Parwan's contractual obligations. As for the Mortgage, Hooper submits that Parwan, by asserting that the need for CBA's consent or the discharge of the Mortgage is a barrier to specific performance, is seeking to rely on its own wrongdoing. In oral submissions, Counsel for Hooper expanded on this submission by asserting that whether or not CBA consented to the Contract of Sale is immaterial, because CBA's consent was not a condition precedent to the performance of the contract. Hooper further submits that Hooper, as a bona fide purchaser for value, was entitled to rely upon the representations made by Parwan through the Contract of Sale and, as such, it is erroneous to say that the Contract of Sale is not amenable to specific performance.

51 Hooper also contends that the indefeasibility of the Mortgage is not germane in this regard, and that such an argument is tantamount to arguing that Parwan is entitled to maintain the Mortgage for the collateral purpose of preventing performance of the Contract of Sale. Should the purchase price under the Contract of Sale fall short of the balance secured by the Mortgage, Hooper submits that this could be dealt with in a number of ways, including by Hooper redeeming the Mortgage.

52 Regarding the Lease Agreement, Hooper submits that the issues arising with respect to the Lease Agreement should be dealt with at the trial of this proceeding. This is because, Hooper submits, the period of the Lease Agreement has expired such that it is continuing as a periodic lease until such time as it is validly terminated. Hooper submits that there is a serious question to be tried as to whether the Lease Agreement was validly terminated because, it is said, the Notice is framed in terms of an intention to sell the Property, when in fact it has already been sold (that is, to him). Hooper submits that Parwan's entitlement to terminate the Contract of Sale and re-sell the property must be ascertained as a precondition to determining the validity of the Lease Agreement.

53 In oral submissions, Hooper's Counsel submitted that it is disingenuous for Parwan, at the time the Notice was issued, to assert that the Lease Agreement was being terminated on the ground that the Property was to be sold immediately upon vacation. Hooper submits that the only evidence supporting this proposition that the Property was to be sold immediately is the Receivers' exclusive authority to sell the Property. Hooper further submits that Parwan provided no evidence of any marketing or prospective purchasers, or other material in support of the assertion that the Property was to be immediately sold. On this basis, Hooper says, the Notice fails to meet the requirements of s 91ZZB of the RTA, and therefore there is a real prospect that Hooper will successfully defend Parwan's application for declaratory relief on the question of the Lease Agreement.

54 With respect to the Charge Deed, Hooper contends that on the one hand Parwan does not appear to challenge the validity of Hooper's equitable charge, but on the other argues that the equitable charge cannot preclude Parwan from selling the Property. In doing so, Hooper submits, Parwan appears to assume that it possesses the powers of sale ordinarily ascribed to a mortgagee in possession.

55 Hooper then submits that he has a caveatable interest in the Property by virtue of the Contract of Sale and the Charge Deed. At the hearing, Hooper's Counsel made a number of submissions which are said to tilt the balance of convenience in favour of the maintenance of the Caveats pending trial of the proceeding. These are as follows:

(a) firstly, Hooper submits that he lives on the Purchased Area and has invested significant sums of money into improving the Purchased Area, as evidenced by the Charge Deed. Due to the scale of these improvements, Hooper submits that damages would be an inadequate remedy;

(b) secondly, Hooper says that this is not a case in which a separate contract of sale with a third party has been entered into for the sale of the Property or the Purchased Area. The highest Parwan can put it is that the Receivers intend to sell the Property;

(c) thirdly, Hooper submits that he is willing to provide an undertaking to pay into Court the discrepancy between the sale price under the Contract of Sale and that which remains owing to CBA, such that there would be no prejudice to CBA if the Caveats are maintained pending trial of the proceeding; and

(d) finally, Hooper contends that, in circumstances where he claims only the Purchased Area, and not the Property as a whole, there is nothing preventing the Receivers from taking steps to subdivide the Property and sell the remaining part of the Property which is not subject to Hooper's claim in order to satisfy the Mortgage.

56 Parwan initially sought to impugn the validity of the Contract of Sale by pleading that it is void for uncertainty. However, this matter was not agitated by Parwan at the hearing nor was it among the matters for which it sought summary judgment. The validity of the Contract of Sale having been conceded by Parwan for the purposes of the Application, the key battleground concerned the issue of whether or not the Contract of Sale is amenable to specific performance.

