(2006) 227 CLR 57
Bayblu Holdings Pty Limited v Capital Finance Australia Limited [2011] NSWCA 39
Forder v Cemcorp Pty Limited [2001] NSWSC 281
Source
Original judgment source is linked above.
Catchwords
(2006) 227 CLR 57
Bayblu Holdings Pty Limited v Capital Finance Australia Limited [2011] NSWCA 39
Forder v Cemcorp Pty Limited [2001] NSWSC 281
Judgment (2 paragraphs)
[1]
Judgment
By a Summons filed on 15 May 2015, the plaintiff seeks an order that the defendant withdraw caveats recently lodged over Lots 7 and 8 in Deposited Plan 29317, being caveats AJ457074 and AJ457124. The caveats, which are in substantially the same terms, each claim an equitable interest in the land. The facts which are said to give rise to the interests are stated to be:
"The registered proprietor has expressly agreed both orally and in writing to sell two blocks of vacant land to the caveator in the past. The registered proprietor is not agreeing to the performance of the obligations pursuant to the agreement."
The salient facts appear to be as follows. On 7 November 2013, the plaintiff entered into a contract for the purchase of Lots 7 and 8 from the defendant and the defendant's wife for $3,600,000. The contract was completed in January 2014 and the plaintiff became the registered proprietor. Also on 7 November 2013, the plaintiff entered into contracts to purchase Lots 7A and 8A in Deposited Plan 29317 from EMS Property Holdings Pty Limited, a company associated with the defendant. Those contracts were also completed in January 2014 and the plaintiff became the registered proprietor.
Special Condition 18 of each of the contracts provided that the contract was interdependent with the other contracts and that completion was to take place simultaneously with completion of the others. The contract for the purchase of Lot 8A contained special condition 25 which was in the following terms:
"The vendor [EMS Property Holdings Pty Limited] agrees prior to completion to enter into contracts with the purchaser [the plaintiff] to purchase two vacant lots of its choice in the subdivision of the land with the following conditions:
[…]
(d) Completion to be the date of completion of this contract if the subdivision has been completed or four weeks from the date of registration of the subdivision if it has not been registered prior to completion of this contract."
It is not in dispute that the plan of subdivision of the land of which Lots 7A and 8A form part has not been registered. However, the plaintiff is currently negotiating for the sale of numerous proposed lots in the subdivision including proposed lots that fall within the existing Lots 7 and 8. It is for this reason that the plaintiff seeks the removal of the caveats over Lots 7 and 8.
Mr Warren of counsel, who appeared for the plaintiff, submitted that the caveats should be removed for a number of reasons. Essentially these were:
1. that the caveats were defective;
2. that any rights conferred by Special Condition 25 to the contract concerning Lot 8A were rights of EMS Property Holdings Pty Ltd, not the defendant;
3. that in any event no such rights existed in circumstances where no notice was given by EMS Property Holdings Pty Limited prior to completion that it had chosen any lots or required the plaintiff to enter into a contract to sell such lots; and
4. that in so far as the defendant seeks to rely on alleged discussions concerning the putting aside by the plaintiff of two blocks for the defendant to purchase, such blocks were clearly not within either Lot 7 or Lot 8.
Mr Kulkarni of counsel, who appeared for the defendant, ultimately did not contest that the caveats were defective. However, he submitted that serious questions existed that the defendant had an interest in each of Lots 7 and 8.
Mr Kulkarni submitted that the evidence adduced by the defendant showed that it was arguable that by mistake Special Condition 25 was omitted from the contracts concerning Lots 7, 8 and 7A, and thus those contracts ought to be rectified to include such provision. He then submitted that Special Condition 25 could be construed such that it was not necessary for there to be any notice given or choice of lots prior to completion of the contract. As I understood the submission this was because the Special Condition was concerned with lots in a subdivision and should be taken to be directed to the time when the subdivision was complete.
Mr Kulkarni submitted that even if Special Condition 25 was construed as the plaintiff would have it, an estoppel could be raised against the plaintiff due to statements made by its former director (the late Mr Vangeli Snr) to the defendant prior to settlement to the effect that he was not yet able to proceed with contracts for the sale of two blocks that had been put aside for the defendant. Mr Kulkarni further referred to evidence of statements made by Mr Vangeli Snr to the defendant after settlement to the effect that the two lots were going to be sold to him.
