This is an application by the plaintiffs following judgment which I delivered in this matter finalising the claims made by the plaintiffs in their proceedings and finalising the cross-claims brought by the first and second defendants: Issa v Osman (No.2) [2017] NSWSC 663 ("the principal judgment").
Shortly put, the plaintiffs claimed orders which had the effect that the Contract for Sale of Land dated 20 April 2015, between them as vendors and the first defendant as purchaser, of land at Glenorie, had been validly and lawfully terminated. I was persuaded to grant that relief.
The plaintiffs claimed against the second defendant that he be ordered to remove caveat AK182112 lodged over the Glenorie property on or about 3 February 2016. I granted that relief.
I ordered that each of the cross-claims be dismissed and I stood over until today the question of whether or not I should order an enquiry as to damages.
Today, the plaintiffs seek an order against each of the defendants that there be an enquiry as to damages. It is unnecessary for me to set out all of the facts, matters and circumstances underlying the judgment as I will presume familiarity with the principal judgment. It is convenient to deal with the application for an enquiry as to damages against the second defendant, Mr Mohamed Osman, first.
Mr Mohamed Osman lodged the caveat AK182112 which was in a form which prevented any dealing with the property. The estate claimed in the caveat was an equitable interest arising out of moneys expended on the property by Mr Mohamed Osman.
In the substantive proceedings, Mr Osman claimed that the Court ought grant equitable relief by way of a constructive trust or an equitable charge or lien with respect to those moneys. I concluded that I was not satisfied that any basis had been established for such equitable relief and I concluded that Mr Mohamed Osman had no interest in the property and was not entitled to maintain his caveat.
With respect to his caveat, which was lodged in December 2015, but which was first notified to the plaintiffs on or about 3 February 2016, the plaintiffs commenced proceedings on 25 February 2016 in the Duty List, seeking an order that the caveat be removed forthwith together with other relief. That matter was initially dealt with by consent before the Duty Judge and returned ultimately to Court before Justice Davies on 18 March 2016.
On that day, his Honour ordered that the second defendant, if he wished the caveat to be extended, was required to give an undertaking as to damages. His Honour noted that given that the plaintiffs had sought an order of the Court that the caveat be removed, the obligation fell on the second defendant to justify the continued existence of the caveat. His Honour noted that, although s 74P of the Real Property Act 1900 gave a right to compensation, the usual practice of the Court was to require that an undertaking as to damages be given if a caveat is to be extended.
The proceedings were adjourned so that Mr Mohamed Osman's solicitor could obtain instructions. Following the adjournment, his Honour noted that Mr Mohamed Osman's lawyer, on behalf of his client, gave the usual undertaking as to damages and on that basis his Honour extended the caveat.
In light of the fact that the caveat prevented all dealings with the property until, in effect, the Court determined the respective claims of the parties, and given that the second defendant was unsuccessful, it seems to me that it is appropriate that the Court order that there be an enquiry as to damages with respect to the existence of the caveat. It will be necessary to formulate that order with precision shortly. In so doing I wish to expressly note that Mr Mohamed Osman submitted to this Court that, given the state of the property market in Sydney and the period of time during which his caveat in fact remained on foot, it was highly unlikely that the plaintiffs will have suffered any damage at all and in fact may well have benefited from the delay in selling the property. In my view, that submission is one properly to be considered by the Court when it holds an enquiry as to damages. In so ordering an enquiry, I am not to be taken to have found that there has been any damage established by the plaintiffs. It will be a matter for them to establish and prove that, as a consequence of the existence of the caveat and in light of the undertaking as to damages, they in fact have an entitlement as to damages.
The plaintiffs also sought an enquiry as to damages with respect to the first defendant. The first defendant was the purchaser of the property under a Contract for Sale. The issues determined by the Court with respect to that contract were whether, as contended for by the plaintiffs, it had been lawfully and validly terminated or whether, as contended for in the cross-claim, that in substance the Contract was still on foot and capable of being performed by the first defendant.
As I have earlier said, I found that the Contract had been lawfully and validly terminated. But the first defendant is in a different position from his father, the second defendant. First, he did not lodge a caveat to protect his equitable interest in the property which arose by reason of the exchange of contracts. Secondly, he did not seek any interlocutory relief with respect to the conduct of the plaintiffs so as to prevent them from selling the land. Thirdly, he did not give an undertaking as to damages. All that occurred with respect to the first defendant was that he contested the plaintiffs' claim against him and cross-claimed for relief which was, in substance, the obverse of the plaintiffs' claim.