57 Therefore, I will proceed on the basis that the Contract of Sale is a legally binding agreement. That being the case, it seems to me that that the Application raises two fundamental matters upon which the prospects of Hooper's claim for specific performance turn. The first is whether or not the Property can be subdivided, and the second is whether settlement of the Contract of Sale is possible, given the CBA's attitude to the sale and in particular whether the Mortgage will be discharged.

58 Dealing first with the question of subdivision, special condition clause 7.1 of the Contract of Sale provides that settlement is conditional on Parwan subdividing the Property within 18 months from the day of sale. The clause also requires Parwan, at its own expense, to use its best endeavours to cause the plan to be prepared and registered.[20] Subdivision is yet to occur such that the Property remains intact and it is therefore not possible to transfer the Purchased Area alone.

59 Despite Hooper's contention that Parwan can effect subdivision through the applicable planning scheme, no evidence regarding any such scheme has been adduced. Rather, the weight of the evidence favours the view that the Receivers do not consent to the sale of the Purchased Area, such that Parwan refuses to perform its obligations under the Contract of Sale to effect the subdivision so as to be able to sell the Purchased Area to Hooper. The evidence also makes plain that CBA, the appointer of the Receivers, does not consent to the Contract of Sale.[21] CBA's position in this respect is confirmed by a letter addressed to the Receivers by Mr Eric Hampton of CBA, dated 3 December 2021, stating that CBA 'does not consent to the sale of part of the [P]roperty to Mr Hooper'.[22] For the avoidance of doubt, the phrase 'part of the [P]roperty' in that letter is a reference to the Purchased Area.

60 On the one hand, Parwan's unwillingness to set the process of subdivision in train and, more broadly, CBA's firm resistance to the sale pose a significant barrier to the performance of the Contract of Sale. On the other hand, it cannot be right that Parwan can simply refuse to perform its obligations under the Contract of Sale, being to effect the subdivision, and then rely on its own non-performance or breach as a barrier to specific performance.

61 Nonetheless, the fact remains that the Property has not been subdivided and it is now in the control of the Receivers, whose appointor shows no sign of taking steps to achieve the subdivision. Specific performance in such circumstances would likely require the Court to carry out a supervisory role, which is usually a reason not to grant specific performance. Further, even if Parwan (presumably through the Receivers) did take steps towards subdivision, whether or not that was achieved is not within its control.

62 The second barrier to specific performance raised by Parwan is the question of the Mortgage and, specifically, whether Parwan could deliver clear title to Hooper at settlement by redeeming the Mortgage.

63 It is common ground that the Mortgage was first in time and takes priority over any interest of Hooper as purchaser under the Contract of Sale. The evidence is that the purchase price due under the Contract of Sale (being $900,000.00) is insufficient to satisfy the balance of the Mortgage, under which an amount of $1,165,058.00 was owed as at 3 December 2021.[23] This figure would be subject to any interest and costs that have accrued since this time.

64 That being the case, and in view of the reality that performance of the Contract of Sale will require a discharge of the Mortgage from CBA in circumstances where CBA is not likely to be paid out from the sale proceeds and does not consent to the sale, it cannot be said that the Contract of Sale is specifically performable.

65 Taken together, but with the emphasis being on the fact that settlement of the Contract of Sale will not be able to occur as the Mortgage will not be discharged at settlement, these barriers are such that Hooper's claim for specific performance of the Contract for Sale has no real prospect of success.

66 I now turn to the question of whether or not the Purchaser's Caveat ought be removed from the title of the Property. The test requires Hooper to show first that there is a prima facie case that he has the estate or interest claimed in the caveat, and, secondly, that the balance of convenience favours the maintenance of the caveat until trial.[24] Given the validity of the Contract of Sale is not contested for the purposes of the Application, the real question is where the balance of convenience lies.