That Mr Vangeli Snr had indeed put aside two lots for the defendant was corroborated by evidence given by an agent who had been engaged by the plaintiff to sell lots in the proposed subdivision, and by evidence given by an accountant who had discussions with Mr Vangeli Snr in relation to the subdivision. The evidence was clear that the two lots so put aside were lots described as lots 12 and 25 on a plan that was shown to the defendant and his wife. As Mr Warren submitted, and as Mr Kulkarni ultimately conceded, lots 12 and 25 are not located within either Lot 7 or Lot 8.
The plaintiff's application is for orders under s 74MA of the Real Property Act 1900 (NSW) for the removal of caveats. The principles that govern applications of that kind were described by Campbell JA (with whom Tobias and Macfarlan JJA agreed) in Bayblu Holdings Pty Limited v Capital Finance Australia Limited [2011] NSWCA 39 at [20] in the following terms:
"The primary judge correctly proceeded on the basis that on an application for an order to remove a caveat it is not necessary for the court to make a final determination as to the interest claimed by the caveator or a final determination as to the priority that the caveator may or may not have over competing interests. Rather, the court should enquire whether the caveator would have been granted an interlocutory injunction to protect the interests that the caveator claimed in the caveat. If no such interlocutory injunction would have been granted the caveat should be ordered to be withdrawn."
The nature of the interest claimed by the defendant is that of a purchaser of land under an agreement enforceable against the plaintiff owner. The defendant's argument faces major difficulties. Even if it is assumed in the defendant's favour that it is reasonably arguable that the contract for the sale of Lots 7 and 8 (which was completed some 16 months ago) should be rectified to include a provision in terms of Special Condition 25 found in the contract concerning Lot 8A, I think that it is clear that in so far as the provision creates obligations to enter into contracts, the contracts must be entered into prior to completion of the principal contract. Whether the provision is regarded as being in the nature of a put option, a call option, or both, the agreement calls for the contracts to be entered into "prior to completion". The language of the condition is clear in that respect. The expression "prior to completion" means prior to completion of the contract of which the Special Condition forms part. I do not accept the submission that the provision is directed to when the subdivision is complete. Paragraph (d) of the condition indicates that it was contemplated that contracts may be entered into prior to the registration of the subdivision.
I therefore do not think that there is a serious question (or prima facie case as described by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at [65]) that the defendant may have an interest in either Lot 7 or Lot 8 by virtue of a provision in terms of Special Condition 25.
The defendant's argument based upon the discussions about the putting aside of two lots for him to purchase fare no better. It is clear that none of the land the subject of these discussions falls within either Lots 7 or 8. In my opinion the discussions relied upon do not, whether by way of estoppel or otherwise, give rise to any interest in Lot 7 or Lot 8.
I do not accept the submission made by Mr Kulkarni that the defendant may have an interest in such lots because he has an interest in the whole of the land the subject of the proposed subdivision. The proposed subdivision in this case involves a number of separate parcels of land. The discussions concerned particular parts of a parcel (or perhaps parcels). The defendant might be said to have an interest in the whole of such parcel or parcels (compare Forder v Cemcorp Pty Limited [2001] NSWSC 281; (2001) 51 NSWLR 486 at [16]). However, I do not think that the defendant can be said to have an interest in any other parcel merely because such parcel is to be involved in the same subdivision.
For the above reasons, I do not think that the defendant would be granted an interlocutory injunction against the plaintiff to protect the interests he claims in respect of Lots 7 and 8. The caveats, which are defective in that they fail to give the required particulars of the nature of the interests in land that is claimed, should be removed.
The Court orders pursuant to s 74MA of the Real Property Act:
1. that the defendant withdraw caveat AJ457074 in relation to the land contained in Folio Identifier 7/29317 by 4pm on 22 May 2015; and
2. that the defendant withdraw caveat AJ457124 in relation to the land contained in a Folio Identifier 8/29317 by 4pm on 22 May 2015.
The Court further orders that the defendant pay the plaintiff's costs of the proceedings. The exhibit may be returned.
[2]
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Decision last updated: 22 May 2015