In this matter, the Court made final orders in September 2021 disposing of the proceedings as they were then constituted. There is now an application before the Court to vary or set aside some of those orders.
The September 2021 orders were made by Kunc J following a hearing in which only the plaintiff participated, as I shall describe. His Honour delivered reasons for his decision on the same day: Hunter Water Corporation v Landmarque Holdings Pty Ltd [2021] NSWSC 1233 ("J1").
The proceedings before Kunc J concerned a parcel of land in Rothbury in the Hunter Valley. The land was (and remains) registered in the name of Hunter Water Corporation ("Hunter Water").
The land was acquired by Hunter Water in June 1990, apparently to facilitate the subdivision or development of adjoining land. The purchase monies were provided to Hunter Water by Landmarque Holdings Pty Limited ("Landmarque"). In 2004, part of the land was resumed. As at September 2021, the resumption monies, which amounted to $53,000, had not been claimed and were being held for the benefit of the owner by the NSW Treasury: J1 [20].
Hunter Water does not claim, and has never claimed, beneficial ownership of the land. It brought the proceedings to obtain orders which would result in the land being sold, Hunter Water's holding costs (including over $220,000 in land tax) being recouped out of the proceeds and the resumption monies, and the balance being paid out to the beneficial owner (which was believed to be Landmarque).
Landmarque was the first defendant in the proceedings. Six other parties were joined as defendants to allow them, if they wished, to make claims to the land and the resumption monies. But neither Landmarque nor any of the other defendants appeared to contest the orders sought by Hunter Water. In fact, a director of Landmarque wrote to Hunter Waters' solicitors stating that Landmarque had no interest in the land or the resumption monies.
Kunc J was satisfied, on the evidence presented to him, that Hunter Water had acquired the land with funds provided by Landmarque. His Honour noted that the disavowal, by Landmarque's director, that Landmarque had any interest in the land, was not binding on the Court. He concluded that Hunter Water had acquired the property under a resulting trust for Landmarque, although Hunter Water was entitled to an equitable lien for expenditure incurred in holding the property since 1990. It had been proposed that a receiver would be appointed to undertake the sale, but in order to minimise the cost, his Honour instead accepted an undertaking from Hunter Water to make the necessary sale as trustee.
His Honour's orders were relevantly:
"Upon the undertaking given by the plaintiff, through its Counsel, to the Court, as set out in the Schedule to these orders, the Court orders as follows:
1. Declare that the plaintiff, as trustee, holds on resulting trust for the first defendant, as beneficiary, the land comprising Lot 21 in DP XXXXXXX in Rothbury, Hunter Valley, New South Wales ("Land").
2. Declare that the plaintiff is entitled to the payment of funds from the Consolidated Fund under ss 37 and 51(5) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), in respect of the resumption by the Roads & Traffic Authority of part of the Land on 13 February 2004 ("Resumption Money").
…
4. The plaintiff is entitled to its costs of the proceedings, on an indemnity basis, such costs to be paid out of the assets held on trust (being the Land and the right to the Resumption Money).
5. Declare that the plaintiff is entitled to indemnity, out of the assets held on trust (being the Land and the right to the Resumption Money), for the following costs and expenses:
(a) council rates;
(b) land tax;
(c) the costs of obtaining legal advice regarding the competing claims of beneficial ownership in the Land and the costs of corresponding with those making such claims;
(d) the plaintiff's costs of these proceedings in accordance with order 4 above;
(e) the costs of sale of the Land; and
(f) any taxation, duty or other impost consequent upon the ownership or sale of the Land;
(collectively, "Indemnity Entitlement").
…
Schedule
The plaintiff undertakes to the Court that it will sell the Land on the open market, in an arm's-length transaction, whether by public tender, by expression of interest or by public auction, and then to apply the sale proceeds as follows:
(a) first, to pay the third-party costs of selling the Land;
(b) secondly, to apply the Resumption Money in reduction of its Indemnity Entitlement and thereafter to apply the sale proceeds to pay to itself the remaining Indemnity Entitlement; and
(c) thirdly, to pay the net balance of the sale proceeds to the first defendant."
His Honour made directions requiring Hunter Water to give notice of the orders to Landmarque and one of the other defendants and reserved liberty to those parties to apply, should they wish to be heard on the form of the orders and undertakings. No such application was made.