67 In this respect, there are a number of matters to which I will have regard. Firstly, Hooper says that the absence of a separate contract of sale for the sale of the Property to a third party supports the maintenance of the Purchaser's Caveat. True this may be, however it is important to qualify this argument with Mr Blakeley's evidence which unequivocally demonstrates that CBA wishes to sell the Property upon removal of the Caveats, but has been precluded from doing so due to the existence of those Caveats. In the circumstances, I consider the absence of a contract of sale between Parwan and a third party to be neutral.

68 Secondly, at the hearing Hooper submitted that he remains in possession of the Purchased Area, though the evidence brings this proposition into question. Specifically, the First Rogers Affidavit refers to a conversation between Ms Rogers, Parwan's solicitor, and an employee of Melton City Council ('Council') in which Ms Rogers was told that Hooper had vacated the Property.[25] This conversation took place in the context of discussions regarding enforcement proceedings undertaken by the Council against Hooper at VCAT in relation to breaches that are alleged to have occurred at the Property. While this evidence is undeniably hearsay and of limited probative value, the Court is faced with the task of weighing this evidence against the complete lack of evidence adduced by Hooper on this question. On this basis, this factor neither weighs in favour of nor against the balance of convenience.

69 Thirdly, during the course of the hearing, Parwan pointed to evidence suggesting that the Council has foreshadowed enforcement proceedings in respect of the breaches referred to in the preceding paragraph pending the outcome of this application, in which Parwan is likely to become embroiled by virtue of its status of landowner of the Property. A copy of a letter sent by the Council to Ms Rogers dated 8 March 2022 has been tendered in support of this argument. Relevantly, the Council's letter states that 'any enforcement order applied for [in VCAT], by default would be sought against the land owner, and would include any other party involved in the contravention to ensure compliance is achieved with the Melton Planning Scheme'.[26] On this basis, it is argued that if the Court were to retain the Purchaser's Caveat, this would cause prejudice to Parwan by prolonging this proceeding and, as a consequence, delaying any enforcement proceedings brought by the Council, which are currently on hold. However, the likelihood of any foreshadowed proceedings involving Parwan, in its capacity as landowner of the Property, must also be viewed in light of the final paragraph of the Council's letter, which observes, '[s]hould this matter progress to a hearing in a Magistrates Court, or VCAT, these actions may be taken against all land owners, occupiers and persons or companies involved'.[27] Further, there is a paucity of evidence concerning the prospect of future enforcement proceedings. In circumstances where any impending proceeding brought by the Council is by no means guaranteed, I am of the opinion that this factor does not weigh in favour of or against the removal of the Purchaser's Caveat.

70 Fourthly, that the Contract of Sale is not specifically performable weighs against the maintenance of the Purchaser's Caveat on the title of the Property. This is because any remedy for breach of the Contract of Sale would be for damages in lieu of specific performance.

71 Fifthly, Parwan submits that because it will pay the net proceeds of the future sale of the Property into Court or a solicitor's trust account pending the hearing and determination of Hooper's claims over the fund, this supports the removal of the Purchaser's Caveat. A corollary of this argument is that if specific performance of the Contract of Sale is not possible, then any claim that Hooper wishes to bring for breach of contract would sound in damages only. Parwan submitted that if Hooper can establish an interest in the Purchased Area arising from a contract of sale that cannot be enforced, then that interest translates into a damages claim or a claim against the funds to be paid into Court following Parwan's sale of the Property.[28] However, I do not find this argument persuasive, for the reason highlighted by Barwick CJ in Chang v Registrar of Titles,[29] who observed that 'it is only true that the purchaser of land under a contract of sale of land becomes its equitable owner if the contract is specifically enforceable'.[30] This is consistent with the characterisation of a purchaser's interest in land as being commensurate with the availability of specific performance.[31] While it is not necessary for me to determine the nature of any claim arising from the Contract of Sale (as opposed to the charge) that Hooper may or may not have over the fund paid into Court (or a solicitor's trust account) following Parwan's sale of the Property, I consider the fact that the net proceeds of sale would be preserved does not necessarily weigh in favour of removing the Purchaser's Caveat.

