Mathews v Council of the Shire of Gunnedah [2010] NSWSC 412 | Case summary

2010/98819 MATHEWS v THE COUNCIL OF THE SHIRE OF GUNNEDAH EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an application for extension of two caveats pursuant to section 74K of the Real Property Act. The caveats have been lodged over lots 16 Deposited Plan 6022A and B (lot 16) and lot 304 of Deposited Plan 754954. The land over which the caveats have been lodged comprise part of the Gunnedah Airport, which is owned by the defendant. 2 The plaintiff claims an interest in the land, which is the subject of the two caveats, as assignee of an unregistered lease dated 1 August 2000 between the defendant and Mr Kenneth Hearne. The assignment is in writing and is dated 28 June 2007. Neither the lease nor the assignment has been stamped. 3 Section 304(1) of the Duties Act 1997 provides that an instrument that is chargeable with duty under that Act is not available for use in law or equity for any purpose and may not be presented in evidence in a court unless it is duly stamped. An exception is created under subsection (2). That subsection says that the instrument is admissible if the instrument is after its admission transmitted to the Chief Commissioner of State Revenue in accordance with arrangements approved by the Court, or if, where the person who produces the instrument is not the person liable to pay the duty, the name and address of the person so liable is forwarded, together with the instrument, to the Chief Commissioner in accordance with arrangements approved by the Court. 4 The plaintiff has proffered an undertaking in respect of the assignment to transmit that instrument to the Chief Commissioner of State Revenue within seven days and, in respect of the lease, to forward to the Chief Commissioner of State Revenue, the name and address of the person liable to pay duty on the instrument, together with a copy of the instrument, within seven days. Those undertakings were proffered in accordance with the UCPR rule 31.13. 5 There is a dispute about the effect of the undertakings. Mr Balafoutis relies on a judgment of Young CJ in Eq in Reliance Financial Services Pty Ltd v Baddock [2002] NSWSC 857. In that case, his Honour expressed the view that the effect of the undertaking was to make the instruments admissible but was not to make them available for use in law or equity. 6 In Weston v Metro Apartments Pty Ltd [2002] NSWSC 682 Campbell J was inclined to the opposite view on the basis that there seemed little point in admitting the documents if they could not be used for any purpose. However, his Honour declined to decide the issue at an interlocutory hearing. Instead, his Honour concluded that, where there was a serious question to be tried about the ability of an unstamped contract to give rise to an interest in land, then, if the balance of convenience favours the maintaining of the caveat, it should be maintained. 7 The issue raised by the decisions of Young CJ in Eq and Campbell J still appears to remain unresolved. In those circumstances, I think that I should follow the course adopted by Campbell J. I would not decide this application against the plaintiff because the instruments on which he relies are unstamped. 8 Recital A of the lease on which the plaintiff relies records: "The lessee has agreed to purchase from one Richard Andrews Anderson a Lame aircraft hangar situated at the Gunnedah Aerodrome."

"Lame" in this context stands for Licensed Aircraft Maintenance Engineer. 9 Clause 1 of the lease provides that: "The lessee hereby leases to the lessee the land on which the hangar is located, being approximately 1225m 2 as per sketch annexed and marked A." 10 Clause 8 of the lease provides: "Vehicular access to the hangar shall be from the existing gates on the western side of the terminal parking and the gates must remain closed and locked at all times when not being used for access and no more than three motor vehicles are to be on the outfield at any time." 11 I accept Mr Balafoutis' submission that the leased land is limited to the land on which the hangar sits. I think that is the plain meaning of clause 1. 12 Although it is not clear whether clause 8 confers a right on the lessee or merely imposes an obligation, I also accept that it does not itself give rise to a caveatable interest. 13 The precise location of the hangar is not clear from Annexure A to the lease. However, it is worth noting that the hangar occupies only a very small proportion of the land which is covered by the caveats. 14 The defendant is in the process of redeveloping the Gunnedah Airport. It has entered into an agreement dated 14 November 2008 with Australian Asia Flight Training Pty Limited (AAFT) for the sale of part of the land on which it is situated and for the lease of other parts. Under the terms of the lease attached to that agreement, the lessee takes a lease subject to the lease of the plaintiff. The agreement is conditioned on registration of a subdivision. If the subdivision is not registered by 30 April 2009, either party may rescind the contract at any time. 15 The council has two principal complaints about the caveats lodged by the plaintiff. First, it says that they affect a far greater area of land than that which is the subject of the plaintiff's lease. Second, it says that the caveats prevent the council from doing far more than is necessary to protect the plaintiff's interest. The council proposed in a letter dated 30 April 2010 from its solicitors that, first, the caveats be withdrawn. Second, the letter proposed that the plaintiff lodge a new caveat over lot 16, which is limited to the land immediately surrounding the hangar. That land is identified in a plan enclosed with the letter. Third, the letter proposed that the caveat not prevent the council from registering a subdivision plan. Mr Balafoutis informed me that this offer remains open. 16 There is no dispute about the principles which should apply to an application under section 74K of the Real Property Act. Essentially, they are those that apply to an interlocutory injunction. The plaintiff must establish a prima facie case or serious question to be tried and must establish that the balance of convenience is in favour of an extension. In my opinion, neither of these conditions has been established in this case. 17 Section 74F(5)(b)(vii) of the Real Property Act provides that a caveat lodged under that section must, where the caveat relates only to part of the land described in a folio of the register or a current lease, specify a description of that part in the form or manner prescribed. On the material before me, I think that the plaintiff will only be able to establish an interest in that part of the land where the hangar is situated. I do not think that there is sufficient doubt or difficulty in describing that part. 18 Even if there is still some doubt about the precise location of the hangar, I think its location is sufficiently clear from the plan attached to the council's solicitor's letter dated 30 April 2010 to enable a caveat to be lodged which properly protects the plaintiff's interest since the location of the hangar itself is clear. Nor do I accept that the plaintiff has a reasonably arguable case that, in order to protect his interests, he is entitled to prevent the subdivision from being registered. I cannot see how registration of the subdivision itself affects the plaintiff's interests. 19 Finally, I think that the balance of convenience is in the council's favour. If the caveats are extended, there is a risk that AAFT could rescind the contract with the council. There is no evidence before me on how great or small that risk is, but I think that it must be regarded as a real rather than a fanciful one. If that contract is terminated, the council could suffer very substantial damages. On the other hand, the plaintiff is free to lodge a further caveat in the form proposed by the council or a similar form. In my opinion, that provides the plaintiff with adequate protection. The motion is dismissed with costs. In view of the council's offer of 30 April and its rejection by the plaintiff, I order that the costs of the application be payable on an indemnity basis on and from 3 May 2010. 20 Mr Knowles asked me for leave under s74O of the Real Property Act to file a further caveat in the terms of the offer made by the Council in its solicitor's letter dated 30 April 2010. Having regard to that offer, I will give that leave. **********

Mathews v Council of the Shire of Gunnedah

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