[2]
Application to set aside and vary September 2021 orders
The present application comes before the Court because another company, Vintage Developments Pty Limited ("Vintage"), claims to have acquired Landmarque's beneficial interest in the land (and thus also in the resumption monies) as a result of dealings with Landmarque in 2007. The land has not yet been sold by Hunter Water. Vintage wishes to retain it and seeks a transfer of the land from Hunter Water accordingly (Vintage accepts that, as a condition of the transfer, it will be required to discharge the equitable lien in favour of Hunter Water which secures Hunter Water's Indemnity Entitlement under the September 2021 orders, together with the costs of and occasioned by the transfer). Hence Vintage applies to vary or set aside such of the September 2021 orders as are necessary to achieve this outcome.
Vintage's application is made under r 36.15(1) of the Uniform Civil Procedure Rules 2005 ("UCPR"), which empowers the Court "on sufficient cause being shown" to set aside a judgment or order if it the judgment was given or the order was made "irregularly". The ground for the application is that the September 2021 orders were made without notice to Vintage, which claims to have had an interest in the land and the resumption monies which were the subject of the orders.
The application was made by way of separate proceedings commenced in 2022. Vintage is the plaintiff; Hunter Water is the first defendant and Landmarque and the other original defendants in the 2021 proceedings were named as the second to eighth defendants. Vintage has filed a statement of claim and the proceedings have been prepared for hearing in the ordinary way. Hunter Water has appeared but does not oppose Vintage's application. There has been no appearance for any of the other defendants.
The received view is that, where an application is made to set aside a judgment on the ground of fraud, the application should be made by way of statement of claim in separate proceedings. In Tjiong v Tjiong [2021] NSWSC 1389 at [73]-[75], I raised the question whether it remains necessary to follow that procedure in applications to set aside judgments for fraud under UCPR r 36.15(1). It is unnecessary to decide that question in the present proceedings. But it does seem to me that other applications under r 36.15 should, in the ordinary course, be made by way of notice of motion in the proceedings in which the original orders were made.
That is for two reasons. First, if any orders are to be set aside or varied, the orders effecting that should be made in the original proceedings so that the record of those proceedings is complete for future reference. Secondly, it seems to me that an application to set aside or vary orders under the rule, as an ancillary procedure, is properly made by notice of motion. It is notable that UCPR r 36.16, which also provides for the setting aside of judgments and orders in some circumstances, expressly provides in sub-rules (1) and (3A) for applications under those sub-rules to be made by filing a notice of motion.
When I put this view to counsel for the parties, they did not disagree. I will therefore regularise the position by ordering that Vintage be joined as the eighth defendant in the 2021 proceedings. Given the procedural steps that Vintage has already taken in the 2022 proceedings to bring the matter before the Court, however, there is no need now for any formal notice of motion in the 2021 proceedings.
It is plain that the only substantial issue considered by Kunc J at the September 2021 hearing was whether Hunter Water had a beneficial interest in the land. There is no dispute that, as his Honour found, Landmarque provided the funds when Hunter Water acquired the land in 1990, and therefore it had done so on resulting trust for Landmarque. It is equally clear that, as the registered proprietor, Hunter Water was entitled to receive the resumption monies when they accrued in 2004. Although, with the benefit of hindsight, Landmarque's disavowal of any interest in 2021 might have led to the discovery that Vintage had acquired Landmarque's beneficial interest, that was obviously not considered at the time and the Court not unnaturally assumed that Landmarque remained the beneficial owner.
If the declarations made in September 2021 had been only expressed in terms of the historical position, there would have been no difficulty. But as the declarations speak in terms of Hunter Water's obligations and Landmarque's entitlements as at September 2021, they do exclude, or at least arguably exclude, Vintage's claim. It is now clear that Vintage should have been heard on the making of orders in that form, and is now entitled to have the orders, to the extent to which they affect, or arguably affect, its rights, set aside: John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at 48 [137].
I turn to the merits of Vintage's claim that it has become the owner of Landmarque's equitable interest in the land. The claim is put on two bases. The first is that a written settlement agreement between Vintage and Landmarque provided, as a matter of interpretation, for an assignment of that interest. Alternatively, Vintage alleges an equitable estoppel arising from a representation in the deed that Landmarque claimed no interest in the land.