72 Finally, during the course of the hearing Counsel for Hooper raised, for the first time, the prospect of Hooper providing an undertaking to the Court to pay the difference between the purchase price for the Purchased Area and the amount owing on the Mortgage. It was said that this would ensure that CBA suffers no prejudice in the event the Court decides to maintain the Caveats and the matter proceeds to trial.[32] At the conclusion of the hearing, Hooper was directed to circulate a draft of the Proposed Undertaking between Counsel before being filed, and, as I mentioned at paragraph 21, the 17 March Orders required Hooper to file the Proposed Undertaking.

73 The Proposed Undertaking subsequently filed with the Court provided as follows:

[Hooper] HEREBY UNDERTAKES to [Parwan] that in addition to the usual undertaking to abide by any order the Court may make as to damages, he will pay into Court, or into a solicitor's trust account acceptable to the parties, an amount equivalent to the difference between the amount required to repay the moneys secured by mortgage AM410806R to the Commonwealth Bank of Australia and the balance of purchase moneys payable at settlement of the contract of sale dated 21st October 2016 referred to in paragraph 3 of the statement of claim in this proceeding ("Contract of Sale").

In the event that the sum paid into Court, or into a solicitor's trust account as the case may be, is paid to the Commonwealth Bank of Australia so as to repay any remaining moneys secured by mortgage AM410806R following settlement of the Contract of Sale, then the Plaintiff and First Defendant to Counterclaim shall be entitled to be subrogated to the rights of Commonwealth Bank of Australia as mortgagee under mortgage AM410806R in respect of the balance of the land remaining in certificate of title volume 8614 folio 990 following such settlement.

74 Shortly after the Proposed Undertaking was filed, Parwan's solicitors filed short (albeit unsolicited) written submissions in which it was asserted that a draft was not provided to Parwan's Counsel prior to it being filed. The submissions also made a number of observations about the Proposed Undertaking. By email dated 12 April 2022, at my direction my Associate invited Hooper to make short submissions in response to those filed by Parwan. However, Hooper did not avail himself of this opportunity.

75 With regard to the first paragraph of the Proposed Undertaking, the thrust of Parwan's submissions, which I accept, is that the Proposed Undertaking is ambiguous and fails to articulate a number of factors. I consider that the Proposed Undertaking fails to specify a number of matters, including when the amount will be paid, the amount to be paid, whether the Proposed Undertaking will account for increases in the balance payable on account of interest, whether, and if so how, the Proposed Undertaking will account for variations to the settlement sum before settlement, the consequences that will flow in the event payment is not made on time, and what will occur if settlement on the Contract of Sale never takes place.

76 Another issue detracting from the efficacy of the Proposed Undertaking is that the Court does not have evidence of Hooper's financial position or Hooper's ability to settle the Contract of Sale and satisfy the balance of the Mortgage. Although Hooper pleads that he is ready, willing and able to settle the Contract of Sale, there remains a dearth of evidence as to Hooper's capacity to perform his obligations under the Contract of Sale to pay the purchase price and to satisfy the discrepancy between the purchase price under the Contract of Sale and the amount due under the Mortgage. While Counsel for Hooper indicated that Hooper is willing to put on further affidavit material to this effect,[33] I consider that Hooper has had ample opportunity to adduce any such material and has hitherto failed to do so.

77 In terms of the second paragraph of the Proposed Undertaking, Parwan submits, and I also accept, that this is not an undertaking but merely an attempt to seek orders from the Court which were not the subject of pleadings or argument at the hearing. Further, I consider that the second paragraph of the Proposed Undertaking goes well beyond the matters raised by Hooper's Counsel at the hearing and those which I instructed the parties to address.

78 Also relevant in considering the weight to be placed on the Proposed Undertaking are the negotiations that took place between the parties in correspondence between 14 September 2021 and 8 October 2021. The correspondence indicates that, despite requests from Ms Rogers (Parwan's solicitor), Hooper did not provide evidence of the funds required to satisfy CBA's debt. Hooper also failed to provide a proposed deed of assignment as a means of settling the dispute in response to a proposal put forward by Ms Rogers. When taken together with Hooper's failure to file any material in support of his capacity to satisfy the undertaking and settle the Contract of Sale, the correspondence gives credence to the doubts raised by Parwan as to Hooper's capacity to fulfil the Proposed Undertaking, let alone perform the Contract of Sale. The Court is left in a position where there is doubt that the Proposed Undertaking would be fulfilled. It follows that the Proposed Undertaking does not tip the scales of the balance of convenience in favour of Hooper.

