Ipandco (Australia) Pty Ltd v Australian Technology Park Precinct Management Ltd

REASONS FOR JUDGMENT 1 This is an application under s 74K of the Real Property Act 1900 (NSW) for an order extending the operation of caveat no 9940473H until the final hearing of these proceedings. It is common ground that this Court has jurisdiction to order an extension of the caveat, notwithstanding the fact that s 74K refers to an extension by the Supreme Court of NSW. It was sensibly conceded by senior counsel for the first respondent, a concession which was made for the purposes of this application only, that the condition referred to in s 74K(2) has been satisfied, in that the applicants claim to have a caveatable interest in the land the subject of the caveat may have substance. Prima facie, that suggests that the caveat should be allowed to remain in force. 2 However, the first respondent opposes the continuation of the caveat, essentially on two grounds. First, the applicant lacks the financial capacity to support the undertaking as to damages. Second, that the balance of convenience favours allowing the caveat to lapse. Whilst an extension of the caveat involves the exercise of a statutory jurisdiction, I accept Mr Cassidy QC's submission that principles relating to the grant of interlocutory injunctions are nonetheless, of application. 3 There was, I think, some substance in the first ground of opposition. The applicant is a company without financial substance, and I would not have been satisfied that the applicant is able to support or sustain an undertaking as to damages. In order to overcome that problem, the applicant proposes to join Mr Ip as a party to the proceedings for the purposes of proffering an undertaking as to damages on behalf of Mr Ip personally. 4 Mr Ip comes from Brunei, but he is an Australian citizen and he and his family have close and significant ties with Australia. There is evidence from Mr Ip that he has an interest in properties and projects in various places in the world, which give him a net worth in the order of $25 million. $7 million of that sum is referable to the technology park the subject of these proceedings, and would obviously not be available to meet an undertaking as to damages, as such an undertaking would only be called upon in circumstances in which any interest which Mr Ip or his companies may have had in the technology park would have come to an end. Nonetheless, I am satisfied that Mr Ip is a person of substance and that his undertaking affords an adequate protection for the first respondent in relation to damages. That is particularly so, as the first respondent has not established that continuation of the caveat would expose it to a real risk of any particular financial loss, or quantified the extent of its claimed exposure. 5 The real problem for the applicant is that under the terms of the sub-lease it is required to develop the property as a 400-room hotel and serviced apartment building. It is not economically viable for such a hotel to be constructed at the present time. Hence an order which merely avoided the termination of the sub-lease and restored it to the title would not provide any real practical benefit to the applicant. It is no doubt for that reason that the Further Amended Application seeks in order 2: 'An order varying the sub-lease with effect from 5 November 1997, suspending the obligations Ipandco as sub-lessee to develop the land, until such time as the first respondent as sub-lessor has substantially complied with its obligations under clause 2.1 of the sub-lease to conduct a high quality Technology Park at the ATP in conformity with the representations and conduct of the first respondent, or permitting staged or mixed development according to the stage of development of the Australian Technology Park and making all other appropriate ancillary and consequential amendments.' 6 It is the applicant's case, and some evidence has been filed on this application in support of that case, that its inability to carry out the development of the property which the sub-lease requires is referable to the misleading and deceptive conduct on the part of the first respondent of which it now complains. That being so, the Court must have the power to order variations to the lease of the type sought. Mr Cassidy has identified a number of possible problems in relation to the exercise of that power, and as to whether the Court is likely to order a variation of the lease in the manner sought. But the resolution of those problems is for the final hearing rather than something which I should anticipate at this stage. 7 I should say that there is some evidence from Mr Ip as to his willingness and ability to undertake development of the property if the sub-lease is varied so as to permit the staged development. Some of that evidence, particularly from overseas companies as to the terms on which they would be willing to commit finance to the project, is less than totally satisfactory, but, nonetheless, I am satisfied that for the purposes of the present application I should proceed upon the basis that there is at least a real prospect that Mr Ip would be able to undertake development of that type. 8 There is evidence that the applicant has taken a 97-year lease of the property and has paid $2.5 million of rent in advance. There is also some evidence that the applicant has incurred expenses of the order of $10 million in connection with the hotel development and the performance of the applicant's obligations under the sub-lease. It seems to me that the applicant has established that it has a long-standing and large financial stake in this technology park. On the other hand, if the caveat is extended some prejudice will accrue to the respondent, but as Young J recognised in Kingstone Constructions Pty Ltd v Crispel Pty Ltd (unreported, 12 March 1991), continuation of a caveat will often cause inconvenience or harm to the registered proprietor. That is something which is to be weighed in the balance in determining whether or not the caveat should be continued. 9 The prejudice to which the first respondent points from a continuation of the caveat is that it has to complete its arrangements for the development of the park, and will be inhibited in doing so. The first respondent is about to enter into negotiations with a body, which has been referred to in the evidence as NICTA, to take up space in the park and the most obviously suitable space for NICTA's purposes is that which was formerly the subject of the sub-lease to the applicant. As against this, NICTA has a license to occupy bay number 15 in the locomotive shed until March 2006. There are other sites in the park which are being considered for occupation by NICTA other than the land the subject of the sub-lease. It will be some time before the position with NICTA will be clarified, and this is not likely to occur at the earliest prior to March 2004. NICTA has not put any evidence on in opposition to this application, nor does the first respondent assert any specific threat on the part of NICTA to withdraw from the foreshadowed negotiations unless the position in relation to the applicant's sub-lease is immediately crystallised. 10 I therefore have to balance the position of the applicant with a long-term lease with a substantial rent paid in advance, coupled with a $10 million investment in this property as against the possible prejudice to the first respondent of sterilisation for a period of some months of its ability to plan with confidence for the continuation of the development. It seems to me that the balance of convenience clearly favours the extension of the caveat. Whilst I recognise that this will cause some prejudice and some inconvenience to the first respondent, nonetheless, I think that the extension should be granted. Therefore, subject to the proceedings being amended to join Mr Ip as an applicant for the purpose of giving the undertaking as to damages, and subject to Mr Ip personally undertaking to the Court to pay any damage which the respondent or any other person might suffer by reason of the extension of the caveat, I propose to extend the caveat until the hearing of these proceedings, or further order. 11 I propose to reserve the costs of the application. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.