Mr Barrak, who appears for the plaintiffs today, submitted that there are two bases upon which the enquiry as to damages with respect to the first defendant's conduct should be ordered. First, that the Court should regard him as being linked or joined together with his father, that he was only involved in the transaction as a consequence of a request from his father and for his father's benefit so that in substance and in truth the first defendant was the beneficiary of the caveat which had been lodged. As a consequence, so he submitted, the Court ought see his position in that respect as being no different from that of his father.
The second basis upon which it is said that an enquiry as to damages ought be ordered is that the lodging of the cross-claim as opposed to lodging a submitting appearance or not defending the principal claim had, in a practical way, prevented the plaintiffs from moving to sell their property because any plaintiff who did so in those circumstances would run the risk of behaving in a way which was offensive to the Court or which had the tendency to undermine the Court proceedings.
I note the following with respect to the cross-claim and the plaintiffs' claim. First, and this is not said critically but it is a fact which is relevant, the plaintiffs did not move for summary judgment, that is to say they did not seek to persuade the Court that the first defendant had no proper defence to their claim.
Secondly, when the claim was mounted, the plaintiffs did not move to strike it out or to obtain summary dismissal of it on the basis that it was not a claim which was tenable or properly advanced.
As the principal judgment shows, there were matters of substance canvassed on the plaintiffs' claim against the first defendant and on the first defendant's cross-claim.
In those circumstances it cannot be said that the conduct of the first defendant in resisting the plaintiffs' claim and in propounding his cross-claim, was anything other than reasonable conduct engaged in by a litigant in the course of the proceedings.
I accept that a prudent vendor may choose not to resell a property whilst litigation is on foot, and I accept what Mr Barrak puts that such course of action is both prudent and sensible. However, the fact that the plaintiffs adopted such a prudent and sensible course, putting to one side the fact that they could not act to sell the Property because of the existence of the caveat, does not mean that the opposing party, the first defendant, ought be causally responsible for any loss which may have occurred in that period.
I am not attracted to the submission that the robust defence of the plaintiffs' claim mounted by the first defendant ought give rise to a basis for an enquiry as to damages.
The first submission put was that I should hold the first defendant's conduct, in effect as the alter ego of the second defendant, was linked to the conduct of the second defendant and that, to the extent that the caveat prevented dealings by the plaintiffs with the Property, I should find the first defendant had a role to play and ought be legally liable for any damages which ensued. I am unable so to do. There was no relief sought against the first defendant with respect to the caveat. It was not said in any proceedings that he had the capacity to require the second defendant to remove it, and there is simply no evidence of any involvement by the first defendant with the caveat. In fact the whole of the evidence in the proceedings tended to suggest to the contrary, that is, that the second defendant lodged the caveat and sought to keep it in place so that he could remain living in the property whilst the litigation was on foot.
I am therefore unpersuaded that I should order any enquiry as to damages against the first defendant, and I reject the plaintiffs' application for such an order.
I make the following orders:
1. Order that there be an enquiry as to damages with respect to the lodging by the second defendant on or about 3 February 2016 of caveat AK182112 and in light of the second defendant's undertaking as to damages given to the Court on 18 March 2016.
2. Stand over the enquiry for directions to 9am on Wednesday 12 July 2017 before the Registrar.
3. Order that the orders of the Court made on 3 May 2017, except for the order for costs, be vacated.
4. Order that the application by the plaintiffs for an enquiry as to damages against the first defendant be dismissed.
5. Order that the plaintiffs pay the first defendant's costs of today.
6. Order that any party seeking to set aside or vary the order that the defendants pay the costs of the plaintiffs made by the Court on 8 June 2017 is to file a notice of motion and all affidavits in support and to serve those documents on or before 4pm, Wednesday, 21 June 2017. I note that such notice of motion is filed pursuant to rule 36. 16 (3A) of the Uniform Civil Procedure rules.
7. I grant leave for any such notice of motion to be made returnable before the Court at 9am on Wednesday, 12 July 2017.
8. I list any such motion in the Registrar's list on that day.
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Decision last updated: 26 June 2017