79 Therefore, despite Hooper having established the interest claimed in the Purchaser's Caveat, I am of the view that the balance of convenience favours its removal from the title of the Property. This is because the presence of the Mortgage, coupled with the strong evidence that the settlement proceeds due under the Contract of Sale will not be sufficient to discharge the Mortgage, along with the attitude of the CBA, presents as a fundamental barrier to an order for specific performance of the Contract of Sale being obtained.

80 Parwan did not seek to dispute the validity of the Charge Deed for the purposes of the Application. Nor does the Application seek summary dismissal of Hooper's claim for a declaration that he has a valid equitable charge.

81 It follows that Hooper has established a prima facie case to the interest or estate claimed by the Charge Caveat. Rather, the question as to whether or not the Charge Caveat ought be maintained will once again turn on where the balance of convenience lies.

82 In seeking to maintain the Charge Caveat on the title of the Property, Hooper contends that, in light of the amount secured by the Charge Caveat, damages would 'most certainly be an inadequate remedy'.[34] However, I do not consider this to be so. It is clear that the rights under the Charge Deed are not in any way connected to any rights under the Contract of Sale. The parties have not tendered any evidence regarding the value of the Property, and there is no evidence that the sum secured by the Charge Caveat is unlikely to be of such magnitude that it cannot be covered by the surplus proceeds paid into Court following sale of the Property. More fundamentally, all that the Charge Deed does is give security, by way of a charge over the Property, for the payment of the amount secured under the Charge Deed. That security is indisputably behind the CBA's mortgage in terms of priority. If the Receivers sell the Property and there is a surplus after discharge of the Mortgage, Hooper has a secured interest in that fund. His interests are protected by the surplus being paid into Court or to a solicitor's trust account pending resolution of the dispute. In that way, the Charge Caveat does not have to be maintained in order to give Hooper the protection afforded by his secured interest. In this sense, any prejudice that Hooper may face by virtue of the removal of the Charge Caveat is ameliorated by payment of the sale proceeds into Court by Parwan following sale of the Property.

83 For these reasons, I consider that while Hooper has a prima facie case in regards to the interest claimed by the Charge Caveat, the balance of convenience overwhelmingly favours its removal, on the condition that the net proceeds of sale are paid into Court or to a solicitor's trust account pending resolution of the dispute.

84 Parwan also seeks a declaration that the Lease Agreement has been validly determined.

85 That the Lease Agreement was executed simultaneously with the Contract of Sale is not in issue and, as such, the RTA does not apply by virtue of s 13 of that Act. The parties were in agreement in this respect. It is also common ground that the Lease Agreement has come to an end, with the Lease Agreement continuing as a periodic tenancy thereafter. As discussed at paragraph 12, the parties have agreed by the terms of the Lease Agreement that they will have the benefit and burden of the rights and liabilities respectively imposed by the RTA on the parties to a residential tenancies agreement, with the relevant provisions of the RTA having been incorporated into the Contract of Sale as a matter of contract.

86 Hooper was served with the Notice pursuant to s 91ZZB of the RTA. Hooper acknowledged receipt of the Notice.

87 While there appears to be some uncertainty as to whether Hooper remains in possession of the Property,[35] the parties proceeded on the basis that he had not complied with the Notice and remained in possession of the Property under the Lease Agreement.

88 Upon being prompted in the hearing, Parwan's Counsel indicated that non-payment of rent under the Lease Agreement could be an issue.[36] However, I do not consider this to be relevant to the question of the validity of the Notice, given the Notice was issued on the ground that the Property is to be offered for sale by the Receivers. Moreover, these matters were not raised in the written submissions of either party, nor is there any evidence on this point.

89 Hooper disputes that the Notice has the effect of terminating the Lease Agreement because the Property is not to be offered for sale immediately after 13 September 2021, being the termination date stipulated in the Notice. However, the evidence is that the Receivers intend to sell the Property upon determination of the Application. Relevantly, Mr Blakeley's evidence is that:[37]

It is my intention as Receiver, to sell the Property with vacant possession and apply the proceeds of sale in accordance with section 105 of the Property Law Act 1958. I intend to pay any surplus funds into Court pending determination of Hooper's claim over any surplus funds, or alternatively into an appropriate solicitor's trust account.