Vintage's claim is consistent with the statement by Landmarque's director that it had no interest in the land made at the time of the 2021 proceedings. Landmarque was served in the 2022 proceedings but has taken no steps to contest the claim. In the circumstances, I think I can be satisfied that Landmarque admits that Vintage's claim is valid. I will however give Landmarque one further opportunity to reopen the question, in the form of liberty to apply, within a period of 21 days after service on it of my orders and my reasons for judgment, to vary the orders.
Accordingly, I will:
1. vary declarations (1) and (2) in the September 2021 orders so that they are expressed in purely historical terms;
2. make a declaration that Landmarque's beneficial interest in the land and the resumption monies has passed to Vintage (but in order to prevent the possibility that the declaration could inadvertently affect the rights of any other person, the declaration will only be made as between Landmarque, Hunter Water and Vintage);
3. discharge the undertaking by Hunter Water to sell the land and instead order that Hunter Water transfer the land to Vintage, subject to Vintage agreeing to indemnify Hunter Water against the Indemnity Entitlements defined in declaration (5) of the September 2021 orders, and also any costs associated with the transfer (the parties have agreed a form of order in that regard).
The parties have also agreed on the quantification of the Indemnity Entitlements and a date by which the amount is to be paid by Vintage. The orders will contain a notation of this agreement.
The parties also agree that the 2022 proceedings should be dismissed with no order as to costs. The costs orders made by Kunc J will not be disturbed.
[3]
Orders
The orders in the 2021 proceedings are:
1. Order that Vintage Developments be joined as the eighth defendant to these proceedings.
2. Order that order 1 of the orders made on 28 September 2021 by Kunc J in these proceedings ("2021 Orders") be varied by:
1. deleting the word "holds"; and
2. inserting the words "acquired and thereafter held" after the word "trustee".
1. Order that order 2 of the 2021 Orders be varied by:
1. deleting the word "is"; and
2. inserting the words "as registered proprietor of the Land was" after the word "plaintiff".
1. Declare that, as between the plaintiff, the first defendant and the eighth defendant, the first defendant's beneficial interest in the Land (as defined in order 1 of the 2021 Orders) has passed to the eighth defendant.
2. Order that the plaintiff be discharged from compliance with the undertaking recorded in the Schedule to the 2021 Orders.
3. Order that the plaintiff do all things reasonably necessary, including by executing all necessary documents, to transfer the Land to the eighth defendant within 28 days of the date on which these orders are entered.
4. Order that, separately and in addition to the Indemnity Entitlement (as defined in order 5 of the 2021 Orders), the eighth defendant is to indemnify the plaintiff against:
1. all of the plaintiff's reasonable expenses, including, but not limited to, capital gains tax, stamp duty or other taxes, levies, fines or penalties incurred by reason of its compliance with order 6 above; and
2. subject to order 8 below, the plaintiff's costs of proceedings 2022/363664 in this Court ("the 2022 Proceedings").
1. Note that the plaintiff and the eighth defendant have agreed that the amount of the Indemnity Entitlement and the plaintiff's costs of the 2022 Proceedings (as referred to in order 7(b)) be the sum of $500,000.32, inclusive of GST.
2. Order that the eighth defendant serve a copy of these orders and Parker J's reasons for judgment on the first defendant forthwith.
3. Order that, after the period of 21 days has elapsed from the date on which the first defendant is served with copies of the orders and reasons for judgment referred to in order 9 above, the eighth defendant's solicitor is to file and serve on the plaintiff an affidavit setting out:
1. the manner in which the first defendant was served in accordance with order 9 above; and
2. whether the eighth defendant has received any communication from the first defendant in relation to these orders.
1. Reserve liberty to the plaintiff, first defendant and eighth defendant to apply to the Court, by email to the Associate to Parker J, in the event they wish to be heard in relation to the terms or implementation of these orders, such liberty to be exercised within 21 days of service of the orders and reasons for judgment referred to in order 9 above.
The orders in the 2022 proceedings are:
1. That the proceedings be dismissed.
[4]
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Decision last updated: 28 August 2024