90 This paragraph of the Blakeley Affidavit does not explicitly state that the Property is to be sold 'immediately'. However I do not consider that Mr Blakeley's failure to specify this has the effect of invalidating Notice. Rather, Parwan's evidence and the mere fact of the Receivers' appointment is consistent with the conclusion that they wish to sell the Property upon determination of the Application. Further, the Notice itself states that the Property is 'to be offered by the receivers for sale with vacate possession immediately after termination date in s 4 of this notice'.[38] It is the presence of the Caveats on the title of the Property which has precluded the Receivers from promptly selling the Property. The existence of the Caveats on the title of the Property also offers a response to Hooper's submission as to the absence of any marketing or evidence regarding potential purchasers. The taking of steps to sell the Property would be premature in light of these proceedings and the enforcement proceedings foreshadowed by the Council, in the event they come to pass (which is by no means certain).

91 It follows that the Notice had the effect of validly terminating the Lease Agreement. I will grant summary judgment in respect of Parwan's claim for a declaration in this respect.

92 Parwan indicated, in its written submissions and at the hearing, that it sought summary judgment of those portions of Hooper's prayer for relief in his statement of claim as shown in italics below:

(i) the Contract of Sale is valid and enforceable against Parwan (and now its Receivers);

(ii) the Purchaser's Caveat is valid and must be maintained on the register;

(iii) Hooper has a valid equitable charge which may be enforced against the Property; and

(iv) the Charge Caveat is valid and must be maintained on the register.

1. An order for specific performance of the Contract of Sale by the Receivers.

2. An order restraining the Receivers whether by their agents, servants or contractors, from selling or attempting to sell, or otherwise dispose of, the Purchased Area until final hearing and determination of this proceeding.

93 Parwan also indicated, in the same way, that it sought summary judgment on those portions of its prayer for relief in the counterclaim as shown in italics below:

A. A declaration that the Contract of Sale is void for uncertainty.

B. A declaration that the Contract of Sale is not amenable to specific performance.

C. A declaration that the charge does not bind Parwan.

1. A declaration that the Purchaser's Caveat cannot be maintained and a mandatory injunction that Hooper take all steps and execute all documents reasonably necessary to remove that caveat from the title to the Property.
2. A declaration that the Charge Caveat cannot be maintained and a mandatory injunction that Hooper take all steps and execute all documents reasonably necessary to remove that caveat from the title to the Property.
3. A declaration that the Notice will either validly determine or, if it has expired by hearing and determination of this claim, has validly determined the Lease Agreement giving Parwan an entitlement to vacant possession of the Purchased Area and the Property.
4. Further or alternatively:

(i) an order pursuant to s90(3) of the TLA that the second defendant by counterclaim remove the Purchaser's Caveat and the Charge Caveat from the title to the Property;

(ii) a declaration that the Property may be sold by the Receivers appointed to Parwan free of Hooper's claims under the Contract of Sale and the charge; and

(iii) an order that the net sale proceeds (after payment of the mortgagee's claims under the Mortgage, including the Receivers' costs and all interest) be paid into Court (or as otherwise directed by the Court) pending hearing and determination of Hooper's claims over that fund.

94 For the reasons set out above, summary judgment for Parwan will be granted in respect of:

(a) paragraphs B and C of Hooper's prayer for relief in his statement of claim; and

(b) paragraphs B and G of the prayer for relief in Parwan's counterclaim.

95 In light of my reasons, it is not appropriate to grant summary judgment to Parwan on the following paragraphs of Hooper's prayer for relief in his statement of claim (in respect of which summary judgment was sought):

(a) paragraph A(i), as the validity of the Contract of Sale has not been determined in this Application;

(b) paragraph A(ii), as I have not found that the Purchaser's Caveat is invalid; and

(c) paragraph A(iv), as I have not found that the Charge Caveat is invalid.

96 Similarly, in light of my reasons, it is not appropriate to grant summary judgment to Parwan on paragraphs D and E of the prayer for relief in its counterclaim (in respect of which summary judgment was sought).

97 Having determined that the Caveats should be removed, orders should be made that:

(a) Hooper withdraw the Caveats;

(b) If Hooper does not withdraw the Caveats, the Second Defendant should be directed to remove them; and

(c) Parwan pay the net proceeds of sale into Court or a solicitor's trust account as set out in paragraph G(iii) of the prayer for relief in the counterclaim.

98 I will hear further from the parties on the question of costs and the precise terms of the proposed orders. The proceeding will be listed for final orders on 17 June 2022 for that purpose. If the parties are in agreement as to the orders to be made to give effect to this Ruling, including as to costs, then proposed consent orders can be submitted to my Chambers prior to that date.

[1] By letter dated 19 July 2021, the Registrar of Titles informed the Prothonotary that she does not intend to appear in the proceeding. A copy of this letter is on the Court file.

[2] Blakeley Affidavit, Exhibit RB-1, p 24-25.

[3] Blakeley Affidavit, Exhibit RB-1, p 221-222.

[4] Blakeley Affidavit, Exhibit RB-1, p 242.

[5] Blakeley Affidavit, Exhibit RB-1, p 242.

[7] Blakeley Affidavit, Exhibit RB-1, pp 17, 18 and 21.

[8] Second Rogers Affidavit, Exhibit SJR-2, p 6.

[9] Michael Murray and Jason Harris, Keay's Insolvency: Personal & Corporate Law and Practice (Lawbook, 6th ed, 2008), [20.45].

[10] Second Rogers Affidavit, Exhibit SJR-2, p 8.

[11] Blakeley Affidavit, Exhibit RB-1, p 150.

[12] Corporations Act, ss 420(a), (b), (p).

[13] [2013] VSCA 158; (2013) 42 VR 27 ('Lysaght'), 40, [35] (Warren CJ and Nettle JA, Neave JA agreeing in part (42, [40]-[42])).

[14] [2011] VSC 222; (2011) 35 VR 1, [18].

[15] [2018] VSC 301, [19]-[28]. These principles were adopted by Sloss J in Israfoods (2006) Ltd v J & D Consortium Pty Ltd [2019] VSC 323, [41]. See also Silver Chef Rentals Pty Ltd v Makong Australia Pty Ltd [2019] VSC 703, [50].

[16] [2022] VSC 1, [7]-[9].

[17] [2022] VSC 27, [36]-[39].

[18] Blakeley Affidavit, [41]; exhibit RB-1, p 258.

[19] Rojtarowski v Rojtarowski [2009] VSC 15, [23]; Perpetual Trustee Company Ltd v Lindlirim Pty Ltd [2009] VSC 182, [23].

[20] Blakely Affidavit, Exhibit RB-1, p 196.

[22] Blakely Affidavit, Exhibit RB-1, p 259.

[23] Blakely Affidavit, Exhibit RB-1, p 258.

[24] Piroschenko v Grojsman (2010) 27 VR 489, 491, [7]; Carbon Black Lab Pty Ltd v Launer [2015] VSCA 126, [35].

[26] Second Rogers Affidavit, Exhibit SJR-1, p 13.

[27] Second Rogers Affidavit, Exhibit SJR-1, p 29 (emphasis added).

[28] Transcript dated 17 March 2022, T19.4-8.

[29] [1976] HCA 1; (1976) 137 CLR 177 ('Chang').

[30] Chang, 181 (emphasis added). See also Mason J who observed, at 184, that '[i]t is accepted that the availability of the remedy of specific performance is essential to the existence of the constructive trust which arises from a contract of sale'.

[31] Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ), which was cited with approval in Black v Garnock [2007] HCA 31; (2007) 230 CLR 438 (Gummow and Hayne JJ).

[32] Transcript dated 17 March 2022, T28.25-30.

[33] Transcript dated 17 March 2022, T42.30-43.4.

[34] Transcript dated 17 March 2022, T28.15-20.

[35] See paragraph 68 above.

[36] Transcript dated 17 March 2022, T43.22-23.

[38] Blakeley Affidavit, Exhibit RB-1, p 242 (emphasis added).